Socio-Economic Inequality in South Africa is Due to the Institutionalised Ideological Mismatch Regarding Labour and Economic Policy

Socio-economic inequality in South Africa is due to the institutionalised ideological mismatch regarding labour and economic policy

Economic growth is shaped by policy context and promoted most effectively when it is consistent with either liberal market or co-ordinated market ideal type varieties of Capitalism. Policy inconsistency dampers economic growth post-apartheid South Africa attempted to adopt a social-democratic and co-ordinated variety of Capitalism. This failed due to the adoption of macro-economic neo-liberal policies. Organised labour protected labour market policies which lead to policy inconsistencies with regard to trade liberalisation. Trade liberalisation combined with labour market protection leads to unemployment. (Nattrass 2013, 56)

Insert some definitions

VoC approach highlights policy inconsistencies

There did exist the possibility of a post-apartheid political economy shaped by social accords/ tripartite negotiations, but the State preferred to act unilaterally with regard to macro-economic policy. Business was divided and preferred bilateral engagement with government. Organised labour has an ideological preference for managing capitalism through a developmental state tasked with promoting wage and productivity growth.

Economic growth has been slower in MME’s compared to either CME’s or LME’s

But Hall and Soskice have shown that government can create a win-win situation through institutional design. Firms gravitate towards strategies that take advantage of opportunities provided by institutions (2001:15)

South Africa is like an LME as it has high levels of market capitalisation and inequality but labour regulations are coherent with that of CME, which makes it a MME with the accompanying problems of ...

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...alism is uncertain (Nattrass 2013, 75).

SA variety of capitalism

It is a variety of Capitalism that provides the support of a CME to the employed, patrimonial and corrupt support for sections of black business, while neglecting the predominantly unskilled and unemployed to such an extent that Marikana like events occur.

Works Cited

“An Introduction to Varieties of Capitalism.” In Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, by P Hall and D. Soskice. Oxford University press, 2001.

Nattrass, Nicoli. “A South African variety of Capitalism?” New Political Economy 19, no. 1 (2013): 56-78.

Parsons, R. “The Emergence of Institutional Social Dialogue in South Africa.” South African Journal of Economics 75, no. 1 (2007): 1-21.

Robinson, V, and S Brummer. “SA Democracy incorporated: Corporate Fronts and Political Party Funding.” 2006.