Politics and economics in ANC economic policy. (African National Congress)

SINCE ITS UNBANNING IN February 1990, the African National Congress (ANC) has had to transform itself from an exiled South African liberation movement into a negotiating partner and government-in-waiting. This has wrought enormous changes on the organization and its policies. Amongst the more controversial of these has been economic policy, which not only evokes widespread reaction in government and business circles, but also raises major differences between various ANC constituencies. Economic policy has the potential to split the ANC and to place great strain on its alliance with the South African Communist Party (SACP) and the Congress of South African Trade Unions (Cosatu).(1) For this reason, ANC economic policy is moulded by both technical economic arguments and political considerations.

As of yet, no substantial work exists on developments in ANC economic policy.(2) Analysis has largely remained the preserve of financial journalists with little appreciation of the history of ANC economic thinking or of the organizational dynamics involved. Such writers tend to ignore the possibility of politically driven compromises and attribute ambiguous or theoretically suspect ANC economic utterances simply to ignorance.(3)

In tracing the more important shifts in ANC economic policy(4) since 1990, this paper outlines theoretical underpinnings and indicates political dimensions of policy formulation where appropriate. It is argued that as the ANC attempted to broaden its appeal, economic policy became more business-friendly and less structured by the trade union agenda. However, as indicated by the slight re-radicalization of ANC economic policy at the 1992 conference, this process was constrained to some extent by grass-roots resistance. The paper concludes with brief commentary on the ANC's Reconstruction and Development Plan of February 1994.

Early ANC economic policy statements

Although the ANC produced no substantial economic policies until 1990, demands for redistribution can be found in documents dating from the 1940s.(5) A recurrent argument was that apartheid, inequality and capitalism were integrally related and hence that strong state intervention was needed to create a more equitable and acceptable economic system. The most important statement of the ANC's pre-1990 economic intentions was The Freedom Charter (adopted by the ANC in 1956). Redistribution was an unmistakable theme, yet it was far from being an 'operational blue-print grounded upon or compatible with only one mechanism or form of economic organization'.(6) Although the Freedom Charter had an arguably strong emphasis on working class demands,(7) the document's vagueness helped 'reconcile business as well as working class interests'.(8) The lack of specificity was politically expedient in that African nationalists, supporters of the SACP, workers, small entrepreneurs, professionals, and others, were able to unite behind the broad slogans.

In a widely interpreted call for nationalization, the Freedom Charter did, however, specifically demand that the mines, banks and monopoly industry 'be transferred to the ownership of the people as a whole'. On the day of his release, Nelson Mandela stated: 'The nationalization of the mines, banks and monopoly industry is the policy of the ANC and a change or modification of our views in this regard is inconceivable'.(9) These comments had a negative impact on the stock market and set the financial press ablaze with indignation. The ANC's uncoordinated and often contradictory responses to the uproar(10) were unimpressive. The most controversial statements were those implying that nationalization was a means of obtaining capital for redistribution.(11) As Mandela expressed it: 'Nationalization is a demand which is reasonable from our point of view. Where do we get the capital and resources to tackle the national issues facing us?'.(12) Views such as these implied either nationalization without compensation, or nationalization by means of issuing long-term, low interest government debt.(13) Either way, nationalization would erode investor confidence and undermine future growth prospects. Unsurprisingly, considerable pressure was palced on the ANC to modify this stance.(14)

The problem for the ANC, however, was that nationalization had become synonymous in the eyes of many of its supporters with the idea of redistributing wealth from those who had benefited under apartheid to those who had been exploited. The rival call for privatization was thus dismissed 'with the indignation of an heir apparent watching the family fortune being auctioned on the eve of his inheritance'.(15) Technical economic arguments about the relative benefits of private versus public ownership were subsumed by the moral demand for compensation through the vehicle of nationalization. However, as the weight of international and doestic opposition grew, and the failure of centrally planned economies became increasingly self-evident, the ANC leadership softened its position. A workshop package was circulated to its branches warning of the costs and inefficiencies of nationalization.(16) But these efforts simply highlighted the absence of any formal ANC economic policy. Although some elaboration of economic principles had occurred in the ANC'S 1988 Constitutional Guidelines which committed the organization to a mixed economy,(17) these were still glaringly short of detail.(18)

The challenge facing the ANC was to come up with a consistent set of policies which promoted economic growth and job creation, alleviated white fears and boosted business confidence--while at the same time supporting redistribution, affirmative action, small business development and trade union demands. The policy had to be economically sound, understandable, and contain sufficient continuity with past pronouncements that it did not alienate the ANC's political support base. This was a tough order. The first attempt was made at two workshops in Harare by the ANC's fledgling Department of Economic Policy in conjunction with Cosatu. The result was the Discussion Document on Economic Policy (DDEP), the final draft of which appeared in September 1990.(19)

The 1990 Discussion Document on Economic Policy (DDEP)

Like the Freedom Charter, the DDEP stressed redistribution and state intervention while remaining ambiguous in key areas. In this sense, economic policies continued to be influenced by the political need to weld together the multi-class alliance. A central theme was the call for 'reconstruction' and the 'restructuring' of South Africa's economy. These terms were popularized by Cosatu and hence suggest continuity with trade union economic understandings. However, their exact meanings were never specified in the DDEP. Restructuring could thus hypothetically include anything from extensive state intervention to conventional marketdriven structural adjustment. Nevertheless, such language was useful in that it injected a radical flavour while avoiding compromising socialist rhetoric.

The problem with this conceptual fluidity, however, was that it resulted in an unclear (if not incoherent) vision of the role of the state. The DDEP proposed a confusing mixture of support for markets, strong state intervention and democratic economic policy formulation: 'The ANC's basic perspective is that of a mixed economy in which all sectors contribute towards defining and achieving national goals and objectives for the benefit of all'.(20) The tensions between state and market, and between strong state intervention and consultation with organs of civil society were not addressed. Instead, the DDEP outlined a programme of restructuring which entailed both direct intervention via industrial policy, and expansionary demand management.

An extensive role for the state was proposed ranging from strategic industrial planning, to protecting the environment and …