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Inequality Studies from the Global South
 2019058928, 2019058929, 9780367235963, 9780367235680, 9780429282447

Table of contents :
Cover
Endorsement Page
Half Title
Series Page
Title Page
Copyright Page
Table of Contents
List of Figures
List of Tables
List of Contributors
Preface
Acknowledgements
Abbreviations and acronyms
Part 1 Conceptual questions on inequality in the South
1 Towards a Southern approach to inequality: Inequality studies in South Africa and the global South
Introduction
Understanding inequality studies – The status quo
Lessons from inequality studies in South Africa for the global South
Towards a Southern approach
Conclusion
Notes
References
2 Is hierarchy the same as inequality?
Hierarchy and relationships
Ambition
Spirituality, hierarchy and being with/through others
Acknowledgements
References
3 Inequality under globalisation: State of knowledge and implications for economics
Note
References
Part 2 The political economy of inequality in the global South
4 A survey of trends in macroeconomic policy and development in the global South: From World War II to the global financial crisis and beyond
Introduction
Three distinct periods
Changing ideological paradigms of development
Vignettes of country case studies
Inequality
Summary and conclusion
Notes
References
5 Economic power and regulation: The political economy of metals, machinery and equipment industries in South Africa
Introduction
Political economy frameworks and economic power
The metal, machinery and equipment industries as a case study
Industrial development and power relations in the MME industries: local and international dynamics relating to industrial policy
Power dynamics and rent capture in the MME industries
Conclusion
Notes
References
6 Inegalitarian growth: India and Brazil compared
Premises for a comparison
Aggregate trends
Growth regimes: an historical perspective
The growth regimes since 2014
Summing up
Notes
References
Part 3 Work, households and the labour market
7 The crisis of social reproduction in petty commodity production and large-scale mining: A Southern perspective on gender inequality
Introduction
The intersection of production and reproduction
The state and mediation of the mining regime
The zama zama case
The galamsey case
Crises of social reproduction and petty capitalism: LSMs fill the policy gap
Conclusions: whither the state?
Notes
References
8 Vocational education and inequalities in transitions from education to work in three African countries
Introduction
The development of TVET systems historically
Vocational education, education systems and labour markets in Ethiopia, Ghana and South Africa
Functional and less functional relationships
Acknowledgements
Notes
References
Part 4 Land, space and cities
9 Investigating infrastructures of urban inequality
Introduction
Four thinking tools
Conclusion
Notes
References
10 Social reproduction at end moments: Land, class formation and rural economies in Ghana and South Africa
Inequality beyond incomes: class formation and social reproduction in rural Ghana and South Africa
Economic restructuring: precarious employment and insecure rural incomes
Kinship and Income Redistribution Networks
Social reproduction and emerging gender orders
Parallels and variations in daily and intergenerational labour reproduction
Acknowledgements
Notes
References
Part 5 Alternatives
11 Minimum wages: Tackling labour market inequality
Introduction
The re-emergence of minimum wages in social and economic policy
Politics, policy and process: a national minimum wage for South Africa
Conclusion
Notes
References
12 Building counter power in the workplace: South Africa’s inequality paradox
Introduction
Part one
Part two
Conclusion
Notes
References
13 Global inequality and human rights
Introduction
Human rights as an alternative
The role of financial markets
Global governance
Conclusion
Notes
References
14 Conclusion
Overview
A Southern approach: developing a research agenda
Concluding thoughts
References
Index

Citation preview

“This book not only brings Southern perspectives on inequality by highlighting the approaches and experiences of both the geographical South and the South as a metaphor for the victims of exclusion of oppression (the ‘subaltern’) around the world, it also points to the need to shift the centre of gravity of inequality studies to the global South, where inequalities of income and power are often far more pronounced than in the global North. The book, by posing the issue of the inequalities within the global epistemological order that tends to mirror the unequal and unjust global order, shows the need to reframe the narratives about inequality as well as the need for a comprehensive structural transformation agenda. The Southern Centre for Inequality Studies, based in South Africa where millions of people are still grappling with the devastating effects of Apartheid, by producing this must read on inequality is clearly off to a great start.” —Ebrima Sall, Executive Director of TrustAfrica and former Executive Secretary of CODESRIA “This is a major contribution to social science discourse on inequality that seriously shifts the focus from money-matric, income-centric engagement to historically understood, interconnected, structural dimensions, centering on power. It is likely to infuence not only thinking on inequality in global South but also in academies and policy circles of the global North.” —Manoranjan Mohanty, Retired Professor of Political Science, University of Delhi “An important collection of essays that add up to a fresh and innovative perspective on inequality from the global South. It broadens and advances the feld of inequality studies through an interdisciplinary approach and it draws our focus beyond measurement of economic inequality, which so far has dominated the literature. The different chapters examine inequality across the global South from multiple perspectives, including gender, race and class and offer exciting theoretical and methodological innovations for the study of inequality. This book is an essential tool for researchers and students in both the global North and South who are concerned about growing levels of inequality across the globe.” —Naila Kabeer, Professor of Gender and Development, Departments of International Development and Gender Studies, London School of Economics

Inequality Studies from the Global South

This book offers an innovative, interdisciplinary approach to thinking about inequality, and to understanding how inequality is produced and reproduced in the global South. Without the safety net of the various Northern welfare states, inequality in the global South is not merely a socio-economic problem, but an existential threat to the social contract that underpins the democratic state and society itself. Only a response that is frmly grounded in the context of the global South can hope to address this problem. This collection brings together scholars from across the globe, with a particular focus on the global South, to address broad thematic areas such as the conceptual and methodological challenges of measuring inequality; the political economy of inequality in the global South; inequality in work, households and the labour market; and inequalities in land, spaces and cities. The book concludes by suggesting alternatives for addressing inequality in the global South and around the world. The pioneering ideas and theories put forward by this volume make it essential reading for students and researchers of global inequality across the felds of sociology, economics, law, politics, global studies and development studies. David Francis is Deputy Director of the Southern Centre for Inequality Studies, at the University of the Witwatersrand, Johannesburg, South Africa. Imraan Valodia is Dean of the Faculty of Commerce, Law and Management and Director of the Southern Centre for Inequality Studies at the University of the Witwatersrand, Johannesburg, South Africa. Edward Webster is Distinguished Research Professor at the Southern Centre for Inequality Studies at the University of the Witwatersrand, Johannesburg, South Africa.

Routledge Inequality Studies

After the second world war, many thought that the world was moving in a fairer and more equitable direction. However, in recent years, dramatic economic and social shifts around the world have put inequality right back at the heart of debate in the social sciences. This book series draws on subjects from across the social sciences, demonstrating how inequalities of race, education, income, ethnicity, gender, and social class are evolving in the twenty-first century. The series particularly promotes comparative and interdisciplinary research targeted at a global readership. Books in the series might draw on approaches and methods taken from across Sociology, Anthropology, Political Science, Economics, Geography, Law, Social Policy, Media and Communications, Gender, and Statistics. Overall, the series aims to bring together the very best in international research on the subject, exploring how inequality manifests, how it can be assessed using quantitative and qualitative methods, and how to combat it. The series welcomes submissions from established and junior authors on cutting-edge and high-level research on key topics that feature in global news and public debate. To submit book proposals, please contact your Routledge subject editor, or the lead editor for the series, Helena Hurd ([email protected]). Inequality Studies from the Global South Edited by Edward Webster, Imraan Valodia and David Francis

Inequality Studies from the Global South

Edited by David Francis, Imraan Valodia and Edward Webster

First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 selection and editorial matter David Francis, Imraan Valodia and Edward Webster; individual chapters, the contributors The right of David Francis, Imraan Valodia and Edward Webster to be identifed as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identifcation and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Francis, David, 1988-editor. | Webster, Eddie, editor. | Valodia, Imraan, editor. Title: Inequality studies from the global South / edited by David Francis, Imraan Valodia and Edward Webster. Description: Abingdon, Oxon; New York, NY: Routledge, 2020. | Series: Routledge inequality studies | Includes bibliographical references and index. Identifers: LCCN 2019058928 (print) | LCCN 2019058929 (ebook) | ISBN 9780367235963 (hardback) | ISBN 9780367235680 (paperback) | ISBN 9780429282447 (ebook) Subjects: LCSH: Equality–Developing countries. | Labor market–Developing countries. | Land use–Social aspects–Developing countries. | Urban policy–Developing countries. Classifcation: LCC HN981.S6 I54 2020 (print) | LCC HN981.S6 (ebook) | DDC 305.509172/4–dc23 LC record available at https://lccn.loc.gov/2019058928 LC ebook record available at https://lccn.loc.gov/2019058929 ISBN: 978-0-367-23596-3 (hbk) ISBN: 978-0-367-23568-0 (pbk) ISBN: 978-0-429-28244-7 (ebk) Typeset in Goudy by Deanta Global Publishing Services, Chennai, India

Contents

List of fgures List of tables List of contributors Preface Acknowledgements Abbreviations and acronyms

ix x xi xvii xix xx

PART 1

Conceptual questions on inequality in the South 1

Towards a Southern approach to inequality: Inequality studies in South Africa and the global South

1 3

EDWARD WEBSTER, IMRAAN VALODIA AND DAVID FRANCIS

2

Is hierarchy the same as inequality?

22

DILIP MENON

3

Inequality under globalisation: State of knowledge and implications for economics

33

JAMES K. GALBRAITH AND JAEHEE CHOI

PART 2

The political economy of inequality in the global South 4

A survey of trends in macroeconomic policy and development in the global South: From World War II to the global fnancial crisis and beyond

53

55

VISHNU PADAYACHEE

5

Economic power and regulation: The political economy of metals, machinery and equipment industries in South Africa SUMAYYA GOGA, PAMELA MONDLIWA AND SIMON ROBERTS

75

viii

Contents

6 Inegalitarian growth: India and Brazil compared

99

ALEXANDRE DE FREITAS BARBOSA, MARIA CRISTINA CACCIAMALI AND GERRY RODGERS

PART 3

Work, households and the labour market 7 The crisis of social reproduction in petty commodity production and large-scale mining: A Southern perspective on gender inequality

121

123

HIBIST KASSA

8 Vocational education and inequalities in transitions from education to work in three African countries

141

STEPHANIE ALLAIS

PART 4

Land, space and cities 9 Investigating infrastructures of urban inequality

161 163

MARGOT RUBIN, MELANIE SAMSON, SIAN BUTCHER, AVRIL JOFFE, STEFANIA MERLO, LAILA SMITH AND ALEX WAFER

10 Social reproduction at end moments: Land, class formation and rural economies in Ghana and South Africa

184

AKUA O. BRITWUM AND BEN SCULLY

PART 5

Alternatives

203

11 Minimum wages: Tackling labour market inequality

205

PATRICK BELSER, DAVID FRANCIS, KIM JURGENSEN AND IMRAAN VALODIA

12 Building counter power in the workplace: South Africa’s inequality paradox

221

EDWARD WEBSTER

13 Global inequality and human rights

240

RADHIKA BALAKRISHNAN

14 Conclusion

257

DAVID FRANCIS, EDWARD WEBSTER AND IMRAAN VALODIA

Index

263

Figures

1.1 Income inequality around the world (30 most unequal countries) 3.1 Schematic of the Augmented Kuznets Curve, with illustrative placement of selected countries 3.2 The time trend of global inequality 5.1 Share of merchandise exports, % 5.2 Portfolio infows and FDI outfows 5.3 MME value chain 5.4 Net trade balance in the MME industries 6.1 Gini coeffcient of inequality of labour income, Brazil, 1960–2011 6.2 Gini coeffcient of inequality of household expenditure per capita, India, 1950s to 2011–2012 6.3 Brazil and India, pre-tax income share, top 10 per cent (individual adults) 6.4 Annual rates of GDP growth (%), Brazil and India, 1950–2010 6.5 Gini index of wage inequality, India and Brazil, 1983 to 2011–2012 10.1 Main income sources by household 10.2 Grant or private pension status, Ghana 12.1 Trade union power resources 12.2 The application of the power resources approach (PRA) 12.3 The labour share of income (current prices)

8 46 48 78 79 80 81 100 101 102 102 110 190 192 222 226 230

Tables

1.1 3.1 11.1 11.2 12.1

The three dimensions of the core–periphery framework Country effects on a two-way fxed-effects regression using UTIP–UNIDO measures of industrial pay inequality Components of income inequality in South Africa Unemployment in South Africa Average earnings of Cosatu members surveyed

7 44 213 213 231

Contributors

Stephanie Allais is Research Chair of Skills Development and Professor of Education at the Centre for Researching Education and Labour at the University of the Witwatersrand, Johannesburg, South Africa. Her research is located in the sociology and political economy of education, focused on relationships between education and work. She was Fellow at the Centre for Educational Sociology at the University of Edinburgh, UK, and Researcher for the International Labour Organization, Geneva, Switzerland. In South Africa she has worked in government, distance education, trade union education, teaching high school, teaching adult basic education and training, and leading a student organisation, as well as serving on many committees by appointment of Ministers of Education in South Africa. Radhika Balakrishnan is Faculty Director at the Center for Women’s Global Leadership and Professor in Women’s and Gender Studies at Rutgers University, New Brunswick, New Jersey. She has a PhD in Economics from Rutgers University. She is Commissioner for the Commission for Gender Equity for the City of New York, on the Global Advisory Council for the United Nations Population Fund and on the Board of the International Association for Feminist Economics. Her most recent co-authored book is Rethinking Economic Policy for Social Justice: The Radical Potential of Human Rights with James Heintz and Diane Elson; Routledge, 2016. Alexandre de Freitas Barbosa is Professor of Economic History and International Economics at the Institute of Brazilian Studies at the University of São Paulo, Brazil, and Senior Researcher at the Brazilian Center for Analysis and Planning (CEBRAP). His research is concerned with inequality and the labour market in Brazil, the role of developmentalism in Brazilian economic history and Brazil’s pattern of international economic integration. Patrick Belser is Senior Economist at the International Labour Organisation (ILO) in Geneva, Switzerland. He is the main author of the ILO Global Wage Report, a fagship report of the ILO published every two years since 2008. Earlier at the ILO he worked on issues related to forced labour and human traffcking. He holds a PhD in Economics from the Institute of Development Studies (IDS) at the University of Sussex, UK, and also studied at the Graduate

xii

Contributors Institute for International Studies in Geneva, Switzerland, and at Columbia University in New York. He has published several articles and book chapters, including most recently on minimum wages.

Akua O. Britwum is Associate Professor at the Department of Labour and Human Resource Studies, University of Cape Coast, Ghana. She previously served as Director of the Centre for Gender Research, Advocacy and Documentation. Her research and publications are in the area of gender and labour relations. Her most recent publication is: Britwum Akua O. (2018) ‘Organizing Rural Women in Ghana since the 1980s: Trade Union Efforts and ILO Standards’ in Boris, E, Hoehtker, D and Zimmermann, S (eds.) Women’s ILO, Transnational Networks, Global Labour Standards and Gender Equity, 1919 to Present. Leiden: Brill Publishers. Sian Butcher is Human Geographer at the School of Geography, Archaeology and Environmental Studies at the University of the Witwatersrand, Johannesburg, South Africa. She completed her PhD in Geography at the University of Minnesota, Minneapolis, in 2016, with a dissertation titled “Infrastructures of Property and Debt: Making ‘Affordable’ Housing, Race and Place in Johannesburg”, followed by a postdoctoral fellowship at the Gauteng City-Region Observatory, Johannesburg, South Africa. Her research examines the production of developer-driven ‘affordable’ housing on the edges of Johannesburg for an aspirant but vulnerable middle class. Maria Cristina Cacciamali is Professor of Latin American Political Economy, Public Policy and Labour Studies at the University of São Paulo, Brazil, where she is Coordinator of the Research Group on International Studies and Comparative Policies. As Senior Researcher of the Brazilian National Research Council, her work covers political economy and comparative studies of labour markets, institutions, income distribution and informal economy. Jaehee Choi is Postdoctoral Fellow with the University of Texas Inequality Project, Austin, Texas. She received her PhD in Public Policy from the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin in 2018. Her primary research includes empirical research on economic inequality and social policy. David Francis is Deputy Director at the Southern Centre for Inequality Studies, and PhD candidate in Economics at the University of the Witwatersrand, Johannesburg, South Africa. His research interests focus on labour market economics, the informal economy and inequality. He was Researcher for the Advisory Panel on the minimum wage in South Africa. He has previously worked as Development Consultant, and Policy and Budget Analyst at South Africa’s National Treasury, where he worked in health and social policy. He has an MA in Development Studies from the University of KwaZulu-Natal, Durban, South Africa, and a BSocSci in Economics and History from the University of Cape Town, South Africa.

Contributors

xiii

James K. Galbraith is Lloyd M. Bentsen Jr Chair in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs and Professor of Government at the University of Texas at Austin. He was Executive Director of the Joint Economic Committee of the United States Congress in the 1980s. He is Managing Editor of Structural Change and Economic Dynamics. In 2010, he was elected to the Accademia Nazionale dei Lincei. In 2014 he was co-winner of the Leontief Prize and in 2020 of the Veblen-Commons Award. His most recent book is Inequality: What Everyone Needs to Know; Oxford University Press, 2016. Sumayya Goga is Senior Researcher at the Centre for Competition, Regulation and Economic Development (CCRED) at the University of Johannesburg, South Africa, specialising in research on industrial development issues. Her range of experience in the development feld extends from labour markets to sustainable development and industrial policy and serves to provide a holistic perspective on development issues in South Africa. She previously worked at the Development Policy Research Unit at the University of Cape Town, South Africa, conducting and leading research on the labour market and labour market policies, as well as at Pegasys, Pretoria, South Africa, focusing on sustainable development. Avril Joffe is Head of the Cultural Policy and Management Department, Wits School of Arts at the University of the Witwatersrand, Johannesburg, South Africa. She is an Economic Sociologist with experience in the feld of cultural policy, culture and development and the cultural economy. She is an active member of UNESCO’s Panel of Experts for Cultural Policy and Governance, the International Advisory Committee for the Cultural and Creative Industries’ Policy and Evidence Council, chaired by NESTA, UK, and the South African Ministerial Review Panel revising the cultural policy for South Africa and sits on the board of the National Arts Council. Kim Jurgensen is currently a PhD candidate at Rhodes University, Grahamstown, South Africa, researching gender inequality and confict-related sexual violence. She worked at Nedlac where she managed the National Minimum Wage negotiations. Hibist Kassa is Postdoctoral Research Fellow with the Southern Centre for Inequality Studies at the University of the Witwatersrand. She holds a DLitt et Phil in Sociology. Her dissertation was titled Petty Commodity Production in Artisanal and Small-scale Mining: A comparison of Ghana and South Africa. She is turning her dissertation into a monograph to be published by Brill in its New Scholarship in Political Economy Series edited by Prof David Fasenfest, SOAS University of London and Prof Alfredo Saad Filho, King’s College London. For a decade, her work has spanned academic, policy and social movement spaces. She was an Executive Committee member of Development Alternatives for Women in a New Era (DAWN). Dilip Menon is Mellon Chair in Indian Studies and Director of the Centre for Indian Studies in Africa at the University of the Witwatersrand, Johannesburg,

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Contributors

South Africa. He has been working on the idea of knowledge from the global South and annually conducts the Theory from Africa workshops. Two forthcoming volumes from this ongoing project are Kaveh Yazdani and Dilip Menon (eds.) Capitalisms: Towards a Global History; Oxford University Press, 2019, and Concepts from the Global South; Oxford University Press. Stefania Merlo is an Archaeologist and Teaches GIS in the School of Geography, Archaeology and Environmental Studies of the University of the Witwatersrand, Johannesburg, South Africa. She completed a BA in Classics at the University of Padua, Italy, in 2000, followed by an MPhil and PhD from the University of Cambridge, UK. Her research focuses on understanding the transformations of cultural landscapes through long-term, multidimensional models that incorporate large datasets on environment, culture and society with the use of quantitative and computational methods, in particular, Geographic Information Systems and remote sensing. She has worked in Libya, Algeria, Sudan, Botswana and South Africa. Pamela Mondliwa is Senior Researcher at the Centre for Competition, Regulation and Economic Development (CCRED) at the University of Johannesburg, South Africa. She has worked extensively and published on issues on industrial development particularly relating to structural transformation, capability development, competition, industrial policy and economic regulation in Southern Africa. She has advised government departments and regulators in South Africa and competition authorities in the region. Prior to joining CCRED she worked as an Economist in the Policy and Research Division of the Competition Commission of South Africa where she conducted economic analyses on complex enforcement cases, cartels, and mergers and acquisitions. Vishnu Padayachee is Distinguished Professor and Derek Schrier and Cecily Cameron Chair in Development Economics in the School of Economics and Finance at the University of the Witwatersrand, Johannesburg, South Africa. He is a lifetime Fellow of the Society of Scholars at Johns Hopkins University, Baltimore, Maryland, and an Emeritus Professor in the School of Built Environment and Development Studies at the University of KwaZulu-Natal, Durban, South Africa. His research interests straddle the felds of political economy, post-Keynesian economics and development studies. He has published eight books and authored or co-authored over 100 articles in accredited journals as well as over 35 book chapters and numerous working papers. Simon Roberts is Economics Director at the UK’s Competition and Markets Authority and Professor of Economics at the University of Johannesburg, South Africa, where he founded the Centre for Competition, Regulation and Economic Development (CCRED). He has worked extensively and published on issues of industrial development, trade, regional value chains, competition and economic regulation in Southern and East Africa, advising governments, competition authorities and regulators. He previously held the position of Chief Economist and Manager of the Policy and Research Division

Contributors

xv

at the Competition Commission of South Africa from November 2006 to December 2012. Prior to this he was Associate Professor at the University of Witwatersrand, Johannesburg, South Africa. Gerry Rodgers is Visiting Professor at the Institute for Human Development, New Delhi, India. He was Director of the International Institute for Labour Studies at the International Labour Organization and headed several other research programmes at ILO. He works on poverty, inequality, inclusive development, labour and employment, especially in India and in Latin America. His current research concerns the development of Northeast Brazil. Margot Rubin is Senior Researcher in the South African Research Chair in Spatial Analysis and City Planning, in the School of Architecture and Planning and Research Associate with the Society, Work and Development Institute (SWOP) at the University of the Witwatersrand. She has worked as Researcher and Policy and Development Consultant, focusing on housing and urban development issues. Her PhD in Urban Planning and Politics interrogates the role of the legal system in urban governance in India and South Africa. She has been writing about inner-city regeneration, mega housing projects and issues of gender and the city. Melanie Samson is Senior Lecturer in Human Geography at the University of the Witwatersrand, Johannesburg, South Africa. Her research focuses on the multiple forms of labour reclaimers of reusable and recyclable materials perform to produce value out of waste and what this analysis reveals about the form and nature of capitalism in post-colonial contexts. Ben Scully is Senior Lecturer in the Department of Sociology at the University of the Witwatersrand in Johannesburg, South Africa. His research focuses on labour, social welfare and economic development in Africa, with a focus on South Africa. His articles have appeared in Theory and Society, Journal of Peasant Studies, Journal of Agrarian Change, Studies in Comparative International Development, Global Labour Journal, Review of African Political Economy and The Journal of World-Systems Research. He also serves as an editor of the Global Labour Journal. Laila Smith is currently Senior Advisor on Learning in Evaluation at the Centre for Learning on Evaluation and Results for Anglophone Africa (CLEAR-AA). She is a leading international development professional with expertise in water and sanitation governance, integrated water resource management, urban management, monitoring and evaluation, evaluation capacity development and building learning organisations. She has served as Team Leader, Senior Researcher, Senior Program Manager for water and sanitation initiatives in local government, think tanks and aid organisations and has written over 20 articles on the subject of water, sanitation and urban development. Imraan Valodia is an economist and Dean of the Faculty of Commerce, Law and Management at the University of the Witwatersrand, Johannesburg, South Africa. His research interests include inequality, competition policy,

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Contributors

employment, the informal economy, gender and economic policy and industrial development. He has led the initiative at the University of the Witwatersrand to establish the Southern Centre for Inequality Studies (SCIS) – a multi-disciplinary, cross-country initiative to promote research and policy change to promote greater equality in the global South. In addition to his duties as Dean, he leads the SCIS. He has led and participated in a number of large national and international studies. He is recognised nationally and internationally for his research expertise in economic development. He is a part-time member of the Competition Tribunal in South Africa. He is also Commissioner of National Minimum Wage Commission and Member of the Academy of Science of South Africa (Assaf) Standing Committee on Science for the Reduction of Poverty and Inequality. In August 2016 he was appointed by President Cyril Ramaphosa to chair the Advisory Panel on the National Minimum Wage. This led to the introduction of a National Minimum Wage in South Africa. Alex Wafer is Senior Lecturer in the School of Geography, Archaeology and Environmental Studies at the University of the Witwatersrand, Johannesburg, South Africa. His current research includes the ongoing research project “Platforms for precarity: digital technologies and precarious work in the informal economy” (with Dr Angus Bancroft), and “Ways of Knowing in a time of Crisis” working with a transdisciplinary collective to explore the relationship between science and society in the context of global change. Edward Webster is Distinguished Research Professor at the Southern Centre for Inequality Studies and the founder and past director of the Society, Work and Development Institute (SWOP) at the University of the Witwatersrand, Johannesburg, South Africa. He is author of seven books and over 120 academic articles. He was Senior Fulbright Scholar at the University of Wisconsin–Madison, Madison, Wisconsin, and the frst Ela Bhatt Professor at the International Centre for Development and Decent Work (ICDD) at Kassel University, Germany. His co-authored volume, Grounding Globalisation: Labour in the Age of Insecurity, was awarded the American Sociological Association award for the best scholarly monograph published on labour. In May 2017, he published an edited volume, Crossing the Divide: Precarious Work and the Future of Labour locating the changing dynamics of work in a comparative context through research in India, Ghana and South Africa. In 2019 his co-edited volume, The Unresolved National Question: Left Thought Under Apartheid was shortlisted for the annual National Institute of Humanities and Social Sciences (NIHSS) non-fction award. His current research interests are on the production and reproduction of inequality in the workplace and the use of labour power as a strategy for reducing this inequality.

Preface

The Southern Centre for Inequality Studies (SCIS) was established at the University of the Witwatersrand in October 2017 in order to advance inequality studies in the global South. While inequality is a global problem, the feld of inequality studies is in a large part undertaken in the global North, principally in North America and Western Europe, and this geographical locus infuences its methodology and focus. But we cannot assume that the forces which drive the production and reproduction of inequality are universal. Our starting premise is that while technical solutions to addressing inequality are very important, they will not be politically feasible unless the social and political forces driving high levels of inequality are clearly understood and addressed. Given the global nature of inequality, studying and addressing it in South Africa will enable us to enter into a dialogue about inequality in other settings across the global South. Since the establishment of the Centre, we have focused our work on the conceptual and methodological questions which underpin inequality studies in the global South, working with research partners in South Africa and across the global South. In this collection of research-based essays, we attempt to reverse the historic imbalance in knowledge creation between the global North and South and present a view of contemporary inequality studies from the global South. Today, the global South faces unprecedented levels of poverty and inequality without the safety nets of the various Northern welfare states. As this volume shows, in many countries in the South, inequality is not merely a socio-economic problem, but an existential threat to the social contract that underpins the democratic state and society itself. In this volume we engage with conceptual, methodological and substantive questions about how inequality is produced and reproduced in the global South, and we identify the sources of power that can address and overcome this inequality. The volume is an interdisciplinary collection of essays which engages thematically (rather than through country case studies) with the most pressing issues of inequality in the global South. It problematises the notion of a universal approach to inequality studies and is located frmly in the South at the Southern Centre

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Preface

for Inequality Studies at the University of the Witwatersrand, in Johannesburg, South Africa. We hope that it provides the foundation for a sustained investigation of inequality in the global South. David Francis, Imraan Valodia and Edward Webster Johannesburg, South Africa

Acknowledgements

The editors would like to thank the authors, and the research associates and staff of the Southern Centre for Inequality Studies for the hard work and dedication that went into producing this book. We would also like to thank the Ford Foundation and the Friedrich Ebert Stiftung for the funding which made this volume possible. Finally, we thank Karin Pampallis for a most careful copy-edit and proofreading of the manuscript.

Abbreviations and acronyms

AfDB AGA AMSA ANC ANRC ASM

African Development Bank Anglo Gold Ashanti ArcelorMittal SA African National Congress African Natural Resources Centre artisanal and small-scale mining

BAA BCEA BJP

Business Assistance Agreement Basic Conditions of Employment Act, 1997 [South Africa] Bharatiya Janata Party [India]

CAC CAT CBCF CCMA CEO CGGC CME Cosatu

community arts centre Create Africa Trading community-based cultural facilities Commission for Conciliation, Mediation and Arbitration Chief Executive Offcer Center on Globalization, Governance and Competitiveness coordinated market economy Congress of South African Trade Unions

DOL DS DTI

Department of Labour Deininger/Squire [data set] Department of Trade and Industry

ECC EEA EEC EHII EPWP ESCR-Net

Employment Conditions Commission Employment Equity Act Employment Equity Commission Estimated Household Income Inequality Expanded Public Works Project Economic, Social and Cultural Rights Network

FDI Fosatu

foreign direct investment Federation of South African Trade Unions

GATS GDP

General Agreement on Trade in Services Gross Domestic Product

Abbreviations and acronyms

xxi

GDR GEAR GPN GVC

German Democratic Republic Growth, Employment and Redistribution [programme] Global production network Global value chain

HIPC

Highly Indebted Poor Country Initiative

ICT IDC IIE ILO IMF Ipap ISI ITAC

Imperial Crown Trading Industrial Development Corporation Institute for Industrial Education International Labour Organization International Monetary Fund Industrial Policy Action Plan import substitution industrialisation International Trade Administration Commission

JSE

Johannesburg Stock Exchange

Leap LME LRA LSM

Livelihood Empowerment Against Poverty liberal market economy Labour Relations Act, 1995 [South Africa] large-scale mining

MEC MECE MERG MDG MGNREGA MIT MME

minerals–energy complex mutually exclusive, collectively exhaustive Macroeconomic Research Group millennium development goal Mahatma Gandhi National Rural Employment Guarantee Act [India] Massachusetts Institute of Technology metals, machinery and equipment [value chain]

Nedlac NIC NIHS NIMBY NREGA Numsa

National Economic Development and Labour Council Newly Industrialised Countries National Health Insurance Scheme Not In My Back Yard National Rural Employment Guarantee Act [India] National Union of Metalworkers of South Africa

ODA OECD OMCC OMCP

Offcial Development Assistance Organisation for Economic Co-operation and Development Obuasi Malaria Control Centre Obuasi Malaria Control Program

PIGS PMDB PPP PPP PPPFA

Principle Instigator, Goldman Sachs Partido do Movimento Democrático Brasileiro public–private partnership Purchasing Power Parity Preferential Procurement Policy Framework Act

xxii

Abbreviations and acronyms

PRSP PT

Price Preference System power resources approach Programa Nacional de Fortalecimento da Agricultura Familiar National (Programme to Strengthen Family Farming) Poverty Reduction Support Programme Partido dos Trabalhadores (Workers’ Party) [Brazil]

RDP

Reconstruction and Development Programme

SABS SACP Sactu Sactwu SADC Sadtu SAF SAP SARS SCIS SENAC SENAI SETA SME SoA SRT SRWP SSNIT Stats SA SWIID

South African Bureau of Standards South African Communist Party South African Congress of Trade Unions South African Clothing and Textile Workers Union Southern African Development Community South African Democratic Teachers Union South African Foundation structural adjustment programme South African Revenue Service Southern Centre for Inequality Studies National Commercial Training Service [Brazil] National Industrial Training Service [Brazil] Sector Education and Training Authority small and medium enterprises Systems of accumulation Social Reproduction Theory Socialist Revolutionary Workers Party Social Security and National Insurance Trust Statistics South Africa Standardized World Income Inequality Database

TNC TOD TRC Trips

transnational corporation Transit Oriented Development Truth and Reconciliation Commission Agreement on Trade-Related Aspects of Intellectual Property Rights tailing storage facility

PPS PRA PRONAF

TSF UDF UIF UK UNESCO UNIDO US(A) USSR UTIP

United Democratic Front Unemployment Insurance Fund United Kingdom United Nations Educational, Scientifc and Cultural Organization United Nations Industrial Development Organization United States (of America) Union of Soviet Socialist Republics University of Texas Inequality Project

Abbreviations and acronyms VSLS VTI

village savings and loans scheme Vocational Training Institutions

WID.world WIDER Wits WTO

World Wealth and Income Database World Institute of Development Economics Research University of the Witwatersrand World Trade Organization

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Part 1

Conceptual questions on inequality in the South While inequality is a global problem, our interest is primarily in the global South where, we argue, inequality takes particular forms, and how we think about inequality is at the core of any project seeking to address it. What do we mean by equality and inequality? Inequality of what? Is inequality necessary? Why? Equality of what, and for whom? Secondly, how do we conceptualise and measure these various types of inequality? The three chapters in this section engage with some foundational conceptual and methodological questions about the study of inequality in the global South. The premise of Chapter 1, by Edward Webster, Imraan Valodia and David Francis, is that the process of global knowledge production is not neutral, and that where we study inequality matters for how we understand it and how we address it. In addition to shifting the locus of inequality studies to the global South, it is also important to move beyond only money-metric understanding of inequality, to one which is both located in the historical context and is interdisciplinary. What, then, is involved in thinking about inequality in the South? Usually little consideration is given to the question of producing a set of conceptual categories from the lived experience, intellectual traditions and social practices of the global South. We need to proceed from a position that theories produced elsewhere (“Northern theories”) might have little explanatory power unless they engage with local ways of looking at and living in the world. In Chapter 2, Dilip Menon argues that we need to think about the question of hierarchy as a value in the global South, and that inequality and hierarchy may not be the same thing. Finally, we turn to some methodological questions about measuring inequality. Is it possible to compare inequality of income – a useful measure, and proxy for wider inequalities – between countries in the global South, given the challenge of obtaining accurate and comparable data? In Chapter 3, James K. Galbraith and Jaehee Choi summarise an empirical project that has produced a consistent global panel of income inequality estimates. Their work integrates Southern economies with their Northern counterparts in a single frame of reference, illustrating the structural and political elements behind comparative levels of inequality. They demonstrate that the global macroeconomics of fnancialisation, debt crises and

2

Conceptual questions on inequality in the South

exchange rate movements play an essential role in the evolution of economic inequality over time. Taken together, the chapters in this section present a new approach to conceptualising, understanding and measuring inequality in the global South in a way that rejects universalist explanations of inequality while avoiding reductionism.

1

Towards a Southern approach to inequality Inequality studies in South Africa and the global South Edward Webster, Imraan Valodia and David Francis

Introduction The University of the Witwatersrand (Wits) has embarked on a multi-partner research and policy project focusing on understanding and addressing inequality, and building a collaborative South-focused research institution to strengthen and sustain this work. Our starting premise is that while technical solutions to addressing inequality are very important, by themselves these will not be politically feasible unless the social, economic and political forces driving high levels of inequality in South Africa are clearly understood and addressed. While inequality is a global problem, our interest is primarily in the global South, where, we argue, inequality takes particular forms. Locating our study and addressing inequality in South Africa will also enable us to enter into a dialogue about inequality in other settings, particularly in the rest of the global South. The global South is emerging at the forefront in the use of, inter alia, socio-economic rights and the law to achieve social change. Crucially, widening inequalities between and within countries are coupled with the persistence of poverty. The objective of our study is a comprehensive and broadly shared understanding of how inequality is produced and reproduced in South Africa and in comparable countries in the global South, and the identifcation of the sources of power that can address and overcome this inequality. South Africa is something of a paradox. In spite of a powerful internal democratic movement driving resistance to inequality under apartheid, as well as progressive legislation and a constitution that foregrounds the promotion of social and economic rights, economic inequality in the post-apartheid period has deepened.1 But, if we broaden the defnition of inequality beyond resource inequality (income and assets) to include what Goran Therborn calls existential inequality,2 then “enormous egalitarian advances have been made in race, settler–indigenous, gender and sexual relations” (Therborn, 2013: 137). Having to accept that black people have their own history, or that people of the same sex may legally marry, may be culturally offensive to some, but because “it has been decoupled from resource inequality … powerful elites have found the issue a gift of costless egalitarianism” (Therborn, 2013: 145). Indeed, Therborn believes that globally, existential egalitarianism is the great “success story” of

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Edward Webster, Imraan Valodia and David Francis

the past half-century. It begins in 1945 with “the total defeat of Nazi Germany, militaristic Japan and Fascist Italy” (Therborn, 2013: 137–8). It set the stage for the United Nations Declaration of Human Rights, adopted in December 1948, and the human rights victories that followed – the decolonisation of the colonies of Africa, Latin America and Asia, the defeat of institutionalised racism in the United States and eventually South Africa, and the breakthrough of women’s rights in the 1970s. Manoranjan Mohanty, although less optimistic than Therborn, argues something similar when he writes: All constitutions affrm the right to equality before law for all citizens. … [but] … at the same time, the trend of increasing social and economic inequality within and between countries and regions has been prominently noticeable in recent decades. Inequality of incomes in countries such as the United States, India, and China has continued to rise, with occasional slight fuctuations. (Mohanty, 2018: 2) But unlike Therborn, Mohanty emphasises the persistence of existential inequality: “Discrimination on the basis of caste in India, race in the United States and South Africa, ethnicity in China and many other countries, and gender in all countries persists even though laws prohibit it” (Mohanty, 2018: 3). Whether one adopts Therborn’s optimistic view of the successful emergence of an egalitarian movement or the more sceptical view of Mohanty, both approach inequality from a multidimensional perspective. Inequality is not just about one’s bank balance. It is, in Therborn’s (2013: 10) words, “a violation of human dignity; it is a denial of the possibility for everybody’s capabilities to develop”. In framing this debate, we begin with the assumption that inequality is a power relationship. It is not just about differences between individuals, groups, regions or countries. Differences are given or chosen, while inequalities are socially constructed (Therborn, 2013: 38). Inequality is about the conditions that allow certain groups to dominate over others (Mohanty, 2018: 6). In this volume we engage with inequality from the perspective of the global South. The term global South mainly refers to the countries of Asia, Africa and Latin America, even though, geographically, many of them are located north of the equator. There are three common features in our understanding of the term global South (Mohanty, 2018). First, these countries are mostly former colonies or semi-colonies that are engaged in consolidating their independence. Second, their economic conditions remain underdeveloped compared to those of the former colonial powers or the developed countries of Europe and North America. Third, they are currently engaged in transforming the unequal global order, where the global North enjoys more political, economic, technological, and cultural power than the global South and accordingly has framed the rules of global governance during the past 200 years of colonial and postcolonial history. (Mohanty, 2018: 7)

Towards a Southern approach to inequality

5

At the centre of our understanding of inequality, then, is a recognition of the unequal nature of the global order. Our premise is that the creation of new knowledge relating to inequality is in itself determined by patterns of inequality in research and knowledge creation – following a core–periphery pattern between the global North and the global South. Understanding the reality of inequality in the global South requires interrogating inequalities in the global order.

Understanding inequality studies – The status quo The result of this unequal global order, we argue, is that, as a general pattern, Northern institutions set the agenda, get the resources and establish the epistemological framework for knowledge creation; they use the South only as the site of research and observation. This was most pronounced in the discipline of anthropology, which emerged from the colonial expansion of Europe. Colonialism structured the relationship between anthropologists and the people they studied and had an effect on the way the discipline was conceptualised. “For example, the role of ‘objective outsider’ with its resultant professional exploitation of subject matter”, Diane Lewis (1973: 581) argues, “can be viewed as an academic manifestation of colonialism”. This approach to research and inquiry is problematic for various reasons; it removes the agency from the South to set the intellectual and policy agenda for the study of inequality. It is a form of epistemological imperialism.3 For the content of research and knowledge production, too, there are important concerns. This approach assumes, to a certain extent, a universalism in the causes of inequality, and the origins of that universalism are located squarely in the global North. While this may be true to a certain extent, it is a very strong assumption when it underpins the research agenda. It is particularly dangerous because, while inequality may look similar in the North and the South, it is our hypothesis that the reproduction of inequality in the South may be determined by factors that are quite different, and possibly which are particular to the South, and of course is shaped by the way the South articulates with the North. To take one example, the reproduction of inequality in the South is certainly determined by the historic process of colonialism, which has left a very different legacy in the global South compared to the North. From an epistemological perspective, we must ask why inequality studies have proliferated in recent years. More importantly, why they have been championed by academic institutions in the North, where inequality is a rapidly growing problem, but where its quantum is signifcantly lower than in many Southern states? In the North, inequality has attracted attention because it poses a threat to the stability of the welfare state. The rise of a counter-movement to the neo-liberal hegemony from the right has led to introspection by the North on the role of inequality in undermining social and democratic stability. We cannot assume that the primary concerns about inequality in the South have their basis in the same set of problems. Indeed, it could be argued that the methods of colonial accumulation by the North which underpinned its

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development are in large part responsible for the reproduction of inequality in the South (Frank, 1966). Northern institutions focusing on inequality have developed formidable technical expertise in the measurement and quantifcation of inequality. This work has developed an impressive literature on innovative and comparable measures of inequality around the world. The development of comparable statistics, however, has led to the confation of appearance with cause. We contend that there is a largely unquestioned assumption which underlies inequality studies – because forms of inequality are quantifable and comparable, it is assumed that they are products of universal causes. In The Spirit Level, Richard Wilkinson and Kate Pickett (2009), who are epidemiologists, argue that more equal societies almost always do better than more unequal ones. Essentially, they claim that inequality is the root cause of many societal challenges, including disease, violence and crime. Importantly, they argue that inequality makes all of society worse off, not only the poorest. Thus they argue that inequality, in and of itself, is a severe problem. But this argument contains a Northern bias: In much of the South, inequality is reproduced alongside high levels of poverty, and both are often driven by the same forces. In many Northern states, by comparison, poverty has until recently largely been eliminated, leading to a focus on inequality as a separate phenomenon. Furthermore, we argue that the feld of inequality studies has paid insuffcient attention to the political economy of inequality. There is a measurement bias in the study of inequality that ignores its social, spatial and perhaps most importantly its political dimensions. While technical solutions to addressing inequality are very important, they will not be feasible unless the social and political forces driving high levels of inequality are clearly understood and addressed. Addressing inequality requires an understanding of power that goes beyond the power to control markets, and seeks to understand how power manifests in structural and institutional exclusion and discrimination. Indeed, power is produced and reproduced at the intersection of race, class, gender, sexuality and other aspects of identity. Of course, it is clear that a similar problem arises when one attempts to generate a Southern approach to inequality. To what extent are Southern countries even comparable, and is it possible to draw out meaningful generalisations between them? Is it possible to group countries such as China and Namibia together, under the banner of the global South? In that regard, it is important to differentiate between the approach to the study of inequality (which is what primarily concerns us here) and generalisations about the nature of inequality itself.4 The literature on global knowledge production is useful in providing a framework for understanding how we produce knowledge about inequality in particular. Keim (2017) suggests that the creation of knowledge in the social sciences can be understood through a core–periphery conception that has historical roots. Most scientifc disciplines, including the quantitative analysis that underpins much inequality research, are concentrated within specialised academic institutions that emerged frst in Europe, followed by North America, and have now, to a certain extent, expanded across the world through colonial and neo- or post-colonial relationships (Keim, 2017: 2). This core–periphery conception is outlined in Table 1.1.

Towards a Southern approach to inequality

7

Table 1.1 The three dimensions of the core–periphery framework Dimension

Centre

Periphery

Infrastructure and internal organisation Conditions of existence and reproduction Position and international recognition

Development

Underdevelopment

Autonomy

Dependency

Centrality

Marginality

Source: Keim (2017: 2).

For inequality studies, this manifests in several ways, three of which we discuss here: intellectual stewardship, funding and the geography of knowledge creation. The core–periphery conception of knowledge creation is highly evident in inequality studies. There are inequality studies centres located at the London School of Economics, Cornell University, Stanford University and the University of Amsterdam, among others. While these institutes no doubt produce high-quality work in the feld of inequality, the process of knowledge creation is often that a particular project is conceptualised in these Northern institutions, and then case studies are subcontracted to Southern researchers, who usually have little or no say in the project design, research aims or funding allocation. Secondly, and in the same way, funding originates in the North, often from large philanthropic foundations or wealthy governments, and is often awarded to Northern institutions. A current example of this is the Atlantic Fellows programme which is based at the London School of Economics and funded by the Atlantic Philanthropies. Finally, the geography of knowledge creation in inequality studies is problematic. Given the location of inequality centres in the North, related conferences and events tend to be located in Northern cities. While some effort is often made to bring in Southern scholars, it is diffcult to develop an inequality studies that is both for and in the South when the physical position of the intellectual interactions is so frmly in the North.5 These factors lead, Paulin Hountondji suggests, to “extraversion” – that is, the output of the global South is not oriented towards local colleagues or local society but rather towards an overseas, North Atlantic audience (cited in Keim, 2017: 14). North Atlantic audiences, he suggests, are more interested in case studies on local societies that feed into the work of theorisation in the North. The global North and South are different in three important ways. The frst is the magnitude of inequality. Second, there are important differences in politics. Third, there are key differences in state capacity and confguration. Reliable and comparable data on inequality has, in the past, been problematic to secure, but there has been great progress in recent years, both by the World Bank and the World Inequality Database. This data is important because it allows us to compare income inequality between countries around the world. In order to understand

8  Edward Webster, Imraan Valodia and David Francis the global picture of income inequality (as a proxy for inequality more broadly), we use the World Bank Gini coefficients to rank countries according to their income inequality.6 The findings are striking. Of the 30 countries with the highest income inequality, 28 are in the global South, while only two (Iran and the United States of America) are in the global North (see Figure 1.1).

Iran, Islamic Rep. Ethiopia Sri Lanka Uruguay Philippines El Salvador United States Cote d'Ivoire Argen†na Turkey Togo Peru Mexico Dominican Republic Ecuador Nicaragua Bolivia Cameroon Chile Benin Guatemala Costa Rica Paraguay Honduras Panama Brazil Colombia Mozambique Zambia South Africa 30

35

40

45

50

55

60

65

Figure 1.1 Income inequality around the world (30 most unequal countries). Source: The World Bank (2019), calculations by the authors.

Towards a Southern approach to inequality

9

Of course, income inequality is only one measure of inequality, but it does indicate that the realities of inequality in the global South are very different to the North. There are some interesting dynamics. In many parts of the global South, income inequality has remained stable but at very high levels, while countries in the global North have seen rapid increases in income inequality (Alvaredo et al., 2018). As a result, the political dimensions of inequality are different, too. In the North, the focus of inequality studies is on the rise because of right-wing ideology arising from exclusion, and rapidly rising inequality. This is not the case in the global South, where the rise of right-wing politics is driven, at least in part, by other factors. In Brazil, for example, the rise of the right is a response to the redistributive policies under President Lula (Anderson, 2019), and (to a lesser extent), the rise of Modi in India is a reaction to welfare policies such as the National Rural Employment Guarantee Act (NREGA). To the extent that it is possible to generalise about the South, the re-emergence of the right is a reaction to policies of redistribution. In the North, the concern is with safeguarding the welfare state; in the South there is, for the most part, no welfare state to safeguard. Instead, experimentation with social programmes such as the Bolsa Familia in Brazil and NREGA in India, which have made huge inroads into addressing inequality, are being pushed back. Finally, there is the issue of the solutions to inequality. Countries in the North have high tax-to-GDP ratios, capable welfare systems and established public sectors. This is less so in developing countries; thus, we have to more urgently address the pattern of growth that is driving inequality, rather than relying on post hoc interventions through the welfare system.

Lessons from inequality studies in South Africa for the global South We now turn, briefy, to a discussion of inequality in South Africa and the global South as the point of departure for our project. As Dilip Menon argues in his chapter here, there is a need to proceed from a position that theories produced elsewhere (i.e. Northern theories) have little explanatory power unless they engage with local ways of looking at, and living in, the world. The second lesson to draw from the study of inequality in South Africa and the global South is the need for an historical perspective. This is demonstrated by Vishnu Padayachee in his chapter tracing the changing macroeconomic policies in the global South from World War II to the present, and the impact of such policies on the trajectory of inequality. The current distribution of wealth and income in South Africa has historical roots that go back several centuries, as detailed in the seminal contribution on inequality in South Africa by Sampie Terreblanche (2002) and in his testimony to South Africa’s Truth and Reconciliation Commission (TRC), which highlighted how the process of accumulation by dispossession in South Africa has entrenched the reproduction of inequality (Terreblanche, 1997). Several econometric studies have found that inequality of income has remained constant at around a Gini coeffcient of 0.66 since the end of apartheid (Finn, 2015; Hundenborn, Leibbrandt and Woolard, 2016). Writing at the start of the

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1990s, Wilson and Ramphele (1994) found that South Africa had the highest Gini coeffcient of all 57 countries for which there were data at that time, at 0.66. The most recent data from the World Bank found South Africa to have the highest income inequality in the world, of the 149 countries for which there are data (Sulla and Zikhali, 2018). The third lesson is that inequality in South Africa is maintained by several structural forces which cannot be understood in isolation from the structures of economic and social power that were entrenched under apartheid, many of which persist today. In his testimony before the Truth and Reconciliation Commission in 1997, Sampie Terreblanche (1997) argued that apartheid and South Africa’s capitalist system were mutually reinforcing.7 This is contrary to a popular view, argued by Lipton (1986), among others, that capitalism and the apartheid regime were mutually self-defeating. The capitalist system in contemporary South Africa continues to reproduce inequality across all areas of social and economic life, despite the demise of apartheid (Francis and Webster, 2019). In their chapter, Sumayya Goga, Pamela Mondliwa and Simon Roberts examine the role that power plays in shaping inequality, with a particular focus on market power, economic concentration and regulation. Another striking fnding of the inequality literature in South Africa is that inequality is not only a phenomenon between race groups, despite the persistence of the legacy of apartheid. By 2008, inequality within race groups was larger than inequality between race groups, and the trend is that within-group inequality continues to become the more dominant contributor to overall inequality. In 1993, inequality within race groups accounted for 48 per cent of overall inequality; by 2008 this had increased to 62 per cent (Leibbrandt, Finn and Woolard, 2012). It is highly signifcant that inter-racial inequality has decreased markedly. This points to the need to introduce a class-based approach to understanding inequality, not as an alternative to race-based inequality but in order to show how race and class intersect. Furthermore, there are also important gender dimensions to poverty and inequality. Over the last 30 years there has been a signifcant rise in female labour force participation (Casale, 2003), which has been accompanied by rising female unemployment (Casale and Posel, 2002; Casale, 2004), and persistent gender inequalities in economic outcomes (Posel, 2014). Black women continue to carry the burden of low-paid work. In 2015, there were 1.1 million domestic workers in South Africa, 887 000 of them women, who earned less than R3 500 per month. In community services, 1.2 million workers, of which approximately 800 000 are women, earn less than R3 500 per month (Valodia and Francis, 2016). Furthermore, it is important to consider the implications for class formation of the gendered structure of work, particularly home-based and care work (Lund, 2017). This intersection of labour markets, gender and inequality is emphasised by Hibist Kassa in her chapter analysing petty commodity production and small-scale mining in Ghana and South Africa. A recent attempt to demonstrate this intersection was undertaken by Boike Rehbein (2018).8 The paper examines the reproduction of social inequality in South Africa using the concept of habitus.9 Rehbein argues that the incorporation

Towards a Southern approach to inequality

11

of habitus traits leads to the reproduction of the social structures in which these traits are acquired, even across generations. He argues that with regard to South Africa, it can be observed that the structures developed before and under apartheid continue to persist to some degree even in contemporary South Africa, both as elements of people’s habitus and as foundations of social classes that have been emerging in South African society. The paper identifes fve social classes and seven habitus types, all of which can be traced to the social hierarchies of apartheid. (Rehbein, 2018: 1) These fve social classes are the dominant, established, middle, fghters and marginalised. In South Africa, the current marginalised class is largely comprised of the descendants of poor, rural households, who, Rehbein notes, accumulated neither cultural nor economic capital of any value, and were subject to various forms of dispossession. In their chapter on the rural political economy in Ghana and South Africa, Akua O. Britwum and Ben Scully show how this land dispossession has shaped inequality in these two countries in different ways. The innovative study by Rebhein (2018) suggests not a declining signifcance of race, but that power is produced and reproduced at the intersection of race, class, gender, sexuality and other aspects of identity. One example can be found in the university student protests in South Africa that in the past four years have focused attention on the extent of inequality in the provision and access to tertiary education, and links to historic privilege and inequalities in wealth and income (as argued by Allais, 2017). But inequality and inequity in the education sphere in South Africa pervades all levels of the education system, from basic education to vocational training and tertiary education. South Africa has, by some measures, the highest private returns to tertiary education in the world (Bhorat, Cassim and Tseng, 2014; Cloete, 2016). In addition, there is evidence that tertiary education largely excludes the poor and very poor; over 80 per cent of students who qualify to apply to study at degree level come from the top two income deciles (Allais, 2017). As argued by Stephanie Allais in this volume, there is a growing contradiction between the ability of education and training systems to produce the substantive knowledge and skills needed in workplaces and society, and the ways in which credentials are used in labour markets. This has important implications for the reproduction of inequality. Researchers investigating poverty and inequality in South Africa have for many years had access to excellent poverty data, and to data on income inequality. Comparing inequality between countries, however, remains a challenge. In their comparative analysis of inequality in this volume, James K. Galbraith and Jaehee Choi suggest that inequality should be analysed as a macroeconomic variable, associated with global fnancial policies, and specifcally with the rise and decline of neo-liberal policy regimes at the global scale. Moving beyond income inequality, there has been very little written about the extent and dynamics of wealth inequality – a feld of study that has attracted increasing attention since

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the seminal contribution on wealth inequality by Thomas Piketty (2014). A recent insightful paper by Orthofer (2016) is the frst signifcant investigation into wealth inequality in South Africa. The author used previously unpublished personal income tax data from the South African Revenue Service (SARS) for the 2010–2011 tax year. Her results are striking, and underscore the importance of including an analysis of the distribution of wealth in any study of inequality. She found that while the highest-earning 1 per cent of the population earns between 16 and 17 per cent of all income, the top 10 per cent earn 56 to 58 per cent. Looking at wealth, however, the top 10 per cent of the population own approximately 95 per cent of all wealth, while 80 per cent own no wealth at all (Orthofer, 2016). Not only are these fndings striking, they show that the country has made little progress in addressing wealth inequality: In 1970, the richest 20 per cent of the population owned 75 per cent of all wealth (Wilson and Ramphele, 1994). There is a growing appreciation that inequality in wealth, around the world, and in South Africa, is signifcantly higher than inequality of income. But there is much more work to be done to understand the dynamics of wealth inequality in South Africa and this is a focus of the Southern Centre for Inequality Studies. An area of on-going rural inequality that is a defning feature of the South is the power of the traditional authorities. One of the puzzles of post-apartheid South Africa is the endorsement by the ANC of traditional Bantustan rulers, given the chiefs’ complicity with the apartheid administration. The chiefs and tribal authorities that were created were authoritarian, deeply undemocratic and often corrupt, and yet they have survived into the post-apartheid period. Ntsebeza’s (2005) answer is that it has been politically expedient for the ANC to strengthen traditional authorities. Indeed, as Gibbs (2014: 53) suggests, “Today, these densely populated rural areas have become a dominant part of party caucuses”. Additionally, Delius (2019) argues that there is also a link between the extractive economy and traditional authorities, where support for the latter promotes expedience in mining, and this explains the persistence of support for traditional authorities. Classens (2019), however, sees the consolidation of traditional authorities as part of a process of class formation and draws on Mamdani’s (1996) notion of subject and citizen as a central part of the legacy of colonial rule. The fnal area of research in inequality studies in post-apartheid South Africa is on the role of the Constitution in challenging inequality. Constitutional lawyers such as Cathi Albertyn (2018) do not see the Constitution as a blueprint, but rather as an enabling document that is capable of diverse interpretations, within a social democratic/democratic socialist spectrum of ideas. Her reading of the jurisprudence and policy is that it generally refects a “(contested) social democratic/liberal egalitarianism, rather than a narrow (neo) liberal democratic consensus, but that the Constitution could enable more radical social democratic or democratic socialist interpretations which would not prevent more radical and redistributive policy measures” (Albertyn, 2018: 23). She concludes: Despite all the reasons as to why our failure to address the deep structural social and economic inequalities of the past might be attributed to a variety

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13

of causes that are not apparently attributable to the Constitution itself, we cannot lose sight of the symbolic role of our founding covenant. Insofar as it symbolises a ‘new beginning’ that defnes a new political community and holds out the promise of substantive transformative change, it will always run the risk of losing its legitimacy when this does not materialise. The solution to that lies not in the constitutional text, but in politics. (Albertyn, 2018: 25)

Towards a Southern approach Making sense of the persistence of inequality in South Africa requires us to understand South Africa’s position in the global South, and the position of the South in relation to the North. So how then do we study inequality in the South in a way that is new, meaningful, comparable and useful? We propose adopting the distinction drawn by Burawoy (2010) between a study of inequality that is in the South, one that is of the South, and one that is for the South. As argued by Webster (2014) and Burawoy (2010) for sociology, so is it true for inequality studies: The majority of Northern-dominated inequality studies present themselves as a “false universal”, and it can be shown that “Northern theory is either false when applied to the South or has very different signifcations” (Webster, 2014: 153). It is important to note that we are not embarking on a process that is wholly new. Indeed, as Keim (2017) argues: What has hardly been taken into account so far is the existence, in Southern countries, of vibrant, engaged scholarly communities around specifc, most often locally relevant topics that function despite the strictures and structures of North Atlantic domination … the central feature of what I here call counterhegemonic currents is their refusal to participate in the dominant arena – less through theoretical discussion and explicit critique, but rather through specifc forms of collective social scientifc practice … the concept of the counterhegemonic current thus refers to the emergence of original, autonomous sociologies at the periphery. (Keim, 2017: 21) Drawing from Keim, it is important to note that the theoretical approach we take here is not new. Firstly, there is the subaltern school in India led by Partha Chatterjee; secondly, there is the work of Frantz Fanon on colonial domination and decolonisation theory; and, of course, there is dependency theory that comes out of Latin America. We are, however, embarking on a process to apply this theory to the feld of inequality studies. How, then, do we locate the study of inequality that is both in and for the South? We propose that there are four pillars that must form the basis of this approach: theory, history, interdisciplinarity and the centrality of the concept of power. We now examine each of these in turn. A theory of the South needs to begin, Prathama Banerjee (2018) suggests, by not depending on one single intellectual tradition, the Western European. She

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argues, however, that the alternative, is not to turn only to national or indigenous traditions of thought. “Instead, we must learn to think across multiple traditions of thought in order to become theoretically free – traditions not excluding the European, but including also the Chinese, the Arabic, the Sanskrit and so on” (Banerjee, 2015: n.p.). This approach is informed by the realisation that the territorially bound demarcation of different traditions of thought has colonial roots; the colonial system repressed what Banerjee calls cross-cultural geographies of intellectual exchange. She concludes: Against both the cultural confnement of thought and the operation of hegemonic universalisms, we must exercise the theoretical right, as it were, to “reassemble” thought from multiple sources and resources, with a cultivated facility for translation, adaptation and renewal … We must contemporanise. To contemporanise is not just to make present, but to think in temporal contiguity – as in and of the same time – different modes of thinking and living, both ‘modern’ and ‘non-modern’. (Banerjee, 2015: n.p.) Secondly, it is vital that inequality studies are grounded in an historical context. Historical reality is very different between the North and the South. Colonial conquest and land dispossession are central to the reproduction of contemporary inequality in the South in a way that is not true for the North (Terreblanche, 2002: 6). While it takes a particular form in South Africa (settler colonialism), the shadow of colonialism shapes many countries in the South. What we see in South Africa, in particular, is a persistence of the apartheid labour regime even in the post-apartheid dispensation. As Von Holdt argues: Apartheid existed not only in the residential and social segregation of the town … but also in the social and occupational structure of the Highveld Steel workplace. The workplace regime allocated skill and authority on a racial basis. The racial structure of power was characterised by racial insults and racial assault. This apartheid workplace regime had deep historical roots in the evolutions of the labour regime, work practices and racial structures of power within settler colonialism, and was underpinned by the educational and labour market policies of apartheid. There were no mechanisms for workplace incorporation of black workers: on the contrary, the broader political and social exclusions of blacks was mirrored by workplace exclusion and oppression. (Von Holdt, 2003: 27) This is still largely true for South Africa; in the same way the colonial legacies still shape many Southern countries. It is for this reason that we argue against the universalisation of inequality studies, which is underpinned by a largely unexamined assumption that inequality is produced by universal factors. But if there are material differences in the production and reproduction of inequality between

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the North and the South, in the same way there are differences in inequality between Southern countries. Understanding the nature and extent of these similarities and differences is at the core of the evolving research agenda which currently occupies our project. For example, in Brazil, sociologist Jesse Souza argues that the large number of marginalised people in Brazilian cities are not what Guy Standing (2014) calls a precariat as they are not a “class which is losing ground, losing power” (Souza, interview, 26 March 2019, Berlin). These people, he suggests, were never included; they were the sons of the former slaves and former white people and poor people in the country side. They went to the great cities and they were marginalised and never entered the competitive labour market. That is very different from the useful worker. Because the useful worker is exploited because he incorporated knowledge. A worker has to have knowledge incorporated in order to use machines and operate machines. What we have in a country like Brazil is that people are selling their muscle energy as animals. You have very little knowledge or cultural capital, and the nanny that will look after the sons and daughters of the middle class, and will make their food and clean their houses, and the guy who will take care of the car in the street and so on, those kinds of jobs. In a country like Brazil there is a huge number of human beings who will do it. And these people are not only economically exploited, they are also despised in a very objective way. (Souza, interview, 2019) As Alexandre de Freitas Barbosa, Maria Cristina Cacciamali and Gerry Rodgers show in their chapter comparing Brazil and India, in order to understand how the pattern and trend of inequality differ from one country to another, it is necessary to examine and compare their histories and institutions. Thirdly, we propose that inequality studies must be interdisciplinary. Inequality studies has been dominated by quantitative analysis: the increasingly sophisticated measurement and classifcation of inequality which largely focuses on money-metric inequality. Inequality, however, manifests in various ways and in various spaces across the life of an individual, and it is important that inequality studies transcends traditional academic boundaries, and incorporates work across the social sciences, beyond a narrow economic focus. The particular shape of the economic hegemony in inequality studies has allowed for a discipline with a strong Northern bias, and accepting the assumption that inequality is a universal problem that requires particular technical skills in order to overcome. The reason we argue for an inequality studies that is interdisciplinary is because the social and historical contexts are crucial, and in order to understand these, we need to draw on the skills in disciplines such as sociology, anthropology, development studies, politics, history, geography and law. For example, in their chapter on the infrastructures of urban inequality, Margot Rubin, Melanie Samson, Sian Butcher, Avril Joffe, Stefania Merlo, Laila Smith and Alex Wafer emphasise the increasingly important role that urban space plays in producing and reproducing

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inequality. Furthermore, if we want inequality studies to be truly transformative – that is, to reduce inequality, not only understand it – we need to understand inequality in all its dimensions.10 There are, as Nancy Fraser and Axel Honmeth (2003) argue, multiple and differing claims by those affected by inequality which extend beyond redistribution alone, and include the recognition of difference and disadvantage. As Radhika Balakrishnan illustrates in her chapter, there is a growing recognition of the fundamental importance of a human rights framework in addressing global inequality, and the ways in which the Maastricht Guidelines can provide important policy guidance. Finally, we propose that the concept of power must sit at the heart of inequality studies, because inequality is primarily a power relation. There are two dominant narratives in the inequality discourse in South Africa. A useful point of departure in framing our research is the distinction between them. On the one hand are those who see inequality as a function of the distribution of capabilities (Sen, 1993). From this perspective, skills development, signifcant material incentives and labour market fexibility are required at both the level of the sector and the frm to unlock the dynamic potential of the economy. This view sees workers as over-protected, and believes that reducing inequality will require signifcant labour market reform. The alternative narrative of South Africa’s inequality argues that the distribution of economic power in South Africa (rather than the unequal distribution of capabilities) is a potential leading causal factor driving inequality (Mohanty, 2018). This perspective requires that the distribution of economic power be addressed head-on and necessitates a bolder and more integrated approach combining strategies for inclusive growth, expanded social protection, and rethinking labour markets and the future of work at a scale suffcient to reconfgure structural defciencies in the distribution of power. But addressing inequality requires an understanding of power that goes beyond the power to control markets, and seeks to understand how power manifests in structural and institutional exclusion and discrimination. In their chapter, Patrick Belser, David Francis, Kim Jurgensen and Imraan Valodia examine the role that labour market regulation, and minimum wages in particular, can play in addressing inequality by mediating the power relations between employers and workers. Power is, of course, produced and reproduced at the intersection of race, class, gender and sexuality and other aspects of identity. An intersectional approach is necessary in order to understand the way in which these different dimensions of power interact to reproduce inequality. While power underpins all social relations, it is often taken for granted or completely overlooked as it is often hidden behind other social relations. Resistance to power emerges through engendering counter-hegemonic projects that are intertwined with alternative everyday practices. In his chapter, Edward Webster traces the origins and development of counter-power in the workplace through the rise of a militant and powerful labour movement. Inherent in a power-centric approach is the understanding that structures matter, and this emphasises the importance of class, both as a unit of analysis and as an intellectual approach.

