[DEBATE] : (Fwd) Bill Freund on the MEC

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Subject: [DEBATE] : (Fwd) Bill Freund on the MEC

(This was presented at Ike's Books last night, at the MEC workshop. 
Coming up are some of the papers being presented now.)

THE SIGNIFICANCE OF THE MINERAL-ENERGY COMPLEX IN THE LIGHT OF SOUTH 
AFRICAN ECONOMIC HISTORIOGRAPHY

Bill Freund
Economic History & Development Studies Programme,
University of KwaZulu-Natal, Durban

In recent months, Ben Fine has provided us with two papers which reflect 
on the context in which he developed the concept of the minerals and 
energy complex which dominate his book jointly authored with Zav 
Rustomjee, written in 1997.1 These papers make two very valuable points. 
First, Fine points to the policy context of the early 1990s; he had been 
involved in anti-apartheid organisations and was involved in and 
searching for something to put forward for the new government as a 
policy framework.. This of course underlines the polemical and 
contentious nature of the proposition that they set forth even though 
the actual release of the book postdated the struggle over policy in fact.

Second, he makes the interesting point that until late in the day, he 
had never thought about the economic structure of South Africa. He did 
not in any sense come out of training in the economic history of South 
Africa and he had not participated in earlier debates connected to that 
history. On the contrary, he was thrown into the subject matter through 
his investigation of the report of the Reynders Commission, through 
musing over Duncan Innes’ book on the history of the Anglo-American 
Corporation2 and through his previous policy work on the British coal 
industry as an introduction to energy policy and energy politics. As 
intellectual history, the second point is probably the more remarkable. 
It is through in a sense an uitlander’s insight coming at material from 
an unexpected place that a paradigmatic shift takes place rather than 
through the patient work of those of us who work through existing 
material and tend to be unconsciously bound to incremental thinking and 
incremental change.

Finally, Fine suggests that his work has been to some extent pushed 
aside and forgotten. It certainly cannot be said, except in the most 
cynical sense, to have influenced post-apartheid economic policy making. 
However, it is not really true that it has been forgotten. On the 
contrary, I would argue that it is taken now as written and has 
potentially an enormous continuing influence. I will return towards the 
end of this paper both in terms of adding to the contextual framework 
and in addressing the question of influence and where we go with this 
concept. For now, however, I want to present some sense of the broad 
context of where Fine and Rustomjee’s work fit into the broader 
framework, the historiography, of South African economic history. Some 
of this work they actually do themselves in the course of developing 
their argument but I will choose in this presentation to give an 
alternative version as I see it myself in order to set forth their 
significance and originality.

***

The origins of an economic history of South Africa, an analysis of the 
South African economy have their roots in a variety of material: 
official statements, reports and memoranda, accounts by travellers and 
attempts by boosters to sell South Africa to outside investors and 
immigrants from the nineteenth century. This hardens during the first 
third of the twentieth century into what might be described as an 
unproblematic master narrative of progress with increasing academic 
trimmings. Progress meant social and educational infrastructure, better 
transport and communications networks, the rise of cities and the 
diversification of a rural economy. Obviously the reality of what we 
have come to call the Mineral Revolution of the late nineteenth century 
could hardly help but dominate perceptions of radical change from the 
1880s onwards in this respect. At the end of this period, the eloquent 
historian C.W. de Kiewiet in his History of South Africa, Social and 
Economic evocatively recreated the world of the assegai and the 
ox-waggon (particularly the latter) and the painful evolution out of 
these by-words for rural backwardness and agrarian stagnation which 
represented the platform on which South African society stood.3 It is 
sobering to be reminded that this firm believer in progress, while 
recognising the rapid growth of secondary industry in the years before 
the publication of his best-known work, was pessimistic about its 
prospects. Loyally adhering to the Smithian precepts of his 
contemporaries in the English-speaking academic world, he insisted on 
the role of gold, diamonds, and wool as the foundational elements in the 
economy, precisely because they were the products in which South Africa 
clearly held a comparative advantage. He took up the commonly held view 
that, taken past a point, secondary industry was a drain on the economy 
in which the dangers of too much protectionism on the part of the state 
was manifest. This was the view held by the doyens of Wits economics, 
C.S. Richards and Solly Frankel, both of whom were fighting the 
rear-guard fight of the old British establishment against the 
protectionism rearing its head seemingly everywhere in the 1930s, indeed 
in Britain itself.

Industrialisation was associated into the 1930s, of course, with 
creating and supporting the jobs of low-skill white male voters, 
especially Afrikaners,a partisan policy that the more pro-British and 
pro-imperialist ideologues tended to deplore. In practice, the 
protectionism of the time was quite moderate compared to later 
developments after 1948, especially when security concerns raised their 
heads. By this time, moreover, while the new Purified National Party 
dominated government certainly aimed to support the uplift of 
Afrikaners, years of good times made the problem of the poor white far 
less urgent. Urban whites benefited from the expansion of training and 
educational possibilities and the extension of skilled employment 
substantially and racial politics in this sense became less and less 
salient an issue.

In South Africa, the seven fat years stretched into something like 
thirty or forty covering what we might call the heyday of white 
supremacy. Early in the tenure of Prime Minister Hendrik Verwoerd, as 
South African capitalism began to recover from the shock associated with 
manifest black resistance, urban and rural, and an intensively 
successful crackdown, a more conservative economist, A.J. Norval, head 
of the Board of Trade and Industries which set the tone for South 
African protectionism, wrote a guide to what he called ‘industrial 
progress in South Africa’ aimed at policy makers and investors, 
published in 1962.4 Norval had witnessed a period of rapid industrial 
growth, diversification and investment that had come to an abrupt halt 
under crisis but was beginning to revert towards rapid growth again. In 
large part, he celebrated achievements which included not just increases 
in volume and value but growing diversity and sophistication of 
industrial production including the movement into capital goods 
production. Industry had moved into a new era in which it was the source 
of the largest number of new jobs in urban South Africa; further 
expansion was the key to providing employment in general, not primarily 
for ‘poor whites’..

