Stealing Africa’s Commodities

August 7, 2019

Stealing Africa’s Commodities: Europe’s destruction of African development

Exposing the continued European control of the global commodity trade, Angus Elsby looks at the import and re-export of raw commodities from Africa by European countries. Focusing on the coffee market, this blogpost charts the destructive impact of Europe’s commodity ‘theft’ for Africa’s development.

By Angus Elsby

Despite lacking in the environmental conditions necessary to grow many of the world’s most valuable commodities, Europe dominates the global commodity trade. Data shows that Switzerland, despite being a relatively minute and landlocked country bereft of any major ports and far from key trading routes, leads the way in transit trading for coffee, sugar, metals, grains and crude oil (one third of globally produced oil is controlled by companies headquartered around Lake Geneva alone). Through the import and subsequent re-export of raw commodities from Africa and the rest of the Global South, a number of European countries have managed to establish hugely profitable commodity export industries, despite the lack of any obvious natural comparative advantage in the sector. Recent research, focusing on the coffee market, has found that a sample of leading European re-exporting countries earned an average of over $300 per standard bag of coffee exported between 2000-2010, compared to only $106 for a sample of leading low-income coffee producing countries, all located in the Global South.

Given that many African countries still tend to rely heavily on their natural resource exports for domestic employment, foreign exchange earnings and tax revenues, the concentration of commodity export profits in Europe is a major cause for concern. Research calculated that developing countries lose approximately £8 billion a year from irregularities in commodity trading prices with Switzerland, alone. Considering that such a figure would be considerably higher if it included the host of other successful European commodity re-exporters, such as Germany, Belgium, France, Italy and the UK, the purpose of this blogpost is to explore why such a counter-intuitive dynamic persists in the commodity sector, long after the colonial era of resource exploitation is said to have ended. It argues that European states have actively promoted the intense concentration of their commodity trading multinationals and have simultaneously pressured developing countries into liberalising and fragmenting their own commodity export industries. The focus of this piece will be on the coffee industry, in particular, but the trends discussed here can almost certainly be applied to the majority of other major commodities, most of which are characterised through similarly Europe-centric, extractive dynamics.

Based on re-export data published by the International Coffee Organisation, it is apparent that European countries earn over 3 times more from the exports of coffee products than those in Africa. Whilst the sample of developing countries included in the study discussed here encompassed all major regions in the Global South, three were included from Africa. Between 2000 and 2010, Ethiopia, Uganda and Cote D’Ivoire received an average of $138, $71 and $68 per bag of coffee exported, respectively. Switzerland, Europe’s most profitable coffee re-exporter, earned over $700 per bag. However, other European countries, such as the UK and Italy, also earned more than double, per unit exported, than the best-performing African country studied, Ethiopia. In terms of total value earned, Germany’s coffee export industry eclipsed that of any of the three African countries studied, despite the fact that all three are leaders in terms of coffee export volume in an African context. In 2009, the International Coffee Organisation’s annual review showed that coffee added $31 billion to the economies of the nine leading coffee importing nations, twice as much as the total export earnings of all coffee producing nations.

Whilst coffee is but one example, it, by itself, is an essential commodity for a number of African states and many livelihoods depend on it for subsistence. For four African countries, coffee exports account for more than a fifth of total exports (Uganda, 20%, Burundi, 23 %, Rwanda, 27%, and Ethiopia with 32%). This not only impacts the millions of small-scale African coffee producers, their families and communities, but also African economies as a whole, as the state is heavily dependent on tax revenues from these industries. Rwanda, for example, raises 70% of its total tax revenue from multinationals, with nearly half of its revenues coming from just 0.3% of its taxpayers. For Nigeria, multinationals represent 88% of its tax base, whilst one multinational tax payer, alone, contributes to 20% of Burundi’s (see research here).

Given the developmental implications of a highly unequal distribution of value in commodity trading markets, it is critical to understand why such a disparity between the export earnings of coffee producing and re-exporting countries exists. The problem here is not solely a case of European countries being more competitive in the higher-value adding activities along commodity value chains, as often claimed. This traditional ‘value-added’ narrative is based on the idea that the majority of the value in a final cup of coffee sold in a European coffee shop is primarily derived from retailing, marketing and more advanced processing activities, such as roasting or decaffeinating. The majority of these activities take place in re-exporting countries and is undertaken by Northern multinationals. However, the basis for the calculations that underpin this value-added assessment is inherently flawed. According to John Smith’s The GDP Illusion, traditional GDP calculations can paint a distorted picture of where value is generated. In many key value chains, that produce goods such as the T-shirt, iPhone and the cup of coffee, value is ‘captured’ by imperialist re-exporting countries in the Global North, rather than ‘added’. Such a distinction is important, because it suggests that the disparity in export earnings is more likely the result of severe imbalances in power relations between the key actors in coffee producing and coffee re-exporting countries, rather than the technical superiority of Northern multinationals in performing more advanced and profitable ‘value-adding’ activities.

Rather than taking the traditional approach of questioning how African countries can become more internationally competitive in advanced coffee processing activities, the key question is, instead, how to address the severe power imbalances between coffee producers and coffee buyers, processors and traders. To do so, it is essential to understand how these imbalances have developed and which actors have been driving such developments. Evidence seems to suggest that active policies implemented by European states during the 1980s and 1990s contributed to dramatically restructuring global commodity markets in their favour and artificially inflated the international competitiveness of their commodity trading and processing industries. In the 1970s, around 20% of total earnings were retained in coffee growing countries, compared to 53% staying in the re-exporting and consuming countries. By the end of the 1990s, this had changed to 13% versus 78% (see research here).

On the one side, the European re-exporting states, at best, allowed and, at worst, promoted the consolidation of their commodity trading multinationals. This consolidation has further extended the power advantage of these firms in price negotiations with smallholder coffee farmers in producing countries. Monopoly capitalism has been used to describe this growth of increasingly powerful multinational monopolists in imperialist countries, who have close connections to their states and use their power advantages to manipulate prices and inflate their own profits and the GDP statistics of their home countries.

In the early 1990s, five traders controlled the lion share of coffee imports into the major consuming countries, all of whom were based in Europe or the US. By the 2000s, mergers and acquisitions had led the market to become even more concentrated, with just three firms dominating, all of which European. In the processing sector, the share of the five largest firms more than doubled between 1995 and 1998, from 21.5% to 58.4%. At the very end of the chain, the market share of the five largest grocery retailers in 16 European countries eclipsed 80% by 2000 (see research here).

Susan Newman, in her work on the effects of financialisation on the coffee market, summarises that ‘The trend has been towards the concentration of a few large coffee traders, many of which have merged with other commodity traders to become very large multinational commodity trading companies.’ She goes on to state that the ‘Concentration of the top five companies has also increased since 1998, and now accounts for a market share of over 55 percent’ (2009, p.544). Whilst technological and communication advancements no doubt eroded trade margins and created conditions that favoured the largest international corporations, the reluctance of European states to take action against the increasing monopolisation of their commodity industries is indicative of the shared interests between these states and their commodity multinationals. It is no coincidence that Switzerland, the most profitable commodity re-exporter, also has a merger policy which is incredibly weak, unaccountable and easily-influenced.

Research by Thomas Zweifel compared the best and worst practices of US, EU and Swiss merger policy in the early 2000s and found that ‘Unlike under US or European rules, responsible persons cannot be prosecuted. Sanctions against Swiss cartels cannot be imposed retroactively: no fines equivalent to the economic damage can be imposed. Penalties can be imposed only if a monopoly has been certified as illegal and continues nonetheless,’ and further, that Swiss merger policy is ‘neither very accountable nor very independent,’ with its competition commission officials appointed by the executive rather than the legislature. It also reports primarily to the economics ministry and is not required not seek public participation, publish its decisions or even give reasons. In turning a ‘blind eye’ to the consolidation of its largest multinational commodity firms, the Swiss state has artificially inflated its international competitiveness through enhancing the power of its commodity trading multinationals in price negotiations with foreign producers and through allowing them to enjoy such significant economies of scale that it makes it nearly impossible for low-income countries to compete in any of the more advanced and profitable activities along the value chain. Whilst the Swiss case is the most extreme example of weak competition policy, the shocking degree of concentration that has been allowed to develop in commodity trading, processing and retailing industries across Europe in the neoliberal period partly explains why coffee re-export statistics show that many other European countries, albeit to a lesser extent, are still far more profitable re-exporters than even the leading African coffee producers.

On the other side, the 1980s and 90s also saw important developments in the coffee markets of producing countries. Between the end of WWII and the 1980s, intervention in coffee markets was commonplace and emphasised the stabilisation of export prices through multilateral agreements. Various International Commodity Agreements (ICAs) between 1954 and 1989 established an international minimum price maintenance system, whilst the majority of domestic coffee markets in many ex-British African economies had marketing boards (as well as in Angola, Ethiopia and Togo). Ex-French economies were also similarly structured, with ‘Caisse de Stabilisation’ the Francophone equivalent. These boards were responsible for buying coffee, setting prices, regulating quality control and, most importantly, acting as an intermediary between smallholder coffee producers and global traders, coordinating the sale of coffee through auctions. Thus, these marketing boards negotiated prices and the terms of the export arrangements of coffee to trading multinationals (often European) but, as a result of the structural adjustments of the early 1990s, the majority of these boards were dissolved, rather than reformed. It should be noted that not all African countries embraced the restructuring of their commodity export markets to the same degree. Whilst Uganda fully liberalised its coffee market by 1991 and completely eradicated its cooperatives, Tanzania only begun partial liberalisation in 1994 and retained a state-run coffee auction system. However, the general pattern across Africa has been the dismantling of varying forms of coffee export cooperatives.

The result of this restructuring was to further fragment the coffee industries in producing countries. At the same time as European buyers were becoming more concentrated, smallholder coffee farmers were being forced to negotiate as individuals, rather than as collective national industries. Karin Wedig and Jörg Wiegratz, in their work on cooperatives in Uganda, point out that, despite the fact that cooperatives in the pre-neoliberal era often had problems with inefficient management that meant that below-market-prices were frequently paid to producers and that there was generally low investment in infrastructure, cooperatives are ultimately necessary to address power imbalances in the market. ‘Through bulk sales, as well as the pooling of resources to access processing technology and services, cooperatives can strengthen smallholders’ capacities to compete with large producers, because buyers are more willing to engage in direct negotiations if farmers can offer larger output volumes at constant quality’ (2018, p.349). Furthermore, they found that farmers in Uganda enjoyed significantly higher prices during the years when the cooperative studied was revived, an effect that was reversed in 2011 when the state intervened to limit the cooperatives’ operations once again. Whilst lax competition policy in re-exporting countries enhanced the power of commodity buyers, the dismantling, rather than reform, of cooperatives in producing countries reduced the power of commodity growers, which has fostered a situation of severe power imbalance in the market and explains the significantly higher returns enjoyed by coffee re-exporting countries.

The concentration of European commodity trading and processing industries alongside the atomisation of commodity producing industries in Africa and much of the rest of the Global South has restructured the global commodity trade to favour European countries, to the detriment of the rest, an assertion supported by leading research into the coffee industry. These twin developments are often put down to natural changes in the market, but European states have certainly played a role in facilitating these developments through active policy. The negligent approach of the EU and certain individual European nations to anti-trust policy and to the breaking up of their commodity monopolies is a clear indicator of this, whilst it should not be forgotten that they also helped promote the atomisation of commodity export industries in producing countries through their advocation of global neoliberal restructuring through international financial institutions.

The role of these European states as the handmaiden of the monopolistic commodity multinationals has generated criticism from the development community, as well as accusations of hypocrisy for adopting policies which undermine development at the same time as ‘sacrificing’ sizeable public funds to development aid. So far, it appears that these concerns have largely been ignored. Apparently with Margathe Vestager as the new European Competition Commissioner, the EU now has a ‘trailblazer in regulating big tech and business’, according to the Financial Times, but this newfound regulatory zeal does not seem to apply to the mega-mergers taking place in commodities industries (see report into this issue from the Free Trade Advocacy Office here). Of the 24 mergers that the EC has formally prohibited since 1990, none have related to coffee or any of the other major commodities.

Existing research does not seem to explain why this is the case, which highlights the need to delve further into the politics of competition policy in the EU and other the major imperialist re-exporters. With the destructive effects of concentration in commodity industries in these countries now abundantly clear, attention must be turned to holding responsible parties to account and reversing these trends.

I would like to thank Jörg Wiegratz, Janina Grabs and Susan Newman, for their comments and suggestions on this blogpost.

Angus Elsby is a researcher and development commentator based in Leeds (UK). In addition to investigating the role of European actors in price formation in agro-commodity markets, his areas of specialism include issues of tax competition and, in particular, the developmental impacts of corporate tax incentives.

Featured Photograph: Taken at a coffee farm in Sao Tome and Principe (11 February, 2014).

Towards a Full Understanding of Walter Rodney

ROAPE

August 1, 2019

Towards a Full Understanding of Walter Rodney – A reply to Andy Higginbottom

Discussing the extraordinary work of the Guyanese activist and historian Walter Rodney, Chinedu Chukwudinma describes how Rodney’s work remains a priceless weapon of theory and history that restores the dignity of African people. However, this blogpost takes issue with Andy Higginbottom’s review of Rodney’s How Europe Underdeveloped Africa on roape.net and argues that Rodney’s version of dependency theory presents a flawed analysis of imperialism.

By Chinedu Chukwudinma

Andy Higginbottom has written a brilliant, and engaging review of Walter Rodney’s masterpiece How Europe Underdeveloped Africa. He describes how Rodney challenged the intellectuals and institutions that trivialised the disastrous impact of capitalism on Africa such as historian John D Fage and J.K Fieldhouse. I agree with Higginbottom’s argument that Rodney sets the record straight on historiographical debates concerning the destructive impact of the slave trade and the material benefits of colonialism for the European ruling class.

Rodney uses Karl Marx’s historical materialism to demonstrate that African society had a vibrant and independent process of development before the arrival of Europeans in the 15^th century. He argued that the slave trade and colonialism thwarted this development by first kidnapping African labour and later exploiting it to extract raw materials. This theft of wealth not only impoverished Africa but also played a crucial role in Europe’s industrial development.

Even today, there is still a need to refute the bourgeois narratives that treats African underdevelopment as an intrinsic feature of Africa and its people. One must look at when the former French President Nicholas Sarkozy addressed a Senegalese audience in Dakar in 2007 and declared: ‘The tragedy of Africa is that the African has not fully entered into history.’[1] His position was that for centuries the African peasant lived an idyllic life isolated from adventure and progress. Against this racism, Rodney’s work is a priceless weapon of theory and history that restores the dignity of African people and highlights the weight and significance of their contribution to history.