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Conclusion We have argued here that while inequality is a global problem, we cannot assume that the forces which drive its production and reproduction are universal. Due to the current geographical and fnancial landscape of the academy, inequality studies have so far been grounded in the North, with the result that a Northern understanding of the causes and solutions to inequality has dominated the feld, and has even been adopted as universal. We are not suggesting that a Southern approach be developed in isolation from Northern studies. It must, instead, be built in dialogue with the North.11 But, we have argued, there is a need to reverse this historic imbalance and develop a Southern approach to inequality studies. Indeed, in the “pointedly provocative” subtitle to their book, Theory from the South: How Euro-America is Evolving toward Africa, Comaroff and Comaroff (2015: 12) suggest that “it is the south that often is frst to feel the effects of world-historical forces, the south in which radically new assemblages of capital and labour are taking shape, thus to prefgure the future of the global north” (see also Connell, 2007). The historic social achievement of the North, the welfare state, seemed to have solved the “social question” by the 1970s. But this is now under threat and the social question has been globalised (Breman and Van der Linden, 2014). Today the South faces unprecedented levels of poverty and inequality without the safety net of the welfare state. In this context, the question of transformation takes a central place in a Southern approach to inequality studies. In many countries in the South, and in South Africa in particular, inequality is not merely a socio-economic problem, but an existential threat to the social contract that underpins the democratic state and society itself. As we have argued, inequality studies must be as much about overcoming inequality as it is about understanding it. This requires that inequality studies be rooted in both the policy process and in the lives of those who experience inequality. Inequality studies must both inform and be informed by the experiences of those most affected. This can best be achieved by anchoring our Southern project in a range of strategic partnerships covering government departments, non-governmental organisations and the grass-roots social movements that are emerging in the workplaces, informal settlements and townships in the rapidly changing landscape of the global South.

Notes 1 The 13 May 2019 cover of the International Edition of Time magazine examines South Africa as “the world’s most unequal country”. The photographer successfully achieved a method of visualising inequality by using a drone to spotlight from above how rich and poor can inhabit spaces that are right next to each other, but so different. It is actually quite unusual to see South African wealth and shackland poverty side by side, because pre-1994 apartheid planners and post-1994 class-apartheid planners have religiously enforced various kinds of geographical buffer zones. 2 Existential inequality refers to “the unequal allocation of personhood, i.e., of autonomy, dignity, degrees of freedom, and of rights to respect and self-development” (Therborn, 2013: 49).

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3 The domination of Northern knowledge production does not mean that researchers in the global South are powerless to set distinctive agendas and form local knowledge. A recent study by Collyer and colleagues (2019) of three domains of knowledge – HIV/AIDS, climate change and gender studies in South Africa, Brazil and Australia – shows how “signifcant Southern tier research workforces were formed in the three domains”. These researchers represent, the authors argue “a substantial regional capacity for collective knowledge development. They also create a potential for dealing with the global economy of knowledge from a position of strength” (Collyer et al., 2019: 172). 4 For an excellent example of a recent attempt at engaging with a Southern approach to inequality see Gallas (2016). 5 The attraction of the North lies deep in the academies of the South. We were looking forward to publishing one of the excellent fndings of one of the research projects we had supported in a special edition on inequality in a well-cited local journal when we received this response: “We have decided not to submit the paper for the special issue, as we would like to try for an international journal with a higher Impact Factor”. 6 We take the average Gini coeffcient for the years 2014, 2015 and 2016. 7 Terreblanche’s research is rooted in a lively debate in the early 1970s led by the so-called revisionists suggesting that capitalist development was reinforcing white supremacy (see Johnstone, 1970). 8 Rehbein explores a similar issue using Bourdieu’s concept of habitus but gives primacy to class: “While social class becomes more important than race, skin colour still matters in South Africa because it is both associated with a habitus and assessed by a habitus shaped under Apartheid. ‘Race thinking’ does not disappear overnight and the habitus takes generations to change” (Rehbein, 2018: 12). 9 Bourdieu’s (1977) concept of habitus assumes that one has the tendency to act in the way in which one has learned to act. If a form of behaviour is repeated many times, it has the tendency to become a stable pattern. 10 In poverty studies, there is an increasing acceptance of the concept of multidimensional poverty, but this has yet to be adopted in inequality studies, where the focus remains largely on money-metric inequality. 11 An example of the opportunities for dialogue is Northern scholar Ben Selwyn (2017) who, in his latest book The Struggle for Development, provides a very useful analysis of global inequality. He concludes by offering an alternative in the form of a Southern labour-led development which shows how collective actions by labouring classes – whether South African shack-dwellers and miners, East Asian and Indian industrial workers, or Latin American landless labourers and unemployed workers – can and do generate new kinds of challenges to inequality.

References Albertyn, C. (2018) The Constitution and (In)Equality. Conceptualising and Understanding Inequality. Paper Presented at the Southern Centre for Inequality Studies Inaugural Conference, 3–5 September 2018, Johannesburg. Allais, S. (2017) Towards Measuring the Economic Value of Higher Education: Lessons from South Africa. Comparative Education, 53(1): 147–63. doi:10.1080/03050068.201 7.1254985. Alvaredo, F., L. Chancel, T. Piketty, E. Saez and G. Zucman (2018) World Inequality Report 2018. https://wir2018.wid.world/fles/download/wir2018-full-report-english.pdf (accessed 20 March 2019). Anderson, P. (2019) Bolsonaro’s Brazil. London Review of Books, 41(3): 11–22.

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Banerjee, P. (2015) Lecture IV: Contemporanising. Lecture Presented at the Presidency University, Kolkata, November 2015. https://sites.google.com/site/presiuniv/sociology/ theory-matters-prathama-banerjee (accessed 21 March 2019). Banerjee, P. (2018) Theories from the South 1: An Interview with Prathma Banerjee. https://www.borderlines-cssaame.org/posts/2018/11/6/theories-from-the-south-i-an -interview-with-prathama-banerjee (accessed 21 March 2019). Bhorat, H., A. Cassim and D. Tseng (2014) Higher Education, Employment and Economics Growth: Exploring the Interactions. Cape Town: Development Policy Research Unit. Bourdieu, P. (1977) Outline of a Theory of Practice: Volume 16 of Cambridge Studies in Social and Cultural Anthropology. Cambridge: Cambridge University Press. Breman, J. and M. van der Linden (2014) Informalizing the Economy: The Return of the Social Question at a Global Level. Development and Change, 45(5): 920–40. doi:10.1111/dech.12115. Burawoy, M. (2010) Southern Windmill: The Life and Work of Edward Webster. Transformation: Critical Perspectives on Southern Africa, 72/73: 1–25. Casale, D. and D. Posel (2002) The Continued Feminisation of the Labour Force in South Africa: An Analysis of Recent Data and Trends. South African Journal of Economics, 70(1): 156–84. Casale, D. (2003) The Rise in Female Labour Force Participation in South Africa: An Analysis of Household Survey Data, 1995–2001. Unpublished PhD thesis. University of Natal, Durban. Casale, D. (2004) What Has the Feminisation of the Labour Market “Bought” Women in South Africa? Trends in Labour Force Participation, Employment and Earnings, 1995–2001. Journal of Interdisciplinary Economics, 15(3–4): 251–75. Classens, A. (2019) Equal Citizenship and Property Rights in South Africa’s Former Homelands. Land, Class and Rural Economies. Paper Presented at the Southern Centre for Inequality Studies Symposium: Understanding Inequality in the Global South, 10–11 April 2019, University of the Witwatersrand, Johannesburg. Cloete, N. (2016) Free Higher Education: Another Self-Destructive South African Policy. https://chet.org.za/fles/Higher%20education%20and%20Self%20destructiv e%20policies%2030%20Jan%2016.pdf (accessed 20 March 2019). Collyer, F., R. Connell, J. Maia and R. Morrell (2019) Knowledge and Global Power: Making New Sciences in the South. Clayton, Australia: Monash University Publishing. Comaroff, J. and J.L. Comaroff (2015) Theory from the South or, How Euro-America Is Evolving Toward Africa. https://search.ebscohost.com/login.aspx?direct=true&scope= site&db=nlebk&db=nlabk&AN=1099165 (20 March 2019). Connell, R. (2007) The Northern Theory of Globalization. Sociological Theory, 25(4): 368–85. doi:10.1111/j.1467-9558.2007.00314.x. Delius, P. (2019) Why the ANC Is Bent on Conferring Colonial and Apartheid-Era Rights on Rural Chiefs. The Daily Maverick, 25 April 2019. https://www.dailymaverick .co.za/article/2019-04-25-why-the-anc-is-bent-on-conferring-colonial-and-aparthe id-era-rights-on-rural-chiefs (accessed 10 May 2019). Finn, A. (2015) A National Minimum Wage in the Context of the South African Labour Market. http://nationalminimumwage.co.za/wp-content/uploads/2015/09/NMW-R I-Descriptive-Statistics-Final.pdf (accessed 19 March 2019). Francis, D. and E. Webster (2019) Poverty and Inequality in South Africa: Critical Refections. Development Southern Africa, 36(6): 788-802. Frank, A.G. (1966) The Development of Under Development. Monthly Review, 18(4): 17–31.

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Fraser, Nancy and Axel Honneth (2003) Redistribution or Recognition? A Political– Philosophical Exchange. London/New York: Verso Books. Gallas, A., H. Herr, F. Hoffer, and C. Scherrrer (eds.) (2016) Combating Inequality: The Global North and South. New York: Routledge. Gibbs, T. (2014) Mandela’s Kinsmen: Nationalist Elites and Apartheid’s First Bantustan. Woodbridge, Suffolk: James Currey. Hundenborn, J., M. Leibbrandt and I. Woolard (2016) Drivers of Inequality in South Africa. Working Paper No. 194. Cape Town: SALDRU. Johnstone, F. (1970) White Prosperity and White Supremacy in South Africa Today. African Affairs, 69(275): 124–40. Keim, W. (2017) Universally Comprehensible, Arrogantly Local: South African Labour Studies from the Apartheid Era into the New Millennium (Trans. M. Hiley). Paris: Éditions des archives contemporaines. Leibbrandt, M., A. Finn and I. Woolard (2012) Describing and Decomposing PostApartheid Income Inequality in South Africa. Development Southern Africa, 29(1): 19–34. doi:10.1080/0376835X.2012.645639. Lewis, D. (1973) Anthropology and Colonialism. Current Anthropology, 15(5): 581–602. Lipton, M. (1986) Capitalism and Apartheid: South Africa, 1910–1986. Aldershot, UK: Wildwood House. Lund, F. (2017) Hierarchies of Care Work in South Africa: Nurses, Social Workers and Home-Based Care Workers. In Women, Gender and Work. Volume 2: Social Choices and Inequalities, edited by M. Lansky, J. Ghosh, D. Meda and U. Rani. http://www.ilo.org/w cmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_488 475.pdf (accessed 15 March 2019). Mamdani, M. (1996) Citizen and Subject: Contemporary Africa and the Legacy of Late Colonialism. London: James Currey. Mohanty, M. (2018) Inequality from the Perspective of the Global South. In The Oxford Handbook of Global Studies, edited by M. Juergensmeyer, S. Sassen, M.B. Steger and V. Faessel. Oxford: Oxford University Press. doi:10.1093/oxfordhb/9780190630577. 013.42. Ntsebeza, L. (2005) Rural Governance and Citizenship in Post-1994 South Africa: Democracy Compromised? In State of the Nation: South Africa 2004–2005, edited by J. Daniel, R. Southall and J. Lutchman. Cape Town: Human Sciences Research Council. Orthofer, A. (2016) Wealth Inequality in South Africa: Evidence from Survey and Tax Data. http://www.redi3x3.org/sites/default/fles/Orthofer%202016%20REDI 3x3%20Working%20Paper%2015%20-%20Wealth%20inequality.pdf (accessed 25 November 2018). Piketty, T. (2014) Capital in the Twenty-First Century (Trans. A. Goldhammer). Cambridge, MA: The Belknap Press of Harvard University Press. Posel, D. (2014) Gender Inequality. In The Oxford Companion to the Economics of South Africa (1st edition), edited by H. Bhorat, A. Hirsch, S.M.R. Kanbur and M. Ncube. Oxford: Oxford University Press. Rehbein, B. (2018) Social Classes, Habitus and Sociocultures in South Africa. Transcience, 9(1): 1–19. Selwyn, B. (2017) The Struggle for Development. Cambridge, UK/Malden, MA: Polity Press. Sen, A. (1993) Capability and Well-Being. In The Quality of Life, edited by M. Nussbaum and A. Sen. Oxford: Oxford University Press. Souza, J. (2019) Developing a Southern Approach to Inequality. Interviewed by Edward Webster, 26 March 2019, Berlin.

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Standing, G. (2014) The Precariat: The New Dangerous Class (revised edition). London: Bloomsbury. Sulla, V. and P. Zikhali (2018) Overcoming Poverty and Inequality in South Africa: An Assessment of Drivers, Constraints and Opportunities. http://documents.worldban k.org/curated/en/530481521735906534/pdf/124521-REV-OUO-South-Africa-Po verty-and-Inequality-Assessment-Report-2018-FINAL-WEB.pdf (accessed 20 March 2019). Terreblanche, S.J. (1997) Testimony Before the TRC During the Special Hearing on the Role of the Business Sector. https://www.wits.ac.za/media/wits-university/facultiesand-schools/commerce-law-and-management/research-entities/scis/documents/SC IS%20Working%20paper%20no%201%20Wealth%20Tax.pdf (accessed 15 October 2018). Terreblanche, S.J. (2002) A History of Inequality in South Africa, 1652–2002. Pietermaritzburg: University of Natal Press. Therborn, G. (2013) The Killing Fields of Inequality. Cambridge: Polity Press. Valodia, I. and D. Francis (2016) How the Search for a National Minimum Wage Laid Bare South Africa’s Faultlines. The Conversation, 28 November 2016. https://theconv ersation.com/how-the-search-for-a-national-minimum-wage-laid-bare-south-africasfaultlines-69382 (accessed 20 March 2019). Von Holdt, K. (2003) Transition from Below: Forging Trade Unionism and Workplace Change in South Africa. Pietermartizburg: University of Natal Press. Webster, E. (2014) Building a Sociology for the Global South: Assessing a South–South Research Network. In Global Knowledge Production in the Social Sciences, edited by W. Keim, E. Celik and V. Woher. Farnham, UK: Ashgate. Wilkinson, R.G. and K. Pickett (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better. London: Allen Lane. Wilson, F. and M. Ramphele (1994) Uprooting Poverty: The South African Challenge. Cape Town/Johannesburg: David Philip. World Bank (2019) World Bank Development Indicators. http://datatopics.worldbank.or g/world-development-indicators (accessed 20 March 2019).

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Is hierarchy the same as inequality? Dilip Menon

What is involved in thinking about inequality from the global South? There is the merely empirical question of the geography of the global South – Asia, Africa, the Caribbean, South America – and an analysis of the form and content of economic and social divisions in this space. A universal methodology could be adapted for the study of local forms as it were. Inequality may have different manifestations in Mali, India and Trinidad, but these differences could be studied as only minor variations on a theoretical grid. There is also the polemical position that forms of inequality in the global South are the particular result of history (colonialism), the skewed nature of international relations (neocolonialism) or policy (structural adjustment, neo-liberalism). A set of problems is envisaged here that has a very specifc history and a structural longevity that sees no mitigation over time. The world being what it is, this persistence in inequality in one space is seen as necessary for the imagination of equality in another. Finally, there is the cultural question which is usually brought in to explain the dogged persistence of forms of poverty and inequality despite the fact that there are both economic resources and occasional political will to create transformations. This resolves itself into characterisations of national traits and institutional features – corruption, tribalism, patronage and so on – that stand in the way of secular processes that might work towards a mitigation of the effects of the access to power of the few. However, in all of these positions, there is little consideration of the question of producing a set of conceptual categories from the lived experience, intellectual traditions and social practices of the global South. We need to proceed from a position that theories produced elsewhere (“Northern theories”) might have little explanatory power unless they engage with local ways of looking at and living in the world. Otherwise, what we may achieve at the end is little more than a Procrustean commensurability. In the attempt to fnd a universal solution, inequality in X place comes to be understood merely as similar to inequality in Y place. If we are to understand “inequality” from, and in, the South, then we need to understand the presence of hierarchy as a value in Africa and India. This premise allows us, counter to social science clichés that oppose the egalitarian West to the hierarchical East, to engage in a truly comparative exercise with Europe and the United States of America (USA). The fundamental question to be asked is:

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Does equality as we theorise it exist anywhere? Indeed, does our idea of inequality arise from our ideological understanding of spaces in the global South as “nonWest” and “non-modern” by which we mean that a combination of social and historical factors have made it impossible to realise equality in any substantial measure here? Joel Robbins (1994) is one of the most acute anthropologists who has lately engaged with questions of hierarchy and relationships while providing nuance to the idea that hierarchy is not to be confated with inequality. One of the problems that he points to in our attempts to conceptualise inequality is the inability of social scientists to see equality as “an important feature of social life anywhere”, which leaves us with a “desolate half of a concept” as it were. As Robbins puts it, Equality as a value is so glaringly unrealized that it represents the most obvious rent in our ideological fabric … the fact that equality (whatever its rhetorical value on the ideological plane) is such an empirical non-starter in Western societies has led to a curious blindness on the part of Western social scientists. (Robbins, 1994: 21) Robbins explores the idea of equality within Melanesian social relations – its forms and implications – and the enunciation of contexts in which this is made visible. For the purposes of our argument, we shall return later to his idea of hierarchy as a value in societies imagined as egalitarian. Even as the rhetoric of egalitarianism sits alongside violent racism in the USA, the casual brutality of caste exists alongside injunctions against caste discrimination in the Indian Constitution. We tend to run together a set of ideas too easily – of equality, inequality, hierarchy, stratifcation – and elide questions of value and of power. There is that which is measurable and quantifable, and that which is present in symbolic and ideological ways. Bourdieu’s (1977, 1987) work speaks of the idea of “distinction” and of the possession and reproduction of symbolic and cultural capital. Egalitarian societies are also marked by distinctions and impassable gulfs, caste being only the most extreme form, which aim at preventing miscegenation and preserving purity. Scholars of the Chicago school of race like Oliver Cox, South African intellectuals like Nevile Alexander, and the doyen of black sociology in the USA, W.E.B. Du Bois, spoke of the presence of caste-like forms of inequality and the equivalence of caste and race (Cox, 1948; Alexander, 1979; Visweswaran, 2010). What would it mean to move away from some of the conceits of modernity, characterised by ideas of the triumph of the individual and egalitarianism, and see clearly that they are observed more in the breach? We need to think with hybrid representations where there is an intimate combination of modernity and non-modernity in all societies and where hierarchy remains a universal value, at the same time as it may be partially, or in certain cases effectively, contradicted. As Louis Dumont (1977: 4–5) points out, not all holistic societies stress hierarchy to the same degree nor do all individualist societies stress equality to the same degree; equality and hierarchy combine in

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some manner in the societies that we inhabit. Piketty’s (2014) work has served to show the deeply entrenched nature of inherited wealth as much as inherited inequality within societies putatively premised on egalitarianism.

Hierarchy and relationships B.R. Ambedkar (1931) writes of caste as a system of graded sovereignties, characterising it as an ascending scale of reverence and a descending scale of contempt. He too was speaking about a value – that of hierarchy – and a space of imbricated relationships. Caste society may merely be the most extreme form, which adds proscriptions against miscegenation and preserves purity through what Ambedkar memorably called a “biological trench”. In his Annihilation of Caste, Ambedkar (2014 [1936]: 286) speaks about caste as a “notion, a state of mind. The destruction of caste does not mean, therefore, a destruction of a physical barrier. It means a notional change”. Here he is pointing to hierarchy as a value that structures society, but one in which hierarchy is premised on ineffably unequal and ascriptive relationships. It is a layering of inequality between humans with a conception of hierarchy that implies the services of the many with the uncertain patronage of the few. As Dumont (1977: 11–12) points out, in modern societies there is a residue of hierarchy in the form of social inequality, “but hierarchy is deemed unthinkable. So this residue is ‘designated’ by an expression that evokes inanimate nature and thus presents the phenomenon as devoid of human meaning, incomprehensible: we call it social stratifcation”. Stratifcation assumes an accretion of one layer on another, time out of mind; the question of value is subordinated to fact. It is this understanding of caste as mere stratifcation that has led to academic attempts to represent it as congealed class relations, doing away with the cluster of values, including that of hierarchy which constitutes relations between humans. Ambedkar’s critique of caste takes into account that hierarchy as a value structures relationships, but he is concerned to characterise these relationships as ones suffused with power to the extent that any conception of obligations and responsibility is absent at the top. If for Dumont hierarchy encompasses power, for Ambedkar it is the reverse. Dumont raises the question of a comparative method in a signifcant sense. He asks us to move away from the sleight-of-hand conceptualisation that rests on the conceit that modern (that is, Western) civilisation is at one and the same time a culture like others and a kind of metaculture imposing itself as such. If all societies are studied only through the lens of the putative modernity of the West, then the conceptual vocabulary generated by Europe to describe itself and the world would have been enough. However, all concepts are locally rooted and do not necessarily travel well. The attempt to make local realities commensurable with a theoretical ideal results in misrecognition of structures, processes and actions. This is true of the assumption of individualism and egalitarianism as being the defning elements of European and therefore modern societies, and the evaluation of other societies as being modern or not, according to these criteria. Dumont argues that individualism was a kind of utopian idea sheltered against

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any contact with actual social life. Everywhere, it has cohabited with other forms and, as Dumont (1995: 8) points out, is a “remanence of holistic modes of thought”. (Remanence, or residual magnetism, is the magnetism left behind in a magnetic material after an external magnetic feld is removed.) Similarly, when thinking about equality, we have to think with hybrid representations – the intimate combination of seemingly contradictory elements. Hierarchy may continue to exist as a value (social and cultural capital as “distinction” in a Bourdieu-an sense in an egalitarian society), just as it may be partially or, in many cases, effectively contradicted. We cannot exclude the psychic damage done by colonialism, apartheid and so on through the importation of forms of hierarchy (cast as civilisation or racial difference) and the intimate interaction between different forms of hierarchy (Bethencourt, 2015). David Cannadine (2002) uses the idea of “ornamentalism” in his dialogue with Edward Said to show how British notions of monarchy and aristocracy sat comfortably alongside the Empire’s fascination with princes and pageantry in India: the marriage of the “modern” and the “feudal”. The particular layerings of inequality in any region are also made up of the debris of previous orderings, misrecognitions and the importation of forms from elsewhere. Arguably, in the global South the detritus of colonial forms would be a signifcant local as much as universal history to be addressed. Dumont thinks through the question of racism in societies with a politic rhetoric of egalitarianism as fulflling what he calls an old function under a new form: “It is, as it were, representing in an egalitarian society a resurgence of what was differently and more directly, and naturally expressed in a hierarchical society” (Dumont, 1980: 263). He puts it succinctly: “Make distinction illegitimate and you get discrimination, suppress the former modes of distinction and you have racist ideology” (Dumont, 1980: 263). The cascading effect of this is that “All men instead of being divided into a number of estates, conditions and stations as previously, in harmony with a hierarchical cosmos are now equal, but for one discrimination. It is as if a number of distinctions had coalesced into one, absolute, impassable boundary” (Dumont, 1992: 256). As Hannah Arendt (1944: 63) points out in her essay on race thinking before racism, this problem surfaces with acute intensity in America and England, “whose people had to solve a problem of co-habitation after the abolition of slavery”. The inherent conficts were sharpened by the assumption of absolute equality which foundered against the rocks of prejudice and habit, producing racism and race feeling in its most vicious forms. Thus, what we have in America is a rhetoric of egalitarianism that sits alongside racism: what Dumont (1980: 36) calls an obscure or shamefaced hierarchy. As Dumont points out, the moment hierarchy as a value is eliminated, subordination has to be explained as the “mechanical result of interaction between individuals” and “authority degrades itself into power, power into mere infuence” (Dumont, 1977: 10). We are left with an impoverished notion of human relations which can be reduced to the banality of statements which dwell on brute force or wealth. Dumont’s concern was with the Western misunderstanding of hierarchy that confated it with mere power and as synonymous with social stratifcation. This resulted in seeing caste and class as phenomena of the same nature.

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Joan Robinson’s quip that “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” (Robinson, 1962: 45) makes little empirical sense perhaps, but in fact gestures towards a deeper understanding of social relations in which questions of dependence, patronage and belonging-in-hierarchy can be examined. Anthony Appiah (2005) has remarked recently that if one does Western philosophy, one is very bad on the question of how relationships matter to moral life, suggesting that Confucianism may be a guide in this regard. Relationships matter, and have entailments, as in conceptualisations of a moral economy where a shared conception of thus far and no further is the basis of negotiation within unequal relations of power. We have to see hierarchy as structured by relationships and as a value, not in the simple sense of that which is held to be good, or that which is maximised, but rather, as Dumont (1980) puts it, as the thing that structures the relationships of elements to the whole. Robbins (1994: 36–7) points to how discussions on equality are joined at the hip with, and refer to, a cluster of other ideas like individualism and the state – both dear to Western social theory. Western individualism is structured by a preference for difference over similarity. Those types of equality that are not consistent with difference are abandoned as a value, “leaving fnally an idea of equality conditioned by and subordinated to individualism”. Second, there is “a persistent avoidance of discussion of actual social relations with concrete others”. Equality in the West is a “relation with the State, not with consociates”. Following Steven Lukes’s argument that equality in individualist ideology is defned in terms of liberty alone, Robbins further states that it is “only as the equal ability and right to become different that equality is fully integrated as a value in Western ideology”. To put it sharply, people are equal with regard to the state or to society, but their equality does not refer to any relationship between them. However, in Melanesia or Africa, a person is conceived of as a “microcosm of relations”, where one is through others. This is most evident in thinking about questions of patronage and prestige, which are fully relational. While these ideas are located in a landscape of unequal relations, it is also true that they imply relationship and obligation. Prestige cannot be hoarded and has to be worked out through the enactment of relations of patronage through which it is accrued and maintained. What distinguishes hierarchy from inequality, arguably its opposite, is the normative expectation of social responsibility. The crucial condition, as Vita Peacock (2015) has pointed out, is whether those with more did more for others. The entailments of hierarchy do not work within a zero-sum game logic of redistributive justice, with procedures of dividing equally, making a level playing feld and so on, but rather getting those in a position to do so, to take care of one. Authority fgures have a responsibility for social order, a “clear binding of responsibility for social projects to known and visible persons” (Peacock, 2015: 14). This is quite unlike the largely unknown and invisible elites under capitalism where large-scale abnegation of social responsibility is possible. As Thaddeus Metz (2007: 326) points out, “the requirements of an individual to help others are typically deemed heavier in African morality than in

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Western”. To be a moral agent is to push oneself to realise one’s distinctly human nature, which is the ability to “engage in communal relationships” (Metz, 2007: 331). Metz offers an alternative to individualism and holism, a third perspective that grounds moral status in “relational properties” and premised on the idea of Ubuntu: that a person becomes a person through others (Metz, 2012: 388). Thus, the question of whether those with power actually fulfl obligations towards a set of people with whom they are imbricated is not a merely theoretical one. People often seek to re-establish the conditions of what they consider to be justice, well-being and full human fourishing by constituting hierarchies, particularly so in the face of globalising forces. Jason Hickel’s (2015) work on South Africa studies responses to neo-liberal policies in the province of KwaZulu-Natal through re-establishing hierarchies. His respondents question the idea that all individuals act independently and consider themselves equal to others. Central to this reconception is the idea of hlonipha which looks at respectful relations across hierarchies constituted of people embedded in relations. It is through a location in kinship hierarchies that the idea of advancement or fruition is thought about. This should give us pause and lead to a refection on the paradigms of a Western social science which sees something intrinsic to humans that, as Hickel (2015: 5) points out, “predisposes them to desire liberal freedom”. If, as he says, we were to listen closely to “liberalism’s subalterns” (Hickel, 2015: 9), the axiomatic relation between individual liberation and disentanglement from social relations appears to be problematic. The question of liberation itself comes to be questioned when it is seen that democracy does not liberate people from hierarchy but inserts them into newer ones in which they have less agency with regard to those who claim to represent them. Instead of a relationship with its entailments of obligation and responsibility, people surrendered to distant patrons exercising power independent of networks with people at the local level. Given this, people many prefer to “reconstitute hierarchies” and create newer networks and ways of relating (Hickel, 2015: 26). James Ferguson makes a similar argument when he points out that waged work is not the means through which most people in Africa obtain their livelihoods. What he calls “survivalist improvisation” is achieved by accessing or making claims on others’ resources – through the cultivation of relations of dependence (Ferguson, 2015). He is careful to point out that reliance on forms of redistribution is not a feature of African “backwardness”, but rather a global phenomenon. For instance, in the USA, only just over 60 per cent of the population is to be found in employment even in the classic “breadwinner” category.

Ambition One question that is not often asked when considering inequality concerns human ambition. It is assumed generally that the poor and those at the bottom of society live their lives as if afficted with a low-grade fever; the very business of living takes up too much of their time for there to be any refection on the future. The question of where people see themselves fve or ten years into the future is seen as ensuing from their class position, and the possession of cultural

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capital that allows for the luxury of refection and a sense of time beyond the present. Cultural constraints are added on to this picture, such as predispositions to belief in the role of fate, of inherited and unchangeable status, and of belief in the idea of rewards in another life. How can one situate individual aspiration within secular processes of the economy, affrmative action, economic liberalisation which have created spaces for advancement? It could be argued that even the engagement with the expansion of the economy happens for some and not all. Recent studies have shown how Dalits in India have been largely incorporated in the post-liberalisation economy as agricultural labour, sanitary workers, carcass cleaners in the leather industry and construction workers. Barbara Harris-White and her colleagues, in their massive study of 2006–2007 on Dalits in the Indian economy, looked at 90 businesses in 6 states and 13 districts. They concluded that 30 per cent of Dalit entrepreneurs ran businesses in occupations historically associated with Dalits (Harris-White, 2014). Only about 5 per cent were in highly skilled work. This enumeration provides us with data which in one sense confrms what one intuitively knew already about the intersection of caste and the economy. What it does not explore are the impulses behind the setting up of businesses, the possible advantages of having a niche in the economy that is available only to Dalits, and the trajectory of generational movement. What is involved in the idea of “Dalit entrepreneurship”? The very idea of entrepreneurship implies a departure from an existing landscape of imagination and an entry into ideas of foresight, proft, prudence and a future. It involves ambition as much as posing the question of the enigma of departure. There are subjective and ontological questions involved here which cannot be understood merely in structural and historical terms. Gopal Guru, a Dalit political theorist, has remarked that capitalism has had little effect on the common man. New Dalit capital where it exists, has relied on patron–client relations, reinforcing Dalit status. Economic outcomes are shaped by caste and there is a persistence of untouchability. Guru (2012) warns that we must not be blinded by what he calls the spectacle of the few. Devesh Kapur, Shyam Babu and Chandrabhan Prasad (2014), in their study of Dalit entrepreneurs, argue that Dalits who have become wealthy through setting up businesses have done so in spaces like recycling garbage or providing medical care to areas and people outside the health sector net, where they face little competition. It might be argued that there is a structural advantage to social exclusion and the existence of economic spheres that are anathema to other social groups. What needs to be explored further is the creation of newer relations between these new entrepreneurs and those whom they employ, and the generation of further hierarchies and networks of obligations. The relation between ambition, prosperity and patronage leads us to questions that render the issue of inequality more complex. Thus, while caste and ascriptive status are, to a large extent, determinants of individual advancement, the recognition of self does not happen only in relation to societal hierarchies. Dalit entrepreneurs generate their own hierarchies of value in their relation to the communities that they belong to and this has been studied less often, if at all. Mattison Mines (1994) explores

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the idea of the “big men” among the Chettiar mercantile castes of Chennai in southern India who create relationships, institutions and networks that situate them in society but also draw in others into associations built on obligations and responsibilities. What would it mean to think with the idea of the Dalit “big man” and the circle of relationships that they create within their community? While this phenomenon is studied within narrowly political terms, as in the relation of elected representatives and their “vote banks”, there are almost no analyses of the social capital possessed by Dalit entrepreneurs and professionals in other than instrumental terms. At a broader level, this failure is connected to the inability to theorise the idea of the individual within an ideology of caste, which has resulted in mystifcations such as the availability of the idea of the individual within Hindu society only to the renunciant and ascetic. A recent study by Ashwini Deshpande (2011) evocatively titled The Grammar of Caste argues strongly that caste provides the hierarchical order for a corporate form of regulation of labour and the market. Caste transformation happens, if at all, in one direction – to provide support to local capital in its hegemony over local society. She cites a 2006 study across 565 villages in 11 states which showed that the language of merit was not unknown, but the belief that merit is distributed along lines of caste, religion, gender and so on was strong. All of these address only one set of questions, which are about the reproduction of social and economic inequality within a seemingly unchanging structure. However, as I have tried to argue, Dalit ambition, advancement and hope are located within the mirror of their community as well and not only in the mirror held before them by caste society. Hierarchy as a value within caste society also allows for the generation of multiple, parallel hierarchies and networks and practices of patronage that cannot be envisaged by visualising a singular vertical order. Inequality exists within a landscape of hierarchies where it is not the idea of equality and of the freedom of the individual that is crucial, but an idea of belonging that is located within linkages and relationships that cannot be comprehended only by binaries of equality and inequality.

Spirituality, hierarchy and being with/through others There have not been many studies that look at Dalit ontology and thinking on hierarchy in modern India. Arguably, lower-caste intellectuals have sought to come to grips precisely with this all pervasive value, rather than thinking on mere inequality. Ravindra Khare’s masterly The Untouchable as Himself engages with the thought of Jigyasu, an untouchable Chamar intellectual from the northern Indian state of Uttar Pradesh, whose main thrust is “to show to the hierarchical person an equalitarian mirror” (Khare, 2009: 17). The question that concerns Jigyasu is how thinking can happen within a hierarchical form. While the varnasrama, or the ideal caste hierarchy, is ordered from the Brahmin-priest, through the Kshatriya-warrior to the Vaisya-merchant and Sudra-agriculturalist with the untouchable as the excluded supplement, there is one other fgure that stands outside the traditional hierarchical ordering. That is the spiritual intellectual who stands beside the social

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world and offers a fundamental axis for refection on the ordering of the universe. The central message of Jigyasu and spiritual intellectuals is that of spiritual equality, of spiritual individuation which makes each individual a “locus of all the moral causes and consequences in the world” (Khare, 2009: 52). By emphasising the spiritual individual rather than the “person” (caste-d and located within a hierarchical space), mere social experience is seen as incomplete. Such a conceptualisation calls the caste order to “fundamental moral account” and has been the basis of medieval and early modern sectarian formations as much as contemporary conceptualisations of social being by Dalits. Khare’s work directs us to a phenomenological space and the creation and understanding of experience. It brings into discussions of inequality questions of emotion, affect, intellect, and the idea of affnity and the commensurability of humans. Works such as Khare’s also direct us to be more attentive to forms of thinking usually ignored in the literature that looks at structural factors and the political economy of inequality alone. How do people refect on the world? Do they see themselves as individuals who are not the equals of others? Do they see inequality as the central fact, or even the horizon of their existence? What are the intellectual resources that they bring to an understanding of their being in the world? The central question concerns the categories that people think with while in a feld of relationships, and the contextual as much as conjunctural nature of thinking. Khare reminds us of the spiritual resources that mitigate and allow for a vocabulary, even a grammar, of existence, moving us away from religion as a form of false consciousness or merely a way of coping with the suffering of the world. Jigyasu draws upon a religious tradition to refect on forms of hierarchy within which individuals are situated, moving us towards more complicated understandings than an equation of individual freedom with equality as in the liberal tradition. Naomi Haynes’s (2017) work on Zambia re-evaluates the connection that is made in studies on Zambia between Pentecostalism and neo-liberalism, in which Pentecostalism is seen as fostering individualism and the breaking down of relationships, towards the idea of self-realisation. She argues that newer forms of relational life are being forged and the idea of ukusela or moving rather implies progress through collective advancement. As with Hickel’s work on South Africa, she too is concerned with the “selection and construction of hierarchies” (Haynes, 2017: 12) as people seek to enter into relations which, though ostensibly “unequal”, imply an insertion into a set of obligations and responsibilities governed by a value of belonging. Patronage connects those who need to those with resources, and prosperity is kept in its place as it were (Haynes, 2017: 17). Central to any understanding of inequality has to be the question of the experience of being human or less than human. In any society undergoing moral chaos, whether of the secular or religious kind, where the idea of the human is qualifed by criteria that exclude the many, experience and self-consciousness have to be the substance of academic enquiry. This has been emphasised by thinkers as diverse as B.R. Ambedkar – “I did not know what untouchability was till I was made to sit separately in my school” – (quoted in Guru and Sarukkai, 2017: 2),

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and W.E.B. Du Bois – “To be a Negro is to ride Jim Crow in Georgia” (Du Bois, 1923: 58). The production of social experience is where hope lies and the generation not only of alternative notions of self (whether through the idea of ambition or through a non-acceptance of the given) but other epistemologies. Experience hinges on the reproduction of spaces conditioned by hierarchy, within which one is located and where one becomes, where one thinks from. Understanding relationships and hierarchy could be the premise of a theoretical departure in studies of inequality that look at structures and secular processes alone. This demands an engagement with ethnography and the ontology of being poor, a shack-dweller or an untouchable, and asking the important question: How do people make sense of their lives? How can the poor and the untouchables move beyond merely making guest appearances in somebody else’s formulations, as the Dalit thinker Gopal Guru (2012) asks.

Acknowledgements This essay was written while I was a Mercator Fellow at Freie Universitaet, Berlin, Germany, in June to July 2019.

References Alexander, Nevile (1979) One Azania, One Nation. London: Zed Press. Ambedkar, B.R. (1931) Indian Round Table Conference, 12 November 1930 – 19 January 1931, Proceedings. Calcutta: Government of India, Central Publications Branch. Ambedkar, B.R. (2014 [1936]) Annihilation of Caste. New Delhi: Navayana. Appiah, Anthony (2005) The Ethics of Identity. Princeton, NJ: Princeton University Press. Arendt, Hannah (1944) Race-Thinking Before Racism. The Review of Politics, 6(1): 36–73. Bethencourt, Francisco (2015) Racism: From the Crusades to the Twentieth Century. Princeton, NJ: Princeton University Press. Bourdieu, Pierre (1977) Outline of a Theory of Practice. Cambridge, UK: Cambridge University Press. Bourdieu, Pierre (1987) Distinction: A Social Critique of the Judgement of Taste. Cambridge, MS: Harvard University Press. Cannadine, David (2002) Ornamentalism: How the British Saw Their Empire. New York: Oxford University Press. Cox, Oliver (1948) Caste, Class and Race: A Study in Social Dynamics. New York: Monthly Review Press. Deshpande, Ashvini (2011) The Grammar of Caste: Economic Discrimination in Contemporary India. Delhi: Oxford University Press. Du Bois, W.E.B. (1923) The Superior Race (An Essay). The Smart Set: A Magazine of Cleverness, 70(4): 55–60. Dumont, Louis (1977) From Mandeville to Marx: The Genesis and Triumph of Economic Ideology. Chicago, IL: Chicago University Press. Dumont, Louis (1980) Homo Hierarchicus: The Caste System and Its Implications. Chicago, IL: Chicago University Press. Dumont, Louis (1992) Essays on Individualism: Modern Ideology in Anthropological Perspective. Chicago, IL: Chicago University Press.

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Dumont, Louis (1995) German Ideology: From France to Germany and Back. Chicago, IL: Chicago University Press. Ferguson, James (2015) Give a Man a Fish: Refections on the New Politics of Distribution. Durham, NC: Duke University Press. Guru, Gopal (2012) The Rise of the “Dalit Millionaire”: A Low Intensity Spectacle. Economic and Political Weekly, 47(50): 41–9. Guru, Gopal and Sundar Sarukkai (2017) The Cracked Mirror: An Indian Debate on Experience and Theory. New Delhi: Oxford University Press. Harris-White, Barbara (2014) Dalits and Adivasis in India’s Business Economy: Three Essays and an Atlas. New Delhi: Navayana. Haynes, Naomi (2017) Moving by the Spirit: Pentecostal Social Life on the Zambian Copperbelt. Berkeley, CA: University of California Press. Hickel, Jason (2015) Democracy as Death: The Moral Order of Anti-Liberal Politics in South Africa. Berkeley, CA: University of California Press. Kapur, Devesh, Shyam Babu and Chandrabhan Prasad (2014) Defying the Odds: The Rise of Dalit Entrepreneurs. New York: Vintage Books. Khare, Ravindra (2009) The Untouchable as Himself: Ideology, Identity and Pragmatism Among Lucknow Chamars. Cambridge, UK: Cambridge University Press. Metz, Thaddeus (2007) Towards an African Moral Theory. The Journal of Political Philosophy, 15(3): 321–41. Metz, Thaddeus (2012) An African Theory of Moral Status: A Relational Alternative to Individualism and Holism. Ethical Theory and Moral Practice, 15(3): 387–402. Mines, Mattison (1994) Public Faces, Private Lives: Community and Individuality in South India. Berkeley, CA: University of California Press. Peacock, Vita (2015) The Negation of Hierarchy and Its Consequences. Anthropological Theory, 15(1): 3–21. Piketty, Thomas (2014) Capital in the Twenty-First Century. Cambridge, MS: Harvard University Press. Robbins, Joel (1994) Equality as a Value: Ideology in Dumont, Melanesia and the West. Social Analysis: The International Journal of Social and Cultural Practice, 36: 21–70. Robinson, Joan (1962) Economic Philosophy. London: Aldine Press. Visweswaran, Kamala (2010) Un/Common Cultures: Racism and the Articulation of Cultural Difference. Durham, NC: Duke University Press.

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Inequality under globalisation State of knowledge and implications for economics James K. Galbraith and Jaehee Choi

In the years following World War II the division of labour between neoclassical microeconomics and pseudo-Keynesian macroeconomics was pioneered at the Massachusetts Institute of Technology (MIT) and disseminated worldwide from there. Macro held a narrow strip of economic territory: unemployment, infation, interest rates and money supply, the business cycle, the rate of growth, and their interrelations through the quantity theory, the Phillips Curve and Okun’s Law. The personal distribution of income fell squarely into the microeconomics of labour markets, governed by supply and demand for various levels of skill, alongside such ad hoc matters as frm-size effects, industry-specifc labour rents, imperfect competition and effciency wages. A theory of changing inequality was offered for developing countries by Simon Kuznets in 1955, positing a rise in inequalities in the early stages of development but a decline later on. For the rich, the Kuznets evolution was supposedly complete, the Cobb–Douglas distribution theory with Hicks-neutral technical change predicted stable functional shares, and national income accounts appeared to bear this out. So the functional distribution – the division between wages, profts and rent – was hardly spoken of. Beginning in the late 1970s and early 1980s, circumstances began to force a change. An early hearing on rising inequalities at the Joint Economic Committee (1982)1 pointed an accusing fnger at right-wing policies, and this message was reiterated by Bluestone and Harrison (1988), who laid the blame on de-industrialisation and the war on unions, conspicuous features of the Reagan and Thatcher years. The point seemed obvious enough, but there was a subtle diffculty. The severing of micro from macro made it conceptually diffcult for many economists to tie the Reagan Recession of 1981–1982 and its UK counterpart – major drivers of de-industrialisation – to a distributional outcome. Instead the emphasis fell on specifc anti-worker political actions – the fring of air-traffc controllers, deregulation of trucking, a radical-right National Labor Relations Board. Still, this was a minor muddle compared with what was to come. It was only in the early 1990s that mainstream economics began a concerted search for a less contentious explanation of rising inequality, rooted in the labour market analysis to which distribution issues had been consigned. Given the evolving preference of applied microeconomists for data based on surveys of household characteristics – however limited these may be by survey-takers’ fxation on race,

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gender, age, education and a handful of similarly simple categories – the evidentiary basis for a labour market analysis of inequality was remarkably thin. It consisted in important instances of little more than widely separated surveys of earnings stratifed by worker characteristics, and then largely confned to a small handful of wealthy countries. Bound and Johnson (1992) set the template for neoclassical investigation. Rising inequality was a matter of changing relative demand for skill, a characteristic unobservable in practice but usually approximated by the number of years spent in school. Demand being driven by technology, the underlying cause had to be a “bias” in the character of technological change. The remedy to the resultant inequality could only be an increased supply of skill – more years in school. This remedy had the peculiar feature that if enough people pursued it, the advantage accruing to each would diminish until it disappeared. Education was economically worthwhile, but only if it was restricted – a truism that is nevertheless in its way subversive. The labour economists Claudia Goldin and Larry Katz (2008) eventually produced a thick book on this theme, from which the ugly class politics of the 1980s had disappeared. The discipline of economics is such that, to have purchase with the profession, any argument counter to “skill-biased technological change” had to adapt the same broad framework of labour market supply-and-demand. Such an alternative was presented by Wood (1994), who argued that North–South trade in manufactures would expand the effective supply of unskilled workers in the global North, driving down their wages in rich countries but raising them among the poor (where Wood argued factory workers form an intermediate skill class), thus moving inequality in opposite directions in the two hemispheres. Wood’s argument gained an audience briefy but was ultimately dismissed by the mainstream; among other things, the encouragement it would have given to sceptics of free trade made it politically incorrect. It was at this point in the mid-1990s that analysis based loosely on the Kuznets hypothesis revived. This was thanks in part to efforts at the World Bank to begin to compile a comprehensive global data set of inequality measures, along with income measures prepared by the Penn World Tables and Purchasing Power Parity (PPP) estimates of the relative purchasing power of different national currencies. Fairly soon after the publication of the landmark Deininger and Squire (1996) data set there were multiple efforts to trace the growth (or decline) of inequality on the world scale, resolving roughly into three conceptual measures as described by Milanovic (2005): inequality between countries pure and simple (Concept I), inequality between countries weighted by population (Concept II) and inequality across individuals irrespective of nationality (Concept III). The diversity of concepts brought new sources of uncertainty in the result and indeed inconsistent – on more precisely, divergent – conclusions depending on the concept deployed. Thus, while inequality between countries (Concept I) tended to rise, inequality between countries (Concept II) fell. The difference was largely due to the rise in average Chinese incomes, PPP adjusted, notwithstanding that China (reportedly) manipulated its participation in PPP surveys to reduce the

Inequality under globalisation 35 measured rise in average incomes there for political reasons. Meanwhile Concept III inequality could be calculated only by merging data sets from different countries at either PPP or exchange rate equivalents; these numbers too were driven largely by national-average movements rather than measures of inequality per se, and the extensive data requirements meant that only a few years (initially just three) could be brought to fruition. At the other end of the measurement-method scale, the Luxembourg Income Study set out to blend and homogenise household and personal income surveys so as to permit detailed and accurate welfare comparisons (Atkinson et al., 1995) – but with the limitation that such surveys are sparse, restricted mainly to the wealthy countries and for the most part to recent years. What one gains in fne detail on household characteristics one loses in the capacity for extensive international and historical comparison. In these matters, there are different ways to process a fnite body of data but, methodologically speaking, there is no free lunch. In this cacophony of facts and semi-facts, Kuznets’s straightforward and intuitive hypothesis did not fare well. Indeed, most researchers citing Kuznets were not much interested in his narrative of intersectoral shifts; rather they sought inverted U-curves anywhere they might fnd them and made that the test of Kuznets’s thesis, irrespective of whether there existed an underlying framework of early-to-late transition from agriculture to industry and from rural to urban life. In retrospect, this work largely (or wholly) lacks enduring value. For many researchers by then, the relation of inequality to income level was no longer of prime interest. Debates over development, education, industrial policy (the East Asian Miracle) and economic growth directed attention toward the link between initial levels of inequality and later growth rates. Two competing strands emerged. One held that low levels of inequality were good for growth (Birdsall, Ross and Sabot, 1995) – citing Korea, Taiwan and post-Mao China but largely ignoring East Germany and the USSR. The other advanced the opposite thought, that income and savings must frst be concentrated before investment and growth would follow (Forbes, 2000). A fair summary of these debates is that by choosing periods, countries, data sources and econometric techniques with suffcient care, either argument can be made. But whatever the result, this literature bore only a slight resemblance or relation to Kuznets. One is hard-pressed not to draw an unpleasant conclusion: that a driving force behind much inequality research on both right and left has been a search for polemical advantage. The very existence of the topic favours the left; it is no accident that mainstream economics shunned it for decades. But in many left-leaning accounts inequality is always bad – notwithstanding that it is a prime mover of human effort and an inevitable consequence of functional specialisation between labour and capital as well as of differential rewards based on skill, education, seniority, danger, responsibility or anything else. Left analyses also have a proclivity to fnd that inequality is always rising, and to minimise or dismiss the moments when it may be on the decline. On the right, the characteristic task is apology: Inequalities are natural, they are just, at the worst they are unavoidable and don’t

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do excessive damage. They are the product of market outcomes, and they can be overcome only by dint of education and effort; if they are not overcome in any particular case the fault lies with the worker or other economic agent and not with the social order. Against this counterpoint of alarm and apology, a few lines of reasoning stand out as having a pragmatic bent and driving toward policy relevance. Of these, perhaps the most signifcant is the Meidner–Rehn model of wage compression as a path toward productivity gain in an open economy (Meidner and Rehn, 1951; see also Martin, 1981). The insight by Meidner and Rehn was that the composition and technological level of industry in a small economy such as Sweden is endogenous. Floors on wages drive out weak players and place pressure on stronger ones to modernise. The result over time is a superior industrial mix and a higher standard of life, both in absolute and relative terms. Moreover, an advanced industrial base can support a large and well-paid service sector; the downside is that high tax rates may force the expatriation of high-net-income persons, but this is a minor price. The Meidner–Rehn approach is highly validated by the Swedish experience over 70 years, but is of less relevance to large economies that cannot export the full spectrum of backward technologies and cheap services. Still, to understand that economic progress occurs along a spectrum of existing technological levels and vintages is a critical insight, largely neglected in the neoclassical treatment. A second framing of the issue of inequality in policy terms builds on the model of Harris and Todaro (1970), who studied urbanisation, minimum wages and unemployment in East Africa in the 1960s. Their sharp insight was that an unequal wage structure (say, across an urban/rural divide) generates migration and competition for the better jobs. If such opportunities are few and the pay gap is large, then jobseekers will outnumber jobs and unemployment necessarily results. The Harris–Todaro hypothesis can be extended to many different circumstances – migrations in Europe, North America and China come to mind – and provides a testable hypothesis, in contrast to the skill-bias model. The latter predicts that more fexible and unequal labour markets will have less unemployment, since employers will be able to match pay to skills and requirements; they will choose to hire more unskilled workers if the latter are cheaper. However, the Meidner–Rehn and Harris–Todaro models predict the opposite, namely that societies with compressed and regulated wage structures will (within limits) tend to enjoy lower unemployment, and (if they target investments cleverly) higher rates of productivity growth and larger manufacturing sectors than those who maintain their allegiance to “free and fexible” labour markets. This proves to be one of the rare points on which evidence is spectacularly clear, as refection on the cases of Scandinavia, Austria and Ireland will attest. The preference of employers for fexibility has everything to do with power, with a reactionary attitude toward modernisation, and nothing at all to do with “economic reform” or combating unemployment. A third pro-equality argument was offered a few years back by this author (Galbraith, Priest and Purcell, 2007; reprised in Galbraith, 2016) – when

Inequality under globalisation 37 countries fght wars, as happens from time to time, the more equal of two combatants generally wins. This appears to hold going back to classical times. Republics fght their way to independence, become empires by conquest, fall into decay and disunion, and recede. Communist countries, particularly, did not lose wars unless they fought with each other. And when theocracies collide, the advantage lies not with the richer but with the more compact and coherent, which is usually to say, with the Islamic. None of these arguments are referenced in the 700-page tome of Thomas Piketty (2014), Capital in the 21st Century, which set out to provide an empirical account of the evolution of inequality worldwide. Piketty’s book also sought to embed that record in a theoretical framework capable of bearing the weight of comprehensive explanation. For this, a “new” theory is evidently required, and while Piketty is at pains not to disparage the mainstream labour market education/technology theory, he is not prepared to accept it either. His grand scheme requires a framework capable of operating over a long span of history and prehistory – thousands of years – and for this the concept of skill-biased technology is too specifcally modern, too tightly linked to the digital age. Piketty’s proposed solution is to base a theory of inequality on the relationship between r and g where r is the rate of interest and g is the rate of economic growth. Where the former exceeds the latter inequality must rise, since capital (and land) are owned by the upper classes. So, it remains for Piketty to establish that r > g is both normal historically and plausible as a matter of theory. For theory, Piketty reverts to the neoclassical standard, the marginal productivity of capital – a choice that requires him to make a drive-by shooting attack on Cambridge Capital Theory, which since the 1960s established that smaller “quantities” of capital do not produce higher rates of return. Having made his attack, Piketty argues that a proft/interest rate drive by the marginal productivity of capital typically exceeds overall growth rates, without recourse to the culpable (but correct) proposition that interest rates are set by and for the beneft of the state. Instead, for reasons not entirely clear, technology must keep raising the real rate of return on capital. For Piketty, episodes of levelling are restricted to short periods of capital destruction in wartime – never mind that this did not happen in Germany in World War I or in the United States in either war, nor to any dramatic degree in World War II in the United Kingdom. Piketty also implicitly assumes that fortunes largely pass unbroken from one generation to the next. Thus he builds his hypothesis that the inequalities of the nineteenth century were natural and the mitigations of the twentieth an aberration, now (however regrettably) receding. Piketty’s celebrated empirical work rests partly on archival research on patrimony in the Paris archives – a narrow foundation – but more on a compilation of income tax records from (initially) 29 countries, later expanded with some exaggeration to about twice that number. There is no doubt value in this collection, but recognising that value and its limitations requires acknowledging that (a) not every country has income tax, and those that do not may not resemble those that do; (b) among countries that do have income tax, tax laws defning

38

James K. Galbraith and Jaehee Choi

taxable income vary, as does the effectiveness of enforcement and degree of evasion; and (c) even in countries with good reporting and enforcement, tax law changes can alter the reported distribution without effect on the underlying reality (Galbraith, 2019). In 1986 in the US, tax reform was designed to be of this last type – that is, to alter the reported distribution without altering the tax burden. The reform required high-income individuals to report more of their income while taxing the whole at a lower rate. The resulting bulge in Piketty’s top income share for the US in 1987 and later provides a substantial part of his case that rising inequality in America outstrips that in Europe. But it is fctitious; it should have been stripped from his series. Thus statements attributing US inequality to (for example) allegedly exceptional inequalities in American education lack foundation in fact; compared to Canada or the UK, even by Piketty’s own data (with this one correction) the US experience is not exceptional. Further, some of Piketty’s longer-run data are simply imaginary; there are fgures in his book that report values for 2100 and 2200 AD. And as Noah Wright (2015) has shown, even those parts which have an arguable basis in fact do not support his central claim that the rate of proft is again coming to exceed the rate of growth. What remains missing, in the account so far, is a reliable fact-base of information on the evolution of inequality over time and across countries, using a single consistent concept of inequality measured across the full spectrum of nation– states and with suffcient density over time to establish trends and turning points reliably. To summarise the state-of-play as of early 2019: •

• •







The World Institute of Development Economics Research (WIDER) has produced a comprehensive bibliographic compilation of inequality surveys, but any conceptually consistent panel will necessarily be a relatively sparse subset. The Luxembourg Income Study (LIS) has produced a fully consistent micro data collection but for only a relatively few, mostly high-income, countries and years. The World Bank has reverted to a data set of numbers provided by member states with no attempt to assure consistency of concept. Consumptioninequality numbers for (say) India are intermingled with income-based numbers for Western countries. Piketty and his collaborators rely on tax rather than survey data, with advantages in covering top incomes but weak comparability across countries, limited overall coverage and problems of continuity within countries as tax laws change (Galbraith, 2019). Milanovic (2005; 2016) has built a unifed world inequality measure, but it is based on a melding of internal inequality measures and country comparisons based on PPP estimates – largely driven by the latter and subject to their weaknesses. Solt (2019) has produced a synthetic data set covering a very wide range of countries and years, but with a great deal of interpolation and imputation

Inequality under globalisation 39 across countries and years. The approach is largely benign where survey data are dense, but unreliable in many cases where they are sparse. Arguably, these approaches exhaust what can proftably be done from a record of survey and tax data assembled from diverse, incomplete, independent and conceptually autonomous sources. Further progress requires extracting, if possible, reliable information from alternative records, compiled with greater persistence and regularity over the decades and across the globe. But to undertake this task requires a different method, indeed a different measure of inequality, altogether. As the work of the University of Texas Inequality Project (UTIP) over twenty years has shown, suitable inequality measures exist – and have existed for decades – and suitable source data are ubiquitous and easy to handle (Galbraith, 1998; Galbraith and Berner, 2001; Galbraith, 2012) So, the task of producing a nearly comprehensive, consistent world panel data set of inequality proved to be far simpler and far easier than the prior survey-based or contemporaneous tax-based approaches, as well as incomparably less expensive and faster to implement. The insight behind the UTIP measures touches on several distinct issues, especially the nature of category structures – of taxonomies – and the fractal character of economic distributions, which bears on the relationship between an observable portion of a distribution and the whole thing. Categories are groups of individuals. The characteristics of a category are the statistical summary of the characteristics of the individuals covered by the category. Changes in the income (say) of individuals within a group change the average income of the group. One can therefore use a change in group average income as a proxy measure of changes affecting the underlying individuals. As group structures become more detailed and refned, the correspondence between group and individual necessarily becomes closer, until the two ways of looking at the data converge with each individual and their own group. This is true irrespective of the overlying character of the group – whether individuals are classed by location, industry, age, gender, body weight, religion, language or any combination of these or other characteristics so long as the groups are “MECE” – mutually exclusive, collectively exhaustive – that is to say, non-overlapping and covering the entirety of that part of the population being observed. At all points, dividing groups into subgroups increases between-group inequality. And after a certain point, the movement of a distribution consistently measured across groups must refect the movement of the same distribution measured across individuals. There is no need for a “random sample” to establish what the ebb and fow of the distribution is. Moreover, if the prime forces driving change in a distribution of incomes or earnings are differences across substantial geographic regions or between different industrial or economic sectors, then a fairly rough group structure will capture the important movements over time – so long as the structure is measured consistently. The existence of administrative data sets, collecting income and population by region and employment and payrolls by sector and industry in hierarchical structures that remain reasonably

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James K. Galbraith and Jaehee Choi

stable over time, therefore turns out to be of great practical importance to a project of flling in the historical record of inequality statistics. A limitation of categorical data in practice is that the group and underlying individuals covered may be a systematic (and therefore biased) subset of the population of interest. Thus, in a survey of manufacturing establishments, workers in units below a certain size may be excluded, while those in agriculture, services and the informal economy are not covered at all. But the fractal character of distributions implies that so long as the broad social relations of a society endure – so long as bankers make more than factory workers who make more than peasants – an increase in the inequality within a given observational frame (say, the manufacturing sector) is far more likely than not to mirror a change in the distribution writ large. By the same token, one can tell the weather – usually, though not always – through a window at a glance. The specifc methodological contribution of the UTIP effort was to marry the above insights about categorical data sources – which are cheap and abundant in the real world – to Henri Theil’s proposed general entropy measures of between-group inequality, specifcally the between-groups component of Theil’s T statistic, a simple and fexible formula that requires just two morsels of information on any group structure, namely the total population (or employment) and total income (or payroll) of each group. From this an inequality measure can be computed which is unaffected by sampling error, by infation or by changes in the currency unit over time. Moreover, the measure can be added-up at will across sectors or regions, or divided between them (Galbraith, Conceição and Bradford, 2001). The statistic is thus well-suited to the construction of dense, consistent, long inequality time series, on an annual or even monthly basis where sources permit. The production en masse of such series from diverse national and regional data sources was an early UTIP contribution. But there was more. For reasons that remain mathematically obscure, at least to us, in data sets that measure employment and payrolls across consistently categorised industries or economic sectors – such as the Industrial Statistics of the United Nations Industrial Development Organization (UNIDO) and Eurostat’s REGIO – the between-groups component of Theil’s T statistic is effectively normalised. This results in measures compared between countries – and not merely through time within a country – tending to correspond closely to the available survey-based measures (especially from harmonised data sets such as LIS) and to evolve smoothly across international frontiers (rising from North to South in Europe, for instance) in ways that strongly suggest that international comparisons with these measures correspond to underlying economic realities. The same cannot be said for at least some of the survey-based data sets, which in some cases show sharp inconsistencies in inequality between neighbouring countries (France and Germany, for example) with similar average income levels and open borders. But if France were radically more unequal than Germany, as some data sets appear to show, then street sweepers in Hamburg would be French. A visit to the streets in the early morning should easily establish that this is generally not the case.

