SOC 2602 - Study Guide

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University of South Africa
Muckleneuk, Pretoria
SOC2602/1/2019–2024
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THE LATE RUHR MARTIN – AUTHOR, COLLEAGUE, TEACHER AND FRIEND
CONTENTS
Page
Learning unit 1: Introduction to globalisation and social change 1
1.1 Welcome note 2
1.2 What is globalisation? 3
1.3 The scope of the concept of globalisation 7
1.4 Summary 9
1.5 An overview of the learning units 10
Learning unit 2: The concept and theories of globalisation 11
2.1 Understanding globalisation 12
2.2 Theoretical underpinnings and explanations for globalisation 14
2.3 Summary 31
2.4 Self-assessment questions 33
Learning unit 3: A decolonial approach to globalisation 34
3.1 Introduction 34
3.2 Theoretical leanings and underpinnings of decoloniality 36
3.3 The historical origins of globalisation 38
3.4 Globalisation and global inequalities 42
3.5 Summary 43
Learning unit 4: The global capitalist system, globalisation and South Africa’s position
in the world today 44
4.1 The global or world system and South Africa’s position therein 44
4.2 Historical reflections on South Africa within the global capitalist system, 1994–2017 48
4.3 Globalisation and the nation-state 52
4.4 Summary 53
Learning unit 5: Neoliberalism and the changing role of the state: Relevance to the
South African state 55
5.1 Introduction 55
5.2 Macroeconomic policy and the role of the state in “the management of”
capitalist economies 57
5.3 The post-World War II economic boom and the Keynesian revolution 66
5.4 The end of the post-Second World War boom and the birth of neoliberalism 69
5.5 Conclusion: Society in the image of neoliberal principles 74
Learning unit 6: The consolidation of Neoliberalism in post-Apartheid South Africa 77
6.1 Introduction 77
6.2 The development of capitalism and its indentation on South African society up
to the early 1970s 78
6.3 Crisis in the apartheid capitalist system and the road to 1994 85
6.4 Ruling class responses to the crisis of the apartheid capitalist system 86
6.5 The collapse of attempts to reform the apartheid capitalist system and the
road to 1994 90
(iii) SOC2602/1/2019–2024
6.6 The new South Africa embraces neoliberalism as a guiding principle for
socioeconomic reconstruction and development 93
Learning unit 7: More than twenty years of neoliberalism in South Africa: Effects
and responses 104
7.1 Introduction 104
7.2 South Africa after more than two decades of neoliberal policies 106
7.3 Intellectual responses to the effects of neoliberalism in South Africa 109
7.4 Social struggles against neoliberalism: New social movements in post-apartheid
South Africa 112
7.5 Enter the students: Fees Must Fall 114
Learning unit 8: Reflections, further readings and future projections 116
8.1 Reflections 116
8.2 Recommended further readings 117
8.3 Exercises in decoloniality and decolonising the university 118
Bibliography 120
(iv)
Learning unit 1
Introduction to globalisation and social change
OUTCOMES OF LEARNING UNIT 1
Once you have completed this learning unit and the next one, we expect you to be
able to do the following:
(1) Give a definition of globalisation and describe the scope of the concept. This
includes showing an understanding of the “world” or “global capitalist system",
as well as South Africa's position within it. (The concept of globalisation is closely
related to the notion of a 'world' or 'global' capitalist system and a country's
position in this system has implications, among other things, for its developmental
prospects.)
(2) Discuss the debates that surround globalisation and, more specifically, provide
reasons, on the basis of your understanding of this debate, to questions like
whether globalisation really exists and, if it does, what it is, and if it does not,
what people are referring to when they use the concept. (We also hope you will
be able to provide your own reasoned answers to questions raised in the debate
about, for instance, the causes, characteristics and consequences of globalisation.
You should then be able to apply your acquired critical understanding to society
and social change in South Africa.
(3) Describe and discuss the historical origins of globalisation and, specifically, its
linkages to the emergence of a globalising, industrial capitalist system.
(4) In relation to the debate about globalisation, you should be able to identify
relevant and current theories and theorists who explain it.
(5) Describe and discuss the relationships between globalisation and, in particular,
(a) the global system, capitalism and neoliberalism, (b) social change in South
Africa (c) disadvantages and global inequalities, and (d) politics, economics and
culture in SA.
(6) Provide reasoned answers to the question of whether globalisation is utopian or
dystopian (simply put, whether it is a “good thing” or “bad thing", respectively,
or both) – in general and for South Africa in particular.
Note that your achievement of outcomes 1, 2, 3, 4 and 5 depends on your grasp and
understanding of the study guide and will shape the critical conclusions you come
to – i.e. as part of outcome 6 – on the basis of your understanding of the debate about
globalisation in outcome 3. As already mentioned, this constitutes the critical understanding
of globalisation you will be applying to questions about society and social change in South
Africa later on in this module.
Note that we have structured this learning unit in terms of this list.
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APPROXIMATE TIME NECESSARY TO WORK THROUGH THIS LEARNING
UNIT:
The approximate time that you should take to work through learning unit 1 is
two (2) hours.
1.1 WELCOME NOTE

Welcome to this module on globalisation and social change in South Africa! This module
has been offered by the Department of Sociology for well over a decade because of its
historical, archival and critical relevance, but has recently undergone extensive revision
and updating. It tells a story about changes in South African politics that influenced the
economic, cultural and social landscape from apartheid, and the influence of globalisation,
leading up to and in a post-apartheid South Africa. While this is a new edition of the study
guide that updates “old” information, it does not remove the centrality of historical, archival
(facts) or critical accounts of the political, economic, ethno-cultural and social landscape
issues within South African society. It maintains these as the underlying structure of the
module on globalisation and social change in South Africa.
However, while maintaining this historical focus, the updated version takes cognisance
of several important developments and changes occurring in South African society, not
least of all the #fees-must-fall student uprising symbolic of the central importance of
education in a post-apartheid SA. Related to this is the emergence of calls for decolonising
education, in short decolonising South African society. What does this mean? Last but
not least, the study guide maintains its focus on the state, labour and movements, and
the position of South Africa in the global capitalist system which, since the 2008 financial
crisis in the west, has been subject to severe turbulence wreaking havoc in global and
national economies and which has required state intervention in the form of “bailouts” of
large financial institutions and banks within traditionally neoliberal social and economic
contexts. Over and above this, and in relation to the emerging “decolonial project” in
education, the module touches on the role of and transformation within the discipline of
sociology in SA, in calls by students of the “hash-tag movements” for “decolonising the
curriculum".
Phenomena that are central to a transforming sociology, but that could not be given
detailed coverage in the limited pages of this study guide, are merely mentioned within
the scope (and limitations) of our main focus on globalisation with additional readings
on these social issues being recommended instead. These issues include environmental
sociology, climate change, migration and a sociology of gender studies. Because this is a
study guide focusing mainly on the phenomenon of globalisation, the latter mentioned
are not dealt with individually. Other central and relevant social issues cutting across a
sociology of globalisation include gender issues, education in South Africa, social and
labour movements, culture, policy changes and the influence of the modern mass media
and communication on social change. These are some of the sub-themes embedded in the
learning units. Jansen (in Seedat-Khan, Jansen & Smith, 2016: 367) explains a phenomenon
or social phenomena as giving rise to certain conditions that influence behavior and/or
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social relationships. Globalisation is a social phenomenon and it is important to study
because it is thought that it presents conditions that affect human existence in various
ways and in ways we will see in the case of South Africa.
1.2 WHAT IS GLOBALISATION?

We may have all heard and read about the phenomenon of globalisation. On the radio,
on television, in newspapers and magazines, in finance ministers' budget speeches and
so on. We are often told that “globalisation” characterises the world that we live in and
that it is indeed changing the world. The term is very popular and fashionable among
ordinary citizens, politicians, media people, artists, musicians, and even academics, and
it is used by many different people in different contexts. We have all come across all
manner of assertions about what globalisation is, and about various “exigencies” (that is,
demands or needs) that globalisation imposes on us. In this regard, a variety of changes,
implications and consequences, both negative and positive, have been associated with
globalisation; for the world as a whole, continents and regions, countries, governments,
economies, groups and individuals. We go into these in more detail as we proceed through
this learning unit.
According to Martin (2006:20), “Typically, 'globalisation' is used to refer to the emergence

of quite radical social, economic, political, cultural, environmental, and other changes, in
what is now considered to be an increasingly 'global' or 'globalised' world. But this is not
what globalisation IS. However, we need to look at these aspects of social change or, in
other words, what impact globalisation has had in the world.”
Putting it briefly,
globalisation refers to an increasing interconnectedness and interdependence
between us, no matter who we are or where we are in the world. It is a condition
or a status quo that we experience daily because of things such as “the media”
and social media, which brings us into contact with each other and the world. It
is our interconnectedness, our common or shared experiences when there are
fluctuations in currency and prices soar or drop at the local grocery store, when
the price of petrol or diesel goes up, and when we turn on the television to news
in some remote place that connects us immediately there. Think about (i.e. reflect
on) this information for a few minutes …
Some suggest that globalisation has arisen as a result of certain social changes,
such as improvements and advances in technologies, the opening up of and free
information, cultural flows, and improvements in transportation and hence the
reduction of time, to name a few (see Held & McGrew, 2003).
You may have read or even heard talks about the experience of people all round the world
living in a “global village” (McLuhan, 1964), or of a “shrinking world” (Giddens, 1999), and
similar phrases. These expressions are held to be characterising the consequence/s of
globalisation, depending on who is speaking. Globalisation is thought by others to be
closely linked to unprecedented advances in transportation and also in the proliferation
(i.e. wide spread) of information through communications technologies (ICTs), as well as
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the exchanges in cultural goods and services (e.g. exchange of music, art and sporting
experiences). Think about how modern air and ground transportation enables the mass
movement of people and goods over wide distances in shorter times than ever before
and from almost any destination in the world. Think about how computers, the internet,
e-mail and the cellphone have each enabled almost instantaneous communication
between people located in different parts of the globe. These technologies are held
to be underpinning our increasing interconnectedness and interdependence and the
increasing volumes and spread of trade, finance and exchanges of information that are
linked to the social, economic, political and cultural changes in the world.
1.2.1 "The local in the global and the global in the local"
There are many definitions of globalisation, and many of the statements that we have
produced so far are also used as descriptions of globalisation focusing on one key aspect or
another. In defining globalisation, however, Cohen and Kennedy (2013:10–11, 23–34) claim
that it is a condition where people in different parts of the world have become increasingly
and more intensively interconnected and dependent on each other. For example, they say,
local events and ideas, and individuals, groups and organisations, are increasingly being
influenced by events and ideas, individuals, groups and organisations in different parts
of the world to their own. ”The local” is also being influenced by world institutions and
organisations, in other words, by ”global forces”. The converse is also true; ”the global",
is also being influenced by the local. For instance, some world organisations, groupings,
and regions are impacted upon when local actors make decisions about their own social
contexts. We saw this in the spread of events which started in one place and resulted in
what was termed ”the Arab Springs” (use Google Scholar to search for academic articles
on ”the Arab Springs” for more information on that). Another example would be the
USA's ”war on terror” – implemented in response to local events, but global in its reach.
Importantly, according to Bromley (1999:280–281), we are also becoming increasingly
conscious of the global nature of our exchanges, interactions and interdependencies,
and of their global consequences (see Waters' 1995:38–46 discussion of Robertson's
(1992) important contribution towards the idea of the emergence of a global awareness
or consciousness).
People all over the world have become – or are becoming – more aware of events in
different places and are indeed becoming increasingly more “knitted together” as a result.
This closeness and sharing is being brought about by, among other things, an increasingly
free flow of goods, money and information, as well as the more frequent and voluminous
global interchanges between people, with regard to information, knowledge and culture
(Cohen & Kennedy, 2013). There is now also an ''increased density and lower cost of travel
and communication'' (Cohen & Kennedy, 2000:11). Much of this is, in large part, facilitated
by developments in transport and ICT.
Giddens (1999), Hoogvelt (1997), and Waters (1995), among others, hold that globalisation
involves space and time being “compressed”. What they mean by this is that distances
increasingly appear to be shorter and easier to travel and it generally takes less and less time
to do things. Space-time compression involves a faster, ever-increasing and intensifying
volume, depth and density of movements, interactions and transactions of all sorts, all
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around the world. Communication, and information and financial exchanges in particular,
can take place just about anywhere, instantaneously and at any time. Clearly, this is
related to developments in transport and ICT. However, as mentioned above, these global
exchanges and their benefits (and deficits) are unevenly distributed among the centers
and peripheries of the global system. All sorts of regional and international agreements
and associations have emerged to facilitate and regulate these global interactions, such as
the World Trade Organization (WTO), the North American Free Trade Association (NAFTA),
the United Nations (UN) and the European Union (EU). There is indeed a growing network
of transnational actors, social movements, organisations and agreements (such as the
WTO and others just mentioned, and the TNCs, IGOs, INGOs and global social movements
referred to previously).
It is worth mentioning here that we all seem to be facing the same sorts of problems,
that is, global problems. For instance, we all need to solve the problems of excessive
pollution, resource depletion, environmental degradation and destruction, the disposal of
nuclear and other wastes, and global warming, to mention just a few of the social issues
and problems. Nations are also being called upon by international agencies such as the
United Nations (UN) to do so collectively, interactively and cooperatively at the global
level. Such problems impact so many nations that not much can be done about them
by one nation state acting alone. This brings us to another characteristic often ascribed
to globalisation, that is, the apparent declining power and sovereignty of the state due
to the increasingly free flows across borders of information, goods, money, people, and
others. You will see in learning unit 2 that this point is a point of contention between
“believers” that globalisation is real and significant and those sceptics who denounce such
ideas, for example that the nation-states often seem powerless to control anything within
its borders. Arguments can be made for both sides in this. Furthermore, the presence of
trans-national corporations (TNCs), international government organisations (IGOs) and
international non-government organisations (INGOs), referred to later on, suggests the
presence of globalisation and that, increasingly, “governance” is shifting from the national
to the regional and global levels. More on this in further learning units.
Below is an exercise testing your summation of what globalisation could mean. Answer
it for yourself as part of your revision.
ACTIVITY 1.1
This activity should take you approximately 45 minutes to complete.

Watch the following YouTube clip on globalisation and then answer the self-completion
quiz below it (answer it on the myUnisa forum by clicking on “Self-Assessments” and
then selecting the self-completion quiz).
Please note that these marks do not count towards formative or summative assessment,
but are central to your use of technology as well as for revision.
https://www.youtube.com/watch?v=JJ0nFD19eT8
(If you are unable to access this YouTube clip, then open YouTube and type in the
following key words to search for the video. Key words: “explaining globalisation”.)
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Self-completion survey
(7) What is said to have led to globalisation? Give examples.
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(8) Is globalisation technical, economic, political or cultural, or all of these? Explain
in your own words why you say so.
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(9) What are some disadvantages of globalisation identified in the following YouTube
video clip?
https://hw-cdn.contentabc.com/ads/jb_300x250_768201/uploadLogo.png
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1 FEEDBACK on Activity 1.1
Despite seeing for ourselves what globalisation is said to have resulted in in the world today,
we can agree that it is still difficult to put one's finger on an exact definition of what it is.
This is because we are talking about an abstract phenomenon that is not clearly observable
except through observing contingent factors that indicate the “presence” of globalisation
– whether in the economy (such as currency exchanges and market relations), in politics
(international laws and treaties such as the Kyoto Protocol), culturally (especially in the “flows”
and exchanges of cultural goods such as music, art, fashion and even ideas), and socially
(in the media today, especially the media genre “news” and in social media, and so on).
1.2.2 What is social change?

The title of this module is “globalisation and social change”. What do we mean when, as
sociologists, we talk about social change? Seedat-Khan, Jansen and Smith (2016: 400)
define social change as “Any significant alteration, modification, or transformation in the
organisation and operation of social life.” Clearly, by this definition, there is an impact on
the patterns of human life – such that significant attention to it is warranted. Sociologists,
among other social scientists, are the ones prone to investigating, describing and analysing
what social change is in the context of societies and what its impact is. The same authors
state that, when sociologists study social change, they are prone to asking at least three
questions, namely: (1) What has changed? (2) What factors triggered this change? (3) What
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are the consequences of the change? (Jansen, in Seedat-Khan et al, 2016:369). Relating
these three questions to globalisation helps to provide an idea of whether globalisation
exists, but also, what its impact is on societies and human life and also on the environment
as a whole.
ACTIVITY 1.2

Read the questions below then watch the following YouTube clip and answer these
questions based on it.
https://www.youtube.com/watch?v=vGJ3KEuwSTg
(1) What are the three “core components” identified in the video that are necessary
to bring about social change? (6 points)
(2) Summarise the main focus of the video and include in your summary a list of key
words* used in the video that you can identify.
*Tip: The “key words” in Activity 1.2 are mainly the “language” of sociologists and
what they refer to as “concepts”. Concepts are abstract terms that refer to
phenomena in society.
1.3 THE SCOPE OF THE CONCEPT OF GLOBALISATION

Cohen and Kennedy (2013:15–17, 21–25) argue that, in order to make sense of the idea
of globalisation, sociologists must dramatically expand their intellectual horizons. In
fact, they are critical of the foundational roots of sociology as a discipline that emerged
in western society and that are focused on western problems and encounters of social
change. Sociologists, whether located in the West, South, or East must recognise, or at
least seriously entertain the possibility, that local communities and national societies are
being influenced by profound changes at the global level – and that the global level is
also being influenced by the local. Cohen and Kennedy (2013) believe that the scope of
the changes associated with globalisation encompass (among other things) the following
spheres/areas of societies and the world as a whole:
• the world of work, production and finance
• the political sphere, the state and the city
• the nature, levels and distribution of global inequality and poverty population and
migration trends
• the nature and significance of patterns of consumption, in areas such as media, trans-
port, information and communications technology, as well as in culture and changing
patterns of identity and belonging
Ankie Hoogvelt (1997) also argues that forces associated with globalisation are profound
in scope. She is particularly concerned with the implications of globalisation for the
possibility of development in the poorer parts of the world, especially the ex-colonies. She
links the emergence and nature of contemporary globalisation to the historical expansion
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of industrial capitalism in the form of colonialism, and to current crises (such as crises of
profitability) and resultant changes in the global capitalist economic system. Can you
see here that she is stressing that the global system we are concerned with is industrial
capitalist in nature? In other words, unlike a couple of two other extreme positions we will
discuss in the next unit, viz. globalists and skeptics, briefly, she believes that globalisation
is a reality and that it is fundamentally capitalist in nature. She also associates globalisation
with new conceptions of time and space (sometimes called “space-time compression”)
brought about by developments in transportation and in information and communications
technologies (ICTs) – as well as in new global (rather than national, such as in the form
of the nation state) regimes of discipline and regulation such as those associated with
massive transnational corporations (TNCs) like oil companies and banks, and international
governmental organisations (IGOs) such as the United Nations and the World Bank. We
examine most of these ideas and terms in more detail in later learning units. Can you
see that her conception of the scope of globalisation reflects the content of Cohen and
Kennedy's (2013) list above?
In Hoogvelt’s views on the implications of globalisation for the postcolonial world (the ex-
colonies), however, her focus is on how there is now a shift away from the geographical
expansion all over the world of the industrial capitalist system, as occurred during the
colonial era, towards “deeper” and “thicker” flows of capital, goods, services and information/
knowledge within and between the “centers” of this system. Hoogvelt (1997), along with
others, holds that there is now a marked and growing tendency to exclude and marginalise
the postcolonial world at the peripheries from this scheme, particularly Africa, and most
severely, its sub-Saharan region. However, this rather bleak picture need not necessarily
always be the case for all peripheral countries. Human intervention, in the form of, say,
various anti-globalisation protests and pro-“Third World” social movements, can have and
have had some (albeit limited) successes in improving some conditions in some parts of the
periphery, despite capital and other flows, increasing and having increased in parts of the
periphery as TNCs scramble for natural resources. Thus, according to Martin (2006: 22), “for
Hoogvelt (1997), the scope of globalisation is profound, but it is concentrated in and relatively
utopian (positive) for the centers (the rich, developed parts of the world), and marginal in and
dystopian (negative) for the periphery (i.e. for the poor, mainly once colonised, un- or under
or less-developed parts of the global system).” He adds that, “For Hoogvelt (1997), nations'
increasing interconnectedness and interdependence is marked by increasing inequalities
between them, and growing poverty in the poorer peripheries, in particular” (Martin, 2006:22).
This is just a short introduction to the larger picture of globalisation, which is to follow.
ACTIVITY 1.3

Watch the following YouTube video clip and reflect on your understanding of
globalisation. Record your thoughts in a learning journal that will provide revision
material for your final exam:
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https://www.youtube.com/watch?v=uwGgLfu5aGs
(1) In this video clip, what is the connection between neoliberalism and economic
globalisation?
Tip: Enter this question in your learning journal and, when you have finished reading
learning units 5 and 6 in the study guide, revisit this question and check your
answer against the additional information you will then have.
1.4 SUMMARY
In this learning unit, we introduced you to the main concepts of the module,
namely globalisation and social change, and we offered you activities that
sought to explain these concepts and help you come up with definitions
of both. We also briefly introduced you to what social change is from the
angle of the discipline of sociology. Why we narrow down concepts to
particular disciplines is mainly because we tend to see social issues from
different perspectives or points of views. Acquiring knowledge is a broad and endless
process, and it would take millennia to come up with agreed upon ideas about the social
world, growth and progress because the world and people are never static. Change is
immanent in the social world. Hence, we have to commit ourselves to at least attempting
to find agreed-upon meaning/s and understandings about the world we live in, with in
certain enclaves of information, such as within disciplines, in order to keep moving forward.
When new information comes to light, we readapt and readjust our thinking and focus.
There is nothing wrong with this. In fact, we have come to refer to this as “innovation”.
Social change is a concept used in sociology to denote this – the fact that human knowledge
(thinking, ideas) and action (interventions) impacts in one way or another on the social
(political, economic and cultural) and ecological world we all live in. There is only one
world, but with many ways of life.
We find that it is not as straightforward as we might originally think to define these

concepts because they are “politically loaded”. By this we mean, depending on which
part of the world we are from, we bring with us, our own unique and sometimes different
and conflicting viewpoints about how the world works and how these technical concepts
should be defined. This does not mean that there is no way to define and find consensus
on these abstract concepts because we all have a sense of what is “right” and “good” and
what is “wrong” and “bad”. People living in poverty, for instance, is bad! Exploitation is
bad! We can more or less agree on this because we know poverty and exploitation bring
much discomfort, struggle and strife. No one wants that. Hence, we see, in this learning
unit, that some associate globalisation with what is wrong and bad in the world today,
while others associate it with a neutral position and even with positive growth – but for
whom? We will see in the next learning units a deeper and more thought-provoking idea
of how sociologists come to define concepts and assign meaning to them.
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1.5 AN OVERVIEW OF THE LEARNING UNITS
When you have finished learning unit 1, we suggest that you also add a summary of this
learning unit into your learning journal, including only relevant information. A summary
is a short excerpt of writing that includes the most important facts. Therefore, try your
best not to write copious amounts of information, but be strategic about what you decide
to include and leave out.
The next 3 learning units (learning units 2, 3 and 4) focus your attention on understanding
globalisation in context and in its relationship to phenomena, such as global capitalism,
world systems theory and decolonisation. In learning unit 2, various theoretical positions
about whether globalisation is real, and whether it exists at all, will be expounded.
Learning unit 3 then introduces an alternative perception of the world as framed from
the point of view of decolonial scholars who are more interested in the impact that
related processes of colonisation, modernisation and now globalisation have on the lived
realities of the peoples whose lives become social experiments within these top-down
imposed phenomena. Colonialism is a process of continued subjugation of the majority of
people living under the dictates of processes such as global capitalism and neoliberalism.
Coloniality, is a concept that describes the actual plunder and usurpation of people, lands
and raw materials or material resources to enrich foreign countries – colonies. Under
modernisation and globalisation, this exploitation on a global scale continues.
In learning unit 4, the discussion turns towards South Africa as a third world country
but living on the precipice of becoming a “fourth world” country in the understanding
provided by social theorist and African economist, Samir Amin. The world systems theory
is deconstructed in this unit to discuss, at the global level, how countries become ordered
and relegated to certain “positions” depending on their position (and compliance) in the
global capitalist system, which has emerged, in its modern form, since the 17th century
(1600s) through the process of colonialism. The ideas of development theorist Ankie
Hoogvelt complete the picture by situating South Africa within the “post-colonial context”
instead of using the concepts of world systems theory. In learning units 5 and 6, the focus
is on understanding how globalisation as a phenomenon practically imposes compliance
on states across the globe. This is achieved through a process of neoliberalism. Learning
units 5 and 6 therefore take issue with how neoliberalism, as a now global phenomenon
for development and macro-economic policy strategy, imposes limitations on countries
via the role of the state. Learning unit 5 provides a more general and broad view of the
various roles that the state can play in economic and social development, and alludes
to examples of the transition in South Africa from an apartheid state and its control of
macro-economic policy to the post-apartheid state and its role in macroeconomic policy.
Learning unit 6 then, more specifically, relates the role of the current democratic state in
SA to neoliberal policy and the influence of global capitalism.
Learning unit 7 consolidates the discussion in learning units 5 and 6, while learning unit
8 summarises the main foci and concludes the study guide.
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Learning unit 2
The concept and theories of globalisation
After completing this learning unit, you should be able demonstrate that you are able to:
• give your own definition of globalisation with supporting argument/s.
• provide a description of its scope and impact.
• discuss and define what capitalism is in relation to globalisation.
• explain the impact of globalisation on social change in various social contexts,
and in terms of your own experiences.
• critically apply your understanding of globalisation to social change in general, and
to South Africa and Africa in particular.
APPROXIMATE TIME TO WORK THROUGH THIS LEARNING UNIT:

The approximate time that you should take to work through learning unit 2 is four
(4) hours.
The aim in this learning unit is to engage with the concept of globalisation and to help
you gain a critical understanding of it. This learning unit adds to the substance of the first
learning unit and brings further dimensions to the theoretical debates about globalisation.
Aside from the usefulness of knowing something about this concept for its own sake
(because we hear and read about it and its implications so frequently), we want you to
be able to apply your critical understanding of globalisation to social change in general
and in South Africa in particular.
When we talk about a “critical understanding” and application of the concept, we are
referring to the fact that globalisation is, in the academic and social worlds, a controversial
and much debated and contested idea. We therefore want you to become familiar with
and able to discuss the concept in its broadest sense and relate it to drawing on your
own reasoned conclusions about the debates that surround it. This is what we mean
by developing a critical understanding – it is to be able to understand, criticise, apply
and reason or deduce. Furthermore, in this learning unit, we want you to develop your
understanding and to apply the concept of globalisation to social change and changes in
South Africa. This application will be required mainly in the learning units that follow this
one but, for now, we require you to gain as much in-depth knowledge of and experience
with globalisation as a much-contested phenomenon.
In later learning units we apply the concept and discuss how it is relevant to society and
social change – specifically, social change in South Africa. You will see that phenomena
11 SOC2602/1
associated with the idea of globalisation begin to appear early on in South Africa’s history
and can indeed be said to have shaped this history in part.
2.1 UNDERSTANDING GLOBALISATION

Once you have worked through this section of the learning unit, we expect you to be
able to:
• find sources in the library and on the World Wide Web (www) such as in Google Scholar
or Google Search that explains what globalisation is,
• contribute to online discussions in the Discussion Forum on myUnisa about the
concept and what you have found out about it.
While we have so far defined globalisation as if it is relatively unproblematic, it is in fact a
controversial and much debated or “contested” concept in academia. We have dealt with
defining the concept in this way in learning unit 1, to give you a taste and an idea of what
globalisation could mean and what it involves before we proceed to introduce you to
the debates that surround it. What this means is that what we have said about the scope
of the concept of globalisation – and the ways in which we define it – are, nonetheless,
still subject to debate. Ultimately, you will have to make up your own mind on where
you stand in this debate. This will influence how you define globalisation and describe
it. It will also influence what causes, characteristics and consequences you attribute to
globalisation, and how this informs your decision as to whether globalisation really exists
as something new and different; whether it is a variation and an outcome of more familiar
forces of social change; whether it is utopian or dystopian (or both), and so on. However,
when forming your own conclusions, you must do this consistently, giving clear reasons
for why you believe this or that about it.
As we have said, many of the characteristics that we have suggested as being definitive of
globalisation are obviously facilitated by developments in transportation, communication
and ICT. Examples are jet travel, satellite television, and the internet. According to Cohen
and Kennedy (2013:28–30) and others, however, what is really definitive about globalisation,
and what is really important (given that there almost always has been some sort of
international interaction), is that all these global phenomena are occurring simultaneously
and reinforcing each other, and that they are occurring and interacting much more quickly,
regularly and intensely. This is laying a foundation for the possibility of new and emergent
global phenomena, all increasingly related to globalisation.
Important, too, is the fact that the technological developments that seem to underlie
much that is deemed to be definitive of globalisation have not emerged autonomously
or overnight. Most of these global phenomena have emerged over a long, historical
process of socioeconomic, political and ideological change, associated with the emergence
and development of industrial capitalism and its expansion on a global scale. Indeed,
globalisation is strongly associated with a shift from “industrialism” to “post-industrialism”,
from “Fordism” to “post-Fordism”, from “capitalism” to “post-capitalism” and so on. We shall
be looking at many of these ideas and views in more detail below, but for now it is enough
to mention that these shifts involve not only technological change, but are inextricably
bound up with socioeconomic, political and ideological change too. Furthermore, earlier
12
we referred to deeper and thicker flows of capital, goods and information; increased
inequality and poverty; new patterns of consumption; and the rise of powerful TNCs.
We also referred to the link between globalisation, or the world/global capitalist system,
and the historical, global expansion of industrial capitalism by means of colonialism.
These are all quite obviously not merely technological, but socioeconomic, political and
ideological changes.
Moreover, many other definitive characteristics ascribed to globalisation are also clearly
related to mainly socioeconomic change. For example, changes associated with the state
in our globalised order include its supposedly decreasing sovereignty and its increasing
inability to make and act upon decisions on behalf of its own citizens. These changes are
linked to economic changes such as the increasingly free flow of capital and the unfettered
activities of large and powerful TNCs. State power is also constrained by the regulations of
the international organisations to which states belong and the international agreements
to which they subscribe. In addition, many of these organisations and agreements are
about economic issues, such as trade, production, the exploitation of natural resources
(i.e. fishing quotas, mineral rights and the like). Changes in and the development of the
media, transport and ICT themselves are strongly linked to the historical development
and expansion of industrial capitalism. This is because these developments are closely
bound up with and frequently motivated by the pursuit of profit on a worldwide basis.
Many of the global problems we now all face, such as global warming, and environmental
and natural resource destruction, despoliation and depletion, are also functions of the
pursuit of profit.
So, while the definitive characteristics ascribed to globalisation are obviously a

multidimensional set of social, economic, political, cultural, ideological, technological
and other, similar, phenomena, they are nonetheless also fundamentally socioeconomic
in nature. The profound global changes associated with globalisation are interrelated with
historical, global socioeconomic changes, and with changes in industrial capitalism at the
global level in particular. Most commentators on globalisation agree that its socioeconomic
dimension is one of globalisation’s most important, if not the most important, definitional
characteristic. This is why we said in our introduction that one of our points of departure
is that whatever globalisation may be, it is bound up with changes and developments
in industrial capitalism.
ACTIVITY 2.1

(1) Give your own definition of globalisation, providing reasons for how/why you
selected this as a definition.
(2) Watch the following YouTube clips to see what’s “out there” on how people think
about globalisation:
https://youtu.be/dWjWfyzmk1Q
https://youtu.be/xUYNB4a8d2U
13 SOC2602/1
If you are unable to access this YouTube clip, then open YouTube and type in the
following key words to search for the video. Key words: “does globalisation exist”.
2.2 THEORETICAL UNDERPINNINGS AND EXPLANATIONS FOR

GLOBALISATION
Different people in different contexts often attach very different meanings to the term,
globalisation. There are a number of different and indeed competing conceptualisations of
globalisation and they associate the notion with often quite different causes, characteristics
and consequences. To take two extreme positions, there are, for instance, authors who
reject altogether the idea of a new and radically different globalised, world order. These
authors might argue, for instance, that the causes, characteristics and consequences
associated with the term “globalisation” are no more than a quantitative variation on or
development of an old theme; namely, the nature and dynamics of industrial capitalism.
In other words, such authors believe and argue that what is called “globalisation” is merely
the latest phase of a now more “global” than in previous times “industrial” process. They
believe, for example, that contemporary advances in transportation, communication and
information technologies are caused by developments in capitalism.
Conversely, other authors, while not necessarily rejecting some sort of link between
changes in industrial capitalism and globalisation (for instance, the idea that the latter is
loosely based on the former in one way or another), argue that globalisation is a totally new
phenomenon that is indeed radically and rapidly changing our world. They may believe,
for instance, that the world is changing into or has already become some variant of a
post-industrial, post-capitalist society. They may hold that this is a function of the ongoing
development of industrialisation rather than capitalism and, in particular, of developments
in modern transportation and information and communications technologies as mentioned
above. There are a variety of positions between these two extremes, and there is thus a
great deal of disagreement, controversy, and debate about the nature and even existence
of globalisation, and about the need for or usefulness of the idea or of theories developed
to account for it. It is thus a highly “contested” notion. In this module, a main focus is on the
relationship between globalisation, or, rather, various interpretations of globalisation, and
the possibility of achieving prosperity, equality, and justice for all people in South Africa.
We shall return to this idea of contestation, and the relationship between globalisation
and social change in South Africa in particular, further on.
We attempt to both weigh up the positive and negative consequences commonly ascribed
to globalisation, as well as project further possible positive and negative consequences
on the basis of the forces driving contemporary social change, that is, on the basis of
what we are calling “globalisation”.
We do strongly suggest, however, that whatever globalisation may involve, it must be

understood in historical context, as a phenomenon characterised by both continuities
and discontinuities with the past. We also suggest that it is, in one way or another,
linked to changes and developments in industrial capitalism that have had implications
at the global level. Whether or not this is the case, and/or whether or not globalisation
14
represents a radically new departure from industrial capitalism, are questions we hope
to help you answer for yourselves. This is how we will look at the impact of globalisation
on the nature of South Africa and social change in South Africa, and on South Africa’s
place within the global system. For example, in the next few learning units, you will see
that one of our premises is that the emerging global industrial capitalist system was the
broad context from which the capitalist apartheid system in South Africa emerged, and
that the latter developed, and ultimately came to an end, in the context of changes in
the global industrial capitalist system. This learning unit thus provides a general, “global”
conceptual context for the learning units that follow.
ACTIVITY 2.2

(1) What is the main difference between the two extreme positions mentioned above
on the causes of globalisation?
https://www.youtube.com/watch?v=QPSBDLM67bI
following key words to search for the video. Key words: “Globalisation’s negative
effects on Africa documentary”.
We see globalisation as a “contested” rather than a “given” phenomenon. We treat it criti-

cally, in relation to a debate about the many possible explanations for the ways in which
the world is changing. We pose the question, for example, of whether globalisation is the
cause of contemporary social change, or a continuation or consequence of other, older,
more familiar causes and courses of social change such as industrialisation.
2.2.1 The debate about globalisation

Once you have worked through this section of the learning unit, we expect you to be
able to describe and discuss at least three theoretical positions on the debate about
globalisation, and to come to your own conclusions about what globalisation involves.
Thus far we have been defining globalisation and discussing its scope. However, as we
said in the introduction to this learning unit, any definition, description and discussion
of globalisation is subject to debate and contestation. Therefore, what we have said so
far about the concept can only be seen as provisional, and as not much more than a
way of introducing you to the debate. Ultimately, you will have to formulate your own
position on whether globalisation exists and what it involves and so forth, as well as
what implications it holds for South Africa. Definitions of globalisation abound, as do
descriptions of its causes, characteristics and consequences. Interpretations range from
the position that globalisation is not a particularly useful concept at all, given that what
15 SOC2602/1
it refers to is hardly new, to the position that new theories of globalisation need to be
generated so as to capture the radical changes the concept refers to.
While many scholars suggest that globalisation represents a new and important phase
in human history, others argue that there is nothing new about the economic, political
and other networks which interconnect the world. Critics may argue that globalisation
can be explained in terms of older, existing theories, such as Wallerstein’s (1979) world-
systems theory (also see So (1990) and Kiely (1995)). However, even among those observers
who accept that globalisation is a reality, there is a lively debate about its causes, nature
and consequences. There may also be disagreement about the extent to which a new
theoretical paradigm or a new “global” way of thinking about our contemporary world
is required, and what such a theory should comprise.
More specifically, the debate on globalisation hinges on a number of related aspects

which include the following key questions:
• Does globalisation really exist and is the concept of globalisation meaningful?

