Introduction1
In the last two years, some writers have suggested that South Africa has made something of an about-turn. From being a neo-liberal lapdog, based on the adoption of the GEAR (Growth, Employment and Redistribution) strategy in 1996 characterised by tight monetary regulation, privatisation and enthusiastic promotion of international investment and trade as the locomotive to take the country out of poverty, President Thabo Mbeki has shifted instead towards visualising the country as a developmental state (Bond, 2000; Marais, 1998; Padayachee & Valodia, 2001). This has meant courting other so-called giants in the developing world, notably India, China and Brazil, a marked policy of looking out towards Africa, the abandonment of privatisation and a willingness to use fiscal benefits to engage in more far-reaching social change and more generous budgets to attack the massive problems of poverty in the country. It also suggests the need to revive thinking about comparisons with the different layers of so-called newly industrialised countries in eastern, southern and south-eastern Asia.
I am not swept up by this new discourse into enthusiastic endorsement. While I think that developmental state thinking is held by some parts of the state apparatus, that it is more acceptable within general discourse than earlier in the new era, it doesnot qualify as much of a success story. Neither do I see ‘developmentalism’ as solving the country's problems. Successful developmental states have usually been authoritarian, at least for significant phases, and usually have historically and recently displayed intolerance towards minorities as well as repressive attitudes towards other substantial social problems. Yet in some measure, South Africa has elements of a developmental state that have a significant bearing on understanding the society as a whole. Measuring it against other developmental states is a very useful heuristic device. In particular, I think that it has considerable advantages in enriching our understanding rather than simply looking at the present as apartheid manqué – as a country where a whole range of well-known, essentially negative, social elements remain somewhat vaguely but incorrigibly in place – because there is still racism or whites are still relatively wealthy or most blacks are still poor or excluded in some sense. Of course, these features are true but as merely a part of a negative drawing, they lack the capacity to be the building blocks of a comprehension of what is in some respects a significantly changing society. The developmental state paradigm offers the possibility of a somewhat different way of thinking.
One aspect of the developmental state is its dirigisme: direct state involvement in economic policy and in social policy with key economic implications. This may include state ownership of major industrial, infrastructural and financial structures and it certainly will include institutional formation and intervention. There is the assumption, however, of a vibrant continuous private sector; dirigisme is not the same as complete state ownership or an orientation towards complete socialist transformation. Dirigisme is a word most frequently associated with the post-war French state committed to modernisation, defined in terms of contemporary social and economic competitive goals (Lane, 1995). However, the developmental state is more frequently applied as a term to poorer countries with a far greater initial sense of international impotence; here ‘development’ is assumed by all to be the raison d’être of the national government. In the words of Adrian Leftwich,
the distinguishing characteristic of developmental states is that their political purposes and institutional structures (especially their bureaucracies) have been developmentally driven, while their developmental objectives have been politically driven
(Leftwich, 2005:154).
Best-known for his studies of development in Brazil Peter Evans (1995) argued that the question to ask about state intervention in economic and specifically industrial evolution is not ‘how much’ state involvement but ‘what kind’? The predatory state for Evans is one where there is plenty of involvement of the wrong kind, where private interests systematically loot a state that has ability to extract wealth from natural resources. The opposite to this would be one, such as Korea, where a smooth integrated path was followed in private and public sectors (Amsden, 1989). The model developmental state is one where
bureaucratic apparatuses … are embedded in a series of social ties that bind the state to society and provides institutionalised channels for the negotiation and renegotiation of goals and policies
(Evans, 1995:12).
Thus a second aspect to the developmental state is the typical dominance of an elite that has internalised developmental goals. This elite will straddle the boundaries between the management ranks in the private sector, the established bureaucracy and politicians. It will by and large be the product of a common socialisation process through educational formation and through common social interaction, sometimes very obvious in the symbolic participation in particular institutions or leisure sites. Such an elite is not necessarily in agreement on all points but it shares a discourse about the needs and orientation of society that can allow for continuity and change.
Third, the classic developmental states have concerned themselves with establishing the foundations, usually out of rickety or one-sided beginnings, of wide-ranging economies. They have focused on projects of industrialisation in particular and of course industrialisation activities in the sense of factory industries dominated economic growth discourse in the twentieth century. Finally, developmental states have been associated – when successful – with wide-ranging social intervention in such areas as electrification, housing, urbanisation and education at all levels.
