The task that confronted the post-apartheid South African government was no small one. Cavernous racially tinged economic inequalities, commingled with social antipathies that had been painstakingly nurtured through centuries of conflict, conquest and subjugation implied an unpromising prognosis for the country’s future.
But hope is a powerful force. It galvanised the country towards a triumphant rainbow-hued narrative in hopes of transcending the gravitational pull of its difficult past. Such was its influence, the true scale of the daunting realities momentarily retreated into the invisible background.
Twenty one years into the democratic era, the complexity of these socioeconomic fissures has re-emerged to loom much larger. That all important fuel of hope seems in short supply nowadays.
Political leadership is ultimately about solving the pressing problems of the day. Its mettle is ultimately assessed on the scale of results. On this score the assessment is mixed, with pockets of excellence juxtaposed with areas of unmistakable disappointment.
Success in solving problems in turn hinges on unsullied clarity about the nature of the problem. From this, strategic directions can be plotted.
Missing among the multiplicity of proposals that bespatter the local discursive landscape, is analysis on the implications of the industrial structure of the South African economy. Specifically its relation to the sphinx problem of unemployment, which remains the defining economic challenge confronting post-apartheid South African society.
The evolution of economic modernisation in South Africa was shaped by two distinct politico-economic forces. The nexus of Colonialism and English Capital on one hand as well as that of Apartheid and the emergent Afrikaner Capital on the other.
Both of these deserve much credit for their role in building the economy to the dynamism it became. Albeit appreciably aided by the abundance of land and cheap “surplus” labour that has been previously discussed.
The mining industry, with its large capital outlays, lent itself to a concentrated ownership structure that eventually cascaded into broader South African industry.
The two icons of this structure on the mining side of things were Anglo American, representing English capital and Gencor (subsequently Billiton), which flew the flag for Afrikaner Capital. The financial services sector was a mirror image of the mining edifice, with Old Mutual and Sanlam, playing identical roles in representing the two poles of the apartheid power constellation.
There certainly were other players but these were among the most conspicuous. Their control extended well beyond the mining and financial service sectors. In fact, such was the dominance of Anglo American, in 1987 the group constituted as much as 60% of the Johannesburg Stock Exchange market capitalisation alone.
The decline of the relative importance of mining to the South African economy as well as timely exits to London and elsewhere have diminished their dominance here. But the legacy of industrial concentration remains an inescapable feature of the contemporary economy.
The implications on unemployment are notable only by their absence from popular analysis. Nevertheless they cannot be avoided.
It is no earth-shattering proclamation to assert that Capitalism is driven by the quest for profit maximization.
Oligopolists, by definition, are in the privileged position of competing with fewer players. This makes for easier coordination between them in the interest of the overarching quest for profit maximization.
Oligopolists are subject to a unique production curve according to economic theory. According to this curve profit maximisation occurs at lower production levels to what can be expected under perfect competition. Lower production entails lessened supply. This in turn culminates in higher consumer prices.
The absence of competition thus makes reducing supply easy for South African oligopolists across a range of sectors.
The comparatively higher prices with which South African consumers are quite familiar are a discussion for another day. My concern today is the reduced demand for labour necessitated by the artificially lower production.
This is because lower production means fewer workers in the production process.
The result is the stubborn unemployment that has proven impervious to the ebb and flow of the local and global business cycles. Thus South Africa has come to be saddled with a problem of structural unemployment that has few peers anywhere in the world.
Restructuring the economy seems the only way it can be rescued from its current dismal loop. There is also no shortage of simplistic suggestions as to how this can be done. Clear thinking is what seems to be in short supply.
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