Marko Saravanja THE POLITICAL ECONOMY OF SOUTH AFRICA: FROM MINERALS-ENERGY COMPLEX TO INDUSTRIALISATION by Ben Fine and Zavareh Rustomjee (Witwatersrand University Press, R89,95)
If you want to know the present you must understand the past. Ben Fine and Zavareh Rustomjee (the director of the centre for economic policy for Southern Africa at the University of London and the director general of the Department of Trade and Industry respectively)have used this ancient logic to explain the present state of the South African economy. What have they discovered?
They identified theminerals-energy complex (MEC) as the key player of the South African economy, and they monitored the development of the MEC and its relationship with the state and rest of the economy.
This highly successful analysis demonstrates the nature and inner workings of capital, its power, expansion, influence, brutality and flexibility. The goal justifies the means, which is why the MEC at times worked hand-in- hand with the apartheid regime, at times against the state, exploited the labour, dominated the industry or left the country.
The authors consider the MEC (in their words ”the system of accumulation”) the main culprit for the present economic inequities of South African society and the economy’s lack of industrial diversification, particularly in export-led manufacturing industries.
Fine and Rustomjee follow South African industrial development from the beginning of the century. They analyse the relationship between political power (which was ostensibly in the hands of the Afrikaner people) and economic power (which was in the hands of English capitalists). Economic power was organised around mining industry, which provided income for the state.
In return the state created enabling social conditions for mining industry to exploit labour. This symbiosis between the MEC and state stifled industrial diversification and export-led manufacturing industry.
The MEC expanded through capital-intensive investments in those industries that were directly related to its own needs and interests: iron and steel industries; electricity; non-metallic mineral products (cement, bricks, tiles, phosphate); and basic chemicals.
This ”backward expansion”, the authors argue, was due to the MEC’s lack of trust in the state’s economic policies and fear of nationalisation. Expansion of the MEC was financed through in-house financial institutions that have emerged through the needs for expansion and control of capital.
The negative effect of backward expansion was underdeveloped manufacturing industry, which made the South African economy internationally uncompetitive.
The state’s attempts to develop a coherent industrial development policy through tax incentives and tariffs did not succeed. The MEC was too powerful. Instead, the Afrikaner government tried to create an enabling environment for Afrikaner capital, which was at the early stages of development, to grow and penetrate into the MEC. This major political and economic aim of the apartheid state, although with limited success, gave rise to powerful conglomerates.
Traditionally, six conglomerates dominated the South African economy: Anglo American Corporation, Sanlam, SA Mutual, Liberty/Standard, Rembrandt/Volkskas and Anglovaal. Each of them has varying interests in mining, manufacturing and the financial sector. The conglomerates exercise oligopolistic control over these sectors through various linkages, relations and structures of holding and subsidiary companies.
The inner workings of capital remain mystical. In its ever-longing brutal greed for expansion, many get hurt. Are the latest privatisation attempts some of mysterious symptoms of the inner workings of capital? Or is it the agenda of the International Monetary Fund and the World Bank, in the name of globalisation?
In the search for South African economic truth, Fine and Rustomjee have made a great contribution. They have stripped naked and exposed private capital, political power and their love affair. But the question remains: will the new political elite hear the sounds of the voiceless masses?
Marko Saravanja is a lecturer at the graduate school of public and development management, University of the Witwatersrand
They try to move beyond qualitative ideological debate in their analysis of South African political economy and successfully use quantitative economic factors. However, their nostalgic ideological positioning, which is left of centre, becomes obvious in their citing of South Korea as a successful example of state-centred development. Once again, after the collapse of communism and the onset of Asian flu, the South Korean irony appears to be the authors’ poor choice.