• Do we need a new theory in order to understand contemporary reality?
• What are the characteristics that we can associate with globalisation?
• How can we (or can we at all) periodise the history of globalisation?
• What are the causes of globalisation?
• What are the consequences of globalisation now and what will they be in the future?
Held, McGrew, Goldblatt and Perraton (1999) identify three broad positions in this
debate. They distinguish between the so-called “hyperglobalists”, the “sceptics” and
the “transformationalists” (also see Amin (1997), for a similar identification of positions
on globalisation). It is difficult, however, to identify these three camps in terms of clearly
defined perspectives or world-views, because they cut across most conventional
intellectual, theoretical, methodological, political and ideological divides. Each position
has its “conservatives”, “liberals” and “radicals”. There are, for example, representatives
from the pro-capitalist “neoliberal” (a “new” form of “liberalism” involving the support
of free markets, reduced state spending, et cetera – see the discussion of neoliberalism
further on) camp and the anti-capitalist neo-Marxist camp in each of the hyperglobalist,
skeptical and transformationalist positions.
Hyperglobalists, such as Robinson (1996), Albrow (1996), Sklair (1995), Waters (1995),
Drucker (1992), Hoogvelt (1997) and Womack, Jones and Roos (1990) tend to argue for the
emergence of a historically unprecedented, fundamentally new type of globalised world.
Many of the more extreme claims that are frequently made about a new global world
order can be attributed to hyperglobalists such as these. They tend to emphasise the
uniqueness, ubiquity, inevitability and irreversibility of globalisation, and they argue that
it has momentously positive and/or negative consequences. They associate contemporary
society with historically unprecedented global change which is occurring in socioeconomic,
political, cultural and technological areas. Consequently, they call for a corresponding
“paradigm shift” in human perception, theory and action in order to understand and
deal with the challenges of globalisation.
16
As with sceptics and transformationalists, hyperglobalists operate from within a variety
of ideological and theoretical traditions. Drucker (1992) and Womack et al (1990), for
example, argue from a conservative, pro-capitalist and neoliberal orientation. They claim
that capitalism’s global ascendancy since the end of the Cold War (marked by the collapse
of the socialist Soviet Union, and socialism more generally), reflected in increasingly
free trade, global markets and technological innovation, is what is driving globalisation.
They argue that this latest phase of the development of Western capitalism is inexorably
transforming the whole world and that it will eventually benefit all people and all countries
in the world. They believe, therefore, that unrestricted free competition and participation
in this emerging, single global capitalist market, is a positive development with (ultimately)
benign (or “utopian”) consequences for all human beings.
However, there are hyperglobalists who are very critical of what they see as the destructive
consequences of globalisation. Hoogvelt (1997), for example, contends that globalisation
will increasingly marginalise and impoverish people in peripheral and sub-peripheral
areas, and will thus exacerbate the global polarisation of wealth and poverty. An anti-
capitalist, neo-Marxist hyperglobalist like Robinson (1996) argues that the characteristics
and consequences associated with globalisation are directly attributable to the unfolding
profit-seeking character and logic of the capitalist mode of production and the related
activities of a global monopoly capitalist and state elite. Departing from a more or less
orthodox Marxist reading of the “laws of motion” (or socioeconomic “workings”) of
capitalism, Robinson proceeds to present globalisation as the contemporary, but radically
new manifestation of globalised capitalism. He argues that capitalism must incorporate
new arenas, and not merely by means of geographical expansion, as happened during
the colonial era. This is because capitalism is inherently contradictory, rapidly exhausts
existing avenues of profit and continually exacerbates class distinctions and inequality.
The result is that it is now producing contradictions at the global level.
Robinson (1996) reaches an interesting conclusion. He argues that there are two broad
possible outcomes of globalisation. Firstly, he suggests that “barbarism” could result
from the unchecked contemporary trajectory of global capitalism. What he means
by this is that it is likely to bring about increasingly exacerbated resource depletion,
environmental destruction, untrammeled TNC domination and exploitation, rampant
unemployment, poverty, crime, and famine. Only a privileged minority may be able to
live a wealthy, abundant and sheltered lifestyle. On the other hand, the vast majority of
the world’s population may become increasingly impoverished, deprived, dehumanised
and marginalised. They may, therefore, resort to extreme measures, violence even,
possibly in the form of fundamentalist social movements, or even bands of robbers, in
order to claim a more equitable distribution of power and resources. This, in turn, may be
met with increasingly brutal official and private security measures. The second possible
outcome, according to Robinson, could be socialism. He derives this from the classical
Marxist argument (see Marx & Engels, 2000) that as capitalism develops on the global
level, so do its contradictions and crises. As capitalists develop the forces and relations of
production of capitalism, they are simultaneously developing the conditions (exacerbated
class division) and the socioeconomic (rising class inequality) and technological (easy,
world-wide communication) means for, the mass mobilisation of anti-capitalist protest.
This could help bring about global anti-capitalist revolutionary action.
17 SOC2602/1
Indeed, many scholars, whether hyperglobalists, sceptics or transformationalists, are
concerned with the future consequences of the increasing contemporary global polarisation
of power, wealth and opportunity. Even some neoliberal authors, such as Drucker (1992)
and Fukuyama (1989), are aware of this problem, although they argue that the economic
and political benefits of globalisation will ultimately “trickle down” to all people in the
world. On the other hand, Huntington (1996) and Barber (1996), not unlike the neo-Marxist,
Robinson, foresee great conflict between the “haves” and “have nots” as a result of the
globalisation of neoliberal free market capitalism and its associated “Western” values of
individualism, materialism, and consumerism. They believe that these disparities could
be articulated as a “clash of civilisations”, and/or as conflicts between cultures, ethnic
groups, religions, ideologies and classes, at a global level, and with global consequences.
Perhaps the current aggressive activities of the Trump administration in the USA against
immigrants from other countries, regions and groups, and the counter-reaction by the
rest of the world, indicate that this is already happening.
Some hyperglobalists tend to conceptualize globalisation in a rather monocausal and
linear manner. For example, Daniel Bell (1976) and Alvin Toffler (1980) tend to de-link the
causes and character of globalisation from capitalism. They tend to stress the independent
dynamics, structures and processes of industrialisation. Those who hold this type of view
tend to attribute the causes of globalisation to technology, particularly computerisation,
as an independent variable. Developments in ICT are even held to be among the most
important causes of the decline of the state, given that the state is no longer able to
monitor, let alone control, the exponentially increasing free flow of information, ideas and
capital, a volume of electronic traffic directly attributable to developments in information-
processing technologies in particular.
Sceptics, such as Hirst and Thompson (1996) (see also Scott 1997; Du Boff et al, 1997;
Meiksins Wood, 1996; Tabb, 1997; Koechlin, 1997; Kleinknecht and ter Wengel, 1998;
Sweezy, 1997 and Williams et al, 1987), problematise and even question the usefulness
of the concept of globalisation on both empirical and theoretical grounds. Indeed, Hirst
and Thompson (1996) argue that there is nothing even quantitatively different about
contemporary trade, production, finance and local and international governance. However,
other sceptics argue that quantitative – but not qualitative and thus not “new” – changes
have occurred or are occurring. Still other scholars concede that qualitative changes have
occurred, but reject the idea that these are the result of a new set of global forces. All
sceptics tend to agree, however, that understanding contemporary social reality does not
require a radically new set of “global” concepts or a new “global” theoretical paradigm.
Rather, they argue that whatever changes may have occurred merely represent variations
on old themes such as the contemporary, but now global, manifestations of industrial
capitalism.
Hirst and Thompson (1996 and 1996b), among others, base their criticism of the globalisation
thesis on mainly empirical grounds. They associate talk about globalisation with increased
global volumes of trade and finance flows, worldwide free-market capitalism, (neo)
liberal ideology, and the decline of the nation-state. Nonetheless, they also argue that
the connection between the world economy and the role of the nation state has not
changed significantly since the late 19th century. They hold too that the nature and extent
of global free market capitalism, and its legitimating neoliberal ideology, is today not
appreciably different from what it was a century ago. However, they, and other sceptics,
18
argue that an intervening period, dating roughly from the middle 1940s to the late 1970s
and characterised by a reformist “welfarist” variant of capitalism (see the next part of
this learning unit), differentiates the late 19th century from the present. On the basis,
though, of the steady dismantling of the welfare state from the late 1970s, qepitomised
by “Thatcherism” in the UK and “Reaganism” in the USA, some sceptics argue that, in
important respects, the contemporary era represents a regression to the (neo)liberal
free market capitalism of the 19th century (see Foster (1999) and the discussion of the
effects of globalisation on the state further on the learning unit). They contend, therefore,
that the claims made about globalisation are insufficiently grounded, as is the need for
new concepts and theory. Sceptics have been accused, however, of using a narrowly
conceptualised empirical methodology as the basis for their rejection of the concept
of globalisation. There are, nonetheless, also sophisticated theoretical arguments that
ground a skeptical position (see Scott (1997) – the position of which we elaborate on later
in this learning unit, and Rosenberg (2000), who provides a complex but very interesting
philosophical critique of theories of globalisation).
Transformationalists, such as Amin (1997), reject both hyperglobalist and skeptical positions
as being too excessive, and hold a variety of positions between these extremes in the
debate on globalisation. Held et al (1999) characterise a transformationalist position
as one which entails a provisional acceptance of the emergence of a new form of
globalised society. The transformationalist, unlike either the hyperglobalist or the sceptic,
conceptualises globalisation as an incomplete and largely indeterminate phenomenon.
They view globalisation as an extremely subtle and complex aspect of contemporary
reality that has to be analysed very carefully. Transformationalists refer to an increasing
interdependency and reciprocity between local, regional, national, and international
aspects of globalisation. From a transformationalist view, globalisation has historical
continuities and discontinuities, and they tend to per iodise globalisation in terms of
aspects such as the intensity and volume of global exchanges and interdependencies
over time (see Held et al, 1999).
Transformationalists, along with some hyperglobalists and sceptics, are concerned about
global inequalities of power and wealth and global environmental problems. They also
tend to attack the neoliberal ideology that frequently accompanies the discourse, practices
and occurrences associated with globalisation, for reducing democracy to participation
in the market as a consumer (see Frank, 2001). They also criticise the related neoliberal
collaboration between TNCs and governments because it weakens democracy (see Hertz,
2001; Monbiot, 2000). We elaborate on the link between neoliberalism and globalisation
below, but one important reason why neoliberalism weakens democracy is that the state
leaves more and more public and social issues to the market. The market, rather than
the people affected/involved, is thus what ultimately determines the nature, quality and
provision (if at all) of what are really public, social goods, such as health care, education,
transport, pensions and so on – goods that we should have the definitive say about.
At first glance, the transformationalist position seems to be the most “reasonable” position
to hold in the debate about globalisation. Some critics, however, have argued that it
is precisely the very “temporariness” of this position that is also its greatest weakness.
While the transformationalists are trying to do conceptual and theoretical justice to a
complex and elusive problem, their analyses of globalisation have been criticised as
19 SOC2602/1
vague and unconvincing. For example, the attempt to “periodise” and identify “degrees”
of globalisation from past to present tends to contradict the contention that it is a “new”
phenomenon.
As for the question of whether globalisation is inevitable and irreversible or not, sceptics
and, to a lesser extent, transformationalists, do not see globalisation as “given”, that is, as
something that is here, now, and to stay. On the other hand, hyperglobalists, and indeed
most popular commentators on globalisation, do take it as “given”. In fact, most view it
as inevitable and irreversible, and as somehow being independent of human agency,
regardless of whether they think it is a “good thing” or not. In other words, the prevailing
view is that there is not much that we can do about globalisation. We should accept and
adapt to it, perhaps at most trying to shape the way in which it unfolds. In this respect,
those who argue that globalisation is negative in its consequences, mostly either throw
their hands up in despair, or urge that we learn to offset as best we can the damage that
globalisation can do and has done.
Those that think that globalisation will ultimately benefit us all advocate that we should all
get onto the globalisation “bandwagon”, and do everything we can as quickly as possible
to facilitate and hasten its unfolding – and governments everywhere, including South
Africa’s, tend to take this view. That is, that capitalist, neoliberal globalisation is inevitable
and irreversible, and that policy must be couched in terms of both making the most of
the benefits that globalisation has to offer, and avoiding the negative implications of
not doing so. A great deal of policy activity by governments all over the world is, in fact,
couched in precisely these terms – that is, in terms of making the best of globalisation.
Your grasp of this issue, as well as your critical understanding of globalisation in general,
will improve as you work through the next few parts of this learning unit.
ACTIVITY 2.3

Think about the debate on globalisation with reference to the hyperglobalists,
sceptics and transformationalists. Then, write down your answers, with reasons, to
the following questions:
(1) Does globalisation exist?
(2) What are the causes, characteristics and consequences of globalisation?
(3) Is the idea or concept of globalisation real or make believe?
(4) Do we need a theory of globalisation to capture what it is?
2.2.2 Globalisation encourages a “culture of consumerism”

Earlier on in this learning unit, we discussed some of the most salient interrelated
socioeconomic, technological, political and ideological aspects associated with
globalisation. We pointed out that contemporary global society is neoliberal, capitalist
and profit-orientated, and that the main agents of our rapidly changing global capitalist
system are a relatively small number of enormously rich and powerful multinational or
20
transnational corporations (MNCs or TNCs). We also pointed out that, in the pursuit of profit,
these massive corporations are fundamentally changing the nature of the world economy
– the relative importance of different sectors of the economy, the nature of production,
the nature of work and employment, and the distribution of the fruits of economic activity
and so on. We emphasised that the TNCs activities are bringing about an increasing global
polarisation of wealth, poverty, opportunity, and effective marginalisation. The dualistic
notions of “core” and “periphery” and “inclusion” and “exclusion” were used to describe
the growing global contemporary stratification of wealth and privilege, and poverty
and deprivation between the rich countries in the “north” and the poor countries in the
“south” and even between elite and non-elite in both the poorer and richer countries.
We also discussed the view that there is an almost symbiotic interrelationship between
these changing socioeconomic characteristics, and between salient technological,
political and ideological features of the contemporary global capitalist era. Burgeoning
developments in ICT, for example, produced and/or used by the TNCs themselves, have
greatly facilitated their changing activities and their increasingly global reach and sphere
of operations. Moreover, the capitalist free market system has expanded, since states all
over the world have become increasingly friendly to TNCs. This is associated with policies
of deregulation, liberalisation and privatisation which are often justified in terms of an
“inevitable” development towards a neoliberal world order (which we have already
problematised). Many observers argue this view, which furthers the profit-oriented cause
of the TNCs and helps to justify their activities and the resulting global polarisation of
power and wealth. Neoliberalism not only enables states to claim that they cannot do
anything about the escalating inequality, but it also enables them to claim that intervention
in this regard is indeed undesirable, given the inviolability of the principles associated
with the free market. It is this ideology, and its associated “culture of consumerism”, that
we are concerned with here.
On the globalisation of a “culture of consumerism”, Burbach et al (1997:22–23), in observing

the effect of contemporary capitalist globalisation on culture, point out that there is a crass
materialism and fetishism of commodities that is at the core of contemporary capitalism.
It is a major virus inherent in capitalism as it spreads to every nook and cranny of the
world. It eats away at the very fabric of society, making people more and more cynical
as they see that the rich take what they want, and then taunt the rest of society through
the media, the movies and advertising with the ‘’good life’’ of consumerism.
They hold that any other cultural values and norms that may once have bound people
together and encouraged respect for the law (which, perhaps only ideally, involves the
codification of social values and norms), are now subject to growing “de-legitimisation and
breakdown”. They argue that the mass media, through its enshrinement of consumerism,
has now so permeated virtually all societies of the world – First, Second and Third –
that rampant materialism is the dominant ethos. Be it the advanced and hedonistic
consumerism of the First World or the migration of people from the Second and Third
Worlds to the metropolitan centers, the goal and objective is the same – to gain access
to material luxuries and the good life. Except for a very few isolated pockets, there are
no longer totally separate or independent cultures and societies. They have now all been
penetrated by a specific form of secularism, the market economy which drives people to
possess commodities. A “permissive cornucopia” has become the new utopia replacing
21 SOC2602/1
old religious and ideological values in the world. The Western world, through the media,
spreads materialism and consumerism as the paramount values. In 1965, there were
only 180 million television sets in the world. Today there are well over a billion. With one
television for every five people, almost everyone in the world has a visual conception
(colored of course by the ideologies and biases of the media) of what other people in
distant countries or continents are doing and how they are living. Provincial, isolated
views of the world are eclipsed, making interests more global and, at the same time,
more insatiable. Those in a position to participate in the permissive cornucopia sold by
the media orient their lives around the accumulation of material pleasures and goods to
the detriment of more important values that deal with the quality of life. Simultaneously,
much of the world’s population, unable to obtain many of these goods, grows frustrated,
resentful and rebellious.
Burbach et al (1997:103–105) hold that commercialism in the USA, in particular, and its
associated culture of consumption and consumerism, has had a pervasive nihilistic and
community/family bond-breaking effect on those (in the USA and wherever on the globe
these values are disseminated by the mass media) unable to materially “buy” into this
world-view. They (Burbach et al, 1997:104) argue that the images that corporate America
uses to sell its culture of consumption to the public are those of comfort, convenience,
machismo, femininity, violence and sexual stimulation ... the primary motivation of the
corporate world is to make profits, and their basic strategy is to convince the public
to consume. These institutions have helped create a seductive way of life, a culture of
consumption that capitalises on every opportunity to make money. Market calculations
and cost-benefit analyses holds way in almost every sphere of US society. Corporate
commercialism feeds on and develops some of the basest tendencies of human nature.
It fetishises love, foments rank consumerism, generates mediocrity, augments selfish
tendencies and encourages aggressiveness. These values, while edging out non-market
values that are more community and family oriented, play upon and accentuate the
individualism that has permeated US society throughout much of its history. And for ...
groups at the lower income end of ... society, ... their inability to purchase many of the
pleasures and goods hyped by rampant commercialism leads to deep-seated despair and
nihilism. They feel that their situation is hopeless, that they are doomed to live on the
margins, denied access forever to all that corporate America holds up as the ‘’good life’’.
Burbach et al (1997:105), therefore, link contemporary negative socioeconomic trends,

ranging from unemployment to crime, to the symbiotic relationship between neoliberal
government policies and the activities of the TNCs. They also add that rising rates of crime,
and drug-dealing in particular, can also be understood in terms of the perception (some
would say the reality) among the poor and marginalised that such activity constitutes one
of the quickest and most lucrative ways to tap into the consumerist “good life”, especially
in the increasing absence of formal employment opportunities. (Note that the idea here
is not to eulogise or call for the reinstatement of religion or “family values” and the like.
The point is that the globalisation of consumerism subordinates all other values and/or
commodifies them.)
The plight of the homeless and the underclass in general makes their living conditions
increasingly indistinguishable from those of people living in the Third World. In all the
major cities of the United States, one commonly sees people begging in the streets,
22
scouring garbage for bits of food, and living in squalid sub-human conditions, making
their lives similar to many in cities such as New Delhi, Sao Paulo, San Salvador, and informal
settlements in South Africa. The percentage of the destitute may still be larger in Third
World cities, but as the corporate and financial elites of the United States internationalise
their activities, the numbers and percentages of the dispossessed and downtrodden in
America are increasing.
We live in a world in which ‘’a minority enjoys a grand banquet while large numbers are
castaways’’ (Burbach et al, 1997:143) and in which there is a profound sense of despair
and nihilism. The poorest people – be they in the United States, Mexico, the Philippines
or Great Britain – feel they are trapped, that neither they nor their children have any
hope of escaping from a life of poverty. Besieged by the media hype that the good
life of consumerism is the only way to live, the poor continually face those who are
prosperous or well-to-do, those who have a piece of the modern material dream. This
type of environment naturally breeds complete despair, and a turn to crime, alcohol and
drug abuse (Burbach et al, 1997:144).
According to Burbach et al (1997:144–145) the globalisation of a “culture of consumerism”

does not affect only poor people negatively. Even among those ‘’middle sectors’’ around
the globe who have access to much of the material world, there is a sense that one’s life is
controlled by a ‘’deus ex machina’’ comprised of the ‘’marketplace’’. Many feel bound by
a daily grind in which all they can do is try to survive though continual hard work. They
have no time or space to improve the quality of their lives or that of their neighbors. Under
globalisation, it is a dog-eat-dog world for much of humanity. Who can worry about the
decline of the environment or unrepresentative political systems when it is difficult to
eke out a living on a day-to-day basis?
These extracts from Burbach et al (1997) resonate with the hyperglobalists, and, to a
somewhat lesser extent, the skeptical views in the debate on the globalisation of culture.
However, despite Held et al’s (1999) rejection (for the most part) of these two positions, they
express a similar view in places. They claim, for example, that transport technologies, and
telecommunications technologies, including broadcast, radio, music, television, movies
and satellite, are owned and controlled by massive media and other TNCs – whose main
motivation is the pursuit of profit (Held et al, 1999:341–375). It is precisely these TNCs that
have generated the contemporary globalisation of a “popular” culture, expressed most
saliently in the form of the consumption of goods associated with ‘’Coca-Cola, Madonna
and the news on CNN’’.
Furthermore, Held et al (1999:368) also emphasise the importance of today’s transport

and ICT, because they are intensively used for business and commercial communications
as well as for the production, transmission and reception of popular culture. Elite cultures,
high cultures, academic and scientific cultures, while obviously making use of these
technologies, and occasionally featuring as content within them, are drowned in the high
seas of business information systems and commercialised popular culture. No historic
parallel exists for such intensive and extensive forms of cultural flow that are primarily
forms of commercial enrichment and entertainment ... this phenomenon has historic
predecessors ... but in scope and scale ... is dwarfed by today’s industry.
23 SOC2602/1
Held et al (1999:368) argue that TNCs (particularly dedicated media corporations), whose
‘’cultural reach and power is historically unparalleled’’, are transforming the entire ensemble
of transport and media and ICT industry in the interest of private profit and ownership
rather than any cultural values. Consequently, ‘’even though most people remain rooted
in a local or national culture and a local place, it is becoming increasingly impossible for
them to live in that place disconnected culturally from the world in which it is situated’’
(Held et al, 1999:369). Instead, they are locked into a popular, consumerist culture.
Finally, Held et al (1999:372) point out that the ownership of culture industry MNCs is
overwhelmingly Western and, within that, predominantly American. British, German,
French, Dutch, Australian and Japanese corporations have a stake, but often on the
basis of ownership of American-based subsidiaries. The majority of export markets are
controlled by these corporations. Thus, there is a flow of imagery, genre and content
mainly from the USA and some Western cultures to other Western states and most of
the developing world. In the end, Hollywood, Microsoft and AT&T are in the business of
making money – not of founding alternative centers of political identity and legitimacy.
Yet the huge flows of information, people and imagery that circulate around the globe,
crossing borders with impunity, have changed the context in which national projects of
any kind must develop (Held et al, 1999:374) and this context is informed by a culture of
consumerism.
ACTIVITY 2.4

Watch the following YouTube clip and then relate it in your answers to the questions
below:
https://www.youtube.com/watch?v=QeXvtz0_Ex0
https://www.youtube.com/watch?v=riK3dlgusrI
following key words to search for the video. Key words: “causes-globalisation
animation” for the first video and, “Immanuel Wallerstein, global systemic crisis and
struggle for a post-capitalist world” for the second video.
(1) What is a “culture of consumerism”? Explain how this phenomenon comes about.
(2) What is meant by the idea of a world or global-capitalist system? How did this
system come about?
(3) Is there a crisis of capitalism? If so, who is affected? Explain your answer.
Economic developments are driven by ideas. These ideas are shaped into markets that
produce economic goods and labour. Economic goods that are not vital to human survival
draw more income because they appeal to our sense of status, ego, greed and so on because
they are not “needed” items; having them translates into “wealth” and status for their owner.
This value system of acquiring and accumulating unnecessary goods spreads through the
24
media and social media, advertising or just by word of mouth. The result is more demand
for products that are now referred to as consumer items and we become the consumers of
these items. More demand means more factories and more environmental degradation.
With a change in social values comes a change in priorities; the earth and its resources are
ignored, so are people, animals and healthy living. Power, greed, consumerism and other
vices replace the former values. Poor countries and nations do not possess the economic
power or “capital” to purchase these consumer items and are thus marginalised in the media
and in reality by, for example, being excluded from being allowed to purchase these items
or having to purchase them at exorbitant prices. The irony, however, is that much produc-
tion and (ab)use of raw materials takes place in the poor countries for use in rich countries
that have the capital, machinery and skills/knowledge to facilitate this.
2.2.3 A theory for the globalisation of a culture of consumerism

Leslie Sklair (1995) offers a theory of the globalisation of a culture of consumerism (or
a “culture-ideology of consumerism” as he prefers to call it) linked to its central role in
the “transnational practices” of a “transnational capitalist class” (TCC). Sklair argues that
this TCC serves to legitimate the hegemony and promote the interests of “transnational
corporations” (TNCs), which amounts to legitimating and promoting profit. This, for
Sklair, is what the culture-ideology of consumerism in the contemporary global capitalist
system is all about. In other words, the TCC disseminates a culture of consumerism that
facilitates the survival and promotion of the contemporary global capitalist system. (More
recent contributions to a variety of theories of cultural consumerism linking the interests
of nation-states, state and other elites, and the profit orientations of large multi- or
transnational corporations, can be found in the writings of Monbiot (2000), Hertz (2001)
and Frank (2001).)
Sklair (1995:6–8, 20–21, 60–61) argues that transnational practices (TNPs) in the
contemporary global capitalist system occur in and consist of a totality of interrelated
and mutually reinforcing economic, political and cultural-ideological levels or spheres.
The USA, in his view, is hegemonic in all three spheres, but other countries and coalitions
of various kinds share hegemony in some spheres to varying degrees. He holds that the
contemporary global capitalist system is now qualitatively different from previous phases
in the development of capitalist society. It has changed and continues to do so, because
it is driven, for the most part, by the qualitatively changing nature of capitalism – from
an international capitalist system to a transnational, global one. He argues that each
of the three levels of the global capitalist system has its own agent(s) of transnational
practice, although in reality, these agents often occupy overlapping positions and exercise
overlapping functions in each sphere. According to Sklair, TNCs are the main agents of the
transnational economy, a “still-evolving” transnational capitalist class is the main agent
of TNPs at the level of politics, and the main agents of transnational cultural-ideological
practices of consumerism are the transnational mass media, also controlled by the TCC.
TNCs produce commodities and provide services, but they also need to sell them.
The transnational capitalist class produces the political environment within which the
products of one country can be successfully marketed in another. The culture-ideology
of consumerism produces the values and attitudes that create and sustain the need for
the products. These are analytical rather than empirical distinctions. In the real world,
25 SOC2602/1
they are inextricably mixed. TNCs get involved in host country politics, and the culture-
ideology of consumerism is largely promulgated by the TCC through the transnational
corporations involved in mass media and advertising. Members of the transnational
capitalist class often work directly for TNCs, and their lifestyles are a major exemplar for
the spread of consumerism (Sklair, 1995:60).
Sklair combines both culture and ideology in the predominant consumerism, because
the fact that we consume, what we consume and why we consume (that is, why we need
or want particular things), is determined both culturally and ideologically. By this, he
means that consumption patterns are not necessarily related to needs, and/or shaped by
local culture, because they are increasingly being shaped by the transnational practices
of the TNCs and the TCC in terms of their interests. Sklair (1995:48–49) holds that culture
always has an ideological function for consumerism in the capitalist global system, so all
cultural transnational practices in this sphere are at the same time ideological practices,
thus cultural-ideological ... The idea of cultural-ideological transnational practices and,
in particular the idea of the culture-ideology of consumerism in the global system, are
conceptual tools in the theory of the global system. Global capitalism does not permit
cultural neutrality. Those cultural practices that cannot be incorporated into the culture-
ideology of consumerism become oppositional counter-hegemonic forces, to be harnessed
or marginalised, and if that fails, destroyed physically. Ordinary so-called counter-cultures
are regularly incorporated and commercialised and pose no threat, indeed through the
process of differentiation (illusory variety and choice), they are a source of great strength
to the global capitalist system. For example, the celebrations of the twentieth anniversary
of the student revolts of 1968 became a media event in Europe, less so in the Americas,
and were relentlessly commercially exploited, with the willing and presumably lucrative
participation of many of those who had then been (and still are) dedicated to the overthrow
of the capitalist system. Consumerist appropriations of the bicentennial of the French
Revolution are another interesting example. The culture-ideology of consumerism is, as
it were, the fuel that powers the motor of global capitalism. The driver is the transnational
capitalist class, but the vehicle itself is the mighty transnational corporation.
Sklair (1995:46–49) argues that, as the global capitalist system has unfolded, it has become
increasingly characterised by the selective inclusion and exclusion of people at economic
and political levels (as we said early on in this learning unit). Economic globalisation is,
for example, characterised by the decreasing importance of the manufacturing industry
and organised labour with all the usual benefits it affords workers. There is an increasing
emphasis on the service sector and a strong trend towards casualised, non-unionised
labour with few benefits, and decreasing numbers of employed generally. However,
this “brave new economy” uses cheap labour profitably wherever it can be found in
the (usually, Third) world. This is due to the ability of TNCs to quickly and easily relocate
parts of the production process anywhere they like, especially the labour – rather than
capital-intensive parts of the production process. Politically, the tendency is towards the
increasing irrelevance and exclusion of subordinate classes. In parliamentary democracies,
voting is seldom compulsory and turn-out is usually low. ‘’While political organisation is
usually unfettered, the structural obstacles to genuine opposition to the capitalist system
are such that there are rarely any serious challenges to it’’ (Sklair, 1995:47). Anything like
a serious challenge can be countered successfully by the TCC in and via the state, by
26
mobilising the army, police, and other sectors of the “establishment”. In one-party states,
political participation is actively discouraged and repressed, and challenges generally are
usually really about shifting people at the top (in the form of a coup d’état), rather than
about changing the nature of the local and global capitalist system.
However, at the level of culture-ideology, things are totally different – here global capitalism
is concerned with including all classes (and it goes without saying that the bourgeoisie are
already included). In Sklair’s (1995:47–8) words, the cultural-ideological project of global
capitalism is to persuade people to consume above their own perceived needs in order
to perpetuate the accumulation of capital for private profit, in other words, to ensure
that the global capitalist system goes on forever. The culture-ideology of consumerism
proclaims, literally, that the meaning of life is to be found in the things that we possess.
To consume, therefore, is to be fully alive, and to remain fully alive we must continuously
consume. The notions of men and women as economic beings, or political beings, are
discarded by global capitalism, quite logically, as the system does not even pretend to
satisfy everyone in the economic or the political spheres. Men and women are consumers.
The point of economic activity for ordinary members of the system is simply to provide
the resources to be consumers, and the point of political activity is to ensure, usually
through inactivity, that the conditions for consuming are maintained. This system has
been evolving for centuries, first for bourgeoisies all over the world, then spreading to
the working classes in the First World, and slowly but surely penetrating to those with
disposable income everywhere.
TNCs, for example, operate worldwide and spread – in a variety of ways – the culture-
ideology of consumerism to even the poorest regions of the globe, including the poorest
Third World countries. According to Sklair (1995:57), modern techniques of communication
have intensified the demonstration effect whereby the practices and beliefs of one society
are introduced to other societies and have increased the speed with which consumption
patterns common to one socio-cultural grouping spread to all corners of the world. Few
will wonder why the products and lifestyles of the industrialised world seem desirable
and relatively accessible to many in the developing countries.
According to Sklair (1995:71), there is a segment of the transnational capitalist class (TCC)
who are ‘’professional purveyors of the culture-ideology of consumerism’’, which involves
‘’the mass media and promotional personnel whose task it is to sell the consumerist goals
of the global capitalist system to the masses. These goals have to be sold to producers,
citizens and consumers’’. For Sklair, this class is motivated to perform this function for
a number of reasons. These include that they ‘’tend to have global rather than local
perspectives on a variety of issues; they tend to be people from many countries, more
and more of whom begin to consider themselves ‘citizens of the world’ as well as of their
places of birth; and they tend to share similar lifestyles, particularly patterns of luxury
consumption of goods and services’’. Sklair (1995:71) constitutes the TCC as follows:
– TNC executives and their local affiliates.

