Document(s) 4 of 11

A moment of truth

An icy midwinter meeting in Davos, Switzerland, was the setting for the first formal statement of the economic policy of a democratic South Africa. Here, at the World Economic Forum annual meeting early in 1991, Nelson Mandela made the first really significant statement of economic policy on behalf of the ANC since it had been unbanned in February 1990 by President F.W. de Klerk. Davos, the site of annual meetings of the world's economic elite, was also the first venue where Mandela and De Klerk had shared a public stage for more than a press conference. This, in itself, was a statement, in the sense that De Klerk's decision to release Mandela had been strongly influenced by a desire to make peace with South Africa's potential investors and markets, while Mandela was signalling that he recognised that the world's plutocrats wanted to see him and De Klerk acknowledge their constituencies' mutual dependence.

Mandela's speech at his first Davos meeting was shrouded with controversy. The original draft of the speech had left space for a section on the ANC's economic policies, which was to be prepared by an ANC-allied economist in the United Kingdom. When the insert arrived from London it was included in the draft speech. However, when Mandela and his economic advisers read the section they found that it was fashioned in a traditional socialist style, virtually calling for the nationalisation of the commanding heights of the economy. Tito Mboweni, 31 years old, one of Mandela's key aides and an economist, had to redraft the economic section in great haste.

Mboweni was one of the bright young stars in the ANC. He trained in economics while in exile, first at the University of Lesotho, later at the University of East Anglia where he earned a Masters degree. He then took up a position in the ANC's department of economic planning in Lusaka, and was one of the first officials to move back to the ANC's new headquarters at Shell House in Johannesburg in 1990. Over the next few years, along with Max Sisulu, Trevor Manuel and their team, Mboweni helped to finalise and formalise the economic policy of the ANC for the real world of power.

Mboweni's rewrite of the speech tread a far more careful path, shying away from echoes of the old British Labour Party or eastern European socialism. The ANC had not held its important 1992 policy conference yet, so Mboweni had to say as little as possible while appearing to say more, without offending anyone. This he managed to do, and the version of Mandela's speech actually delivered at Davos in 1991 could best be described as carefully written, harmless and mildly reassuring for the collected band of plutocrats and international financial bureaucrats.

The difficulty of addressing potential foreign investors was summed up in an internal ANC document circulated during April 1991. The aim of the document was to advise ANC officials on how to conduct themselves in meetings with potential probing investors. 'Firstly,' instructed the briefing paper, 'we need to persuade foreign investors not to invest in South Africa until our conditions for the lifting of sanctions are met.' 'Yet,' noted the next point, 'we need to make an effort to sustain foreign investors' interest in investing in a Post-Apartheid South Africa. The South African economy desperately needs investment in new productive capacity' (ANC 1991d).

The story of Davos, 1991, might never have been known, were it not for the fact that Mandela's communications team released the first draft of the speech before Mboweni's rewrite. In South Africa the first version was published under alarmist headlines by the press, owned and controlled by whites, and close to big business. The second and final version was never as well known in South Africa as the speech that was never given.

A year later in Davos, Mandela was unambiguous and clear. Though the policy conference was still to be held in May, the position of the ANC had evolved to the point where Mandela felt he could make some definitive statements. He talked about a 'mixed economy', using a term that had been introduced into the lexicon of the ANC by economists seeking to hold on to more interventionist socialist policies, but turned the term into a synonym for social democratic capitalism. In Mandela's mixed economy, 'the private sector would play a central and critical role to ensure the creation of wealth and jobs'. The public sector would be strong, but would be modelled on western European social democracies such as France and Germany (Mandela 1992a).

Moreover, the ANC had decided to address, directly, the concerns of potential foreign investors. Without being too specific, Mandela recognised that, in order to meet its objectives of job creation and poverty alleviation, the ANC would have to 'address such questions as security of investments and the right to repatriate earnings, realistic exchange rates, the rate of inflation, and the fiscus' (Mandela 1992a).

In addition, Mandela made it clear that there was to be no rash assault on the assets of white-owned South African firms. He realised that this would also be an important signal to foreign investors. The South African economy, he predicted, 'will offer very good prospects for the investors present in this room, both South African and international' (Mandela 1992a). Considering the fact that the ANC still supported economic sanctions against South Africa, and would continue to do so until there was a constitutional settlement, this was as far as Mandela could go.

The people's charter

But where did the economic policy of the ANC come from, and was it true, as some analysts have suggested, that the ANC changed its tune some time in the early 1990s in order to placate foreign investors and the multilateral banks in Washington?

It might be more accurate to say that ANC policy had come full circle. In 1955 the ANC and its Congress Alliance partners met in a huge popular gathering, a 'Congress of the People', at Kliptown near Johannesburg. Three thousand people gathered for two days in wintry late June to endorse the first policy document designed to enlist a broad alliance in a struggle for a non-racial, democratic South Africa.

The Freedom Charter remained the ANC's only broad statement of social and economic policy until May 1992 when a huge, representative ANC conference in Johannesburg endorsed the 'Ready to Govern' policy. In the life of the Freedom Charter it came to have many guises and interpretations. The first declaration in the Charter is perhaps the definitive one. It reads:

We, the people of South Africa, declare for all our country and the world to know that South Africa belongs to all who live in it, black and white, and that no government can claim authority unless it is based on the will of the people (ANC 1955: 81).

These sentiments, redolent of the phraseology of late 18th century anti-aristocratic and anti-colonial revolution, perfectly capture the spirit of non-racial, national, democratic revolution. This 'nonracial' dimension of the struggle against apartheid was essentially new; previously the ANC, though steeped in democratic liberalism, understood that it represented the majority of South Africans of indigenous African origin. As the ANC's programme of action had stated only seven years previously, in 1949: 'Like all other people, the African people claim the right to self-determination' (ANC 1949: 80).

In the vicious face of apartheid, the struggle intensified, and democrats of different hues and social classes were pushed together. Some 'Africanist' black South Africans left the Congress Alliance a few years later to form the Pan-Africanist Congress (PAC), but the ANC with its Congress Alliance, which included organisations for non-Africans (until they were accepted directly into the ANC in 1969) and the trade-union federation SACTU (South African Congress of Trade Unions), remained the central opposition.

The chief economic clause of the Freedom Charter went a bit further than Tom Paine, the printer and pamphleteer of the American and French revolutions, would have. But things looked a lot bleaker for the black South African middle classes than they had for the tradesmen in America or the sans-culottes in Paris. The declaration 'The People shall share in the Country's Wealth' was elaborated as:

The national wealth of our country, the heritage of all South Africans, shall be restored to the people;

The mineral wealth beneath the soil, the banks, and monopoly industry shall be transferred to the ownership of the people as a whole;

All other industries and trade shall be controlled to assist the well-being of the people;

All people shall have equal rights to trade where they choose, to manufacture, and to enter all crafts and professions (ANC 1955: 82).