This blogpost focuses on the debate that Andy Higginbottom described as ‘the intersection of race and class, the position of the African working poor and the nature of their exploitation under the European colonial regimes’ (see Higginbottom’s original blogpost here). This discussion is also crucial for understanding how imperialism continues to damage Africa after colonialism. I take issue with Higginbottom’s embrace of Rodney’s version of dependency theory and argue that the theory presents a flawed analysis of imperialism. I also defend the work of Marxist Martin Legassick, who Higginbottom dismissed as Eurocentric, and argue he was right to point out that Rodney was wrong to claim that African workers were more exploited European ones.

What’s wrong with dependency theory

In the 1960s, dependency theory emerged as the dominant left-wing explanation for the failure of many Third World nations to develop industries. Its leading proponents Andre Gunder Frank and Paul Baran held that rich countries in the north amassed capital by exploiting and transferring the resources of the Global South. They saw development in the centre and underdevelopment in the periphery as opposite sides of the same coin. In How Europe Underdeveloped Africa (HUEA), Walter Rodney adopted dependency theory’s central idea that imperialism condemned poor nations to stagnation, as he wrote: ‘Whenever internal forces seemed to push in the direction of African industrialisation, they were deliberately blocked by the colonial governments acting on behalf of the metropolitan industrialists.’ [2] He believed that underdevelopment would continue even after Africa nations achieved their independence. Rodney like other dependency theorists called on intellectuals to break with capitalism and adopt state-directed socialist planned economies.

However, Rodney’s solution proved unrealistic as African attempts to mirror the Soviet Union’s model of self-reliant development ended in failure by the early 1980s. In the case of Algeria, after 1965 dictator Houari Boumediene nationalised hydrocarbon companies and redirected oil and gas exports to build local industries such as car, steel and electricity plants. But the global recession of the 1980s led to the decline of Algerian export-revenues and hampered Boumediene’s state led-development forcing his successor to open Algeria to free trade.

In 2003 Chris Harman contended that dependency theory relies on the mistaken assumption that Western states are always interested in preventing industrialisation in their colonies. The case of the British colony of Hong Kong, which through the production of manufactured products for export from the 1960s demonstrates Harman’s point. South Africa remained a notable exception that contradicts Rodney’s views that British colonialism always stifled industrialisation and failed to create a powerful working class. The emergence of industry in South Africa created one of the strongest labour movements in the world that was key to the defeated of apartheid.[3]

Rodney’s concession to Africa nationalism

The crucial point where Rodney’s African nationalism overshadowed his Marxism was in his belief that European workers materially benefit from the colonial exploitation of African workers and peasants. Rodney argued that under colonialism the African workers and peasant were exploited at higher rates than their European counterparts. The low wages paid to African workers guaranteed that higher amounts of surplus value was extracted from their labour, as Rodney wrote in HEUA: ‘A Scottish or German coalminer who could virtually earn in an hour what the Enugu miner was paid for a six-day week.’[4] For Rodney, the Western ruling class could use part of the enormous surplus value extracted from African toilers to offer European workers material benefits in the form of increased wages, welfare reforms and better working conditions. It could thus bribe the European proletariat and deter them from initiating revolutions. Rodney concludes that colonialism was in the interest of all classes in the West and white workers were natural allies of the capitalist class in their support for the racist colonial project.

Rodney may have been right to celebrate the key role played by Ahmed Sékou Touré in the establishment of independent trade unions in Guinea as a break from the pro-colonial patronage of the Confédération Générale du Travail (CGT). But he overplays his hand when declaring that the move was justified because the main conflict was between the colonised and the colonising nation: ‘So long as African workers remain colonised, they had to think of themselves firstly as African workers, rather than members of an international proletariat. This was entirely in accordance with the reality.’[5] The danger of Rodney’s version of Africa nationalism was proven by the fact that Sékou Touré crushed independent working-class organisations in Guinea following independence.

The condition of the peasantry

Rodney’s belief that independent peasants constituted an exploited class is also erroneous. The relationship between the wage earner and the capitalist is by no means the same as between the peasant and the merchant capitalist. The wages that the capitalist pays to workers represents the amount of value they created for their own reproduction of labour-power in the working day. The capitalist then uses the worker’s labour-power for free to produce extra or surplus value during the remaining part of that day. The peasant does not sell her labour-power to the capitalist and therefore the extraction of extra value is completely absent from the scenario. The peasant/ merchant relationship is different because it’s that of seller and buyer. The merchant may well cheat the peasant by buying the crops at a low price but this nonetheless represents a transfer of already produced value, which the peasantry created by employing their own labour power.

However, Rodney was absolutely right to show how peasants suffered at the hand of trading companies who offered miserable prices, imposed colonial taxation and crippling debt. Yet, these horrors relate to the oppression of the peasantry not their exploitation and Rodney confuses these notions (which have very different meanings in Marx’s political economy).

Imperialism and the exploitation of Africa workers

Rodney was wrong to argue that European workers do not have an interest in fighting colonialism and racism because they benefit from imperialism. His argument takes inspiration from the Russian revolutionary Vladimir Lenin’s theory of the ‘labour aristocracy’, which located reformism in the economic interest of a very small section of well-off workers. The bourgeoisie bribed these workers with extra profits of imperialism obtained ‘over and above’ those taken from workers at home.[6] He also draws from dependency theorists who claimed that workers in the Third World are the source of the West’s wealth because they increasingly bore the burden of most of the worlds’ exploitation. This explains why Rodney came to the formulation that all people of the Global North receive material benefits from the extraction of wealth created by toilers in the Global South.

However, both theories were mistaken. Rodney failed to appreciate that imperialism had not always elevated the standards of the Western working class. On the contrary the economic competition between capitals protected by their national state provoked two world wars in the 20^th century. The misery of the First World War was ended by the biggest wave of workers’ revolution in Europe. Lenin’s theory disregarded the fact that skilled metal workers—so-called ‘labour aristocrats’—formed the vanguard that led these upheavals from Petrograd to Glasgow in this period of revolutionary struggle. The cause of reformism was not the higher living standards of a section of workers but was found within the contradictory consciousness of the working class, wavering between acceptance of capitalist ideology and collective action against exploitation.

Rodney focuses on the difference in wage levels between African and European workers to prove that the former was more exploited for the benefit of the latter. However, a real understanding of who is more exploited cannot be achieved by comparing income figures. As the radical theorist Alex Callinicos explains Marx’s theory of exploitation examines the ‘relationship between the wages that workers receive representing the value of their labour power and the amounts of surplus value they produced for their employers.’[7] If a high-income Scottish miner creates, relative to his earnings, a larger amount of surplus value than his lower paid Nigerian counterpart, he’s more exploited.

The first reason why Rodney’s argument does not hold true, even when using comparable categories, is because he fails to account for the differentials in productivity. The higher wages for Western workers reflects their higher productivity and they have a greater cost for their reproduction than African workers. Western workers therefore tend to be more exploited because their larger output (or productivity) means that their capitalist employers extract more surplus value. Along those lines, Martin Legassick’s criticism of Rodney stressed that capitalist accumulation was not simply a transfer of surpluses from Africa to Europe. On the contrary, it relies on the constant transformation of productive forces, which enhances Western workers’ productivity, wages and their exploitation.[8] This contention has nothing to with a Eurocentric analysis or a one-sided reading of Marx, as Higginbottom suggested.

Secondly, Rodney’s affirmation that African workers are more exploited than Western ones does not match the patterns of capital investment between rich and poor countries. The World Bank figures showed that two-thirds of all Foreign Direct Investment (FDI) went to developed countries of North America, Europe and Japan between 1965 and 1983. The remaining third went to a small number of industrialising countries of East Asia and Latin America such as South Korea and Brazil. These figures indicated that the Western capitalist class sought higher profits by investing in their own advanced economies where workers were skilled and productive. Africa had through colonialism and after independence figured as a marginal recipient of FDI and this condition worsened in the aftermath of the global crisis in the late 1970s. In 1995, for example, FDI to Africa amounted to a mere US$55 billion whilst FDI flows to developed countries stood at US$2047 billion. In that same year the International Labour Organisation figures for African employment stated the Africa workers accounted for just five per cent of the world’s 270 million workers. Africa’s problem was not the hyper-exploitation of African labour but rather the relatively small importance imperialism gave to African labour.

Conclusion

In the 21st century, Rodney’s understanding that imperialism prevents industrialisation in the Global South appears to be obsolete as larger amounts of foreign direct investment are being poured into Africa than ever before in the context of intensified imperialist competition between the United States and China. Although war, lack of infrastructure and de-industrialisation remain present on the continent as the legacy of colonialism and structural adjustment programmes, there’s another side to story. Africa has also experienced the growth of new urban centres, ports, infrastructure and jobs. These developments suggest that the capitalist class continues to create their antithesis in the form of an expanding working class.

Contrary to what Rodney argued in his 1972 book, the workers movement in Africa has the same interest in breaking with capitalism as their comrades in the West.[9] In recent months, Algerian revolutionaries expressed their vocal support for the gilets jaunes (‘yellow vest’) movement against the government of the French president Emmanuel Macron. In turn, Algerian flags emerged on the Paris protests hence opening up the possibility for real international workers solidarity.

Chinedu Chukwudinma is a socialist activist and writer based in London. He writes on African politics, popular struggles and the history of working class resistance on the continent.

Featured Photograph: ‘Walter Rodney Papers’ at the Robert W. Woodruff Library Archive, Atlanta University Center.

References

[1] Nicolas Sarkozy ‘Speech at the University of Dakar’ 26 July 2007, accessed July 2019

[2] Walter Rodney, How Europe Underdeveloped Africa, Dakar, Codesria, 2012, p. 217

[3] See Chris Harman, ‘Analysing Imperialism’, accessed July 2019

[4] Walter Rodney, 2012, p.199. For a contemporary version of this argument, see Higginbottom’s contribution to the Harvey/Smith debate on imperialism and the Global South on roape.net.

[5] See Walter Rodney, 2012, p.150

[6] Vladimir Lenin, ‘Imperialism, the Highest Stage of Capitalism’, accessed July 2019

[7] Alex Callinicos ‘Race and Class’, online, accessed July 2019

[8] Legassick, Martin (1976) ‘Perspectives on African “Underdevelopment”’ The Journal of African History, Vol. 17, No. 3, pp. 437

[9] However, several years later Walter Rodney ‘returns’ to the working class, revisiting his own ideas on the subject. See Leo Zeilig’s blogpost

An Injury to One is an Injury to All

ROAPE

July 26, 2019

In this review of Peter Cole’s comparative study of port workers in Durban and San Francisco Bay, Dockworker Power, Peter Limb assesses the combination of labour, comparative and global history framed by the political economy of containerization which makes this book timely and worthy of deep reflection. The book’s author insists on the relevance of these dockworker struggles for the present and future, how workers can change their conditions, and the world, which is why the book is useful not just to scholars but also to workers, trade unionists and social activists more broadly.

By Peter Limb

Global and many national-economies today remain strategically integrated through shipping, which continues to carry 90 percent of global trade in goods. This important and timely book comparing the most advanced capitalist states of the North and of Africa will be of interest not just to scholars of the past or present, but also to activists in labour, anti-racist and other solidarity movements. At first glance, with sharply declining employment on docks and the related runaway financial success of containerisation, we might simply imagine the workers who run the ports as being increasingly in a precarious position. In many ways, they are, but they tend to retain some strategic ‘oomph’ due both to this substantial world trade and also to increasingly interconnected just-in-time production and distribution networks.

Peter Cole, who had written previously on the American labour movement (see his Wobblies on the Waterfront), has more recently given his close attention to African dockworkers. In this book he carefully and insight-fully compares and contrasts the history and continuing importance of dockworkers on the west coast of the United States and in Durban, South Africa. It is good comparative history, which is never easy. More often than not, a comparison of different countries is stronger on one than the other. This is somewhat the case here too, evident in the deeper archival and oral resources drawn on by the author in his excellent case study of Local (Branch) 10 in San Francisco/Oakland of the International Longshore and Warehouse Union (ILWU; ‘international’ referring to the U.S. and Canada). But useful interviews and other sources on Durban dockworkers are also presented, and the treatment is well structured by historical period and theme to give equal balance. An interesting difference was that as Durban dockers fought to end the togt or casual day labour ruthlessly exploited by management, so San Francisco longshoremen held tightly to their decasualised work routines that gave them some flexibility and leisure opportunities.

Dockworkers in Durban and San Francisco Bay, from the 1940s to the 1970s

Cole first sketches the historical context in the ports, the harsh, dangerous work and the irregular, often casualised workplace regime, underlining how skilled dockers became (despite being labelled ‘unskilled’), for example in fitting complex cargo into ships’ holds. In Durban, wharves, ships, and grim hostels served not just as places of strict employer or state control, but also as places of incubation for alternative resistance strategies. In both ports, workers opposed the much-abused ‘shape up’ system of employers or their agents picking workers for jobs. In Durban, where the stevedore labourer workforce was black, they lived in terrible housing and working conditions but forged resistance to low wages through collective work and solidarity that encouraged unity and nurtured deep working class bonds. Cole then details how workers and their organisations (in unions or ‘informally’—in Durban, black unions were effectively illegal) fought class and race oppression in the 1940s and 1950s, then extends this to the 60s and 70s, before embarking on an analysis of decasualization and containerization and concluding with a chapter on more recent protests for social justice.

Along the way, we meet a good number of the activists themselves. These include, for example, Curnick Ndlovu, an underground activist who had been a dock and rail worker, African American docker Jimmie Ward, friend of the Black Panthers, and Herb Mills, who combined a lifetime’s work on the docks with writing a doctorate about it and continued to remain active. These and many other biographical snapshots add agency and African and worker voices to the narrative.

The Durban story is particularly rich for the 50s, 60s and 70s, bringing out the dynamic interaction between class and race, between social movements and workers. Integral to this is ‘political unionism’, with Cole adducing strong evidence for the ‘central role in local and national efforts against apartheid’ of dock strikes and political stay-aways (deeply entwined for black people under colonialism/apartheid), this is a strength in his analysis as labour historians have tended to downplay the political activist-labour equation. Here he acknowledges the diverse political influences, from the Industrial Workers of the World (the IWW, or Wobblies as they were known), communists, radical Pan-Africanists and sympathetic intellectuals. Harsh work, low wages, few guaranteed rights to change conditions. Little wonder dockers and militant unions in both lands vigorously applied the old Wobblies slogan ‘An Injury to One is an Injury to All’, vividly seen in a plethora of workplace and solidarity actions in both ports over the decades.

As the apartheid juggernaut rolled on, crushing labour and democratic rights, Durban dockers hit back. They had struck in 1949 under their enigmatic rank-and-file spokesperson Zulu Phungula, banished for his troubles. In 1954, a strike lasted a week and won a small wage increase. In the face of widespread police brutality—Govan Mbeki spoke of ‘civil war’ on the Port Elizabeth wharves; it was much the same in Durban—they took action again in 1956, 1958 and 1959, prompting dismissal of the entire workforce. When the Congress movement (African National Congress (ANC) and allies) called a national stay-at-home in 1958, dockers comprised three quarters of Durban participants. Throughout history, dockers had developed an arsenal of survival tactics. In this case, they refused overtime, used absenteeism and deployed well-timed stoppages showing ‘they understood their own power’.

