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Current Economic Policy Priorities�

Wits University

20 July 2022

Kenneth Creamer

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What is economics?

Economics is the study of how people interact with each other and with their natural surroundings in producing their livelihoods, and how this changes over time (www.core-econ.org)
What tools do economics use?

Empirical (what is the level of A and B)
Historical (how have the level of A and B changed over time and why)
Institutional (what laws rules and practices impact on A and B)
Theoretical (what is the relationship of A and B, if A increases what might we expect to happen to B)
Policy proposals (what actions can government take to influence the level of A and B in the future)
Example: Let A be economic growth and B be level of employment

Historical Growth Rates in SA Economy

Apartheid Period

Apartheid growth model (1950’s and 1960’s)
SA characterised as Colonialism of a Special Time (CST) settler and colonised living together in one country, period of very unequal growth characterised by super-exploitation and racial exclusions, as well as inward industrialsiation and the Minerals Energy Complex (MEC) (unlike pure extractive colonialism in most parts of African and the rest of the colonised world)
Crisis of apartheid (1970’s and 1980’s)
Capitalism had benefited from apartheid, then Marxists writers like Wolpe characterised the relations as historically contingent – initially apartheid was functional to capitalism but then it became dysfunctional – not producing the internal market, the skills or the stability needed - “Apartheid Form became a fetter to capitalist development” (as well as the impact of intensified struggle and international isolation)

Post 1994 Period

Initial Post-apartheid period (Transition to democracy 1994 to 2008)
Growth dividend of peaceful settlement with some growth and employment creation, increasingly open to trade and part of globalising world economy, but not enough investment and strategic state guidance of the economy to overcome the historical CST structure of race, class and gender inequality
Recent Post-apartheid period (Persistent low growth 2009 to 2022)
Hostile global conditions (global financial crisis and mineral prices falling as China adjusted its growth model) combined with and state capture and corruption resulting in low growth and social and economic indicators in wrong direction
Current challenge: Need new growth and transformation model - infrastructure, basic needs, green transition, digital transition, capable developmental state, racial and social cohesion to guide SA’s economy beyond CST structure by period of rapid and sustained inclusive growth

Current Policy Priorities

Lift levels of investment
Accelerate Job Employment and Reduce Unemployment
Restore electricity supply
Correctly manage Fiscal Policy – Promote Growth and Redistribution while Avoiding Debt Trap
Correctly manage Monetary Policy – Promote Growth and Investment while avoiding inflation

Lift Investment Levels

Accelerate Employment and Reduce unemployment

Restore Electricity Supply