The Workers Socialist Republic of South Africa?

4 Comments on The Workers Socialist Republic of South Africa?

Segoy on Wed, 21st Oct 2009 5:05 pm


Hi Tim

I just have to tell you that your mini-rant about the Workers’ Socialist Republic of SA lacks the reason that is apparently the raison d’etre for your blog.

Patel is not a “wild-eyed ultra-leftist”. Not by any stretch of the imagination. In fact he is derided by ultra leftists for his committed stance and his passionate belief in pursuing co-operation and dialogue with business and government. I mean, he was the main proponent in COSATU who supported the need for labour to engage with employers and government rather simply engage in industrial action. He headed the labour team at NEDLAC for 15 years, and sat on the ILO governing body! An ultra-leftist would not be caught dead in those arenas. Given these facts, your portrayal of him as ‘wild eyed’ and ‘ultra-leftist’ is simply wrong. Baseless. Fictional. Nonsensical.

Neither did Patel single-handedly destroy the textile industry in the Western Cape. In fact, a claim like that borders on the fantastical rather than the rational. There are deep structural faults in the local clothing and textile industry which have nothing, absolutely nothing, to do with Patel. Most of the companies have not bothered to upgrade their machinery in the last 20 years. Their productive capacity as a result remains highly uncompetitive when compared to other countries which have invested in their productive capacity and upgraded their machinery. Furthermore, the local industry cannot in any way compete with the low prices offered by countries like China. That’s not because Patel and the union wanted higher wages. Its cause the Chinese government subsidizes their industry to such a large extent that the costs borne by Chinese companies are much, much lower than South African companies and they can therefore charge lower prices. Furthermore, the Chinese government offers workers a range of social benefits and subsidies (food, housing) which make it possible for the workers to survive off their slave wages.

Patel is irrelevant in these factors. He did not guide Chinese government policy which gave China such an advantage over its competitors. Neither did he tell a range of other cheap-labour countries to follow similar industrial policy strategies which have helped to further undercut our local industry. Whether he campaigned for wage increases for workers or whether he left workers alone to earn the money their employers felt happy giving them, South African workers would still have been unable to compete with cheap-labour countries. Our cost of living is simply too high. I mean, a South African clothing worker currently earns between R300-R700 a week. Is that too high? If they must compete with China and cut their wages further, how much lower do you reasonably expect them to go and still survive? How would you survive off that income?

In fact, Tim, if you had followed the progress of the industry very closely – and not simply followed trite media reports – you would have known that Patel has been trying to encourage employers to modernize their machinery for almost 15 years; for probably the last 15 years he has also tried to get government to provide a temporary reprieve for local industry (by creating temporarily high tariffs and providing temporary loans to South African companies – in much the same style as the Asian Tigers) so that it can readjust itself and be more competitive in the global market; for probably the last 8 years, he has tried to encourage local employers and industry to upskill themselves and the workforce to produce higher-end fashion instead of the low-end fashion that it has traditionally produced in order to stop being direct competitors with China (a race we will never win); and for at least the last 5 years he has been trying to get employers to work with workers and come up with new, more efficient models for workers’ production on the factory floor.

Those are the facts. Tim, you should be careful about latching onto the very limited sound-bytes you find in the media and forming an authoritative opinion about them. Too often the media seizes on partial stories, or misrepresents, or does not understand, or does not bother to understand, or is not privy to the deeper facts. As a result, the media have contributed to a situation in which people such as yourself have completely misguided ideas about things – yet think them to be true ‘because you read it in the papers’. Even the ‘media pundits’ you mention get it wrong, wrong, wrong. I read an article in the Business Times (I think) the other day talking about how Patel has finally come to his senses by telling the clothing union and clothing businesses that government couldn’t be an indefinite lifeline for them. The journalist implied that Patel had thought differently in the past when he was in the union. But if that journalist had been to any public speech that Patel made when he was in the union (and you can see by now that I have been to such speeches – I follow the industry very closely), they would have heard him say over and over again that government cannot be an indefinite lifeline for the industry; that all the government can do is provide a temporary reprieve and the union and the industry must do the rest. His recent statement therefore is not an instance of ‘coming to his senses’ since that’s what he always thought and always said. That journalist, a pundit, simply made up her own version of what she thought Patel must have once thought and then wrote her article accordingly. In the process lies are told about an individual and people such as yourself become grossly misinformed.

