Neoliberalism and the political economy of the new sa

Neoliberalism and the Political Economy of the "New" South Africa.

Paul Williams and Ian Taylor

New Political Economy, Vol. 5, No. 1, 2000

Neoliberalism and the Political Economy of the ‘New’ South Africa PAUL WILLIAMS & IAN TAYLOR

South Africa’s relatively smooth transition from the institutionalise d racism of apartheid to a universally franchised democracy was, from any perspective, remarkable. Even the most astute political pundits would have struggled to predict the process which would see Nelson Mandela and the African National Congress (ANC) dominate a Government of National Unity (GNU) less than a decade after the traumas of the states of emergency of the 1980s.1 In this sense, g in the ‘new’ South Africa. However, this article is more much has changed concerned with what has stayed the same and why.

We believe that the economic continuitie s evident in so-called post-apartheid South Africa are just as interesting, and perhaps even more fundamental, than the more celebrated and obvious constitutiona l changes.

The article examines g one signi cant g part of the p p process that altered the economic trajectory j y of the ANC from being g broadly y social democratic,, to the conservative, neoliberal position it advances today. p y In pparticular, our interest lies in understandin g how the ANC’s de nition of what constituted ‘good’ g economic p policy y underwent a articulated during the liberation dramatic transformation from the promises p struggle, to the policies pursued via the GNU. We believe that the international discourse of neoliberalism has played a crucial, and often underestimated, role in this pprocess. After outlining g what we mean byy neoliberalism , the article charts of how the major j shifts in the ANC’s economic p policy y and offers an explanation p these shifts occurred, with p particular reference to the role that the neoliberal discourse played in delegitimisin g alternatives and sti ing debate during the transition.

De ning neoliberalism Neoliberalism as an ideology gy did not emerge g from a historical or p political vacuum. The neoliberal p point of view had to be activelyy disseminated byy an array y of social forces, institution s and intellectual agents. g Byy the early y 1980s, as Roger g Tooze has argued, g neoliberalism had achieved ‘a special p status in society: y [ it was] taken to represent p the reality y of the global economy, against which other views … [were] judged and evaluated’.2 But this had not always been the case.

Paul Williams & Ian Taylor, c/o Department of International Politics, University of Wales, Aberystwyth, Ceredigion SY23 3DA, Wales, UK. ISSN 1356-3467/00/010021-2 0 Ó 2000 Taylor & Francis Ltd

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Paul Williams & Ian Taylor After the devastation wrought by World War II, ‘embedded liberalism’ represented the orthodox stance in Western economic debates. 3 Indeed, during the late 1960s, proponents of neoliberalism were still derided as ‘stupid’ and in danger p g 4 g society y down the ‘road to reaction’. In short, neoliberalism as a of leading project p j had to be actively y p promoted by y an array y of actors in speci c p historical contexts. In this sense, its rise to dominance was neither natural nor inevitable.

We label this discourse neoliberal to emphasise p how the contemporary p y articulation of this orthodoxy y shows a blatant disregard g for the traumatic social consequences q which arise from the imposition p of unfettered market-logic g to the international realm. By y contrast, the classical liberal theorists such as Adam Smith exhibited a concern for the well-being g of society as a whole which is lacking from the chief exponents of neoliberalism . Today’s disciples of this p discourse seem happy ppy to live in what J.K. Galbraith called a ‘culture of contentment’ in which those at the topp of the social ladder ignore those at the g bottom and spend and p their leisure-time jjustifying y g the growing g g inequalities q 5 demonising the poor as ignorant, lazy and criminally y motivated. The wider objective of the neoliberal pproject is to engineer j j g a stable environment in which and which signi cantly constrains internationall y mobile capital p can reproduce p g the possibilitie s of collective action in the global political economy. In the South African context, neoliberalism became increasingly in uential in ANC pronouncements, such as the 1990 Discussion Document on Economic Policy; the 1992 draft policy guidelines; and both the 1994 Reconstruction and Development (RDP) and the 1996 Growth, Employment and Redistributio n (GEAR) programmes. Part of this article will chart the shifts in ANC economic policy, broadly from the Freedom Charter to the RDP and GEAR. The con guration of neoliberalism currently dominating the theory and much of the practice of the global political economy is based on a number of assumptions, many of which have their origins in liberal political economy and have been transposed to the international realm. Since the end of the Cold War these assumptions have come to de ne the rules of what is now often perceived to be ‘the only game in town’ as far as paths to economic ggrowth and p development are concerned. Although p g alternatives have been p proposed, p such as UNICEF’s notion of ‘adjustment j with t a human face’ or, in the African context, the African Alternative to Structural Adjustment Programmes, they have failed to materialise in any signi cant form. The central questions for this discussion are how and why neoliberal interests and practices have prevailed in South Africa and particularly within the ANC. So what assumptions underpin the neoliberal pposition?

First, neoliberal p political economy y ‘demands nothing g less than the institutiona l separation of society into an economic and p political sphere’.6 This forms ppart of what Karl Pola´nyi y called the ‘economistic fallacy’ y whereby y this separation p of spheres p is assumed to be common to all societies regardless of their historical context. Crucially, this separation is not neutral: economic activity is viewed as conforming to an inherent rationality which distinguishe s it from the (inherently irrational ) political sphere.

From this pperspective, liberals can claim that probp p p lems de ned as ‘economic’ can be solved by ‘experts’ through the application of a socially-neutral , technical rationality. This leads quickly to the assumption 22

Neoliberalism in South African Political Economy that economic motivation is the dominant driving force behind all human activity.

Secondly, economics, with its supposedly inherent rationality, should govern the irrational processes of political decision making. This normative claim rests on the liberal belief that a long-term harmony of interests is implicit in economic p activity ‘policy y within the framework of a free market. Anyy subsequent q p y prescripp p tions’ will therefore inevitably y emphasise p market solutions to relieve the headache of (re)distribution problems. Witness the ‘one-size- ts-all’ approach to adjustment programmes: reduce public investment and current expenditur e (includingg wages g ), devalue the currency and curtail in ationary tendencies. For liberals, the market (if left free from unnecessaryy state/political/irrational interp ) p primaryy mechanism to resolve policy problems at both vention represents the p the domestic and international level. However, the ppolitical consequence of such q prescriptions is to p p p privilege g the desire for maintaining g the smooth and ef cient running of the status quo over claims for redistributiv e justice. In practice, this often goes hand in hand with policies designed to maintain a system of law and p g y order based on the protection of the rights of the property-owning individual .

As is implicit above, neoliberal political economy also proposes that ‘a natural community of interests would be brought about by the operation of free markets’.7 This allows for the reconciliation (de ned as ‘natural’ and noncoercive ) of the individual to the nation and the nation to mankind. As David Ricardo famously declared: Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employment as are most bene cial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole.8 Thus, byy p pursuing g one’s own advantage g everyone, y given g time, would bene t absolutely—although y g the bene ts would not be distributed equally q y throughout g society. y In addition, in the international realm such a ‘harmony y of interests’ a necessary represents p y element for long-term g peace between nations. p Finally, y neoliberalism , with its focus on ‘economic man’, a rational egoist g constantly y seekingg to optimise p his p position, ultimately y stresses that the natural size for an ef cient economic community is the global market. National governments have their uses, but should not be allowed to impose rigid boundaries around economic activity. Within the framework of a free market, government should play the crucial but limited functions of providing security from external threats and ensuring law and order at home. Nevertheless, the irrationalitie s of government intervention constitute the main source of anxiety for liberals. John Gray’s comments are typical of this view: Every y governmental g intervention has real costs, and there is that the vagaries of governmental strong g evidence to suggest gg g g policy p y constitute the chief source of economic disturbance in of recent decades. It is a g general truth … that the imperfections p 9 the market are never suf cient to justify intervention.

