The capitalists and their parties claim that there is a world economic crisis and they use this to justify mass retrenchments, cuts in social expenditure and a drive to attack and undermine workers gains that have been won through centuries of struggle. But what is the nature of the crisis and who is responsible for it? More importantly what can be done about the crisis?


Why are we participating in these elections?

Many people have asked us why we are participating in the elections when we believe that Socialism will not come through parliament. We are participating in these elections because many people have the illusion that parliament can bring about an improvement in their lives. Our main aim by participating is to confront the representatives of the capitalist parties head on. We will put forward proposals and demands of the working class. The very responses of the representatives of the capitalist parties will help reveal to the mass of the working class what the true role of parliament is. The role of parliament is to give the masses the illusion that we have a real say in the running of the country, when in fact, we are being ruled by the dictatorship of the class of capitalists.


It is because the capitalist parties realise that they will be exposed by us, that they will try everything to keep our representatives out of parliament.


We have strict conditions on our representatives to ensure that they advance the working class struggle and do not get co-opted. Our representatives will sign pledges in advance that they will be subject to instant recall, they will receive the average wage of a skilled worker; they will only serve 6 months (representatives will be rotated); they will place the struggle of the working class outside of parliament above any parliamentary work.


So what is the cause of the so-called crisis of the bosses?

Their drive to increase profits has hit a major obstacle. Their profits have begun to fall more sharply because they cannot extract enough surplus value from the world working class. This has led to capitalists diverting their money from investing in production into speculating in housing, food, shares, derivatives, etc. It is the collapse of this speculative bubble that has sparked off the current crisis, which is but a symptom of falling profits in productive sectors. Over the years, they have so cut down on workers to increase their rate of profit that a point has been reached that there are too few buyers (too few in employment to buy commodities) so the rate of profit has started to decrease more rapidly. The capitalists are so used to making massive profits that a slight decrease is for them a ‘crisis’. The supermarkets are full of food, the car dealers are over-stocked with cars, but there are too few buyers to purchase at the high level of prices. Thus the crisis is not that there is too little, but too much! Capitalism means the wealth of the world is in the hands of a few capitalists, while the working class of the world is kept in starvation.


Imperialist Capitalist monopolies continue to make huge profits

Last year, the SA government collected R161Billion in company taxes on profits. This was at 28%, which meant that companies made profits of R580 Billion last year. If we consider these are only declared profits then it is safe to assume that the real company profits were closer to at least R700 Billion. So clearly, there is no crisis of profits in South Africa. The rate of profit in the neo-colonies like South Africa, have always been much higher than in the imperialist centres. Now the imperialists are demanding even greater profits from the neo-colonies to offset their falling profits at home.


When the big bosses talk about crisis and when workers talk about crisis, we are talking about different things. When the bosses talk about crisis they mean that instead of making 3000% profit their level of profit has come down to 2500%. When workers talk about crisis, we mean high unemployment, starvation and early death of millions of workers.


Superprofits come from commodities sold way above their real cost of production

The real cost of a bag of cornflakes is 30 cents. But will the giant food producers or retailers reduce prices so that the millions of starving can eat? No, because it means that their rate of profit of 5700% would come down to 100% or 200%- this they are not prepared to do.  


Not too long ago the price of Platinum was $440, then speculation drove up the price to over $2000. Now that it has dropped to $1000, Anglo Platinum wants to retrench 10 000 workers, yet they were quite comfortable with the same number of workers when the price was $440. They have become used to a higher profit level and are not prepared to sacrifice this.


Over 40% of petrol used in SA is locally produced at less than $20 per barrel by Sasol. When the company was starting up, the working class, through our taxes subsidised them but now they are making massive profits they continue , with the active help of the ANC government, to keep the price of fuel artificially high. The main shareholders today of Sasol are US banks such as the Bank of New York, JP Morgan Chase, SSB, State Street.


Why doesn’t the ANC impose higher taxes on imperialist monopolies?