Much of the literature that uses the idea of a developmental state is unfortunately inclined to see such a model as inevitably a total success story. However, the reality is rarely so positive. First of all, it is notable that the classic catch-up models of the past which used dirigiste elements to compete on the world stage, especially Germany and Japan, acquired a nationalist and militarist cast so virulent as to threaten to dominate the entire world through conquest. Second, less virulent models have also varied enormously in their ability to overcome problems. Within South-east Asia, for instance, it is clear that Indonesia and Thailand are not straightforwardly emulating the success of Korea and Taiwan. Burma and the Philippines are still less successful. At the bottom end of the spectrum lie African countries which have had important elements of developmentalism as governing factors since independence but where development has largely failed to happen, certainly as desired or predicted. Third, so-called globalisation has changed the nature of capitalism in important ways: industrial infrastructure (steel mills, textile plants) able to employ very large numbers of men and women with limited ‘modern’ skills can no longer be the touchstone of economic growth as it was in the past. Can a dirigisme be adapted to the age of financial dominance and economic networking?
Questions about the state and its capacity to lead the modernisation of African societies and promote economic growth loomed very large in the early years of this journal. Most important perhaps were those articles that took up the so-called Kenya debate; although the evaluation of Nigeria by Turner and Beckman, as well as other countries, was also very significant (Beckman, 1982; Turner, 1976). This was a debate in which the question of neo-colonialism, of enduring imperialist control of the main forces pushing change loomed the largest. However, as it developed, analysis of internal social forces broadened and deepened; the necessity for assessing those forces with some acumen was stressed. In a convincing late assessment with regard to Kenya, Colin Leys expressed the view that further development of capitalism in Kenya was certainly conceivable despite its limited success through the 1980s; the view that international constraints hold Africa in an immutable vice is no longer so widely held.2 The failures of developmentalism in Africa have constrained use of the concept of the developmental state. Where it has remained a fertile source of ideas in Asia, it is because, following Leftwich, this kind of project remains thought to be able to achieve remarkable success (Harris, 1986).
Afropessimism was an inevitable accompaniment to the severe economic downturn closely linked to broader international change in the last quarter of the twentieth century. The present environment, if far from ideal, is however somewhat different. Natural resource prices, especially for minerals and energy related commodities, have boomed again and money has again begun to flow into Africa. The possibilities for building state capacity as well as intensifying growth and promoting social change have been increasing compared to the heyday of structural adjustment. In this spirit, it is suggested that a return to some of the burning questions of the 1960s and 1970s is far from irrelevant for many countries on the African continent; they are back on the agenda . This is the spirit in which this article addresses the question of whether the new South Africa is Africa's newest giant, to steal a phrase from Alice Amsden's paradigmatic study of South Korea: does it fulfil in reality the role of a developmental state. There will be some direct comparison with Malaysia which has clearly interested the ANC leadership as an Asian developmental model in which social change has had strong undertones of ethnic engineering. Malaysia at first ranked as an important economic investor in South Africa due to its interest in TELKOM, the national telephone service provider, and the Durban docklands area, in the first years after 1994 when little foreign investment was flowing into the country.
The New Elite
Certainly the strongest element in South Africa being labelled a developmental state lie in the effort being made to create a new elite, able to navigate the waters of corporate South Africa but fundamentally loyal to the ruling African National Congress and tied to its hegemonic political control of the country.
How might this parallel Malaysia? British Malaya had been a very wealthy and an economically successful colony.3 Its chief exports were rubber, mainly grown on British-owned rubber plantations and tin mines owned by British and, sometimes, ethnic Chinese, business, in a location that stood astride the main sea-route between South and East Asia. A lightly peopled territory, it attracted few British settlers but large numbers of Indian, Indonesian and, particularly, Chinese immigrants. Indeed, at the time of independence if one included the Straits Settlements, notably Singapore, with Malaya, the Chinese formed the largest element in the population, an unacceptable political fact for Malays. Thus Malaysia had been structured after independence through the extrusion of Singapore and the inclusion of the British territories on the northern and western coast of the island of Borneo, where the Chinese minority was smaller and the Indian minority very small, so as to have a Muslim Malay majority population.
But the large Chinese minority continued to appear dominant in business and the urban environment generally. Discourse about the nation oscillated between colonially-derived concepts of an ethnically-defined plural society with little but the market holding ethnic groups together and the championing of the formation of a Malay/Muslim dominated national state (Wah, 2002:23ff). ‘Both Malaysia and South Africa share a potential for racial violence and strife that is Bosnian in complexity and ugliness’ to use the words of a Eurasian Malaysian businessman very familiar with South Africa, himself a family beneficiary of Malaysian state policies.4 Urban ‘race’ riots largely aimed at the Chinese in Malaysian cities on the part of ‘indigenous’ Malays in 1969 revealed the depth of tensions in this former British colony.
