SOUTH AFRICAN POST-APARTHEID ECONOMIC PLANNING AND PERFORMANCE: A CRITICAL ASSESSMENT OF GEAR Thesis submitted in partial fulfilment of the requirements for the degree of Masters in Arts in (Political Studies) By Sambulo Mathebula University of the Witwatersrand Supervisor: Dr Joel Quirk February, 2015 DECLARATION I Sambulo P. S Mathebula, declare that this research report is my own work. Any assistance that I have received has been duly acknowledged in the research report . It is submitted in partial fulfilment of the requirements for the degree Masters of Arts (Political Studies), at the University of the Witwatersrand. It has not been submitted before for any degree at this or other University. Sambulo P. S Mathebula 16 February 2015 i ABSTRACT The ANC ascended to government against the backdrop of a rapidly changing global political economic order after the end of the Cold War. This effectively marked the collapse of communism as a global political force and the concomitant dominance of neoliberalism. In 1996, the African National Congress government adopted the Growth Employment and Redistribution strategy (GEAR) as its new economic blue print, through which it would pursue its transformation agenda. In so doing, the ANC circumvented economic policy consultation processes with its political alliance partners and declared GEAR ‘non- negotiable’. This research argues that the shift to GEAR was essentially an economic policy alignment with the dominant post -Cold War neoliberal discourse and practice. It was fashioned deliberately by key ANC policy makers who had bought into the neoliberal assumption that development would occur after economic growth had been attained. The GEAR strategy privileged market led reforms which subordinated the transformation agenda to orthodox macroeconomic considerations. The pro-market bias which began with the adoption of the GEAR strategy has continued to shape South Africa’s post-apartheid economic policy environment to a significant extent. ii ACKNOWLEDGEMENTS I owe a substantial debt to my supervisor Dr Joel Quirk, for his patience and constructive guidance towards ensuring the completion of this research report. Thank you for refusing to let me give up, when it seemed the most rational option at the time. I would like to express deepest gratitude to Ms Gillian Renshaw whom I regard as the pillar of the Political Studies Department; her consistent support over the years has contributed immensely to the completion of this work. I would like to thank Ms Joan Brickhill for being the visionary that she is and allowing me to take time off work to complete this research report. I cannot thank her enough. I would like to thank my loving Parents for the continued support and encouragement; you have been a life -long inspiration. To my siblings Khaya, Thandeka, Mbanguli, Nomvuselelo and my cousin Simphiwe, I have no words to describe what your support over the years has meant to me, a big thank you! Lastly but certainly not least, I would like to thank my incredible wife Siphathisene. Without your unwavering belief in me, your sacrifice and ceaseless encouragement, completing this research report would not have been possible. I owe you the biggest debt. iii Table of Contents DECLARATION .......................................................................................................................................... i ABSTRACT ................................................................................................................................................ ii ACKNOWLEDGEMENTS .......................................................................................................................... iii CHAPTER ONE ......................................................................................................................................... 1 INTRODUCTION ................................................................................................................................... 1 RESEARCH QUESTIONS: ...................................................................................................................... 5 OBJECTIVE OF THE THESIS ................................................................................................................... 6 RESEARCH DESIGN AND METHOD ...................................................................................................... 8 CHAPTER STRUCTURE ......................................................................................................................... 9 CHAPTER TWO ...................................................................................................................................... 10 THE STATE VERSUS THE MARKET: A CONCEPTUAL OVERVIEW ........................................................ 10 INTRODUCTION ................................................................................................................................. 10 MARKET FUNDAMENTALISM, A HISTORICAL AND THEORETICAL OVERVIEW: ................................. 10 LIMITS TO MARKET FUNDAMENTALISM: .......................................................................................... 13 CONCLUSION: .................................................................................................................................... 17 CHAPTER THREE .................................................................................................................................... 18 NEOLIBERALISM A HISTORICAL OVERVIEW: SOUTH AFRICA IN A CHANGING GLOBAL ORDER ....... 18 INTRODUCTION: ............................................................................................................................ 18 THE ASCENDANCE OF NEOLIBERALISM AND THE GLOBAL CONTEXT ........................................... 19 AFRICA AND NEOLIBERAL INFLUENCE: ......................................................................................... 24 SOUTH AFRICA AND NEOLIBERAL CONVERGENCE: ...................................................................... 26 CONCLUSION: ................................................................................................................................ 29 CHAPTER FOUR ..................................................................................................................................... 30 A SHIFT IN GEAR EMBRACING THE MARKET ..................................................................................... 30 INTRODUCTION: ............................................................................................................................ 30 THE ANC’s IDEOLOGICAL BATTLE FOR TRANSFORMATION: THE DAVOS MOMENT ..................... 31 THE TRIUMPH OF ORTHODOX ECONOMICS: ................................................................................ 33 CONSTRAINTS ON DEVELOPMENT: EMBRACING THE MARKET.................................................... 34 THE ADOPTION OF GEAR .............................................................................................................. 39 WHY GEAR? ................................................................................................................................... 42 CONCLUSION: ................................................................................................................................ 44 CHAPTER FIVE ....................................................................................................................................... 46 GEAR IN ACTION: CONSEQUENCES FOR SOUTH AFRICA’S POLITICAL ECONOMY OF TRANSITION .. 46 INTRODUCTION: ............................................................................................................................ 46 GEAR FAILURE AND COMMITMENT TO MACROECONOMIC ORTHODOXY: ................................. 47 Table 3.1: GEAR Prediction versus Actual Performance ............................................................... 48 POLICY CONTINUITY AND IMPACT: ASGISA AND THE NEW GROWTH PATH ................................ 50 THE ROLE OF THE DEMOCRATIC STATE AND A DEEPENING NEOLIBERALISM .............................. 53 TRANSFORMATION & CLASS CONSOLIDATION: BLACK ECONOMIC EMPOWERMENT (BEE) ....... 55 SOCIAL DECLINE AND THE NDP ..................................................................................................... 56 CONCLUSION: ................................................................................................................................ 57 CHAPTER SIX:......................................................................................................................................... 59 CONCLUSION ..................................................................................................................................... 59 BIBLIOGRAPHY ...................................................................................................................................... 65 CHAPTER ONE: INTRODUCTION: At the centre of the African National Congress’ (ANC) liberation narrative has been the articulation of a transformation vision for South Africa. This transformation vision was brought about by the recognition that centuries of colonial and subsequent decades of Apartheid exploitation had left the majority of South African citizens disenfranchised and systematically excluded from meaningful participation in South Africa’s political and economic life. Of utmost importance for the ANC and its allies in the South African Communist Party (SACP) and the Congress of South African Trade Unions (COSATU),