Post-Apartheid Economic Policy in South Africa: Putting Mandela’s Legacy in Perspective

Matías Vernengo

Cross-posted from Naked Keynesianism.

The coverage on Mandela, no doubt one of the greatest leaders of the 20th century and essential for the ending of Apartheid, was as  is often the case a bit simplistic, which actually reduces the struggles he had to fight to relatively simple and manicheistic choices between good and evil (e.g., like in Bush’s famous “if you’re not with us, you’re against us,” ‘against us’ meaning with the terrorists). His actual legacy is considerably more complex, and a few publications had noted it (see here for three myths about his political legacy, including the racist notion that without him blacks would have murdered all whites; hat tip Butch Montes).

His economic legacy is also considerably more complicated than what one might expect, and there was virtually no coverage in the press about it. John Pilger in Counterpunch relates how Mandela was in neogotiations with the Apartheid regime since the early 1980s, and that “the apartheid regime’s aim was to split the ANC [African National Congress] between the ‘moderates’ they could ‘do business with’ (Mandela, Thabo Mbeki, and Oliver Tambo) and those in the frontline townships who led the United Democratic Front (UDF).” He further quotes an ANC Minister suggesting that their policies were Thatcherite and saying: “You can put any label on it if you like … but,  for this country, privatisation is the fundamental policy.”

He suggests that by the time Mandela was freed in 1989, the Apartheid regime had already helped build up a tiny black elite, supported by crony relations with the regime, which led to increasing the inequality among blacks. He argues, further, that “Mandela, too, fostered crony relationships with wealthy whites from the corporate world, including those who had profited from apartheid. He saw this as part of ‘reconciliation’.” His conclusion is that even though racial Apartheid is over, economic Apartheid is very much alive.

A more thorough analysis of the failure of the post-Apartheid economic was presented a while ago in Patrick Bond’s book Elite Transition: Form Apartheid to Neoliberalism in South Africa, were he argues that “post-apartheid policy-makers drew all the wrong lessons from ‘international experience’ and hence prepared to amplify rather than correct apartheid-capitalism’s main economic distortions.” These wrong lessons implied “very conservative economic policies–fiscal restraint, an independent Reserve Bank (hence inoculation from democratic inputs), trade liberalisation and co-optive labour policies.” Mandela resisted fiscal policies that favored redistribution, and maintained fiscal conservatism in order to avoid inflation (a very conservative view of the causes of inflation).
Inequality remains incredibly high (a Gini of 63.1 according to the World Bank data), unemployment is also at really high levels (at around 25%), and the economy has not grown very much. The groups favored are those connected to mineral and energy export-oriented corporations, which has been enough to keep the old white elites and a few in the new black elites well enough while the vast majority not only is left out and with very low living standards (with a ranking in UNDP’s Human Development Index of 121 out of slightly less than 190 countries, and life expectancy of 53.4 years), but also suffering from one of the worst HIV/AIDS epidemics in the world.

P.S. Similar arguments were put forward by my colleague Geoff Schneider back in 2003 here (subscription required).

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