The example of Ethiopia’s recent development experience may be useful in setting the MERG state-led investment programme in some comparative perspective. Ethiopia’s impressive growth rates, which averaged 10 per cent per annum over the past decade after the global crisis of 2008, was driven by substantial public sector infrastructural investment. Ken Coutts and Christina Laskaridis (2019) show that contrary to the concern that high public sector investment would crowd out private sector investment, the latter kept pace with public investment, being lower than public investment (as a percentage of the GDP) in the first phase and appreciably higher in the second. The only concern raised by analysts was the risk of exposure to spiralling external debt, calling for careful management of the currency and reserves and policies aimed at increasing output and exports of both agriculture and industry (Coutts and Laskaridis 2019).
Over 30 years ago, the ‘largely and dangerously’1 ignored post-Keynesian scholar Hyman Minsky wrote: ‘Economic issues must become a serious public matter and the subject of debate if new directions are to be undertaken. Meaningful reforms cannot be put over by an advisory and administrative elite that is itself the architect of the existing situation’ (in Rapley 2017: 416).
This book eschews both singular and conspiratorial narratives about why certain economic and social policies were decided upon and adopted in this period. Instead, we favour an in-depth and ‘no-holds-barred’ account that contrasts and reflects on the ideologically varying vantage points of all the key protagonists in South Africa’s transition to democracy until approximately 1996 with the introduction of the market-friendly Growth, Employment and Redistribution policy framework. Without sacrificing our own voice, we have tried to give voice deliberately and fairly to all sides involved in the debates. But to understand the 1990s shifts, we felt the need to take a longer, historically grounded approach.
The book, therefore, locates the period of ANC economic and social policy-making in the post-1990 era against a wider historically contextualised canvas of ANC policy-making since the 1940s – commencing with African Claims of 1943 through the Freedom Charter of 1955, the 1992 Ready to Govern policy document, the RDP Base Document and MERG’s macroeconomic policy framework of the 1990s. This detailed contextual framework allows us to argue unequivocally that the historical policy orientation of ANC economic and social policy-making was firmly social democratic in character (even though, and with the possible exception of Albert Luthuli, not conceptualised in such specifically ideological terms).
Social democracy as applied here by us is located within a broad tradition of socialist thought characterised historically by the state-led universalised provision of public goods to all citizens and across social strata (such as a single state-run national health service provided free at the point of delivery), based on principles of social solidarity and inclusive social citizenship and with accompanying redistributive macroeconomic policies. In the indigenised social democratic policy strategy reflected in ANC policy thinking, historically the democratic state would play a critical and leading role in the reconstruction and development of South Africa.
It is instructive to acknowledge at this point that very shortly after its unbanning in 1990, the ANC was fully open to such bold, nuanced and imaginative social democratic thinking on policy alternatives, but that this impetus was rapidly eclipsed by an emerging residualist, market-friendly policy discourse that was eventually consolidated in the Growth, Employment and Re-distribution (GEAR) strategy of 1996. The openness to redistributive, social democratic policy thinking at this stage was represented by no less a commanding figure than Nelson Mandela in a seminal keynote address to the Consultative Business Movement on 23 May 1990 early after his release from incarceration (Mandela 1990). Here, in contrast to the tone and content of what was soon to follow from the ANC, is an open and flexible approach to economic policy options, albeit firmly anchored in the specificities of South Africa’s own history and legacy. Apart from the focus on education, housing, skills and social policy interventions, Mandela’s economic policy ideas as reflected in this 1990 speech are significant. He speaks of the need for a ‘macroeconomic indicative national plan’; the recognition of gross inequalities arising out of imbalances in concentrations of corporate power and land distribution; a proposal for strengthening economic democracy through, for example, state representation on private boards; a focus on employment and centralised bargaining; the need for anti-trust legislation and a more progressive tax policy; the importance of successfully competing in global markets; the imperative to build a small and medium business sector; a focus on investment, industrial policy and a living wage; registering opposition to the late apartheid era government’s policy of privatisation, and his concern about capital flight. He does not fail to recognise fiscal realities in his speech, though he clearly does not labour over or fetishise them at this stage. Most significantly, the ideas raised here by Mandela are all key elements of a redistributive, social democratic economic and social policy framework, closer, we argue, both to the original social democratic and emancipatory vision of the ANC as contained in its African Claims policy document of 1943 and the Freedom Charter of 1955, and to the vision articulated later in the Macroeconomic Research Group (MERG) and Reconstruction and Development Programme (RDP) in 1993.
Its historical alliance with the vocal and Marxist-Leninist-inspired South African Communist Party gave the appearance, however, that the ANC was ideologically more to the left of this position. The book describes how and why these social democratic policy alternatives were summarily abandoned through the new centralised and elitist leadership politics that gripped the ANC in the transition era, displacing the mass-based, democratic politics of accountability of the anti-apartheid era. Indeed, the consequences of this market-value-informed political elitism that took root in the mid-1990s was most eloquently expressed by iconic anti-apartheid liberation fighter and United Democratic Front (UDF) founder member, the late Johnny Issel:
Our public appearances are carefully choreographed. These are the requirements of the market. It demands that we present ourselves as saleable commodities. As functionaries we are required to possess a certain measure of exchange value, like any other commodity for sale. Such are the dictates of the ‘market’. And more better if it is ‘packaged’ in an Italian-designed suit and driven in a German-produced automobile. And if so, the exchange value increases and the market rewards a higher premium. But on the market not all goods up for sale are sought. Similarly, some of us discover that we are not appropriately packaged. And we begin to doubt our own worth, our own self-worth. Others seem to find somewhat more expedient ways, albeit criminal ways, to appropriate what the market has to offer (South African History Online 2011).
While the ANC clearly and correctly triumphed on the political front in securing a globally celebrated constitutional democracy, the egregious lack of attention to economic theory for most of its history, the lack of economic capacity within its ranks in contrast to the late apartheid state’s capacity and skills, the almost criminal neglect of its mass democratic base, and the summary rejection of the recommendations of its own progressive think tanks, including MERG and the RDP Base Document, all combined to cripple the ANC’s stance on economic and social policy from about mid-1993 and into the early democratic era.
We do not characterise these compromises by Nelson Mandela and the ANC leadership as some kind of ‘betrayal’ or ‘selling out’, as has become popular in some circles today. Yes, in our judgement there were many things the ANC could have done better, especially in respect of the way it cut itself off from its greatest strength, that is the mass democratic movement. But we accept that those comrades in leadership who took these policy decisions were genuinely convinced it offered the best hope for our people. In this respect, we cannot conclude on the basis of the evidence that there was a conscious and intentional ‘sell-out’ of the decades-long struggle to achieve an emancipated society in South Africa. Neither is there any conclusive evidence, apart from some speculation, of secret late night meetings involving the ANC, Western governments, the Bretton Woods institutions and local capital, which persuaded the ANC to adopt market-friendly economic and social policies. For us, the jury is still out on this point. The extensive available evidence we have reviewed could not substantiate