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Lucien van der Walt, 2000, “South African Capital and Power in SADC: Neo-liberalism and “small” imperialism,” paper presented at Comparing and Connecting Labour in Southern Africa/ Workshop for Comparative Labour Studies, Randse Afrikaanse Universiteit (now University of Johannesburg), 28-29 October.
Lucien van der Walt
The issue of South African neo-liberalism in relation to the southern African region, and the Southern African Development Community (SADC) is an important one. It has, however, received little attention.
The literature on neo-liberalism in South Africa has, of course, closely examined the international dimensions of these policies. Some of it is concerned with the question of why South Africa adopted neo-liberal policies – specifically, whether this was due to international pressures. Other analysts have focused on how neo-liberalism affects trade and investment – specifically, whether South Africa is attracting Foreign Direct Investment (FDI), and whether South Africa can compete.
Neither of these approaches really engages with the question of South Africa in southern Africa. Since there is little reason to suppose that South Africa adopted neoliberalism response to SADC pressures, its relations with southern Africa are absent in discussions of why it adopted neo-liberalism.
Work on trade and investment has focused on relations with powerful economies elsewhere, such as those of the West and the New Industrialised Countries (NICs). It has looked at issues like the effects of trade liberalisation on manufacturing industry, and the implications for exports of agreements such as the EU/ South Africa trade pact. Comparisons tend to made with countries outside of SADC: the latest Federation of Unions of South Africa (FEDUSA) newspaper examines job creation options in South Africa by reference to middle-income countries like Brazil, Ireland and Portugal.
Neo-liberalism and South African imperialism
Thus, the literature on South African neo-liberal policy, such as 1996 Growth, Employment and Redistribution (GEAR) strategy, has little to say about the effects on the southern African region. Such policy has, however, enormous implications for neighbouring countries. The simple fact is that South Africa is the dominant power in SADC, and can for all intents and purposes be described as a small imperial power.
Much has been made in the literature, for example, in Mamdani’s Citizen and Subject, of the case against “South African exceptionalism,” focussing on how apartheid political and social practices paralleled those of colonial Africa elsewhere.
This has validity up to a point, but it downplays the enormous differences between South Africa and its neighbours. It is true that SA is still heavily dependent on raw material exports to generate foreign revenue, and is thus similar in this respect to its neighbours; however, the SA economy is so much larger and more industrialised than its neighbours that such issues must be seen in their proper context.
In 1998, South Africa was responsible for over 40% of the GDP of all sub-Saharan Africa: within the region, the SA economy is far larger than all the other SADC economies combined: indeed, between 1990 and 2000, South Africa’s share of the total GDP of the SADC region rose from 92 to 93%.
Class structure and political economy
Although weak state capacity and regulation across SADC means that the GDP of some countries is undercounted, the fact remains that the South African economy is far larger and qualitatively different to those of its neighbours. For instance, in the South African economy the primary sector plays a limited role in the overall constitution of the GDP, representing at most 15% of total output if we include agriculture and mining.
Poor manufacturing export performance accounts for the ongoing reliance on mining exports for foreign exchange – and foreign exchange is primarily required for manufacturing inputs, especially capital goods. As such, the over-reliance on raw material exports in South Africa is a failure of industrial policy, rather than a primary defining feature of the South African economy. That South Africa relies as heavily on raw material exports for foreign exchange as Zambia does not mean South Africa and Zambia have identical economies.
We need to move our analysis from the realm of exchange, to the class relations seen in production and elsewhere. South Africa started an industrial, capitalist revolution more than a century ago. This is reflected in the social structure as well: there is almost no peasantry at all, an economically active population of over 15 million concentrated within (or, in the case of the unemployed, dependent upon) income from wage labour. A large part of the population is rural, and involved in agriculture but the great majority are wage workers, many of them dwellers on large commercial farms. This situation helps account for South Africa having proportionately (and, besides Nigeria, also absolutely) the largest union movement in the continent.
It would be greatly mistaken to discount, as Mamdani has noted, similarities between apartheid and the segregation that preceded it, and indirect rule in the British empire more generally. It would also be a mistake to discount the chieftaincy. But to try and force South Africa into the exact same mould is also a mistake: the homelands were more than just indirect rule systems, and even at the most generous estimates, the proportion of the black African population under continuous chiefly rule was less than 50% by the 1980s.
