Magazine article Monthly Review

South Africa's 'Radical Economic Transformation'

Magazine article Monthly Review

South Africa's 'Radical Economic Transformation'

Article excerpt

Nearly a quarter-century ago, the transition from juridical apartheid to a liberal constitutional democracy in South Africa brought with it hopes for the improvement of the standard of living for the majority-black working class and the poor. However, it did not take long before voices of discontent began to emerge from both within and beyond the ruling alliance led by the African National Congress (ANC).1 Eventually, growing anger at the ANC government's perceived inability to improve the conditions of the black working class and the poor led the organization, at its December 2017 54th National Conference in Johannesburg, to adopt an economic and development policy that has come to be known as the Radical Economic Transformation program (RET).2

The plan lays out a long list of initiatives as critical to the country's economic transformation in South Africa: reigniting growth by encouraging an investment pact between government, business, and labor; rooting out corruption; avoiding credit downgrades; regulating uncompetitive behavior by corporations; accelerating land redistribution by, among other measures, expropriation without compensation, while at the same time ensuring food security; improving the governance and management of state-owned companies, and using them to catalyze growth; addressing the pay gap between company executives and workers and implementing the minimum wage; nationalizing the central bank; transforming financial institutions such as banks, to make development finance more widely available; fast-tracking the establishment of a state bank; setting up a sovereign wealth fund; strengthening black economic empowerment through preferential procurement for black companies; and supporting small businesses in general.

Delivering his maiden State of the Nation address as president in February, Cyril Ramaphosa promised to translate the ANC's proposals into government policy.3 To assess whether the RET will bring about these changes, let us examine the ANC's approaches to economic policy over the years, both prior to the 1994 political settlement and since.

The ANC's Policy History

The ANC has long been able to accommodate different and at times clashing ideological and policy positions. But in his studies of the ANC's history, Dale McKinley concludes that the organization has always been under the influence of the aspirant black middle class.4 This class character would prove pivotal in shaping the organization's ideological content during the years of the liberation struggle, as well as later policy choices once it assumed political power.

In the late 1980s and early 1990s, as the ANC was compelled to negotiate with the apartheid regime-largely because of diminishing support from the disintegrating Soviet Union-the earliest clear signs emerged of a settlement whose policy direction would be far removed from the interests and aspirations of the black working class and the poor.5

Many other factors obliged the ANC to agree to negotiations with the apartheid government. These included growing discomfort and fatigue among some southern African states toward continued support for the armed struggle against apartheid South Africa and for exiled ANC leaders. This came even as the South African Defence Force was intensifying its military attacks.6

Big business, meanwhile, was desperate to avert the negative consequences of international sanctions on profits, effectively forcing the apartheid government to consider negotiations and encouraging the ANC to do the same. As the economy stagnated, South African capital had grown isolated in a globalizing world economy. Major firms could make such demands on the state due largely to the fact that in 1985 Chase Manhattan had led other U.S. banks in refusing to extend loans to the government, precipitating the near-collapse of the apartheid economy.7

This confluence of the weakening apartheid state on one side and a liberation organization with a shrinking international base on the other led to what some observers have called an "elite transition. …

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