Waiting for the old (ANC) regime to die (I)
WAITING FOR THE ANCIEN REGIME TO DIE (PART I)
A lesson from Gramsci
We are at a strange juncture in South Africa’s history. As Antonio Gramsci wrote in the early 1920s, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear”. Gramsci had seen the old Italy collapse in the First World War and believed passionately that a new, socialist Italy must be born. But for cultural reasons – the hegemonic hold of the Catholic church over the workers and the peasantry – this was impossible.
What Italy actually got was Mussolini, who threw Gramsci in prison where he died at the age of 46. He had a keen sense of the tragic. “History teaches”, he wrote, “but it has no pupils”. Indeed. Gramsci had been a member of the Turati (Left) wing of the Italian Socialist Party before it became the PCI. Some of his Turati comrades ended up joining Mussolini and, like Il Duce, were butchered by the Partisans.
In the South African case the old regime that is struggling to die is that of the ANC and SACP, all of whose formative ideas date from the 1950s and 1960s. The ANC that came to power in 1994 was largely the work of three men – Oliver Tambo (b.1917), Walter Sisulu (b.1912) and Nelson Mandela (b.1918) – who would not have been out of place in the era of African independence in the early 1960s but had no real grasp of post-1973, let alone post-Soviet realities. Mandela happily confessed to a complete ignorance of economics, clearly not understanding that this is an admission that no modern leader can make.
Unsurprisingly, the ANC opted for an etatiste model of the “developmental state” which creaked with age even when it was introduced.
That is “the old (which) is dying”. For it has failed quite spectacularly. In part this was because the ANC runs a patronage state and its clients eagerly exploited the possibilities of personal gain which governmental and parastatal structures afforded. But the party also had an old-fashioned devotion to state ownership, to industrialisation (actually, re-industrialisation), to the beneficiation of minerals and just to old technologies in general.
By the end of the Zuma period this mixture had produced runaway corruption, huge unemployment, growing inequality, de-industrialisation, almost no growth and steadily falling per capita incomes. By any reckoning this was completely disastrous and, by definition, unsustainable.
What “the new” is which wants to be born is less certain. At the moment the air is thick with plans to reform South Africa’s economy in such a way as to make recourse to the IMF unnecessary. But its seems unlikely that the government will (a) agree on exactly what needs to be done (b) move with anything like the urgency required or (c) actually manage to get anything done.
On top of which, of course, any money handed to government to achieve any particular project has a high risk of leaking away due to theft, maladministration and BEE special deals. So it would be safer to assume that none of these plans will be effective in the now very limited time we have, although they will doubtless give birth to any number of new presidential task teams, committees, war rooms, commissions, summits and what have you. The main thing is, don’t hold your breath.
The more likely debt crisis
So it seems far more likely – as the ratings agencies have already unanimously decided – that the ANC will instead guide South Africa into a sovereign debt crisis. What happens then depends on who wins the ensuing and inevitable battle within the ANC as to whether or not to apply to the IMF for a bailout. It may seem as if the forces against a bailout must win: Mboweni and the Reserve Bank would clearly – however reluctantly – see a bailout as inevitable and necessary, but the forces against a bailout are surely stronger and more numerous.
But that may be simplistic. For quite apart from the pros and cons of particular reforms, the argument would also be about whether South Africa was going to remain part of the international political economy – part of the modern world, if you like – or whether it would instead opt to stumble into a parochial, dark and immiserated little world of its own, like Zimbabwe or Venezuela. This latter prospect is so alarming that one would expect some rather unlikely figures to swing round in favour of an IMF application. In addition, of course, the government would come under strong international pressure not to throw away Mandela’s legacy in favour of the Mugabe/Maduro option. Even the Chinese would doubtless choose that: they would prefer a viable partner to deal with.
If South Africa does take the bailout the end result is likely to be a slimmed down state with far fewer functions and a much smaller public service, together with the privatization of most of the SOEs and a much freer labour market.
After nearly thirty years of edging steadily leftwards, South Africa would then rebound sharply in a more market-oriented direction. Our politics would do the same, not only because the old policies would be discredited but because the SACP and Cosatu would emerge from such a process as mere shadows of their former selves. Provided – it’s a big if – the government was keen to take advantage of the now much more competitive economy, the country might then enjoy a period of stronger economic growth.
