Let's Think

Cronyism is, was, and will remain the real danger

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In its transition to democracy the people of South Africa was robbed. It was to be expected and, the battle is not near over as it threatens social stability across the globe.

South Africa is far from unique in becoming a victim of “crony capture” at a time of big socio-political transitions. In fact, most of the world fell victim of this phenomenon in the post-Cold War.

It can probably be blamed for the world-wide levels of inequity where 1% of the population controls 90% of the wealth – something that has become a threat to the socio-political construct and stability in many parts of the world.

Just think of what has been happening to ‘main-line’ political parties and leaders in recent-time elections – the election of Donald Trump in the USA, for one.

How holistic and wide ranging this phenomenon manifests itself, is illustrated by a recent article on the Foreign Affairs website under the heading “Capitalism Did Not Win the Cold War; Why Cronyism Was the Real Victor.”

Summarising the broad consensus judgement on the outcome of the Cold War the article states: “When the Soviet Union collapsed 26 years ago, it was generally agreed that the West had won the Cold War. This was affirmed by the prosperity and possibilities awaiting citizens of Western countries, as opposed to the political and economic stagnation experienced by those in Communist states.

“A natural conclusion, much repeated at the time, was that capitalism had finally defeated communism.

“This sweeping statement was only partially true. If one took capitalism and communism as the only two protagonists in the post–World War II struggle, it was easy to see that the latter had suffered a mortal blow.”

A third force

Using a term, familiar to South Africans, from the ‘total onslaught’ days of PW Botha to the ‘foreign agents’ of the Zuma-administration, the article then states: “… there was a third (force), stealthier protagonist situated between them. This was a system best identified today as cronyism. For, if capitalism did win over the other two contenders in 1991, its victory was short-lived. (Our emphasis.)

“And in the years that have followed, it is cronyism that has captured an ever-increasing share of economic activity. A survey of the distribution of power and money around the world makes it clear: cronyism, not capitalism, has ultimately prevailed.”

Cronyism defined

The writer then goes on to define “cronyism,” while rejecting the oft used term of ‘crony capitalism’ as antithetical to the principles of capitalism, which should not be viewed as a derivative of capitalism, as:

“Cronyism is, rather, a separate system that falls between capitalism and state-controlled socialism. When a country drifts from capitalism toward socialism, the transitional period is one in which cronies rule the land.

“Transitional cronyism claims to be capitalistic, whereas socialism claims to be egalitarian. But they are very similar, except for the size of the group of cronies at the top;” and then, what very much reads like a description of the present South African situation follows:

“In cronyistic societies, a larger group extracts a growing share of society’s wealth for themselves and their associates. In socialistic systems, a smaller group vies savagely for wealth and power (our emphasis): because putatively egalitarian economies are usually less efficient at generating wealth, there may be less to go around, making the infighting among socialist leaders that much more bitter.”

Transition bring change of elites

If one glance at history against this background, and consider the present wealth distribution/concentration referred to above, one thing becomes clear: During, and after, a transition from one power construct to another, all that really happens is that a shift from one crony-elite to another one takes place.

This holds true, be the transition from feudalism to democracy/capitalism or socialism; from colonialism to democracy and/or socialism; or from group domination to liberation under democracy/capitalism or socialism.

The footprint of this trend can also be followed throughout South Africa’s modern recorded history, and it tells us that no single group qualify for a holier than thou decoration.

  • As far as early colonialism is concerned, it is possible to organise a tour, for example to monuments of crony-monuments left behind by a ‘gentleman’ called Cecil John Rhodes;
  • In the old Republic of Transvaal, President Burger gave road construction contracts to his brother-in-law, while in present-day Springs – the constituency I had the privilege to once represent under the previous dispensation – the prime farm Geduld on the then transport route from the Eastern Transvaal goldfields, belonged to president Paul Kruger, managed by his brother-in-law;
  • In the province of KZN, President Jacob Zuma’s controversial Nkandla residence is located on land belonging to the Zulu-king but allocated to his family after the Anglo-Zulu War of the 19th century;
  • The spectacular rise of some Afrikaner families and business institutions, post the establishment of the Union of South Africa, and especially after independence from Britain is well known; and
  • The record of post-liberation South Africa’s cronyism is emerging faster than ever before, on the back of improved counter-balances and driven by modern technology.  

We Think

Those in power today, politically and economically – locally and world-wide – should take proper note of another historical reality: Very seldom, if ever does a system which does not work for most of the population have a happy ending. It, more often than not, ends in a bloody and messy affair.

There are occasions that the damage is controlled, like when ex-president and Nobel-prize-winner FW de Klerk decided to lead a managed transition, rather than risk a potential full blown revolution.

by Piet Coetzer

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