Naomi Klein in her master piece the Shock Doctrine refers:

In January 1990, Nelson Mandela, while in prison wrote a note to some of his supporters who gathered outside regarding a question as to whether he had become weak and tired after being locked up for twenty seven years in his long battle for economic transformation of the South African Apartheid state?

His answer was simple: "The nationalization of the mines, banks and monopoly industries is the policy of the ANC, and the change or modification of our views in this regard is inconceivable. Black economic empowerment is a goal we fully support and encourage, but in our situation state control of certain sectors of the economy is unavoidable”.

That belief had formed the core doctrine of the ANC and was enshrined in a document known as The Freedom Charter.

"The national wealth of our country, the heritage of South Africans, shall be restored to the people; the mineral wealth beneath the soil; the banks and monopoly industries shall be transferred to the ownership of the people as a whole; all other industries and trade shall be controlled to assist the well-being of the people," the charter states.

What the ANC wanted for the citizens of South Africa was a share in the wealth of a minority who had amassed enormous sums in the richest country in Africa, containing, among other treasures, the largest goldfield in the world. The first defiant demand of the Freedom Charter reads: "The People Shall Govern!"  (Naomi Klein; The Shock Doctrine).

Jean-Cristophe Rufin says: “The liberal democracies which present themselves as separate, distinct and rival nations, in reality form a highly integrated system, a space in which the ideas, information, products and men circulate and enter into mutual dependence. We do not consider the democracies separately: the history of each one holds no interest, but the destiny of the civilization they form all together does”.

The fact that the world capital markets are forty times larger than real trade is indicative of the source of power in our society. Thabo Mbeki, for all his vices and virtues, does not control the money, and while appointing Tito Mboweni as Governor of the Reserve Bank, he did not have the power to choose him. The private owners of the South African Reserve Bank did.

What concerns us is power, the power to, amongst other things; allow a country’s leaders to realize their vision of peace and prosperity. The dismal failure that characterizes each and every politicians tenure in office demonstrates either, utter incompetency, or an inability to do anything constructive, or both.

While we recognize the intelligence and competence of Thabo Mbeki, we also realize that he played a losing game. Taking the reins of political power from Nelson Mandela in 1998, Thabo Mbeki, educated in economics at Sussex University, knew the dangerous territory he was navigating. He came to power during a period in the development of capitalism called ‘neo-liberalism’, or ‘globalization’.

The neo-liberal agenda has as its goal ‘small-government’; the state ‘open for business’; privatization and loose capital controls. Neo-liberal globalization was unfortunately threatened by the policies outlined in the ANC Freedom Charter and had to be revised before things could move ahead.

State ownership of the means of production, of minerals and strategic commodities would not only result in the denial of ownership to international investors but also the denial of the ability of international cartels to fix prices on key commodities.

If the diamonds of South Africa, Namibia and Botswana were owned by the government, then what would stop their overproduction and the collapse of the diamond price?

OPEC, while ostensibly keen on managing oil prices in their favor, have an abysmal historical track record, with oil prices on a historic downtrend and the absence Middle Eastern conflict - as was evident with the 1973, 1979, and 2003 conflict. Low oil prices it must be remembered mean low profit margins for OPEC and the dominant energy companies. The same is true with diamonds and De Beers.

Gold is another story altogether, and it is here that we find the key to South Africa’s dilemma. Who owns the gold fields? Who owned them under Apartheid and who owns them now? And how much more important are they now that the world looks to hard assets to protect themselves from the volatile stocks and futures markets.

Gold is the key to understanding the failure of democracy. It is not that South Africa failed democracy - Thabo Mbeki was after all a capitalist’s best friend - but rather democracy that failed South Africa.

We reject the separation of politics and economics, because this separation is what veils the workings of power today.

The transfer of ownership of wealth and land is at the heart of a transfer of power. The state, while claiming to represent the needs and interests of the masses, has failed to take ownership of and redistribute these strategic commodities, without which it is doubtful whether the levels of education and health envisioned by each incumbent could be achieved. As such it has to be taken into account.

On the other hand, no democratic state is designed to realize the welfare of its citizens, defined by the so-called national interest; instead it takes into account, and realizes the interests of the dominant capital groups at the heart of the political-economy.

This is where democracy has been a tremendous success, and if we take the current stock market as a yardstick, then this political system has a small group of winners, and many losers.