Other than the second sub-clause, on nationalisation, the economic clause would have it appear as if the Congress Alliance represented a bourgeois struggle against feudalism. Even the second clause, on public ownership of banking and mining monopolies, fitted into the social democratic mainstream in the 1940s and 1950s when United Kingdom and West European labour and socialist parties sought to expand the economic role of government. For example, between 1945 and 1951, the Labour government in the United Kingdom nationalised the Bank of England, civil aviation, telecommunications, coal, the railways, long-distance road haulage, electricity, gas, iron and steel. They also built a welfare state that offered social insurance and a national health system. In doing this they followed the Labour Party's social democratic manifesto, Let Us Face the Future. With regards to the welfare state, they were also following proposals developed by the Liberal Party supporters, William Beveridge and John Maynard Keynes (Sassoon 1996: chapter 6).

Mandela felt, at the time, that the nationalisation clause could be explained in context. It was true that the demand for nationalisation would strike a fatal blow against the 'financial and gold-mining and farming interests that have for centuries plundered the country and condemned its people to servitude'. However, Mandela continued, 'the breaking up and democratisation of these monopolies would open up fresh fields for the development of a prosperous, non-European bourgeois class. For the first time in the history of this country, the non-European bourgeoisie will have the opportunity to own in their own name and right mills and factories, and trade and private enterprise will boom as never before' (Mandela 1956: 49).1

Thirty-six years later – in 1992 – Mandela referred to this passage in his 1956 article and acknowledged: 'Immediately after the adoption of the Freedom Charter, and even up to the present, there has been extensive debate about the intention of the clause which reads: "The people shall share in the country's wealth"' (Mandela 1992b).

There can be no doubt that the ambiguities of this part of the Freedom Charter were intentional. The Congress Alliance was a broad church, stretching from rural traditional leaders through peasants and workers to professionals, intellectuals and business people. The ANC itself was almost as broad. The Freedom Charter was intended to be inclusive; attempting to represent so many diffuse, though related, interests with a crystal clear document would have been futile.

The radical 1960s and 1970s

During the 1960s and 1970s, ANC economic policy leaned towards the left. One reason was the radicalising influence of anti-colonial African socialist movements. First Abdel Gamal Nasser in Egypt, then Kwame Nkrumah in Ghana, then Julius Nyerere in Tanzania and Kenneth Kaunda in Zambia, frustrated by the lack of economic progress of their popular constituencies, moved decisively towards state interventionist policies. These policies were, rightly or wrongly, collectively known as 'African Socialism', and spread to other African states. The main characteristics of African Socialism were nationalisation of large companies, usually with compensation, a variety of land reform strategies, the expansion of the state, and an increasing reliance on the use of state-owned companies and the state apparatus itself for the economic advancement of individuals. The weakness of the African middle class in the post-colonial era, due largely to the destructive effects of colonialism and the lack of preparation for decolonisation, was the main driving force behind African Socialism. By the mid-1970s, left-wing critics had begun to describe African Socialism as 'state capitalism', or, in relation to its most degenerate forms, 'kleptocracy'.

A second influence on the economic thinking of the ANC in the 1960s–80s period was the fact that the organisation had been driven underground. After being banned in 1960, massively harassed with arrests, detention, torture and long-term imprisonment, the ANC made the decision to resort to armed opposition to the South African government. The ANC went underground without the support of most liberals, the business community, or the international community other than independent African countries, Scandinavia, and the socialist countries of Eastern Europe and Asia. This had the effect of 'pigeon-holing' the ANC in a 'socialist box' to an even greater extent than it was before.

And, in the early days of exile at least, beyond Sweden, the socialist states were the only non-African countries prepared to offer moral and material support to the armed struggle. Combined with the apparent fact that Soviet socialism seemed more successful than the west allowed, the South African Communist Party (SACP) element in the Alliance was able to gain greater credibility and influence than before the armed struggle.

Not long after the ANC went underground, the intellectual tide in those parts of the western world affected by the student and worker revolts of 1968 was shifting towards the left – the new left. The economic crises of the 1970s characterised by the new phenomenon of rising unemployment and inflation suggested to some that the failure of Keynesian capitalism meant that capitalism was unsustainable. Undoubtedly these currents influenced the thinking of the younger ANC intellectuals in exile, as well as young opposition intellectuals who were not forced to or had not chosen to leave South Africa.

The shift to the left is reflected, however superficially, in the ANC's first important policy document of the 'exile era'. This was a document called 'Strategy and Tactics', adopted at an ANC conference in Morogoro in Tanzania in 1969. The description of economic oppression linked to national (racial) oppression is familiar. What is less so is the statement:

But one thing is certain – in our land this problem [poverty and inequality] cannot be effectively tackled unless the basic wealth and the basic resources are at the disposal of the people as a whole and are not manipulated by sections or individuals, whether they be White or Black (ANC 1969: 392).

In the next paragraph there is a specific reference to a capitalised Socialism, and the role the revolutionary working class would play in the construction of 'a real people's South Africa'. There is also a reference to the military struggle for political and economic emancipation as a 'first phase', though the subsequent phase(s) are not described (ANC 1969: 392). While the terms are still vague and general, the language is less 18th-century petit bourgeois liberalism and far more Cold War-era anti-imperialism.

By the end of the 1970s, ANC leaders were asking themselves whether they should make explicit the organisation's commitment to the ideology of Marxism-Leninism. The 1979 drafters of the strategic 'Green Book' argued that while 'no members of the commission had any doubts about the ultimate need to continue our revolution towards a socialist order', it was not thought appropriate for the ANC to say quite as much 'in the light of the need to attract the broadest range of social forces among the oppressed'. Instead, the report referred to 'phases of the struggle' without actually using the term socialism. The most explicit statement was the following:

The aims of our national democratic revolution will only be fully realised with the construction of a social order in which all the consequences of national oppression and its foundation, economic exploitation, will be liquidated, ensuring the achievement of real national liberation and real social emancipation. An uninterrupted advance towards this ultimate goal will only be achieved if... the dominant role is played by the oppressed working people (ANC 1979: 724–726).

This view was consistent with the position adopted by the black and white organisers of many of the new black trade unions, which during the 1970s and early 1980s became a dominant internal force struggling for freedom. Three years before the Green Book, the leader of SASO (South African Students' Organisation), Diliza Mji, had made an analysis of the pro- and anti-revolutionary forces and concluded: 'It is against this background in a capitalistic set-up like it is in South Africa, we have to align ourselves with the majority of working people and be with them.' Mji pointed to yet another factor pushing the anti-apartheid struggle in this direction: the fact that the United States had chosen to support the apartheid regime, quite explicitly under Kissinger and Nixon, showed that South Africa was being defended as the last bastion of capitalism in Africa. It was evident that if apartheid was being defended in order to defend capitalism, the two were indivisible and had to be attacked together (Mji 1976: 740). Several of Mji's contemporaries in the black student movement ended up as prominent union leaders in the late 1970s and early 1980s. Some of them, such as Jay Naidoo, Sydney Mufamadi and Cyril Ramaphosa, are now cabinet ministers or top business leaders.

