{"id":492,"date":"2019-09-03T09:49:05","date_gmt":"2019-09-03T07:49:05","guid":{"rendered":"http:\/\/marxistworkersparty.org.za\/?page_id=492"},"modified":"2019-09-03T10:05:04","modified_gmt":"2019-09-03T08:05:04","slug":"chapter-three","status":"publish","type":"page","link":"https:\/\/marxistworkersparty.net\/?page_id=492","title":{"rendered":"Chapter Three"},"content":{"rendered":"\n

The Ec<\/strong>onomy<\/h2>\n\n\n\n

The significant manufacturing\nbase of the Zimbabwean economy appears to be in contradiction with the general\nstagnation and lack of development in \u2018third world\u2019 countries. At the time of\nindependence because of this base, there were great hopes among the bourgeois\nthat capitalism in Zimbabwe could show the way forward to the crisis-ridden and\nimpoverished states to the north.<\/p>\n\n\n\n

The relative development of the\neconomy, however, cannot be seen independently from the South African economy\nwhich dominates the whole region.<\/p>\n\n\n\n

The development of the\nmanufacturing sector took place most rapidly during the war for independence,\nin reaction to international sanctions. But the consequence was that the\neconomy became dominated by the South African monopolies. This advanced\nintegration into the South African economy has meant that the Zimbabwean economy\ngenerally follows the lead set by the dominant partner.<\/p>\n\n\n\n

Recently, this has appeared to be\ncontradicted by the movement of the economy in a direction opposite to that in\nSouth Africa. While the South African economy has been in the midst of a sharp\ndownward phase, in Zimbabwe there has been a burst of economic activity. This\nhas given rise to renewed optimism about the prospects for ‘independent’\ndevelopment in Zimbabwe\u2014yet in reality this trend will be overtaken by the\nfundamental tendencies of capitalism in crisis<\/p>\n\n\n\n

The upturn in Zimbabwe was partly\ndue to the effects of a devaluation of the Zimbabwean dollar, which has\nresulted in better earnings (in local currency) for the same volume of mining\nexports. But mostly it has been because of a good rainy season with a sharp\nincrease in peasant production. <\/p>\n\n\n\n

In Zimbabwe agriculture still\nmakes the greatest contribution to the national economy and to exports. Despite\nthe development of mining and manufacturing, tobacco is still the main single\nforeign exchange earner. In such a relatively underdeveloped economy, small\neconomic changes, such as good rains or a new investment project, can have\nquite an important effect.<\/p>\n\n\n\n

In 1985\/6 the peasants delivered\na record 900,000 tonnes of maize to the Grain Marketing Board\u2014which is an\nincrease 10 times greater than the best record prior to independence. Overall\nthe l985\/86 crop delivered to the GMB is 1,8m tonnes, 80% higher than the poor\nfigures of the previous year, a year of drought.<\/p>\n\n\n\n

The fact that Zimbabwe is one of\nthe few countries of Africa which are able to feed their own population, and\nthe rapid increase in peasant production, is causing western journalists to\nbubble over with excitement at this capitalist miracle which is a \u2018model for\nAfrica\u2019.<\/p>\n\n\n\n

The dramatic increase in peasant\nproduction has come after years of droughts during which production has been\nvery low. The good crops have been the result of large-scale state\nintervention\u2014the very policies which the IMF have brought to a halt in Africa\nin the drive to cut budget deficits.<\/p>\n\n\n\n

The government provided the\npeasants with fertiliser seeds, and the possibility of plugging into a state\nploughing scheme. Most importantly loans to peasants have been made by the\nstare Agricultural Development Bank (some Z$40m over the last season). The\nstate Grain Marketing Board has expanded its depots into most peasant regions,\nthus eliminating the \u2018middle men\u2019 and ensuring a predictable income from the\nsale of grain in a reasonable time.<\/p>\n\n\n\n

All this is an argument for more\nstate intervention, not for less!<\/p>\n\n\n\n

The crucial factor, however, has\nbeen the fact that unlike most of black-governed Africa, Zimbabwe has a\nmanufacturing industry capable of turning out stylish clothes, radios and\nbatteries, bicycles, and most importantly, agricultural implements, seeds, and\nfertilisers. The availability of these goods locally (without eating into\nforeign exchange) is a tremendous incentive to the peasantry to expand\nproduction for the market.<\/p>\n\n\n\n