South African capitalist expansion in SADC
The size of South Africa’s holdings elsewhere in Africa as a whole is, at first glance, somewhat limited, apparently calling into question the claim for South African dominance. In December 1998, South Africa had R9.12 billion in FDI in Africa and R6.20 in non-direct investment. These assets constitute only 4.6% of South Africa’s foreign assets, as compared to almost R100 billion in the UK (31.8% of total SA foreign investment), R118 billion in the rest of Europe (35% of the total), and R66 billion in the USA (around 20% of the total).
However, given the disparity in size between the South African economy and other economies in the SADC region, its investment in the region is immensely significant. The issue is not whether South African invests more in Europe than in Africa: it is how large the South African investment is, in SADC countries, relative to the SADC economies. South Africa’s FDI in the EU and the USA is substantially larger in absolute terms than its FDI in Africa more generally, but it is quite trivial to those large economies. But in the small SADC economies, South African FDI is absolutely and relatively huge.
Linking SADC to South African neo-liberalism and expansion
Now, that FDI comes from an economy that has increasingly moved towards neo-liberalism. This is not something new or something reducible either to the post-apartheid impact of globalisation or the polices of the post-apartheid state.
Rather, the process began in the 1970s and was, furthermore, driven from within. Neo-liberalism began to be implemented in South Africa from the late 1970s, and was a key plank of the P.W. Botha regime of 1978. This was reflected in a greater acceptance within ruling circles of fiscal discipline, the deregulation of exports and imports and of monetary policy and the privatisation of state assets. Unlike almost any other country in the SADC region, the shift to neo-liberalism was driven by the local ruling class including a large local corporate sector. South Africa has never been under an IMF or World Bank structural adjustment loan, nor has the state ever been dependent on a foreign bail-out. Its debts are largely internal.
Much of the late apartheid neo-liberal project stalled, in large part due to internal resistance to its impacts. Furthermore, due to the strategic considerations of the last apartheid government (which enforced strict controls over capital exports), and due to the effects of sanctions on trade and investment, South African capital had little opportunity to globalise in this period. There were limited capital outflows, although some certainly took place. But with the 1990s transition, neo-liberalism got new life– notably with the new African National Congress (ANC)-led government liberalising capital and other controls, commercialising and privatising state firms, and promoting a process of “rolling north.” 
An important vehicle for the expansion of South African capitalism northwards into the continent was SADC. This is ironic given that SADC was initially conceived and established by states in the region for protection against South African power, with the specific aim of reducing dependence on the South African economy.
The role of SADC changed greatly in the 1990s. South Africa was welcomed into SADC for the first time, where it soon exerted enormous influence and engaged in some ostentatious displays of power. But this was also the time of liberalisation of capital and commodity movements in the region as a whole, and of privatisation – rather than the 1960s-style protectionist state policies.
SADC itself was transformed. On the one hand, the very aims and rationale of SADC have been reconstituted. It has shifted from being a site for state-led development projects in pursuit of economic autarchy, to the basis for a regional free trade zone dominated by South Africa.
In the Windhoek declaration signed by southern African governments in October 1997 it was stated that “the private sector [is] the locomotive of economic development,” and that “business requires … a climate in which it can develop safely, freely and profitably.” The February 2000 Mbabane meeting of the SADC Council of Ministers issued a regional trade protocol with the following stated objectives: “to “liberalise intra-regional trade in goods and services, ensure efficient production within SADC, contribute toward a climate for investment and enhance the economic development, diversification and industrialisation of the region.”
Obviously, South African private capital will be the key beneficiary in SADC of trade liberalisation in the SADC region. And so, on the other hand, power within SADC has been reconstituted: it has shifted from being a structure to overturn, to being a structure to reinforce, South African dominance in the region.
Whilst foreign investment within South Africa has been rather lower than expected in the neo-liberal period (growing by only 413% between 1986 and 1998) South African investments abroad grew by 606% in the same period (with this growth concentrated in the post 1992 period).
Changes in SADC facilitated and reinforced a major expansion of South African capital into the region. Given that local capital was already suffering economic crisis, it was attracted to the investments offered by speculation on regional stock markets, the profits to be made from snapping up privatised state utilities within the region and new openings for the private sector as the old statist models rolled back across SADC.
This expansion has included $800 million in Zambia by Anglo-American, with much of this in the Zambian Consolidated Copper Mines which were being sold off. However, the South African state was itself active as an investor, state-owned corporations like ESKOM got involved in privatisation deals, while the Industrial Development Corporation (IDC) put about $600 million into Mozambique.