This is not to say that Norval did not punctuate his narrative with some 
qualifications. He remarked on the low productivity of the South African 
worker. In no sense a dissident, he associated this with the low 
productivity of what he termed the ‘Bantu’. He did not envision any 
deracialisation of the system or any movement of Africans into skilled 
labour but he held out hopes for productivity increased through better 
management and training programmes at the hands of South Africa’s white 
bosses. For needed skilled workers, the answer lay in encouraging 
immigration and indeed during the 1960s white immigration would shoot up 
to new heights as he had hoped. He held out hopes too that the capital 
could be found for investment in manufacturing without any specific 
thought about the role of mining companies. He also was quite aware of 
the disinterest on the part of manufacturers in exports. As he pointed 
out, South African industrial exports to Britain, still its main 
customer in the West, lay in such items as unprocessed wood and tinned 
fruit which we would at best categorise as beneficiated. However, he 
painted a bright future for industrial exports to Africa especially in 
the region where there was a market for a far greater range of 
industrial products from South Africa while trusting that the 
nationalist nonsense that was bringing independence to African colonies 
rife with hostility to South Africa would be replaced by more sensible 
policies with time. Norval had few problems either with protectionism or 
with the manifold state intervention into the construction of an 
industrial economy as the parastatals took shape; these were an 
essential part of the necessary tools for building a strong economy.

This sort of optimism was of course bound to the genuine successes of 
the economy and its tycoons of the day and it continued into the 1960s 
and beyond. We can find it in the work, for instance, of D. Hobart 
Houghton, certainly a more liberal figure than Norval but equally a 
celebrant of South African economic achievements who wrote a popular 
text for the growing number of South African university economics 
students as well as a well-known chapter for the Oxford History of South 
Africa, a hallmark of liberal and critical thought written at the end of 
the 1960s. His optimism seems to us somewhat astonishing: ‘On the more 
general question whether secondary industry will continue to grow 
towards a situation where it is fully self-supporting, past development 
and available reousrces give a confident answer that this goal can be 
reached’. (137)

Houghton gives the impression that he thought the logic of progress and 
modernity must overcome the backwardness he identified with the African 
majority as well as the discrimination and the exclusion that they 
encountered in the market as well as the political arena. ‘The simple 
African tribesman who has once worked in the mines, like Plato’s caveman 
who has seen the light, can never be quite that same simple tribesman 
again.’ (110) There really is a touching quality to this paternalistic 
but apparently benevolent comment looked at from our perspective.5

Famously Houghton packed his ideas in the then fashionable modernisation 
paradigm of W.W. Rostow. Thus the Mineral Revolution played much the 
same role as the Industrial Revolution elsewhere: the first stage in 
Rostow’s formula. But the secondary industry boom that was set off by 
the leap in the gold price in 1933 was the real

‘take off’ of the rocket ship. Houghton opined that what Rostow had 
called maturity, by which he meant a consumer-driven affluent society 
like the USA, would be reached in 1993, which ironically turned out to 
be the last full year of the old political dispensation. Of course, in 
some respects South Africa in the middle 1960s already displayed 
affluent consumerism on the part of the white public that consumed most 
of its gross national product while its marked market dualism has 
remained as much a feature today as it was then.

Houghton was aware of the racial realities of his country but he wanted 
to present South Africans with a framework that would take them beyond 
their narrow prejudices. He was able to present a clearcut distinction 
between different sections of the economy but seems to have assumed that 
gold mining, or perhaps mining in general, would be able to remain a 
powerful, if not the powerful, engine of growth indefinitely. He did not 
take up different sectors critically. His application of Rostow, such as 
one may think of Rostow, was superficial and descriptive but it gave an 
unprecedented element of theory to earlier ideas of progress in South 
Africa.

If we wish to take this view one step further, we can consider the work 
right at the close of the apartheid period of the Durban development 
economist Jill Nattrass. Nattrass significantly continues to focus on 
the growing importance of manufacturing and on its impact; she seems to 
expect it to be the locomotive of the economy over time. However, her 
work, which lacks the naivete of Houghton’s, asks some questions that 
start to make the possibility of a more sophisticated analysis possible. 
She was very aware of the linkages between mining and manufacturing and 
seems to be heading beyond a simple classic division of the economy into 
primary and secondary category for one thing. She also was conscious of 
the declining capacity of manufacturing by the start of the 1980s to 
offer unlimited jobs to the population. She did identify the rise of 
industry as increasing urban employment dramatically and, despite 
apartheid machinations, making possible substantial improvements in the 
prospects of the black peasant cum migrant labourer population. In the 
classic developmental formulation of W.Arthur Lewis, industrialisation 
was the key to mopping up the so-called unlimited labour supply of poor 
and colonised countries and in so doing beginning the process of 
augmenting the value and reward of that labour. However, the tendencies 
manifest by the 1980s led to her fear that the rural poor, her major 
concern, would simply never be mopped up and raised the possibility of 
dualism perpetuating itself permanently. She was well aware of the 
weaknesses of manufacturing, the poor skills base, the small domestic 
market, the price and relative scarcity of available capital, although 
she did not concern himself particularly with the question of exports. 
So long as apartheid persisted, the bifurcation in society would follow 
racial lines fairly strictly or at best, the racial colour bar would be 
retained but raised. If it was overcome, there remained the danger that 
the divisions would continue but now within the black population.6

