Gradual erosion of public influence over economic matters

Siyabonga Hadebe

Siyabonga Hadebe

Published Feb 22, 2024


Siyabonga Hadebe

Marxist theorists contend that history follows a spiral trajectory, repeating itself while introducing new layers of complexity with each iteration.

Drawing from this spiral analogy, I posit that discernible repetitions occur across time and space, contributing to the persistence of imperialism in a territory now called South Africa and the continuous accumulation of layers.

Despite its imperfections, criticisms toward the ANC might be overly exaggerated, considering the influence of external actors who consistently contribute substantial layers to the imperfect situation. Since 1994, South Africa has been undergoing experimentation in terms of economics and human rights, and the focus on eradicating apartheid was given a subsidiary role. South Africa continues to go through its own spiral trajectory: economic imperialism is strong and deepens wounds created by apartheid.

At the UN General Assembly in December 1972, Chilean president Salvador Allende expressed his frustration over embedded forms of imperialism that posed threats to his country. Allende’s powerful speech is a potent illustration of a recurring pattern in the Global South: the gradual erosion of public influence over economic matters.

The “deterritorialisation” manifests through an ever-growing separation between economic concerns and public debate, domestically and internationally.

Putting this in a much simpler language, economic factors like investment and natural resource exploitation are increasingly divorced from the realm of public debate (potentially even the local sphere).

They are instead being more controlled by the private sphere (potentially even the transnational and international arenas). As the public-private divide widens each day, it normalises the exclusion of critical economic matters from democratic discourse and decision-making, potentially reinforcing inequalities and eroding public good.

As the Global South progresses through its historical spiral, informal discourses championing capital interests subtly alter the language used to frame crucial issues. Terms like nationalisation are reframed as “expropriation”, and sovereignty over natural resources and the right to economic development towards the apolitical human rights terminology.

Also, concepts such as business and human rights and human rights due diligence championed by the developed north present a problematic narrative. They position old imperial powers as the ‘saviours’ of ‘pagans’ they once exploited, thereby obscuring historical power dynamics and raising concerns about neo-colonial intentions. The civilised world is suddenly concerned about the soulless, uncivilised people who were once deemed to bear real rights due to their apportioned sub-human status.

The gradual linguistic shift normalises “deterritorialisation”, the erosion of national economic control, often achieved through increasingly informal interventions or external mechanisms imposed at the international level. Numerous soft-law and hard-law approaches aim to separate economic interests as a public good from states and their populations. Some notable examples include trade agreements, the UN Guiding Principles, the Kimberley Process and the OECD Guidelines for Multinational Enterprises.

All this unfolds under the pretext of dubious international law principles originally designed to safeguard the interests of old powers at the expense of the Global South. Rather than overt aggression, the modern twists in this rapidly turning spiral involve embedded economic and diplomatic pressure, subtly swaying countries towards policies favouring external capital.

On September 21, 1970, Allende was elected president and implemented significant economic reforms that impacted the interests of the US and the Chilean elite. Some perceived the policies as threatening their interests, leading to internal and external pressures against Allende’s government.

The extent of foreign intervention, particularly by the US, remains a topic of historical debate and analysis.

For example, US Ambassador Edward Korry said: “Once Allende comes to power, we shall do all within our power to condemn Chile and the Chileans to utmost deprivation and poverty.”

Nonetheless, Allende continued to nationalise industries, aiming to benefit the state and promote social welfare, which clashed with the interests of foreign corporations and the Chilean elite. His economic agenda and potential threat to external interests were met with internal and external pressures, culminating in a US-backed coup in 1973. Allende took his life during the coup, ushering in the dictatorship of Augusto Pinochet.

Pinochet’s policies deepened Chile’s economic dependence and facilitated exploitation by foreign corporations, representing another twist in the historical spiral of imperialism persisting even post-colonialism. Arguably, the pattern continues to be observable across the Global South, with corrupt local leaders enabling continued imperialist influence. Conditions are nurtured for an adversarial relationship between “savages” (dictators) and “victims” (citizens), requiring the saviour from the north in the shape of old powers, the UN and international civil society.

Knowing his economic reforms faced opposition domestically and abroad, Allende sought solidarity from the Global South during his UN address. This coincided with prevalent Third World economic considerations and decolonising rhetoric at the UN, particularly reflected in General Assembly Resolution 1803 (XVIII) on the permanent sovereignty over natural resources. Allende warned against a “reflex modernisation” model excluding millions from progress and condemning them to suffering.