It is possible to raise company taxes

In the days of ‘apartheid’ the company tax rate was 48%. The ANC government alliance has reduced company tax to 28%. As a measure within the capitalist system, the government could easily raise the company tax rate to 50%. This would raise an extra R200 billion per year for social expenses and the companies would still be making R350 billion profit per annum. In several European countries the rate of company tax is 48%. The rate of company tax in the USA is 35%. So why does the ANC government not raise company taxes? The excuse that the company would just up and run does not hold water as they pay much more in tax in other parts of the world. The truth is that the ANC government, with the active support of the Cosatu and SACP leadership, are fundamentally pro-capitalist. They are the junior partners in the imperialist exploitation of SA. When capitalism is in crisis, with the masses in uprising, as they were here in 1985-1994, the capitalists sometimes rule through a Popular front. This Popular front is a multiclass alliance, which generally has the support of the trade union leadership, which ties the working class movement to support the capitalist system. In essence the leaders of the ANC-Cosatu-SACP popular front pose as pro-worker, but divert the struggles of the masses into a dead-end, away from a struggle to overthrow capitalism, that is, away from the struggle for Socialism.


Popular fronts have a history of betrayal of the working class

The popular fronts of the MDC in Zimbabwe, of the MAS in Bolivia and the PSUV in Venezuela are similar examples where the struggles of the working classes are diverted away from struggling for power. Recently the miners of Huanuni in Bolivia rose up to demand that pension age be dropped to 55. The army of Morales (the supposed left leader) was set upon the workers to crush them. Two miners were killed and the leadership of the trade union federation sat with folded arms while the workers were put down. These miners have adopted a resolution calling for the immediate replacement of their sellout trade union leadership. On the other hand when US-imperialist back fascist bands took over almost half the country, Morales did nothing to stop them, hundreds of workers and peasants have gone missing, several were killed. The workers were kept disarmed while the fascist bands operated freely. Such were the anti-working class steps taken by a Popular front in Bolivia, from which the world working class should draw strong lessons.


A brief analysis of the recent budget

All parliamentary parties, without exception, generally welcomed the budget. The Cosatu leadership had warm words of praise for the budget. The Cosatu and SACP leadership justify support for the ANC because we have a ‘developmental’ state. The Cosatu and SACP leaders believe we have to go through a period of ‘democratic capitalism’ to build conditions for Socialism. This is a smokescreen to hide the real aim of the ANC-SACP-Cosatu popular front alliance, namely that a section of the black middle class becomes the junior partners of imperialism, at the expense of the demands of the working class. Let us examine a few areas:



It is estimated that the current housing backlog is 1.5 million houses. Due to population growth the number of houses needed each year just to keep pace with this is 200 000. Let us assume that a decent home is 90 square metres. Each house would cost R270 000, then with a budget of R19,6 Billion only 73 000 houses can be built. This is not even enough to cover population growth. This means that the current 7.5 million people without housing will always remain homeless and the number of homeless people will increase each year by 600 000. Even if the small RDP houses are built it will only amount to 163 000, still less than population growth; still the number of homeless will grow by 180 000 every year. To completely wipe out the backlog in housing requires R400 Billion (at today’s over-inflated housing prices). When the government talks about R700 Billion for infrastructure, they clearly do not have housing in mind.


Most of the R700 Billion will be used for the Eskom scam (which we have written on extensively – see our website). In summary, the government plans to double the electricity generation capacity within 20 years. ‘Growth’ in the economy has come from public works, financial services and tourism. How many power stations are needed to power the smile of a tour guide? The companies who will benefit are the shareholders of General Electric and Murray and Roberts (with the major shareholders such as Bank of New York, State Street, JP Morgan Chase, SSB, etc).


Most of the budget deficit of R90 Billion is not for housing or any social need, but for building power stations that are not needed, even by capitalist industry. The ANC government is prepared to borrow from imperialism to fund projects of imperialism but are not prepared to go to the same extent to put the millions of shack dwellers in proper houses. Their stated commitment to abolish slums is a lie, proven by their own budget figures.