Jill Nattrass’ contemporary, Merle Lipton, in a much-discussed work, 
Capital and Apartheid, shared many of Nattrass’ views. Like Nattrass, 
she focussed on the positive aspect of manufacturing and commercial 
capital on South African economic development, owing as she felt nothing 
to apartheid regulation but particularly on the possibilities it held 
forth for black workers because its very essence called for flexibility, 
for the emergence of consumerism and economic differentiation. This 
contrasted to the potentially harsh dictates of agriculture and mining 
as they existed in South Africa. Lipton had worked for Anglo-American 
and found herself in conflict with the more conservative mining houses 
and indeed the more conservative managers in Anglo-American whom she 
hoped to influence in moving beyond the apartheid structures of the 
labour market. Her work shows some frustration if it also celebrates, in 
its continuing hopes for the triumphs of the deracialised modern, the 
possibilities of the right sort of capitalism. The idea that mining 
dictates might remain dominant, that some manufacturing would remain 
resistant to the progressive thrust Lipton favoured and that some 
aspects of what black insurgency was beginning to demand were not 
covered in this model of progress in any case are missing, just as 
Lipton failed to see the limits that might exist to the advance of 
manufacturing in the economy. However, precisely because of her emphasis 
on sectoralism in South African business and the extent to which she was 
alive to the conflicts and ructions amongst capitalists and with the 
state in the late apartheid era, Lipton is in a sense an important 
intellectual forerunner to the Fine & Rustomjee thesis.7

But of course what was at stake for Lipton was not fractions of capital 
but apartheid. The economic history of South Africa, itself so 
underdeveloped, opened up to debate, fragmentation and emotional 
loyalties in the increasingly politicised 1970s and after.

In the final generation of the apartheid era, a different view of 
capitalism in South Africa emerged as more than just a political slogan. 
Jack and Ray Simons’ Class and Colour in South Africa, conceived in Cape 
Town in the late 50s but finished and published only in the late 1960s 
was the work of the exiled political scientist Jack Simons (and his 
trade unionist wife) who had been probably the only Marxist social 
scientist of any significance in the universities of post-war South 
Africa.8 The orthodox Marxist view saw industrialisation as a major 
stage in economic development with important progressive political 
consequences in tow. The malaise of mid-twentieth century capitalist 
South Africa, taking this view further, ‘stemmed from the impact of an 
advanced industrialism on an obsolete, degenerate colonial order’(610). 
The implication of this was that, rid of this order, capitalism would 
develop in a healthier way which had nothing necessarily to do with 
racism and that class contradictions could come to a head where the 
logic of socialism would empower a working class movement to transform 
society in a new way. This was a perspective which could at most see 
industrial capitalism as taking advantage of some aspects of what had 
preceded it with a clear distinction between two social orders that 
would have made sense to de Kiewiet as well as Nattrass or Lipton.

As has frequently been noted, the Simons(and of course Ray Alexander 
Simons was particularly interested in the history of labour 
struggles)opened the door to a rich parade of labour and social 
historians who have transformed South African historiography. Without 
going through this literature, one might still mention the influence of 
the remarkable Trotskyite former political prisoner Baruch Hirson, with 
an open door in London where within there flowed ideas on how to develop 
this subject matter. The late Stan Trapido in Oxford and Shula Marks at 
the School of Oriental & African Studies opened space for post-graduates 
and seminar interaction and also played a pivotal role here.9 In the 
1950s, Marxists were virtually entirely excluded from the academy in 
England10 but, particularly after the arrival of Labour in power in 
1964, the doors opened and a fertile period ensued when Left ideas 
flourished as much as or more than in the legendary middle 1930s. 
However, unlike in the earlier period, the Communist Party was 
influential but far from hegemonic in its influence and even within knew 
less unanimity than had once been characteristic in its ranks.

In this paper, I do not wish to proceed with discussing the 
historiography of labour or indeed society in general in South Africa 
but rather to point out that a theme that also developed in tandem, 
albeit a secondary one, focussed on the specific nature of capitalism in 
South Africa. In Marks’ Institute of Commonwealth Studies seminars of 
the early 1970s, an important role was played by two key figures, Harold 
Wolpe and Martin Legassick. Wolpe was neither an economist or an 
historian but a lawyer putting together a new career as a sociologist in 
exile at a time when the South African Communist Party lay at a weak 
point open to debate. His very well-known work, absolutely critical in 
the future development of social science in South Africa, insisted that 
South African capitalism had depended on and flourished with the 
institution of a migrant labour system, perpetuated through a political, 
juridical and social order that was already largely in place before the 
National Party came to power again in 1948. Indeed he saw apartheid as 
trying to shore up this system, a Sisyphean task that might well bring 
down South African capitalism in its wake. Putting to work new ideas 
from French Marxists, he understood these processes in terms of the 
intersection of apparently contrasting distinct modes of production.11 
Wolpe did not concern himself with singling out a healthier or more 
advanced kind of capitalism that might do without the dominance of the 
mining labour system. Capitalism in South Africa(he made no claims for 
this globally) had come to depend on the survival of its primitive 
forebear. This made possible the continual emergence of a cheap labour 
force nurtured in a pre-capitalist framework towards which it was 
eventually thrown back. In the same influential collection, Wolpe 
included the work of Mike Morris,who equally insisted that it was the 
advance of capitalist forms in agriculture that were pushing for the 
more flexible capitalism of the segregation era (1910-48) to give way to 
apartheid.12

It was however Martin Legassick, a trained historian with a flair for 
economic history, who did the most to nail the capitalist pin on the 
apartheid donkey. Legassick, for example, showed how dominant mining 
interests were in the Reconstruction period after the Boer War when 
labour and social policies for the twentieth century were laid out. For 
Legassick, capitalism in South Africa depended fundamentally on cheap 
labour, achieved its strength on this basis in large part and worked, 
not without contradiction, to bend the state to its purposes.13 The key 
lay in the gigantic gold mining system of labour controls which evolved 
so as to operate very unlike the precepts supposely governing free 
labour under capitalism, as well as the very unequal partition of land 
and emergence of ‘tribal law’ segregated land systems for blacks. 
Secondary industry, Leggassick recognised, had diverse origins but the 
key element was re-investment from the forced labour economy. The 
manufacturing sector had failed to tear itself away from dependence 
there; the advantages of this system outweighed the disadvantages, 
despite rather different needs of manufacturers who were sometimes at 
odds with the state. So there was in Legassick a notion of linkage 
between mining and manufacturing which implied that mining set the pace 
and tone but it was dominated by an historically structured and 
intensely racialised conception of labour. It created a capitalism 
without a real free labour system throughout that was highly profitable. 
Yet the state gradually was more and more effective in integrating and 
harmonising capitalist interests and were closest to them as secondary 
industrial interest too became dominated by small numbers of large firms 
in the late apartheid era. This was a firm challenge not just to the 
Pollyannaish liberal view of modernity and progress of earlier writers 
but to the benevolent view of manufacturing expressed by the like of 
Nattrass and Lipton. Legassick, however, had much less interest, in the 
particular economic linkages that tied together different sectors of the 
capitalist economy that were conventionally assessed separately in 
economic analyses.