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Paul Williams & Ian Taylor In short, the larger the sphere of market relations and the less state/political interference, the better.

Our claim is that this neoliberal ideology of course byy considerable gy (supported pp material interests) has played p y a necessaryy but not suf cient role in the dramatic about-face in the ANC’s de nition of what constitutes ‘good’ economic policy. g p y The ANC’s acceptance of neoliberalism , we believe, re ects not only p y a highly g y selective readingg of the empirical evidence concerningg the ‘success’ of numerous p neoliberal-inspire projects emanatingg from the international p d development p p j nancial institution s (IFIs), in particular the World Bank, but also a failure to p acknowledge the amount of ‘theory’ implicit in their own position. The result is a deeply political policy, portrayed as solely ‘economic’, which has enormous repercussions for the whole of South African society but most notably the richest and poorest elements. It is to how the ANC’s economic thinking came to embody neoliberal principles and how this has been translated into policy objectives that we now turn.

The early phase of ANC economic policy At the time of the ANC’s unbanning g in 1990, the organisation g had no clearlyy formulated political and economic policies.

Instead, the organisation had relied p p g on an emotional attachment to the principles of the 1955 Freedom Charter with p p its vague but prominent redistributionis t slogans: The People shall share in the country’s wealth!

The national wealth of our country, the heritage of all South Africans, shall be restored to the people; The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole; All other industries and trade shall be controlled to assist the well-being of the people; All people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions.10 On paper, p p at least for most of the struggle, gg the ANC (encouraged g byy its strategic g ally, y the South African Communist Party y (SACP)) was committed to a mixture of dirigisme and socialist reform of the economy via nationalisatio n of the g mines, banks and monopoly industries. However, the exact manner and ppolicies by which the ANC was to pursue this were never formally enunciated. The reasons behind this lay primarily in the diverse membership pro le of the movement. As Murray suggested: Its purposefully anti-capitalist rhetoric gave the ANC p p y vague g p g leadership p considerable ideological g leeway y successfully y to stitch together a looselyy de ned coalition of interest g g groups p that included workers and aspirant entrepreneurs, Christians and Comp p munists, and the unemployed p y and middle class, around a shared objective of dismantling apartheid.111 24

Neoliberalism in South African Political Economy Getting ready to govern g p in ANC policy p y came at the Harare The rst concerted effort to ll this gap p y 1990. This was followed byy a draft f ANC Economic Conference in April–May ( p p p by y the 1991 National Conference) and Manifesto prepared for but not adopted the ANC’s Ready dy to Govern document of Mayy 1992. Central to this was a basic commitment to the restructuring g of society y and a dynamic y role for the state in the economy. y However, the document continued the ANC’s track-record of vague statements on economics, to the extent that its readers could infer g ‘anything y g from extensive state intervention to conventional market-driven structural adjustment’. adjustment’ 12 Nevertheless, the document did call for the unbundlin g of the four massive corporations that dominated the South African economy and a rejection of capital’s familiar demands for low labour costs. Simultaneously, labour y was accorded a pivotal role in the planning and execution of industrial ppolicy.

In a rejection of economic ‘trickle-down’ thinking, j g the document’s central message was that growth g was ‘growth g through g redistribution ’. The assumption p g would be p promoted byy meeting g ‘the basic needs of the majority j y through g a redistributio n of income which would increase employment, demand and prop y p 113 duction’. Such a strategy gy clearly y demonstrated the residual in uence of socialist ideas within the alliance at this juncture. This was partly because the document appeared early on in the transition process before the ideological onslaught from neoliberal intellectuals began signi cantly g g y to in uence the decision-makin g elite within the ANC. However, this breathing space for ideas outside of neoliberal strictures would not last long. g of the document, in particular its ‘growth through Indeed, the prescriptions p p p g g array redistribution ’ agenda, g were immediately y attacked byy a disparate p y of pro-business elements in the media and various ‘independent’ p p policy p y think-tanks and economists. These attacks ‘ranged g from consternation about the “socialist” d set of objections to its undertones of the document to a more sophisticate p j 14 1 alleged g overtones of macro-economic p populism’. p At the same time, the p probusiness media ran a string g of hysterical y articles warning g about the ‘foolishness’ of redistributin g wealth from the massively privileged to the chronically disadvantaged. The Financial Mail, for example, warned: There will be a massive loss of jjobs, shops p will empty p y of g goods, housing g will fall into ruin, disease and misery y will p predominate— Comrade Nelson, like Comrade Nyerere y of Tanzania, will say: y ‘Sorry, we made a mistake. We’ve redistributed all we have’.115 However, such criticism g generally y lacked detailed analysis y of what ‘growth g through g redistribution ’ could mean and instead simply p y dismissed alternatives to neoliberalism as nonsensical. These scare-mongering g g tactics coincided with t a remarkable project to ‘educate’ the ANC elite and the public about the foolishp j p ness of non-neoliberal approaches to the economy. pp y As the Financial Mail put p it, ‘the ANC is muddled and confused. It needs to be g guided and educated—taught g to face harsh economic reality y and the need to modify y the expectations p of its cadres’.116 Under the weight g of this intellectual onslaught, g the ANC’s economic thinking increasingly came to bear the hallmarks of neoliberalism . In particular, 25

Paul Williams & Ian Taylor promotion p of macro-economic stability y (through g scal and monetaryy stringency, g y ) deregulation, g privatisatio n and export-led growth strategies was pushed closer to p the top of its agenda.17 Preventing an alternative?

A number of factors militated against g the introductio n of a viable non-neoliberal approach. pp First, the collapse p of the Soviet economies threw manyy socialist and practical disarrayy and strengthened the intellectuals into a state of conceptual p p g that there was ‘no alternative’ to neoliberal capitalism. hand of those who argued g p Second, there was the more p pragmatic g question of resources. In the face of a q well-funded array y of p pro-neoliberal groups g p in civil society, y the ANC’s economic strategists were swamped by this ideological tidal wave. As Karl von Holdt remarked: Very, How bigg is the ANC Economics Department? p y veryy small and veryy new in a lot of ways. y And y yet y you’ve g got the captains p of industry, y with t their think tanks that have g got a whole lot of policy studies coming out. That can be quite seductive.18 At the same time, the representatives p of big g business continued their educational and Mandela in particular, to ‘charm offensive’ on the ANC elite in general, g p ‘correct’ any y remaining g heresy. y This p process was helped p by y Mandela’s eagerness g to mix with the privileged p g elite, in particular p the so-called Brenthurst g group, p an informal association of monopoly p y capitalists p meeting g under the aegis g of Anglo– g This was a re ection, p American magnate, g Harry y Oppenheimer. pp perhaps, of the petit bourgeois aspirations that many ANC leaders have long held. As Waldmeir observed: [Mandela] constantly y sought g the views of international businessmen and bankers on South Africa’s future and he cultivated close relationship p s with t top p local businessmen—he spent p holidays y with the head of one of the country’s y leading g mining g families [and] entertained at the home of one of Johannesburgg ’s most ostentatious businessmen … where g guests were met in the driveway y with champagne p g on silver salvers. [He also] dined regularly with Anglo patriarch Harry Oppenheimer.119 Dinner apparently pp yg got results, as a satis ed Oppenheimer pp explained: p ‘when y you talked [to Mandela] about the future of the country, y p particularly y on the economic manyy things side, he said a great g g that seemed to me veryy silly, y but he says y manyy 220 of them less now’. Such sentiments were echoed by y another analysis: y ‘the close-knit circle of associates together g with their coterie of supporters pp in the media and academia now p pride themselves on having g “weaned off” f the ANC of its p past economic fantasies … and generally “saved the country” from becoming another Bosnia’.221 Tactically, y this offensive was designed g to bolster the hegemony of neoliberal ideas in South Africa through consensual means. However, coercion was not 26