Exploiting apartheid's fissures

By the late 1980s, as politics shifted towards the possibility of a negotiated resolution to the South African conflict, the shape of the ANC's economic policy returned to a more conventional form – gradually diluting the revolutionary socialist spice with which the policy was flavoured between the late 1960s and the mid-1980s. There were several contributing factors.

One was the emergence of an economically vital East and South-East Asia following economic paths that were market-oriented, but with high degrees of government intervention. The conventional view for the success of Japan, South Korea, Taiwan and countries in South-East Asia was that they had followed orthodox laissez faire free-market policies. By the end of the 1980s, work by prominent western economists such as Alice Amsden and Robert Wade had shown that, although the macroeconomic policies, other than the exchange rate and exchange control, were orthodox and conservative, the governments of the newly industrialised countries in Asia played a huge role in supporting human resource and technology development, and in directing public and private investment flows (Amsden 1989; Wade 1990). This challenge of non-western/non-white nations to the economic hegemony of the west within the capitalist system began to impact on the thinking of some ANC leaders and intellectuals (for example, see Erwin 1989: 93).

Another factor influencing economic thinking of the ANC was the failure of Soviet socialism and its rejection by the ordinary people of Eastern Europe. For some, the experience of Poland in the early 1980s was enough evidence; for others Gorbachev and the fall of the Berlin wall eventually influenced their thinking. Some of those who spent part of their lives in Eastern Europe or in African socialist countries made the most radical shifts.

The ANC and the SACP always remained separate organisations. In a sense, the SACP was a political club within the ANC. Its analysis had become very influential in the 1950s, as we saw in Chapter One in Mandela's economic analysis of apartheid. In the conditions of underground struggle, where the support of the Soviet Union and the German Democratic Republic, and later, Cuba, were absolutely crucial, the influence of the SACP in the Alliance had grown. Some have argued, overenthusiastically, that the SACP de facto 'took over' the ANC between the late 1960s and 1990, when it was legalised (Ellis and Sechaba 1992).

The line adopted by the SACP up to and including the report 'The Path to Power' in 1989 remained orthodox Soviet socialism, in spite of Gorbachev. Early in 1990 Joe Slovo, the Secretary-General of the party, published the paradigm-shifting 'Has Socialism Failed?'. Nobody had more authority in the traditional South African left than Joe Slovo. He was a pillar of the armed struggle as one-time Chief-of-Staff of the ANC's military wing Umkhonto we Sizwe, he was Secretary-General of the SACP, and later was elected its chair. Slovo had joined the Young Communist League in the early 1940s in Yeoville, a lower middle class and mainly Jewish suburb of Johannesburg. He remained an energetic and influential leader of the anti-apartheid struggle, and was a senior member of President Mandela's first Cabinet until his death from cancer in 1995.

Slovo's analysis was simple: socialism had failed not because the underlying economic philosophy was wrong, but because it was undemocratic in implementation in the USSR and elsewhere, allowing the formation of a parasitic and repressive state. Said Slovo: 'In short, the way forward [for the SACP] is through thorough-going democratic socialism...' (Slovo 1990: 25).2 While the article supported multi-party, pluralistic democracy, it had no clear economic prescriptions. By 1990 this hardly mattered – all the key players in the ANC and the internal opposition in South Africa were converging around the idea of a modernised form of social democracy. For social policies the intellectual leaders now looked to Scandinavia and northern Europe, even Canada, rather than the USSR. For economic policies they were studying East Asia.

Indeed, ANC leaders were careful to avoid revolutionary socialist terminology in the Constitutional Guidelines published by the ANC in 1988 as a public gesture towards a negotiated settlement. The guidelines refer to a mixed economy, 'with a public sector, a private sector, a cooperative sector, and a small-scale family sector'. There would be corrective action to address past inequalities, and the 'private sector shall be obliged to co-operate with the state in realising the objectives of the Freedom Charter in promoting social well-being' (ANC 1988: 12). Not the 'liquidation of economic exploitation' terminology of the Green Book.

The language of the Harare Declaration of 1989 was similarly moderate. The Harare Declaration was a statement of the Organisation of African Unity (OAU) setting out terms for a negotiated settlement for South Africa, and setting out some key parameters for negotiations. Included amongst the parameters was a statement of principles that was, in a sense, a prototype bill of rights for the new South Africa. The ANC played the principal role in drafting this document, including the statement of principles. In general, the principles establish a liberal, pluralistic democratic order with an implicit separation of powers. In particular they refer to an entrenched bill of rights that would protect civil liberties, and 'an economic order that shall promote and advance the well-being of all South Africans' (ANC 1989: 15). It would be hard not to interpret these aspects of the Harare Declaration as a self-conscious projection of the ANC into the political mainstream, far from the currents of radical revolution.

But, for the broader layers of ANC and SACP leadership, Slovo's paper was like the intellectual equivalent of a sudden supply of pure oxygen to a person who had been slowly asphyxiating. It took a little while to adjust to the sudden change in the atmosphere. Released, as it was, in the same month as the unbanning of the ANC and the SACP, the paper had a powerful impact on the next round of policy debates; the first debates conducted with the prospect of imminent state power.

Between the mid-1980s and the early 1990s, the ANC returned to the philosophical world of the Freedom Charter, a world combining middle-class nationalism and working-class egalitarianism. It took a little while, though, to work out what this meant in practical economic terms.

Preparing for power

When the ANC and the SACP were unbanned, and Nelson Mandela was released, Mandela's early statements on economic policy were confrontational and opaque. In his initial speeches he referred to nationalisation as an option, explaining this in terms of the desire to redress deep historical economic inequalities. It was also a reaction, and a counter-measure to the NP government's attempt to hastily privatise existing publicly owned companies to prevent them from falling into the hands of a future ANC government. Mandela was not concerned about creating economic uncertainty at that time; seizing a power advantage for the ANC was more urgent. Some commentators also claim that more radical internal leaders of the liberation movement heavily influenced the initial speeches – had exiled ANC policy leaders written the speeches they might have been more moderate (for example, see Waldmeir 1997: chapter 8).

The use of nationalisation as a bargaining tool, and as a means of inhibiting decisive action by the NP government (which remained in power, at least de jure, for more than four years after Mandela's release), was evident in Mandela's speech to an assembly of 300 white business executives in May 1990. He opposed the process of privatisation outright. 'It would only seem reasonable', he argued, 'that so important a question as the disposal of public property be held over until a truly representative government is in place.' And he was, for the business community, infuriatingly vague on the question of nationalisation. As he put it:

We believe that there must be further discussion on the issue of nationalisation of assets that might not at the moment be publicly owned. The ANC has no blueprint that these or other assets will be nationalised, or that nationalisation will take this or the other form. But we do say that this option should also be part of the ongoing debate, subject to critical analysis as any other, and viewed in the context of the realities of South African society. It should not be ruled out of the court of discussion simply because of previously bad experience or because of a theological commitment to the principle of private property (Mandela 1990).