Here again, a whole body of work began to emerge through the 1980s and 
into the 1990s that problematised and historicised the nature of South 
African capitalism, completely rejecting its identification with an 
immanent progressive trajectory, even if this work is not really as rich 
as the labour history discussed briefly already. Much of this should not 
detain us here but it is worth noting the study of Rob Davies on the 
incorporation of white working class into participation in state-created 
institutions that privileged them and minimsed class conflict, the work 
of Dan O’Meara on the complex relationship of Afrikaner nationalists, 
the most potent of South Africa’ s white politicians and the emerging 
capitalist organisations and forms of business in the country and the 
dissertation, then book, which Ben Fine does cite prominently, by Duncan 
Innes, on the particular development of Anglo-American, the mining house 
whose tentacles stretched so widely and which was so dominant on the 
stock exchange and in the financial world of South Africa in the 1980s.

Innes’ interests were unusual in the extent to which they looked at the 
world of the capitalists per se rather than being intensely focussed on 
the state, as was true of the so-called University of Sussex ‘Gang of 
Four’. (Morris, Kaplan, O’Meara and Davies)14 However, two additional 
contributions from the next academic generation also deserve a mention. 
First of all, Renfrew Christie, working on an Oxford thesis but in fact 
committed to ANC and the efforts of Umkhonto we Sizwe guerrillas to 
penetrate strategic industry, explained how critical energy 
considerations had been in the development of the mining industry, 
notably electrification and how it proved essential for state 
involvement to underwrite energy development.15 He carried this by 
extension into the contemporary area where the new focus on security led 
towards the concentration via state-private co-operation on nuclear 
energy. There are some interesting aspects of labour history covered by 
Christie but here we have a very different sort of focus. This was a 
startling contribution compared to the hallowed writing which had been 
dominated by the view that this kind of state intervention was likely to 
stifle the healthy impetus of the private sector or the usual 
segmentation of South African economic activity into primary, secondary 
and the like.

Second, one should add to this the Yale University history thesis of the 
American Nancy Clark, which carefully explained how the interests of 
mining capital, the security needs of the state and a developing concept 
of the importance of industrialisation focussed on heavy industry came 
together to mutual benefit, particularly in the pre-apartheid Smuts 
era.16 This remarkable and somewhat neglected work (never unfortunately 
published in South Africa) provides the historical foundation of the 
parastatatals, reinforces the basic thrust of the Christie thesis while 
also not neglecting the labour and social context. She does not 
originate, but convincingly shows, how mining was a kind of model for 
work organisation and racial structure of the workforce in big 
operations in South African enterprise more generally. Clark and 
Christie, while lacking any theoretical pretensions, lay the ground for 
a more sophisticated conception of South African capitalism. Clark 
acknowledges the old arguments about competitiveness that Frankel and 
Richards put forth but identified the lack of competitiveness as having 
a very different basis than wasteful protectionism; instead, she 
actually exposed the real core of capitalist dynamism in the country.

What this literature failed to do, of course, was to suggest that in 
some critical ways, South African capitalism was in trouble. In fact, 
the fat years ran out on South African capitalism and South African 
industry in the 1970s. International trends (the oil shock stagflation) 
fell together with the unprecedented upsurge in black protest that led 
to establishment questions about the stability and the future of South 
Africa. It took some time, however, for this awareness to filter into 
the literature, to create a new sort of problematisation. A short last 
growth spurt accompanied a spectacular rise in the gold price at the 
beginning of the 1980s. This was the point where Martin Fransman, who 
had close ties to the Gang of Four, attempted a summary of South African 
industrialisation within a broader survey.17 While he identified 
weaknesses in the industrialisation process, for instance, the faltering 
industrial export effort and low productivity and skill levels, he also 
noted the continued profitability of the system. He did not really 
identify it as experiencing any remarkable difficulties nor did he 
anticipated the poor growth years to come. Using the economic model of 
Ajit Singh, he repeated the Rostovian grail of economic maturity using 
as evidence the presence of a [often mining-related] semi-capital goods 
sector of the economy and its development as a sign of capitalist 
‘maturity’.

If we turn for a moment to a conservative response to the downward trend 
in growth indicators at the end of the apartheid government, 
particularly in manufacturing, while ironically noting the success, 
albeit limited of state intervention, in promoting the Mossgas natural 
gas development, characteristically for the time insisted that it was 
state meddling in the economy which had brought about problems, 
oblivious to more structural problems emerging18. It does seem fair to 
argue that in its final years, the apartheid state was increasingly 
moulding the MEC mechanisms to fulfill its need for security, notably 
through the creation of a surprisingly varied and successful armaments 
industry that has however become irrelevant and found itself blocked by 
more powerful international players from any substantial success at 
export or export-based spin-offs.19

Shortly after the apartheid government of F.W. de Klerk created 
conditions for negotiations that would lead to the extinction of the old 
political regime, a thoughtful article by Terence Moll was already 
considering whether that long drive to progress, specialisation and 
national prosperity was actually rather a failure.. While accepting that 
some features of the economy in the apartheid period did reasonably 
well, he argued that the rapid growth of the post-World War II years 
were no more and perhaps less than one would expect from the most 
successful economies of the period internationally, that productivity 
growth was low, that exports of manufactured goods were particularly 
modest and lagged compared to some third world producers. He does not 
emphasize, of course, the one element where South African capitalists 
did succeed so well, that is to say, profits. Moll accounted for these 
weaknesses both through the ineptitude of state policies (his least 
successful line of argument) but also through a point that we shall take 
up below, the clustering of business around a range of profitable and 
increasingly predictably successful options..20

Amongst writers on South Africa before 1990 who tried to address these 
problems, I would give pride of place to Stephen Gelb, who began his 
introduction to an important collection, South Africa’s Economic Crisis, 
published in 1991 by writing that ‘South Africa enters the 1990s with a 
legacy of economic problems that makes a long and depressing list.’, a 
dramatic contrast to the whole gamut of scholars of an earlier 
generation.21 A young Canadian-trained economist with strong Marxist and 
ANC sympathies, Gelb addressed South African issues together with the 
well-known radical writer on African politics, John Saul, in terms of 
what he termed crisis. Capitalism in South Africa after 1970 was termed 
in crisis albeit a crisis which related to state-business relations and 
to the increasingly pressing need for an end to the apartheid system and 
to white exclusive government.22 In other words, Gelb’s ideas of crisis 
gave pride of place to the apartheid system and to politics.