In response, the state adopted the New Economic Policy (NEP) deliberately aimed at uplifting Malays – characterised as the bumiputera, the sons of the soil – and disrupting the ethnic-economic order that had characterised colonial development. Malays were favoured to various degrees in terms of state procurement, tendering processes and the licensing of businesses and targets were set in terms of the Malay share of ownership on the Stock Exchange. There were many aspects of policymaking that were intended to privilege Malays, some of them not really traceable in hard figures. Thus the state-influenced and controlled financial sector was able to give preference and direct loans to Malay-run businesses (Chin & Jomo, 2000). While Malays had long become established in the state bureaucracy, the result of NEP was the creation of a very wealthy ethnic Malay business elite. In this sense, the closeness of the model to the aspirations of the ANC and the policies it has pursued is remarkable. Jomo K.S., the well-known radical Malaysian critic, has called this ‘crony rentierism’, most strikingly manifest in the way the Malaysian state made life easy for close friends in the private sector during the 1998 crisis (Jomo, 1998).
The South African equivalent of the New Economic Policy is known as BEE – Black Economic Empowerment. It is the subject of daily attention in the South African press and virtually dominates the financial pages but thus far it has only begun to receive scholarly attention (Hirsch, 2005; Southall, 2004, 2005a). The beginnings of this story came from the initiatives not of the ANC but from established corporate business where the once Afrikaner insurance giant SANLAM and Anglo-American hived off space specifically designed to cater to a new class of black businessmen and women.5 It is an interesting and cautionary tale that these early projects (New Africa Investments Limited (NAIL) and Johnnic Communications (JOHNCOM)), ultimately proved to be failures. NAIL faltered as the executive directors appropriated its assets for their personal fortunes. By 2004, NAIL was ‘limping along the path to dissolution’ (Hirsch, 2005:218) while JOHNNIC, which had largely shifted into the media business, came under the dominant control of white ex-trade unionist John Copelyn in early 2006. Model BEE ex-politico and tycoon Cyril Ramaphosa was effectively forced to abandon his leading interest in the company. Copelyn, however, leads an international firm, HCI, built on union pension funds and thus with empowerment credentials of its own, if virtually independent from the new state-generated elite.
Reports of the continued small percentage of the Johannesburg Stock Exchange shares held by firms owned by blacks, especially after the mini-crash of 1998-99 which ruined NAIL, clothed early BEE in the cloak of imputed failure. The early form of black corporate empowerment was considered to be unsuccessful. In 1998, a body known as the Black Business Council was appointed to formulate BEE legislation and the state instituted a Black Economic Empowerment Commission to get policies on track. The commission reported in 2001 and in 2003 BEE legislation was promulgated in the form of the Broad-Based Black Economic Empowerment law (Hirsch, 2005:221). This is now the legislative basis of BEE.
Prior to 2001 emphasis has been laid first and foremost on targets for particular sectors of the economy. The first such set of targets was established for the liquid fuels industry in 2000 (Hirsch, 2005:223). The Mining Charter, watered down from initially quite extravagant demands for change, eventually required that companies be under black ownership to the extent of 26 per cent in ten years, to be financed by the industry6 (Gumede, 2005:226; Southall, 2004:323-24). Non-compliant sectors cannot be criminalised but the pressure to BEE oneself is clearly intense and the targets are very likely to be filled at least nominally. A myriad of ‘empowerment’ companies have emerged in order to attract the kind of business that will fulfil targets and please the state; at the same time, the state has effectively itself been prepared to make the introductions and initiate company formation to this end. It has also to some extent turned the very important parastatals (at first considered scheduled for privatisation but in fact always with a strong element of state financial ownership and now defended as economically essential in present form) into BEE state corporations (often with ‘strategic partners’ involved). Tendering and largescale projects involving mineral extraction and construction particularly is a major part of the BEE process: ‘The annual R120b.state procurement budget is an important tool in the quest to establish a black bourgeoisie’ (Gumede, 2005:227). By the late 1990s, apparently black companies were receiving the majority of national and provincial tendering contracts although the genuineness of their blackness was not easy to ascertain.
A new set of alliances is particularly evident. A contemporary example is that a huge contract currently going forward will serve the Gautrain, a new express train service to be created between Johannesburg and Pretoria at the behest of the Gauteng provincial government at very high cost. The contract has gone to a company with the fetchingly African name of Bombela but which consists of a major established South African multinational, a British branch of a Canadian company and a previously completely inexperienced black empowerment company called Loliwe, created for the purpose. A French company (RAPT, Transports en Île-de-France) will manage the service (Sunday Independent, 30 October 2005). It seems very likely that the state has played a role in these partners meeting one another; it has become ever more involved in informal midwifing of such partnerships and increasingly enamoured with very large government-generated projects of this nature.