Lastly, on your concern about COSATU being ultra-leftists, I’d warn you to be conscious of the disjuncture between what people declare about themselves and what people actually do. The Congress Resolution is a not an action plan. Well, not quite. It is more an ideological statement of what COSATU would like, and a form of political posturing. COSATU may wish to see socialism ushered into South Africa, but they are well aware that doing that under the present international climate would be serious folly. They know that socialism in one country has never worked, and they know that if South Africa attempted socialism, it would marginalised in the world. Since the country does not have natural resources which are indispensable to the world economy (like Venezuela has oil), they know that if they upset ‘the market’ they would be pushed aside, ignored and forgotten. They also know that they can’t develop South Africa and eradicate massive material impoverishment without international help – and that help does not exist in the current international climate.

Recognising these facts, you would find them confirmed in the actually strategy (not the ideological statement) of COSATU. Despite their grand claims, they are ACTUALLY pushing a fairly welfarist policy (‘The Developmental State’ – which is simply just the RDP reborn), and why they motivated to have someone like Patel in government – a person who doesn’t call for revolution but works with business, labour and government to address social and economic problems.

Tim on Thu, 22nd Oct 2009 6:18 pm


Segoy – thanks for your considered and thoughtful response. I appreciate your insights. Yes, it was a mini-rant because I feel I’m the only one who’s worried by what’s going on.

I will take a keener look at Patel in the light of what you say about him. But I have a very different take on the “facts” you dispute.

Patel did do all the things you mentioned. But let’s look more carefully at their effects. Patel’s brief was and perhaps still is to look after the interests of unionised workers. The industry was in serious decline made uncompetitive in no small part through declining skills and increasing wages. The industry itself had an advanced plan for its revitalization when Patel waded in demanding good old fashioned protectionism. This was in no way in the interests of the industry, even though Patel might have portrayed it so. It was in the interests of the workers alone. Import quotas failed and the larger industry relations fell into disarray. Could you imagine any enterprise investing more capital into a business under such conditions? When your industry is forced to turn its back on trade and focus inwardly on a highly over-regulated economy with ascendant trade-unions backed by government, the last thing you would want to do is invest.

Patel simply continued to gorge the industry through excessive wages with little or no quid pro quo on productivity. Jobs without enterprise is a recipe for failure. When China refused to play along with his little game, the industry all but collapsed. To blame business and not labour is disingenuous.

To show how little Patel understood or cared about modern economic theory and globalisation, Sactwu actually owned (owns?) a stake in Seardel which owns Frametex. That Patel, as both union leader and government minister orchestrated that the government pour millions into this company is nothing less than a scandalous conflict of interests.

However, to his credit, Patel has recently withdrawn from issues of labour and has defended the cessation of the bailout to the industry he helped destroy. I wasn’t aware of his previous statements on not relying on government lifelines. But I’m afraid his actions have spoken louder than his words.

As far as Cosatu goes, I would ordinarily agree with you. They have always had absurd position statements and policies. But although they have a lot of street muscle they couldn’t really do a great deal to steer the course of economic policy. But that’s all changed now. Having got Manuel out of the way, they now appear to be intent on dictating economic policy. And we know what their policy is. If they really didn’t believe why would they waste their time? I think we should take this threat seriously.

If the ANC hasn’t capitulated (and I suspect they haven’t), we could look forward to a big fight within the alliance. Either way nothing’s going to be the same.

Segoy on Fri, 23rd Oct 2009 10:55 am


Hi Tim

Thanks for the response. Thanks also for your analysis. It shows you have thought through these issues to a greater extent than I assumed from your ‘mini-rant’. I’d like to reply on a few of them, if you will let me.

1) “The industry was in serious decline made uncompetitive in no small part through declining skills and increasing wages.”

