Contextualising the Nationalisation Discourse in the South African Corporate Media
2.2 The dominant schools of thought in global and local contexts
2.2.1 The history and background of nationalisation
From the outset it is crucial to appreciate that nationalisation is about the transfer of ownership from private firms to the state, thus assigning discretionary decision-making to the public sector (Du Plessis, 2011). However, some scholars like Keeton and Beer (2011) argue that state ownership and the existence of state-owned enterprises should not be misconstrued as nationalisation. Srivastav (2015) posits that from an economic perspective, nationalisation is about the establishment of public ownership over the principal means of production and implies government ownership and operation of the productive system, and sometimes distributive system, on behalf of the nation. Indeed, Routledge (2002) defines nationalisation as “the acquisition of privately owned enterprises by a government, with or without compensation”
(cited in Keeton and Beer, 2011: 1). Essentially, the argument advanced by Keeton and Beer
(2011: 1) is that state-owned enterprises are a historical phenomenon in all economic systems and thus should not be conflated with nationalisation which “involves the acquisition of an existing asset and the transfer of its ownership into public hands”. However, South Africa has an interesting history of nationalisation, especially during the apartheid epoch where the Nationalist Party regime had to contend with various economic challenges brought about by international sanctions. Nationalisation is not an isolated South African phenomenon but a global discourse which has had its supporters and detractors throughout various historical epochs.
The abundance of mineral resources in South Africa, coupled with the country’s history of social and economic exclusion and contradictions, makes the country a perfect candidate for nationalisation. According to Chang et al. (2010), nationalisation and privatisation have historical cycles which “tend to occur more often in the natural resources and utilities sectors”
but also occur “when the price of the corresponding commodity is high”. Furthermore,
“nationalisation is more likely when inequality is endemic or worsens in the country, and especially when the rents from natural resource or utility companies are perceived as benefitting only a minority” (cited in Keeton and Beer, 2011: 5). Indeed, these are some of the key points advanced by proponents of nationalisation. The South African context is worsened by the country’s historical and institutionalised marginalisation, oppression and exploitation of the African indigenous people by the powerful successive governments of the minority white settler population. With this in mind, it is also crucial to note that the country has an abundance of mineral resources, which makes it one of the leading mineral exporters in the world (Coetzee, 2010, cited in Lazare, 2012). Indeed, it is the mining sector that made the country the most industrialised on the continent (ANC, 2012). The mining sector is a big contributor to the South Africa economy:
Directly and indirectly it provides more than one million jobs; it pays about R89 billion a year in salaries and wages, is responsible for more than 90 per cent of electricity generation through coal-fired power stations and consumes about 15 per cent of Eskom’s total power supply (Lazare, 2012: 15).
Therefore, it was only logical that the nationalisation question would arise, and be primarily targeted at the mining sector.
2.2.2 Reversing the acute social and economic contradictions – a case for nationalisation
There are major arguments advanced by proponents of nationalisation including the fundamental question of equitable distribution of resources, especially in unequal societies.
Indeed, this argument flourishes in countries such as South Africa, where society is characterised by high levels of poverty, unemployment and inequality. Fundamentally, these are direct consequences of the capitalist economic system. This context, coupled with the fact that many Western countries that had been destroyed during the Second World War emerged and developed from that crisis through social democracy and nationalisation policies, is used by proponents of nationalisation and ignored by its detractors. Indeed, once these economies had developed they evolved and reverted to neo-liberal policies and the privatisation dominant in the 1980s (Du Plessis, 2011). For example, in the post-war era nationalisation had a strong case:
…by the late seventies, state-owned enterprises accounted for about 10% of world GDP. A period of scepticism and roll-back followed in the 1980s and 1990s, lowering the state’s share in global output by 40% by the early 2000s (Du Plessis, 2011: 7).
In some countries, nationalisation has staged a comeback – countries like Bolivia and Venezuela come to mind – while in some Scandinavian countries like Norway it never went away (Du Plessis, 2011).
The United Kingdom is a good example of a country that developed on the back of nationalising industries such as “railways, electricity, broadcasting, the central bank, road transport, steel production and other sectors” (Keeton and Beer, 2011: 4). At the same time, a number of the so-called “developed” economies owe their development to policies such as the state control of key strategic sectors in the economy, an aspect often disregarded by the opponents of nationalisation. Essentially, nationalisation emerges as a consequence of excesses perpetrated by “laissez-faire capitalism” which produces acute social and economic problems (Srivastav, 2015). In other words, nationalisation often responds to intractable social challenges as a result of the highly privatised capitalist economic system. Some of the shortcomings of the capitalist system, such as increased inequality in wealth and income and the stagnation of monopoly capital (Srivastav, 2015), are clear examples cited by proponents of nationalisation.