The pressure to change the face of South African capitalism is not easy to squeeze into juridically defined categories. In practice, the state has done everything to make it clear that it prefers to do business with firms that fall in line with empowerment. In my view, Seekings & Nattrass (2005) are correct in seeing state legislation rather as constantly mounting pressure on substantial existing business entities to conform rather than in enacting definitive punitive measures. On the one hand, there continue to be questions about how successfully BEE is actually transforming ownership of wealth in South Africa. The more optimistic figures are those that count pension funds and the like within the BEE camp. On the other hand, there can be no doubt that the state is doing much to create a class of closely aligned capitalists. This includes share-holding members of government, former politicians who have become wealthy and successful as members of corporate boards and those closely related to top figures in government.
Increasingly the emphasis has shifted from the role of financial vehicles that involved indebting new entrepreneurs to existing sources of finance from the banks, insurance companies and mining/industrial firms to outright state creation of black capitalists. Probably the three wealthiest figures in Johannesburg financial circles of this type are ‘Tokyo’ Sexwale, the former premier of Gauteng Province (which includes Pretoria and Johannesburg), and now in the race for State President, Cyril Ramaphosa – once Thabo Mbeki's principal rival for the succession to Nelson Mandela, and Patrice Motsepe, brother-in-law both to Ramaphosa and related to more than one Mbeki cabinet minister. Sexwale arrived in business via the Thebe Investment Corporation, founded in the transition years to provide a funding source for the newly legal African National Congress, which still survives as a business (Southall, 2005a:317). Motsepe has perhaps had the most of this trio to do with the building of his own fortune through successful financial manoeuvres (Southall, 2005a:324). It can be taken for granted that resignations from top civil service or cabinet positions are followed by individuals being taken up in the BEE world but today the deed is done before and without resignation.
Features of deals announced this week include a growing list of government officials who are major beneficiaries, continuing generous share allocations to members of the African National Congress's national executive committee and highly unequal allocations between leading and ordinary members of BEE consortia
(Kevin Davie in Weekly Mail & Guardian, 11-17 November 2005).
One can perhaps categorise the new world of top black business figures into four categories with varying degrees of relationship to the BEE legal framework.
First, there are firms established by blacks, frequently recently created ones that are aimed at attracting the attention of anyone wishing to meet the wishes of the state. Often, however, the state and/or existing business has directly and purposively generated their existence. Sometimes however they do represent extant independent and genuinely entrepreneurial activities.
Second are firms which represent partnerships between whites and blacks but are sufficiently black in ownership to qualify as BEE. Firms such as these are certainly desired by the government as partners but they have not been so easy to structure as pure empowerment firms. Still, there have been remarkable instances where white entrepreneurs, typically new entrepreneurs such as John Copelyn, formerly a trade unionist, have been able to insert themselves very successfully into this world. This of course can shade into varieties of fronting which goes against the wishes of the state but is difficult to control. The violent death of Brett Kebble in 2005, a youthful mining finance magnate who had his hands in many pies, unveiled this world to some extent.7 Kebble had learnt to cultivate many ambitious and greedy figures in the ANC, of which he was a prime financial backer (Weekly Mail and Guardian, 4 August 2006), and in particular had become a partner and mentor figure to members of the ANC Youth League, helping them to set up BEE vehicles from which he of course benefited very largely. Two young and ambitious Youth League political activists, Lunga Lcwana and Andile Nkhulu were for instance made the heads of Itsuseng, one of his many companies accused today of fraudulent operations. Another remarkable wheeler-dealer in the BEE world, sometimes indeed called ‘Mr. BEE’ is Martin Kingston, a British banker, now linked to Deutsche Bank. When the broad indebtedness of the black executives are toted up, perhaps it will eventually even seem, as black nationalist lawyer and journalist Christine Qunta has suggested, that ‘the major beneficiaries of BEE deals are likely to be white’ (cited in Southall, 2004:178).8
Some of the partnerships are due to the limited capacity and experience of companies in the first category. Existing white generated corporations also remain important as parents of black empowerment companies. Wiphold is dominated by several well-known black women, notably Wendy Luhabe, the wife of an ex-trade union leader currently premier of Gauteng Province. As its CEO, Gloria Serobe, recently informed the public, Wiphold is ‘the BEE partner to Old Mutual, Nedbank and Mutual & Federal’, a set of major powers in the world of finance and insurance (Weekly Mail & Guardian, 17-23 March 2006). Who has set up whom? And the big corporate players serve as the models for smaller and more variegated forms of business. Thus a major law firm announced in March 2006 that ‘our target is to have 25 per cent of the economic benefit and control of the firm in black hands by late 2007. We are well on our way to achieving that’ (cited in an article by Sanchia Temkin, Business Day, 20 March 2006). A poll of 300 owners of medium sized businesses showed an increase from 51 per cent to 70 per cent between 2003 and 2005 in those who felt empowerment status would be a powerful factor in their finding new clients.