– Globalising or globalisation-oriented state bureaucrats.
– Capitalist-inspired politicians and professionals.
– Consumerist elites (merchants, media personnel, etc).
27 SOC2602/1
Elaborating on the nature, function and motivation of the TCC, Sklair (1995:71–72) argues
that the TCC ‘’sees its mission as organising the conditions under which its interests and
the interests of the (global capitalist) system (which usually but do not always coincide)
can be furthered within the national and local context’’. They are thus involved in one
way or another in the political struggle between capital and labour in various forms of
local and transnational political organisational forms, often using the power of TNCs
to influence local politics and labour in particular. They, especially those involved in
the ‘’brain drain from indigenous to transnational enterprises, mainly ... TNCs’’, tend to
glamorise transnational over domestic practices, and, when it comes to their domestic
origins, they tend to create a so-called “comprador mentality” (a local “buy-in”) there, by
politically, ideologically and culturally trying to ‘’persuade co-nationals that their interests
are identical with, or at least best served by, those of the TNCs’’.
Sklair points out that, in today’s unprecedentedly unequal global capitalist system, it
has become more important than ever for the powerful and privileged (the TNCs and
the TCC) to be able to exercise effective hegemonic control, especially over those most
marginalised from the “good life” enjoyed by the few. Some sort of consent to the status
quo must be manufactured if it is to endure. Fortunately, (for those who benefit from
the status quo that is), according to Sklair, it is precisely within the cultural-ideological
sphere where the greatest opportunities have opened up for hegemonic control (Sklair,
1995:85–86). In large part, this is based on the development of modern communications
technologies, which have emerged within and as a result of the innovation characteristic of
the global capitalist system. This technology is now owned and controlled by a few TNCs
(Sklair, 1995:87) who basically own the media industry, and for whom national boundaries
are virtually meaningless. These TNCs strive for total control in the production, delivery,
and marketing of what we can call the cultural-ideological goods of the global capitalist
system. Their goal is to create a “buying mood” for the benefit of the ... media, advertising
and consumer goods manufacturers. “Nothing in human experience has prepared men,
women and children for the modern television techniques of fixing human attention
and creating the uncritical mood required to sell goods, many of which are marginal at
best to human needs” ... by the age of 16, the average North American youth has been
exposed to more than 300 000 television commercials.
The mass media do many things for the global capitalist system. Advertisements speed
up the circulation and consumption of commodities. As media consumers get younger
and younger, e.g. as more young children watch greater amounts of television, so the
dominant culture-ideology of consumerism becomes inculcated from an earlier age. This,
according to Sklair, ‘’creates the political/cultural demand for the survival of capitalism. The
systematic blurring of the lines between information, entertainment, and promotion of
products lies at the heart of this practice” (Sklair, 1995:87). For Sklair (1995:88), it is not that
a culture of consumerism is new. He points out that capitalist elites have long subscribed
to one or other variant of such a culture to varying degrees. What he thinks is indeed
new and of major import today, “is a reformulation of consumerism that transforms all
the public mass media and their contents into opportunities to sell ideas, products, in
short, a consumerist worldview”.
Here he gives a different example of the “selling” of a culture of consumerism to the

masses, that of the seductively designed and ubiquitous shopping malls geared to
28
enhance the consumer experience – and here again, people are exposed to the shopping
mall culture from childhood onwards, even in the poorest parts of the Third World. In the
case of the latter, the malls are designed to cater for expatriates and the local elite. The
impoverished majority can only look on in awe and envy – and hope that they too may
one day, somehow, join the “banquet”. Goods, according to Sklair (1995:89) ‘’are framed
and displayed to entice the customer, and shopping becomes an overtly symbolic event’’.
The symbols and images inherent in the malls and advertising are crucial. Regarding the
dissemination of a culture-ideology of consumerism, they ‘’play a central part, constantly
created and circulated by the mass media’’. The result is the creation of a lifestyle and
self-image “ideal” defined by consuming and from which few people are able to escape.
The USA has played, and continues to play, a central role in universalising this consumer
culture-ideology. According to Sklair (1995:90) through Hollywood, and the globalisation
of the movies, via Madison Avenue ... the modern advertising industry, to the more
geographically diffuse but ideologically monolithic television net-working conceptualisers,
the transnational capitalist class in the United States has assumed leadership of the
culture-ideology of consumerism in the interests of global capitalism in the twentieth
century ... The universal availability of the mass media has been rapidly achieved through
relatively cheap transistor radios, cassette recorders and televisions, which now totally
penetrate the First World, almost totally penetrate the urban Second and Third Worlds,
and are beginning to penetrate deeply into the countryside in every country. Thus, the
potential of global exposure to global communication, the dream of every merchant in
history, has arrived. The socialisation process by which people learn what to want, which
used to occur mainly in the home and the school, is increasingly taking place through
the media of the global communications industries.
Sklair (1995:94–95) summarises his theory in the following way:
The global system is made up of economic transnational practices and, at the highest
level of abstraction, these are the building blocks of the system. The political practices
are the principles of organisation of the system. Their agents work with the materials on
hand, but by manipulating the design of the system they can build variations into it. The
cultural-ideological practices are the nuts and bolts and the glue that hold the system
together. Without them, parts of the system would drift off into space. In order to work
properly the dominant forces in each of the three spheres have to monopolise the key
resources for which there is great competition. The transnational corporations strive to
control capital and material resources, the transnational capitalist classes strive to control
global power, and the transnational agents and institutions of the culture-ideology of
consumerism strive to control the realm of ideas. Effective TNC control of global capital
and resources is almost complete. There are few important national resources that are
entirely exempt from economic transnational practices. Transnational capitalist classes
rule directly, through national capitalist political parties or social democratic parties
that cannot fundamentally threaten the global capitalist project, or they exert authority
indirectly to a greater or lesser extent as the price levied on non-capitalist states as a sort
of entrance fee into the global capitalist system. In the last resort, it is the global control
of capital and labour that is the decisive factor for those who do not wish to be excluded
from the system. The control of ideas in the interests of consumerism is almost total. The
ideas that are antagonistic to the global capitalist project can be reduced to one central
29 SOC2602/1
counter-hegemonic idea, the rejection of the culture-ideology of consumerism itself.
Without consumerism, the rationale for continuous capitalist accumulation dissolves. It
is the capacity to commercialise and commodify all ideas and the material products in
which they adhere, television images, advertisements, newsprint, books, tapes films and
so on, not the ideas themselves, that global capitalism strives to appropriate.
He summarises the application of his theory to the poorer parts of the world, particularly
the Third World, as follows (Sklair, 1995:186–187):
The choice of high prestige, relatively costly non-essentials is deliberate, because it is

precisely the contradiction inherent in these “mass-luxury” products of foreign origin
that symbolises the problem that the global capitalist system faces in extending itself
over the whole world. The questions remain: can capitalism ever achieve its global goal
of transforming all the people of the world into genuine consumers? Can it even meet
the basic biological needs of the world’s people? Despite the ingenuity of the TNCs, the
efforts of the transnational capitalist class, and the hegemony of the culture-ideology
of consumerism, the answers are by no means clear. This sentiment encapsulates what
many Third World thinkers fear most about the impact of the TNCs on their countries in
the future. The spread of the new international division of labour, in its widest sense, has
indeed brought many jobs and a good deal of prosperity to the transnational capitalist
class and other groups in the Third World. Nevertheless, many in the Third World believe
that, despite the apparent successes of the culture-ideology of consumerism, the material
benefits, such as they are, will never percolate through to the masses ... products developed
in advanced countries are likely to have in egalitarian effects when introduced to poor
countries and may, under certain conditions, cause losses among some or all consumers ...
capitalism will also have left behind in the Third World, as its most enduring contribution
to Third World development, an almost unfettered and wild consumerism, undergirded
by the new electronic entertainment technologies ... most would agree that the TNCs
have played a crucial role in raising consumerist expectations that cannot be satisfied
within the foreseeable future for the mass of the population in the Third World.
ACTIVITY 2.5

Summarise Sklair’s theory of the globalisation of a culture of consumerism, with
particular reference to both the role of TNCs and the TCC, and the implications that
the globalisation of this culture has for both the rich and the poor.
30
2.3 SUMMARY
We hope that we have helped you to gain a critical understanding of the
concept of globalisation, make it your own, and be able to apply it in the
learning units that follow to social change in South Africa. In brief, we have
argued that the world is indeed changing in the sense that it is increasingly
“global”. We have suggested that this is largely a function of processes set
in motion by the emergence of industrialisation and capitalism, associated
technological developments, and (neo)liberalism, particularly from the 17th century
onwards. We said that the increasingly global character of the world is also characterised
by an unprecedentedly unequal and disproportionate distribution of its advantages and
disadvantages. Capitalist neoliberal globalisation tends to entail an increasing tendency
towards an ever richer and more powerful and privileged minority in the centers (and to
a lesser extent in the peripheries) and an increasingly impoverished, disempowered and
disadvantaged majority, excluded from and marginalised within the global capitalist
system. We suggested that a culture of consumerism plays an important role in justifying
and sustaining this situation and we said that this is particularly true of Africa. We have,
however, also suggested that the “fact” of the existence, characteristics and consequences
of globalisation is highly contestable. We also said that it is inherently neither utopian
nor dystopian. Nor is it irresistible or inevitable. It can be criticised, challenged, shaped
and even changed. This is a very important premise underlying our application of the
concept to social change in contemporary South Africa.
For instance, Cohen and Kennedy (2000:361–363) agree that the pressures generated by
TNCs and the media are immense, and that this scenario represents a real danger, but they
counter that it is not inevitable or irresistible and thus not necessarily disempowering. They
argue that, despite the global onslaught of the TNCs and the media, there is always space
for personal and group autonomy and creativity. They also argue that we do not simply
“swallow whole” the ideology and culture of consumerism associated with globalisation
– we tend to more or less consciously select elements from this “alien invasion” and
incorporate them into our own consciousnesses and lifestyles. Cohen and Kennedy call
this “hybridisation” or “glocalisation” (2000:377), the process of ‘’how global pressures and
demands are made to conform to local conditions. Whereas powerful companies might
‘customise’ their product to local markets, globalisation operates in the opposite direction.
Local actors select and modify elements from an array of global possibilities, thereby
initiating some democratic and creative engagement between the local and the global’’.
On the question of globalisation bringing about a clash of civilisations and ethnic/cultural

conflict and violence, that is, that there is and will be an increasingly violent cultural,
ethnic, religious and nationalist response to the individualistic, materialistic and hedonist
consumerism associated with the hegemony of the “western” world, and of the USA in
particular, Cohen and Kennedy (2000:364–366) counter that not all different cultural,
religious and similar groups are equally opposed to all aspects of western consumerism,
or are at least ambivalent about it. They give examples such as environmental and
religious groups protesting quite vigorously about western domination of the United
Nations, the World Bank and the IMF, while wearing Nike footwear and communicating
with each other via popular brands of mobile phones or even electronic-mail from their
laptop computers. They point out that not all cultural and religious conflict is caused by
31 SOC2602/1
or directed at western industrial capitalism. They also point out that different cultures do
not always necessarily “clash”. They already are, and always have been mixed, borrowing
from each other since they first came into contact with each other. Finally, they point out
that there is as much inter and intra-cultural (or ethnic or religious) conflict, as there is
between the “west and the rest”, citing the long-standing (at least in large part – religious)
conflict in Northern Ireland as a case in point.
On the question of whether globalisation will lead to a dystopian future, Cohen and
Kennedy (2000:366–367) cite the fears of trade wars, global unemployment, destructive
financial speculation, the collapse of the poor countries, the “gutting” of inner-cities in rich
countries, the rise of a “barbaric” bourgeoisie in the post-socialist world (and anywhere
else deregulation, liberalisation and the neoliberal advocation of free markets goes hand
in hand with weak or corrupt states) and so on. In this respect, Cohen and Kennedy
(2000:367) respond as follows:
The emergence of a new global age is a painful, uncomfortable and often distressing
process. Not to recognise this pain, discomfort and distress would be to promote a
blinkered perspective, as well as showing a total insensitivity to the many marginalised
and excluded people round the world. The angry and desperate Russians in queues
outside banks bitterly denouncing their country’s flirtation with global capitalism further
demonstrate the point ... But it has to be recalled that Marx himself saw the dual nature of
capitalism. It was both destructive and potentially liberating. Just as capitalism consigned
feudalism and slavery to the dustbin of history (just about), so too it can be argued that
globalisation is undermining nationalism and other impediments to the full realisation
of capitalism on a worldwide scale.
The point they are making is that global capitalism is still unfolding, and that individuals
and groups can still intervene in this process. Thus, ‘’there is no need to collapse into an
impotent sense of predestination’’. While some hold the view that globalisation will be
destructive and dystopian, they (Cohen & Kennedy, 2000:367) argue that this may happen,
but only if ‘’we allow it to be so; if we remain deaf to the cries of help from societies
presently being destroyed; or to the voices of those who still believe in the possibility of
building stable, prosperous societies in which people can live in harmony with nature and
with each other, while spending time in less stressful, more interesting jobs and devoting
an increasing part of their lives to social and cultural pursuits. Technology has made this
dream a possibility; politics must realise it’’.
They also say that the kind of politics that can perhaps make this dream possible can be
based on one of the cornerstones of globalisation (or modern, neoliberal, global capitalism)
itself, namely, modern technology. On the basis of developments in transport and ICT,
social groups can coordinate and mobilise themselves on a global level and organise
global resistance (as the “Greens” do, and as evidenced by the frequent mass protests
against the WTO, the IMF and the World Bank) against the forces and agencies of the
more pernicious aspects of globalisation. It’s not only governments, TNCs and banks that
can “act” transnationally.
Cohen and Kennedy (2000:372) continue that
32
Globalisation has so far done little to diminish the blight of poverty and wretchedness
in which about half of the world’s inhabitants is forced to live. Social movements have
still not proved effective in mobilising efforts to reduce global inequalities. Thus, we
are not dealing with a uni-linear process that will inevitably take us to a better world ...
In itself globalisation will lead to neither a dystopia nor a utopia. The future directions
of global society depend on us as ordinary world citizens, on what moral positions we
choose and what battles we are prepared to fight ... The world remains lop-sided. Many
powerful and wealthy actors profit disproportionately from global changes ... ‘’global
winners’’ use their privileged access to power, wealth and opportunity to feather their
own nests. The TNCs, crime syndicates, rich tourists ... are all major beneficiaries of the
opportunities for transnational activity. It behooves us, however, to remind you, in a final
word, of the many ‘’global losers’’ – the refugees, poor peasants, the underclasses of the
collapsing cities – who still peer through the bars of the gilded cages of the rich and
powerful. The key social challenge of the twenty-first century is to prize open the bars
for these disadvantaged people so that they can discover the transformative possibilities
globalisation has generated. A vibrant civil society and active global social movements
provide far-off glimpses of that benign future.
2.4 SELF-ASSESSMENT QUESTIONS

(1) Define the concept of globalisation and describe its main characteristics.
(2) Describe the historical origins of globalisation and its links to the emergence of a
global, industrial capitalist system.
(3) Discuss the debate that surrounds the concept of globalisation, with reference to the
views of the hyperglobalists, the sceptics, and the transformationlists. Who do you
think is 'right' in this debate? Whatever your answer, give your reasons.
33 SOC2602/1
Learning unit 3
A decolonial approach to globalisation
After completing this learning unit, you should be able to:

• explain where decolonial thinking comes from; what it is said to represent, and “who”
• name some of the main proponents of a “decolonial project” and explain their ideas
• understand decoloniality in the larger scheme of modernity and globalisation
When you have finished learning unit 3, we suggest that you add a summary of this
learning unit to your learning/revision journal including only relevant information.

The approximate time that you should take to work through learning unit 3 is three
(3) hours.
3.1 INTRODUCTION
You have read in the previous study unit what globalisation is and what its impact
in the world is. This study unit engages with and focuses our attention on a not-so-
new phenomenon, but an academically new one in the sense that it has been lying
dormant as we allowed mainly western derived ideas, knowledge systems and theories
to emerge as central throughout the world. Paradoxically, this “passivity” enabled a
form of westernised globalisation, one that has subjected other (alternative) paradigms
and forms of knowing almost into extinction, with the twin processes of elevating
dominant western knowledge systems and simultaneously subjecting any and all forms
of “alternative” or “other” knowledge systems from developing, instead labelling the
latter as “backwards”, “prehistoric”, ancient, “outdated”, “Third World”, and so forth. The
phenomenon of questioning the dominance and subservience and moving beyond that
is known simply as “decolonisation”. It is not so much about “anti-westernisation” as it is
about rediscovering and re-establishing the proper place for such dormant and subjected
global ideas of “the other”, as Said (1978) once wrote of the perceptions westerners have of
non-westerners. From the outset, we prefer to differentiate between the slight variations
in meanings of the terms decolonialism, decoloniality, and decolonisation.
To best understand the “decolonial project” (see Maldonado-Torres, 2011) and where it
comes from, as well as why it is so opposed to westernisation as a measure of knowledge
34
and developmental success in the world, we need to know something about how the world
was fashioned during colonial times, and thereafter under the guise of modernisation,
and then globalisation. These epochs or historical moments are not self-contained and
exclusive, and far from “over”. We argue that the guise in which colonialism is presented
today – the political, cultural and economic conquering of lands and peoples – is very
much extended into the modernisation period and now the so-called globalisation of
the world. The conceptual references might have changed, but not the conditions, which
are more or less the same in terms of who runs the world and those in it.
Open and follow the links below to watch these short video clips on the problem of
colonialism and the emergence of decolonialism as a result of the inhumanity and
destructiveness of the former process.
ACTIVITY 3.1

Watch the following video clips by clicking on the links below and then answer the
questions that follow. Write down your answers in a “revision journal” that you should
keep for your revision notes and to upload to the myUnisa Discussion forums if required.
Video 1: https://www.youtube.com/watch?v=gzGQGBgJUsU
Video 2: https://www.youtube.com/watch?v=I7P0O9bgu9Q
(1) According to video 1, do coloniality and colonialism mean the same thing? Explain
their meanings and your answer in not more than two paragraphs.
(2) In your opinion, what is “internal colonialism” and “external colonialism”? Give
an example of each (video 1).
(3) Complete this sentence (based on the information in video 1): “Colonialism is the
other face of _________.”
(4) According to video 1, what do “decolonial approaches” try to understand and
then do? Answer in three sentences.
(5) What is the meaning of “alienation”, “epistemicide” and “linguicide”, according to
Prof Sabelo Ndlovu-Gatsheni in video 2?
NB. (To access the links you can also copy and paste the URLs directly into the
YouTube search browser. Or, you can also type the following keywords into the
YouTube browser to search for the videos: Video 1: “Decolonial Theory”, Video
2: “Professor Sabelo Gatsheni-Ndlovu on ‘The origins of decolonial education’ ”).
4 Feedback on Activity 3.1
The origin of decolonial thought can be said, ironically, to have emerged with colonialism
which was a process of westernised conquest of territories, lands and peoples from the con-
tinents of Africa, Asia and South America. The USA started out as a colony, but then went
on to become, similarly, a colonialist of culture, ideas and modernity. In fact, modernity is
the other face of colonialism. In education, when a people’s land, knowledge systems and
culture have been destroyed they have been “epistemicised”.
35 SOC2602/1
According to Bhambra (2014:115), the term decoloniality developed in the sociological
theorising about modernity and coloniality by sociologists, Anibal Quijano and María
Lugones, and the semiotician and philosopher, Walter Mignolo. They are among
those who started integrating such thought into the mainstream knowledge that fed
decolonial thinking. Bhambra also sees decoloniality as strongly associated with Immanuel
Wallerstein’s, World Systems Theory (1974), and Latin American Studies on development
and underdevelopment of the Third World, as well as with the Critical Theory of the
Frankfurt School, a group of scholars that fled Nazi Germany to escape the persecution
of Jews and European anti-Semitism to the USA. Critical theory is about emancipation
from all sorts of exploitations and persecutions. Hence, it is not hard to see the association
of decoloniality with these “Third World” theories of underdevelopment and World
Systems theory on the core-periphery-semi-periphery arguments given that these
latter arguments centre on themes of power, exploitation, exclusion and subjection, as
well as on emancipation. Decolonial ideas, however, go further than these theories on
development and underdevelopment to produce their own conceptual arrangements
about rediscovering and remaking identity/ies of “the decolonised”.
3.2 THEORETICAL LEANINGS AND UNDERPINNINGS OF

DECOLONIALITY
Ndlovu-Gatsheni (2014:181–186) identifies “global coloniality” as a major, if not the main
challenge, that is “denying Africans [the] space to create African futures (…).” The term
“global coloniality” is, accordingly, identified as “a modern global power structure that
has been in place since the dawn of Euro-North-American-centric modernity” (ibid. 2014:
181). This global coloniality is constituted and sustained, according to Ndlovu-Gatsheni
(2014:182), by three “interconnected and intertwined issues” including the “coloniality of
power”, the “coloniality of knowledge” and the “coloniality of being”. Each of these three
core aspects to sustaining an unequal and asymmetrical power within global relations,
among nations, and in maintaining a divide between the symbolic “global North” and
“global South” (i.e. through colonialism, modernity and globalisation) is unpacked and
explained below.
3.2.1 Coloniality of power

“What links the modern world system and its global orders is called coloniality of power”
(Ndlovu-Gatsheni, 2014:87). The term, coloniality of power, is a reference to the uneven,
unequal, and asymmetrical ordering of the world, where one-third – situated mainly in
the geopolitical and symbolic north – dominate the system laid out for the rest of the
two-thirds of the world situated in the geopolitical and symbolic south; those who must
yield to and follow this uneven power scheme. According to Peruvian sociologist, Anibal
Quijano (2007:171), this modern world system and its global orders is “based upon racial
social classification of the world population under Eurocentred (sic) world power” (quote
in Ndlovu-Gatsheni, 2014:187).
Colonialism was not only about domination by the more powerful European powers and
later the imperial Anglo-Saxon powers over the resources in other territories outside of their
36
borders, but it was and still is also a subjugation of the different cultures, “races”, and even
religions across the globe. This means that anything different or unlike Euro-Saxon/white
European was subjected to inferior, outcast status in the modern world system. The onset
of further global processes, such as neoliberalism under the banner of globalisation, has
the further impact of suppressing non-Euro-North-American-centered nations and peoples
(Ndlovu-Gatsheni, 2014:183, 187–188) ensuring their support of a growing unequal and
unjust world order by strategic and forced means. One of the unintended consequences
of this imposed power and subjugation of “the other” has been a destabilised world of
contestation of power through, for instance, acts of terrorism, seemingly aimed at the
North, but certainly not confined there.
3.2.2 Coloniality of knowledge

According to Ndlovu-Gatsheni, coloniality of knowledge is what allowed the dominance
of “colonial reason” and imperialism to control the minds and imagination of its subjects,
which, in his words “culminated in colonisation of African minds and destabilization of
African imaginations of the future” (2014:182). Ndlovu-Gatsheni states that “epistemological
colonisation”, which is the colonisation of the mind and imagination, impacted Africans.
Again, quoting Peruvian sociologist Anabel Quijano (2007:169), Ndlovu-Gatsheni states
(2014:194) that this “epistemological colonisation” affected the African’s “modes of knowing,
of producing knowledge, of producing perspectives, images and systems of images,
symbols, modes of signification, over the resources, patterns, and instruments of formalised
and objectivised expression”. Coupled with “global coloniality” which propped up western
modes of knowledge and legitimated its “scientific ways of understanding the world”
(ibid.), the subjugation of mind and body was ensured. In short, this amounted to the
displacement of African culture and ways of being in the world and its replacement with
European/western ways of being. This resulted in the further alienation of the African
from being African. This epistemological colonisation was subsumed under ideas of
modernisation and carried over into globalisation of westernisation as we will see discussed
in the last section of this unit.
3.2.3 Coloniality of being

Ndlovu-Gatsheni (2014:197) states that modernisation, a process of “Euro-North American-
centric” domination, instituted the “colonisation of being” through its racialisation and
classification systems of peoples according to race. Racialisation operated differently in
different contexts, for instance, in South Africa it was legitimised and legalised by an
oppressive illegitimate government, and committed to law by an apartheid oligarchy, but
whatever the context or period, it always has the same outcome, to attribute superiority
to “white” (usually male) and subservience and inferiority to black (including female)
(ibid.). According to Ndlovu-Gatsheni (2014:197), “White races claimed complete being
for themselves and pushed African people into a perpetual state of becoming – a state
of incompleteness.” He states that
“The overarching purpose of racial classification and racial hierarchisation (sic) was
to construct a social system of differentiation of those who could own slaves and
37 SOC2602/1
those who would be enslaved, between those who could claim and own land and
those who would be forced to work on it (…)” – Ndlovu-Gatsheni (2014:197).
The result was that the African was stripped of identity and a cultural richness leading to
what Ndlovu-Gatsheni identifies as a “list of deficits”; from a lack of history, identity and
culture to a lack of a soul, a humanity and what goes with that, including lack of human
rights, right to self-determination and right to self-expression.
Together, coloniality of being, coloniality of knowledge and coloniality of power perpetuate

and sustain, within the system of westernised globalisation and under neoliberal
development, the shackles of enslavement of “the other”. The next section presents
a historical outline of how unequal and asymmetrical power within global relations is
sustained in the emergence of “westernised globalisation”.
3.3 THE HISTORICAL ORIGINS OF GLOBALISATION

In previous learning units we introduced you to the concept and some theorisations
attempting to explain what globalisation is. Here, in this learning unit, we discuss what we
think is a plausible account of globalisation’s historical origins or how it really came to be.
Starting with Cohen and Kennedy (2000:41–59), they argue that the contemporary
dynamics, characteristics and consequences associated with 21st century globalisation
has its origins in 17th century (i.e. 1600s) Europe. They link globalisation historically to
the emergence, development and ultimate expansion of the early industrial capitalist
system of Europe. They believe that the causes of the latter must be found in a complex
combination of economic, social, political, and ideological phenomena that occurred more
or less simultaneously in Europe during that period. What were these developments?
Briefly, a system of more or less modern nation-states began to emerge in Europe owing
mainly to almost continuous competition, conflict and warfare among the various peoples,
communities and territories in the region. “Nation-states” emerged largely as a function
of this state of affairs; they emerged to maintain order (or what they believed order to
be), to collect taxes, develop military force, develop the means of modern systems of
transportation and communication, secure and concentrate resources, improve production
methods for self-sufficiency, and to foster and cement a sense of “national” identity. In
a sense, the endeavours of these emerging nation-states represented an early form of
state-led capitalist industrialisation (this notion, along with the idea of a “developmental
state”, is explained in more detail in later learning units). They helped bring about, or at
least helped create the optimal conditions for the emergence of the industrial revolution
and large-scale industrialisation (i.e. which would be carried over into other places
through colonial conquest). They also, more or less simultaneously, helped bring about
the emergence of a hierarchical and competitive free market, industrial capitalist system
that we see today (21st century).
As these nation-states became more industrial capitalist in character, they entered into
even more conflict and competition with each other over territory and raw materials, and
were constantly searching for new sources of wealth and profit. Once they reached a kind
of “saturation” within their own territories, they thus began to look outwards towards
38
the rest of the world to secure cheap supplies of labour, raw materials, and new markets
to consume their products. From about the 17th century (1600s), up until the late 19th
century in particular (1800s), they proceeded to conquer, colonise and exploit much of
Africa, Asia and Latin America, in the process exporting European (e.g. English, French,
German, Italian, etc) cultures to these places, and, perhaps most importantly, exporting
capitalism (an economic-political system) on a worldwide basis. The European powers
were able to do this because of their economic, technological, military and organisational
powers – powers that they had developed for the most part on the basis of competition,
conflict and warfare among themselves. According to Cohen and Kennedy (2000:53),
“European expansion and colonialism had ... drawn far-flung parts of the world into a
... global economy. However, it had done so often with great cruelty and without the
consent of the colonised peoples”.
In short, it was European imperialism or colonialism that first “connected” people from all
over the world into this global system, and “knitted together” large parts of the world –
forcibly, and on terms firmly dictated by and most favourable to the relatively powerful
colonialists. The same set of complex processes that underpinned and precipitated this
initial “knitting together”, namely, those associated with the emergence of industrial
capitalism in Europe, also underpinned our technological “revolutions” (especially in
transport and ICT) – revolutions that have facilitated further, deeper, and thicker global
“connectedness” today, that is, greater globalisation.
Many factors gave rise to the emergence of industrial capitalism from feudalism (some of
which we have already discussed), but Cohen and Kennedy (2000:47) cite two especially
important ones:
“The creation of a fully commoditised economy in which everything, including land

and labour, had a price and so could be bought and sold in a market (and) the exercise
of, often violent, measures to dislodge self-sufficient peasants and craft producers
from their farms and workshops – so forcing them in ever greater numbers to live
by selling their labour to capitalist entrepreneurs as wage workers.”
Depriving self-sufficient producers from their means of production (their land, animals,
tools, etc.), otherwise called “proletarianisation”, and turning them into wage labourers (or
“proletarians”) was a vital condition for the emergence of industrial capitalism, because
they were now brought under the direct control and domination of capitalists (often
called the “bourgeoisie”). This was important for three reasons. Firstly, capitalists were
now the sole owners of the means of production. They could now organise labour and all
other aspects of production (or the “labour process”) as they liked in order to maximise
profit. A further “bonus” for capital here is that, under the discipline of the capitalist, and
organised in shifts of a given period of time within the factory, the now wage-dependent
worker, supplies “labour power” rather than simply labour. Slave trade and slave labour
facilitated the rise of economic capitalism.
Secondly, Cohen and Kennedy (2000:48) point out that, because workers can no longer
meet their needs through self-employment, they need their wages to buy necessities. In
39 SOC2602/1
other words, they become consumers who form part of the market that capitalism depends
on for the sale of its products and the realisation of profits. Thirdly, in its relentless pursuit
of profit, capitalism competes with and increasingly eliminates all non-capitalist forms of
production (such as peasant and craft production). To do this, and due to competition
between capitalists, capitalism entails the constant, ongoing transformation of the
labour process, both internally (through the way in which it is continually organised and
reorganised, and through the constant introduction of new productive technologies),
and externally (in the form of the constant expansion of capitalism to previously non-
capitalist spheres).
This inherent dynamic of industrial capitalism, that is, of constant change, innovation and
expansion in pursuit of profit, is closely associated with two other characteristics inherent
in capitalism. These are (1) the constant and increasing competition between different
capitalists, and (2) the constant class competition, conflict and struggle (sometimes
open, sometimes hidden) between workers and capitalists over working conditions and
the distribution of profits. Cohen and Kennedy (2000:375) point out that the struggle
between workers and capitalists is a function of the fact that, in capitalism, social
relationships are based on inequality and exploitation, which is what made ‘’goods sold
in the market possible in the first place’’. According to Cohen and Kennedy (2000:48), in
combination, these factors impelled capitalists constantly to find ways to cheapen and
improve their products so as to capture new markets or to displace their rivals. As the
labour force gained in maturity and organisational strength, employers were compelled
to raise the productivity of labour by investing in more advanced plant and machinery
and adopting more streamlined systems of business organisation and marketing. An
important consequence was the tendency for capitalism to expand the productive forces
by developing ever more advanced technology, harnessing the power of science, increasing
the scale of production and developing business arrangements to facilitate greater capital
pooling. Nothing under capitalism ever remains static for long. Rather, constant change,
not only in the productive process but at all levels of society, is inevitable.
The need for a constantly expanding market for its products chases the bourgeoisie over
the whole surface of the globe. It must nestle everywhere, settle everywhere, establish
connections everywhere. The bourgeoisie has, through its exploitation of the world-
market, given a cosmopolitan character to production and consumption in every country
... All old-established industries have been destroyed or are daily being destroyed. They
are dislodged by new industries, whose introduction becomes a life and death question
for all civilised nations, by industries that no longer work up indigenous raw material, but
raw material drawn from the remotest zones; industries whose products are consumed,
not only at home, but in every quarter of the globe. In place of the old wants, satisfied
by the products of the country, we find new wants, requiring for their satisfaction the
products of distant lands and climes.
Two other significant historical phenomena in the emergence of industrial capitalism, the
global capitalist system, and contemporary globalisation, are (1) the rise of “modernity”
or the “modern era” and (2) the growth of “rationality”. According to Cohen and Kennedy
(2000:378), modernity can usefully be dated to the 15th and 16th centuries. Symbolically,
the so-called “discovery” of the “New World” in 1492 and the circumnavigation of the world
can be taken as convenient markers opening the modern era. However, the orientations
40
towards modernity crystallised in the 17th century and spread and accelerated in their
impact during the 18th and 19th centuries with the growth of a questing spirit, a strong
leaning towards the purposive pursuit of material and social “progress”, rationality,
industrialisation, urbanisation and the triumph of the nation state.
Modernity (and the growth of rationality too) is closely associated with the emergence of
“Enlightenment” thought which gradually spread across Europe during the 18th century.
According to Cohen and Kennedy (2000:45), the Enlightenment’s ‘’optimistic view of the
potential for human progress through the power of reason was considerably assisted by
advances in science and philosophy. Enlightenment thinkers saw the importance of critical
reason, skepticism and doubt, but were certain that self-realisation could be attained
through practical involvement in, and attempts to transform, the material world’’.
Enlightenment ideas must be understood as a reaction to the then prevailing, mainly

religious beliefs, that human beings inhabited a largely preordained and given universe
and social order created by God and that no one (perhaps apart from the clergy) was
supposedly able (or allowed) to understand, let alone subject to intellectual scrutiny
and practical change. Enlightenment thinkers used the tools of reason and rationality to
challenge this religious view of the world. They made it clear that they believed science
had the power to enable human beings to choose and shape their own circumstances
and destiny. More to the point, for the purposes of our discussion, Enlightenment thinkers
believed that science could help people rationally bring about individual and wider social
development and progress (Cohen & Kennedy, 2000:45–46). In short, there was a growing
belief in progress and rationality. According to Cohen and Kennedy (2000:49), this was
an important ingredient in the industrial capitalist transformation of society; that ‘’once
established, capitalist rationality and modernity were mutually supportive, each creating
scope for the other’’.
In summary, a mixture of economic, social, political and ideological variables in 17th century
Europe led to the emergence of an industrial capitalist mode of production. Through
colonialism in particular, this mode of production spread all over the world and created
a hierarchical and unequal global capitalist system that relied initially on slave labour, but
onwards enslaved consumerist populations. This modernisation laid the foundation for the
emergence of the socioeconomic, political, geographical and ideological characteristics
and consequences associated with contemporary globalisation.
ACTIVITY 3.2

(1) Write an essay of about three pages in which you discuss the historical origins
of globalisation. In your essay, discuss the link between the emergence of
modernisation, industrial capitalism and globalisation. Refer also to the role of
the modern nation-state.
41 SOC2602/1
3.4 GLOBALISATION AND GLOBAL INEQUALITIES
Leys and Panitch (1998:18–19; see Meiksins Wood 1998) argue that the contradictions
and crises of capitalist neoliberal globalisation are becoming increasingly obvious. This is
because its impoverishing and other effects on the majority of the world’s population are
becoming more and more acute. These effects include the effects of global neoliberalism
on the environment, on rising levels of unemployment, on the affordability of health care,
on homelessness, and even on sport, culture and education (all three of which have now
been commercialised and commodified). Simultaneously, the glowing rhetoric, in the
popular media as well as in academe, justifying the general prosperity that neoliberal
globalisation can supposedly bring about, is becoming increasingly less convincing. It is
probably convincing, if at all, only to those, the elite capitalist minority, who have indeed
benefited from it. In addition, it is again becoming quite clear that the vast majority
of the world’s population are distinctly and unambiguously working class (see Wallis,
1998; Lowy & Mage, 1998 and Ahmad, 1998), whether employed, underemployed or
unemployed. In much of Africa, Central and South America, and Asia, despite the handful
of elites there that benefit from the status quo, ‘’the misery and barbarisms provoked by
‘structural adjustment’ ... or the rape of the public sector ... have done nothing to make
neoliberalism more beguiling to ordinary people anywhere in the Third World’’ (Cohen
& Kennedy, 2000:119). “Structural adjustment” is a reference to severe austerity programs
imposed on poor countries by organisations such as the IMF, in return for loans and/or the
rescheduling of loan repayments. However, it should be noted that, generally, states in
Africa and elsewhere in the periphery were failing to deliver long before the imposition
of Structural Adjustment Programs or SAP’s – due to, among other things, a lack of
appropriate infrastructural and institutional underpinnings, and also corruption. Also,
thinking within organisations like the IMF and World Bank has since shifted somewhat
towards measures other than mere austerity programs and the like. And even workers in
those First World countries that once benefited from capitalism’s “golden age”, are now
subject to the steady dismantling of social welfare systems, insecure and “casualised”
(temporary, part-time and often poorly paid with few benefits) forms of employment,
and rising levels of unemployment. In short, even workers in First World countries are
also “feeling the pinch” of neoliberalism.
Poverty and marginality are thus not restricted to the poorest parts of the world. They
are increasingly to be found in the old “second world”, the better off peripheral countries
and regions, and in the centres of the globalised world too, especially in the form of an
urban poor “underclass” in major cities. The ultimate losers in the increasingly globalised
world are those in the poorest countries exposed to famine, those that are refugees, the
unskilled, the unemployed, and those discriminated against in various ways. Added to
this, the destitute of the world tend to be found at their most concentrated in what were
once the colonies, particularly in Africa, of what are now the richest, most powerful parts
of the world (see also pages 99–115, and pages 134–150 in Cohen & Kennedy (2000);
Hoogvelt (1997)).
42
ACTIVITY 3.3

(1) Why do we say that globalisation is characterised by unprecedented differentials
in power and wealth? While answering this question, write down who is powerful
and wealthy, who is powerless and poor, and where in the world they are. Also
write down what proportions of the world’s population belong in each of these
categories. Finally, has globalisation brought about these inequalities? Do you
think that a non-neoliberal form of globalisation (if possible) would be more
benign than the neoliberal form that predominates today? Explain your answers.
3.5 SUMMARY
This learning unit considered the emergence of decolonial thought, tracing
it back to the problematic global colonial process and what that meant for
Africa’s, Asia’s and South America’s development, in general. It explained
what the processes of coloniality of power, coloniality of knowledge and
coloniality of being are. These concepts help us explain how the process of
global colonialism led to the subjugation of non-western contexts and the
stripping away of power, indigenous knowledge systems, culture, identity and essentially
“soul”.
Coupled with this has been the growth of global capitalism, spread through colonialism,
modernisation and the emergence of neoliberalism. Globalisation, today, is central to
perpetuating the colonial process of economic, political, cultural and human exploitation
begun over three centuries ago.
The next learning unit focuses more narrowly on the social context of South African
development (and underdevelopment) and historical processes that explain where South
Africa is today in the global system, and why.
43 SOC2602/1
Learning unit 4
The global capitalist system, globalisation and South
Africa’s position in the world today
After completing this learning unit, you should be able to:

• explain the relationship between globalisation and the global capitalist system
• discuss the world or global capitalist system from the point of view of the world
systems theory of Amin or postcolonial theory of Hoogvelt
• understand and describe the nature of “First”, “Second”, “Third” and “Fourth” worlds,
according to Amin
• explain and discuss South Africa’s position in the global capitalist system