Neoliberalism in South African Political Economy ruled out by the establishment . For example, the then Finance Minster Derek Keys g gave ANC economics head Trevor Manuel a brie ngg on the economy, y and Manuel repeated p it to Mandela. ‘And I g got frightg ened’, Mandela recalls. ‘Before Trevor nished, I said to him, “Now what does this mean as far as negotiations g are concerned? to me that if we allow the situation to continue Because it appears pp … the economy is going to be destroyed” ’.222 Such assertions were given added credibility in light of the dramatic increase in South Africa’s budget de cit under the stewardship of the National Party (NP).23 Not only had the 1980s witnessed massive spending in the defence and ‘sanctions-busting ’ industries, but corruption had become endemic.24 The national debt was further aggravated between 1990 and 1994 with the NP’s indulgence in reckless spending and practices of personal enrichment, particularly through in ated contribution s to civil servants’ pension funds. In addition, the scramble for state funds by various homeland bureaucrats during this period only compounded the situation. Whatever motives lay behind the de cit, the deteriorating situation severely circumscribed any future ANC government’s room for manoeuvre as further spending, in order to redistribute wealth for example, would have led to in ation and unacceptable debt. Moreover, byy p p maintaining g most of the old apartheid p bureaucrats, not onlyy did the GNU continually y receive ‘economic [advice] almost exactly y the same as under the 225 National Party y regime’, g but upon p leaving the public service, these individual s received substantial golden handshakes.

The ANC and its partners were also constrained by the scal and monetary prescriptions of the IFIs. Throughout this period, a deluge of high-pro le studies and conferences funded by y the World Bank and IMF ppromoted the neoliberal message. about what was ‘reasong While the IMF delivered sharp p prescriptions p p able’ and ‘realistic’, the World Bank began g discussion s with the ANC and its liberation p partners. The Bank enjoyed j y considerable access to the ANC elite and, in South Africa during ‘even byy World Bank standards’, its presence p g this p period 26 2 represented p ‘an unusually y large g … effort’. Consequently q y , ‘bigg business, the IMF and the World Bank [became] increasingly g y in uential in the topp ranks of the ANC leadership’. p 227 Indeed, one World Bank representative p later boasted that ‘this is the only country in the world where we speak to the opposition ’.228 Such activity only con rms the assertion of two Bank of cials that one of the organisation ’s main tactics was to ‘win access to the most senior policy-makers, thereby permitting the Bank staff to accelerate reform and to in uence its character [by y securing] g a pplace at the policy p y table’.29 The Bank’s Reducing g Poverty ty report p became the p public symbol y of this p process of coercion and consent—pressurising p g and ‘trust-buildingg ’—with the ANC elite The Report of Pretoria’s and its liberation partners. p p combined elaborate probes p economic situation ‘with somewhat restrained neoliberal directives that were often offset byy incorporating p g aspects p of p progressive g thinking’. g 330 Incredibly, y the Bank adopted p a more p progressive g perspective p p than many y of the South African ‘captains of industry’, arguing that ‘South Africa’s unequal legacy cannot be 27

Paul Williams & Ian Taylor reversed solelyy byy market reforms because those disenfranchised byy apartheid p will be unable to obtain the resources necessary to exploit market opportunities’.331 But even this relatively moderate position was unacceptable for some of the South African elite. For example, the National Manpower Commission’s chair, Frans Baker, demanded that ‘employers and unions negotiate wages g g in the 32 face of the cold winds of international competition’. p Little concern was devoted to the structural inequalities that labour had historically faced in South Africa.

Manufacturing the future: corporate scenarios The assault on any y lingering g g socialist tendencies within the ANC continued through g a p plethora of corporate p scenario p planning g exercises aggressively gg y p promoted after 1990.33 The role of such scenarios in mouldingg future options p was quite explicit: q p to ‘signi cantly g y alter the mindsets or paradigms through which world’.34 decision makers see the world’ The rst was Nedcor/Old Mutual’s Prospects p for f a Successful f Transition, launched in 1990. Between January y 1991 and June 1992 over 45,000 handpicked South Africans, invariably p y from the decision-making g levels of societyy and 35 3 the ANC, attended the p presentation of the Prospects. p This scenario was q quicklyy for followed byy Sanlam’s Platform f f Investment and the more eclectic Mont Fleur Scenarios. Simultaneously y , other documents, such as the South African Chamber of Business’ Economic Options p ffor South Africa, f were aggressively gg y advertised as offering g ‘realistic’ blueprints p of South Africa’s future. These supposedly pp y ‘diverse’ scenarios—which in p practice differed only y super cially—were p y coordinated by a close-knit circle of managers and corporate strategists. As Robin Lee observed, ‘Wack and Newland were both part of the Sunter exercise, while Wack was also a member of the Nedcor/Old Mutual team—and the present scenario pplanner at Shell, Adam Kahane, was the facilitator of Mont Fleur’.36 The multiple p linkages g between the organisers g supports pp the assertion that ‘debates’ over the terms of South Africa’s economic strategy were (and remain) carefully concocted by selected representatives. As Susan George explains: There has been a concerted effort, an extremely y well-funded effort, to make [neoliberalism ] and all that goes with ideological g g it seem bene cent and necessary. y You fund p people p to create an ideological g climate which becomes the life f support pp system y for the doctrine…. You create the colloquia q and the symposia, y p open p to that the p press that y you sponsor. p And they y all write [in] journals j you also fund, and from there they y yg get on the editorial p pages g and on the air. Pretty y soon y you have those three-man … p pseudo debates on television between the raving g radical right, g the extreme who thinks differently … right g and the right g of centre…. Anyone y must make apologies for his or her beliefs.337 This ideological g bombardment from neoliberal management g gurus g was also replicated p byy the business press p which continued its savaging of any nonneoliberal messages from the ANC. 28

Neoliberalism in South African Political Economy Despite such pressures it would be incorrect to describe every element of the ANC as passive observers in this process of deradicalisation . For example, any progressive economic policies were increasingly quali ed with strong caveats (such as the need to protect property rights and privatisatio n) designed to reassure big business. Furthermore, as the negotiation process wore on, such caveats were put in place with only the barest level of consultatio n between the ANC elite, its membershipp and political allies. 38 Capital p p had long g demanded such guarantees as a foundation for ppost-apartheid g p South Africa and this was re ected in the appeal pp made byy the South African Chamber of Business for a constitutional bill of rights, g described as ‘a way y of p protecting g the minority’s y p privileges g 39 3 rather than enlarging g g the freedom of the majority’. j y In his studyy of South Africa’s transition to democracy, y Adam Habib agrees, g arguing that one of the outcomes of the transition had been to bring about: the ANC’s commitment to manage, g and to locate its p programme g of economic reconstruction within the framework of, a market in a range economy. y This commitment was captured p g of clauses in the Bill of Rights, g which recognised g the rights g of individual s to and to dispense with these own property p p y and accumulate capital, p p of as they yp please. The settlement thus established the parameters p the GNU’s economic p programme and conditioned its evolution in a neo-liberal direction.440 Indeed, the ANC’s draft policy guidelines of April 1992 made no reference to higher taxation thresholds for the massive corporations, suggested privatising elements of the public sector and ditched calls for a restructuring of the nancial sector.