Third comes the BEE-related world of the parastatals, almost all led by black ANC appointees on very large salaries.9 Parastatals have been partially turned into ‘partnerships’. Thus the telecommunications monopoly TELKOM has been partially sold both to foreign investors and to black empowerment owners. The monopoly was breached in 2005 but again the chief beneficiaries will certainly have a big black empowerment stake and this is true very significantly for the owners of the three cell phone companies, an immensely profitable undertaking (which also involves interlocking TELKOM!) as well as the state franchised system of gambling casinos which exist nationwide.
A fourth category would be black managers and executives in the big industrial, commercial and financial companies, some of them nurtured since well before 1990. It is obviously particularly difficult to identify whether or not they are becoming effective generators of policy in economically important activities; some do not have strong ANC backgrounds. They would in any event be to some extent intermediaries between white businessmen and the state/BEE world rather than directly of it.10
Evidence does indicate that there are certainly some successful black business figures who emerged before 1990 in interstices allowed by the reforming apartheid state. The corporate sector began to head-hunt and identify future black executives in this era, often via the medium of creating management positions in the personnel and later sales sections of their organisations. A second point is that while prominent BEE beneficiaries do include individuals such as the former ambassador to Britain Cheryl Carolus or the Minister of Environmental Affairs Valli Moosa, respectively considered to be Coloured and Indian. But the real BEE world is overwhelmingly a black African one despite what one might expect from the higher educational qualifications and stronger business traditions amongst Coloured and especially Indian South Africans. The signs are that the private sector in South Africa, if it wishes to have a serious engagement with the state, must show a black face, ideally from top to bottom but especially at the top. This is not the case with regard to foreign capital. Foreign investment is in part being excused from BEE rules.11 The desire rather would be to bring international capital in as a distinct, autonomous partner. In this sense, Evans’ notion of a changing set of alliances in response to globalisation is in large part beginning to be carried out in South Africa.
Assessing BEE requires more than detailing the clearly extensive intermeshing of the private-state based elite of common origins and common political affiliation. First of all, it remains true that actual black influence as directors and as owners of South African companies remains very modest. For instance, black ‘tycoons’ and company directors are often dependent on large loans from the existing sources of finance which will not be repaid quickly or easily, as we have seen. Most of the black directors of listed companies are in fact non-executive. The disjuncture between public power and private weakness that so troubles the ANC and its supporters has been bridged to some extent but remains very substantial. In 2003, only 1. 6 per cent of JSE ownership was held by definably black companies according to one estimate12(Hirsch, 2005; Balshaw & Goldberg, 2005). The proportion in listed firms of black executive directors was well under 10 per cent13 (Hirsch, 2005:230). The state has by contrast proposed a 2014 target of 25 per cent ownership.
Second, while one can certainly find energetic and intelligent black capitalists in South Africa, and firms that are very independent of state links, the extent of corruption, the speed of class creation, makes it imperative to ask to what extent this is a class that is essentially parasitic, equivalent to what Jomo has called crony rentiers with reference to Malaysia. Thus far some kind of nationalist patriotism remains more a feature of Thabo Mbeki's wish-list than any kind of reality. According to the best-informed of writers on the subject, William Gumede, this is a deep source of frustration to the president. Gumede believes that the kind of alliance Mbeki stands for is intended as well as a model for African development continentwide; South Africa stands or falls on the premise of BEE (Gumede, 2005:224-25, 230). Mbeki's commitment to regulated governance and clean hands, moreover, goes directly against the strong pressure to empower and enrich black people quickly which he equally demands; the tension between these two tendencies are a regular manifestation of South African life as witnessed in the media. Whether or not BEE is creating a class of capitalists with no cleaner hands than elsewhere or a class of parasites dependent on an older class with only uneasy linkages to the regime is still far from certain.