The approximate time that you should take to work through learning unit 4 is four
(4) hours.
4.1 THE GLOBAL OR WORLD SYSTEM AND SOUTH AFRICA’S

POSITION THEREIN
At this point in our discussion of the scope of globalisation, let us expand briefly on what
we mean by the global or “world capitalist system”, characterised by “centers” (or cores)
and “peripheries”, that we previously referred to. We can also take this opportunity to
think about where South Africa fits into this global system, given that our focus in this
module is on the implications of globalisation for South Africa. The ideas developed by
development theorists Andre Gunder Frank (1989, 1993) and Immanuel Wallerstein (1979)
particularly influenced Samir Amin (2001), a North African, Egyptian-French economist who
introduced the term “Eurocentrism” in 1988 (https://en.wikipedia.org/wiki/Samir_Amin,
accessed 14 May 2018). We are particularly interested in Amin’s ideas because goes even
further than development theorists do when they add to their ideas in providing a fuller
account of core-periphery or centre-periphery theory. In order to get to where we would
situate South Africa in the global scheme of countries and development, we first draw
on his ideas and his thesis.
44
4.1.1 Samir Amin (1931–) on the global world (capitalist) system
Amin is an important “world systems” and “dependency theorist”, but he actually goes
beyond these theories to identify “four worlds” or “typologies” rather than the three types
upon which Immanuel Wallerstein developed his core-periphery thesis (i.e. First, Second
and Third Worlds) within the global capitalist system. Simply put, Amin recognises, apart
from the “First”, “Second”, and “Third” Worlds, a “Fourth” World. This terminology and
these terms are, in themselves, important to our grasping how the world was organised
according to western knowledge production and, in particular, in understanding that
same “logic” in the establishing of a globalised world, and therefore how globalisation
works. This typology of “worlds” represents how the world appears, with some extremely
rich/wealthy nations and other more extremely poor or impoverished nations. According
to Amin, the “First World” refers to prosperous, highly advanced, highly industrialised,
capitalist countries such as the USA (and now the G8 or Group of Eight richest and most
powerful countries in the world), and the “Second World”, which is no more, refers to
relatively advanced, industrialised, mainly formerly socialist countries, like Russia (then the
Soviet Union). The concept of “Third World” refers to modern, relatively recently (from the
late 1900s) industrialised or industrialising countries such as Brazil, China, India, Mexico
and perhaps South Africa? The “Fourth World” refers to countries that are mainly rural,
relatively unindustrialised, usually very poor, and that tend to rely almost exclusively on
the export (rather than processing) of raw materials. According to Amin (2001), “Fourth
World” is an expression referring not specifically to any country, but to all Third World
countries in which there are people living in extreme poverty alongside those living a First
World existence. These impoverished of the “Fourth World” are said to be even further
away from the centres (i.e. core) of wealthy countries than the “peripheries”, which are
already on the outermost fringes or outskirts of development.
Amin’s classification of “four worlds” are closely related to the terms “centre” (or core) and
“periphery” of the global or world system of capitalist development. (Sometimes world
systems theorists also refer to the existence of “semi-peripheries”, but this is a complex
and controversial concept that remains undecided on by theorists.) The emergence of
this capitalist world system coincided, historically, with the period of European colonial
expansion that began in the 17th century. The idea of a “global capitalist system” refers
generally to the interconnectedness and integration of all countries and regions in the
world, on the basis of mainly (but not exclusively) economic activities. These activities are
mainly capitalist in nature and focused primarily on profit-making or wealth. Countries
within the global capitalist system are, however, not evenly or equally integrated and nor
do they all benefit in the same way. Based historically on colonialism, expropriation and
exploitation of various kinds, the global system was always, and is still being, characterised
by an enormous differentiation between countries and regions in terms of power and
wealth. It forms a “centre” or “centres” that consist of the richest and most powerful First
World countries. The economic and other activities of these First World countries have
had, and still tend to have, increasingly significant (and more often than not, destructive)
implications for the remainder of countries in the global capitalist system, that is, the
“peripheries” or “the rest”.
The periphery is constituted by countries within the Second (e.g. Cuba), Third (e.g. many
countries in Africa), and Fourth (i.e. existing on the fringes of Third World poverty) worlds.
45 SOC2602/1
Most of the countries in these three categories can only aspire towards periphery status
because most of them, at best, exist only on the margins of the periphery (see Hoogvelt,
1997). Fourth World countries are particularly marginalised within the global capitalist
system of today. For Amin (2001), this means that Fourth World countries are part of, and
greatly influenced by this system, but mainly negatively. Because they are at the “bottom
of the pile”, so to speak, within this highly differentiated, hierarchical and unequal global
capitalist system, they have little influence on the system, and increasingly little influence
over their own affairs too. In this regard, Amin (2001) talks of the “real” periphery and
a “real” centre in the global capitalist system of today. What he means by this, is that
in today’s rapidly globalising industrial capitalist system, the periphery is increasingly
comprised of only those countries, such as South Korea and Brazil, that have not merely
industrialised, but have also achieved a degree of global economic competitiveness. Such
countries constitute the “real periphery” of today. However, far from gradually becoming
part of the centre, as many tend to believe will happen, they continue to lag behind the
“real centre”, which are those richest and most powerful countries.
Until quite recently, the world or global capitalist system has been characterised in largely
“tripolar” terms, a reference to the First, Second and Third Worlds, or in “bipolar” terms
– a reference to the differences and divisions between capitalist and socialist societies.
However, since the collapse of socialism and the end of the “cold war”, the Second World
no longer really exists as a significant alternative development option to countries.
Economically, the world has become “unipolar”, run by the “real centres”. In addition,
owing in part to forces associated with globalisation, the concept of a Third World, while
still in use, has also lost much of its meaning. The world is “unipolar”, referring to the
global ascendency of free market capitalism and the ideology of neoliberalism (more on
these notions in later learning units). The real centre today consists solely of those few
countries and regions that, owing to their historical monopoly over economic, financial,
technological and military power, can and do influence, and indeed control, the global
capitalist system and most of its resources. This historical monopoly came about in large
part (at least initially) due to the colonial activities of the countries of the “real centres”
of today, which forged or at least created the basis for the nature of the contemporary,
highly differentiated world or global capitalist system.
All countries that do not have or gain a degree of global economic competitiveness,
including relatively modern and industrialised countries such as some of those from the
old Second World, Egypt, and significantly, South Africa, will, according to Amin, tend to
become part of an increasingly marginalised Fourth World. Indeed, the enormous and
growing polarisation, unevenness and inequality between countries and regions within
the global capitalist system is becoming so extreme that the only countries or regions
that really “count” are the relatively few that comprise the centre and the periphery. The
category of a Fourth World is also becoming quite meaningless: it is now more a case of
centre, periphery, and “the rest”. The “rest” (the term we left undefined a few paragraphs
back), unfortunately, already includes most countries on the African continent. This is how
the theory goes (i.e. explains things). Poverty is, however, an absolute reality throughout
Africa, and in South Africa, the gap between the richest and poorest grows wider.
46
ACTIVITY 4.1

(1) What is a “global or world capitalist system?
(2) Where would you place South Africa in the global/world capitalist system? Explain
your reasons.
(3) Do you agree with Amin’s views above? Or partially, or not at all? Whatever your
answer, explain why.
(4) Do you think you live in a centre, a periphery, or in a marginalised Fourth World
context? Give reasons for your choice and explain what you mean by this choice.
4.1.2 Ankie Hoogvelt discusses the centre and periphery implication for
globalisation
Hoogvelt (1997) points out that the relationship between the centres (or the “core”) and
the periphery is increasingly no longer mainly “geographical”. Her point is that, due to the
way in which the world is rapidly becoming more globalised, both centers and peripheries
can exist anywhere in the world, even alongside each other. In other words, a small centre
can exist in an otherwise peripheral or even more marginal geographical region. Added
to this, a periphery, or worse, can and does exist in just about all of the most advanced
countries and regions. Hoogvelt is arguing that there is an increasing shift away from the
national or regional origins and nature of what we usually refer to as the centre and the
periphery. Instead, the factor that now tends to determine centre or periphery status is
the degree of competitiveness within and/or usefulness to and/or marginalisation and
exclusion within the global capitalist system. The contemporary globalised capitalist
system is constituted (or perhaps “dominated” would be a more appropriate term) mainly
by a handful of powerful, wealthy and economically highly competitive centres (located
mainly in the USA, western Europe and Japan) and by some partly competitive peripheries
(located mainly in East Asia and some parts of Latin America) that are useful in one way
or another to the centres. There are also a few small centres and peripheries elsewhere
in the global capitalist system, including, for example, peripheries in western Europe.
The majority of the world’s population, however, is marginalised and excluded from most
of the benefits that can be obtained from full participation within the global capitalist
system. Indeed, as the centres (and the peripheries, relatively, and to a lesser extent) get
richer and more powerful, so the majority of the world’s population gets poorer and
increasingly powerless. This part of the contemporary global capitalist system, often
referred to as the Fourth World, or more disparagingly as “the rest”, is located mainly
in the ex-colonial regions of Asia, Latin America, and in sub-Saharan Africa in particular.
However, as already mentioned, “pockets” of Fourth Worlds in the form of, for instance,
inner-city slums and ghettos, can even be found in the USA and in the richest cities of
western Europe, just as small centres can be found in the poorest parts of the world.
Hoogvelt prefers to use the term “postcolonial world”, rather than Third or Fourth Worlds
to refer to the regions containing the ex-colonies (usually called the Third World). Her
47 SOC2602/1
reasoning for this is similar to Amin’s (also see Cohen & Kennedy, 2000:380): pockets of
Third World characteristics, like Fourth World characteristics, appear just about anywhere,
even in the most advanced capitalist countries (i.e., in northern America and western
Europe). She uses the term “postcolonial” to refer to those countries in Africa, Asia and
Latin America that were once the colonies of mainly European states. Importantly, not all
ex-colonies can be characterised as peripheral or Third World or Fourth World countries
– both the highly developed USA and Australia, for instance, were once British colonies.
Some ex-colonies can be characterised as centers and some as peripheries; but most
are marginalised and excluded within the contemporary global capitalist system. (A
family analogy can be used here to illustrate this seemingly paradoxical idea of being
marginalised, yet still within the system. A family member may be treated as an outcast,
and thus excluded in various ways from some family activities and benefits. Nevertheless,
he or she may still remain in, and be a member of, that family.) Are you getting the idea of
the world or “global” scope of the concept of globalisation? Can you see that it is based
on processes that gradually began to make countries all over the whole world increasingly
interconnected, interdependent and integrated, but in a highly differentiated and very
unequal manner? For instance, colonialism involved very close economic, political and
cultural-ideological ties between coloniser and colonised. These close ties, however,
involved the exploitation and domination of, and hegemonic (briefly, ideological rule
by means of manufacturing the consent of the ruled) ascendency over, the colonised.
Now where does South Africa fit within this global capitalist system? In which of the four
worlds can it most accurately be placed? Is it a centre or a periphery? Or is it a marginalised
part of what we have referred to as “the rest” of the system? Clearly, given the uneven
and unequal way in which this global system has evolved, and differentially placed or
distributed countries within it, this is an important question. This is because any country’s
developmental prospects, including South Africa’s, are profoundly influenced by the
nature of its distribution and location/place within this system.
4.2 HISTORICAL REFLECTIONS ON SOUTH AFRICA WITHIN

THE GLOBAL CAPITALIST SYSTEM, 1994–2017
According to Amin (2001), South Africa occupies a very ambiguous position within the
global capitalist system, which makes it extremely difficult to classify and place within
this system. This is because, both after being colonised, and under the apartheid regime,
capitalist industrialisation took place in large part on the basis of the creation of a racist,
exploitative, cheap black labour migrant system, and a market reliant mainly on the
rising incomes of a ruling white minority. He argues that these and other peculiarities
of apartheid-based capitalist industrialisation in South Africa have led to the internal
manifestation in the country of attributes of all four worlds. This is why he contends that
South Africa is a “microcosm” of the global capitalist system. (We look at central aspects of
the historical emergence, development and decline of apartheid South Africa in learning
units further on.)
More specifically, Amin argues that firstly, the white section of the population in South
Africa seems to have many of the characteristics of people living in the First World. In
addition, until quite recently (that is, until the middle 1980s), South Africa also had a
48
“statist” apartheid policy and system, reminiscent ironically (in form if not content) of
Second World countries. (Second World, formerly socialist countries were characterised by
a great deal of state intervention in and control over society generally, and the economy
in particular.) This is ironic for at least two reasons. Firstly, the apartheid regime was
vehemently anti-socialist, mainly due to left-leaning and socialist support for the anti-
apartheid movement. Secondly, although during the apartheid years the state espoused
the principles and virtues of free market capitalism, at the same time it intervened
massively in and controlled both society in general and the economy in particular – mainly
on behalf of whites and (particularly) Afrikaners and Afrikaner capital, to the detriment
of the black community. The Nationalist Party (NP) increasingly punted its own stance
as an unambiguous advocate of free market capitalism from the early 1980s onwards,
particularly when it became apparent that apartheid rule was no longer sustainable and
that a new political dispensation was on the cards.
The other two reasons why Amin contends that South Africa is a microcosm of the global
capitalist system are that South Africa has a relatively modern, urban black population,
that appears to have the characteristics of a Third World country and, lastly, that South
Africa has a rural black population with characteristics that can only be associated with the
Fourth World. According to Amin, the peculiarities of South Africa’s history have produced
a situation in which the country as a whole now seems to “straddle” both the Third and
Fourth Worlds, but it is more like a Fourth World than Third World country. It is true that
South Africa is modern, industrialised and capitalist, but unlike “real” periphery countries
such as Brazil and South Korea, it does not really possess global economic competitiveness.
This is a direct result of the peculiar way in way capitalist industrialisation (referred to
above) took place in South Africa, a point we elaborate on in greater detail further on.
Given this historical overview of South Africa’s position within the global capitalist system,
Amin’s views on the prospects for prosperity, equality and justice in the country remain
uncertain despite its successful transition from apartheid to democracy. In the main, all
the right sort of (liberal) democratic political institutions and arrangements are in place
(more on this in later learning units), but the country (or, more precisely, the ANC-led
government) faces a mammoth task. It must redress the iniquitous consequences of the
apartheid past, but it must also ensure that the sort of development that takes place will
enable the country to be both economically viable and internationally competitive. This
requires economic policies designed to bring about redistribution, development, and
growth.
Amin is referring here to policies facilitating the type of overall development that can meet
basic needs, stimulate demand (both within the country, by increasing and equalising
the ability to consume, and by creating external markets), and increased productive
capacity (for example, by investing in education, increasing the productivity of the labour
force, and by upgrading production facilities). Increasing productivity is crucial if South
Africa is to achieve a degree of global competitiveness, and avoid becoming increasingly
marginalised (becoming part of “the rest”) within the contemporary global capitalist
system. In addition, this mammoth task, according to Amin, must be accomplished in
the context of the following:
49 SOC2602/1
a. economically unfavourable conditions, determined historically by the peculiar
way in which capitalist industrialisation developed in South Africa;
b. the associated injustices and worsening inequalities bequeathed by the past; and
c. a far from “friendly” and rapidly changing contemporary global capitalist system.
It must be noted here, however, that Amin tends to firstly, overemphasise South Africa’s
dependence on the export of primary products. SA also exports a variety of more-or-
less processed primary products, such as steel, paper and plastics. Secondly, he tends
to underemphasise SA’s productivity and its ability to export manufactured goods
competitively (albeit limited to certain sectors, such as motor manufacturing). Here
though, productivity has come at the cost of employment, as it is very capital intensive.
(See the related discussion of “jobless growth” below.)
Unlike some Third World countries, South Africa, until quite recently, failed to develop
the export capability of its manufacturing sector, and failed to shift its economic base
from the export of primary-products to exports from the secondary-sector (that is, to
the processing of primary products, manufacturing, etc, for export, which, as mentioned
above, it has now managed to do). South Africa did and still does export manufactured
goods, but, until recently, mainly to the quite limited market consisting of its nearest
neighbours. (Now, however, roughly 50% of South Africa’s exports go to the European
Union or EU, North America and countries in the East, including China.) Its racially-created
(and thus limited) domestic market soon became saturated, and its racially-based, migrant
low wage system limited the development of skills and productivity. Productivity was
also undermined by insufficiently developed capital goods and technology sectors,
and an undeveloped research and development (R&D) capacity. (Some R&D did take
place, but mainly for purposes of armaments and alternative fuel supplies.) In the later
years of the apartheid period, productivity and competitiveness were inhibited by an
unwillingness and/or inability to invest in the manufacturing/industrial sector owing
to a combination of factors. These included balance of payments deficits, voluntarily
committing to International Monetary Fund (IMF)-like conditions, increasingly expensive
capital goods and a sanctions-related inability to obtain much in the way of foreign
investment, even loans.
Importantly, South Africa has long remained primarily a minerals exporter, and heavily
reliant on earnings from this sector for the purchase and import of capital goods and
technology for both primary extraction and manufacturing. As we have already said,
manufacturing was from its beginnings very dependent on the import of capital goods
and technology, and was thus very capital-intensive. The result is that South Africa is
chronically subject to balance of payments problems (“balance of payments” means the
ratio of money flowing in and out of the country, based on imports/exports, capital flows,
etc. Currently, the balance of payments is “healthy”, but this could change if investment
flows out due to the volatility of financial markets), caused mainly by fluctuations in the
demand for and price of its primary commodities on the world market. An economic
crisis began to emerge in South Africa from 1973, which became “organic” (that is, very
intense at all of the economic, political and ideological levels) by the 1980s, and led to
massive capital outflows from participating transnational and multinational corporations
(TNCs and MNCs), and also from local corporations. Moreover, economic sanctions really
began to “bite” in the middle to late 1980s.
50
Briefly, while the categories of First to Fourth Worlds have some classificatory value and
are still being (and will no doubt continue to be) used, they are becoming increasingly
meaningless in the context of the contemporary global capitalist system. This is because the
Second World no longer exists, and the global capitalist system is simply not characterised
by more and more countries catching up with the First World. Rather, a handful of
countries, those that constitute the periphery of the global capitalist system (some in
Asia, others in Latin America) are “running faster” to merely maintain, not narrow, the
“distance” between themselves and the mainly western European and North American
countries that, along with Japan, constitute the “core” or centres of the global capitalist
system. Some of these periphery countries (such as China, India and South Korea) do seem
to be “closing the gap”, but they are characterised by enormous inequalities between
different sectors and rich and poor, and it remains to be seen whether such countries can
indeed join the ranks of the “core”. The global capitalist system is becoming more and
more polarised and unequal, not less so. The contemporary reality, according to Amin
(2001), is that it is only these periphery countries that are fully integrated into the global
capitalist system. They can compete sometimes, in some areas and at some levels, with
the centers, but they are not catching-up and indeed cannot. The simple historical and
structural fact is that the centres are dominant and, unless there is a systemic change in
the entire global economic and political world system, these core countries will continue
to dominate. They completely monopolise the world’s financial markets, trade, access to
the world’s resources, the weapons industry, the media, the means of communication,
new technologies and so on, and they dominate the various international and regional
institutions, organisations and agreements. These include, the United Nations, the IMF
and World Bank, the European Union (EU), the World Trade Organization (WTO), the
North American Free Trade Agreement (NAFTA), NATO, and the like. These organisations
and agreements exert increasing influence over and regulate world affairs, particularly
global markets. This does not rule out the possibility that some countries can gain some
leeway to improve their situations, depending on what they have to “offer”, but this of
course depends on what the global powers and conditions “allow”.
Countries such as South Africa, and former Second World countries such as Russia, can
aspire towards peripheral status and may become part of the periphery – but that is all.
As for the rest (and as indicated above, the “rest” includes most of sub-Saharan Africa),
current global capitalist trends suggest a future that is not even worth thinking about. In
summary, the contemporary global capitalist system consists of the following: a handful of
centre countries, a few periphery countries, some aspirant-periphery countries (including
South Africa), and a few natural resource-rich countries (in Africa these include, for instance,
Nigeria, Botswana, Tanzania, Mozambique and others). However internal strife, corruption,
political mis-management and suchlike limit their aspirations with the global capitalist
order that sets its own laws and policies. All other countries, in terms of this scenario, are
already in dire straits, and face an even bleaker future.
Importantly, we hope that by now you have an idea of the scope of what is called
globalisation and the creation of a global capitalist world system, as well as some grasp
of the differentiated way in which the latter has developed and become manifest. In this
regard, we’ve illustrated this section with some ideas about South Africa’s incorporation
into and place within the global capitalist system. Some of the information we’ve used here
51 SOC2602/1
may not be clear to you, but we elaborate on it in greater detail in the next two learning
units, 5 and 6. These two learning units more directly discuss and explain globalisation’s
“pandemic”, that which we may call neoliberal development, which has spread around
the world and is infecting nation-states and their economies as well as their political
international relationships. We focus on South Africa and the impact of neoliberal policy
development on the role of the SA state, as well as in a post-apartheid context.
ACTIVITY 4.2

(1) Discuss and compare Amin’s and Hoogvelt’s explanations for global capitalism
and its relationship to globalisation. What theory/ies have influenced the ideas
of the two theorists? Describe that/those theories.
(Tip: Review the Activity 2.4 in learning unit 2).
4.3 GLOBALISATION AND THE NATION-STATE

The main question on the state that Cohen and Kennedy (2000:78–95), and commentators
on globalisation more generally, are concerned with here, is the “sovereignty” and
“autonomy” of the modern (nation) state in the context of powerful transnational agencies,
such as TNCs (e.g. Apple and Microsoft) and IGOs (e.g. the United Nations and the World
Bank). The sovereignty of states means that they have the sole right to exercise a monopoly
of legal and coercive control, both over their own territories and the people living within
their borders. With the onset of modern globalisation, it was argued that nation-states
were losing their control and authority over their territories and the people in them.
Hence, there was the introduction of the term “global village” to signify the breakdown of
the nation-state and of borders or boundaries between people. To some extent – a very
small extent – this is true that there are far more cross-border interactions, transactions
and exchanges among sovereignties. This begs the question, however, of whether
states have found it difficult to retain their sovereignty within their territories. In other
words, can the state and or government of a country still make decisions on behalf of its
citizens and meaningfully and autonomously act on such decisions? For the purposes of
this module, however, it is important to look for answers to this question in terms of the
relationship between globalisation and state policy, particularly in contemporary South
Africa. This will become clearer as we unpack macro-economic policy in learning units 5
and 6, which come next.
For now, using Cohen and Kennedy (2000), we want to make two points clear that are
particularly relevant in this section on globalisation and the state. These are firstly, that
the issue in question is more accurately that the role of the state has changed, rather
than that its sovereignty and autonomy are being undermined under globalisation.
Cohen and Kennedy (2000:93) point out, for instance, that in an attempt to force down
wages, politicians across the world use the argument of globalisation as a pretext to cut
welfare or social expenditure, remove trade union rights and deregulate labour markets.
52
In the 2008 Budget Speech, then Finance Minister, Trevor Manuel, made references to
globalisation and the turbulent global capital crisis brought about by the United States
housing crisis that, in economic terms, created a bubble burst, or when high lending or
loans by banking institutions (i.e. speculative demand and increased supply as a result)
far outweigh the returns in payments (or consumer demands for housing) which creates
a bubble. When the demand goes down and the supply is too high, the bubble bursts,
as happened in the case of the US housing market in 2008. Using this example, Minister
Manuel supported the role of the South African state in exercising its control over the
national economy by stating the regulations in place to curb over-supply and speculative
lending by local banking institutions. This is an example of how the state exercises its
sovereign power in the face of, or despite, globalisation. However, the role of states differs
in different contexts, such as in the USA and in SA.
The second issue – about the change to the state in the face of globalisation – is related
to the first one above. In previous units, we describe globalisation as a phenomenon in
which, because of improved flows in transportation and communication brought about
by technological advances, there are intensified interactions and connectivity among
nations such that we can speak of a “global” capitalist system wherein every nation seeks
to find a footing in order not to be excluded and left out of, for instance, trade. There
are further measures in place, established by the richer nations and in line with what we
learnt above about the divisions of centres and peripheries, that ensure that not-so-rich or
developing nations are “plugged” into this global economic system by a set of values and
rules imposed by the richer countries. This is the implication of “policy”. Macro-economic
policy, simply put, means policy that affects the national (economic) growth or Gross
Domestic Product (GDP), as well as the economic planning of a country. Learning unit 5
provides more detailed explanation on this.
4.4 SUMMARY
In this learning unit we sought to understand globalisation as a worldwide
process of capitalist development. In other words, we associated globalisation,
not only with the spread of global capitalism within the world system, but
also as a continuation of modernisation and colonialism.
We discussed the global world system from the points of view of economic
social theorist, Samir Amin and development social theorist, Ankie Hoogvelt.
Amin (2001) goes beyond the world system theory developed by Immanuel Wallerstein
that explained the world as divided into rich, highly industrialised “First Worlds”, highly
industrialised but socialist “Second World”, and poor and developing “Third Worlds”, which
form the core (centres) and peripheries (marginalised). Amin introduces Fourth Worlds;
those that exist outside the fringes of the periphery in a zone of absolute poverty such
that they are not even linked into this global capitalist system.
Hoogvelt, on the other hand, prefers to see the division among countries and the placing
of developing countries as part of post-colonialism. For her, colonialism is alive and
real and relevant, but in a different, post-colonial form, because most of the poorest
53 SOC2602/1
developing countries are those that were once colonised, including countries in Africa,
Asia and South America.
We then discussed where South Africa might fit into this scheme of things, based on its
position in the global capitalist system. We maintained that South Africa is a periphery
country, with high rates of poverty, unemployment, corruption, and still developing,
while it, paradoxically, also has high levels of development and infrastructure, but only
in limited parts of the country and restricted to fewer members of the population. South
Africa is a Third World country with some aspects of First World development.
Finally, we briefly introduced the role of the state under globalisation and global capitalism,
as a foretaste of what is to come in learning unit 5.

(1) Discuss and describe South Africa's position in the global/world system.
(2) Discuss and compare Samir Amin's and Ankie Hoogvelt's views on the global or
world system of capitalism.
(3) Discribe Amin's views on South Africa's position in the global capitalist system and
explain whether you agree or disagree with his views.
54
Learning unit 5
Neoliberalism and the changing role of the state:
Relevance to the South African state
Upon completion of this learning unit you should be able to:

• expound on the characteristic features of neoliberalism as a distinct way of organising
the role of the state in the economy and in society more generally
• give an account of the conditions in South Africa that made the birth and consolidation
of neoliberalism both necessary and possible
• elaborate on essential details of the different ways in which the state can participate
in economic activities and show how these manifest within the neoliberal framework
• reflect on the effects of neoliberalism in shaping processes of social change in the
last four decades
Key Concepts:
• Neoliberalism
• Keynesianism
• Capitalism
• Macroeconomic policy
THE APPROXIMATE TIME THAT YOU SHOULD TAKE TO WORK THROUGH

LEARNING UNIT 5 IS FOUR (4) HOURS.
5.1 INTRODUCTION
In the previous learning units, you learnt more about the nature, origins, evolution and
consequences of globalisation. The discernible differences in the debates on its periodisation
and significance notwithstanding, the growing integration and interdependence between
national economies were generally identified as principal characteristic features of this
social, cultural, economic and political phenomenon. Alongside these vital landmark
developments in the evolution of the world economy, substantial transformations in
the policy landscape also began to unfold and gather momentum. The fundamental
transformations that profoundly altered the social and economic policy outlook pivoted
on the role of the state in driving social and economic development. Neoliberalism is
a term that came to be used extensively to describe the changes in the way the state
played a role in processes of social and economic development, with an emphasis on
55 SOC2602/1
less and limited participation of the state in these areas. In drawing attention to this often
taken-for-granted attribute of globalisation, the Latin American sociologists James Petras
and Henry Veltmeyer (2001:11) argued that, in addition to globalisation being understood
as a general description of the objective realities of the widening and deepening of the
international flows of trade, capital, technology and information within a single integrated
global market, there is also a prescriptive usage in which it denotes the liberalisation of
national and global markets in the belief that free flows of trade, capital and information
will produce the best outcome for growth and human welfare. In other words, implicit
in the latter denotation of the term globalisation, critical actors in society embark on
purposive and intentional interventions to propel and shape the manifest changes
associated with the process of globalisation. Thus, in the context of the imperatives of the
phase of world capitalist development that opened up in the early 1970s, neoliberalism
represents a set of social, economic and political measures prescribed by ruling classes, first in
advanced capitalist countries, before spreading these to other parts of the world to promote
their own interests (Dumenil & Levy, 2004) (own italics). For these reasons, any attempt to
illuminate the social, economic and political context in which the process of social change
unfolds, in South Africa and elsewhere in the world, will have to come to terms with the
phenomenon of neoliberalism and its significance.
Since neoliberalism represents a particular tradition of configuring the role of the state
in the economy, the learning unit will begin with a general discussion of different ways
in which the state can play a role in the economy. The various elements that account
for such varied roles are ordinarily framed under the notion of macroeconomic policy.
This discussion will thus establish a framework from which students can easily relate to
Keynesianism and neoliberalism as distinct ways of organising the activities of the state
in the social and economic affairs of society. Over and above the distinguishing features
of each tradition, it is crucial to comprehend the conditions, factors and circumstances
propelling the rise and dominance of each in the different epochs of capitalist development.
Accordingly, the learning unit will discuss the social, economic and political conditions that
made the prevalence of each both necessary and possible. In the closing sections of the
learning unit we will sum up the general effects of neoliberalism on society more generally,
and on specific social and economic indicators more specifically. The main purpose of
the learning unit is to set the scene for subsequent units in which we examine the effects
of neoliberalism in shaping the transition from apartheid to democracy in South Africa, as
well as its significance as a cardinal dynamic in the evolving social change and economic
development processes in the country.
Activity 5.1

Watch the YouTube video on Neoliberalism, explained by Stuart Bass,
https://www.youtube.com/watch?v=2_ruEbn4jU0;m
(1) Make notes on important defining features of neoliberalism as an approach to
capitalist development beginning in the early 1970s.
56
5
6 Feedback
Make sure that your summary on what you manage to assemble as essential features of
neoliberalism addresses or incorporates three important ways in which the state plays a
role in the economy, namely: production, social provision and regulation.
5.2 MACROECONOMIC POLICY AND THE ROLE OF THE STATE

IN “THE MANAGEMENT OF” CAPITALIST ECONOMIES
There are essentially three different elements that define the scope and terrain of state
activity in the economic affairs of society. The state can be directly involved in the
production of goods and services; it can become comprehensively involved in the provision
of social services; and it can also be exhaustively engaged in the regulation of the various
dimensions of economic activities such as labour markets, financial markets and trade.
The peculiar way in which all these three basic functions are aligned and configured is
expressed in a macroeconomic policy. In other words, macroeconomic policy conveys
nothing but the role that the state is designated to play in driving, coordinating and organising
the economy. In turn, the particular way in which these three roles are framed will signify
the overall orientation (e.g. Keynesian or neoliberalist) of a given macroeconomic policy.
In this connection, there are two polar opposite approaches to how these roles can be
configured and framed. There is, on the one hand, an approach that emphasises a direct
and active role of the state in the economy in respect of all three of the basic typologies.
On the other hand, there is an approach that calls for a limited and lesser role of the state
in economic affairs. As will become clearer soon, the first approach is consistent with the
Keynesian (following the ideas of John Maynard Keynes) or social democratic principles of
economic management, whilst the second one adheres to the principles of neoliberalism.
In what follows, we first outline the basic features of each role, then look at how they are
expressed in macroeconomic terminology and, in the process, we make general allusions to
how each role is framed in the context of the governing principles of the two approaches.
5.2.1 Macroeconomic policy and the three essential aspects of state

activity in the economy
In the first instance, the state can play a role in the economic affairs of society by assuming
direct responsibility for the production of essential goods and services. Such goods and
services can be destined for simple consumption in the sense of catering for the subsistent
needs of members of society, or they can be meant for productive consumption in the
sense of being used for the further production of other goods and services. When the
state assumes direct responsibility for the production of such goods and services, it also
means it assumes ownership and control of the means for producing them. The means
of production, in this case, can be mines, factories or farms that fall under the ownership
and control of the state for the collective benefit of society as a whole.
57 SOC2602/1
When the state behaves in this way, we often hear of the word nationalisation, with
reference to the fact that designated assets are brought under the direct ownership and
control of the state for the benefit of the nation as a whole. Many countries in the world
have had moments of experience with this form of economic management. In other
historical periods, the state assumes such responsibilities because it is often expensive
to undertake such massive projects through individual private resources. In the case of
South Africa, some of the critical corporations that are central to the functioning of our
modern industrial economy include ESKOM, SASOL and Telkom, and were initiated, owned
and controlled by the state. Under the apartheid capitalist system, such ownership and
control was used to the exclusive benefit of the white population.
In contradistinction to direct ownership by the state, there is the situation where all the
production of all goods and services is the exclusive responsibility of the private sector. It is in
this context that we hear of privatisation, with reference to the absence of the state and the
designation of the private sector as the sole producer of goods and services in society. This
method of organising the economic activities of society with reference to who assumes
responsibility for the production of goods and services became dominant from the early
1970s with the emergence of economic crisis within the global capitalist system.
State ownership and control – or lack thereof – as well as state acquisition of productive
assets or sale of such assets, goes a long way in illustrating the nature of such a state
and how it plans to organise and manage the economy. A macro-economic policy can
thus either emphasise direct ownership and control by the state or propagate wholesale
or partial sale of productive assets previously under the control and ownership of the
state. How a macro-economic policy structures and configures this aspect of the state’s place
and role in the production of goods and services signifies the character of the interests being
accommodated. Previously, economies organised on the active role of the state in the
production of goods and services varied from the model pursued by the former Soviet
Union and some Eastern European socialist models in which the state owned and controlled
everything, to social democratic governments in parts of Western Europe premised on principles
of mixed economy in which state owned and controlled selected assets deemed crucial for
national development.
In the second instance, the state can play a role in economic activities through assuming
responsibility for the provision of various social services deemed essential for human
existence. The state can assume responsibility for provision of social services such as health care;
education; housing; water and sanitation; and various social grants such as old age pension,
childcare grants and disability grants. The extent of such provision will also vary from one
state form to another, with some opting for high quality provision on a universal basis,
whilst others might do so partially and on a means test basis, i.e. a technical criterion for
determining eligibility for such assistance.
In the South African context, under apartheid, provision of essential social services was
organised along racial lines. For the segregated black population, provision was allocated
at substandard levels with minimum expenditure in the provision of social services from
government. A large chunk of government expenditure on social services was directed
at meeting the social and cultural needs of the white population. In other parts of the
world, the most notable example of social provision on an expanded scale is that of the
58
social democratic or welfare states in parts of Western Europe where the majority of
such services are provided free at point of access for the majority of citizens. Such states
shouldered the task of sourcing and paying for these services.
In contradistinction, the state can opt to withdraw wholly or partially from the provision
of such services. When that happens, by implication the private sector assumes the
mandate for such provision. In other words, access to such essential services as education,
healthcare, water and sanitation will depend no longer on need but on ability to pay as
the private sector acts only for sale and profit and not to meet basic human needs. From
the 1970s to date, there has been a growing tendency for the privatisation of the provision
of such essential and basic social services throughout the world. In such circumstances,
the role of the state is limited to that of facilitating and creating conducive conditions for the
private sector to profitably roll out this provision.
In the last instance, the state can play a role in the economy by regulating various economic
activities. In this respect, the state can introduce a number of rules and administrative
measures to guide the performance and undertaking of a variety of economic activities on
the part of role players in the economy. As in the other two modes of state involvement
in economic activities, the state can opt to deregulate instead of regulating, depending
on its orientation and priorities.
The state’s regulatory activities are designed to shape conduct and outcomes in markets
and there are several markets in which such regulations are typically deployed:
The first such market in which the state can institute regulations is the labour market. The
labour market is an institution through which the sale and purchase of labour power is
conducted. It is the realm in which the availability of jobs is discovered; the level of wages
determined; conditions of employment set and a range of work related entitlements such
as leave, hours of work and job security are processed. Depending on its orientation and
priorities, the state can institute rules and laws that govern how all of these are to be
handled. For instance, the state can determine or influence the level of wages by setting
minimum wages as the basic floor below which no employer will be permitted to pay his
or her workers. The state can also determine the number of hours each worker works as
well as the level of benefits accompanying employment. During apartheid, such labour
market regulations and protections were designed to exclusively benefit and protect
white workers to the detriment of black workers. In the developed countries of the world,
particularly the Western European social democratic states, labour market policies also
entailed elaborate provisions on incomes policy, job security and other entitlements.
Instead of instituting labour market rules and regulations, the state can also opt to
deregulate the labour market and leave the determination of wages and conditions
of employment to workers and employers. In other words, the state withdraws from
interventions on this sphere and only ensures that processes for determining such labour
market outcomes are done so in an environment conducive to the smooth running of
productive activities.
The second market in which the state can institute rules and regulations is the market
for goods and services, which in turn has two dimensions, the internal dimension and
59 SOC2602/1
the external one. The idea here is for the state to facilitate the flow and circulation of
produced goods and services, ensuring that they leave producers and reach consumers
at the right prices and quality. For instance, with reference to agricultural products, the
apartheid government had various boards established to regulate the production of
various agricultural commodities. These boards focused on access to markets, pricing
and quality standards.
The external dimension of this phenomenon relates to rules and regulations to manage
the movement of goods and services in and out of the country. In macro-economic
terms, this is also known as trade or international trade. Beginning in the 1940s when the
local manufacturing industry took off, the apartheid state implemented measures with a
view to protecting locally produced goods and services and to cushioning them against
competition from advanced capitalist countries. Such measures included restrictions on the
amount of goods permitted from outside as well as instruments such as tariffs – taxation
levied on imported goods as a way to encourage consumption of locally produced goods
and, by so doing, also supporting the development of local industries.
Instead of regulating and controlling the movement and flow of goods and services, both
internally and externally, the state can also opt to deregulate these markets and leave the
determination of such flows to market forces. Ideas of trade liberalisation and free trade
are essentially about the state withdrawing from such interventions.
The last market in which the state can institute measures to influence desired outcomes
is capital markets or money markets. These are markets that shape conditions under
which money in its various forms such as cash, shares, bonds, securities and derivatives
is circulated within the economy. These are institutions that regulate the cost, availability
and ease with which money in its various guises circulates in the economy. These markets
in turn also have an internal as well as an external dimension.
The internal dimension of these markets deals with the cost and availability of money
in the economy. The primary instrument used to regulate these is the interest rate,
which is essentially the cost of borrowing money from financial institutions. Depending
on the level at which interest rates are set, they can determine the ease or difficulty of
accessing money as well as the attached cost. The country’s central bank, also known as
the Reserve Bank in the case of South Africa, is primarily responsible for determining the
level of interest rates.
Another such institution is the stock market, organised in the form of the Johannesburg
Securities Exchange (JSE) in the case of South Africa. This is an institution that regulates
the sale and purchase of various forms of entitlements such as shares, bonds and securities
of various kinds. Depending on the orientation of the state through its designated
regulatory authorities, measures can be instituted to make it easier or harder to trade in
such forms of entitlements in the stock markets. The amount of trade in these markets
has exploded exponentially over the years as testimony to the centrality of these markets
to the functioning of modern economies.
The external dimension of capital markets relates to the management and regulation of the
movement of capital and money in and out of the country. Historically, exchange controls
60
have been instruments of choice for keeping such flows in check and ensuring that this
is done in a manner consistent with the macro-economic goals, desires and aspirations
of countries. Exchange controls are essentially measures designed to restrict the amount
of money that can enter or leave a country, as well as defining conditions under which
such movements can be admissible, including penalties in the form of taxes levied and
waiting period before such transactions are sanctioned. Since the 1970s onwards, there
has been a growing tendency for most countries to relax such measures in what came
to be known as exchange control liberalisation.
Activity 5.2