Forging a consensus or manufacturing consent?

Although elements from the left, and the Congress of South African Trade Unions (COSATU) in particular, attempted to stem the drift rightwards, by p g y the time of the 1994 election the Financial Mail could triumphantly p y claim that macroeconomic p policy y was tilting g ‘in the right g direction’,, with the ANC adopting p g 41 4 ‘a steadily y more realistic approach pp y Symbolically, y y,, the new to the economy’.

ANC ggovernment retained Derek Keys y (an ex-chief executive of Gencor) as By Finance Minister. B y doing g so, Mandela ‘delighted g investors, businessmen and White South Africans … Nothing g else would have p persuaded the outside South Africans—of his commitment to freeworld—not to mention sceptical p market economies and p political moderation’.442 Keys’ appointment was certainly interesting for a number of reasons. As a report in the corporate mouthpiece, Business Day, commented approvingly : We can look with some hope p to the evolution in economic ago thinking g in the ANC since the occasion nearlyy three years y g when Nelson Mandela stepped pp out of p prison and p promptly p y reaf rmed his belief in the nationalisatio n of the heights g of the economy. By contrast … Mandela [has gone] out of his way to 29

Paul Williams & Ian Taylor that the assure a large g g group p of foreign g (and local ) journalists j ANC was now as business-friendl y as anyy potential foreign p g investor could reasonably y ask. He indicated further that ANC economic thinkingg was now beingg in uenced in n uenced as much byy Finance Minister Derek Keys and by organised business as anyone else. 43 When Keys y resigned g a few months later, Mandela replaced p him with t another white, conservative banker, Chris Liebenberg, g whose 1995 budget g spoke p ‘volumes about the new-found conservatism of the … government of national unity’. y 444 Whilst byy this stage g the ANC had not entirelyy surrendered to the demands of capital, p its economic p proposals p had taken a de nite neoliberal slant. Thus the new government accepted the compulsions g p p of nancial and monetary y ‘discipline’, defended the reorganisation of South African trade policies to foster an p g p export-led p growth p g plan and envisaged g a reduced role for the state. Economic regeneration was p via a surge g predicated on sustainable growth g g of foreign g investment (which never materialised), whilst domestic capital was supposed to p pp intensify y its investment, not indulge g in off-shore relocation as frequently q y occurred. Ironically, y this had been facilitated—at the demand of capital—by the removal of exchange controls. At the same time, the GNU was bombarded with ‘advice’ that it ‘should act decisively to reassure the nancial markets rather than 45 concentrate on ful lling of its supporters’. g the expectations p pp As Marais highlights, g g an important p factor in shifting g ANC p policy y was the p ) of the terms of the debate from the alteration (at the behest of capital ideological, where the ANC was at best in a state of confusion, to the technical, g where the organisation was most certainly g y disadvantaged g . 446 As indicated above, ANC efforts to p produce a coherent macroeconomic framework were hampered p not least byy the lack of attention afforded to bodies such as its Economic Department. p Moreover, concentrating g on the intricacies of an economic p policyy was a luxury y that an organisation g which had been banned and persecuted until very recently could ill afford. This subtle alteration turned out to be crucial in deciding how the economic debate unfolded. The fact is that the ANC and its liberation partners were severely constrained in their technical ability to combat the rush of neoliberal ideas that engulfed the movement in the transition period. The situation was not helped by ‘patent abuse of technically rigorous economists at the helm of the ANC’s DEP [Department of Economic Planning]’.47 Consequently: In terms of the economic debate, the ANC was … clearly y on the defensive at the beginning g g of the negotiation g process. It simply p py did not have a set of new p progressive g ideas and strategies g to counter those neo-liberal ideas so p powerfully y p proposed p byy the Washington g institutions , western governments, g local business interests, and the De Klerk regime.448 This factor considerably y strengthened g the hand of capital p and its intellectuals who embarked on a concentrated p political struggle to promote the neoliberal principles to which they subscribed. Moreover, it allowed them to dismiss 30

Neoliberalism in South African Political Economy alternative policies on relatively basic, technical grounds. This not only emasculated the progressive wing of the liberation movement, but it also encouraged conservative elements within the ANC who, in tandem with erstwhile ideological partners in the business community, rapidlyy moved to direct the ANC’s economic ppolicy y down more ‘realistic’ ppaths.49 As Nicholas Oppenheimer pp later asserted, ‘in a remarkably y short time [the ANC] matured into a government marketplace’.50 Prior to this, which understands and accepts the disciplines of the marketplace’ a holding action centred around the RDP had temporarily placated many left-wing critics and postponed a wholesale swing to neoliberalism . This temporary alternative re ected the ambiguities and tensions in the ANC’s stance as it struggled to reconcile disagreements within the alliance.

The Reconstruction and Development Programme: neoliberalism in waiting?

Although it represented the socioeconomic platform upon which the ANC fought the elections, a White Paper on the RDP indicating how the government would translate these vague proposals into policy only appeared on 23 November 1994.

However, previous drafts of the White Paper had emerged—and were heavily g y criticised byy COSATU—from August onwards. The RDP was largely g g y the brainchild of social democratic forces within COSATU, particularly p y the National Union of Metalworkers, which became increasingly g y disgruntled g as more and more of the progressive content of the document was watered down with each new draft.551 Eventually, those alienated elements agreed to publish the seventh draft as the White Paper in the (vain) hope that publication would prevent any further dilution of the document.52 This formative process clearly re ected the ongoing tensions within the GNU exacerbated by the pressures of capital. The Base Document (February 1994) had been widely interpreted as a compromise p COSATU and the SACP onboard duringg the immediate by the ANC elite to keep pre-election p pperiod. Indeed, the South African labour movement had ‘made its entry y into the Tripartite p Alliance contingent g upon p the ANC and SACP adopting development policy’. p g [the RDP] as the basis of all subsequent q p p y 553 Yet, after the elections, the ANC was constitutionall y obliged g to share of ce of f ce with the NP and absorb pressure from both domestic and international capital to was made easier byy its vagueness dilute the RDP. Acceptance of the programme p g g and lack of concrete proposals.

The result was a compromised document p p p administration , desperate to reconcile the multiple from a compromised p p p voices in South Africa’s domestic polity with t the mantras of globally- orientated capital. p compromise to the Hence the RDP has been seen as a ‘veryy signi cant g p 54 5 neo-liberal “trickle down” policy preferences of the old regime’. For example, eliminating calls for nationalisation , even as a policy option, whilst pushing for privatisatio n and ‘ scal discipline’, was just one way the White Paper had changed from the initial Base Document. Whereas the Base Document had viewed scal discipline as a means to achieve development, the White Paper saw scal discipline as an objective in its own right, irrespective of its effect on development. The White Paper also differed from the Base Document over the state’s role in the economy. In accordance with the dictates of neoliberalism , the 31

Paul Williams & Ian Taylor White Paper reduced the state’s role to a ‘neutral’ source of management. The business community predictably welcomed the programme (while expressing concern at the cost) as a great deal of its enthusiasm was based on ‘expectations of major new business opportunities ’ in the various expansion schemes promised by the RDP.55 However, a more sophisticate d interpretation might see capital’s support for the programme arising from its perception that the RDP was based ‘on the balance of evidence’ that would ‘guide the decision for or against economic policy measures’.56 The keyy question q thus became: who decides what constitutes the balance of evidence? It was quite apparent that capital’s intellecq pp p tuals had lost no time in persuading p g the g government which factors counted as ‘evidence’ and which should be dismissed as mere anomalies.

