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Capital Accumulation and Macro Policy in South Africa: Political Instability, Distributive Conflict, and Economic Institutions

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  • James Heintz

Abstract

This paper explores the institutional factors behind the crisis of capital accumulation in South Africa in the 1970s and 1980s. Because of its focus on institutional stability, the paper contributes to the literature on the existence of an apartheid social structure of accumulation in which economic and political institutions are important determinants of investment. Investment function estimates show that political instability accounted for most of the fall in the rate of accumulation, independent of distributive outcomes, such as the level of profitability. Based on these findings, the paper argues that tensions between political stability, democratic reforms, and distributive outcomes prompted the adoption of market-oriented macroeconomic policies in the post-apartheid era that have so far failed to move the economy away from the low rates of accumulation characteristic of recent decades.

Suggested Citation

  • James Heintz, 2002. "Capital Accumulation and Macro Policy in South Africa: Political Instability, Distributive Conflict, and Economic Institutions," Working Papers wp29, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:periwp:wp29
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    References listed on IDEAS

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    1. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    2. repec:fth:oxesaf:2001-4 is not listed on IDEAS
    3. Fielding, David, 2002. "Human rights, political instability and investment in south Africa: a note," Journal of Development Economics, Elsevier, vol. 67(1), pages 173-180, February.
    4. G. P. C. De Kock, 1978. "Central Banking and Financial Markets in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 46(3), pages 135-143, September.
    5. Glyn, A. & Hughes, A. & Lipietz, A. & Singh, A., 1988. "The Rise And Fall Of The Golden Age," Cambridge Working Papers in Economics 884, Faculty of Economics, University of Cambridge.
    6. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
    7. Glyn, Andrew, 1997. "Does Aggregate Profitability Really Matter?," Cambridge Journal of Economics, Oxford University Press, vol. 21(5), pages 593-619, September.
    8. Samuel Bowles & Herbert Gintis, 1993. "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 83-102, Winter.
    9. Wintrobe,Ronald, 1998. "The Political Economy of Dictatorship," Cambridge Books, Cambridge University Press, number 9780521583299.
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    Cited by:

    1. Gerald Epstein, 2002. "Employment-Oriented Central Bank Policy in an Integrated World Economy: A Reform Proposal for South Africa," Working Papers wp39, Political Economy Research Institute, University of Massachusetts at Amherst.

    More about this item

    Keywords

    investment; South Africa; political instability; social structure of accumulation;

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