In this regard, it is argued that nationalisation will reverse such social and economic ills of capitalism.
The advantages cited by proponents of nationalisation include safeguarding the interests of the workers and the working class. In the South Africa context, Malikane (2011) argues that nationalisation will develop the economy, thereby taking many South Africans out of poverty.
South Africa ranks seventh internationally in terms of coal and iron ore production and fifth in terms of gold production; yet for all its mineral wealth, the country has little to show in terms of production output (Malikane, 2011).
Several peer countries, including some that also bore the brunt of colonialism, are outperforming South Africa, not only in terms of output volumes, but critically also in terms of developmental indicators, such as employment, poverty and inequality. These countries have one thing in common: significant state ownership in the mineral extraction sector. While others are steaming ahead on the road of economic development, South Africa seems to be caught in a rut of low growth and slow development (Malikane, 2011: 13).
Furthermore, Malikane (2011) posits that the downstream processing of mineral resources and the process of industrialisation are linked to activities such as the creation of sustainable jobs.
Still on the advantages of nationalisation, Srivastav points out:
Under private capitalism the managers are agents acting for a host of owners ... to oppose the demands of labor in every case to safeguard the owners’ interests and to keep their own position absolutely safe and clear. This would not be so under a system of nationalized industries, because the interests of the laborers would not be opposed to those of the managers. Both would act on behalf of the nation and get such rewards for their services as the nation is willing to pay (Srivastav, 2015: 2).
Therefore, proponents of nationalisation argue that it will lead to efficiency and lower cost of production, cooperation and prosperity for all, increased earnings for the state, control over prices of war supplies, more employment opportunities, and an environment conducive to economic and political growth (Srivastav, 2015: 3). Of course, it is crucial to appreciate the distinction that nationalisation or state ownership does not necessary mean public ownership of mineral resources. Essentially, if the structural features of the economy are not tampered with, the nationalised industries will still exist within a capitalist economy. While, nationalisation may result in a more equitable distribution among the people, fundamentally there appears to be a distinction between public and social ownership which must be appreciated in the debate.
2.2.3 Nationalisation as a discounted economic policy choice – the anti-nationalisation school of thought
While globally the state has a fundamental role to play in the economy, albeit to varying degrees, this state ownership is a historical consequence of nationalisation policies (Keeton and Beer, 2011). In the current global hegemony of capitalism, through liberal policies, nationalisation has been “discounted as a legitimate economic policy choice” and countries that pursue such policies are viewed suspiciously and often seen as undemocratic.
It follows that the countries which do still practise nationalisation are those with unusual and often despotic or autocratic governments (eg Bolivia, Venezuela, Zimbabwe), often with power concentrated in the hands of an individual or small group, where limits to state activity are not easily recognised (Keeton and Beer, 2011: 2).
However, European countries like Norway, which has continued to this day to nationalise its oil industry, are not included in this category. Indeed, this is the brutal hegemony of the capitalist perception perpetuated through the corporate media and portrayed as a reality even though most of the maligned countries are essentially “democratic”, with governments elected by the majority of the people. Unlike Zimbabwe, where its recent national elections have been fiercely contested as not free and fair, Bolivia and Venezuela presidential candidates, Evo Morales and the late Hugo Chavez, emerged through a very popular contest backed by the working class and the poor. On the back of their victories they entrenched participatory democracy by introducing
“the idea that the political systems must open more channels for the citizens’ participation through constitutional mechanisms” (Flores, Filho and Coelho, 2012: 2). Indeed, such interventions moved the monopoly of the decision-making process from elected representatives to the people. Nevertheless, their regimes have been classified as despotic mainly due to their anti-capitalist stance and willingness to nationalise natural resources on behalf of the people.
The disadvantages of nationalisation cited by its detractors include lack of individual initiative, freedom and the spirit of competition (Srivastav, 2015: 3). Indeed, perception abounds about the disadvantages to the public being served by nationalised industries (Conrad, 2005). South African scholars like Croucamp and Malan (2012) argue that nationalisation implies the presence of an array of undesirable political phenomena that range from state interventionism, which may be to the detriment of markets and international trade regimes, to the gradual
erosion of the state’s operational regime due to excessive, often redistributive, societal demands.
The required extent of state interventionism which will enhance social stability and a more even distribution of the greater good is an important feature of the public and political discourse in developing political economies. The protracted and acrimonious nature of the debate, however, is cause for concern, as well as the extremity of positions advanced by contending interests (Croucamp and Malan, 2012: 8).
The long and short of this school of thought is that nationalisation has negative consequences for the economy and therefore does more damage than good to the broader society.