The Post-Apartheid Development Debacle in South Africa: How Mainstream Economics and the Vested Interests Preserved Apartheid Economic Structures

Abstract

:Nelson Mandela and the African National Congress (ANC) were persuaded by mainstream economists and South African businesses to pursue neoliberal policies. The ANC implemented policies that made South Africa more open to international trade and financial flows along with privatization and austerity, other than a modest increase in social expenditures. After twenty-three years of such policies, we can judge their effectiveness. Unfortunately, neoliberalism worsened the inequality created under apartheid and failed to stimulate significant growth and development. This article documents the extent to which the maintenance of key apartheid-era institutions, under the guise of “market friendly policies,” undermined the prospects for long-term economic and human development in South Africa. This post-apartheid development debacle should go down in history as one of the great failures of mainstream economics and its neoliberal policy recommendations. Breaking the cycle of uneven development in South Africa will require fundamental changes in institutions, including changes in democracy, ownership structures, and the very nature of the economic system. This article offers some ideas for how an adjusted institutional structure might reconfigure the social provisioning process in South Africa to address racial divisions and lingering inequality.