However, as his perspectives matured on returning to live in South 
Africa, he began to search for an intellectual framework to explain what 
was going on and he increasingly promoted ideas that had emerged in the 
work of French post-Marxists known as regulation theory. The best-known 
writer on regulation in France (but translated into English) was Alain 
Lipietz. In the 1991 book, Gelb proposed that South African capitalism 
had been characterised not merely by capital ‘in general’ and its needs 
but by an historically specific stage which he adapted from Lipietz and 
termed racial Fordism. This allowed him to acknowledge that South Africa 
had indeed established a mature diversified industrial economy but on a 
racial basis that represented its political and social regulatory 
character. Gold mining enabled secondary industry to flourish even while 
it was essentially uncompetitive and unsuccessful at exporting goods 
outside the country. The links to capital goods production was 
recognised as what Gelb called Department I, not far from the MEC that 
Fine & Rustomjee would propose. Gelb saw this as a regime which had 
fallen into crisis, and following Lipietz, such crises represented a 
typical part of capitalism’s historical development thus far. He went 
further than in the Saul & Gelb collection at pinpointing the economic 
nature of the crisis through emphasis on the impact of the dramatic 
decline in the price of gold (and one could add, its increasingly 
expensive extraction within the Republic) and the problems faced by 
imbalance of payments internationally but still the weight for him lay 
on the problem of apartheid, which had become the political and social 
form of regulating the system in South Africa.

Here also was an important intervention in the coming debate on the 
future development of a post-apartheid South Africa. Gelb was very aware 
of the strength, assisted by international pressures, of arguments from 
capital that would lead largely to a deracialisation of the system in 
which black leaders would be bought into existing forms of accumulation. 
One of his contributors, Mike Morris, in thinking about what this meant 
from the perspective of inclusion and exclusion, called this a 50% 
solution and in so doing demonstrated some conscious(?) influence from 
the approach of Jill Nattrass who had understood that as manufacturing 
capital changed, this would be roughly the direction it would seek as a 
consequence of the policies it desired.23 It is equally true that this 
road might allow capital to solve its problems by decoupling the 
economic from the social side of the crisis on the basis of neo-liberal 
policies, creating a black management stratum, substantial disinvestment 
out of South Africa and modest levels of investment within the country.

***

At this point of course we have the ingredients with which the MEC could 
be cooked. It is important to signal however a key tendency which has 
not really been made apparent. After 1970, with interventionist policies 
usually identified as Keynesian having been dismissed as ineffective, 
Keynesian economics, which has had limited influence in South African 
economic thought, lost its international prestige and what we usually 
term neo-liberal policies, which have much in common with those typical 
of pre-Depression days but including forms of financial and monetary 
intervention that have so far prevented a recurrence of a crisis of such 
power, have acquired dominance and won the support of corporate 
interests everywhere. Marxism too has lost prestige; while South African 
Communists have only really been willing to acknowledge the importance 
of the absence of democracy in the old Soviet Union, in fact the 
economic limitations of classic Communist policies and especially when 
applied outside Europe, have also been too manifest. As a result, the 
door has been open for a whole range of new theoretical approaches, 
approaches which have affected the study of economic history as well as 
economics more generally even if they have yet to achieve much real 
impact in the policy sphere.

Economic historians such as Douglas North, the only one to win that 
symbol of orthodox merit, the Nobel Prize, have accepted the idea that 
capitalism contains the potential for following specific growth paths 
marked by particular institutional and sociological characteristics. 
This is not, of course, far from the Lipietzian attempt to theorise 
systems of regulation for particular phases and regions within 
capitalism. This is quite different than a narrow classic approach which 
simply defines phenomena as either correct or deviant in a market economy.

Roberto Bagnasco, in his theorisation of the Third Italy (as opposed to 
the classic two of Antonio Gramsci and others) noted the successful 
survival in important parts of Italy of a capitalist world of small 
family firms producing specialised products highly orientated to 
international markets, to the competitive promotion of quality and to 
the potential in networking amongst themselves whilst maintaining 
competitive traditions. Vulgarised by Piore & Sabel into a panacea for 
the business world as a whole, this third Italy becomes implausible.24 
Indeed the failure of Italy’s most famous and historically impressive 
great industries continue to more than make up for the successes of the 
fashion trades. However, this is not to take away from identifying an 
important continuing prop of capitalism in many significant countries 
and sectors, much clearer to see now than in the past. In one important 
sense, there is a link to the MEC: the Bagnasco approach identifies 
networks and linkages as critical to understanding the workings of 
modern capitalism as opposed to the classic sectoral approaches.

