Big business’s response to the COVID-19 pandemic highlights a problem of incentives in South Africa

jasonfbellLeave a comment

The COVID-19 pandemic has swept across the global economy, causing havoc and leaving many economies teetering on the brink of economic and social collapse. Moreover, the arrival of a second and now third wave of infections and a further mutation of the virus is driving the economy further into peril and uncertainty. The announcement by Cyril Ramaphosa, back in March 2019, that two of South Africa’s wealthiest families and the pinnacle of big business, the Rupert and Oppenheimer families, would be donating R1 billion each was met with admiration from all corners of the country. These commitments have since been matched by the Motsepe group of companies and Naspers, donating R1.5 billion. To date, the fund has amassed over from a wide array of private, public, and political donors.

Responses of this type are understandable when combining the already bleak outlook for the South African economy with a significant and potentially catastrophic supply shock. However, a question that may be playing on many South Africans minds is: why, given the fact that South Africa’s economy has long struggled with growth and several structural issues, is this response from big business only coming now in the face of a global pandemic? An easy answer may be that there has not yet been an event of this magnitude for big business to respond. However, a counter to this argument is that businesses should continuously be re-investing their profits regardless of the economy’s health.

South Africa has a long history of the inefficient use of profits, which favours hording cash and conducting unproductive investments such as mergers and acquisitions. These uses of profits are a direct result of the skewed incentives facing the agents of many large companies. For instance, many CEOs are incentivised through sizeable bonus packages to maximise the shareholders’ value rather than focusing on the long-term health and sustainability of the business. This short-term view causes CEOs to opt to retain earnings rather than embark on risky research, development, and innovation endeavours that often fail but may result in enormous payoffs if they succeed economically and socially. Short-termism is a result of a corruption of the idea of value creation where price is associated too closely with true value, nuturing an entrenched system of extraction that contributrs to worsening economic and social conditions. This is something the professor in the Economics of Innovation and Public Value at University College London, and director of the Institute for Innovation and Public Value, Mariana Mazzucato laments in her book .

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Review of Macroeconomics by Alex M. Thomas

mohitarora18Leave a comment

by Alex M. Thomas, Cambridge University Press, 2021.

This recently published introductory Macroeconomics textbook written by Alex M. Thomas provides a refreshingly novel approach to teaching Macroeconomics to undergraduate students. As the author points out in the Preface, this textbook offers a 鈥�problem-setting approach rather than a problem-solving one, as is the case with most economics textbooks鈥� (Page xvi, emphasis mine). The textbook has nine chapters, and the chapters have enough material to whet the appetite of a broad audience 鈥� Chapters 1,2,6 and 9 deal with the history and philosophy of Macroeconomics, Chapters 3-5 deal with the core economic theory of money and interest rates, output and employment levels and economic growth and Chapters 7 and 8 talk about the macroeconomic policy of achieving full employment and tackling inflation. In this review, I would focus on four issues 鈥� the commitment of the book towards enhancing pluralism in Macroeconomics, the importance given to studying macroeconomic theory, the idea of relating macroeconomic concepts to the context which is being studied and an explicit concern to make Macroeconomics accessible to an undergraduate audience residing in underdeveloped parts of the world.

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The D-Econ Database: A response to the most common excuse

51本色Leave a comment

The Economics profession has long been too white, too male, too Western-centric, and too hostile to non-mainstream approaches. Today, a new tool 鈥� the D-Econ Database 鈥� is being launched to address this. 

鈥淎ll the women were busy.鈥� 鈥淭here are no people of color working on this topic.鈥� 鈥淚t鈥檚 the male-dominated field that鈥檚 the problem, not this particular panel.鈥� We needed big names and all the big names just happen to be white men based in the Global North.鈥�

We鈥檝e all heard these excuses many times over. Women, minorities, and scholars from the Global South are severely underrepresented in the field of Economics 鈥� and that makes putting together panels that do not simply reproduce the dominant identities in the field a challenge. The high concentration of a few dominant identities in the Economics field has rightly led to outrage against all-white and all-male panels .  