I agree with you, to some extent. But I have an issue on the wage front. Wages increased, sure, and those increases saw our industry become uncompetitive. No disputing that fact. However, one can (I believe), dispute the concepts that cause poverty wages (the machinists rate of between R300 – R700 a week) to be considered to be too high, and therefore a cause for a lack of competitiveness.

Essentially what I’m saying is this: when price is considered to be the most important measure of value in a society, South African workers who earn R300 a week will always be told they earn too much if workers in China are earning R150 a week. They will be told this even when they live in conditions of material poverty; even when they budget in two or three full days of fasting into their week because there is no money for food; even when they don’t eat breakfast for 5 days a week because breakfast is a luxury they cant afford; even when they are forced to borrow money from friends, employers or money-lenders and sink into a debt cycle that they will never break. I have done a lot of work with ‘the working poor’ (those who work for wages that fall below the poverty line). This is how they live.

However, if the concept of value is broadened and includes not only price but also things like ‘well-being’, then it would hard to begrudge workers earning a tiny R300 a week their income. In fact, in that light it becomes possible to advocate earning higher wages – what is now being termed ‘decent work’.

At its core, this is a debate about economic theory and economic practice. Its an ideological debate. I’m reluctant to get into it because ideological debates are seldom won, and they are not based on fact but rather on belief. I have read your profile and know your sentiments to be free market ones. Mine are socialist. The problem is, both of our ideologies have a very, very bad track record and have produced misery in the world when they intended to create prosperity. No denying that. We can both claim that our ideologies have not been practiced in the manner they were intended, and we could both accuse the practice of the other’s ideology as signaling its bankruptcy.

With that in mind, I simply ask you to recognize the following: that the core of your statement that increasing wages are bad for competition derives not from the fact that increasing wages must necessarily be bad for competition, but from the fact that they are bad for competition in an environment which rewards those who offer the lowest cost (and pay low wages to their workers regardless of the human cost). That environment is ideologically informed – based as it is on the principles of the free market. Consequently, since the high-wage/ low-competitiveness conundrum is ideologically based, it is open to challenge.

2) “The industry itself had an advanced plan for its revitalization when Patel waded in demanding good old fashioned protectionism.”.

Again, I think you need to see this differently. Protectionism is not such a terrible thing. And Patel did not want ‘protectionism’, he wanted temporary protectionism. The fact that China and the Asian Tigers have such strong (manufacturing) economies is because they used industrial policy measures and temporary protectionism to build robust industries that could enter a liberalised global economy with greater effect. That is indisputable. Patel simply wanted South Africa to do the same thing – though in a much shorter period of time.

Patel’s protectionism was only ever a temporary measure. He asked for a two year period in which the South African industry could be given a temporary reprieve from the instability it was under. Building up to – and during – that two year period (the China Quotas), Patel tried to get the South African government and industry to implement measures to upgrade machinery, start upskilling, improve problems which affected lead times, etc. He got zero assistance from the DTI, which only started implementing some of the plan in the last three months of the Quota period.

3) “This was in no way in the interests of the industry, even though Patel might have portrayed it so. It was in the interests of the workers alone”.

Again, not true. The manufacturers have generally been behind Patel on this issue. It was the retailers who were not. In fact, during the negotiations to develop industry plans, it was invariably labour and the manufacturers against the retailers.

4) “Import quotas failed and the larger industry relations fell into disarray”.

Only partially true again. The import quotas did not actually fail. They succeeded in slowing the rate of imported clothing into the country. In some instances very dramatically. In the process, procurement by retailers from local factories increased. Where the quotas did fail was in stopping the demise of the industry – but because virtually none of the measures agreed to by government, labour and industry were implemented. The party responsible for implementation was the government. They failed miserably to do what they had agreed to do.

Did larger industry relations fall into disarray? I don’t think so. Not that I have heard. SACTWU has a very strong relationship with the employers associations through the bargaining councils. (The recent strike was not about relations falling into disarray, but a result of power games played by both parties testing each other in the face of Patel’s departure).

