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The economic bubble and the self-destruction of capital

02 October 2017, 11:51

The Statistician General, Mr. Pali Lehohla, has announced that South Africa’s GDP grew by 2.5% between April and June this year. According to this report, Agriculture and Mining were the major drivers of this growth. My question is; of what use is this growth for the majority of South Africans?

Agriculture, despite growing by a phenomenal 33.6% in that quarter, failed to create jobs, at least in tandem with its growth. The same is the case for Mining, and other sectors that experienced growth. The report mentioned above alluded to the high level use of machines by owners of firms as a reason for poor creation of jobs. This is deliberate, rather than accidental.

This happens in a country where almost 30% of people of working age, the majority of whom are African, youth and female, are without jobs. The inability of capitalists to use proceeds of production to employ more people is an insult to about one in three South Africans who live on less that R797 per month.

Liberal economist John Maynard Keynes argued that actions by private business and government policies that stimulate demand raises output and production, and lowers unemployment. This assumption has been proven wrong on a number of occasions. In fact, in South Africa, bourgeois economists were forced to invent a phenomenon they called “job-less growth”, in an attempt to justify instances where stimulus spending failed to lower unemployment. This summarizes the crisis of capitalism, as Karl Marx properly predicted.

Nouriel Roubini, an economics professor at New York University, correctly captured the crisis of capitalism as follows; “If you're not hiring workers, there's not enough labor income, enough consumer confidence, enough consumption, not enough final demand. In the last two or three years, we've actually had a worsening, because we've had a massive redistribution of income from labor to capital, from wages to profits.” (Roubini, N. 2011).

What we are confronted with is a consistent self-destruction of capital. Rather than invest in new firms, new equipment and employ more people, business in South Africa and elsewhere in the capitalist world, is “hoarding” cash. Billions of rands made in South African firms lie under mattresses and in local and foreign bank accounts of capitalists. In South Africa, white oligopolies operate as a monopoly to ensure that this hoarding benefits lesser and lesser people by the day. This is a crisis in the making.

The growth in GDP as announced by Mr. Lehohla is a bubble that may burst at any time. The current global economic crisis, which began in USA in 2008, is but one of the material indicators of the crisis that is being created. It is in the interest of both the working class and the capitalist class to share the wealth through capital re-investment, change in ownership patterns and creation of jobs.

In a mixed economy like ours, it is not the primary task of government to create jobs? Bourgeois propaganda would want ideologically innocent minds to believe otherwise. The primary role of government, instead, is to create a conducive environment for private business to create jobs. This government has more than created such an environment, despite an unfortunate history of Apartheid and colonial oppression of the black majority by a white minority.

The lowering of corporate taxes, incentives for trade and wholesale capital injections by the state are but some examples of the creation of that conducive environment. Despite those, private sector has stubbornly refused to play its role. This is tantamount to treason by the private sector, generally. As capital continues to self-destruct, the poor and the workers are the biggest victims. For them, the bubble growth mentioned by the Statistician General is merely imaginary, and their dreams of a better life continues to be deffered!

Makhele is an ANC member in Bram Fischer Branch, Mangaung Region, Free State. He writes in his personal capacity

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.


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