This seemingly rather ominous vagueness represented a tactic by the ANC to undermine the power of the existing government, and to begin to assert the ANC's power in relation to the established, essentially white, South African business community. It is true that the ANC's position was not entirely clear on all aspects of economic policy – its powerful ally, the SACP, was still committed to Soviet-style socialism as late as 1989.

Tito Mboweni wrote about the complexities of the ANC engaging with business in an internal memo. 'The private sector is', he explained, 'very sceptical about the policies of the liberation movement and would like to change them in its favour. The ANC, on the other hand, wants to engage the private sector mainly for political reasons... to win the support of the broadest section of South Africa's civil society.' He noted, 'the interest for this dialogue is mutual, albeit for different reasons, sometimes diametrically opposed to each other' (ANC c. 1991c).

Another reason for the complexities of the ANC's economic Gordian knot was the role that increasingly powerful trade unions played in the internal liberation struggle. The internal struggle against apartheid depended on the organisational weight of the trade unions as a major source of its strength. The unions had no doubt that workers should have a great deal more power in the South African economy, though they did not necessarily agree on how this should be achieved. Some preferred traditional socialist strategies, others looked to a unique new hybrid of worker power and economic planning.3

However, the apparent uncertainty of ANC policy shortly after its unbanning should not hide the fact that its economic thinkers had already given a good deal of thought to the desired nature of the post-apartheid economy. During the second half of the 1980s, before the unbanning of the ANC, there were at least seven international conferences on the 'post-apartheid economy' in venues as far apart as Boston and Beijing. These conferences provided the opportunity for sympathetic social scientists from within and outside of South Africa to get together with ANC intellectuals and leaders to begin to address post-apartheid economic challenges (Padayachee 1998: 434).

Beyond the professional policy conferences, there was a series of meetings between ANC-in-exile leaders, and mainly white business and non-governmental leaders from within South Africa (to the anger and condemnation of the NP government). As early as 1986, these discussions began to address economic questions. Gavin Relly, then chief executive of the Anglo American Corporation, told the ANC in 1986 that 'we accept the likelihood of some form of mixed economy with a measure of state planning and intervention', because 'there is a quite justifiable emphasis on the part of Black South Africans on a more equitable distribution of wealth to compensate for the errors of omission and commission of the apartheid era' (Sunday Times 1 June 1986). This statement was made after one of a series of meetings between white non-government leaders and the ANC that began in 1985 in Lusaka, and continued, in different forms and places, until the ANC was unbanned.

One very large version of such a meeting was organised in Lusaka, Zambia, in the middle of 1989. The South African delegation of 115 included 23 academics, 20 business people, and 6 newspaper editors. The 123 ANC representatives included 20 members of its National Executive Committee, and were led by the ANC President, Oliver Tambo. In the economic commission, the ANC repeated the formulation as enunciated in the Constitutional Guidelines, anticipating the Harare Declaration. While the ANC statement referred to direct control over the mines, banks and monopoly industries (echoing the Freedom Charter), it noted:

The exact forms and mechanisms of state control are left open in our programmatic perspectives. The element of private participation in state enterprises is occurring more and more in socialist countries... and has not been addressed.

Nationalisation, which involves a mere change in legal ownership, does not advance social control... In some conditions of premature nationalisation it can actually result in impeding social control by the destruction or downgrading of industry. This occurred in Mozambique [after 1974] (Louw 1989: 81).4

Meanwhile, behind the policy conferences and political seminars, groups of researchers were beginning to develop a broad body of work to inform post-apartheid policy leaders. The ANC set up a Department of Economics and Planning in the mid-1980s (later the Department of Economic Policy), but its initial function revolved around project management and fund-raising. It did, however, participate in the establishment of a research group based in the United Kingdom, called EROSA, or Economic Research on Southern Africa. Leading researchers were drawn from universities and the private sector in London. EROSA prepared a series of sectoral reports for the ANC, and some broader analyses of policy options. While EROSA was linked to the ANC through some highly placed intellectual leaders, the influence of the group on the ANC's thinking was patchy. However, when the ANC was asked early in 1990 to contribute to a newspaper supplement on proposed economic policy for the next government, the author was Vella Pillay, a banker and ANC member, who was close to EROSA (Padayachee 1998).5

At about the same time, in 1986, a South African research group was constituted to serve the policy needs of the recently formed Congress of South African Trade Unions. COSATU was then officially politically independent, though it was not a great surprise when, after the unbanning of the ANC, the ANC and COSATU constituted a formal alliance, along with the SACP. The new research group, called the Economic Trends group (ET), was a loose collective of university-based, oppositional economic researchers from around South Africa, most of whom were white.6 The coordinator until the end of the decade was Stephen Gelb, a Canadian-trained South African economist who had co-authored a very influential analysis of the South African economic crisis (Saul and Gelb 1981).

The key point of contact for researchers in COSATU was Alec Erwin, then Education Secretary of the National Union of Metalworkers of South Africa (NUMSA), but an influential thinker in COSATU beyond his formal status. Erwin had lectured in economics at the University of Natal in Durban until he resigned in the late 1970s to become a full-time trade union organiser. He was later to become Deputy Minister of Finance in Mandela's first Cabinet, and early in 1996 joined the Cabinet as Minister of Trade and Industry.

Initially, the Economic Trends group was required to conduct research to advise COSATU on policy in relation to economic sanctions, but as the end of apartheid began to appear on the horizon, ET shifted to an analysis of the causes of the South African economic crisis (the focus of the last section of Chapter One of this book). It was important to understand the economic crisis in order to develop suitable policies for a post-apartheid government, or so that COSATU could influence such a government. The analytical findings of the ET group were contained in a series of working papers and in a book edited by Gelb (1991b).

The ANC starts writing

We have identified a series of parallel, sometimes conflicting, and sometimes interlinked processes contributing to the formulation of an economic policy by the ANC in the early 1990s: formal pre-1990 documents stemming from the ANC's headquarters in Lusaka, Zambia; meetings of academics and political and business leaders; and at least two significant policy groups. During the course of 1990, the formal position of the unbanned ANC began to take shape in a series of key documents that would lead to the ANC's national policy conference in 1992.

The first significant formal ANC-linked document drawn up after the legalisation of the ANC arose out of a conference in Harare, which concluded on 2 May 1990. Harare, Zimbabwe, was an appropriate setting for the meeting, which was the first time that economic researchers from inside South Africa, mostly associated with COSATU, and ANC-linked economists from outside South Africa met with the purpose of hammering out a common policy framework. Harare is located between Lusaka, the ANC's headquarters in exile, and Johannesburg, South Africa's major city. In addition to ANC officials and South Africa-based researchers, mainly linked to ET, some EROSA researchers attended too. At the end of the conference, a paper was issued entitled 'ANC and COSATU Recommendations on Post-Apartheid Economic Policy' (ANC and COSATU 1990).