(1) Discuss, in essential details, the different approaches or traditions of macroeco-
nomic policy.
7 Feedback
The crucial point of departure is to show how macroeconomic policy is about designating
the role to be played by the state in the economy, and thus shaping the process of social and
economic development. Your discussion should describe the three important generic ways
in which this role can manifest and should then demonstrate the different ways in which
these three roles can, in turn, be framed. In other words, you should begin differentiating
between the policy manifestation of an active and direct role on the one hand and that of
a less and withdrawn state on the other.
5.2.2 Macroeconomic policy and the main policy instruments

In this section we briefly consolidate an understanding of the role of the state in the
economy by summarising the basic macroeconomic policy instruments at the disposal
of the state to discharge its role. Once you comprehend these policy instruments, you
should be in a position to study any macroeconomic policy, appraise its intentions and
judge its stance with respect to its overall injunctions with respect to what the specific
role of the state in the economy will be.
Among the most contentious phenomena in the lives of many nations are the notions
of nationalisation and its counterpart, privatisation. These are by far the two of the most
important overarching considerations in the framing of any macroeconomic policy in that
they bring to the fore the place that the state will occupy in the management of economic
life in each country. Any choice exercised over these polar opposites settles the question
of who, between the state and the private sector, will lead the process of procuring the
goods and services so central to reproducing and sustaining human existence as we know
61 SOC2602/1
it today. In the case of South Africa, the question was which of the two, the state or the
market, would lead the process of social and economic reconstruction and development.
In the next section and in the subsequent learning units you will read about and appreciate
how this crucial aspect of the management and coordination of societal resources was
settled in the case of South Africa.
The next aspect relates to the role that the state will play (or not play) with respect to the
provision of essential social services. It is in relation to this aspect of state activity that
you often hear about fiscal policy. Fiscal policy is about the income and expenditure of
the state. In other words, this represents a set of measures and processes that determine
the size of government income and resources, as well as how the government plans to
expend and use that income in discharging its responsibilities. Fiscal policy spells out the
nature and levels of taxation that the state will impose on both individual and corporates.
The larger the pool from which such taxes are collected, and the higher the levels at
which they are set, the greater the amount of money and resources the state will have at
its disposal to roll essential services out to its citizenry. As already seen, in the apartheid
era, such resources were deployed in a manner that was heavily skewed in favour of one
section of the population to the detriment or neglect of another.
By and large, the nature of fiscal policy implies a particular way in which the state
approaches its role with respect to the provision of social services. Low social expenditure
means that the state implicitly or explicitly opens the way for the private sector to be the
critical provider of such services. High social expenditure means that the state views itself
as the central player. In the latter case, the state will be prepared to spend money over
and above what it has at its disposal due to its commitment to such provision as well as
deeming it central to economic activity. When that happens, we learn of fiscal deficit – the
amount of money the state spends that it does not actually have. When states announce
their annual budgets, there is always in indication of how much money is available from
taxes and other sources and how much money that state is committing to spend. Where
there is a zero deficit, this means that the two amounts are equal, something that rarely
occurs in real life. There is a deficit if the amount to be spent is more than the amount
available and there is a surplus if the amount to be spent is less than what is available.
In the case of a deficit, the state, in its annual budget, will then spell out measures to
be undertaken to close that gap. Such measures may include debt or borrowing or may
also entail cutting back on some of the anticipated expenditure. How this is ultimately
resolved points to how the state positions itself in the overall economic life of society.
Monetary policy is the next important aspect of macroeconomic policy management. As

already alluded to, this is a set of measures used to influence the cost and availability of
money in the economy. The most common instrument used here is the level of interest
rates, the price we pay for borrowing money. Low interest rates mean that money is
cheap and therefore easily accessible. High interest rates mean that money or credit is
expensive and therefore not easily obtainable.
The borrowing of money, or credit, can either be to finance the consumption needs of
individuals and families, or to fund the investment and production needs of firms and
corporations. The cost and availability of credit thus goes a long way in determining
62
whether individuals and families can meet their subsistence needs and whether or not
corporations can grow their operations and create more wealth and employment.
The institution charged with the responsibility of regulating the cost and availability of
credit is, in the case of South Africa, the Reserve Bank. There was a period throughout
the world, especially in the post Second World War era, when such institutions were
guided by the need to encourage economic growth and employment when coming to
decisions on interest rates. Since the 1970s, central banks have viewed inflation as the
single most important consideration in deciding the level of interest rates. By inflation,
we mean the rate at which the prices of goods and services tend to increase. There is zero
inflation when prices stay the same, there is low inflation when they increase by a low
percentage, and high inflation when they increase by a considerable fraction. Due to the
interplay of supply and demand, prices tend to go up when there is a lot money and too
many people wanting to purchase a limited amount of goods and services. In order to
reverse this, central banks use interest rates to discourage the demand and as a way to
apply downward pressure on price movement. The rationale offered by central banks is
that high prices disadvantage poor people as they render the cost of living unaffordable.
Yet, the difficulty is that the remedy, high interest rates, discourages economic growth
and the creation of employment.
Labour market policy represents a set of institutional measures used to regulate the
purchase and sale of labour power in society. Historically, states instituted administrative
protocols, legal instruments and institutional mechanisms to protect workers from
exploitation. Such measures covered levels of income, working conditions and other
entitlements. Obvious examples include matters such as minimum wages, hours of work,
leave and collective bargaining rights. In most parts of the world, and in the advanced
capitalist countries of Western Europe in particular, trade unions emerged stronger
after the Second World War and managed to secure significant concessions from states
and employers. These concessions were then codified into progressive income policies,
generous employment benefits and democratic participation in the affairs of corporations.
In the case of South Africa, such privileges were reserved for white workers as they were
co-opted into “machinery” for monitoring and controlling cheap black labour.
However, since the 1970s, there have been radical shifts in the labour market policy
landscape throughout the world. The subject of these shifts has been a sustained attack
on the labour market gains made by workers in previous periods. These attacks assume
various forms ranging from ideological and political to organisational restrictions of
working class organisations. In South Africa’s case, the struggles of the black working class
heightened in the 1970s and resulted in the then government introducing reforms that
legalised black trade unions and allowed them to participate in the collective bargaining
system. In the wake of the democratic transition in 1994, the new government joined other
states in implementing measures to relax labour market regulations in what was termed
“labour market flexibility” and put into place by various pieces of labour legislation passed
since the inception of the new government. In this new course, there is no commitment to
regulated standards; instead, there is expressed devotion to variable conditions depending
on market conditions.
63 SOC2602/1
Lastly, we discuss trade and exchange controls. Trade policy controls the movement of
goods and services in and out of the country. Historically, states deployed measures such
as quotas and tariffs to regulate such flows with a view to protecting and cushioning local
industries from the ruin that global competition might bring. Since the 1970s, the calls for
free trade have seen countries dismantle such protections, with South Africa undertaking
to implement what was termed an “accelerated tariff reduction programme”, over and
above what was required by the World Trade Organization (WTO). The dismantling
of measures such as tariffs and quotas means that cheaper goods and services from
elsewhere in the world find easy access to local markets, thus suffocating the growth of
locally produced goods.
Exchange controls are measures aimed at governing the movement of money and
capital in and out of the country. Historically, states have used taxes and administrative
restrictions to keep such movements in check so that they do not destabilise the health
and soundness of the local economy. By so doing they were attempting to make sure that
money that enters local capital markets does so in a way that encourages its productive
investment and is not merely motivated by intentions to make quick returns. Since the
1970s, countries have dismantled and abandoned such restrictions through what is known
as exchange control liberalisation. This has made it easier to move money in and out of
capital markets of countries as and when determined by short-term considerations of
making profits, but without benefiting the country in any tangible way. It is on account
of exchange control liberalisation that there has been exceptional growth in the amounts
of daily trade in the capital markets. It is this that also explains the level of volatility in the
value of currencies due to the incessant buying and selling that goes on with no measure
being taken of the rate at which this happens.
To sum up, the state can either play an active role in the organisation and management
of economic activities or it can choose to play a passive one, restricted mainly to that of
cultivating conducive conditions for the private sector to assume a principal position in
leading economic development and reconstruction. The state can choose to be directly
involved in the economy through ownership, provision and regulation, but it can also opt
to stay out by privatising, abdicating provision and deregulating a range of markets. The
model according to which the state plays a passive role and in which the private sector
emerges as the leading force in social economic development has gained ascendency
as the model of choice for states since the early 1970s. This started with advanced
capitalist countries and has slowly cascaded to almost, give or take a few variations, all
countries in the world today. These approaches have become known as neoliberalism. The
widespread adoption and almost universalisation of neoliberal approaches to economic
development follow in the wake of the globalisation process. South Africa entered the
democratic transition at the time when neoliberalism was already hegemonic within the
global capitalist system.
By now it should be becoming easier to relate to the different ways in which the state can
steer economic activity, as well as to the macroeconomic terminology used to express
them. With that, the stage is now set for concrete demonstration of how these different
approaches found expression in the diametrically opposite experiences of the Keynesian
revolution and the neoliberal revolution. Over and above the institutional features of each
tradition, this presentation will emphasise the conditions that gave rise to each.
64
In an insightful discussion of the evolution of macroeconomic policy in post-apartheid
South Africa, Oupa Lehulere (2003:40–41) cautions against an erroneous assumption that
economic development is a product of the subjective preferences and choices exercised
by policy-makers. He contends that the question of the relationship between the actions
of policy-makers on the one hand, and the process of capital accumulation on the other,
is an important one for the general understanding of economic processes. In other
words, the issue is not primarily whether or not those entrusted with the power and
responsibility to determine economic policy have a preference for Keynesian or neoliberal
principles, but rather one of illuminating how the adoption of each choice expresses the
central dynamics of capitalist development at a point in time. This is mainly because the
production distribution and consumption of goods and services in a capitalist economy
are driven by the need to make profit. The process of making profits for the capitalist in
turn presupposes the exploitation of the working class, i.e. extraction of more and more
unpaid labour from those who produce. By implication then, the economy – the process
of producing, distributing and consuming goods and services – is, at the same time, a
process of struggle between the capitalists and workers, with the latter pushing for a share
of what is produced in the form of wages, and the former pushing for a larger portion
of that accounting for profits. In the ultimate sense, the nature and outcome of such
struggles play a cardinal role in shaping institutional choices and appropriate state forms.
Accordingly, the discussion of the two traditions and approaches to economic development
will pay attention to not just the distinct ways of organising state activity in the economy,
but most significantly, to the material, social and political conditions that made each both
historically necessary and possible. In the next section we explore the institutional features
of the state form designed through Keynesian principles and examine the conditions of
capital accumulation that made this necessary and possible, including the balance of
forces between the ruling classes and the working class.
Activity 5.3

(1) Compare and contrast the different ways in which fiscal policy, monetary policy
and labour market policy are applied in the broad macroeconomic traditions i.e.
Keynesianism and neoliberalism.
8 Feedback
Although there are other differentiating dimensions of the two broad traditions (Keynesian-
ism and neoliberalism), in this discussion you are required to focus on three aspects. For
your own learning purposes and development, always bear in mind that the differences
are much deeper and broader than the issues we request you to focus on. In other words,
an exhaustive discussion of the differences should take into account the totality of the ways
in which the state relates to the economic affairs of society.
65 SOC2602/1
5.3 THE POST-WORLD WAR II ECONOMIC BOOM AND THE
KEYNESIAN REVOLUTION
To comprehend the scale, significance and meaning of the neoliberal transformation
that evolved in the wake of the prolonged structural crisis that erupted in the early
1970s, it is necessary to develop a firm appreciation of what it is that was being altered.
In other words, we need to pay closer attention to the state form and model of capitalist
development that evolved in the longest growth period of world capitalist development,
the Keynesian Welfare State or Social Democratic State. This state form became prevalent
in some countries of the advanced capitalist world from 1945 until the early 1970s.
In what follows we briefly look at the specific institutional features of the state as well as
an examination of the social, economic and political conditions that made this way of
forming the state and shaping its economic roles necessary and possible.
5.3.1 Institutional features of the Keynesian, Social Democratic or

Welfare States
Capitalism was (and is) by and large organised on the basis of an active role of the state
in the economy and (capitalism) assumes various forms in different parts of the world.
Most economies emerged from the Second World War with strong states that intervened
actively in the economic affairs of their societies. As a phase in the evolution of capitalist
development on a world scale, most economies were thus organised along the lines
of what came to be known as Keynesianism, Welfare state or Social Democratic state.
Keynesianism, or social democracy, was a particular way of configuring the role of the
state consistent with prevailing conditions of capital accumulation. The state is formed
and constituted in a way that ensures that production, social provision and regulation
promote the health, stability and growth of economic activity. In the context of capitalist
economies, such health and stability can mean a suitable level and rate of profitability
to encourage investment or deployment of capital by those who have sufficient money.
Accordingly, Keynesian or social democratic states were predicated on key elements such
as direct ownership of productive assets, extended scope in social provision and an active
role in the regulation of various markets. Dumenil and Levy (2004:12–18), maintain that
“the Keynesian state became involved in controlling the level of economic activity and
growth through various regulations and policies (having to do with credit, the currency,
and the oversight of financial institutions) and regulating state spending according to the
economic situation, thus affecting global demand, and thus production”. They also point
out that such states also used the idea of sharing the fruits of growth’ as an organising
framework, thus paving the way for them becoming more involved in “education, research,
and industrial policy, sometimes directly taking over certain sectors of the economy”. The
scope of state involvement also covered such areas as social protection (health, family,
retirement, and unemployment) as well as significant labour market advances such as
job guarantees, decent working conditions, and increased purchasing power of workers
through progressive incomes policies. This set of conditions became the sum-total of
the role of the state in world capitalism as it emerged from the Second World War and
experienced its long wave of sustained growth up to the late 1960s and early 1970s.
66
From a macroeconomic policy point of view, as illustrated in the last section, the variety
of state forms that followed the dominant form of capitalist development during this
period were characterised by expansive fiscal policies, growth-oriented monetary policies
and strong regulatory measures. Such states were defined by prevalence of fiscal deficits,
progressive tax policies, ownership of state assets, albeit selective, strong regulatory
measures and relaxed monetary policies. This became an era of the institutionally large
state with budget deficits as an ever-present feature so as to finance the roll out of an
expanding floor of essential services. In other words, the various policy instruments
were configured to produce a state that is actively involved in productive activities, that
assumed a decisive responsibility in the delivery of social services and that instituted
strong measures to regulate various spheres of economic activity.
Consequently, Keynesianism presided over what ranks as the longest sustained growth
period in the history of the development of capitalism. The post-war reconstruction
boom unleashed a prolonged period of high economic growth rates, increased levels
of productivity and excessively high rates of profitability that lasted from 1945 to the
early 1970s. The boom saw advanced capitalist economies surging relentlessly forward
with incessant economic growth rates, accelerated job creation, consistently high profit
rates, and rising incomes. This period, referred to by Ernest Mandel as the long wave of
capitalist development with an expansionary tone, made possible the class compromise
in which both capitalist profits and workers’ wages could rise concurrently in ways that
had not been possible before. In this way, the sharing of the fruits of growth translated
into general improvements in the quality of living standards of the working class and
poor in advanced capitalist countries.
5.3.2 The political and material conditions making the Keynesian

revolution both necessary and possible
As already alluded to in the previous section, the adoption of policies giving rise to
an expansive role of the state in steering economic activities is not just a result of the
ingenuity of those entrusted with the responsibility of exercising the judgement over
which approach to adopt; most crucially it is about the sets of compelling and facilitating
factors. In what follows we address the conditions that made the rise of social democracy
both necessary and possible as a way of managing the form of capitalism that emerged
after the Second World War.
In summing up the conditions in the post-second world war period that made the
Keynesian revolution a political and economic necessity, Gary Teeple (1995:17) points out
that “with the exception of the United States, most advanced industrial economies lay
exhausted or in ruins, and for the working classes, the experience of the 1930s and the
collective war effort made socialism an attractive alternative to the fears and indignities
of the capitalist labour market. To reconstruct national capitalism in Europe and to resist
widespread popular support for socialism in the industrial world, the capitalist classes
had to employ the state to a degree not seen in earlier decades to socialise the costs of
reconstruction and to circumvent a repeat of the Depression and its consequent class
struggle … and so began almost three decades of unprecedented state intervention” .
67 SOC2602/1
In other words, there were two dimensions that propelled the degree of state intervention
as experienced in most countries in the form of the capitalism that emerged during this
period. The economic dimension relates to the terrible state of the economies of most
of the countries and the consequent imperative for reconstruction and development.
The political dimension relates to the consciousness and militancy of the working class
in most of these countries. A combination of these factors meant that the normal course
of capitalist development inherited from earlier periods was not feasible if the viability of
the system was to be secured. In other words, capitalist classes had to invent new ways
of organising capital accumulation that accommodate the imperative of reconstruction
whilst making concessions to a working class that was ready to raise the stakes in the
quest to improve its working and living standards. This is the dual reality that confronted
capitalism at the end of the war – on the one hand, economically, reconstruction was
urgent so that material needs to reproduce life necessities could carry on and, on the other
hand, politically there was a stalemate as the working class emerged from class battles
with enough strength and militancy to ensure that it would not be ignored in the form
of that reconstruction and the subsequent form of capitalist development.
It is this dual reality of economic conditions and political circumstances that account for
the emergence of macroeconomic policy being configured in a way that saw the state
intervene in in the form of social policies, programmes, standards, and regulations in order
to mitigate class conflict and provide for, answer, or accommodate certain social needs for
which the capitalist mode of production in itself has no solution or makes no provision.
The moral of this story is that a variety of institutional features of state intervention in the
economy that came to be variously embraced under such generic terms as Keynesianism,
social democracy or welfarism, were not an outcome of the natural course of development
of capitalism. Hence, the pertinent allusion by Teeple (1995:5) that such state forms must
be understood “… as a product of a historical period in the development of capitalism,
as resting on certain national and international configuration of social forces, ideas, and
political and economic institutions”. They represent outcomes that were historically
contingent on circumstance and condition that prevailed at a point in time in the evolution
of capitalism. Immediately such conditions and circumstance were eroded, a new historical
epoch was opened. The changing conditions of capital accumulation in the early 1970s
and the accompanying realignment of political forces between the capitalist and working
classes created the impetus for a search for new ways of organising capitalism. In this lay
the social, political and economic roots of the neoliberal revolution.
Activity 5.4

(1) Make a short summary of the social, economic and political conditions that made
Keynesianism both historically necessary and feasible.
68
9
10 Feedback
You are expected to think about the conditions without which Keynesianism or social
democracy, as it evolved historically, could not have done so. In your notes, you must pay
attention to both the material and political circumstances. In this way, you are not only able
to account for why the phenomenon of social democracy came into existence, but you are
also able to explain why it declined and collapsed in a particular period in the evolution
of global capitalism.
5.4 THE END OF THE POST-SECOND WORLD WAR BOOM AND

THE BIRTH OF NEOLIBERALISM
As in the case of the Keynesian revolution, the birth of neoliberalism is not merely
about exercising preference for one set of macroeconomic principles over another;
most importantly about comprehending a confluence of social, economic and political
dynamics that propelled its origins and development. Apart from a discussion of the
general features of neoliberalism as an approach to organising the role of the state in the
economy, in this section of the learning unit we will also look at the role of the economic
crisis that erupted in the early 1970s in making such transformations a necessity, as well
as the changing balance of class forces that made possible the dismantling of the post
war class compromise upon which the form of capitalist development of that period was
anchored.
5.4.1 The economic and material basis for the birth of neoliberalism
The Keynesian revolution was driven by the imperatives of post war reconstruction and
the associated balance of forces in which there was a stalemate between the capitalist
classes and the working classes that necessitated a compromise as a basis for securing
further development of the capitalist system. The neoliberal revolution, on the other
hand, was driven by the dynamics unleashed by the economic crisis and the defeat of
the working class that, in turn, made it possible for the capitalist classes to design the
responses to the crisis in the image of their own interests, with little or no regard to the
interests of the working class and the poor as had happened in the previous phase. In its
essence, neoliberalism constituted measures adopted by the capitalist classes, initially of
the leading capitalist countries and later elsewhere in the capitalist world, to resolve the
crisis of capital accumulation. An understanding of key aspects of this crisis is important
to discern the essence of neoliberalism and illuminate the impulses that enlivened it.
The end of the post-war boom and the protracted economic crisis that resulted discerned
a break between two phases in the global development of capitalism. A generalised
contraction marked the end of the era of high economic growth rates and the beginning
of slow economic growth and rising unemployment, amongst other indices of the new
phase. Radical political economists, following the intellectual foundations build by Karl
Marx, implicate the inherent functional dynamics of capitalist economies as lying at the
root of the crisis that ensued. They single out declining profitability and over-accumulation
69 SOC2602/1
of capital as crucial underlying trends that account for the nature and sources of the crisis
of capital accumulation (McNally, 2011:28–36; Dumenil & Levy, 2004:21–28). Consistent
with Marx’s conception of capitalist production process, they maintain that the rate of
profit is the motor force of capitalist production and that, when it is low or declines, firms
are in trouble, disrupting the general functioning of the economy. The rate and level of
profitability is the propelling force behind fundamental economic processes of production,
distribution and consumption. It is the utmost ingredient in the logic of process of capitalist
production. Under capitalism, production, distribution and consumption are regulated
by pattern of profitability. The availability material needs for reproducing and sustaining
human life is regulated by whether or not those with the means to supply these material
needs can realise the desired level of return in the form of profits, which is what motivates
their involvement in such activities in the first and last instance. In other words, under
the capitalist system, the degree of profitability determines whether or not, and how,
the creation of jobs, the building of new factories and buildings, the acquisition of new
machines and equipment, the building and operation of office towers and so on will be
undertaken.
The foregoing analysis of the logic of capitalist production process leaves no reservation
about the conclusion that high profitability will attract investments by those with money
or capital, the capitalists and that, equally, low levels of profitability will entice lesser or low
levels of investment. Logically, a slowing of investment leads to a decline in the growth
of output and employment. The low output and employment levels point to the second
aspect of the capitalist crisis, the over-accumulation of capital. This means that those
who own and control the means of production have acquired and accumulated more of
these than they can invest or deploy profitably. The means of production in this case exist
in two forms – the physical one in the form of factories, mines, farms, buildings and so
on, as well as the non-physical one in the form of money. By implication, the capitalists
have physical means of production that they cannot utilise since profit levels are low and
inferior, and they are also in possession of a great deal of money that they cannot use to
purchase new means of production.
It is in these two senses that the capitalist crisis that erupted in the early 1970s is said
to have declining profitability and over-accumulation as the two crucial dimensions.
It is also these two dimensions of this crisis that neoliberalism emerged to specifically
deal with. At the substantive essence of neoliberalism was a set of social, economic and
political measures aimed at addressing these two aspects of the crisis of accumulation.
Neoliberalism expressed a transformation programmed aimed at restructuring the role
of the state to make possible the new conditions of capital accumulation and, thus, the
resolution of the crisis and the restoration of capitalist production processes on a firm
foundation. It is in this way that neoliberalism evolves as a transformation project whose
characteristic purpose is the erosion of all the social, economic and political institutions
associated with the previous phase of capitalist development that fell under the generic
term “Keynesianism”. These institutional manifestations of Keynesianism were no longer
consistent with the new conditions of capital accumulation and had to be dismantled. The
social, economic and political conditions that gave rise to them in the post war period
were no longer viable.
70
5.4.2 Political factors facilitating the rise of neoliberalism
In addition to the material developments that made the birth of neoliberalism necessary,
it is also crucial to appreciate this phenomenon as a product of a historical period in the
development of capitalism, founded on a certain national and international alignment
of social forces. If the previous phase of capitalist development was shaped by the class
compromise in which the capitalist classes had little room but to accommodate the needs
of the working class as a basis to reconstruct and secure the development of post war
capitalism, what are the class configurations that underpinned the phase that opened
up in the wake of the capitalist crisis of the early 1970s?
In a number of important capitalist countries, neoliberalism as a social, economic and

political programme is based on the defeat of the working class. The defeats suffered by
the working class internationally were not delivered as a single event but rather unfolded
in a series of setbacks in many countries around the world and with significant landmark
moments that set the scene for the completion and widespread implementation of
neoliberalism. Of these landmark developments in the history of class battles that gave
birth to neoliberalism, there are two that stand out as pioneering. The first is the electoral
victory of the Tory government and the installation of Margaret Thatcher as the Prime
Minister of Britain. She immediately focused her energies on dismantling trade union
power and accomplished that in a series of episodes. Then, Ronald Reagan rose to the
presidency of the United States and launched a series of attacks on labour on his way
to introducing measures to deregulate labour markets as well as trade and financial
markets (Harvey, 2005:1). A few years earlier, a democratically elected leader of Chile,
on the periphery of global capitalism by any standard imaginable, was overthrown in
a coup d’état that put to an end not only democratic rule, but that also paved the way
for the reversal of social reforms of the welfare state and forcefully installed free market
policies (McNally, 2011:34). In other parts of the world, what came to be referred to as the
Global South, neoliberal policies were to be later forced on countries through a number
of International Monetary Fund (IMF) and World Bank (WB) driven programmes known as
Structural Adjustment Programmes (SAPs). Here too, the adoption and implementation
of these policies required the defeat and subjugation of the working class and poor
social groups in these countries. The crisis and eventual collapse of the Soviet Union
and Eastern European socialist states also contributed to the triumph of neoliberalism
in that removed an alternative pole towards which humanity could look for a different
way of organising society and managing human affairs. The actual content and meaning
of these experiments on humanity notwithstanding, their mere existence in the context
of the Cold War has always been a source of instability in the capitalist world, and their
demise, therefore, removed the ideological and political threat in terms cultivating ideas
that could prove hostile to the realisation of the requirements of the development of
incipient phase of capitalist development on the world scale.
5.4.3 Institutional features of neoliberalism as a phase in the local and

global form of development of capitalism
As in the previous phases of capitalist development, neoliberalism derives its substance
from the principal features of the international crisis of capitalism – declining profits and
71 SOC2602/1
over-accumulation of means of production. The assortment of measures unleashed first
in advanced capitalist countries, and later transposed to other parts of the world, were
aimed at resolving these aspects of the crisis. In other words, neoliberalism represents
a set of interventions to reverse the declining profit levels and create new avenues for
profitable investment of over-accumulated means of production. It is in this sense that
Dumenil and Levy (2004:11–18) insist that neoliberalism is principally aimed at restoring
the revenues and incomes of the leading capitalist classes by reversing the downward
pressure on profits and creating new spheres of profitable investment. Neoliberalism is
a generic term used to denote the social, economic and political measures embraced to
tackle these crucial attributes of the crisis. In their institutional totality, these are measures
that pivot on restructuring the role of the state in the economy to make possible an
upward trajectory in profits and availability of investment opportunities for those who
command sufficient amounts of resources to undertake productive activities of various
kinds. To the extent that the state constituted an obstacle towards the realisation of any
of these organising objectives, it had to be restructured. It is in this context that all the
institutional features of state activity associated with the Keynesian wave of capitalist
development, and that no longer served the requirements of capital accumulation in
the new phase, had to be dismantled. Below, we look at various forms assumed by this
restructuring. Always bear in mind the different roles the state plays in economic life,
as discussed in previous sections. In addition, and most significantly, always keep at the
back of your mind how the elements of the restructuring programme correspond with
the key attributes of the crisis.
In contradistinction to Keynesianism, the central organising logic of neoliberalism pivots

around the principle of a lesser role of the state in economic activities of production, social
provision and regulation. Hence, this form of development of capitalism is also referred
to as the profit-led path to socio-economic development. The market or the private
sector is the leading force in undertaking social and economic development; the state
must cultivate conditions to facilitate this, including where necessary undertake political
measures to make this social order possible.
Neoliberalism emphasises the withdrawal of the state from the direct involvement in the
production of goods and services and hence the centrality of privatisation of state-owned
assets and corporations. During the Keynesian era and the boom years that underpinned
it, some profitable and potentially profitable areas of investment fell under the ownership
and control of the state. As already indicated, limited spheres of profitable investment
was an important feature of the capitalist crisis that neoliberalism aimed to resolve. The
neoliberal call for privatisation signifies the craving, yearning and desire by the capitalist
to capture such profitable areas of investment. In this way, capitalists can deploy the
huge amounts of money and other means of production in a way that guarantees profits.
Neoliberalism also emphasises the withdrawal of the state from the general provision of
essential social services. Under the previous phase, the state became massively involved
in the provision of such basic services as health, education and various social welfare
entitlements. The state used its fiscal policies, taxation in particular, to siphon wealth from
capital and distribute it in the form of expanded social provision. Such a role had become
inconsistent with the new conditions of capital accumulation and neoliberalism set out
to eliminate it. In the first instance, by extracting as much in taxes as it could, the state
72
was reducing the amount of profit available to the capitalists. Secondly, by being directly
involved in the provision of such services, the state was occupying a sphere that could
be profitably used by the capitalists. It is this aspect that the neoclassical economists are
referring to when they talk about the “crowding out” effect of the state. Accordingly, the
role of the state in social provision had to be scaled back.
The various regulatory measures deployed by the state to coordinate various markets
within capitalist economies under the previous phase also constituted formidable barriers
to the rate of profit and thus the revenues and incomes of various capitalist strata, along
with these, also had to be dismantled.
The first such area of regulation relates to the role of the state in determining the general
conditions of the labour market. As evident during the previous phase, the state put in
place labour laws that regulated how a range of conditions of employment – such as
working hours, hiring procedures, wages, benefits and so on – were determined. Such
state-driven regulations saw real improvements in the general conditions of the labour
market. As a result, the working class did experience real improvements in wages and
other working conditions. Trade union organisations also played an important part in
the upward trajectory of the incomes and living standards of the working class during
that phase. In the context of the crisis of capital accumulation of the early 1970s, high
wages and favourable working conditions exerted downward pressure on the profits
of the capitalist. The call for the deregulation of the labour market is about undoing
all the gains of the previous phase that have since become inconsistent with the profit
requirements of the new period. Labour market flexibility is another term that was used
to convey the range of changes that became necessary in order to restore the profits and
incomes of investors. The aim here was to diminish the role and power of the state in
determining the level and quality of labour market conditions. To the extent that trade
unions constituted obstacles towards the attainment of this ideal, they had to be dealt
with and this is precisely how, under Thatcher and Reagan, they became the first targets
of the neoliberal transformation.
Neoliberalism also took aim at other aspects of state regulation that stood in the way
of the imperatives of restoring profitability and opening up new spheres of profitable
investment for capital. The markets for goods and services, as well as the market for capital,
had been under tight control during the previous phase and this needed to be loosened.
Trade and exchange control liberalisation became emblematically important features
of how the state organised these spheres. Trade liberalisation, or free trade, meant that
new markets for the goods and services that could not be purchased had to be created.
Exchange control liberalisation meant affording capital the freedom to move in and out
of countries in search of high returns.
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Activity 5.5

(1) Make a short summary of the factors (both economic and political) that propelled
the evolution of neoliberalism to becoming an approach of choice, from the early
1970s onwards, when it came to organising how the state relates to the economy.
11 Feedback
To adequately account for the evolution and dominance of neoliberalism; you need to ad-
dress the nature of the crisis that afflicted capitalism in the early 1970s and show how the
institutional aspects of neoliberalism are aimed at addressing elements of that crisis. Your
summary should also describe the balance of forces that made the widespread acceptance
and implementation of neoliberalism possible.
5.5 CONCLUSION: SOCIETY IN THE IMAGE OF NEOLIBERAL

PRINCIPLES
In the closing decades of the preceding century, the neoliberal revolution had cemented
its foundations as the dominant outlook framing the course of social and economic
development in many, if not all the countries in the world. At the core of this world outlook
has been inviolability and supremacy of private property rights. Fundamental to this
agenda has been the reincarnation of the market as panacea to all the economic and social
ordeals of era under consideration. Relative to the conditions and outcomes of the previous
phase of capitalist development, the variety of changes and transformations unleashed
consistent with the precepts of neoliberalism (the phase of capitalist development that
opened up with the beginning of the international economic crisis in the early 1970s
and is still unfolding today) has been a polar opposite to the golden years in a number
of instructive ways.
Economically, the neoliberal form of capitalist development has been defined by

persistently low levels of economic growth which, in turn, translated into stagnant levels
of new wealth formation in the form of investment in new productive assets. As already
alluded to in earlier sections, when levels and rates of profit are too low, capitalists have
little or no appetite for injecting their resources into new productive capacity; let alone
the fact that they still sit with over-accumulated or surplus capacity for which they must
still find profitable areas for deployment. The insistent low levels of economic growth
also translated into growing unemployment to a point where, in some countries in the
world, South Africa being one of them, we began to hear of the rare phenomenon of
“jobless growth”. In other words, unlike in the previous phase, it was no longer given that
economic growth would result in the trickling down of wealth in the form of the creation
of jobs through which to expand the production of goods and services.
74
At a social level, the neoliberal era has also given rise to societies characterised by
rising levels of inequalities, increasing levels of poverty and a general decline in living
standards. The low, and at times negative rates of economic growth play an important
part in the creation of this social reality of existence for the majority of poor and working-
class communities across the world. The other side of this coin points to the regressive
distributive policies that accompanied the neoliberal revolution. In this context, tax
structures, fiscal policies, monetary policies and labour market policies have all been
configured in a way that redistributes societal resources in favour of richer sections of the
populations. In most countries, these required the dismantling of the aspects of the welfare
state that were central in ensuring an expanded floor of incredible social benefits that
redistributed incomes in favour of the poor and the working class and thus ameliorated
poverty. In the case of South Africa, as will become apparent in the next learning unit,
the neoliberal revolution required a specific way of dismantling the racial welfare state
that apartheid expressed in its social redistributive mechanisms.
At a political level, the neoliberal revolution has also necessitated the reconfiguration
of political institutions in a way that promotes the interests of the capitalist classes. At
the core of the approach to this political transformation has been the limitations of the
substance of political rights. There is a mistaken belief that neoliberalism is only about the
limitation of social and economic rights, to the exclusion of political or citizenship rights.
The first in a variety of measures aimed at limiting the meaning and substance of
political rights has been the alteration of decision-making processes as they impact on
important aspects of capital accumulation under neoliberal conditions. One example in
this connection is the independent status of central banks that has become an emblematic
element in the management of monetary policy under neoliberal regimes worldwide. In
the case of South Africa, as will be shown in later learning units, the independence of the
Reserve Bank has gone beyond the realm of policy into a constitutionally guaranteed and
sanctioned provision. The implication is that such a crucial institution of policy making is
completely insulated from the popular wishes and aspirations of the citizenry. Whereas, in
the context of representative forms of democratic participation the voices and interests of
the electorate are expected to be funneled through their parliamentary representatives
and such wishes and interests converted into government policy, such reach is severely
limited when it comes to such matters as falling under the scope of central banks. Their
independence is also supplemented by the narrowing of the scope and goals around
which their policy outcomes are framed, and in most cases, their mandate is restricted to
maintaining price and exchange rate stability. This means that much attention is devoted
to combating inflation, with resultant high interest rate regimes. As in the previous phase,
central banks also have as their central mandate the promotion of economic growth and
employment creation.
Another area that expresses the shielding away from popular access of important aspects of
economic and social policy relates to the elevation and centralisation of power in selected
government departments to the detriment of the rest. In this case, the national treasury or
ministry of finance has become the most powerful locus of power and influence without
whose consent no policy instrument sees the light of day. Apart from the mere fact of
being the department at the hub of resource mobilisation and allocation, it is also the one
that approves the necessity and feasibility of programmes. It has become commonplace
75 SOC2602/1
to hear that, in South Africa as elsewhere in the neoliberal hemisphere, any government
intervention that cannot gather the stamp of approval from national treasury has very
little, if any, chance of implementation.
In sum, as they emerged in the wake of the international crisis of capital accumulation and
went on to evolve over decades thereafter, neoliberal states have presided over low rates
of economic growth that also contributed to the decline of progressive social reforms.
The anti-growth and socially regressive distribution policies have definitely resulted in
rising inequalities, growing unemployment and increasing poverty across the neoliberal
world. Politically, as a regime grounded in the denial of economic and social wellbeing
of the majority of the populace, neoliberalism has also as predictable trajectory become
undemocratic in its political practices. Logically, a social and economic order that is
configured not only to deny but erode the material interests of the majority of the people
cannot at the same time be democratic and accountable in the way it promotes the rights
to participate in decision-making processes. It is in this way that, under neoliberalism, a
range of measures have been undertaken to render the political right to determine the
substance of governance decisions so purposeless and meaningless for the majority of
the citizenry.
In the next learning unit, we look at how neoliberalism evolved in the South African
context and we explore the specific social, economic and political dimensions it assumed.

