Dissolve capitalism to end state capture

2016-11-20 06:39

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The State of Capture report, through unconventional methods, identifies the Guptas as critical business actors manipulating President Jacob Zuma’s administration to obtain government contracts and licences.

Oakbay Investments and Sahara Holdings, whose interests range from mining to media, are vehicles through which the Guptas allied with state officials and politicians to make money.

This phenomenon has elevated the World Bank’s notion of state capture in South Africa’s political lexicon.

The concept of state capture signifies institutional matrices and networks through which elites accumulate wealth – legally and illegally. ANN7, The New Age and the SABC tend to rally around the Guptas, Zuma and their allies’ economic agenda.

The conflict at the SA Revenue Service is an attempt by the Guptas’ patronage network to set conditions for its own tax evasion.

The Hawks, just like the Scorpions before, are used to selectively investigate and fight political opponents.

Some senior officials in state companies such as Eskom and Transnet are appointed to favourably award tenders to Gupta-related companies, like Tegeta.

The executive arm of the state is meant to take decisions such as the nuclear power deal, which will benefit the Guptas’ Shiva uranium mine.

National Treasury was supposed to become a conduit through which budget allocation and control would serve the priorities of the Gupta network.

The capture of the ANC is a precondition to enable business groups to capture the state.

The Guptas are correct that part of the battle against them is also linked to the ANC’s 2017 leadership succession.

Here, the Guptas serve as an economic faction, whereas the so-called Premier League serves as a political faction to defend the Guptas’ state capture of other economic and political factions – some of which are backed by white business.

The Gupta family wants to defend its political influence in the ANC.

It would appear it has captured a significant number of national executive committee members, hence the reluctance or inability to recall Zuma.

Other overt mechanisms through which different business groups, not only the Guptas, capture the state include bribery and political funding.

DA party funders, for instance, are interested in enabling the opposition to ascend to state power to advance their own business interests.

These overt mechanisms, which can encompass the notion of state capture, only provide privileged access to sections of the business class – right to the centre of state decision-making.

It blinds us from seeing how business groups without direct contact with senior state officials and politicians capture or influence the state.

States under capitalism are inherently captured by business because they depend on the decisions of business to generate revenue. Given that states do not control and own significant economic assets, they depend on business to invest their resources.

Without business investment, the state cannot generate revenue from taxation in order to undertake its functions such as the provision of social services, building economic infrastructure and administering the legal framework within which business competes.

Businesses make certain considerations before they invest, which include state policies, potential profit generation and realisation, and the extent to which poor people are politically strong.

This is referred to as investor confidence – a euphemism for profit-making conditions.

Ratings agencies are among other instruments business uses to assess whether doing business in a particular country is profitable.

Established businesses such as Anglo American, Absa and Pan Mixers SA do not necessarily need direct access to politicians and officials to capture the state.

The business class relies on its ownership of the economic resources such as land, mines, banks and industry to force the state to set a conducive environment for its business interests.

It does not depend on privileged access to state officials.

For certain business actors, privileged access to state mandarins and politicians enhances their competitiveness against other business groupings.

If the state elite presides over a declining economy characterised by unemployment and low state revenue to finance social services, it will lose the confidence of the electorate, thus running the risk of losing electoral support.

So, it is in the material self-interest of the state elites for business to invest.

Politicians, regardless of their ideologies, have to generate investor confidence for business to make profitable investments.

Often, the Guptas are treated as a cause – and ending their privileged access to senior state officials and politicians as a cure – for South Africa’s political and economic problems.

It doesn’t matter who will be in power after the 2017 ANC conference, business will still have undue influence over the state based on its control of investment decisions.

The dominant post-2017 business actors might be more politically sophisticated than the Guptas.

The immediate fight is to ward off corruption. But the long-term solution to business state capture is the dissolution of the basic structure of capitalism and its corresponding political institutions.

Masondo is a former Young Communist League chairperson

Read more on:    sahara holdings  |  oakbay investments  |  guptas  |  jacob zuma  |  state of capture report

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