Though the paper had no formal status, it was considered to be a relevant policy statement by ANC officials, to the extent that Tito Mboweni presented the paper at a conference in Lesotho a month later. In any case, the paper was publicly released and reported widely in South Africa's financial press.

Several significant formulations were contained in this document. There was recognition of the importance of international competition in products, and the need to make South African production more competitive. While the responsibilities of the state were defined broadly, its economic role was defined more narrowly, in terms of 'some form of macro-economic planning and coordination'. There was a very strong statement of the importance of fiscal conservatism, concluding: 'A future non-racial democratic government would not replicate the recent practice of using borrowings to finance current state expenditure' (ANC and COSATU 1990). Balance of payments problems and inflation were also to be avoided. All these formulations picked up on themes that were being debated in South Africa in ET forums and beyond. Some of the strongest language refers to the importance of re-regulating capital markets to encourage appropriate investments. This represented, in part, the stamp of the EROSA delegates' more interventionist approach to investment and planning.

While the problem of monopolistic conglomerates was highlighted, dismemberment of these clumsy business giants was the main proposed remedy. Nationalisation was noted as a possible strategy, though the document emphasised the need for a 'viable' state sector. One of the objectives of the document, like Mandela's speech to white business in the same month mentioned earlier, was to prevent privatisation by the then current government. The document explicitly threatened the possibility of re-nationalising companies that were privatised by the current government. The threats worked, and privatisation ceased between 1990–94. In the late 1980s, the state-owned steel company, Iscor, and the state's oil company, Sasol, had been sold, except for a small share of each retained by the state-owned Industrial Development Corporation (IDC).

The rest of the document referred to sector specific issues regarding manufacturing, mining and agriculture; labour rights; human resource and gender equality issues; and aspects of redistribution through welfare and housing programmes. In all, with the exception of threats designed to hamstring the strategies of the then current government, and some comments on the capital market, it was a conventional, modern social democratic economic policy document. The growth model relied on macroeconomic stability, competitiveness and exports, while the state was responsible for equity and the redistribution of wealth and income in order to right past wrongs.

The other notable economic policy document of 1990 was that put together by ANC economists in their own right and on their own, again in Harare, and again including exiles as well as some who had remained in South Africa. This time there was no official COSATU presence, and no non-South African advisers. The meeting ran over four days and produced a document published by the ANC's Department of Economic Policy (DEP), under the title 'Forward to a Democratic Economy'.

By and large, the ANC document echoed the ANC/COSATU recommendations prepared five months earlier. There were similar references to the redistribution of wealth and income and the restructuring of manufacturing, agriculture and mining. One additional element was the explicit statement that '[p]rivate business has a major role to play in the economy of a democratic, non-racial South Africa' and 'a future democratic government should strive to build confidence with the private sector and encourage maximum cooperation in pursuit of democratically defined development objectives'. The failings of the private sector in regard to the woeful under-representation of black managers and businesses, and its extreme concentration of ownership were noted, now increasingly in the language of reform. However, if co-operation was not forth-coming from the private sector, 'a future democratic government could not shirk its clear duty in this regard' (ANC [DEP] 1990).

'Ready to Govern'

It was decided to relocate the offices of the DEP to the new ANC headquarters in Johannesburg. The ANC had bought a 26-storey building from Shell, which did not like its location in downtown Johannesburg near the commuter train station and informal taxi ranks. It did not take the ANC long to begin wondering whether the R25 million it paid for the building showed the ANC's capacity to exploit Shell's opportunistic generosity, or Shell's business acumen relative to the ANC. Even during the 1994 election campaign, the ANC did not need the whole building for officials, but it was never able to rent out much of the rest of the building. Since then the ANC has moved its headquarters to the more modest Luthuli House in a quieter part of downtown Johannesburg.

From 1990, Shell House bustled with enthusiastic, young and old activists and intellectuals. The 19th floor, where the DEP was located, was well blessed. The DEP manager was Max Sisulu, until he left for a course at Harvard University. Max was the second oldest son of Walter Sisulu who had been Secretary-General of the ANC for many years until he was locked up on Robben Island with Nelson Mandela. Max Sisulu is an intelligent, quietly confident man, who managed to win the confidence of the range of mostly younger economists who looked to him for leadership and direction. He later left his post as Chief Whip in Parliament for senior positions in the defence parastatal Denel, and later in the privatised oil company Sasol.

One of Sisulu's two lieutenants in the DEP was Trevor Manuel, a highly regarded leader in the Western Cape of the United Democratic Front (UDF), an ANC-oriented internal movement. Manuel, born in 1956, had no background in economics; he had trained in civil engineering at a technikon in Cape Town. Since then his career had largely been professional activist in community, then regional, and then national politics. By 1990 he was a manager of the Mobil Foundation – Mobil overlooked the fact that most of his time was spent on ANC politics. Manuel is highly focused and a quick study, with strong political skills. He made macroeconomics his area of focus, and learned fast, without making serious mistakes. When Sisulu left for Harvard in 1992, Manuel took his place, and kept it, even after Sisulu's return a year later. Trevor Manuel was appointed Minister of Trade and Industry in Mandela's first Cabinet, and proved such a success that he was appointed the first 'black' and the first ANC Minister of Finance early in 1996.

The other young leader was Tito Mboweni, born in 1959, who was Nelson Mandela's economic adviser at Davos. Mboweni covered the trade and industrial sectors of the economy, with a special interest in competition policy. Mboweni took the labour portfolio in Mandela's first Cabinet. Other staffers included Ketso Gordhan (born 1961), a Sussex University development studies graduate who ran the ANC's election campaign in 1994, took a seat in Parliament, and soon left to take the job of Director-General of Transport, and recent graduate Vivienne McMenamin who later moved on to run the economic development office of the city of Durban. Zavareh Rustomjee (born 1957), a chemical and industrial engineer and economist who was later appointed Director-General of Trade and Industry, joined after receiving his Ph.D. in economics from the University of London. Paul Jourdan, who had spent 16 years doing development and policy work in Mozambique and Zimbabwe, had accumulated degrees in geology and mining economics, before returning to South Africa as the ANC's mining policy co-ordinator. After returning Jourdan received a Ph.D. from Leeds, and then went on to take another (part-time) Masters degree at the University of the Witwatersrand. He was appointed special adviser to Trevor Manuel when Manuel became Minister of Trade and Industry. Derek Hanekom, DEP agricultural policy co-ordinator, had used his farm as an underground ANC base until he went to jail for it. He was made Minister of Land Affairs in the first Cabinet, and later also took over the agriculture portfolio. Along with some junior officials, these ANC employees worked with ANC-aligned economists around the country, developing policies and trying to ensure that they were communicated to and canvassed with the grassroots membership of the ANC.