Refusing the IMF
However, as we know, many within the ANC, as also Cosatu, the SACP and EFF are resolutely determined not to go near the IMF, no matter what – and there will be no difficulty in rounding up plenty of “progressive” economists to support them in this. For South Africa’s sadly fallen universities have been in the vanguard of that long leftward swing and have been pumping out a highly politicized product for a whole generation now.
Instead the refuseniks will advocate more state control, more debt and more printing of money. No one should be surprised by the fact that some of those advocating this more socialist path will be notorious villains and crooks. Imagine, if you will, the nationalisation of more industries and the imposition as directors or CEOs on the resulting SOEs of the cronies of Ace Magashule, Floyd Shivambu or Julius Malema. The result will be more bankrupt SOEs and more very rich cronies.
It should be realised that if the ANC refuses to go to the IMF the alternative of a Chinese take-over recently floated by David Bullard does not really exist. China has been drawing in its horns, concentrating far more on its own development and it appears to have little appetite for pouring money away into hopeless Third World regimes. So if we refuse an IMF bailout the result is more likely to be a South African version of what we see in Zimbabwe (which is trying desperately to get an IMF bailout but can’t).
This involves a small but highly privileged party elite retaining power by brute force in the midst of near-universal unemployment, hyper-inflation and ever-falling living standards for the population at large. For per capita incomes in Zimbabwe are now far lower than they were in 1960 and all the welfare gains not only of the early Mugabe period but of the colonial period too (good schooling, hospitals etc) have been wiped out.
Note that Zimbabwe did not reach this nightmare situation because anybody planned or wanted it: nobody ever said “wouldn’t it be nice to have a ruined country with 90% unemployment”. It is, rather, the negative resultant of following other imperatives which had the effect of backing the country into a corner. Mugabe wanted to spend heavily on health and education but his talk of Marxist socialism frightened investors away. So there wasn’t the economic growth to pay for those reforms. The result was economic stagnation, a ballooning debt and an IMF bail-out. But Mugabe hated having to follow IMF prescriptions and so kicked them out.
The resulting economic malaise saw Mugabe lose a popular referendum and it was clear that in a free election he would lose power. So he seized the commercial farms, tortured and beat the farmworkers who had dared to vote against him and rigged the elections. The resulting economic collapse and the complete lack of investment saw the Zimbabwe dollar founder, so Mugabe printed more and more money and tried to boss the economy with price controls.
He only got away with this because Mbeki supported him and because millions of Zimbabweans fled the country. And in the end even he didn’t get away with it. Mnangagwa has meant more of the same. At each stage of this Calvary the key imperatives have merely been to preserve the privileges of the party elite and to ensure that they remain in power.
A lesson from Zimbabwe
To get the flavour of the result read Brezh Malaba in the Zimbabwean Independent (11 July 2020) writing about Vice President Kembo Mohadi, the MP for Beit Bridge, around whom the normal number of business scandals revolve:
“This week (Mohadi) stunned people in Matabeleland South when he said the economy is in bad shape because at independence white people did not train us on how to run it. I was astounded. 40 years of blaming white people. How did we get here?
Four decades after the end of racist settler rule, Zanu PF leaders continue blaming white people for this tattered economy while conveniently absolving themselves. It is a tragic failure of leadership. A former liberation movement has been reduced to a kleptocratic dictatorship with nothing to offer an increasingly young and restless population.
Mohadi’s incredible statement is not the only example of Zanu PF’s out-dated analogue politics in a dynamic digital world. Victor Matemadanda, the party’s national commissar, elicited guffaws of ridicule on Wednesday when he claimed that Zimbabwe’s imaginary Western enemies are co-ordinating an anti-government protest scheduled for July 31.
Can anyone tell me the “big idea” or the philosophical paradigm at the heart of today’s version of Zanu PF? The tired outfit has no capacity to build a globally competitive developmental state in the 21st century.”
Mohadi’s story is not actually true. At independence Ian Smith volunteered his services to Mugabe who gratefully accepted them. For many months Smith sat next to Mugabe every day as they went through government business with Smith drawing on his his experience from many years in government. For whatever his other demerits, Smith was a patriot who wanted his country to succeed. The two men got on extremely well until one morning Mugabe informed Smith that he was nationalising a whole slew of companies. Smith made his opposition clear whereupon Mugabe lost his temper, ending the relationship for good.