One of the most interesting sections of the book is the reassessment of the significance of docker strikes in Durban in the late 1960s and early 70s. Some scholars, notably David Hemson, had earlier drawn attention to such matters, but Cole amplifies and further develops the argument. Just how significant, in Durban and beyond, were these strikes? Is too much made of single strikes over a longer period? Cole would argue they had a kick-on effect.

In April 1969, some 2,000 Durban dockworkers took illegal strike action. Moving surreptitiously, exploiting state-imposed labour relations structures, and using hostel walls and word of mouth to mobilise, they weathered machine-gun pointing police and mass expulsions to win a doubling of wages nationwide (‘African Dockmen Win Pay Increase’ the Rand Daily Mail headline read on 23 April 1969). In September 1971 they threatened a repeat, again winning raises, and in October 1972 struck again. All of these actions, in the face of rising inflation and poverty wages, were without formal or legal union structures. But the strikers were bolstered by their class/race solidarity, memory of past struggles, and support of sympathetic white activists in the Student Wages Commission, of which Cole presents a cogent view; its role should not be exaggerated, but neither should it be discounted.

On the ANC/South African Communist Party (SACP)/ Umkhonto we Sizwe (MK, the armed wing of the ANC) underground in Durban, Cole acknowledges there could well have been some work behind the scenes, such as, for example by Stephen Dlamini and Bhekisisa Nxasana. This appears to have borne fruit, in the re-establishment of South African Congress of Trade Unions (SACTU)-like structures that morphed into the Wages Commission Benefit Fund. Cole’s synthesis draws attention to the activist side of events and unlike earlier theoretical jousting is even-handed on the ‘Workerist/Congress’ debate. He shines a light into the shadowy origins of the 1969-72 dock actions. An interview with Omar Badsha about 1972 docker subterranean organisation that intersected with the underground reveals some details of how they struck, employing rhythmical calls across the yards, slogans, and pasting up anonymous leaflets. They wisely refused to pick a delegation, insisting on speaking as a group, shouting demands—an effective defensive measure against victimisation/dismissals. Cole puts this down to collective memory, ‘perhaps whispered among the Buffalo [dockers] in their hostels’. His close attention to striker tactics, some of them surely evergreen and worthy of consideration by today’s activists, is a further strength across the book.

Relating all this to the causes of the great 1973 strike wave across South Africa but mainly in Durban, Cole notes the national poverty, inflation and repression, but asks, Why in Durban? He zeros in on the dockers’ October and December 1972 actions that stimulated the 1973 wave, which began just after in January 1973 at the Coronation plant, commonly seen as heralding the 1973 strikes. The dockers, he argues, through community and work contacts were in touch with other migrant workers, who in turn were inspired and emboldened by the successful dock strike tactics thrice in four years. It is a solid argument backed by convincing evidence. Some of this ground has been covered in theses by Nelson Tozivaripi Sambureni (see 1994, 1997), and Robinduth Toli (1991), but Cole deftly brings the literature together, adds his own innovative perceptions, and compares it to the San Francisco experience.

Similarly, Cole charts the close ties of practical solidarity between Local 10 and the Oakland-based Black Panthers, with farm workers, anti-racism movements, Japanese Americans during World War II. indigenous peoples occupying Alcatraz, and African American hotel workers, their protests against the assassination of Martin Luther King (an honorary union member), white supremacist terrorist murders and anti-Communist hysteria, which ‘helped thaw the domestic Cold War’. The union also fought against segregation in San Francisco and funded housing from its pension fund following forced removals. Within the union, Local 10 from the 1930s worked hard to integrate races at work, helping to reduce class-race divisions.

A major theme of the book is dockworker ‘power’; the organised power of the union in the U.S., of the less-formally grouped workers in Durban. In the face of the technological revolution of containers, the ILWU under long-term, Australian-born leader Harry Bridges after 1956 negotiated controversial wage rise and retirement packages resisted by many rank-and-filers. Capitalists created a fund to buy out current workers with job security, but not future workers. Bridges underestimated the rate and scale of automation, how employers would exploit the process to undermine the hard-fought gains of the union-controlled hiring hall, protection against heavy loads, and flexible hours. Worker participation in selecting people for tasks helped strengthen the democratic tradition in unions and gave some power over hiring and the work process, later used in anti-apartheid solidarity actions. But with automation, jobs haemorrhaged, accidents spiralled, profits skyrocketed. By 1970, 85 percent of tonnage was in containers. New machine operators of cranes became more distant from workmates; solidarity decreased, the workforce became more ‘company oriented’.

Things came to a head when 96 percent of workers, voting against a contract proposed by Bridges and employers, launched a major strike in 1971/2, which was lost. The element of class compromise suggests real limits to workers ‘power’; rearranged work processes not only maintained but also strengthened the stranglehold of capital. With huge profits, small wage concessions at the expense of important processes made strategic sense to capitalists.

Such outmanoeuvring was also the case in Durban, where due to reliance on cheap black labour, introduction of containers took place only from 1977, accompanied by a shift from the Point – where most dock work had been concentrated – to South Durban and to casualisation, which Cole rather grandly sees as marking ‘a major turning point in the entire history of Durban’; ‘ushering apartheid onto the waterfront’. Yet a segregated workforce had long been in place in all labouring jobs, so whether casualisation so markedly changed the history of others, is questionable. Yet, combined with containerisation, it did involve increased efficiency and employer power, whilst shipping remained Durban’s main industry.

Dockworkers and Solidarity from the 1980s

Durban dockers, still largely un-unionised, suffered more from containerisation. Massive layoffs saw the stevedoring workforce shrink from 3,500 in 1965 to only 1,200 by 1985.

Serious unionisation efforts began after containers arrived, but took two decades. There is little discussion around the unionising process, or internal divisions and contradictions although they are well expounded for Local 10. With scantier sources, Cole says less about the ‘fragmented and partial unionisation’ efforts in Durban in the 1980s by the General Workers Union (GWU) and Transport and General Workers Union (TGWU). Neither does he elaborate on divisions caused by the Inkatha ‘union’ UWUSA, its collusion with bosses and violent intimidation of TGWU led by its indomitable female organiser Ntokozo Mbhele. As in San Francisco Bay, redundancies and divisions lessened dockers’ militancy and political action in the 80s and 90s, and beyond, as labour brokers descended on the docks. However, those interested in more detail of these events can turn to the work of David Hemson.

Cole examines different angles, right down the hierarchy from bosses to union leaders and rank-and-file, as well as technology and ideology. He captures well how employers were able to reduce docker power by changing contracts, but also how worker resistance continued. One difficulty is in comparing the strong union organisation of Local 10 with un-unionised Durban workers. Less attention is given to unions which did emerge in Durban, notably at the national level in the wider transport sector, the South Africa Railway and Harbour Workers Union, GWU, TGWU and finally SATAWU (not formed until 1997). This is understandable given the proscription of black unions and the fact that SARHWU was strongest among railway workers. In the 1940s and 50s shunting yards and docks were in a common area, helping activists like Billy Nair organise both sectors but unions among dockers, where they existed, remained largely unrecognised and secret (hence obscuring the historical record). There were SARHWU strikes in 1987 and 1989, with Durban workers involved and sabotage against trains blocking trade. Further painstaking research might map connections between rail and port workers. In all these struggles, Cole makes clear the lessons with the resilience, unity and creativity of workers undoubtedly valuable for today’s workers, whether unionised or not.

In San Francisco Bay of the 1980s, despite the impact of containerisation, Local 10 members continued to protest class and internationalist issues, well analysed by Cole drawing on solid oral history as well as archives. Dockers in the early 70s had used ‘guerrilla ambushes’, offloading then reloading South African goods. Their 11-day 1984 action was the longest, most significant workplace boycott against apartheid in the U.S. An African American clerk advised of ship arrivals and a union dispatcher allocated committed members to work them. Facing massive fines, the workers finally unloaded cargo. But their actions inspired and helped mobilise students and the wider community in the formation of a powerful local anti-apartheid movement that contributed to overriding Reagan’s veto on sanctions. In 1990, Nelson Mandela spoke at Oakland and warmly commended Local 10’s 1984 action.

A final chapter examines ‘striking’ for social justice, interrogating the histories and intersection of Black and labour internationalism. Docker protests have continued, whether in 1984 in San Francisco against apartheid, or in 2008 in Durban against Mugabe’s rule, against the Marikana massacre, the Iraq war, Swazi autocracy and the bloody occupation of Palestine. Due to the recent nature of events, this chapter is briefer, sources less extensive, though drawing on some relevant interviews. A minor slip posits ‘Mugabe’s Movement for Democratic Change’. A brief diversion into ‘blue-collar cosmopolitanism’ appears to unnecessarily complicate matters theoretically, but the point about the international flavour of ports and its osmosis into dockers’ makeup is appropriately made. The main point though, as reflected in the book’s title, is power: dockworkers have ‘enough power’ and awareness of their strategic position to act in solidarity with their class and with others. Strikes and boycotts were tangible, demonstrating ‘a robust sense of working class internationalism’.

Summing up, Cole emphasises that dockers played leading roles in labour and black freedom struggles but employers used containerisation and hiring practices to regain workplace control and, despite resistance, workers could not reverse the change. Notwithstanding, their strategic position continues and unions retain their collectively built labour and wider internationalism and solidarity. He ends on a positive note: their history teaches us of labour successes, how people ‘can combat racism in their own workplaces and in other lands’.

Whether, when considered over time, these strikes and solidarity actions amount to a ‘leading role’ might be moot to some but they were certainly of considerable significance in their own regions and at the time. As I noted, Cole argues for the crucial impact of the 1969/1972 Durban strikes ‘paving the way’ for major strikes of 1973; ‘probably only the miners proved more influential’ nationally, he argues. All this hinges on the significance of the 1972/3 strikes, which undoubtedly sparked a revival not just of labour but also indirectly political resistance. Yet, once under steam, new union federations, Fosatu and Cosatu, and a new political front, the United Democratic Front, proceeded apace after the late 1970s. In contrast, since 1972, Durban dockers’ power has seemed somewhat more symbolic.

Some questions could do with further elaboration. Pan-African or race solidarity could be unpacked: would not dockworkers have expressed race solidarity with Mugabe if Pan-Africanism itself lacked contradictions, and if one takes class solidarity out of their equation, how much is left? Why should the ANC necessarily have felt beholden to the same Zimbabwean who jailed its cadres and supported instead the PAC? These are not easily resolved, for racial oppression and division formed such an important pillar of both apartheid and U.S. monopoly capital hegemony. Overall, Cole does bring these diverse social forces together and show their tensions, and the lessons of history for today’s politics.

Thoroughly surveying the historiography, Cole draws attention to the neglect of labour in the history of anti-apartheid movements in the U.S. and South Africa. Philip Foner fifty years ago pointed out a similar neglect by scholars of early protests by select unions against the war in Vietnam (see his American Labor and the Indochina War, 1971). Such examples, if admittedly limited, might have tempered somewhat Cole’s claims of the passivity of other U.S. unions when it comes to international solidarity. South African historians have also neglected labour history of the 1960s and further research might adjust somewhat the consensus on a decade of very limited strikes shattered by the bold Durban dockworkers. Nonetheless, Cole makes a strong case that their courageous, ongoing resistance was quite often inspirationally and practically in the vanguard of class and liberation struggles. Even if the dockers’ lack of formal organisation and declining numbers, and Durban’s remoteness from the industrial hub of today’s Gauteng province surely limited its impact nationwide, he has now written them into these histories.

Dockworkers, Containers, and Monopoly Capitalism Today

Are dockworkers still strategically significant? Cole makes a strong argument for their continuing potential powerfulness given increasingly networked just-in-time global trade. On the other hand, there has been a steep decrease in national shipping in South Africa and dockworker numbers, so what is the state of the union on the Durban docks? How many dock strikes have there been lately, how effective have they been? Cyril Ramaphosa has been moving against the right to strike in new legislation. Working class power is anathema to the Trump regime. So it would not pay to be overoptimistic.

As Beverley Silver points out, the percentage of shipping and dock disputes among wider transportation industry labour unrest globally has been declining for some time. If comprising 52 percent of global transportation labour unrest from 1870 to 1996, already by the 70s their relative weight of actions was slipping, falling by the 90s to a mere seven percent as aviation protests rose (see Silver’s Forces of Labor, 2003). As Silver goes onto to argue such measures do not necessarily equate to qualitative aspects of stoppages or their strategic potential but transport workers ‘continue to possess relatively strong workplace bargaining power’, evident when we see ‘their workplace as the entire distribution network in which they are enmeshed’. Nevertheless, containerisation and dock automation ‘dramatically downsized historically militant dock labour force in the second half of the twentieth century and in large part account for the dramatic decline in labour unrest’. Behind these trends, containers have been central to the actualisation of globalisation. Away from, but linked to the flood of containers arriving in ports, the unrelenting spread of monopoly supply chains backed by online marketing has exacerbated problems of labour organising. Cole is well aware of such trends but sees some hope in the wider global unity of workers, who also can make use of new technology, and use solidarity.

Transnational solidarity has been highlighted by unions and committed scholars for some years now. Three studies in 2008 alone underline the problems and prospects. Edna Bonacich and Jake Wilson, studying two other major Californian ports, similarly concludes ‘the purpose of organising all of the logistic workers … into an effective fighting force is not just to gain power and increase the well-being of those workers … unorganised and exploited …[but also] to create among U.S. workers worthy partners for a global struggle’. Editors of a collection assessing possibilities for revival of labour internationalism in South Africa, India, and China argue the capitalist system ‘can really be transformed only at the level of the planet’, but by starting ‘locally, nationally and regionally.’ Getting there is another problem. To Bill Fletcher and Fernando Gapasin, ‘True international labour solidarity has both haunted and eluded the U.S. trade union movement’, which was side tracked by anti-communism. Yet some unions practised consistent international solidarity in ‘sectoral and social justice solidarity’, the latter seen in their support of anti-apartheid movements.

Peter Cole continues in such a vein, adding his own comparative insights, giving many examples of concrete class and black solidarity. Cases cited of solidarity with Palestinians, Zimbabweans and Swazis in the 2010s would have been morale boosting, and assisted the maintenance of a militant approach by dockworkers themselves. In all these cases, the building of transnational solidarity can be an important result, which Cole emphasises. Just how effective some actions can be is another question. Future research should address issues of power and organising across the wider transportation industry and across the globe.

The combination of labour, comparative and global history, framed by the political economy of containerization and technological change, makes this book most timely and worthy of deep reflection. The author transcends a purely academic approach by insisting on the relevance of these struggles for the present and future, how workers can change their conditions, and the world, and he convincingly demonstrates this theoretically and empirically. This is why the book is useful not just to scholars at their writing desks but also to unionists and social activists more broadly. Peter Cole’s book will inform and motivate, and may be read profitably with other recent insightful books on Durban dockers, by Ralph Callebert and Shaun Ruggunan, as well as the sections on transport workers in the copious ILO-funded tome, General Labour History of Africa. His blend of theory, past evidence, and current application will be instructive to all those committed to progressive and engaged writing.