Thus the upturn in the peasant\nareas in Zimbabwe results from: organised state support for peasants, and the\npossibility of peasants buying consumer goods with their earnings from the sale\nof their products.<\/p>\n\n\n\n

In the same way, the prospects\nfor continued agricultural growth are entirely bound up with the prospects for\nthe development of industry. Yet it is here, on a capitalist basis, that the\nprospects are most limited.<\/p>\n\n\n\n

The capitalists themselves\nacknowledge that Zimbabwe is undergoing only a ‘moderate upturn’ and that\nmanufacturing\u2014the key sector for development\u2014is dragging behind agriculture.\nThe transport equipment industry, for example, has not seen an increase in\nproduction at all!<\/p>\n\n\n\n

Despite the general upturn in the\neconomy there is, according to the Minister of Industry, Callistus Ndlovu, a\ncrisis in manufacturing. This is not only caused by a lack of confidence in the\nfuture by the capitalists. Although by African standards Zimbabwe is relatively\nprosperous, there is a very limited market by world standards, and no good\nprospects for exports.<\/p>\n\n\n\n

It is this, fundamentally, which\nlimits the prospects for local or foreign capitalist investment in Zimbabwe. Even\nwhere decisions have been made to invest, the capitalists face the problem of a\nshortage of foreign exchange to pay for the imported machinery and raw materials\nneeded for production.<\/p>\n\n\n\n

Even at the beginning of the\nupturn, the more intelligent bourgeois commentators admitted that the boom\ncould not last because of the shortage of foreign exchange. This shortage will\ninevitably lead to the recovery faltering, and will result in shortages both of\nintermediary and consumer goods.<\/p>\n\n\n\n

<\/div>\n\n\n\n

The problem of foreign exchange<\/strong><\/p>\n\n\n\n

The main cause of the cuts in\nforeign exchange allocations so vital to ensuring continued growth is the\ngrowing burden of foreign debt. With the stagnation and decline in world\ncommodity prices, Zimbabwean exports have not been able to earn sufficient\nforeign exchange to pay off these debts.<\/p>\n\n\n\n

Since independence, a surprising\nZ$580m has been spent in repaying existing foreign debt. To meet the demands of\nthe foreign bankers the government has been forced to cut essential spending of\nforeign exchange on machinery and raw materials.<\/p>\n\n\n\n

The Mugabe government strategy is\nto gamble everything on attracting foreign investment. After imposing a ban on\nprofits and dividends leaving the country, a relaxation was announced, apparently\nat the insistence of the IMF. The government now hopes that, having won the\nfavour of the IMF, it can ask for further loans to finance the outflow of\ncapital in the form or profits and dividends!<\/p>\n\n\n\n

Wriggling in the grip of finance\ncapital, the government is hoping that its demonstration of \u2018good faith\u2019 in\nallowing the export of profits will encourage a big inflow of foreign\ninvestment.<\/p>\n\n\n\n

As a RAL economic review pointed\nout: “if the current economic upswing is not to be aborted \u2026 the active\nrather than the passive encouragement of foreign investment now seems to be\nabout the only viable solution”. This would ease the foreign exchange\nproblem, as investment would be made in ‘hard’ currencies. Both the government\nand its capitalist advisors are grasping at a straw!<\/p>\n\n\n\n

There has been no significant\nforeign investment since independence and there is no reason why the capitalists\nshould start investing now.<\/p>\n\n\n\n

Although in 1984 there was the first\nbalance of payments surplus since 1979, this ‘surplus’ has been built up on\ndevaluation, the temporary increase in raw materials exports (particularly to\nthe US), and ‘creative budgeting’. According to one bourgeois economist the\ncurrent account balance is “very much the same as it was at the end of\n1983 when a deficit of $450 million was incurred”. (Herald<\/em>, 28 March 1985)<\/p>\n\n\n\n

The shortage of foreign exchange,\nmore than any other factor, is marking the limits to the development of\nmanufacturing \u2014 the cutting edge of change from an undeveloped to a developed\neconomy.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Prospects for the economy<\/strong><\/p>\n\n\n\n