By September 2008, the number of formal jobs was put at 8.4 million. This figure has dropped over the past 10 years from over 9 million. This means that the supposed job increase of 2 million jobs since 2002 have not been formal jobs and in fact have been largely confined to public works. These ‘jobs’ have already disappeared. Since 1994 half the number of 50 000 commercial farms were wiped out and over 1.5 million farmworkers lost their jobs. Every year there are 500 000 school leavers. Thus the number of unemployed increase at least by 200 000 every year. Yet the government plans only to create 400 000 ‘fulltime- equivalent’ jobs through public works schemes over the next 3 years. Instead of employing 400 000 new municipal workers with benefits, the government chooses to privatise municipal services through these casuals in public works. The Cosatu leadership fully supports this casualisation of the public sector. The government has redefined the meaning of who is unemployed to exclude millions who have given up looking for work and the millions who starve in the informal sector. Last year they even redefined the meaning of ‘discouraged’ to exclude a further million workers from their books and put them in the general category of ‘not economically active’. The government claims unemployment has come down when in fact it has not only gone up but will always keep increasing under the current government plans.




A further tax for low-wage workers is being planned

The ANC government is planning to introduce an extra tax of 12-15% for all workers. This is supposedly to go for workers’ pensions. When a worker leaves a job, you will not be able to claim any of the money, you must wait until you go on pension. The average life expectancy is less than 50 and 3 out of every 10 workers will die before the age of 40. This means that the ‘pension’ deduction will go to the banks and that most workers will not even see this money. But what will happen is that your take-home pay will be reduced by 12%. For example, if your wage is R2500 per month, your take-home pay will be R300 less.


Cuts in pensions and grants

Pensions and grants rose by 5% or less. This means that in real terms the government cut pensions and grants, ie with the new level of R1010 and R240 pensioners and grant holders can buy less than what they could last year.  Yet, the Cosatu leaders and all the parliamentary parties hailed this budget as pro-poor. Pensions are cut, while at the same time the government is bailing out the mining monopolies by R2 Billion and the motor bosses by hundreds of millions of Rands. The 310 000 that are currently being retrenched by the monopolies are not being bailed out at all.



Education is being privatised and many of the school leavers can hardly read or write. In addition about 4 million youth between 7 and 24 years are not attending any educational institution.



From 1994 to date, the number of hospital beds per 1000 people has dropped from 27 to 17. Two-thirds of health expenditure goes to the private sector. Cosatu unions have investments in privatised health care.


All the parliamentary parties are capitalist

The international prices of wheat, maize and sunflower seeds has dropped by over 40% in recent months, yet the major retailers and food producers have not lowered food prices on this scale. Not a single parliamentary party has waged a campaign for food prices to come down. Not a single one of them opposed the Eskom scam; not a single one of them demanded that the price of bread should be dropped, after Tiger Brands and other producers were found guilty of collusion over raising the price of bread since 1994.  The Cosatu leaders have waged no centralised campaign against the current bloodbath of retrenchments, yet they praise a capitalist budget that supports profiteering by the bosses. They should have called a general strike to stop the retrenchments but do nothing because they are too busy campaigning for the election victory of the capitalist ANC. The fight against high food prices was reduced to a one-day strike for workers’ to blow off steam- no prices have come down. Workers’ sanctions should have been called in support of the masses in Zimbabwe, Swaziland, the DRC and Gaza, but only irregular pickets and once-off stoppages have been held.



Both DA and ANC have similar positions on Palestine, calling for a 2-state Bantustan for Palestinians. Not a single parliamentary party has been prepared to call for a decision of parliament to implement sanctions against Israel.  The Cosatu leaders support a campaign of boycott and sanctions only in so far as it leads to a 2-state Bantustan for Palestinians.