Dockworker Power: Race and Activism in Durban and the San Francisco Bay Area by Peter Cole (University of Illinois Press, 2018) is available here.

Peter Limb (emeritus, Michigan State University, limb@msu.edu), has written widely on Southern African liberation and labour movements. He was deeply involved in anti-apartheid movements and recently co-authored an article in Labor History with Peter Cole on anti-apartheid solidarity of dockworkers in the U.S. and Australia.

Featured Photograph: The cover of Durban Strikes (Salt River: Labour History Group, 1987). Efforts to locate any copyright owners, who are unnamed, have not been successful.

Precarious Labour, Unions and Struggle

ROAPE

July 16, 2019

Precarious Labour, Unions and Struggle: an interview with Mondli Hlatshwayo

In an interview with Mondli Hlatshwayo, ROAPE’s Leo Zeilig asks about his activism and research on the South African working class, precarious labour and unions. Mondli, who has just won ROAPE’s Ruth First Prize, argues that precariousness is as old as capitalism itself and it is only the collective strength of workers in unions, or outside the formal union structures, that can push back the frontiers of precariousness.

Can you tell us a little about your activism and how you got into research?

As a former South African Commercial, Catering and Allied Workers Union (SACCAWU) shop steward in a small workplace in Ladysmith in KwaZulu-Natal in the 1990s, I used to organise workers who were older than me. Organising workers in the context of a despotic regime is extremely difficult and requires patience. On the other hand, the workers I was organising were my educators, in the sense that as we were discussing their problems, they were also pointing to possible solutions. Eventually, I was forced to leave the workplace because I was dismissed for my union activities.

In 1994, I became a student at the University of the Western Cape where I participated in student struggles and focused on labour studies and politics. In 1999, I joined Khanya College, a Johannesburg-based leftwing NGO, as a labour researcher. Khanya College is an organisational platform which taught me about the significance of radical thought in the context of the struggle against capitalism.

Besides conducting research for Khanya College, I was also a social movement activist. I still maintain that activism is one of the best schools, in the sense that we had to constantly combine theory and practice, and all true learning is collective and emancipatory. In workshops and during social and economic justice campaigns, one learns from women, workers, shop stewards and community activists, all of whom enrich your conceptual and theoretical frameworks.

How did you start to develop your own research projects?

As a former shop steward turned researcher, I was always concerned with workers and working conditions. Armed with knowledge gained in concrete struggles, in 2009 I joined the University of Johannesburg as a doctoral candidate. My research was on trade union responses to technological innovation at the Vanderbijlpark plant to the south of Johannesburg. I studied technological innovation in production long before the much talked about, so-called Fourth Industrial Revolution, and concluded that trade unions in South Africa must view production as a contested terrain. A proactive approach to technologies of production must be grounded in a long-term strategy to appropriate technology in order to meet the needs of society; rather than those of avaricious capitalists.

After completing my doctoral studies in 2012, I had the opportunity to present my findings to shop stewards, union officials and academics. Many of my peer-reviewed book chapters were published, as well as journal articles on production technologies and union responses. I was also concerned about xenophobia in the labour landscape and began to research migrant workers from other African countries in the South African context.

Based on this research, my main scholarly argument is that migrant workers from other countries must be organised to build worker solidarity within the country’s borders. One of my findings is that migrant workers want to be organised by trade unions, but the problem is that, in the main, the major South African trade unions are not approaching them.

I suppose this drew you closer to the research you have conducted on working conditions and precarious labour. These workers, their labour and struggles, has often been neglected in the mainstream literature on forms of work. Can you talk a little about how the research developed and some of the issues involved?

That’s right. It really started in 2016, when I initiated a multi-year research project on changes in the nature of work in post-apartheid South Africa. The aim is to investigate the conditions of workers who are often regarded as precarious workers, with a specific focus on women workers. An additional aim of the research is to develop an understanding of various responses of female workers, and workers in general, to their ever-changing, precarious forms of work.

In the process of conducting this research, I came across women healthcare workers who are single parents and who provide crucial healthcare services to working class patients. These women are breadwinners with huge social reproduction responsibilities, which include looking after their children and other members of their households. The women earn very low wages, sometimes work double shifts for two employers, and have no benefits such as pension funds. In fact, these women are subsidizing the neoliberal South African state through their unpaid work in the workplace and at home. Of course, these women do not see themselves as powerless victims of the neoliberal system.

How do the major unions deal with these workers?

The workers have been largely abandoned by established trade unions, but they made links with progressive NGOs and activists and started challenging their conditions. This has led to some major legal and organisational victories. As in any other struggle, the opponents of the working- class, and of these women in particular, are always devising strategies and tactics to undermine their organisational and material gains.

Returning to your research project, what have been some of the objectives of the research?

Well, one aspects of the research project entails developing a scholarly understanding of conditions and resistance in manufacturing, retail, fishing and the public sector. My research project also seeks to examine the precariousness of permanently employed workers – largely male – in the manufacturing sector. Technological innovation and the reorganization of work appear to be the main reasons for vulnerability among permanent workers, leading to retrenchments and joblessness.

I suppose one of the key arguments and the over-arching intellectual approach is that precariousness is as old as capitalism itself and it is the collective, organizational strength of workers in unions, or even outside the formal union structures, that can push back the frontiers of precariousness.

I am also starting to examine the implications of my research findings for worker education, especially in the context of precarious work and technological employment. One of the key questions I am grappling with at the moment is: what is the role of worker education in a context where many workers are not unionised?

Can you tell us what it means to have received the ROAPE Ruth First prize?

It is an honour for me to receive a prize associated with the late female socialist activist, Ruth First. She was a remarkable woman who dedicated her life to the struggles for the total emancipation of women and other sections of the oppressed in South Africa, in Africa, and in the rest of the world. The Review of African Political Economy is one of those rare platforms in the academy that preserves her memory and continues her work. The journal has always been associated with radical, scholarly works of intellectual giants like Harold Wolpe, Archie Mafeje, Samir Amin and others. As an emerging scholar, my own research is largely inspired by their works.

The Ruth First Prize is likely to take my research to a higher level by giving me international exposure and possible collaborations with radical scholars from other parts of the African continent, the Global South and the Global North. I would like to collaborate with scholars who are studying precarious forms of work in the context of neoliberalism, the role of technologies in production and union capacity to respond to technical changes, the role of women in new forms of work, and migrant work in the context of neoliberal globalisation.

I am also looking forward to supervising doctoral students who are prepared to conduct ground-breaking research on the changing nature of work, looking at women and work, and migrant workers. I also aim to visit other researchers who are conducting research on labour in the context of lean production.

Building relationships with progressive scholars in the Global South and the Global North is likely to help contribute to a reconstruction of a world free from ecological and the economic crises. Finally, I hope that winning this prize will help build international solidarity for the women healthcare workers who continue to carry most of the social and economic burden of society. In doing so, I will communicate their message to audiences in different parts of the world.

I thank the University of Johannesburg’s Centre for Education Rights and Transformation, my family and all my comrades for supporting my intellectual work.

Mondli Hlatshwayo is a Senior Researcher in the Centre for Education Rights and Transformation at the University of Johannesburg. He is the recipient of the ROAPE Ruth First Prize for his article on the struggles of precarious workers in South Africa and specifically the organisational responses of community health workers. The article can be accessed here.

Zimbabwe’s Financial Collapse

ROAPE

July 11, 2019

Zimbabwe is confronting its deepest crisis since 2008. At the end of June, the ZANU-PF government reintroduced the Zimbabwe dollar, 10 years after an economic crisis compelled it to use a foreign currency. In an analysis of Zimbabwe’s economic and monetary situation, Mike Chipere-Ngazimbi describes rapid economic decline amid the incompetence and brutality of the current government. Is another social explosion a possibility as the young are forced to protest against the severe hardships?

By Mike Chipere-Ngazimbi

Zimbabwe is on the brink of economic paralysis. The current crisis has been precipitated by a string of catastrophic political decisions made by the current President Mnangagwa and his ruling party ZANU-PF, the disputed 2018 general elections, ordering soldiers to fire live bullets and killing unarmed peaceful protesters in August last year and again in January 2019. These coldblooded acts have destroyed the little trust that Zimbabweans may have had. As if that was not enough, the President and his Finance Minister Professor Mthuli Ncube, and the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya decided it was time to reintroduce the Zimbabwe dollar in June this year.

This decision was expected because both the President and Finance Minister had previously alluded to it, but when asked about the timing, their response has always been that it would happen only when the economic fundamentals were right. Yet with inflation currently at 97.85 % in May 2019, unemployment of 90% for the past two decades, and a rapidly declining exchange rate (between the US$ and the local currency, the Real Time Gross Settlement (RTGS) dollar, introduced in February 2019) the fundamentals are clearly out of whack. The Zimbabwe dollar and rapid economic decline are the two major triggers for the impending social explosion. It could be only a matter of weeks before workers (predominantly civil servants), and the young unemployed who constitute over 70% of the population, occupy the streets in protest against severe economic hardships. Recent use of violence by the government suggests that further repression cannot be ruled out.

The deterioration in the few economic fundamentals briefly stated above suggests it was too premature to be introducing the discredited Zimbabwe dollar. So, the question is why did they rush? Before I attempt to explain this bewildering question and events that surround it, I will provide a brief explanation of Zimbabwe’s recent monetary history.

In 1980 when Zimbabwe attained independence, the Zimbabwe dollar was much stronger than the United State dollar (ZW$1 to US$1.56). A decade after that, the IMF and World Bank imposed their disastrous Economic Structural Adjustment Program (ESAP) experiment, combined with government economic mismanagement and corruption, the economy took a devastating knock. The toxic combination of President Robert Mugabe (who claims to have an economics degree) and the RBZ governor Gideon Gono, and their preferred monetary policy of printing money finally broke the camel’s back.

By 2008, inflation was an unbelievable 231 150 808 87%. After this ‘high point’ the RBZ could not be bothered calculating it, however, researchers who persevered (see Steve Hanke and Alex Kwok’s 2009 article here) found it to be much higher at 89 sextillion percent (see World Bank 2018). Because of the hyper-inflation, the Government of National Unity (GNU) decided to adopt a multicurrency system in January 2009, made up of the South African Rand, British Pound Sterling, and Botswana Pula but as time went on the USD became the preferred currency resulting in the economy becoming effectively ‘dollarized’. Many scholars rightfully point to the fact that the GNU dollarized the economy, but the fact is that the majority of Zimbabweans, ordinary citizens, retailers and companies had abandoned the Zimbabwe dollar well before dollarization took place.

Under the coalition government and dollarized economy, the country’s GDP grew at an average of 12.08% per annum between 2009-2013. For the same period total GDP averaged US$12 billion which was three times the rate immediately prior to the formation of the coalition government when inflation was at its peak in late 2008. Quickly, inflation dropped to an average 3.45%, this was partly due to the cash budgeting constraints and use of the US$, which diminished opportunities for overspending (the government simply could not print their way out of budgetary constraints). Consumer confidence returned to the economy and the country’s international standing also marginally improved as the long standing tendency of the ruling ZANU-PF government to abuse national funds was restrained under the coalition government.

In addition, the Ministry of Finance was under the control of the opposition party’s Tendai Biti, a lawyer by profession, he was celebrated by the international community for accepting the orthodox mantra, ‘we eat what we kill’. Though how many countries have ever lived only on what they ‘killed?’

The inherent risk of monetarism is that too much emphasis is ascribed to pure economics, the narrow functions of money and superiority of the market at the exclusion of social and institutional factors. Cash budgeting – eating what one kills – may have worked for Zimbabwe in the short term but not in the long term. The failure to address the underlying institutional factors which have long ensured that the nation’s financial resources only serve the ruling elites and their cronies is the reason why economic progress under the GNU was reversed almost as soon as the government of national unity ended.

When the GNU came to an end, the government decided to start printing money and introduced what they called the bond coin in 2014, then the bond notes in 2016. Initially the idea was presented (or sold to the population) as a means to ease the small change shortages, where shoppers were forced to accept small value items in lieu of their change in low denomination notes and coins. The commodities which ended up functioning as money included mobile network credit, sweets, chewing gums, lollipops and other goods that shoppers would not ordinarily have wanted. Soon afterwards the government and RBZ decided to introduce higher denominations, namely the ZWB$1 coins and ZWB$2 coins in 2016 and lastly the ZWB$5 note in 2017.

At the end of 2017, Robert Mugabe was deposed in a military junta, in came his lieutenant Emmerson Mnangagwa, this time pared-up with a neoclassical economist Professor Mthuli Ncube as Finance Minister and the incumbent, RBZ governor, the economist John Mangudya (who like his predecessor Gideon Gono holds a doctorate degree from an unregistered American university, Atlantic International University, on their website it is stated that, ‘ATLANTIC INTERNATIONAL UNIVERSITY IS NOT ACCREDITED BY AN ACCREDITING AGENCY RECOGNIZED BY THE UNITED STATES SECRETARY OF EDUCATION.’) The trio continued with the bond note and then introduced what they called the RTGS dollar in February 2019. As Jesus turned water into wine, they decreed that their RTGS dollar was equivalent to the US$ at a 1:1 rate. As a consequence, real US$ bills started to disappear from banking halls and ATM dispensers.

Ordinary Zimbabweans started to experience serious liquidity problems, long, endless bank queues became a common sight, customers spent days queuing at their banks only to withdraw a $20 bond notes which was at times dispensed in coins. To ease the liquidity problems, the government encouraged its citizens to go cash-light and adopt electronic forms of money. As a result, the nation’s payment system is currently virtually cashless, according to the RBZ’s National Payments Report for the fourth quarter of 2018, 98% of payments were made via digital forms of money. Bizarrely, this aligned the government with the World Bank, the IMF, and other affiliated organisations such as the Alliance for Financial Inclusion (AFI), the Bill and Melinda Gates Foundation, Mastercard, VISA and others who argue that digital forms of money will lift Africans out of poverty (see the recent roape.net blogpost on fintech). These forms of money attract between 1-6% transaction fees (paid by both payer and payee), to top it all, the Finance Minister saw it fit to impose a 2% tax on all mobile money payments made predominantly by the poor. In total the government and mobile network operators are making nearly 10% out of every mobile payment transaction. The question that International Financial Institutions and their affiliates must answer is, how exactly does digital money alleviate poverty?

Before long the fiction of a 1:1 exchange rate between the US$ and a useless local currency which had no use beyond Zimbabwe’s borders (and at times even within), started to collapse. Parallel market activities increased, the local currency traded at a discount, inflation spiralled out of control, and in response civil servants started to strike against low salaries and eroded purchasing power and ordinary citizens took to the streets in protest at the exorbitant fuel price increases of up to 150% in January 2019 (a few months later in May, again fuel prices shot up by 47%). In turn transport costs became unaffordable, and the Minister of Energy and Power Development announced severe power shortages as households and industries went for hours without power.