The RDP’s weaknesses were increasingly evident in ‘the disjunctio n between the RDP as an economic programme and other aspects of economic policy’.57 In particular, the contradiction s that the RDP engendered made its place within the wider economic framework ‘unclear [and] at worst … potentially antithetical’.58 The fact that the RDP could be seen as arguing for the creation of an ‘enabling environment’ through macroeconomic balance and ‘sound scal policy’ compounded this ‘cocktail of confusion’.59 Moreover, the palpable lack of delivery on the ground proved a major embarrassment to the government and it became a relatively simple exercise for critics (from both left and right) to point to such failures as evidence of the inherent ‘unworkability y ’ of the RDP. Indeed, the business community y increasingly g y bemoaned the g government’s lack of a clear macroeconomic blueprint and continued its campaign p g for an all-out This was symbolised byy the South Africa Foundation’s neoliberal programme. p g y (SAF) publication p of a rabidly y orthodox economic strategy gy entitled Growth for f All, to which Mandela was treated to a private p presentation p p prior to its release. 660 Representing p g a consortium of 50 of South Africa’s most powerful p corporations, p the document endorsed capital’s p call for a wholesale embrace of neoliberalism y byy the GNU. The p pro-business media saw the SAF document as an opportunit pp into embracingg the neoliberal p to blackmail the government g position of the SAF, asserting g that, ‘if g government reacts negatively, g y it will draw attention to its quali ed endorsement of market-oriented economics. That in turn will discourage investment, undermine the Rand and lock this economy into a low-growth trap’.61 Coincidentally , the document was released at a time when the South African economy was in a state of ux. The Rand was in free-fall (losing 25 per cent between February and July); interest rates remained high; whilst the trade account of the balance of payments moved in a highly erratic fashion. At the same time, the foreign exchange reserves were being steadily depleted until, by mid 1996, they were equivalent to only 5 weeks’ import cover. As Michie and Padayachee remarked, ‘these factors and pressures all served to focus attention on the appropriateness or otherwise of the government’s macro-economic policy’ and further undermined the RDP.62 Indeed, the Financial Mail claimed that such failings in the economy were due to the failure of the RDP.63 Not surprisingly , the programme was hastily abandoned in ‘a panic response to the … exchange rate instabilit y and a lame succumbing to the policy dictates and ideological pressures of the international nancial institutions ’.64 32

Neoliberalism in South African Political Economy The Growth, Employment and Redistribution Programme: neoliberalism triumphant In February 1996 Thabo Mbeki, then Mandela’s deputy-president , announced a new strategy for the nation’s economic development. Although the government continued to pay lip-service to the RDP, its of ce was closed (28 March 1996 ) and its nominal head—Jay Naidoo—was reassigned. This was rapidly followed in June by the government’s hasty release of its new macroeconomic strategy, the GEAR programme.65 This document ambitiously claimed it would increase annual growth by an average of 4.2 per cent, create 1.35 million jobs by 2000, boost exports by an average 8.4 per cent per annum and improve social structure. To date, it has failed even on its own terms.66 The new policy’s adoption derived from a coalescence of factors which has been summarised as follows: economists The ANC, p pressured by y advisers from the old regime, g from the World Bank and IMF [and] experts p from the business community y … stepped pp back from the RDP’s emphasis p on social spending p g … and instead adopted p a neo-liberal economic export p strategy gy which emphasised p free markets, scal discipline p and building g business con dence, even if that meant ‘downsizing’ to be competitive in the global economy.667 In an attempt p at sti ing g g genuine debate, the g government’s Finance Minister, ’ in its broad Trevor Manuel, immediately y declared GEAR A ‘non-negotiable g outline—a move applauded pp byy investors, both local and foreign, g but which 68 6 those on the left f saw as ‘utter arrogance’. g Indeed, contraryy to p previous assurances and continuing g its tendency y to eschew g genuine consultation , the for prior consideration byy NEDLAC government did not submit the programme g p g p (the business/labour/government g national economic and labour council). Incredibly, y as Mandela later admitted, even senior ANC leaders were not informed of its contents.669 770 ‘Produced in great g secrecyy byy a small team of technical experts’, p GEAR was modelled on a South African Reserve Bank econometric model (used byy the Bank during ) and was ostensiblyy ‘cong the late apartheid p y years g models of the Development p sistent with the results obtained using Bank of Southern Africa, the Bureau for Economic Research and the World Bank’.771 This alone invited criticism, but was further exacerbated byy the fact that ‘the main model used … [w]as never … made public p and thus [w]as never … j of an independent and rigorous debate by professional econothe subject mists’.772 The document did, however, exhibit a ‘commitment to conservative scal policies, trade liberalisatio n and a shift from consumption p to investment spending’. p g 73 GEAR thus tted neatly y into the so-called international consensus around ‘good’ g economic p policy y elucidated byy such neoliberal g gurus as Standard Bank’s Conrad Strauss.774 Whilst the new framework stunned many y on the left f within the ANC alliance, it offered conclusive proof p that the neoliberal path to development was nally entrenched in government thinking. 775 33

Paul Williams & Ian Taylor Although the government had appeared sensitive to accusations that its policies constituted neoliberal monetarism, a 1996 document openly admitted 76 that ‘certain measures in GEAR are similar to many y neoliberal ppackages’. g According g to one analysis, y ‘to all intents and purposes, p p the p policy y that almost [ the sacred Freedom Charter i.e. the RDP] in its vision of a more equal replaced p q and p progressive g order has now been shelved [and a] Thatcherite discourse of scal discipline p and market forces has taken over’.777 Mandela himself later admitted that p people p ‘can say y [our p policy] y is Thatcherite, but for this country, privatisatio n is the fundamental policy of our government’.778 Although GEAR was justi ed as a continuation of the RDP by other means, the RDP is onlyy referred to in the GEAR ppolicyy document on four occasions. 79 Furthermore, in contrast to the RDP, GEAR explicitly p yp posited ‘redistributio n as a by product of growth instead of an integral g part p of its economic strategy’. gy 880 It was not surprising p g therefore that, upon p re ection, GEAR was denounced as ‘a 881 regime’, recourse to the p policy y g goals and instruments of the past p apartheid p g which shared many of the ideological commitments of the SAF document.882 Such criticism stemmed primarily from the economic methods chosen to deliver GEAR’s ambitious promises. GEAR privileged the position of mobile capital (both foreign and domestic) within South Africa and relied on it to empower the disadvantaged through increased private investment. This dynamism was to be achieved by cutting state spending in an attempt to lower the budget de cit to 3 per cent by 2000; maintaining a low in ation rate; reducing corporate taxes; phasing out the remaining exchange controls; promoting wage demand restraints by labour; creating a more ‘ exible’ labour market; and pushing for the privatisatio n of state assets. The model was based on ‘a set of orthodox, outward-oriented, investor-friendl y stabilisatio n and adjustment policies’, which re ected the concerns and aspirations of the neoliberal elite within South Africa.83 In so doing, GEAR adopted ‘market reaction (for example, in the foreign exchange market) and notions of business con dence’ as the yardstick ‘to assess government’s performance’, further strengthenin g the hand of the outwardly-linke d classes in the country. y y 84 This fraction of capital p and its allies fell over itself in praising p g GEAR y and ‘responding p g to manyy of the concerns expressed p as ‘investor friendly’ byy business’. 885 As a Financial Times writer asserted, with GEAR ‘the ANC emerged a commitment to budgetary g with as powerful p g y discipline and scal conservatism as White South Africa could have wished’.886 Such a situation was due in large part to the international discourse of neoliberalism which helped create a climate wherein, if the ANC ‘come out and say: p y “Our rst there [would] be some very obligation g is to our people”, p p y heavyy choking’ g byy 887 capital. p Hence, an ostensible liberation movement that had struggled gg under the banner of socialism now saw as its p priority y the soothing g of international capital’s demands as the only, and for some the best, way forward. Moreover, with the NP’s departure from the GNU in June 1996, the argument that conservative, non-ANC elements were responsible for the organisation ’s econp g omic direction proved false: GEAR was ultimatelyy a product of the ANC elite. p p The scrapping pp of the RDP and the adoption of GEAR nally saw neoliberalism triumphant.