Other Capacities
It is also less clear whether or not the BEE elite has wider capacities, or could develop wider capacities in terms of economic and social transformation. The radical and populist roots of the liberation movement that brought the ANC to power have continually sprouted a repeated critique difficult for the government to thrust aside. As Seekings and Nattrass point out, there is no reason to think that the emergence of a small class of rich business people either increases the number of small business opportunities or has any effect on unemployment (2005:344-45). Southall has argued that they preside over firm structures dominated by managers with essentially narrow financial ambitions only, whatever their colour (Southall, 2004:183-84). Gumede notes,
Very few of the new rich put their money into bricks and mortar; they much prefer to simply acquire more money 14
(Gumede, 2004:215).
Taking this further, it remains much less clear that the new class of black businessmen and women have any kind of broader project relating to South African economic development.
Most of the critique of BEE in South Africa is essentially moralistic as we shall argue below. This is insufficient. The ANC, if it is to have an embedded elite, needs something like BEE. In the case of South Africa, the new elite does not inhabit a country with no history of industrialisation or predecessor. Indeed, a rich, crowded and contentious literature, some of it produced for this journal, has explored the history through the 20th century of relations between the state and capital, or fractions of capital defining in ethnic or functional terms.15 On the one hand, this does mean that a pool of corporate knowledge and sense of direction which can potentially be deracialised exists in the country. With some justification, the ANC considers that it has created a national economic system that is highly business friendly although rewards for this in terms of growth have been slow in coming.
However, this is a world which is characterised by habits – such as intimate relations to the London financial world, strengths lying in large materials production, lack of experience with democratic work practices or thick layers of skill embedded in civil society – not easily changed. This is a mature capitalist class, inclined to invest in speculative and leisure activity, new technology and property, very unlike Evans’ type of potential industrial investors. There is a mistrust of black politicians and a shared discourse of what might politely be called Afro-pessimism. Disinvestment and emigration (particularly of the families of top figures in business) are very typical; only a small proportion of the established capitalists in South Africa vigorously engage in the new business environment (Gumede, 2005:215).
The limitations of the previously established elite have created problems for the ANC. Its focus is now on the creation of a new national elite intended to be the bearers of the new regulatory system that is being put into place. This is not merely a question of racial preference or nationalist ideology. On the contrary, the new regime has permitted (and perhaps encouraged) the shifting of headquarters of some of the big corporate empires in South Africa – Old Mutual, South African Breweries, Rembrandt and, above all, Anglo-American to stock exchanges in the North, especially London (Southall, 2005:182). The negative perceptions about South African prospects are occasionally aired openly, to the anger of the South African government whose relationship to Anglo-American, for instance, has not been very warm.
Superficially up to the time of writing, there seems little if any absolute clash between the rise of the BEE elite and successful economic strategy in South Africa. At the end of 2006, the economy appeared to be growing at a rate of 6 per cent p.a., the Holy Grail figure held out for decades and the Johannesburg Stock Exchange was booming. However, the relationships of the new black empowered to the established business elites even as they unbundle the oligopolies of the past and restructure their interests, still remains questionable. Is this potentially a stable or effective set of partners? How will the growing impact of foreign investors impinge? At a journalistic level for instance, a short report included the view of the executive director of the Japanese External Trade Organisation in South Africa that BEE codes are an ‘African cost’, a ‘hurdle’ which is part of what is involved in doing business in South Africa; the implications of these terms are not exactly positive. However, the article suggests that opinion amongst foreign investors on this varies considerably (Weekly Mail & Guardian, 20-26 January 2006). And what about white corporate and managerial representation? There is a lack of clear positive signals as to where its place is in Mbeki's real vision and the message is often one of grudging exploitation of superior skills and resources filled with resentment about the past rather than a genuine partnership. Whites speaking frankly generally have a pessimistic outlook.
Beyond this, there is the question of structural transformation. Can the new embedded elite and its partners shift the basis of growth away from the sale of natural resources, even efficiently gathered and sold (Fine & Rustomjee, 1996)? South Africa remains a country powered by the demand for its basket of resources. In the early twenty-first century, this remains an effective strategy financially given the immense demands placed by the growth of the Chinese and Indian economies especially. However, prosperity continues, as in the past, to depend on easy credit and translates into balance of payments problems given the public tendency to buy foreign finished and intermediate goods. Nor does it form the foundation of a more broad-based improvement in the standard of living. Government proclamations indicate that there is a slow and difficult understanding emerging of this reality. The thrust of the business world, however, is to seek wealth in familiar ways with the new elite in a weak position to promote fundamental institutional changes.
