In the first quarter of 2021, amidst the social and economic devastation wrought by the Covid-19 pandemic, the , and subsequently defended, its decision to refrain from increasing the country鈥檚 extensive social grant payments鈥攚hich now reach 18 million impoverished citizens鈥攂eyond the growth in inflation. Treasury officials have argued that a larger increase in social welfare protection is simply not currently feasible given the country鈥檚 rapidly rising public debt鈥攚hich has now breached 80% of the debt/GDP ratio鈥攁nd investor demands for fiscal consolidation. This type of fiscal restraint is unfolding in a context of heightened wealth inequality and an official unemployment rate now above 30%.
Those familiar with the financialization scholarship pertaining to developing countries鈥攖hat strand which portrays the global financial markets as a force that can alter committed policy trajectories on a whim ( 2004), as well as the more nuanced literature ( 2000; 2017; 2014; 2017)鈥攎ay recognize the Treasury鈥檚 framing of South Africa鈥檚 fiscal dilemma. However, as much of the international development literature on industrial upgrading and state policy has noted ( 2018; 2019; 2006), there is a third option available to policy-makers in developing countries beyond the binary of debt build-up vs. austerity; namely, comprehensive, employment generating state-led development.
This is precisely the case I make in my new book, published by Palgrave (2021), . In addition to documenting the onset of a financialized accumulation regime in post-apartheid South Africa since the democratic transition and the ANC鈥檚 adoption of economic liberalization, the monograph also highlights the missed opportunities that could have allowed the country to embark on a self-sustaining path of industrial up-grading, inclusive development, and internal revenue generation. Such missed opportunities include the early rejection by party leaders of the heterodox 鈥淢acro-Economic Research Group鈥� (MERG) policy cluster, the removal of the trade unions from broader macro-policy-making processes, the rejection of a modest reconstruction and wealth tax, and the abandonment of much of the 鈥淩econstruction and Development Program鈥� (RDP) platform in favor of the orthodox 鈥淕rowth, Employment, and Redistribution鈥� (GEAR) package in 1996. Had some of these missed opportunities been pursued, South African state officials would likely be in a much better position to currently adopt expansionary fiscal policies, and perhaps could have lifted their citizens out of poverty via inclusive development instead of cash-transfers.
Yet, as my monograph further documents, since the democratic transition Treasury officials have continued, despite recommendations from other government ministries such as the Department of Trade and Industry (DTI), to veto or oppose heterodox policy proposals that could potentially offer South Africa a path away from the current neoliberal quagmire. Such proposed polices include capital controls, export taxes on raw materials, the utilization of foreign exchange reserves to capitalize State-Owned-Enterprises (SOEs), and targeting specific industrial sectors for subsidies and state promotion.
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