Another major development has been the evolution from the harsh and 
gloomy Third Worldism of the ilk of Immanuel Wallerstein who defined the 
world in terms of commercial ties established in the early modern period 
by Europeans as a ‘world system’ and who believed that the Third World 
is eternally doomed to dependence and subordination at the hands of the 
dominant few, a cycle of centre and periphery not unlike the solar 
system, towards a recognition that in some parts of that world dramatic 
changes have begun to change the picture. Moreover, while it was already 
necessary before 1970 to start to understand the success of the Japanese 
growth model, it has increasingly become clear that Asia contains 
diverse successful regimes, some with potential to become central to the 
entire global economy, others with rather more uneven and gradual 
patterns of growth. Africa may be left out of this model very largely 
but that may require more of a particular and African than a global 
model of explanation. Thus a final aspect of the MEC book to bring out 
here is that it actually commences with a chapter on the 
industrialisation of the Republic of Korea. That fascination with Asian 
models is shared by others that Fine & Rustomjee criticise, notably the 
Industrial Strategy Project approach favoured by the émigré South 
African Raphael Kaplinsky and his followers, Mike Morris and David 
Kaplan. They have, however, been especially interested in the question 
of exports and their content in emphasising the extent to which the 
South African industrial economy had become overly protectionist and 
focussed on import substitution. Morris, however, has in this connection 
brought in the centrality of networking through the [initially equally 
French] theoretical perspective of recreating value chains as a means of 
taking on ISI. MEC fits quite well into this array of approaches in time 
and in the directions it is exploring and was really part of a fertile 
attempt to reconstruct the specifics of the economic situation of South 
Africa.

If Fine & Rustomjee themselves are by the best guideline to understand 
why and how they differ from other contemporary voices, this has been an 
attempt to consider what they have had in common with those voices. 
However, let us turn somewhat briefly to what seems to me the very core 
of their argument. ‘The central theme of our argument,’ wrote Fine and 
Rustomjee, ‘is that what will be termed the MEC lies at the core of the 
SA economy, not only by virtue of its weight in economic activity but 
also through its determining role throughout the rest of the economy’.25 
Not all industry in South Africa is closely tied to the MEC; there is 
indeed an import-substituting logic led set of interests which it is 
argued peaked in importance around 1960. But it has never really taken 
on autonomous strength since then proportionate to the economy and is 
dwarfed by activities linked to the MEC. Thus Fine and Rustomjee insist 
that the MEC core of the industrial economy is very export-orientated, 
only that the exports consist of beneficiated raw materials rather than 
sophisticated fabricated products.

The MEC is defined in terms of linkages and agencies tied together 
through very well-developed institutional and financial structures. In 
fact, it is really the insistence on studying that architecture which 
represents its most original and significant contribution. The links 
that tie the MEC together are not just metaphoric or even forged by the 
state; critical to this is the financial sector and the interconnection 
between the parastatals such as ESKOM, the government and the private 
sector. Thus the Board of Trade and Industries, which has historically 
been the protectionist gatekeeper, plays second fiddle in this scenario 
to the Industrial Development Corporation, created in the Smuts era. The 
study of institutions has equally become an important way capitalist 
development is being understood in the international literature.

Without neglecting the centrality of mining, Fine and Rustomjee place 
the real weight of their assessment on heavy industry and energy, which 
not just services but critically plays a role in the pricing of mining 
itself. The majority of South Africa’s huge coal production is converted 
into electricity, they point out, while forty per cent of electricity 
goes into mining operations. On a global scale, the South African 
economy is uniquely dependent on electricity and is uniquely 
electricity-intensive, with levels of consumption per capita comparable, 
for example to those of the United Kingdom, despite limited domestic 
consumption by the majority of the population’. The state’s role has 
been to create and reinforce the appropriate linkages and to harmonise 
the various interests that affect the economy by contrast with simply 
presiding over distinct groups of capitalists or economic activities as 
classically defined (‘the front desk governing committee of the ruling 
class’). In an overall assessment, Fine & Rustomjee (in this sense 
differing quite substantially with others) conclude with the view that 
‘The evolution of the MEC has left the economy with both strengths and 
weaknesses. The strengths arise out of the productive and 
infrastructural capacities that have been built up around its core 
sectors. The weaknesses arise from the failure of this to be vertically 
integrated forward into the rest of the economy.’(252)

This is an impressive assessment but what to do with it? The final 
section of the book that tries to look ahead to policy is in my view 
much less incisive and clear as to any way ahead. This is one reason 
why, as Fine has mused, the MEC has seemingly had so little impact on 
actual policy. Elsewhere, he has made the point that the MEC would be 
best applied by becoming a kind of matrix through which policy is seen. 
Promoting particular industrial growth without this, he argues, becomes 
a form of reducing industrial policy to trade policy in consequence.26 
The other point he has made is that the MEC and its priorities account 
for the difficulties in bringing into the benefits of economic growth 
the wider population. In that sense it needs to be countered and 
compromised with in a structured way so as to find new developmental 
tools that can realistically work. Third, there is a need to reconsider 
the value and purpose of key MEC institutions. At the same time, of 
course, we are left with an overwhelming sense that the MEC is the way 
economic decisions are orientated and made in both private and public 
sectors.

I might in conclusion call attention here to where the policy 
connections need to be hooked in by briefly looking at two influential 
works on South African economic history of recent years which do 
sidestep the MEC. First of all, the economist Sampie Terreblanche, while 
failing to display the institutional and structural insights that the 
MEC construct has begun to lay bear, has actually made in some respects 
rather parallel comments. ‘Verwoerd’s policy of creating a white or 
“European” economy at the southern tip of Africa had far-reaching 
effects on the South African economy. His policies for creating a 
capital-intensive first-world economy on a third-world economy not only 
weakened the employment capacity of the economy, but did so in a way 
that was highly detrimental to African workers.’ (377).27 Terreblanche 
has described the economy as dominated by a capitalist enclave which has 
socially dysfunctional policies and which effectively gives orders to 
the ANC run state. The weakness of Terreblanche’s approach is his 
failure to assess trends in the global economy and consequently his 
assessment of the structures of the South African growth path is 
over-politicised in laying the blame and under-politicised in failing to 
explain how to construct a coalition committed to change. This leads him 
to a too easy reliance on the possibility of applying now, in the early 
twenty-first century, the policies that made for social democratic, or 
so-called social market, regimes emerging in continental Europe over the 
course of political conflicts in the twentieth century. There is 
nonetheless the challenge of how to marry his insights with the vista of 
MEC dominance.