(1) Compare and contrast the main features of the Keynesian and neoliberal approaches
to the role of the state in economic development. In your discussion, focus on the use
of macroeconomic policy instruments in each approach.
(2) Discuss the conditions that gave rise to the evolution of the Keynesian form of capi-
talist development in the post-Second World War period. Also indicate what gave
rise to its decline.
(3) Write an essay in which you describe the social, economic and political conditions
that made neoliberalism both necessary and possible as a particular way of organis-
ing the activities of the state around the economy.
(4) Write an essay in which you discuss your own judgement of the impact of neoliber-
alism on the economic, social and political aspects of societal development today.
76
Learning unit 6
The consolidation of Neoliberalism in post-Apartheid
South Africa
Upon completion of this learning unit you should be able to:

• describe the broad features of the development of capitalism in South Africa
• define and describe key elements of the organic crisis that characterised the apart-
heid capitalist system from the mid 1970s
• give an account of the specific conditions under which neoliberalism evolved and
rose to dominance in South Africa
• explain the major policy and institutional form assumed by neoliberalism in South
Africa
Key Concepts
• Apartheid capitalist system

• Political stalemate
• Organic crisis
• Negotiated settlement
• Accelerated and Shared Growth Initiative of South Africa (ASGISA)
• New Growth Path (NGP)
• Growth, Employment and Redistribution Strategy (GEAR)
• National Development Plan (NDP)
THE APPROXIMATE TIME YOU SHOULD TAKE TO WORK THROUGH

LEARNING UNIT 6 IS FOUR (4) HOURS.
6.1 INTRODUCTION
In the preceding learning unit, we discussed the defining features of neoliberalism, we
gave an account of the conditions making its rise and widespread implementation both
necessary and feasible and we made broad allusions to the general nature of societies
constructed in the image of the neoliberal principles. In the main, societies built on
neoliberal foundations tended to be economically unequal, socially imbalanced and
politically restrictive. The persistently low levels of economic growth rates and the changes
in the political alignments contributed to the unrelenting decline in social reforms, with
the resultant exceptional levels of inequalities and record levels of poverty across the
77 SOC2602/1
world. Political regimes whose primary vocation has been the design and execution of
neoliberal policies also found themselves having to constrict the exercising of political
rights with a view to rendering them meaningless with respect to the supremacy of the
private sector as the leading force in social and economic development.
By the time neoliberalism began to sink and consolidate its roots in post-Apartheid South
Africa’s political economy and in the context of the democratic transition in 1994, its values
and principles had already been reigning in most parts of the world for more than three
decades. Although, in general, the evolution of the neoliberal philosophies’ economic,
social and political developments took place as described in the previous learning unit,
the finer aspects of this trajectory are determined by the concrete manifestation of these
factors in each country. It is for this reason that it becomes obligatory to explore the
peculiar circumstances in which neoliberalism emerged and evolved – as a minimum
assurance for understanding its local design and principal features. In view of this insight,
the learning unit begins with an exploration into the conditions, both material, social and
political, that made the evolution of neoliberalism both necessary and feasible in the South
African situation. To complete the analysis of the rise of neoliberalism in South Africa, the
learning unit will look closely at that which was being transformed. The learning unit will
then close with a detailed examination of the policy and institutional manifestation of
the hegemony of neoliberalism in the country.
6.2 THE DEVELOPMENT OF CAPITALISM AND ITS

INDENTATION ON SOUTH AFRICAN SOCIETY UP TO THE
EARLY 1970s
In the previous learning unit, we saw that neoliberalism is a set of measures undertaken
by capitalist classes to restore their incomes that were being eroded by the crisis of
capital accumulation that erupted in the early 1970s. The magnitude of the crisis is,
however, dependent on the specific path of development assumed by capitalism in
each country, as well as the material, social and political contradictions that arise from
such a developmental trajectory. With reference to the nature of these contradictions
in South Africa, Davies et al (1985:2) contended that “… the historical development and
contemporary functioning of the apartheid system can only be properly understood
through an analysis of the contradictions around and the interlinked processes of capital
accumulation, class struggle and national liberation”. In this section, we set the scene
for the unfolding of these contradictions by looking back at how capitalism developed
in South Africa, with a view to clarifying the peculiar way in which the crisis of capital
accumulation registered locally. The section closes with a discussion of the main features
of the form of state that corresponded to the form of development of capitalism in the
country.
6.2.1 Origins and main features of the capitalist apartheid system

Although the South African social formation had been undergoing significant
transformations since the arrival of European settlers, it was only with the discovery of
diamond and gold deposits in Kimberly and Johannesburg respectively, in what came to
be known as the mineral revolution, that capitalist production first emerged on a large
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and expanding scale. “It is the mining industry that emerged in the wake of the mineral
discoveries that in turn paved the way for the development of the wage labour system; the
mining industry also created the conditions for the development of capitalist production
in agriculture and manufacturing; and it was also in the mining industry that many of
the institutions or forms of exploitation and consequent national oppression specific to
South Africa were first developed in their modern form – the migrant labour system, pass
laws, job colour bar, the racial division of labour, the compound system etc.” (Davies et al,
1985:8). It can thus be said that the forms of exploitation and relations which developed
in the diamond and gold mining industries largely shaped the development of labour
practices and social relations in other sectors of the economy, and in society at large, for
subsequent periods of social, political and economic development in South Africa.
From its inception in the mineral discoveries, South African capitalism faced significant
challenges that shaped its propensity and huge appetite for cheap labour. Of the myriad
challenges experienced in early capitalist mining production, three were significant: fixed
price of gold, deep-level mining and low grade ore (Callinicos, 2014:18–19). The first meant
that mining owners could not manipulate prices to increase their profits as the prices were
fixed elsewhere. The second meant that mining owners needed expensive machinery
and special equipment to cope with requirements of digging deeper into the bowels of
the earth. The third meant that there was only a limited amount of gold to be extracted
from each ton of ore, meaning very little return for copious amounts of effort. All these
factors meant that labour was the only variable that the mine owners could control and
determine to influence the levels of profit. It is in that context that they had to make
labour as cheap as possible to keep their profit levels as high as possible.
The issue of which sections of the South African population were to become the permanent
source of this cheap labour that was so indispensable for the viability of the capitalist
system in the country was, however, sustainably settled only by class battles in the mining
industry in the early 1920s. The mining owners initially tried to cheapen all labour and
changed this strategy only in the wake of the aftermath of the early class battles that broke
out on the Rand. Although the so-called Rand Revolt in 1922 (see Callinicos, 2014:127–144)
was mainly restricted to labour battles over wages and working conditions in the mining
industry, the outcome proved to be a template around which the future trajectory of
capitalist development in the country was to be constructed.
On account of a variety of factors, the inchoate South African working class emerged
from the Rand Revolt with deep racial divisions. Although these battles decisively ended
in favour of mine owners, some sections of the South African working class, the white
sections, managed to extract significant concessions that shaped the further evolution of
the country’s political economy. Due to their relative political strength and organisational
experience, the white workers emerged from the battles with privileged positions as
compared to their black counterparts. Even though the working class emerged conclusively
defeated at the end of the 1922 class battles, the mining owners emerged from that
experience with a clear lesson – for the stability of the capitalist system in the country,
they had to abandon their efforts to cheapen all labour. From then onwards, all aspects of
societal development reflected the privileged position of white workers and the “cheap”
status of black workers.
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The further evolution of the South African political economy, in its various dimensions
– whether these were labour relations regimes, patterns of urbanisation, labour market
dynamics or access to political rights – reflected this basic reality that was cemented in
the political and industrial relations battles in the early 1920s. All of these dimensions were
moulded on the reality of the cheap status of black labour and the privileged position
of white labour. Various pieces of legislation, such as the Job Colour Bar and others that
later mutated into substantive racial segregation under apartheid, reflected the template
established in the aftermath of the Rand Revolt. Not only were black workers henceforth
excluded from the industrial relations system in the form of rights to form trade unions
and participate in collective bargaining, but they were also barred from participation in
certain job categories and levels. Not only were black workers refused free entry into
industrial and urban areas but, once there on account of employment, they were then
confined to compounds and hostels as part of the monitoring and control measures.
On the other hand, white workers enjoyed the privilege of political rights, access to the
industrial relations system with attendant rights to form trade unions and participate in
collective bargaining, exclusive reservation of all skilled and managerial positions in the
labour market, as well as secured residence in urban areas closer to places of employment.
All these basic features of capitalist development were later codified by successive white
governments, culminating in the inauguration of official apartheid with the electoral
victory of the National Party (NP) in 1948.
The mining industry’s endeavours to secure its particular labour requirements produced a
long-term racial division of labour in South Africa. This division of labour was constituted
by, firstly, skilled and semi-skilled, union-organised and relatively well-paid and privileged
white workers in the urban areas. These workers, mainly imported from Britain, brought
with them their traditions of trade union organisation. This, and their status as members
of the colonial power, provided them with the political means to secure relatively high
wages from the mine-owners and urban social services and benefits from the colonial
state. Secondly, this racial division of labour was constituted by an unskilled, cheap,
migrant African “reserve army of labour”. This African labour supply was forced into
rural “native reserves”, without the provision of health, welfare or educational facilities. It
was kept migrant largely by being prevented from moving permanently into the urban
centres by measures such as the “pass laws”. In addition, it was kept cheap on the basis
of the justification that African workers and their families had access to land (and thus
subsistence) in the reserves (later to become the “homelands”). As the reserves became
increasingly non-viable, this became an increasingly implausible justification. In this sense,
African labour was forced to bear the full costs of its own reproduction, unlike white labour.
(White workers’ reproduction, that is, their ongoing maintenance, was partly subsidised
by relatively good wages and benefits, and a variety of welfare measures provided by
the state. Black workers were denied all of this). It is in this sense that scholars of South
African political economy argue that cheap, migrant African labour actually subsidised
the growth and profitability of early capitalism in South Africa. It also subsidised the
relatively high wages and other benefits of white workers.
In summary, the capitalist economy emerged in South Africa owing to the discovery of
mineral wealth. From then on, the South African economy was inserted into an emerging
global capitalist system as an exporter of primary products and importer of capital goods,
80
and was based on the exploitation of cheap African labour. This laid the foundation for
the emergence of a “two nation”, racially-divided South African society. In the words of
Davies et al 1985:2, “the national oppression of black people in South Africa is a product
of, and was indeed the necessary historical condition for, the development of capitalism in
that country”. This characterisation of the form of capitalist development in South Africa,
based on the interlinked processes of capital accumulation, class struggle and liberation
from racial oppression was also endorsed by other scholars working from within the
tradition of political economy, such as Bernard Magubane (1990) and Dan O’Meara (1996).
Davies et al then aptly sum up the functional and institutional implications of this capitalist
developmental trajectory thus:
“Apartheid, then, is much more than a system of intense racial discrimination.

Fundamentally it, like the segregationist policies which preceded it, is a system of
economic, social and political relations designed to produce cheap and controlled
black labour, and so generate high rates of profit. As such, it serves both the dominant
capitalist class – which benefits directly from the high levels of exploitation and
rates of accumulation made possible by a cheap and controlled labour force – and
certain other privileged classes in white society”.
6.2.2 The Nationalist Party (NP) electoral triumph and the needs of
capitalist development in the 1940s
The intricate factors that shaped the path towards the electoral triumph of the Nationalist
Party (NP) in 1948 were themselves a specific expression of the interlinked processes of
capital accumulation, class struggle and struggle against racial oppression alluded to
earlier. Marais (2001) argues that the explicitly racist, institutionalised apartheid legal and
administrative measures imposed by the NP, “hardened” and intensified South Africa’s
oppressive, unjust and unequal “Two Nation” character. It made race the main criterion
for segmented and differential access to socioeconomic and political opportunities and
rights. The NP, for instance, intensified influx control over African labour and the pass laws
in particular, and cracked down on resistance organisations such as the African National
Congress (ANC) and the South African Communist Party (SACP). It also cracked down on
African trade unionism.
However, Marais further argues that the apartheid system “proper” was not much more
than an elaboration and intensification of trends already present, in fact, since British
colonialism. Thus, it is overstating and oversimplifying the case to hold that apartheid
signalled a historical rupture that represented the triumph of the (racist) ideology of
Afrikaner nationalism. According to Marais, “liberal” (and other) accounts emphasising the
ideological and irrational nature of apartheid neglect the economic, and indeed capitalist
nature and interventions of the apartheid state. For instance, central to the rise and policies
of the NP was the input of the “Broederbond”, a secretive group of middle class Afrikaners
committed to providing a binding ideology for the promotion of Afrikaner interests as
a whole, but of Afrikaner capital in particular. Marais argues that the NP represented the
economic class interests of an alliance of (mainly, but not only, Afrikaner) white workers
and small-scale capitalists, especially those drawn from the ranks of “poor whites”. “Poor
whites” were the group of white farmers proletarianised after the “Great Depression”,
81 SOC2602/1
and the small-scale capitalists referred to here were mainly located in the agricultural
and manufacturing capitalist sectors. In other words, the NP state actively intervened
in socioeconomic life, and focused in particular on promoting Afrikaner capitalism, and
the welfare of Afrikaners generally. For example, it began to implement a comprehensive
“affirmative action” programme which consisted of giving government accounts to
Afrikaner banks, government contracts to Afrikaner firms and top government posts
to Afrikaners. It also opened up the civil service generally to Afrikaner workers, and in
the process gave them access to all sorts of state benefits. It thus effectively created an
Afrikaner middle-class (or at least a segment of Afrikaner workers who enjoyed rising
incomes and benefits in a class alliance committed to the racially-exclusive status quo).
Marais (2001) argues that the rise and success of the NP and its policies reflected not only
the continuities, but also the contradictions and crises in capitalist South African society
that the existing state (then controlled by the United Party) could not adequately deal
with. A case in point here is that the UP had failed to satisfy the middle-class aspirations
of Afrikaners. Furthermore, South African capitalism depended on cheap, migratory
African labour, but the reserve system had become increasingly non-viable, which had
led to growing, semi-permanent African urbanisation. This was of great concern to mining
capital, because its profitability depended heavily on cheap migrant labour. Agricultural
capital was also concerned, because it did not want to lose its source of cheap labour to
the cities. Both mining capital and agricultural capital wanted to see the maintenance of
the reserve system and to contain the geographical mobility of African labour. However,
manufacturing capital needed a permanent urban labour supply and thus wished to see
the reform or relaxation of the migratory labour system. In other words, different interests
and needs of different branches of capital were making different demands on the state.
The NP government acted in response to all these pressures. It shored up the reserve
system, but exerted flexible control over African labour to accommodate these divergent
interests. It calmed the fears of the white working and middle classes, who were worried
about competition from African labour, and it protected nascent white small-scale
entrepreneurship from competition from African entrepreneurs. The NP solved, or at
least ameliorated, just about all the contradictions of the 1940s for all branches of capital
and benefited all whites generally. The NP indeed increased the profitability of South
African capitalism to the extent that foreign investment flowed in, and it was successful
enough to remain in power for 40 years. The costs of this, of course, were borne by the
black majority.
6.2.3 The apartheid capitalist system from the 1950s to the 1970s
According to Marais, during this period the apartheid state continued to develop and
indeed further refine the capitalist growth path it had mapped out for South Africa in the
interests of a racist class alliance (as it had done since the NP came into power in 1948). In
addition to raising the status and living standards of Afrikaners generally, the actions of
the apartheid state were increasingly geared towards realising its vision for modernising
South African capitalism. The state made it easier for Afrikaner capital to be integrated
with the dominant English monopoly capital. In many ways, the state actually encouraged
corporate conglomeration and monopolies by means of, for instance, fiscal and tax policies
that benefited the large corporations. The state chose an industrial strategy of import-
82
substitution (a strategy which includes high tariffs on certain imports to protect the local
manufacturing industry), still based on cheap African labour. The economy as a whole
remained heavily dependent on mineral exports, however, which to a considerable extent
financed through state intervention in other aspects of the economy. The expansion of
the manufacturing sector was also based on the state-aided, and rising, purchasing power
of whites, who could increasingly spend more of their income on consumer goods. The
apartheid state also made capitalist growth easier by setting up infrastructural parastatals
such as Iscor for the provision of steel and Eskom for electricity, and by improving transport
and telecommunications infrastructure. These parastatals also became avenues to soak
up white workers and grant them good wages and various benefits. Slowly but surely, a
modern working class and modern industrial capitalism, characterised by concentrated,
monopoly ownership, began to emerge in South Africa.
Unlike elsewhere in the world – where capitalist development took the form of social
democracy, welfare states and various versions of what is termed the developmental state
in East Asian countries where high wages, conducive working conditions and generous
benefits formed an integral part of the system – capitalist development in South Africa
during this period continued to be based on, and was thus in large part still subsidised
by, the cheap black migrant labour system. Furthermore, growth in South Africa became
increasingly mechanised and capital intensive and thus increasingly unable to absorb
surplus labour. This had obvious implications for both unemployment and an ultimately
limited domestic market for manufactured goods and services due to the constrained
purchasing power of the black and African working class.
The consequences of apartheid policy during this period was the creation of a welfare-state
for whites, which increased white consumptive power and encouraged the growth of a
white middle class. This enabled the consumption of products from a growing capitalist
(and, in particular, manufacturing) economy. Whites had access to a vast range of public
services, and white trade unions were able to secure protection against competition
from low-paid African labour by preventing the job colour bar from being raised. The
NP’s repeated election success was due to its pursuit of a nationalist, racist class alliance
that prevented Africans from gaining political and other rights and opportunities. African
communities (unlike the “Indian” and “coloured” communities – which were afforded
some, albeit limited access to various aspects of the “fruits” of apartheid) were excluded
from such benefits, with the result that class formation and differentiation among Africans
emerged only in a very rudimentary fashion, if at all. Importantly, this racist exclusion
also prevented Africans from becoming a significant market for the goods produced by
the expanding manufacturing sector. There were, however, significant merchant and
professional middle classes emerging within the Indian and coloured communities.
The South African economy “boomed” until the early 1970s, attracting foreign capital
for investment in the manufacturing sector in particular. However, the manufacturing
sector was very capital-intensive (and thus unable to absorb much surplus labour and
alleviate growing African unemployment). The South African economy also failed to
become export-oriented. The major exporting sectors and earners of foreign exchange
were the mining and agricultural industries. Furthermore, the capital-intensive nature
of manufacturing, and of the parastatals, entailed a continued reliance on the import of
expensive capital goods. The manufacture of capital goods hardly developed at all in
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South Africa. This placed great strain on the foreign reserves generated by the primary
commodity exporters. After the oil crises of the early 1970s, economic growth slowed
appreciably in South Africa, and indeed all over the globe.
Marais argues that South Africa’s economy was heading towards a crisis as a result of its
capital-intensive growth path, its dependency on importing capital goods, its increasingly
saturated “white” market, its failure to expand its export activities and its decreasing
productivity (due in part to the deliberate, racially-motivated creation of a shortage
of skilled black labour). Unemployment was rising, and the economy was becoming
increasingly vulnerable to fluctuations in the prices of primary commodities on the world
markets. This led to increasingly expensive capital goods, a net outflow of capital and
thus balance of payment problems. This in turn led to a debt crisis, rising inflation and
self-imposed International Monetary Fund (IMF)-like austerity measures. It was Africans
who suffered most from the effects of this growing economic crisis. Renewed worker
resistance emerged in the early 1970s. Low wages, lack of basic infrastructure in African
communities, destitution in the homelands and escalating unemployment meant that
already low incomes had to be stretched that much further. As a result, African urbanisation
became virtually unstoppable while shoring up Africans on marginalised, non-viable
land became increasingly impossible. The cycle of poverty in the reserves had grown
systemically untenable. African oppression under the apartheid system began to take
on an all-encompassing, deeply politicised nature. This was because it had begun to
manifest itself as a generalised struggle – simply to survive.
The South African version of social democracy or welfare state, also referred to as racial
Fordism by the political economist Stephen Gelb (1991), like developments elsewhere
in the capitalist world, experienced the lengthiest periods of sustained high economic
growth rates at the height of apartheid rule. Compared to developments elsewhere, where
upwardly trending wages, social welfare provisions and general living standards were
crucial defining features of the golden years of capitalist development, in South Africa,
the benefits of this period were felt only by the various sections of the white population.
In fact, the rate of exploitation and tightening of political control defined patterns of
capital accumulation during this period. However, as a result of developments in the
world economy in the early 1970s and the weight of the internal contradictions that have
been accumulating beneath the surface of societal affairs, the apartheid boom years also
came to an end as the South African economy entered a period of crisis. As will become
clear in the next section, the nature and magnitude of this crisis reflected the peculiar
evolution of capitalism as it developed in the mining industry and evolved in the next
decades in the image of the accumulation dynamics and class battles of the early 1920s.
Activity 6.1
(1) Make a summary of the main features of the development of capitalism in South
Africa from its inception in the mineral revolution up to the emergence of crisis
in the 1970s.
84
12
13 Feedback
You can actually be creative in your description of the key attributes of the capitalist system
as it evolved over the years in the country. One example is that you should consider doing
this in the form of a timeline that situates major social, economic and political develop-
ments in this trajectory.
6.3 CRISIS IN THE APARTHEID CAPITALIST SYSTEM AND THE

ROAD TO 1994
In the same way that the beginning of the crisis of capital accumulation unleashed a
number of developments that culminated in the rise of neoliberalism in most advanced
capitalist countries, in South Africa also, the crisis brought to the fore a range of forces in
the battle for the redefinition of the path of capital accumulation. According to Marais
(2001), the way in which capitalism had developed in South Africa had begun to produce
contradictions that threatened continued capital accumulation. The crisis that emerged
was a classical one of over-accumulation and declining profits, except that in the South
African case the profit crisis was linked to corresponding crises in the social, political and
ideological spheres. Capitalism in South Africa had long depended on a combination of
cheap African labour, import substitution, capital-intensive industrialisation and the need
for a growing market for manufactured products. But (repressively) keeping labour cheap
was backfiring on and undermining capitalist development in apartheid South Africa.
Low wages to African labour limited the possibility of expanding the local consumer
goods market. Furthermore, the lack of services to African communities (and the denial
of educational opportunity is particularly relevant here) and protections against cheaper,
better quality imports, and the capital-intensive nature of industrialisation, created a
scenario of low productivity, an inability to absorb surplus labour, and high unemployment
levels. This crisis threatened the legitimacy of the apartheid state, in that it produced
tensions between the state and parts of the rest of the ruling alliance (capital, and whites
generally). In addition, it posed a threat to its authority, due to the re-emergence of
African resistance.
After the lull in resistance activities during the 1950s and 1960s, which also explains the
growth dynamics on the back of a defeated and repressed black labour force, African
workers began to reorganise themselves in unions and, during the early 1970s, engaged in
a wave of strikes all over the country. This period was also marked by the student uprisings
in Soweto, which were mostly a reaction to (or at least triggered by) black students being
forced to receive tuition in Afrikaans. According to Marais, there were four main reasons
for this upsurge of resistance. Firstly, unemployment and inflation had risen steeply, which
had a severe impact even on employed Africans. Secondly, national liberation struggles
elsewhere in Southern Africa had raised expectations of liberation in South Africa too.
Thirdly, the Black Consciousness Movement (BCM) had emerged, and began to motivate
many young Africans, both psychologically and ideologically, into taking up a position of
resistance. The state cracked down on the BCM, and this motivated many young Africans
to go into exile in order to return as liberation fighters. Fourthly, the masses of oppressed
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people became increasingly politicised. This was the result of a growing tendency to
attribute all the increasing hardships they were enduring – particularly socioeconomic,
but political and ideological too – directly to the apartheid system. As part of the path of
capitalist development in South Africa, it became necessary for the black masses to be
denied basic political rights, such as citizenship and the right to vote. Marais and others,
like Gelb, began increasingly to use the notion of organic crisis to describe the problems
encountered by the apartheid capitalist growth model from the early 1970s onwards. By
this they meant that the combination of socioeconomic, political and ideological factors
that had sustained this growth model, based mainly on cheap, unskilled African labour,
were beginning to unravel. The various indicators were pointing to the deepening of the
dimensions of the crisis. Economic growth was very sluggish, the inflation rate extremely
high, the fiscal dilemmas of the state were rapidly proving untenable and the balance
of payment crisis was intensifying. The legitimacy of the apartheid government was at
its lowest among the black communities and, increasingly, within enlightened sections
of the white population. The mounting resistance to all manifestations of apartheid rule
was unrelenting.
Activity 6.2

(1) Describe the organic crisis that affected the apartheid capitalist system from the
early 1970s and point out its essential elements.
14 Feedback
In your response, try to link the organic crisis to the ways in which the capitalist system works
and show how this crisis is a result of how the system evolved in the country.
6.4 RULING CLASS RESPONSES TO THE CRISIS OF THE

APARTHEID CAPITALIST SYSTEM
The South African ruling class, acting through the apartheid state under the stewardship
of the Nationalist party, responded to the multi-dimensional crisis by instituting a series of
reform measures in an attempt to contain the economic, social and political contradictions
that were increasingly undermining capital accumulation in the country.
6.4.1 Reforming the urban and industrial aspects of the apartheid

capitalist system
The first phase of reforms (from 1977 to 1982) involved attempts to restructure two central
dimensions of the apartheid capital accumulation strategy. These were urbanisation and
86
industrial relations. Both dimensions were obvious targets for restructuring, given the
centrality to capitalist development in South Africa of the oppressive, cheap African migrant
labour system – and the emergence of increasing resistance to the latter. The Riekert and
Wiehahn Commissions were respectively given the tasks of restructuring urbanisation
and industrial relations so as to ensure that there continued to be an African labour force
that met the needs of capital and that this labour force had some of its own interests
addressed – that is, had a stake in the system. The general idea was a restructuring in
order to pre-empt the overthrow of the whole system.
The Riekert Commission recommended that urban rights be granted to some Africans and
that the remainder be “banished” to the homelands. The idea was to create a privileged
layer of urbanised, politically moderate Africans to act as a buffer between the existing
system and the marginalised and revolutionary remainder, and to satisfy capital’s need
for a stable, semi-skilled workforce. The Riekert Commission also proposed a cost-saving
delegation of control over, and revenue collection in the urban townships to local township
councils. This was also, however, aimed at developing class formation and differentiation
amongst the African community, and thereby also creating a buffer between a relatively
privileged layer of blacks and the “rest”, and in turn defusing revolutionary conditions.
The Wiehahn Commission led to labour legislation that allowed African unions to register,
negotiate with employers, and participate in an Industrial Council system. It also ended job
reservation. The idea was to replace repressive control over labour with the bureaucratic
discipline of an industrial relations system, and to increase the productivity and spending
power of an urban African work force. The Commission was also concerned with deflecting
the attention of African labour from political to workplace and “bread and butter” issues.
This aspect of the recommendations of the Commission gave rise to one of the more heated
debates in the history of the black trade union movement – the Registration debate, which
was fundamentally about how the working class should relate to institutions through
which the capitalist class exercises its control over the wage labour system. Ultimately,
some (“political”) unions did not want to register with the new system, on the grounds that
it was far too restrictive, and because they feared being co-opted by the system. Others
registered with a view to exploiting “spaces” opened up by the new system, despite its
restrictions. Many were quite successful in this respect, especially in terms of building up
their organisational capabilities and creating some shop-floor democracy. To date some
of the organisational innovations for building and co-ordinating worker control on the
shop floor originate from the strategic choices made by the trade unions in responses
to the initiatives of the ruling class.
In brief, both commissions were set up to design the reform of the cheap African labour
system in order to secure capital’s changing, but continuing, labour needs. Both made
recommendations designed to do so in a manner that increased the legitimacy and
authority of the state and buttressed the apartheid capitalist system as a whole. Both
sets of recommendations entailed giving a privileged layer of urban Africans, particularly
workers, a stake in the system, and setting these Africans up as a buffer against the
revolutionary demands of those excluded from/within the system. The resultant reforms
did, to a certain extent, exacerbate competition between urban and rural labour, and did
contribute to creating the beginnings of class division and differences among Africans
(which previous apartheid measures had tended to “flatten”). However, the ruling bloc
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had underestimated the degree of urban-rural integration that already existed due to
the long-standing migratory labour system. In addition, it did not foresee the extent to
which the unions could use the new industrial relations system to not only build shop-
floor organisation and democracy, but also to become organisational vehicles for wider,
more popular political protest.
The deepening global crisis, and particularly the recessionary conditions during this period,
was a major contributory factor to the overall “failure” of this set of reform measures.
This led to increasing capital outflows and deepening recession in South Africa itself.
In reaction, the apartheid state made many “free-market” policy adjustments, such as
lifting some exchange controls (which regulate the amount of money leaving the country)
and tightening up monetary policy (which controls interest rates). The state also made
attempts at privatisation and sale of state assets. In fact, contrary to widely held views
that neoliberalism first enters the South African political economy scene in the early years
of the democratic era, as early as the late seventies various attempts were defeated and
resisted by the working class and broader anti-apartheid forces. Failure to see the reform
measures through, and the collapse of the intended neoliberal programme, saw inflation
and unemployment continuing to rise, leading to fresh waves of strikes. This tended to
undermine any gains the reforms may have secured for the ruling bloc. Furthermore, the
devolution of control of the townships to township councils, and of revenue generation
in particular, must also be partly understood as an action by the state to try to reduce
its spending. The result was that the costs of running the townships were passed on to
residents (in the form of higher rents), leading to a great deal of protest and resistance
directed against the new township councils and against councillors in particular.
6.4.2 Reforming the political margins of the apartheid capitalist system

The second phase of reforms (from 1982 to 1987) was associated with a shift in the balance
of power within the Nationalist Party (NP), a shift which was supported by “modernising”
fractions of Afrikaner capital. In fact, the NP was shifting away from its traditional class
base (this being right-wing, white workers and small Afrikaner business and agriculture).
In other words, it was also moving away from its formerly rigid racist ideology. The
government faced increasing popular resistance. It also had to contend with shifting
relations and increasing tensions between contending classes (capital and labour) and
fractions of classes (within the capitalist class itself – between “big” and “small” capital –
and even within the increasingly class-differentiated African community).
The situation in the country was also characterised by shifting relations between the state
and capital (the state was moving increasingly closer to big capital), and even tensions
within the state itself (between different government ministers and departments – some
supported reform, others wanted a crackdown on resistance). Despite these shifts and
tensions, and opposition from not only the popular resistance movement, but from within
the old ruling bloc too, the government’s second set of reforms went even further than
the first. Influx control and the pass laws, and indeed most “petty” apartheid laws were
abolished. A tricameral parliament with racially segregated white, coloured and Indian
chambers, and corresponding government departments, was introduced, extending a
limited franchise to all but Africans. In short, this second phase of reforms was aimed
88
at deflecting radical resistance away from the system as a whole. It included a mild
democratisation of apartheid itself (in the political and ideological spheres), combined
with a continued, indeed intensified attempt to build a “buffer” African middle-class,
and the provision of material incentives to undermine political mobilisation (especially
in townships or those areas in the townships deemed to be particularly volatile). These
material incentives entailed various selective redistributive measures, such as infrastructural
projects, and investment in African education.
However, as with the first set of reforms, the second set of reforms produced mixed results.
Despite some “buffer” and “deflection” success, they also opened up new opportunities
and avenues for resistance. The establishment of the tricameral parliament led to the
alliance of a variety of mushrooming resistance organisations in the form of the United
Democratic Front (UDF), formed in direct response to the second reform measures. The
UDF, together with the Congress of South African Trade Unions (COSATU), formed in
1985, led a front of community based campaigns to resist the formation of the tricameral
parliament which excluded Africans. The UDF’s first campaign was against the racial nature
of, and exclusion of Africans from, this limited political reform. The formation of the UDF
was a signal event in the sense that, in many ways, particularly ideologically and politically,
it represented and did the groundwork within South Africa for the later emergence of
the then exiled ANC/SACP alliance. Importantly, the UDF continued the ANC tradition of
broadly nationalist, popular political struggle, that is, of diluting the class-political and
socialist content of mass resistance in South Africa.
As with the first set of reforms, the global and local economic crises, which were among the
primary reasons for the introduction of reforms in the first place, also tended to undermine
their chances of success. Recession, unemployment, balance of payment problems and so
on all resulted in the state’s adoption of a host of even more “free-market” policy initiatives
in reaction to this crisis. These initiatives included the reduction or elimination of state
spending on various aspects of social welfare, such as subsidies on basic commodities.
The burden fell mainly on the already unemployed, poor and marginalised – but such
measures affected everyone. Economic and material hardship proved to be the most
important and enduring cause of resistance to the apartheid regime in South Africa.
6.4.3 Embarking on a complex blend of reform and repression