The process was presented in various ways: benevolent help from the big brother in the South, African solidarity, part of an “African Renaissance,” and sometimes simply and crudely as a “new scramble for Africa.” In short, the liberalisation of the SADC region is directly in line with the strategic objectives of South Africa’s ruling class – both its economic and political wings – and, given the disparity between the power of the SA bourgeoisie and its regional counterparts, these strategic objectives are realised through the entrenchment of South African economic and political dominance in the region.
Implications for SADC
The role of South Africa in SADC has enormous effects. It entails an entrenchment of enormous regional disparities and a historic pattern of unequal regional development. It has seen some export of South African management styles and hierarchies – including authoritarian and racist practices – across the SADC region. Even the second most powerful regional bourgeoisie, that of Zimbabwe, has been unable to meet the challenge posed by the battery of South African exports, with the development of a huge trade imbalance between the two countries. In effect, then, SA capital is “exporting deindustrialisation” into the region.
SADC regional markets are too small to resolve South Africa’s ongoing economic crisis, but do provide sites to sink excess capital, sources of labour and raw materials, and scope for sales of manufactured goods and services which can help deal with excess capacity. South Africa has advantages accessing the region, and can even use its large financial sector and infrastructure to accumulate by acting as a “gateway to Africa” for its rivals, Western and Eastern investors.
To the extent that South Africa is, in fact, the hub of a regional political economy, wherein some countries serve a direct role in a division of labour geared to the South African ruling class (Lesotho, Mozambique and Swaziland as labour reservoirs, Namibia as source of raw materials) or as markets for South African products and investments (Mozambique, Zambia, Zimbabwe …), the fate of all SADC is tied to the South African economy.
Last, the trajectory of class struggles will itself be affected by the process of regionalisation. South African FDI will probably have some contradictory effects such as a possible growth of large, concentrated working classes in centres outside South Africa.
At the same time, regionalisation is also connected to growing immigration within the region, with South Africa the major immigrant-attracting country. This will also have contradictory effects. Given South Africa’s high unemployment, competition for nationals and foreigners for jobs – especially when immigrants are seen by some employers as non-union, low-wage workers – there are fertile grounds for large-scale anti-immigrant sentiment and even violence in South Africa. This trend is already clear.
But we should not reduce the problem to grim competition in labour markets. A very powerful current of South African nationalism is flowing – and South African dominance in the region is very clearly part of a sense of South African superiority, including within the black working class. This is the dark side of post-apartheid nation-building.
Some larger theoretical and political implications
The process of neo-liberalism within SADC simply cannot be read off a simple North/ South or Western/ African dynamic. It can only be understood properly through understanding African dynamics – and, specifically, inequalities within Africa. This is exactly what Third-Worldist approaches, and much of dependency / underdevelopment theory, obscures.
We need to understand, on the one hand, that African countries vary in terms of the different political economies and class structures of each country, and, on the other hand, in terms of the geo-political and economic relations between different ruling classes and nations.
Arguments that reject any notion of South African exceptionalism do not help us grapple with these issues. There are enormous differences between South Africa and other SADC countries: South Africa is “exceptional” in many ways, and this is reflected very clearly in regional dynamics, and in the way that neo-liberal capitalism is developing within SADC.
At the same time, much of the literature on globalisation and neo-liberalism tends to present processes of economic liberalisation and foreign domination as external impositions on “third world” countries. As the SADC case indicates, such approaches fail to examine the agency of local ruling classes in the implementation of neo-liberal policies, the role of local states in enforcing them, and how this is driven by local class interests expressed in highly unequal regional systems.
Crises of capitalism, and economic and geo-strategic competition between ruling classes happen wherever capitalism, and states, exist. They cannot then simply be something that happens in the West, with some subsequent impacts on Africa; nor can Africa be reduced to some sort of monolithic entity with an essential unity. Capitalism and the world state system are, moreover, global systems. It is obvious that the global economic crisis that started in the 1970s, and the neo-liberal restructuring that follows, directly affect African ruling classes, and that these classes act in this situation in pursuit of their own interests. States, in general, are not the victims of neo-liberal globalisation, but some of its main authors, and many “third world” states are among these authors.
So nationalist and Third-Worldist approaches which posit a neat world conflict between unified nations and regional blocs fundamentally miss what is needed in terms of strategy agency, and possible in terms of alliances and struggles. The question of SADC is not a simple question of an African bloc facing an outside imperial power. It is a question of an imperial contradiction between South Africa and the rest of SADC, and of class contradictions within each SADC country.