It is already possible to discern trends in South Africa which lead the same way. Not a few African nationalists would like to expropriate the white-owned farms here too. The National Command Council has seen the ANC elite enjoying power without responsibility, including the brutal use of the security forces against its own population. Per capita incomes have been falling ever since 2013 and Mboweni has publicly warned that all the gains of the democratic era (he means social grants, education and health spending) could be wiped out by rising debt. And, of course, our government is similarly lacking in capacity and competence.
A further point of comparison emerges from the recent report by SA Statistics which reveals that the median age of South Africans is 27. So our average citizen was born in 1993, has no memory of apartheid, and is very likely unemployed. Our population too is “increasingly young and restless”.
However, as I have argued elsewhere, no exact replication of Zimbabwe seems possible. Our government has little foresight but even it can see that the expropriation of white farmers would lead immediately to famine and huge social discontent. And there is nowhere south of us for desperate people to flee to.
In addition, the ANC’s power rests centrally on its ability to keep paying social grants. It relies absolutely on the tax revenue from white South Africans and the private sector. If a large number of whites left, the government would collapse. (Zimbabwe, after all, has never recovered from the flight of just 4,000 white commercial farmers.) But one should remember that, as in Zimbabwe our current situation did not arise because anyone willed it but because other imperatives altogether have been followed.
Singing the old songs
Morbid signs there are a-plenty. Chief of them is the new economic statement by the ANC, full of the same old formulae: the developmental state, a state bank, a state pharmaceutical company, more manufacturing, beneficiation of minerals and so on. All the old favourites, including, of course, the nationalisation of the Reserve Bank.
In addition, the ANC has asked its social and economic transformation committees to examine the possibility of a Basic Income Grant – R500 a month payable to everyone aged 19-59. Currently social grants cost R188 billion a year but this would add a further R198 billion. In addition, the ANC wants NHI to be expedited – costing perhaps another 4%-5% of GDP. There will, doubtless, be no shortage of “progressive” economists saying these are all wonderful ideas.
The new ANC economic statement is a bizarre document. It repeatedly says that the pandemic has created new opportunities. With three million jobs lost and 47% of households going hungry it is clear that these “opportunities” do not apply to the people at large. Instead they are opportunities for the ANC elite to consolidate their power. Under the heading “The balance of forces” the document tells us that as a result of the pandemic:
“… the contested relationship between the public and private sectors has shifted. The pandemic has reinforced the legitimacy of public investment in health care. It has legitimized a greater and more active role of the state in guiding the economy. It has forced a rethink on public services that are now seen as a necessary investment rather than a liability. Central banks are increasingly being called upon to assume a more active and direct role in supporting the real economy.”
Note that this is all politics, not economics. There has been no real shift between the private and public sectors. No one ever doubted the legitimacy of public health spending: the problem was that so much of it got wasted and stolen. Nothing has increased the state’s ability to “guide” the economy and indeed its incompetence has been shown up in many ways by the pandemic.
The fact that the document’s authors are now willing to re-name consumption as investment does not change the economic facts. And, of course, the arguments for and against central banks just printing extra money haven’t changed. All that’s really meant is that in the confusion and disorganization of the pandemic, the ANC sees ways in which it can push its old agenda that much further.
Suffice it to say that as an essay in political economy this document would fail badly in any undergraduate course. It is an embarrassment. But it reminds one of the old Italian saying that “the situation is desperate but not serious” for the fact is, of course, that it doesn’t really matter for there is not the slightest prospect that any of the document’s recommendations will be carried out.
It will quickly be overtaken by events and be swamped by the usual winning combination of ministerial incompetence and low-energy management. One can imagine an IMF economist sent to South Africa in a few years time to drive through a structural adjustment programme, turning up this antique document and getting a few laughs out of it. That’s all it’s good for.
Naturally, the document inveighs about the need to fight poverty and inequality which are (of course) the fault of apartheid. When you read this you should remember that in the current year the wages of the 1.3 million public servants (2.2% of the population) will consume 60% of all tax revenue – and of course, they are currently fighting for another inflation-plus increase.
No one who is remotely interested in alleviating poverty and inequality would agree to such a situation for a moment. And this situation has nothing to do with apartheid: it is entirely an ANC construct. In practice South Africa is now being run for the benefit of a smaller minority than was the case under apartheid.
