Vishnu Padayachee

The role and influence of the IMF on economic policy in South Africa’s transition to democracy: the 1993 Compensatory and Contingency Financing Facility revisited

SUMMARY Many commentators have pointed to the 1993 International Monetary Fund (IMF) loan, which occurred on the eve of South Africa’s democratic elections, as a key factor in explaining the shift in African National Congress (ANC) economic policy in the 1990s. This argument is now invariably taken for granted. Little understanding of the nature of the Compensatory and Contingency Financing Facility (CCFF) is displayed, nor has any hard evidence been produced to back this argument. Drawing upon previously unseen data and reports from both the National Treasury and the IMF, we show that the IMF loan could not have had such an impact on ANC economic policy thinking.

BOOK REVIEW: After Piketty: The Agenda for Economics and Inequality

Thomas Piketty’s Capital in the Twenty-first Century 1 (hereafter C21) has spawned a host of books, articles and reviews that take up and develop the study of inequality in contemporary Western soc...

Vella Pillay: Revolutionary Activism and Economic Policy Analysis

Between the late 1940s and the early 1990s, Vella Pillay made a major contribution to South Africa’s liberation struggle. This article focuses on three aspects of his contribution: as a revolutionary procuring funds and training for the ANC’s military struggle, as a leader of the anti-apartheid and boycott movements, and as a highly trained intellectual producing economic policy analyses. In the mid 1960s, Pillay was suddenly prevented from holding leadership positions in the Congress Alliance; and, in the mid 1990s, he was again humiliated when the report of the Macroeconomic Research Group, of which he was Director, was dumped without any debate of its policy recommendations. This article aims to provide some reasons for the sidelining from history of someone so committed to the economic and political liberation of South Africans.

South African business in the transition to democracy

ABSTRACT The transition to democracy in South Africa represents one of the most celebrated political moments of the late 20th C. While much has been said about the narrowly political and constitutional aspects of this period in South African and world history, little has been said about economic policy choices made in the transition years, or about the role of business in the transition or indeed about how business of all kinds responded to the changes. This collection of essays written by some of the leading scholars of South African business represents one of the first attempts to cover this lacunae in the literature. In the Introductory essay we review the context for these changes in politics and business relations, and summarise the findings of the papers that follow.

“Volkskapitalisme” in the transition to democracy and beyond

ABSTRACT In an assessment of the transition of the Afrikaans business sector to the post-democracy period in South Africa since 1994, the growth or the PSG Group since 1995 is remarkable. We use a biography or Jannie Mouton, the founder and Chairperson of PSG, as a basis for this analysis. His story is quintessentially a narrative of Afrikaner business adjustment in the new democratic South Africa. The success of PSG after democratic elections in 1994 shows some similarities to other Afrikaner business interests developed in the period between the First and Second World Wars. This business development was not overly dependent on the state and can be viewed as a form of “volkskapitalisme”. In contract, the ANC government has taken an active role in attempts to develop black business in South Africa through a policy of black economic empowerment (BEE). The assessment of the success of the PSG Group under the leadership of Mouton shows that the company developed the ability to identify and use opportunities for growth. This ability makes Mouton arguably the most influential South African businessman (black or white) of this current generation. Mouton’s personal success and the success of the PSG Group serve as an example for South Africans.

Inequality, macroeconomics and financial instability. A South African perspective

The link between financial instability and inequality has been anecdotally evident for over at least the past century. So in France in the 1930s, we are told, the financial clouds of the times were ‘often lined with silver, at least for the chosen few’. While small firms, small investors and all wage earners suffered, large banks and large investors ‘made hay by coming to the rescue of failing concerns at the expense of previous shareholders and owners’ (Weber 1994, 32). So, the French bankers danced their nights away at the Ritz while the barbarians pressed at their gates (Weber 1994, 36). Official data was unreliable even when available and, therefore, next to useless at the time, so capturing these developments statistically made no sense. In any event, it would appear that the French political class had little appetite for economics or statistics in the 1930s. Among French economists, Keynesian solutions were largely unknown – the General Theory being translated only in 1942 under Vichy Occupation. Senior fascist bureaucrats thereafter devoured Keynes and came to believe religiously in the value of aggressive state intervention, something that would have horrified the great man who was an admirer of the ‘prophets of the ancient race’, including Marx, Freud and Einstein, and a vocal and trenchant critic of Nazism (Bordiss and Padayachee Forthcoming). The key question facing those concerned about analysing the roots or drivers of intensifying income inequality today is therefore this: can we go beyond the anecdotal views evident above with the data and techniques at our disposal to better understand the role of financial development and instability in producing such inequality? This is an especially important question in a country such as South Africa, widely believed to be one of the most unequal economies in the world, where a sophisticated financial infrastructure equal to that found in Europe and the United States, exists alongside a sea of poverty and increasing interand intra-racial income and wealth inequality. In its heyday in the early 2000s, the School of Development Studies at the University of Natal (later UKZN) produced excellent and innovative research, with policy recommendations, on poverty and inequality in South Africa. The work headed by Julian May and his local and international research colleagues on poverty dynamics in Kwazulu-Natal used

How global geo-politics shaped South Africa's post-World War I monetary policy : the case of Gerhard Vissering and Edwin Kemmerer in South Africa, 1924-25

ABSTRACT The purpose of this paper is to highlight using international archives, the extent to which Americas attempts to anchor its increasingly dominant global economic power and specifically the struggle between London and New York as the centre of global finance, impacted on the nature and character of the monetary policy advice given by these two international experts, as evident in their work on the Kemmerer-Vissering Commission. We show that Kemmerer, a representative of the rising new global economic powerhouse, the United States of America, and Vissering, a representative of a far less significant global player, the Netherlands, also with somewhat closer historical ties to Britain, were in fact instruments of these global dynamics, as they went about their work on the Commission. This global aspect of the narrative of the Kemmerer-Vissering report has not been highlighted by previous research.