We expose the DA's plans to starve the working class

The DA claims that it has a 'plan' to address unemployment. For this they put forward the setting up of Export processing zones (EPZ's).


The reformist ILO has done a study over 20 years of EPZ's and concludes that these are areas of low wages and high exploitation. Today there are over 27 million workers in 850 EPZ's worldwide, 90% of these workers are women. These are areas where there are regular mass dismissals, child labour, no minimum wages, where security guards and paramilitary are used to bash even the right to belong to a union. Worker leaders have been murdered, such as in Bangladesh; often police use physical violence to crush union organization; there are no minimum conditions such as the right to overtime pay and a limit on the working day; in Thailand, long promoted as an Asian Tiger, child labour works for 90 cents per hour- this is what the DA wants to reduce the working class to- absolute slaves.


The worst capitalists like Coca cola, Nike are serial perpetrators of human rights abuses in the EPZ's; if the capitalists do not like the conditions, if for example the government wants to clamp down on their practices, they just leave; this happened in Malaysia where a few years ago when workers wanted more rights, 60% of the EPZ bosses left overnight. What is more, EPZ's are like another country- not covered by any local law (or any law for that matter); the capitalists there pay no tax at all.


The DA reflects the worst side of the current capitalist crisis: the capitalists have made massive profits for many years, now that their profits are falling slightly, they want us to bail them out. They want to shift the burden of their crisis onto the working class by taking back what little rights we have. They want to reduce our wages and crush the unions. Every year the capitalist companies in South Africa repatriate over R200 bn in profits to their principals in the imperialist centres. For years while the tax rate was reduced from 35% to 28%, the capitalists continued to mass retrench workers. They have failed to produce jobs and what the DA wants for them is to further reduce the company tax rate. This is an obscene way to increase profits as the capitalists will just continue retrenching. The DA says ‘we are one nation’ when they want our votes, but when it comes to sharing company profits, they believe in a 2-tier labour market. No to the bailout of the capitalists- retrench the bosses!



We expose the attempt by COPE to split the working class

Workers International Vanguard League condemns the attempts by COPE (Congress of the People) to split the workers'movement by wanting to form a new trade union and/or new federation. Belatedly this splinter of the black middle class has discovered that they have no base among the working class. As is typical of the middle class they want to use the working class to fight their battles for them; they want to use workers for votes in the April elections.


Their manifesto is based on 'macro economic stability' that the country has énjoyed' (read: they support the GEAR economic policy responsible for opening the working class to increased exploitation, increased suffering and starvation); they believe the key is 'enterprise development' (read: more black capitalists to share in the exploitation of the working class); they believe in joint decision-making with big business in all that government does. Let's put it clear: big capital is retrenching 310 000 workers, they have deliberately starved us through high prices and kept us homeless by profiteering on housing. This is the same big capital that COPE wants to have a joint decision -making over government. In other words, the programme of COPE is to become the new boss boys of imperialism in South Africa, they want to become the South African MDC. With a capitalist programme, what sort of union can these opportunists build? Only monopoly capital will gain from having the working class even further divided.


Now is the time we need working class unity against high prices, against retrenchments, against imperialist backed war in the DRC, in Gaza, against the ongoing imperialist plunder of Zimbabwe. If the trade union leadership are not advancing working class leadership, let us mobilise to change them; but let this be on a clear working class programme, and on the basis of working class unity.


We call on the working class to reject COPE and their opportunist 'trade unionism'.

What do we propose?


Issued 21.02.09 Workers International Vanguard League, 1st Floor, Community House, 41 Salt River rd, Salt River, 7925 ph 021 4476777 email workersinternational@gmail.com website http://www.workersinternational.org.za/             Gauteng: ph 0781297797 or 0834832038;               Free State ph 0761866147; Eastern Cape ph 0734751732;                                   Western Cape: ph 0822020617; Mpumalanga ph 0766462481 Kzn: ph 0763657361