Thabo Mbeki embraced neo-liberalism without a whiff of shame. Indeed, in 1996 he told a group of businessmen in London, “Just call me a Thatcherite”. Thatcher and Reagan are famous for breaking with the welfare-state and instituting neo-liberal reforms on a large scale within their respective countries. General Pinochet did the same.

Leaving the ownership of the gold fields in the same hands of those who held them during Apartheid, Mbeki sought to realize his dream of a prosperous South Africa by creating favorable conditions for international investors, this included taking on the Apartheid regime debt load so as to appease the IMF and World Bank, without which loans could not be secured, such as the $46 million loan in 1997 for industrial competitiveness and job creation.

Nationalizing the mineral wealth would cause the ANC government to be labeled ‘leftist’, anti-business, and South Africa as being an unstable investment destination.

Capital flight would have ensued and this country could have descended into a similar situation as Zimbabwe is in today - the result of anti-capital political decisions.

There is reliable evidence that the state of the nation is worse for most people today than it was during Apartheid. One must remember that the Apartheid regime was democratic - exclusive but democratic. By comparison, today we have an inclusive political culture yet the poor are poorer and the rich are richer.

Democracy has not remotely achieved the fiscal objectives outlined in the Freedom Charter.

In the early 1990’s talks emerged between the ANC and the then National Party. To its credit, the ANC did negotiate a peaceful handover but did not manage to prevent South Africa's apartheid-era rulers from wreaking havoc on their way out. The negotiations focused on two aspects:  one was political, the other economic. The attention, naturally, focused on the high-profile political summits between Nelson Mandela and F. W. de Klerk, leader of the National Party. (Naomi Klein; The Shock Doctrine)

The infamous economy focused meetings between the old ANC elite and the corporate establishment prior to 1994, and after, are testimony to the real source of power. Here the interests of big business was negotiated - most notoriously those of the Oppenheimers.

The outcome of these meetings were that the ANC could have the political power but the gold and diamonds would remain in the hands of the individuals that controlled it before.

One of the most revealing aspects of the economic transition was the ownership of the Reserve Bank of South Africa. Arguably the most powerful institution in the country, its fate was explained by Durban businessman Vishnu Padaychee; asked to draft a document for the negotiating team on the on the pro’s and con’s of having an autonomous central bank, run with total autonomy from the elected government. Padayachee could not believe what he was hearing. He and his team drafted and submitted the document with a clear policy of not allowing the Reserve Bank to be autonomous.

He was later told by the negotiating team that, “We had to give that one up”.

On the South African Reserve Bank website, we find a document titled: ‘Introduction to the Reserve Bank’: “Since its establishment, the bank has always been privately owned and today has some 650 shareholders. After allowing for certain provisions, payment of company tax on profits, transfers to reserves and dividend payments of not more than 10 cents per share to shareholders, the surplus of the bank's earnings is paid to the Government. The bank's operations are therefore not driven by a profit motive, but by serving the best interests of all the people in South Africa.”

Not only would the Reserve Bank be run as an autonomous entity within the South African state, with its independence enshrined in the SA constitution, but it would be headed by the same man who ran it under apartheid, Chris Stals. Another Apartheid era figure, finance minister Derek Keyes, also retained his position in the new administration. The New York Times praised Keyes as “the country’s ranking apostle of low-spending business-friendly government”.

Padayachee lamented that with the loss of the Reserve Bank, “everything would be lost in terms of economic transformation”. One of the Freedom Charter pledges is the redistribution of land; this became highly constrained with a new clause in the constitution which protected all private property. Job creation was constrained by the signing on to General Agreement on Trade and Tariffs, precursor to the World Trade Organization, which made the subsidization of auto plant and textile factories illegal. Free Aids drugs violated the intellectual property rights commitment under the WTO. Money which could potentially be used to rebuild schools, medical facilities and build houses was diverted to repay Apartheid Era debt. Even services like water and electricity, have been privatized and now results in cut-offs as the poor cannot afford the cost.

To impose currency controls to guard against speculation and value fluctuations would violate the conditions attached to an $850 million IMF deal signed just before the ’1994 elections. This IMF deal also includes “wage restraint” in order to allow for a “flexible labour pool”.

Human rights activist Yasmin Sooka noted that the ANC rules in name, saying about the ANC; “you can have political power, you can have the facade of governing, but the real governance will take place somewhere else”.  The new government, to use Naomi Klein’s metaphor, was given the keys to the house, but not the combination to the safe.

