Elite Transition: From Apartheid to Neoliberalism in South Africa (Second Edition)

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Patrick Bond (2000). Elite Transition: From Apartheid to Neoliberalism in South Africa (Second Edition). Pluto Press (preface dated July 1999; second edition adds a 2004 Afterword).

Type	book
Scope	Post-1994 South African economy
Method	mixed
Period studied	1970–2004
Regions	South Africa, Southern Africa, Zimbabwe, Mozambique
Themes	transition post apartheid, macro fiscal finance debt, business and state, inequality poverty unemployment, politics ideology elections, manufacturing industrial policy, sanctions divestment, comparative theory, resistance social movements
Citation key	bond2000

Argument

Bond argues, from a Marxist uneven-development and overaccumulation framework, that South Africa's 1990s transition was an elite pact. A structural crisis of overaccumulation from the late 1960s pushed capital into finance, capital flight and 'spatial fixes'. Big business, scenario planners, the World Bank/IMF and a cohort of ANC/Cosatu technocrats then steered the ANC from the Freedom Charter and RDP to home-grown structural adjustment (NEM, Gear). Chapters on social-contract scenarios, the RDP's abandonment, market-led housing and the Bank's ideological influence document the shift; the final chapter and the 2004 Afterword argue that racial apartheid was replaced by 'class apartheid'. It is polemical and written by a participant-observer, with Chapter 1 the main historical-economic background.

Evidence and method

Press (Business Day, Financial Mail, Mail & Guardian, Star), government and ANC documents (RDP, White Papers, NEM, Gear, Ten-Year Review), World Bank/IMF papers, scenario-planning publications, Reserve Bank Quarterly Bulletin series, Statistics SA and UNDP data, secondary literature (Fine & Rustomjee, Nattrass, O'Meara) and the author's own interviews and earlier articles.

Findings

• Capital-intensive overcapacity in luxury goods, side by side with black unemployment, is the core structural crisis. (p. 12)

  persistent overcapacity and overproduction of (relatively uncompetitive) luxury manufactured goods for the (mainly white) upper-income consumer market, side-by-side with growing surpluses of unemployed black workers

• Manufacturing profitability collapsed and investment fell sharply between the 1950s and 1993. (p. 14)

  average profitability rates (earnings in relation to capital stock) fell steadily from 40 per cent during the 1950s to less than 15 per cent during the 1980s

• Net fixed investment bottomed out in the 1989-93 depression. (p. 14)

  By the trough of the subsequent 1989-93 depression, net fixed capital investment was down to just 1 per cent of GDP, in comparison to 16 per cent annually during the 1970s.

• Decentralisation to the bantustan deconcentration points was a subsidised spatial fix; many operations were unprofitable without state support. (p. 15)

  the per centage of manufacturing employment in the deconcentration points soared from 2 per cent to 18 per cent of the country's total, thanks to billions of rands in state subsidies (half the decentralised operations were unprofitable without state support)

• Capital flight in the late apartheid and transition years was large enough to have offset decline. (p. 17)

  from 1985-92 amounted to an estimated 2.8 per cent of GDP in net terms (indeed, Zav Rustomjee estimated that during the period 1970-88 it was as high as 7 per cent of GDP)

• Foreign direct investment was falling from the early 1970s, well before anti-apartheid disinvestment pressure. (p. 35)

  total foreign direct investment (measured in 1985 rands) fell from R31 billion in 1973 to R26 billion in 1983 and R22 billion in 1992

• The 1993 debt rescheduling committed the new government to heavy repayments. (p. 136)

  South Africa had committed itself to repaying virtually its entire current hard currency indebtedness within the next eight years, with servicing costs averaging some $2 billion per annum.

• Gear's 1996 targets were missed immediately, particularly on jobs. (p. 37)

  71,000 jobs were lost in 1996, a far cry from the 126,000 new jobs predicted in Gear in June that year

• Bank/IMF-linked analysis blamed unionised black wages for unemployment, which Bond disputes as ahistorical econometrics. (p. 138)

  'a 10 per cent increase in the real product wage would eventually lead to a 7.1 per cent decrease in Black employment,'

• Post-1994 inequality and poverty worsened, per the Afterword. (p. 247)

  average black 'African' household income fell 19% from 1995-2000 (to the purchasing-power parity level of $3,714/year), while white household income was up 15% (to $22,600/year)

• The migrant labour system rested on a gendered rural subsidy, which the Afterword says persists. (p. 245)

  capitalism systematically looted the 'bantustan' areas, especially women, which supplied such a large proportion of workers