The country’s agriculture and manufacturing sector is also in complete paralysis. Almost all foods products are imported from other countries which requires foreign currency, which the government simply does not have. The country recently ran out of wheat, communal cattle are dying because the government cannot afford basic vaccinations, or the dipping of livestock to control ticks etc. So, in several regions cattle are dying in their thousands, while butcheries are buying the same diseased meat and selling it but no one from the government seems to be concerned. In Matabeleland North where I conducted research for two years, domestic production is purely for subsistence purposes and can barely meet basic nutritional needs to the extent that people are surviving on just one meal per day. Many people are having to depend on the flourishing informal market which has sprouted in all large and small towns across the country.

The demand for foreign currency on the informal market is not only spurred by import needs, local retailers are also demanding payment in foreign currency. These pressures are causing ordinary consumers to abandon the local currency, furthering its collapse in value.

As a consequence, the US$ retail prices of food stuff, agricultural inputs, pharmaceutical products etc are becoming increasingly unaffordable, to survive employees started demanding payments in US$. Civil servants – teachers, nurses and other government employees – are threatening to strike because their local currency salaries are becoming worthless. In a June 2019 interview, the former Finance Minister, Tendai Biti, said someone who earned $500 in the local currency was effectively now earning US$35. There were recent rumours that at one-point soldiers at several army barracks threatened to protest after refusing local currency denominated payslips, and instead demanded to be paid in US$. Realising they could not meet these demands, the President and Minister of Finance rushed the reintroduction of the Zimbabwe dollar.

In his bid to sugar coat this disaster the President claimed that the local currency was one of the strongest in SADC, even stronger than the South African Rand. As part of this magic show, the Finance Minister boasted of a local currency budget surplus, in one interview he strongly advocated for the use of the local currencies by the business sector and government. Underlining these arguments is a dangerous belief in monetarism, the idea that one can have a strong currency in a country with a dead production base, while celebrating a budget surplus denominated in rotten eggs!

Most if not all these policy announcements were plucked out of a typical economics or finance textbook written from the perspective of the Global North. There is very little evidence of any originality. The Finance Minister once claimed the Zimbabwe economy was undervalued, arguing that the per capita income is actually around US$1500 (see ‘Zimbabwe’s economy is undervalued by the media’ a report by SABC, 2018), one wonders where exactly he got this figure? However, the fragile economy and political tension will soon dispel these illusions, and hopefully no one will ever again reduce people’s real lives into worthless numbers.

In all this, no one seems to be standing on the side of the suffering and vulnerable members of Zimbabwean society, particularly the elderly, disabled, orphaned children or even civil servants, low wage earners and the so-called self-employed. In 2008 when Zimbabwe dollarized, people lost all their bank savings, however they gradually managed to accumulate US$ denominated savings, but after a few months the government used up these bank account savings and replaced them with the valueless local currency. Today people are lumbered with a currency which can only buy 10% of what they could purchase in 2018.

Some insurance and pension companies pay pensioners as little as US$6 per month, despite making contributions all their working life. According to a 2017 Commission of Inquiry into pensions and insurance policies, the Zimbabwe insurance industry owes these pensioners close to US$3 billion dollars. The insurance companies claim that the pensioners investments were lost during the period of hyperinflation and yet the majority of assets in their balance sheets were acquired well before hyperinflation.

The government owned National Social Security Authority (NASSA) is no better, pensioners are being paid as little as US$30 in a country where the Total Consumption Poverty Line (TCPL) for an average family of five persons per household is estimated to be US$562. But, the saddest part is that in 2014, it was reported that the CEO of NASSA was paid about US$30 000 per month, (basic salary plus benefits), while senior managers are earning US$18 000 per month and this excludes bonuses and other benefits. When confronted about this, the chairman of the board stated that the wage rates were in line with the going market rates, unfortunately the same ‘market rates’ do not extend to pensioners who live on US$30 per month. Sadly, no one from politics or civil society batted an eye, it was business as usual. Similarly, Premier Service Medical Aid Society (PSMAS) a government owned medical aid insurance company paid its chief executive officer close to US$7 million per year, and yet they refuse to honour a large percentage of medical aid claims, in the process forcing poor subscribers to pay from their earnings and savings for unaffordable medical expenses. In one way or another all of these activities are labelled as ‘monetarism’.

Many maintained hopes in the main opposition party, the MDC Alliance, but their 2018 general election manifesto was almost juvenile in its content. The party’s leader, Nelson Chamisa, is unable to articulate an alternative policy position. In his short period as leader of MDC Alliance, he has already made far too many serious mistakes to be relied upon e.g. the depravity of manoeuvring himself into power while former leader Morgan Tsvangirai’s family was in the middle of mourning, or agreeing to proceed with the 2018 elections without the necessary electoral reforms. He has also failed to manage or lead the hungry and justifiably angry youth when they protested about the delay in announcing the results of the 2018 general elections. Though perhaps Chamisa’s greatest blunder was publicly supporting the military junta in 2017.

Due to the absence of strong leadership the likelihood is that the looming protests will be spontaneous and largely leaderless. Zimbabwe sorely needs militant and organised political leadership that can challenge the incompetence and barbarity of the current government.

Mike Chipere-Ngazimbi is Associate Researcher at the University of Pretoria, Human Economy Program, where his research looks at the future of money in developing countries.

Featured Photograph: During the height of the inflation crisis in Zimbabwe in 2009, people resorted to ox carts as fuel prices were high and only available in US dollars (Kate Holt, 22 April 2009).

Sudan’s Season of Revolution

ROAPE

July 5, 2019

Examining the recent and brutal attempts to suppress the Sudanese revolution, Magdi el Gizouli looks at the efforts by the regime and its various factions to seize the initiative from the streets. In recent months the ruthless figure of Mohamed Hamdan Daglo (aka Himeidti), the leader of the infamous Rapid Support Forces, has moved into the centre of Sudanese politics. However, will the ‘neighbourhood committees’ be able to translate their revolutionary zeal into mass political action that can unite rural and urban discontent and challenge the regimes hold on power?

By Magdi el Gizouli

The last ten days of Ramadan, Islam’s fasting month, are supposed to be a period of spiritual transcendence. By this time, the discipline of fasting and nightly prayer is expected to have smoothed over the ugly creases of the believer’s soul in preparation for a new beginning. Likewise, it is the year’s peak shopping season, as families prepare for the Eid festivities and the associated cycles of gift exchanges. Not this year in Khartoum. Instead the remarkably peaceful city had on appointment with a ‘katla’, vernacular Sudanese for mass and senseless killing.

In the early hours of 29 Ramadan, 3 June, joint troops of the National Intelligence and Security Service (NISS) and the Rapid Support Forces (RSF), stormed the site of the massive sit-in surrounding the headquarters of the Sudan Armed Forces (SAF) with the aim of crushing the protest movement that had for almost six continuous months captured Sudan’s politics. The attackers did not spare bullets, within hours around 130 unarmed protesters were killed, some clinging to the concrete blocks and bricks of the barricades they had anxiously guarded throughout the months of the sit-in. Many corpses were pulled out of the Nile tied to rocks.

The tent city which constituted the geography of an alternative Sudan in the minds of its inhabitants was soon in flames. Throughout the months of the protest sit-in, the tent city was a Woodstock of sorts on the Nile, a site where urban Sudan struggled to reinvent itself in a fervour of festive creativity and solidarity. The protesters reimagined their world and in exercising their imagination forged new relations that transgressed the boundaries of patriarchal authority and the established social order. The bubbling democracy of the qiada – Arabic shorthand for the [army] headquarters – became a cultural attraction. A middle class Khartoumian would go to work in the morning, drive home in the late afternoon to pick up the kids and stroll through the qiada tent city in the evening in the company of family and friends.

As an organisational form for protest the qiada sit-in was wildly successful, probably far beyond the expectation of the parties involved. While it lasted, it was a place where mostly young women and men could live out their claim to identity as real citizens . Cash transactions were the exception in the qiada sit-in as the protestors fashioned an economy of their own devised around the socialist instinct of ‘from each according to her ability and to each according to her need’. Food, medical care, public health services, security and transport were organised on a voluntary basis and proved remarkably resilient. A minor flu epidemic, known as the ‘qiada cold’ troubled the protesters but otherwise the massive sit in registered no other public health crisis thanks to robust and efficient public health measures. From afar, expatriate Sudanese, contributed funds and information technology hardware as well an explosion of sympathetic protests in Western capitals.

The attackers of 3 June were not satisfied with destruction of the human and physical structure of protest. Their aim was to extinguish the drive that had propelled the thousands upon thousands of young Sudanese into political action during a winter of revolutionary crisis, so they raped men and women. By the evening, residents of the smaller towns down the Nile from Khartoum were fishing corpses out of the river. In their hurry to clear the protest site, the valiant butchers of the RSF and the NISS ordered their troops to dispose of the young bodies in the river clumsily tied to concrete blocks in an effort to keep them down in the deep, silent for ever, but even as hapless corpses the protesters seemed to be challenging the will of Sudan’s security lords, floating up and out into open sight. The sacrilege was not intended to hide the obvious crime but was primarily a demonstration of brutality and immunity from accountability.

The massive sit-in around the army headquarters in Khartoum was the culmination of five months of popular protests. The scale and tenacity of the sit-in forced the hand of the military-security establishment to do away with President Bashir and declare a new dispensation. For some time already a liability, President Bashir was politically eliminated by his very generals. His deputy, Lieutenant General Awad ibn Ouf declared on state television on 11 April that a transitional military council headed by himself would take over authority. Outside military headquarters, thousands of jubilant protesters were not convinced and demanded the transfer of power to a civilian government. Soldiers and junior officers at the army headquarters were equally unsatisfied with Ibn Ouf. Within less than 48 hours Ibn Ouf appeared again on state television, this time to announce that he was stepping down as head of the Transitional Military Council (TMC), the official title of the ruling junta. Ibn Ouf named Abd al-Fattah al-Burhan as his successor, another army general with no known record of association with the Islamic Movement. Significantly, al-Burhan was the liaison officer of the Sudanese military’s deployment in the Saudi-Emirati-led campaign against Houthi rebels in Yemen.

In his first address to the nation, al-Burhan made remarkable overtures to the protest movement. He announced that no attempt will be made to break up the massive sit-in around the army headquarters and declared that the former president and leading figures of his party, the National Congress Party (NCP), will be arrested and eventually face justice. An announcement of the composition of the TMC followed. Unlike Sudan’s previous juntas, the TMC is not exclusively a ‘military’ organ in the strict sense of the word. The officers of the Sudan Armed Forces (SAF) who had long enjoyed political dominance were now forced to share their authority with separate armed formations, the NISS and the RSF, both creatures of the Bashir era. However, the TMC is by all means a re-creation of president Bashir’s own ‘security committee’, a central organ under his chairmanship that joins military, security, police and militia bosses and is replicated at the various level of administration as a grid of oppression.

The emergence of a strongman

Mohamed Hamdan Daglo (aka ‘Himeidti’), the leader of the infamous RSF emerged as the deputy chairman of the TMC and the critical agent of ‘change’ at the top. Himeidti, the name is a motherly diminutive form for ‘my little Mohamed’, was born in a family of agro-pastoralists north of Kutum. His people, the Mahariyya , a subsection of the wider Rizeigat, are predominantly pastoralists whose subsistence existence was convulsed by the penetration of commodification and the cash economy in twentieth century Sudan. The inadequacies of the Mahariyya ’s pastoral livelihood were laid bare in the 1984-1986 famine that struck Kordofan and Darfur as part of the wider Sahelian drought. Mohamed Hamdan the boy and his kin were displaced by the famine to Nyala, Darfur’s largest city and trade hub connecting regional trade networks that stretch through Chad, the Central African Republic and beyond, and into Libya and Egypt. Many Mahariyya became settled millet farmers around Mellit, others remained camel herders. Whether settled or on the move most had to supplant their livelihoods with alternative strategies connected to the cash economy including labour migration, trade, and petty commodity production.

Many Mahariyya men, including Mohamed Hamdan, flocked to Libya as migrant labourers or traders. In one study carried out in Mellit, four out of every ten Mahariyya households had a male family member working in Libya. Mohamed Hamdan, the youngster, began his career as a merchant procuring goods from Nyala to Mellit. By the mid-1990s he was engaged in cross-border trade between Darfur, Chad and Libya. When the Darfur insurgency erupted in 2003, he was a livestock merchant with a base in Mellit and operations mainly in Libya . The war encircled Mellit. Both farming and livestock migration were severely curtailed while the closure of the Sudanese-Libyan border and widespread looting endangered trade routes and restricted the movement of labour. Mahariyya traders including Mohamed Hamdan Daglo were under the impression that they were specifically targeted by the Darfuri insurgents. For many, Mellit became a place of siege. Two of Mohamed Hamdan’s brothers were killed in an incident on their way to Libya when insurgents attacked their trade caravan and looted their camels close to Karb al-Toum.

The racialisation of the conflict in Darfur was the background from which Mohamed Hamdan Daglo emerged as militia leader of his angry Mahariyya and Rizeigat kin. He joined the Sudanese army’s Border Guards, a militia formation fighting on the side of the government against the Darfur insurgents in 2003 and began a recruitment campaign in Nyala amongst his own ‘nas’ (Arabic for people) starting with a squad of 200 kinsmen. The brutal efficiency of Himeidti’s forces soon attracted the attention of Khartoum’s rulers. At the time, General Ibn Ouf was head of military intelligence. Himeidti demanded the formalisation of his militia and their inclusion in the wage-system of the SAF.

Three years later, Himeidti was granted court with President Bashir. Khartoum had signed the 2005 Comprehensive Peace Agreement (CPA) with the rebels of the Sudan People’s Liberation Army/Movement (SPLA/M) granting southern Sudan the right of self-determination as well as the 2006 Darfur Peace Agreement with the Sudan Liberation Army/Movement (SLA/M) faction led by Minni Minawi granting the rebel group regional authority over Darfur. In response, the still active Darfur rebel groups led by the then powerful Justice and Equality Movement (JEM) formed the umbrella National Redemption Front (NRF). The JEM under the leadership of its late founder, Khalil Ibrahim, was beginning to break the racial barrier in Darfur and actively winning supporters among Darfuri pastoralist Arabs including Himeidti’s own Mahariyya . Himeidti was in a position to negotiate. He asked for a share of power akin to the southern Sudanese militia leaders who had fought alongside the government in southern Sudan. The government was reluctant to accept his demands. In response, he camped outside Nyala with his troops in protest leaving the demoralised SAF units to their fate in Darfur’s harsh war-fields.

Soon, the Mahariyya merchant turned militia leader was in a position to punch even higher. He proved his worth in the bitter battles that followed the 2008 JEM attack on the capital Khartoum. In Darfur, JEM’s forces encircled al-Fasher and Himeidti came to the rescue after pleas from the garrison commander at the time, the SAF officer Imad al-Din Adawi.