William Gumede, author of the expose “Thabo Mbeki and the battle for the soul of the ANC”, said that the reason why the grassroots populace allowed these developments to take place was that “everyone was watching the political negotiations, and if people felt it wasn’t going well there would be mass protest. But when the economic negotiators would report back, people thought it was technical; no one was interested. We missed it! We missed the whole story”.

He explained that South Africa appeared to be on the brink of a civil war during this time and that all the focus was on the unfolding political situation and that most people naively assumed that no matter what compromises had to be made to get into power, they could be unmade once the ANC was firmly in charge. “We were going to be the government-we could fix it later”, he said.

The ANC initially tried to fulfil its pledges, it did build more than 100 000 homes in the first two years and millions were hooked up with electricity and water. But after 10 years of democracy, under neo-liberal duress and bankruptcy, privatization of government services ensued, resulting in millions of people cut off from newly connected water and electricity because they could not pay.

According to a June 2003 edition of the Sunday Independent, up to 40% of the new phone lines were no longer in service by 2003. According to a 2006 study, life expectancy in South Africa had dropped by 13 years.

As stated earlier, under the leadership of Mbeki, the ANC pursued a policy of attracting Foreign Direct Investment into the country, which would create new wealth, the benefits of which would trickle down to the poor, as the saying goes. The ANC had to make sure that the country was attractive to foreign investors. This proved difficult as the state had to first be subjected to the “electronic herd” of global capital.

Following the release of Nelson Mandela, the SA stock market collapsed, and the Rand dropped by 10%. A few weeks later, De Beers moved its headquarters to Switzerland. This “electronic herd” was a call-and-response shock dialogue between the ANC leadership and the financial markets. When an ANC official dared to utter something which hinted at the Freedom Charter becoming policy, the market responded with a shock, sending the Rand into free fall. Gumede writes in his book that shortly after his release from prison, Mandela spoke out in favour of nationalization at a private lunch with leading businessmen the “All-Gold index plunged 5%”.

This reality was acknowledged by Mandela in the ANC national conference in 1997 when he said that “the very mobility of capital and the globalization of capital and other markets, make it impossible for countries, for instance, to decide national economic policy without regard to the likely response of these markets”.

Thabo Mbeki understood this game and from the early days gave assurances to the corporate elite as to ANC policy. Gumede writes that shortly before the 1994 elections, the ANC submitted their economic program to Oppenheimer for approval and made several key revisions to address his concerns, as well as those of other top industrialists”.

In 1996 Mbeki unveiled his new economic plan for the country, it called for more privatization, cutbacks to government spending, labour ‘flexibility’, freer trade and looser controls on money flows. According to economist Stephen Gelb, who helped draft the plan, its overriding aim “was to signal to potential investors the government’s commitment to the prevailing (neo-liberal) orthodoxy”.

In the first years of democracy, the South African government serviced the Apartheid Era debt to the tune of $4.5 billion annually. Gumede notes that between 1997 and 2004 the government sold off 8 state-owned farms to raise just under $4 billion and that half that money went to servicing the inherited debt. He writes that not only did the ANC renege on “the nationalization of mines, banks and monopoly industry” but they actually sold off state assets to pay the debt of the previous regime.

This county has seen an influx of FDI and is relatively competitive, yet this has not resulted in the masses of poor being lifted out of the squalor in which they live. According to South African government statistics, the poorest 50% of South African’s have seen their income drop by 20%.

Since 1994, the year the ANC took power, the number of people living on less than $1 a day has doubled, from 2 million to 4 million in 2006.

Between 1991 and 2002, the unemployment rate for black South Africans more than doubled, from 23 percent to 48 percent.

The ANC government has built 1.8 million homes, but in the meantime 2 million people have lost their homes.

Close to 1 million people have been evicted from farms in the first decade of democracy.

Such evictions have meant that the number of shack dwellers has grown by 50 percent. In 2006, more than one in four South Africans lived in shacks located in informal shantytowns, many without running water or electricity.

Democracy by its very nature, if implemented successfully will result in nothing other than what we have in South Africa today where there are a handful of incredibly wealthy winners and the rest losers.

It is exactly what a neo-liberal democracy aims to achieve.

This is the failure of democracy, or as I prefer to call it the success of democracy, depending on whether one is at the very top, or in the swamps below. 

It is not South Africa that has failed Democracy but Democracy that has failed South Africa.