Inequality under globalisation 41 The discovery in principle and practice that between-groups Theil statistics could accurately depict both the evolution of inequalities over time and comparative levels of inequality between countries (or other geographic entities, such as sub-national regions in Europe, or US states) opened up the prospect of a search for international, intercontinental and global patterns in the evolution of inequality through time. This leads to the possibility of identifying forces driving a continental or even global macroeconomics of inequality, as well as decompositions of each inequality measure into the specifc contributions of each region or sector. In turn, this enables a descriptive history of inequality going far beyond – in detail, accuracy and causal implications – the limited information reported on households or persons in surveys. It also becomes possible to seek the institutional and political correlates of changing inequality within countries, as the measures prove to be sensitive refections of revolutions, coups d’état and regime change. Sometimes even the mundane consequences of ordinary elections can be detected. Before moving on to those themes, it is useful to ask: Do measures of inequality computed in this way from a limited and systematically biased data set (such as UNIDO’s Industrial Statistics) correspond to measures taken by other researchers over time in the customary (and far more expensive) ways? To assess this question, UTIP conducted two research exercises. The frst was a comparison by linear regression of the UTIP Theil measures to an early collection of Gini measures from diverse surveys – the Deininger/Squire (DS) data set of the World Bank, frst published in the mid-1990s (Deininger and Squire, 1996, 1998), and chosen for this purpose because it has a manageable number of distinct conceptual categories (six) and also because it was the dominant international comparative data set on inequality at the time. First, the data set was controlled for concept – whether an inequality measure was gross or net of tax, whether it was a measure of income or expenditure, whether the observational unit was the person or the household. The resulting comparison showed that much of the variance in the DS set could be accounted for by just two variables – the share of manufacturing employment in the total population and pay inequality measured across industries within the manufacturing sector. Coeffcients on both variables were stable and precisely estimated, which thus permitted the construction of extensive estimated measures of gross household income inequality in Gini format, and so UTIP constructed an extensive, dense and consistent data set of this particular concept, conveying almost 150 countries from 1963 forward, more than available from any other independently measured source (Galbraith and Kum, 2005). The second verifcation exercise was a matter of comparing the UTIP estimates to inequality measures in the published record, a painstaking exercise carried over a period of years, largely by Béatrice Halbach and Alexandra Malinowska (Galbraith, Halbach, Malinowska, Shams and Zhang, 2016). There is no easy way to summarise this evidence; it has to be examined and evaluated visually. However, a fair summary is that for wealthy and transition economies, the Estimated Household Income Inequality (EHII) series track available survey

42

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evidence on the same concept uncannily well, and generally falls – as predicted – between measures of “market inequality” and measures of “disposable” (or net) income inequality – the former high and the latter low (Galbraith, Choi et al., 2016; Galbraith, Halbach et al., 2016). For developing countries, a similar story holds, except that in some cases – typically larger countries such as Mexico, Brazil, South Africa – the EHII estimates tend to fall below those found by surveys. The relatively small weight of manufacturing in these economies may be partly responsible, but there is also the fact that in some large, poor countries a signifcant share of households report no income at all – about a third in South African data. This calls into question whether the meanings of “income” and “household” are comparable as between wealthy countries and those with a substantial share of deeply impoverished people. In South Africa, the EHII estimates run continuously from the 1960s into the early 2000s, thus spanning the liberation in 1994, which is not the case for any survey evidence on inequalities in South Africa. The inequality estimates are tolerably close to survey-based Gini coeffcients in the apartheid period, but way below those of more recent years. We suggest two reasons, based on discussions at the Southern Centre for Inequality Studies (SCIS) in 2018. First, in the earlier period, a signifcant share of the South African population was simply uncounted, because it was offcially considered not to be South African, but rather citizens of the various apartheid-era homelands. Second, in the post-liberation years, a great many households have formed that subsist on non-market income and the basic social security grant, but consider that they have no regular “job” and report zero income to surveys. If this number indeed approaches 30 per cent of all households in South Africa, that would by itself add 30 points to the Gini even if all reported incomes were equal, which is of course not the case. Thirty Gini points is about the difference between the EHII estimate and measures from modern South African surveys. With respect to the United States, after the early 1990s the EHII estimates diverge from – fall below – survey and tax estimates of inequality, because the wealthiest US households in these years had substantial and rapidly growing income from capital, which they reported. This adds an almost unique dimension to measured income inequalities in the US, closely tracking capital asset prices. Whether the US case is, in this respect, actually different from that of other wealthy countries, or whether the apparent difference is merely an artefact of more accurate measurement of capital income in the US, is unclear. Insofar as it affects the wealthy, the US tax system is considerably more rigorous than, say, the Italian. In any event, even after noting the exceptions, it is clear enough that the simple UTIP EHII model is a success at producing sensible and reliable estimates of gross household income inequalities over time; and the EHII data set is the largest available one, consisting solely of independently measured, consistent inequality concepts. Solt’s Standardized World Income Inequality Database (SWIID) is larger, but it is reliant on interpolations, and it draws on EHII as one of its source data sets.

Inequality under globalisation 43 The successful creation of conceptually consistent, dense panel data sets on inter-industry pay inequality and its derivative data set on estimated household gross income inequality, each with about 150 countries and about 4,000 independent country–year observations beginning in 1963, opens the door to a new kind of global economics. Such an economics integrates distribution – the central preoccupation of microeconomics in mainstream classical and neoclassical theory – with the presence of macroeconomic forces and infuences on an international and even on a planetary basis. It is an economics without a priori national or regional boundaries, an economics sans frontières, an empirical economics for an age of globalisation. It is an economics which treats interdependence as a foundational fact whose properties are to be analysed, rather than as an add-on to a prefabricated national model (as in Keynesian macroeconomics) or as a mere incantation in a world of insular, supply-and-demand driven labour markets, each with its boundaries fxed, in practice, by the happenstance and whim of national or regional statistical agencies. The work also transcends the conventional distinction between advanced and developing countries, blending the two into a portrait of the world economy as a unifed whole. We turn fnally to what the analysis shows. Research possibilities with such a data set are essentially limitless, since inequality measures can be compared proftably not only to each other but also to every other measured socioeconomic variable under the sun: income, life, health, violence, happiness. There is work here to keep researchers busy for years. The UTIP team has largely – not entirely – steered clear, in part because the limited span of other data sets means that many comparisons entail many lost observations, but also because establishing the credibility of our measures and exploring the relationships within our own data set have proved to be challenging enough for a small, part-time team. Sometimes the most basic facts are, from the standpoint of previous theory, the most fundamental. In this case, a glance at a map tells that there is a gradient of inequality measures that runs roughly from North to South, from wealthier countries to poorer ones, and also (to a degree) from East to West, in the sense that socialist or formerly socialist economies (until they collapsed) had egalitarian qualities which their capitalist adversaries did not. This gradient plainly refects the strength of an industrial and urban middle class in the wealthy countries, and the plain fact that without such a class, a country is necessarily both poor and unequal, an amalgam of landlords (and resource barons) and peasants (and urban service workers). Especially high inequality readings turn up – no surprise – in the oil kingdoms and in the mining fefs of the Third World. Table 3.1 presents the country fxed-effects from a two-way fxed-effects regression on the measures of inter-industrial pay inequalities, 1963 to 2014. While the coeffcients have no intuitive interpretation, they provide a rank-ordering and relative size-effect of these inequalities, representing so far as we know the only effort to achieve this result consistently so far available. This simple observation tells us that Kuznets (1955) was right – up to a point. There is an organic relation between income and inequality. In general, inequality declines as income rises. Kuznets’ view of an initial period of egalitarian peasant

Chile

Central African 0.010 Rep. Turkey 0.010

0.086 0.063 0.060 0.059

0.057

0.055 0.051

0.051 0.048 0.048 0.047

0.046

0.046

0.043

Armenia

Malawi Belize

Burundi Mozambique Togo Puerto Rico

Papua New Guinea Azerbaijan

Oman

Honduras Syrian Arab Republic Jordan Uganda Thailand Barbados

Nepal

Bolivia Saudi Arabia Guatemala Congo

0.089

Trinidad and Tobago Bahamas Cameroon Swaziland Lesotho

0.011

0.013 0.012 0.012 0.011

0.016 0.014

0.016

0.021 0.020 0.019 0.018

0.023

0.027 0.026 0.024 0.023

0.265 0.250 0.203 0.095

Kuwait Peru Kyrgyzstan Cambodia

0.028

United Arab Emirates India Brazil Indonesia Dominican Republic Tanzania

0.350

Qatar

Greece

−0.003

Ecuador

Panama

Venezuela

Tonga Sri Lanka Kazakhstan Fiji

Belgium Croatia

−0.00 −0.008

−0.007

−0.005 −0.005 −0.006 −0.006

Spain Bosnia/ Herzegovina Hungary United States Romania Republic of Korea Yugoslavia

Costa Rica Iraq Malaysia Lithuania

Ukraine

Uruguay Colombia Estonia Bulgaria

Bangladesh

0.001 0.000 −0.000 −0.001

0.001

0.004 0.003 0.002 0.002

0.004

Burkina Faso −0.003 Georgia −0.005

Haiti

Gambia Egypt Singapore Somalia

Montenegro

Macedonia Pakistan Philippines Argentina

El Salvador

Czechoslovakia Latvia Poland United Kingdom Germany, Dem. Rep. Slovenia Germany

−0.019 −0.019 −0.020 −0.021

−0.027

−0.026

−0.026

−0.024 −0.024 −0.024 −0.025

−0.022 −0.023

−0.021

Finland

France

Macao

China Slovakia Paraguay Luxembourg

Austria Australia Ireland Republic of Moldova Malta

−0.014 −0.017 −0.018 −0.018 −0.019

Cuba

−0.014

−0.038

−0.038

−0.038

−0.037 −0.037 −0.038 −0.038

−0.036 −0.036

−0.036

−0.034 −0.035 −0.035 −0.035

−0.034

−0.033 −0.034 −0.034 −0.034

−0.033

Table 3.1 Country effects on a two-way fxed-effects regression using UTIP–UNIDO measures of industrial pay inequality, countries ranked by size of effect

0.039 0.039

0.037

0.036 0.036 0.036 0.035 0.035 0.029

Gabon Rwanda

Benin

Jamaica Morocco Mongolia Kenya Tunisia Serbia & Montenegro

Israel Zambia South Africa Ethiopia Sudan Mauritius

Ghana

Ivory Coast Botswana

Eritrea

0.006 0.006 0.005 0.005 0.005 0.005

0.007

0.010 0.010

0.010

−0.009

Myanmar Portugal Senegal Nigeria Iran Albania

−0.010 −0.010 −0.010 −0.011 −0.012 −0.012

Madagascar −0.009 Libyan Arab −0.009 Rep. Japan −0.009

Taiwan

Occupied Palestine Afghanistan Algeria Canada Iceland New Zealand Italy

Russian Federation Cyprus Seychelles

Vietnam Sweden Switzerland Suriname Czech Republic

Denmark

−0.030 −0.030 −0.031 −0.031 −0.032 −0.032 −0.033

Norway Hong Kong

Netherlands

−0.027 −0.029

−0.027

−0.044 −0.044 −0.047 −0.048 −0.048

−0.042

−0.040 −0.041

−0.039

Source: Calculations using UTIP–UNIDO and time/country fxed-effects. Note: These rankings do not refect any particular moment in time, and in certain cases the inequality measures have changed dramatically over the life of the panel, 1963–2014. Fixed-effects may also be infuenced by the years for which data are available.

0.04

Yemen

46

James K. Galbraith and Jaehee Choi

agriculture applies only to a handful of cases – such as North America north of the Mason–Dixon Line in the nineteenth century – and in the wider world only if one excludes, as he did, landlords and rental income. In the modern world, the case of post-revolutionary China fts under the rising pattern of Kuznets’ inverted U; India appears to be another important case. Meanwhile close examination of a handful of the richest countries – the US, the UK, Japan – exposes another salient fact. In these cases, inequality also rises as the economy grows. This is evidently the consequence of a structural concentration on technology and fnance – to which one of us tried to call attention back in 1989: Countries that export fnancial services and advanced capital equipment to the world experience rising inequality in investment booms and falling inequality in a slump (Galbraith, 1989). The “Augmented Kuznets Curve” frst presented in 2001 by Conceição and Galbraith captures these stylised facts. (See Figure 3.1, and Galbraith and Berner, 2001). In short, Kuznets correctly captured the critical role played by intersectoral structural change in inequality; however, his historical experience precluded him from applying that correct insight to the particular and peculiar facts of globalisation. A second observational fact that emerges from a glance at UTIP maps is that countries of the core of the world economy – call them the Organisation for Economic Co-operation and Development (OECD) – resemble each other, and resemble their close neighbours more closely than their distant ones. Thus, the Scandinavian countries form a low-inequality unit, so do Germany and its neighbours, while the Mediterranean countries are more unequal. These are signs of economic integration; large differences occur only across substantial boundaries. Further, large continental regions – the United States – are necessarily more unequal than small European states taken individually, but the picture changes if one

Inequality

Chin na

Brazzil

India

a Korea

USA

Income Placement for illustrative purposes only, not calibrated to data.

Figure 3.1 Schematic of the Augmented Kuznets Curve, with illustrative placement of selected countries. Placement for illustrative purposes only, not calibrated to data.

Inequality under globalisation 47 takes Europe as a single integrated continental economy, adding the betweencountries element of inequality to the within-country components. When this is done, pay inequalities across Europe are larger than in the US. Whether the same is true for all income is murky, because so much capital income is reported by the American wealthy. Such income also exists in Europe, but its extent is masked by a greater proportion of privately held business assets and the presence of entire countries that live off of sheltering high-net-worth individuals and families from the tax man. Examining national patterns over time, it is clear that measures of inequality – particularly those of pay inequality in manufacturing, but also many geographic and intersectoral measures drawn from national data sources – are sensitive mirrors of underlying political events. Thus, the coup in Chile in 1973, in Argentina in 1976, the emergency in India, the reforms after 1993 in China, and above all the collapse of the Union of Soviet Socialist Republics (USSR) and of socialism in Eastern Europe show as moments of rising inequality. In some cases, these are dramatic. Meanwhile the Iranian revolution, the Iran–Iraq war and the period of post-neo-liberal recovery (and higher commodity prices) in South America and Russia in the 2000s are among the limited instances of declining inequalities. The social implications of declining inequality are not always unambiguous. For example, data for the late German Democratic Republic (GDR) show declining inequality on a steady path until the country disappeared. As a general rule, though, low and stable inequality is associated with strong institutions and wealth; high and fuctuating inequality is the lot of poorer open economies adrift on a sea of unstable commodity prices and interest rates, as well as military confict and political upheaval. Patterns of geographic contiguity establish the existence of interdependence and of global hierarchies. They also validate the core–periphery view of economic relations under global capitalism and put paid to the practice of national economic modelling except for the largest, most autonomous economies of the global centre – one simply cannot understand what is going on, except by reference to global trends. They also establish the transnational scale of distributive relations, calling into question the notion of “micro-foundations”. Instead of building a consolidated picture from individual or household data, a practice that assumes the autonomy of those units, the world appears to be structured from the top down and the question becomes, by what major force or forces? An answer can be sought in a search in the data for global patterns – trends and turning points through time. The existence of a common pattern of movement is prima facie evidence of a common underlying force, with broad global effect on national distributions of pay or income. It is also proof that purely national or local analyses of “market forces” – the stuff and substance of neoclassical microeconomic and labour market analysis – cannot be suffcient to explain the phenomenon under review. A simple inspection of trends and changes in mean inequality gives a strong clue to the sweep of events. There are four trends and three distinct turning points. From 1963–1971, no trend appears, and changes in individual countries

48

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are for the most part small. After 1971, inequality increases in some of the wealthy countries, but in much of the world it is declining. After 1980, there is a radical change, and the world enters on a period of large inequality increases, sweeping across regions beginning in Latin America and Africa, hitting Eastern Europe and the former USSR after 1989, and moving on to Asia in the 1990s. In 2000 there is a further turning point, after which stabilisation and even modest declines in inequality are found in Russia, China, Latin America, parts of Africa and elsewhere. Figure 3.2 provides this time trend as estimated using time dummies in a two-way fxed-effects regression over the entire global data set; the key turning points in the early 1970s, in 1981, and 2000 emerge very clearly. The meaning of these patterns seems accessible without requiring elaborate theory or hypothesis testing; mere knowledge of key economic developments at global scale seems suffcient. In 1971 the stabilising exchange-rate framework of the Bretton Woods institutions collapsed – or more precisely was torpedoed by the anchor country, the United States. There followed a nine-year boom in commodity prices, led by oil, and fuelled by the recycling of petrodollars into commercial bank loans to the Third World. Inequality fell in the (numerous, relatively poor) commodity-producing and debt-increasing countries, which grew rapidly: it rose in the fewer (relatively rich) industrialised

Figure 3.2 The time trend of global inequality, measured from pay across industrial sectors, and calculated as the time coeffcient of a two-way fxed-effects model using the UTIP–UNIDO data set. Source: UTIP-UNIDO data set (2019), calculations by the authors.

Inequality under globalisation 49 consumers, especially in the crisis year, 1973. Two simple parameters, debt fow and oil prices, dominated the global pattern, while national institutions and politics affected the timing of effect in particular cases, such as Chile (1973) or Argentina (1976) on the side of rising inequality as compared with (say) Iran (1979) or Iraq (1973–1980). These patterns are consistent with the central thesis of the original Kuznets hypothesis, in a world where most countries are to be found on the downwardsloping surface of the inverted U – and where this is especially the case for countries suffciently developed to be reporting industrial statistics to the United Nations. In most such cases, stronger growth – whether fuelled by commodity exports or debt – absorbs surplus labour into formal and informal activities, raising wages more rapidly at the bottom of the pay scale than toward the top. The two great exceptions in those years were China and India, clearly still on the upward-sloping Kuznets surface, but which had not then begun to enjoy their long growth-and-development phases. In 1981 the global crisis ended the commodities debt-and-development boom. The crisis hit frst in the most exposed indebted countries, provoking a collapse of investment, de-industrialisation, a collapse of public revenues and public services, and in certain cases – Chile, 1982 – a banking crisis. Inequalities rose as the middle classes were destroyed. Ultimately better-protected countries – the East Bloc – also fell before the pressure, along with the internal political strains it had generated. Financial liberalisation and its discontents then spread to the most successful of the developing nations, the East Asian Tigers, who entered crisis in 1997. Only China, which had maintained capital controls throughout (and, especially, resisted the temptation to lift them in 1995) remained untouched by this fnal act. That China was poised to reap the spoils in the following decade is therefore perhaps not a surprise, albeit with growth that in the frst instance raised, rather than lowered, inequalities inside the country. In the 2000s, following the NASDAQ collapse of April 2000 and the 2001 9/11 attacks, global interest rates fell and, with China’s growth, commodity prices recovered, giving space for left-wing governments to come to power in South America and in parts of Africa, enabling broad-based growth and poverty reductions. Meanwhile growth in China spread past its initial geographic concentration on Guangdong, Shanghai and Beijing, so that China too moved toward a downward-sloping Kuznets surface (Zhang, 2016). Meanwhile in Russia a new government took partial control of the national resource base, stabilised living conditions and arrested the free-fall of life expectancy, fertility, emigration and violence that had followed the dissolution of the USSR. So, in Russia too inequality declined after the late 1990s. In the US a saw-tooth pattern emerged, of underlying stagnation capped by income gains to property speculators and mortgage fraud, the signature elements of the age of Bush and Obama. In Europe, the consolidation of the Eurozone replayed the global boom of the 1970s on a regional scale, as capital fowing to the newly bankable countries of Portugal, Ireland, Greece and Spain set the stage for the subsequent collapse – PIGS, or, Principal Instigator, Goldman Sachs.

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And the collapse came. Curiously the Great Financial Crisis was in the frst instance a debacle of the rich countries, reducing measured inequalities for the very richest countries along the augmented, or secondary upward-sloping surface of the Kuznets Curve. One can see this clearly in national data for the United States, and in Europe-wide data showing the relative losses in London and Paris, the great fnancial centres. The effects on the wider world ran through other channels: declining commodity prices, the return of reactionary governments (throughout Latin America, also in India) and above all, the ironical fight to the US dollar, capital markets and Treasury bonds. A fnal discovery of the UTIP team underscores the point: the relationship of pay inequality to exchange rates, measured against the dollar. From a theoretical point of view, the nexus of exchange rates and inequality is of interest partly because it is on refection transparent and clear; the lines of causality are unmistakable. A manufacturer has only two possible types of markets – those inside the country and those outside. Typically – if not invariably – a country exports its best products, and the pay scales of the exporting sectors exceed those who sell only or largely at home. From this it follows instantly that a depreciation of the national currency raises inequality: the peso or real or rupee income of the exporter rises, while that of the non-exporter stays the same. Inequality must rise as a pure matter of accounting – and all the more so if the increased local currency fows are concentrated within the exporting sector. No behavioural response or effect on trade fows is required, no J-curve or other exotic effect. Devaluations raise inequality; overvaluations therefore create the conditions under which vulnerability to increased inequality grows. These fndings strongly reinforce the arguments of Bresser-Pereira’s (2010) new developmentalism. Moreover, we already know that variations in pay inequality drive household income inequality, so the line of causality is unambiguous – from the exchange rate to the inequality measure. How important is this effect? In an examination of data from over 30 countries, Galbraith and Rossi (2016) found that while the slope of the relationship varies, depending on proximity to the United States, the data speak with one voice; the relationship is often both strong and inverse. More extensive work on the data is underway, and it suggests broadly that the effect is present in up to two-thirds of countries, strong in one-third of them, with the strong effects found in countries with open capital markets and supplier relationships with the global North. Large industrial economies and those insulated from global capital are less affected, or not affected at all. The statistical chase comes to an end: That global fnancial capital drives the movement of inequality around the world seems established. And this, in a nutshell, is what we know about the relationship between globalisation and inequality.

Note 1 The hearing was organised by the senior author of this chapter at the direction of the committee chairperson, Rep. Henry S. Reuss (D-Wis). It was diffcult to fnd academic witnesses as the subject was out of fashion and obscure.

Inequality under globalisation 51

References Atkinson, Anthony B., Lee Rainwater and Timothy M. Smeeding (1995) Income Distribution in OECD Countries: The Evidence from the Luxembourg Income Study (LIS). Paris: Organization for Economic Co-operation and Development. Birdsall, Nancy, David Ross and Richard Sabot (1995) Inequality and Growth Reconsidered: Lessons from East Asia. The World Bank Economic Review, 9(3): 477–508. Bluestone, Barry and Bennett Harrison (1988) The Great U-Turn: Corporate Restructuring and the Polarizing of America. New York: Basic Books. Bound, John and George Johnson (1992) Changes in the Structure of Wages in the 1980s: An Evaluation of Alternative Explanations. American Economic Review, 82(3): 371–92. Bresser-Pereira, Luiz Carlos (2010) Globalization and Competition: Why Some Emergent Countries Succeed While Others Fall Behind. Cambridge: Cambridge University Press. Deininger, Klaus and Lyn Squire (1996) A New Data Set Measuring Income Inequality. World Bank Economic Review, 10(3): 565–91. Deininger, Klaus and Lyn Squire (1998) New Ways of Looking at Old Issues: Inequality and Growth. Journal of Development Economics, 57(2): 259–87. Forbes, Kristin J. (2000) A Reassessment of the Relationship Between Inequality and Growth. American Economic Review, 90(4): 869–87. Galbraith, James K. (1989) Balancing Acts: Technology, Finance and the American Future. New York: Basic Books. Galbraith, James K. (1998) Created Unequal: The Crisis in American Pay. New York: Free Press. Galbraith, James K. and Maureen Berner (eds.) (2001) Inequality and Industrial Change: A Global View. New York: Cambridge University Press. Galbraith, James K., Pedro Conceição and Peter Bradford (2001) The Theil Index in Sequences of Nested and Hierarchical Grouping Structures: Implications for the Measurement of Inequality Through Time, with Data Aggregated at Different Levels of Industrial Classifcation. Eastern Economic Journal, 27(4): 491–514. Galbraith, James K. and Hyunsub Kum (2005) Estimating the Inequality of Household Incomes: A Statistical Approach to the Creation of a Dense and Consistent Global Data Set. Review of Income and Wealth, 51(1): 115–43. Galbraith, James K., Corwin Priest and George Purcell (2007) Economic Equality and Victory in War: An Empirical Investigation. Defense and Peace Economics, 18(5): 431–49. Galbraith, James K. (2012) Inequality and Instability: A Study of the World Economy Just Before the Great Crisis. New York: Oxford University Press. Galbraith, James K. (2016) Inequality: What Everyone Needs to Know. New York: Oxford University Press. Galbraith, James K., Jaehee Choi, Béatrice Halbach, Aleksandra Malinowska and Wenjie Zhang (2016) A Comparison of Major World Inequality Data Sets: LIS, OECD, EU-SILC, WDI and EHII. In Income Inequality Around the World: Research in Labor Economics, edited by Lorenzo Cappellari, Solomon W. Polachek and Konstantinos Tatsiramos. Vol. 44, pp. l–48. Bingley, UK: Emerald Publishing. Galbraith, James K., Béatrice Halbach, Aleksandra Malinowska, Amin Shams and Wenjie Zhang (2016) The UTIP Global Inequality Data Sets 1963–2008: Updates, Revisions and Quality Checks. In Inequality and Growth, edited by Kaushik Basu, Vivian Hon and Joseph Stiglitz. Basingstoke: Palgrave MacMillan. Also appearing as: The UTIP Global Inequality Data Sets, 1963–2008: Updates, Revisions and Quality Checks. In

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Contemporary Issues in Microeconomics, edited by Joseph E. Stiglitz and Martin Guzman. Basingstoke: Palgrave Macmillan, 2016, pp. 7–39. Galbraith, James K. and Delfna Rossi (2016) Exchange Rates and Industrial Wage Inequality in Open Economies. UTIP Working Paper No. 71, April 26. Austin, TX: UTIP. Galbraith, James K. (2019) Sparse, Inconsistent and Unreliable: Tax Records and the World Inequality Report 2018. Development and Change, 50(3): 329–46. Goldin, Claudia and Lawrence F. Katz (2008) The Race Between Technology and Education. Cambridge, MS: Harvard University Press. Harris, John R. and Michael P. Todaro (1970) Migration, Unemployment and Development: A Two-Sector Analysis. The American Economic Review, 60(1): 126–42. Joint Economic Committee (1982) Hearings on the Economic Report of the President. Washington, DC: Government Printing Offce. Kuznets, Simon (1955) Economic Growth and Income Inequality. The American Economic Review, 45(1): 1–28. Martin, Andrew (1981) Economic Stagnation and Social Stalemate in Sweden. In Monetary Policy, Selective Credit Policy and Industrial Policy in France, Britain West Germany and Sweden, edited by James K. Galbraith. Washington, DC: Joint Economic Committee. Meidner, Rudolf and Gosta Rehn (1951) Fackföreningrsrörelsen och den Fulla Sysselsättningen. Stockholm: LO. Milanovic, Branko (2005) Worlds Apart: Measuring International and Global Inequality. Princeton, NJ: Princeton University Press. Milanovic, Branko (2016) Global Inequality. Cambridge, MS: Belknap Press of Harvard University Press. Piketty, Thomas (2014) Capital in the 21st Century. Cambridge, MA: Harvard University Press. Solt, Frederick (2019) Measuring Income Inequality Across Countries and Over Time: The Standarized World Income Inequality Database. SWIID Version 8.1, May 2019. https:// fsolt.org/swiid (accessed 5 August 2019). Wood, Adrian J.B. (1994) North–South Trade, Employment and Inequality. Oxford: Clarendon Press of Oxford University Press. Wright, Noah (2015) Data Visualization in Capital in the 21st Century. World Social and Economic Review, 5: 54–72. Zhang, Wenjie (2016) The Evolution of China’s Pay Inequality from 1987 to 2012. Journal of Contemporary Chinese Affairs, 45(2): 183–217.

Part 2

The political economy of inequality in the global South In this section, we examine the role that power plays in shaping economic inequality, and particularly the role that market power, economic concentration and regulation play in shaping economic and social outcomes. The chapters in this section focus on several important areas of research which relate to the structure of the economy. These include macroeconomic policy, economic regulation, competition and concentration, ownership and fnancialisation. These broad areas are linked fundamentally by questions of structure – the structure of ownership of assets, for example. This section explores how the structure of the economy, in South Africa and in the global South, continues to reproduce inequality in various dimensions. Chapter 4 links macroeconomic policy to inequality; it assesses changes in the key features and trends within macroeconomic policy in countries in the global South from the end of World War II to the present period. Vishnu Padayachee charts how a focus on macroeconomic policy for long-term growth in output and employment in the 1950s and 1960s gave way to a narrow focus on debt and price stability after the end of the Bretton Woods System in the early 1970s. Understanding these changes requires consideration of differences among countries, and to that end this chapter summarises key developments in India, Brazil, Ethiopia and South Africa. The chapter makes a strong case for relocating macroeconomic policy frmly within overall development strategy, with the primary objective of reviving long-term growth and employment, and addressing inequality in income and wealth, while managing price stability and balance of payments equilibrium. In Chapter 5, Sumayya Goga, Pamela Mondliwa and Simon Roberts return to South Africa and examine the relationships between the structure of the economy, economic performance, the share of returns from economic activity, and different forms of economic power using the metals, machinery and equipment value chain. The analysis shows that economic structure is a source of economic power, and so the relative strength of the upstream industries means their interests are served over those of the downstream industries. This underpins the poor record of structural transformation in South Africa. We then turn to a comparison of the patterns and determinants of economic inequality in Brazil and India. The theoretical approach taken by Alexandre de Freitas Barbosa, Maria Cristina

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Cacciamali and Gerry Rodgers in Chapter 6 considers how the pattern of inequality in each country depends on historically specifc social and economic institutions, giving rise to “growth regimes” which underpin the dynamics of production and distribution. The chapter also considers the new situation in both countries since the global fnancial crisis, especially since 2014. Declines in inequality in Brazil have been reversed, while inequality in India continues to rise. There are obvious challenges for the future development path in both countries.

4

A survey of trends in macroeconomic policy and development in the global South From World War II to the global fnancial crisis and beyond1 Vishnu Padayachee

Introduction While the economic literature is rich in narratives of changing strategies of development, less dense and deep is the literature on changing trends in macroeconomic policy2 in the group of countries variously described as developing, less-developed or, more recently as “emerging-market economies”. Of course, the primary reason for this relative silence lies in the fact that macroeconomic policy was developed in and for developed, industrialised countries and, for various reasons, was voluntarily used in or forced upon developing countries with little or no modifcation (Nayyar, 2011: 340–1). Not many scholars have attempted to look closely at longrun trends in macroeconomic policy in the global South. Deepak Nayyar (2011) and Joseph Stiglitz (2006) are exceptions and they feature prominently in the frst sections of this survey paper, as does Thandika Mkandawire’s (2014) paper for the African Studies Review which focuses on African development policy over the past 50 or so years. In respect to developing countries, macroeconomic policy should be viewed and assessed alongside broader strategies of growth and development. This chapter is organised as follows. I begin by identifying a rough periodisation, noting three distinct structural breaks in macroeconomic policy trends over the past 70 years. Next I review the main ideological paradigms in development thinking and macroeconomic policy currents since World War II (from late colonial development to neo-liberalism). In the section titled “Vignettes of country case studies”, I summarise at a high level of abstraction the main discernible trends in macroeconomic policy in a few Southern countries since the war, ending with South Africa, before turning briefy to some consideration of inequality trends in a few select countries. I then conclude with a brief summary which tries to capture the main trends in respect of macroeconomic policy in the global South.

Three distinct periods For developed countries in the quarter-century after the end of World War II, often referred to as the “Golden Age of Capitalism” (1945–1970), the thrust of

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macroeconomic policy was twofold and broad: internal balance, meaning both price stability and full employment; and external balance meaning balance of payments equilibrium, with special attention to the current account balance. The demise of Keynesian economics since the early 1970s and the end of the Bretton Woods System (the institutional integument that enabled the Golden Age) eventually brought about profound change in macroeconomic policy in the global North – more specifcally a narrower focus in both sets of objectives: The singular pursuit of price stability pushed aside the full employment goal (on the questionable assumption that price stability in and of itself would be good for growth and employment). With the end of the era of fxed exchange rates and with a drive to capital account liberalisation, the balance of payments objective was also diluted. In broad terms the new objective was to reduce and eventually to eliminate an active policy role for the state in such areas of economic life. This is an argument made strongly by Deepak Nayyar (2011), who shows that for developing countries the traditional concern was economic growth for the long term, provided that both infation and the balance of payments remained within manageable proportions. Macroeconomic policy was “embedded in broader growth-oriented development strategies” (Nayyar, 2011: 341). Our second period begins with the debt crises of the early 1980s. The debt crises that took hold in many developing countries, starting with the Latin American crisis of the early 1980s, changed the focus of policy to macroeconomic management in the short term with price stability and public debt management coming strongly to the fore (Nayyar, 2011: 340). Stiglitz has argued in a similar vein: [In developing economies], macroeconomic policy traditionally focused on economic growth. From the 1950s to the 1970s, policy-makers and economists assumed that unemployment and underemployment were caused for the most part by a lack of capital. Accordingly, the policy emphasis was on savings and investment. After the end of the Bretton Woods System in the early 1970s and the developing country [debt] crises of the 1980s many economists and policy-makers shifted their focus to short-term macro-management even in developing countries. (Stiglitz, 2006: 53) A growing orthodoxy around fscal and monetary discipline and fnancial and trade liberalisation solidifed in the developed countries and was carried to developing countries through the conditionalities that were an integral part of the Structural Adjustment programmes imposed by the International Monetary Fund (IMF) and the World Bank. The next break in our periodisation comes with the 2008 global fnancial crisis. A number of factors made it relatively easier for developing countries to move away from the orthodoxy towards a policy package of fscal stimulation and monetary policy easing in this recent period. First, the developed countries themselves moved towards expansionary macroeconomic policies such as qualitative

A survey of trends in macroeconomic policy 57 monetary easing and fscal stimuli; second, an international effort to better coordinate macroeconomic policies across countries was led by the G20 countries; and third, in many developing countries the 2008 fnancial crisis was preceded by a period of rapid and robust economic growth without compromising macroeconomic balance, which made it possible to be less obsessed by issues of public debt. But this was a relatively short period before the old orthodox shibboleths resurfaced almost everywhere (Nayyar, 2011: 345–6). We examine trends in the development and implementation of macroeconomic policy, traditionally defned, in developing countries in the post-war era. In doing so we keep half an eye open to policy changes related to closing income and wealth inequalities in the global South, cognisant of the fact that the literature suggests that analysing and addressing income inequality was a very marginal policy focus in the global South, a situation not dissimilar to the global North until the early 1990s. We therefore deal with the issue of “inequality” separately and briefy later in this survey. We plan in this way to survey the broad literature on macroeconomic policy changes across developing countries, as far as this is possible, to identify commonalities, continuities and divergences, and then to examine the changing situation in a select number of developing countries in the post-war era (Brazil, Ethiopia, India and South Africa).

Changing ideological paradigms of development But before we get there, let us look at another take on developments in the postwar era, viewed from what (for lack of a better term) we call a changing ideological lens over time. Mkandawire has argued: The focus of economists working on Africa has moved from the structuralist–developmentalist and neo-Marxist perspectives of the 1960s and 1970s, through a neoliberal phase of the 1980s and 1990s, to a more eclectic combination of neo-institutionalism, growth orientation, and welfarist interests in poverty and redistribution issues. These shifts in development thinking are, of course, not unique to Africa. However, they have not been the subject of much debate in Africa. (Mkandawire, 2014: 173) Late colonial development As the world entered the second great war, the appalling legacy of the Great Depression was fresh in the memories of most, and anti-colonial protests and riots were breaking out all over the world in the late 1930s. The colonial powers, notably Britain and France, faced the prospects of losing their empires in Africa and Asia and contemplated options to stave off the inevitable. The British Colonial Offce tried one last trick; it took the form of the Colonial Development and Welfare Act of 1940, and the historian Fred Cooper argues it was a form of

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development to save colonial civilisation as they understood it (Cooper, 1940; Cooper and Packard, 1997). John Maynard Keynes himself was widely viewed with some envy, in the United States (US) and in many developing countries, as the intellectual force of the times. His infuence permeated the Colonial Offce and, as Fred Cooper shows, the British deployed a “colonial version of Keynesianism” without realising that it would open up numerous points of contestation in their own discourse and “paved the way for decolonization” (Hart, 2018: 2). Keynesian macroeconomics – with its focus on public investment, economic growth and stabilisation, and a role for an activist state – was tied to a tradition of thinking that included development, political economy and indeed, at a push and in contradictory ways, even revolutionary social and political movements in the “Third World”. Keynesian macroeconomics and the birth of development economics Keynes died “prematurely” in 1946 before the birth of modern development economics. A lifetime defender of empire, he had little direct interest in the condition of developing countries. The frst great development experiment after the war – the second Indian fve-year plan, whose theoretical framework was developed by P.C. Mahalanobis – owed more to the Soviet Model than the British-infuenced First Plan or to Keynesian macroeconomics in general. Development economics was from the onset far more dirigiste than anything Keynes would have favoured. And Keynes’s focus was on the demand side, while early development planning was a story of relieving supply side constraints. Yet despite all this Keynes was an infuential fgure both directly and indirectly in the birth and development of early modern development economics. Amiya Kumar Bagchi (2005: 143) points to three seminal Keynesian contributions: forging the tools of macroeconomics, including an activist state and fscal policy, which was used widely from the 1950s in many developing countries; “signposting the dangers of unlimited capital mobility” whose value was again recognised after the 2008 fnancial crisis; and paying attention to all aspects of growth and stabilisation, including those aspects for addressing unemployment, stabilising primary goods prices and regulating fnancial markets. Then there was his role in the establishment of the Bretton Woods System which acted as a crucial integument under which many developing countries prospered in the Golden Age of Capitalism. But early post-war development economics was infuenced by W.W. Rostow and his view that all societies progress in defnite stages from traditional roots, through a “take-off” into maturity and beyond, an approach labelled (early) modernisation. Each stage was defned by, among other key factors, changes in savings, consumption and the rate of investment. Capital shortages that constrained growth in developing countries could be resolved in large part by foreign capital infows, and the relationship between developing countries and the suppliers of foreign capital in the North was, in Rostovian terms, benign. That understanding was to change soon enough in the course of the emergence of many different

A survey of trends in macroeconomic policy 59 strands of radical ideas in development economics, in which the key fgures included Raul Prebisch, Paul Baran and Andre Gunder Frank, who mounted a “swingeing critique” of Rostow (Harriss, 2005: 21). Dependency theory, neo-Marxism, structural adjustment and inequality Of course, the big inequality debates of the 1950s to 1970s centred around what some described as the intrinsic underdevelopment of the South (the periphery), resulting from its integration or engagement through trade and investment with the North (the core) on unequal terms. The great divide took the form of North– South inequalities and the divergence of income and wealth between these two groups of countries. A “soft” version of this approach was associated with Prebisch and his Latin American structuralists; it appeared to work well in the Latin American context but its transfer to other contexts seemed to have been less successful. A more radical tradition of dependencistas attributed the slow, uneven and frustrating development experience of Latin American countries to these structural fxes or inequalities in North–South relationships. Many prescribed a high degree of isolation or delinking from the global North as a precondition of any Rostovian take off. More conventional scholars, including Simon Kuznets, argued using impressive longitudinal data sets that such inequalities among countries would decline in the long term in the course of development. Marxist political economy approaches were infuential in the 1960s and 1970s, with many scholars using this for their studies of developing countries. Infuential texts include Bill Warren’s (1980) Imperialism: Pioneer of Capitalism, described as a text in classical Marxism, and Philip Corrigan, Harvie Ramsay and Derek Sayer’s (1978) more Maoist-leaning Social Construction and Marxist Theory: Bolshevism and its Critics. While there is no challenging the ideological appeal of Marxist political economy to many in this feld, and its powerful and important role as a critic of capitalism, can we discern anything particularly Marxist in the methods and practical economic policies on offer? The answer must be “no” or, as a more generous Henry Bernstein (2005: 126) concludes, “probably very little”. No doubt any suggestion that “socialism” was a feasible development option cannot be sustained. Rather Marxists could be said to associate with a wide range of progressive positions shared with structuralists, dependencistas and social democrats (including an anti-war and anti-nuclear stance), and they pushed development strategies such as punting state intervention, public investment, and planning and coordination that could also be linked to other schools of thought. But by the 1960s and 1970s, a sharp increase in inequalities within countries in the South itself became noticeable. By the 1980s the more successful countries (what came to be known as the Newly Industrialised Countries or NICs) drew away from the others, the less-developed or developing countries. Although growth rates were high albeit uneven, especially in the 1960s, the common Western wisdom for remedial action in Southern countries gradually turned to “supporting” macroeconomic policy reform in these countries. The mounting

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debt problems and rising oil prices coupled with falling terms of trade for the mainly primary goods exports of developing countries eventually led to balance of payments problems as well, and opened the door for World Bank and IMF intervention (structural adjustment). Reducing public debt, restoring price stability and balance of payments equilibrium all combined to rule out activist progrowth fscal policy and to focus on both the internal and the external value of national currencies. The outcomes were horrifc for the most vulnerable and poor peoples of these countries which were forced to submit to IMF and World Bank conditionality, as budgets for education, health and social policies came under massive pressure. Even by the 1980s the issue of intra-country inequalities in the South did not feature highly on macroeconomic policy agendas. But what we do know about changes in income distribution patterns in developing countries is not without interest for us. The evidence (albeit somewhat shaky) suggests that it was the urban sector in many Southern countries that bore the brunt of structural adjustment and other (home-grown) economic policy reform initiatives. Urban employment tended to fall along with real urban wages, which fell by about 30 per cent between 1980 and 1985. At the same time in many countries undergoing structural adjustment there was a noticeable improvement in the internal terms of trade in favour of agriculture. The net effect was a narrowing of intra-country income inequalities, at least if looked through an urban–rural lens. Given its signifcance in many countries in sub-Saharan African countries and elsewhere in the South and claims of its negative impact, we had until recently little evidence-based knowledge about the impact of IMF structural adjustment programmes on intra-country inequality in sub-Saharan African countries and other recipients of IMF loans. A recent study by Timon Forster, Alexander Kentikelenis, Bernhard Reinsberg, Thomas Stubbs and Lawrence King (2017) has helped to fll this gap. Studying a panel of 131 countries over the period 1980 to 2014, they argue: In many regions of the world, within-country income inequality has increased over the past three decades. This study has shown that part of this increase may be attributed to IMF programmes … While we show that fscal issues – austerity measures restricting government expenditure – have adverse distributional consequences, poverty-reduction measures have an inequality-narrowing effect. This is true for economies in Sub-Saharan Africa. In addition, we fnd that conditions of the external sector lead to higher income inequality in all regions considered. This impact primarily works through adverse effects of fnancial openness … turning our attention to the fnancial sector, the models indicate that a reduction in infation, a common target of IMF programmes, widens the pay gap. (Forster et al., 2017: 96–7) So the variables they found that widen inequality are fscal austerity, trade and fnancial liberalisation and a reduction in infation, all favourite IMF conditions.

A survey of trends in macroeconomic policy 61 Poverty reduction programmes (like Poverty Reduction Support Programmes or PRSPs), on the other hand, help to narrow inequalities. Debt and growth and the birth of neo-liberalism A few years after the Lehman Brothers crash, a paper was published by Carmen Reinhart and Kenneth Rogoff (2010) in which the authors purport empirically to show the negative consequences of rising public debt on growth. In this nowfamous and infuential paper, published in the world’s top mainstream economics journal, the American Economic Review, Reinhart and Rogoff argue that over the period 1946–2009 advanced economies with a public debt-to-GDP ratio above 90 per cent had an average real annual GDP growth of –0.1 per cent. Where this ratio was at lower levels, average annual growth ranged between 3 and 4 per cent. Public debt levels of such a magnitude were, in other words, bad for growth. This is a key argument behind what constitutes the Treasury or orthodox view of economics and the basis of the bizarre term “expansionary fscal contraction”. In a powerful rebuttal published in the post-Keynesian Cambridge Journal of Economics, Herndon, Ash and Pollin (2014) replicate the Reinhart and Rogoff analysis. They come to the conclusion that growth rates in fact averaged 2.2 per cent, not –0.1 per cent, over the same period for the same group of countries. They conclude: We … believe that the debate generated by our critique of Reinhart and Rogoff has produced some forward progress in the sphere of economic policy making. In particular, it has established that policy makers cannot defend austerity measures on the grounds that public debt levels greater than 90% of GDP will consistently produce sharp declines in economic growth. (Herndon et al., 2014: 22) Despite this critique, the Reinhart and Rogoff paper remains highly infuential in the United States and Europe, and sadly also in some countries in the global South. Though written only in 2010, it captured the spirit of the neoclassical position on debt that has dominated thinking on fscal policy since the early 1980s and reset the policy agenda for a post-crisis world. Nobel Prize-winning economist Paul Krugman, a (moderate) critic of Reinhart and Rogoff, has conceded that their paper “may have had more immediate infuence in public debate than any previous paper in the history of economics” (in Herndon et al., 2014: 5, my emphasis). That infuence has permeated both developed and developing countries. The effect of these new neoclassical interventions since the 1980s has been to severely limit, if not entirely exclude, a role for the state in macroeconomic policy. It is not my intention fully to engage the Reinhart and Rogoff debate here, save to use it to note that policy-makers concerned about growth, development and redistribution can be spooked by such paralysing analyses, leading them to hand total control of monetary policy to an independent central bank, to reject any activist

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role for fscal or monetary policy and to funnel all attention on reducing public debt to the almost total exclusion of growth-enhancing public investments. The current post-global fnancial crisis situation in Africa is more eclectic. Mkandawire notes: The current thematic areas are Poverty, Income Distribution and Labor Market Issues; Trade, Regional Integration and Sectoral Policies; Macroeconomic Policies, Stabilization and Growth; and Finance, Resource Mobilization and Investment. This current set of themes evolved from a consolidation of macroeconomic and trade issues to make room for the introduction of the theme [of] poverty and labor markets and … the incorporation of issues [of] natural resource management, agricultural policy … and food security. (Mkandawire, 2014: 189)

Vignettes of country case studies Brazil Brazilian history in the twentieth century was marked by an alternation between democratic and authoritarian/military political regimes. Like many developing countries, Brazil followed an import substitution growth model after World War II with the substitution of consumer goods, investment goods and armaments production topping the table at various times depending in part on the political regime in place. Korner, Maass, Siebold and Tetzlaff (1986: 74), argue that “all previous Brazilian governments since the Second World War had again and again vacillated between half-hearted attempts at stabilization and ambitious development programmes”. Between 1964 and 1974 its growth model was “exclusive” – that is, it excluded workers as benefciaries. This changed in the next (democratic) era when wage indexation was put in place. Most commentators, from the left and right but for different reasons, would agree that the import substitution industrialisation (ISI) model in Brazil had limited success after an initial momentum. In time a number of factors came into play. Saad-Filho (2010) lists and analyses six such factors: a balance of payments constraint; the fragility and ineffciency of the Brazilian fnancial sector, especially for long-term development fnance; fscal defcits; high infation; rising income inequality accompanied by social tensions; and a lack of policy coordination. High levels of indebtedness have dogged Brazil’s post-war economic record, and eventually in 1982 Brazil was forced to go cap in hand to the IMF and accept rescheduling agreements with its private and public creditors and the full package of IMF’s traditional medicine including an end to wage indexation and a reduction of real wages. Added to this was the problem in its balance of payments arising out of the heavy reliance of its industries on oil imports. The oil price hikes of 1973 and 1979, therefore, severely hit Brazil’s balance of payments. Despite its best efforts the government was not able to meet the IMF’s austerity targets,

A survey of trends in macroeconomic policy 63 and the IMF cancelled its second tranche payment. To begin the process of requalifying for another IMF loan the government forced through more austerity measures, which impacted worst on workers and the poor leading to widespread strikes. Given these problems Brazil from the 1970s to the early 1990s underwent something of a change in its accumulation model, from a failing ISI model to neo-liberalism. It was, Saad-Filho (2010: 12) argues, neo-liberal in four senses: “neoliberal economic policies, the microeconomic integration of domestic capital into transnational circuits (i.e. denationalisation of frms and their integration into global value chains), a decisive role for fnance in economic policy-making, and political democracy” which stabilises and ensures predictability in the rules of the neo-liberal game. The package of reforms underpinning this shift included raising interest rates, infation targeting, fscal reforms along orthodox lines, and capital account liberalisation. The state quickly lost its institutional capacity for development planning and coordination. These reforms did deliver short-term stabilisation and some growth. President Lula da Silva’s election in 2002 was based on what Morais and SaadFilho (2005: 4) call a “losers’ alliance” – that is, the losers under neo-liberalism, including workers and the urban poor, whose aim was to limit their losses going forward. The alliance lacked strategy and hegemonic power to claw back neoliberalism’s excesses. But Lula’s popularity and economic success and his third reelection worried Brazilian and international fnanciers and the neo-liberal elite who feared the loss of political and economic leverage (Morais and Saad-Filho, 2005: 8). Seeking a fourth election victory, Lula capitulated to intense pressure from fnance, the media and the Bretton Woods institutions, and things moved fast to secure neo-liberalism’s continuation: Realising that Lula was poised to win, the neoliberal camp now demanded institutional guarantees of the continuity of neoliberalism, especially an independent Central Bank committed to a “responsible” monetary policy and a new IMF agreement spanning well into the new administration. Lula acquiesced, and the wheels turned extraordinarily rapidly in Brasília and Washington. (Morais and Saad-Filho, 2005: 10) Though it occupied a political space on the left and had popular support from workers and the poor, the Lula administration after 2002–2003 was also able schizophrenically to accommodate virtually all the demands of neo-liberalism including “fscal orthodoxy, privatisation, the concession of privileges for fnance or the rich and neoliberal reform of pensions, labour law, the fnancial system and social security” (Morais and Saad-Filho, 2005: 23). The model under Lula has been described variously as a hybrid, as heterodox or as neo-developmentalism, sometimes referred to as New Developmentalism (Coleman, 2014; Bond, 2020). There was a focus on industrial and infrastructure development wrapped in a fairly orthodox yet mixed macroeconomic framework.

