TESSA DOOMS | Patriotic capital is a necessary step towards national economic dialogue

Last week, a warrant of arrest was issued by German authorities for infamous South African businessman Markus Jooste. Although Jooste is one of Africa’s wealthiest individuals, his name first became nationally recognisable in 2017 when in a shock move, he resigned as managing director of Steinhoff, a retail multinational investment company based in SA.

Jooste’s resignation came after Steinhoff was investigated for “accounting irregularities”, a euphemistic term for allegations of widespread fraudulent and fictitious transactions through the company for many years. Much like Wall Street trader and perpetrator of the world’s largest ponzi scheme, Bernie Madoff, became the face of the 2008 economic crash, Jooste has become the face of what I call predatory capitalism in SA.

A man at the helm of a company that makes its money in retail, with major shares in companies like Pep Stores, Ackermans, Shoe City and Paxi Parcel, is accused of taking that money to make more money through dubious trades.

Having a monopolistic share of a South African retail market was not enough, they wanted more. Never satisfied with what it has, predatory capital seeks to extract as much as possible even if the cost is the financial credibility, economic stability or political stability of an entire country.

Jooste may be the face of such behaviour in contemporary SA but these practices are neither new or limited to him. The post-1994 economy has been defined by oligopolies. Entire economic sectors dominated by three or four big corporations, contributing to the concentration of capital and high barriers to entry for a broad-based of small and medium businesses.

From retail and mining to financial services and construction, oligopolies undoubtedly contribute to entrenching inequalities in the most unequal country in the world. This has enabled collusion in things as basic as the price of bread.

Perhaps one of the most insidious forms of predatory capital in SA is the way corporations selling what ordinarily would be considered public goods like basic education, healthcare, security and fire services, have flourished as the government’s delivery of basic services collapses.

While those companies can hardly be blamed for the government’s failures, it should make us increasingly uneasy when multibillion-rand industries that are able to only service a small market who can afford to pay competitively for these services, thrive. In this case government failures come at a cost to millions of poor people, at the expense of a fragile middle-class and to the benefit of a small wealthy elite.

Predatory capital has always been able to exploit weaknesses in governance for its benefit. Predatory capital finds its roots in unpatriotic capital when businesses have little or no regard for the impact of profit-making endeavours on the countries they do business with or in.

Some have argued that a call to more patriotic capital is the fastest path away from business models and practices that harm societies. This would require businesses, both local and multinational such as multilateral lenders like the IMF and World Bank to show an earnest weighing up of their impact on the national developmental agenda of a country with their private interests as companies.

This requires a change of ethics and regulations in the public and private sectors. That in the vein of the medical profession’s hypocritic oath they should at minimum commit to “do no harm” to the national interests of a country. This further needs strong governments with representative and moral legitimacy to set the principles and enforce laws that ensure greater economic participation.

For too long we have framed economic inclusion as making space for disenfranchised people into the mainstream of the existing economic systems without adequately and critically evaluating the effectiveness and ethics of these systems.

This has the danger of simply producing shareholders, entrepreneurs and professional managers who may be from marginalised groups but are socialised into forms of economic endeavour that centres individual interest at the expense societal impact.

At best this may amount to economic redress but in no way signals economic reforms that promote national development and substantive economic inclusion. At worst it only changes the hue of those perpetrating predatory and unpatriotic capitalism.

Patriotic capital may be an insufficient condition for a more just, equal and developmental South African economy, but it certainly is a necessary step toward a national economic dialogue centred on radical solidarity.

A solidarity that recognises that if the nation is to succeed it will require all interlocutors and role players to act in national before individual interests.

The government must lead this from the front. Outcomes for our national interests must determine the ethos for local economic development, the terms of deal-making for Foreign Direct Investment and find expression in regulatory policies. If we insist as a country on playing the game, “Capitalism, Capitalism”, then SA as a whole must have the capability to win the game or the courage to change the game.