The contrast with Malaysia in this regard is enlightening. The adoption of NEP in Malaysia went together with a shift in overall economic strategy: the typical Import Substitution Industrialisation model buttressed by large traditional exports, notably tin and rubber, diminished in importance. Economic emphasis shifted to the courting of new foreign investment emphasising export-orientated industrialisation. This policy has been marked by dramatic success (punctuated with downturns in the mid-1980s and 1990s) especially with regard to investment from East Asia. At least in some sectors, where established British capital was unwilling to adjust to new conditions and disinvested, new foreign partners needed to, and did, effectively emerge.16 Stock market expansion has included recent massive foreign portfolio investment. This feature has been a major part of overall investment figures far higher than in South Africa17 and also contributed to consistently high economic growth figures, rapid urbanisation, an expansion of wage employment and a remarkable decline in poverty indicators.
In popular South African discourse, criticism of BEE is not primarily structural but made in class terms. Again and again, the problem with BEE is defined as its narrow base and its tendency to reward (if extremely generously) only a tiny number of select beneficiaries. At present, the spectacular benefits accruing to a few hundred black families at the top largely linked to the ruling party but unconnected to the broader issues of equality and opportunity in South African society leave BEE as a policy attracting very limited enthusiasm from the bulk of the ANC's supporters. The moral element here frequently tends to be quite dominant in the available literature (Hirsch, 2005; Southall, 2004, 2007). The heart of the story is that the masses have been left behind while the leaders fatten themselves with new wealth. GEAR, taken as a charter for the policies in which BEE is entwined, is invariably contrasted with the Reconstruction and Development Programme (RDP) adopted in 1994. The RDP highlighted the social and economic conditions in which poor people were living in South Africa and pledged to put dramatic improvement in these conditions at the forefront of policy. The RDP was made the basis of a ministry by Nelson Mandela but after two years lost all structural identity. Radicals connect this with the shunting aside in influence of COSATU, the Congress of South African Trade Unions and the South African Communist Party.
Social Stratification in the New South Africa
Social analysis of the new South Africa suggests that critiques of the ANC as merely presiding over the continuance of older social patterns is too crude to indicate current realities.18 South Africa's emerging social structure indicates that at the top of the pyramid are small numbers of people including a few black people generally with close links to the state. Second there is a varied middle class which includes more or less disgruntled whites but also a dramatically increased black middle class. For African people whose command of the discourse and skills needed to function in a business environment is reasonable, the heavens have really opened up. This particularly can be equated with access to tertiary education and could amount to 1/10 of the African population as well as much larger percentages of Indians and Coloureds. This perspective is shared with the recent assessment of Roger Southall (2007:81-82).
We need to also note the stably employed working class. A striking change since 1990 has been the transformation of the trade union movement, especially COSATU, from one overwhelmingly organising workers in the private sector to the growing proportion of state employees (Webster & von Holdt, 2003). In COSATU today, teachers, health workers, government clerks, etc. form by general estimates at least one-third of membership. All unionised workers benefit from the labour conditions hammered out legislatively by the ANC although they are a varied bunch and continue to include some poorly-paid workers. However, a large section of the African population (and far smaller sections of the other groups defined racially), fall outside this loop. This includes a huge part of the rural population, locked in by access to secure homesteads to impoverished areas with no hope of alternative economic activity. It includes the so-called informal sector which in South Africa includes a big criminal element and relatively little productive activity; it is mostly ‘survivalist’. It also sociologically is characterised by very high levels of serious illness, threats of violence and instability. The channels for mobility opened by the state have not been of use to the great majority of the poor whose access to work has generally diminished. Moreover, in the first years of the 21st century, the largest growth in census figures has belonged not to the unemployed but to the most poorly paid category of (non-unionised) employees.19
If we look at BEE and indeed the ANC led government era as a whole, there is very limited structural change in the lives of the poorer part of the population. Unemployment remains a massive feature in a context where only very limited peasant self-sufficiency survives. Dismissals of miners and agricultural workers have been more important here than shifts in industrial employment. The historically deeply etched division in rewards between unskilled or semi-skilled labour and skilled and technically proficient labour remains extreme, even though those on the right side of the line are no longer exclusively racially definable. Yet the survival of mass poverty has not so far been very destabilising for the ANC for lack of any plausible alternative despite outbreaks of resistance, sometimes violent, against the contradictory and frustrating policies in place, or perhaps more accurately, the ways in which these are implemented.