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According to Patrick Bond (2020), New Developmentalism’s promotion of manufactured exports is closely associated with four macroeconomic, monetary and fscal policy factors. First are falling exchange rates, second is a shrinking state defcit on current (not capital) spending so as to avoid crowding out fnancing for private sector investment, third is a commitment to establishing new infrastructure, and fourth is a relatively low real interest rate. A cash transfer scheme, consisting of many elements including the federally administered Bolsa Familia programme which started in 2003, was introduced to counter rising poverty and inequality in Brazil; some empirical analysis confrms that it has had some success in reducing Brazilian poverty and inequality. Thus, for example, Soares et al. conclude: the Brazilian programs for the direct transfer of cash to the low income population are important because, without them, it would hardly be possible to eradicate poverty or reduce inequality to tolerable levels within a reasonable time frame. Even without a long history and without reaching all of the eligible population, they have the virtue of alleviating the poverty of millions of Brazilians. (Soares et al., 2006: 26) Widely publicised corruption scandals, poor economic performance and social tensions led to the defeat in October 2018 of the broad left after many decades in power, going back to Cardoso’s government and through Lula’s two terms and that of his chosen successor Dilma Rousseff. Elected instead was the popular, pro-landowner, anti-corruption, right-wing, ex-military captain, Jair Bolsonaro. India In a review of economic performance and policy shifts in India since independence Deepak Nayyar (2006) attempts with success to correct serious misconceptions of the Indian economy, misconceptions largely informed by viewing that economic history through a contemporary orthodox lens. Indian economic policy under its frst Prime Minister Nehru is perceived as an odd mix of late colonial policy and a kind of Fabian socialism popular at that time: heavy industrialisation, heavy regulation and licencing arrangements, but there were also important successes in the 1950s which is occluded in the accounts of the current batch of neo-liberal sympathisers. India’s economic performance in the 1950s did not resemble the caricature of a lumbering elephant (captured by Raj Krishna as “Hindu rates of growth”) – it was respectable and a radical break with its performance during the colonial era. Nor is the image of a shining Indian economy (a running tiger) of more recent decades correct either – but it was still impressive. In terms of economic policy there was in the 1950s: a conscious attempt to limit the degree of openness and of integration with the world economy, in pursuit of a more autonomous path to development.

A survey of trends in macroeconomic policy 65 For another, the state was assigned a strategic role in development because the market, by itself, was not perceived as suffcient to meet the aspirations of a latecomer to industrialisation. Both represented points of departure from the colonial era which was characterised by open economies and unregulated markets. (Nayyar, 2006: 1454) Economic growth was reasonably robust throughout the past 70 years (in line with the global average); the real failure has been an inability to transform growth into development for the beneft of the poor. As Nayyar observes, the current neo-liberal world view from India ignores the signifcant achievements of that [earlier] era, more than four decades were simply wasted. For them, the economic liberalisation in the early 1990s, which reduced the role of the state to rely more on the market, dismantled controls to rely more on prices, cut back on the public sector to rely more on the private sector and increased the degree of openness of the economy at a rapid pace, represented a new dawn. It is almost as if the economy began life in 1991. And the ideologues are convinced that the economic reforms of the early 1990s unleashed economic growth and led to the superb economic performance that is now much admired. (Nayyar, 2006: 1452) There is no doubting the evidence from the data that India has performed exceptionally well even by world standards in recent decades. What accounts for this? For India’s orthodox economists the answer lies in the liberalising economic reforms instituted by Congress Prime Minister Manmohan Singh from about 1991 and accelerated by later BJP governments including the current Modi government. As Nayyar notes, however, the turning point in India’s economic growth was 1980 and economic reforms date from the early 1990s. He provides four reasons for this, which should command greater attention by policy-makers in the developing world. First, expansionary macroeconomic policies since c. 1980 did increase aggregate demand and stimulated economic growth. Second, an increase in the total investment–GDP ratio started in the 1970s and was sustained throughout the 1980s. Third, there was a signifcant increase in public investment which was sustained throughout the 1980s. Finally, trade liberalisation and deregulation in industrial policies since the later 1970s also contributed to increase productivity and economic growth. This is, in short, a mixed but more realistic set of explanations. Yet the real problem lies not in growth but in its distributional challenges: India’s economic growth rates, respectable in the frst era, impressive since the 1980s, have not translated into development and a meaningful improvement in the lives of the poor. India must provide all its citizens with the capabilities, opportunities and rights they need to exercise their own choice for a decent life. In the pursuit

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Ethiopia Ethiopia is Africa’s oldest independent country, and apart from a fve-year occupation by Italy’s fascist government beginning in 1935 it has not had a typical colonial history of the type we have seen in some of the other countries selected for this impressionistic survey. Emperor Haile Selassie offcially reigned from 1930 until he was ousted in 1974 by a military committee under the leadership of Mengistu Haile Mariam, which abolished the monarchy and embraced Marxism and communism with somewhat disastrous political and economic results. I do not plan to say much about economic policy in the twentieth century, and will cut soon to more contemporary developments. Ethiopia’s economy around 1940 was largely based on subsistence agriculture and its nomadic people also raised livestock. In the early 1950s Haile Selassie established a central administrative bureaucracy to implement his development plans aimed at facilitating a transition from subsistence agriculture. Social and physical infrastructure improved and the skills capacity was enhanced to support industrial development. The 1974 revolution ushered in a period of nationalisation and economic restructuring with mixed results for the economy (Ofcansky and Berry, 1991). It is worth briefy mentioning Ethiopia’s current success (without taking a long post-war view) if only because of the unorthodox, hybrid economic policy that it followed in the face of opposition from the World Bank and others. Its strategy may be termed that of a “development state type” but elements of neo-liberalism are practiced especially in agriculture in some regions. While such market-driven practices are not openly contested by the country’s revolutionary government, they are deliberately undermined in practice (Lie and Mesfn, 2018). Ethiopia’s impressive growth rates, averaging 10 per cent per annum over the past decade and more, were driven by substantial public-sector infrastructural investment. Coutts and Laskaridis (2019) show that contrary to the (neoclassical) concern that such high public sector investment would “crowd out” private sector investment, the latter kept pace with public investment, being lower than public investment (as a percentage of the GDP) in the frst phase and appreciably higher in the second. Between 2001 and 2011, public sector investment was the leading contribution to total Ethiopian investment. Since 2012, private sector investment has overtaken the public sector, averaging about 23% of GDP, although the

A survey of trends in macroeconomic policy 67 latter has remained at about 15% of GDP. Within the public sector, general government investment was stable at about 8% of GDP. The investment of public enterprises increased from under 4% to about 10% of GDP in ffteen years. This is a substantial rate of investment and a signifcant contribution to the overall growth in GDP … The other feature is the sharp rise in private sector investment after 2011, which now substantially exceeds public sector investment. (Coutts and Laskaridis, 2019: 8) This is precisely what was predicted by the Macroeconomic Research Group (MERG) model and strategy proposed for South Africa in 1993, although it was rejected by the African National Congress (ANC) (see below). Ethiopia’s remarkable economic growth over the past decade or so is testimony to the potential role that public investment can make, and to the reinforcing dynamics of public and private investment over time. Of course, there are costs. The concern that has emerged is the risk of exposure to spiralling external debt, calling for careful management of the currency and reserves, and policies aimed at increasing output and exports of both agriculture and industry. And although Ethiopia’s political crisis continued throughout this period, this cannot detract totally from its economic successes. The unorthodox Ethiopian model has garnered praise from many quarters. Möller and Wacker (2015, in Coutts and Laskaridis, 2019) praised the successful economic development of the past decade, led by public sector investments while maintaining macroeconomic stability: They note that the public-sector-led structure of development included heterodox fnancing policies such as direct borrowing from the central bank in contrast to that of other African countries in which reforms to promote private sector development were more prominent. They questioned whether, despite this phase of success, the strategy was sustainable without hitting macroeconomic constraints that would bring the rapid growth to a halt. (Möller and Wacker, 2015, in Coutts and Laskaridis, 2019: 226) The IMF Article IV report, agreed with the Ethiopian government in January 2018, is also on balance a positive one, with their main concern being on the growth in current account defcits (Coutts and Laskaridis, 2019: 16). Despite its impressive growth – it is often referred to as the African Tiger – there remains a major problem of poverty in its rural areas, coupled with growing regional and other inequalities. South Africa Bill Freund (2019) argues that there was a signifcant continuity in economic policy in South Africa from the late Smuts era, which he describes as a nascent

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“development state” under the penumbra of late British imperialism, into the frst few decades of Afrikaner-centred development after 1948. Key economic policies and key fgures remained in place, at least initially. Stephen Gelb (1991: 2) has described the post-war growth model as one of “racial Fordism” focusing on extending industrialisation by means of the production of goods that were previously imported (that is, import substitution industrialisation) – being in the main the importation of sophisticated consumer goods for the white South African market.3 Fiscal policy remained somewhat activist, under the infuence of Keynesianism – a separate capital or loan account in the budget used to promote infrastructure and some industrial development was in place from 1937 until 1967. Norval (1962: 126) characterises this period as having a “rather more positive growth bias” but at the same time it was not an era in which balancing the budget free from infationary fnancing was sacrifced. Monetary policy, on the other hand, despite occasional phases of growth orientation, remained primarily focused on price stability and the fght against infation (Rossouw, 2011). The importance attached to conservative monetary policy with a focus on price stability was matched by the pursuit of fnancial stability through the maintenance of stable exchange rates. To this end, as allowed by the Bretton Woods agreements, South Africa imposed restrictions on foreign exchange transactions from the early post-war era, and especially after the Sharpeville uprising of 1960 strict controls of capital movement were instituted to head off capital fight as much as possible. The De Kock Commission into monetary policy, the Wiehahn Commission into labour reform and a slew of commissions addressing reform in trade, competition and industrial policy all ushered in an era of market-oriented reforms. They turned the substance of economic policy away from a decades-old preoccupation with state intervention of a pro-growth variety. In the transition to democracy in South Africa, an attempt was made to place on the table a state-led investment programme aimed directly at promoting growth and employment and at reversing the legacy of racial and class inequalities that lay at the heart of the apartheid–capitalist project. That was the aim of the ANC’s own macroeconomic policy think tank, the Macroeconomic Research Group.4 The theoretical foundations of MERG’s economic policy framework lie in what I would characterise as a Cambridge, post-Keynesian or structuralist approach to economic policy where effective demand failures and the possibility of under-full-employment equilibrium are recognised as key problems. MERG envisioned a two-phase, “crowding-in” approach to South Africa’s development. The latter was built around a powerful state-led social and physical infrastructure investment programme focusing on housing, education, health and physical infrastructure investment as the growth drivers in the frst phase, followed by a more sustainable growth phase which would see private-sector investment kick in more forcefully as growth picked up (MERG, 1993: Chapter 1). The ANC leadership chose to dump MERG, its own policy think tank, and did not even debate it within the movement – against calls for democratic

A survey of trends in macroeconomic policy 69 debate of economic policy, especially from its trade union and civil society allies. Two  years after gaining power, it introduced a homespun, neo-liberal macroeconomic policy framework – the Growth, Employment and Redistribution programme (GEAR). GEAR was (ostensibly) produced and published in the wake of the currency crisis in June 1996, to counter the claim that the ANC-led government had no modelled macroeconomic policy. Central to GEAR, as even senior state bureaucrats now admit, was an orthodox macroeconomic policy. Alan Hirsch, a key fgure in the policy world since the late 1980s and then at the Department of Trade and Industry, argued that, faced with new global realities, the ANC took the view at that time that it had to “play the globalisation game, but try to play it our way … So we adopted a fairly orthodox set of policies”, especially in respect of monetary, fscal and trade policy (Hirsch, n.d.: 1–2). What we now know without a shadow of doubt is that apart from low growth and rising unemployment, inequality (including intra-black) has widened sharply in post-apartheid South Africa on the back of GEAR – whether directly because of GEAR or not is a matter of debate.

Inequality Latin America’s attempts at reducing inequality are generally accepted as being a success story. Giovanni Andrea Cornia argues that: The last decade experienced a Polanyian reversal of the political, economic, and distributive trends of the 1980s and 1990s. Between 2002 and 2010 inequality fell – albeit to a different extent and with different timing – in all 18 countries analysed with the exception of Nicaragua and Costa Rica. (Cornia, 2014: 61) Many factors account for this, and macroeconomic policy changes can be counted among them. Latin American countries shifted from fxed to managed exchange rates to realise competitive currencies; their central banks accumulated large international reserves and a few introduced capital controls; they abandoned the pro-cyclical fscal and monetary policies of the past in favour of reducing defcits, some even achieving budget surpluses; interest rates were lowered and public banks increased lending; and tax reforms to close loopholes and reduce tax exemptions were introduced (Cornia, 2014: 62ff.). Now we can turn to a few country cases. James K. Galbraith has examined inequality trends in Brazil and Argentina in the period of “high neo-liberalism” – that is, from the 1990s. In both countries he found that inequality increased, and argued from the evidence that this could be largely attributed to the “big increase in the economic weight, power and income of the banks” (Galbraith, 2012: 252). The power of fnance was the biggest driver of increases in inequality in these two Latin American countries. As the crisis passed, the weight of the banks declined. In Brazil especially this “retreat of fnance” created space for an expansion of the

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public sector, making Brazil “one of the success stories of the early twenty-frst century” (Galbraith, 2012: 252). Democratic transitions in the middle-income countries of Brazil (1985) and South Africa (1994) paved the way for innovative social protection programmes in these countries, widely known to have among the highest levels of inequality in the world. Political and constitutional changes have supported the introduction of such programmes. South Africa’s scheme has been in the form of social assistance (grants to targeted vulnerable groups including children, the aged, and the disabled), while Brazil’s initially took the form of social insurance, shifting more recently to social assistance. But the Brazilian pattern does not appear to be the case in India. Deaton and Dreze (2002) analyse trends in poverty and inequality in India in three time periods: 1987–1988, 1993–1994 and 1999–2000. Here are their general conclusions: Based on further analysis of National Sample Survey data and related sources, we argue that there has been a marked increase in inequality in the nineties, in several forms. First, there has been strong “divergence” of per capita expenditure across states, with the already better off states (particularly in the southern and western regions) growing more rapidly than the poorer states. Second, rural–urban disparities of per capita expenditure have risen. Third, inequality has increased within urban areas in most states. The combined effects of these different forms of rising inequality are quite large. (Deaton and Dreze, 2002: 3729) Some have argued that such increases in inequality in India are an inevitable consequence of its liberalising economic reforms since the early 1990s. Proponents of the “Kuznets Curve” would argue that this was to be expected and that such inequality will be reversed in time. But Deaton and Dreze (2002: 3741) believe that evidence from China after its reforms suggests otherwise and that a further accentuation of income disparities in India in the near future is very likely.

Summary and conclusion This admittedly cursory review of developments in macroeconomic policy in a select number of Southern developing countries not only brings out differences between these countries and those in the developed North but also inequalities and differences within developing countries. In broad terms, these may be attributed to differences in colonial histories, institutional settings, structural characteristics, resource endowments, changes in sectoral weights (e.g. in the power of fnance), degrees and nature of integration into the world economy and a host of other factors. As a generalisation we can say that an early focus on development/ growth and a state-led public investment programme focused on industrialisation and infrastructure gave way to fscal imbalances, a debt crisis and inevitably to the entry of the IMF and World Bank into domestic macroeconomic management.

A survey of trends in macroeconomic policy 71 As Deepak Nayyar (2011: 341) points out, until the 1980s macroeconomic policies were growth-oriented and shared a long-term perspective. A post-war Keynesian consensus around counter-cyclical demand management then gave way to a narrow focus on fscal policy to contain growing public debt, monetary policy to control infation regardless of growth – that is, a focus on price and fnancial stability until infation was tamed and fscal and external balances were restored to the satisfaction of the IMF if not the majority of the peoples of these countries. That is the almost universal pattern of changes in macroeconomic management in the global South emerging from our survey. For Nayyar (2011: 342) the challenge is clear if not simple: “to return a developmental approach to macroeconomic policies, which is based on an integration of short-term counter-cyclical fscal and monetary policies with long term development objectives”. This can be termed Keynesianism plus developmentalism, growth with the quest for full employment, to which suite of policies we must add the goal of closing inequalities of all kinds – between the North and the South, within Southern economies, and inside Southern and Northern countries for that matter (such as urban–rural divides). All must feature as the key macroeconomic goals of the twenty-frst century. The big take-away from our survey can be summarised as follows. Much more deliberative work is needed to ensure several important factors: a continuous link between national development plans and macroeconomic policy; better coordination of fscal and monetary policy (not so straightforward in an age of independent central banks); and the structural integration of social, labour and industrial policy into overall developmental planning aimed at improving growth, raising employment and reducing inequality. Social policy, as some country case studies show, needs to be brought in from the cold and not considered as some kind of ameliorative afterthought. Careful planning within a capacitated and embedded state machinery to ensure effective prioritisation, timing and sequencing of policy implementation is crucial to success. Standing in the way of the realisation of this vision are many forces – including the realm of global, national and local politics – which shape macroeconomic policy choices and implementation.

Notes 1 Published since this paper was completed is a new book on macroeconomics in the global South edited by Anis Chowdhury and Vladimir Popov, entitled Macroeconomic Policies in Countries of the Global South (New York: Nova Science Publications, 2019). The volume is a useful addition to the scant literature dealing with macroeconomic policies for inclusive and sustainable development in developing countries. 2 By macroeconomic policy we mean fscal, monetary and balance of payments or exchange rate policy in a fairly traditional sense as employed by Keynes in the 1930s and in the form that is covered by both orthodox and heterodox defnitions since then. 3 This characterisation of an ISI model with backward linkages from consumer goods production to intermediate and capital goods has been challenged by, among others, Ben Fine and Zavareh Rustomjee (1996: 14). 4 This section on MERG is drawn from Padayachee and Van Niekerk (2019).

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References Bagchi, Amiya Kumar (2005) Keynes, Kaldor and Economic Development. In The Pioneers of Development Economics, edited by K.S. Jomo. London/New York: Zed Books. Bernstein, Henry (2005) Development Studies and the Marxists. In A Radical History of Development Studies, edited by Uma Kothari. Cape Town: David Philip/New York: Zed Books. Bond, Patrick (2020) BRICS Banking and the Demise of Alternatives to the IMF and World Bank. In International Development Assistance, and the BRICS, edited by J. Puppim de Oliveira and Y. Jing. London: Palgrave Macmillan. Coleman, Neil (2014) What Can South Africa Learn from Lula’s Brazil? A COSATU Perspective. In A Lula Moment for South Africa: Lessons from Brazil, edited by Edward Webster and Karen Hurt. Johannesburg: Chris Hani Institute. Cooper, Fred (1940) Modernising Bureaucrats, Backward Africans and the Development Critique. In International Development and the Social Sciences: Essays on the History and Politics of Knowledge, edited by F. Cooper and R. Packard. Berkeley, CA: University of California Press. Cooper, Fred and Randall M. Packard (1997) International Development and the Social Sciences: Essays on the History and Politics of Knowledge. Berkeley, CA: University of California Press. Cornia, Andrea Giovanni (2014) Falling Inequality in Latin America: Policy Changes and Lessons. World Financial Review, Jan–Feb: 60–3. www.worldfnancialreview.com. Accessed 1 March 2019. Corrigan, Philip, Harvie Ramsay and Derek Sayer (1978) Social Construction and Marxist Theory: Bolshevism and Its Critics. London: Macmillan. Coutts, Ken and Christian Laskaridis (2019) Financial Balances and the Development of the Ethiopian Economy. In The [Oxford] Handbook of the Ethiopian Economy, edited by Fantu Cheru, Christopher Cramer and Arkebe Oqubay. Oxford: Oxford University Press. Deaton, Angus and Jean Dreze (2002) Poverty and Inequality in India: A Re-Examination. Economic and Political Weekly, 37(36): 3729–48. Fine, Ben and Zavareh Rustomjee (1996) The Political Economy of South Africa, from MineralsEnergy Complex to Industrialisation. Johannesburg: Witwatersrand University Press. Forster, Timon, Alexander Kentikelenis, Bernhard Reinsberg, Thomas Stubbs and Lawrence King (2017) How Structural Adjustment Programmes Affect Inequality: A Disaggregated Analysis of IMF Conditionality, 1980–2014. Draft unpublished paper. Cambridge, England. Freund, Bill (2019) South Africa in the Twentieth Century: A Development History. Cambridge: Cambridge University Press. Galbraith, James K. (2012) Inequality and Instability: A Study of the World Economy Just Before the Great Crisis. New York: Oxford University Press. Gelb, Stephen (1991) South Africa’s Economic Crisis. London: Zed Books/Cape Town: David Philip. Harriss, John (2005) Great Promise, Hubris and Recovery: A Participant’s History of Development Studies. In A Radical History of Development Studies, edited by Uma Kothari. London/New York: Zed Books. Hart, Gill (2018) Comments on Geoff Mann’s “In the Long Run We Are All Dead: Keynesianism, Political Economy and the Revolution”. American Association of Geographers Newsletter. 11 April 2018.

A survey of trends in macroeconomic policy 73 Herndon, Thomas, Michael Ash and Robert Pollin (2014) Does High Public Debt Consistently Stife Economic Growth? A Critique of Reinhart and Rogoff. Cambridge Journal of Economics, 38(2): 257–79. Hirsch, Alan (n.d.) Globalisation and Policy Formulation: Refections on the South African Experience. Unpublished mimeo, Pretoria. Korner, Peter, Gero Maass, Thomas Siebold and Rainer Tetzlaff (1986) The IMF and the Debt Crisis. London; NJ: Zed Books. Lie, John Harald Sande and Barouk Mesfn (2018) Ethiopia, A Political Economy Analysis. Oslo: Norwegian Institute for International Affairs. Macroeconomic Research Group (MERG) (1993) Making Democracy Work. A Framework for Macroeconomic Policy in South Africa. Bellville: CDS/ANC. Mkandawire, Thandika (2014) The Spread of Economic Doctrines and Policymaking in Postcolonial Africa. African Studies Review, 57(1): 171–98. Morais, Lecioand and Alfredo Saad-Filho (2005) Lula and the Continuity of Neoliberalism in Brazil: Strategic Choice, Economic Imperative or Political Schizophrenia? Historical Materialism, 13(1): 3–32. Nayyar, Deepak (2006) Economic Growth in Independent India: Lumbering Elephant or Running Tiger? Economic and Political Weekly, 41(15): 1451–8. Nayyar, Deepak (2011) Rethinking Macroeconomic Policies for Development. Brazilian Journal of Political Economy, 31(3): 339–51. Norval, A.J. (1962) A Quarter Century of Industrial Progress in South Africa. Cape Town/ Johannesburg: Juta and Co. Ofcansky, Thomas and Laverle Berry (1991) Ethiopia, a Country Study. Washington, DC: Federal Research Division, Library of Congress. Padayachee, Vishnu and Robbie van Niekerk (2019) Shadows of Liberation: Contestation and Compromise in the Economic and Social Policy of the African National Congress, 1943– 1996. Johannesburg: Wits University Press. Reinhart, Carmen and Kenneth S. Rogoff (2010) Growth in a Time of Debt. American Economic Review, 100(2): 573–8. Rossouw, Jannie (2011) A Selective Refection on the Institutional Development of the South African Reserve Bank Since 1921. Economic History of Developing Regions, Supplement, 26 (Supplement 1): 3–20. Saad-Filho, Alfredo (2010) Neoliberalism, Democracy, and Development Policy in Brazil. Development and Society, 39(1): 1–28. Soares, Fabio Veras, Sergei Soares, Marcelo Medeiros and Rafael Guerreiro Osório (2006) Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty. UNDP International Poverty Programme. Working Paper 21. Brasilia: International Policy Centre for Inclusive Growth. Stiglitz, Joseph (2006) Is Macroeconomics Different in Developing Countries? In Stability with Growth, edited by Antonio Ocampo and Joseph Stiglitz. Oxford: Oxford University Press. Warren, Bill (1980) Imperialism: Pioneer of Capitalism. London: New Left Books.

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Economic power and regulation The political economy of metals, machinery and equipment industries in South Africa Sumayya Goga, Pamela Mondliwa and Simon Roberts

Introduction Some of the most striking features of the South African economy are how high inequality remains in both income and wealth, and how little the structure of the economy has changed since 1994. This underpins other outcomes, notably high unemployment, weak growth and poor investment levels. There has been an almost complete failure to develop a more diversifed industrial base and, notwithstanding major increases in foreign ownership, concentration within sectors remains very high (Roberts, 2013; Bell et al., 2018). Despite low growth and investment levels, profts have been sustained, with evidence of base erosion and proft shifting (OECD, 2013b; UNECA, 2018), implying higher net returns to the owners of equity. South Africa’s experience has not been unique and provides an interesting case study for understanding poor outcomes in middle-income countries in the global South. As South Africa was transitioning into a democracy in the early 1990s, it followed the dominant orthodoxy which held that liberalisation of trade and fnancial markets would result in increased investments in the economy and also facilitate technology upgrading. South Africa opened up, becoming increasingly internationalised in terms of trade, capital fows and ownership of listed companies. In this chapter we analyse these challenges in South Africa’s post-apartheid economy through an analysis of economic power understood in terms of control over accumulation. This entails an examination of the relationships between the structure of the economy, economic performance, the share of returns from economic activity and economic power. It involves an analysis of interests in the economy, and how these interests have set agendas and shaped policy to maintain economic power in the hands of a few to the detriment of the majority. This underlies the persistence observed in inequality in income and wealth. We use the metals, machinery and equipment (MME) sector (or value chain) in South Africa – which has strong links to mining and energy – in order to understand how economic power is constituted and perpetuated. This will be done using conceptual frameworks on systems of accumulation (Fine and Rustomjee,

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1996), political settlement approaches (Khan, 2010, 2018a and b), as well as literature on global value chains (GVCs). The MME industries were at the heart of South Africa’s industrial base under apartheid, including upstream basic metals and downstream diversifed activities in machinery and metal products. They have undergone extensive restructuring over the past two and a half decades with far-reaching liberalisation and internationalisation of ownership. There have been a number of interventions including industrial policies, competition law cases, and regulation of energy and mineral rights. We analyse how the balance of power has evolved, and why it has apparently continued to favour incumbents and large frms even while the source of the power has changed in some regards. Insights are drawn more broadly with regard to the importance of understanding interests and economic power in assessing the persistence of inequality in South Africa.

Political economy frameworks and economic power Though there is no one accepted defnition of economic power in economic literature, it is broadly understood as the ability to control or infuence the behaviour of others through the deliberate use of economic assets. Various disciplines engage with the sources of power as well as the ways that it is exerted. The growing concentration of the global economy in the hands of transnational corporations has come under the spotlight in the last decade. The signifcance of dynamic increasing returns to scale means that a few large frms dominate in many industries in developing countries, and that concentration is an inevitable feature of industrial development. These frms have considerable power over their suppliers and customers, as well as being important political actors. The renewed focus on concentration and market power in the competition policy literature has been partly due to concerns about inequality, as well as links to discouraging innovation and reducing productivity (Baker and Salop, 2016; De Loecker and Eeckhout, 2017; Ennis, Gonzaga and Pike, 2019). Stronger competition law is sometimes recommended as the answer (Atkinson, 2015; Stiglitz, 2017). Firms with substantial market power can earn returns from the exertion of this power and protect their position by excluding rivals. As retained earnings are important for a frm’s ability to make investments, smaller frms are typically more constrained in terms of the liquidity they can use in order to invest (Goergen and Renneboog, 2001; Audretsch and Elston, 2002). High entry barriers can weaken economy-wide investment and prevent new business models and products from being introduced (Cohen and Levin, 1989; Shapiro, 2012; Federico, Morton and Shapiro, 2019). The concept of power also features prominently in GVC studies. GVC literature tends to deal with how lead frms are able to mobilise and exploit vastly asymmetrical power relations between frms and other actors within value chains, in order to control how, where and by whom value is created and captured (Gereff and Fernandez-Stark, 2011). However, Dallas, Ponte and Sturgeon (2019) note the absence of direct defnitions of power within the GVC and global production network (GPN) literature.

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More recent GVC literature recognises that there are multiple dimensions of power in GVCs beyond the coercive, dyadic power between frms in the chain, or between the state and frms. Power can be exerted by collectives (such as unions, social movements and business associations), and it can be direct or diffused (such as through standards and certifcation) (Ponte and Sturgeon, 2014; Dallas et al., 2019). Dallas et al. (2019) have developed a typology of power which incorporates these.1 GVC literature makes important contributions to understanding power as it relates to governance; however, the discussions of the role of the state are often restricted to the state as a regulator or player in value chains (Behuria, 2018). This neglects important discussions of how the domestic political economy infuences who benefts from economic upgrading. The political settlements framework is helpful in this regard as it focuses on how politics shapes economic outcomes. This allows for the analysis of why certain interests and frms have held sway; it is necessary to understand the complexities of the coalitions of interests backing them and how these evolve over time. The political settlements framework considers how interests are pursued in an economy, where a settlement is defned as a combination of power and institutions that is mutually compatible and also sustainable in terms of economic and political viability (Khan, 2010).2 The framework emerged as a criticism of institutional economics, which emphasised the role of institutions in making rules as well as distributing benefts (North et al., 2012); but this does not properly explain what the underlying power arrangements and confguration of interests are. Khan (2010) highlights the issue of power vested in elites through “informal institutions”,3 refecting that power has a covert dimension and can be agendasetting. The framework identifes four sources of holding power,4 – namely economic structure, ideology, violence rights and rents. The political settlements framework allows us to assess how incumbent frms or groups of frms are able to lobby and enter into arrangements with political actors to shape regulation and the economic environment to protect rents, effectively setting the rules of the game to suit incumbent interests. In the application of the framework to the South African case we engage in detail with three main sources of holding power – economic structure, ideology and rents. We also draw on key insights from industrial organisation, GVCs and systems of accumulations in our discussions of the sources of holding power. For example, systems of accumulation literature has rich insights on accumulation as part of an analysis of the evolution of capitalist systems (Kotz, 2016). The historical accumulation, and simultaneous exclusion from the use of economic surplus, has played a defning role in shaping the economic structure of a country (Galor and Moav, 2004), and forms the foundations of today’s extreme levels of inequality in South Africa.

The metal, machinery and equipment industries as a case study The system of accumulation in South Africa has been characterised by Fine and Rustomjee (1996) as the minerals–energy complex (MEC) due to the infuence of mining-linked activities over the economy as a whole. This includes metals

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and machinery which have close links with mining in South Africa.5 The origins of the MEC system of accumulation is linked to the economic power of the mining conglomerates and their alliance with the political power of Afrikaners under apartheid. As a result, the basic metals industries received favourable electricity tariffs, logistics support and investments aimed at promoting competitiveness. Machinery and structural steel were, in turn, key intermediate capital inputs to mining. The development of the sector up to 1994 was thus a refection of the priorities and power of the apartheid state. Subsequently, the post-apartheid state has grappled with how to engage the main companies, while concurrently responding to international developments and supporting downstream industries. With the transition to democracy during the 1990s, the economy was subject to far-reaching liberalisation of tariffs and capital controls following the prevailing orthodoxy relating to the perceived benefts of globalisation. One of the results was a massive increase in capital infows and outfows (Figure 5.1), and of foreign ownership on the Johannesburg Stock Exchange (JSE). The opening up of the economy did not, however, result in signifcant change in the export profle (Figure 5.2). In 2017 resource-based exports, including basic metals and chemicals, continued to account for close to 60 per cent of total merchandise exports. While the value of the shares on the JSE increased strongly over the 2000s, there was no sustained increase in investment rates in the economy. The industries that benefted from liberalisation were those that were already at the technology frontier and/or internationally competitive in 1994 (Aghion et al., 2013). Moreover, on some measures, industry has become less diversifed and more concentrated in terms of ownership (Bell et al., 2018). In what can be described as a regression, resource-based sectors have become more signifcant in terms of output and fxed investment. More broadly, integration into the global

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economy has been accompanied by very poor economic performance, persisting extremely high levels of unemployment, poverty and income inequality, and an increasing concentration of wealth (Orthofer, 2016). The MME value chain consists of mining of metals, manufacture of basic iron, steel and basic non-ferrous metals, and manufacture of metal products and machinery (Figure 5.3). The MME industries are an important location in which to understand the power dynamics, linkages and arrangements underpinning poor outcomes in the South African economy. The signifcance of the MME industries is refected in their share of manufacturing value-added at 19.02 per cent in 1994 and 18.8 per cent in 2017 (Quantec data; calculations by the authors). MME industries have historically been strongly linked to minerals and energy. At the same time, the growth of machinery and equipment is at the core of broaderbased industrialisation, if this is to be achieved. Iron ore and coal are the key mining inputs to basic iron and steel manufacturing, along with electricity (itself generated from coal). Upstream in basic steel there are substantial scale economies and the sector is dominated by ArcelorMittal SA (AMSA), formerly Iscor.6,7 There is also a single major stainless steel producer, Acerinox, and a very few large aluminium smelters. The basic metals are key inputs to downstream fabricated metal products, machinery and equipment, where the great majority of employment in the MME industries is located. Iscor was privatised in 1989. The basic metals sectors received substantial support during the 1990s through South Africa’s main development fnance institution, the Industrial Development Corporation (IDC), in order to invest in and

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Figure 5.3 MME value chain. Source: Rustomjee, Kaziboni and Steuart (2018).

Economic power and regulation 81 improve their production efficiencies (Roberts and Rustomjee, 2009; Rustomjee et al., 2018). Between 1993 and 2000, Iscor improved internal efficiencies by reducing costs through product rationalisation, resulting in job losses in the basic iron and steel industry. The machinery and equipment sector performed well in this period as a result of a more competitive exchange rate reflected in the decline in the real effective exchange rate (Figure 5.4). In the early 2000s, the mining business was unbundled from steel-making in the steel value chain, and Iscor was acquired by a transnational company, Mittal. On the back of higher commodity prices in the 2000s, steel exports boomed till 2008. However, the downstream machinery and equipment sector experienced high import penetration as a result of the appreciating exchange rate. The 2008 global financial crisis once more resulted in a decline in steel prices leading to poorer performance of the basic iron and steel and non-ferrous metals sectors, and the continued poor performance of the machinery and equipment sector. The outcomes in the sector have been weak overall, and the downstream, more labour-intensive sectors have performed much more poorly than the upstream basic metals when reflected in terms of the trade balances (Figure 5.4). In 2016 the net trade balance of basic iron and steel was substantially better than in 1994 and in non-ferrous metals it was similar. As far as the downstream is concerned, despite South Africa having established capabilities in the machinery and equipment sector and a natural advantage in supplying the growing countries of the Southern African Development Community (SADC), South Africa has lost competitiveness. The MME value chain has also seen a consolidation of upstream industries that have continued to receive support, while there has been a hollowing out

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of capabilities in the downstream, more diversifed and employment-generating industries. Upstream heavy industries (metals) historically beneftted from development fnance and favourable energy prices, and they have continued to beneft from support during cyclical price downturns. In contrast, downstream industries (machinery and equipment, foundries, etc.) have suffered as a result of continued support for the upstream that has not been passed down, an overvalued exchange rate during commodity upturns, as well as a lack of investment by the government in capabilities. The continued importance of the upstream industries suggests that the distribution of economic power in the economy has not changed substantially. Why has there been no change in terms of the downstream relative to upstream industries despite the need for employment creation? In the discussion below we focus on the key decisions that were taken, as well as non-decisions across the state that have contributed to these outcomes. It is important to note that decisionmaking is dispersed across different branches of the state (industry, trade, mining, energy, competition, infrastructure and fnance), and at different levels of the state. The implications are that coherent policy requires different arms of the state to work together. It also means that there are multiple opportunities for infuencing outcomes. The next section analyses how the regulatory environment (for instance, industrial, energy and procurement policies) continues to favour larger and entrenched frms in the MME sector. In looking across these regulatory areas, the chapter will argue that the system of rents and accumulation created during apartheid has not been dismantled, thus disadvantaging downstream frms’ ability to build capabilities and therefore access the economy meaningfully. This, in turn, is enabled through both formal and informal institutions, and has been exacerbated by the extension of GVCs with the opening up of the economy. We refect on the outcomes in the sector from two perspectives – frst, local and international dynamics relating to industrial policy; and second, power dynamics and rent capture.

Industrial development and power relations in the MME industries: local and international dynamics relating to industrial policy Structure, ownership and control Economic structure is a source of economic power; that is, the structure of the economy will reproduce itself unless there is a change in relative power. Historically, countries have achieved economic development by changing the structure of their economies and moving towards more diversifed higher valueadded and labour-absorbing activities. Individuals are able to accumulate based on returns to equity and wage income. A more diversifed economy means that there are greater opportunities for the outsiders to accumulate, lowering income and wealth inequality. In 1994, the newly elected government (representing the

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interests of the majority black population) was faced with an economy in which economic power was vested in upstream, capital-intensive industries linked to white and Afrikaner capital (insiders during apartheid). The challenge then was how to redistribute economic power in the context of globalisation and internationalisation. The post-1994 economy has experienced changes driven by privatisation, liberalisation and globalisation. The tariff reform programme resulted in an extensive and widespread reduction of tariffs, including those on steel. The drive to internationalise and reduce tariffs was informed by the orthodox belief that with increased competition and a more international orientation, transnational corporations (TNCs) would invest and upgrade technology, improving the competitiveness of domestic industries. While the high levels of concentration in the economy were identifed as a potential constraint for diversifcation early on, the expectation was that both import competition and competition law would constrain market power (Joffe et al., 1995). The approach adopted in the steel value chain was to unbundle key stateowned enterprises, privatise and internationalise the ownership of Iscor, while some measures were taken to support downstream sectors. The major change was to unbundle the upstream steel and mining operations in Iscor and to bring in a multinational steel equity partner, which eventually resulted in Iscor becoming a subsidiary of one of the largest transnational steel companies in the world, Mittal, in 2003. The government recognised that the privatisation, unbundling and internationalisation led to rents for Mittal (later ArcelorMittal) – as a result of negotiation of low-cost iron ore in the unbundling – and sought to ensure that the rents were conditional on performance. However, the negotiation of a developmental price for the downstream steel sector took years with Mittal only making a small change to the pricing (Roberts and Rustomjee, 2009), and rents were essentially captured by AMSA. We return to this later in the discussion on rents below. The inability to ensure better pricing of steel for downstream industries served to entrench the power of AMSA in the value chain. The upstream bias has further been supported by energy pricing policy in South Africa; electricity pricing is a subsidy for upstream energy-intensive industries related to the MEC. In contrast, the downstream sectors pay much higher prices, as most frms (including the foundry sector) source electricity from municipalities and thus face greater charges than if they sourced directly from Eskom (estimated to be around 30 per cent higher for a typical medium to large foundry [Kaziboni, Rustomjee and Steuart, 2018]). In 2018, South Africa again had excess electricity, and there was likely to be a repeat of the process of allocating, in effect, subsidised electricity. The result of the developments tracked above has been a persistence of the apartheid skewed structure in the steel value chain, with de-industrialisation, even though the sector has become internationalised at the upstream. Furthermore, the continued importance of the upstream industries has created a vicious circle where the state has no choice but to rescue upstream businesses in diffcult times. For example, with the drop in global steel prices between 2012 and 2016, the

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industry applied for and received tariff support in 2016. At the same time, AMSA has been able to further consolidate through acquisitions as a result of smaller steel producers becoming bankrupt.8 Upstream industries continue to be concentrated, and competition law has had limited success in addressing entrenched market power. (We return to this below.) The state’s response to global commodity dynamics The global cyclicality of steel prices and developments in the global steel industry need to be taken into account in industrial policies. Government policies in South Africa have tended to react to downturns by providing a measure of support in response to industry lobbying, generally with a lag; at the same time, the government has tended not to respond to the super-profts in the upturns. Furthermore, as detailed below, the conditionalities associated with support have not been adhered to, hampering structural transformation of the sector. Steel production in most developed and developing countries enjoyed substantial subsidies up until the 1990s, after which the level of support diminished, although domestic steel markets continue to be protected at various points during price declines (Rustomjee et al., 2018). There was a steady consolidation of the global steel industry outside of China from the early 2000s, through mergers and acquisitions (Zalk, 2017). There was also a shift from national ownership towards transnational ownership with TNCs increasingly locating themselves in low-tax jurisdictions. The downturn in global steel prices in the 1990s led to consolidation of the steel sector in South Africa, but conditions attached to the consolidation have not been adhered to. In 2002, the then Iscor acquired sole control of Saldanha Steel; two years later, Mittal took sole control of Iscor. South Africa thus followed the international trend and the major national steel manufacturers (Iscor, Columbus Steel and Highveld) were absorbed into TNC groupings by the early 2000s (Rustomjee et al., 2018). The government supported these deals on the basis that the company would move to a “developmental steel price”, the nature of which was not specifed and ultimately not agreed with the government. Furthermore, instead of investing in plants and improving effciencies, Mittal’s global strategy was to use the profts from AMSA and other steel plants in developing countries to fund acquisitions and investments in developed countries. AMSA’s research and development expenditure is concentrated on steel plants in developed countries (Zalk, 2017). This means that the expected benefts in developing countries were not realised and instead effciencies further declined with underinvestment. In 2016 further government support was provided to AMSA, again on the back of a decline in steel prices. This support was linked to a deal in which the state would provide a basket of support, including tariff support and settlement of AMSA’s competition cases regarding pricing, while AMSA was expected to adopt a production cost-based formula (plus a reasonable capped margin). The rationale for the interventions were threefold: mitigating job losses given the

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importance of the steel industry for manufacturing in South Africa; the importance of the steel sector for achieving South Africa’s economic development goals; and the importance of having a local upstream steel industry to minimise exposure to the volatility of the global steel industry and continue to leverage its mineral resources (iron ore).9 The 2016 agreement resulted in upstream steel tariffs of 10 per cent, which effectively increases to 22 per cent when safeguard measures are included, in exchange for settling AMSA’s competition cases for R1.5 billion. Support for the downstream would be given at the same time through agreement on a set of principles for fat steel pricing in South Africa to ensure that steel-dependent industries are competitive while the upstream steel mills remain sustainable (Rustomjee et al., 2018). However, the tariff support came into force when global steel prices were already increasing, thus directly raising the costs for the downstream industry which is not protected by tariffs in the same way.10 Thus, the state has socialised losses of the steel industry during steel price lows, while AMSA retains the super-profts or windfall gains during price highs. Furthermore, the mechanisms for ensuring that conditionalities related to support are adhered to in order to aid structural transformation of the sector have been weak. While there is much more employment in downstream industries, the concentration of employment in very few upstream frms has supported their lobbying for the state to intervene during crises to protect these jobs, thereby reinforcing the prevailing structure. Industrial policy levers Post-1994, there were a range of measures that the government sought to use to support the downstream, including incentive programmes, tariff measures and investment support programmes.11 The bulk of the benefts from these programmes, however, were absorbed in more capital- and energy-intensive investment projects in the sector, and the quantum of funding that went to the downstream was small compared to the upstream. Moreover, companies evaded conditionalities. For instance, the 37E tax incentive was offered to the upstream industries on condition that they were legally obliged to sell at non-discriminatory export-parity prices to the domestic market. This was side-stepped by Saldanha Steel which elected to export its production in its entirety (Roberts and Rustomjee, 2009). While mining licences were also a potential tool for better pricing of steel for downstream industries, the state has elected not to use this instrument. Specifcally, clause eight of the standard mining licence in South Africa states that the pricing of minerals and derivative products are to be sold at competitive market non-discriminatory prices. This, in effect, requires ex-factory gate prices for downstream steel customers of AMSA (given its production from local iron ore). This provision has never been enforced by the state. Competition law was identifed as an important means to address the exercise of market power by dominant frms and cartels. There has been successful

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enforcement of competition law relating to cartels (Das Nair, Mondliwa and Roberts, 2015; Roberts, 2020), but less success with abuse of dominance cases. The difference has been attributed to the framing of the Competition Act, and the standards that need to be met to successfully prove an abuse of dominance (Roberts, 2017, 2020). It is important to note here that the Competition Act adopted in 1998 was a negotiated outcome between the government, business and labour. In the steel sector, competition authorities uncovered various cartels involving AMSA engaging in coordinated conduct with its competitors (including fxing prices, exchanging competitively sensitive information and dividing markets) to keep prices of long and fat steel products above competitive levels, resulting in harm to the downstream industries. The reinforcing bar price-fxing cartel, which lasted from 1999 to 2008, led to average prices being between 31.4 per cent and 34.2 per cent above competitive levels (Mondliwa and Das Nair, 2017). Though these cartels were uncovered, it took some years to fnalise, and the cases were only recently settled by AMSA in exchange for tariff protection in the 2016 deal struck between AMSA and the government. The extent of cartel conduct in the MME value chain suggests that frms understood this as a way of doing business, which may have been part of the political settlement. Competition law has also not been able to deal with AMSA’s import-parity pricing. Harmony Gold complained to the Competition Commission about AMSA’s abuse of dominance by charging excessive prices at import-parity (40–60 per cent above the export-parity prices) for fat steel, despite the fact that 40 per cent of total production was exported and there were low input prices brokered by the government. The case was lost on appeal, with the court deciding that the economic value (competitive benchmark prices) needed to refect a long-run competitive equilibrium, which has been interpreted as rewarding investment as if made by a greenfeld entrant and not taking into account benefts from historic state support (Roberts, 2008; Das Nair and Mondliwa, 2017). The weakness of the abuse of dominance provisions in the Competition Act is a refection of the fact that though the law acknowledges redistribution, it does not have instruments to enable competition law to be a primary tool of redistribution (Hirsch, 2005). The anti-competitive conduct in the steel sector has direct implications for inequality. First, prices above competitive levels result in transfers from the poor to the relatively wealthy. Second, market power reduces the incentive to invest in upgrading, thereby undermining capability development. This may have longterm consequences for international competitiveness and jobs. This is illustrated by the poor effciencies, reduced production volumes and low levels of investment by AMSA (Roberts, 2008). Third, by raising barriers to entry in these industries frms are denying entry to innovative frms that would otherwise have been successful and improved the competitiveness of the industry. A further industrial policy lever that the government sought to use for more competitive pricing of steel was the introduction in 2013 of the Price Preference System (PPS) for pricing scrap metal. The pricing and quality of scrap metal is

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a signifcant issue, with South African scrap merchants being export-oriented, largely as a result of the fact that the grading and sorting of scrap is done by the importer. The PPS gives the International Trade Administration Commission (ITAC) the power to bar exports of both ferrous and non-ferrous scrap metal unless the metal is frst offered to domestic purchasers at a 20 per cent discount to the prevailing International London Metals Exchange price. The PPS has not, however, made it less attractive to export scrap, due to the lack of enforcement capacity by ITAC as well as the fact that transactions are conditional on the consumer incurring the cost of delivery, resulting in a signifcant cost to the purchasers (Rustomjee et al., 2018). Government and parastatal procurement is another instrument which can be used to support the development of downstream sectors in the steel value chain. The Department of Trade and Industry (DTI) sought to leverage procurement as an industrial policy tool through the National Industrial Participation Programme in the 1990s and more recently through the Preferential Procurement Policy Framework Act (PPPFA) (Crompton et al., 2017). However, the procurement initiatives have not worked for South Africa for various reasons. First, a large number of exemptions have been granted (Rustomjee et al., 2018), and the policing of local content and exemptions has been identifed as problematic, as in the case of the Transnet procurement of 1,064 locomotives through a tender issued in 2012 (Crompton et al., 2017).12 Second, procurement is prone to contestation for rents, creating fertile ground for corruption, as has arisen in the Transnet procurement. In sum, while there have been a number of industrial policy levers that the state has attempted to use to develop downstream industries in the MME value chain, these have largely been ineffective. Key reasons include the need for policies to respond appropriately to international dynamics of the steel industry and the perpetuation of structure through policy choices and support. There has also been a lack of coherent industrial policy and implementation for development of downstream industries that are crucial to job creation and structural transformation of the sector. This is refective of the power of the upstream industries in shaping policies and their implementation, discussed below.

Power dynamics and rent capture in the MME industries The outcomes in the MME industries are a refection of the dominant ideologies which have shaped policies. Moreover, where rents have been created, they have been captured by transnational companies, with the settlements that were reached failing to change the control over rents to ensure structural transformation. The role of ideology Post-apartheid, the interests of big business have been key to crafting and shaping policy in South Africa. The negotiated settlement which led to the end of the

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apartheid regime occurred against the backdrop of markets and market institutions which already existed, with a powerful group of conglomerates that encompassed key elements of mining, fnance, energy and industry. Thus, the African National Congress (ANC) government negotiated a political settlement within an environment where a segment of the population had powerful economic interests, and an incentive to protect these interests. The balance of power between the new government in 1994 and domestic and foreign economic actors was, for various reasons, confgured in favour of the business community, foreign investors and international fnancial agencies (Habib and Padayachee, 2000). First, the status of the International Monetary Fund (IMF) and World Bank in the global economy had been elevated and enhanced since the late 1970s and early 1980s, thus giving credence to conservative policies, and these institutions had a great effect on the prevailing belief systems in the ANC (Marais, 1998). Second, the perceived reliance on foreign investors enhanced the power of foreign capital and weakened the power of the new government. Third, the main South African conglomerates worked ceaselessly throughout the transition to ensure that the new government would create the kind of macroeconomic stability that would facilitate the further globalisation of their activities (Habib and Padayachee, 2000). Intermediary agencies like Anglo American Corporation’s Urban Foundation Think Tank, alongside former apartheid development fnance institution the Development Bank of Southern Africa, played a crucial role in the negotiated settlement in ways which served to “blunt the movement’s economic weapons, close down certain policy options, and slow down the process of transforming institutions, structures and personnel so crucial to a successful economic transition” (Michie and Padayachee, 1997). This is evident in the policies which were adopted, in line with World Bank recommendations of getting the prices right and reducing state intervention in order to attract investment, despite the examples of countries like South Korea and Taiwan (Habib and Padayachee, 2000; Amsden, 2001). The Growth, Employment and Redistribution (GEAR) macroeconomic framework that was adopted in 1996 tied the government to reducing the government defcit, tightening monetary policy, privatising state assets, and liberalising trade. The similarity of GEAR to the “Growth for All” document produced earlier by the South African Foundation (SAF, 1996), which represented South Africa’s 50 largest companies, illustrates the extent to which the neo-liberal economic strategy was accepted by the government (Michie and Padayachee, 1997; Marais, 1998; Habib and Padayachee, 2000). It also pointed to the relative lack of power of trade unions and the South African Communist Party in shaping ANC policy outcomes, and the sidelining of trade unions (Webster and Adler, 1999). Competition policy, too, was shaped by these ideologies, with more conservative provisions regarding the abuse of market power by dominant frms than is the case in the European Union and many other jurisdictions (Roberts, 2012). This is despite many assessments, including by organisations such as the World Bank

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and the Organisation for Economic Co-operation and Development (OECD), identifying high levels of concentration as a critical problem facing the country (Mncube, Khumalo and Ngobese, 2012; OECD, 2013a; Roberts, 2013). Thus, the dominant ideology of pursuing market-friendly policies, which assumes that markets are effcient in the absence of aberrant anti-competitive behaviour, has resulted in an emasculated policy agenda in South Africa, hampering effective transformation. Rents, rent management and the political settlement The allocation of rents is refective of a political settlement in South Africa which has not made rents conditional on productive investments. This in turn is evidence of the distribution of economic power in the economy and how this distribution has interacted with the changing structure of industry. Substantial rents were created when Iscor was unbundled into mining and steel businesses. The iron ore resources were ultimately acquired by AngloAmerican-linked Kumba Iron Ore, and coal resources went to Exxarro (Zalk, 2017). Iscor remained as a steel-making business, with a large IDC shareholding and a disproportionate amount of the balance-sheet debt. Counter-balancing this was rights to the supply of 6.25 million tonnes of iron ore per annum from Kumba at cost plus a 3 per cent management fee, bargained for through the intervention of the DTI and IDC (Rustomjee et al., 2018). This access to low-cost iron ore then devolved to Mittal when Iscor was internationalised.13 Two main mechanisms were pursued to ensure that mineral rents were passed onto downstream steel users in the economy in relatively low steel prices. The frst was the developmental steel pricing which Mittal had agreed to, and the second was competition law enforcement. A third mechanism was the provisions in mineral licences with regard to downstream steel pricing, which have never been enforced. As mentioned, developmental steel price negotiations were not completed when Iscor was privatised (Roberts and Rustomjee, 2009). It is well understood that for conditionalities to be effective they must be designed in line with the capabilities of the state to monitor and enforce them (Khan, 2009). There is a stark contrast between the steel price negotiations which were not completed and the negotiation around the iron ore price during the unbundling, with the latter being included in the supply contract. This made it legally binding and easy to enforce. The failure to design and enforce effective direct regulation of pricing meant AMSA had latitude to exert its market position to extract above-competitive profts. It did this through coordinated conduct (collusion) with its various competitors in the long steel industries and through its unilateral pricing of fat steel. The result of this conduct is high input steel prices for downstream users, undermining their cost competitiveness. The misplaced faith that the fat steel monopoly would pass on its cost advantages in the form of lower prices to downstream industries, in the absence of local competition, was highlighted by the

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Competition Tribunal in its decision on the merger between Iscor and Saldanha Steel.14 The DTI supported the merger in the belief that it would improve Iscor’s international competitiveness by reducing per-unit costs for the beneft of domestic downstream industries.15 Extraction of rents by AMSA is evident in the outfows of funds from AMSA to its shareholders in the face of rising ineffciencies. This included substantial payments related to the Business Assistance Agreement (BAA) in 2003 and 2004 (which exclude BAA remuneration received in the form of Iscor shares), dividend outfows, and fees remitted to the parent company for “corporate services” from 2008 and “research and development” from 2009. In total, between 2001 and 2015 the recorded fow of funds out of AMSA to its shareholders amounted to R21.8 billion, of which 63 per cent or R13.7 billion accrued to the ArcelorMittal global group (Zalk, 2017). With the deal struck between AMSA and the government in 2016, the state is once more faced with the challenge of ensuring that support in the form of tariffs is matched with competitive steel pricing in the market. The enforcement of aspects of the settlement (relating to a cap on the return AMSA may make) relies on effective monitoring and enforcement of conditionalities. There is a need for a strong technical monitoring team as far as implementation of the agreement is concerned (Rustomjee et al., 2018). In the absence of this, rents created by the support provided to AMSA will not be transferred to downstream steel users. Importantly, the tariffs agreed to as part of the 2016 deal were supported by well-organised trade unions at the upstream level who have an interest in seeing jobs being protected in the steel industry (Steyn, 2016). Unions, in effect, prioritised current jobs upstream, at the expense of potentially growing more labourintensive downstream industries. The source of unions’ holding power is the potential use of violence rights in the form of strikes that could de-stabilise the political settlement. However, this power was not exercised because the unions’ interests aligned with AMSA. The various policies attempted with regard to pricing have been ineffective. The lesson is that ideal policies have not been designed with a view to the entrenched structure and the need to address the power relations related to this. Furthermore, the state has socialised the losses of the upstream sector during downturns, while the upstream has engaged in widespread anti-competitive pricing (structured in line with import-parity pricing) despite the fact that AMSA is a net exporter of steel. This means that independent institutions such as the competition authorities have been ineffective in constraining market power in the sector, and have failed to change the control over rents. The existence of allegations of corruption with regard to procurement also shows a failure to control rent management. The allegations imply that the procurement of locomotives by Transnet was captured by the interests of the politically connected who sought to extract rents (amaBhungane, 2018). Moreover, local content verifcation, which is the responsibility of the South African Bureau of Standards (SABS), has been outsourced to fnancial auditors at an exorbitant fee due to lack of capacity (Rustomjee et al., 2018). The checks and balances that

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were meant to ensure that the right organisations are receiving the rents have failed in practice, and the frms that received the rents were not made to deliver on the expected outcomes. Finally, beginning in 2009, there was contestation over iron ore rights, and which set of interests would beneft from rents embodied in iron ore given rising prices (Zalk, 2017). Kumba Iron Ore applied for the iron ore mining rights, excluding AMSA, in a bid to rid Kumba of the obligation to supply AMSA with iron ore at concessional prices (as per the deal that was struck with the 2001 unbundling of Iscor). At the same time, a previously unheard of third party called Imperial Crown Trading (ICT) also applied for and was granted a mining licence over the same iron ore under controversial circumstances, justifed on the grounds of black economic empowerment (Zalk, 2017). ICT is a subsidiary of Oakbay, owned by the controversial Gupta family, who have been at the heart of recent state capture allegations in South Africa. While the subsequent legal battle eventually resulted in the mining rights being awarded to Kumba, the contestation over these rights brings to the fore the battle for rents. It signifes that there has been some change in the political settlement, albeit not to productive investment but through capture by another politically linked group, the Guptas.

Conclusion The policies to decrease inequality and address poverty post-apartheid have not had a signifcant impact, aside from the impact of the system of social grants (Takunda, Bayat and Mohamed, 2017). South Africa remains among the most unequal countries in the world (Sulla and Zikhali, 2018). At the heart of these poor outcomes has been a failure to meaningfully change the structure of the economy. Historically, signifcant changes in the political system in the country have been accompanied by changes in the system of accumulation associated with changes in the structure of the economy and the distribution of wealth. A case in point is the development of new industries such as steel and chemicals to support the growth of Afrikaner capital and opportunities for Afrikaners when the National Party came into power. The post-apartheid government understood this and emphasised the need to diversify the economy and in particular to leverage mineral resources to achieve this through benefciation. However, various interventions using a variety of instruments have failed to achieve this, with dire consequences for the country. The reasons for these poor outcomes have been the subject of research, with competing explanations put forward. On the one hand, it has been argued that liberalisation has reinforced South Africa’s static comparative advantage in minerals, commodities and other resource-based manufactures, and exports of high-value and diversifed products have underperformed. On the other hand, it has been argued that there has in fact been a positive relationship between liberalisation and performance, and that more time has to pass to realise the gains, or that liberalisation did not go far enough (Mondliwa, 2018).

