State, capital and the emergence of a new power elite in South Africa: ‘Black economic empowerment’ at national and local levels

In this paper, the idea of a developmental state as a way of characterising postapartheid South Africa is interrogated. From the point of view of definition, Peter Evans’ concept of embedded autonomy is followed through. By and large, the creation of an intersecting elite that crosses the public-private sphere characterised by intense social interaction and with growing prestige has taken place and its leading members have acquired enormous paper wealth. In some respects, however, its hold on society is still fragile and could be challenged. Its relationship both with white business and with other segments of society are noted in this regard. The developmental state model calls to mind eastern and southern Asian parallels. The New Economic Policy of Malaysia has often been cited here and the chief elements in the modern political economy of Malaysia are outlined for comparison. It is a model that has been successful in promoting the fortunes of Malays as a dominant national element in Malaysia but in some respects this success is less than total: the Chinese business elite remains very powerful and is less challenged today while Malaysia in some respects is very dependent on foreign investment and foreign decision allocation in its economic growth success. Apart from creating a large Malay middle class, the NEP has also been able to organise deep interventions that have signally improved living conditions and the transition to a modern urbanised and industrialised society for the masses. South Africa has been considerably less successful in making its growth strategies work with consequences for the success of the adaptive model generally. While the ANC is rapidly creating an African middle class, it has so far been very unsuccessful in institutional change aimed at transforming the life of a more extreme case of an unequal society in class terms. Again, considering certain theoretical interventions in recent years, some attention is paid to the possibility of looking at the developmental state from the local level; it is concluded that this is largely irrelevant in the South African context; elite formation and social intervention is powerfully driven from the centre. In tentative conclusion, it can be suggested that the questions raised remain somewhat open. Elite formation in the new South Africa has a parasitical and rentier character to it and is only tied to a broader social project to a limited extent. Nor is it, as in the classic Evans model, tied effectively yet to a project of re-industrialisation and economic reorientation. However there are elements in the ANC project that are relevant and may become more significant in the future. State, capital and the emergence of a new power elite in South Africa (Bill Freund) 2 The premise of this paper is that, while classic models of capitalist development were predicated on the assumption of the rise of a class of native entrepreneurs, particularly industrialists, completely distinct from the state although obviously functioning in an at least partially enabling environment created by the state through omission or commission, in what we could term later industrialisation, capitalism has often (not always) proceeded through and with, the creation of close ties between state officialdoms and business elites. This picture of intertwined elites, educated together, interacting socially, can also be drawn for developed, industrialised economies as witness the classic sociological work of C. Wright Mills for the USA or Pierre Bourdieu for France. (Mills, 1956; Swartz, 1997, Hall, 1986 on France) for various purposes. In less developed countries, we can add the ingredient of a nationalist-minded development ideology unifying bureaucrats, politicians, businessmen and perhaps parastatal directors and military officers. At the same time, one has to add in the role of foreign firms and their representatives, sometimes powerful to the point of dominance in particular economic sectors or areas of policy. The interpenetration of the state and capital has long been analysed by students of the industrialisation of Germany and particularly Japan, as well as in more recent studies of the Asian Tigers and the Newly Industrialising Countries. It can certainly be argued that the evolution of large-scale business organisations and the multi-national firm lend themselves to this development very forcefully although there may well continue to be tensions and difficulties in shaping a uniform policy outlook within this elite. Peter Evans, best-known for his studies of development in Brazil, believes that the question to ask about state intervention in economic and specifically industrial evolution today is not ‘”how much” state involvement but “what kind’”? ’ The predatory state for Evans is one where there is plenty of involvement of the wrong kind, where private interests systematically loot a state that has systematic ability to extract wealth from natural resources. The opposite would be one, such as Korea, where there is a smooth integrated path being followed in private and public sectors. The model developmental state is one where ‘bureaucratic apparatuses.are embedded in a series of social ties that bind the state to society and provides institutionalised channels for the negotiation and renegotiation of goals and policies. ’(Evans, 1995, 12) Obviously this implies an interpenetration and/or functional division of relatively likeminded elites. In the following analysis, I hope to interrogate the South African case along these lines. It is interesting that just as Evans is prepared to look at Western models (Austria) as well as non-Western ones, he is also considers sub-national units (Kerala State, India). In contemporary analyses, the concept of the developmental state has changed to include (and for some to be superseded by) sub-national units of study, notably provinces and cities. (Piore & Sabel, 1984) While the larger part of what follows will consider South Africa as a nation, I will also consider the case of the large port city of Durban although the conclusion will tentatively be that the national unit is overwhelmingly the more important one in this case, regardless of some contemporary globalisation theory. The original intention of this paper was in fact to put more emphasis on Durban but local elections in 2006, the period intended for 1 Classic studies set in Asia are Amsden, 1989 and Wade, 1990. 2 In considering one of the most economically developed African countries, Colin Leys applies this sort of approach to Kenya. In practice, the state has largely behaved in a predatory manner but Leys believes that this is not something that is structurally inherent or unalterable. Kenya can be evaluated in this sense in the same light as Brazil. Leys, 1996. Harold Wolpe Memorial Trust colloquium, September 2006, Cape Town, South Africa 3 research, made fresh enquiries difficult and thus most of the Durban material is an extension of previous shared research.