South Africa: Revisiting Capital's ‘Formative Action’

Abstract

This article revisits Saul and Gelb's 1981 analysis of South African capital's ‘formative action’, employing their framework to assess how capital hasshaped the economic framework since 1990. I show that once prominentbusiness leaders became committed to non‐racial democracy, the privatesector became enormously influential in shaping the economic programme.The policy changes permitted South African firms to restructure theiroperations largely on their own terms, becoming major investors elsewherein Africa and around the world. Despite their ostensible success, the neoliberal framework they cultivated may lack durability, simply because the ‘historical bloc’ underpinning it is so narrow that the programme has notoffered many benefits to the majority. Despite measures taken by thegovernment since 2000 to broaden the political coalition supporting the neoliberal restructuring, the recent crisis over presidential succession reflects the failure to vest the economic changes in a hegemonic programme.

Acknowledgements

Special thanks are owed to John S. Saul and Marlea Clarke, who read earlier versions of this paper, as well as the ROAPE editorial committee (especially Reg Cline‐Cole) and anonymous reviewers, all of whom offered invaluable comments and suggestions. Paul Tucker performed outstanding research assistance for the paper, and thanks are owed to Atkinson Faculty, York University, which provided a grant that covered some of the research.

Notes

1. The financial rand was a parallel currency mechanism for foreign investors designed to prevent disinvestment from affecting South Africa's foreign exchange reserves. If an investor wanted to sell a South African asset, another foreign buyer had to be found. If the asset was sold to a South African, another investor wanting to invest in South Africa had to be found before the seller could exchange the proceeds into another currency. The financial rand rate was far less favourable than the commercial rate, which was used for ordinary transactions.