Ethical Leadership in Social Transformation: Debating the Notion of State Capture – by Joel Netshitenzhe

What is the ethical foundation of South Africa’s democratic society? In what way is this rooted in the struggle against apartheid colonialism? How do we define state capture; and what are the prospects for society and the ANC to re-assert ethical leadership?

By Joel Netshitenzhe, ANC NEC Member

South Africa is emerging from a period in which, to quote a resolution of the 54^th National Conference of the African National Congress (ANC), “state capture or simply corruption… undermined the integrity of our institutions, cost our economy hundreds of billions of Rands and contributed to the further impoverishment of our people”^[1].

It is therefore critical for us to reflect on issues pertaining to the ethical foundation of South African democracy, where we went wrong and how we can correct the weaknesses identified by the Conference.

Debating ethics

In the evolution of human society, there have been many attempts at setting out rational frameworks for human behaviour. In this regard, the works of various philosophers bear relevance. Immanuel Kant championed the Categorical Imperative, asserting that individuals should act as if they are defining a universal law; relate to other human beings as an end and not as a means; and, as rational beings, regard themselves in exercising “freedom of will” – whether in authority or not – as “giving laws” to the rest of society^[2].

Friedrich Hegel grappled with the matter of the subjective will and whether what it recognises as valid is necessarily good. Ultimately, he argued, the authority of ethical laws, not just what is ethically good, should be fundamental in determining the conduct of individuals. In this context, universality of ethics should be represented in the collective: made up of the family, civil society and the state.^[3]

There is much in the conceptualisations of Kant, Hegel and others that rhymes with the notion of ubuntu – ‘I am because we are’. Further, the more positive in virtually all religions across the globe also articulates a humane approach to ethics in particular and human relations in general. These representations of what is meant to be human and humane, constitute an attempt at managing social relations, and regulating impulses which otherwise would make us less human.

But Frederick Engels, at the graveside of Karl Marx, makes the important point that Marx’s greatest contribution was his assertion of the ”law of the development of human history: the simple fact…that the production of the immediate material means, and consequently the degree of economic development attained … during a given epoch, form the foundation upon which the state institutions, the legal conceptions, art, and even the ideas on religion, … have been evolved, and in the light of which they must, therefore, be explained, instead of vice versa.”^[4]

Engels however does acknowledge that the superstructure – including ethics, art and religion – do “also exercise their influence upon the course of the historical struggles and in many cases preponderate in determining their form.”^[5]

Ethical foundations of struggle

In this context, the ethical foundations of the South African struggle against apartheid colonialism should be sought in its core objective: that is, to resolve the social antagonisms created by this system in the form of national oppression, class super-exploitation and patriarchy.

The injunctions in the 1955 Freedom Charter that “no government can justly claim authority unless it is based on the will of all the people”, and in democratic South Africa’s constitution that the national democratic society should “improve the quality of life of all citizens and free the potential of each person”, aptly capture these ethical principles.

The wars of resistance against colonial incursions and the formation of the African National Congress (ANC) to fight modern manifestations of colonialism were, by definition, acts of transformative ethics. So were the responses to intensified oppression and repression, in the decades that followed, to raise the struggle to higher levels of militancy, across the four pillars of mass mobilisation, underground organisation, armed struggle and international mobilisation.

The ultimate in the ANC’s ethical response was to lead in the process of concretely defining the constitutional antithesis to the system of national oppression. Thus were developed the constitutional principles for a democratic South Africa towards the end of the 1980s and early 1990s. These principles, informed by the African Claims document^[6] and the Freedom Charter included not only political rights; but also, other generations of human rights such as social, economic, gender and environmental rights.

In other words, ethics cannot be separated from the framing vision of an equitable society and the struggle to attain it.

Ethics in social transformation

How should ethical leadership manifest in the era of political incumbency – when the liberation movement is the governing party?