34

Neoliberalism in South African Political Economy Explaining the shift Why the ANC changed its macroeconomic stance during the transition has often been reduced to the simplistic view that the movement simply ‘woke up’ to q p economic ‘realities’ and subsequentl y ditched its socialist pretensions in favour of neoliberalism. Obviously, y the ANC was faced with the appalling pp g socioeconomic legacies g of apartheid which undoubtedl y deepened during the last years of NP rule. Chronic unemployment, low levels of investment, high public debt, a low human capital base situated within a brutalised society and an unstable currency all acted to restrict the ANC’s room for manoeuvre. As noted above, the ANC’s predicament was further compounded by inheriting an inef cient and often intransigent civil service whose aspirations were in the main unsympatheti c to the new dispensation ’s political project.

Nevertheless, whilst acting as powerful constraints on any redistributionis t proposals, such factors alone cannot account for the ANC’s ‘ideological quantum leap’. As Terreblanche suggested: In an attempt to solve this riddle one can either blame it on the imperatives of the South African situation after decades of apartheid, or we can blame it as the outcome of an intense ideological ‘power struggle’ behind the scenes in which pressure groups on the right of the ideological spectrum emerged as ideological conquerors in June 1996 … the quantum leap [was] the outcome of the ideological ‘power struggle’, although the hard reality of the South African situation also played a minor role.88 Undoubtedly, y the ANC’s ideological g incoherence over ‘economic’ policy p y did not help p in this struggle. gg However, for an organisation g ‘whose raison d’eˆtre before 1990 was liberation from apartheid, it was perhaps p p p not surprising p g that formulatingg [an] economic strategy gy was not a priority’. p y 889 In the face of a well-funded and co-ordinated onslaught g from neoliberal intellectuals and institutions , the ANC’s pro-redistributio n cadres were marginalised. p g In sum, the ANC’s ideological quantum leap resulted from a number of contributory factors. We will focus on: the ANC’s relationship with the IFIs, on the one hand, and the old apartheid structures, on the other; and the process of dispute within the Tripartite alliance itself.

Undoubtedly, the structural context within which any economic restructuring would necessarily have to take place weighed heavily upon p the ANC’s shoulders, with the IFIs pushing p g a rigidly g y neoliberal line. For example, p Mandela’s attempts p to address the issue of social transformation in his p presidential address were derided as ‘antiquated q Marxist g gibberish’ by y one set of respected p international observers.990 The IFIs have provided p what Michel Camdessus, Managing g g pushing Director of the IMF, has referred to as a ‘permanent p discipline’, p p g states in the direction of economic liberalisation . In addition, two members of the 15-person p technical committee that compiled p the GEAR document were from the World Bank and were in a strategic g p position to convince the other team members of the virtues of the so-called Washington consensus. 91 That said, and as noted 35

Paul Williams & Ian Taylor above, some internal voices in South Africa’s debate were often more fanatically neoliberal than representatives of the IFIs themselves.

The fact is that, despite this process of structural conditioning , a number of prominent ANC intellectuals, in particular Thabo Mbeki, Trevor Manuel and Tito Mboweni, pplayed role in shaping y an important p p g the terrain of debate. In short, speci c p decisions were taken which could have been made differently. y For instance, these individual s could have been more sympathetic y p to the p proposals p of COSATU and the SACP as outlined in the p preliminary y drafts of the RDP; or paid closer attention to the recent observation of the senior vice-president of the p p World Bank, Joseph Stiglitz, that the policies of the Washington consensus were too anti-state. This is not to say that following these suggestion s would have been free from costs or would have offered an ideal solution to the grievances of South Africa’s impoverished majority; rather it highlight s that neoliberal prescriptions were but one imperfect option among many.

In relation to the old apartheid structures, we have already noted how the NP’s recklessness contributed to a huge increase in the national debt prior to the GNU assuming of ce. Clearly, this unwelcome inheritance severely circumscribed the new government’s ability g y to ful l numerous ppromises made during g the struggle. gg Indeed, even if the ANC had vigorously g y embarked upon p a programme p g of g genuine socioeconomic transformation, they y would have found themselves in command of a state which lacked the resources and capacity to implement such a process. However, this is only half the story. y Another crucial, but often neglected, of thee old apartheid structure g , component p p ( ) was the white both English and Afrikaner business sector. South Africa’s major g j corporations, p which had undergone g only y super cial p alteration during g the transition, and the associated business press were also veryy effective in pressurising p p g socialist elements within the ANC to conform to neoliberal principles.

In p p addition, the business sector played role in facilitating p y an important p g and funding g the negotiation g process itself and was keen to ensure that a break with apartheid p p did not threaten its ability y to ppro t from a severely y exploitativ p e labour system. y In relation to ‘economic’ p policy, y therefore, South Africa’s major j corporations were (and largely remain) forces for continuity rather than change.

The process of dispute within South Africa, and within the Tripartite alliance in particular, was perhaps most notable for the way in which appeals to neoliberalism were assumed to trump all other considerations and perspectives.

The disputes occurred in an intellectual climate where neoliberalism was taken to represent the ‘gold standard’ against which rival perspectives were judged. In short, the agents of neoliberalism successfully managed to conceal the (considerable) ideological content of their position, portraying it instead as the only sensible and socially-neutra l policy option. This process stymied genuine debate g ( ) byy delegitimisin g and often ridiculingg alternative positions.

Manuel’s preseng p p tation of GEAR as ‘non-negotiable g ’ is a case in p point. However, the ideological g struggle about winningg gg that took place p within South Africa was never just j a con ict of interests in which the intellectual arguments; g rather it represented p powerful social, p p political and corporate p proponents p p of neoliberalism effectivelyy steamrollered a somewhat confused and incoherent opposition . Compromise, it appeared, was out of the question.

36

Neoliberalism in South African Political Economy Finally, y although g very y much implicit p in our analysis, y there is a need brie y y to ask what the costs of neoliberalism are for South Africa. First and foremost, adoption p of neoliberal p principles p has exacerbated inequality q y and increased the concentration of wealth in the hands of the privileged p g few.992 Apart p from the ) ( ethically y odious and increasingly g y dangerous g prospect p p of living g in one of the world’s most unequal q economies, such a p polarised environment is fertile g ground for social and p political instabilit y which will ultimately repel the very ‘investors’ GEAR was designed g to attract. for its tradition of Second, byy p pursuing g a neoliberal agenda g with t scant regard g democratic consultation , the ANC is in danger g of alienatingg its traditional constituencie s of COSATU and SACP members. While a ‘workerist’ alternative to the ANC remains unlikely, y the p potentially y damaging g g effects of a fractured alliance should not be dismissed out of hand. In addition, South Africans of all p persuasions should look to the horrendous tearingg of the social fabric that has occurred elsewhere, not onlyy in Africa but also in Latin America and eastern Europe, p where neoliberal p prescriptions p have undoubtedly y aggravated gg contradiction s within these societies. In South Africa, evidence is alreadyy apparent pp that the GNU’s scal p policies have constructed ‘an economyy which g goes nowhere in terms of conditions of life for the greater majority of people’.993 Conclusion The shift in the ANC’s macroeconomic policy p y clearlyy demonstrates that debates from politics.