A key task for the DEP was attempting to manage the almost impossible demands of foreign business and government requests for meetings to discuss economic policy, and fulfilling obligations to liaise with the local business communities. The DEP office also drove an active policy development programme – what it thought was its primary task, at that stage. The intention was that the initial work programme of the DEP (and similar departments in health, education, etc.) should culminate in a national policy conference, which would finalise and endorse a comprehensive social and economic policy for the ANC. This could act as the foundation for an election platform. There was an underlying desire to prove to the world that the ANC had the technical competence and the political coherence to produce a workable policy.

Through a structure of regional economic representatives, initially nominated by ANC structures in the regions, and through the work of officials employed in the DEP, workshops were held round the country to discuss economic policy issues. The DEP circulated a rewritten version of the 'Forward to a Democratic Economy Document', and later distributed a workshop package on economic policy (ANC 1991a, 1991b).

The issue most extensively debated in the regional workshops, in my experience, was the section on nationalisation. The DEP documents explained that although nationalisation might be an option, it could drain the financial and managerial resources of the new government, and therefore might not be manageable. Moreover, they explained that redistributing wealth from the rich to the poor would not solve the problems of the poor, because there was not enough wealth, and the economy had to grow to create more wealth to be redistributed.

Perhaps more interesting in both documents was the section on the 'growth path' where the meaning of 'growth through redistribution', the current slogan, was described. The DEP explained that income streams would be redirected towards the poor (who had a higher propensity to consume), and at the same time the productive sector would be restructured to meet the new demand. In the longer term, the new strength of the productive sector would be directed towards export markets.

This formulation was naïve compared with other ANC economic formulations at the time. It masked a choice that the ANC was as yet unwilling to make: between stimulating demand through the redistribution of income, or through increasing productivity to compete in export markets. Both paths could be accommodated by the slogan 'growth through redistribution'. In the case of the export-oriented path, redistribution would have been through the social wage in the form of education, health and other social services that could improve the capacity of existing and new industrial workers. This approach, later embodied in the Industrial Strategy Project's (ISP's) vision, was less Keynesian and more Asian in its approach, and its proponents failed at this stage to make its parameters very clear.

After several delays, the ANC's grand policy conference was held in May 1992 at the national agricultural show grounds – NASREC – a collection of outdoor arenas and aeroplane hangar-type halls located near Soweto. Hundreds of elected ANC delegates from around the country stayed in shabby downtown hotels in then run-down Johannesburg. The fleet of buses that whisked the delegates to the conference was escorted by noisy swarms of traffic police on motorcycles. Up until that time, most delegates still saw the traffic police as part of the repressive apparatus that had fought against democracy. Now, it seemed, the tables were really turning.

The conference lasted three days, a day longer than the Kliptown conference 37 years earlier. This time it was for real – the policies adopted would begin to bind the ANC to an election platform and would help guide the first democratic Cabinet.

In the economic commission there were two key debates: one over the clause on the role of the state in the economy with respect to nationalisation; the other was the clause on relations with the multilateral financial institutions: the World Bank and the International Monetary Fund (IMF). There were other clauses, not the focus of attention at this meeting, that probably were more significant in setting the agenda of the future ANC government.

The nationalisation debate ended only after the ANC's president, Nelson Mandela, was asked to participate. The result recorded in Ready to Govern was a victory for the moderate social democratic formulation. '[T]he state', it was argued, 'should respond to the needs of the national economy in a flexible way... the balance of evidence will guide the decision for or against various economic policy measures.' In this context, the democratic state would consider either or both '[i]ncreasing the public sector in strategic areas' or 'reducing the public sector in certain areas that will enhance efficiency, advance affirmative action, and empower the historically disadvantaged...' (ANC 1992: clauses D1.6–D1.7.2). Not only was nationalisation moved out of the ideological sphere into the realm of pragmatism, so was privatisation.

The clause on the IMF and the World Bank ended with wording that satisfied all, though again weighted towards the moderate view. Relations with the World Bank and the IMF would be conducted in such a way as to 'protect the integrity of domestic policy formulation and promote the interests of the South African population and the economy'. The ANC would also strive to 'reduce dependence on international financial institutions' (ANC 1992: clause D4.4). What this meant in practice was that the government would avoid excessive public or private borrowing from abroad.

The trade policy section began with a commitment that 'trade policy will aim at raising the level of productivity and improving the competitiveness of domestic and Southern African producers'. Any economist, especially in highly protected South Africa, would interpret this as a commitment to a trade policy reform programme. This was backed up by a commitment to 'participate in international institutions governing multilateral trading arrangements', in other words, the General Agreement on Tariffs and Trade (GATT). These commitments were elaborated in other clauses that referred to avoiding job loss and support for 'new branches of production', but the significance of the clause was clearly in the basic commitment to trade liberalisation (ANC 1992: clauses D8.1; D8.2).

The clause on foreign investment also broke new ground. It committed an ANC government to adopting the principle of 'national treatment' towards foreign investors, which meant equal treatment with South African companies before South African law. Again, there were some qualifications appended, but the commitment eventually worked its way through to be enshrined in the democratic regime's new constitution (ANC 1992: clauses D8.3–D8.7).

These two steps indicated that the ANC was embracing the strategy of global integration more enthusiastically than before; 'growth through redistribution' understood in a Keynesian sense of managing domestic demand had begun to disappear. Instead, the two principal components of the ANC's national economic strategy – redistribution and growth – were now separated into complementary programmes, rather than being dealt with in an integrated way (ANC 1992: clause D1.2). Afraid of the dated Keynesian connotations, the slogan 'growth through redistribution' was dropped altogether. Perhaps the old-fashioned Keynesian slogan of 'growth through redistribution' should have been systematically replaced with a more modern, Asian-inspired version, emphasising redistribution in the form of cheaper wage goods due to lower tariffs, and better government services for the poor, especially in health and education, leading to higher productivity and exports, and therefore growth. Perhaps the drafters thought, consciously or otherwise, that this was too subtle a shift to manage in a huge, mass-based policy conference, or that it would confuse external observers.

Filling in the details

At the DEP's Harare meeting in September 1990 it had been agreed to set up a national economic policy institute that would fund economic research projects to aid the ANC in its policy development process. The ANC called for and participated in a study supported by the International Development Research Centre (IDRC) of Canada, an independent state-supported body. Canadian trade economist, Gerry Helleiner, led the mission, which included Benno Ndulu, a Tanzanian and one of Africa's top macroeconomists. The commission recommended that the policy institute should support macroeconomic policy research as a priority. Monetary and fiscal policy were key responsibilities of government that the IDRC team felt were the most in deficit in the ANC policy community. This recommendation was influenced by the fact that the IDRC was already committed to a major 'microeconomic' policy research project linked to the ANC through COSATU – the Industrial Strategy Project (ISP). So, the ANC-linked institute started out in an interim form as the Macroeconomic Research Group (MERG), located in the economics department at the University of the Witwatersrand in Johannesburg.

MERG was intended to focus on options for the ANC in fiscal and monetary policy, but it soon became clear that the project's mandate would be wider. In his address launching the project, ANC president Nelson Mandela emphasised fiscal policy issues, especially on the expenditure side of the account. The ANC had more or less accepted that taxation systems were not the key to redistribution, although it strongly endorsed progressive systems of taxation. While monetary policy issues were not mentioned, items referred to beyond fiscal policy included housing, land, transport, education, health, social security, mining and energy.

