Between Globalisation and (Post) Apartheid: The Political Economy of Restructuring in South Africa

Literature › Works

Padraig Carmody (2002). Between Globalisation and (Post) Apartheid: The Political Economy of Restructuring in South Africa. Journal of Southern African Studies, Vol. 28, No. 2. Taylor & Francis (Carfax).

Type	journal article
Scope	Post-1994 South African economy
Method	synthesis review
Period studied	1960–2001
Regions	South Africa, Southern Africa, London
Themes	transition post apartheid, business and state, macro fiscal finance debt, manufacturing industrial policy, inequality poverty unemployment, labour markets wages, comparative theory
Citation key	carmody2002

Argument

Carmody argues that South African globalisation has been largely generated from within, by the post-apartheid state and the major conglomerates, rather than imposed through structural adjustment. Orthodox GEAR policies, trade liberalisation and conglomerate offshore listing, unbundling and relocation to London have left the state with 'negative autonomy' from domestic social forces and embeddedness with transnational capital. The outcome is job loss, sectoral disarticulation and rising inequality. The article draws on policy documents, secondary literature, press reports and some interviews. It closes by urging re-imposed exchange controls, mobilisation of domestic savings, partial asset redistribution and 'downscaling' toward alternative economic institutions.

Evidence and method

Secondary literature, official statistics (SARB Quarterly Bulletin, Statistics South Africa), IMF, World Bank and ILO reports, press and business sources (The Economist, Mail and Guardian), and a few interviews with DTI, IDC and union officials (1999). No systematic data set or archive.

Findings

• Employment fell sharply after GEAR was adopted, contrary to its job-creation targets. (p. 3)

  since 1996 when neo-liberal economic reforms were introduced more than a half a million jobs have been lost, in contrast to the 600,000 that were meant to be created.

• Apartheid-era capital controls and sanctions pushed conglomerates to diversify from mining into other sectors. (p. 9)

  overseas investment opportunities were restricted for South African conglomerates by domestic exchange controls, and later by international sanctions.

• Conglomerates outgrew a narrow domestic market, which explains big capital's push for a negotiated settlement. (p. 9)

  by the 1990s, US corporations earned 30 per cent of their profits overseas, the equivalent figure for South Africa companies was only 7 per cent.

• Major conglomerates relocated primary listings and headquarters to London after liberalisation. (p. 10)

  many of the main business groups, such as Anglo- American, Old Mutual, SA Breweries, Billiton, and Dimension Data, have shifted their primary stock market listings and headquarters to London

• South African firms invested more abroad than flowed in, undermining GEAR's FDI assumption. (p. 11)

  South African companies invested $1.6 billion more abroad than came into the country between 1994 and 1999,

• Unbundling benefited few and shifted currency risk to emergent black capital and labour, while Afrikaner capital gained share. (p. 12)

  Afrikaner businessmen with pre-existing capital were less exposed to the consequences of rising interest rates. Consequently, their ownership share of the JSE rose from 24 to 36 per cent

• Defines 'negative autonomy': state autonomy from domestic forces is the obverse of dependence on global forces. (p. 8)

  Negative autonomy is where the state appears autonomous from domestic social forces, but that autonomy is the obverse of dependence on global forces, and therefore reflective of their priorities.

• Trade liberalisation coincided with capital-intensive, job-shedding growth in manufacturing. (p. 16)

  In the metal and engineering industry, employ- ment declined by 9.2 per cent from 1994 to 1999.

• FDI is weak because post-apartheid conditions no longer replicate the 1960s low-wage, protected-market model. (p. 14)

  with trade liberalisation, underdevelopment of skills in the workforce, higher wage costs than in most of Asia and Latin America, and the relative insignificance of the South African market, there is little incentive to locate new investments there

• Inequality is very high and rising even as inter-racial inequality narrows. (p. 19)

  although inter-racial inequality is falling, South Africa has the first or second highest rate of income inequality in the world, and this is rising.