‘Economics’ is not an about economics can never be separated p p inherently y rational, technical pprocess: it is a social activity y in which various interests compete to determine who gets what, when and how on a global scale.

In our opinion, such attempts to remove the ‘politics’ from political economy should be viewed with profound distrust. p Backed byy a daunting g array y of material and nancial interests both inside and outside South Africa, successive g groups p of intellectuals (some of whom held the ANC elite of neoliberalism ’s ANC membership p) successfully y persuaded p merits. In p particular, neoliberalism was p portrayed y as ‘the only y g game in town’, discrediting g alternatives before theyy even reached the negotiating g g table. The result has been a dramatic about-face in the ANC’s economic thinking, g wherebyy the redistributio n of apartheid’s p considerable inequities q is no longer g the p primaryy goal. Instead, ‘good’ g g economic p policy y fetishises transnational capital p in an effort to make South Africa ‘competitive’ p in the g global market-place. p In p practice, this has meant competing p g with other destitute regions to provide the cheapest and most ‘ exible’ labour-force.

In sum, there is considerable cause to regret the current shape g p of South Africa’s transition. As always, who have suffered the most. y it is the poorest p GEAR has done little to address the chronic unemployment p y that p plagues g black South Africans and even less to redistribute the p pro ts of apartheid. p In this sense, GEAR has failed even on its own terms. Onlyy when the ANC is able to concentrate its efforts on the eradication of p poverty y and confront the question of redistributio n head-on will a genuine transition occur. While the ANC may be 37

Paul Williams & Ian Taylor all geared up for the journey ahead, unfortunately it is heading in the wrong g direction.

Notes The authors would like to thank Anthony Payne, Philip Nel, Peter Vale and the anonymous reviewers for their constructive advice.

1. As late as July 1989 some prominent academics remained convinced that ‘it is unlikely that the ANC will gain (any form of ) power by 1992 or 2000. However, by 2010 and 2020 the ANC might share some power as a coalition partner’. W. J. Breytenbach , The ANC: Future Prognosis (University of Stellenbosch: Institute for Futures Research, 1989) , p. vi.

2. Roger Tooze, ‘Conceptualizin g the global economy’, in: Anthony McGrew, Paul Lewis et al., Global Politics: Globalization and the Nation-State (Polity Press, 1993) , p. 235.

3. John Gerard Ruggie, ‘International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order’, International Organization, Vol. 36, No. 2 (1982 ), pp. 379–415.

4. See Herman Finer, Road to Reaction (Quadrangle Books, 1963) , p. 67.

5. J.K. Galbraith, The Culture of Contentment (Sinclair-Stevenson, 1992) .

6. Karl Pola´nyi, The Great Transformation: The Political and Economic Origins of Our Time (Beacon Press, 1957 ) , p. 71.

7. James Mayall, ‘The liberal economy’, in: James Mayall (Ed. ), The Community of States: A Study in International Political Theory (George Allen & Unwin, 1982), p. 97.

8. Cited in ibid., p. 98. Emphasis added.

9. John Gray, Liberalism (Open University Press, 1986), p. 71. Emphasis added.

10. Cited in ‘The Freedom Charter’, Third World Quarterly, Vol. 9, No. 2 (1987 ) , p. 673.

11. Martin Murray, Revolution Deferred: The Painful Birth of Post-aparthei d South Africa (Verso, 1994 ) , p. 18.

12. Nicoli Nattrass, ‘Politics and Economics in ANC Economic Policy’, African Affairs, Vol. 93, No. 372 (1994 ), p. 6.

13. Matthew Kentridge, Turning the Tanker: The Economic Debate in South Africa (Johannesburg : Centre for Policy Studies, 1993) , p. 6.

14. Hein Marais, South Africa: Limits to Change—The Political Economy of Transformation (Zed, 1998 ) , p. 148.

15. Financial Mail (Johannesburg), 18 October 1991.

16. Financial Mail (Johannesburg), cited in Patrick Bond, Commanding Heights and Community Control: New Economics for a New South Africa (Ravan Press, 1991), p. 60.

17. Marais, South Africa: Limits to Change, pp. 149–50.

18. Karl von Holdt, quoted in ‘Strategy and Tactics: Karl von Holdt and Devan Pillay’, in: Alex Callinocos (Ed.), Between Apartheid and Capitalism: Conversation s with South African Socialists (Bookmarks, 1992) , p. 57.

19. Patti Waldmeir, Anatomy of a Miracle (Penguin, 1997), p. 256.

20. Ibid.

21. Heribert Adam, Frederik van Zyl Slabbert & Kogila Moodley, Comrades in Business: Post-Liberation Politics in South Africa (Tafelberg, 1997) , p. 171.

22. Waldmeir, Anatomy of a Miracle, p. 213.

23. The budget de cit rose from 0.9 per cent of GDP in 1989–90 to 10.8 per cent in 1993–94. This directly contributed to the stock of governmen t debt rising from approximatel y R100 billion to R250 billion. See Gavan Duffy, cited in ‘On Macro-economi c Policy’ at http://www.aidc.org.za/themba/on_macro_ eco_pol.html. Interestingly, this increase in debt of R150 billion could have covered expenditure for essential services in South Africa for nearly twenty years. Business Day (Johannesburg) estimated it would require R90 billion for ten years. 15 September 1998.

24. Most of this paragraph is based on the authors’ interview with Professor Sampie Terreblanche, 15 July 1999, Stellenbosch, South Africa.

25. Philip Dexter, ‘The RDP’, South African Labour Bulletin (September 1995), p. 58.

26. Economic Trends, internal memorandum (1991 ) , cited in Vishnu Padayachee , ‘The evolution of South

38

Neoliberalism in South African Political Economy

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

48.

49.

50.

51.

52.

53.

54.

55.

56.

57.

58.

59.

60.

61.

62.

Africa’s international financial relations and policy: 1985–1995’, in: Jonathan Michie & Vishnu Padayachee (Eds), The Political Economy of South Africa’s Transition (Dryden Press, 1997) , p. 30.

Karl von Holdt, ‘What is the Future for Labour?’, Southern African Labour Bulletin, Vol. 16, No. 8 (1992 ), p. 34.

Isaac Sam, Business Day (Johannesburg), 15 August 1994.

E. Berg & A. Batchelder , Structural Adjustment—Lending a Critical View (World Bank Country Policy Department , 1985) .

Marais, South Africa: Limits to Change, p. 152.

Business Day (Johannesburg) , 15 August 1994.

Sunday Times (Johannesburg), 17 July 1994.

See Patrick Bond, ‘The making of South Africa’s macro-economi c compromise’, in: Ernest Maganya (Ed.), Development Strategies in South Africa (IFAA, 1996 ).

Robin Lee, ‘Choosing Our Future’, Leadership, Vol. 12, No. 3 (1993 ) , p. 72.

‘Foreword’, Nedcor—Old Mutual Scenarios, South Africa: Prospects for Successful Transition (Juta, 1992 ) .

Lee, ‘Choosing Our Future’, p. 73.

Susan George, The Debt Boomerang: How Third World Debt Harms Us All (Pluto, 1992 ), p. 109.