Capable and ethical leadership should find expression in efforts to change people’s lives for the better. The broadening of access to basic services should be reinforced by an improving quality in these services.

Economic growth should be pursued not as an end in itself; but as a necessary – though insufficient – condition to improve people’s lives. Critical in this regard should be the role of the state as an instrument of redistribution, and the centrality of state-owned enterprises as a leverage to guide economic development. Ethical economics needs to proceed from the basic principle that the economy is meant to serve society and not the other way round. This should be reflected in measures to deal with inequality in terms of income, assets, opportunity, social capital and spatial dynamics.

The democratic state should be capable and developmental, reflected in practical efforts to meet societal needs and in a deliberate drive to improve its legitimacy in the eyes of society.

All these and other measures should have at their core the desire to improve the quality of life of all the people, especially the poor and the marginalised. In this regard, it is not a matter of political correctness to argue that everything we do should be infused by a gendered approach. The level of humanism and ethics in any society should be measured by the extent to which it addresses the challenges that affect the most vulnerable.

The place and role of the state

Why is the state such a crucial factor in the discourse on social transformation and ethics?

The state, in the words of Friedrich Engels, “is a product of society at a certain stage of development; it is the admission that this society has become entangled in an insoluble contradiction with itself, that it has split into irreconcilable antagonisms which it is powerless to dispel. But in order that these antagonisms, these classes with conflicting economic interests, might not consume themselves and society in fruitless struggle, it became necessary to have a power, seemingly standing above society, that would alleviate the conflict and keep it within the bounds of ‘order’; and this power, arisen out of society but placing itself above it, and alienating itself more and more from it, is the state”^[7]

Engels uses the phrase, “seemingly standing above society” deliberately; because the state is in fact an expression of class dynamics in society. It expresses rule by a class or classes that have attained power and control the means of production. In the South African situation, it can be argued that, because the predominant social system is capitalist, the capitalist class is by definition the ruling class. But the attainment of liberation, reflected in the transfer of power from the colonial ruling group to the multiclass formation that is the liberation movement, lends the post-colonial state the unique attribute of reflecting the coalition of classes and strata that constitute the liberation front: primarily, the black bourgeoisie, working class, peasantry and middle strata.

This coalition of liberation forces sets out to transform the inherited state to represent their interests. But these forces do have their own internal contradictions, as their interests – beyond the act of liberation – do not always coincide. In that sense, the state in post-colonial societies is a heavily contested terrain. It is the arena of endless wrestling, and it may oscillate from one extreme to another in terms of what liberation actually means.

One of the first tasks of the liberation movement as it ascends to political office is the transformation of the state to serve the objectives of thoroughgoing change. In this context, in the past fifteen years, the notion of a developmental state has started to feature prominently in South African policy discourse.

Notion of a developmental state

What is so alluring about the notion of a developmental state; and does its theorisation matter?

Some scholars have argued that all states are developmental: it is all about the path they choose to achieve their objectives, and the instruments they use to this end. In reality, though, the concept of a developmental state has been theorised post facto by economists and political economists to explain the riddles of growth and development trends of such magnitude and consistency, that countries have climbed from one rung of industrial and socio-economic development to another within one generation – qualitatively bridging the gap between themselves and the most developed countries.

The speed with which developmental states have built their economies and improved the social conditions of large populations, justifiably had to generate new categories in the science of social development. The practice of development had unearthed a new narrative regarding the relationship between the state, the citizen and the market.

A developmental state plays a leading role in directing economic development. In a society such as ours with deep social fissures, the state should have the strategic capacity not only to define the vision and course of social development but also, where necessary, to make the tough choices and ensure their implementation.

Of course, for the state to be able to intervene in this manner, it should enjoy popular legitimacy. Society should accept that the state genuinely represents the national interest. This cannot be decreed. Legitimacy and authority have to be earned. While many instances of developmental states may have had elements of authoritarianism in the early years, in South Africa there is consensus that the state we seek to create should be a democratic developmental state.

