The Economic System: South Africa’s Systemic Crisis
South Africa stands at a crossroads. For decades, the African National Congress (ANC) has been the lightning rod for public frustration. It is blamed for everything from unemployment to crumbling infrastructure. But the real issue runs deeper than any single political party. The economic system rooted in global financial orthodoxy dictates outcomes that no party, no matter how well-intentioned, can fully escape. The ANC is not the architect of this system; it is merely its manager. To address the nation’s challenges, South Africans must confront the economic system itself, not just the party in power.
The Economic System: A Silent Dictator
The phrase the economic system is not a vague buzzword. It refers to a concrete set of policies and frameworks that shape South Africa’s trajectory. These include the South African Reserve Bank’s (SARB) inflation targeting. They also involve fiscal austerity, free capital flows, and adherence to World Trade Organisation (WTO) trade liberalisation rules. Together, these policies prioritise global investor confidence and capital mobility over the needs of ordinary citizens. While the ANC has implemented these policies, they were not its invention. They stem from a global economic order designed to protect wealth and discipline nations.
Inflation targeting, for instance, keeps interest rates high to control price increases. This approach, championed by the SARB, stifles job creation by making borrowing expensive for businesses. High interest rates discourage investment in local industries, which create jobs and reduce unemployment. Instead, they protect the value of financial assets, benefiting the wealthy. Similarly, free capital flows allow billions of rand to leave South Africa annually, draining resources that will be reinvested locally. WTO trade liberalisation, meanwhile, prevents the government from using protectionist policies. As a result, local manufacturing cannot be nurtured, leaving industries vulnerable to cheap imports.
The question is not ‘which party can govern better?’ but ‘how do we change the constraints themselves?
The economic system ensures that unemployment, inequality, and crime are not merely policy failures. They are systemic outcomes often blamed on ANC mismanagement. The system is designed to maintain a delicate balance. There is enough unemployment to keep wages low and profits high. However, unemployment is controlled to avoid sparking societal collapse. This is not a conspiracy theory. It’s the explicit logic of neoliberal economics. South Africa adopted this in the 1990s under global pressure.
The ANC: Manager, Not Mastermind
Critics of the ANC argue that its corruption and incompetence are the root of South Africa’s woes. While corruption is undeniable, it’s a symptom, not the cause. The ANC operates within a system that limits its options. Swapping it for the Democratic Alliance (DA) would not automatically change outcomes. Choosing the Economic Freedom Fighters (EFF) or uMkhonto weSizwe Party (MKP) would also not lead to automatic changes. Any party governing under the economic system would face the same constraints. These include capital flight, credit rating downgrades, and pressure from global financial institutions.
For example, the EFF’s radical rhetoric about land redistribution and nationalisation sounds promising to many. Yet, implementing such policies within the current system would trigger swift retaliation from global markets. Investors will pull their money out, causing the rand to plummet and inflation to soar. Credit rating agencies, which wield immense power, would downgrade South Africa’s debt, making borrowing more expensive. The result? Economic chaos that would hit the poor hardest. This is not to say radical change is impossible, but it requires dismantling the economic system that enforces these constraints.
The ANC’s failures are real, but blaming them alone obscures the bigger picture. The party has been complicit in upholding a system that prioritises profitability over people. Yet, even a more competent party would struggle to deliver meaningful change. A less corrupt party would also face difficulties without addressing the economic system itself.
Systemic Outcomes: Unemployment, Inequality, Crime
South Africa’s challenges of unemployment, inequality, and crime are not accidents. They are baked into the economic system. Unemployment, presently hovering around 33%, is not just a failure of job creation; it’s a feature of the system. The SARB’s inflation targeting deliberately keeps interest rates high to maintain price stability, which suppresses economic growth and job opportunities. The logic is simple: high unemployment keeps wages low, which benefits corporations by reducing labour costs. This is a reason why the SARB’s policies have been described as aiming to keep unemployment high. They aim to do so without causing societal collapse.
Inequality, too, is a systemic outcome. Free capital flows allow South Africa’s elite to move their wealth offshore, avoiding taxes and local reinvestment. According to the World Bank, South Africa remains one of the most unequal countries globally. The top 10% own over 70% of the wealth. The economic system enables this by prioritising capital mobility over wealth retention. Instead of taxing capital outflows or incentivising local investment, the system allows billions to flow to tax havens annually.
Crime, often seen as a law enforcement issue, is deeply tied to the economic system. High unemployment and inequality create desperation, fuelling crime rates. When the system excludes the majority from economic opportunities, it’s no surprise that many turn to illegal means to survive. Addressing crime requires more than policing; it demands an economic system that includes, rather than excludes, the majority.
The 1990s Trap: How South Africa Got Here
To understand the economic system, we must revisit the 1990s. As South Africa transitioned to democracy, it faced immense pressure to adopt neoliberal policies. The International Monetary Fund (IMF) and World Bank, along with Western governments, demanded market-friendly reforms. These reforms were conditions for global integration. The ANC was eager to stabilise the economy. It also wanted to gain international legitimacy. To achieve this, it adopted policies like inflation targeting, fiscal austerity, and trade liberalisation. These were sold as pathways to growth but have instead entrenched inequality and exclusion.