In addition, however, the ANC party-state (with 70 per cent of the popular vote in national elections) has held itself out as a potential and actual patron able to offer a range of life-saving hand-out payments and services. As a class, the new elite may be kicking away the social ladder (a topic that has not really been seriously researched) but the state remains committed to means of reaching out to its impoverished electorate. In the form of progressive direct taxation, in offering transfer payments via pensions, child support grants and disability grants, which for instance affect those stricken with HIV/AIDS, in the laying on of electricity, water reticulation, improvements to township amenities and the construction of between one and two million free houses (so far); it has used its patrimonial power considerably in this regard. A recent article insists on this point for Lula's Brazil and suggests that strategies for countries with a social base not unlike that in South Africa aiming at structural reform under contemporary conditions are very difficult to achieve (de Oliveira, 2006).
Yet as with Brazil, significant transfer payments are not a substitute for structural change. In a recent and harshly critical article on the current Brazilian leadership, Chico de Oliveira has made this comparison quite explicit. He sees the Bolsa Familia, a grant made available to the poor on a means-tested basis, as the foundation for depoliticising
The question of poverty, turning inequality into an administrative problem, while closing off the possibility of a nationalist-developmentalist project or totalised transfer of social relations … the dominated realise the ‘moral revolution’ – defeat of apartheid in South Africa, election of the Workers Party in Brazil – which is then transformed and deformed through capitulation to unfettered exploitation
(de Oliveira, 2006:22).
Not only has the Malaysian experience been far more broad-based but it has also seemed to lay the foundations for social stability more surely. There is no question that a tightly-knit elite of black businessmen, ex-politicians and public servants, bureaucrats and ANC leaders has formed over the past decade in South Africa. The social structure is altering in ways that offer substantial opportunities to various strata in the black population. However, the new elite remains limited in capacity, fragile and very dependent on the ANC remaining in power. A split in the ruling party, for instance, might have quite serious consequences. The Mbeki project may come unstuck; the business elite are not easily accepted or liked by the ANC membership as a whole, amongst whom trade union members and Communist Party cadres are important elements, more generally. At the moment, the ANC is increasingly paralysed by the emergence of a succession question on the horizon (2008) and strong populist elements manifest themselves so these questions are increasingly salient. If one wishes a familiar African parallel, the chances for rapid capitalist development under the presidency of Jomo Kenyatta, dramatically changed when he was succeeded as president of Kenya by Daniel arap Moi, whose political base was so different. South Africa is not immune to a comparable shift of some sort.
Conclusion
In conclusion, we can evaluate South Africa as having some aspects of a classic developmental state. In particular, the ANC is nurturing the rapid creation of a new class that will have an embedded relationship in Evans’ sense to development in the country. It is also using economic growth to finance large infrastructural projects such as the Gautrain and various construction jobs linked to the 2012 soccer world cup in a way familiar to developmentalism. However, the picture is very much murkier when one questions the capacity of this class to take South Africa forward to a more successful set of niches in the globalised world. Even more serious is the failure thus far to transform the lives of the masses through the set of deep institutional and social interventions that can be associated with the most successful Asian developmental states. Some of this failure must lie in the uncomfortable relationship of the new elite to its predecessors, now confined to the private sector and their practices. In the late apartheid years, Saul and Gelb suggested that South Africa was increasingly the prey of an organic crisis which involved both the processes of accumulation by capital and the thwarted lives of the masses, particularly in the cities (Saul & Gelb, 1981). Despite some continuing longterm problems, the former aspect of the crisis can be said to have been largely solved, for the time being, by the 1994 arrangements made in negotiations. But the latter aspect has in some respects become more flagrant. Politics here has turned the crisis back towards civil society and away from the state but this is a more superficial and fragile solution that could lead eventually to instability and a change of direction. Intensive study of social conditions in post-apartheid conditions and with regard to the post-apartheid state are needed to understand this situation more deeply.
Socialists may feel frustrated at developmentalist discourses which seem to push aside, or marginalise as secondary, concerns with poverty and miserable living conditions (or, for instance, inequities with respect to gender) in favour of debates about state macro-projects and capacities. It is true that proponents of the developmental state believe, I think with strong evidence, that it is possible to create far more egalitarian and welfare-promoting (and thus empowering) societies under capitalism than the classic marxist critical tradition allowed for. Moreover, there is also the potential for marginalising discussions of democracy, of organisation and consequent empowerment from below, which has little if any place in such discourses.
However, it would be wrong to dismiss the development state idea as reactionary with regard to improving the lives of the majority of the population and ‘merely’ nationalist in scope. It is clear that the most successful developmentalist projects, particularly in Asian countries, have involved deep interventions in areas such as labour regulation, family welfare, land reform, etc. They have led to large-scale improvements as measured in human development index indicators. It is certainly possible to argue that the relationship of socio-economic conditions of the mass of the population to macro-economic policies are intimate; without the harnessing of developmentalist strategies by effective states, it is not clear how fundamental social and political conditions can change.