Further, the state’s visionary acumen and legitimacy have to be backed up by organisational and technical capacity.

The South African democratic movement inherited a state that it had to transform over time; at the same time as it used the same state to start implementing policies of change. Attached to this process was the danger of locking-in inherited bad habits, and tentativeness in reconfiguring the state to play a leadership role in directing economic development.

At another level, we still have to find the appropriate balance between embeddedness and autonomy – insulation and connectedness – which are critical attributes of developmental states. Because of the fault-lines of our history, the state bureaucracy has tended towards suspicion and insulation in its attitude towards the private sector, and vice versa. Further, the state and the liberation movement have not been able to inject strategic visioning within civil society, including the trade union movement. The ructions within working class organisations are in fact one of the greatest tragedies in the South African polity.

Roots of toxic conduct

Progress or otherwise in the transformation of the state and society at large is impacted upon by weaknesses that the ANC has characterised as ‘sins of incumbency’. How do liberation movements lose the sense of idealism that included a preparedness to pay the ultimate price? How insidious can sins of incumbency become?

A few of the factors deserve mention.

The first element relates to legacy. The colonial state maintains its rule and seeks to impose legitimacy among the oppressed through force and subterfuge. It therefore develops networks of patronage on a grand scale, in relation to its collaborators and whole sections of the population. It purchases the obsequiousness of its constituency through privilege and favouritism. Especially towards the end of its days, the apartheid state in South Africa had become deeply corrupt, including through sanctions-busting activities and the extra-judicial space it had accorded its security agencies. This broadly is what the liberation movement inherited; and in situations where transitions include the integration of old-order political and bureaucratic functionaries, the problem is multiplied many-fold.

The second and related element pertains to the manner in which power is exercised and public service is rendered. This in part has to do with legacy; but it is also a matter of individual attitudes. When systems to provide services are unjust and/or unwieldy, the population develops ingenuous ways to circumvent these; and the providers of the services themselves tend to seek underhand benefits. At the psychological level, if the power wielded has massive implications for the citizen – individual or corporate – and state remuneration does not approximate the extent of that power, all manner of temptation is injected into the system, with ‘weak’ personalities easily tempted.

Thirdly, the act of liberation also entails efforts to raise a section of the liberation elite into the status of ruling class. It involves the rise of previously marginalised elites into business activities and positions within the state, which catapults them into ‘middle and upper class’ lifestyles. This is a necessary part of social transformation. But it has its unintended consequences. For many, the rise into middle class lifestyles is tenuous, dependent on party selection processes and continued employment in state institutions. In the South African situation, the very nature of middle-class lifestyles is distorted by the presence of a large white community, social trend-setters whose position was earned through racial privilege. In trying to mimic these white lifestyles, the emergent elite overextends itself and individuals are then tempted to sustain newly-acquired tastes not through an honest day’s work, but by corrupt means.

The fourth dimension relates to personal fidelity to ideal and principle. Cadres of the liberation movement who have limited capacity for self-restraint, get entangled in venality hook, line and sinker. But there are also extremes, reflected by personalities who either do not have any, or lose all, sense of compunction and shame. The liberation movement may therefore also find itself dealing with syndromes that are essentially psychopathic – where the meaning of words is lost as individuals seek to rationalise bad conduct. Where corruptors and benefactors are criminally creative, blackmail – including through down-payments that leave the beneficiary hopelessly entangled – also becomes the stock-in-trade.

The fifth element is about party funding. It is par for the course that party establishments and activities require material resources. The practice of returning favours for donations infects virtually all democracies, and it is not unique to post-colonial societies. This does add toxicity to party-state relations. To win a state tender, unscrupulous businesspeople would promise donations to the party first, even before assembling the capacity to meet bid requirements; and party leaders then intervene to undermine state processes, whether in government departments or state-owned enterprises.