While the substance of the policies would be important, the image of the ANC in the media was important too. 'The ANC is portrayed in the media', complained Mandela, 'at best as being incapable of formulating economic policy, and at worst as preparing for a massive nationalisation programme' (Mandela 1991). The ANC had to correct this image in the view of the general public and its supporters.

There was confusion amongst some MERG researchers about the status of their output – so much so that this still influences the way people see the MERG process. Some researchers apparently thought their work would be endorsed as ANC policy; others understood that their work would be considered by the ANC along with the work of other sympathetic projects, such as the ISP. After all, the researchers were simply researchers, and had no direct mandate or licence from the ANC.

This would not have mattered had an attempt at a MERG synthesis report not ended in some chaos. MERG funded a range of discreet projects (including the Trade Policy Monitoring Project at the University of Cape Town which I set up and ran). It also aimed to produce a unified report on macroeconomic policy. The report was managed by a steering committee that included several British economists who had been involved in the EROSA programme. The report was to be constructed as a synthesis; however, the authors of various parts of the synthesis did not all agree on a range of general and specific issues. The various groups of researchers were never effectively brought into a discussion to attempt to resolve these issues, and the steering committee failed to do so.

When the report was presented to the ANC's DEP, and even when it was later published, it contained contradictions and unresolved conflicts (MERG 1993). The chapter I contributed to, on trade, industrial and competition policy, contained contradictory policies based on differing philosophies. One researcher withdrew from the process at a rather late stage as he felt members of the steering committee were usurping his policy formulation responsibilities. One of the South African members of the steering committee was not included in the final editing process. Of the final editorial committee, only one of the four editors was a South African – the rest were British academics.

The muddled nature of the final report was probably one of the reasons the report was received lukewarmly by the ANC; another was that the conflicts between the researchers had become something of a public controversy; a third might have been that some of the policies might be seen to be contradicting the positions adopted in Ready to Govern.

Nevertheless, the MERG report has been resurrected as an icon for the left. The MERG report is now commonly portrayed as a coherent left-wing alternative to the ANC mainstream. According to this view, by 1993, when the report came out, the ANC had already 'surrendered' to the established business community. In another version, MERG was soon betrayed by the ANC.7 However, the report was less revolutionary than muddled. The distinctive aspects of the report required the government to play a stronger role in the private and public investment decisions of society, and called for certain targeted interventions. Most of these ideas were not ideologically controversial in the ANC; their 'back-burner' status was more an outcome of a realistic (or pessimistic) assessment of the likely capacity of government administration after the first democratic elections. Policies that had worked well in East Asia might not be able to be implemented immediately in South Africa because of the incompetence and potential treachery of the old state apparatchiks and the expected inexperience of new civil servants.

Perhaps one point of real debate, which only crystallised on the publication of the ANC government's GEAR report in 1996, was over the size of an acceptable fiscal deficit. The MERG report, like an early World Bank report (Fallon and Perreira da Silva 1994), had bold macroeconomic prescriptions, contrasting with the ANC's preoccupation to get the deficit down to 3% of GDP. Another debate concerned the independence of the SARB, where the ANC took the conservative view to maintain and entrench the independence of the central bank. It feared that the statement of contrary policies would unnecessarily unsettle international capital markets' views of policy stability in South Africa. The MERG report saw a more developmental role for the SARB, again after the Asian model.

In spite of the partisan crust that has since coagulated around the MERG report, in general the MERG project supervised useful policy research outputs. Another useful though far narrower policy research initiative was the ISP. This descended from the COSATU-linked Economic Trends group, and went through several phases. Its goal was to determine how to revive the manufacturing sector in South Africa in order to preserve and create jobs, and to create wealth. The outcome was an interesting synthesis drawing on the East Asian experience, which emphasised the role of government in improving competitiveness, meshed with an appreciation of recent work on modern production methods, the new growth theory which emphasised the role of technology in productivity and competitiveness, and a view of the world economy that was alive to its opportunities, but wary of its potential pitfalls. It was supply-side oriented, not in a Reaganomics sense of tax-cutting for the rich, but in an operations management sense of reorganising and re-engineering the workplace. This subversion of the concept of 'supply-side' was one of the distinctive and influential features of the ISP.

The project produced a set of monographs on industrial sectors, and several studies on cross-cutting issues such as small business development, innovation, trade policy, and competition policy. Many of the reports came to inform future policy, not surprisingly as many of the authors took senior economic policy positions in government within a year or two of the democratic elections.

The project also produced a synthesis report published as a book (Joffe et al. 1995). The key policy proposals focused on reorganising the work process and hence industrial relations, elevating training, increasing competition in the domestic market (through trade and competition policy) while simultaneously encouraging co-operative relations between certain types of firms, and developing instruments to support small business development and innovation. The expectation was that future growth was more likely to come from exports than from the expansion of the domestic market, which was over-borrowed and under-saved – except where there were significant effects from the redistribution of income and wealth and through the erection of new houses: building materials and semi- and durable consumer goods. No matter how effective such redistribution, the ISP felt that more growth would have to come from export markets. Perhaps one reason for this, contrasting South Africa with the original Asian tigers of Japan, South Korea and Taiwan, was that the land reform in South Africa seemed unlikely to be as efficient and effective as it had been in those countries – nor did it have as much potential, with the supply of arable land in South Africa being very limited.

The subversion of the concept 'supply-side measures' showed that the ISP found many of South Africa's economic problems and potential solutions (with the key exception of the exchange rate) to be in the sphere of microeconomics. The issue of the precision to which interventions should be targeted that would be appropriate for South Africa was never quite resolved. While most of the ISP researchers favoured targeted interventions in theory, some doubted that the South African government would have the capacity to manage such interventions without being captured by special interests or simply wasting resources.

The compromise answer was to design general incentives that would allow firms or sectors to self-select themselves, and to design them in such a way as to make them suitable only for firms with a high potential to grow and make good profits. In Chapter Four we will look at how the government attempted to put these ideas into practice.

Economic policy as election manifesto

While the largest, black-dominated trade union federation in South Africa – COSATU – had a relationship with the ISP, the latter was ultimately responsible for its own output, and that output did not necessarily represent the views of COSATU, although by and large, at the time, it did. COSATU was emerging as a key electoral ally of the ANC, but could not go into an election pact without indicating to its members what an ANC government would deliver for the working class. Moreover, some COSATU leaders felt that the ANC leadership did not take economic transformation seriously enough, and that it was their task to help the ANC set its economic transformation agenda. From these concerns emerged the Reconstruction and Development Programme. The RDP was published as the ANC manifesto before the elections, and, in a modified form, as a government white paper later in 1994. The manifesto is now commonly known as the 'base document'.