Finally, of course, we have the demand for another R10.4 billion from government to start up SAA again. This is largely the work of Pravin Gordhan who has conducted a peculiar kamikaze mission over the corpse of the failed airline. Everything about the deal is surreal, including the fact that white pilots are now to be replaced by black ones. Is there anyone in the world keen to fly with an airline which chooses its pilots on the basis of skin colour?
But, as we have seen, this is simply one more demand for the Treasury to somehow “find” enormous sums for all manner of pet projects. Such demands mainly reflect the fact that the ANC has almost no understanding of the country’s economic situation and that the pressure groups within it remain just as hungry as ever. The long-term collective effect of such demands is, of course, to push South Africa headlong into a sovereign debt crisis.
Short term they are probably intended as a battering ram to bounce Mboweni into concessions or to force him out. No one would have dared play such brazen factional games when Trevor Manuel was the finance minister under Mandela and Mbeki, but everyone knows the President is a weakling now so factional fun and games are the order of the day.
How the end will come (II)
WAITING FOR THE ANCIEN REGIME TO DIE (PART II)
The first article in this series can be read here.
So what should we expect to happen? At present the ANC only wants to enable pension funds to invest in SOEs and infrastructure if they want to. They may be able to bully the PIC into doing this but one may be certain that most pensioners will be extremely leery about putting their savings into the hands of the incompetent and corrupt people who run SOEs.
Many will cash their pensions rather than allow that. If this happens, expect the ANC to legislate to force such investment by prescription. In which case watch for a tidal wave of encashment. But where, then, will that money go?
If you look at the plentiful bumf which reaches you from investment managers and advisers you will notice that currently many of them are saying that the best thing for South African investors to do is to put their money into fixed interest bonds. The vast bulk of this asset class is of course made up of government and SOE bonds, which means that other bonds have to compete with them on at least equal terms. After all, with a ten-year government bond yielding around 9.5% and inflation down under 3%, what can be guaranteed to do better than that?
But what does it say about an economy if nobody wants to invest in the shares of companies that make and sell things but instead investors prefer to lend to the government so that it can subsidise the consumption of the public service and the grant recipients? Can any society possibly work like that?
This is, in fact, the larger version of the situation in which productive private sector managers and workers pay taxes which help pay the salaries of vastly better paid public servants whose productivity is often negligible. Such are the contradictions of a “state-guided economy”. One is reminded of the old saying from Hungary when it was a People’s Democracy: “The definition of Socialism: an incessant struggle against difficulties which would not exist in any other system”.
The thing to watch is the bond market. Already the downgrades by the ratings agencies are having an effect: the proportion of bonds owned by foreigners has shrunk from 42.8% to 30.6% as foreigners sell heavily. There has, in fact, been an avalanche of foreign sales of South Africa bonds and equities: such has been the power of the downgrade in the credit rating. This is important because the ratings agencies are poised to downgrade South Africa even further if the government doesn’t get a handle on the situation.
That would undoubtedly see a lot more selling of bonds and equities. Ramaphosa began his presidency by appealing for increased foreign investment but in fact his dithering and his mouthing of tired old ANC slogans has had exactly the reverse effect. The government has lost all credibility and trust in the markets, a dangerous result since it means that in a crisis there will be no benefit of the doubt.
There is a political problem here, for Ramaphosa’s domestic popularity rating remains high which is likely to convince him that dithering and the mouthing of platitudes during his TV appearances is just what is needed. Whoever advises him on such matters needs to tell him that his popularity stems in large part from the awfulness of the possible alternatives and that he had better pay more attention to what the markets are telling him. Failure to do that will produce a thunderous result.
Secondly, it is becoming harder to sell ten year bonds because it is so difficult to believe anything the government says about the longer term, so the government is selling more and more short-dated stock. For the moment enough buyers are still rolling up at bond auctions but their numbers have already thinned: a lot of those foreign sellers will not be coming back.
As the year advances and the state’s enormous appetite for money just keeps getting bigger, one suspects things will get a great deal tighter. The pressure for the Reserve Bank to intervene in the market will grow. The Treasury will desperately resist all the demands for extra spending, not only because it knows that will mean yet more borrowing but because it knows that if it gives way on anything it could be engulfed by an avalanche of demands.
As this tightening happens Mboweni will have to warn the cabinet that if the state can’t obtain enough local buyers for its bonds it will have to start offering bonds in stronger currencies in order to tap into foreign markets. This will really start the alarm bells ringing since South Africa’s traditional strength has lain in its small dependence on foreign-denominated debt.