A recent article in the Financial Times<\/em> (21 August 1985) exposes\nsome of the reasons for the doubts of the capitalists about the economic future\nof the country. Bourgeois commentators are worried by the vulnerability or the\nZimbabwean economy both in relation to South Africa and in its long-term\nprospects generally.<\/p>\n\n\n\n

The possibility of\ncounter-sanctions by a desperate South Africa with its back to the wall is raised\nas a question mark over Zimbabwe\u2019s future economic prospects. Undeniably there\nmust be some thinking on these lines by the Botha regime. But what has held\nback the showdown at present is a recognition of mutual economic dependence. As\nwell as the trade between them, South Africa has enormous investment in\nZimbabwe, while Zimbabwe desperately needs secure trade routes through South\nAfrica to world markets.<\/p>\n\n\n\n

This recognition has led to a\nbrittle but diplomatically ‘correct’ relationship between the two governments,\nalthough the growing Zimbabwean military intervention in Mozambique to secure\nthe transport route to Beira against MNR attack shows Mugabe\u2019s desperation in\ntrying to break free from the southern stranglehold.<\/p>\n\n\n\n

All hopes in an alternative to\neconomic links with South Africa through SADCC and the Preferential Trade\nAgreement or Southern and Eastern Africa are, however, illusory. The economies\nof Botswana, Mozambique, Zambia, Malawi, etc are either insignificant, or devastated\nby war and low world commodity prices, and provide no realistic alternative\nmarket.<\/p>\n\n\n\n

Mutual cooperation between them\nis also constantly threatened by trade barriers and a lack of foreign currency.\nThe crash of the rand has, paradoxically, strengthened South Africa’s grip over\nthe region, as its exports are now much cheaper.<\/p>\n\n\n\n

A country whose economy is so\ndependent and dwarfed by South Africa can hardly hope to grow steadily when the\neconomic giant of Africa is a sick neighbour. Already key markets for\nZimbabwean manufactured exports (which are encouraged by the Preferential Trade\nAgreement between Zimbabwe and South Africa) are being cut off by tariff\nbarriers and by the higher value of the Zimbabwean dollar in comparison with\nthe rand. This fall off in exports is not being compensated by significant opportunities\non the world market, as the major capitalist powers are either experiencing economic\ndecline or slow growth.<\/p>\n\n\n\n

The fundamental weakness of\ncapitalism in Zimbabwe in developing the economy is ironically shown during the\npresent upturn. The basis of this upturn has been the sharp rise in agriculture,\neven though manufacturing responded by an increase of production of 11%. But\nkey sectors of manufacturing such as metals and transport equipment have gone\nagainst this upward trend and declined<\/strong>\nin 1985.<\/p>\n\n\n\n

As significantly, the crisis in\nworld commodity prices is now paralysing the mining industry. The volume of output\nhas declined since 1980. World metal prices have fallen by 13% in 1985 and\nprofits have only been maintained by a corresponding 18% depreciation in the value\nof the Zimbabwean dollar.<\/p>\n\n\n\n

Almost all expansion has been the\nresult of using spare capacity\u2014even though the bourgeois economists realise\nthat investment-led growth is the “only means of achieving real economic\ngrowth in the long-term”. (RAL, Sunday\nMail<\/em>, 29 September 1985)<\/p>\n\n\n\n

A recent survey showed that over\n60% of businesses were making no plans for investment\u2014”an extraordinarily\nbleak picture” according to the University of Zimbabwe’s Department of Business\nStudies. Overall investment from 1983 to July 1985 was little more than the entire\ninvestment made in 1981! (Africa Now<\/em>,\nSeptember 1985) By refusing to invest, the capitalists are making sure the\nupturn will not last.<\/p>\n\n\n\n

Capitalism has been unable to\nprovide more jobs and higher incomes for the people as is shown in startling\nfigures on the lack of jobs, low incomes, etc, both before and after\nindependence.<\/p>\n\n\n\n

