many argue is rooted in a manufacturing crisis of profitability, the enduring social crisis experienced by the majority of the world’s (and South Africa’s) population, as well as an ecological crisis of multiple dimensions (including resource depletion, pollution of various kinds and climate change) that threatens the very existence of the earth as we know it.
As indicated at the outset, South Africa is in many ways a microcosm of the world crisis, given its history of plunder, exploitation and enclave (or bifurcated) development. The wealth of the few is dialectically interlinked with the poverty of the many – a notion that sits uncomfortably with those who dominate the ideological discourse in the country and the world. Instead of the dominant view that separates the ‘alleviation of poverty’ of the majority from the ‘accumulation of wealth’ of the few, or the ‘economic’ from the ‘social’ and ‘ecological’, it is necessary to take a more holistic view of the poly-crisis at the global level, in order to understand its impact at the national or local levels. In this sense, the ‘alleviation of wealth’ becomes a central pre-condition to the eradication of poverty (Sachs 2001).
Articles in this section address aspects of this crisis as it affects South Africa. Seeraj Mohamed and Neva Makgetla directly address the impact of the financial crisis on South Africa’s economy. Mohamed shows how South Africa’s immersion in the global economy after 1994, and its adoption of neoliberal macroeconomic policies, accelerated the financialisation of capital with devastating consequences for industrial development and employment creation. He underlines the view that South Africa was in crisis long before the recent financial crisis, through rising unemployment, deindustrialisation, debt-driven consumption, and the outsourcing and informalisation of labour. These features of the country’s higher growth path, which was also driven by the growth in private security services (as the upper and middle class enclaves shield themselves from rising crime arising out of increased social dislocation) may very well have been the ‘wrong’ kind of growth.
Mohamed shows how the corporate sector speculated in financial markets more than in fixed investment, further weakening the country’s fragile industrial base, and entrenching its reliance on the mineral-energy complex. The post-apartheid period was characterised by massive capital flight, and a rash of mergers and acquisitions, which served to further stifle diversification of the economy. Economic liberalisation, low inflation and high interest rates, in keeping with global practice, was explicitly designed to attract foreign investment – but what South Africa attracted in the main was increased speculation and ‘hot’ money. The heightened role of services in the economy is not a sign of maturation, but ‘is due to the withdrawal of capital from the economy and the misallocation of capital towards financial speculation, housing price booms and exuberant consumption instead of productive investment’ (p60 in this volume).
Neva Makgetla continues this line of argument with a focus on the impact of the recent financial crisis on employment in the country. South Africa’s already high unemployment (officially at 26 per cent but unofficially up to 40 per cent of economically active citizens) worsened significantly during 2009. She shows a loss of almost a million jobs, at a far higher rate than the drop in GDP. Makgetla, however, acknowledges that government’s short-term countercyclical fiscal policy response and substantial industrial investment, unlike in the late 1990s downturn, seem to have moderated the impact of declining growth, investment and jobs. While revenues dropped by 9 per cent in 2009, Treasury maintained expenditure growth at 9 per cent, increasing the budget deficit to almost 8 per cent of GDP. On the other hand, microeconomic responses were too little too late, she argues, and the rapid appreciation of the rand has slowed the recovery significantly.
Along with Mohamed, Makgetla argues that the recent crisis underlines the need for a rethink of traditional approaches to industrial policy, which is still oriented towards exports, to the neglect of domestic and regional demand and the creation of employment, while also increasing living standards.
Scarlett Cornelissen unpacks the economic costs and benefits of hosting the football world cup. As she shows, South Africa’s headlong rush into hosting this spectacle, to showcase the country as a desirable tourist and investment destination, may cost the country dearly. Inflated job and incomes projections belie the real costs of building stadiums that will probably end up as white elephants. While the country may benefit in terms of increased national unity, and by showing the world that we can be as capable of hosting a multi-billion dollar event as any developed country, it is becoming clearer that instead of addressing our problems of underdevelopment and inequality, the event might in fact worsen them.
For many the World Cup, like the recent Miss World beauty pageant which cost the City of Johannesburg millions of rand for little return, is indicative of the misplaced priorities of the enclave elite, which are out of sync with the interests of the increasingly restless impoverished outsiders.
Finally, Mark Swilling and Mike Muller introduce the concept of ‘decoupling’, whereby economic development is decoupled from negative environmental impacts and resource extraction.4
Swilling’s comprehensive overview of government policies and initiatives argues explicitly for a ‘green new deal’, in contrast to South Africa’s continued reliance on a ‘resource-intensive economic growth path’, which has led to the rapid depletion and degradation of our natural resources. Swilling identifies a range of impressive policy interventions in recent years, to shift the country towards a greener development path, but laments the fragmented and incoherent nature of these shifts. Tellingly, South Africa’s recent World Bank loan for a carbon-intensive power plant, its pursuit of nuclear power alternatives and the continued embrace of a minerals-energy economic growth path at the macro-economic level, underlines the country’s persistent subordination of ‘sustainable development’ to traditional growth imperatives.
Muller is more positive about decoupling with respect to water resources, arguing that state planning (together with ongoing interaction with major water uses and other stakeholders) has been critical. From his past experience as South Africa’s director general for water affairs, Muller believes that South Africa has already been successful in decoupling socio-economic development from water availability. He gives a detailed description of South Africa’s water resource planning system, but warns that while effective legislation is in place, the institutions and knowledge base that underpin decoupling remain weak – and this includes the effectiveness of broader development institutions and municipalities.
CONCLUSION
Ecological issues, as integral parts of the social and economic spheres, are increasingly being placed on the world’s agenda, particularly in parts of Latin America. For example, the 2010 election campaign in Colombia placed an explicitly Green candidate, Anatanas Mockus, the former mayor of Bogota, in a strong position to become the first Green Party president in the world (Financial Times 30 May 2010). Radical attempts to transcend capitalism are being embraced in countries like Bolivia under Evo Morales, who is pursuing an explicit green socialist development strategy (Morales 2009). The financial and ecological crisis has spurred on greater awareness about the need for fundamental alternatives among activists in social movements and trade unions around the world (Ransom and Baird 2009; Angus 2009).
In South Africa, a new mood is slowly awakening as it becomes clear that the ANC’s ‘national democratic revolution’ (NDR) is little more than a ‘national tender revolution’ (NTR), where new or aspiring members of the black elite fight furiously among themselves for the spoils of state patronage in the form of state tenders at local, provincial and national levels. Black economic empowerment, instead of tackling the roots of class power and social inequality, is designed to facilitate the entry of black elites into the world of white economic power and hyper-consumption.
Nevertheless, there are countervailing tendencies in government. In May 2010, the government convened the Green Economy Summit, attended by a range of ministries and the presidency, and driven in large