The more brazen among corrupt benefactors and beneficiaries will actually seek to capture whole institutions and turn them into their cookie jar. Thus is born institutional capture, of which state capture is but an important part.

Debating state capture

The notion of state capture gained currency largely in discourse around institutional changes in post-socialist Eastern Europe. However, it is acknowledged by objective analysts that it is a phenomenon prevalent in many other regions, including established democracies such as the United States of America.

State capture is defined in some literature as

“…the efforts of firms to shape the laws, policies, and regulations of the state to their own advantage by providing illicit private gains to public officials…

…firms seek to shape decisions taken by the state to gain specific advantages, often through the imposition of anticompetitive barriers that generate highly concentrated gains to selected powerful firms at a significant social cost. Because such firms use their influence to block any policy reforms that might eliminate these advantages, state capture has become not merely a symptom but also a fundamental cause of poor governance. In this view, the capture economy is trapped in a vicious circle in which the policy and institutional reforms necessary to improve governance are undermined by collusion between powerful firms and state officials who reap substantial private gains from the continuation of weak governance.”^[8]

Others argue that state capture can be distinguished from ordinary corruption in that “while in cases of corruption the outcome (of policy or regulatory decision) is not certain, in cases of state capture the outcome is known and is highly likely to be beneficial to the captors of the state.”

 

“Also, in cases of corruption (even rampant) there is plurality and competition of ‘corruptors’ to influence the outcome of the policy or distribution of resources. However, in state capture, decision-makers are usually more in a position of agents to the principals (captors) who function either in monopolistic or oligopolistic (non-competitive) fashion.”^[9]

Transparency International goes further to assert:

“State capture can also arise from the more subtle close alignment of interests between specific business and political elites through family ties, friendship and the intertwined ownership of economic assets.

The main risk of state capture is that decisions no longer take into consideration the public interest but instead favour a specific group.”^[10]

In recent South African debates on state capture, there have been attempts at throwing red herrings across the trail to rationalise some of these practices. Let us look at some of these arguments.

It’s in the very nature of the system because capitalists are the ruling class: There may be an element of truth in the assertion about the system and the ruling class. But, as argued earlier, the current state is one in transition, with the classes and strata that brought about liberation gradually wresting control to pursue a national democratic society. Among these, of course, are the black bourgeoisie; and the established capitalist group who are the owners of most of the country’s capital have much sway over the direction of economic policy. This cannot be conflated with “unobvious channels” through which state capture takes place, and the alignment of interests “between business and political elites through family ties” and other links. Further, what the definitions of state capture may not have taken into account is that this can also be exercised by other sectors in society, as reflected in the recent report on capture of some education departments (national and provincial) by teachers’ union(s).

Complaints against state capture are a matter of sour grapes as a black-owned company outstrips the old establishment: Many black companies have been on the rise in various sectors of the economy. Most of them have benefited from policies of Black Economic Empowerment including government’s preferential procurement and financial support from development finance institutions. This is a transparent generic policy that applies to all who qualify. There may even be instances of corruption in the execution of the policy; but even then, there would be “plurality and competition of ‘corruptors’”, as distinct from activities that favour captors of state institutions.

All capitalists do seek to influence policy decisions: Of course, all classes and strata as well as interest groups try all the time to influence state decisions in their own interest. They lobby, cajole and also campaign to influence public opinion. There will always be policy contestation, and business does seek to assert its interests and use leverages it commands to attain its own objectives. So do other social actors, including the working class; and some may even try corruptly to purchase their way into favour, influence appointments and so on. This is par for the course; and it is definitely different from any of these players being the decision-makers as such.

The state has to work with business: Indeed, it is in the nature of a developmental state that it should continually interact with all social role-players and mobilise them behind a vision and strategy for growth and development. The state should be embedded among business (and other sectors); but it should remain autonomous in terms of the content and processes of decision-making. Working with business should not translate into state actors working for, and at the instruction of, a particular business entity.