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We argue that inequality in South Africa is structural in the sense that the structure of the economy and associated ownership and concentration levels in the economy continue to be perpetuated. In particular, the regulatory environment within which policy is made and implemented has resulted in the balance of power being tilted towards incumbents and large frms, resulting in poor outcomes for smaller participants in the economy. A political economy analysis allows us to show how incumbent frms or groups of frms are able to lobby and enter into arrangements with political actors to shape regulation and the economic environment to protect rents, effectively setting the rules of the game to suit incumbent interests in the political and economic space (Khan, 2010). The case study goes beyond an examination of the policy choices that were taken, to understanding why particular choices were made, and, at times, why certain policy decisions were not taken. This leads to a discussion about interests and the power to infuence the policy agenda. Power is a useful lens as it can both shape policy and outcomes, and determine who benefts from rents created. Increasing globalisation has meant that developing country outcomes are infuenced not just by local interests but infuential TNCs. In South Africa’s case, as is the case for many countries in the global South, understanding the impact of the internationalisation of interests and the power that TNCs hold is imperative to understanding the outcomes in the economy. Political economy frameworks used to analyse the MME industries provide tools for assessing the contestation of interests and the resultant outcomes. The MME sector is refective of South Africa’s overall economic structure with its strength in the upstream capital-intensive industries. As such, the case study highlights issues about the economy more generally and not just the sector. Twenty-fve years after democracy, the record shows that the MME sector has not transformed its structure; instead there has been a hollowing out of capabilities in the downstream industries, required to create employment and new business opportunities. This is despite key businesses in the sector being privatised, bringing in TNCs and participation in GVCs, trade liberalisation and tight macroeconomic policies (as required by the dominant ideology of the time). Why is this the case? The analysis shows that economic structure is a source of economic power and the relative strength of the upstream industries means their interests are served over those of the downstream industries. The historical importance of the upstream industries and support provided to them also creates a vicious cycle of policy-making, such that policy decisions are taken to further support the industries even at the cost of downstream industries that are important to changing the system of accumulation. But how do these upstream industries ensure that their interests continue to be served? Our analysis shows that control over ideologies infuencing policy and capturing of rents and the rent management system play a key part. As far as ideologies are concerned, the business sector in South Africa has played a key role in shaping policy. As a result, the policies adopted in the

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post-1994 environment, including macroeconomic policy, competition policy and management of large frms (unbundling and privatisation) have favoured an approach of “trusting in the markets” and “getting the prices right”. There has thus been an emasculation of the policy agenda, which has hampered transformation of the sector. Moreover, the upstream steel sector has utilised its market power to engage in widespread anti-competitive conduct, further impacting negatively on downstream steel users. Additionally, where policy instruments and support have been leveraged in an attempt to transform the sector, large frms in the upstream industries have managed to capture the rents created, as well as infuence the rent management system. The upstream sector has also managed to extract support from the government during downturns – with the state socialising the losses during downturns while upstream frms have earned super-profts during upturns in steel prices – without passing these rents on to downstream steel consumers. This is evident in the manner in which the government failed to implement competitive steel pricing for downstream steel users either through steel pricing initiatives or through competition law. It also evident in the failure of local procurement and other policies that could have helped to transform the sector. Thus, while the government has a set of institutions and policies that could help to transform the economy, the government is lobbied and interests are pursued in order to protect rents and infuence rent management. Interests have therefore acted through the state where power is dispersed. While one might expect that groups such as trade unions may act as a countervailing source of power to big business, in the steel sector unions at the upstream are much better organised than those downstream; it appears that their interests have aligned with big business since they have an interest in protecting jobs in the steel industry. The political settlement in South Africa serves narrow corporate interests, which have now become internationalised. The MME case study underlines the importance of understanding how and through what mechanisms power is exercised, and how this has led to the extremely poor outcomes in the economy. Corporates have been lobbying and entering into arrangements with political actors to shape regulation and the economic environment to protect rents. The impact on inequality is severe. There has been both greater concentration and consolidation of market power, as well as a hollowing out of capabilities and employment in downstream sectors. Wealth creation in the economy has therefore become more concentrated, resulting in South Africa remaining one of the most unequal countries in the world (Sulla and Zikhali, 2018). The case study also allows us to draw some insights on the usefulness of the three political economy frameworks in examining economic power in South Africa and elsewhere. First, analysis of the distribution of power in the GVC framework highlights why participation in GVCs does not necessarily lead to capability upgrading. Second, there are some similarities in the systems of accumulation and political settlements frameworks. These include the examination of economic structure, ideology and rents as “sources of power” in political

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settlements and a “means of accumulation” in systems of accumulation. These proved very useful in unpacking the outcomes in the MME sector. The discussion about ideology is particularly relevant for other countries in the South which were setting development agendas in a period in which the orthodox economics approach endorsed by international organisations such as the IMF and the World Bank were popular. The case study shows how misplaced faith in markets and foreign direct investment denied the country opportunities to diversify and change the control over accumulation. While a number of frameworks can be applied to understand why outcomes have been so poor in South Africa, the analysis above highlights the importance of analysing outcomes using three basic tools. Analysing the structure of a particular sector, and more generally of the economy, is key, since the structure points to those within the system who have the ability to accumulate, and therefore tells us about the distribution of economic power. The implication is that inequality in South Africa is tied to the inability to change the structure of the economy and therefore the distribution of economic power, whether through industrial policy or other means. Moreover, one has to understand and analyse how and by whom rents are captured, and the role of ideology in shaping outcomes including policy, since these are the mechanisms or tools that are used to reinforce economic structure. These three lenses can be employed to understand poor outcomes in any sector of the economy.

Notes 1 The frst category of power in this typology is bargaining power which operates in frm-to-frm relations and is shaped by the orientation of the lead frm, as has been the main focus of the majority of GVC studies. The second is demonstrative power which operates through informal transmission mechanisms. The third is institutional power which operates through government regulation or other forms of institutions. The fourth, constitutive power, is based on broadly accepted norms or best practices. 2 The defnition of political settlements has been contested in the literature; see Khan (2018) for a discussion of the various defnitions. 3 Khan (2010) argues that typically in developing countries informal institutions are used by powerful groups during development transitions to sustain economic benefts for groups that would otherwise have lost out. They are thus the mechanisms through which social and political stability is maintained, helping to generate distributions of economic benefts that are more in line with existing distributions of power. In doing so they also sustain these distributions of power. Thus, informal institutions are compatible with the incentive structure of powerful elites, who can use these institutions to facilitate their continued access to incomes through “political accumulation”. 4 “Holding power” refers to the capacity to engage and survive conficts – in other words, the ability to infict costs and to absorb costs inficted by opposing groups. 5 Other industries in the MEC identifed by Fine and Rustomjee in 1996 include coal, gold, uranium and other mining, coke and refned petroleum products, basic chemicals, other chemicals and rubber products. 6 The South African government passed the Iron and Steel Act in 1928, enabling the establishment of the state-owned South African Iron and Steel Industrial Corporation (Iscor). Iscor’s frst plant came into production in Pretoria in 1934 (Zalk, 2017).

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7 Others include Highveld Steel and Vanadium, using iron ore as the main feedstock. Mini mills using scrap steel as feedstock include Scaw Metals and others. 8 Parts of both Scaw and Highveld were taken over by AMSA as a result of poor performance related to the downturn (Rustomjee et al., 2018). 9 This is based on a DTI presentation to the joint portfolio committees on trade and industry and economic development on the steel industry interventions; the presentation took place on 23 August 2016. See www.thedti.gov.za/parliament/2016/Steel_ Industry_Interventions.pdf. 10 There is a lack of tariff support for the downstream, with 90 per cent of capital equipment duty-free (Rustomjee et al., 2018). 11 Investment support programmes included the IDC’s Global Player Fund, a tax holiday programme and accelerated depreciation allowance tax incentive scheme under section 37E of the Income Tax Act. 12 Transnet is South Africa’s state-owned rail, port and pipeline company. 13 There was also abundant thermal coal and very low-priced electricity (although not coking coal, which was imported). 14 See Tribunal Decision of case number 67/LM/Dec01 pp. 27–9. 15 Tribunal Decision of case number 67/LM/Dec01 p. 28.

References Aghion, P., J. Fedderke, P. Howitt and N. Viegi (2013) Testing Creative Destruction in an Opening Economy. Economics of Transition, 21(3): 419–50. amaBhungane (2018) Analysis: The R16bn “Gupta Premium” – How the Transnet Locomotive Acquisition Went from R38.6bn to R54.5bn. Daily Maverick, 3 June 2018. https://www.dailymaverick.co.za/article/2018-06-03-analysis-the-r16bn-gupta -premium-how-the-transnet-locomotive-acquisition-went-from-r38-6-bn-to-r54-5-bn (accessed 17 August 2019). Amsden, A. (2001) The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies. New York, NY: Oxford University Press. Atkinson, A. (2015) Inequality: What Can Be Done? Boston, MA: Harvard University Press. Audretsch, D.B. and J.A. Elston (2002) Does Firm Size Matter? Evidence on the Impact of Liquidity Constraints on Firm Investment Behavior in Germany. International Journal of Industrial Organization, 20(1): 1–17. Baker, J.B. and S.C. Salop (2016) Antitrust, Competition Policy, and Inequality. Mercato Concorrenza Regole, 1: 7–34. Behuria, P. (2018) The Politics of Upgrading in Global Value Chains: The Case of Rwanda’s Coffee Sector. ESID Working Paper No. 108. Manchester: Effective States and Inclusive Development Research Centre. Bell, J., S. Goga, P. Mondliwa and S. Roberts (2018) Structural Transformation in South Africa: Moving Towards a Smart, Open Economy for All. CCRED Working Paper 9/2018. Johannesburg: CCRED. Cohen, W.M. and R.C. Levin (1989) Empirical Studies of Innovation and Market Structure. Handbook of Industrial Organization, 2: 1059–107. Crompton, R., J. Fessehaie, L. Kaziboni and T. Zengeni (2017) Railway Locomotives and Transnet: A Case Study. CCRED Working Paper 2017/9. Johannesburg: CCRED. Dallas, M., S. Ponte and T. Sturgeon (2019) Power in Global Value Chains. Review of International Political Economy, 26(4): 666–94.

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Michie, J. and V. Padayachee (1997) South Africa’s Transition: The Policy Agenda. London: Dryden Press. Mncube, L., L. Khumalo and M. Ngobese (2012) Do Vertical Mergers Facilitate Upstream Collusion? In The Development of Competition Law and Economics in South Africa, edited by K. Moodaliyar and S. Roberts. Cape Town: HRSC Press. Mondliwa, P. and R. das Nair (2017) Overcharge Estimates in the South African Reinforcing Bar Cartel. CCRED Working Paper 2017/6. Johannesburg: CCRED. Mondliwa, P. (2018) Capabilities, Diversifcation and Market Power in Industrial Development: A Case Study of South African Manufacturing and the Plastics Industry. Unpublished MCom dissertation, University of Johannesburg, Johannesburg. North, D.C., J.J. Wallis, S.B. Webb and P.R. Weingast (2012) In the Shadow of Violence: Politics, Economics, and the Problems of Development. Cambridge: Cambridge University Press. Organisation for Economic Co-operation and Development (OECD) (2013a) Action Plan on Base Erosion and Proft Shifting. Paris: OECD Publishing. Organisation for Economic Co-operation and Development (OECD) (2013b) OECD Economic Surveys: South Africa 2013. Paris: OECD Publishing. Orthofer, A. (2016) Wealth Inequality in South Africa: Evidence from Survey and Tax Data. REDI 3X3 Working Paper 15. http://www.redi3x3.org/sites/default/fles/Orthofer%202 016%20REDI3x3%20Working%20Paper%2015%20-%20Wealth%20inequality.pdf (accessed 23 August 2019). Ponte, S. and T. Sturgeon (2014) Explaining Governance in Global Value Chains: A Modular Theory-Building Effort. Review of International Political Economy, 21(1): 195–223. Roberts, S. (2008) Assessing Excessive Pricing: The Case of Flat Steel in South Africa. Journal of Competition Law and Economics, 4(3): 871–91. Roberts, S. and Z. Rustomjee (2009) Industrial Policy Under Democracy: Apartheid’s Grown-Up Infant Industries? Iscor and Sasol. Transformation, 71(1): 50–75. Roberts, S. (2012) Administrability and Business Certainty in Abuse of Dominance Enforcement: An Economist’s Review of the South African Record. World Competition, 35(2): 269–96. Roberts, S. (2013) Competition Policy, Industrial Policy, and Corporate Conduct. In The Industrial Policy Revolution II, edited by J.E. Stiglitz, J.L. Yifu and E. Patel. International Economic Association Series. London: Palgrave MacMillan. Roberts, S. (2017) Barriers to Entry and Implications for Competition Policy. In Competition Policy for the New Era – Insights from the BRICS Countries, edited by T. Bonakele, E. Fox and L. Mncube. Oxford: OUP. Roberts, S. (2020, forthcoming) Assessing the Record on Competition Law Enforcement for Opening-Up the Economy. In Opening the Economy? Barriers to Entry, Regulation and Competition in South Africa, edited by T. Vilakazi, S. Goga and S. Roberts. Cape Town: HSRC Press. Rustomjee, Z., L. Kaziboni and I. Steuart (2018) Structural Transformation Along Metals, Machinery and Equipment Value Chain – Developing Capabilities in the Metals and Machinery Segments. CCRED Working Paper 7/2018. Johannesburg: CCRED. Shapiro, C. (2012) Competition and Innovation: Did the Arrow Hit the Bull’s Eye? In The Rate and Direction of Inventive Activity Revisited, edited by J. Lerner and S. Stern. Chicago, IL: University of Chicago Press. South Africa Foundation (SAF) (1996) Growth for All: An Economic Strategy for South Africa. Johannesburg: SAF.

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6

Inegalitarian growth India and Brazil compared Alexandre de Freitas Barbosa, Maria Cristina Cacciamali and Gerry Rodgers1

Premises for a comparison Economic inequality has deep roots, in the histories, structures and institutions of each society, and how they connect with international economic forces. To understand how and why the extent and trend of inequality differs from one country to another it is necessary to examine and compare these histories and institutions. The present chapter compares Brazil and India, two countries with high levels of inequality, but with different trajectories over time. We believe that a comparison of Brazil and India can help us to understand these trajectories, provided that the differences are understood as well as the similarities. Our approach to the comparison is to examine how economic outcomes – such as inequality, economic growth dynamics and the pattern of international integration – are embedded in national institutions and histories. This requires an understanding of the dynamics of social and economic change, which inevitably makes it less precise than more focused studies, because of the number of “variables” and interactions involved. Comparison is “reciprocal” in the sense that it explores how actual paths and patterns in the two countries deviate one from another. This strategy allows for the identifcation of important driving forces that underpin the divergent paths. An example of this kind of comparative work can be found in the attempt by Pomeranz (2000) to contrast Europe and China and their different development paths in the nineteenth century. Another example of such a holistic approach is Evans’ (1995) examination of the role of states in the periphery seeking to change their relations within the wider global economy. Our theoretical framework draws on the work of the Regulation School, as expressed in the work of Aglietta (1982), Boyer (1990, 1994) and others. The basic idea is that a set of mutually interacting institutions underpins a particular path of growth, capital accumulation and distribution, which can be characterised as a “regime of accumulation” or “growth regime”. These institutions shape the balance between the interests and power of different groups within the political economy, potentially paving the way for a “mode of regulation” that can stabilise the growth path. But there is no universal pattern of development. Moreover, institutional forms change over time, or external factors may change,

100  Alexandre de Freitas Barbosa et al. and ultimately contradictions arise. These contradictions can lead to economic or political crisis and a shift in the growth regime in which institutional forms are rearranged or modified and eventually a new mode of regulation emerges. This approach also has elements in common with the “varieties of capitalism” literature (Albert, 1993; Boyer and Hollingsworth, 1997; Hall and Soskice, 2001; Amable, 2005); for an application to India see De and Vakulabharanam (2013). Growth regimes comprise a variety of economic and social relations, usually grouped under five institutional forms in the analysis of industrialised countries: monetary/fiscal regime; wage labour relations; the competition regime; type of integration in the international economy; and the role of the state. In India and Brazil, we found it desirable to add a sixth institutional form: the agrarian system. These institutional forms do not all have the same importance, as some dominate others, but the hierarchy varies across time and geography. Nor are they independent, for within a growth regime there is a dynamic process of mutual adaptation among institutions. Moreover, growth regimes are influenced by changes in the world economy, especially during periods of radical reorganisation, such as the economic and political reconfiguration after World War II and the rise of neo-liberal globalisation in the 1980s and 1990s.

Aggregate trends The point of departure of our study was the contrasting path of economic inequality over time in the two countries. To compare the countries, we immediately face a problem. Household survey (and census) data on economic inequality in Brazil mainly concern labour income; household survey data on inequality in India mainly concern expenditure. There are some individual surveys that are more comparable, but they do not give the long-term trend. Nevertheless, inequality of expenditure is closely related with inequality of income, so it is interesting to set the long-term trend in expenditure inequality in India alongside that in income inequality in Brazil. Figure 6.1 shows the Gini coefficient of inequality of individual labour income for Brazil since 1960; Figure 6.2 shows the Gini coefficient of inequality of household expenditure per capita for India since the 1950s.2 0.650 0.600 0.550 0.500 0.450

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Figure 6.1 Gini coefficient of inequality of labour income, Brazil, 1960–2011. Sources: 1985 onwards, computed on the basis of PNAD/FIBGE data (1985–2011). Earlier years, census data (1960, 1970, 1980).

Inegalitarian growth 101 0.400 0.380 0.360 0.340 0.320 0.300 0.280

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1987-88 1993-94 1999-00 2004-05 2009-10 2011-12

Figure 6.2 Gini coefficient of inequality of household expenditure per capita, India, 1950s to 2011–2012. Source: Mainly National Sample Survey. For earlier years, UN-Wider World Income Inequality database WIID V3.3 (http://www.wider.unu ​ ​ ​ ​ .edu/research/Database/en_GB/database/). ​ ​ ​ ​ ​ ​ ​

These graphs show an absolute level of inequality that was much higher in Brazil than in India throughout the period, but little attention should be paid to this because the two measures are different, as noted above.3 What we can reasonably compare is the shape of the graph over time. The two countries seem to be almost a mirror image of each other. In Brazil the Gini coefficient rose from the 1960s to the 1980s, peaked and then started to decline. By 2011 it was almost back to the level of 1960. In India, inequality fell from the 1950s to the 1970s, bottomed out and then did not change much for some twenty years. But from the end of the 1990s it started to rise, so that in 2011–2012 it was higher than in the 1950s. Of course, these graphs merely provide a frame of reference, for even within the same country changes in inequality do not tell us much about living standards and class structures. But while they do not tell the whole story, they pave the way for an analysis of the underlying structural forces. Household survey data underestimate the degree of inequality of income and expenditure, because they severely underestimate the incomes and expenditures of the top income groups. But the contrasting trend for India and Brazil is reproduced in recent estimates from the World Inequality Database, which use alternative sources (mainly tax records) for higher-income groups. Figure 6.3 gives the income share of the top 10 per cent, which rose sharply in India after 1990, falling slightly in Brazil in the early 1990s and stabilising after the Real Plan (1994) (Brazil 2 in the graph). For the period from 1960 to the 1980s, Indian data on the share of the top 10 per cent reproduce (more weakly) the pattern of slight decline in inequality shown in Figure 6.2. While comparable data for Brazil are not available from the World Inequality Database before 1990, census data on labour income show the share of the top 10 per cent rising from 40 per cent to 53 per cent between 1960 and 1990 (Brazil 1).4 Taking the two series of data from Brazil together, we see that the mirror image is reproduced for this measure of inequality as well. The idea of the mirror image also carries over to the history of economic growth in the two countries. Figure 6.4 shows that from 1950 to 2010 the average

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Brazil 2

55% 50%

Brazil 1

45% 40%

India

35% 30% 25%

Figure 6.3 Brazil and India, pre-tax income share, top 10 per cent (individual adults). Source: WID.World database (https://wid.world); Assoud, Chancel and Morgan (2018); and (for Brazil 1 data from 1960 to 1990) Dedecca and Brandão (1993: 317). 8 7 6 5 4 3 2 1 0

1950-2010

1950-80 Brazil

1980-2010 India

Figure 6.4 Annual rates of GDP growth (%), Brazil and India, 1950–2010. Source: Maddison database (2013); World Bank, World Development Indicators (1950–2010).

rate of growth in Gross Domestic Product (GDP) was similar in both, between 4 per cent and 5 per cent per year; however, from 1950 to 1980 Brazil grew fast and India slowly, while from 1980 to 2010 it was the reverse. Indeed the gap in favour of India in this latter period was larger than the earlier gap in favour of Brazil, and it has widened further since 2010.

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There appears to be a connection between growth and inequality here, as the periods of highest growth in the two countries (1960s and 1970s in Brazil, and 2000s in India) were also the periods when inequality rose most. But to understand this relationship we need to look at the growth regimes in each country and time period, their social and political context, and how they were connected to the international economy.

Growth regimes: an historical perspective From 1940 to 1980, Brazil was one of the world’s fastest-growing economies. In 1980, it had a highly diversifed manufacturing industry compared to other developing countries, which led to the creation of wage employment not only in manufacturing but also in modern services. Nevertheless, its social structure was very unbalanced. There was a large informal sector, high levels of rural–urban migration, and a substantial segment of wage earners who were deprived of basic social goods and labour rights and received at best a minimum wage that was diminishing in real terms over time. The booming economy may have brought about a fall in absolute poverty (Rocha, 2003), but inequality grew, regional disparities increased and social exclusion became more widespread, especially with respect to health, education, housing and labour conditions (Singer, 1977). On the other hand, the urban middle class, with higher levels of education and holding better jobs, expanded substantially, and their income share rose. In India, the 30 years of a state-led growth regime from Independence up to 1980 succeeded in expanding the country’s industrial base to some extent. However, it created a highly dualistic economy, reproducing neo-Fordist industrial relations for a small fraction of the workforce, while leaving the great majority in essentially unregulated, competitive labour markets, subject to various forms of vulnerability and exploitation. Productivity gains in agriculture were modest despite the Green Revolution, and growth was insuffcient, over the period as a whole, to generate rising living standards for the population as a whole (De and Vakulabharanam, 2013). There is some evidence that the income share of the highest income groups declined during this period (Banerjee and Piketty, 2005), unlike in Brazil where there was a growth of a wealthy elite. But the income share of the poorest groups hardly rose in India and poverty remained high, so that such redistribution as occurred was mainly from the top to the middle. During this period, a breakpoint can be seen around the mid-1960s in both countries. The process of capital accumulation intensifed in Brazil after that date, bringing about higher growth – driven by manufacturing and modern services – and increasing concentration of both personal and functional income distribution. The opposite occurred in India. Capital formation ceased to rise as a share of GDP, growth rates fell and government policy shifted towards fghting poverty, with modest success. In both countries these new disparities overlaid a pattern of inequality with deep historical and social roots. One has only to think of the caste system in India and the heritage of slavery in Brazil, the embedded gender inequalities

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– stronger in India but present in both – and the uneven regional growth of industry and agriculture. The new inequalities in the labour market tended to refect and reproduce the old, so that low castes in India and blacks in Brazil were disproportionately found in the lowest-wage or most precarious jobs. Only a small group of industrial workers beneftted from economic growth in India, while the mass of workers was engaged in casual or low-productivity work in agriculture or services. This segmentation has persisted right up to the present. In Brazil, especially during the 1970s, the industrial workforce expanded signifcantly. Even though unable to beneft from productivity gains, they were much better off than the huge sub-proletariat concentrated in urban areas (Singer, 1981). At the same time, the growth regime in Brazil was instrumental in expanding a relatively welloff middle class, while in India the growth of this class was slow. In 1980 the global economy was in deep crisis. There was a sharp contraction of world trade and a debt crisis in some countries of the periphery, mostly in Latin America and Africa. Growth rates fell around the world, and economic institutions were restructured to serve the interests of the increasingly globalised private sector, especially transnational corporations (TNCs) and major fnancial groups, providing the foundations for the subsequent phase of deregulated globalisation. Given the histories of the two countries up to that point, it would seem that Brazil’s economy was better placed to face the turbulence. After all, despite weaknesses in the late 1970s, 30 years of high growth in Brazil had created a substantial industrial base for the economy. Meanwhile, India had faced both economic and political crisis with a model that was delivering declining rates of growth and stagnant living standards. But the result was the opposite: India embarked on a period of increasing growth, while Brazil found itself mired in the “lost decade” of low growth and high infation, informalisation of economic activity and expansion of precarious employment. In fact, Brazil’s “success” was related to its deep integration into the capitalist world economy of the 1960s and 1970s. In the new context of global crisis, Brazil’s industrial sector faced a sharp fall in demand because of deep recession both at home and abroad, compounded by the oil price shock and a steep increase in foreign debt. In India the external crisis was much less intense, largely because the country’s ties to the global economy were weaker. This permitted India – or its policy-makers – to ultimately, though not immediately, embark on the opening of its economy as a part of the effort to stimulate the internal market. Economic liberalisation was to dominate the policy agenda throughout the world in the following decades. In India, the move from a largely state-controlled to an increasingly market-based regime started in the 1980s, and was strengthened by steps towards deregulation of both the domestic economy and of international trade in 1991. This triggered an increase in private investment (Rodrik and Subramanian, 2004). By 2010 public investment was down from a half to a quarter of all investment. The manufacturing sector as a whole failed to take off, but construction and the modern services sector boomed. Foreign direct investment (FDI) rose, though it was only 5 per cent of all investment, even twenty years after the reform started.

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In 1980 Brazil was already more open to the global economy than India, notably on the capital account, and this was one reason for the depth and duration of its economic problems in the 1980s. The domestic market was sacrifced because of external debt, leading to low growth and high infation. In the 1990s efforts at liberalisation focused on the opening up of trade and reducing restrictions on foreign direct investment. But the economy was severely hit by increasing industrial competition from abroad, partly because high interest rates to control infation under the Real Plan led to currency overvaluation, while balance of payments equilibrium depended on unreliable short-term capital fows. Growth remained slow. Open unemployment and informal and precarious employment rose throughout the 1990s, affecting social groups that had been protected in the earlier industrialisation period. At the end of the decade the global consequences of the Asian fnancial crisis led to another recession and the devaluation of the Real. In contrast, India’s liberalisation of the capital account was more cautious, its GDP growth was fuelled by domestic private investment and it faced no external crisis after the beginning of the 1990s until the global fnancial crisis of 2008. The period after 2000 saw higher rates of growth in both economies. The Indian economy responded positively to liberalisation. As deregulation was gradually extended, GDP growth accelerated from decade to decade after 1980, reaching annual rates of almost 10 per cent for several years in the frst decade of the twenty-frst century, before the recent slowdown after the 2008 global fnancial crisis. This growth has been unevenly distributed across economic sectors (construction and services did much better than manufacturing) and there has been a substantial shift of the share of value-added from wages to profts, but real wages and incomes have been rising across the economy as a whole and absolute poverty has dropped steadily. Nevertheless, there is little doubt that an elite group has beneftted disproportionately from the new economic model, and capital accumulation has been concentrated in a relatively small group of families and businesses. By the time of the global fnancial crisis, steps towards external deregulation had gone further than at the end of the 1990s, and the Indian economy was more vulnerable to international instability. Growth rates fell, in large part because global recession led to lack of growth in export markets, as well as the continuing weakness of India’s manufacturing sector. But the economy returned to growth rates of 7 per cent or more relatively quickly after the crisis, though growth remained concentrated in services and construction. In Brazil, the economy resumed growth in 2004. The new cycle of global economic expansion, especially in the United States, together with the changing role of China in the international division of labour, had changed the scenario. Devaluation increased the competitiveness of Brazilian exports, and continuing high interest rates and tight fscal policies encouraged capital infow. Exports rose to China, to other Latin American countries and elsewhere, refecting both the commodity boom and an increase of manufacturing exports. Brazil’s external accounts improved, foreign debt was reduced and international reserves were boosted. The result was a recovery of growth, aided by other economic policies

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such as the expansion of credit, especially by public banks, an increase in household consumption resulting from rising wages and income transfer programmes and, to a lesser extent, public investment in infrastructure and state-owned enterprises (Barbosa, 2013). So the basis for growth was different in India and Brazil. But in addition, in Brazil economic growth in the 2000s was accompanied by a qualitative shift in social policy, to a much greater extent than in India. The Fernando Henrique Cardoso government of 1994–2002 had introduced a number of important social policy instruments such as Comunidade Solidaria and Bolsa Escola. But there was a more substantial change with the election of Luiz Inácio Lula da Silva as President in 2003 and the arrival in power of the Workers’ Party (Partido dos Trabalhadores, PT). The PT-led government increased social transfers, notably including large-scale transfers to low-income groups though the family allowance (Bolsa Familia), rural pensions for the elderly poor and other social benefts (Guerra, Pochmann and Silva, 2015). At the same time there was a sharp increase in the purchasing power of the minimum wage and a wider social protection net, which increased the real incomes of workers and reduced social and economic inequality, while helping to maintain the expansion of aggregate demand in the economy. In India, too, there was greater investment in social policy by the Congress-led government that came to power in 2004, though the shift was less marked than in Brazil. This included debt forgiveness for farmers, the employment guarantee scheme (MGNREGA),5 to create employment for the rural poor, a strengthening of the public distribution system to provide subsidised food, the right to education and other policies. Not all of these policies were new, but they took on new signifcance within the new growth regime. MGNREGA was particularly signifcant, successfully raising rural employment and income levels in much of the country. But these policies were essentially a complement to an unchanged central strategy of liberal reform. There is therefore a sharp contrast between the two countries. Throughout the period, the success or failure of Brazil’s growth regime has been heavily dependent on the nature and degree of its integration into the global economy. The success in combining growth with a reduction in inequality after 2004 was facilitated by a favourable international environment, and by a dynamic internal market. However, in the wake of the 2008 crisis, and in a much less favourable international context, the growth regime proved fragile. Although social policies were maintained, at least up to the fall of the PT-led government in 2016, they now drew on a stagnant economy, which led to unsustainable fscal defcits. In India, on the other hand, the international economy has not been nearly so central to economic and social performance. Nevertheless, as the Indian economy modernises and increasingly opens its markets for goods and capital, and the internal market becomes less strategic, international factors play an increasing role. But the challenge is different from that in Brazil. It is not that a change of growth regime is needed because of the loss of effectiveness of a set of economic policies; the scenario is rather one in which the dynamics of the economic model

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generates growing inequality, and this has implications for its sustainability in the long term. These macroeconomic outcomes mainly refected four of the institutional forms identifed above: the monetary/fscal regime, the competition regime, the type of integration in the international economy and the role of the state. But two other institutional forms played an important role in the trend in inequality: labour institutions and agrarian relations. Agrarian relations were of declining importance in both countries but continued to play a substantial role in India, while labour institutions were signifcant in both – especially in Brazil, where a strengthening of labour institutions and labour market regulation was key for the unleashing of a new growth regime in the 2000s. In neither country did the deregulation of investment and trade extend to the labour market. But in India, throughout the period since 1980, labour legislation was slackly applied, and the extent of casual, contract and other forms of unstable and precarious wage labour was enormous and growing. It was widely observed that the rapid growth of the Indian economy was “jobless”, in the sense that the employment elasticity of growth was low, so that there was little creation of regular, protected jobs in the formal sector (Papola and Sahu, 2012). The informal economy continued to account for the bulk of employment, and the great majority of informal workers had little security or protection. Market forces strengthened in rural areas, where the share of casual daily-paid labour also grew, as did circular migration to urban areas, but small-scale self-employment in agriculture continued to dominate. Labour market opportunities differed greatly between men and women, and between different social groups, and the labour market was highly fragmented. Trade unions remained weak, and almost invisible in the large service sector which dominated the economy. Although there were regular calls for greater fexibility in the Indian labour market, in particular because of legal restrictions on dismissals, in practice these did not hinder the liberal growth regime (Kohli, 2012). In Brazil, the situation was not much better in the 1980s and 1990s. The 1980s was a period of informalisation of labour relations and a growth of precarious employment, though it was also an important period for the reconstitution of the trade union movement and the creation of new democratic institutions. Then, in the low-growth 1990s a rise in productivity was refected in layoffs of workers and growth in outsourcing rather than an expansion of productive capacity (Kupfer, 2005). Open unemployment and informal employment rose in this period, affecting groups that had been protected in the previous growth regime, and real living standards declined. Nevertheless, there were important policy innovations, notably the introduction of a system of unemployment insurance and a reinforcement of training institutions. The role of labour institutions changed radically under the PT-led government that came to power in 2003. The wage relation no longer played a subordinate role; instead, it now contributed positively to macroeconomic performance, as rising real wages added to the growth of aggregate demand, driven by a steadily increasing real minimum wage. A central feature of this growth regime was

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a reformalisation of wage labour, so the minimum wage was also applied to an increasing share of workers; Brazil was one of the few countries to show a substantial growth in formal employment in this period. In the 1980s and 1990s there had been a growth of both unemployment and precarious forms of work, and this was true of India as well. But after the turn of the century, the paths diverged, as India continued down an informal road while Brazil started to reverse that trend. With respect to agrarian institutions, the situations of Brazil and India could hardly be compared. In India, older forms of bondage and semi-feudal structures tended to disappear, but in many parts of the country agricultural production was dominated by middle and rich peasants. The agrarian system changed slowly, becoming increasingly integrated into national markets for commodities and labour. Green Revolution technology spread rapidly in the 1980s, and continued to spread thereafter, but public investment in irrigation and power fell away in the 1990s and so did agricultural growth (Bhalla and Singh, 2012). In some regions, capital entered rural areas either through the production of commercial crops or through the supply of seeds and other agricultural inputs, but severe problems of farmer indebtedness ensued. Agricultural growth recovered after 2005, but agriculture was a declining share of GDP and rural development was relatively neglected. In Brazil there was a slow implementation of agrarian reform. An increasing share of rural labour gained access to social protection. But peasant agriculture was relatively unimportant as a share of output compared with the expansion of agribusiness, which made rural areas essentially appendages of the urban, thus fuelling the development of the growth regime as a whole. Investment in modern agriculture contributed to growth in productivity and output, as it increasingly used inputs from the manufacturing and services sectors. However, because of its low share in the GDP it could not by itself drive the overall growth in demand. Moreover, while formal employment in agriculture increased, wages rose more slowly than productivity. On the other hand, small agricultural producers were better placed in the internal market, benefting from wider access to credit, a substantial government support programme (PRONAF)6 and growing demand in urban areas. Since the bulk of agricultural labour worked in family farms, this, together with the expansion of social security in rural areas and the Bolsa Familia Programme, was an important source of poverty reduction. This occurred without any substantial change in the concentration of wealth in Brazilian agriculture, as land was still very unevenly distributed, indeed increasingly so. The overall pattern of inequality refects these histories and growth regimes in two ways: frst in the power and class relations that mould the different economic and social institutions; and secondly in the economic consequences – especially market opportunities and outcomes – that derive from the overall structure of the growth regime. The broad picture is the following. Liberalisation and high growth in India drove inequality upwards after the 1980s, due to the pattern of private investment, the less interventionist state, and a rather fexible labour market with excess

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labour supply and high levels of informality and migration. The mechanisms lay partly in the competition regime and the pattern of international integration, both tending to concentrate wealth and incomes and to shift factor shares from wages to profts; partly the persistent informality of wage labour relations; and partly the limited role of the state. Nevertheless, the rise in inequality up to 2004 seems to have been slowed after that date by the redistributive programmes implemented by the Congress-led government, at least in rural areas. The government also raised the reference minimum wage in 2004, though subsequently it was allowed to stagnate in real terms. But gains from growth continued to be concentrated at the top of the income hierarchy. Chancel and Piketty (2017) estimate that the share in income of the top 1 per cent rose from about 10 per cent in 1992 to 22 per cent in 2013. There was a parallel increase in the inequality of wealth – the Gini coeffcient of household wealth inequality rose from 0.66 in 2002 to 0.74 in 2012 (Anand and Thampi, 2016) (and since this is based on household survey data it is certainly an underestimate). During this period, living standards were generally rising and absolute poverty diminishing. But absolute poverty is not a suffcient yardstick in a rapidly growing economy, and relative poverty has certainly increased, as social expectations rise faster than the means to satisfy them. And the growing inequality that has accompanied high growth has generated many new conficts of interest and aspirations. There are also indications of an increasing diversity of experiences across India. Rural areas have clearly gained less than urban, and since the majority of the population still lives in rural areas this is an important divide. Growth is also regionally concentrated, so that regional inequality is growing (Barbosa, Rodgers and Soundararajan, 2016). Finally, the process of market-driven growth does not seem to be reducing some of the key embedded inequalities – between castes and communities, between genders, between those with assets and those with none, and between the more and less educated. Differentials in wages and employment opportunities between these social categories remain large and, unlike in Brazil, minimum wage policy is fragmented and ineffective. In Brazil, the growth of inequality to exceptionally high levels peaked in the late 1980s, when high infation levels disproportionately affected the poor. By the same token, the stabilisation of infation at low levels in the 1990s helped to reduce inequality, though this was at least partly offset by growing unemployment and informalisation. Nevertheless, some innovative social policies were also introduced during this period, and poverty and inequality started to decline after the mid-1990s. But it was the PT-led government that made a more systematic effort to address poverty and inequality after 2003. Alongside the social policies noted above, this was built on the growth of formal employment and rising real minimum wages, facilitated by higher economic growth which leveraged the labour market. Growth created many lower-skilled formal jobs which, together with a better-educated labour force and increases in the real minimum wage, helped reduce wage inequality between the more and less educated, men and women, and whites and non-whites. State policies and labour market institutions

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therefore played an important role in offsetting the tendencies of liberalised markets towards greater inequality. The outcome was a substantial fall in overall measures of labour market inequality, starting in the latter part of the 1990s and accelerating after 2003. This fall in inequality, and a parallel fall in poverty, in a democratic political setting is a notable achievement. The contrast in outcome between the two countries is well illustrated by the trend in wage inequality (Figure 6.5, which takes into account both registered and unregistered workers). In both rural and urban areas, wage inequality was higher in Brazil than in India in 1983, especially in urban areas. But sometime around the turn of the century the lines on the graph crossed, so that in 2011–2012 inequality was higher in India. The pattern in urban areas is particularly striking. But despite the progress, inequality remains high in Brazil. As in India, some of the inequalities – among social groups and regions – are deeply entrenched. For instance, white-to-black and male-to-female income differentials fell, mostly by virtue of the increase in the minimum wage, as disadvantaged groups are more likely to earn a wage around the legal minimum. But these differentials remain substantial, and larger than the relative educational attainment of these groups could explain. Furthermore, poverty and inequality have fallen less in the poorest regions – like the Northeast – than in the richest ones, as the former lack the

Figure 6.5 Gini index of wage inequality, India and Brazil, 1983 to 2011–2012. Source: Rodgers (2016). Note: Based on unit-level data from various rounds of the Brazilian national household sample survey (PNAD) and the Indian National Sample Survey (NSS). “1994–95” refers to the 1993–94 Indian National Sample Survey and 1995 Brazilian PNAD data. 2005 refers to the 2004–05 National Sample Survey and 2005 PNAD data. 2011–12 refers to the 2011–12 National Sample Survey and 2011 PNAD data. These data include both formal and informal wage workers, but not own account workers, nor (in Brazil) domestic service.

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dynamic labour markets of the latter. Above all, as Figure 6.3 shows, the share in income of the top 10 per cent has hardly changed since the 1990s (indeed the share of the top 1 per cent probably grew, according to IPEA (Institute of Applied Economic Research) income tax data). The observed improvements in overall inequality mainly refect an increase in the income share of the bottom 50 per cent, and especially the bottom 30 per cent, at the expense of the second to ffth deciles of the distribution (though this latter group did not lose in absolute terms; rather their gains were less). Despite differences between the two countries in the overall role of the state, there were some parallels in the efforts of governments in both countries to put in place social programmes to counter the dis-equalising effect of liberalisation. But in Brazil the effort of state intervention in social policy and its impact were signifcantly greater than in India. This is a key difference between the two countries: Brazilian labour market and social policies delivered signifcantly better outcomes in terms of social protection and redistribution than India, despite lower GDP growth and investment rates. And while some of this difference refected the differences in economic and social structures and productivity levels, it is also clear that the Brazilian government after 2003 had a broader social vision and a stronger base of support in the trade union movement and civil society, which was strategic for the attempt to confgure a more redistributive growth regime.

The growth regimes since 2014 Both India and Brazil were hit by the global recession that started in 2008, and deepened after 2011. There were also major corruption scandals in both countries, which undermined the credibility of the ruling parties. This contributed to the fall of both governments, but in entirely different ways. The Congressled government in India was decimated in the 2014 election, and the Bharatiya Janata Party (BJP) returned to power with a parliamentary majority. In Brazil, the PT-led government just survived a close-run presidential election in 2014, but in the face of powerful political opposition and deep economic recession, it fnally lost power in 2016 as the result of the impeachment of President Dilma Rousseff. Then, following a two-year interim period under the unpopular President Michel Temer, who started to reverse some of the policies of the PT-led governments, the presidential election of 2018 was won by the extreme-right candidate Jair Bolsonaro, after the exclusion of former President Lula from the contest as a result of his controversial conviction and imprisonment on corruption charges.7 The implications for the growth regimes of these radical changes in the political situation in both countries are still working themselves out. Nevertheless, the current situations already provide some insights into the interactions between the political process and the underlying forces supporting the growth regime, and in particular the signifcance of inequality as both cause and consequence. On the face of it, the change was more dramatic in Brazil. Dilma Rousseff’s impeachment was an “institutional coup” against the socially progressive policies of the PT-led governments, but also refected failures of economic policy.

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Historically, despite the fragmentation of political parties, it has been possible to identify three major forces in Brazilian politics since the 1940s: a right-wing liberal current, broadly favouring free market economic policies; a left-wing party or group of parties, representing the interests of workers with a national development agenda; and a clientelist group refecting rural and regional interests and traditional power structures without a clear ideological identifcation (Singer, 2018). This latter group has sometimes allied with the left and sometimes with the right, depending on circumstances, but has always been an essential partner for the constitution of a government. And in government it has usually succeeded in defending its interests – including during Lula’s presidency from 2003 to 2010, which helps us to understand why income distribution was little changed at the top despite the social policies implemented during the period. However, after Dilma’s election in 2010 she attempted to consolidate her power and change the economic policy agenda without some of the PT’s key allies of the Lula period, including important actors of this middle political grouping, the Partido do Movimento Democrático Brasileiro (PMDB), who switched sides and worked with the political right and with business to overthrow her government. After they had failed to remove her through the ballot box in 2014 – the PT and its redistributive agenda remained extremely popular among lower-income groups, especially in the North and Northeast – they succeeded in obtaining a congressional majority for impeachment. In this they were aided by Dilma’s unsuccessful macroeconomic policies, which switched abruptly from expansionary, attempting to maintain an unsustainable growth of consumption, to contractionary, while failing to mobilise political support for the change of direction. This was reinforced by the deteriorating social climate, leading to the destabilisation of her government. The result was to drive the Brazilian economy into a deep recession – GDP fell by 7 per cent in two years (2015 and 2016). But the turn to the right in Brazilian politics cannot be explained only in economic terms; it also had massive support from the media, the middle class and the judiciary through the “Car Wash” anti-corruption operation. Inequality played a crucial role in this process. As we have seen, every social segment benefted in terms of incomes at least up to 2010, but the gains were larger among the poorer groups. When GDP growth decreased after 2011, labour market outcomes remained positive. However, proft rates fell, incomes of some better-off groups were hit and the idea circulated that the underprivileged were gaining more than they deserved. This hierarchical mindset was even reproduced by some workers whose situation had improved but who feared competition from the poorest. In this situation, where reality and perception were mixed, an anti-poor discourse emerged. The middle and upper classes were more and more virulently opposed to the macroeconomic and redistributive policies of the government, especially when growth stalled after 2012. This spilled over into large-scale demonstrations in June 2013, which changed the political equation. Dilma’s popularity dived. But given the numerical strength of the lower-income groups who beneftted from PT policies, a political coup was required to overthrow her and exclude the PT from power.

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She was replaced by Michel Temer, a key member of the PMDB (now the Movimento Democrático Brasileiro, MDB) and Dilma’s Vice President. He started to implement policies to limit the public sector defcit – in which he did not succeed – by restricting government expenditure, and most strikingly put in place a far-reaching labour reform that undermined workers’ rights, introduced precarious work contracts and weakened labour institutions. Infation was contained but growth did not recover (1 per cent in both 2017 and 2018), and open unemployment rose from 6.8 per cent in 2014 to 12.3 per cent in 2018. Not only did unemployment rise, but also the share of the registered workforce – employed with a labour card – fell from 48.4 per cent at the end of 2014 to 42.4 per cent at the end of 2018. Unregistered wage employment rose by 7.8 per cent from 2014 to 2018, while registered wage employment fell by 10.1 per cent. These changes in both policies and economic outcomes are already starting to raise inequality again. Between 2014 and 2018 the Gini coeffcient of household labour income rose from 0.514 to 0.533 (Lameiras, Carvalho and Corseuil, 2019). This was in part because regional inequality was rising again, as well as inequalities between whites and non-whites and between men and women. The election of Bolsonaro, who was an outsider in Brazilian politics, represents another large political shift. His economics Minister, Paulo Guedes, often characterised as a “Chicago boy”, intends to deepen neo-liberal reforms undertaken during the Cardoso period (1995–2002), and weaken worker rights further by fexibilising labour contracts and restricting the transfer of resources to trade unions. PT social policies are unlikely to disappear overnight but will probably be starved of resources and targeted to the “worthy”, so weakening their redistributive role (and probably increasing regional inequality, since poorer regions beneftted disproportionately from social policies). The pension reform that was approved in 2019 not only paves the way for capitalisation but also eliminates the principle that social benefts cannot fall below the minimum wage (Fagnani, 2019). The regulation of private capital will doubtless be weakened as well, and privatisation of many public enterprises is a priority. All of these policy changes are likely to accelerate the growth of inequality. In other words, the redistributive growth regime of the PT period has clearly come to an end. The society is deeply polarised, there is resistance to the new policies and there is concern about the stability of democratic institutions, with an increased presence of present or past members of the military in both government and Congress. But whether a stable, although unequal, growth regime will emerge remains to be seen. There is a widespread belief in the media and the private sector that once economic reforms are in place investment will rise and growth will resume. This seems optimistic to say the least, and the economy remained stagnant in 2019. In his frst months of government, Bolsonaro has shown little capacity to deal with the political forces represented in Congress, deeming them part of the “old policy”. Helped by his falling rates of approval, opposition to the government is increasing, due to clashes among his constituency on the right, the parties of the centre and even the mainstream press. His pension reform was signifcantly

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modifed by Congress before its approval in October 2019. Government policies on education, social inclusion and environmental regulation are attracting criticism from different parts of the Brazilian political spectrum, and there have been mass demonstrations from social movements and from the left, although these are still fragmented. In India the situation is also problematic but in different ways. The BJP government that came to power in 2014 did so in the wake of corruption scandals and the perceived weak leadership of its predecessor, rather than because of failed economic policies or growing inequality. In fact, while growth had dropped in the wake of the global fnancial crisis, poverty had clearly declined, formal employment and wages had risen, and there were signs that the increase in inequality of the previous two decades had at least started to slow. The new BJP government could be described as national populist, with a neo-liberal foundation for its economic policies. In reality its macroeconomic policies were not qualitatively different from its predecessor, built around closer connections with the global economy and continued deregulation. However, its social policy differed in that it aimed to reduce social shortfalls through deeper integration in the market, for instance through a programme of “fnancial inclusion” involving universalisation of bank accounts, ad hoc adjustments to appease specifc groups (e.g. cash handouts to farmers), and more effcient policy implementation. The government was, however, quite insensitive to the situation of poor and excluded groups, for instance in the bizarre policy of demonetisation of high-value currency notes in 2016, which had a dramatic effect on the informal economy and the employment of casual workers (Harriss-White, 2017). In addition, there are persistent complaints about underfunding of MGNREGA, the employment guarantee scheme. There are more successful programmes, such as the building of rural toilets and extending electricity connections. But many vulnerabilities are not addressed, and the government’s policies and the actions of its Hindu fundamentalist supporters have often added to social strains and conficts, including religious intolerance, notably of Muslims, mob lynchings, atrocities against Dalits and denial of land rights of Scheduled Tribes. Inequality tends to be presented in terms of differences between castes and communities, diverting attention from the continued accumulation of wealth among the elite, but leading to persistent demands for economic benefts based on social identity, for instance job reservations in the public sector. The focus on caste and religious identity in Indian politics diverts attention from broader-based policies, and helps explain why social policy goals appear to have only limited effects on voter behaviour (Banerjee, Gethin and Piketty, 2019). The assessment of the implications for inequality is rendered diffcult by lack of recent information. The government has not maintained the regular employment and expenditure survey that was carried out until 2011–2012, and delayed publication of data from a substitute labour force survey; it is widely believed that this was to avoid the publication of poor results before the election in April–May 2019. Even macroeconomic data are widely contested, with GDP growth estimates adjusted upwards for the period when the BJP was in power and reduced

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for its predecessor, despite a fall in investment rates (Ghatak and Mukherjee, 2019). An open letter by 108 economists and other social scientists recently protested that “Indian statistics and the institutions associated with it have … come under a cloud for being infuenced and indeed even controlled by political considerations” (Azad et al., 2019: 4). There are also concerns about an authoritarian approach that has put freedom of speech and dissent at risk. Nevertheless, it is possible to glean some indications of general trends from non-offcial sources and fragmentary evidence. These show deterioration in the labour market and rising inequality. In the last few years formal employment creation has been very slow despite moderate GDP growth. Within the formal sector there is a growing share of precarious work; open unemployment is rising among men, while women are being pushed out of the labour force (Basole et al., 2018). Leaked information from the delayed labour force survey suggests that open unemployment (usual status) rose from 2.2 per cent in 2011–2012 to 6.1 per cent in 2017–2018.8 And there is much anecdotal evidence about rising youth unemployment rates, as increasingly educated young people fnd that few good jobs are being created. In the absence of wider information, data on wages give some indication on how far the benefts from growth are being shared. In the four years January 2015 to December 2018 rural wages rose only by 1.8 per cent in total in real terms (Damodaran, 2019, based on Labour Bureau and CSO data), while in approximately the same period overall real GDP per capita grew by 27 per cent if we believe the national accounts. There is a severe defciency of data on urban wages, but Labour Bureau data for the lowest-paid cotton textile workers in Ahmedabad and Bengaluru indicate that real wages rose by 3 per cent in the former and by less than 2 per cent in the latter in the period from 2014 to September 2017. For this period overall real GDP per capita grew by approximately 19 per cent. So very little of the growth trickled down to rural workers or to low-paid urban factory workers, a strong indicator of increasing inequality. We may conclude that “Modinomics” (Ghatak and Mukherjee, 2019) is associated with increasing inequality, and, the most recent GDP data suggest, also with lower growth. This appeared to have some electoral impact, since the BJP lost three state elections at the end of 2018. But the benefts of recent growth have been captured by the middle class and capital owners, who have considerable infuence on the media and political discourse. In the general election campaign of 2019, the relatively poor economic outcomes were successfully downplayed in favour of fery nationalist rhetoric, concentrated on continuing tensions and confict with Pakistan. This was combined with a strong populist message around Hindu identity which clearly reached an electorate beyond the largely upper and middle caste constituency of the BJP, but which effectively excluded 200 million Muslims. The result was a clear victory for the BJP despite the negative economic results. In the end, from different starting points and with different social and economic constraints, India and Brazil face many similar challenges. The growth regimes of the two countries differ in important respects, and political responses

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to inequality have also been different. But the same questions of the compatibility of growth and inequality persist in both. In both countries there has been a political shift towards a populist agenda that combines economic neo-liberalism with political conservatism and authoritarianism, and in both there must be concerns about the future path of inequality. In India the question is whether the existing economic model can maintain high rates of growth without causing inequality of income and wealth to rise further; whereas in Brazil the shift away from progressive policies since 2016 is unlikely to be consistent with a stable and equitable growth path in the future.

Summing up The patterns of inequality in Brazil and India are different, and so are the paths of inequality over time, but by exploring how they connect with the growth regimes in the two countries we can understand some of the reasons for the differences and also identify similarities. Some sources of inequality are deeply embedded, and different in the two countries – caste and community in India, race in Brazil; gender inequalities that have different origins and manifestations; diverse patterns of deprivation and exclusion with different historical origins. Each country has its own character. But there are also important commonalities, especially in the social and institutional mechanisms that underpin inequality. Our framework in terms of growth regimes treats the pattern of growth and inequality as dependent on constellations of economic, social and political institutions. Growth and inequality are not preordained by technical economic relationships, nor are they a simple manifestation of class relations. Instead, they refect patterns of compatibility and tension among institutions and actors in each country. In both countries there have been periods when a certain coherence among institutions has generated a fairly stable growth path with a clear distributional pattern. But there have also been periods of crisis and reaction, when tensions built up either because of internal contradictions or because of external factors. A growth regime built on redistribution by the state may ultimately provoke a backlash from those who consider themselves as the losers, especially when growth stalls, as in Brazil. Sustained high growth with increasing concentration of income may be viable with an authoritarian state, but this also leads to increasing social tensions, as in India. So a growth regime interacts with national politics. And the national economy interacts with the global economic environment, itself unstable, which also conditions the pattern of growth and distribution. What is apparent from our analysis is how the different institutions interact. Which institutions are most important may vary between particular points in time, but the path of inequality always results from a set of political and institutional forces and not just from the market. When these institutions come together in a coherent confguration, the result may be stable, or steadily rising or steadily falling inequality. Each of these brings its own tensions. Falling inequality in the case of Brazil has itself been a source of instability, and it has combined with other macroeconomic constraints and forces to drive change in the growth

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regime. Rising inequality in India has not yet put the growth regime in question, but if social and political conficts increase, it may well do so. The question, in both India and Brazil, is how these tensions are manifested, and whether the growth regime can evolve to accommodate them, or whether structural changes are needed in order to move to a new mode of regulation and a corresponding development path.

Notes 1 This chapter derives from a project on labour market inequality in Brazil and India carried out at the Institute for Human Development in Delhi and the Brazilian Centre for Analysis and Planning in São Paulo, with support from the International Development Research Centre, Canada. It relies heavily on the work of other members of the research teams in these two institutions, and in particular Taniya Chakrabarty, Nandita Gupta, Janine Rodgers, Vidhya Soundararajan and Fabio Tatei. This paper draws on, summarises and updates more detailed analysis in Barbosa, Cacciamali and Rodgers, (2017) Growth and Inequality: The Contrasting Trajectories of India and Brazil. New Delhi: Cambridge University Press. 2 Data on household income inequality for Brazil are only available since the 1980s. The broad trend in that period is similar to that for labour income (a peak in the early 1990s followed by a decline). 3 The inequality of expenditure is generally lower than that of income. Figure 6.3 shows that the income share of the top 10 per cent was similar in the two countries after 2010. 4 The gap between the two series in 1990 can be taken as an indication of the degree of underestimation of top incomes in the census data. 5 Mahatma Gandhi National Rural Employment Guarantee Act, 2005. 6 Programa Nacional de Fortalecimento da Agricultura Familiar (National Programme to Strengthen Family Farming). 7 The imprisonment of Lula was controversial because it was widely seen as a political manoeuvre to eliminate him from the 2018 presidential election, which – according to opinion polls – he was well placed to win. 8 The rise was confrmed after the survey results were fnally offcially released after the election.

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Banerjee, Abhijit, Amory Gethin and Thomas Piketty (2019) Growing Cleavages in India? Evidence from the Changing Structure of Electorates, 1962–2014. Economic and Political Weekly, 54(11): 34–44. Barbosa, Alexandre de Freitas (2013) Os Avanços da Era Lula. Interesse Nacional, 5(20): 40–50. Barbosa, Alexandre de Freitas, Gerry Rodgers and Vidhya Soundararajan (2016) Regional Inequality Compared: The Cases of India and Brazil. Indian Journal of Economics, Special Centennial Issue, XCVI(383): 657–79. Barbosa, Alexandre de Freitas, Maria Cristina Cacciamali and Gerry Rodgers (2017) Growth and Inequality: The Contrasting Trajectories of India and Brazil. New Delhi: Cambridge University Press. Basole, Amit, Arjun Jayadev, Anand Shrivastava and Rosa Abraham (2018) State of Working India 2018. Bengaluru: Azim Premji University. Bhalla, G.S. and Gurmail Singh (2012) Economic Liberalization and Indian Agriculture: A District Level Study. New Delhi: Sage. Boyer, Robert (1990) The Regulation School. A Critical Introduction. New York: Columbia University Press. Boyer, Robert (1994) Do Labour Institutions Matter for Economic Development? A ‘Régulation’ Approach for the OECD and Latin America with an Extension to Asia. In Workers, Institutions and Economic Growth in Asia, edited by G. Rodgers. Geneva: International Institute for Labour Studies. Boyer, Robert and J. Rogers Hollingsworth (1997) From National Embeddedness to Spatial and Institutional Nestedness. In Contemporary Capitalism: The Embeddedness of Institutions, edited by J.R. Hollingsworth and R. Boyer. Cambridge: Cambridge University Press. Chancel, Lucas and Thomas Piketty (2017) Indian Income Inequality, 1922–2014: From British Raj to Billionaire Raj? World Wealth and Income Database, Working Paper 2017/11. http: //wid.world/wid-publications/#library-working-papers (accessed 20 August 2019). Damodaran, Harish (2019) Rural Distress Deepens: Wage Growth Dips, Non-Farm Jobs Hit. Indian Express, March 11. https://indianexpress.com/article/india/rural-distressdeepens-wage-growth-dips-non-farm-jobs-hit-5619766/ (accessed 20 August 2019). De, Rahul and Vamsi Vakulabharanam (2013) Growth and Distribution Regimes in India After Independence. Paper Presented to the World Economics Association Conference on Inequalities in Asia (Online Conference), 12 May to 8 June 2013. World Economics Association. Dedecca, Cláudio Salvadori and Sandra M. Brandão (1993) Crise, transformações estruturais e mercado de trabalho. In Crise Brasileira, anos oitenta e Governo Collor, edited by Bernard Appy, et al. São Paulo: DESEP-CUT/Instituto Cajamar. Evans, Peter (1995) Embedded Autonomy: States and Industrial Transformation. Princeton, NJ: Princeton University Press. Fagnani, Eduardo (2019) Entenda como a reforma da previdência aprofunda as desigualdades. Carta Capital, 25 March. https://www.cartacapital.com.br/economia /entenda-como-a-reforma-da-previdencia-aprofunda-as-desigualdades (accessed 20 August 2019). Ghatak, Maitreesh and Udayan Mukherjee (2019) The Mirage of Modinomics. The India Forum, March 8. Guerra, Alexandre, Marcio Pochmann and Ronnie Aldrin Silva (2015) Atlas da Exclusão Social no Brasil: Dinâmica da Exclusão Social na Primeira Década do Século XXI. São Paulo: Cortez.

