Ismail Lagardien: Bankrupting SA an option

South Africa goes through cyclical episodes of crisis and every time we emerge from one of these crises there is a new normal that becomes culturally assimilated.

Over and again, we take one step forward and two steps back, then hit the repeat button.

For instance, most people are no longer upset by disruptions in electricity supply, corruption, maladministration or failures to deliver public goods and services. We have become inured to it all.

It has become part of the transaction costs – the cost of participating in market exchange – of being South African. You know the way you groove something, like when you don’t need to adjust your step when you reach an escalator – that is how we take everything in our stride without skipping a step. This is our new normal. As we enter another long week of politics, and probably another round of false accusations of the innocent by opportunists, it is that thing called the economy that will probably take a battering. Among the country’s most senior politicians there seems to be an almost scorched-earth approach to the economy.

It is as if they believe that if we can’t have it all, nobody else will. This, anyway, is the impression one gets from the outside.

If there is a glimmer of hope, conjured up by a willing suspension of disbelief, in all of the anger reflected in the country’s politics, it would be that South Africa will survive.

In a generation from now, we might have a hollow shell of a country, marked by dens of iniquity, pockets of excellence, privilege and prosperity (barring any likely secessionist efforts), but the Republic of South Africa will remain.

This is not a claim based on national pride or patriotic zeal – far from it. It is based on the fact that countries, unlike corporations, do not cease to exist once they have been bankrupted.

A liberal capitalist democracy (like ours) without the threat of bankruptcy and the possibility of disappearance is, as someone once remarked, “like Christianity without the threat of hell”.

To be sure, some of the biggest companies in the world went bankrupt and ceased to exist.

Companies like Enron, Pan Am, TWA, General Foods and the DeLorean Motor Company have disappeared completely. During the month of July 185 South African companies went bankrupt and disappeared.

As for the republic, the absence of the threat of disappearance (because of bankruptcy) means that rapine and rapaciousness can proceed unfettered by the threat of ruin – or of eternal damnation.

In this, we are, of course, not alone. There are countries around the world where there is no formal political economy, and very little, if any, public services, administration, access to law and human security, but these countries have not gone “out of business”.

Countries like Somalia, Liberia, South Sudan, Central African Republic, Syria, Yemen, Iraq or Zimbabwe remain on the map. In most cases they have not ceased to exist notwithstanding the fact that they are bankrupt.

In many of these cases, the country’s external sovereignty is lost, because they have almost no standing in the global community of states and their internal sovereignty has dissolved because foreign actors, from foreign governments to non-governmental agencies, now determine their domestic policies. In the remotes reaches of Somalia, for example, where there are no formal banking systems, aid agencies literally helicopter in millions of US dollars and euros.

This cash is channelled through local warlords or satraps who, along with their closest relatives and friends, are both the local distributors and the recipients of largesse. As long as money circulates there is no need for a state, regulations of any kind, nor for checks and balances.

This is the infectum somnium of free marketeers and corrupt elites.

We may be approaching, then, a period in which the country’s most trusted institutions, especially the national Treasury, which was built with such professionalism and precision between 1995 and 2009, will be raided. If the current trajectory continues, South Africa will be downgraded to junk status and effectively be insolvent, unable to pay its debts.

If this happens it will be justified on the basis of claims to sovereignty, independence, liberation, freedom and autochthony, but like that million-dollar bill in Zimbabwe, it will not be worth the paper it is written on.

Consider the destruction in Syria today. Then consider the statement by Syrian President Bashar al-Assad in July this year, that history would see him as “the man who protected his country . . . and saved its sovereignty”.

Now consider the statement by Zimbabwean President Robert Mugabe: “We have fought for our land, we have fought for our sovereignty, small as we are we have won our independence and we are prepared to shed our blood . . .”.

There is increasingly little economic activity and probably no new investment or job creation in Syria. The Zimbabwean economy is dead or dying.

Both countries are effectively bankrupt, but the leaders of both countries lay claim to independence, sovereignty and autochthony. Neither country has ceased to exist and barring secessionist or irredentist claims, both will remain.

In this sense, then, bankruptcy remains an option for South Africa.