It is becoming increasingly accepted that this underrepresentation is not simply an issue of fewer women, minorities, and scholars from the Global South聽choosing聽not to be a part of the field. On the contrary, research shows that there are systemic biases that make it more difficult for economists who are not white, not male, and not based in the Global North, to be heard. An additional layer of discrimination has to do with approach. Indeed, Economics is 鈥渦nique among the social sciences in having a single monolithic mainstream, which is either unaware of or actively hostile to alternative approaches鈥� (: 17).

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Theory from the South, or Reading the Global Order from the Antipodes

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By John and Jean Comaroff

There appears to be a growing echo, slowly reverberating around the world, that, for good, ill, or both, Africa is the future, a harbinger of Europe鈥檚 history-to-come. Experts may debate the reasons for this: among them, a significant population bulge heavily skewed toward youth; an urban 鈥渞evolution鈥� unique in the current era; burgeoning consumer markets, rising middle classes, and accelerating techno-development; also, a propensity to repurpose material practices both foreign and homegrown, thus to remake modernity for late modern times. Says Keith Hart (2017:2), basing his prediction on the long historical relationship between demography and economy, 鈥淪ooner or later, Africa and Europe will change rank order.鈥� The former 鈥� Africa, the continent that once signified the West鈥檚 prehistoric past and remains a perennial 鈥渂asket case鈥� in the jaundiced eyes of Euro-America 鈥� is now frequently taken to prefigure what lies ahead for humanity at large.

A decade or so ago, our Theory from the South explored this proposition and its implications for the social sciences, one of them being that Africa, as an 鈥渆x-centric鈥� location (Bhabha 1994) and ground-zero of the Global South, has become a privileged axis from which to theorize the emerging world order of the twenty-first century. In so doing, it provoked a great deal of argument and, among northern intellectuals unused to the idea that their hemisphere may not be the font of all knowledge and theory-work, frank skepticism.

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Investment, Sustainability, Decent Jobs: Challenges and Promises for the Sub Saharan African Auto Industry

lmonacoLeave a comment

In a comparative research recently conducted for IndustriALL Global Union/ FES South Africa, we[1] tried to shed light on the high potential of the automotive industry in Sub Saharan Africa. At the same time, we explored the key challenges and pressing issues that need to be addressed for a sustainable industrial development path in the region. Our research focuses on seven countries, identified as promising, fast-growing or broadly committed to supporting their Auto sector: Ghana, Kenya, Ethiopia, Namibia, Nigeria, Rwanda and South Africa.

First and foremost, the report claims attention towards these economies, and industries,  that are still largely underexplored, that still enjoy very limited visibility, whereas the largest portion of research on industrial development and on the Automobile industry is often addressed to traditionally established industries in the Global North (Europe, US, Japan) or to emerging giants in the Global South (China, Mexico, Brazil etc.). Our objective was thus to emphasise the increasingly important role that these seven industries, and the Sub Saharan African region more broadly, can play within the Global Auto Industry. Despite structural weaknesses that do persist, and despite the heavy impact of the Covid-19 pandemic, these seven countries share a willingness to own their industrial development trajectory, and to widen their participation in Global Production Chains. In this regard, the local auto industry remains an important bet.

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Economic Corridors as Infrastructures of Extraction

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Economic Corridors

Economic corridors are geographically targeted development initiatives currently under construction on nearly every continent of the planet. While hard infrastructure such as transportation links, power generation, ports, and industrial zones contrive a spine, economic corridors are distinguished by accompanying “soft infrastructure” including business-friendly policies, regulations, and institutions to facilitate trade and investment. They feature prominently in foreign policy and development initiatives worldwide and have provided They will likely do the same for those spurred by the recently announced by the G7. Yet despite being around for over twenty years,

Notable exceptions to this dearth of conceptual engagement include those framing them as a form of , and In an article recently published in the : a constellation of policy prescriptions that advance processes of valorisation and accumulation based on the subjugation of human and extra human nature to intensified exploitation. The adjective “extractivist” here denotes This includes but is not limited to the plundering of the earth and biosphere, extending also to social dimensions of exploitation, such as the reorganisation of production and social relations that enable production.

