About this site

This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

Moving beyond the Social Contract by Langa Zita*

LAST year one of the main debates within the South African left centred around the issue of a social contract. The debate tended to be stuck between three positions: those who were advocating a social contract as an end in itself; those who saw in the social contract a stepping stone to socialism; and those who rejected the notion of a contract outright, and called for an immediate socialist revolution instead (without being very clear how this was going to happen).

In the course of 1993 the second position has begun to develop more coherently, moving away from a central focus on the social contract, and highlighting a different issue - a reconstruction programme. In this paper I want to support this shift, in doing this I will also briefly consider the limitations in the original three positions.

Social contract positions

In the words of Enoch Godongwana "a social contract or accord is an agreement by major stake holders in society - notably organised labour, capital and the state - to give content to common objectives of economic growth, employment creation and better standards of living for the whole population"1.

There have been a number of voices echoing support for a social contract of this kind, ranging from big business to social democrats and socialists. It is not my intention to respond to the representatives of capital, their objectives are quite clear and are basically designed to save capital. It is more with our comrades in the left that I wish to raise some points for debate.

Karl van Holdt2 of The SA Labour Bulletin, John Copelyn3 of SACTWU, and Geoff Schreiner4, formerly from NUMSA, have all participated in the debate, moving from the assertion that various accords with the state and/ or with capital would have to be entered into. However all of them appear not to have moved to the extreme of seeing the social accord as an end in itself, but rather as laying a foundation for future socialist advance. But as to how this is to come about, not much clarity is offered.

On the other hand, there are a number of avowed social democrats, among them Pieter Le Roux5 of the University of the Western Cape and Alan Fine6 of Business Day, who favour a social accord in its own right. Le Roux is hostile to the immiseration thesis of orthodox Marxists. He sees it as inapplicable to modem capitalism, particularly because the revolution that was supposed to follow it has not yet materialised. Fine suspects that those who are opposed to a social contract welcome the immiseration of the working class, working class poverty is their only hope for such "antiquated" concepts as class consciousness and class struggle. For Le Roux and Fine social contracts and social democracy are the answer, any other socialist alternative will degenerate into authoritarianism. For Fine the left has no other method of realising socialism other than authoritarianism, whose main expression, in his view, is the indispensable forceful expropriation ofthe capitalist means of production.

The Socialist Revolution Camp

A strong criticism of the social contract has emerged from Alex Callinicos7 of the Socialist Workers Party of Britain in his interesting intervention, Between Apartheid and Capitalism. The basic gist of his intervention is that the social contract, that we appear to be embracing in South Africa, has not succeeded anywhere in Europe. Even in Sweden, which is often advanced as a model, the contract is suffering immense problems. Callinicos makes the point that in countries where the social contract existed, the working class kept its side of the deal only to be dumped by the bourgeoisie. He urges South African revolutionaries to take the struggle to its logical conclusion - socialism (but by what means is not very clear).

It is my view that aspects of all these positions have serious omissions, silences and errors that need to be highlighted as part of the process of developing a socialist, working class programme in our country.

A critique of the social contract advocates

It cannot be doubted that workers in social democracies have made enormous gains in social services such as housing, education and full employment. They have gone a long way in decommodifying a number of areas relating to working class life. The advance of these decommodified use values has begun to impact on the profit logic of capitalist production.

The very gains of the working class in these societies has, to some extent, led to the current crisis of the social contract, a crisis evidenced in the recent decline and election losses by social democratic and labour parties in Europe.

The social democratic social contract needs, in part, to be related to the impact of the ideas of Keynes in the late 1930s and 40s. Keynesianism introduced the notion of influencing the market by financial and other means, and this increasingly gained some currency within the citadels of capitalist power. The basis for its popularity was its practical success, with Roosevelt's New Deal, in renewing the US economy and thereby saving capital after the 1929 crash.

However, it is important to note from the outset that Keynesian interventions into the market were also in part due to the struggles of workers on the ground. This was a positive historical development because,similarly to the adoption of the 10 hour bill in 19th century Britain (a victory celebrated by Marx), the notion of utilising human agency as against blind market forces represented an historical advance. The principle of plan and of conscious activity was introduced in relation to and against the blind principle of market forces.

With different historical determinants, a similar process was evolving in Europe, particularly in the Scandinavian countries with Sweden in the lead. This was the development of the welfare state. A number of factors were responsible for the development of what came to be known as the "Swedish miracle". I will merely make a list of the most salient elements that led to its evolution:

1. The Social Democrats (SDs), with a reformist working class programme, assumed power at an early stage and were able, in the context of real crises, to evolve policies that benefitted both capital and labour.

2. Sweden did not participate in the first world war and, therefore, had an economic edge in relation to the belligerents.

3. After the 1929 capitalist crash, the SDs evolved a New Deal that was qualitatively better than Roosevelt's. The unemployed, for instance, were given wages equal to their employed counterparts.