The SACP and Cosatu will demand the imposition of tougher capital controls to try to stop capital flight. This could well happen but we have been here before and seen the ingenuity and determination of South Africans in getting their money abroad. For many the very fact that the government is trying to stop you from acquiring hard currency is an extra incentive to ensure you get it. In the 1980s one would find friends of very slender means who would happily boast that they had a few hundred pounds in a British building society. Better-off friends tended to keep their mouths shut because they had considerably more stashed away in the Channel Islands or on Wall Street. Capital flight is like love: it always finds a way.
Dominoes falling, casting around
As in the 1980s the aim of such measures is to try to prevent the present turning into a future which you don’t like. Generally this doesn’t work. In the 1980s the future which the government was trying to prevent was black majority rule, which happened anyway a few years later. The trouble again now is that South Africa is moving rapidly into a very different future, whether the government likes it or not. Wherever one looks one can see the old order collapsing.
An obvious example is local government. A clear majority of all municipalities in the country are now dysfunctional, many of them bankrupt or hopelessly in debt. Whatever SAMWU does it can’t obtain higher wages for municipal workers in such a situation. The collapse of these municipalities naturally produces a flight to the metropoles by the youth, professionals and business people, further weakening the ratepayer base of smaller centres. These hollowed-out communities rapidly become ghost towns.
Until recently it seemed likely that we were moving towards the usual African model where local government only functioned in a handful of the largest cities. But even that is looking optimistic now. Bloemfontein and Pietermaritzburg are under administration, Durban is nearly bankrupt, Pretoria is a mess and Port Elizabeth is close to collapse. To drive through Johannesburg at night is uncomfortably like driving through Kinshasa: traffic lights don’t work and nor do many streetlights. Constant vigilance is necessary as dark shadows flit across the road in front of you. Manhole covers are sometimes missing and there are potholes everywhere. There are many areas where it’s not safe to drive. Everyone who can avoids the old centre of the city completely. This may be Africa’s greatest city but it is a city on its uppers.
This decay at local level has major implications for the ANC, for local government has been a key part of its patronage network. Large numbers of councillors and council staff members have drawn salaries and allowances and a whole class of black entrepreneurs has feasted on municipal contracts and tenders. Much of this is now threatened: major cuts are coming in state subsidies to local government.
Meanwhile, some three million jobs have been lost in the lockdown, a fact which is producing desperation both in the workforce and in the unions. On June 29 the unions at SAA put out an angry statement: “Minister Gordhan must be stopped in his plans to retrench 3700 workers as these totally unacceptable actions cannot be carried out by a democratically elected government. In fact, in difficult economically depressed conditions such as what we are facing, government must be the employer of the last resort.”
Note the logic: we are the masses. The ANC represents the masses. So it is definitionally impossible for a government representing the masses to allow any of the masses to lose their jobs. In the last analysis the government must simply invent jobs to give to people. There is no room for economics or functionality in this argument but in fact it has been largely followed for some time – hence the hugely swollen number of employees in SOEs and in the public service. Such is the welfare function of the ANC – and of course that is coterminous with its powers as a patron. Recipients of jobs or welfare grant are expected to be loyal clients.
Amazingly, this notion of government as the employer of last resort has now made it into the ANC’s economic policy document, doubtless as a result of Cosatu lobbying. There is, of course, no prospect of the state really employing all those who want jobs but what is notable is that jobs are here viewed not as something necessary to a productive enterprise but as a revenue stream, as welfare. This is, indeed, the ANC’s central attitude: for workers, jobs are welfare; for the ANC they’re patronage.
Infrastructure spending is good not because it might produce better roads or ports but because it creates jobs. It is indeed a good thing to create more jobs but any large investment has to be judged first and foremost on its return as a public good. Yet the government’s list of infrastructure projects contains many non-economic projects. The argument is that even if it’s a white elephant (more stadiums anyone?) it means jobs. But as public expenditure gets slashed much of this part of the ANC’s patronage network is threatened too.
Similarly, SAA workers carried placards which read “We demand job security”. Here again, a job is welfare. The fact that SAA is losing money partly because it’s overstaffed is irrelevant. It wouldn’t matter if the job was digging holes and then filling them in again: job security would still be the demand. SADTU clearly has the same view of teaching jobs: the key thing is that they represent a revenue stream, not that the teachers actually go into the classroom.
