About this site

This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

24 Jul 1990: Gelb, Steven and Mboweni, Tito

Click here for more information on the Interviewee - Gelb

Click here for more information on the Interviewee - Mboweni

Click here for Overview of the year

Economic Trends Group, ANC Economics Unit

(Notes on discussion)

The economic debate is between growth and redistribution. Business argues that growth must be the priority and that we can't take measures that will hold growth back; that once it is restored the increment can be redistributed to the poorer elements of the black population. The other side of the policy argument says redistribute wealth and income in the first place.

To assume that you will get a growth rate of five percent or more, you have to make assumptions about the inflow of foreign investment loans and foreign investment, tax incentives for foreign investment and an internal growth in savings.

Most reliance should be put on internal savings, given the international competition for capital.

Policy should increase the level of domestic investment with certain levels of state intervention. Steer industry towards such things as housing construction and the production of basic consumer goods and services. It is a process you have to go through before you can have a high added industrial base.

It is important when doing an analysis of the South African economy to keep in mind that we need to raise domestic surpluses to be channelled into domestic production. A few corporations influence a lot of domestic investment. We want to move that investment into the creation of wealth – not just the exchange of papers. We want to increase the amount of money the average black person has. The major money, however, is in the hands of big companies. If surpluses are dependent on the exploitation of labour, that is not acceptable. For example, a lot depends on what happens in the mining sector. We will demand that mining villages be built with the surpluses so that families can live together.

Incentives and pressures must be placed on corporations to do things that are socially responsible. It's not that corporations should not be able to make profits – they have to be channelled back to increase productivity.

In order to alleviate the disparities in income, etc., a lot has to do with job creation, which will in turn depend on increased investment. The trade union movement is the key to an ANC/coalition government. There must be agreement on the basic fundamental needs: housing, electricity, sewage, and clean water. The state has to play a role in these. I am for national health care. Education must be free and compulsory. You must have adequate public transportation for work and recreation. Environmental protection – trees are disappearing because our women are cutting the trees for heating. The basic issue is how much can a democratic state afford.

In the short term there is no way that we can stop expenditures on whites from dropping. That is already happening. Expenditures on blacks will have to be raised very slowly. This must be accompanied by increasing production and employment.

The economic models that interest us are Taiwan, South Korea and Japan, which have good state intervention but poor labour policies. There is no one model that fits. Also we are looking at the social democratic countries such as Sweden in the 1920s and 1930s which worked for fifteen years.

Nationalisation is a very bad word. The issue is what role should the state play. The private sector alone can't adequately address the massive inequalities we face. Also, small scale business cannot reconstitute the economy and the state can't do it on its own. We need a social contract and a national consensus.

You have to go for a macro perspective to determine how large the surplus will be. The more conventional approach would be micro analysis with the market as the distributor of resource allocation.

The South African economy performed well until twenty years ago. It has two major problems: the structure is inappropriate because it is built on a manufacturing sector that is consumer goods oriented and on security/defence. It inefficiently produces goods and services. In the eighties it had a one percent growth rate per annum. The government relies increasingly on export of minerals. At the centre are South African conglomerates, either mining houses or insurance companies.

Priorities? The creation of jobs is a high priority than increasing wages. The way to resolve the conflict with labour is to provide them with guarantees regarding job security and putting wage/price increases in line with each other.

This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. Return to theThis resource is hosted by the site.