4. Sweden did not participate in world war two, either, and instead profitted from selling raw materials and ball-bearings to Hitler and, when the course of the war changed, to the USA.

5. There was a close relation between the SDs and trade union leaders, and therfore a convergence on what was possible and what was desirable.

6. Sweden experienced rapid industrialisation and a 4.5% annual growth rate.

These factors, historically and geographically specific, were responsible for giving rise to the "Swedish Miracle". However, some of the specifics of this model have now begun to erode:

1. The strong export economy built up in previous decades has left Sweden susceptible to the vicissitudes of the world economy. This was reflected by the 1978 slump that led to closures and layoffs .

2. With the emergence of transnational trade blocs, former markets are no longer so readily accessible.

3. At the same time, Sweden will snow have closer access to its European market, a factor that has already strained relations between Swedish capital, some of whose sectors stand to gain, and the SDs who will lose their traditional control over the working class now that production and the working class is going to be Europeanised. The ruling class appears not to give a damn, as evidenced by its change of heart towards the recently elected conservative forces in Sweden, who, with the support of the ruling class, are bent on reversing the gains of the Swedish welfare state.

4. Internationalisation has also led .to a substantial relocation of Swedish capital to other countries and the fusion of Swedish capital with other national capitals. All of this further undermines any commitment Swedish capital might feel to a national social accord.

The recent electoral defeat of the Social Democrats in Sweden might be interpreted as the maturation of social democracy as a particular form of capitalist accumulation which has now started to fetter this very accumu-lation process. Another possibility is that left forces in Sweden, and in other developed countries, may analyse the crisis of social democracy as the result of the contradiction between a relatively socialised market and persisting capitalist relations of production.

From our own immediate South African point of view, the essential lesson to be drawn from this brief sketch is that a social contract is not a product of a new found love between capital and labour. It is a product of unique circumstances, such as as the choice or possibility of not participating in wars while benefitting from them. It is a product of a steady economic growth. It has to be sustained by an economy that is not only competitive but which is one of the leading ones internationally. There has to be an accompanying ideology of industrial peace. There has to be a strong union movement that is willing to discipline the workforce, and employers who are willing to discipline each other.

Whilst conditions from one society to another may differ, a core of these elements must obtain if a social contract is to be maintained for any meaningful length of time.

One does not have to be a seasoned economist to observe that none of the above conditions operate in our country. We have have had an oppressive social and political system for more than 350 years. We have an economy that has been in a downswing for more than 15 years. We have a large manufacturing sector, but our products are not competitive internationally. We have a racially divided working class, whose white component still remains committed to racial economic bargaining. We have a section of the working class that is militant and is steeped in class struggle and the ideas of socialism. A significant section of the working class is not unionised, and 40% is unemployed, with a significant core that is developing an ingrained fascist mentality all factors that can entice the ruling class out of any agreements.

We have a disastrous education system, whose technical component has been a preserve of a white minority until recently.

In the light of these realities, where will we get the resources to sustain a Swedish-style social contract? Can a corrupt, semiperipheral capitalist system that has been conniving with racism all these years have the will and commitment to master the required resources? Does this capitalist system have the capacity to help finance the bill to rehabilitate our social fabric and to lay a foundation for a possible welfare system? One can only be sceptical.


Before suggesting an alternative perspective on our situation, it would be instructive to return to Callinicos. In this respect I do not have a blank slate, Godongwana has opened the way. Essentially, Godongwana is critical of Callinicos's abstract and ahistorical rejection of the social contract. Godongwana is right, and this ahistoricism of Callinicos reflects a general weakness of seeing transformation only as a result of insurrection, shutting out any other historical possibilities. For Callinicos there can only be one route to transformation the 1917 route. Godongwana asks a very pertinent question of Callinicos: "What do we tell the 9000 workers in the tyre manufacturing industry when tariffs are removed and their jobs are at stake? Do we tell them to wait for a socialist revolution?"

Godongwana agrees with his colleague Geoff Schreiner that "under certain circumstances, taking into account the balance of forces, such accords, contracts, pacts, agreements might be neccessary for tactical reasons". Godongwanana concludes that "Social democracy in some countries, such as Sweden, did improve the conditions...These improvements cannot be ignored." As a socialist, however, he does not just embrace a social contract, but qualifies that the whole process has to be informed by a socialist approach that includes mass action, report-backs by the leadership and mandates by the membership.

Godongwana, therefore, expresses qualified support for a social contract. I do not entirely disagree. The problem is that this qualified and socialist-informed social contract is the only leg upon which Godongwana's position tends to stand.