Second is the posthumous economic history of South Africa by the émigré 
Charles Feinstein28. Feinstein unfortunately also made no reference to 
the MEC as a way of analysing the economy although the raw ingredients 
are all there in his important assessment: the institutional role of the 
state, the mining-generated character of heavy industry. He points to 
the links that helped construct what at first sight appears to be the 
most successful non-MEC complex that exists in manufacturing around 
automobiles. He also understood the devastating logic of where the South 
African cheap labour growth path, which for such a long time seemed a 
successful modernising road, has led:

‘
low levels of skill, inadequate nutrition, poor health, bad housing, 
social instability and security, weak motivation, denial of industrial 
and political rights, the disruptive effects of migrant labour, 
bureaucratic interference in the allocation of workers’. (249)

He accepted—too readily-- the idea that manufacturing represented a 
positive turning on the lines of Nattrass and Lipton but he was very 
aware that manufacturing was inefficient and uncompetitive and would 
have an uphill battle in playing the role of leading a new kind of 
developmental growth path in the future.

In truth, I don’t believe one could argue that there have been major 
refutations of the MEC idea, which in essence is in fact widely and 
respectfully cited but rarely if ever applied. One problem it has faced 
in reception,. however, is that while,as we have seen, studying the 
political economy of South Africa was taken for granted as absolutely 
critical in building an intellectual foundation for the anti-apartheid 
movement but it has been enormously less interesting to post-apartheid 
intellectuals, including critical intellectuals. The issues it raises 
have been placed on the back burner.29

At the same time, the policy debates were in reality themselves 
sidestepped. Much has been written by the likes of Marais, Bond and 
Padayachee with various collaborators on the actual policy debates of 
the transitional era. In reality, the ANC was overwhelmingly committed 
to continuing the growth model laid out and accepted by the de Klerk 
government following the IFI consensus of the day. This is exactly what 
Gelb and Morris predicted, the unfolding of the 50% solution with all 
the discomforts, such as our huge and dysfunctional crime rate or the 
recent so-called xenophobia violence, that go with it.

Despite some rhetorical scraps thrown to the Industrial Strategy Project 
approach from time to time, this approach has been dominant. One can add 
perhaps to this that the core of the MEC has also been the conscious 
heart of the programme to hand over controls and assets to some extent 
to a new black elite with political connections through the BEE 
programme. It is not an accident that the mining sector was the first to 
proclaim BEE targets and that the big boys of BEE, Motsepe, Sexwale, 
Macozoma and the like have been linked to the heart of the MEC whilst 
very highly paid black executives have taken over key parastatals. This 
of course brings us to the likely reality that the ANC government does 
not have, and is not really capable of coherently promoting, an 
industrial policy and that such policies as exist are always 
subordinated to the BEE dictates and tend to dissolve into favouritism 
and crony capitalism, as I have argued elsewhere.30 Into the transition 
period, it was possible to discuss MEC type planning as potentially 
still very impressive. ESKOM, for instance, at the heart of the energy 
economy, had grandiose and quite arrogant plans for expansion throughout 
the African continent involving massive infrastructural investments. 
Today however it is hard to look at the disarray of ESKOM and believe 
that forceful thinking about energy lies behind the thinking of anybody 
very intelligent or influential in its ranks anymore. Nor do we see the 
state anxious to reconstruct it and make good its failure.

Fine has in recent papers called financialisation a key new element in 
the system. Here we have what I consider a new but very undertheorised 
element of the MEC perspective. What Fine calls financialisation has 
made BEE takeovers by indebted, well-connected but ultimately parasitic 
‘tycoons’ easy. It has also eased the passage of key players and capital 
out of South Africa entirely in a process of capital flight whose 
importance we probably have been too faint-hearted to acknowledge as 
fundamental and perhaps irreversible. Financialisation, the role of the 
banking sector in particular, needs far more research and theorisation 
in order to understand contemporary trends. Fine seems to see it as a 
self-absorbing process that does not necessarily return money into the 
real economy of production, reproduction and consumption at all. To what 
extent is this Marx’s dead labour standing ever more heavily on living 
labour? To what extent moreover is South Africa here merely an exemplar 
of international trends?

Finally, are we now entering a new phase where the discomfiture of the 
Mbeki presidency is opening important spaces for debate and discussion? 
It is of course the actual impulse of real change on the ground that 
brings about the new theoretical insights. What does remain of the 
playing fields of the early 1990s and has indeed gathered force is the 
insight that the deep historical patterns of economic development that 
went together with the social and political structures of segregation 
and apartheid are still with us. The MEC is a tool which can help us 
understand this and consider how to move forward.

NOTES
1 Ben Fine, ‘The Minerals-Energy Complex is Dead: Long Live the MEC?’, 
unpublished paper for the Amandla Colloquium, Cape Town, 2008; Ben Fine, 
‘Engaging the MEC’, paper for the MEC Workshop, Durban, 2008.

2 Duncan Innes, Anglo; Anglo-American and the Rise of Modern South 
Africa, Raven Press, Johannesburg, 1984.

3 C.W.de Kiewiet, A History of South Africa, Social and Economic, Oxford 
University Press, London, 1941.

4 A.J. Norval, Industrial Progress in South Africa, Juta, 1962, Cape 
Town, Wynberg & Johannesburg

5 D. Hobart Houghton, The South African Economy , Oxford University 
Press, Cape Town, 2nd edition, 1967.

6 Jill Nattrass, The South African Economy; Its Growth and Change, CT, 
Oxford University Press, 1981.

7 Merle Lipton, Capitalism and Apartheid, Gower, London, 1985.

8 Jack & Ray Simons, Class and Colour in South Africa 1850-1950, 
International Defense & Aid Fund, London, 1983.

9 Although it cannot be described as their most characteristic or 
typical writing, both made their own contribution to the subject as 
historians, jointly in a provocative article on the Anglo-Boer War in 
the light of post-war Reconstruction and, in Trapido’s case, through an 
often-cited article on the the marriage of two originally antagonistic 
interest groups representing different sectors of the economy in 
conventional economic terminology. Marks & Trapido, ‘Lord Milner and the 
South African State’ in Philip Bonner, ed., Working Papers in Southern 
African Studies, 2, Ravan Press, Johannesburg, 1981 and Trapido, ‘South 
African in a Comparative Study of Industrialisation’, Journal of 
Development Studies, VII(3), 309-20, 1971, an early but brief work with 
a wide influence.

