It's time to start thinking the unthinkable. Could we be witnessing the beginning of the end of South Africa as we know it? Certainly as we've known it these past 18 years.

The ANC-SACP-Cosatu Alliance that has been at the helm since 1994 has become an arena for behind-the-scenes manoeuvring by the SACP, hungry for radical change in the direction of economic policy. For decades SACP and ANC leaders have been locked in a complex relationship the details of which remain hidden. In a recent article (see here) Paul Trewhela asked an embarrassing question: why has the SACP been hiding behind the skirts of the ANC for these many years? Why doesn't it come out into the daylight and campaign like a normal political party?

Especially now that the two junior partners in the  governing alliance see the disarray in the ANC as an opportunity to move from being bit players to being "king makers". Together with the virulently anti-Mbeki faction and the wild men of the ANC Youth League they could throw their weight behind Jacob Zuma and virtually assure him that in May he'll be elected South Africa's next president.

However there could be a price for that. The SACP (and Cosatu?) wants to exercise more influence, right at the centre of government, over the post-election direction of economic policy.

The SACP believes a lot went awry during nearly two decades of ANC rule. According to a September 10 2008 Discussion Paper drafted by the SACP's leadership (see here) its main gripe - in communist-speak - is that the ANC allowed the post-1994 democratic state to be progressively hegemonised by the bourgeoisie and to be used as a tool of "monopoly capitalism". In addition the SACP faults ANC governments for "compromising the coherence of the post-1994 democratic state" by creating a dysfunctional interface between the three spheres of government: national, provincial and local, exacerbated by interdepartmental rivalries at the national level.

According to the SACP bourgeois domination was facilitated by:

--- The regrouping of "monopoly capital" which resulted in a period of capitalist stabilisation and renewed "accumulation", rather than to substantive transformation;

--- The cultivation of a new "comprador stratum" within the Movement and the state;

--- The relative demobilisation of the ANC and the marginalisation of the SACP and Cosatu;

--- The forging of an alliance between "monopoly capital" and an "emergent fraction" of capital linked to elements of the ANC/state leadership - presumably a reference to Black Empowerment - that facilitated the emergence  of a small group of Black "fat cats" who have enriched themselves, who  relish the perks of office like their White counterparts and are equally indifferent to the needs of the working class;

--- The replacement of the 1994 Reconstruction and Development Program (RDP), supported by the Alliance, by the Growth, Employment and Redistribution Program (GEAR) in 1996. An integrative transformational national program was thus replaced by a program of discrete projects favoured by "external players". 

--- This left a gap at the centre of government in terms of strategic planning that was filled by the Treasury. Strategic planning was subordinated to financial management and the pursuit of macro targets. As a result "effective strategic coherence was displaced by a string of unintegrated and non-strategic mega-projects, such as Coega, Gautrain, and the Pebble Bed Molecular Reactor which dominate budget allocations".

--- Many of them also became "corporate/comprador enclaves for private accumulation". Attempts to introduce some degree of integrative coherence via clusters failed due to the absence of a Ministerial hierarchy and prolonged deadlocks. Coherence was also compromised by dysfunctionalities between national, provincial, and local authorities with the state becoming less an implementer and more a tender processor.

These missteps, the SACP asserts, prevented the building of "working class hegemony". Therefore it sees an urgent need to make sure the next Alliance government establishes a "strategic centre with the capacity to plan, monitor, and coordinate public resources and therefore to discipline capital. For example an Alliance political centre might resolve on driving the strategic priority of job creation. But if the state is incoherent, locked up in bureaucratic routineism, and captured and fragmented by the cherry-picking interests of compradorist factions within our Movement working with monopoly capitalism, then there is little prospect of driving through transformation."

Bottom line: The SACP sees an opportunity to push the next ANC government into diminishing the role of private enterprise and market-based allocation of resources and transferring control over a significant share of economic decision-making from the private sector to government. Its Discussion Paper reminds SACP members that they "... have a special responsibility of maintaining strategic focus on our medium-term vision-- BUILDING WORKING CLASS HEGEMONY IN ALL KEY SITES OF POWER...AND NOT LEAST IN THE STATE".

The radical transformation of South Africa proposed by the SACP shows that its leaders are totally out of touch with reality and haven't heard of the Law of Unintended Consequences. They will not acknowledge that  considerable improvements in average living standards achieved since 1994 were only possible because investors, local and foreign, were confident that the free market/ private enterprise model would be seen by ANC-led governments as essential for GDP growth, job creation, achieving a better life for the majority of South Africans and a fairer society.

No one would claim that in South Africa the private enterprise market-oriented system is perfect. Far from it. Outcomes are not always fair; it is sometimes manipulated to enrich the few at the expense of the many; and competition between suppliers that should protect consumers from exploitation is often ineffective. There's no doubt government regulation is frequently needed to ensure the rules of the game are observed and the public interest protected. Nor is the private sector necessarily the best provider of essential services; where that dividing line is drawn differs from country to country.

Private enterprise (or capitalism if you prefer) is a system that requires continuous reform. But why throw the baby out with the bath water?

There is a reason why today there is acceptance world wide that the mixed economy - part private, part public - is the model most likely to deliver what people want in the most cost-efficient way. The debate is mainly about where the dividing line should be. Should it be shifted a little this way or that? Will consumers benefit if this industry or that one is more or less closely regulated?

Investor confidence in South Africa is a fragile plant. Investors the world over, whether individuals or institutions, take on risk - the future is everywhere and always uncertain. The only reason they are prepared to do so is the prospect of a commensurate risk-adjusted reward. The higher the risk the greater needs to be the expected return. Sometimes they win; sometimes they lose. The more predictable, the more stable and the more investor-friendly the political, social and economic environment, the more likely investors will choose South Africa rather than elsewhere.

Make no mistake about it. It is investment that drives a nation's economic growth, creates jobs, enhances productivity, enables higher wages to be paid, boosts corporate earnings and generates the tax revenues needed to finance the provision of essential public services.

Another fact of economic life the comrades should ponder is that governments, whether of the Left or Right, are run by politicians and administered by bureaucrats. For the most part few are equipped by temperament, training or experience to be innovators and risk-takers or manage corporations.

The comrades should ask themselves a simple question: Why has Communist China since the demise of Mao been moving rapidly away from state ownership and central planning towards private ownership; encouraging entrepreneurs; welcoming foreign investment by the world's major corporations; and towards the allocation of financial resources via active capital markets? The result: more than a decade of rapid economic growth, job creation and rising living standards that's the envy of the world.

Replacing private enterprise and free markets by central planning would not only not create more jobs or working class prosperity, let alone working class hegemony. It would frighten off investors, lead to an even bigger exodus of skills and talent from South Africa and destroy any hope of a better life for those whose cause the SACP claims to be fighting.

George Palmer is a former Editor of the Financial Mail

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