The qualified acceptance of a social contract needs to be encompassed within a much wider process. A social contract can only be acceptable as as an element alongside many other measures, some of which, by their character, cannot be negotiated with capital, but can only be realised through democratic force. They must be handled under a broader reconstruction programme. As for the social contract itself, it can be accepted if we see it as an arena of struggle, involving not only labour, capital and the state, but also civics and other forces. The accord needs also to be reproduced at regional and local level with a dialectical relationship between the national forum and regional forums. There needs to be a relationship between these forums and industry forums and the multiple factory initiatives to restructure production patterns. The objective of engagement is both to influence and to expose and discredit capital in the eyes of society as a whole. A socialist ideology must inform the basis of engagement in this process which underscores the central role that the SACP as a key element of the left has to play in the process.

Sketching an alternative towards a reconstruction programme

Handling the matter in this light bypasses the danger of seeing a social contract as the only form of manoeuvre available to the left within contours imposed by capital. Instead of this limited viewpoint, we should, whilst not pretending that capitalist parameters are non-existent, begin to advance positions that take society away from capitalist development. This should best be seen as a process.

It is my view that, already within the present situation, elements of an alternative path of development are to be found in embryo. Cosatu is discussing the notion of "social leadership", in which social forces such as trade unions, civics and the rural poor develop manifestos that become the basis and the precondition for their support of parties in the coming political electoral contests. This is, I believe, a strategic advance and, if correctly handled, would mean that working class perspectives would be firmly placed in the unfolding political process. This new notion of social leadership is important, provided it is not fetishised, thus undermining the important role of political organisations. We need to blend social movements and political organisation.

There are also other positive embryonic factors. We have a unique civic movement that, with all its problems, has maintained and sustained its grassroots base over the past 10 years. It is a civic movement which has clearly posed the question of the decommodification of land through the control of land by elected trusts. The civic movement has also put on the agenda the whole notion of people's development banks. The essential principle of popular control in these projects is a positive development and a pointer towards a democratic, non-profit form of development. These aspects need to be looked at and developed by socialist economists. It remains the challenge of all socialists to conceptualise the role of civics in the post-apartheid South Africa, bearing in mind their significance as organs of self activity of the popular masses.

Looking to other embryonic possibilities, some left economists have recently raised the possibility of a new government ensuring that the millions of rands of public funds in large financial institutions like Old Mutual and Sanlam are used for progressive development. Related to this is the 25% of the present economy that is in public hands, and the milions of rands of workers' funds. There are also many possibilities for a future democratic state redirecting taxation. This gives us a significant leverage to influence the direction and the model of the economy. The same can be said of the R8 billion lying idle in the stockexchange. We need a strong state to force capitalists to invest this idle capital in productive investments.

The essence of my input is that there are objective conditions for a socialist advance, which can be realised through a dynamic and creative route under the conditions of democracy that we are in the process of creating. Our major challenge presently is to evolve an anticapitalist path of development. This is our immediate challenge.

The concept of an anticapitalist path does not imply an immediate supersession of capitalism. But it does imply a reorientation of the logic of accumulation to include the basic needs of the people. This ought to be the essential objective of our participation in the National Economic Forum.

At the same time, while bending the logic of accumulation, we need also to challenge the logic itself. This means transferring certain areas of economic activity away from the mediation of the market to society via the state. The state should not just intervene on broad policy, but must be actually involved in economic production. At the same time, historical evidence shows that such state controlled concerns must give room to effective producer control over the labour process and over macro-investment decisions.

Finally, all of these possibilities will remain utopia if the present state is not effectively restructured. Such restructuring should include the evolution of mechanisms to facilitate civil society's interaction with the state, as well as the creation and development of the capacity of the weaker organs of civil society.

In this intervention I have tried to carry the social contract debate forward. I have deliberately not confined myself to the politics and ideology that should inform such acontract. I have tried to go beyond these concerns to argue for an integrated approach. There may well be corporate pressures that lead to a social contract, and while acknowledging these we should also not hide the limitations of such a contract. I have tried to outline a number of programmes that might withstand and sidestep the tendency simply to revive capitalism. The challenge is to propel the advance towards socialism. A


1. Enoch Godongwana, "Industrial restructuring and the social contract", SA Labour Bulletin, vol.16, March-April 1992.

2. Karl von lioldt, "Towards transforming South African industry: a reconstruction accord between unions and the ANC", SALB, vol. 15, March 1991.

3. John Copelyn, "Collective bargaining: a base for transforming industry", SALB, vol. 15, March 1991.

4. Geoff Schreiner, "Fossils from the past: resurrecting and restructuring the National Manpower Commission", SALB, vol.16, July/August 1991.

5. Pieter Le Roux, "The South African economy: the challenge of democracy", IDASA occasional papers, 1989.

6. Alan Fine, "Democratic socialism or social democracy", SALB, vol. 16, January 1992.

7. Alex Callinicos, Between apartheid and capitalism, conversations with SA socialists, Bookmarks 1992.

This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. Return to theThis resource is hosted by the site.