From Liberal Welfarism to Neo-liberalism

85 This policy emphasised the need for human resources development through better education and training, with minimal intervention by the state in the economy (National Treasury 1996, p.

2). Although GEAR was informed by market economics, and the adoption (alongside the aforementioned liberal rationality) of a neo-liberal mentality of rule, it departed from an earlier left leaning economic strategy known as the RDP (Redistribution and Development Programme), which had been adopted by the GNU in 1994. To understand why this happened, we must look closer to its development and logic – to this task we will now turn.

86 relations of production nor the terms of property-ownership could be transformed; this limited the RDP to conceptualise a “non-revolutionary path to socialism” (ibid, p. 154). Although issued under the auspices of the GNU, the RDP had its roots in negotiations between the ANC, its alliance partners, the Mass Democratic Movement⁶⁵ and other Non-Governmental Organisations (NGO) but, ultimately, was born out of engagements between the ANC and COSATU. A 1990 workshop between the ANC and COSATU in Harare saw the adoption of proposals which included “an extension of public ownership, state regulation of credit, a prescribed high-wage economy, and a central role for organised labour in policy formulation…[with redistribution serving]…as the principal agency of economic growth”

(Lodge 2002, p. 21). This followed the socialist ideals espoused by both organisations during the struggle against apartheid. However, the RDP base document (ANC 1994a), published by the ANC prior to adoptions of the White Paper, revealed the influence of both socialist and market-based discourses. The state was framed less as a direct driver of economic development but, more ambiguously – as an active partner, catalyst and facilitator of economic growth. In the document, reference is also made to the private sector’s role in providing utilities and welfare to the population; thus signaling the marked departure from the outcomes of the Harare workshop (World Bank Development Report (1997) as cited in Lodge 2002, p. 56).

Nevertheless, the RDP was broadcast as a ‘people-driven’ programme that would advance a growth-through-redistribution thesis and, in addition to restructuring the economy, was intent on delivering housing, water, electricity and other services to the poor (RSA 1994).

To achieve its goals, an RDP office was established in the Presidency to oversee and coordinate the RDP but its implementation was met by many difficulties. Some considered the programme as complex and impractical; others blamed the inexperience of the government bureaucracy to

65 The Mass Democratic Movement was a loose coalition of anti-apartheid organisations during the 1970s and 80s in South Africa. It succeeded the UDF after the latter was banned in 1988.

87 service a considerably larger constituency than before. The fact was that much of the RDP budget was unspent during the first two years of democracy (Handley 2005, p. 224; Jeffery 2010, p. 241). In February 1996, in addition to the business sector’s increased agitation with the

“underlying tone of authoritarianism in the RDP” (South African Chamber of Business (1994/95) as cited in Jeffery 2010, p. 243) (largely due to its encouragement of state intervention in the economy), the country’s currency came under pressure. As has become clear, a new macro-economic programme (GEAR) was being drafted in secret by a group of economists and academics, the Ministry of Finance and the Office of the then Deputy President, Thabo Mbeki, during this time. This new programme was presented to Parliament in June 1996; it resembled a ‘localised’ Structural Adjustment Programme because of the appropriation of the “essential tenets and policy recommendations of the neoliberal framework”

(Adelzadeh 1996, p. 67) advanced by the IMF and the World Bank. So, informed by a neo- liberal rationality of governing, this ‘self-imposed’ pro-market economic strategy (Tikly 2003, p. 167; Vally & Spreen 2006, p. 2) was officially endorsed by the ANC at its national conference in December 1997. The ANC undertook to implement “deficit reduction, government ‘rightsizing’, tariff reduction, privatisation and productivity-linked wage rates”

(Lodge 2002, p. 25). The conclusion is unavoidable: the market became, to draw on Foucault, a site of veridiction, as “strategically placed officials announced unequivocally that GEAR was non-negotiable – because of globalisation there [was] no alternative” (Hart 2008, p. 681, my emphasis). This famously echoed Margaret Thatcher’s ‘TINA’ (‘There is no alternative’) claim.

Despite assertions that GEAR was aligned to the goals of the RDP, and that it sought to produce rights-bearing citizens which were able to participate “in the democratic institutions of civil society” (National Treasury 1996, p. 1), it envisioned a different society from the one

88 promised by South Africa’s liberation discourse. The role of the state in creating jobs through intervention in the economy was downplayed and it emphasised redistribution-through-growth by encouraging international investment, competition and skills development (ibid). It furthermore envisioned a citizenry that possessed the skills necessary to function, as Foucault puts it, as ‘active’ economic subjects (Foucault 1979, p. 223), within a market-driven, investment-friendly economy. Among other things, this meant fostering an ‘entrepreneurial mindset’ among South Africans by encouraging “small and medium-sized enterprise development” (National Treasury 1996, p. 14) so that new jobs and new wealth could be created by economically-responsible citizens. It soon became clear that GEAR – in line with HCT (Human Capital Theory) – positioned economic-growth above all societal concerns, including liberation politics (Greenstein 2009, p. 76; Peters (2001) paraphrased by Doherty 2007, pp. 201-202). So, it was that the market, together with business management principles, came to inform subsequent policies and practices of government. This was evidenced, most notably, in the call for fiscal restraint by the state and the privatisation of select public utilities.