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Hall, Peter A. and David Soskice (2001) Introduction. In Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, edited by P. Hall and D. Soskice. Oxford: Oxford University Press. Harriss-White, Barbara (2017) Interview with Barbara Harriss-White. Madras Courier, 13 January 2017. www.madrascourier.com/barbara-harriss-white-on-demonetisation-par t-1 (accessed 20 February 2017). Kohli, Atul (2012) Poverty Amid Plenty in the New India. Cambridge: Cambridge University Press. Kupfer, David (2005) Tecnologia e Emprego São Realmente Antagônicos. In NovoDesenvolvimentismo: Um Projeto Nacional de Crescimento com Eqüidade Social, edited by J. Sicsú, L.F. de Paula and R. Michel. Rio de Janeiro: Manole. Lameiras, Maria Andrea Parente, Sandro Sacchet Carvalho and Carlos Henrique Corseiul (2019) Mercado de Trabalho. Carta de Conjuntura IPEA 42: 1–24. Maddison Database (2013) Statistics on World Population, GDP and Per Capita GDP. 1– 2010 AD. http://www.ggdc.net/_maddison/maddison-project/home.htm (accessed 20 August 2019). Papola, T.S. and P.P. Sahu (2012) Growth and Employment Structure in India: LongTerm and Post-Reform Performance and the Emerging Challenge. Institute for Studies in Industrial Development Working Paper. New Delhi: Institute for Social Studies in Industrial Development. Pomeranz, Kenneth (2000) The Great Divergence: China, Europe, and the Making of the Modern World Economy. Princeton, NJ: Princeton University Press. Rocha, S. (2003) Pobreza no Brasil: afnal do que se trata? Rio de Janeiro: Editora FGV. Rodgers, Gerry (2016) Inequality and the Labour Market: Comparing India and Brazil. Indian Journal of Labour Economics, 59(1): 39–55. Rodrik, Dani and Arvind Subramanian (2004) From “Hindu Growth” to Productivity Surge: The Mystery of the Indian Growth Transition. IMF Working Paper WP/04/77. Washington, DC: International Monetary Fund. Singer, André (2018) O Lulismo em Crise. São Paulo: Companhia das Letras. Singer, Paul (1977) A Crise do “Milagre”: Interpretação Crítica da Economia Brasileira. São Paulo: Paz e Terra. Singer, Paul (1981) Dominação e Desigualdade: Estrutura de Classes e Repartição da Renda no Brasil. Rio de Janeiro: Paz e Terra.

Part 3

Work, households and the labour market There is a growing appreciation that the unit of economic analysis in many important socio-economic questions is the household, rather than the individual. In this section, we examine the world of work, broadly conceived, in the global South. We look at the relationship between paid and unpaid labour both within and without the household, and the implications for the persistence of structural inequalities. We examine the role of education in the reproduction of inequality, and interrogate the structure of the labour market. Furthermore, central to understanding work in the South is the role of informality – both informal employment and the informal economy – in shaping the world of work. At all times, of course, we must be aware of the role of class forces in producing and reproducing inequality. In Chapter 7, Hibist Kassa examines the intersection between production and reproduction, by drawing on empirical evidence from Obuasi, a mining town in Ghana, and KwaThema, a township in South Africa. The chapter assesses the bearing this intersection has on gender inequality and how this can deepen an understanding of how social reproduction is integral to the accumulation process as a distinctive feature of the global South. Drawing from these comparative case studies, the chapter argues that social reproduction is shaped by the extent and quality of the provision of social infrastructure, shrinking formal sector employment and pervasiveness of precarious work. In Chapter 8, Stephanie Allais explores inequalities in transitions from education to work, and the effect of these inequalities on the nature of education and training systems in Ethiopia, Ghana and South Africa. The chapter argues that the structure of education, in which small elites are educated through elite secondary and university education, mirrors but does not cause this labour market structure. The weakness of technical and vocational education and training (TVET) systems has deep roots in colonialism and the extractive nature of economies established by the colonial powers, as well as the government administrative systems they created and the ways in which education systems interacted with sub-elite jobs.

7

The crisis of social reproduction in petty commodity production and large-scale mining A Southern perspective on gender inequality Hibist Kassa

Introduction In the aftermath of economic liberalisation, the increasing concentration of women in the informal sector has drawn attention to deepening gender inequality in the global South. While the persistence of the gender-segmented nature of the labour market is widely recognised, the challenge has been understanding the manner in which the intersection between production and reproduction is both “cause and consequence” of gender inequality (Braunstein, Bouhia and Seguino, 2018: 3). Integrating the informal sector, a distinctive feature of the global South, provides a better understanding of how social reproduction is integral to the accumulation process (Mezzadri, 2019). This chapter explores how the erosion of social infrastructure, shrinking formal sector employment and pervasiveness of precarious work has had direct bearing on the emergence of non-formal mining operations in Africa.1 It draws attention to how the state has essentially left a gap in terms of social provisioning but also in providing support for petty commodity producers and petty capitalists. These circumstances do not only have bearing on petty commodity production and petty capitalist mining operations, but also on large-scale mining (LSM) operations. The latter are developing policy innovations in the form of public– private partnerships (PPPs) in response to the gap left by the state. I suggest that the above has had a bearing on the contradictory manner in which social reproduction and production relations reproduce gender inequality in the cases investigated in this study. The chapter draws on empirical evidence from Obuasi, a mining town in Ghana, and KwaThema, a township in South Africa.2 Zama in isiZulu means to try, since the miners are trying to make a living, to ensure they are able to cover basic living costs within their households, and also to lay the basis for concrete improvements in their own and their dependents’ living conditions. “Zama zama” miners who operate in abandoned gold mines and mine dumps in Gauteng (where feldwork was conducted) trace the origins of their operations to the early 1990s and the end of apartheid. “Galamsey”, on the other hand, is derived from “gather-them-and-sell”, and emerges from the period immediately after independence in Ghana when white supervisors and captains in the formal mines would purchase gold from locals (Aadam, interview, 2017).

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This draws attention to a similarity between both cases, where galamsey and zama zama emerge at the moment of “freedom”. In 2018, agriculture in Ghana accounted for 34 per cent of employment (World Bank, 2019), which has been in decline, but also has a low and falling share of Gross Domestic Product (GDP) at 18.9 per cent (World Bank, 2018: 23). It is estimated that there are about one million people who are directly involved in non-formal mining, and four to fve million who are indirectly involved. In 2017, the government of Ghana imposed a nationwide ban on artisanal and small-scale mining (ASM). In the lead-up to the nationwide ban, non-formal mining in Obuasi increased and culminated in a nine-month occupation of the Anglo Gold Ashanti (AGA) concession by 3 000 miners in 2016. As the chapter illustrates, there is a process of displacement of agriculture by other livelihood activities, particularly largely non-formal, artisanal, smallscale mining operations (Bryceson and Jønsson, 2014; Lahiri-Dutt, 2018: 1–22). KwaThema, on the other hand, is in the middle of a de-industrialisation process with declining large-scale mining and manufacturing sectors (City of Ekurhuleni, 2010: 22–3). In both cases, these are the key trends shaping the emergence of petty commodity production in mining. Both cases illustrate how, in the aftermath of economic liberalisation, social reproduction is integrated into production relations to reproduce gender inequality. A central actor shaping this outcome is the state and what I theorise as the contradictory manner in which it mediates petty commodity production and petty capitalism. Drawing on Bujra (1986: 133), this should also be extended to the manner in which capitalist transformation not only integrates women’s work in the domestic sphere, but also in terms of their participation in petty commodity production and petty capitalism.

The intersection of production and reproduction Feminist writers have sought to break from a simplistic dualistic understanding of the relation between production and reproduction. According to Bhattacharya’s conceptualisation of social reproduction theory, labour is a “unique commodity produced outside of the circuit of capital”. Production and reproduction are distinct and yet interpenetrating in sexualised, gendered and racialised processes that are rooted in historical epochs. These processes in turn shape sex, gender and class in ways that “act upon the determinate form” of the extraction of surplus value (Bhattacharya, 2017: 7, 228). The outcome of this is that the burden of care work constrains labour participation and erodes gains from the increase in wages for women workers (Braunstein et al., 2018: 25–6). Nancy Fraser (2016: 103–5), in a broad historical analysis, examines the emergence of social reproduction regimes which at their core entail the “social contradiction of capitalism”. She argues that in the current epoch the crisis of care focuses on a contradiction between production and reproduction which shape capitalism in its entirety. An important aspect is how, even when there is growth, the extent of the burden borne by the care economy in developing economies

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is related to how social investments reproduce gender inequality (Braunstein et al., 2018: 25–6). However, Alessandra Mezzadri (2019) adds that excluding the informal sector, a distinctive feature of the global South, from analysis of social reproduction will feed into a dualist conception that is unable to holistically map the lines of interlinkage (and contradiction) between them. In a working paper on unpaid labour, Budlender and Brathaug (2002) emphasise the need to understand non-market-oriented production and consumption of households. Labour statistics are oriented towards market-oriented production which is presumed to be the only form of productivity in the economy. This bias enables a lack of understanding of how productivity in non-market household production compares with productivity in market-oriented production. The authors conclude that “data is needed to improve working conditions in the household and even release labour” for more productive forms of work. This identifes a critical and persistent problem of a focus on economic activities related to the formal sector, which is a bias informed by a focus on the global North. There is also a need to integrate unpaid care work, petty commodity production and petty capitalist forms of production to provide a holistic understanding of the heterogeneous economies in the global South. Petty commodity production is composed of producers and traders who deploy low levels of capital and utilise their own labour, as a form of disguised wage labour, under the dominance of market forces (Harris-White, 2006: 982). Petty commodity production is primarily a site of value production. In mining this can be characterised by accumulation that leads to reinvestment, but only in a very limited sense, such as ensuring viability of the activity. Any surplus generated tends to be used mainly to cover living expenses in households. Reinvestment leads to an expansion in production and integration of wage labour and mechanisation, mainly as a response to an impulse to expand for proft, which in this study is a mark of petty capitalism. It is also the case that exploitation, in varied forms, is more clearly established in petty capitalism. This draws attention to a process by which accumulation can, among other things, enable petty commodity production in mining to become petty capitalism. Bujra (1986: 121–7), writing at an early stage of economic liberalisation, highlights how wage labour was predominantly male, while the subsistence economy or non-capitalist forms of production were largely dependent on women’s work. She shows how the viability of non-capitalist forms of production are undermined. With the disruption created by demands from large-scale capitalist enterprises, women are partially or fully proletarianised as members of families where men are turned into wage workers. In some contexts, this leads women to turn to petty commodity production and petty trading to ensure access to cash incomes and also due to the fexible terms which enable them to juggle their care work. A recent study on time use by women in Ghana shows that men specialise in market production while women engage in household production (Amporfu et al., 2018). In this regard, the market has been equated with the dominant market forces (such as commercial agriculture, wage work and retail). What is left to be explored is the processes through which social reproduction is linked

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with production, and how this can be measured in time use studies. A qualitative approach can reveal other dynamics at play (Budlender and Brathaug, 2002). This chapter examines the manner in which petty commodity production and petty capitalism in mining have accelerated and intensifed the processes, as outlined above by Bujra, and how an expanded conception of social reproduction explains the reproduction of gender inequality. This will enable an understanding of how unpaid work that is not valued under capitalism also shapes the importance of value created in a space that indirectly benefts capital by subsidising it, precisely because this work is unpaid. It also demands an approach that integrates an understanding of how petty commodity production can fall within nonmarket-oriented production. The bias informing the exclusion of unpaid work is informed by assumptions of what constitutes productive labour. The market prioritises production directly oriented to the needs of big capital, instead of the heterogeneous forms of economic activities which contribute to social reproduction and securing well-being. This has a direct bearing on poorer households and economic activities consigned to the informal sector. Historically, this is also a product of colonialism, which imposed coercive methods to stabilise the labour force while simultaneously depending on the subsistence economic activities to subsidise wages and care for the sick, the injured, the ageing and children, and to see to other needs such as water, food and clothing. Women’s work covered this expanded range of activities which was of indirect beneft to big capital and the colonial state. The migration system under apartheid in South Africa utilised the reserves as a labour pool and depended on black women’s unpaid care work (which included subsistence agriculture) as a source of stabilisation. This process is predicated on dispossession and the superexploitation of black workers.3 South Africa offers an extreme case where dispossession facilitates the integration of social reproduction, centred on unpaid care work, to stabilise big capital. A global South perspective of unpaid care work needs to be broader in the context of the rapid expansion of the informal economy within which these forms of economic activities take place. By drawing on empirical evidence from non-formal mining, the chapter makes the case for understanding petty commodity production as creating the space for the emergence of petty capitalism, which is also integrated into the global commodity chain. A key actor mediating social reproduction and the conditions within which women undertake unpaid care work and livelihood activities, is the State. Historically, state formation in both Ghana and South Africa is tied to rise of LSM, but also in the organisation of social reproduction.

The state and mediation of the mining regime Contemporary mining history in South Africa has been marked by conficts between “small diggers” or artisanal miners, large-scale mining operations and landowners (Mostert, 2012: 26). The government of the old Transvaal province (now Gauteng) initially sought to protect small diggers, but this soon gave way to conglomerates which offered to rationalise production. Sourcing the fnance

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and technology required to undertake mining underground and to extract ore in increasingly diffcult situations, as well as the need to source an adequate water supply, led to the dominance of emerging large-scale mining operations. The emerging State and LSM operations can be said to have developed a symbiotic relationship which “was written into the fabric of present-day South Africa, as in Ghana” (Kassa, 2018). The process of dispossession was more extreme in South Africa than in Zimbabwe and Ghana (Amanor-Wilks, 2007). This balance of power set the stage for the displacement of artisanal miners. In the midst of this, Africans were sourced as cheap wage labour on the mines and policed with invasive forms of surveillance, restrictions and corporal punishment. Surveillance also included controls on movement, which was a precursor to the pass laws (Lanning and Mueller, 1979). The mining industry, at its very beginning, was founded on the exclusion of Africans from capital accumulation. This was despite the signifcant extent of precolonial mining in Limpopo by Africans, specialising around tin, iron ore and gold mining prior to the entry of white settlers (Bandama, 2013: 22). During this phase a series of mine laws were introduced on an ad hoc basis, resulting in a chaotic legal framework. Gold laws were based on the existing framework for regulating diamond mining. The laws sought to regulate prospecting and ownership of precious stones, which was used as a model to regulate gold and base metals in the Transvaal and Orange Free State (Mostert, 2012). The surface workings, which had hitherto required simple methods of mining, were inadequate when operations went below 40 metres. In 1892 the introduction of potassium cyanide improved the gold extraction process. The shift to mining deeper underground was also dependent on advances in technology, fnance, a stable workforce and expertise (Bonner and Nieftagodien, 2012: 6–8). This draws focus to how the South African state not only excluded Africans from capital accumulation, but actively sought to ensure the coexistence of Afrikaans capital and British-dominated LSM operations; this permitted racialised provisions for smaller-scale mining operations to occur alongside emerging large-scale mining (Mostert, 2012: 26–7). The former would enable a form of locally driven capitalist enterprise while the latter could deploy international fnance. The landowners in the Transvaal and Orange Free State were most likely white Afrikaans-speakers. At its very beginnings, the exclusion and marginalisation of Africans from capital accumulation was embedded in the foundations of state formation of what became the Union of South Africa in 1910. The 1920s and 1930s witnessed the infux of women into the East Rand (now Ekurhuleni). Black women were being pushed off farms due to “tightening restrictions on farm labourer families” (Bonner and Nieftagodien, 2012: 47–9). The attempts to regulate the black urban population were not only through racial segregation but included location regulations through the Native (Urban Areas) Act of 1923. The regulations not only sought to control the infux of populations, but in the case of locations regulations were intended for “surveillance and control” (Bonner and Nieftagodien, 2012: 51–3). Urban women launched legal challenges, which made the laws diffcult to implement in Ekurhuleni. In 1930,

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the Women’s League of Justice was formed, not only to resist a permit system for lodgers but also regulations seeking to stop liquor production. Benoni, Brakpan, Springs and Germiston were key towns where women organised protests. In response, municipalities amplifed surveillance by introducing “pick-up vans”. During World War II, South Africa had built up its manufacturing base, supplying consumer goods for local demand and the war effort. This led to a shift to import substitution industrialisation. Manufacturing eventually overtook mining in 1943 (Bonner and Nieftagodien, 2012: 80). In the 1970s, the East Rand remained an important base for the labour movement, and migrant labour was drawn into the emerging manufacturing hub of South Africa (Barchiesi, 2010: 73). Mining, however, had begun to decline in the 1950s and 1960s, leading to closure of mines in Benoni. The rather volatile and unstable nature of the mining industry still provided a basis to diversify into manufacturing. The isolation that apartheid South Africa experienced from the global economy due to a successful boycott campaign shielded the local market from global competition and enabled protection from import commodities. Liberalisation after the end of apartheid lifted the veil and exposed the manufacturing sector to intense competition from newly industrialising countries and challenges with exporting to developed markets. As a result, manufacturing went into decline in the 1990s, leading to a period of crisis (Bonner and Nieftagodien, 2012: 204–5). Within gold mining areas in precolonial Ghana, a variety of mining practices evolved over many centuries, and these varied in different areas. Specialisations and technologies evolved by integrating some European tools with traditional hoes (Dumett, 1998: 42). Families worked pits together, and surface-level mining was worthwhile. After digging, the rocks were crushed and the gold separated through a manual process of panning. The amalgamation process, which includes use of mercury or arsenic, was not incorporated into extracting gold at that time. Instead a laborious and highly skilled process of sifting was used. Women specialised in this (Ofei-Aboagye, 2001). Driven by an ethic of saving and reinvestment in other economic activities (Dumett, 1998: 54–65), this was a form of petty commodity production that had its own character and dynamism within the domestic economy. This precolonial mining forms the core of indigenous knowledge that continues to shape small-scale mining in Obuasi, even after the entry of LSM operations. The galamsey operations in Obuasi, and nationally, expanded rapidly as an alternative livelihood option in the aftermath of structural adjustment in the 1980s and the frst wave of regulation (Awumbila and Tsikata, 2010: 99). At this point, the operations of large-scale mines were more extensive, especially with the use of open-cast surface mining, and displaced smallholder farmers. In the case of Obuasi, communities in areas such as Sanso and Anyinam were particularly affected (Akabzaa, Seyire and Afriyie, 2007). A study by Akabzaa et al. (2007) provided insights into the worsening livelihood situation in Obuasi, which was set against a context of environmental and health deterioration. This is also the period in which non-formal mining

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operations expanded and were being undertaken deeper underground and therefore required safety measures to ensure stability of the pits. There was also a gradual improvement in processing techniques. This period of expansion also deepened the tension between large-scale mining and the state, and required interventions in the galamsey. Both cases show how economic liberalisation has had particular impacts on the labour regime and thereby placed households at the centre of a crisis of social reproduction. Women in poorer households, who undertake unpaid care work, are left with the burden of dealing with the precarious conditions created by the state and markets. Women are also concentrated in the informal economy in precarious forms of work. Workers and the self-employed in the informal sector tend to be excluded from access to credit schemes, technical support services and social services such as health insurance and pensions. All this increases the burden of care work on women, which entrenches the feminisation of poverty. Indeed, when a ban on all forms of small-scale mining was imposed in 2017, it exacerbated the social reproduction crisis. The survival of the whole family depended on any income the women could generate. Importantly, unlike the crisis in social reproduction in the global North, it also includes paid work in precarious conditions (Fakier and Cock, 2009). Moreover, the women in this study are not only involved in the care of children; they are involved in the social reproduction of the family as a whole, which includes collecting frewood and water, caring for the sick, growing food crops and supplementing incomes through petty commodity production and petty capitalism. In this regard, it draws into focus how the way in which the burden of social reproduction on women in families and communities of the global South is shaped by the social infrastructure, which differs from the global North where a welfare state was created (Webster, Britwum and Bhowmik, 2017: 10–15). This determines how the crisis in social reproduction impacts on production relations, which in turn has bearing on reproducing gender inequality. In order to understand non-formal mining in each case, it is important to analyse the specifcities of each context (LahiriDutt, 2018: 372). I turn in the next section to the case of reprocessing gold in KwaThema in South Africa.

The zama zama case The tailing storage facility (TSF) in KwaThema where feldwork was conducted is located close to townships, posing an immediate health hazard (Benchmarks, 2017). The townships in the area include Langaville, Langaville Extension 6, Phelendaba, KwaThema Phase 2, KwaThema Phase 3, Sharon Park, Dunnottar, Duduza and Tsakane. In the 1950s, residential areas were usually about three to four kilometres from TSFs. With forced removals imposed by the Group Areas Act, black South Africans were forced to live closer to mine dumps (or mine tailings). These conditions continued to worsen after the end of apartheid, resulting in buffer zones being limited to a minimum of 500 metres (Kneen, Ojelede and Annegam, 2015: 1–2).

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At the mine tailing, workers do not have supervisors or group leaders. They work as individuals and only meet as a group on the site. They sometimes collectively sell their products or do so directly in the central business district of Johannesburg without the involvement of middlemen/women. The mine tailing is not as rich as underground operations and therefore it does not draw much attention from robbers who operate in the area. In locations where the tailing is rich, it is more likely that fghts break out. Groups of criminals also operate in these areas, creating greater risks. Besides security or police, people carry guns to work, whether it is around mine tailings or underground. The insecure conditions that the zama zama face emerges not only from harassment from the police and mine private security but also out of tense relations between miners within mine sites. Women tend to be visible in surface operations of zama zama in gold operations in South Africa. They manually process rock ores extracted from abandoned or active mine shafts. In instances where mills are set up to process rock ores, as in the case of a mill 44 kilometres from Johannesburg, they tend not to be employed. The zama zama in KwaThema have been active at a mine waste dump since 1994. They work in situ to reprocess and extract gold from the TSF. Mr Mangaliso Mbatha, a zama zama miner, who has been reprocessing mine tailings since 1994, described how he learned to undertake reprocessing. The work then was not as laborious as it is now, and there were more women active in the TSF just after 1994: When she [a woman zama zama miner] sees that things are not going well at home she comes here and asks that we show her how to do the work … they [the women] were there around ’94/’95 going into ’96 because they used to sweep outside on the surface in places like this. It was so much easy. (Mbatha, interview, 2018) There was also less harassment, even though people were present at the mine tailing to move gravel while others would extract part of the tailings for construction. This did not disrupt zama zama who were operating at the mine tailing. The situation changed with the entry of LSM operations into reprocessing, which began to encroach onto the spaces occupied by zama zama. Referring to largescale mines, Mbatha explained: “because they are now here, they take all the soil; it makes it even harder because they carry it in trucks and that leaves us with nothing” (Mbatha, interview, 2018). Mr Moses Khoza, who operates in underground shafts in Roodepoort, explained that he would leave his home for weeks to work underground in abandoned mines late at night, from 1.00am to 4.00am. It was not easy for him to do this in active mines due to the presence of security. Nonetheless, there is greater immediate danger in underground mines due to the operations of gangs and the conditions in the underground tunnels which they use to access unstable areas. But it is also the case that the incomes earned from these areas are higher (Khoza, M, interview, 2014). The uncertainty of his situation was also

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felt by his wife, Mrs Azande Khoza, who expressed her anxiety over the risks taken in her husband’s work as a zama zama. When Mr Khoza was working, he could be away for up to two weeks, during which time Mrs Khoza would hear nothing from him. When he was away, Mrs Khoza did not know exactly where he was or how he was faring. This was very stressful due to the high-risk nature of the work. Moreover, Mr Khoza was also keenly aware of how dangerous the mine tailings were because of toxins such as cyanide and uranium (Khoza, A, interview, 2014). Mrs Khoza also described how her husband had hidden his work from her when they frst met. It was hard for her to accept that he did this work because his earnings were so low. At that time, he was working on mine waste dumps. He took her to the mine site once to show her how he worked, so that she could be more accepting of him. Initially, she did not like the work he did. He worked very hard but earned little money. However, she understood that he had to do this because he was an undocumented migrant, which undermined his search for better-paying work (Khoza, A, interview, 2014). Mrs Lucy Zwane, who had been working as a zama zama miner reprocessing mine tailings for six months, emphasised the labour-intensive nature of the work. Like most of the mineworkers at the site, she independently reprocessed the mine tailings. With the sole exception of the fnal stage of amalgamation, which she was yet to master, she had control over the production process. The absence of alternatives in the formal sector, such as cleaning and retail (which she considered worthwhile, while rejecting sex work), was what pushed her to set up a zama zama operation. Her income was unpredictable. Sometimes after labouring at the mine tailing, she got nothing at all. Mrs Zwane explained: Sifting gold is a problem. Digging the soil is diffcult. I work because I don’t have other options. If you sit, you will steal or become a prostitute. I don’t want that. Zama zama is better … the problem is that I’m not fnding the right job. If I can fnd the right job I would leave because it’s diffcult … I don’t know [if] I would be able to move forward or not [that is, to improve her livelihood situation]. It’s tough because with the R400 [that is the minimum she makes in a week], I have to give children pocket money and pay for creche. (Zwane, interview, 2018) This draws into focus the manner in which her exclusion from formal employment limited her options, and compelled her to work in a mine dump. When probed about whether it had improved her situation, she was adamant that it “made no difference”. Nonetheless, she also spoke about how she could earn and have complete control of her income from this operation, so she was able to access contraceptives for herself without the knowledge of her husband. Her exerting bodily autonomy in this manner illustrated an important moment of agency. In spite of this, she insisted that this was not transformative of her condition of marginalisation and precarity.

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The galamsey case The Obuasi mine concession covers almost the entire Obuasi Municipality, which is 220.7 square kilometres. Ashanti Goldfelds Corporation, which was the frst Africa-based LSM operation listed on the London Stock Exchange, merged with Anglo American in 2004 and became Anglo Gold Ashanti.4 The Obuasi Municipality concentrates the problems posed by development centring on a mining sector framed by an extractivist strategy. In the absence of a comprehensive policy framework which can reap mineral rents and redirect them to the provision of public goods or reinvestment in other economic activities, the livelihoods of the majority of the population remain precarious. Mr Seifu Hussein, a supervisor at the site, outlines the structure of galamsey operations in Obuasi. Some dig the pits for access to the tunnels. Others are in charge of blasting the rock underground. Those who transport the rock to the surface from the pits are referred to as “loco boys”. There were those specialising in operating the crushing machine, while others (also known as chisellers) use hammers to further break down stones into smaller bits. Still others pack the small stones into sacks which are moved to the carriers (who are women). The sacks are taken to workers who do the washing, desilting and application of mercury for amalgamation. The fnal stage is siltation to separate the gold on a washing board. The mills, where the rocks are crushed, can employ 30 people working with 5 or 6 machines (Hussein, interview, 2017). This latter stage of the processing is regarded as highly specialised work and requires a high level of skill. Usually team members are tasked with this work and are paid as part of the team. However, due to the highly specialised nature of this part of the process, sometimes formal-sector mineworkers are brought in specifcally for this task. In these cases, they are paid in cash. This is also a high-risk job since the mercury evaporates during amalgamation and is inhaled by the worker and anyone near the site. Sometimes this work is done in villages or informal settlements, exposing the entire community, including children, to health risks.5 Women are not regarded as holding specialised skills. As a result, they are not hired to undertake this work in Obuasi (Hussein, interview, 2017). On the other hand, when processing is undertaken in the household, they undertake this specialised work which is unpaid. Instead, their work as factored in as a contribution to household production (Asiedu, interview, 2017). In Obuasi, the gendered nature of labour segmentation is evident in non-formal mining. Women are often designated as carriers and are assigned to transport a number of head pans of crushed ore-bearing rock per day. They start work from about 9.00am or 10.00am and fnish at about midday. This enables them to juggle other responsibilities in their homes. In a day, they are expected to carry about 50 head pans. Women are paid a daily wage of GH₵ 30 (about US $5). Both men and women mineworkers are paid on a weekly basis. Some arrange to be paid at the end of the month (Danso, 2017). Mrs Ama Danso, a carrier, explained her transition from trading in food to mining:

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I went into a more lucrative business. I was selling meat at my sister’s pub; then I got pregnant and stopped, so after delivery I joined the galamsey. Over 100 are women doing this on daily basis … It was a good business because I was able to afford the child’s school fees and other things I needed … But I can speak for myself and I will say it did greatly … life was very good for me. But as I speak with you now things are really diffcult. I have to go to the bush to fetch frewood, or I will go and buy coconut to the market before I can get my daily bread. Even with the coconut, sometimes it takes four to fve days to sell GH₵ 100 worth of coconut. (Danso, interview, 2017) When it comes to domestic work, a carrier explains: If you have … someone to cook and take care of your children, you can work from 6.00am to 6.00pm. And if you don’t have children or a husband, and you don’t need to come back on time and prepare food for them, you can stay and work as long as you can. I, for example, could work day and night; I go in the morning till 4.00pm, then I come and eat, rest for a while, then go back like 6.00pm and return the next morning. (Danso, interview, 2017) Without the support from younger women at home, she would have to work fewer hours and thereby earn less income. This shows how labour participation in mining depends on the arrangements for domestic work. On the other hand, a carrier in galamsey operations cites a diffcult period when she separated from her husband (who is also a mineworker in galamsey operations). Since she was working as a galamsey, she was able to support herself and her children by depending on her work as a carrier. With the government’s imposition of the moratorium on non-formal mining, she was not able to fnd anything comparable as an alternative livelihood. Sometimes male mineworkers process the ore at home, utilising the unpaid labour of women. Processing of the ore is understood as specialised work which is undertaken by team members who are not paid for this task. However, if young men are brought in to do the processing specifcally, they are paid with portions of ore. Women were not only carriers but also provided auxiliary services; they supplied some inputs such as sacks used to reinforce pits and prevent collapse. These sacks were transported from the Tema port on the coast to the middle belt of Ghana where they were resold for ten times their value (Hussein, interview, 2017). These economic activities were stimulated by the input needs of galamsey operations. They also enabled the fnanciers and supervisors to support mineworkers when they had health problems or in cases of injuries. Mr Seifu Hussein explained further: There were those who [were] also selling items such as rice, cooking oil, tinned tomato, fsh – all these people were gainfully employed by the

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The above highlights how non-formal mining is intervening in the sector by flling a gap left by the state and the dominant market forces. Agriculture as a primary source of employment is disrupted by the emergence of petty capitalist mining operations. Women prefer arduous work in mining compared to agriculture, but gender segmentation also means their potential to undertake more specialised work remains blocked. In the meantime, women perform auxiliary roles supplying inputs in mining operations, and in food provision, and have been able to develop their enterprises. These are the harsh conditions within which livelihood strategies are integrated in order to ensure survival and, where possible, improved conditions of living. However, these are circumstances created by the operations of dominant market forces and by the state. These actors have essentially left a vacuum that not only has bearing on the operations of petty commodity producers and petty capitalists, but also LSM operations. One case in particular shows how Anglo Gold Ashanti as an LSM operation has made a specifc intervention in healthcare. This is a particularly interesting example of a mining company taking a more active role in managing a health programme, and therefore intervening in an aspect of social reproduction.

Crises of social reproduction and petty capitalism: LSMs fll the policy gap A report on AGA’s malaria programme in 2004 begins with a claim that the spread of malaria is caused by galamsey operations (AfDB, 2016: 9). Considering the extent to which malaria is more closely related to poor sanitation exacerbated by the condition of limited social infrastructure provided in the areas where AGA operates, this claim is implausible to say the least. In 2005, AGA lost three days per month for 2 500 workers due to illness, which is the equivalent of 7 500 shifts per month. This undermined viability of their operations (AfDB, 2016: 9). In the meantime, the millennium development goals (MDGs) introduced an approach to reaching health targets on the basis of development partnerships, with specifc measures to address the health pandemic (AfDB, 2016: 9). This new framework enabled the introduction of a malaria programme in Obuasi by AGA in 2004. The Obuasi Malaria Control Program (OMCP) focused its interventions on insecticide-treated nets, indoor spraying, environmental management, lifestyle changes, and early and effective diagnosis and treatment (AfDB, 2016: 10). AGA received a grant of $138 million from the

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Global Fund, one of the development partners, and another fnancing PPP based in Geneva to expand the OMCP. In 2016, the OMCP was cited by the African Natural Resources Centre (ANRC) of the African Development Bank (AfDB) as one of fve exemplary cases for extractives oriented towards PPPs. AGA’s own perspective is to go beyond corporate social responsibility and what it considers as philanthropy to PPP, to ostensibly share the “benefts of extraction”. With the fnancing provided by the Global Fund, the project is organised as a collaborative programme with the Ghana Health Service and operates in 40 districts in the country. The Ghana Chamber of Mines also plays a coordinating role. Furthermore, AGA set up the Obuasi Malaria Control Centre (OMCC) for training purposes but also for research with a “modern insectary and laboratory”. This appears to be a constructive intervention; however, the obstacles facing malaria control in Ghana seem to have more to do with addressing a funding gap, access to quality data and more broadly strengthening health systems including provision of research facilities and ensuring maternal and child health (WHO, 2014: 21–2). Meanwhile, the World Health Organisation (WHO, 2016: 12) highlights how external fnance for healthcare has declined from the late 2000s. This draws attention to the importance of strengthening the capacity of the state in the provision of social services. Even though women’s work includes undertaking care work that is essential to flling this vacuum, there are limits to which this is able to ensure well-being. This is illustrated in the problems that AGA itself has faced in its attempts to ensure it has a stable workforce. The viability of operations has been undermined by health problems, especially from malaria. The next sub-section explores how AGA is intervening in the health sector and the implications for policy-makers. This vision goes beyond the provision of social services, such as tackling a health pandemic but also integrating local partners into services operated by AGA. This narrative speaks to creating a space for local capitalist enterprises and ensuring benefciation. The AGA strategy is to dispose of the current corporate social responsibility model in favour of interventions focused on integrating local enterprises as a form of PPP. Nana Ampofo-Bekoe (Interview, 2017), spokesperson for AGA in Obuasi, elaborated in an interview with the author: In Obuasi over the years the mine’s strategy with regard to sustainable development created a lot of dependency … that is not a sustainable way of ensuring economic development so the mine was providing almost everything, so when you go to a community their school, their clinic, their water facility – the mine was providing everything. The new paradigm shift when it comes to economic development is about … Local content development, local capacity development, local economic development empowering a lot of local entities to set up businesses that in a way can provide services to the mine that will retain all that income within the Obuasi Municipality and even within the region – that is a sustainable development. When you create a certain kind of worth through services that the people provide through works that the people do,

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Hibist Kassa then you’re enhancing the community through such development, you’re increasing purchasing power within the hands of people … and that is the essence of modern-day sustainable development, and that is what the mine is targeting now. (Ampofo-Bekoe, interview, 2017, my emphasis)

AGA is not alone in such an approach. Anglo American runs the Zimele programme, founded in 1989 to provide support to small and medium enterprises (SMEs), with a focus on black entrepreneurs. In 2016, 110 SMEs with 3 992 employees received a total of R121 million with R692 million in profts. Anglo American provides technical support and credit at subsidised rates. OMCP and the Zimele programme are cited by the ANRC as two of fve PPP exemplary projects for extractive industries in Africa. The above illustrates how dominant LSM operations, which have been central in entrenching an extractivist strategy of development – which, simply put, centres the export of raw materials and dismantling of domestic industrial capacity – are also building their own capacity to provide targeted support in specifc projects, a role that ought to be played by the state. By managing a malaria programme in 40 districts in Ghana, with support from government and an international donor, LSMs in Ghana are taking a more active role in social provisioning but with a narrow set of priorities. Rationalising them as development partnerships in the form of PPPs, they lay a basis for narrow interventions where funding mechanisms can be provided for corporations to intervene in the crisis of social reproduction and create space for the development of petty capitalists. These approaches do not address such issues as comprehensively as a “developmental”-oriented state which could take a more comprehensive and holistic approach to building its own capacity to mobilise resources and implement policies in an integrated manner. Instead, these interventions by LSMs provide a vehicle to continue hollowing out the states’ own capacity by flling the vacuum created by economic liberalisation.

Conclusions: whither the state? The contradictory manner in which social reproduction is integrated in accumulation processes within these mining operations has a bearing on the extent to which women can exert autonomy. The Obuasi case shows that the state and dominant market forces have created a vacuum, mainly through economic liberalisation; this is being flled by petty commodity production and petty capitalists through the provision of work, ensuring access to social services and stimulating the domestic economy more broadly. It is in these circumstances that petty capitalist operations create space for agency for women in mining, but this has not laid the basis for challenging gender inequality. Instead, it has opened space for a form of relative autonomy. One fnding is that in both cases, even though women are excluded from roles that can provide them higher returns, there is an extent to which they are able

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to exert some autonomy. The fexible labour arrangements in petty commodity production in KwaThema and petty capitalism in Obuasi enable women miners to juggle their role in provision of unpaid care work with the pressure to earn an income. This is more so when they are the sole breadwinners in a household. In these circumstances, access to income from petty commodity production and the livelihood strategies being adopted are precisely the product of structural problems created by the state and dominant market forces. In the case of Obuasi, the stagnation in agricultural productivity is due to conditions created by the withdrawal of the state from the provision of extension services and access to credit to farmers. In KwaThema, the pervasiveness of high unemployment and precarious work has created a layer of workers compelled to work in mine waste dumps. Petty capitalism can ameliorate conditions, but it does not address structural problems. Petty commodity production and petty capitalism in mining do not secure well-being, let alone social transformation. Instead, it is a fulcrum around which women are able to contest their social position, and therefore remains relevant. The chapter also shows how corporations like Anglo Gold Ashanti are responding to the effect of crises of social reproduction on their own operations. They undertake activities which states ought to implement in a more comprehensive manner. In the absence of a state that provides social infrastructure and pursues industrialisation policies aiming to reverse the trend of unemployment and low productivity, LSM operations have responded by developing their own narrow interventions. Under the banner of public–private partnerships, mobilising fnancing from global funding mechanisms, this threatens to accelerate the hollowing out of the state. The growth of petty commodity producers and petty capitalists represents an organic attempt from below to create a space for alternatives for indigenous or local capital. At the same time, LSM operations have shown how corporations can be dynamic enough to intervene in provision of services but also crowding out the space for the state to carry out transformative programmes. Therefore, building the capacity of the state is essential. Social investment to strengthen health systems, or to provide access to quality education, the provision of extension services and credit for petty commodity producers can address the crisis of social reproduction in the global South. By alleviating the burden of care work and supporting petty commodity producers, inequalities between women and men, and the global North and South, would be reduced.

Notes 1 I deploy the concept “non-formal” to capture part of the complexity surrounding categorisation of these operations. Particularly in Obuasi where non-formal operations are criminalised, they can also include fnanciers who hold licences in other areas. The challenges with formalisation of artisanal and small-scale mining are discussed in Kassa (2018). 2 The chapter draws on empirical data from a broader PhD dissertation titled “Petty Commodity Production in Artisanal and Small-scale Mining: A Comparison of Ghana and South Africa” (Kassa, 2019).

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3 Harold Wolpe (1972) contends that the creation of reserves laid the basis for entrenching a system of cheap wage labour, where women played an important role in reproduction, primarily to supply the labour needs of white mining capital. Belinda Bozzoli (1983: 144) makes the case for a materialist analysis of contradictions between women and men rooted in “the domestic sphere”. 4 This controversial deal came in the aftermath of volatilities in commodity prices, and its character as an African corporation earned lower credit ratings compared to others. This has to do with perceptions of political instability (Akabzaa et al., 2007: 28–9). 5 The Minamata Convention was crafted to address the health crisis generated by mercury use which intensifed with the expansion of non-formal mining in gold. It was signed and adopted in 2013 by 128 countries and was ratifed by Ghana on 23 March 2017. It is yet to be ratifed by South Africa. 6 Pseudonyms have been used for ASM miners cited in this publication due to safety concerns arising out of the criminalised nature of their operations.

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Braunstein, E., R. Bouhia and S. Seguino (2018) Social Reproduction, Gender Equality and Economic Growth. Paper Presented at the American Economic Association Conference, Philadelphia, 8 January 2018. Bryceson, D.F. and J.B. Jønsson (2014) Mineralising Africa and Artisanal Mining’s Democratising Infuence. In Mining and Social Transformation in Africa: Mineralizing and Democratizing Trends in Artisanal Production, edited by D.F. Bryceson, E. Fisher, J.B. Jønsson and R. Mwaipopo. London: Routledge. Budlender, D. and A.L. Brathaug (2002) Calculating the Value of Unpaid Labour: A Discussant Document. Pretoria: Statistics South Africa. Bujra, J. (1986) “Urging Women to Redouble Their Efforts”: Class, Gender and Capitalist Transformation in Africa. In Women and Class in Africa, edited by Claire Robertson and Iris Berger. New York: Africana Publishing Company. City of Ekurhuleni (2010) Development Guide, Germiston. Directorate Communications and Marketing. https://www.ekurhuleni.gov.za/yourservices/city-planning/developm ent-guide (accessed 5 August 2017). Dumett, R.E. (1998) El Dorado in West Africa: The Gold-Mining Frontier, African Labour and Colonial Capitalism in the Gold Coast, 1875–1900. Athens: Ohio University Press. Fakier, K. and J. Cock (2009) A Gendered Analysis of the Crisis of Social Reproduction in Contemporary South Africa. International Feminist Journal of Politics, 11(3): 353–71. Fraser, N. (2016) Contradictions of Capital and Care. New Left Review, 100(July–August): 99–117. Harris-White, B. (2006) Poverty and Capitalism. Economic and Political Weekly, 41(13): 1241–6. Kassa, H. (2018) Formalising Artisanal and Small-Scale Mining: Problems, Contradictions and Possibilities. In The Future of Mining in South Africa: Sunset or Sunrise?, edited by Salimah Valiani. Johannesburg: Mapungubwe Institute for Strategic Refection. Kassa, H. (2019) Petty Commodity Production in Artisanal and Small-Scale Mining: A Comparative Study of Ghana and South Africa. Unpublished PhD thesis, Johannesburg: Department of Sociology, University of Johannesburg. Kneen, M.A., M.E. Ojelede and H.J. Annegam (2015) Housing and Population Sprawl Near Tailings Storage Facilities in the Witwatersrand: 1952 to Current. South African Journal of Science, 111(11/12): 1–9. Lahiri-Dutt, K. (2018) Reframing the Debate on Informal Mining. In Between the Plough and the Pick: Informal, Artisanal and Small-Scale Mining in the Contemporary World, edited by Kuntala Lahiri-Dutt. Canberra: Australian National University Press. Lanning, G. and M. Mueller (1979) Africa Undermined: A History of the Mining Companies and Underdevelopment in Africa. Harmondsworth: Penguin Books. Mezzadri, A. (2019) On the Value of Social Reproduction: Informal Labour, the Majority World and the Need for Inclusive Theories and Politics. Radical Philosophy, 2(4): 33–41. Mostert, H. (2012) Mineral Law: Principles and Policy in Perspective. Cape Town: Juta. Ofei-Aboagye, E.O. (2001) Gender Dimensions and Gender Impacts of the Paradigm of Mining Led Economic Development in Africa. In Mining, Development and Social Conficts in Africa, edited by Third World. Accra: Third World Network Africa. Webster, E., A.O. Britwum and S. Bhowmik (2017) Conceptual and Theoretical Introduction. In Crossing the Divide: Precarious Work and the Future of Labour, edited by Edward Webster, Akua Opokua Britwum and Sharit Bhowmik. Pietermaritzburg: University of KwaZulu-Natal Press. Wolpe, H. (1972) Capitalism and Cheap Labour Power in South Africa: From Segregation to Apartheid. Economy and Society, 1(4): 425–56.

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World Bank (2018) Third Ghana Economic Update: Agriculture as an Engine of Growth and Jobs Creation: Africa Region, February. http://documents.worldbank.org/curated/en/113 921519661644757/pdf/123707-REVISED-Ghana-Economic-Update-3-13-18-web.pdf (accessed 28 August 2019). World Bank (2019) Employment in Agriculture (Percentage of Total Employment). https ://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?most_recent_year_desc=false (accessed 28 August 2019). World Health Organisation (WHO) (2014) World Health Organisation Country Offce for Ghana, Annual Report. https://www.afro.who.int/sites/default/fles/2017-05/ghana-a nnual-report-2014-fnal.pdf (accessed 13 May 2019). World Health Organisation (WHO) (2016) World Health Organisation Country Offce for Ghana, Annual Report. https://www.afro.who.int/sites/default/fles/2017-05/annualreport-2015--wco-ghana-.pdf (accessed 13 May 2019).

Interviews Aadam, Mohammed. Interviewed by Author and Justice Dzivon Mensah, Obuasi (Ghana), 24 November 2017. Ampofo-Bekoe, Nana. Interviewed by Author and Justice Dzivon Mensah, Obuasi (Ghana), 23 November 2017. Asiedu, Zacharia. Interviewed by Author and Justice Dzivon, Obuasi (Ghana), 25 November 2017. Danso, Ama. Interviewed by Author and Justice Dzivon Mensah, Obuasi (Ghana), 25 November 2017. Hussein, Seifu. Interviewed by Author and Justice Dzivon Mensah, Obuasi (Ghana), 23 November 2017. Khoza, Azande. Interviewed by Author, Lenasia (South Africa), 12 November 2014. Khoza, Moses. Interviewed by Author, Lenasia (South Africa), 12 November 2014. Mbatha, Mangaliso. Interviewed by Author, KwaThema, 11 July 2018. Zwane, Lucy. Interviewed by Author, KwaThema, 20 July 2018.6

8

Vocational education and inequalities in transitions from education to work in three African countries Stephanie Allais

Introduction Low levels of technical skills are widely believed to be a constraint to industrial development; the availability of a skilled and knowledgeable population is believed to support economic and social development in a range of different ways (Fredriksen and Fossberg, 2014; World Bank, 2018). This could intersect with inequality in various ways. The most obvious is that individuals without the requisite skills are not able to access jobs. At a systemic level, skills shortages or inadequacies could render industry unproductive or stife new ventures, thus undermining economic growth and job growth. All of this is a challenge for most of the global South, and Africa in particular, which has the lowest levels of education in the world. For example, Newman et al. (2016: 264) cite a survey of country experts from 45 African countries in which over 50 per cent of respondents cited lack of skills as a major obstacle to African frms becoming competitive. Formal technical and vocational education and training (TVET) systems in poor countries in general, and in Africa in particular, are weak, low status and, for the main part, have weak linkages to and acceptance from employers (Allais, 2009; McGrath et al., 2013; ICQN/TVSD, 2014; Oketch, 2014). TVET generally refers to formal systems of provision of mid-level skills, usually including programmes at the level of senior secondary education and as well as some tertiary education below bachelor level.1 A plethora of policy interventions have been repeatedly attempted by governments and supported or driven by donors and international organisations, mainly focused on attempting to get employers to set occupational standards and on “managed autonomy” for public providers (McGrath, 2011; UNESCO, 2012a, 2012b; King, 2013). The reforms have seldom worked, as evidenced by their continual reintroduction (Allais, 2014). This chapter explores what underpins the persistent weakness of TVET systems, and how this interacts with other inequalities, with a focus on Ethiopia, Ghana and South Africa.2 I argue that despite substantial differences across countries, the weakness of TVET systems in all three countries is reinforced at least in part by labour market and income inequality in economies with small formal sectors and small numbers of middle-class jobs, while large numbers of the workforce

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are either in survivalist work (Ethiopia and Ghana) or unemployment (South Africa). The structure of education, in which small elites are educated through elite academic secondary and university education mirrors but does not cause this labour market structure. Further, I argue that this inequality contributes to positional competition for educational credentials, which in turn reinforces preference for general education and the stigmatisation and systemic weakness of TVET, to the detriment of economic development. This, as well as the role of TVET in social reproduction, has deep roots in the history of colonialism and the extractive nature of economies which the colonial powers established, as well as the nature of the government administrative systems they created and the ways in which education systems interacted with sub-elite jobs. I use the terms “academic” or “general” education to refer to education which does not include the aim of direct workplace preparation for specifc occupations or felds of work. I use the term TVET to refer to senior secondary education (as well as tertiary education below bachelor level) which aims to prepare learners for specifc occupations. This does not include professional degrees – which is an area of contestation in itself. This is a pragmatic use of the terms, as there is a large body of knowledge in which there is debate and contestation about what kinds of knowledge best prepare people for work.3 The defnitions are further complicated by attempts to vocationalise senior secondary curricula as a result of massifcation of schooling.4 Rising levels of secondary education have led to considerable debate on the substance of secondary curricula, which historically were designed for preparation for university.

The development of TVET systems historically Weak TVET systems are not a feature of poor or developing countries only. Relatively few countries have managed to develop education and training systems which enrol large proportions of senior secondary students in vocational paths that lead to good employment options (Busemeyer and Trampusch, 2012; Bosch, 2017). Many wealthy countries, particularly English-speaking ones, have systems in which students and their families tend to select general education, resulting in relatively small TVET systems, with pockets of excellence and pockets of good relationships between education and work, but in the main weak relationships. Three different sets of countries are singled out for discussion below because they all represent examples of relatively successful TVET systems. The frst group had collective cooperation over time; the second experienced strong state coordination in economies with state-led industrialisation; and in the third, national, industry-funded institutions provided training for a population for whom academic secondary education was not easily accessible. In all three cases population demand for general academic education was curtailed or controlled. The term “skill formation systems” is used to refer to the national systems through which skills are produced for particular economies, both through formal TVET systems and through general or academic education and in-house training.

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The most successful TVET systems with large enrolments at senior secondary level have been dubbed “collective skill formation systems”. These exist in countries in which TVET is collectively organised; employers, labour unions, intermediary associations and the state cooperate in the process of skill formation in initial vocational training (Busemeyer and Trampusch, 2012: 4). Countries in this group include Austria, Denmark, Germany, the Netherlands and Switzerland. Both frms and the state play a role in the provision and funding of the mid-level skills, and training takes place in both schools and workplaces. Intermediary associations, including employer and employee organisations, play a role in the governance, management and, where necessary, reform of the TVET system. Certifcation systems ensure that the skills produced are collectively recognised, and not specifc to individual workplaces or education institutions. Despite their success, there is contestation about the key factors that led to the development of these highly regarded, collectively organised systems (Streeck, 2012). Furthermore, the chances of their survival may be decreasing in a world in which capitalist economies are converging, manufacturing in these economies is declining and the demand for higher education is growing (Martin, 2017). In other words, even these historically robust systems are seen as relatively fragile and under threat from political, economic and cultural factors. Another group of countries which, at least for a time, developed reasonably robust vocational education systems are the so-called “developmental states”, particularly the “Asian Tiger” late industrialisers that looked to Japan for a model of how to industrialise their economies. The clearest example is South Korea. Here, as well as to some extent in Singapore and Taiwan, a model of skill formation has been observed that researchers have referred to as “developmental skill formation” (Morris, 1996; Ashton et al., 1999, 2002; Park, 2013). While there is debate about the centrality of skills to the economic development of these nations, the literature cited above argues that during the time in which these states were driving the industrialisation process, they were also driving and coordinating the production of mid-level skills. Their skills systems were successful in meeting the rising needs of their changing economies through strong state coordination of the vocational education system, including centralising curricula and shaping enrolment towards vocational and away from university education (Morris, 1996; Ashton et al., 1999, 2002; Park, 2013). Like the collective skill formation systems, these systems have been under increasing pressure from rising family demand for higher education, which has not been easy to control as the countries have democratised and liberalised (Park, 2013). Latin America offers insight into a different approach. Most Latin American countries developed a distinct model of TVET during the import substitution period. National Vocational Training Institutions (VTIs) were created by industry or under Ministries of Labour with a strong role for industry, including funding from industry. The original model developed in Brazil, with two national institutions – the National Industrial Training Service (SENAI) established in 1942, and the National Commercial Training Service (SENAC), established in 1946 (De Moura Castro, 1979). While the role of the private sector was

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stronger in these than in their successor organisations, other countries developed similar models, funded through payroll levies and with a strong role for employers and unions (Cintefor and the ILO, 1991a). Their focus was on the provision of training that was separate from the formal education and training system, aimed at the growing manufacturing sectors. This model, unique because of the national character of the TVET-providing institutions as well as the strong role for industry, provided or coordinated the provision of training for extensive vocational skills for a population that was in the most cases not accessing secondary education because they were moving from the rural areas in search of work (De Moura Castro, 1979, 2000; Cintefor and the ILO, 1991a). The VTIs functioned separately from the schooling system, notwithstanding various attempts to vocationalise the school curriculum during the massifcation phase (Corvalan, 1988). The VTI model came under strain with the end of the import substitution industrialisation era (De Moura Castro, 2000), and has changed since then. Subsequently, there have been attempts to introduce competency-based training models to improve relevance, and national qualifcations frameworks to integrate vocational training with mainstream education offerings (Cintefor and the ILO, 1991b). Much of the research on national skill formation systems builds on institutional political economy (Thelen, 2004), and in particular the literature on “varieties of capitalism” (Hall and Soskice, 2001). Starting from frms, and analysing the spheres in which frms need to interact in any capitalist economy, Hall and Soskice (2001) argue that different sets of reinforcing institutional structures gave rise to patterns of specialisation within the wealthy capitalist world that led to two main “types” of wealthy capitalist economies: coordinated market economies (CMEs) in which strong TVET systems arose, and liberal market economies (LMEs) in which academic or general education was more valued. There is much debate within and about the idea of varieties of capitalism.5 Notwithstanding various critiques, its infuence in the study of TVET systems remains, because of its insights into different kinds of reciprocal or self-reinforcing relationships between skill formation systems and economic, social, political and cultural institutions and factors. The varieties of capitalism literature provided the foundation for a body of literature which accounts for how supply and demand shape each other through a range of institutions and social arrangements determining the ways in which skills are produced in a particular economy, and popularised the notion of skill formation systems or regimes. As an example of this functionality, a salient feature of Hall and Soskice’s analysis of LMEs is relatively fuid labour markets. Strong provision of general education complements these, because it is in the interests of individual workers to be fexible for many different possible work situations. These economies do not have strong apprenticeships – because of moral hazard problems in contexts where training is not widely supported by companies. Training provided in companies is company-specifc and not certifed or portable, although relatively cheap because of strong general education. This type of skill formation system is generally seen to favour a service-based economy, as well as highly innovative industry (through

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strong higher education and research) and to create skills shortages for companies that need specialised technical skills. By contrast, CMEs have strong vocational education systems at a secondary level because of coordinated relationships between industry, the state and labour. These relationships enable a virtuous cycle which supports manufacturing, including incremental innovation drawing on the broad skill-set of the workforce. Industry receives a stable supply of technical skills, and people who are not interested in or prepared for academic higher education obtain technical skills that lead to stable employment. These types of economies have a lower percentage of university graduates than liberal market economies, and, importantly, there is a relatively lower graduate premium in labour markets. There are other examples in the literature of “skill formation regimes” that are functional to the nature of economies and societies. Japan, for instance, is an example of a “segmentalist” skill formation system, where in-house training is strong because of strong internal labour markets (Busemeyer and Trampusch, 2012). Strong state-based TVET systems can be found in European countries without strong apprenticeship systems (Bosch, 2017). The important point from this literature is that capitalist economies develop distinctive regimes of skill formation, which reinforce particular production regimes as well as types of economies (Martin, 2017). Education and training systems are shaped by and inseparable from political and economic arrangements, and a range of self-reinforcing institutional complementarities make this relationship diffcult to change. The potential usefulness of the comparative capitalism approach in Africa has been debated (Ashman and Fine, 2013; Bond, 2013; Padayachee, 2013), and the dearth of research may suggest that few researchers have found it productive (Breckenridge, 2018). One noticeable point is the lack of relationship between the nature of capitalist economies in African countries and the degree of liberalisation or coordination in the capitalist arrangements of their colonisers. And methodological nationalism is problematic for analysis of African economies given the extreme inequality between Africa and the Western world, as well as extreme inequality within African societies. But without starting from an approach which embeds analysis of patterns of skill formation in political and economic institutions, research into vocational education in Africa tends not to go further than descriptive accounts. I have therefore attempted to draw on insights from the institutional economy literature to consider what is known about skill formation in Africa, and whether existing theories are adequate.

Vocational education, education systems and labour markets in Ethiopia, Ghana and South Africa I selected three countries – Ethiopia, Ghana and South Africa – because they have very different levels of economic development, private sector provision, and technical and vocational education and training. The study is not comparative as there are no single stable factors compared across countries. Rather, I analysed the different countries to see what patterns seem to be emerging.