As a reward, President Bashir summoned the war hero to Khartoum for decoration. Himeidti was granted the medal of courage and the authority and funding to expand recruitment under the umbrella of the ‘Rapid Support Forces’, for all practical purposes a private militia outside the formal chain of command of the SAF. President Bashir and his officers effectively outsourced their entire counterinsurgency operations to the RSF. Himeidti’s shock troops were in deployment across Sudan’s war zones, in Darfur, in South Kordofan and in the Blue Nile. When a wave of riots erupted in Khartoum in September 2013 against the government’s decision to slash fuel and bread subsidies in the aftermath of the independence of South Sudan it was the RSF’s teenage fighters who did the shooting in the capital. Hundreds of protesters lost their lives in the confrontation.

Thanks to Himeidti, herdsmen from northern Darfur had tapped into a new livelihood resource, war on commission. Geopolitics created ample opportunities for a mobile and capable fighting force on rent in a volatile region. Himeidti troops functioned as an extension of the European Union’s borders against intruding migrants deep in the African Sahara and as a long arm for the rulers of Saudi Arabia and the United Arab Emirates in their battle against Houthi militants in Yemen. At the command of a loyal fighting force spread across the country and backed by powerful and rich patrons in the region, Himeidti was ready to displace the ageing resident of the palace on the Blue Nile. When coup officers confronted Bashir in the early hours of 11 April, he shouted that this is a Saudi-Emirati-Egyptian plot carried out by RSF commander Himeidti and the NISS boss Salah Gosh, or so claim Khartoum’s loud whisperers.

Himeidti’s rise from camel merchant in the Darfur wilderness to militiaman to ruler in the heart of the Nile Valley is a remarkable feat of historical cunning. The most recent example of such a transformation in power dates back to 1885 when Abdullahi son of Mohamed Taur Shein (arabic for vicious bull), a Baggara faki (holy man) from Darfur and Mohamed Ahmed al-Mahdi’s earliest disciple, succeeded the charismatic mystic and revolutionary from Dongola to become the Khalifa, ruler of the nascent Mahdist state. Abdullahi the Khalifa was significantly challenged by the Mahdi’s powerful kin, the country’s pre-modern coup plotters. Thanks to a massive standing army recruited predominantly from Baqqara herdsmen, the Khalifa persevered, defeated the putschists and was only dislodged from power sixteen years later by British Maxim guns, the first recoil operated machine-gun.

As a child in Omdurman, al-Khalifa’s capital west of the Nile, I went on school trips to the fields of Karari to the north of the town where over twenty thousand Mahdist fighters were massacred in the early hours of 2 September 1898. Every rainy season, some of those brave bones glittered dazzling white in the blazing sun against the reddish-brown soil of the Karari plain.

It is then not much of a surprise that Himeidti’s emergence at the top of the chaotic crowd of Bashir’s last years was perceived as an opportunity in many quarters. As a foreigner to the Khartoum establishment, Himeidti was generously interpreted by some as a hero of the downtrodden who could rework power relations in favour of Sudan’s marginalised peoples and finally win authority from the elite of the riverine heartland. From this perspective, his major achievement is perceived to be the subversion of the SAF, since Sudan’s independence the guarantor of the hegemony of the riverine elite. Accordingly, he became the betting horse of a Darfuri merchant class of predominantly Rizeigat and Zaghawa composition and the politicians and intellectuals in their orbit.

Uniting rural and urban politics

Bashir had managed subnational interests through a system of ethnic politics that involved a division and redivision of state and locality boundaries to match and create ethnic majorities with a dominant position in state and local government under the mantle of the ruling NCP. Hence, power conflicts often took the form of intra-NCP competition and manipulation of competing blocs was a constant preoccupation of the NCP high command. Likewise, ministerial positions at the central level were apportioned according to a complex calculus of political party and ethnic power division and sub-division. In this apportionment of posts and since the eruption of the Darfur insurgency and the secession of south the third position in the formal hierarchy of power, the office of vice president, was the preserve of Darfuri figures as successors to ethnic South Sudanese who had traditionally occupied the post before the independence of South Sudan. As a result, Bashir’s cabinets were more a warehouse of clients and far less so an effective executive. In his late years, he attempted to bypass this dysfunctional state of affairs born out of political convenience by further centralising power into his own hands. He created a series of councils that dealt with critical aspects of government business – defence, economic policy, investment and foreign relations amongst others – under his direct chairmanship that were superior to the individual ministries.

As a countermeasure to Bashir’s rationale of government, the opposition Forces of Freedom and Change (FFC) demand the formation of a government of ‘meritocrats’ solely drawn from their ranks to rule over a transitional period and pave the way towards free and fair elections. While on first consideration a reasonable demand, government by merit is interpreted by the Rizeigat and Zaghawa nationalists and their allies as a refashioning of the narrow effendiyya nationalism of the riverine heartland at the root of rural grievances and a replay of the exclusionary ‘Sudanisation’ of independence. In a bid to groom a counterforce to the urbanite neo-effendiyya of the FFC, Himeidti and his allies were quick to seek the support of tribal notables from Sudan’s vast and largely impoverished rural worlds with the promise of ethnic representation as a reward. In many ways, Himeidti’s political operation seems to recreate Bashir’s very sultanic politics absent the organisational framework of the big tent NCP.

While the bare-knuckle negotiations between the TMC and the FFC revolve around one character of government, military or civilian, an underlying contradiction remains the rural-urban divide that has long bedevilled Sudan’s politics. Protesters in Sudan’s urban centres crystallised their demands into the singular slogan of ‘civilian’ government while the rustic rural support base of the TMC and its champion Himeidti shout for continuation of ‘military’ rule. The FFC, unfortunately, are yet to imagine a political formula that can provide a bridgehead into rural Sudan. I would argue that the notion of a government of ‘meritocrats’ drawn from Sudan’s best educated cosmopolitans misses the target. Meanwhile, Himeidti was savvy enough to engage the leaders of the Darfur insurgencies he had almost obliterated on the battlefield securing friendly hand-shaking photoshoots and an embryonic alliance.

The brutality of the RSF and the ineloquence of their leader and his many gaffes, he once referred to the minister of higher education as the minister of ‘giraya’, colloquial Sudanese Arabic for learning, were identified by Khartoum’s cosmopolitans as markers of a violent pastoral essence. He was ridiculed as a backward herdsman and as a rogue general in contradistinction to the ‘true’ military college generals of the SAF. In anguish, Khartoum’s political class rummaged the officer corps in search for a ‘enlightened’ soldier who could save the day, crush the RSF with a bold strike of military advantage and rescue the honour of the SAF corps. This political wish acquired the form of myth in popular imagination, the myth of the Atbara armoured battalion expected at any moment in Khartoum. Himeidti and the RSF are as much an expression of the rural crisis as they are of the chaotic war-driven urbanisation of Sudan. In a way, Himeidti is today the political name of Nyala, the trading capital of Darfur that has long displaced Wad Medani in the Gezira heartland as Sudan’s second largest urban centre and possibly the country’s most important commercial hub trading in narcotics and cross-border smuggling of livestock.

The revolutionary challenge from below

Now, in the face of these trials Sudan’s revolutionary surge remains a formidable challenge to Himeidti and his powerful allies and patrons. At the core of revolutionary action is a radical component drawn from urban subalterns who are neither subsumed under the FFC meritocratic model nor liable to co-optation by Himeidti’s pledge of ethnic representation under sultanic authority. The most successful organisational form of this precariat spread across Sudan’s urban landscape is so far the neighbourhood-level ‘resistance committee’. These neighbourhood committees are accessible to precariously employed and unemployed labour and dominated by groups of militants whose political orientations are drawn from confrontation with the abusive and extractive state and the relations of power that sustain it. It is these militant elements, with no recognised place in the social order and with little to gain from its racial hierarchy and ethic building blocs, who have faced the greatest wrath of the military security establishment.

Ahead of the 29 Ramadan massacre state media launched a vicious smear campaign against the protesters of ‘Columbia’, the name the subalterns of the qiada sit-in chose for their favoured spot on the bank of the Nile, for their disregard of middle-class norms. Columbia, state media claimed, had become a site of flagrant moral corruption rife with debauchery, drugs, crime and unnameable social ills. The Sudan Professionals Association (SPA), hitherto the trusted guardian of the revolution, dithered and issued a statement distancing itself from Columbia and its inhabitants. In government speak the 29 Ramadan massacre was hatched as an operation to sweep Columbia ‘clean’ but ran out of control and in the words of the spokesman of the TMC ‘what happened happened!’. Significantly, it was in Columbia where fraternisation between subaltern protesters and their fellow SAF and RSF soldiers was most marked, at times threatening military command and discipline.

The TMC generals, al-Burhan and Himeidti, attempted to reach out to the stricken masses in an effort to soothe the revolutionary anger fuelling the daring protest movement. Himeidti addressed a rally in Mayo and al-Burhan another in Um Badda, both sprawling impoverished and heavily populated neighbourhoods in the outer circle of Khartoum and Omdurman respectively. Himeidti promised the allocation of residential plots to squatters and al-Burhan reproduced the discourse of marginalisation promising a new beginning of social equality with some success but the masses were not satisfied. Both men were incessantly interrupted by cries of ‘madaniyya’ – Arabic for civilian – the catchphrase of the protest movement.

As al-Burhan spoke on 30 June, the anniversary of the 1989 putsch that brought President Bashir to power, demonstrators filled the streets of Khartoum and almost all of Sudan’s major towns in their tens of thousands in a remarkable show of popular will to bring down the rule of the junta and install the pursued ‘madaniyya’. The response of the military-security establishment to this enduring determination was a series of extrajudicial killings targeting militants of the ‘resistance committees’. A policeman who inspected the corpses shot at close range to the head identified one of the slain militants as his own son.

Whatever the outcome of the negotiations between the TMC and the FFC, now mediated by the African Union (AU) and the Ethiopian government as well as a cohort of Western diplomats including newly reappointed US envoy to Sudan, Donald Booth, the course of the Sudanese revolution is for the now in the hands of the ‘resistance committees’. Some have claimed local authority in their neighbourhoods toppling the petty autocrats of the Bashir-era ‘popular committees’ and are refashioning micro-authority to fit an emancipatory zeal. The question remains, will they be able to translate this zeal into mass political action that can take on the brutal machinations of the Sudanese state?

Magdi el Gizouli is a scholar and a fellow of the Rift Valley Institute. He writes on Sudanese affairs here.

Featured Photograph: ‘Sudanese Revolution: Interview with Egyptian Socialist’ in Socialist Worker (Canada).

Activists Killed in Burkina Faso

ROAPE

July 3, 2019

Bettina Engels writes about the murder of two activists in Burkina Faso. The activists were well known for campaigning against mining in the province of Yagha in the North East of the country. For years the region has been a hotspot of artisanal mining and conflicts between residents, the mining company and state security forces. Using the fight against ‘Islamic terrorism’ the government is frequently targeting activists. ROAPE appeals to our readers for solidarity and any form of support in the campaign to expose the murderers.

By Bettina Engels

On Friday, 31 May 2019, two activists of the Democratic Youth Organisation of Burkina Faso (Organisation Démocratique de la Jeunesse, ODJ) were killed in the province of Yagha in the North East of the country, bordering Niger. Civil society organisations demand an investigation and prosecution—however, until now, the authorities seem remaining inactive.

Fahadou Cissé and Hama Balima were on their way to a meeting with the high commissioner of the province, Adama Conseiga, in the provincial capital Sebba but never reached their destination. Instead, they were found dead, riddled with bullets, about five kilometres away from the town. A third dead body of an unidentified person (possibly an uninvolved witness) was lying a few hundred metres next to them. The place had obviously been ‘cleaned up’, as not a single bullet casing was left at the scene.

An alliance of trade unions, human rights and students organisations, and other civil society associations immediately condemned the killing and demanded an official investigation and prosecution of the perpetrators and those responsible for the murder. Unsurprisingly, given Burkina Faso’s ‘tradition’ of impunity and repression and intimidation of radical civil society organisations, nothing has so far been done by the authorities. The two activists who lost their lives were well known. Cissé was a member of ODJ’s national board and president of the organisation’s section in Yagha province, and Hama the treasurer of the section and visible, for instances, in the recent struggles against mining in the province.

Yagha has been long been a hotspot of artisanal mining and related conflicts between residents and local artisanal miners on the one side, and the mining company Société Minière Kindo Adama (SOMIKA) and the state security forces on the other. In October 2014, as village residents and artisanal miners protested against the company, the national police (the ‘counter-insurgency forces’ Compagnie Républicaine de Sécurité, CRS) and SOMIKA’s security guards shot at the demonstrators. Four died on the spot and a fifth on the way to the hospital.

Currently, Yagha is one among 14 provinces in the country where, since late 2018, a ‘state of emergency’ has been applied. Based on articles 58 and 59 of the 1991 Constitution, the state of emergency allows for wide-reaching curtailing of civil rights and liberties: The Minister of Territorial Administration, the Minister of Security, and the Governor of the respective region are enabled to prohibit circulation of people and vehicles at times they decide on; public prosecution and police are allowed to search private houses at any time; publications and assemblies that are suspected of promoting ‘radicalization and violent extremism’ can be prohibited. On 14 May, 2019 the National Assembly voted a new law specifying that the state of emergency can be declared in a situation of ‘permanent crisis’.

The state of emergency, as well as a considerable augmentation of the military budget, is justified as a measure to fight ‘Islamic terrorism’ in Burkina Faso. The presence of the latter, particularly in the North and East of the country, cannot be denied. Since 2015, several hundred persons have been killed in attacks (including around 60 in the capital Ouagadougou); more than 500 schools have been closed, resulting in around 60,000 students being denied access to education; more than 130,000 people have been displaced, several thousand even seeking refuge in neighbouring Mali, itself a crisis-ridden country.

The town of Sebba is located in the area affected by the state of emergency, and by the military operation ‘Doofu’, a counter-terrorism operation launched in mid-May 2019 in three regions in the North of the country (Nord, Sahel, and Centre-Nord). Human Rights Watch is investigating possible cases of killings by both sides, including alleged executions of people in security force custody. In the period between late 2017 and February 2019, the NGO has documented 60 killings by armed Islamists—and 130 killings of suspects by the state security forces in the Sahel region. ‘Terrorism has a broad back’, one activist commented on the social media, pointing out that it provides an excuse for the authorities and security forces to justify repression against all kind of opposition.

As the authorities so far seem unable or unwilling to appropriately investigate the case of the killing in Yagha, ODJ attempts to pay for the autopsies itself.

As a contact for solidarity and any form of support:

Organisation Démocratique de la Jeunesse du Burkina Faso (ODJ)

Email: odjburkina@gmail.com

Website: https://odj-burkina.org/index.php/fr/

Bettina Engels teaches at the Otto Suhr Institute for Political Science, Freie Universität Berlin, Germany and is a regular contributor to ROAPE.

Featured Photograph: Police officer in front of protesters during the 2015 Burkinabé coup d’état (4 October, 2015).