Furthermore, capitalism and the neo-liberal phase of capitalism is a global system, and its class contradictions exist everywhere. The acceleration of trends towards a world economy with integrated labour markets, along with a downward pressure on incomes and an end of older class compromises, opens new opportunities for working class internationalism. The failure of both statist and neo-liberal models to being equality and freedom points to the intrinsic limitations of both nationalist and Third-Worldist approaches, which are dominated by the interests of local ruling classes.
And, finally: South Africa. The radical/ revisionist literature that emerged from the late 1960s has sometimes been marred by reductionism and functionalism. Nonetheless, it has provided an extremely powerful set of ideas for rethinking South Africa in relation to class, capitalism and the state. An examination of South Africa in SADC draws attention to one of the salient but rather undeveloped elements of this work: the political economy of South African regional domination. It would be worth revisiting analyses that present South Africa as, for example, a “semi-peripheral” or “sub-metropolitan” power, or an “imperialist” exporter of finance-capital.
 This is a lightly edited version of the paper presented.
 Members include: Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Seychelles, Swaziland, Tanzania, Zambia and Zimbabwe, and now also the DRC.
 E.g. Hein Marais, 1998, South Africa: Limits to Change, Zed Books: London, New York/ UCT Press: Cape Town.
 Fedusa Debate, mid-2000.
 See, for example, Duncan Innes, 1984, Anglo-American and the Rise of Modern South Africa, New York: Monthly Review Press, concluding chapter. Innes used Lenin’s definition. Other definitions would also fit.
 Mahmood Mamdani, 1996, Citizen and Subject: Contemporary Africa and the Legacy of Late Colonialism, Princeton University Press.
 E.g. Avril Joffe and Moses Ngoasheng, 1992, “Industrial Restructuring in the De Klerk Era,” in Glen
Moss and Ingrid Obery (eds.), South African Review 6, Johannesburg: Ravan Press, p. 479.
 Larry Swatuk, 2000, “South Africa in the Region,” Southern Africa Report, 3rd quarter, p. 12.
 SA Institute for Race Relations, Fast Facts bulletin May 2000.
 Almost all work on the period has focussed on the 1970s and 1980s Riekert and Wiehahn commissions (dealing with influx control and black trade unionism, respectively), these commissions must be seen in the context of a broader rethinking of macro-economic policy exemplified by the Reynders report (which advocated trade liberalisation), the De Kock and Kleu Commissions (which advocated the deregulation of the currency and capital markets), and the 1987 White Paper on Privatisation and Deregulation in the Republic of South Africa.
 A partial exception can be made for Zimbabwe in the late 1980s and early 1990s: Tor Skålnes, 1993, “The State, Interest Groups and Structural Adjustment in Zimbabwe,” Journal of Development Studies, volume 29, number 3, pp. 401-428.
 Anglo-American had more investments in the USA than Unilever, according to Innes: Innes, 1984, Anglo-American …, pp. 234-236.
 Sunday Independent, 13 August 1995, “SA rolling North”
 Larry Swatuk, 2000, “South Africa in the Region,” Southern Africa Report, 3rd quarter, p. 12.
 Quoted in Swatuk, 2000, “South Africa in the Region,” p. 13.
 Fast Facts, May 2000.
 Darlene Miller. 2000, “South African Corporations and Recolonisation,” South African Labour Bulletin, volume 24, number 5, pp. 14-19
 Miller 2000, “South African Corporations….” pp. 14-19. South African state corporations have long played a role in the region, including owning large parts of the regional rolling stock on Zimbabwe’s railways and engaging in hydro-electric schemes in Mozambique. There was no distinction between the state corporations of Namibia and South Africa when the former was still a colony of the latter.
 Sunday Independent, 13 August 1995, “SA rolling North”
 Miller 2000, “South African Corporations….” pp. 14-19.
 Lucien van der Walt, 1998, “Every Worker Must Condemn Attacks on Foreigners,” Workers Solidarity, volume 4, number 2, p. 11.
 Kim Moody, 1997, Workers in a Lean World: Unions in the International Economy. London, New York: Verso.
 Martin Legassick, 1977, “Gold, Agriculture and Secondary Industry in South Africa, 1885-1970: From Periphery to Sub-Metropole as a Forced Labour System,” Robin Palmer and Neil Parsons (eds.). The Roots of Rural Poverty in Central and Southern Africa, London: Heinemann.
 Innes, 1984, Anglo-American …, pp. 234-236.