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Brief overview of the three countries and the research Ethiopia is an East African country categorised by the United Nations as a “least developed country”. It has an estimated population of over 100 million (the second-highest population in Africa after Nigeria). A self-styled developmental state, it has achieved some of the highest growth rates and development outcomes in the world over the last twelve years – double-digit growth for ten years, averaging 10.8 per cent per year between 2004 and 2014 – without increasing its relatively (by African standards) low levels of inequality (Gebreeyesus, 2016; Stifel and Woldehanna, 2016). The vast majority of the population still works in the agricultural sector; over 50 per cent of the workforce are reported as being self-employed without employees (generally survivalist) and less than 20 per cent are in waged employment. Eighty-four per cent of the total labour force is classifed as being in vulnerable employment, without benefts or social protection, and is vulnerable to economic cycles (Baah-Boateng, Ansu and AmoakoTuffour, 2013). Ghana is a West African country with a population of approximately 27 million. It is frequently portrayed as a role model for African development because of “good governance” and what has been viewed as successful liberalisation. It has seen steady economic growth for 30 years – one of a few African countries to achieve this in a period of general stagnation or decline – and is now classifed as a lower-middle-income country. Poverty has declined but close to a quarter of the population still falls below the poverty line (McKay, Pirttila and Tarp, 2016). Most of the labour force (90 per cent) work in the informal sector, and people are socialised and trained into this sector through “informal apprenticeships”. Industry is mainly dominated by micro and small frms, privately owned and mainly located within urban areas in the form of industrial clusters. Current industrial policy is focused on empowering small and medium enterprises to expand productive employment and technological capacity within the manufacturing sector, and on promoting agriculture-based industrial development. South Africa, on the southern tip of Africa, with a population of approximately 56 million, is the richest country in Africa, but also the most unequal country in the measured world (World Bank, 2018). It has the largest industrial sector in Africa, but its economy has been stagnant for decades, and its industrial sector, which was stunted by the history of apartheid, has been shrinking (Fine and Rustomjee, 1996; Arrighi, Aschoff and Scully, 2010; Roberts and Rustomjee, 2010; Ashman and Fine, 2013). South Africa has exceptionally high levels of unemployment. The offcial unemployment rate (narrow defnition) at the end of December 2017 was 26.7 per cent, the expanded unemployment rate was 36.3 per cent, the labour absorption rate 43.1 per cent and the labour force participation rate at 58.8 per cent (Stats SA, 2017). Unlike most poor countries, it has a small informal sector – roughly 30 per cent of employed workers (Heintz and Posel, 2008: 26). South Africa attempted to introduce some of the features of a coordinated market economy after 1994, rather unsuccessfully; in conjunction with liberalisation of other aspects of the economy, this perhaps

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contributed to weak development outcomes through policy confusion (Webster, 2013; Nattrass, 2014). Ghana and Ethiopia had extensive states before the colonial period, while South Africa had smaller political groupings. Ethiopia was not formally colonised. Ghana, colonised by the British, was the frst sub-Saharan country to obtain independence. South Africa was the African country with the largest colonial settler population, which then developed into the notorious apartheid system that has shaped all aspects of that country. I started with an attempt to gather data in the fve spheres studied in the institutional political economy literature: industrial relations, corporate governance, inter-frm relations, employee relations, and vocational and educational training. All three countries have regulatory frameworks for work as well as tripartite institutions, but in all three these cover the relatively small percentage of the labour forces in formal employment. All three have professional associations and licencing requirements for a small selection of mainly highly-paid occupations. All three countries have formal policies to support and incentivise apprenticeships and work placements. Ghana and South Africa have both developed public employment schemes that provide short-term employment at very low salary levels in public works programmes; Ethiopia has a food-relief scheme that is linked to local community improvement programmes. However, what became clear – and this is elaborated in the analysis section below – is that the small size of formal labour markets, and in particular the small number of well-paying protected jobs, means that a focus on the above factors only tells a small part of the overall story. I therefore explored the history of the education and training systems, as well as historical and current development paths of the economies in an attempt to build insight into the predominant patterns of skills formation systems at a macro socio-political as well as institutional level. Colonial path-dependency Patterns of capitalist development in Africa have been shaped by the initial engagement with capitalism through the two-century-long Atlantic slave trade, which not only destabilised African nations and societies and prevented emerging trade-based economies, but supported the development and wealth accumulation of the industrialising capitalist countries (Amin, 1972; Walter, 1973; Curtin et al., 1978). Of the three countries in my study, Ghana was the most directly and extensively affected by the slave trade. These destabilised and weakened economies were, almost immediately after the end of the slave trade period, colonised by European countries from the 1880s, which destroyed local industry and set up local administrations focused on resource extraction. Education was a major component of colonial domination throughout the continent, with the explicit aim of cultural conversion and domination, as well as religious conversion. Once systems of primary schools had been established, in the main the pattern was to develop secondary and higher education for small

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groups of students fairly rapidly, sending tiny groups of high-achieving students to European universities, at the expense of building mass education at lower levels (Curtin et al., 1978: 534). Specialised secondary schools were created specifcally to train people for administrative service. Like in many European countries in the 1920s, elite boarding schools were created for a small minority – and this pattern persists until today in Ghana. In Anglophone Africa in particular, attitudes towards the status of occupations were also shaped by the particular confguration of class experienced in Britain as the frst industrial nation (Curtin et al., 1978). This very particular class-infused understanding was racialised during the colonial era, particularly in the large Southern and Central African labour migration zone (McGrath et al., 2004). The period shortly after independence saw growth both in education levels and economic development, with a strong role for states pushing the development of national industries. State-owned enterprises were created in the 1960s for the production of consumer goods, building materials and the processing of primary products, with initial success (Newman et al., 2016). This period also saw the building of national universities. While there was some push from the newly independent governments to build vocational education as an alternative to general secondary education (Oketch, 2007), they did not succeed in altering the perception both of employers (in the main, the public service) and of families that general schooling was preferable (Forster, 1965; Nherera, 2000). Oketch argues that what developed was a system of education that placed TVET against general education, but relegating it to an education training that did not have prominence and did not attract those with higher aspirations. It was more or less creating a two tier education system – general track for those with higher ability, often also associated with their socio-economic status and/or prior education of their parents, against TVET, for those of lower ability and always from low socioeconomic status and/or low or zero prior education of their parents. (Oketch, 2014: 3) Very shortly after independence (except for South Africa which attained democracy much later), the global economic crisis of the 1970s and 1980s hit Africa with particularly destructive effects, and structural adjustment programmes from the 1980s led to a dramatic about-face in economic policies and more than a decade of very poor development outcomes (Newman et al., 2016). This prevented investment in infrastructure, and enforced fee-based services for anything except the most absolutely basic social services. During the structural adjustment period (1975–1990), the World Bank and development agencies strongly advocated against vocational education in Africa, with a dominant consensus on building primary education and letting elites self-fnance higher education (World Bank, 1991, 1995; Middleton, Ziderman and Adams, 1993; Johanson and Adams, 2004). As mentioned in the introduction to this chapter, today the donor and development community is focused on vocational education as well as

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vocationalising secondary school curricula, accompanied by reforms which try to give power to employers through competence-based qualifcations and/or occupational standards, quality assurance systems, outcomes-based and “institutionally-neutral” funding, and managed autonomy for public providers (McGrath, 2012). These generic policies are all mechanisms to create and support regulated markets for vocational education, with the hope – in the absence of positive evidence – that this will provide the skills that will drive economic development and enable individuals to get skills which can lead to jobs or work (Allais, 2014). Over the last 40 years, industry has shifted from high-income to developing countries, which now produce more than a third of global production. Africa’s share of global manufacturing fell from about 3 per cent in 1970 to less than 2 per cent in 2010; today it has much lower shares of manufacturing output per person than the average for all developing countries (Newman et al., 2016). When labour began to move out of agriculture after 2000, it mainly moved to retail trade, instead of to manufacturing. Many countries in Africa began to experience positive per capita income growth in 1995, which accelerated in the 2000s. However, despite this positive movement, African industry is now not competing with high-wage industrial production in the North, as it had been during the initial post-independence phase, but with lower-waged Asia. Further, the years of slow growth and austerity created growing gaps in infrastructure, institutions and education relative to the Asian competition, and “two decades of piecemeal reforms have not succeeded in pushing a single low-income African country over the threshold above which industrial growth becomes – as it has been in Vietnam – explosive” (Newman et al., 2016: viii). The result of the ways in which colonial powers shaped national administrations and economies, as well as the policies of the structural adjustment years is economies with small middle-class elites, is a large difference between these elites and the majority of the population. Education systems mirror this gulf. Labour market structures The three countries in my study have small numbers of people in jobs that might generally be seen as middle-class6 and huge numbers of people either in survivalist work or unemployed. This is common in sub-Saharan Africa, where in general less than 10 per cent of the workforce is absorbed in the formal/modern sector, of which about half tends to be in the public sector (Fredriksen and Fossberg, 2014). South Africa has a larger formal sector, which includes many in precarious or low-wage work, as well as extremely high levels of unemployment instead of informal employment. Education systems refect this labour market structure. In all three countries there is a steep drop-off from close to (or over) 100 per cent enrolment in primary education to relatively low levels of secondary completion, with South Africa having the highest, followed by Ghana, and then Ethiopia.7 Ethiopia and Ghana are both formally selective through examinations at the end of primary and junior secondary education. In all three countries performance in national

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and international achievement tests which attempt to measure literacy and numeracy show weak results. A massive body of research is involved in attempting to improve these, with promising results for some incremental improvement of performance in the early primary years in many cases – but without labour market impact. In all three countries young people are more educated than their parents were. While the three countries have very different patterns of labour market participation, what is consistent across the three is that graduates have labour market outcomes that are substantially better than non-graduates in all three countries – and in general the difference between graduates and non-graduates is dramatically larger in sub-Saharan Africa than anywhere else in the world (Montenegro and Patrinos, 2014). Formal sector employment is dominated by the public sector in all three economies, although to a lesser extent in South Africa, and in all three countries coveted public-sector jobs are mainly confned to university graduates. TVET systems which have played a remedial role historically are automatically stigmatised, and enrol students who have weak prior educational achievements. For example, the Ethiopian education system historically has had a very strong focus on preparation for university, with a challenging academic education provided in years eleven and twelve of schooling that used to be seen as almost part of university system.8 Policy formally suggests that TVET (as well as teacher training colleges for primary school teachers) is the option available for those Grade 10 students who do not achieve the grades required for entrance into Grade 11 (Ethiopian Ministry of Education, 2017). Ghana, like many African countries, has elite secondary schools which are public, often boarding schools, with a strong academic record; they are accessed by elites who are able to send their children to the best (usually private) primary schools.9 South Africa does not have a public boarding school model, but also has highly unequal public provision. In all three countries, vocational education formally begins after junior secondary school, which ends at Grade 9 in Ghana and South Africa and Grade 10 in Ethiopia. The percentage of students who enrol for formal vocational education is far less than the numbers enrolled for academic secondary schooling, and also far smaller than the percentage enrolled in higher education. Policy documents in all three countries express a formal prioritisation of vocational education, describe a litany of problems with vocational education, and articulate a need for technical skills in the economy. All three countries bemoan the bias of their populations towards academic education, and complain about a putative mismatch between curricula and the needs of employers. All of them are attempting to improve systems for understanding the skills needed in the economy. And in all three countries, there are weak labour market outcomes in formal labour markets for vocational education graduates (Krishnan and Shaorshadze, 2013; Ghana Ministry of Employment and Labour Relations, 2014; Bhorat, Cassim and Tseng, 2016). This gulf in labour market rewards is sometimes believed to be the result of a tight labour market for professionals – in other words, a lack of supply of

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graduates. This is in line with much economic thinking, in which the “primary system of income distribution in market economies is rooted in labor scarcity; citizens possess (or acquire) a bundle of valuable ‘human capital’ that, due to its scarcity, generates a fow of income over the career path” (Autor, 2015: 28). But South Africa expanded higher education substantially over the past 30 years, and is currently attempting to put a brake on expansion. While it does not (yet) have a graduate unemployment problem, there is evidence of under-employment, suggesting that a lack of graduates is not the key factor underlying labour market inequality. Both Ghana and Ethiopia have identifed graduate unemployment as a major concern, but at the same time are continuing to expand higher education. Both countries are in the process of building tertiary vocational education institutions, while South Africa has undermined its small but fairly robust tertiary vocational education sector by incorporating polytechnic institutions (formally known as technikons) into the university system, renaming them “universities of technology”; these institutions are now governed by targets and fnancial incentives which favour academic programmes. All three countries experience graduate emigration, which means their skills systems are producing for other countries’ labour markets, raising questions about the extent to which skills shortages are a supply-side problem. At the same time, African countries import skilled labour (Newman et al., 2016). All of this suggests that the relationship between supply and demand of skills is not as functional as theories of skills formation from wealthy countries suggest.

Functional and less functional relationships I suggest that understanding the nature of TVET systems in African countries requires a distinction between the substance of education, which matters in the labour process (or what actually happens in the workplace, and for all the other roles that education plays in society), and the sorting role of educational credentials in labour markets. Researchers dispute whether educational credentials provide meaningful indications of actual knowledge and skills (as assumed by human capital theory) or whether employers read other information into the possession of a credential. This might include that a particular candidate is high-achieving and therefore likely to be retrainable, or that the candidate is hardworking (Weiss, 1995; Bills, 2003). From the employers’ point of view, the difference may not matter, as long as they are confdent that they are getting the most productive workers from an available pool. However, from the perspective of building education and training systems, the distinction between the screening and sorting role of education and the substantive role of education is important. To the extent that education is used for signalling or screening in labour markets, it is a positional good. Positional goods have absolute limits on their supply. Supplying more education to more people can increase the role education plays developmentally, by providing more people with the opportunity to learn. But increasing the supply of education cannot increase the positional gains made by achieving particular educational levels. This is sometimes captured by the notion

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of credentialism, as well as the notions of qualifcation infation and education “arms races” (Collins, 1979; Livingstone, 2009; Halliday, 2015). The notion of an educational arms race (Livingstone, 2009; Halliday, 2015) captures the situation whereby labour markets respond to the demand for positional consumption – as more people get higher levels of education, and demand for ever higher educational levels is proliferated more and more. Lauder, Brown and Cheung (2018: 509) point out that if “the fundamental problem is not one of skills shortages or mismatches but of good quality jobs, then … encouraging more educated workers to apply for fewer good-quality jobs simply intensifes the positional competition for credentials”. This is one factor behind the fact that, as education systems have massifed over the course of the twentieth century, populations tend to push for higher levels of general or academic education (Foster, 1965; Nherera, 2000; Hall and Soskice, 2001; Wolf, 2002).10 Carnoy’s (1972, 2019) systematic account of what he calls four waves of educational expansion in the developing world explains how the supply of education affects the ways in which education interacts with labour markets, in ways that in turn shift the supply of education over time, and that usually maintain elite privilege even as education is massifed at different levels. Initially, primary school education prepared students for sub-elite jobs because people who could read and write assumed status jobs in colonial administrations and colonial economies. When primary schooling expanded, its function changed from elite preparation to socialising students to be good citizens and preparing and selecting elites for secondary school. At this point, primary school stopped being an end in itself for teachers and students – and labour market rewards were low, even when, as discussed above, a lot of effort went into improving quality. High labour market rewards went to secondary school graduates. When secondary schooling expanded in the third phase, its purpose changed from elite formation to “socialisation and selection for elite formation in the university” (Carnoy, 2019: 65). This happened frst for lower secondary and then for upper secondary. The wage premium was on university degrees. In the fourth phase the supply of university-educated work-seekers increased faster than demand: University training gradually changes from a form of elite professional training to a means of further socializing students to accept sub-elite roles in society and to try to keep them out of the labor force for an additional four or more years. (Carnoy, 1972: 186) Elite reproduction still happens, not through the mass university education system, but through a few elite universities, as well as the elite secondary schools with a strong role in channelling students to elite universities. In South Africa, where unemployment is very high, economists interpret declining returns to lower levels of education and rising returns to higher levels of education as caused by shifts in the economy towards higher-skilled labour (Bhorat et al., 2016). Carnoy’s

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account explains why the relationship is less functional than that. His concern is to show how supply shapes demand, with changing structures of rewards over time.11 My interest here is the impact that this pattern has on the possibilities of building TVET systems. The distinction between the screening and sorting versus the substantive role of education allows us to see that this relationship is not necessarily or always functional to the needs of the economy. As education levels rise, and given that educational credentials are highly valued in labour markets, the relationship between the supply and demand of educational qualifcations may become less and less functional because of positional competition for credentials. For reasons which are historical (senior secondary education was historically associated with elites) and substantive (if it is the case, as many educationalists believe, that general education provides a broader and more sound foundation in knowledge than most TVET qualifcations are able to provide),12 academic secondary school leads to university while TVET qualifcations usually do not. Educational arms races, therefore, tend to reinforce cultural preferences for academic or general education, because general secondary schooling is the pathway to university education, and university education is the best (or only) chance for good employment. Inequality reinforces this type of cultural preference, because in highly unequal societies people avoid poverty markers; cultural markers of status are relatively more important than in equal societies. In other words, positional competition for credentials and elite jobs counteracts or undermines the capacity of the education and training system to produce substantive specifc skills required for work. The strong preference for academic education does not, in these countries, coexist with the other features that, in Hall and Soskice’s (2001) model of liberal market economies, create virtuous cycles of economic growth such as strong employment prospects in a strong service-based economy and high levels of innovation. But the negative side of the LME pattern is visible where the less academically inclined gain low returns to low levels of general education, and are unlikely to succeed in moving to higher education. Educational provision is weak for the majority who are already less likely to perform well in school due to poverty, rurality and other factors; in many instances children do not achieve enough basic education to obtain meaningful technical skills, and at the same time aspire to more general education. Thus, we see a number of vicious cycles working against the development of the TVET systems that these countries may need for their industrialising economies in the case of Ethiopia and Ghana, and aspirational industrialisation in the South African case. In other words, the ability of education systems to develop the specifc skills required for economic and social development is undermined by the ways in which labour markets use education credentials to funnel the population into and out of a very small number of good jobs. The tiny size of the formal and industrial sectors – and the small number of good jobs – in all three countries, as well as the extreme difference between options inside and outside of these sectors, reinforces competition for credentials, which in turn reinforces public preference for general education and systemic weakness of TVET. A century of

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colonial economies and education systems have reinforced cultural preferences against vocational education. A convex curve of returns to education seems to further aggravate inequality as higher education completion numbers rise. Inequality between Africa and the rest of the world, as well as the interaction of African elites with the rest of the world – in particular through participation in international elite labour markets – acts as a further distorting effect. This does not mean there are no pockets of effective TVET provision, but it does mean that it is very hard to build it adequately at a systemic level. No matter what education policy-makers do, it seems that the offerings developed are lowstatus, in low demand and enrol poorly prepared students, which then aggravates the weaknesses of already weak programmes. This, combined with Africa’s weak position in global value chains and weak manufacturing sectors, seem to have a substantial effect on the nature of skill formation in the three countries. From a policy perspective, the key issue may be the possibility for breaking path-dependency, and avoiding the common trap of starting from a notion of youth unemployment as an educational problem – that youth do not have the right skills, because school systems are not of suffcient quality, or curricula are inappropriate. This approach frequently leads back to the curriculum, and in particular, to debates about the relative value of studying substantive bodies of knowledge versus acquiring specifc concrete skills to perform tasks at work, and has mainly led to curriculum reforms that further marginalise TVET through narrow task-oriented curricula. More promising possibilities could come from government control of enrolments: Ethiopia and Kenya both control university enrolments by controlling grade barriers of senior secondary qualifcations, and this might succeed, against the wishes of populations, in redirecting enrolment patterns. As discussed above, in the collective skill formation systems, TVET provided a route to well-paying and respected occupations and access to university education that has been relatively tightly restricted. The developmental states directly restricted university access. In the Latin American case, the students accessing training from VTIs during the industrialisation period were not candidates for academic secondary education, and so TVET was perceived as an opportunity rather than a second-rate option. But massifcation of secondary education has changed the likelihood of this succeeding, and it is a risky strategy for governments that have fragile legitimacy and need to bolster it with middle-class voters. A stronger possibility would be good labour market rewards for TVET graduates, which might be possible in Ethiopia in the coming years, because of its industrialisation trajectory. One of the major factors to be observed in these countries in the coming years is company attitudes to TVET graduates; positive attitudes could be an early indicator of a shift in the interaction of the skill formation system with the economy. However, current education fgures from all countries indicate a rise in university enrolments disproportionate to TVET enrolments (where TVET enrolments have risen, which is not always the case), indicating a trajectory in the other direction. From an analytic perspective, skill formation patterns in these African countries suggest that functional analysis of the supply and demand of skills is not

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enough to understand the dynamics of skills formation; positional competition for credentials seems to have an effect on the ability of governments to build TVET systems. This difference is very visible in Africa, because the positional competition is for such a small pool of jobs. However, it seems that the patterns that we can see in these Southern countries are not only important to understand our own context, but may also be revealing for the shape of education/labour market relationships that seem to be emerging in the context of rising higher education levels and rising inequality in the global North.

Acknowledgements I am grateful to Carmel Marock and Yael Shalem for critical feedback at various stages of this research, and to Hans Awude, Gloria Erima, Lynn Hewlett, Palesa Molebatsi and Hanlie Robertson for assistance with various parts of data collection for this research. This research was carried out with the support of the South African National Research Foundation, through the South African Research Chairs Initiative (SARCHI) Chair in Skills Development; their support is gratefully acknowledged.

Notes 1 In UNESCO’s International Standard Classifcation of Education this is ISCED-5, short-cycle programmes aimed at preparation for work. 2 The chapter also draws some insights from preliminary research in Kenya, as well as in four South Asian countries – Bangladesh, Cambodia, Laos and Vietnam. 3 See Allais and Shalem (2018) for an overview of research into knowledge and work. 4 Rising education levels is one of the most consistent secular international trends today, which seem to be both inexorable and self-reinforcing, and in many contexts vastly outstripping changes in work (Schofer and Meyer, 2005; Livingstone, Mirchandani and Sawchuk, 2008; Barro and Lee, 2011; Collins, 2013; Pritchett, 2018). 5 This includes the critique that this type of typology is additive (Ashman and Fine, 2013), that it is of very limited value for thinking about developing countries and development and in particular African countries (Breckenridge, 2018), and that it does not take power relations suffciently into account (Streeck, 2012). Looking specifcally at skills, Lauder, Brown and Ashton (2017) argue that the methodological nationalism inherent in the approach misses the role of transnationals and global value chains in shaping skill formation systems. 6 A highly contested term in Africa; see Melber (2016). 7 Educational statistics in Africa include vast underestimates of repeaters in offcial statistics, different ways of reporting data, lack of correlation with years reported in UNESCO data, and simply incorrect data. Formal TVET is particularly problematic, because net enrolment fgures are seldom available. I used international data sources, compared them with local government information, and also obtained insights through key informants; further research is currently underway. My concern is less with accurate numbers than broad trends and patterns, and this is the focus here. 8 Interview with educational specialist, Addis Ababa University. Over 70 per cent of those who pass the senior secondary examination move directly to education, which is testimony to this unusual relationship (Ethiopian Ministry of Education, 2017).

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9 These schools have recently been made free in Ghana, which is highly contested from an equity point of view, as they tend to serve richer learners because of academic requirements. 10 Fredriksen and Fossberg (2014: 248) point out that “at the start of the 20th century, the majority of the labour force in most of today’s ‘old’ industrialised countries had made the transition out of agriculture, at a time when the coverage of their secondary education was well below that of SSA [sub-Saharan Africa] today”. 11 Similarly, Bourguignon, Ferreira and Lustig (2005: 390) describe a pattern in Asia and Latin America of “the ‘convexifcation’ of returns to schooling, a phenomenon that occurs when marginal returns fall at low levels of education but rise at higher levels”. 12 This is aggravated by the number of TVET projects and interventions implemented in poor countries that are focused on curriculum-based reforms predicated on what donors think employers do or should want, and a focus on managed autonomy of providing institutions.

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Part 4

Land, space and cities

This section looks at how space and infrastructure, both rural and urban, shape inequality. Given the rapid urbanisation in the global South, urban spaces play an increasingly important role in producing and reproducing inequality. Infrastructure is often considered to be the materiality of lines that connect spaces and supply basic services. Our conceptualisation goes beyond conventional notions to investigate a range of infrastructures. These include systems, processes, people, practices and policies that interact with each other to entrench inequality in cities. In Chapter 9, Margot Rubin, Melanie Samson, Sian Butcher, Avril Joffe, Stefania Merlo, Laila Smith and Alex Wafer explore the operations and effects of infrastructures of inequality from the vantage point of researchers of Southern African cities. Using infrastructures of inequality as an overarching conceptualisation allows us to analyse the production, reproduction, contestation and transformation of inequality. The methodology employed in the chapter ties together motivations, actors, agents, power analyses and material outcomes in a way that has not been done elsewhere. The chapter identifes “thinking tools” which provide an important methodological innovation, expanding the ways we study and understand infrastructures, and their dialectical and complex relations. Next we turn our focus out of the cities and towards rural economies in Ghana and South Africa in order to understand how the rural–urban divide shapes inequality in these two countries. In Chapter 10, Akua O. Britwam and Ben Scully draw on the recent revival of work on Social Reproduction Theory (SRT), which allows us to think about inequality in a way that includes but extends beyond income. Building on Marxist–Feminist debates in the 1970s and 1980s, the SRT work highlights the connections between production and reproduction; it looks at class and inequality from a perspective that includes but extends beyond incomes and relations to production. This chapter draws on data from empirical studies in Ghana’s Upper West Region and the Eastern Cape province of South Africa, and focuses on two “end moments” of social reproduction – childcare and retirement.

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Investigating infrastructures of urban inequality Margot Rubin, Melanie Samson, Sian Butcher, Avril Joffe, Stefania Merlo, Laila Smith and Alex Wafer

Introduction Infrastructure is often considered to be the pipes, roads and lines that traverse and connect spaces and supply basic services. Within our conceptualisation we look to a multidimensional understanding of infrastructure which goes beyond conventional notions and suggests, as Steele and Legacy do, that we need to extend the lens through which we see infrastructure: as relational; ecological; as everyday practice; as inherently political; as embedded in questions of human and non-human justice and equity, fscal transparency, institutional accountability. (Steele and Legacy, 2017: 2) Given the above defnition, we investigate a range of infrastructures, which we understand to include systems, processes, people, practices and policies that interact with each other to embed and entrench inequality in cities. Central to our understanding of infrastructure is the underlying idea that, despite instincts to the contrary, decision-making regarding technology and its provision and maintenance are highly politicised processes that cannot be divorced from questions of identity, privilege and contestation. Such infrastructures are diverse. They look towards the role of history and historical forces; the collaborations and constellations of urban actors such as the market and the state; the politics of provision, as well as the legal frame, legislation and the law; and multilateral and international organisations and interests (Easterling, 2014). These infrastructures overlay and interact with questions of social status, political affliations, identity and nationality. Zérah (2008) and Easterling (2014), in the Mumbai context, refect on these questions of identity and positionality and agree with Heller that infrastructure “is structured by market forces” but persists with the idea that access to resources of all sorts are “organized through a whole range of categorical inequalities, such as race, class, gender, caste, nationality, and others” (Heller and Evans, 2010: 440). Thus, as Heller and Evans note when refecting on Tilly’s work, inequality is kept in place by a series of social practices in which:

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Margot Rubin et al. Dominant groups have an interest in reproducing their privileges and do so through an “economy of practices” (Bourdieu, 1984) … through routinized practices of networking, socializing, consuming, and sharing information, but also instrumentalizing institutions and governance in general to serve those interests. The weapons of the powerful – to invert James Scott’s famous metaphor – represent a vast repertoire of techniques … to reproduce inequality. (Heller and Evans, 2010: 436)

Infrastructures of inequality are not laid onto passive recipients, but are in themselves sites of contestation, controversy and confict. These contestations in turn mediate and moderate their use and meaning by urban residents. As such, we understand infrastructures of inequality to mean the dialectical relationship that exists between the materiality of services and network provision, and the array of tactics, practices and social conditions that persist in urban environments and which govern questions of access, quality, provision and in turn affect the quality of life and daily experience of urban dwellers. The conceptual framing thus draws together the literature on inequality and that of infrastructure, and fnds a methodological and conceptual way of offering insights into how they are in many ways co-constituting within current urban settings. The chapter was developed between January 2017 and April 2019 by a team of academics from four faculties of the University of the Witwatersrand – Humanities, Science, Engineering and the Built Environment, and Commerce, Law and Management. The authors worked collaboratively to conceptualise and write the chapter through a series of writing workshops and on-line engagements, with each scholar contributing their expertise and empirical evidence. This deeply collaborative process was highly generative. It allowed us to make connections and develop new ideas and insights that would not have been possible had we not collaborated across disciplines with the express intent of generating new knowledge and methodologies. The chapter considers and explores the operations and effects of infrastructures of inequality from our vantage point as researchers of Southern African cities’ housing, transport, waste, water and cultural infrastructure. In order for us to think through and investigate these infrastructures, we identifed four themes or “thinking tools” we believe are central to the discussion of “infrastructures of urban inequality”. These are politics, space, temporality, and people and infrastructure. For each theme we offer a framing of how we understand it, include examples from our research on Southern African cities to fesh out the conceptual issues, and refect on the broader implications for how these tools help us study inequality. The remainder of this chapter is divided into two sections. The section immediately following elaborates the four key themes, and the next section provides concluding refections on what our conceptual framing and method offers to the study of inequality, as well as considering future questions and pathways of work.

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Four thinking tools This section looks at four interrelated themes or heuristic devices that have allowed us to think through the idea of infrastructures of urban inequality and the multiple dimensions that are inherent in our understanding of this conceptual framing. The frst thinking tool considers politics and infrastructure, which looks largely at the role of the state and its relationship to residents, citizens and other non-state actors. It considers the persistent but contested relationship that exists between infrastructure provision and the construction of urban citizenship. This theme offers an entryway into the more conventional ideas of state provision of material infrastructure but infuses them with questions of power and identity. The second thinking tool considers the relationship between infrastructure and the production of urban space – that is, how infrastructural projects change and how they mediate or transform space, its uses and value, and its meaning for urban environments. Here we consider infrastructure in its material presence, histories of built form, the obduracy of space and the ways in which these entrench inequalities. The third theme considers the question of time and temporality, which we look at in a number of different ways – the production of histories, intergenerational issues, the effect on the daily experience of life and the temporality of development thinking (Swilling, 2015). Thus we are trying to think through the manner in which the past has an impact on the present, questions of revisionism, and the rhythms of waiting, hustling, pushing and driving in urban environments. The temporalities of the everyday are often in tension with those of the state and the projects and time horizons of long-term infrastructure developments. The last theme considers the relationship between people and infrastructure. It examines how people, power-laden social relations and infrastructure are mutually produced, how people are part of urban infrastructures, how they mobilise for and augment inadequate and inappropriate infrastructures and how they produce entirely new infrastructures as they address inequality. Politics and infrastructure Framing The distribution of resources and infrastructures of all sorts represents active sites for producing relations of power and contesting or undoing them. These politics of distribution shape and are shaped by multiple forms of inequality. Citizenship differentiated by race, class, gender and nationality often articulates with differentiated infrastructure (Anand, Gupta and Appel, 2018). Claims for more equitable resource distributions are also claims to recognition, as equal citizens and equal humanness (see the section on subjectivity). Hence, infrastructures are never simply technical or material, nor are they merely social. They are always also political, or – to borrow a term from Larkin (2013) – they are “technopolitical” (that is, the intersection of the technical/material and the political). The link between infrastructure and power in society was articulated by Mann (1984) in his analysis of the production of the modern state through “infrastructural

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power”. Mann (1984: 189) differentiates infrastructural power, understood as the “capacity of the state to actually penetrate civil society and implement its actions across its territories”, from what he regards as the older form of despotic power – that is, the capacity of the state to [rule] without routine, institutionalised negotiation with civil society groups. For others, power is understood in more diffuse and capillary ways, insinuated into the social through socio-technical systems that produce selfregulating subjects. These socio-technical systems differentiate citizen from subject, civil from political society (Chatterjee, 2004). This is perhaps most evident in the infrastructural inequalities of colonial rule (Fanon, 2005; Legg, 2014), but also in the forms of techno-political rule in contemporary post-colonial societies (Schnitzler, 2008). Techno-politics can take a number of different forms, including direct mobilisation around service delivery (Ballard, Habib and Valodia, 2004), participation in “invited” and “invented spaces” (Miraftab, 2004a), discursive shifts (Wafer, 2012), everyday “encroachments” (Bayat, 2013), and “plugging in” (Charlton, 2018). It should be noted, however, that some scholars caution that in many places, infrastructure was never imagined for extensive biopolitical projects (Coutard, 2008). Others have focused more on infrastructure as a class project (Harvey, 2010). Increasingly privatised infrastructure offers new sites for speculation and enclavism under “splintering urbanism” (Graham and Marvin, 2001). Infrastructure also provides a “safe bet” in which to sink excess capital rather than industrial investment (Goodfellow, 2017). Property owners also simply work to steer infrastructural investment into their landholdings to beneft from increased future rents (MacKillop and Boudreau, 2008). Some have zoomed in on people’s claims-making vis-à-vis the infrastructural – claims to the “right to the city” or the “politics of the staple” (Amin, 2013) and their micropolitics. “People as infrastructure” (Simone, 2004b) and “community participation” come freighted with gatekeeping, party politics, uneven power relations and contestation (Bénit-Gbaffou, 2012; Bénit-Gbaffou and Katsaura, 2014). In our context of South Africa, the state remains central to infrastructure provision and expectations around “the promises of infrastructure” (Bénit-Gbaffou and Oldfeld, 2011; Anand et al., 2018). We take seriously the state and its infrastructural projects, and the claims-making directed towards them, in this instance through two examples – community arts centres and water infrastructure. We argue for a contingent reading of infrastructural projects and their effects on inequality. In our view, infrastructural claims come in a variety of registers and can be put to multiple ends vis-à-vis inequality, or indeed have a set of unexpected and unintended consequences. Examples PRE-PAID WATER METERS AND WATER AND SANITATION INFRASTRUCTURE

Under apartheid in South Africa, modern potable water systems and water-borne sanitation were designed and engineered to cater for a minority of the population

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(in both their households and industries) at very high standards through public subsidies. Water and sanitation services and infrastructure to this day carry the legacy of high levels of racialised inequality. While large infrastructure investments post-apartheid have managed to signifcantly improve access to services, this investment has been uneven and has often not addressed deeper systemic issues of inequality and social dynamics. New forms of inequality, articulated with gender, race, class and space, have also been produced through these uneven geographies of basic service delivery after apartheid. The pre-paid water meter has been one site making visible the inequalities produced by technological fxes, and the politics engendered and mediated by the infrastructural. The object of powerful social movement activism and legal contestation, the pre-paid water meter reveals the contradictory imperatives of the post-apartheid state around equalising access, cross-subsidisation and costrecovery (Smith and Hanson, 2003; Jaglin, 2008; Schnitzler, 2008; McDonald and Ruiters, 2012; Loftus, 2015; Mahlanza, Ziervogel and Scott, 2016). When pre-paid meters were introduced in Johannesburg in 2003, in the guise of trying to conserve water, the state installed pre-paid meters in pockets of southern, historically black townships. At the same time, in an effort to earn revenue through tradeable services, the state failed to impose restrictions on high levels of demand in northern, historically white suburbs. The focal point of social movements in response to this hypocrisy at the time was focused on the socio-economic contexts that defned who had to restrict their water use versus who could consume in abundance. The spatial inequality underlying the municipal application of state policy ffteen years later seems anachronistic. Today, households living with pre-paid meters are technically guaranteed a steady fow of water, but this is only when they can afford it. Local micro-politics blur the constitutional mandates of the national and provincial state and the revenue goals of the municipality; water and sanitation access can be deeply entangled in networks of patronage and party-political affliation (Bukiwe, forthcoming). A second dimension of technology constraints to what dignifed access means for water and sanitation are chemical toilets. In the absence of resolving the challenge of putting in place sanitation systems that would suggest a form of permanency for communities living without tenure in informal settlements, chemical toilets have become permanent sanitation solutions for temporary settlements, normalising substandard access. In the meantime, affuent neighbourhoods and elite gated communities are installing their own water and sanitation infrastructure (for example, drilling boreholes), bypassing or opting out of bumpy public provisioning for private systems (Rubin, forthcoming). This is despite the government’s own projections suggesting that demand will outstrip supply by 2030 (DWA, 2013). The unwritten rule of “if you can pay for it you can use it” continues to shape class, race and gendered inequalities.

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COMMUNITY-BASED CULTURAL INFRASTRUCTURE

Artists and cultural practitioners are in agreement that a broad set of vital urban infrastructure is necessary for cultural ecology; these can be referred to as community-based cultural facilities (CBCF). These include community arts centres, creative hubs, and community heritage and cultural centres. The normative argument is that building resilient and equitable cultural infrastructure will foster innovation, build social capital, break down social barriers, are vital for confguring liveable user-friendly urban space, and will affect both urban and rural development. This can be seen in numerous international and national policy documents such as the goals of the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions, the United Nations’ Sustainable Development Goals, Goal 9, and South Africa’s White Paper on Arts, Culture and Heritage. There is insuffcient attention in the literature and in practice to the ways in which such cultural infrastructure could exacerbate existing inequalities or foster new forms of inequalities. These relate potentially to spatiality, governance, hierarchy, inclusion/exclusion, authenticity, gender, power relations, participatory action and the like. Community arts centres (CACs) arose from social movements in the 1960s, as the world was engaging with major societal shifts evidenced by the civil rights movement. CACs became important in South Africa during the struggle against apartheid from the late 1970s onwards and were often funded through donor aid. Post-1994, the government built 51 community arts centres throughout the country at a cost of R10 million; these were completed in the early 2000s. However, the CAC programme has had signifcant failures for a number of reasons. The new arts centres were primarily framed as tangible infrastructure. They were regarded as capital projects with almost no regard either for how ongoing operations, artistic and cultural programmes and events would be secured, nor to where these community centres should be spatially based or how they would interface with the communities in which they were located. These reasons provide a range of insights into how our team defnes infrastructure. The inherently political nature of this infrastructure is evidenced by the argument of local authorities that their supposed “ownership” of these physical spaces is rendered null and void by the Constitution (Schedule 4) as it does not give them any responsibility for arts and culture. This has resulted in consequent confusion about the responsibility for maintenance and other operational matters between the national government (the Department of Sports, Arts and Culture), the provincial tier and the local authority in which they are located. Despite this poor articulation of the governance of such CBCFs, the government has to date built close to 250 CACs across South Africa. Communitybased artists are determined to remedy this by calling on the government, as the Mpumalanga representative suggested at the South Africa and European Union Shukuma Mzansi International Conference in March 2018, to “stop all infrastructure – invest into sustaining and maintaining those that we have”.1 CBCFs are seen as spaces from which communities can access local cultural assets and connect with others to further their cultural life. This speaks to the

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idea of infrastructure as part of the public commons (including cultural assets, resources and knowledge) and in which CBCFs can be understood as public spaces through their positioning and rootedness in communities. However, questions need to be asked about whether community arts centres are viewed as artistic spaces and privileging the arts and the artists who work in the space, or whether they are public spaces in which multiple publics can participate in cultural life, have access to the arts and be involved in decision-making and participatory practice (privileging the community in which the space is located). This community experience of exclusion from the CBCF infrastructure was highlighted by Create Africa Trading (CAT): A key lesson to be learnt lies in the unfortunate results that can fow from unplanned and ill-considered investment in infrastructure without proper research/cultural auditing, planning and the integration of processes of community engagement. (CAT and Associates, 2013: 58) Refections Our cases here point to how infrastructural projects can be put to multiple ends in which the guiding logics can range from universalisation and equity, to strategies of accumulation, a “build it deliverology” or, more elusively, facilitating a public commons. Such projects can decrease inequality at one scale, while unintentionally increasing it at another, producing new forms of inequality and new contestations. Claims-making around infrastructure can include demands for more and demands for less – as with the request to “stop all [CAC] infrastructure”. There is also a growing divide between the wealthy who can opt out of the weak state provisioning of essential services in order to have services work on their terms through private provisioning, and sections of dense informal settlements with no political protection to fght for access to these same essential services. Thus, outcomes of infrastructural projects on inequality are contingent on how power is negotiated and contested (Coutard, 2008). Through a focus on politics, we look to demonstrate how infrastructural power is always relational, shaped by the complex relations of the state with itself, and in relation to other powerful urban actors. Production of space Framing People construct the spaces they inhabit (Molotch, 1993), and infuse them with meaning and intention. Rather than being an empty container, space is shaped by a variety of forces and agents, sometimes acting in collaboration and sometimes in confict (Harvey, 1992). The production of space is highly political (Lefebvre, 1991), placing different interests at odds with each other. The way space is structured and produced, its meanings and rules encourage certain activities while

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penalising others. Privileging is done with a number of intents, including a class project of inclusion of some and the continued valuation of land for the wealthiest and most powerful (Lefebvre, 1991; Harvey, 1992). This conceptualisation of space makes clear that inequality is in many ways pursued and embedded through space and spatial practices. According to Molotch: Architecture, human densities, locational relations are a force in structuring what can be done in space itself. Walls and roads obviously privilege certain kinds of activities and inhibit others, support the projects of one type of actor and deter the goals of others. (Molotch, 1993: 888) A host of tools and instruments are used to designate legitimate spaces which are interrelated with the ability to claim citizenship and, with it, make claims on the state. Chatterjee (2001) argues that urban communities that conform to the requirements of the state and hold legal titles are able to use the state apparatus to make claims for services, maintenance and goods. Those inhabiting informal settlements and spaces designated as illegal are forced to use other less formal channels to make claims on the state. Yiftachel and Yacobi take the issue further and note that in mixed settlements in Israel: [T]he process of marking an urban place as “ethnic” and simultaneously classifying it as “illegal” reproduces patterns of segregation and inequality. The making of urban space, therefore, is inseparable from the ongoing contestation between social and ethnic groups. (Yiftachel and Yacobi, 2003: 667) Thus how space is designated, imagined and given meaning has material implications for how these spaces look, what is offered within them and what the communities that inhabit them can enjoy or access. In contemporary postcolonial landscapes new forms of infrastructural segregation and separation are emerging. These relate to privatisation and corporatisation of infrastructure (Coutard, 2008), as well as the inability of many cities in the global South to keep up with the demand created by high rates of growth. Graham and Marvin (2001: 33) discuss a “splintering urbanism” through which “infrastructure networks are being ‘unbundled’ in ways that help sustain the fragmentation of the social and material fabric of cities”. Premium services frequently provided by international service providers to elites “by-pass” those who cannot afford them, leading to a set of seceded spaces within cities, connected to other internationalised sites but disconnected from their surroundings. In the global South, such secession is even more apparent in what have been identifed as “fantasy cities” (Watson, 2014) and cities built from scratch (Herbert and Murray, 2015). In these privately developed new towns or suburbs

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on the periphery, better quality infrastructure by-passes older and often failing public service provisions. Patchwork landscapes of access and denial are layered over other spatial processes such as the peripheral or marginalised location of “auto-constructed” communities – informal settlements (Caldeira, 2017). As a result, we see multiple processes that are contributing to a spatialisation of unequal access, with historical roots, commercial motivations located in privatisation and new formulations of access. Thus the location of infrastructure has specifc economics and histories but also a set of politics concerning who are legitimate citizens and who are not. However, once built, material infrastructure is obdurate, hard to change and infexible (Winner, [1980] 1999: 32). As a consequence, irrespective of changing political regimes, specifc spatial forms and infrastructural choices maintain the obduracy of space and more social and political relations. Example CITY OF JOHANNESBURG’S CORRIDORS OF FREEDOM

In 2013 the City of Johannesburg embarked on the integrated Corridors of Freedom, a Transit Oriented Development (TOD) project. The project was intended to combat urban sprawl and force compaction, densifcation and the intensifcation of land use along a set of Bus Rapid Transit corridors that had been put in place in 2009. The idea was also to resolve the spatial mismatch, whereby the spatial morphology of the city means that poorer people spend disproportionate amounts of their incomes and time on transport. Although great efforts have been made to upgrade and improve townships and informal settlements, many of the best urban goods and amenities still exist in more centrally located older white neighbourhoods. The Corridors of Freedom intended to address these issues by supplying cheap, affordable transport to outlying areas as well as offering affordable accommodation along the corridors. Three corridors were identifed, two of which ran along older transit spines that had effectively been in operation since the earliest days of the city. It was envisioned that public spaces would be improved and activated, affordable and social housing built, and water, sewerage and power supplies increased to facilitate the higher densities. By 2016/2017 the City of Johannesburg and their implementing agent, the Johannesburg Development Agency, had realised many of their plans. Despite a number of engagements between the city and the various communities, certain issues, such as plans for densifcation, were opposed by middle-class residents who believed they would bring social ills. As a result, the push for inclusionary housing never gained traction and in some cases received outright rejection. Thus in many ways the project reinforced a set of existing spatialities; unable to change demographics, it maintained many of the divisions within the city and in fact reinforced them through the provision of infrastructure along existing routes and corridors.

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Refections The TOD case indicates the enduring nature of infrastructure and its ability to maintain and entrench spatial forms and, as a consequence, a set of social and political relations. Expanding the notion of obduracy beyond merely a physical form, we argue that rather than transforming relations, middle-class attitudes both shaped and were maintained by the infrastructure project. NIMBY-ism – Not In My Back Yard – is rife and has not been addressed through the project, which in turn has maintained class separation. Racial and economic differences have also been maintained as the state was unable to institute affordable accommodation along the corridors, and has been unable to force change. In addition, spatial transformation has not been achieved as the historical transit lines and divisions have effectively been maintained through the provision of infrastructure and the political decisions that were made. Temporality – waiting, hustling, expectations Framing Infrastructures also constitute our sense of temporality or, put slightly differently, infrastructure is inextricably linked to various ways of thinking about time. For example, large-scale infrastructure projects that defned twentieth-century state power were premised on an ontology of progress and futurity, and the experience of riding a railway was about materialising modernity and the possibility of endless improvement (Angelo and Hentschel, 2015). Heidegger (1971), in his essay on technology, argues that technology in the modern era is premised on an ontology of the exploitation of nature as raw material. Simone (2004a) and De Boeck and Plissart (2014) have variously shown that the material instability of infrastructures can also rupture these experiences whereby broken and decayed infrastructures might produce imaginaries of being left behind by the advance of the world (Ferguson, 1999). The recent water crisis in Cape Town is another precursor to the reality that this infrastructural imaginary has its very real limits. As Haraway (2016) argues, that limit requires the willingness to occupy the present in ways which recognise the uncertainty of the future. Infrastructures also reconfgure our relationship with the past. Gordillo (2014) has written about the ways in which infrastructures of colonial conquest in rural Argentina continue to shape the imaginaries of past and future, even as they have been subsumed into new social practices. Old ruins of churches have been subsumed into non-Christian rituals; their presence still speaks to the spectral presence of the nation-state, which is often experienced in the form of violence, displacement and capital. Wilhelm-Solomon (2017) has also demonstrated the ways in which futures and pasts are assembled in the material instability of the contemporary city, as the “stuckness” of the present. The hollowed out nearfuture (Guyer, 2007) invokes alternate ontological orientations towards pasts and futures that may exceed the mortality of the individual. In terms of the micro-physics or the embodiment of daily practices of infrastructure, the emergence of gas lights in the nineteenth-century European city

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changed the temporality of cities, allowing for nocturnal economies to emerge (Bouman, 1987). Similar insights have been made in many African cities in the twenty-frst century, where nocturnal economies have emerged around new buildings like banks, with all-night security lighting run on generators (De Boeck and Plissart, 2014). At the same time, ad hoc transport infrastructures and the location of accommodation options for the poor far from urban economic centres has meant that people’s experience of time is extended into waiting or hurrying. Similarly, the queues at communal standpipes and other state-supplied infrastructure often require people to forego other opportunities. Thus time, temporality and infrastructure are entangled in a variety of ways. Below we offer two cases: (a) the valorisation of memory and heritage in urban expression; and (b) the provision of so-called RDP houses to benefciaries of the state’s housing programme. Examples MEMORY, LAND, TEMPORALITY AND DWELLING

Attention to past times and heritage in the context of urban infrastructural development is important in two ways. First, it opens debates on the conceptualisation of the value of the past, what should be preserved and for whom. It also allows for discussion of the tension between the need for infrastructural development and the preservation of important tangible and intangible heritage for different human communities. Second, and urgently, it calls for a conversation on the land question in urban areas, a conversation until recently neglected. Discourses of past, memory and land can drastically change focus depending on the actors who use and consume the concept. Heritage practitioners and visitors primarily see places of the past as “important heritage resources and visitor attractions for locals and foreigners” (McGhie, 2009). However, the framing of what is considered a place of the past and how it is valued, promoted, preserved or abandoned changes geographically and temporally. Competing ideas about cultural value come into play within the making and ruination of the city. Historical settlements, buildings, cemeteries, ancestral land are entangled into the political and the economic. Contemporary urban areas have not often been associated with the African past, contrary to archaeological and historical data (McIntosh and McIntosh, 1984; McIntosh, 1999; Connah, 2001; Pikirayi, 2001; Haour, 2005; Leyser, Standen and Wynne-Jones, 2018); the idea of a city with an infrastructure has not generally been seen as “characteristic” of African people. Colonial and postcolonial discourse has conveniently considered pre-colonial landscapes to be empty spaces before the inception of modern urban development by colonial or imperial powers. Places of the past were “non-existent” or, at best, already abandoned by the earlier occupants, allowing older modes of life and production to be obliterated to clear the way for the creation of new, modern modes and new wealth (Schumpeter, 1994). This is the frst, important infrastructural inequality, an inequality in whose histories of infrastructure are valued, used and preserved.

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Physical infrastructural development (including housing), deemed necessary for the expansion of many cities such as Johannesburg, has contributed to the destruction of archaeological sites of indigenous origin (Sadr, 2017). This destruction has mainly gone unnoticed and is largely unspoken of, perhaps due to the fact that the descendants of these communities had abandoned them in the early eighteenth century. Obliteration of memory and physical evidence becomes the obliteration of land rights within the legislative framework of land reform in South Africa, with few cases of resistance to this destruction and obliteration, mostly linked to more recent forced removals. Reclamation is not unproblematic (Capps and Mnwana, 2015) and little thinking has been done by the political and academic community around the role of competing pasts and ideas of origin, belonging and justice in the battle for access to land, in particular in urban areas. RDP HOUSES

The eponymous RDP house2 is named for the Reconstruction and Development Programme, which was the frst post-apartheid programme for infrastructure and housing delivery to communities that had been denied access under apartheid. The programme’s object, from its inception, contained a particular temporal imaginary: that the material object could stand in the present as a restitution for past injustices (Dubbeld, 2017). For many benefciaries of RDP houses, relocated from informal settlements or sitting for years on waiting lists, the achievement of the house represents the materialisation of their struggles against apartheid. Haferburg (2013), for example, has demonstrated this in the case of Cosmo City,3 where benefciaries who had been relocated from the infamous informal settlement of Zevenfontein claimed their sense of belonging in relation to those experiences, and the promises that were made to them by politicians. But the object of the RDP house is itself uncomfortably located in relation to more obdurate urban forms. Cosmo City was originally designated as the site of an unrealised township in the last days of apartheid (in fact, its plan-form closely resembles the apartheid architecture), and the RDP house itself is little more than a colourful version of the original township house (Wafer, 2019). So, even in the materiality of historical restitution, the spatial forms of the past seem obstinately apparent. These new RDP homes are more than just sterile objects, of course. The house itself connects benefciaries into material grids and networks – electricity, water, sanitation, etc. – which means that bodies and bodily functions are liberated from the rhythms of the day to some degree. Particularly for women and girls, accessing sanitation is something that does not require long and dangerous waits. These networked infrastructures also work on the micro-scale of the bio-political, allowing for changed behaviours; cooking, homework and other domestic routines are able to happen within the home and outside of the constraints of daylight, for example. At a more affective level, the object of the RDP house thus materialises particular imaginaries of and orientations towards futurity: it manifests a better life and a better future (Dubbeld, 2017). This is particularly visceral in practices

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of intergenerational transfers of ownership. Unlike social housing in many other parts of the world, the RDP programme was premised on the direct transfer of title to benefciaries. This was intended to increase social mobility, not only through access to collateral but also the ability to pass on wealth. But the cycles of debt in which many poor people fnd themselves, only defer into the future the uncertainty and precarity of the present. The model of state transfer as a one-off wealth transfer does not necessarily equate to social and class mobility, and the result is often an experience of stuckness (Bradlow, Bolnick and Shearing, 2011; Lemanski, 2011). However, in the context of economic uncertainty RDP benefciaries are often counter-intuitively less precarious than members of the new middle class who rely on commercial mortgages to access housing opportunities (Wafer, 2019). Nevertheless, the housing programme in post-apartheid South Africa is implicated in experiences of waiting and of entropy as the houses themselves are often of poor quality (Dawson, 2014; Dubbeld, 2017). In response to these experiences of stuckness, many people have recast their RDP house not as a source of securing the future but as a ready-at-hand resource for enduring the present (Shapurjee and Charlton, 2013; Gunter, 2014; Wafer, 2019). Refections Time and infrastructure are entangled in a host of ways. The valorisation or lack thereof of certain types of historical infrastructure leads to its erasure or museumifcation, which in turn shapes the City and the points of access. Infrastructural projects can thus also be connected to imagined futures or constructed pasts, and the sense of either joining these states or being left behind. State provision of resources also constructs its own set of temporalities around questions of waiting and the normative construction of waiting (Oldfeld and Greyling, 2015), as well as links to the past through issues of redress. The material production of resources such as houses has impact on the micro-scale and the embodied experience of time, providing or denying opportunities for other activities through its use. However, the infrastructures in question may also assist by providing important ways though which precarity is survived and dealt with in the present and every day. The dialectical forging of people and infrastructure Framing The approaches explored thus far are primarily rooted in a dualistic ontology of people and infrastructure. More relational understandings facilitate recognition and exploration of a wider range of infrastructural urban inequalities. Countering the reduction of infrastructure to its physical components, Simone (2004b) introduced the concept of “people as infrastructure”. This situation arises out of inequality, as it is the poor who transform themselves into infrastructure as a way to compensate for inadequate state provision and to reduce their visibility to the state. People are also seen as part of physical infrastructure as their labour produces and sustains it (Mitchell, 2014) and workers actively enrol their own bodies to

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compensate for physical infrastructure’s decay and malfunctioning within the context of neo-liberalisation (Fredericks, 2014). Scholars working within the new materialist approach recognise “thing-power” (Bennett, 2010) and attribute agency to the physical material of infrastructure (Appel, Anand and Gupta, 2018; Lawhon et al., 2018). The co-constitution of people, nature and infrastructure is also central to infrastructures of urban inequality. As Mitchell notes: The building of infrastructure is a politics of nature: the planning and provision of its grids and networks must negotiate questions of the scarcity, pollution, depletion, fair distribution, and subsequent disposal of available reserves. At the same time, nature is produced in infrastructures. (Mitchell, 2014: 438) As Loftus (2012) argues, people’s sensuous labour is integral to the transformation of nature and production of infrastructure, and through this labour people transform themselves. Infrastructural inequality is also bound up in the production and reproduction of power-laden identities and social relations. Approaches that see people and infrastructure as ontologically discrete focus on how unequal distribution of physical infrastructure entrenches and exacerbates pre-existing spatialised inequalities of class, race and gender. Specifc attention is paid to the more negative effects of inadequate infrastructural provision for women due to the gendered division of labour (Ferguson and Harman, 2015; Parikh et al., 2015). More dialectical approaches reveal how specifc articulations of race, gender, class, nationality and space, and the ideologies that underpin them, shape the form that infrastructure takes in different spatio-temporal conjunctures, and are simultaneously reshaped through this infrastructure (Miraftab, 2004b; Truelove, 2011; Doshi, 2017; Appel et al., 2018; Fredericks, 2018; Siemiatycki, Enright and Valverde, 2019; Samson, 2019a). Feminist political ecologists add new layers to these debates by illuminating how infrastructural inequalities become embodied through daily infrastructural practices (Truelove, 2011; Loftus, 2012; Doshi, 2017). While there is a large literature on how infrastructure interpellates people into subjectivities formed for them by the state, increasing attention is paid to how people resist these framings, forge their own collective identities, and infuse infrastructure with new meaning (Loftus, 2012; Appel et al., 2018; Fredericks 2018). The relationships between gender, race, class, nationality and infrastructure are deeply political and have much wider political ramifcations. Example RECLAIMERS: RECYCLING INFRASTRUCTURE, RECYCLING INEQUALITY

Historically, formal municipal waste management in South Africa focused exclusively on the collection and disposal of waste. Urban recycling systems were created by informal reclaimers who saw value buried in the trash and began to

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support themselves by extracting recyclable materials from rubbish bins and landflls to sell into the recycling value chain. The very existence of reclaimers is predicated on inequality that renders some people so wealthy that they can carelessly discard items of value, and some so impoverished that they will salvage these materials from trash. In South Africa, this inequality and the work of reclamation are deeply racialised due to the entrenched colonial and apartheid divisions of labour and wealth. The fact that residents continue to throw recyclables out with trash even though they know this means the reclaimers will need to plunge into their flth to extract them can be traced to the persistence of racist colonial assumptions that black bodies are polluted and pollutable. Meehan (2014) argues that residents in Tijuana create water infrastructure through combining common household items. In a somewhat similar fashion, through embodied and epistemic labour, reclaimers forge an entirely new networked infrastructure that connects disparate items (garbage bins, trolleys, scales) and places (wealthy suburbs, landflls, buyback centres, recycling plants) in a manner that enables them to transform waste back into value (Samson, 2019b). This is an infrastructure born in the context of violence and sustained through struggle; reclaimers face ongoing harassment as their bodies are seen to not ft into the wealthy suburbs where they salvage the most lucrative materials. Reclaimers face a new form of infrastructural violence as municipalities ignore them and implant a new formal recycling infrastructure on top of the reclaimers’ informal one. The formal recycling infrastructure articulates physical infrastructure, space, subjectivities and embodiment in profoundly different ways to the reclaimers’ infrastructure. Municipal bylaws facilitate the movement of formally collected recyclables through the streets. Recycling workers’ bodies are understood to have a legitimate (although maligned and racialised) place in the suburbs, and the central body is that of bourgeois white and black elite company owners. The dismissal of the reclaimers and their infrastructure hinges on the denigration of reclaimers, their framing as human waste, and the dismissal of informal infrastructure and economic activities as atavistic (Samson, 2019b). However, the reclaimers’ infrastructure is not completely erased. Refusing to be completely dispossessed and fghting to maintain their incomes, reclaimers transform the temporality of their infrastructure to work around the formal infrastructure. The forging of identities is also central to reclaimers’ contestation of the formal infrastructure as they reject their framing as human waste and mount an ontological insurrection to be seen and engaged as epistemic and political actors (Samson, 2015). Refections The example of reclaimers’ recycling infrastructure establishes the centrality of identities, power relations and embodiment to the production, reproduction and contestation of infrastructures that arise out of and seek to transform urban

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inequality. Employing this understanding of infrastructure illuminates multiple forms of inequality that coalesce in infrastructure, identifes the need for a complex and multi-faceted approach to challenging infrastructural inequality, and opens up new avenues and forms of struggle.

Conclusion Our approach enables us to make contributions at three levels. First, it demonstrates the utility of using infrastructures of inequality as an overarching conceptualisation through which to analyse the production, reproduction, contestation and transformation of inequality. Second, our methodology of utilising “thinking tools” expands the ways in which we study, investigate and consequently understand infrastructures, opens up unexpected connections and allows us to productively play with these ideas. Thus we are able to look into a dialectical and complex set of relations. Third, this enables us to understand infrastructures as complex entwinings and crystallisations of physical infrastructure, identities, power, embodied practices, history, temporality, aspirations and struggle. Imbuing our work with a relational conceptualisation means that we are able to work across scales, times and disciplines, and so also offers a novel methodology which ties together motivations, actors, agents, power analyses and material outcomes.

Notes 1 The comment was made during the SA–EU “Shukuma Mzansi International Conference” held at the Sibikwa Community Arts Centre as part of the SA-EU Dialogue Facility, March 2018. 2 These are fully serviced, stand-alone units that are provided free of charge to households who earn below a specifc threshold. 3 A mixed-income housing development to the north-west of Johannesburg.

