South Africa: The rich get richer and the poor get poorer

In 1996, hardly 2 years after the ANC was elected, the leadership, having long since buried the Freedom Charter, abandoned the Reconstruction and Development Programme, replacing it with the neo-liberal capitalist Growth, Employment and Redistribution Programme. Adopted with extravagant promises of high economic growth and a million jobs in 3 years, Gear has, after 7 years thrown the lives of the working class majority into reverse. The capitalist Gear policy has created an “Irish Coffee” society — black at the bottom, white on top, with a sprinkling of black chocolate on the cream. Socially, we are worse off than under Apartheid. Our conditions resemble the social landscape after the Bible’s 7 Lean Years in the Old Testament. There is more unemployment, poverty and hunger. The weed of crime is thriving in this soil of misery. But as our poverty has worsened, the wealthy have never had it so good. The income gap between the rich and poor has widened into a chasm.

Women and children suffer the worst. At the start of Child Protection Week the University of Cape Town’s Children Institute released a study based on the work by Human Sciences Research Council economist Ingrid Woolard. It revealed “that an estimated 11 million children younger than 14 were living in ‘severe poverty’ last year. Severe poverty is defined as less than R245 a month. The Child’s Rights Programme Manager at the Institute, Paula Proudlock points out that “children living in poverty means families living in poverty. You realise that just half of the R15.9 billion of tax rebates given to middle income earners (which in fact benefited the rich mostly – editor) last year would have been enough to extend the child support grant to all children up to age 14”. (Terry Bell – Star 30/5/03).

Research carried out by the University of the Western Cape and published by Research Service id21 found “incomes in South African black households fell by 19% between 1995 and 2000 while white household incomes rose by 15%. Last year, 2 out of 3 black households in Cape Town did not have enough to eat.

The research surveyed black townships around Cape Town where it found 76% of households lived below the poverty line of R352 per month. Over half these households had no waged income, and almost one third reported that the main bread winner had lost a job in the previous year.”(Mail & Guardian 13/5/03)

Retrenchments on farms and mines, mechanisation, privatisation, downsizing and outsourcing have led to the loss of over a 1m jobs and the doubling of unemployment to over 30% in the government’s figures. Cosatu says the real unemployment level is nearer 45%. Professor Sampie Terblanch’s research published in his book “A History of Inequality in South Africa 1652 – 2002” supports this. “Formal sector unemployment has risen from 20.2% in 1970 and 36.1% in 1995 to an estimated 45.8% in 2001”.

“A study by Cape Town health officials shows that within 6 years, life expectancy of black people in Cape Town is expected to plunge by 15 years to an average 40 years because of the Aids epidemic. Dr Ivan Toms, head of the city’s health department said the implication of this Cape Town study for the rest of the country is that life expectancy would fall to that level 3 years faster.” (Mail & Guardian 13/5/03)

A social war is being waged on the working class on two fronts – in the workplace by the bosses and in our communities by the government. As unions prepare for wage negotiations, the bosses are complaining that the strong rand is cutting into their profits. They are threatening mass retrenchments. The capitalists, like vampires thirsty for more blood, do not believe the working class is poor enough. Wits University Economics Professor Johannes Fedderke (sponsored by mining giant Gencor) argues that workers are earning too much and has appealed for cuts in pay! He claims that lower wages would create more jobs.

Yet, the latest survey by the Cape Town-based Labour Research Service, indicates that “the average real wages of workers on the minimum scale fell by nearly 10% last year. At the same time company executive directors of awarded themselves, on average, fee increases nearly 42% more than the rate of inflation. “This meant that the average executive director pocketed R2.8 million a year against the average wage earner’s R67 000 a year. This was last year when average pre-tax profits rose by more than 52%. (Terry Bell – Star 23/5/03). The average executive director earns nearly 42 times more than the average worker. It takes a worker nearly 31/2 years to earn what an executive director gets in just a month!

In 1995, 35% of workers earned under R1000 a month. By 2002, 39% earned under R1000 a month – and in real terms, their incomes had fallen by a third. Workers’ share of the national income dropped from 58% in 1992 to 51% last year. (Cosatu President Willie Madisha- speech to NUM Congress 8/5/03)

Government policies have led to electricity and water cut-offs for 10 million people and over 2 million evictions. “Cost recovery” for basic services has caused a cholera epidemic that has so far claimed over 300 lives. 600 die every day from Aids as the government continues to resist and delay the provision of anti-retrovirals in public hospitals. Children are excluded from education through school fees. University student debt amount to millions.

The result is the gap between rich and poor has placed SA second only behind Brazil as the most unequal society on earth. According to Prof Terblanch, “In 1975 the poorest 40% of households received 5.2% of the country’s (total annual) income. By 2001 this had decreased to 3.3%.” The fastest growing gap is now amongst blacks — between the aspirant capitalists and the working class. Through Black Economic Empowerment, the government puts as much effort providing the black elite with self-enrichment opportunities as it does disguising its programme of impoverishing the black majority that elected it.

Unlike in the Old Testament, there will not be 7 fat years to follow the lean ones. The latest Reserve Bank report suggests the economy is going into a recession just as the big powers in the world economy are themselves slowing down. Things are going to get worse.

No wonder as many as 40% of voters indicate they will withhold their vote in protest in next year’s elections. The only way, however, to combat the government’s capitalist policies is by the working class building its own party. The ANC is the party of the Oppenheimers, Rajbansis and the Ramaphosas. Even if the ANC’s claims that it represents all classes (not just the black elite) were true, it would not be possible to serve the working class and their exploiters, the capitalist class, equally. In a capitalist society, the government serves the interests of Capital. Economist Nico Czypionka said in 1998 “If the ANC came out and said: ‘Our first obligation is to our people’ there would be some heavy choking by capital.” (Ian Taylor (23/5/03). To serve the interests of the working class requires the abolition of capitalism.

Capitalism has exhausted its historical role as a progressive force and has been rotten ripe for overthrow for nearly a century. The black capitalists whose interests the ANC represents have entered the scene of history too late to play a progressive role. This is why they cannot even displace the predominantly white capitalist class, which benefited so much from Apartheid, nor eradicate its legacy of racial inequalities. Instead they are reduced to relying on handouts for loans from big business, seats on their boards of directors to prettify capitalism, and privatisation of state assets to enrich themselves.

The ANC government’s approach to service delivery is to ask the question: can a profit be made from it? Nothing is sacred anymore. Housing, education, health, water, electricity, refuse removal and even the delivery of pensions to the elderly – all are only worth delivering if someone can be enriched by it. The corruption so widespread in government is the inevitable result – corruption is a by-product of capitalism.

We need a mass workers party on a socialist programme to abolish capitalism in SA and internationally. Only on the basis of a democratic socialist economy planned and managed by the working class, can poverty be permanently eradicated and a prosperous life for all be created

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July 2003