Abstract
In 1994 South Africa was politically transformed from an oligarchy into a democracy. How has this momentous change affected the framework of economic policy? This paper approaches the question via the virulent unemployment that is South Africa's most serious economic problem today. The apparent answer gives great cause for concern: South Africa's policy-makers seem about to leave the real world of political economy to enter the illusory world of virtual economics instead.
Highlights
As in the past, the expression "political economy" has several shades of meaning today
Seeing that high unemployment and deficient job opportunities reside at the core of South Africa's labour problems, despite recently positive economic growth, the following comment on labour conditions in Europe (Siebert, 1997:53) may serve as a starting point for South Africa too: The institutional phenomena described in this paper have led to a dual labor market in most European countries
Employment growth has been held back by a long-tenn process of capital deepening, for example, the capital-output ratio in the South African economy rose from 2.22 in 1960-64 to 3.32 in 1993-97. This has been associated with sharp increases in wages and other labour costs, like those caused by strikes, stayaways and the so-called institutional disincentives mentioned at the beginning of this section (CEAS, 1993 :42-3)
Summary
The expression "political economy" has several shades of meaning today. It would be most naIve to think that such political transfonnation would have no major economic consequences This means that there is a good reason to approach the political economy of South Africa today as a "unified subject", as Professor Avinash Dixit Its all-time champion was the French socialist Charles Fourier (17721837), who abhorred industrialism and advocated a return to the land The hub of his envisaged rural economy was the Phalanstere, where a worker "would be employed almost exclusively in looking after his garden, just like Adam was before the Fall and Candide after his misfortunes" (Gide & Rist, 1917 : 242). Karl Marx contemptuously dismissed this kind of socialism as unscientific and utopian, compared to his own doctrine of "scientific socialism" How do these rival approaches (political economy vs virtual economics) relate to the above-mentioned problem at the core of South African economic policy? The public lost its sense of SAJEMS NS Vol I (1998) No 2 money illusion, or faith in price stability, and came to expect that the past experience of inflation would continue in the future as well
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