Book Title: Elite Transition
Author: Patrick Bond
Publisher: Pluto Press London

Elite Transition is a study of the new South African government economic policy choices since the dawn of democracy in 1994. It was among the first academic books to offer a detailed analysis of the post apartheid economic policy choices. It shows how the ruling party, the African National Congress’s (ANC) key leaders took a turn to the right to embrace neo-liberalism. The political view, arising in the 1960s, neo-liberalism emphasizes the importance of economic growth and asserts that social justice is best maintained by minimal government economic activity and free market forces.

The book is based on analysis of extensive documentation, anecdotal information and theoretical insights. It assesses the extent to which the post apartheid government can fulfil the dream of economic freedom. It presents arguments about the reasons for continued poverty despite political freedom. It dissects a range of socioeconomic continuities from old apartheid state policies to the new post apartheid government. It draws on colonial and apartheid policy failures to illuminate the deep connections between economic stagnation and social strife.

The central argument of the book: post apartheid economic policy making is steeped in the fundamentals of the outdated apartheid form of capitalism. This, the author argues is responsible for jobless economic growth. This in turn has a multiple effect in the new state’s capacity to tackle socio-economic challenges posed by years of uneven development, housing backlogs and rising levels of poverty. He seems to suggest that neo-liberalism has taken roots within the upper echelons of liberation movement, the ANC.

Author, Patrick Bond locates this fundamental shift by looking at the emergence of the second post apartheid economic policy that became widely known as Growth, Employment and Redistribution Strategy (GEAR). The first new government economic policy was the Reconstruction and Development Programme (RDP). RDP’s main policy thrust was to link growth, development, reconstruction, redistribution and reconciliation into a “unified programme”. Whereas the new plan, Gear sought to promote growth before redistribution. To tighten fiscal policy and loosen exchange controls while promoting foreign led investment. It was indeed a fundamental shift from the much hailed 1994 economic blueprint, the RDP.

When the new plan (Gear) was unveiled, the then President Nelson Mandela and his Finance Minister Trevor Manuel presented it as a fait accompli. Its presentation caused a rupture within the ruling ANC Alliance comprised of the labour federation COSATU and the South African Communist Party (SACP). Despite their (COSATU and SACP) vociferous objection to the policy, it was implemented with gusto.

However, Elite Transition shows starkly that the two economic policy blueprints were incompatible, and the latter destined to fail.

Bond opened a can of worms on his account about the true origins of Gear. He revealed that it was written by a committee dominated by the World Bank and International Monetary Fund (IMF) economists and policy gurus. The exposure of Gear’s true authors added fuel to the fire causing the anti-Gear lobby to insinuate that it was a self-imposed structural adjustment programme.

The book clearly shows that neo-liberalism has become a key juncture between production and social reproduction in the current era of chronic unemployment and capital-led globalisation. In other words, as the ANC moved from people-centred economic development to capital led growth planning – the socio economic conditions of the poor majority will continue to worsen.

Elite Transition shows a causal a link on how first colonialism, then apartheid economic planning and the post apartheid policy maker’s dithering have failed to change the fundamentals of economic planning. This failure, the author suggests will lead to further social strife.

Today, South Africa is engulfed in rolling service delivery protests. At least 40% of the country’s 283 local governments had been affected by service delivery protests with 111 major incidents recorded in the year. At the same time, the employment figures put the figure of the unemployed at above 25 percent. Since Gear was launched, South Africa has lurched from one economic plan to the other – from the Accelerated and Shared Growth Initiative for South Africa (AsgiSA), the National Industrial Policy Framework, and recently (2011) the New Growth Path for South Africa (NGP).

The issue of corruption has, for a long time, been an unfortunate characteristic of Brazil and a concern of international investors and business people. With the most prominent forms appearing in the country’s political system, below are some short descriptions of the most well known cases:

- Fernando Collor (president from 1990 to 1992) was exposed as having undertaken a number of corrupt extortions in a fairly unsubtle manner and subsequently resigned to avoid impeachment. In 1994, he was acquitted of corruption on the grounds of inadequate evidence and is now back in the Brazilian Senate.

- In 2002, $BRL 1.3 million was uncovered in a police raid at presidential hopeful Roseana Sarney’s husbands office. Despite the controversy at the time, she is back serving as state governor of Maranhao.

- The ‘Mensalo’ affair of 2005 saw the chairman of the Brazilian Labour Party (Partido Trabalhista Brasileiro, PTB) – Roberto Jefferson – being implicated in a bribery case. A Parliamentary Commission was set up where Jefferson stated that there were several MPs receiving money to vote for specific legislation to be put in place. In the same period, campaign manager Duda Mendona admitted that undeclared and illegal funds (derived from private sources and laundered money through an advertising agency) were used to finance the PTB electoral victory of 2002.

- In 2009 Federal District governor, Jose Roberto Arruda, was caught handing bags of money to his legislator allies. What made this case particularly notable was the fact that that when Arruda’s behaviour was exposed – the news was made widespread throughout the country and the politician was publicly arrested and placed in custody: a first in Brazil’s history.

Whilst a 2010 study by German NGO Transparency International pointed to Brazil leading ahead of its BRIC counterparts (Russia, India and China), the recent Index of Economic Freedom stated that uncontrolled corruption amongst the political elite remains one of the main factors impeding the country’s excelled growth. Many of the Brazilian public believe that it is one of the main problems that the country faces.

According to Levy Brandao, leader of the campaign to oust Jose Arruda, the root causes of the problem are a lack of whistle-blowers and public transparency. He believes that, for Brazil to truly be able to grow sustainably, the political system needs to instill higher ethical standards than currently exist which, in turn, will filter into the economy and business world. Many campaigners also state that the punishment for corrupt politicians needs to be greater – many cases continue to go unnoticed and trials can take long periods of time within which corrupt politicians can renew their careers.

At the same time, it is worth noting that several Brazilian commentators debate that modern day principles of decency, avoidance of greed and abuse of power are emerging. According to Jorge Gerdau, chairman of Grupo Gerdau, one of Brazil’s largest steelmakers: “There is a historical, cultural problem of a certain backwardness which is very hard to overcome but there is also increasing public demand for transparency and respect for the electorate.”

Transparencia, a Sao Paulo based NGO, claims that although political bribery does occur, some of the money is in fact used to fund election campaigns. Politicians often feel the need to bypass Brazil’s orthodox campaign finance laws to further their chances of gaining seats in the Senate.

In late 2009, President Lula signed a bill encouraging members of the public to report acts of corruption whilst, at the same time, offering support and protection for those that do. Indeed, most of Brazilians want to see corrupt politicians and people in power exposed and, in turn, more grass roots organisations are appearing across the country. The ‘Arruda Out’ campaign (run by student groups) was an excellent example of the power of self-creating groups taking to the streets to call for a more ethical Brazilian political system (the Arruda Out campaign attracted over 30,000 members). The leader of the campaign believes that the country is moving in the right direction – particularly with regards to media exposure as well as the internet allowing news to be spread quicker and easier. The fact that Arruda was placed in public custody should leave an impression on future generations of politicians to not impeach the law for their own gains.