All leaders have skeletons and should therefore curl up and shut up: There indeed may be skeletons in many cupboards and, as the saying goes, for every ‘corruptee’ there is a ‘corruptor’. Those who are aware of such skeletons should lead the law-enforcement agencies to the burial sites rather than seeking to blackmail the party and society into silence.

For state capture to happen all arms of the state should have been captured: It is quite true that, for the captors to act “in a monopolistic or oligopolistic… fashion”, these principals would need to have captured critical pillars of the state. But this does not necessarily mean that they should exercise control over each and every arm of the state. State capture can exist at a micro-level, as in the case of the allegations about trade union(s) and departments of education; or in various institutions at provincial and local levels. At a macro-level, it may relate to some or all arms of the state. And it is a matter of simple logic that state capture at a macro-level can include capture of the nerve centre or critical organ of the state colossus. Where such capture relates to the very pinnacle of government, there would be few other perfect examples of state capture. This is more so if the person implicated is, to quote the Constitutional Court, “a constitutional being by design …the quintessential commander-in-chief of State affairs and the personification of [the] nation’s constitutional project”^[11].

Therefore, state capture is about state decision-makers being “agents to the principals (captors)”. An interesting allegory for this is the strange parasite, the tongue-eating louse or isopod. The parasite severs the veins of a fish’s tongue until the tongue falls off. It then attaches itself to the stub operating as if it was the fish’s tongue; and it survives by feeding on the fish’s blood or mucus. Unlike other parasites, the isopod does not kill its host; and similarly, it would not be in the fish’s interest for the isopod to leave or to die, as the fish no longer has its natural tongue…. organ and organism capture par excellence!

Can state capture be sustained without another form of institutional capture: in this case, political party capture? Where the captured straddle the party, the government and the state, direction and sequence of the capture can be either way. Clearly, state capture is bound to be faster and more effective if the party is on-side, or if the captured exercise authority and leverage across both entities. Where the relationship between party and state is not managed as demanded by constitutional and legal prescripts, capture of either the state or the party easily transmutes into capture of the other. Some leaders, once ensconced in state offices and once captured, can simply ignore or defy the party – creating a conundrum difficult to address.

Challenges in re-asserting ethical leadership

At the 54^th National Conference of the ANC, various resolutions were adopted urgently to address the cancer of corruption and state capture.

This journey, however, will not be a walk in the park. Experience over the past six months does confirm the truism that the struggle to unravel corruption and state capture in South Africa will be complex and protracted. Why is this the case?

First, the beneficiaries of corruption and state capture will not go down without a fight. Especially as orange overalls beckon, there will be desperate acts to muddy the waters and reverse the gains of the Conference. Constant vigilance is fundamental.

Second, the extent and depth of the rot is much more widespread than the sensational cases of state capture. In addition to dynamics in state agencies, the rot goes quite far into the political party system itself. If you were to dig deeper into even some of the post-NASREC ANC provincial conferences, you will find the usage of money to try and influence outcomes. This challenge goes beyond the ANC. Whatever the status of the parliamentary ethics committee’s case against Democratic Alliance leader Mmusi Maimane, the fact of the matter is that, for his election as party leader in 2015, he needed private sector sponsorship. Within the ANC, even those opposed to corruption have to agonise over the fundamental question whether they can assume leadership positions and detoxify the movement without themselves using toxic means.

Third, while focus naturally falls upon state functionaries, we have seen in the past few years how large corporations such as Bell Pottinger, SAP, McKinsey, China South Rail, KPMG and Bain & Company facilitated and/or co-operated with or succumbed to extortion. This reflects not only the extent of unethical conduct among individuals within the private sector; but also, the general posture of many private companies to adapt their practices to corrupt environments in which they operate.