Unsurprisingly, SADTU want their members to refrain from teaching – though on full pay – more or less indefinitely (“until after the pandemic has peaked”). The fact that the Western Cape schools have been back in action for weeks now is not an example to be followed: it is a provocation requiring a hostile investigation by the Human Rights Commission. Huge pressure is being exerted to close the Cape schools again, largely because of the embarrassment they are causing SADTU.
As may be seen, we are now dealing with the results stemming from mistaken policies which built upon earlier mistakes and so on all the way back to 1994. This has created a rickety structure which is quite unable to deal with an economic or a health crisis. The result now is that almost everything is going wrong at once. The effect can be quite giddying and, of course, the government is way out of its depth, casting around in a fitful and spasmodic fashion which can’t disguise the fact that that things are out of control. And while the ANC elite may see this as an opportunity the mundane truth is that we now have not ten but thirteen million unemployed and that 47% of the population reports that it has gone hungry, a truly shocking figure.
We have reached a point where the ANC hardly dare remember that it promised “a better life for all”. Its central welfare function has failed and the ANC’s all-important patronage structure is being undermined.
All roads lead to a debt crisis
Under these circumstances the progression towards a sovereign debt crisis seems all but certain. Mboweni has put across the idea that our national debt may climb steadily towards 100% of GDP in, say, four years’ time, and then a debt crisis will occur. Anyone familiar with Third World debt crises knows that this is not how it works. As the debt creeps up, the government casts around with increasing desperation for any lumps of capital that it can get its hands on. (In Zimbabwe the government has several times raided people’s private bank accounts.) As tension increases even the smallest savers make heroic efforts to smuggle bits and pieces of money offshore. Trust and confidence in the government evaporates. No one invests.
The situation in the bond market becomes increasingly frantic. From abroad only junk bond dealers show much interest and even some of them are short sellers. Domestic investors too become exceedingly wary. The pressure on the Reserve Bank to intervene to prop up the market becomes insistent. Then a chance event – perhaps another loony ANC economic statement, perhaps the bankruptcy of some notable local company, or just some random international event – causes a panic.
The result is a blizzard of bond sales as investors bolt for the door. Insufficient buyers appear at the bond auction so the Reserve Bank has to intervene but that too creates further ripples of unease. The government, realising that it can’t sell any more bonds for the moment (for it is borrowing now just to pay interest on its debt), is forced to declare a moratorium on debt interest payments. This creates even more panic.
All of this can happen very quickly indeed. By this time the full-blown debt crisis has arrived. The moment that the government is unable to meet interest payments on its debt, creditors everywhere back away: who on earth lends to a government which isn’t meeting its payment obligations? This creates an immediate crisis on three fronts. First, all international trade depends on credit, but if payment is uncertain who is going to export anything to South Africa? So key imports – medical supplies, machine spares, oil – freeze. Secondly, bond auctions become impossible. In the absence of buyers the Reserve Bank is the only possible bidder but even if it takes that route, printing extra money with which to buy bonds, word spreads immediately of this desperate measure, creating further panic. Thirdly, of course, the Rand plummets.
If the panic starts on Monday by Thursday, at the latest, the Finance Minister is telling the cabinet that as things stand there will be no money with which to pay public service salaries or social grants. This produces total consternation: the day that payments to public servants or grant recipients simply stop is the day that the ANC collapses. The only solution is to obtain a large chunk of credit right away and come up with a plan with which to steady the markets: the only possibility is an IMF bailout. Faced with this pressure and these horrid choices some very unlikely ministers will end up voting for the bailout. And a very unlikely president will do the same.
There are, of course, variants to this scenario: there are a number of different routes into the crisis but in the end all roads lead to Rome. We have seen it many times in various countries. A point of some importance, though, is how the denouement is dealt with. The way NOT to do it is the way the ANC has simply run enterprises into the ground – Denel, SAA, SA Express etc – so they can no longer operate, cannot pay their debts or pay wages but just lie gasping like a landed fish.
The French call this a banqueroute sauvage (literally, a wild or uncontrolled bankruptcy). It is the worst option for it makes it all but impossible to save the enterprise or line up another buyer for it. Far better is to see trouble coming, act in good time, avoid the bad publicity of panic and collapse. Then, with luck, the enterprise can be saved. The analogy for saving a country is much the same.
 Cited by Anne Applebaum, Iron Curtain: the Crushing of Eastern Europe (2012), p.238.