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The general crisis of the post-apartheid capitalism

By Thami Madinane, The New School for Social Research
12 October 1995

The on going wave of labor strikes and the stagnant manufacturing sector has raised the question of relevancy of Keynesian economics in South Africa. Clearly, the present political economy in South Africa reproduces faithfully the theory of general crisis of capitalism first predicated by Marx. The contradictions which are inherent in it are those between the productive forces and relations of production demonstrating themselves periodically with a particular force in economic crises such as declining manufacturing working far below capacity utilization and persistent massive unemployment. The intellectual block and policy bankruptcy is the chronic disease currently inflicting the leadership in South Africa. On one hand, the are those who are beginning to recognize the obvious fact of exploitation and oppressive conditions that remain place, yet, nonetheless, feel compelled ideologically to "save capitalism".

To illustrates this argument one does not have to look far than the argument advanced in favor of foreign capital inflows. According to the apologists every investment (i.e., building a new plant) directly creates employment for X number of worker, giving rise to new income and sources of consumer demand--this is the Keynesian theory of income distribution. Furthermore, the new demand stimulates increased production, employment and higher incomes in other branches of the industry and so forth. As a result of this "domino effect", the original investment (building a plant) becomes a source of gross increase in income and employment that greatly exceeds its immediate effects in this manner. Those who remember their elementary macroeconomics this is the notion of the "Keynesian multiplier". As we can see from this argument the profit norm, this very important calculus of the profitability of capital investment is entirely ignored.

Moreover, the fallacious nature of the argument can be further undermined. It is common knowledge that capital investment in any branch of the industry which give rise to greater demand for means of production and labor power often involves (because of interdependence of these spheres of production) expanded division of labor, and hence, augmented investment in other branches. Marx, called this the "secondary effect". Yet, Marx also shows the reverse side of this, namely increased government expenditures (i.e. military budget, taxes, the RDP, etc) which may as well be the sources of economic crises throughout the economy as a result of curtailment in other sphere of production. Thus, it seems to me that the quest for the solution to the problems of unemployment, growth and income distribution must remain elusive for South Africa as long as they remain depended on static macroeconomic models.

Thami
The New School for Social Research
Department of Economics
New York.