5) “Patel simply continued to gorge the industry through excessive wages with little or no quid pro quo on productivity. Jobs without enterprise is a recipe for failure”.

I’m not sure how you come to this statement. For the past 8 years or so, clothing workers received below inflation rate increases – meaning that the value of their wages decreased each year.

And Patel sought to increase productivity continuously. He even invited the ILO to come to South Africa and fund a pilot productivity initiative at 5 Cape Town based factories. Each of these factories used collaborative structures (management and workers together) to find out how to increase their productivity. As a result, Charmfit, an Epping factory which produces lingerie, managed to salvage a line which was completely unprofitable. They turned productivity around, saved the line and it now competes successfully with imported lingerie at retail stores around the country. Pals clothing in Salt River improved their productivity by decreasing their absenteeism. These were Patel’s initiatives, not those of industry. The companies which participated were delighted at the progress they made. Government was given the model and asked to implement it. They did nothing.

6) “To show how little Patel understood or cared about modern economic theory and globalisation, Sactwu actually owned (owns?) a stake in Seardel which owns Frametex. That Patel, as both union leader and government minister orchestrated that the government pour millions into this company is nothing less than a scandalous conflict of interests”.

I’m not entirely sure what you mean by Patel not understanding or not caring about economic theory when SACTWU part of share of Seardel. Can you explain? I don’t want to respond until I understand better.

As for pouring state money into Frame… I think you must temper your criticism a bit. The closure of Frame threatened the capacity of the South African clothing and textile industry. Frame was a major player. When it went down, other companies were threatened too. Patel’s concern was to save the larger industry, not simply one company. Would it have made economic sense to save a company that was so inefficient? Maybe not. But that’s why Patel and Davies were looking at how to make Frame efficient, and if it could be made to be efficient, then they wanted to see if they could save it.

7) “As far as Cosatu goes, I would ordinarily agree with you. They have always had absurd position statements and policies. But although they have a lot of street muscle they couldn’t really do a great deal to steer the course of economic policy. But that’s all changed now. Having got Manuel out of the way, they now appear to be intent on dictating economic policy. And we know what their policy is. If they really didn’t believe why would they waste their time? I think we should take this threat seriously.”

I say this as a (critical) socialist: COSATU are not about to take South Africa into communism. History has taught them that socialism in one country does not work. Their end goal is socialism; their vision is long term. But are the US, Germany, UK, Japan, Saudi Arabia et al about to become communist? No. You must look further afield to see what will happen here at home.

The fluctuations we are seeing in economic policies around the world (bail-outs etc) do not constitute a move to communism. They constitute the minor revival of a Keynesian form of economics. Different theories about how capitalism should operate fluctuate into fashion and out of fashion in response to the business cycle.

In South Africa, COSATU are merely posturing themselves to win the battle for minds; to use the disillusionment about capitalism which the current crisis has brought to win some ideological ground. Also, how could a socialist organisation not publicly proclaim socialist policies without looking like they have sold out? But again the question is what are they doing, not what are they saying. What they are doing is pushing for a developmental state and they are supporting a man (Patel) whose policies support that vision.

I would be interested in what you have to say. As you can see, I’m not frothing at the mouth as you’d expect in a debate between a free-marketeer and a socialist. I have been self critical too. I’d appreciate the same respect from you, which I’m sure you will give. Thanks

Segoy on Fri, 23rd Oct 2009 11:58 am


Sorry Tim, one more thing.

I meant to say this in the discussion about wage increases (and I forgot):

That ‘the market’ does not operate on principles that are free of human belief. It favours low costs (regardless of human costs) not because all humans are selfish, but because we have been socialised into a cultural framework which promotes ‘self-interest’ in economic transactions above other kinds of considerations. Culture is not rock-solid. It changes. Anthropology tells us that social-interest has also been a criterion of economic transactions in the past. Studies in the discipline of Economic History say the same. That is why its not right to say that higher wages must cause a lack of competition. They only do so in our context, given the dictates of the ruling ideology which causes people to behave in a particular way in economic transactions.

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