The Guptas and Capitalism: Not as Related as You Might Think


Written by: Chris Hattingh

The Gupta scandal which preoccupies much of South African’s time and outrage is difficult enough to unravel without analysts, experts and others who try to score a few political points by pinning the blame on capitalism.

Without defining their terms, we are told that the Guptas’ actions are symptomatic of the capitalist system, along with all the other ills it causes. Far from placing responsibility on the people who were involved, such as Jacob Zuma and others within the African National Congress, the focus is shifted to a system which we do not even have in South Africa.

Lest I be accused of not defining my terms, I will take from Capitalism: The Unknown Ideal:

“Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.”

South Africa is not capitalist.

We continually see the tramping of individual and property rights for the goals of ‘social cohesion’, the ‘democratic project’, and the ‘social good’. We instill in our children that they must always give back, that they must not be selfish, that they owe their success to those around them. This is not capitalism. We are luckily not as socialist as Zimbabwe or Venezuela, yet. But we are most definitely not capitalist.

How did the Guptas gain so much control of Zuma and others within government? Did they compete with others on an open market, offering their goods and services in competition with other businesses? Or did they use their wealth to bride and intimidate their way to into the bosom of government?

Which of the two paths mentioned here sound capitalist to you? In the capitalist system, when government is limited to protecting individual rights, people and businesses need to compete with one another for your money. They cannot hold a gun to your head – they must make the best possible case as to why you should exchange your money for whatever it is they are offering.

Again, from Capitalism:

“In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate.”

If we had a capitalist system, we wouldn’t see any tender processes. We wouldn’t see massive, corrupt state monopolies. We wouldn’t the massive growth of the welfare state. The continued exposure of shady political dealings and the large amounts of money thrown at government in the hope of political favour shows us that the actions of the Guptas were everything but capitalist.

Occasionally we will pay lip-service to individual rights, but the consistent belief is that individual rights are only acceptable insofar as we remember that society and its representative, the government, is the final judge of what is moral or immoral. Because capitalism is the only social system based on individual rights, it is the only system which necessarily bans the use of force in social relationships. However, thanks to the size of the South African state and its influence in the economy and people’s lives, it attracts immoral actors such as the Guptas – they realised that control of the state would mean power for them, free from any sort of competition they would face in a capitalist system.

Capitalism doesn’t care about your race, gender or religion. If someone is bigoted towards you, you expose them and their business in the free press and then their business will likely cease to exist as others hope to avoid the treatment you experienced. Under capitalism, you must do everything you can to make the best possible case for people to use the product or service which you are offering. In a free, capitalist system you can only engage in voluntary transactions with others – there are zero opportunities to use the mechanism of the state to drive your own agenda.

The Guptas and all they have wrought are the result of the size, and influence, of the South African state. There were corrupt, behind closed doors dealings well before the Guptas, and the same will happen when they have left the country. The bigger the state grows, the more corruption it will attract.

From what I have written here it should be clear that the actions by the Guptas were fundamentally not capitalist. If you want to decry capitalism, decry voluntary, free interactions between people. That would, at the very least, be honest.

Author: Chris Hattingh is a passionate advocate for free markets and free minds. He is a student of Objectivism and is currently a researcher at the Free Market Foundation.