Sam Ashman

Amnesty International? The Nature, Scale and Impact of Capital Flight from South Africa

The South African Reserve Bank (SARB) announced in July 2010 its intention to introduce a new amnesty for illegal capital flight. For a flat rate fee of 10 per cent of the value of the assets, corporations and individuals disclosing their illegal expatriation of capital prior to February 2010 would receive no further penalties and be allowed to keep their assets offshore under the ‘Voluntary Disclosure Programme’ (VDP). SARB sees this as a first step towards the complete liberalisation of outflows. Such capital flight is not new but it has worsened significantly since the defeat of apartheid. As a percentage of GDP, it increased from an average of 5.4 per cent per year between 1980 and 1993 to 9.2 per cent between 1994 and 2000, and averaged 12 per cent between 2001 and 2007, finally peaking at a staggering 20 per cent in 2007. The vast majority of (illegal) capital flight arises out of transfer pricing by conglomerates, especially in and around mining, and forms part and parcel of a more general adjustment of such conglomerates to the imperatives of financialisation and globalisation in the wake of an apartheid backlog. In this sense, capital flight has been the most important form taken by the post-apartheid dividend, and has dictated and conformed with other less than satisfactory economic and social developments attached to the post-apartheid era, including elite Black Economic Empowerment. The impact has been to intensify falling domestic investment in productive activities, declining capital stock across almost all productive sectors, macroeconomic austerity and vulnerability, and de-industrialisation of the economy, further entrenching unemployment, poverty and extreme inequality in the provision of basic services. Rather than focusing on the motives of individuals, our approach emphasises that capital flight is a consequence of broader shifts in the global economy and the historical trajectory of South African economic development.

Capitalism, uneven and combined development and the transhistoric

What is the status of Trotskys notion of uneven and combined development within Marxist theory and how might it be fruitfully employed by Marxists in international relations? Is uneven and combined development a transhistoric general abstraction or does it need rooting in the relations, processes, tendencies and counter-tendencies of a particular mode of production? This article rejects Justin Rosenbergs recently drawn conclusion that uneven and combined development is usefully understood as a transhistoric general abstraction that potentially offers the basis of a transhistoric theory of the international. Instead it questions the value of transhistoric categories for Marxist theory and pursues the argument that uneven and combined development is best understood within the relations, processes and tendencies of the capitalist mode of production, arguing that capitalist social relations and political forms are historically unique in their capacity to generate both combination and unevenness.

Neo-liberalism, varieties of capitalism, and the shifting contours of South Africa's financial system

This article focuses on the role played by both national and global finance in comparative economic performance. It critically examines financial economics, arguing that both the Efficient Markets Hypothesis and the New Financial Economics, with its emphasis on market imperfections, information asymmetries and financial systems, fail fully to explain theoretically the specific role played by finance in the economy and the emergence of specific financial systems. It cannot provide, therefore, an adequate account of variety in capitalism. Neither, however, can the Varieties of Capitalism literature which rejects excessively homogenising visions of institutional convergence but which foregrounds institutional variety without providing an adequate theory of institutions or a deeper theory of capital and capitalism. The argument is demonstrated through an examination of the changing nature of South Africas financial system from the apartheid to the post-apartheid periods and its insertion in both national and global economies. Financialisation, it is argued, incorporates a global dynamic into the economic and social formation of class interests and national economies which is seen clearly in the South African case. The argument therefore provides a critique of both mainstream financial economics and the Varieties of Capitalism literature and sheds light on the relationship between finance and the real economy and the nature of contemporary capitalism.

The Evolution of Manufacturing in the Gauteng City-Region: From De-Industrialization to Re-Industrialization?

The South African economy has long been dominated by what Fine and Rustomjee (1996) call the “Minerals-Energy Complex” (MEC). Much South African ‘manufacturing’ has been connected to this capital intensive MEC core of the economy, with manufacturing outside the MEC core relatively weak. This chapter situates manufacturing in the Gauteng City-Region within the overall development of the MEC, South Africa’s distinctive system of accumulation. It situates the discussion also within the ongoing debate about the significance of manufacturing, and whether or not manufacturing should be regarded as an economic sector of particular importance, or ‘engine of growth’. If regarded as such, deindustrialization is of specific concern. Empirically, the chapter identifies and traces the evolution of the most important sectors of manufacturing within Gauteng. It demonstrates the concentration of employment and of capital stock in particular sectors and both declining manufacturing employment and year on year declining fixed capital investment. De-industrialization in the Gauteng City-Region has national significance because of the economic importance of the region. Whilst policy discussion reflects this, the specific importance of manufacturing can easily be lost amongst many competing policy objectives.

Economics and Political Economy Today: Introduction to the Symposium on Fine and Milonakis

Abstract Economics has long been the ‘dismal science’. The crisis in classical political economy at the end of the nineteenth century produced radically differing intellectual responses: Marx’s reconstitution of value theory on the basis of his dialectical method, the marginalists’ development of subjective value theory, and the historical school’s advocacy of inductive and historical reasoning. It is against this background that economics was established as a discrete academic discipline, consciously modelling itself on maths and physics and developing its focus on theorising exchange. This entailed extraordinary reductionism, with humans regarded as rational, self-interested actors, and class, society, history and ‘the social’ being excised from economic analysis. On the basis of this narrowing of its concerns, particularly from the 1980s onwards, economics has sought to expand its sphere of influence through a form of imperialism which seeks to apply mainstream economic approaches to other social sciences and sees economics as ‘the universal grammar of social science’. The implications of this shift are discussed in Ben Fine and Dimitris Milonakis’s two volumes, where they analyse the fate of the social, the political and the historical in economic thought, and assess the future for an inter-disciplinary critique of economic reason.