The wider logic of austere public spending was presented in GEAR’s strategy document as a necessary step towards managing inflation and ensuring the availability of domestic resources to finance the development of capital markets (Hart 2008; Narsiah 2007; National Treasury 1996, p. 8).

Informed by this reasoning, the ANC government introduced a policy of Black Economic Empowerment (BEE); a set of guidelines that private companies were compelled to follow in order to do business with the government. BEE was initially implemented on an informal basis until the adoption in 2003 of The Broad Based Black Economic Empowerment Act (RSA 2003). After this, a criteria scorecard, as outlined by the Act, had to be met by companies wishing to do business with the government. Among other things, a company’s

89 scorecard had to favourably reflect its empowerment of Black South Africans either through the ownership or management of the company (ibid). It also had to show the human resource development, the equity standards, the preferential procurement and the investment by the company in other companies (or enterprises) were owned or managed by Blacks (ibid). BEE was framed by the ANC as an ‘accumulative vehicle’ which, once a Black capitalist class had been established, could further drive the deracialisation of the capitalist system (McKinley 2011; RSA 2003, p. 5). Such reasoning, however, bares traces of earlier discursive constructions of BEE (Nzimande 2005). Nzimande points to the similarities between BEE and the policy of Black Advancement which was introduced by some American companies in the late 1970s in response to increased pressures to disinvest from South Africa. This involved the training and promotion of Black South Africans to managerial positions in order to create a Black petty bourgeois class with an eye to “convin[cing] black South Africans that capitalism [was] in their interest” (ibid). Although the national-socialist discourse of the ANC during the struggle period constructed BEE as a way to assume ‘control’ and eventually overthrow the capitalist system, by 1994

the mould of any future BEE was set. The primacy of developing a black bourgeoisie as the accumulative vehicle for an extended BEE and the maintenance/enhancement of capitalist relations of production as the macro-developmental framework within which that took place (alongside political 'freedom') – was presented as the logical and indeed desired outcome of the liberation struggle itself (McKinley 2011, my emphasis).

By 2004, however, GEAR had not realised its promise of creating, as the strategy phrased it, ‘accelerated economic growth’. In the previous year, the country’s economy had only grown by 1.9% (compared to GEAR’s vision of a 6% growth rate by the year 2000) and

90 the unemployment figure⁶⁶ stood at 27% (compared to 17% in 1995) (Jeffery 2010, p. 252;

Manuel 2004, p. 11; National Treasury 1996, p. 5). The lack of skills and expertise among Black citizens due to continued structural inequalities, especially within the education system, buttressed high levels of unemployment and witnessed a lack of transformation in the private sector. In the public sector, the need to achieve employment equity targets saw the appointment of Blacks who did not necessarily possess the required qualifications and skills. This led to widespread mismanagement (Jeffery 2010, pp. 152-155; SAinfo 2009). In the face of unemployment and inadequate service delivery to the poor, the ANC announced in 2004 that a new growth plan would be pursued – this one would launch South Africa on a ‘Developmental State’ path. Drawing on the development strategies employed in East Asia after WWII, the new strategy aimed to “accelerate…economic growth in order to expand service delivery, redistribution and social development” (Mc Lennan 2009, p. 33) through intervention (where this was necessary) in the economy, through the provision and extension of social grants and free basic services, and through a greater infrastructural development (ibid). The ANC subsequently unveiled the Accelerated and Shared Growth Initiative for South Africa (Asgi- SA) strategy (RSA 2006). Instead of departing from the neo-liberal logic of GEAR, this approach highlighted and proposed to address the ‘binding constraints’, or obstacles, to the (reframed) governmental objective of ‘accelerated and shared growth’.⁶⁷ Like the RDP, Asgi- SA was informed by both market-directed and interventionist economic discourses; calling on the one hand for greater liberalisation of the economy and the introduction of competition and, on the other, suggesting the active development of strategic industries through the provision of state subsidies and the use of tax concessions (ibid). This contradictory and obscure change to

66 Using the strict definition, unemployment here refers to the active job seekers who were unemployed as opposed to unemployment according to the ‘expanded’ definition which would include “all discouraged workers not actively seeking jobs” (Jeffery 2010, p. 252).

67 These constraints included currency volatility; a deficient national logistics system; skills shortages; barriers to investment and competition; obstacles to small and medium business enterprises; and weaknesses in state capacity (RSA 2006, pp. 2-4).

91 the language of South Africa’s economic policy resulted in little real adjustment in the economic programme of the ANC government.

Laubscher (2007) noted that although elements of a Developmental State were visible – the state’s involvement in the development of the motor industry; the pressure that the state put on financial institutions to provide financing to low-income groups; and the attempts by the state to develop an overarching industrial policy – South Africa could not be considered as a Developmental State.⁶⁸ Unlike Asia’s Developmental States, South Africa preferred to regulate as opposed to intervene in the economy⁶⁹; there was also no relationship between the public and private sector to coordinate service delivery; and South Africa did not possess “an elite, meritocratic bureaucracy that attract[ed] the best talent in the country” (ibid). Until 2009, therefore, which is relevant to the timeframe of this thesis, governing in post-apartheid South Africa continued to be informed by a neo-liberal rationality of government. This mentality of rule navigated and functioned alongside an earlier adopted liberal mentality of rule. The next section considers some of the tensions alluded to above between these rationalities, specifically the impact of the latter on ‘risk’ calculation by the South African state.