Furthermore, Allende drew parallels between Chile and other developing countries facing similar challenges, suggesting a broader struggle against a system perpetuating inequality. His speech played a significant role in galvanising support for the developing world and its economic struggles. His words resonated with many countries facing similar challenges, and his call for solidarity helped to lay the groundwork for the New International Economic Order movement, which was short-lived.

Nevertheless, the Chilean coup and its aftermath continue to spark debate, particularly regarding the implementation of neo-liberal policies by the Chicago Boys, a group of Chilean economists trained at the University of Chicago.

In his book, “The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism”, Sebastian Edwards attempts to separate the neo-liberal project from the brutal Pinochet regime that first put it into practice. He argues that the policies brought relative prosperity to Chile and defends the Chicago Boys; reputation. However, critics claim he downplays the human rights abuses and negative social consequences of neo-liberalism under Pinochet.

Chileans in Chicago-style economics did not start in Chile but gained expression and prominence there.

Otherwise known as the “Chile Project”, students were indoctrinated with the power of self-interested, rational markets and the folly of state economic planning. They were also trained to view the welfare state with deep suspicion. Following the Cuban Revolution in 1959, the Chile Project became integral to Washington’s Cold War strategy, which has been the case long after the Soviet Union collapsed.

With Allende’s overthrow in 1973 and the establishment of a US-backed anti-communist regime, the Chicago Boys, now well-connected and prepared, played a pivotal role in implementing neo-liberal policies, unintentionally supporting a dictatorship that curtailed labour rights. In this regard, Chile pursued vigorous privatisation of education and its social security programme, with Pinochet’s 1980 Constitution criminalising strikes by public sector workers.

At the macroeconomic level, Chile abandoned efforts to build a diverse and resilient national economy, opting to specialise in low-value exports like fruit. The neo-liberal experiment handed control of prices to market forces, potentially leaving the country vulnerable to external shocks and exploitation. In a surprise turn of events, Chilean industry leaders were pleasantly stunned when finance finister Sergio de Castro permitted them to charge whatever price they wanted for basic consumer goods such as cooking oil.

Despite his general support for neo-liberalism, Edwards admits the harsh realities of Chile’s economic transformation. The shock treatment caused immense unemployment, failed expectations and even led to a devastating recession. He recognises the irony of implementing the reforms under a dictatorship and concedes the privatisation programme enriched regime allies through undervalued asset sales.

Moreover, the lauded pension system fell short, and inequality worsened even by South American standards. Edwards even refers to an apartheid fuelled by neo-liberalism.

In the South African context, the shift towards neo-liberal policies post-apartheid aimed at economic prosperity, mirroring the painful Chilean experiment. However, the implementation of neo-liberal strategies raised debates about their impact on social justice and equality. Like Chile, the experience in South Africa reveals tension between economic gains and the potential disregard for human rights and social welfare.

Similar to the Chicago Boys’ role in Chile, South Africa faces challenges in balancing neo-liberal policies with social justice. The emphasis on privatisation, echoing Chile’s trajectory, has brought forth debates about access to education and social security. Today, the only thing more consistent than the sunrise is the chorus of grumbling about education, the economy and public services.

Yet, few people acknowledge that South Africa could have been better without being used as a laboratory for neo-liberalism like Chile.

All tertiary institutions in South Africa continue to teach toxic economics knowledge that the country is nowhere but a deep dark hole. If neo-liberal economics was so great and divine, why does South Africa swim in the mud without any hope of escaping economic hardship soon? Heterodox economics is violently suppressed in favour of a heavy dose of capitalism from the Bretton Woods institutions.

Furthermore, organisations such as the Edelman Trust Institute also run senseless surveys that measure public trust in institutions across four key areas: business, government, media and NGOs. Supported by local players like the Free Market Foundation, the surveys aim to portray business as a ‘saviour’ against the ‘savage’ (inefficient state). The FMF advocates for “unfettered capitalism”, which “eschews all forms of state intervention in the life of the individual citizen”.

Nobody wants to accept the gruesome intended consequences of neo-liberalism, such as increased inequality and economic hardships, which define post-apartheid South Africa. In essence, the examination of Chile’s neo-liberal experiment provides a lens to critically assess South Africa’s post-apartheid economic policies: a deliberate disaster that is haunting the country to no end.

The fightback by Business Unity South Africa and Business for South Africa against the National Health Insurance and the restructuring of Eskom to allow independent power producers would make Milton Friedman rub his hands in glee. People should decide on all economic matters since economic policy is a public good, not fodder for private interests.

Hadebe is an independent commentator on socio-economic, political and global matters.

Pretoria News