SOUTH AFRICAN POLITICAL ECONOMY: WILL THE MINERALS-ENERGY COMPLEX HOLD? – MADISON MOULTON

Image: Dominic Vanyi (Unsplash)

Since 1994, scholars have endeavoured to explain the intersections between politics and the economy in post-Apartheid South Africa (SA). Two scholars, Ben Fine and Zavareh Rustomjee, introduced a concept in 1996 to define the nature of the South African political economy – the Minerals-Energy Complex (MEC). Using the country’s history as a departure point, the concept was adopted by scholars as an accurate portrayal of SA’s political economy. 

Almost 25 years later and amidst massive economic and political change, the concept could be losing its applicability. Problems in the mining sector, increasing globalisation and interdependence, and new policy developments under a new administration necessitate changes to the original theory to accurately describe the nature of SA’s political economy in 2020, and moving forward.

The Minerals-Energy Complex explained

In their book The Political Economy of South Africa: From Minerals-energy Complex to Industrialisation (1996), Ben Fine and Zavareh Rustomjee use history to explain the country’s current political economy. They argue the South African economy is structured by historical linkages between the mining and energy sectors. These sectors form the core of SA’s economy by their weight in economic activity and their influence over other economic sectors. 

A web of connections with strong state involvement is built, all linking back to the key players in mining and energy, creating a Minerals-Energy Complex that describes SA’s political economy. The MEC is a system of accumulation – the central industries developed over time and gradually increased their influence over other parts of the economy. 

Many scholars who engaged with the concept agreed it was an apt qualifier of SA’s situation, albeit with some minor revisions. These include, the addition of the financial sector and financialisation of the economy, the policy of Black Economic Empowerment (BEE), the impacts of climate change and neo-liberal policies – forming part of the concept in modern day SA.

Does the concept still apply in 2020? 

New contributions to the MEC debate were introduced over the years, but political economy is constantly evolving and requires consistent evaluation to determine a concept’s application to the current economic and political climates. This is especially pertinent in 2020, with significant economic and political change across the world. 

Firstly, the new contributions have ignored the mining sector in favour of electricity and finance, but the sector has undergone extensive changes since 1996. Mining contributions to Gross Domestic Product (GDP) have decreased drastically from 21% in 1980 to 8% in 2018, with forecasters predicting further decline. The lockdown hit the sector hard, resulting in a negative growth rate of 73% in the second quarter of this year. The negative impact of social developments (such as mining strikes) on the economy could point to the continued importance of mining in SA’s political economy, but it is unlikely to remain as important in the years to come. 

Secondly, the MEC is focused solely on SA, ignoring the rise in globalisation and the interdependence of economies. The original concept focuses on the extensive role of the state in the MEC, but this role may be diminishing in favour of external influences. Some scholars have argued for the consideration of capital flight and the increasing percentages of key MEC players migrating overseas, as well as the role of foreign investment in the financial sector, which has the potential to alter the concept extensively. 

Finally, recent political developments and change in leadership warrant a fresh look at policy and the MEC. New policy changes – Mining Charter of 2018, the recurring bailouts of Eskom, and the Carbon Tax Act of 2019 – show a different trajectory for the political economy away from dependence on mining and energy and toward other sectors. This points to a need for the inclusion of finance as a core sector contributing 22% to GDP, or more drastically, a complete revision of the core sectors, their economic contributions and their state linkages. 

There is no doubt the MEC has been valuable in explaining the nature of SA’s political economy. The foundations of the concept – built on an intricate understanding of SA’s history – are solid. The reception has been mostly positive and many scholars have adopted the idea, showing the strength of Fine and Rustomjee’s historical methodology and position. 

In 2020, however, the MEC may not be as accurate a descriptor as it was in 1996. This is not to argue that the concept should be disregarded altogether. It contains key historical features of the political economy which are still relevant today. The concept can be revised for the changing value of economic sectors, globalisation and new political developments to accurately describe the country’s political economy in the 2020 context, and into the future.

Madison Moulton is a freelance writer and editor with a degree in Political Science and History from the University of Pretoria. She covers the environment, food, current events and politics with a historical angle. Her work can be found on her website madisonmoulton.com

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