When the RDP manifesto was published, weeks before the general election of 1994, it represented the participation, not only of formal members of the ANC's alliance – the ANC, COSATU and the SACP, but also the civic federation, SANCO (South African National Civics Organisation), whose main cause was housing. A range of other non-governmental organisations was also consulted. The document was a blueprint for a productive social democratic haven. Aside from a few mildly dogmatic statements, for example about the need for a public housing bank, or the need to retain all infrastructure services in public hands, the RDP proposed a series of practical solutions and targets. Though the programmes were roughly costed by MERG, it was not certain that all these targets could be reached in the time given – generally the five-year term of office of the new government.

There were two key constraints that were not adequately quantified. One was how government revenue flows would be improved. The RDP explicitly committed itself to fiscal prudence, and hence the reallocation of existing revenues rather than the gathering of new taxes.8 The second constraint, not seriously thought about at the time, was one provided by the lack of sufficient skilled managers in the new government, and the lack of proven techniques of policy co-ordination and implementation.

The establishment of an RDP office, in the Office of the President, run by a Minister without Portfolio, former COSATU leader, Jay Naidoo, and managed by one of COSATU's top organisers and strategists, Bernie Fanaroff, was an attempt to finesse both the problem of mobilising financial resources, and the problem of the co-ordination of policy and implementation of programmes. But the RDP office was never able to deal with the problem that its functions were in part a subset of those of the Department of Finance, and that its initiatives were, in part, seen as impositions on the line departments of government. This led to the disappointing performance of the RDP office as an institution, and to its dissolution early in 1996. The dissolution of the RDP office weeks after the appointment of the first ANC Minister of Finance (the first two Ministers of Finance were drawn from the business community) was not a coincidence.

One notable shift from the ANC's Ready to Govern position was a return, in the RDP, to the notion of an inextricable link between redistribution and development, the latter term being seen as more than, but dependent on, growth. Redistribution and development were linked in the same modified Keynesian way that was present in the 1990 documents of the ANC. Redistribution of wealth and income would lead to rising domestic demand, and these goods should be supplied by local manufacturers, leading to a virtuous circle:

This programme will both meet basic needs and open up previously suppressed economic and human potential in urban and rural areas. In turn this will lead to an increased output in all sectors of the economy, and by modernising our infrastructure and human resource development we will also enhance export capacity (ANC 1994a: 6).

So, in certain minor respects, the RDP diverged from the policies embodied in Ready to Govern. There was less hesitancy about the role of the public sector, and more optimism about the direct complementary relationship between growth and development. But with regard to key macroeconomic positions, the RDP was orthodox.

'The largest portion of RDP projects', it indicated, 'will be financed by the better use of existing resources.' This implied, in essence, milking the defence budget, which was considered excessively large, even though it had declined under De Klerk's government. 'In the long run', argued the base document, 'the RDP will redirect government spending rather than increasing it as a proportion of GDP' (ANC 1994a: 142–143).

The document also referred explicitly to concerns about government dissaving, that is: borrowing more than it spent on public investment. 'A severe imbalance exists at present between insufficient capital expenditure and excessive consumption expenditure.' It drew attention to the 'existing ratios of the [fiscal] deficit, borrowing and taxation to GDP'. 'Particular attention would be paid to these ratios', it added, in order to maintain 'macros-tability' during the implementation of the RDP (ANC 1994a: 143).

The RDP was clearly an attempt to set out an Asian-type heterodox policy that combined investment driven hard by the public sector with institutional reform and orthodox macro-economic stability.

COSATU gave the RDP policy a stamp of approval. Ebrahim Patel, one of the drafters of the RDP and one of the leading left-wing thinkers in COSATU, was happy with the RDP document. 'It makes public COSATU debates, is a confirmation of policy positions and has its origin in earlier documents.' Patel might have preferred a more radical document, but 'the RDP accepts and acknowledges the limits of power', he noted (Weekly Mail 21 January 1994).

Taking the RDP into government

The ANC entered government with a history of policy development and policy debate, which had continued throughout the early 1990s, largely in the public arena. It also had a set of economic policies that had been hammered out over time. It is quite justified to ask, at this stage, so what? Many policies are developed in political parties and alliances, especially when they are out of power, only to be forgotten when the party takes power. Sometimes this is deliberate fraud; other times it is a result of political factors entering into Cabinet appointments that shift the direction of policy for the relevant portfolio.

Indeed, in South Africa, there were examples of extensive and sophisticated policy development processes by the ANC that were ignored by the new Cabinet Minister and his or her Director-General, partly because those individuals had not been involved in the policy process and had other ideas.

In the case of the economic portfolios, however, there was remarkable continuity. Key ministers and deputy ministers were, with a few exceptions, the same people who had led the ANC's policy processes – particularly Tito Mboweni, Alec Erwin, Trevor Manuel and Derek Hanekom. New senior parliamentarians had also helped lead the economic policy processes – people such as Rob Davies, Max Sisulu, Chris Dhlamini and Ben Turok. Many of the key provincial economic leaders were soon leading ex-COSATU officials, who had a grasp of the issues and close relationships with the relevant ministers and parliamentarians. Moreover, many of the senior officials in key government economic departments were soon drawn from the ANC policy community, though this happened much faster in some economic departments than others. In the case of economic policy, therefore, the history of the policy development process is relevant. The leaders of the policy processes became the governmental leaders – cabinet ministers and bureau-crats – assigned with the responsibility of implementing policy. In the next four chapters we review their performance.

Notes

1 Interestingly, the passage on the 'non-European bourgeoisie' was excluded from the version of the article included in the Ruth First collection of Mandela's writings (1965).

2 Ironically, though Slovo called on the Party to win its support 'through democratic persuasion', the SACP has not yet tested the electoral waters on its own, beyond the umbrella of the ANC.

3 Alec Erwin (1989), then of NUMSA, thought, for example, that the power of the working class could be used to impose rational planning processes on the South African economy. See Baskin (1991) for the best general analysis of South African unions in the run-up to political liberation.

4 For some of the ANC thinking leading to this formulation, see Davies (1987).

5 Padayachee has summarised and periodised economic policy inputs into the ANC, though his article contains opinions I do not share, and is unevenly reliable.

6 My own involvement has been extensive – I do not write as a dispassionate observer. I joined the Economic Trends group in 1988; participated in ANC economic policy work (including speech drafting) from 1990, wrote a report for the Industrial Strategy Project, established the Trade Policy Monitoring Project, and later the Trade and Industrial Policy Secretariat, participated in the Macroeconomic Research Group book project as co-author of a report and contributor to a chapter, joined government in 1995 and currently work in the South African Presidency.

7 Most strongly stated by Marais (1998: 158–160); also suggested in Padayachee (1998: 437–439); and in an otherwise useful article, 'How the ANC bowed to the market', by John Matisonn (Mail & Guardian 11 November 1998).

8 'In the long run, the RDP will redirect government spending rather than increasing it as a proportion of GDP' (ANC 1994: 142–143).

Document(s) 4 of 11