The third phase of reforms (from 1987 to 1989) was, in fact, a sophisticated combination
of reform and repression. Burgeoning popular resistance activity throughout the first
two phases of reforms had culminated in the declaration of a “state of emergency” in
1986. NP policy-makers had, from the late 1970s, held that a “total strategy” had to be
designed to counter the “total onslaught”. The NP was determined to reform the system,
but now believed that this was only possible in conditions of stability. The state thus
went no further with the limited “democratic” dimensions of its reform agenda, but
carried on with the redistributive and class-restructuring part. Only this time, however,
under the auspices of the National Security Management System (NSMS). The NSMS
functioned as a sort of parallel government, but with a great deal of concentrated and
unconstrained power. It was accountable to and represented only the state president,
the security forces, the military, and the Law and Order Ministry. In brief, it identified
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potential problem areas, and was enabled to act promptly and efficiently (mainly because
it was not shackled by bureaucracy) to effect the type of delivery appropriate to defuse
or prevent the development of revolutionary situations. In effect, it functioned to “put
out fires” to prevent them spreading in conditions that, to take the metaphor further,
can be likened to “dry timber”.
Activity 6.3

(1) Write a summary of the three phases of the reform programme embarked upon
by the apartheid state in an attempt to resolve the organic crisis. In your sum-
mary. Concentrate on:
a. The aspect of the organic crisis that each set of reform measures was aimed
at addressing.
b. Stating your view on how and why the reform measures were not successful
in resolving the crisis.
6.5 THE COLLAPSE OF ATTEMPTS TO REFORM THE

APARTHEID CAPITALIST SYSTEM AND THE ROAD TO 1994
All the endeavours to stabilise capital accumulation in South Africa by reconfiguring critical
aspects of the apartheid capitalist system failed to deliver desired results. The several
efforts undertaken in each phase of the reform programme not only disintegrated, but also
heightened the level and intensity of political resistance in the country. The intensification
of mass resistance to these reform measures and the widespread rejection of the apartheid
capitalist system that saw the formation of COSATU and the UDF, as well as an array of
community based formations, only accelerated the deteriorating political climate in the
country and rendered the system essentially unworkable. The South African ruling class also
suffered serious setbacks during this period in that their attempts to introduce neoliberal
adjustments, following in the footsteps of their counterparts elsewhere in the world,
were intensely fought and effectively repelled by the working class and the broader mass
democratic movement that dominated the political resistance scene from the mid-to-late
1980s. By implication then, the local ruling classes were denied the employment of the
sorts of social, economic and political instruments effectively used by capitalist classes
in other parts of the world to decisively respond to the crisis of capital accumulation. The
failure to secure a stable foundation for the apartheid capital system and the resultant
intensification of class and political struggles amounted to what scholars like Marais (2001)
referred to as the “political stalemate” that opened the platform to the new conjuncture
of a negotiated process towards a new political dispensation.
The notion of a stalemate conveys a situation of equilibrium wherein the balance of

forces between the state, capital and ANC-led resistance forces could not single-handedly
determine the outcome of the battles and the future of society. The apartheid capitalist
state could not completely crush the mass movement on the one hand while the mass
90
democratic movement could not surmount the military might of the racist state. This,
together with the worsening effects of the crisis of accumulation, made negotiations as an
alternative and viable way of resolving the “organic crisis” in South Africa both necessary
and unavoidable. To say that they made negotiations necessary is not the same as saying
that they made them feasible and possible as an eventual route towards resolving the South
African question. Other factors will have to be brought into consideration to complete
the circumstances that account for how it came about that forces that could not stand
the sight of each other for decades suddenly saw value and sense in collaborating over
the making of a new society. Some of the answers to these considerations are contained
in the historic speech made by the then state president on the occasion of the opening
of parliament on 2 February 1990. In this speech, President FW De Klerk highlighted
numerous issues before announcing the substantive decisions that changed the course
of political developments in the country.
President De Klerk prefaced his address with an analysis of the world situation and its
significance to the unfolding political climate in South Africa by observing that:
“The year 1989 will go down in history as the year in which Stalinist Communism expired.
The collapse, particularly of the economic system in Eastern Europe, also serves as a
warning to those who insist on persisting with it in Africa. Those who seek to force this
failure of a system on South Africa, should engage in a total revision of their point of
view. It should be clear to all that is not the answer here either …”
This international conjuncture made possible a raft of political measures undertaken by
the De Klerk regime. Among the most important of these were:
• The rescinding of the prohibition of the African National Congress (ANC), the Pan
Africanist Congress (PAC), the South African Communist Party (SACP) and a number
of subsidiary organisations.
• The identification and release of people serving prison sentences because of member-
ship of these organisations and furtherance of their aims and objectives.
• The rescinding of the restrictions in terms of the emergency regulations on 33
organisations including: the National Education Crisis Committee (NECC), the South
African Students Congress (SANSCO), the United Democratic Front (UDF), and the
Congress of South African Trade Unions (COSATU).
De Klerk then commented on the rationale and the logic behind the choices the government
of the day opted for by pointing out that:
“The events in the Soviet Union and Eastern Europe, to which I have referred already,
weaken the capability of organisations which were previously supported strongly from
those quarters. The activities of the organisations from which the prohibitions are now
being lifted, no longer entail the same degree of threat to internal security which initially
necessitated the imposition of the prohibition. There have been important shifts of
emphasis in the statements and points of view of the most important of the organisations
concerned, which indicate a new approach and a preference for peaceful solutions”.
By explicitly addressing the range of considerations surrounding the decisions and
measures announced in that speech, excerpted at some length above, De Klerk laid bare
the critical factors that made the choice of a negotiated route possible. We noted earlier
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that the deepening economic crisis and the associated social and political problems had
produced a stalemate that had made political change necessary. It then emerges from the
speech that what made the changes both possible and feasible was the then government’s
analysis and estimation of the balance of forces, both ideologically and politically. In other
words, the apartheid government was confident in its ability and capacity to determine
the destiny of the process towards the founding of a new society, and hence in the risks
it was prepared to undertake. These developments opened a lengthy process of political
negotiations over the form and content of the post-apartheid South Africa.
Guided by his estimation of the weaknesses of his political opponents and the significant
moderation in their ideological outlook, De Klerk shared a vision of a post-apartheid
society, with the economy as the key focal point. De Klerk was categorical about what
such a reconstruction and development trajectory should entail:
“The government’s basic point of departure is to reduce the role of the public sector in the
economy and to give the private sector maximum opportunity for optimal performance.
In this process, preference has to be given to allowing the market forces and a sound
competitive structure to bring about the necessary adjustments. Naturally, those who
make and implement economic policy have a major responsibility at the same tome to
promote an environment optimally conducive to investment, job creation and economic
growth be means of appropriate and properly co-ordinated fiscal and monetary policy.
The government remains committed to this balanced and practical approach. By means
of restricting capital expenditure in parastatals (state owned enterprises) institutions,
privatisation, deregulation and curtailing government (social) expenditure, substantial
progress has been made already towards reducing the role of the authorities in the economy.
We shall persist with this in a well-considered way”.
In other words, De Klerk was very clear that the new South Africa of their dreams should
complete and realise a programme that the apartheid capitalist state failed to accomplish
in the height of political resistance in the 1970s and 1980s. The development of a new
society and the eradication of the apartheid social, political and economic order should
be led and guided by the market forces. The course of reconstruction and development
should entail the retreat of the state from social and economic development, with the
private sector emerging as the leading political force principally responsible for the
establishment of the foundational attributes of such a society. In other words, the political
representatives of the apartheid capitalist state entered the negotiation process with the
sole purpose of inscribing neoliberal values on both the formal and substantive features
of the post-apartheid South Africa.
Activity 6.4
(1) What would you consider to be the conditions that made the negotiation process
both necessary and possible? In your answer, take into account what De Klerk
had to say when announcing new political decisions in his speech to parliament.
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15
16 Feedback
We suggest that, when dealing with this activity, you consider what was said at the time as
well as what transpired later as the process unfolded – up to its culmination in the negoti-
ated settlement that paved the way towards democratic elections in 1994.
6.6 THE NEW SOUTH AFRICA EMBRACES NEOLIBERALISM

AS A GUIDING PRINCIPLE FOR SOCIOECONOMIC
RECONSTRUCTION AND DEVELOPMENT
The apartheid capitalist state, represented mainly by the NP, came to the negotiating
table mainly because it could not resolve the political dimension of the crisis that beset
the country for a number of decades. As indicated in the previous section, it had tried
various political and socioeconomic reforms which had yielded only partial success.
However, as implied in the speech by the then president De Klerk, the regime knew that it
held the upper-hand in many ways. This gave it the courage to proceed with negotiating
a political settlement. It had the support of capital, and thus plenty of resources. It had
facilitated, albeit to only a small extent, the emergence of a nascent, black middle class
“buffer”. As alluded to in the speech, the NP was also greatly encouraged by the collapse
of communism, and emboldened by the prospect of the country being welcomed back
into the global capitalist system. The NP, like the elements of big capital in South Africa,
came to believe that the apartheid system was no longer necessary to perpetuate white
power and privilege in capitalist South Africa. In fact, apartheid was now undermining
the capitalist system in South Africa.
As evidenced by key assertions in the speech by the then president, certain outcomes
were clearly never negotiable. The role of the private sector and the free market as the
leading force in the fashioning of the new society was one of those. After all, this is what
the NP government had been trying to promote and force onto the South African society
from the 1970s onwards. These efforts were only undermined by the growing resistance
from the black sections of the population. The conjuncture of circumstances making it
possible for the apartheid capitalist state to experiment with negotiations was mainly
because these opened possibilities of advancing the same agenda without resorting to the
old and failed methods. Hence, reference to the political and organisational weaknesses
of the leading liberation organisation and to veritable changes in essential aspects of
their ideological outlook. Although the negotiations process opened with the leading
role-players from the opposite sides occupying ideological stand points that were the
polar opposites of each other – the NP pushing for a limited role for the state and the
ANC rooting for an active role for the state in the economy – the negotiated settlement
produced a framework for a new society saturated with the principles and values of the
society it replaced. The triumph of neoliberal philosophy suffused both the founding
vision statement of the country – the Constitution of the republic – as well as the defining
macroeconomic policy of the new society.
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6.6.1 Constitution of the Republic of South Africa and neoliberal values
In the previous learning unit, it emerged that one of the important features of neoliberalism
was the tendency to undermine democracy by diluting the substance of a range of political
rights that entitle citizens to a voice in determining the collective affairs of society. Such
limitations of democratic participation are especially aimed at cushioning processes
of economic policy formulation and implementation. In the case of South Africa, the
Constitution of the Republic makes a number of provisions that ensure exactly that.
Chapter 13 of the Constitution, dealing with Finance, makes a number of provisions

pertaining to the objectives, powers and functions of the Central Bank, also referred to
as the Reserve Bank. Throughout the neoliberal era and world, the tendency has always
been to make these institutions independent from the executive and legislative arms of
the state and, by extension, from the influence of the electorate. In this context, section
224 makes two instructive provisions:
In subsection (1) the Constitution clarifies the scope of the mandate bestowed on the
Bank thus:
“The primary objective of the South African Reserve Bank is to protect the value of the
currency in the interest of balanced and sustainable economic growth in the Republic”.
In subsection (2) the Constitution ossifies the partition that shields the Bank from popular
influence with the following stipulation:
“The South African Reserve Bank, in pursuit of its primary object, must perform its functions
independently and without fear, favour or prejudice, but there must be regular consultation
between the Bank and the Cabinet member responsible for national financial matters”.
All of these are standard neoliberal approaches to organising the role of the central bank.
Defence of the value of the currency has produced emphasis on fighting inflation, even
at the expense of economic growth and employment creation. It is this that accounts
for persistently high interest rates being pursued by the Bank with little regard to the
electorate and majority of citizens whose livelihoods are destroyed on the altar of balanced
economic growth.
Section 220 of the Constitution makes provision for the creation of the Financial and Fiscal
Commission. This Commission is endowed with wide-ranging functions that cover a whole
range of government policy areas dealing with fiscal and financial matters across all three
spheres of government, i.e. local, provincial and national. Two significant provisions on the
composition of the Commission and its relationship with government are enlightening.
In section 220 subsection (2) it says:
“The Commission is independent and subject only to the Constitution and the law, and
must be impartial”.
In section 221 subsection (2) it then says:
“Members of the Commission must have appropriate expertise”
94
The creation of the Commission is consistent with neoliberal tendency throughout the
world to privatise economic policy making processes by assigning such crucial decisions
to the exclusive determination of bodies that are not directly accountable and answerable
to the electorate.
Section 214, subsection (2)b of chapter 13 of the Constitution enjoins government to

initiate legislation outlining a framework for allocation of revenue raised nationally to all
spheres of government and further orders government to take into account, among a
wide range of considerations, “any provision that must be made in respect of the national
debt and other national obligations” when determining the division of such revenue.
In other words, before determining how to make use of revenue generated at national
level, the government must make provision for the honouring and payment of its debt
obligations. This clearly comes closer to, if not outright amounting to, instructing the
government to consider debt repayment a direct charge against the National Revenue
Fund, as well as elevating it to the status of first claim on national revenues. The chapter
under consideration, especially sections 214; 215; 226; 227; 228; 229 and 230, abounds
with provisions aimed at enforcing fiscal discipline on the provincial and local spheres
of government in view of their proximity to citizens.
The above demonstrate the extent of the insulation of economic policy making from the
weight and aspirations of ordinary citizens, as well, in some important respects, a direct
insertion and entrenchment of neoliberal values in the socio-economic reconstruction
and development process. However, this tradition of shielding important economic policy
making institutions from pressure by popular forces and civil society organisations was
not restricted to the Constitution only. A number of mechanisms and methods were also
put in place to accompany these foundational moves and with the same intentions of
keeping crucial economic policy making decisions out of the public sphere. For instance,
although in general the public and civil society organisations are called upon to participate
in policy making by making parliamentary submissions on various policy issues, such
submissions are severely limited when it comes to those matters directly related to the
economic and financial domains. Even the elected representatives of the people, the
parliamentarians, can only advise and have no instructive powers on money bills. In
other words, once a money bill such as the national budget is tabled by the executive,
the legislators can only recommend changes to the member of the national executive
responsible for the issues. For example, in the 2018/19 national budget speech, the
Minister of Finance introduced an increment of 1% point in the value-added tax (VAT). In
spite of the all-round reservations and outright rejections by parliamentarians, let alone
determined opposition from the public and important organisations representing the
poor, the Minister of Finance proceeded with this decision. In much the same manner,
the process towards the adoption of a neoliberal macro-economic policy in the form of
the Growth, Employment and Redistribution Strategy (GEAR) followed a similar path of
undermining genuine democratic participation. For all intents and purposes, the policy
was introduced in the same undemocratic way in which the old apartheid government
tried and failed to impose a set of neoliberal adjustments in the dying days of the apartheid
capitalist system. As a matter of tradition, the first inclination has been to suspend
democratic practices and where such are deemed politically risky. Formal consultation
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and participation are resorted to only to the extent that they do not significantly change
the substance of the neoliberal policy intentions.
As elsewhere in the neoliberal hemisphere, the introduction of unpopular socio-economic

policies has necessitated the direct suspension of democratic and participatory process
and, where this is not feasible, the authorities have tended to render such consultative
processes meaningless in terms of their power to shape the ultimate outcomes. In
South Africa, the situation is also the same in terms of the evolution of key landmark
developments in the socio-economic policy decision-making in the post-apartheid society.
Since the adoption of GEAR in 1996, and the plethora of other policies notwithstanding,
the neoliberal foundations from a macroeconomic point of view are still intact to this day.
Activity 6.5

(1) Can you identify any neoliberal elements in the country’s founding document
– the Constitution of the Republic of South Africa? In dealing with this question,
bear in mind the following:
a. The characteristic features of neoliberalism as understood in the previous
learning unit; and
b. Any specific ways in which the Constitution of the Republic of South Africa
shapes the role of the state.
6.6.2 The omnipresence of neoliberal values in post-apartheid

macroeconomic policy landscape
Parallel to the exchange of political ideas on the nature of post-apartheid political
institutions, there was a corresponding flurry of experiments on the most appropriate
socioeconomic framework to underpin democratisation, reconstruction and development.
Both the central political players in the negotiations process had something significant to
say in these debates on the preferred macroeconomic policy framework to transform the
socioeconomic system in a way that would help society transcend the social, economic
and political legacy of the apartheid capitalist system.
From the side of the ANC, through its Department of Economic Policy (DEP), the organisation
started paying closer attention to issues of economic policy only from the early 1990s
when talks about the future South Africa started gaining momentum. Drawing inspiration
from the historical set of aspirations contained in the Freedom Charter, the DEP put
forward an idea of state-led growth through redistribution. Other attempts at state-led
processes of social and economic reconstruction and development saw the formulation
and adoption of the Reconstruction and Development Programme (RDP), which the ANC
went on to use as a broad framework for contesting the 1994 elections. The ANC also set
up the Macroeconomic Research Group (MERG) that produced a comprehensive set of
proposals that were still framed in the Keynesian paradigm of economic policy thinking.
The central proposition in the report was that the economy should be restructured through
96
state-led labour market reform, that is, through targeting training, paying higher wages
and setting a national minimum wage. It was premised on interaction between strong
private and public sectors, and strong state interventions to help make the business sector
more effective, efficient and productive. This involved a strategic mixture of incentives
and regulation, (especially regarding output and pricing in the mining sector). It urged the
control of housing and building supplies, controlling company mergers and acquisitions
and carefully monitoring market monopolies. It also involved setting up supervisory boards
for large corporations. Such boards were to consist of representatives from trade unions,
banks and other interested parties. Importantly, rather than simply advocating demand-
led economic growth (that is, growth through increased state spending, as indicated
in many “growth through redistribution” scenarios), it premised growth on increasing
savings and investment. The MERG report held that the state could encourage this in
various ways, and that the state should regulate and direct such savings and investment
and target spending, say on supply-side measures.
Essentially, the MERG report advocated a two-stage economic growth plan:
1. Stage one. Half of the growth that would occur during the first stage, a “public-
investment-led” phase, would flow from state investment in social and physical
infrastructure. This investment would be made possible by the state’s promotion
and regulation of increased savings and investment, as mentioned in the previous
paragraph.
2. Stage two. The report argued that stage one would facilitate and set off a second,
“sustained growth” phase throughout the economy. The reasoning here is that
encouraging the development of the infrastructural conditions of, and increasing
demand for production would set in motion an economic “virtuous cycle”. This is
also linked to the idea that state spending will create investor confidence and thus
promote and attract productive FDI and productive investment by local capital.
From the side of the NP, the process of consolidating what president De Klerk spelled
out in his parliamentary address culminated in the release of the Normative Economic
Model (NEM) in early 1993. In returning to some of themes first introduced by De Klerk
in that address, the NEM proposed, among others, the following as being indispensable
for establishing a strong platform for socioeconomic development in the post-apartheid
society:
• Lower company tax

• Increased indirect tax, e.g. VAT
• Higher productivity through wage control
• Lower inflation
• Cutting the budget deficit
• Greater spending on research, development and training to promote exports
The architects of the NEM did envisage a somewhat more than merely “facilitatory” role
for the state. The model also contained proposals that capital outflows be restricted,
that the “social wage” be improved (the “social wage” usually refers to the expanded
provision of social infrastructure and can include social welfare measures such as state
unemployment and pension provision) and that trade unions be given a limited role in
corporatist collective bargaining between the government, business and labour. The NEM
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was not much more than a “trickle-down” economic policy. This means that it was free-
market and business oriented, but with the expectation that economic growth would bring
some relief to the poor, the likely victims of such a policy. This would occur in the form of
increased employment opportunities, along with some (limited) state involvement and
support (in the form of welfare and public works measures), on the basis of the extra state
revenues generated by growth. Put differently, although the NEM policy was neoliberal
and included measures aimed at promoting export-based capitalist growth, it also allowed
for some state involvement in this. The NEM also contained the supposition that some
of the fruits of growth would trickle-down in the form of various (limited) social-welfare
and social-infrastructural spin-offs for workers and the poor generally.
In summary, from the beginnings of the political negotiations for a political democracy
in South Africa, until the government’s adoption of GEAR in 1996, there were a variety of
more or less sophisticated and coherent, and more or less Keynesian macro-economic
policy alternatives available to the ANC – including the proposals generated by the
ANC’s own DEP and MERG. Yet the ANC soon abandoned such alternatives and simply
dismissed the MERG report and its major findings. When it came to power, the ANC chose
a neoliberal macro-economic policy.
6.6.2.1 GEAR and the triumph of neoliberalism in South Africa

In 1996 the ANC-led government of the Republic of South Africa adopted GEAR as the
macroeconomic policy of the democratic government. GEAR became the policy that
defined and established the broad socioeconomic, political and ideological framework
from within which, and on the basis of which, issues such as growth, development,
reconstruction, redistribution, prosperity, equality and justice in South Africa were to
be addressed. From a process point of view, the formulation and adoption of GEAR
followed a well-established neoliberal path of bypassing and undermining all democratic
channels of policy formulation and policy-making under a democracy. The process was, of
course, the exclusive preserve of a few experts and was rigorously shielded from popular
participation, including by denying even the leadership of the ANC any meaningful say in
its conception and execution. When President Mandela announced GEAR as the preferred
macroeconomic policy of the new government, he made it clear that the substantive
aspects of the policy were not subject to debate.
Like any sound macroeconomic policy framework, GEAR also started by identifying the
socioeconomic problems to be addressed and spelled out key goals to be achieved by
the measures to be undertaken. The policy even went on to establish targets on selected
items such as job creation and economic growth rate. With respect to the crucial matter
of the underlying macroeconomic policy orientation to drive the realisation of its goals
and aspirations, GEAR entailed a standard neoliberal menu:
• Controlling and restraining wages.

• Creating an increasingly more flexible labour market (which will also, apparently, cre-
ate greater employment opportunities).
• Maintaining fiscal discipline and controlling the budget. “Fiscal policy” refers to gather-
ing taxes for the purposes of allocating resources through the national budget. “Fiscal
98
discipline” refers to controlling the levels of taxation and the amount of state spending,
balancing the budget and reducing – or at least controlling – budget deficits.
• Putting “responsible”, disciplined monetary policy in place (and in particular, control-
ling inflation), and ensuring an exchange-rate that is stable and competitive in terms
of the international context.
• Liberalising trade through reducing and eventually eliminating all tariffs and other
protections (decreasing tariff protections on imports is also, apparently, supposed to
“encourage” local industry and manufacturing to become more competitive). In fact,
the policy called for an accelerated programme of tariff reduction to be implemented
even faster than the guidelines provided by the World Trade Organization (WTO).
• Liberalising all financial controls and eventually eliminating exchange controls alto-
gether, privatising selected state assets (e.g. the parastatals such as Telkom) and gen-
erally privatising all “non-essential” state enterprises and partially privatising others.
The policy also made provision for partial ways of involving the private sector in the
running of state-owned enterprises, such as strategic partnership or commercialisation.
• Generally Liberalising, deregulating and “freeing-up” the South African economy, and
increasingly exposing it to global free-market forces.
From the previous learning unit, you can recall all the elements of macroeconomic policy
and how they structure the role of the state in the economy. From that, it immediately
becomes clear that GEAR was a prototype neoliberal policy framework. It is a framework
predicated on the leading role of the private sector and a lesser role of the state in
socioeconomic development. With the adoption of GEAR in 1996, the ANC deserted
all the policy alternatives it flirted with throughout the transitional period and chose a
socioeconomic framework that is very similar to the one sponsored by the NP, the NEM.
In fact, in most of the critical areas, GEAR is even more affable to business than the NEM.
Activity 6.6
(1) Discuss the similarities and differences between the Normative Economic Model
(NEM) and the Growth, Employment and Redistribution Strategy (GEAR).
17 Feedback
For purposes of describing the overall macroeconomic features of each, you should try to
work out how each prescribes the general role of the state from the specific policy propos-
als contained in them.
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6.6.2.2 From GEAR to the National Development Plan (NDP)
In response to the poor performance of GEAR and its failure to meet all its key jobs and
growth rate targets, as well to increasing opposition from within the public and sections
of the civil society such the unions and nongovernmental organisations, the government
initiated a series of policy refinement exercises that concentrated mostly on redefining
the goals and focal points without changing the underlying macroeconomic orientation.
Firstly, the government introduced the Accelerated and Shared Growth Initiative – South
Africa (ASGISA) in 2004 against the background of failures of the GEAR programme to
reach desired economic growth rates and create employment. ASGISA was meant to
overcome the shortcomings of GEAR and close some of the gaps, especially in job creation
and the growing levels of poverty and inequalities. The policy was driven from within
the office of the deputy president and was carried out from what were, by then, the
margins of policy making and implementation, the context of the central and dominant
locus of policy formulation and implementation having decisively shifted to the National
Treasury or Ministry of Finance. Unfortunately, ASGISA didn’t address the central issues
of the place and role of the state in socioeconomic development. It never addressed and
changed the main orientation of state activity with respect to the three key roles of the
state in the economy discussed in the previous unit. It also failed to evaluate the main
areas on which the GEAR policy enunciated the direction of state activity such as fiscal
policy, labour market policy, trade policy and financial markets. By implication, ASGISA
either deliberately defined such issues outside of the realm of macroeconomic policy, or
implicitly endorsed their articulation in the GEAR policy. The policy came into force and
the essential neoliberal features of GEAR continued to define state activity in the economy.
In an important section dealing with macroeconomic issues, all ASGISA could manage
to say is the following:
“Regarding macroeconomic issues, one challenge is to find strategies to reduce the
volatility and overvaluation of the currency; another is to ensure that within an inflation
targeting regime fiscal and monetary policy work together to produce sustained and
shared growth”.
Not only is there a tacit acceptance of the neoliberal foundations of the GEAR policy in
the form of exchange rate policy and inflation targeting but also, where it matters most,
ASGISA remained very vague about what exactly should be the orientation of fiscal and
monetary policy beyond a general allusion to integration towards sustained and shared
growth. In reality, the macroeconomic story in town remained that authored in the
neoliberal traditions inaugurated by the GEAR programme.
Secondly, the government introduced the New Growth Path (NGP) in 2010. The NGP aimed
at addressing unemployment, inequality and poverty by creating five million jobs and
reducing unemployment from 25% to 15% in the ten years following its adoption. The
NGP, in a sense, marked the first time the government acknowledged that its preferred
policies for reconstructing and developing the economy were not yielding the desired
results. It was in this policy initiative that the government began openly talking about
the triple challenges of unemployment, inequality and poverty. Apart from varying
areas and levels of emphasis, the NGP also failed to identify or implicate the neoliberal
orientation of government policy in the failure to reduce levels of poverty, generate
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adequate employment and narrow the gaping inequality gap. Although duly and justly
placing emphasis on the policy termed “job drivers” with a view to unlocking bottlenecks
and so enable a job creating growth trajectory, the policy remained embedded within
the neoliberal macroeconomic agenda.
In an important section devoted to critical issues defining the structure and orientation of
a socioeconomic development initiative, the NGP details what it terms “macroeconomic
package and states that:
“In terms of the macroeconomic stance, for the foreseeable future government
will be guided by a looser monetary policy and a more restrictive fiscal policy
backed by microeconomic measures to contain inflationary pressures and enhance
competitiveness”.
The NGP then elaborates on specific macroeconomic instruments to underpin its job
creating, poverty eliminating and inequality reducing agenda and states that:
“The monetary policy stance will continue to target low and stable inflation but will
do more to support a more competitive exchange rate and reduced investment costs
through lower real interest rates. This will be accompanied by measures proposed
below to contain inflationary pressures and build competitiveness”.
The measures mentioned to above to contain inflation refers to what the NGP identifies
as “greater restraint in fiscal policy to slow inflation despite easier monetary policy”.
When it comes to critical matters of macroeconomic policy as it frames the structure and
orientation of government activity in the economic affairs of society, both ASGISA and
NGP preserved and extended the neoliberal values emblematic of government policy
since 1996.
In 2012, after a series of consultations spearheaded by the National Planning Commission
(NPC), the government launched the National Development Plan (NDP), a detailed
programmatic statement on how the government can eliminate poverty and inequality
by the year 2030. Among some of its key elements, the NDP targets the attainment of
the following milestones by the year 2030: the creation of nearly 11 million jobs; the
reduction of the unemployment rate to 6%; and the elimination of extreme poverty. For
all this to become a reality, the plan envisages the tripling of the current size of the South
African economy by the year 2030. Accompanying these goals are a range of changes
that are necessary to make sure that the broad vision spelled out in the plan becomes a
reality. For the purposes of this learning unit and our immediate interest in illuminating
the phenomenon of neoliberalism and its policy and institutional manifestation, we will
focus mainly on the economic strategy that the NDP suggests will drive the realisation
of its goals and aspirations. In other words, apart from the desired results and the flurry
of interventions planned, what is the underlying macroeconomic programme through
which the government hopes to overcome the triple challenges of unemployment,
poverty and inequality?
In broad terms, the NDP envisages a limited role of the state in the economy, structured and
dedicated to serving as an enabler of private sector activity in the economy. This vision of
a somewhat disengaged or restrained state is clarified in the plan in the following words:
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“A stable and enabling macroeconomic platform will underpin sustainable growth and
employment creation. Within the framework of a floating exchange rate, the government
will explore approaches to protecting firms from rand volatility. It will devote considerable
attention to fiscal impact on development, through improved efficiency in government
spending, and an appropriate balance between investment and consumption expenditures”
(NDP, 2012:137).
In a section dealing with the role of the state and institutional capability, which is essentially
about the role of the state in the production of goods and services, one of the critical
indicators of macroeconomic policy orientation, the NDP says that:
“Any direct state involvement in productive sectors should be informed by the

balance of evidence in relation to stimulating economic growth and competitiveness,
creating jobs and reducing inequality, as well as availability and optimal deployment
of public resources”.
The NDP’s approach to labour market reform is centered on the gradual realisation of a vision
of decent work in which “a conducive environment for investments is balanced with the
need to protect human rights” (NDP, 2012:123). The exact nature of this balanced becomes
comprehensible in the context of what the NDP (126) considers critical preconditions
for faster growth with a focus on the relationship between earnings and dynamics of
economic growth:
“Rapidly rising wages do not usually precede growth acceleration – they are more likely
to follow they are more likely to follow the onset of a sustained acceleration by two to
five years. This is particularly the case if the urgent focus is on access to employment
opportunities for large numbers of workers, on the back of which qualitative improvements
can be attained. This is a trade-off that South African society has to address … However
… expanding access to new entrants should not be undertaken in a manner that lowers
the working and remuneration conditions of existing employees “.
The whole labour market regulation strategy is predicated on the need to raise the
rate of investment by reducing costs of doing business, removing uncertainty and
enhancing profitability. To achieve the above, the NDP proposes standard labour market
flexibility measures that include variable probationary and dismissal conditions for entry
level workers; flexible wage structure for entry-level workers; a special dispensation for
regulating temporary employment services (labour brokers); allowing job shedding or
short-time work during periods of low demand and so on (131–136).
To sum up, the evolution of macroeconomic policy thinking and practice in post-apartheid
South Africa has been a consistent trajectory of the hegemony of the neoliberal paradigm
of social and economic development. Give or take a few variations and differences of
emphasis, from GEAR to the NDP via the ASGISA and the NGP, the process of socioeconomic
reconstruction and development has always been framed through the prism of neoliberal
principles. With that, the ANC government managed to accomplish what the NP government
failed to impose on the South African population in the 1980s. The ANC government
managed to bring to fruition all the key elements of macroeconomic orientation spelled
out by De Klerk as being both desirable and necessary for South African capitalism to be
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firmly stabilised. In the process, the ANC abandoned all its previously held positions on
how the state should relate to the economic sphere of society in favour of those hitherto
espoused by capital and their erstwhile political representatives in the form of the NP.
Whatever the rationale and impetus for doing so, what remains clear though is that, unlike
in other poor countries in the least developed regions of the world where neoliberalism
was pushed through the medium of international financial institutions such the IMF and
the World Bank, in South Africa such a paradigmatic orientation was driven from within
the leading strata of the principal organisation leading the liberation struggle.

