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. Taylor & Francis (Carfax Publishing).

Type	journal article
Scope	Post-1994 South African economy
Method	mixed
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, comparative theory, sanctions divestment
Citation key	carmody2002a

Argument

Carmody argues that globalisation in South Africa has been driven mainly from within, by the post-1994 state and the big conglomerates, rather than imposed by structural adjustment as elsewhere in the region. Conglomerates outgrew a narrow domestic market under apartheid-era exchange controls and sanctions. They pressed for a negotiated settlement, then unbundled, regionalised and moved their listings and headquarters to London. The state's neo-liberal GEAR programme (1996) and its tariff cuts and FDI strategy have left it with 'negative autonomy' from domestic forces and dependence on global capital. The result is job loss, deepening dualism and inequality. He proposes re-imposing exchange controls, enforced saving and 'downscaling' to alternative institutions.

Evidence and method

Secondary literature, press reports (Economist, Mail and Guardian, NYT), SARB and Statistics South Africa data, IMF/World Bank/ILO/NIEP/TIPS reports, and some interviews (DTI, IDC and NUMSA officials, 1999). Calculations from SARB and SSA series.

Findings

• Employment collapsed after neo-liberal reform in 1996 despite promises of job creation and the end of sanctions. (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.

• Corporate concentration: a handful of conglomerates controlled most JSE-listed companies before the end of apartheid. (p. 3)

  the four largest of which controlled 83 per cent of the companies listed on the Johannesburg Stock

• Conglomerates outgrew the narrow domestic market, which pushed them to back a negotiated settlement and globalisation rather than domestic market deepening. (p. 9)

  Whereas, 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.

• The post-Sharpeville capital flight and exchange controls, followed by sanctions, restricted overseas options and pushed conglomerates to diversify from mining into manufacturing and services. (p. 9)

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

• Outward investment by South African firms exceeded inward FDI, 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 and high interest rates after the East Asian crisis hurt leveraged black empowerment companies while Anglo-American profited. (p. 12)

  the Reserve Bank pushed interest rates to 25 per cent to try to keep portfolio capital in the country.

• The ownership share of Afrikaner capital on the JSE rose as Anglophone capital divested, ironically furthering an apartheid-era aim. (p. 12)

  their ownership share of the JSE rose from 24 to 36 per cent from 1996-1999 as large-scale Anglophone capital divested.

• The growth pattern is capital-intensive and 'job destroying', with productivity gains and employment contraction going together. (p. 16)

  A recent IMF study found substantial increases in total factor productivity as the capital intensity of investment has increased, and employment has contracted.

• Core concept: the state's autonomy from domestic forces is the obverse of dependence on global capital. (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.

• South Africa has extreme and rising inequality in the post-apartheid period, even as inter-racial inequality falls. (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.

• The policy prescription is to restore exchange controls and mobilise domestic savings. (p. 21)

  the state must reassert control over conglomerate and financial capital, through the reintroduction of the system of exchange controls,