Marxism, Populism and the Global South

ROAPE

July 3, 2019

In a major analysis of current developments at the level of the world and multinational market of late capitalism, Esteban Mora grapples with the phenomenon of so called ‘right wing populism’ not only in the West, but in Third World regions as well. He asks if Africa’s decades of trauma now confront metropolitan and central capitalist countries, as the road where they are heading.

By Esteban Mora

The idea for this blogpost is to present an analysis on the origins and formation of ‘right-wing populism’ from the point of view of Marxist economics and to consider the impact of these processes for Africa. I believe that in order to understand the phenomenon, we need to look at the world market from an internationalist and multinational point of view. I argue that the policies of ‘right-wing populist’ movements come from the big multinational financial and productive capitals, not from the local national bourgeoisie. This big financial and productive capital has as a goal the elimination of the fragmentation to the concentration and centralization of value, which is being caused by multinational production itself, at least as it has been functioning until now. In addition, the international bourgeoisie has an understanding of East Asia’s economic ascension, right wing populists see these regions advance in the multinational market (where East Asia is now the centre of industrial production on the planet), as a result of the intervention of the state in the economy. It is from this characterization (and these goals) that they define themselves as ‘nationalists’ or ‘anti-globalists’, but always within the frame of multinational capital and competition.

Let me illustrate this with a couple of examples.

Both Hungary and Poland, or even Austria, have intensified the economic activity of their sovereign wealth funds or equivalent funds, for the investment of state capitals within their economies. In the same way, Hungary and Poland are characterized by the nationalization of certain companies and assets, and by the great support of the state through state and public subsidies (coming mainly from the structural funds of the European Union, which are composed of state and public European budgets) to subsidize multinational companies and their operations within their countries, as well as social spending in general. That means it is simply inaccurate to argue that they are ‘protectionists’ or ‘nationalists’ in the classic sense of the 20th century.

So, the convergence of the Viktor Mihály Orbán government in Hungary or the Polish government with certain multinationals is as great as any other globalized economy, but it is focused on state interventionism. It is worth restating the point. These governments see East Asia’s success and the ability to now compete at the multinational level as almost entirely due to their state-led or state-oriented support or intervention. Therefore, these ‘populist’ governments promote this economic perspective to prevent the fragmentation of concentrated and centralised capital.

It is also important to stress that multinationals arriving in different regions and countries, are producing growth and the development of mainly small and medium industrial enterprises. So, in East Asia the overwhelming majority of industrial companies are small and medium sized, instead of factory-scale, and they are vertically integrated through outsourcing or portfolio investment, which means part of the profits stays within those companies and is not automatically ‘repatriated’ to the multinational, in turn this benefits the host country and companies, and creates the possibility that the Asian Tigers, China or India, or even Turkey, Israel or South Africa, of developing multinationals themselves (See, for example, Marin Alexandrov and Svetla Marinova 2014).

Trumps Tariffs and Brexit

Another example comes from Brexit and the trade war between United States and China, provoked by Donald Trump’s tariffs. None of these policies make the slightest economic sense for either the internal markets of England or the United States. The first ones to oppose and criticize Brexit or US commercial tariffs have been precisely the local big, medium and small bourgeois from those countries, for which inputs, raw materials and means of production, as well as exports, are all affected. While multinational capitals who can produce anywhere in the world remain largely ‘immune’ from these policies. When production was located inside the nation-state, protectionism made sense, but with the internationalization of the division of labour and multinationals, it can only affect the internal markets and not the companies with production sites all over the world.

Let’s look at these processes in a little more detail. Through tariffs (and Brexit, hard or soft, will produce tariffs for trade between England and the European Union) multinationals accomplish the deterioration of the conditions of production for their respective competitors and at the same time promote the movement of multinational production to regions more favorable to their interests. This ‘movement’ of multinational production could stop the ‘spill over’ of productivity, knowledge and profits to those centres or possible centres of world production (for example, against China’s growth, in the case of the US trade war). So, we see in this process a way of preventing the fragmentation and competition at the level of the world market. From this follows that American multinationals are moving their productions sites from China to Vietnam or Malaysia, for example.

Again, it has to be stated that it is impossible to understand these policies (both Brexit or American tariffs) without appreciating that they come in part from multinational capital, as a form of intervention in the multinational market, not at the level of nation-states, but at the international and multinational level. I would argue that we are seeing a shift from commercial freedom characteristic of the World Trade Organization, for example, and the extensive phase of the internationalization of the division of labour in late capitalism to an intensive phase based on the intervention of the state at the level of the world market. From this follows the resurgence of the state by ‘right-wing populism’, as economic intervention increases the role of the state as a centre or point of concentration of power (which has come to be known as ‘neo-fascism’).

Contradictions, questions and solutions

As I have already argued, the world centre for industrial and high-tech production (in East Asia), is not composed of factory-scale companies or processes, but of small and medium sized companies. In the same vein, the biggest component in intra-regional trade in East Asia, as the industrial centre of the world, is not based on finished products, but intermediate parts and components, which come and go from Vietnam to Malaysia, or from South Korea to China, etc. On top of this, it is the state and sovereign wealth funds, for example, which allow this concentration of power to take place. From Singapore to Vietnam, each has working mutual funds or wealth funds of different types, and they all have intensified their involvement in the economy in recent years.

All bourgeoisie economic analysis and research on the multinational market from recent years is questioning neoliberal policies, and describing not without surprise, the incredible performance of economies and multinationals where countries have state-led types of policies for their own multinationals (subsidies, trade barriers, lower interest rates, etc), like India or China, and how this seems to be working much better than Western non-interventionism for the growth and rise of those countries. This change in perspective is a change in bourgeoisie consciousness, in the face of the incredible ascension of Asia as a real competitor, and the possibility of reproducing the same success in the West through the same state-oriented policies (from which wealth funds are just one example).

Poland and Hungary are not the only European countries expanding production through state funds, but we see the same processes from Turkey or from Persian Gulf states, or even India and China. Turkey’s president Recep Tayyip Erdoğan recently formed the first sovereign fund in the country, under his own personal management. Similar processes can be seen in Gulf States, with funds under the control of their royal families, or under Hussein el-Sisi and the state-military elite who are in charge of Egypt’s industrial sector. Even Jair Bolsonaro’s Brasil has immediately focused on pension funds reform, which would allow private investment through those funds, just as we have seen in Austria, Hungary or Poland where state funds are starting to invest in the private and multinational sectors.

We need to remember that even though the US and UK still maintain hegemony in terms of the financial control of assets at the multinational level (demonstrated in Gerard Duménil and Dominique Lévy’s 2018 book), it is the Chinese financial sector which surpasses the Triad in terms of revenue and profits; they may control fewer assets, but are producing the largest revenues of all and China is doing this through exactly these types of sovereign funds. By ‘Triad’ I mean the three historically dominate centres of the world economy from the late 1940s until the end of the 20th century: the United States, the European Union and Japan.

How do these wealth funds work? Wealth funds are very similar to bank capital, which is the definitive characteristic of financial capitalism. But the difference is that it is not based on dividends, and you don’t need to work around stocks and dividends from specific companies, but you can participate on the ‘pool’ of financial assets invested in different companies all at once, getting a percentage of total profits or revenues controlled by the wealth fund. This allows for a faster way of diversification and centralization of profits and value, even more resolutely than bank capital in some senses. Instead of a stock which represents a percentage of the profits for a single company, etc, the percentage you own on a wealth fund is equal to a percentage of the profits not only for one company, but for all the profits from all companies the wealth fund finances all at once.

‘Right wing populism’ or ‘nationalism’ has meant a turn to the state and its financial assets and capabilities, in stark contrast with neoliberalism, where all talk was about a minimal state. It is crucial to point out the historic discrepancy between neoliberal ideology (that states that the state should not interfere with markets) and the neoliberal political projects and practices (that actually reshapes the state, assigning to it clear fields of action, private property right protection, fiscal incentives, privatisation of the public etc.) Alain Lipietz (1997) actually studies how job deregulation and reduction of the state’s involvement is stronger in the Triad, where the flexibilization occurs at the level of the job market and not the internal productive process, and the opposite happens in the Global South: the state is more involved comparatively (although there are also examples of privatization, structural adjustment programs, etc, in Africa or Asia!), the flexibilization occurs at the internal level of the production process, and not at the level of the job market which is highly organized and centralized, etc.

The same process where sovereign wealth funds from the Global South turn into competitors at the multinational level,is at play when multinational production fragments itself into small and medium companies through ‘spill overs’: state-led economies perform better in the world market by subsidizing their multinationals. Equally sovereign funds from countries with state-led economies have the biggest concentration and centralization of financial assets. The consensus among bourgeoisie economists is that state subsidizing of multinationals is the reason for the Asian miracle, and the reason they even entered the multinational market in the first place. This means an intensified competition, both for the market and the state. The whole Huawei controversy or the trade negotiation between the US and China over state subsidies, show the motives and the purpose of ‘right wing populism’.

This explains the convergence of libertarianism with conservative statism in the United States, where Trump erases regulations at the same time as his administration applies tariffs. It may also explain the United Kingdom’s Tory government’s announcement of the end of austerity, and the possibility of state planning.

Falling profit rates

These processes, I would argue, can only be explained by the fall in the profit rate (and its different multiple causes) within multinational companies, which makes it impossible for multinationals to simply buy up companies and integrate them vertically as their own. The companies are instead forced to reduce costs through outsourcing, in combination with ‘offshoring.’ The state, in this situation, turns into a point of comparative and relatively high concentration of capitals, compared to the reigning fragmentation throughout the rest of the economy, where the rate of profit keeps falling, or where the economy continues to fragment into small and medium companies.

This explains the historical rise of sovereign and wealth funds in peripheral economies of the South, allowing them to become real competitors at the multinational level against the Triad. It is these processes that force or propel the formation of this ‘right-wing populist, ‘anti-globalist’ or ‘nationalist’ movements.

Of course, state intervention or fragmentation are not the real causes of East Asia’s rise nor of the increasing competition at the multinational level. From a Marxist point of view, the historical fall in the profit rate hits the Triad and developed countries the hardest, in terms of its expanded reproduction. Why? In Marxist terms this is because of a bigger organic composition: more expensive equipment and raw materials (constant capital) compared to the labor component (variable capital), which causes the fall in the profit rate itself. The process is relatively simple: if profit is derived from what is extracted from ‘the labour component’, it is in the economies of the Triad with a high concentration of constant capital that we see profit rates in a historical, downward spiral. The difference between the profit rate and the accumulation rate (gross investment) is considerably smaller than in peripheral or underdeveloped countries.

As the 20^th century Polish revolutionary and Marxist economist Henryk Grossman explained, even if the profit rate falls immediately after the organic composition of capital rises, it can maintain itself above the accumulation rate and sustain expanded reproduction, but only for a while. After a certain period, the profit rate will be inferior to the accumulation rate, and this is where troubles begin: expanded reproduction needs to be held back, which is precisely what neoliberalism is. Instead of big investments and rising wages to augment profits and productivity, we see the opposite: the cutting costs rationale, and the reduction of real wages. In peripheral or underdeveloped countries, constant capital was cheaper, and so organic composition was lower and profit rates higher. This allows for extended reproduction to have more space to develop in peripheral countries instead of in the Triad.

As it has been shown, the fall in the profit rate works with different causes, specifically the exploitation rate, the unemployment rate and the new value rate in conjunction with the financial variable (the reduction in the financial profit rate), to create crises (See Carchedi, 2017).

These issues are of such vital importance to capitalist development that they must be explained carefully. The difference between the profit and accumulation rate was greater, so peripheral countries were suddenly in the position of sustaining expanded reproduction, as we have seen in the Asian Tigers or China and India, while the Triad had to immerse itself in the cutting-costs rationale of neoliberalism to hold back expanded reproduction. This is the crux that explains East Asia’s resurgence against the West today, in Marxist terms. Just as neoliberalism is not the cause of the crisis, rather the reaction by the bourgeoisie to the reality of the historical fall in the rate of profit since 1973/4, so ‘right-wing populism’ is a reaction against the consequences (state interventionism and fragmentation at the multinational market level) of that very same historical process.

The processes at work in the Global South

The internationalization of the division of labour of late capitalism integrated the bourgeoisie of the Global South not only into the financial aspect of imperialism, but into its multinational aspect, through the emerging industrialization of areas of the South. This took place through the so-called ‘Taylorism’ and ‘peripheral fordism’, as Alain Lipietz’s described it in 1997. This caused the political erasure of the so-called progressive bourgeoisie in the South, which also eliminated the conflict between anti-colonialist ‘bourgeois’ movements from the Third World and the Triad. It was a huge triumph for the Triad’s class project to have finally eliminated this faction al conflict between anti-colonial layers of the bourgeoisie from the South and themselves. It eliminated reformist, social democratic and import-substitution programs in the South, precisely because industrialization was now realized by multinationals, instead of their own nationalistic and anti-colonial projects and at the same time integrating them within the circuits of multinational capitalism.

The internationalization of the division of labour of late capitalism first defined by Ernest Mandel, seems to have had two different stages: an expansionist stage, with the conglomerates boom of the 1950’s and 1960’s, and the industrialization and vertical integration of productive processes all around the world. Today we enter a stage where expanded reproduction shrinks or contracts (due to the fall in the rate of profit), and multinationals stop integrating vertically in the classic and strict sense, and decide to outsource or seek portfolio investments as the main way to diversification.

Portfolio investments are different from Foreign Direct Investment and vertical integration in the sense that they allow for the Southern bourgeoisie to stop being simply passive investors, and allows them to start to behave like active investors, integrated not only as minority partners of multinationals, but as members of the multinationals themselves. The first stage of the internationalization of the division of labour saw the Southern bourgeoisie’s integration into financial capital in a passive way, but the end of the expansive phase of late capitalism has allowed them to turn this relationship upside down: the Triad’s bourgeoisie turns into passive investor, and the South has taken charge and control of the multinational means of production.

These processes have seen the integration of the anti-colonialist class faction of the South, into the industrial and multinational class faction of the multinational Triad over the last forty years. This has also changed the character of the Southern bourgeoisie from a simple ‘comprador’ class, into a managerial multinational faction (not a new class, as Duménil and Lévy argued in 2018) which deals and controls directly in the businesses of the Triads multinationals. The Southern bourgeoisie is still a ‘small partner’ of the Triad or what Paul Baran described in the 1960s as the lumpen-bourgeoisie, but instead of a nation-state bourgeoisie, which produces for its own internal market, or trades the imports and exports of its internal economy, or produces agricultural products, etc, it now controls the means of production of major multinational assets. In a word, the South’s bourgeoisie has stopped producing for its internal market only, and started to produce for multinationals.

If we follow Karl Marx’s work, The 18th Brumaire of Louis Bonaparte, there are two contradictory tendencies here: the absorption of the Southern bourgeoisie into a single international class (with all of the unevenness and dependency that continues to characterize this class), and at the same time, the revulsion based on the increasing competition this multinational integration produces.

This means the international bourgeoisie moves from away from the conflict that characterised 20th century anticolonialism and industrialization/import-substitution, to act as a unified faction or class under the financially dominant faction of the global class. At the same time, it integrates heterogeneous faction s into multinational competition, acting not as a dominant minority faction , but as an entire class.