(1) Discuss the development of capitalism in South Africa with a specific focus on ways
in which this influenced the social, economic and political institutions in the country.
(2) Write an essay in which you discuss the notion of “organic crisis”, attempts by the
apartheid state to resolve the crisis, and why these attempts failed to end the crisis.
(3) In your view, why did the ANC government abandon the various social democratic
policies such as the RDP and MERG report in favour of embracing the neoliberal
policy GEAR?
(4) In what ways does the Constitution of the Republic of South Africa advance the
neoliberal paradigm in South African political economy?
(5) Discuss the evolution of neoliberalism in South Africa. In your essay, also explain why
you think the ANC government succeed in implementing neoliberal restructuring
whilst the NP government failed in its various attempts to introduce such measures.
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Learning unit 7
More than twenty years of neoliberalism in South
Africa: Effects and responses
Upon completion of this learning unit you should be in a position to:

• delineate the effects of neoliberal policies on the new South African society since 1994
• assess the different viewpoints within the South African sociological community
on the sources of the current socio-economic state of the country
• describe the nature and evolution of various social forces active in struggles against
the effects of neoliberalism, with a special focus on the new social movements
• comment on the nature, sources and meaning of the struggles within the higher
education sphere in the form of Fees Must Fall protests
Key Concepts
• Inequality
• New social movements
• Poverty
• Unemployment
• Neoliberalism
THE APPROXIMATE TIME THAT YOU SHOULD TAKE TO WORK THROUGH

LEARNING UNIT 7 IS THREE (3) HOURS.
7.1 INTRODUCTION
In the previous two learning units, we discussed the nature, origins and history of the
economic, political and social phenomenon of neoliberalism, both globally and in its
specific South African manifestation. In learning unit 7, we defined neoliberalism, delineated
its essential features, and traced its evolution in the global economy from about the
early 1970s to date. The discussion emphasised the limited role of the state in its three
dimensions in the economy – with the resultant low levels of economic growth, rising
levels of poverty, increasing inequalities and growing tendencies to disregard political
rights such as the right to participate in the decision-making processes on crucial matters
such as economic policy choices. In referring to the advanced capitalist countries, the
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discussion also highlighted the sustained decline in social reform that defined social policy
in the immediate post-second world war period, the result of this being that many areas of
social provision tended to be individualised in line with the neoliberal doctrine of placing
responsibility for many areas of society on the shoulders of individuals. The discussions also
pointed out that many areas of societal existence were being organised and structured
to match and correspond to the specific needs and interests of the capitalist classes.
The discussion also noted that neoliberalism takes on different characteristic features
in different countries, depending on the social, economic and political conditions in
each country. Flowing from this, learning unit 8 focused on the conditions under which
neoliberalism evolved in South Africa. That discussion highlighted the specific historical
context in which capitalist development took place and the problems it gave rise to. In
particular, the discussion highlighted the crisis conditions arising out of the specific path
of capitalist development locally, and demonstrated how neoliberalism emerged partly
as an attempt to resolve this crisis, and more generally as a way to stabilise the process
of capital accumulation and restore the profits of the capitalist classes. A crucial issue
for consideration is not just what the effects of neoliberalism are or will be but, most
importantly in the South African environment, what the implications of this trajectory of
development will be for one of the crucial features of capitalist development locally, i.e.
the cheap status of black labour. Put differently, will the advent of democracy – through
which the previously excluded sections of the population will now have the right to
determine matters with far reaching material implications on their lives – translate into
palpable improvements in their lived experiences? In other words, can neoliberalism
deliver the socio-economic rights spelled out in the Bill of Rights in the same way that
the Constitution delivered political rights in the form of the right to vote?
In this learning unit, we explore the results and outcomes of the neoliberal turn in the
evolution of the new South Africa with a view to laying bare the effects and consequences
of this policy trajectory. The learning unit will first delineate the results of this trajectory in
the wake of more than two decades of its implementation with reference to a number of
socio-economic indicators. This will be followed by a discussion of the various responses
on the effects of neoliberalism in South Africa, starting with the intellectual responses
and with a focus on three different interpretations of these effects. The learning unit will
then discuss the responses of the new social movements as well as pay special attention
to recent protest within the higher education sphere in the form of what came to be
known as the Fees Must Fall movement.
Activity 7.1
(1) Make a summary in which you cover the essential details of the nature, history
and possible consequences of neoliberalism that you managed to gather from
the discussions in the previous two learning units.
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18 Feedback
In your summary, make sure to cover the three ways in which the state can play a role in
economic activities and explain how such roles are structured under neoliberalism. Describe,
providing the essential details, the history of this phenomenon with a special focus on how
it evolved in South Africa. End with some pointers on the likely effects of this set of policies
on social, economic and political aspects of life in general.
7.2 SOUTH AFRICA AFTER MORE THAN TWO DECADES OF

NEOLIBERAL POLICIES
In the past twenty-three years or so, between 1994 and 2018, the political economy of
South Africa has undergone massive transformations, the dimensions of which have
already been sufficiently attended to in the previous learning unit. Since coming to
power following the electoral victory in 1994, the ANC simply capitulated on most of its
historically held policy positions in favour of those advanced by the capitalist classes and
their erstwhile political representatives in the form of the NP. The substance of the new
course pursued by the ANC government since inception became a profit-led path of social,
economic and political development. This new orientation saw the desertion of popular
policy visions such as the RDP and the MERG report that favoured a state-led approach
to the reconstruction and development process. This approach preferred redistribution
as the basis for cultivating conditions for economic growth in the country, as opposed
to the approach preferred by capital that called for growth first as the precondition for
redistribution of wealth. The preference for redistribution was based on the questionable
idea of the trickledown effect, in terms of which wealth will eventually reach lower sections
society following reasonable growth rates in the creation of wealth. What, then, are the
results of more than two decades of neoliberal policies in the country?
There has been a tremendous amount of evidence pointing to the persistence and
increasing levels of poverty and inequalities in the country in the past few years. In a
paper based on the survey conducted under the auspices of the Centre for Social Science
Research titled: “Poverty and Inequality after Apartheid”, the renowned sociologist
Jeremy Seekings (2007) noted that, despite steady economic growth in the early years of
democracy, income poverty rose … and income inequality has probably grown, and life
expectancy declined. He pins the proximate causes of these developments on, among
other factors, the persistent unemployment, an unequal education system, and a social
safety net that, though widespread, nonetheless has large holes. Writing in 2007, as he
did, Seekings predicted that after another ten years of democracy, unemployment and
poverty rates would remain high, despite significant redistribution through cash transfers,
and that incomes would continue to be distributed extremely unequally.
Ten years later, Seekings’ predictions became a living reality as millions of South Africans
trickled into poverty under what are today widely acknowledged as the triple challenges
of unemployment, poverty and inequality. In a recent study published in early 2018 by the
World Bank, titled: “Overcoming Poverty and Inequality in South Africa – An Assessment of
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Drivers, Constraints and Opportunities”, the findings confirm this reality that the situation
has not only remained unchanged for millions of South Africans but also, that in most
instances, it has become worse.
The following are some of the key findings from this extensive study of socio-economic
trends in South Africa, two decades after the advent of democracy:
• High unemployment remains the key challenge for South Africa and the country
struggles to generate sufficient jobs.
• By any measure, South Africa is one of the most unequal countries in the world and
that inequality has increased since the end of apartheid in 1994.
• Wealth inequality is also high and has been growing over time as the top percentile
of households had 70.9% of wealth and the bottom 60% had 7.0%, meaning richer
households are almost 10 times wealthier than poor households.
• The country also lags behind its peers on the inclusiveness of consumption growth.
• The labour market is effectively split into two extreme types, with the secure and
highly paid at the one end and the insecure, casualised and low paid at the other.
• Inequality of opportunity, measured by the influence of race, parents’ education,
parents’ occupation, place of birth and gender, is high.
• Nearly half the population of South Africa is considered chronically poor.
• Poverty levels are consistently highest among female-headed households, black South
Africans, and children below the age of 15 and these groups tend to have a higher
risk of falling into poverty.
• Food insecurity, stunting and child malnutrition remain challenges in South Africa and
have deteriorated since 2012.
• Food insecurity is also gendered and more prevalent among the black African
population.
In summary, that is the social and economic picture depicted by the findings of the recently
completed World Bank study. The study reveals a compelling image of the state of society
founded on the values of justice and human rights in 1994. It is a detailed representation
of a society constructed and developed in the image of the neoliberal policies that have
been faithfully implemented since the end of apartheid in the country.
A sensible inference can be drawn from the balance sheet of the new South Africa that, not
only have the policies employed to drive the process of reconstruction and development,
failed to eradicate the triple challenges, but most crucially, these policies have in turn
generated more poverty, inequality and unemployment. Given that these triple challenges
have worsened since 1994, not only are there serious issues regarding the plight of millions
of poor people who happen to be predominantly black and female, but most crucially,
this also raises questions about the very nature of the post-apartheid society. One of the
issues that immediately arises is that of the relationship between political liberation and
economic and social empowerment. Why is it that after 24 years of political freedom and
democracy, the socio-economic rights enshrined in the Bill of Rights remain elusive and
a matter of distant dreams for the majority of the country’s citizens? In the context of
the country’s history, and particularly how the capitalist system evolved here, what do
all these developments and outcomes say about the cheap status of black labour and
its inseparable link to the existence of the very system? What do these developments
say about the nature of democracy we have in which formal political equality can exist
107 SOC2602/1
comfortably alongside substantive economic inequality? These questions, together with
endless range of others that students would imagine upon engaging critically with this
material, are at the heart of attempts to come to terms with the nature of society unfolding
in the wake of the democratic transition in South Africa.
These outcomes are, of course, not unique to South Africa as they materialize in any
country whose policy landscape is defined by neoliberal principles of social and economic
development. An OXFAM study titled: “An Economy for the 99%”, published in early 2017,
also confirms the prevalence of these outcomes wherever neoliberal policies reign. Citing
various sources, the study noted among other disturbing developments the following:
• Since 2015, the richest 1% has owned more wealth than the rest of the planet.
• Eight men now own the same amount of wealth as the poorest half of the world.
• Over the next 20 years, 500 people will hand over $2.1 trillion (R31.29 trillion) to their
heirs – a sum said to be larger than the GDP of India, a country of 1.3 billion people.
• The incomes of the poorest 10% of people increased by less than $3 (R37.65) a year
between 1988 and 2011. While the incomes of the richest 1% increased 182 times as
much.
• A Financial Times Stock Index (FTSE – 100) CEO earns as much in a year as 10 000
people working in garment factories in Bangladesh.
• In the US, new research by economist Thomas Piketty shows that, over the last 30 years,
the growth in the incomes of the bottom 50% has been zero, whereas the incomes
of the top 1% have grown 300%.
• In Vietnam, the country’s richest man earns more in a day than the poorest person
earns in 10 years.
The OXFAM report concludes by implicating the policy trajectory based on the leading
role of the market and the elevation of individualism as governing principles of economic,
social and political affairs in societies. The report ends by calling for the construction of
an economic system that works for the 99% of the world population, instead of the status
quo in which all societal efforts are geared towards advancing the interests of the 1%.
That is the magnitude of inequalities and levels of poverty throughout the entire neoliberal
hemisphere. The effects are thus not unique to South Africa as, wherever these policy
choices are preferred, the outcome has consistently been the transference of wealth and
resources from the poor to the rich. Instead of wealth trickling from the rich to the poor
in line with neo-classical orthodoxy, wealth has been flowing from the poor to the rich.
As a result, throughout the entire neoliberal hemisphere, the poor and millions of other
people have been gradually swelling the ranks of poverty by any measure imaginable.
Activity 7.2

Watch this five-minute YouTube video in which the Vice-Chancellor of Wits University,
Prof Adam Habib, addresses students at the Gordon Institute of Business Science
(GIBS) on Inequality in South Africa:
https://www.youtube.com/watch?v=xB19BHIOYi8
108
Make sure you comprehend the three most important ideas he makes about the
persistence of not only poverty, but also inequality in the country, i.e. poor growth,
absence of redistributive measures and different starting points between the poor
and the rich.
(1) What is your assessment of his arguments in relation to the detailed facts from
research findings covered in this section about growing poverty, unemployment
and inequality?
19 Feedback
Your summary should contain, among other things, the following: his argument and the
evidence he advances to criticise singular focus on economic growth as the goal of eco-
nomic policy; government failure to address the root causes of inequality; and absence of
key policy interventions to redistribute wealth in favour of the poor.
7.3 INTELLECTUAL RESPONSES TO THE EFFECTS OF

NEOLIBERALISM IN SOUTH AFRICA
While there seems to be consensus on the effects of the policies designed and implemented
in South Africa over the past two decades following the official end of apartheid, especially
with respect to their failure to end poverty and inequality, but also in generating new levels
of such challenges, there seems to be no such unanimity when coming to what exactly
the underlying causes of such failures are. In this section, we address two contrasting
accounts on the underlying policy explanations behind the dismal record of the post-
apartheid democratic government. One is by a renowned journalist, Hein Marais, and
other by a prominent sociologist, Jeremy Seekings. When assessing the two opinions on
the nature of the South African policy landscape and its aftermaths, always make sure to
remember what was discussed in the past two learning units, especially about the origins,
nature and evolution of neoliberalism.
In a book published in 2016 titled: “Poverty, Politics and Policy in South Africa”, the
sociologist Jeremy Seekings, working jointly with the economist Nicoli Nattrass, asked
the question: “Why has poverty persisted after apartheid?” In chapter 4 of their book,
the authors examine the economic growth path and ruminate on the factors accounting
for the persistence of poverty and inequality so many years after the end of apartheid.
Whilst acknowledging in the core of their argument that the ANC government could
have adopted different policies that would have resulted in a more expansionary and
redistributive economic growth path (84), the authors nevertheless proceed to argue
that “the ANC did not, however, shift to a market-embracing neoliberal position, rather, it
shifted to an approach that was, in many but not all respects, classically social democratic,
that is, an approach that sought to combine supply-side policies with redistribution” (88).
Turning their attention to prevailing criticism of government policies within left cycles at
the time, the authors were of the view that “… the criticisms conflate social democracy
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with neoliberalism, assuming that any concern with supply-side factors and willingness
to consider the use of market mechanisms as tools was evidence of an uncritical embrace
of the market” (91).
Seekings and Nattrass are of the firm view that “every government economic policy
document from GEAR to the NDP adopted some pro-market features whilst endorsing
a strong redistributive and interventionist role for the state with regard to industrial
and welfare policy, employment equity and poverty alleviation. Such policies were far
from ‘neoliberal’ …” (97). They also make reference to institutional initiatives to promote
collective bargaining in the labour market and calls for social accord within various policy
platforms as further evidence of a social democratic orientation in policy formulation
and implementation.
Seekings and Nattrass are thus loathe to blame the persistent poverty and inequality
on the adoption and implementation of neoliberal policies and instead point to lack of
proper implementation of existing policies as being at the centre of the triple challenges.
The authors rely on evidence such as industrial policy initiatives, labour market reforms
and various social grants to make assertions for a strong and active role of the state in
the economy, contrary to neoliberal guidelines. In other words, behind the unrelenting
poverty levels and increasing inequality lies a dark shadow of poorly implemented social
democratic policies, albeit with South African features and not customary neoliberal
principles as they have usually come to be understood. So, instead of a downright free
market programme in which the state completely retreats, in South Africa, according to
Seekings and Nattrass, you find a combination of state and market in which the latter
plays a critical role, including structuring the terrain on which the former functions. It is
with this insight in mind that the authors invoke examples of fiscal interventions around
welfare programmes; regulatory initiatives around trade and industry; and erroneously
with reference to supposedly regulatory labour market initiatives.
A contrary interpretation is found in the work of Hein Marais in a book published in 2011
titled: “South Africa Pushed to the Limit – The Political Economy of Change”. Although
published five years earlier than that of Seekings and Nattrass, his conclusions aptly
anticipate the arguments made by the two with respect to the nature and place of
neoliberalism in the post-apartheid political economy. In chapter four of the book, Marais
directly takes issue with the partial and inadequate conceptions prevalent within left
and scholarly circles in which “neoliberalism depicts a retreat of the state from its social
provisioning and regulatory duties in favour of the ‘invisible hand’ of the market” (134).
He points out that “judged against such a [narrow] definition, even the GEAR plan did
not inaugurate a fully fledged neoliberal adjustment phase in South Africa … and that
government would add that the adoption of the ASGISA framework in 2006 dissolved
most of the neoliberal elements” (ibid). Marais argues that such “claims rest on a simplistic
notion of an absent state and triumphant market, which is always a distorted description
of neoliberalism – even in its early Washington Consensus phase”.
Grounding himself in the insights emanating from an intellectual territory opened up

by, among others, David Harvey (see learning unit 7), Marais contends that “an accurate
definition has to capture the fact that neoliberalism refers to more than a particular set
of policy choices: it constitutes the contemporary form of global capitalist accumulation
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and involves the systematic use of state power to recompose the rule of capital in
economic and social life” (ibid). In other words, in this conception, priority is given to the
economic, social and political force, in this case capital, that has the power to control and
influence the exercising of choices. From this point of view, it is possible for a neoliberal
project understood as the assertion of the power of the capitalist classes to implement
expansionist fiscal policies and regulatory interventions for as long as those help to
advance and buttress the interests of capital. It is perhaps in that way that neoliberalism,
or for that matter even capitalism, is never the same anywhere as it mutates and adapts
itself to existing political conditions everywhere.
Understood in this way, it was quite conceivable that the rule of capital, even in its
neoliberal form, can assume a multiplicity of endless variations, depending on determining
circumstances that influence its formation. In the same way that the rule of capital
assumed democratic form in many advanced countries and dictatorial forms in many
poor countries, it also took on a racially exclusive variant in the form of apartheid in
South Africa. It is, therefore, quite sensible that neoliberalism, as a form of capitalist rule,
can never have universal characteristics. It is in this vein that Marais concludes, “Once
neoliberalism is understood as a set of political economic practices, it becomes obvious
that it varies over time and differs from place to place … [and that] … the notion of it
being a homogenous phenomenon is then upended and replaced with one in which it
is understood as being considerably more variable, adaptive and supple than the ‘tired
neoliberalism versus welfare state’ frame conveys” (ibid).
Once you have read the detailed accounts of the nature of neoliberalism and its place
in the current socio-economic state of the country, you should be in a position to make
your own judgement as to which of the two interpretations best illuminates the dynamics
of social change and transformation in the post-apartheid South Africa. In addition, or
rather parallel to contemplations of the nature of this evolving society, there have also
been eruptions at various points of the struggles against the negative effects of this new
social order, the essential details of which form the subject of the next section.
Activity 7.3
Watch this five-minute YouTube video by Stuart Bass titled “Neoliberalism Explained”:
https://www.youtube.com/watch?v=2_ruEbn4jU0
(1) Make a short summary of the main points captured in the video regarding what
neoliberalism is all about.
(2) Recall what learning unit 5 discussed as the three main ways in which the state
intervenes in the economy and how such roles are exercised under neoliberalism.
(3) What is your own judgement on which of the two views – Seekings and Nattrass
on the one hand and Marais on the other – you find illuminating about the nature
and effects of neoliberalism in South Africa?
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20 Feedback
The starting point should be a summary of the essential details emanating from the video
with respect to the main features of neoliberalism. You can reinforce this outline with a recap
of the key insights from learning unit 5. Based on these, you can then make an argument
on which of the two views you find compelling in terms of revealing the true nature and
consequences of the policies implemented by the ANC government since the mid-1990s.
7.4 SOCIAL STRUGGLES AGAINST NEOLIBERALISM: NEW

SOCIAL MOVEMENTS IN POST-APARTHEID SOUTH AFRICA
The adoption of GEAR in early 1996 was, without doubt, a crucial landmark development in
the consolidation of the post-apartheid policy architecture. This development came right in
the middle of various parliamentary initiatives through which public participation through
submissions was encouraged, as well as experimentation with several RDP-inspired pilot
projects in which some communities were actively participating. The gradual collapse of
these pilot projects, together with the declaration that the GEAR Strategy was not up for
negotiations, began to unsettle the already fragile ground on which the new society was
founded. It was not long after these that new post-apartheid struggles began to register
around such issues as basic social services, landlessness, homelessness, environmental
destruction, gender equity, sexual minorities, migrants, and labour practices (Marais, 2011:
449). These and subsequent struggles launched what came to be known as the “rebellion
of the poor” (Seekings & Nattrass, 2016: chapter 10).
These struggles, in turn, gave birth to a new breed of organisations whose lineage can
be traced to the social and economic conditions of the new South Africa. The range of
formations that emerged include the Treatment Action Campaign (TAC), organised around
treatment for HIV/Aids sufferers; Anti-Privatisation Forums (APFs) in various parts of the
country, most prominently in Johannesburg and Cape Town; the Soweto Electricity Crisis
Committee (SECC) to resist cost-recovery measures adopted by the city of Johannesburg;
the Landless People’s Movement (LPM), waging struggles around land reform; Jubilee
2000, organising around apartheid debt and other finance-related problems; and various
Anti-Eviction Campaigns (AEC) in various localities. As already alluded to, these new
formations took up a range of issues whose genesis can be seen in the deprivations of the
apartheid social order, as well as in the deficiencies of the new order. These movements
came together to announce their existence in one of post-apartheid South Africa’s biggest
marches during the World Conference on Sustainable Development (WSSD) held in South
Africa in 2002.
They are referred to as new social movements mainly because they fall outside the
traditional scope of formations that participated in the anti-apartheid struggle, such as
political parties, trade unions and women’s organisations, as well as civic organisations
and youth formations. They also mobilise social forces on a single issue basis and, in
some cases, the structure or formation does not endure beyond the achievement of the
demands and grievances. In this sense, then, some of the formations may not, strictly
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speaking, be new as throughout human history you find different instances of organising,
both short and long-term. In the case of South Africa, the struggle against apartheid is
full of examples where structures were formed to pursue a specific immediate issue and
then immediately disbanded once the mandate or goal had been realised.
What is, however, distinct about the new social movements in South Africa is that their
existence can be explained by the persistence of problems whose roots are in the previous
political order, as well as in the failure of the new policies to deal effectively with that
social and economic legacy. It is also in this way that most of these movements were
not only expressly anti-neoliberal, but also existed outside the ideological sway of the
congress movement. One of the common features of these movements is that they are
very unpredictable and uneven in their behaviour due largely to their social composition
and the nature of the period in which they operate. In the main, these movements are
constituted by poor women, unemployed youth and other marginalised sections of
society. These social attributes define the extent to which they can sustain organisation
building processes with all the temperaments and resources such processes demand.
The organisations also exist in a period in which the living standards of the poor are on
a serious decline, thus making it difficult for activists to sustain their own organisational
activities without external assistance.
Activity 7.4

Watch this five-minute YouTube video on Social Movements in South Africa: https://
www.youtube.com/watch?v=uQJEIOTHHa4
Thereafter, answer the following questions:
(1) According to this short video, what are the course of social movement protests
in the post-apartheid South Africa?
(2) What do you consider the similarities between the main events covered in the
video with respect to the role of the state – the community struggle against
mining, the Andries Tatane issue and the massacre at Marikana?
(3) Can you define the characteristic features of the social movements active in
protests currently as opposed to the traditional organisations that were active in
the anti-apartheid struggle?
21 Feedback
The important consideration here is to link the political events discussed in this section
with the political economy of the period under review, i.e. the effects of neoliberalism on
society. In this way, you are in a position to trace the relationship between the observed
events and the effects of the government policies; to analyse the role played by the state
in dealing with the specific protests; and, lastly, to analyse the various social movements
with respect to the issues they campaign around, the methods of struggle used and their
relationship to the state.
113 SOC2602/1
7.5 ENTER THE STUDENTS: FEES-MUST-FALL
Student protests, sit-ins and, in some instances, innovative ideas such as teach-ins, marked
the mass entrance of students into national realm of politics over issues that had been
bubbling for some time under the insulated and, in some cases literally fortified, ivory
towers. Initially emerging as disparate initiatives typified by campus based events rallying
around local grievances, the demonstrations soon assumed a national character with the
emergence of central co-ordinating structures. This culminated in a successful march to
the seat of executive power in the Union Buildings in Pretoria. At that stage, the rallying
call was “fees-must-fall”, having moved through several phases that targeted various
vestiges of colonial and apartheid rule such as the Rhodes statue at the University of
Cape Town (UCT) and the very name of the Rhodes University in the Eastern Cape town
of Grahamstown. The theme of transformation, in whatever way imagined, whether with
respect to curriculum content; culture of teaching and learning; or even fundamental
issues of access and exclusion, never left the scene of these struggles. The latter set of
concerns came to be expressed through demands for the higher education curriculum to
be made relevant to the peculiar African conditions in which such institutions are located.
The notions of Africanisation and Decoloniality are deployed to articulate the nature and
content of the grievances.
Historically, students have played an important role in waging struggles against social
and political injustices. At times, as in the case of the 1976 uprisings and in the mid-1980s,
they played a leading role in the political struggle against apartheid. When students
stormed the political stage with protests, sit-ins and marches in various campuses across
the country, they were merely continuing the tradition and culture that goes a long way
back in the history and making of the South African political landscape. In this section
of the learning unit, in line with broader themes explored in the previous two learning
units, we examine the social, economic and political conditions giving rise to these events
across the entire higher learning hemisphere in the country. We explore the underlying
issues that may account for the rise of these protests and struggles at the time and in
the way they unfolded. In the context of the previous units and the thematic orientation
of the study guide as a whole, that means we aim to examine the relationship between
these events and the effects of neoliberalism as the mounting policy framework defining
the landscape on which the social, economic and political conditions of the new South
Africa unfold.
In an article written by a team of research students based at the Institute for Africa’s
Alternatives (IFAA’s) Student and Youth Department, a strong argument is made that “the
socio-economic conditions that sparked the student protests – fee increases, student
debt, labour outsourcing and racial inequality – can all be traced to neoliberal ideology
and practices” (Mokose et al, 2017:28). They refer to the dwindling state funding reflected
in the gradual decrease in state subsidies to universities as a result of strict adherence to
neoliberal precepts. They single this out as the single most important source of student
protests in post-apartheid South Africa.
114
Activity 7.5

Read through the article by IFAA students (Mokose, M, Kawanu, Z, Pennington, A &
Smith MN) on the relationship between neoliberalism and protests in institutions of
higher learning and address the following tasks:
(1) Make a summary of the main points made by the students in the article.
(2) Based on what you understood to be the nature and history of neoliberalism from
the previous two learning units, do you find their arguments plausible?
(3) Indicate, through reasoned arguments, whether or not you agree with their overall
assertions on the relationship between neoliberalism and the higher education
crisis.
22 Feedback
You can start by evaluating the arguments made by the students in the article and locate
them in your understanding of neoliberalism gained from the previous learning units.
Indicate, through reasoned arguments, whether or not you find their line of argument
compelling with respect to the sources of the political events within the higher learning
institutional landscape.

(1) Write an essay in which you describe, providing the essential details, the effects of
neoliberalism in post-apartheid South Africa. In your essay, touch on the state of
poverty, unemployment and inequalities in the country.
(2) Discuss the different sociological viewpoints on the relationship between neoliberal-
ism and the persistence of poverty, unemployment and inequality in South Africa.
(3) Discuss the evolution of the new social movements in South Africa with a focus on the
issues they struggle around and the methods of struggle they use. Use one example
of a social movement of your choice to demonstrate your views.
(4) Write an essay in which you evaluate the views aired by the IFAA students’ research
team on the relationship between neoliberalism and the crisis in institutions of higher
learning in South Africa. In your essay, indicate with arguments whether or not you
share their views on the issues under consideration.
115 SOC2602/1
Learning unit 8
Reflections, further readings and future projections
After completing this learning unit, you should demonstrate that you are able to:
• understand this learning unit as a call to action!
• see systemic changes in the discipline we call “sociology” as having emerged not
only as “theory” and “theoretical reflection”, but mainly as “activism” and embracing
change that is decolonial to the human condition (and not just about “inclusivity”).
• complete independent research and study on the emergent themes of this module
even if they are not directly given prominence in the study guide, such as gender
issues, climate change and environmental issues, racial issues and racism, class is-
sues and social exclusion – the list goes on – to which you must add your concerns
and interests that are shared by others.
8.1 REFLECTIONS
This module is about globalisation and social change with a focus on South African
society and it includes a little about the country’s transitional arrangements and changes
within its politics and economics. Importantly, other dimensions are also impacted upon
with these changes, influenced by the collusion of globalisation and neoliberalism. This
includes the “epistemicising” of cultures, of multiculturalism and of non-racialism, not
only in South Africa, but worldwide. (You came across this term “epistemicide” in learning
unit 3, under activity 3.1. You should review its meaning, which is central to a decolonial
project.) Hence, while we have focused mainly and mostly on the political and economic
impact of globalisation on social change in South Africa, we qualify that these changes
are not only about the economy, but also about what Marx would have referred to as the
“superstructures” – gender issues, climate change and the environment, educational issues
like the #fees-must-fall and other social movements, and so on. These are social issues
we hope that you will become concerned with as you progress through your studies in
sociology and in related fields, but particularly, with an eye on the emerging decolonial
spaces of thinking and engaging in academe and in society.
Decoloniality – the calling into account and into question the damage of the colonial
project in its wake, which was not simply a historical fact, but is still a constant reality in
the world in which we live today – emerges as a central theme in this module. Accordingly,
if you continue with your education and, particularly with sociological studies, we hope
that you will take up the beacon of the Decolonial Project to begin changing the world for
the better. By “better” we mean systemically overcoming and changing racism, classism,
ageism, sexism, “climate changeism” and the denigration of nature, and any and all
116
bigotisms that lead to and feed into the “neoliberal project”. These are enormous issues
for each generation of scholars/students to embrace, carry and engage with in academe
and also in society. “Go out and be teachers of the truth, but first discover who you are”.
The next section lays out a reading list, an essential exercise for the imagination, and
also a call to active participation in your learning. Learning is not about giving you the
content of what you will reproduce back, but about expanding and opening up your
mind/imagination/cultural experience to ideas beyond the classroom. If we cannot get
to places in our physical bodies, reading and books take us there in our thoughts and
imaginations – and are powerful tools for changing the world.
8.2 RECOMMENDED FURTHER READINGS

This list is obviously not exhaustive, and can be added to or even supplemented
here and there by other sources, but you should at least read half, if not all
of these texts, which can be found in Google Scholar, on the internet, and
or in your university library:
Césaire, Aimé. 1972. Discourse on colonialism. Translated by Joan Pinkham. New York:
Editions Presence Africaine (original Discours sur le colonialisme, 1955).
Bailey, David, de Ruyter, Alex, Michie, Jonathn & Tyler, Peter. 2010. Global restructuring
and the auto industry. In Cambridge Journal of Regions, Economy and Society, Vol. 3,
pp. 311–318.
Dussel, Enrique. 1996. The underside of modernity: Apel, Ricoeur, Rorty, Taylor, and the
philosophy of liberation. (Translated and edited by Eduardo Mendieta.) New Jersey:
Humanities Press International.
Grosfoguel, Ramón. 2004. Race and ethnicity or racialized ethnicities?: Identities within
Global Coloniality. In Ethnicities, Vol. 4(3), pp. 315–336. Sage Publications.
Grosfoguel, Ramón, Oso, Laura & Christou, Anastasia. 2015. “Racism’, intersectionality and
migration studies: framing some theoretical reflections. In Identities: Global Studies
in Culture and Power, Vol. 22, No. 6, pp. 635–652. Routledge.
Grosfoguel, Ramón. 2011. Decolonising post-colonial studies and paradigms of
political economy: Transmodernity, decolonial thinking, and global coloniality. In
Transmodernity: Journal of Peripheral Cultural Production of the Luso-Hispanic World,
Vol. 1(1).
Hendricks, Fred. 2006. The rise and fall of South African sociology. In African Sociological
Review, Vol. 10, No. 1, pp. 86–97.
Lugones, Mariá. The coloniality of gender. 2008. In The Worlds and Knowledge Otherwise,
Vol. 2 (Spring), pp. 1–17. (Open access URL: https://globalsocialtheory.org/topics/
coloniality-of-gender/.)
Maldonado-Torres, Nelson. 2007. On the coloniality of being. In Cultural Studies, Vol. 21,
Nos. 2–3, pp. 240–270. Taylor & Francis.
Maldonado-Torres, Nelson. 2016. Outline of ten theses on coloniality and decoloniality.
(Open Access URL: http://frantzfanonfoundation-fondationfrantzfanon.com/IMG/pdf/
maldonado-torres_outline_of_ten_theses-10.23.16_.pdf.) Frantz Fanon Foundation.
Mangcu, Xolela. 2016. Decolonising South African sociology: building on a shared “Text of
Blackness”, In Du Bois Review: Social Science Research on Race, Vol. 13, Issue 1, pp. 45–59.
117 SOC2602/1
Mignolo, Walter D. 2007. INTRODUCTION: Coloniality of power and de-colonial thinking.
In Cultural Studies, Vol. 21, No. 2–3, pp. 155–167.
Ndlovu-Gatsheni, Sabelo J. 2014. Global coloniality and the challenges of creating African
futures. In Strategic Review for Southern Africa, Vol. 36, No. 2.
Ndlovu-Gatsheni, Sabelo J & Zondi, S (eds). 2016. Decolonising the university, knowledge
systems and disciplines in Africa. Durham, North Carolina: Carolina Academic Press.
Ngugi wa Thiong’o. 1986. Decolonising the mind: The politics of language in African literature.
Harare: Zimbabwe Publishing House, London: James Currey.
Quijano, Aníbal & Wallerstein, Immanuel. 1992. Americanity as a concept; or, The Americas
in the modern world-system. In International Social Science Journal, Vol. 4, pp. 549–557.
Rodney, Walter. 1973. How Europe underdeveloped Africa. London and Dar-Es-Salaam:
Tanzanian Publishing House. (Reprinted 1983)
8.3 EXERCISES IN DECOLONIALITY AND DECOLONISING THE

UNIVERSITY
The following exercises are interactive and aimed at facilitating your ability to integrate
technology and innovation into your learning experience. Therefore, you will be required to
complete these online exercises as a part of your formative assessment. You are the future,
and therefore your reflective thoughts and ideas about the contents of the module will
enlighten your journey of self-discovery and the path of others taking the same journey.
8.3.1 Discussion forum

You are required to visit the myUnisa online portal and locate this module, SOC2602. Under
the Discussion forum, use this space to share your notes and feedback on Activity 3.1.
This activity will form part of your formative assessment plan.
8.3.2 Blog posts

On the myUnisa online portal, locate the SOC2602 module, and then click on the Blog
link on the left side of the screen.
• Under the Blog you are required to Create your own Blog, by clicking on the “create
new post” option, and then giving your blog entry a title (e.g. “My ideas about glo-
balisation, global capitalism and neoliberalism”).
• Your name automatically shows when you create the blog.
• In the actual content of the blog that you will create and write up (Blog textbox), you
will either copy and paste or edit in your overview (i.e. a summary) of learning unit 4,
in which you must summarise Amin’s and Hoogvelt’s views with your own comments
on the relationship between the world- global- capitalist system and globalisation.
Using examples to showcase your thoughts will be a highlight of your blog.
• There is a default setting on who can see this post. NB: Leave it at the Default setting
of “All members can see this post”. Do not change this as doing so will block everyone
out.
118
• If you are not finished with your entry, you can click on the “Save as Draft” option.
However, no one else will be able to read your blog until you click on “publish”.
As a tip, we recommend that you review the activities in this learning unit that you have
completed and should have recorded in your learning journal.
You are also required, in your second blog post, to upload a link to a YouTube video clip
(only 1) that you yourself must search for on the topic of “decolonising the mind”.
Finally, here is one more video we recommend you watch in order to add to your online
discussions:
https://www.youtube.com/watch?v=5IIKLWXLoCw
119 SOC2602/1
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OUTCOMES OF LEARNING UNIT 1

1.1 WELCOME NOTE

1.2 WHAT IS GLOBALISATION?

According to Martin (2006:20), “Typically, 'globalisation' is used to refer to the emergence

This activity should take you approximately 45 minutes to complete.

1 FEEDBACK on Activity 1.1

1.2.2 What is social change?

This activity should take you approximately 30 minutes to complete.

1.3 THE SCOPE OF THE CONCEPT OF GLOBALISATION

This activity should take you approximately 30 minutes to complete.

We find that it is not as straightforward as we might originally think to define these

OUTCOMES OF LEARNING UNIT 2

APPROXIMATE TIME TO WORK THROUGH THIS LEARNING UNIT:

2.1 UNDERSTANDING GLOBALISATION

So, while the definitive characteristics ascribed to globalisation are obviously a

This activity should take you approximately 30 minutes to complete.

2.2 THEORETICAL UNDERPINNINGS AND EXPLANATIONS FOR

We do strongly suggest, however, that whatever globalisation may involve, it must be

This activity should take you approximately 30 minutes to complete.

2 FEEDBACK on Activity 2.2

We see globalisation as a “contested” rather than a “given” phenomenon. We treat it criti-

2.2.1 The debate about globalisation

More specifically, the debate on globalisation hinges on a number of related aspects

• Does globalisation really exist and is the concept of globalisation meaningful?

This activity should take you approximately 60 minutes to complete.

2.2.2 Globalisation encourages a “culture of consumerism”

On the globalisation of a “culture of consumerism”, Burbach et al (1997:22–23), in observing

Burbach et al (1997:105), therefore, link contemporary negative socioeconomic trends,

According to Burbach et al (1997:144–145) the globalisation of a “culture of consumerism”

Furthermore, Held et al (1999:368) also emphasise the importance of today’s transport

This activity should take you approximately 60 minutes to complete.

3 FEEDBACK on Activity 2.4

2.2.3 A theory for the globalisation of a culture of consumerism

– TNC executives and their local affiliates.

Here he gives a different example of the “selling” of a culture of consumerism to the

Sklair (1995:94–95) summarises his theory in the following way:

The choice of high prestige, relatively costly non-essentials is deliberate, because it is

This activity should take you approximately 60 minutes to complete.

On the question of globalisation bringing about a clash of civilisations and ethnic/cultural

Cohen and Kennedy (2000:372) continue that

2.4 SELF-ASSESSMENT QUESTIONS

OUTCOMES OF LEARNING UNIT 3

After completing this learning unit, you should be able to:

APPROXIMATE TIME TO WORK THROUGH THIS LEARNING UNIT:

This activity should take you approximately 30 minutes to complete.

4 Feedback on Activity 3.1

3.2 THEORETICAL LEANINGS AND UNDERPINNINGS OF

3.2.1 Coloniality of power

3.2.2 Coloniality of knowledge

3.2.3 Coloniality of being

Together, coloniality of being, coloniality of knowledge and coloniality of power perpetuate

3.3 THE HISTORICAL ORIGINS OF GLOBALISATION

“The creation of a fully commoditised economy in which everything, including land

Enlightenment ideas must be understood as a reaction to the then prevailing, mainly

This activity should take you approximately 45 minutes to complete.

This activity should take you approximately 60 minutes to complete.

OUTCOMES OF LEARNING UNIT 4

After completing this learning unit, you should be able to:

APPROXIMATE TIME TO WORK THROUGH THIS LEARNING UNIT: