/ 9 May 2016

SA needs to overturn state-capital relations, if not society itself

National Planning Committee members in 2012 Trevor Manuel and Cyril Ramaphosa. Gumede says the committee's National Development Plan falls short in many ways.
National Planning Committee members in 2012 Trevor Manuel and Cyril Ramaphosa. Gumede says the committee's National Development Plan falls short in many ways.


The early 1990s were tricky, a fact that gets easily forgotten. The fall of the Berlin Wall had major implications for many, if not all, political economies the world over. Market fundamentalism, driven by the imperialist United States, became the order of the day and experiments with socialist and communist economic policies ended abruptly. 

Africa, in particular, was forced to implement structural adjustment programmes associated with the Washington Consensus – a “consensus” of the Bretton Woods institutions (the World Bank, the International Monetary Fund and the World Trade Organisation) that governments must not interfere in the economy. As such, development – understood as the inclusive socioeconomic advancement of well-being – fell off the agenda. The “war” unleashed by structural adjustment programmes meant that development had to take a backseat.

South Africa, as a new politically independent country, attempted to navigate the complex geopolitical and global economic situation of the 1990s. The political settlement took place against the backdrop of the triumph of the free market dogma, which imposed an ideology that said “there is no alternative to the market”. 

It is, therefore, not surprising that we ended up with the kind of political settlement South Africa embraced. In hindsight, there is always a feeling that things could have been done differently, which is understandable. Imperfect as the settlement was, it was a basis for starting with transformation.  

The reconstruction and development programme (RDP), unveiled in 1994, was a mechanism to place development firmly on the agenda of post-apartheid South Africa to kick off transformation. The 1992 Ready to Govern discussion document had surveyed the terrain and gave an indication of what the ANC would do once in power. 

Then there was a government of national unity (GNU), which had its own challenges. The focus ended up being more on reconciliation, which, as recent events show, has not been effective. It had also become glaringly clear that the economy needed restructuring, starting with stabilising it. Among the less-discussed realities of the early 1990s is that the National Party government had bankrupted the state. The department of public enterprises, for instance, was deeply in debt, which is also a debt of the country as a whole. It made sense to privatise some of the state-owned enterprises. 

Perhaps the most fundamental question we should be confronting is: What has happened to the political economy of South Africa since 1994? Inevitably, we must also discuss what can be done to ensure inclusive growth and development. 

In two letters by former president Thabo Mbeki on the growth, employment and redistribution (Gear) economic framework and the previous RDP, he discussed the logic behind Gear and clarified that it was never meant to be a departure from the RDP. In government, just before the Mbeki was recalled, we discussed this and there was a sense that we had firmly put in place the foundation of and the mechanisms for a take off: we simply needed to push a few levers, as we strengthened the capacity for long-range planning as well as monitoring and evaluation, to set in motion sustainable inclusive development. 

At the recent launch of the ANC local government election manifesto, President Jacob Zuma said: “The ANC has a concrete plan in place to respond to the slow growth and create jobs … At the national level, a nine-point plan is being implemented by the ANC government to boost economic growth and job creation.” 

Just like the radical economic transformation rhetoric, the nine-point plan is simply a long wish list, a sign that those who come up with these initiatives have not fully understood what exactly is fundamentally at issue with regard to the political economy of post-apartheid South Africa.

As for radical economic transformation, in particular, there has yet to be anything radical about what is being proposed. It is standard economic transformation and industrial development. Also, although a step in the right direction, the National Development Plan (NDP), falls short in many ways, at least in as far as what really needs to be done with the economy. The nine-point plan and the NDP effectively say the same things that have been said since 1994, and the New Growth Path replicates many of the same things, too. None of this has brought about the much-needed inclusive growth.

In my forthcoming book, Post-Apartheid South Africa: Economic and Social Inclusion, I advance the argument, as set out in my previous book (The Political Economy of Post-Apartheid South Africa), that, just as the political economy of apartheid South Africa was a compromise between global capital (represented by the minerals-energy complex) and the minority white Afrikaner population, the post-apartheid political economy is also a compromise. It’s a deal between the African-majority ruling party, the ANC, and the white minority, members of whom are leading figures in finance capital. 

In other words, although the economy underwent some restructuring during the transition to democracy, nothing much has changed. In addition, I argue that the hegemony of global capitalism and the skewed distribution of power globally may be limiting the capacity of the post-apartheid dispensation to foster inclusive development in South Africa. The same is happening in most of the developing world.

Understanding these elements of the post-apartheid political economy is the key to many economic questions and to working out what should be done. There should be an acknowledgement that the economy performed relatively well from the mid-1990s to the mid-2000s, including creating a fairly respectable number of jobs (although not enough). Equally, it is important to acknowledge that the economy started performing badly in the late 2000s, before the effects of the global economic crisis reached the developing world (including South Africa). 

I have attributed this to delays in economic policy reforms and poor economic management from the late 2000s onwards. Without a doubt, the global economic crisis is a contributing factor to South Africa’s imminent recession, but the effects of the global economic crisis could have been mitigated if attention had been paid to the political economy of post-apartheid South Africa, especially to what was happening in the mid- to late 2000s. 

In conclusion, therefore, the answer to what must be done (to get back, at least, to the levels of economic performance seen in the Mbeki era) must be informed by a proper understanding of the political economy of post-apartheid South Africa. As for inclusive development, policies – especially when economic and social policies are linked and a proper policy mix is secured – can play a big role, even in the context of the hegemony of global capital. 

But South Africa requires a profound restructuring of state-capital relations, if not the complete restructuring of the society itself, if the ideals that many sacrificed their lives for are to be made a reality.

Vusi Gumede is the head of the Thabo Mbeki African Leadership Institute at Unisa. The views expressed here are his own.