10 Note the exclusion of such seminal and brilliant thinkers as E.P. 
Thompson and Eric Hobsbawm in history, for instance. Of course this 
exclusion was very much less thorough and brutal than the McCarthyite 
purges in the USA which also cast a longer shadow.

11 Harold Wolpe, ‘Capitalism and Cheap Labour-Power in South Africa: 
 From Segregation to Apartheid’ in Wolpe, ed., The Articulation of Modes 
of Production, Routledge Kegan Paul, London, Boston & Henley, 1980, 289-320.

12 M.L.Morris, ‘The Development of Capitalism in South African 
Agriculture: Class Struggle in the Countryside’ in Wolpe, ed., op.cit., 
202-53.

13 Martin Legassick, ‘Gold, Agriculture and Secondary Industry in South 
Africa: From Periphery to Sub-Metropole as a Force Labour System’ in 
Robin Palmer & Neal Parsons, The Roots of Rural Poverty in Central and 
Southern Africa, Heinemann, London, 1977, 175-200.

14 R.W. Davies et al, ‘Class Struggle and the Periodisation of the South 
African State’, Review of African Political Economy, 7, 1976, 4-30.

15 Renfrew Christie, Electricity, Industry and Class in South Africa, 
Macmillan, London, 1984.

16 Nancy Clark, Manufacturing Apartheid; State Corporations in SA, Yale 
University Press, London & New Haven, 1994.

17 Martin Fransman, ‘Capital Accumulation in South Africa’ in M. 
Fransman, ed., Industry and Accumulation in Africa, Heinemann, 1982, 
234-75. I cannot claim to have been any wiser in this regard while 
perhaps contributing to a more complex sense of industrial development, 
especially emphasising the question of regional location. Like others, I 
put the largest amount of weight on the question of race and social 
context while rejecting peculiarities of the system as having been 
deleterious to the early industrial development of South Africa and 
paying little attention to its limitations. Bill Freund, ‘The Social 
Character of South African Industry 1915-45’ in Alan Mabin, ed., 
Organisation and Economic Change, Southern African Studies V, 
Johannesburg. 1989.

18Stuart Jones & André Muller, The South African Economy, 1910-90, 
Macmillan, Houndmills & London, 1992. In this way, they have returned to 
the companionship of the first academic commentators on the South 
African economy, the perspective of the early twentieth century.

19 Dan Henk, South Africa’s Armaments Industry;Continuity and Change 
after a Decade of Minority Rule,, University Press of America, Lanham 
MD, 2006.

20 Terence Moll, ‘Did the Apartheid Economy”Fail”’?, Journal of Southern 
African Studies, , XVII(2), 1991, 271-91. A contemporary and somewhat 
parallel account that emphasizes the unevenness and limitations of South 
African capitalism can be found in Tom Kemp, ‘South Africa: Gold, White 
Supremacy and Industrialisation’ in Historical Patterns of 
Industrialization, 2nd ed., 1993, Longman, Harlow. Kemp also fails to 
perceive the linkages between mining and the industrialsed development 
that has taken place very clearly and sees the problems that South 
Africa must overcome very much in terms of the white supremacy 
socio-political model.

21 Stephen Gelb, Introduction, South Africa’s Economic Crisis, Zed and 
David Philip, London and Cape Town, 1991. For a somewhat different 
analysis, see Daryll Glaser’s thoughtful, Politics and Society in South 
Africa A Critical Introduction, chapter 2, Sage, London, Thousand Oaks & 
New Delhi.

22 John Saul and Stephen Gelb, The Crisis in South Africa; Class 
Defense, Class Revolution, Monthly Review Press, New York and London, 1981.

23 Mike Morris ‘ State, Capital and Growth; The Political Economy of the 
National Question[‘ in Gelb, op. cit. Morris did not, however, show any 
particular awareness of the importance here of a link to a 
mining-generated hegemonic approach in what he dubs, following the 
rhetoric of the day, the ‘free market’ line of argument.

24 Michael Piore & Charles Sabel, The Second Industrial Divide; 
Possibilities for Prosperity, Basic Books, New York, 1984.

25 Ben Fine & Zavareh Rustomjee, The Political Economy of South Africa; 
 From Mineral-Energy Complex to Industrialisation, Hurst & Co, London, 1996.

26 Ben Fine, ‘Industrial and Energy Policy’ in Jonathan Michie & Vishnu 
Padayachee, eds., The Political Economy of South Africa’s Transition; 
Policy Perspectives in the Late 1990s, Dryden , London, 1997.

27 Sampie Terreblanche, A History of Inequality in South Africa 
1652-2002, University of Natal Press, 2002, Pietermaritzburg.

28 Charles Feinstein, An Economic History of South Africa; Conquest, 
Discrimination and Development, Cambridge University Press, Cambridge, 2005.

29 In the transition period and just previous, I can claim that I 
presided as supervisor over the completion of important theses on a) the 
long-term role of the IFIs on South African financial and economic 
planning by Vishnu Padayachee b) the structuration and limitations of 
the chemical industry, a usually neglected part of the MEC, by Rod 
Crompton, c) the links between big industry and notably institutions and 
structures linked to the MEC and big agriculture by Laura Bedford and d) 
a critical look at energy from a radical feminist perspective by Wendy 
Annecke. I have not seen equivalent projects interest post-graduate 
students for many years, however.

30 For an analysis of the ANC as a class project, see my article, ‘The 
End of Apartheid and the Emergence of the BEE Elite’ in Review of 
African Political Economy, XXXIV (114), 2007, 661-78 as well as ‘State, 
Capital and the Emergence of a New Power Elite in South Africa: “Black 
Economic Empowerment” as a Development Strategy’ in Monika Pohle & Helge 
Pharo, eds., The Aid Rush; Foreign Aid for Economic Development (Issues 
in Contemporary History series, Oslo Academic Press, Norway, 2008, 
forthcoming).