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Informal employment and the social reproduction of value

alemezzadriLeave a comment

In the last year, the rise and spread of the COVID-19 pandemic has laid bare the fictitious nature of some of the categories we deploy to conceptualise the world of labour. Indeed, it has revealed the contingent nature of the separation between productive and reproductive spaces, times and realms when it comes to labour processes.

According to produced by Janine Berg, Florence Bonnet, and Sergei Soares, when the crisis hit, around 30% of North American and Western European workers were in occupations that could allow home-based work, as opposed to only 6% of sub-Saharan African and 8% of South Asian workers. This is to say that in the Global North, the pandemic could de facto manufacture million homeworkers overnight, following national lockdowns. In many cases, these would still be contributing to formal sectors of the economy.

It is rather unsurprising that this shift to homeworking could not materialise in the Global South. Labour relations here are largely characterised by informal employment, in its double character 鈥� namely, employment in the informal economy and informalised employment in otherwise formal settings. While homeworking represents one segment of informal employment, its major share is composed instead of precarious forms of casual employment, far more difficult to immediately insource in home-settings. By the time the crisis hit, , informal employment constituted 69.6 percent of employment in the Global South and, given the share of working people it hosts, it constituted over 60 percent of total employment on our planet.

One of the key characteristics of informal employment is the interpenetration between productive and reproductive dynamics, activities and realms. The ever-growing reality of informal employment forces us to reflect and revise theories of value generation and extraction, and ultimately the basis of exploitation worldwide. That is, they force us to re-engage in the study of key Marxian categories of analysis, in ways that may account for how the majority on earth labours. These ways must necessarily account for the centrality of social reproduction in the working of labour processes and relations worldwide.

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Challenging the Orthodoxy: Race, Racism and the Reconfiguration of Economics

stefanouma2443Leave a comment

Books abound on what is wrong with economics (; ; , , , ), and what we would have to do to change it. Given the little change we have seen in economics training and policy-effective economic thinking since  of 2007/08, and in light of the global environmental, inequality and health crises, it is to be seen whether these interventions can make any meaningful impact. What is good though: Half of these impactful books were written by female economists. Despite this 鈥榳ind of change鈥� in an overtly male discipline, it is striking that these books still offer a glaring lacuna: the issues of race and racism (except for brief mentions in  and ). For many people around the world, these are no mere 鈥榠ssues鈥�, but integral to their daily struggles and experiences in White majority countries. These are part of a differentiated life鈥� a life differentiated so much that it can be full of unrealized potentials, suffering and trauma, physical harm and violence, and premature death in the worst of cases. Therefore, while we could move on, building on these interventions and many others (e.g., ;  or ), to discuss what would have to change in economic thinking (which includes economics training), policy and praxis to help achieve a 鈥渟afe and just operating space for humanity鈥� (), the goal of this blog entry is more firmly tied to the question of how economic thinking would change if race and racism were taken seriously as structural-relational problems?

Much of economic thinking happens via economics. Therefore, my entry will often refer to economics as an institutionalized field. That said, expertise about the economy is not just rooted in economics. In fact, economists should not hold an intellectual monopoly over explaining how the economy works and should work (even though many of them, ironically, seem to appreciate that monopoly). That is why I as an economic geographer dare write this post. Pluralizing the economy, economics and economic thinking are separate but still interconnected projects. Some of the arguments that follow apply to other disciplines, too. Nevertheless, economics is singular among the social sciences in terms of its socio-demographic homogeneity (at least in countries of the Global North), prestige, student intake volumes, policy influence and partial self-isolation from other disciplines. It thus deserves particular scrutiny.

So what would an economics that takes race and racism seriously as structural-relational problems have to look like? To what kind of epistemic and institutional practices would it have to commit itself in an effort to effectively engage with these lived realities? A partial answer is already provided by economists who do study race and racism in a field called , not to be mixed up with the so-called  that is largely rooted in a neoclassical economics framework. Building on some the insights of the former, and adding a few more perspectives, we can call for at least 10 ways of how to challenge the broader field of economics (i.e. variants of neoclassical and behavioural economics, but much more than that, as we saw above!) via race and racism.

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