This contradiction between governing as a faction or as a class, explains precisely the mixture of fascistic characteristics, and democratic and republican elements. If you govern as a whole class, you govern through parliamentary and democratic dialogue on how to run society. If you govern as a particular faction among others, you will try to impose your faction’s view on the others, and rule above your own class. The internationalization of the division of labour in late capitalism, eliminating the internal factional conflict between the Triad and the Third World, creating at the same time an intensification of competition and control from multinational capitals seem to be explained by this enormous historical development.

These processes explains the entire political climate and movement to the right, and the virtual disappearance of a progressive bourgeois element from Central America to Africa itself – the transition from progressive (bourgeois) struggles to the so-called neoliberal age. This represents an intensification of the class struggle between a more compact international bourgeois class, and a proletariat with a smattering of allies in parliaments or in mainstream political parties.

Finally, to Africa

For Africa, this divergence in expanded reproduction related to the fall in the profit rate – which produces the phenomenon I have just described – has enabled the economic ‘boom’, just as it facilitated peripheral countries on the continent attempting to transform themselves into Asian Tigers, or to see the so-called BRICS as a vehicle to their development and growth, etc. It does not mean that profit rates have not fallen in Africa or other peripheral countries, it rather means peripheral countries, because of their own underdevelopment, can expand reproduction more decisively than their central and metropolitan counterparts.

This demonstrates how capitalism feeds off ‘backwardness’ itself. We should remember as well, that the so-called economic ‘boom’ in Africa has not translated into the improvements in the lives of peasants and workers, rather the improvement of the economic figures for certain extractive companies on the continent. The boom in GDP growth rates has not translated into higher living standards for workers and the poor on the continent.

At the same time, Africa has something very valuable to teach to the rest of the world: Africa, more than any other continent, thanks to its fragmentation of land and smaller commercial integration, knows very well what it means when the state is in relative terms, a bigger point of concentration of capitals compared to private merchant or financial capitals. Just like in Asia or Latin America, the state in Africa turns into a great possibility for the bourgeoisie to accumulate bigger sums of capital quickly, and dispose of them in any way they want, if they have the state-power to do so. Like sovereign wealth funds today, Africa knows what it means for the state itself to turn into a medium for capitalist enrichment and profit making, and not a neutral ‘people’s state’ which eliminates class contradictions. This turns the fight (even the electoral fight) for the state into a bitter struggle of factions, which, as we know, has already led to disastrous scenarios (from civil wars, to total state repression) or to apparently ‘progressive scenarios’ – until recently Ethiopia was the poster-boy of this ‘success’ – which hides exactly the same process of using the state and state-funds to finance private and multinational production.

At the beginning of his administration, Trump was accused of wanting to turn the US into a ‘Third World strong-man government’, which besides the racist undertones of the comment, was essentially correct. The concentration of power in the state, plus the concentration of specifically economic power in the state, which seems to be the characteristic of ‘right wing populism’, is indeed very common to us here in the so called ’Third World’ – with the fragmented character of agriculture, land tenure, and commercial integration, etc.

Africa understands this world better than others, since the continent has a long history of seizures of state power in order to control the economic concentration and centralization of state budgets, assets and capitals.

At the end of this short essay I should repeat myself: ‘right wing populism’ shows how capitalism feeds off backwardness. The cheapest solution for multinational companies is to control the state in order to stall falling production (a movement very similar to the international bank and state budgets bailouts that happened during the 2008 crisis). The world may now be facing Africa’s recent history. Do Africa’s decades of trauma confront metropolitan and central countries, as the road where they are now heading?

Esteban Mora is a researcher in Communications Science from the Universidad de Costa Rica, he has written books on capitalism and Marxism, and writes a Marxist economics blog.

Featured Photograph: The Hong Kong skyline taken in 2013 entitled, ‘Capitalism close to perfection’ by Lawrence W. K. Ho.

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Neoliberal Shock Therapy in Ethiopia

ROAPE

June 25, 2019

Looking at the case of Chile and Yemen, Tebeje Molla argues that the neoliberal policies advocated by Ethiopia’s new leader and made under a condition of political shock is profoundly dangerous for the country and must be resisted.

By Tebeje Molla

Last year, as part of the ongoing political transformation, Abiy Ahmed’s government pledged swift economic reform. The government specifically expressed its intention to fully or partially privatize four key public enterprises: Ethio Telecom, Ethiopian Electric Power, Ethiopian Airlines, and Ethiopian Shipping & Logistics Services Enterprise. In doing so, Abiy’s government aims to attract foreign investment and stimulate economic growth.

In the coming few weeks, the parliament is expected to start the approval of the liberalization of these state-owned companies. This is a clear signal that the ruling party is on the verge of abandoning the developmental state model that it once zealously endorsed. As William Davison has rightly noted, what former Prime Minister Meles Zenawi saw in neoliberalism as a ‘dead end’ now Abiy sees as a ‘new horizon’.

**Earnings of major Ethiopian businesses**

The purpose of this short blogpost is to put this decision in some historical and political perspective. It argues that the neoliberal policy imposition advocated by Ethiopia’s new leader and made under a condition of political shock is profoundly dangerous for the country.

Neoliberal Shock Therapy

Shock results from a sudden and unpredictable turmoil, be it a natural disaster or a political crisis. It represents fear and uncertainty. Shock activates a sense of urgency in our response. When it happens in a national political space, a shock is a sign of vulnerability. Especially in the context of a weak state and dysfunctional political order, shock signals danger. It invites external intervention.

In her book, The Shock Doctrine, Canadian journalist and activist Naomi Klein documents how neoliberal plutocrats exploit disasters that produce a collective shock. She uses the term ‘shock doctrine’ to describe ‘the quite brutal tactic of systematically using the public’s disorientation following a collective shock’ in order to ‘push through radical pro-corporate measures.’ Shock therapy refers to the calculated neoliberal response to conditions of crisis resulting from wars, coups, terrorist attacks, market crashes or natural disasters. Klein substantiates her claims with empirical accounts from Chile, Russia, Iraq, etc. Klein observes that neoliberals subscribe to Machiavellian advice: injuries should be inflicted ‘all at once’ – at a time when one is weak and confused.

In the last four decades, proponents of the unfettered market have taken advantage of extraordinary conditions (e.g., deep economic crisis or heightened political instability) to provoke their neoliberal agendas of privatization, deregulation, and decentralization. In nearly all cases, the shock therapy ends with political and economic disaster for the afflicted population. I want to briefly discuss two examples.

Chile in the 1970s

In 1973, General Augusto Pinochet carried out a violent coup to topple a left-wing government that challenged economic interests of major global actors including the United States. This political crisis coupled with severe hyperinflation forced Chile to enter into a deep state of shock. Amidst the crisis, with the support of the U.S. government and the World Bank, leading neoliberal proponents (the so-called the ‘Chicago Boys’) advised the Chilean dictator to use ‘shock treatment’ and thereby to stabilize, privatize and liberalize the economy.

The underlying assumption was that under conditions of shock and awe, people have no choice but to adjust to changes. Chile was the test case. Neoliberals saw the political and economic crisis in the country as an opportunity for testing their market principles. They aggressively pushed the government to privatize public enterprises and deregulate the financial system. As a result, the nation’s key economic resources (i.e. big copper mining companies) were sold to foreign investors.

In a short-term, the country enjoyed an economic success that was dubbed as a ‘miracle’. However, in the long run, the outcome was nothing short of a catastrophe. National wealth is concentrated in the hands of the few, poverty has deepened, and the distribution of social opportunities such as education and health remains extremely unequal. Desperate actions of the government, including nationalizing privatized companies, could not avert the damage.

Yemen Today

Another case of neoliberal shock therapy is Yemen. The crisis in Yemen illustrates the unpredictable consequences of neoliberal shock therapy. Yemen’s major political crisis began when the ‘Arab Spring’ drew protesters onto the street of the capital in 2011. Modest compromises and changes failed to satisfy competing demands of the country’s political forces (and their foreign masters). The political crisis quickly escalated into violence. Soon the country was in a state of shock and awe. The transitional government could not maintain law and order.

In Destroying Yemen, Isa Blumi documented that, in the face of deteriorating political and economic circumstances, the transitional government was under pressure to sell public enterprises to foreign investors. As part of the conditionality of its credit to the government, in the name of averting austerity, the IMF prescribed ‘free trade’ policies that allow foreign investors from Saudi Arabia and Qatar to buy the nation’s most valuable assets, e.g. national oil refineries. As part of the deal, the Saudi Government deposited $2 billion directly into Yemen’s central bank (note also Riyadh’s recent $250 million transfer to the account of the central bank of Sudan).

For some Yemeni groups (the Houthi, for example), this was an unacceptable deal. Hence, when the group temporarily assumed power in 2014/15, they reversed the deals. Clearly, this angered the neoliberals and their regional supporters who were on the verge of controlling vital economic resources of the country.

What followed was a disaster. A bloody civil war broke out in 2015. Under the cover of a ‘war on terror’, the Saudi government and its Western and regional allies intervened in Yemen. As a result, the humanitarian crisis has been devastating, and the country is now at risk of total disintegration.

Lessons for Ethiopia

The lesson from the experiences of Chile and Yemen is evident: do not rush to liberalise the economy. At present, Ethiopia is in a state of political shock. The promise of positive change that has accompanied the ascent to power of Abiy Ahmed remains just a promise. With the rise of intensified ethnic extremism, the country’s transition to a democratic political order appears to be a distant mirage. With each passing day, the sense of uncertainty deepens. Amidst this widespread anxiety come the shock therapists: the Bretton Woods Institutions, the European Union and the United States government as well as peripheral and regional players in the Middle East.

Abiy Ahmed assumed power in April 2018. In June 2018, the United Arab Emirate pledged $3 billion in aid and investment. In October 2018, the World Bank approved a total of $1.2 billion to support the government’s ‘policies designed to accelerate economic growth.’ What these and other donors wanted in return has not been made public but we know that the dollars are always attached to policy conditionalities – mainly aiming at further liberalizing the economic sector.

Neoliberal forces do not necessarily instigate political and economic crises. However, in the context of aid-recipient poor countries such as Ethiopia, they are always ready to exploit such calamities. Hence, in dealing with the latest round of neoliberal pressure, there is a vital lesson to be learned from the experiences of Chile and Yemen. The privatization of treasured public holdings – whether it is Chile’s lucrative copper mining fields, Yemen’s valuable oil refineries or Ethiopia’s profitable airline – serves only the interest of transnational corporates based in the Global North. Private investors focus on maximizing their profit and are unlikely to reinvest their returns in the country. In other words, privatizing profitable public assets diminishes the national wealth, and the government will have limited access to resources that can be reinvested in vital services such as education and health.

As many economists and commentators have argued, the privatization initiative is highly problematic. While there are state-owned enterprises that could arguably benefit from private management, Ethiopian Airlines is not one of them. Ethiopian Airlines started operation in 1946 when most African nations were still under the colonial yoke. The success of the airline is regarded as embodying the resilience of the country.

Ethiopian Airlines is probably the nation’s most profitable and well-managed public enterprise. With 110 modern aircraft and over 100 international destinations, the national flag carrier is the largest in Africa by revenue, and indeed one of the most successful public enterprises in the world. As a testimony of its incomparable achievements, it has won a number of regional and international awards. Even CNN reported, Ethiopian Airlines has positioned itself to dominate Africa’s aviation sector, expanding its shares in other African countries’ airlines (including Ghana, Burkina Faso, Rwanda, Côte d’Ivoire, Mali, Mozambique, and Zambia). In other words, if the stated purpose of privatization was to improve the efficiency and profitability of public assets, then the privatization of Ethiopian Airlines is not justifiable.

**Ethiopian Airlines taxiing at Addis Ababa Bole international Airport**

The other key concern is that at the moment there are no reliable institutions that can ensure transparency and accountability in the transfer of assets from the public to the private. In this context, there is a possibility that national wealth can be unfairly transferred to the hands of those who are connected to the political elite, enriching a wealthy oligarchy. What had happened in Russia nearly three decades ago is illustrative of the risk. Even though the Prime Minister has established an advisory council for privatization, its functionality is yet to be seen.

Most importantly, in a multi-ethnic society such as Ethiopia, an unhealthy concentration of national wealth in the hands of foreign corporations and corrupted individuals is a recipe for serious social and political ills. The success of developmental states of China, Singapore, South Korea, Malaysia, and Vietnam suggests that economic security is a safeguard for political stability. Hence, the political transition spearheaded by Abiy Ahmed’s government needs to take the economic variable very seriously. As the national cake shrinks, self-interested ethnic nationalists will not hesitate to use economic grievances to mobilize their base, and take chauvinistic political positions. In so doing, they undermine symbiotic inter-ethnic relations and the very existence of Ethiopia itself.

Even worse, there is a high possibility that those lucrative public enterprises may end up in the hands of the Gulf states. Any conscious Ethiopian would understand that—for historical, cultural and geopolitical reasons—this is a highly perilous scenario. The existing cultural and political disenchantment creates a fertile ground for those foreign forces to nurture dissent. Could the country face what we are witnessing in Yemen today?

The lesson for Abiy Ahmed is clear: it is unwise to make sweeping economic policy decisions when you are in a state of political volatility.

Tebeje Molla is an Australian Research Council (DECRA) research fellow in the School of Education, Deakin University, Australia. His research focuses on education and development. His latest book, Higher Education in Ethiopia, explores the problem of structural inequalities in education and policy responses. The author can be reached at tebe12@gmail.com

Featured Photograph: Addis Ababa suffers lightning strikes during the rainy season (25 June, 2015).

Call for Applications: Radical Perspectives from the South

ROAPE

June 24, 2019

‘Authoritarian Capitalism, Reactionary Populism and Counter-Strategies: Global Perspectives from the South.’

The Rosa Luxemburg Foundation (RLF) will fund up to ten post-doctoral scholarships worldwide in the Global South to realise individual research projects at institutions in the South and to participate in their International Research Group on Authoritarianism and Counter-Strategies.

Research proposals on the global entanglements of authoritarian politics, reactionary movements and ideologies, and emancipatory counter-strategies are welcomed. The RLF is especially interested in studies that propose a global perspective for and from the Global South on these issues, i.e. that critically relate regional problems to global economic and power relations and transnational actor networks and propose creative, inter- and transdisciplinary research strategies.

Like ROAPE, the RLF favours scholar-activist methodologies—i.e. rigorous academic work that is embedded in actual left-wing political projects, movements or initiatives—and are looking for research output that reflect this scholar-activist character.

The RLF request that interested scholars themselves find a suitable institution as well as a mentor for their project.

All necessary documents can be downloaded from the foundations website here. Please note that funding starts in November 2019 and ends in December 2021. Financial support provided to postdoctoral researchers will be based on salaries paid for comparable, full-time academic positions in the region, and as such will vary from country to country.

Application deadline is 4 August 2019

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