The fear of budget deficits, for instance, has become a national obsession. Politicians and economists warn that increased government spending would lead to economic ruin. Yet, this fear is manufactured. Countries like Japan and the United States run massive deficits without collapsing. This is because deficits are not inherently bad. They depend on how the money is spent. In South Africa, austerity has starved public services like healthcare and education while doing little to address unemployment or inequality. The economic system demands fiscal discipline to appease investors, even at the cost of human development.
BRICS: A Path to Freedom?
South Africa is a member of the BRICS alliance (Brazil, Russia, India, China, and South Africa). This membership offers a potential escape from the economic system’s control. The alliance provides a chance to free South Africa from economic constraints. Unlike Zimbabwe or Venezuela, which faced harsh sanctions for defying global financial norms, South Africa has unique leverage. The BRICS Bank is officially known as the New Development Bank. Along with the Contingent Reserve Arrangement, it provides alternative funding sources outside the IMF and World Bank. These institutions finance infrastructure, industrialisation, and social programs without the punitive conditions attached to Western loans.
Moreover, trading in local currencies within BRICS reduces South Africa’s reliance on the US dollar. This would ease balance-of-payments pressures. The country would no longer need to hoard dollars to service debt. It also wouldn’t need to hoard dollars to import goods. By reducing the power of Western financial markets, South Africa will pursue policies focused on people. It can prioritise these policies over profits. For instance, it will lower interest rates to stimulate job creation. It also impose capital controls to keep wealth in the country.
Nonetheless, leveraging BRICS requires bold leadership and a willingness to challenge the economic system. So far, South Africa has been cautious, reluctant to fully embrace the opportunities BRICS presents. The fear of antagonising Western investors remains strong, rooted in the 1990s mindset that global markets are all-powerful. Breaking free from this thinking is essential if South Africa is to chart a new economic path.
The Limits of Regime Change
South Africans are understandably fed up with the ANC. Decades of corruption scandals, service delivery failures, and economic stagnation have eroded trust. Calls for regime change grow louder with each election cycle. Yet, replacing the ANC without addressing the economic system would be like rearranging deck chairs on the Titanic. The DA, EFF, or MKP bring different rhetoric. They also introduce new policies. Nevertheless, the system’s constraints would force them into similar outcomes.
The ANC is not the architect of this system; it is merely its manager.
Take the DA, for instance. Its market-friendly policies align closely with the economic system, meaning it will double down on austerity and investor confidence. The EFF, despite its radical stance, would face the same capital flight and market retaliation that disciplined Zimbabwe and Venezuela. Even the MKP, with its populist appeal, would struggle to govern differently without systemic change. The economic system is designed to outlast any single party, ensuring that profitability for capital remains paramount.
A Call for Systemic Change
So, what’s the way ahead? South Africa needs more than a new party; it needs a new system. This means rethinking the policies that define the economic system. For starters, the SARB’s inflation targeting could be replaced with a focus on full employment. This change would allow lower interest rates to stimulate job creation. Capital controls will be introduced to prevent wealth from leaving the country, ensuring resources are reinvested locally. WTO rules will be challenged through BRICS partnerships, allowing South Africa to protect its industries and revive manufacturing.
These changes won’t be easy. Global financial institutions and investors will resist, as they did with Zimbabwe and Venezuela. But South Africa’s BRICS membership provides a buffer that those countries lacked. By aligning with emerging economies and tapping into other funding, South Africa can weaken the grip of Western financial markets. This change would give the government room to pursue policies that prioritise people. It would focus on affordable housing, quality education, and universal healthcare over investor profits.
Public awareness is also critical. South Africans must move beyond blaming the ANC and start questioning the economic system itself. Civil society, trade unions, and community organisations can play a role in demanding systemic change. Grassroots movements can pressure politicians to rethink the 1990s policies that still shackle the country. Education campaigns can demystify concepts like inflation targeting and capital flows, empowering citizens to demand policies that serve them.
The Stakes Are High
The economic system is not neutral; it’s a deliberate framework that shapes who wins and who loses. In South Africa, the losers are the majority unemployed youth, struggling families, and communities ravaged by crime and poverty. The winners are global investors, local elites, and corporations that benefit from low wages and high profits. Continuing to blame the ANC alone lets the system off the hook, allowing it to continue killing the people, figuratively and sometimes literally.
South Africa has a unique opportunity to break free. Its BRICS membership, joined with growing global discontent with neoliberalism, provides a window for change. But this window won’t stay open forever. The longer South Africa clings to the economic system of the 1990s, the escape from its consequences becomes increasingly difficult. The question is not “which party can govern better?” but “how do we change the constraints themselves?”
Conclusion: A New Vision for South Africa
The ANC’s failures are undeniable, but they are not the root of South Africa’s crisis. The economic system built on inflation targeting, austerity, and capital mobility is the true architect of the nation’s challenges. Swapping the ANC for another party won’t solve unemployment, inequality, or crime unless the system changes. South Africa must leverage its BRICS membership to pursue different funding strategies. It should also explore new trade strategies. This approach will weaken the power of global financial markets. Only then can it build an economy that prioritises people over profits.
The road ahead is daunting, but it’s not impossible. South Africans have overcome immense challenges before, from apartheid to economic sanctions. Now, the challenge is to dismantle the economic system that holds the country back. It’s time to stop blaming the manager and start redesigning the architecture. The future depends on it.