Related to this is the phenomenon of violence in KwaZulu-Natal, and perhaps other provinces, which requires further analysis. It is possible that the violence against politicians reflects loss of control by the ANC and other parties. In this instance, business interests may in fact be dictating the directional flow: with business syndicates identifying politicians of any party or faction as instruments of, or a hindrance to, accumulation and then hiring hitmen to pursue their selfish interests. Some of these business entities may even go to the extent of hedging their bets by supporting both or all factions in a political contest – in other words, with little consideration of the professed policy differences.

Fourth, the fight against corruption is complicated by the fact that the rot permeates all sectors, including civil society. As we all know, the religious community is replete with all manner of scoundrels who prey on individuals and communities. Within the trade union movement, the crisis of business unionism and the privileges that come with union leadership from factory floor to national level has seen not only massive corruption; but also, factional violence that has been fatal.

The fifth reason is that the student and youth movements – the repositories of future generations of societal leadership – have not been spared the malign influence of incumbency. The privileges that attach to student leadership and the resources that go with this have corrupted many young leaders. This malign influence of unethical conduct, especially among the youth, has major implications for the very ethical character of the liberation struggle going forward.

Beyond direct incidents of corruption among youth organisations, there is the matter of the value system and outlook, which are infused with ‘celebrity culture’. Standing in the eyes of peers, possibilities of entering intimate relationships, followership on social media… all this and more seem increasingly to depend on and in turn to feed that celebrity status, with money and decadent lifestyles at the centre of it. The greatest danger is that young cadres are emerging into positions of more serious responsibility within the context of a value system and ‘culture’ that is corrosive of the humanism and selflessness that fundamental social transformation demands.

Conclusion

One of the greatest challenges in rooting out unethical conduct derives from the fact that those who seek to build an equitable society interact everyday with the rapacious licence of a system that encourages greed and crass materialism. The cadres of social change therefore need to be inspired by a transcendental posture: they should be able to resist the constraining and corrupting influence of this system and not bow to its dictates as if they are the natural order of things.

This requires clarity of thought on the value system that should underpin the vision of a democratic and equitable society

Critically, there should be a strong element of compulsion: an effective state, with security agencies, prosecution authorities, revenue services, public protector services, judicial institutions and auditing services that guarantee accountability and just deserts for wrongs committed.

For the ANC, a combination of ethical rectitude informed by principle, and the self-interest of its cadres, should inspire steadfastness to the injunctions of the 54^th National Conference. This is because failure to address corruption and state capture will not only undermine the cause of social transformation and the legitimacy of the democratic state and polity. In a democratic society such as ours, it will also result in devastating electoral punishment and the emasculation of many a political career.

[This article is based on various presentations made by the author on ethical leadership, state formation and state capture.]

1. ANC 54^th National Conference, Report and Resolutions, March 2018 ↑
2. Immanuel Kant, Groundwork of the Metaphysics of Morals – quoted from Speech by Frederick Engels at the Graveside of Karl Marx, https://www.marxists.org/archive/marx/works/1883/death/burial.htm ↑
3. Hegel, Philosophy of Right: https://www.marxists.org/reference/archive/hegel/works/pr/prethica.htm ↑
4. Speech by Frederick Engels at the Graveside of Karl Marx, https://www.marxists.org/archive/marx/works/1883/death/burial.htm ↑
5. Engels to J. Bloch in Konigsberg, https://www.marxists.org/archive/marx/works/1890/letters/90_09_21.htm ↑
6. Africans Claims in South Africa, December 1943 ↑
7. The Origin of the Family, Private Property and the State, pp 157-158 ↑
8. Joel Hellman and Daniel Kaufman: Confronting the Challenges of Sate Capture in Transition Economies, in Finance & Development: A quarterly Magazine of the IMF, September 2001, Volume 38, Number 3 ↑
9. https://en.wikipedia.org/wiki/State_capture ↑
10. Maíra Martini, Transparency International, tihelpdesk@transparency.org: March 2014 ↑
11. Constitutional Court of the Republic of South Africa, Cases CCT 143/15 and CCT 171/15, 31 March 2016 ↑