Engaging the MEC: or a few of my views on a few things

Literature › Works

Ben Fine (2010). Engaging the MEC: or a few of my views on a few things. Transformation: Critical Perspectives on Southern Africa, no. 71. Transformation (Project MUSE).

Type	journal article
Scope	Post-1994 South African economy
Method	theoretical or conceptual
Period studied	1930s–2008
Regions	South Africa
Themes	business and state, manufacturing industrial policy, macro fiscal finance debt, transition post apartheid, comparative theory, labour markets wages, methods data sources
Citation key	fine2010

Argument

Fine reflects on how the minerals-energy complex (MEC) concept arose in the 1980s, from theory, empirical study of mining, energy and corporate structure, and policy engagement. He argues that the MEC is a system of accumulation centred on core sectors and on state-private capital relations, not just a descriptive sectoral category. He claims the post-apartheid economy is still dominated by the MEC, now marked by financialisation and conglomerate capital export, which explain weak domestic investment, macroeconomic policy and the electricity crisis. He proposes extending the MEC to labour-market history and attacks two 'holy cows' (consumer-goods import-substituting industrialisation; industrial policy as tariff protection) as well as the Industrial Strategy Project, racist Fordism and regulation theory. The piece is a reflective, polemical essay rather than a systematic empirical study.

Evidence and method

Largely the author's own earlier work and recollection. Secondary data on capital flight (Mohamed and Finnoff; Wesso), outward FDI (Chabane et al.), the Economist Intelligence Unit, Steyn on Manuel and exchange controls, UBS on the power crisis, World Bank reports, and a Wesgro business survey cited via McDonald.

Findings

• Fine defines the MEC as a concrete form of accumulation centred on core sectors but reaching beyond them through corporate control, and tied to state-capital relations. (p. 3)

  the MEC is to be understood in terms of the concrete form of accumulation of capital taken in South Africa, centred on a core set of sectors, but reaching beyond them

• The MEC had matured by the mid-1980s thanks to 1970s public investment, the incorporation of Afrikaner capital and the mining houses' conglomerate expansion. (p. 4)

  It had already benefited from the massive public sector led investment programme around mining and energy in the 1970s

• The first 'holy cow': industrialisation was not based on failed consumer-goods import substitution but on development around core MEC sectors. (p. 5)

  South Africa’s industrialisation had been the consequence of development, if within limits, around the core MEC sectors.

• The second 'holy cow': industrial policy was more than protection, since state corporations and coordinated state-private expansion around the MEC mattered as much. (p. 5)

  equally if not more important has been the support given to the MEC through the formation and promotion of state corporations such as ESKOM, ISCOR and SASOL

• Outward FDI grew sharply, which Fine reads as conglomerate disinvestment rather than London listings funding domestic investment. (p. 8)

  total stock of outward FDI has grown from $8.7billion in 1995 to $28.8billion in 2004

• Fine argues that finance is unproductive and parasitic on the real economy while dictating macro policy. (p. 9)

  apart from taking one quarter of what is produced by the rest of the economy, financial services are, from a variety of perspectives, entirely unproductive.

• Domestic conglomerates preferred globalisation and financialisation of assets to funding electricity capacity, helping cause the power crisis. (p. 12)

  their individual if not necessarily their collective interests have been served by globalisation and financialisation of their assets, and certainly not tying them up in ESKOM

• No generation capacity was added between 2002 and 2006, despite earlier surplus. (p. 12)

  there has been no capacity added to generation between 2002 and 2006.

• Trade liberalisation after apartheid went beyond WTO requirements, benefiting MEC core sectors and hurting labour-intensive employment. (p. 13)

  tariff reduction exceeding WTO membership requirements, MEC core sectors the main beneficiaries, and black labour-intensive employment the main casualty

• Fine proposes extending the MEC to labour-market segmentation, since the MEC is a major employer and shapes racialised segments. (p. 16)

  the MEC is a major employer of labour and, consequently, is both a source of labour market segmentation and labour market segments