See Marais, South Africa: Limits to Change, p. 154; and Tom Lodge, ‘Policy Processes within the African National Congress and the Tripartite Alliance’, Politikon, Vol. 26, No. 1 (1999 ) , pp. 5–32.

Sammy Adelman, ‘Capitalising on a New Constitution’, Work in Progress, No. 68 (August 1990 ) , p. 34.

Adam Habib, ‘Defeat in Victory: A Macro-study of the Transition to Democracy in South Africa’ (PhD dissertation in progress, City University of New York, 1996), p. 101. Cited in Michie & Padayachee , The Political Economy of South Africa’s Transition, p. 230. Emphasis added.

Financial Mail (Johannesburg), 4 November 1994.

Financial Times (London ) , 7 May 1994.

Business Day (Johannesburg) , 13 January 1993. Emphasis added.

Weekly Mail and Guardian (Johannesburg) , 17 March 1995.

Financial Mail (Johannesburg), 9 September 1994.

Marais, South Africa: Limits to Change, p. 158.

Ibid., p. 158.

Jonathan Michie & Vishnu Padayachee, ‘The South African policy debate resumes’, in: Michie & Padayachee, The Political Economy of South Africa’s Transition, p. 228.

Marais, South Africa: Limits to Change, p. 158.

Nicholas Oppenheimer , deputy chairman of Anglo-American Corporation and De Beers, London, 10 December 1996, cited on South Africa Foundation web page at http://www.safoundation.org.za /psaecon.html.

The Labour Left Collective, COSATU, the SACP and the ANC: The Parting of the Ways? (Read, Act & Struggle Series, No. 1, August 1998), p. 11.

For a more detailed discussion of the RDP’s genesis, see Lodge, ‘Policy Processes within the African National Congress and the Tripartite Alliance’.

David Ginsburg, ‘The Democratisation of South Africa: Transition Theory Tested’, Transformation, No. 29 (1996 ), p. 87.

Ashgar Adelzadeh & Vishnu Padayachee , ‘The RDP White Paper: The Reconstruction of a Developmen t Vision?’, Transformation, No. 25 (1994 ).

Jesmond Blumenfeld, ‘From Icon to Scapegoat : The Experience of South Africa’s Reconstruction and Developmen t Programme’, Developmen t Policy Review, Vol. 15, No. 1 (March 1997 ) , p. 76.

White Paper on Reconstruction and Development : Government’s Strategy for Fundamental Transformation (Government of the Republic of South Africa, 1994).

Blumenfeld, ‘From Icon to Scapegoat ’, p. 69.

Ibid.

Nicoli Nattrass, ‘The RDP White Paper: A Cocktail of Confusion’, Indicator SA, Vol. 12, No. 1 (1994 ), p. 36.

See South Africa Foundation, Growth for All: An Economic Strategy for South Africa (South Africa Foundation, 1996).

Financial Mail (Johannesburg), 8 March 1996.

Michie & Padayachee , ‘The South African policy debate resumes’, in: Michie & Padayachee, The Political Economy of South Africa’s Transition, p. 224.

39

Paul Williams & Ian Taylor 63. Financial Mail (Johannesburg), 6 October 1995.

64. Ashgar Adelzadeh, ‘From the RDP to GEAR: The Gradual Embracing of Neo-liberalism in Economic Policy’, Transformation, No. 31 (1996 ), p. 67.

65. ‘Growth, Employment and Redistribution: A Macro-economi c Strategy’, unpublished , 1996. For the rather limited of cial debate that greeted GEAR’s arrival, see Debates of the National Assembly, 14 June 1996, Cols. 3041–3099.

66. For a discussion, see Jesmond Blumenfeld, Assessing South Africa’s Growth Strategy (Brie ng No. 49: RIIA, 1998 ).

67. Nancy Murray, ‘Somewhere Over The Rainbow: A Journey to the New South Africa’, Race and Class, Vol. 38, No. 3 (1997 ), p. 5.

68. First vice-president of COSATU, Connie September, cited in Umsebenzi (July 1998 ) , p. 2.

69. SouthScan , Vol. 12, No. 34 (19 September 1997) .

70. Jeremy Cronin, ‘Why the SACP Rejects GEAR’, Weekly Mail and Guardian (Johannesburg) , 10–16 July 1998.

71. Growth, Employment and Redistribution: A Macro-economi c Strategy (1996 ), appendix, p. 10.

72. Adelzadeh, ‘From the RDP to GEAR’, p. 68.

73. Business Day (Johannesburg) , 30 October 1998.

74. See Conrad Strauss, chairman of Standard Bank, London, 10 December 1996, cited on South Africa Foundation web page at http://www.safoundation.org.za /psaecon.html.

75. See Anthony Leysens & Lisa Thompson, ‘A Paper Tiger? Political Implications of an Export-Led Growth Strategy for South Africa’, South African Journal of International Affairs, Vol. 1, No. 2 (1994 ) , p. 56.

76. Quoted in Rob Davies, ‘Engaging with Gear’, mimeo, 1997, p. 3, cited in Marais, South Africa: Limits to Change, p. 161.

77. Heribert et al., Comrades in Business, p. 161.

78. Nelson Mandela interview with John Pilger, cited in John Pilger, Hidden Agendas (Vintage, 1998) , p. 606.

79. For such a justi cation, see Thabo Mbeki’s statement to the National Assembly in Debates of the National Assembly, 14 June 1996, Cols. 3041–3045.

80. James Heintz, National Labour and Economic Developmen t Institute, ‘GEAR: A Labour Perspective’ at http://www.und.ac.za/und/indic/archives/indicator/spring97/HEINZ5.html.

81. National Institute for Economic Policy, From the RDP to GEAR: The Gradual Embracing of Neo-liberalism in Economic Policy (NIEP, 1996 ), p. 2.

82. Nicoli Nattrass, ‘Gambling on Investment : Competing Economic Strategies in South Africa’, Transformation, No. 31 (1996 ) , p. 26.

83. Nattrass, ‘Gambling on Investment’, p. 29.

84. Simon Roberts, ‘Monetary Policy within Macro-economi c Policy: An Appraisal in the Context of Reconstruction and Development ’, Transformation, No. 32 (1997 ), p. 68.

85. Business Times (Johannesburg) , 16 June 1996.

86. Waldmeir, Anatomy of a Miracle, pp. 257–8.

87. Nico Czypionka, economi c consultant , in Cape Times (Cape Town ), 30 October 1998.

88. S.J. Terreblanche, ‘The Ideological Journey of South Africa: From the RDP to the GEAR Macro-economi c Plan’, paper for the conference Transforming Public Life: Religion in the Making of Cultural Values and Public Policy, Cape Town, 16 February 1999, p. 10.

89. Alan Ward, ‘Changes in the political economy of the new South Africa’, in: Francis Toase & Edmund Yorke (Eds), The New South Africa: Prospects for International and Domestic Security (Macmillan, 1998) , p. 38.

90. The Independen t (London ) , 18 December 1997, cited in Lodge, ‘Policy Processes within the African National Congress and the Tripartite Alliance’, p. 27.

91. Of the other committee members, three were from the Developmen t Bank of South Africa, two from South Africa’s Reserve Bank and one from each of the Departments of Trade and Industry and Finance. See Terreblanche, ‘The Ideological Journey’, p. 16.

92. See the results from the latest ‘Gini co-ef cients’ from Wharton Economic Forecasting Associates, Sunday Times (Johannesburg) , 11 July 1999, p. 7.

93. Vella Pillay, The Natal Mercury (Durban ) , 6 March 1996.

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