Since the mid-1970s mare than\n100,000 jobs have been lost in agriculture (mostly after independence), 10,000\nin mining, 4,000 in furniture, 10,000 in clothing, and another 10,000 in\nengineering. (Herald<\/em>, 2 April 1485)\nOnly a thin layer of educated people have been to able gain the privileges of\ncivil service employment, mainly by taking over the jobs of departing whites, rather\nthan in new jobs.<\/p>\n\n\n\n

Over the past decade per capita\nincomes have not increased at all: in 1985 they were little different from when\nSmith declared unilateral independence 20 years ago, or when independence was\nconceded in 1979! Despite the enormous political struggles and achievements,\nthe dead hand of capitalism has held back material progress for the mass of the\npeople. The bourgeois economists blame black families for having too many\nchildren, rather than pointing to the declining number of jobs.<\/p>\n\n\n\n

Even if the most optimistic\nforecasts are accepted (and these are actually quite unrealistic), the masses\nwould have to wait until the 1990s to get their living standards back to those\nof the historic peak of 1974. (Financial\nTimes<\/em>, London, 21 August 1985)<\/p>\n\n\n\n

These limits of capitalism which\nare so clear on the general economic field are showing their effects in\npolitical decisions. The July 1985 budget showed that the state, even in times of upturn<\/strong>, is being\nforced to cut back on the advances made after independence. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Cuts<\/strong><\/p>\n\n\n\n

Large real cuts in spending on\nagriculture, resettlement, construction, and housing have been made, with\nsmaller reductions in education and health. The investment in the public\nsector, the keystone of the government is approach to ‘gradually achieving socialism’,\ndropped in real terms by 3% in the 1985 budget!<\/p>\n\n\n\n

Despite these cuts there was a\nrecord budget deficit (excess of spending over income) of Z$808m, and up to 20%\nof the budget is now allocated to paying back debts and loans. Increasingly,\nsocial programs are having to be financed by loans from capitalists at home and\nabroad.<\/p>\n\n\n\n

To lessen state responsibility,\nlocal authorities are being given the task of financing new schools, and there\nhave been calls for reducing or eliminating so-called “non-essential’\nspending on such things as roads and community halls. All this means that the\ntown councils will be under enormous pressure to increase township rents,\nrates, and charges generally.<\/p>\n\n\n\n

As the politicians in the towns\ncome under fire from the workers and their families so they in turn will be\nbeating on the doors of the Ministers to get finance for local government to\nbail themselves out.<\/p>\n\n\n\n

The present upturn is unable to\nlast long. In the coming downturn, in will continue, and even increase.\nShortages of foreign exchange can reduce supplies of raw materials, spare\nparts, etc, thus creating shortages of locally-made consumer goods. These are\namong the factors which will in due course blunt the improvement in peasant\nincomes and the peasants’ desire to sell their products.<\/p>\n\n\n\n

With the United States economy\nslowing down and Europe set to follow, the prospects for continued growth in\nZimbabwe are not good. Even with a good rainy season in 1985-86, according to a\nrecent RAL report, growth is unlikely to be much above zero, and a new downturn\nin 1987 seems certain.<\/p>\n\n\n\n

The weak upturns of the diseased capitalist system provide no solution for the basic demands of the mass of either workers or peasants. To provide a decent life for all working people, the only way forward lies in the struggle to end capitalism\u2014to bring the big factories, banks, mines and farms into state-ownership, under democratic workers’ control and management. This would provide the basis on which peasants could obtain adequate land and the inputs needed to develop it.<\/p>\n\n\n\n

Continue to Chapter Four<\/a><\/h4>\n","protected":false},"excerpt":{"rendered":"

The Economy The significant manufacturing base of the Zimbabwean economy appears to be in contradiction with the general stagnation and lack of development in \u2018third […]<\/a><\/p>\n<\/div>","protected":false},"author":1,"featured_media":0,"parent":477,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-492","page","type-page","status-publish","hentry"],"aioseo_notices":[],"acf":[],"_hostinger_reach_plugin_has_subscription_block":false,"_hostinger_reach_plugin_is_elementor":false,"brizy_media":[],"_links":{"self":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/492","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=492"}],"version-history":[{"count":2,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/492\/revisions"}],"predecessor-version":[{"id":511,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/492\/revisions\/511"}],"up":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/477"}],"wp:attachment":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}