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10 Social reproduction at end moments Land, class formation and rural economies in Ghana and South Africa Akua O. Britwum and Ben Scully Inequality beyond incomes: class formation and social reproduction in rural Ghana and South Africa The recent proliferation of research on inequality is dominated by quantitative analyses of income inequalities. Indeed, in many contexts the term inequality is virtually synonymous with income inequality. This focus is not without warrant, as income is a major determinant of well-being almost everywhere in the world. This refects the reality that some forms of capitalist social relations play a signifcant and usually dominant role in almost all regions and countries in the world. However, as obvious as this fact is, it is equally true that nowhere is income, and in particular wage or money income, the sole determinant of well-being. Although capitalist social relations are dominant, commodity production and wage labour are not equally distributed throughout the world economy. The separation of workers from the means of production and the resultant dependence on wage income – in short, full proletarianisation – was a hallmark of capitalist development in much of the global North. However, in many parts of Africa colonial accumulation strategies did not involve a complete separation of peasant commodity producers from the means of production. In some places, such as Ghana, the colonial state depended on the appropriation of independent peasant production, revenue from which was used to feed mining and manufacturing industries. In other regions, such as Southern Africa, preserving the peasant economy was seen by colonial and apartheid governments as important for maintaining the low wages of migrant workers in the mining and later manufacturing industries. A tie to the rural community ensured that the rural household was responsible for the reproduction of labour. Features of the rural economy shaped by colonial rule persist, underlying deeply embedded forms of inequality, which include but are not limited to income inequality. Despite many changes from the colonial era policies that originally established these patterns, certain rural communities in Ghana and South Africa continue to experience persistent decline. Exacerbating the decline is the fall (and in Ghana, the near collapse) in formal capital-intensive gold mining and an absence of viable rural employment opportunities to supplant the colonial migratory trends between rural agrarian and urban extractive communities. In the face

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of the reduction of viable urban employment and rising rural poverty the rural– urban income fows are reversing, creating certain linkages that appear to belie the viability of urban centres as income-sending sources for the rural poor. This situation raises questions about the economic relationship between rural and urban areas, and the class and gender inequalities that are created and reinforced by this relationship. These questions were the subject of a vibrant literature on the political economy of rural areas in Africa in the 1970s, which argued that rural areas were essential to the proftability of capitalism on the continent (Meillassoux, 1972; Wolpe, 1972; Burawoy, 1976). However, the model of a rural subsidy to urban accumulation that this literature described has long been the subject of debate. Even in the heyday of this literature, there were those who critiqued the connection between rural areas and capital accumulation as deterministic and giving too much explanatory power to capitalist economic processes (Mafeje, 1981; Posel, 1991). Today, views about the role of rural areas are, if anything, even more wide-ranging and often contradictory. There are some who characterise rural residents as super-exploited while others theorise them as “surplus populations” who serve little direct purpose to global capitalism (Amin, 1972; Cliffe, 1976; Li, 2010). Some see de-agrarianisation, where households and livelihoods are increasingly oriented towards urban and wage-based income sources (Bryceson, 1996), while others see a resurgence of the rural peasantry as the key political class of the near future (Moyo and Yeros, 2005). Our approach to these debates starts from the assumption that to understand the structure of inequality in rural areas of the African continent today, it is not enough to simply measure income, or lack thereof, nor to analyse rural residents’ role as wage workers and/or petty commodity producers. While money poverty is certainly a pressing issue for many rural areas of Ghana and South Africa, the class structure of these regions cannot be read directly either from individuals’ money incomes nor from their relations to the capitalist mode of production. Instead it is necessary to focus on the interrelation between the multiple sources of livelihood that individuals and their households rely on such as land, migration, informal-sector business, remittances and social grants. In order to make sense of this complex network of livelihood sources, this chapter draws on the recent revival of work on Social Reproduction Theory (SRT) (Luxton and Bezanson, 2006; Ferguson and McNally, 2015; Moore, 2015; Bhattacharya, 2017). Building on Marxist–Feminist debates in the 1970s and 1980s, this work provides new insights into the connections between waged and non-waged production and social reproduction. In short, it looks at class and inequality from a perspective that includes but extends beyond incomes and relations to production. The SRT approach does not require a priori assumptions about the political or economic position of the rural residents we are focusing on. We avoid questions about whether rural residents are peasants or a rural proletariat, for example. Instead, we use SRT to focus attention on the support networks between rural and urban residents and how these contribute to the reproduction of humanity, and by this the contingent reproduction of society as a whole.

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In particular, our focus in this chapter is on two “moments” of social reproduction in Ghana and South Africa, childcare and retirement. In the classic work from the 1970s on the political economy of rural Africa, these two moments were seen as key to the economic function of the rural areas in the colonial and apartheid accumulation strategies. This work theorised that the reproduction of the next generation of wage workers took place largely in the rural areas, and relied on the unpaid labour of mostly female rural residents. In a sense, the subsidy described by the subsidy thesis was, in large part, a childcare subsidy. However, the rural areas also were seen to have a second key role. When migrant workers passed their prime working age, they could return to the rural areas where they would have access to non-wage sources of income to support them in their old age. Of course, much has changed about the political economies of Ghana and South Africa since the subsidy thesis was formulated in the 1970s. However, we think that the two moments of childcare and retirement continue to provide useful lenses to analyse the economic position of residents of the rural areas. They focus our attention on largely unpaid, gendered labour, used in performing the most basic economic functions – reproducing and maintaining human life. Despite the changes that have taken place, these two moments at the beginning and end of life remain essential to the development of workers for capitalist enterprises, such as the mining operations of Ghana and South Africa. However, they are simultaneously independent of their functional benefts to capital. As such, they provide a perspective on forms of inequality and class formation that take account of both structural economic forces and the agency of individuals and families. This chapter draws on data from two empirical studies the authors1 conducted in Ghana and South Africa. The Ghana study was conducted in the Upper West Region, specifcally in the Jirapa, Nadowli-Kaleo and Dafama-Bussie-Issa Districts, involving a total of 120 individual interviews and two group interviews covering members of Village Savings and Loans Schemes (VSLS). Our interests were households with returned migrants from or family members in Obuasi, the gold-mining town in the Ashanti Region to which individuals from the Upper West Region have historically migrated for work since the colonial era. The Upper West Region in Ghana has a high percentage of persons living below the national poverty line. It also has one of the highest levels of inequality in Ghana and is reported as having the largest increase in inequality since the 1990s. About 88 per cent of households rely on crop production for their livelihoods (Ghana Statistical Service, 2014). In South Africa the study area was the village of Sabalele near Cofmvaba in the Intsinka Yethu Local Municipality within the Chris Hani District in the Eastern Cape province, the birthplace of Chris Hani. Historically, labour was sent to manufacturing industrial cities such as Cape Town, Port Elizabeth and East London, and secondarily to mining and manufacturing in Johannesburg. A total of 105 household interviews as well as a group discussion with local offcials at the Sabalele Development Centre were carried out. The Eastern Cape is the

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poorest province in South Africa. According to Statistics South Africa (2016), 12.7 per cent of individuals were in “multi-dimensional poverty” in 2016. Our analysis of the role of rural areas in social reproduction is organised as follows. In the section after this introduction, we discuss how economic restructuring in the neo-liberal era has transformed economic activities in the rural areas. This restructuring has remade the context in which social reproduction takes place. The next section discusses kinship and income redistribution networks used in the study communities to support social reproduction at the two moments under discussion. Our interest in changing gender orders and women’s status is presented in the third section, where we discuss alterations in women’s roles and emerging social gender relations. By way of conclusion, in the fnal section we discuss the signifcance of the emerging differences between Ghana and South Africa for the daily and intergenerational reproduction of labour at the two moments at the beginning and end of life.

Economic restructuring: precarious employment and insecure rural incomes Since the subsidy thesis was formulated in the 1970s, there has been a dramatic transformation in the political economy of Ghana and South Africa. This section focuses on three important changes which affect the moments of childcare and retirement, namely the increasing precarity of urban wage employment, a decline in the security of rural incomes, and an overall trend towards urbanisation. We draw on data from our feldwork in the Upper West Region and the Eastern Cape to illustrate how these changes have affected the lives of rural residents. Precarious employment Precarious employment is by no means a new phenomenon in either South Africa or Ghana (Scully, 2016b). However, important changes have taken place which changed the relationship of rural migrants to the urban wage labour market. Throughout much of the mid-twentieth century the labour market and wage jobs in mining and manufacturing were highly regulated. In both countries there were formal institutions for recruiting workers from the rural areas and placing them in contracted employment in mines and factories of the urban areas. Beginning in the 1970s and continuing into the present, wage work has become increasingly informal, unregulated and diffcult to access. South Africa has consistently had one of the highest levels of open unemployment in the world. The offcial unemployment rate has ranged between 20 and 30 per cent throughout the entire period of the post-1994 democratic government. The “expanded” unemployment rate, which includes discouraged work-seekers who want work but have given up actively searching, is consistently above 30 per cent. Employment, even for those who fnd it, is also no guarantee of economic security. According to Scully’s (2016a) calculations of 2012 national household survey data, at least 42 per cent of employed individuals in South Africa could

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be said to be in precarious employment. In Ghana open unemployment is less common in rural than in urban communities, and formal wage work is extremely limited, covering only 12 per cent of the working population (Baah-Boateng, 2013; Ghana Statistical Service, 2014). Over 88 per cent are in private informal or agriculture-related informal employment, characterised by low wages and lacking major employment benefts like access to pensions and subsidised health care (Ghana Statistical Service, 2014; Anuwa-Amarh, 2015). This is refected in our own data. In Ghana, the majority of our respondents,2 about 83 per cent, had worked previously as waged employees, mostly in mining concerns (67 per cent). A few (5 per cent) held public sector jobs like teaching or working with the local government authorities. However, these tended to be individuals from an older generation who had returned after their wagework career. For young migrants today, very few would fnd the same formal wage opportunities, especially in the mining sector. Those working-age individuals involved in mining whom we spoke to or learned of from family members were invariably engaged in informal or artisanal mining, which is referred to as galamsey in Ghana. Roughly 40 per cent of our respondents worked for money income, either in wage jobs or self-employment; 75 per cent of these were in non-waged employment, mainly farmers (55 per cent) or running small businesses. Those who had waged employment were in low income and casualised positions such as labourers or security personnel. In South Africa there were more households (28 per cent) in which no member had previously held a job, refecting the higher incidence of open unemployment in comparison to Ghana. Of the 72 per cent who had worked, almost half (47 per cent) had only ever had casual or temporary jobs. Only 26 per cent of the households had a member working for money income. In contrast to Ghana, commercial agriculture was the least common activity in South Africa, accounting for less than 5 per cent of money-earning respondents. The relative lack of formal employment in both study communities shows the effect of the increasing precarity of work on livelihoods in rural households. The ideal image of a rural household with urban migrant members sending remittances was very rare. Those households that had urban members rarely counted on them for regular remittances, and in fact it was common for rural households to send support to urban members as they searched for jobs or attempted to establish self-employment activities, a point we will return to below. Insecure rural incomes Given the lack of wage opportunities both locally and for migrant relatives, it is not surprising that agriculture is one of the main economic activities in both areas. But in both countries the neo-liberal era has seen rural agricultural incomes become more insecure even as wage-earning opportunities have also declined. In South Africa, small-scale rural agriculturalists have long faced serious challenges to economic viability, even before the neo-liberal era. The colonial and apartheid systems in South Africa systematically undermined independent rural

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economic activity among black residents in order to compel a steady supply of migrant labour for the urban mining and industrial sectors. One important result was that agricultural production became highly concentrated in the hands of a small number of large-scale, capitalist and white-owned corporate farms. This concentration has continued, and even increased in the post-1994 period (Mather, 2005; Ngonini, 2007; Davids and Meyer, 2017), further limiting the possibilities of rural households to gain a livelihood without accessing the mostly urban-based wage-earning opportunities. One of the goals of Ghana’s frst comprehensive development plan after independence, the seven-year development plan, was to make agriculture the base of economic growth with a two-pronged target – producing raw materials for industrialisation and food for domestic consumption to stall high import bills. A number of collectivised large-scale production modes were planned, like state-owned plantations, farmer co-operatives and workers’ brigade farms. Northern Ghana was slated for producing food crops and therefore attracted policy attention. An elaborate support system was set up for peasant farmers as well. This included farming equipment, chemicals, fertilisers, and improved seeds and farm animal breeds. State-controlled farm distribution outlets not only ensured the delivery of subsidised inputs but also maintained control over quality and safety of the inputs. State-controlled marketing bodies were introduced but were more successful in regulating cocoa marketing (Gyimah-Boadi, 1989). The fall of the Nkrumah regime led to the progressive decline of collective and public-supported large-scale farming. Adjustment-related policies like privatisation of inputs and withdrawal of subsidies undermined peasant farming. This, coupled with the lowering of tariffs, brought peasant farmers producing for sale into competition with global large-scale producers like rice and poultry farmers in the United States (US) and tomato farmers in Italy (Britwum, 2013). Despite the challenges, agricultural activity remains widespread in rural Ghana. In our research, nearly all participants (93 per cent) carried out some agriculture-related activity, either for subsistence or income. Thus, 55 per cent reported earning money income from their farming, through cultivating crops and/or raising animals. Main crops grown in order of importance were maize, groundnuts, beans, yams, millet, rice and Bambara beans, for livestock, poultry (chicken and guinea fowls) as well as small ruminants like goats and sheep. Cattle-rearing, a more capital-intensive endeavour, was rare. A little over onequarter of respondents reported mainly subsistence production. Not only were respondents farmers, but 68 per cent lived with others who were also engaged in agriculture, cultivating crops and raising animals for consumption and sale. Very few (4 per cent) produced for sale only. Direct commodity production was therefore low in the research communities. In South Africa agricultural activities were much more limited than in Ghana. Households involved in some form of agriculture comprised 65 per cent. However, 57 per cent of these households kept no garden and instead only had a few low-maintenance animals such as chickens, goats and in a few cases pigs.

190  Akua O. Britwum and Ben Scully Only 7 per cent of respondents reported commercial agriculture on any scale, whether as a main activity or in addition to subsistence production. The disparity in agriculture in the two regions, and a major reason to explain this disparity, is made clear by Figure 10.1. In Ghana agriculture was the main income source for over half of residents. In South Africa, not a single household interviewed relied primarily on their own agricultural production. Instead, in South Africa, the most important source of income by far was government grants, at 74 per cent.3 The main income source for over half the Ghanaian respondents was farming, followed by pensions or grants and businesses. Just about 5 per cent relied on income from paid work (Figure 10.1). The government grant system has far greater coverage in South Africa in comparison to Ghana. In South Africa there is a means-tested old age grant which is available to all adults who qualify and are 60 years or older. In rural areas such as the part of the Eastern Cape where we conducted research, receipt of the old age pension is almost universal for age-eligible residents. In addition, there is a means-tested child support grant, which goes to the main caregiver of children under 18 years who live in low-income households. Again, this grant is widely administered in rural communities such as our research site. While the old age and child support grants constitute the large majority of grant income among our respondents, there are also a range of less widespread grants, such as those to support disabled people of working age and individuals fostering children. Overall these grants are the central economic resource supporting rural communities in South Africa. They are not high in value, but they are sufficient to meet the subsistence needs of recipients and often of their households at a very basic level. The availability

Ghana

South Africa

Remittances 11%

Self-employment 2%

Remittances 3% Piece work 5%

Other Sources 3%

Cant Tell 7% Wages 13%

Business 14%

Grants/Pension 74%

Agriculture 51%

Grant/Pension 17%

Figure 10.1 Main income sources by household. Source: Field data (2016/2017).

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of grants explains why more extensive subsistence agriculture is not common in rural South Africa. In short, rather than relying on their own production, which is both labourintensive and subject to the vagaries of weather, pests, theft and other threats to agriculture, many rural residents in South Africa rely on grant income for basic subsistence. The small rural town near the site of our research was home to a large formal supermarket owned by one of South Africa’s supermarket chains, and this was the main source of food for most residents in the area. This reliance on a formal supermarket was a sharp contrast to the Ghanaian case, where the major source of basic foods was residents’ own production. In our South African research site, many respondents reported buying a month’s worth of groceries each month on pension day, as groceries were less likely to be the target of thieves in comparison to cash. In Ghana social grants are less extensive but social policy has not been unknown, both current and in the past. After independence Ghana ran an elaborate system of state-supported social services, a direct outcome of its socialist leanings. They included free access to formal education, health care and heavily subsidised fuel and utility services. National policy orientation identifed agriculture a mainstay of the economy and selected the northern regions for special focus. This resulted in heavy subsidies for inputs, seeds, breed stock, fertilisers and pesticides, supported by extension services. The economic downturn that accompanied the overthrow of Ghana’s frst president, Kwame Nkrumah, and subsequent political instability seriously undermined the Ghana economy, pushing it to the International Monetary Fund (IMF) and the World Bank. Gold mining moved from public to private ownership and subsequent labour retrenchment led to a shrinking of waged employment options for people in the study communities. The health sector adopted the cash-and-carry system and agriculture services were privatised. The major social protection scheme in place before structural adjustment was the public pension scheme instituted in 1965 as a provident fund and in 1991 turned into a pension scheme titled the Social Security and National Insurance Trust (SSNIT), targeting mainly waged earners.4 A revised pensions act in 2010 added a third tier, allowing self-employed persons to join the scheme; the frst and second tiers require contributions from employers in addition to workers’ payments. Most of the existing social protection schemes, with the exception of pensions, were developed post structural adjustment, intensifying after Ghana signed onto the Highly Indebted Poor Country Initiative (HIPC). At the time of feldwork existing schemes included the National Health Insurance Scheme (NHIS) launched in 2003 to replace the cash-and-carry approach common in the structural adjustment programme (SAP) era. The NHIS is based on subscriptions, with premiums determined by the income of subscribers. Persons exempted from premium payments are children under 18 years, adults over 60 years and persons contributing to the public pension scheme (the SSNIT). The Ghana School Feeding Programme was introduced in 2005 to provide one hot meal per day to children in deprived communities attending public primary school and kindergarten. The Livelihood Empowerment Against Poverty (LEAP) Social Grant

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Scheme began in 2008. It is a means-tested facility providing monthly cash transfers to households, persons with disabilities and the aged. Household transfers are conditional; those to individuals are not. Other schemes are the Capitation Grant to public basic schools, the National Youth Employment Programme, the Integrated Agricultural Support Programme, Microfnance and the Emergency Management Schemes (Abebrese, 2011). The main social security schemes that participants in the study area reported benefting from were state-operated ones like employment-based pensions, the NHIS, LEAP and the School Feeding Programme. There was also the community-based contributory Village Savings and Loans Scheme (VSLS) (see Figure 10.2). Low pension coverage is explained by the number of participants who once worked as wage earners qualifying for old age pension. According to Ghanaian pension regulations, only persons who have contributed to the scheme for 20 years or more qualify. About 40 per cent of research participants previously employed as waged workers qualifed; the rest did not. Yet only 32 per cent reported receiving a pension. Included in the reasons for leaving work was ill health, reported by 14 per cent. Not all the illnesses qualifed for coverage under the NHIS. Other persons living with participants were covered by social security schemes such as the NHIS, pension, school feeding programme and fertiliser subsidies (Figure 10.2). The NHIS was what the most research participants benefted from. This section has described the changes which have remade the previously existing economic ties between rural and urban areas in Ghana and South Africa. It has argued that precarious work and insecure rural incomes have undermined the viability of rural-centred livelihoods. However, despite these changes, rural– urban ties remain important in a variety of ways. Household and broader kinship networks continue to act as conduits for redistributing resources, with important implications for social reproduction, and for childcare and retirement in particular. The next section draws on our data to describe the new forms of redistribution that underlie social reproduction in rural areas today. Other Fertilizer Subsidy School Feeding VSLS LEAP Pension NHIS No Grant Receive Grant

0.0

10.0

20.0

30.0

40.0

Others

50.0

60.0

70.0

80.0

90.0

Self

Figure 10.2 Grant or private pension status, Ghana. Source: Fieldwork (2016/17).

100.0

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Kinship and Income Redistribution Networks Kin and household-based redistribution has long been central to the livelihood strategies of rural residents of the Upper West Region and the Eastern Cape. In the mid-twentieth century the wages of migrant workers in urban mines and factories were never suffcient to fully support their rural kin. However, they did provide one of the only sources of cash income available, and so were essential for the purchase of both basic consumer goods (such as clothes, furniture, household tools and appliances) and larger investments such as new homes, cattle and tractors. Often migrant workers worked just long enough to acquire some specifc goods and longer-term investments before returning to the rural area for good. While those remaining in the rural homes received the benefts of the migrant’s cash goods, they also provided extensive and usually unpaid work towards both daily and intergenerational forms of reproduction. Of course, such economic relations among kin are never as instrumental as market exchanges, nor are they entirely altruistic and cooperative. Instead they involve both confict and cooperation. Today, the previous model of exchange has broken down, but kinship networks remain essential to the livelihood strategies of rural residents. In this section we explore redistribution networks by examining what is distributed as well as by whom, and to whom resources are sent and received among our research participants. In both countries we found that there was some degree of exchange and reciprocity within kin networks; however, such sharing was much more extensive in Ghana than in South Africa. In Ghana sharing of farm produce was reported by nearly 80 per cent of participants in our study, while a little over one-third sent money. In exchange, over 80 per cent of our respondents reported receiving money from kin based elsewhere. Interestingly, despite food-sending being so common, just under one-quarter of our Ghanaian respondents reported receiving food as a remittance. It appears there was a wider range of items received than supplied. In South Africa by contrast, only 30 per cent of households reported sending remittances of any form, and only 35 per cent reported receiving remittances. In all cases, the only form of support sent and received was money. In addition to material support, in both countries family networks were responsible for providing income-earning opportunities, especially access to waged employment or start-up capital for businesses or land for farming. In Ghana, about 24 per cent of research participants were able to secure waged employment through the efforts of a family member. Capital to start businesses depended on income distribution within the family, both immediate and extended. The composition of the 25 per cent of participants who owned small businesses, the main source of start-up capital, was in order of importance family members, spouses and children. Family members also helped to run the business as few of the businesses reported employing others. About 62 per cent were farming on land belonging to family members, usually their father’s. Another form of social support that we investigated in the Ghanaian case was social visits. In Ghana, social visits were a form of support more likely to be

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received than supplied. Social visits were seen as a form of support underlying the importance of social interactions to community. Employment decisions were also affected by family roles; thus, deciding to end paid employment could be motivated by the need to assume a position in the family or to provide support to aged parents. Well below one-third ended their wage employment because they had reached the age for retirement, just under one-quarter ended work to take care of family issues, like caring for sick parents or to assume the position of family or clan head. Most (61 per cent) provided the support in order to give their benefactors a sense of belonging, make them feel at home and just showing care. For the rest (39 per cent), it was more from a sense of duty. The players in Ghanaian distribution networks were family members, both receiving and sending. In order of importance for our Ghanaian respondents, they were children, other relatives, siblings, spouses and friends. The major link, however, was with children, either as recipients or senders. Children were more likely to send than to receive, while other relatives were more likely to receive than send. The support was provided either occasionally or infrequently. Those who sent support regularly did so either monthly, quarterly or annually. This is partly explained by the nature of the support sent, which was mainly farm produce. The forms of exchange within kin networks described here are essential, both materially and socially, to the daily and intergenerational reproduction of life in the Upper West region and the Eastern Cape. Having described both the external market-oriented sources of income and the internal networks of redistribution on which households depend, we now turn to the question of how reproductive labour and gender orders have been transformed in the neo-liberal present.

Social reproduction and emerging gender orders The transformations in the economic and social relations described in the previous two sections have also transformed the gender order in both regions, including the gendered division of labour and the gendered nature of social relations. To some degree, economic activities, and particularly paid economic activities, have become less gendered than in previous periods. Urban wage work was once largely the domain of men, and that is no longer the case. Women are as likely to migrate in search of work as are men. However, while the world of paid work has become, in a sense, less gendered, the world of unpaid work remains strongly associated with women. In most cases women are the main force holding together large households in the rural areas. Female household heads tend to have multiple levels of intergenerational family members, sometimes three or four, including aged parents, siblings, their children and grandchildren. These multigenerational living arrangements provided the context for caring at the two moments. Thus, at every point in time there were persons able to give care to household members in terms of new arrivals and the aged. Women’s role in retirement differed in the two countries, with the presence of state grants in South Africa being an important driver of the difference. In Ghana,

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where reliable state support in old age is absent, retirement from waged work did not result in complete dis-engagement from income earning. Complete retirement from active production only took place when health conditions rendered persons incapable. Aged women commonly earned their keep minding shops for their sons or daughters. Thus, not only did the household provide income-earning opportunities, they gave the aged a sense of belonging and usefulness. In South Africa, by contrast, retirement generally took place much earlier, often immediately when individuals reached age 60 and became eligible for the old age grant. In fact, we met one woman who had just moved back from the city at the age of 59 to prepare her rural homestead for her retirement. This “early” retirement was not a decision based on a desire for leisure or rest. Instead, it is in part an economic decision about the allocation of labour and resources across multiple spaces. Especially for those individuals who have a house in the urban area, returning to the rural area frees urban accommodation for members of the extended family in their prime working years. Meanwhile, the older “retired” person can support herself (or himself) in the rural area from the old age pension. In many cases, old age grant recipients even sent a portion of their grant to the urban area to support working-age relatives as they searched for secure wage employment. While this form of “retirement” was not exclusive to women, it was much more common for older women to report ties with relatives elsewhere than for older men. Women-headed households and “early” retirement are activities that are more common in the present than they were in the past, but they refect women’s longstanding association with reproductive work. However, women have also come to take a much more active role in primary income-earning activities. Some of these also refect “traditional roles”, especially when they take place in the rural areas. For example, in Ghana women have always had provisioning responsibilities towards household upkeep (Britwum, 2009). In our Ghanaian study communities, women had specifc responsibilities to contribute soup ingredients for the main meal. This is because, in subsistence households, women produced vegetables for household meals and sometimes had their own plots of land for this (Britwum and Akorsu, 2016). However, other economic activities of women, and particularly those that take place in urban areas, seem to be a refection of the declining association between paid work and male labour. Ngonini (2007), for example, makes this observation in his study of rural communities in the Mbizana Municipality of South Africa. He notes how women were increasingly taking up income-earning activities in the rural and more especially urban settings to provide for their households. Our fndings revealed that women were more likely to own small businesses in either the rural or urban communities. Such income-earning opportunities provided support for households that returned migrants had left in urban centres when they lost their mining-related employment. Such businesses provided additional income for the urban households even when male respondents were in active employment, but as employment disappeared, this “extra” work has come to be the primary money-earning activity of many households. In rural communities,

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where business opportunities are more limited, women’s income-earning was primarily related to agriculture. Besides the cultivation of soup vegetables and work on household farms, usually designated as their husbands’, women reared small ruminants; goats were their preferred livestock, providing income for investment. Income from women’s business or agricultural labour often serves as the main source of livelihood for households, even for “retired” men who are unable to fnd wage work. While the world of paid work has become increasingly feminised, there has not been an equivalent transformation in one of the main forms of unpaid reproductive work – that is, the care of children. In both South Africa and Ghana, childcare was predominantly the role of women. However, given working-age women’s increased participation in paid work, in both countries rural-based women provided childcare on behalf of younger women who had migrated in search of work. Many women in the Upper West Region offered support to younger women in Obuasi. The most critical period when women were seen to need care was immediately after childbirth. In fact, older women based in rural communities considered younger urbanbased women as incapable of looking after new-born babies. This support was not limited to one’s children alone, but extended to daughters-in-law as well. Some male participants in our study mentioned that their wives were in urban Obuasi helping their daughters or sons with childcaring. But the most glaring changing gender order is the fact of females living in urban Obuasi with school-going children while their husbands return to the rural Upper West Region. Schooling chances in Obuasi are deemed better than what is available in the rural communities and therefore there is a preference for keeping children in urban centres, even when waged work is no longer available to support family needs. Because women resort to trading in urban Obuasi, when male income earners lose their wage employment their wives’ income-earning activities support the family up to a point. In South Africa more successful urban migrants might also keep their children in urban areas. However, those with insecure and precarious urban work often rely on being able to send their children to rural areas, especially in their younger years. Many precariously employed or unemployed migrants live in informal settlements or shared rooms. Many respondents described these urban areas as unsuitable for children.

Parallels and variations in daily and intergenerational labour reproduction We set out in this chapter to explore how the multiplicity of rural household livelihoods facilitated social reproduction at two end moments of life, child care and aged care, drawing on fndings from two rural economic landscapes in Ghana and South Africa with distinctly colonial-induced urban connections. Our discussions so far have highlighted how adjustment-related employment losses have reduced the centrality of urban wage work as livelihood options for rural households. We have noted in addition the viability of the rural economies studied

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in terms of the livelihood mixes that rural dwellers were drawing on for human reproduction at the two aspects of our interest. In this concluding section, we draw out emerging similarities and differences from discussions so far, and point out the changes in rural–urban relations around income-earning options and how they are shaping gender and class inequalities. The similarities and differences we outlined between Ghana and South Africa give us insight into how inequality is shaped by both broad structural forces and local contexts. The increasing precarity of wage work is not unique to these two countries. It is to a certain degree a global phenomenon. However, the specifc effects of this structural change are mediated through local and regional historical experiences. Both Ghana and South Africa experienced forms of colonialism that intentionally undermined the economic independence and viability of certain rural areas. These actions were aimed at producing “labour reserves” which would supply migrant workers to the urban mining and manufacturing industries. (See Scully and Britwum, 2019, for a detailed discussion of the history of these two areas.) The result of these policies was that rural livelihoods in many of the poorest rural areas of these two countries became strongly dependent upon the urban wage labour market. As a result of this dependency, the declining security of wage labour affected these rural areas in particular ways, transforming not only wage incomes, but other economic actions such as agriculture, as well as the organisation of social relations relating to childcare and retirement. Thus, the levels of inequality and attendant livelihood options available in the two countries we observed were the outcome of the colonial settlement approach adopted. Another similarity between the two countries is that wage labour and the urban areas have become increasingly central to rural livelihoods, even as wage work has become more precarious. In the past it could be said that the rural area was the economic centre of rural households. Income from urban wage labour was often used to support long-term rural livelihoods – for example, when returning migrants invested in farm expansion or rural housing. Today, in many instances, this relationship has been reversed, with the rural area serving primarily as a base from which to support entry into the urban wage labour market. Evidence of this shift can be seen in the prevalence of what would in the past have been considered “reverse” remittances, from the rural household to urban kin who are searching for work or attempting to establish an urban business. Income redistribution within kin groups provided the basis for survival when income sources proved insuffcient. The players in the distribution networks, either sending or receiving, were both close and extended family members. Intergenerational household membership ensured more income sources, either from grants or direct economic activities as well as persons to care for children and the aged. The primacy of the urban and wage labour market in the two countries studied has also shifted a key aspect of the gender order. The division between the rural female space for reproduction and the urban male space of paid work has been blurred. Migration and urban income-earning activities are no longer strongly associated with men. Nevertheless, the traditional gendered division of labour persisted in both countries, making women responsible for childcaring and sometimes

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holding together several generations of family members in one household. Women were assuming greater responsibilities for household provisioning, making direct contribution to the family upkeep – the result of economic collapse and loss of male waged income. Women’s economic activities in Ghana and earnings in South Africa were the source of income for maintaining children in school. Women were migrating or relocating their dwelling units to cater for their children and children’s children. This also meant that women’s economic activities were important in shaping children’s educational opportunities. The increasing migration of women has created the need for new organisation of childcare activities, including sending children to live in rural areas with retirees, and women even taking children to urban areas while leaving men to tend to the agricultural work and upkeep of the rural home. However, we say that the associations between women’s work and men’s work has been blurred rather than completely transformed. Because even as women have taken on greater wage-earning roles, they remain the major actors carrying out both daily and intergenerational forms of reproductive labour. The similarities outlined so far refect the common experiences between Ghana and South Africa as post-colonial societies. However, there are also differences which refect the specifc local context of each country. Settler colonial rule in South Africa led to deeper de-agrarianisation to allow white settlers complete control over land, leading to the near complete destruction of peasant production. In Ghana the form of colonial accumulation was more dependent on the continued productivity of the rural areas. As such, dispossession and commercialisation of agriculture, while certainly present, did not proceed as far as they did in South Africa. This legacy can be seen in the continued importance of agrarian incomes in Ghana and their relative absence in South Africa. Key factors that differentiate economic activities in rural Ghana and South Africa include the presence of social grants in South Africa and the viability of peasant subsistence farming in Ghana. That is not to say that without social grants rural South Africans would necessarily be more involved in agriculture. They might choose instead to remain in the urban areas during retirement, even if prospects for wage income were very low. Social grants kept families together and allowed both rural and urban-based members to meet their needs in South Africa. Thus, as a source of a reliable income for older people and the smaller grants available for low-income children, social grants enable the use of the rural areas as a sort of refuge from the world of wage labour. Even though land featured in the social reproduction in both countries, the specifcities varied. Thus, households in Ghana have to give more consideration to the availability of labour in the rural area to sustain subsistence agriculture activities. Again, even though in both cases the rural was a preferred place for retirement and rural land provided the home for retirement, the main income source affected other retirement decisions like when one retired and women’s childcare-related residence at pension age. Retirement was earlier in South Africa, happening at the offcial retirement age, while in Ghana retirement was determined by one’s health status. Older women caring for children were more likely to be located in rural South Africa, while in Ghana they were tied to urban centres.

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So just as there are still distinct, if transformed, associations with female and male forms of labour, there are also distinctly rural and urban economic activities. In South Africa, agricultural income plays a minor role. As such, the rural area is not the site of a specifc form of “rural” work. The economic advantages of being in a rural area, such as the lower cost of living and access to free or low-cost housing, are not the result of some specifc kind of rural economic activity. They are instead the outcome of the historical legacy that has made certain rural areas of South Africa into labour reserves, or what could now be thought of as refuges to which individuals retreat when not engaged in paid work or are unable to do so, such as when disabled, in childhood or in old age. Rural–urban networks remain pivotal in social reproduction of rural households where colonial-induced migration had long served as a livelihood option. The changes are reversals in which possible rural or urban income-earning alternatives are available and the viability of reproductive services that households might be able to deploy in either the rural or urban space to facilitate the reproduction of household members. Thus, as a response to structural economic changes in urban wage work, respondents in our study communities show that rural residents utilise alternatives beyond direct income-earning livelihoods, relying on social networks to sustain human reproduction. In all the choices made, women’s labour in all forms plays a key role.

Acknowledgements The authors are grateful to the International Center for Development and Decent Work (ICDD), Kassel, Germany, for research funding.

Notes 1 The research team was led by Prof Edward Webster, University of the Witwatersrand, South Africa. Data gathering was supported by two graduate research assistants, Hikimatu Lalaki Awudu from the University of Cape Coast in Ghana and Hlengiwe Ndhlovu at the University of the Witwatersrand in South Africa. 2 As explained earlier, our focus was the experience of recent migrants. Most of our research participants (77 per cent) were therefore males; females comprised 23 per cent of the total. About 68 per cent were over 55 years. Formal educational attainment was low – only 8 per cent had been beyond senior secondary school and 51 per cent had no formal education whatsoever. 3 It should be noted that in both countries very few households relied on a single income source. Instead, households relied on a mix of multiple income sources. 4 See Abebrese’s (2011) work titled Social Protection in Ghana: An Overview of Existing Programmes and their Prospects and Challenges for a comprehensive overview of social protection schemes in Ghana.

References Abebrese, J. (2011) Social Protection in Ghana: An Overview of Existing Programmes and Their Prospects and Challenges. Accra: Friederich Ebert Stiftung.

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Amin, S. (1972) Underdevelopment and Dependence in Black Africa – Origins and Contemporary Forms. Journal of Modern African Studies, 10(4): 503–24. Anuwa-Amarh, E.T. (2015) Understanding the Urban Informal Economy in Ghana: A Survey Report. Accra: Friedrich Ebert Stiftung. Baah-Boateng, W. (2013) Determinants of Unemployment in Ghana. African Development Review, 25(4): 385–99. Bhattacharya, T. (2017) Introduction: Mapping Social Reproduction Theory. In Social Reproduction Theory Remapping Class, Recentering Oppression, edited by T. Bhattacharya. London: Pluto Press. Britwum, A.O. (2009) The Gendered Dynamics of Production Relations in Ghanaian Coastal Fishing. Feminist Africa, 12(2): 69–84. http://www.agi.ac.za/sites/default/fles /image_tool/images/429/feminist_africa_journals/archive/12/fa12_feature_britwum. pdf. Britwum, A. (2013) Market Queens and the Blame Game in Ghanaian Tomato Marketing. In The Food Crisis: Implications for Labour, edited by C. Scherrer and D. Saha. Mering, Germany: Rainer Hampp Verlag. Britwum, A. and A.D. Akorsu (2016) Qualitative Gender Evaluation of Agriculture Intensifcation Practices in Northern Ghana. Ibadan: IITA. https://cgspace.cgiar.org/bits tream/handle/10568/78479/AR_gender_ghana_dec2016.pdf?sequence=1 (accessed 28 August 2019). Bryceson, D.F. (1996) Deagrarianization and Rural Employment in Sub-Saharan Africa: A Sectoral Perspective. World Development, 24(1): 97–111. Burawoy, M. (1976) The Functions and Reproduction of Migrant Labor: Comparative Material from Southern Africa and the United States. American Journal of Sociology, 81(5): 1050–87. Cliffe, L. (1976) Rural Political Economy of Africa. In The Political Economy of Contemporary Africa, edited by P. Gutkind and I. Wallerstein. Beverly Hills, CA: Sage Publications. Davids, T. and F.H. Meyer (2017) Price Formation and Competitiveness of the South African Broiler Industry in the Global Context. Agrekon, 56(2): 123–38. Ferguson, S. and D. McNally (2015) Social Reproduction Beyond Intersectionality: An Interview. Viewpoint Magazine, 5. https://www.viewpointmag.com/2015/10/31/socia l-reproduction-beyond-intersectionality-an-interview-with-sue-ferguson-and-david -mcnally/ (accessed 28 August 2019). Ghana Statistical Service (2014) Ghana Living Standards Survey: Round 6. Accra: Ghana Statistical Service. Gyimah-Boadi, E. (1989) Policies and Politics of Export Agriculture. In The State Development and Politics in Ghana, edited by Emmanuel Hansen and Kwame Ninsin. London: Codesria. Li, T.M. (2010) To Make Live or Let Die? Rural Dispossession and the Protection of Surplus Populations. Antipode, 41(s1): 66–93. Luxton, M. and K. Bezanson (eds.) (2006) Social Reproduction: Feminist Political Economy Challenges Neo-Liberalism. Toronto: McGill-Queen’s Press-MQUP. Mafeje, A. (1981) On the Articulation of Modes of Production: Review Article. Journal of Southern African Studies, 8(1): 123–38. Mather, C. (2005) The Growth Challenges of Small and Medium Enterprises (SMEs) in South Africa’s Food Processing Complex. Development Southern Africa, 22(5): 607–22. Meillassoux, C. (1972) From Reproduction to Production: A Marxist Approach to Economic Anthropology. Economy and Society, 1(1): 93–105.

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Moore, J.W. (2015) Capitalism in the Web of Life: Ecology and the Accumulation of Capital. New York: Verso Books. Moyo, S. and P. Yeros (eds.) (2005) Reclaiming the Land: The Resurgence of Rural Movements in Africa, Asia and Latin America. London: Zed Books. Ngonini, X.A. (2007) Anxious Communities: The Decline of Mine Migration in the Eastern Cape. Development Southern Africa, 24(1): 173–85. doi:10.1080/03768350601166015. Posel, D. (1991) The Making of Apartheid 1948–1961: Confict and Compromise. Oxford: Oxford University Press. Scully, B. (2016a) From the Shop Floor to the Kitchen Table: The Shifting Centre of Precarious Workers’ Politics in South Africa. Review of African Political Economy, 43(148): 295–311. Scully, B. (2016b) Precarity North and South: A Southern Critique of Guy Standing. Global Labour Journal, 7(2): 160–73. Scully, B. and A. Britwum (2019) Labour Reserves and Surplus Populations: Northern Ghana and the Eastern Cape of South Africa. Journal of Agrarian Change, 19(3): 407–26. Statistics South Africa (2016) Poverty Trends in South Africa: An Examination of Absolute Poverty Between 2005 and 2015. Pretoria: Statistics South Africa. Wolpe, H. (1972) Capitalism and Cheap Labour-Power in South Africa: From Segregation to Apartheid. Economy and Society, 1(4): 425–45.

Part 5

Alternatives

As we seek to understand in greater detail how inequality is produced and reproduced in the global South, we also need to examine ways in which we can develop alternatives in order to overcome inequality. In particular, we need to be aware of power. We have to understand how power produces and reproduces inequality, and to identify sources of power which can be harnessed to confront and perhaps address inequality. The three chapters in this section look at different ways inequality can be addressed. The labour market is one of the principal sites of the reproduction of inequality. Nowhere is this more pronounced than in South Africa, which has the highest income inequality in the world. In Chapter 11, Patrick Belser, David Francis, Kim Jurgensen and Imraan Valodia examine the role that minimum wages can play in addressing inequality in income in the global South. Minimum wage legislation is essentially about mediating bargaining power between employers and workers, and is therefore an important tool for addressing inequality. Recent advances in economics have highlighted the importance of power in determining labour market outcomes, and have deepened our understanding of how labour markets function. The labour market refects and perpetuates unequal power relations between women and men. Since women dominate the lowest-paid and most insecure jobs, they are most likely to beneft from a national minimum wage. This chapter explores the evolution of minimum wages policy, and discuss the political and institutional processes which supported the recent implementation of a national minimum wage in South Africa. In Chapter 12, Edward Webster develops this focus on power relations in the labour market through a case study on the building of counter power in the workplace to challenge inequality in apartheid South Africa. He argues that the deepening of inequality in the workplace in post-apartheid South Africa arises from an ambiguous use of power. On the one hand, there were those who emphasised legal means of struggle and the long-term goal of institutionalising confict; on the other, there were those who aimed to overthrow state institutions under apartheid through insurrectionary and sometimes violent tactics of “ungovernability”. These ambiguous notions of power continue into present-day industrial engagement, underlining the limits of collective bargaining in the context of a declining industrial working class and a legacy of deep, racialised inequality.

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Finally, we move beyond the borders of South Africa and ask what steps need to be taken to address the negative consequences of the extreme polarisation evident in the global economy. The human rights framework provides an important entry point to address issues of global inequality and might be an entry point to address the structural issues behind existing inequalities, the role of international cooperation, and the need for global redistribution. The extraterritorial obligations of states with regard to economic governance are not limited to the regulation of corporate behaviour, but also include the policy choices governments make. In Chapter 13, Radhika Balakrishnan examines global inequality and the ways that human rights treaties and obligations might provide important policy guidance on how to address this growing trend.

11 Minimum wages Tackling labour market inequality Patrick Belser, David Francis, Kim Jurgensen and Imraan Valodia1

Introduction Minimum wages have become an important economic and labour market policy around the world, but there are particular areas of interest when we look at minimum wages in the global South. Economic and social policy in the South has for many years been concerned with poverty reduction due to the pressing concern of widespread absolute poverty. Recently, however, there has been increasing focus on the production and reproduction of inequality in the South, in addition to poverty. While poverty and inequality are similar in important ways, and often reproduced by common factors, there are important differences, too. The most important is that, while poverty is situational and characterised by a basic lack of services (Soudien, Reddy and Woolard, 2019), inequality is a relational phenomenon and the determining relational force is power. Much of the focus of inequality studies is concerned with identifying how and why inequality is produced and reproduced, and perhaps less attention is paid to how to challenge and overcome inequality. It is relatively uncontroversial that the labour market is a site of the production and reproduction of inequality – mostly, but not exclusively, inequality in income – and here we examine the role of minimum wages in confronting inequality in the particular context of the global South. Minimum wage legislation is, at its core, about mediating bargaining power between employers and workers, and is therefore an important tool for addressing labour market inequality. Theoretical and empirical advances in economics have highlighted the importance of power in determining labour market outcomes, and have deepened our understanding of how labour markets function. In recent years, developments in both labour market policy and in academia in the global South have allowed us to examine the role minimum wages can play in addressing poverty and inequality. This development has been supported primarily by signifcant shifts in the theory of and evidence relating to the role of minimum wages, both on employment and on inequality, and a changing global context, namely the rapid growth in low-paid work across the global South in recent decades. These changes have generated renewed interest in minimum wages as a labour market and economic policy tool. In this chapter we present a discussion on the role that minimum wages can play in addressing inequality, with a particular focus on the recent adoption

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of a national minimum wage in South Africa. On 1 January 2019, for the frst time in its history South Africa implemented a national minimum wage of R20 per hour (US$1.42 per hour according to the exchange rate at the time of writing). South Africa is, in some ways, typical of the global South. It continues to grapple with the economic and social consequences of colonialism, and the challenges of contemporary globalisation. Low-paid and precarious work is widespread, and poverty and inequality have signifcant gender and racial dimensions. Furthermore, it has the highest income inequality in the world (Sulla and Zikhali, 2018), as well as persistently high and rising unemployment (Statistics South Africa, 2016). This makes it a fascinating case study of the role of minimum wages in addressing inequality, and the careful balance which needs to be achieved by labour market policy. The national minimum wage in South Africa could raise the incomes of almost half of all working people in the country. Furthermore, in addition to its impact in relieving working poverty, it should have a signifcant impact on inequality among working people (Valodia et al., 2016). Of course, the exact impact of any labour market policy, including a minimum wage, depends on the institutional context, political economy and political confguration of a particular country. In this chapter we discuss how evidence from the global South has deepened our understanding of how economies respond to minimum wages and has made a valuable contribution to labour market theory. In the section which follows, we discuss the rise, fall and rise of minimum wages around the world, and examine how developments in theory, evidence and the changing global political economy have brought minimum wages forward as viable economic policy. In the succeeding section, we review the development and implementation of the national minimum wage in South Africa, and discuss its implications for our understanding of the role of labour market policy in addressing inequality. We add the dimensions of politics and power to the economic policy process, showing that supportive evidence and theory are necessary but not suffcient conditions for the successful adoption and implementation of a minimum wage policy.

The re-emergence of minimum wages in social and economic policy Minimum wages are defned by the International Labour Organization (ILO, 2014: 33) as “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract”. According to the ILO, the purpose of minimum wages is to protect workers against unduly low pay. They can help ensure a just and equitable share of income, and a minimum living wage to all who are employed and in need of such protection. Minimum wages can also be one element of a policy to overcome poverty and reduce inequality, including between men and women, by promoting the right to equal remuneration for work of equal value. As part of a human-centred approach to the future

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of work, the 2019 ILO Centenary Declaration for the Future of Work calls for “an adequate minimum wage, statutory or negotiated” in all member states. Minimum wage policies have been in place for a long time. The earliest minimum wage legislation dates back to 1894 when New Zealand introduced its Industrial Conciliation and Arbitration Act, which allowed the Court of Arbitration to settle industrial disputes by setting minimum wages that were binding for all workers (Starr, 1981). A few years later, Australia introduced similar legislation across a number of its states. In 1909, the United Kingdom legislated against “sweating” in four sectors, and this was rapidly expanded to over 40 trades. In the United States, the frst minimum wage legislation was introduced in 1912, to protect two groups of vulnerable workers – women and children. In much of Europe, by the 1930s minimum wage laws had been introduced in sectors with no collective bargaining and where wages were particularly low. During this early period, a number of developing countries also introduced minimum wage protection. In 1917, Mexico introduced legislation for minimum wages, which provided that: The minimum wage to be received by a worker shall be that which is considered suffcient, according to the conditions of each region, to satisfy the normal needs of his living, education and honest pleasures, considering him as the head of a family. (Starr, 1981: 3) This was the frst legal provision that specifcally linked labour market earnings with minimum living conditions, and made the state responsible for minimum conditions of living. India and Sri Lanka (then Ceylon) introduced minimum wages in the late 1920s. South Africa, through the passing of the Wage Act of 1925, introduced minimum wages but this only applied to white workers since black workers were not classifed as employees in terms of the labour legislation. A number of Latin American countries, including Costa Rica, Brazil and Cuba, introduced legislation in the 1930s. Although a number of countries introduced minimum wages in the early years of the 1900s, as highlighted, these were very much the exception. In the period after the Great Depression and the post-war period, however, more and more countries adopted minimum wage laws. This occurred across the world, and came to be combined with policies that encouraged the development of collective bargaining systems. Across developed and developing countries, throughout the 1940s, 1950s and the 1960s, minimum wages were very much the norm, and were aimed at providing a guaranteed minimum income to workers and providing protection for workers not covered by collective bargaining systems. By the 1980s, however, this trend had been reversed and minimum wage legislation fell out of favour. There were a number of reasons for this development. First, by the 1980s, the ideological foundation of economic policy had changed notably under the neo-liberal consensus. With the ascendency of ideas promoting the effcacy of markets, minimum wages were seen as artifcially interfering in

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market processes for wage determination. The ideology of the free market became entrenched, and was supported by neoclassical empirical studies which showed negative employment effects from minimum wages. Second, in most countries, trade unions began losing membership. For example, whereas in the 1950s some 36 per cent of workers in the United States (US) were unionised, this had fallen to 16 per cent by 1989. The effects of this can be seen in declining labour power and a concomitant reduction in labour share, which has been particularly welldocumented for the United States (Karabarbounis and Neiman, 2013). Third, in a number of countries, minimum wages had become too complex to implement effectively and, without proper adjustment processes, had become ineffective (Rani and Belser, 2012: 48). As a result, minimum wages fell out of favour with economic and social policy-makers, and labour market policy was focused elsewhere. In the 1990s, however, there began a marked about-turn in the approach to minimum wages as a tool for economic and social policy, and there has been a global trend toward the establishment or strengthening of minimum wages in many countries in order to address working poverty and inequality. The United Kingdom (UK) introduced a new statutory minimum wage with national coverage in 1999. Since the early 1990s, eight other members of the Organisation for Economic Co-operation and Development (OECD) have adopted a statutory minimum wage, including the Czech Republic, the Slovak Republic, Poland, Estonia, Slovenia, Ireland, Israel and most recently Germany (OECD, 2015). Many developing and emerging economies also established or strengthened minimum wages in this period. China adopted a minimum wage in 1994 and strengthened it in 2004; Brazil re-activated its minimum wage policy in 1995 and has accelerated the rate since 2005; the Russian Federation complemented its national minimum wage with regional foors in 2007; and Malaysia adopted a national minimum wage in 2013, followed by Myanmar and the Lao People’s Democratic Republic in 2015, and by Macao (China) in 2016. In Africa, before the adoption of the national minimum wage in South Africa, the most recent country to introduce a national minimum wage was Cape Verde in 2014. There are a number of reasons why minimum wage policies have re-emerged as an important instrument for labour market policy across the globe, and these are important for how we think about the role of minimum wages in addressing inequality. The process of globalisation since the 1980s has generated a large amount of low-paid and insecure work across the world. Moreover, inequality, especially in wage incomes, has grown substantially, and has reignited interest in policies to improve the incomes of those at the bottom end of the income distribution. This is especially the case as inequality itself is attracting increasing attention from academics, policy-makers and politicians around the world. There are, however, some particular characteristics of developing countries, which are largely in the global South, and there are new conversations emerging about the importance of minimum wages, for various reasons. One of the most important ones is that, in the late twentieth century, there was a large shift in policy towards social foors. These shifts have essentially been in social policy

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rather than labour market policy, in the form of guaranteed social assistance, such as the provision of state pensions and child benefts, for example. Minimum wages were largely been excluded from this shift because of negative views about labour market interventions, particularly relating to concerns about employment. One of the main exceptions to this was the National Rural Employment Guarantee Act (NREGA) in India. This is a rare case where a social foor has been constructed through labour market policy. More recently, the success of social foors around the world has begun to shift attention to labour market foors, and this has contributed to bringing discussions of minimum wages to the fore. We now look, in detail, at three important changes that have occurred over the last few decades which have supported the emergence of minimum wages as a viable social and economic policy – namely, theory, evidence and a changing global context. It is now relatively uncontroversial that not only do minimum wages have very small impacts on employment levels (if any at all) but, if implemented appropriately, they can be effective tools for combatting inequality (Belser and Rani, 2015). Our understanding of the labour market as segmented, and in fact comprised of many different labour markets, has also evolved in recent years (Fields, 2004; Fine, 2013). This segmentation of the labour market means that the impact of any minimum wage legislation is contingent on the characteristics of the labour market in question, and requires the conceptualisation of the labour market as far more complex than a single commodity market with a clearing wage. The theoretical advances on labour market segmentation help us better understand and predict the effects of the imposition of minimum wages (Fine, 2016). Their impact on inequality is achieved through various channels. The frst is a mechanical one – by raising the wages of the lowest earners, minimum wages compress the wage distribution and reduce the distance within median and mean wages, thus reducing inequality (Valodia et al., 2016; Levin-Waldman and Lerman, 2017). The second is through the effect that minimum wages have on bargaining power, and this is the area in which the most interesting theoretical work has been undertaken. Higher minimum wages can improve the bargaining power of workers, and have been found to reduce the income share of the highest earners in favour of those at the lower end of the wage distribution (Malloy, 2016). Recent evidence also shows that minimum wages can lead to wage increases in the informal economy, including through the so-called “lighthouse effect” (see for example Groisman, 2014, for the case of Argentina). Not only are these effects observable empirically, as discussed later in this chapter, but they are supported by theoretical work on the labour market. According to Belser and Rani (2015), minimum wages have been shown to reduce income inequality at the lower end of the wage distribution in a number of advanced economies, including the United Kingdom and the United States of America. For the global South, Maurizio and Vázquez (2016) fnd that minimum wages in Argentina, Brazil and Uruguay are equity-enhancing due to their compression of the lower end of the income distribution. One of the most signifcant developments in the economic literature is the acceptance that the labour market is not a commodity market in the neoclassical

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sense (Fine, 2013; Francis and Valodia, 2018), and it is now quite clear both empirically and conceptually that employers and employees have highly unequal bargaining power in wage-setting negotiations. Particularly in the low-paid, low-skilled section of the labour market, bargaining power lies predominantly (if not exclusively) with the employer. This recognition – that the labour market is often monopsonistic – is a very important development in the theory of labour markets, not least because it implies that, at some points in the labour market, the demand curve for labour could be upward sloping. In such cases, implementing a minimum wage would result in an increase in employment (Basu, Chau and Kanbur, 2007). Secondly, with reference to the implementation and effectiveness of minimum wages, recent theoretical work by Basu, Chau and Kanbur (2011) has developed the concept of the “endogenous enforcement”. Essentially, the theory posits that the actual employment effects of a particular minimum wage are dependent on the exact nature and confguration of relationships between employees and employers, depending on the particular institutional context. Perhaps more importantly, the theory shows that a carefully designed minimum wage policy can enable signifcant enforcement from workers themselves. Empirical economic work looking at minimum wages has generated new evidence which suggests that minimum wages, when properly conceived and implemented, have very small – if any – negative effects on employment levels. A set of very infuential empirical studies by David Card and Alan Krueger (1993, 1994, 2000, 2015) challenge the orthodoxy that minimum wages lead to a fall in employment. The authors examined the impact that an increase in the minimum wage had on employment in New Jersey in 1992. Using the neighbouring state of Pennsylvania (where the minimum wage was constant) to construct a natural experiment, the authors were able to assess the impact of the minimum wage on the fast food industry in New Jersey. They found that there was no indication that the increase in the minimum wage in New Jersey reduced employment (Card and Krueger, 1993). The importance of this fnding cannot be overstated as it began a sustained empirical investigation into the employment effects of minimum wages around the world. There is now a wealth of empirical evidence for both developed and developing countries on this issue. (For an excellent summary of the literature, see Isaacs, 2016.) While of course not all the studies agree, there is now a near consensus, both for developed and developing countries, that minimum wages have had “little detectable impact on employment” (Broecke, Forti and Vandeweyer, 2017: 384). The third development which has supported the re-emergence of minimum wages in policy is the changing global context. Around the world we have seen rapid growth in low-paid, insecure jobs, a phenomenon that is being accelerated through technological innovation. This has focused attention on the importance of wage foors in the labour market, in South Africa and across the global South. Discussions about minimum wages are taking place in a context when there is renewed scrutiny on the future of work around the world. There are two main areas of focus. The frst is the so-called fourth industrial revolution – a term for the current phase of technological advances and their impact on work. The

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second arises out of this, and that is a focus on the provision of basic income in a world where people are replaced by machines in the world of work. We argue that in this context, minimum wages have an important role to play. Across the world communities are adjusting to new ways of working, doing business, consuming goods, socialising and doing research as technological advances are changing how we do things. The International Labour Organization has taken a particular interest in the labour market consequences of this revolution and has set up a multi-year consultative process to focus on the future of work. We have to acknowledge that technology might be disruptive; new advances may result in extra costs for businesses as they adjust. There is also a chance that some of the advancements (particularly in artifcial intelligence) will impact negatively on employment levels. Many large frms in fnancial and other services are likely to change the composition of their workforces over the coming decades. But the focus must be on looking at innovative ways to ensure technology serves to support and empower workers, rather than replace them. We should also consider policies that will manage these transitions in the labour market so that society, rather than individual workers, bears the costs of adjustment. For technological change is not a process that is independent of social norms and regulations. Instead, these norms and regulations fundamentally shape both the process of technological change and its outcomes. In particular, we need to be careful that we do not assume a universalism in how technology will impact the world of work based on responses, so far, by developed countries. The renewed interest on the economic and social impacts of technological change have once again surfaced debates about the role of a universal basic income. While this is an important debate, a basic income is not a substitute for the important role that minimum wages play in mediating bargaining power within the labour market. A focus on a basic income instead of decent work avoids the important questions of ownership of the means of production, and the distribution of income in a world of increasing mechanisation and digitisation. The argument for a basic income concedes the bulk of the economic surplus to capital, instead of contesting and bargaining over the allocation of income and profts to foster a more equitable distribution of income and wealth (the labour movement in South Africa and around the world has been formidably successful in this regard). Production, whatever the level of technological progress, remains a social relation and there should not be deterministic thinking about the inevitability of the destruction of work. Furthermore, the argument for a universal basic income presupposes a world which does not yet exist – certainly not in the global South – a world where there are abundant resources, and the state and institutional capability to allocate them fairly and at a level that would be meaningful. The cost of a basic income grant, at a level that would allow households to live decently, appears to be beyond the capacity of fscal resources of states across the world, with the possible exception of countries with the highest gross domestic product per capita. Furthermore, given the globalisation of production and the ability of corporations to move in search of the most favourable tax regimes, a universal basic income would need to be part of a global pact that

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would ensure that the level of the universal basic income would be comparable across the world. Until this is achievable, minimum wages remain a powerful labour market tool to address both poverty and inequality. Indeed, the empirical evidence suggests that wages continue to play an increasingly important role as a source of income across the global South. In Argentina, Brazil, Mexico, China, India, South Africa and Turkey, wages account for more than 50 per cent of total household income (Rani and Furrer, 2016; International Labour Organization, 2018a). In this context, minimum wages continue to play an important role in addressing inequality. Of course, international experience shows that minimum wages should not be seen or used in isolation. Rather, they should be designed in a way that complements and reinforces other social and employment policies. While minimum wages can contribute to greater social justice and a more stable industrial relations climate, they are no substitute for economic growth, job creation, education policies or fscal policies such as taxes and transfers – all of which are key to sustainably increase the level of wages and to reduce poverty and inequality. According to the ILO (2007), an environment conducive to the creation and growth or transformation of enterprises combines the legitimate quest for proft and the need for development that respects human dignity, environmental sustainability and decent work. Minimum wages should also be seen as only one component of a broader wage policy, which includes collective bargaining and equal pay policies.

Politics, policy and process: a national minimum wage for South Africa In the previous section we discussed how minimum wages have become viable as economic policy, not only in developed countries but also in the global South. The evidence attesting to the effcacy of minimum wages is compelling. What has received less attention is how minimum wages are implemented, and the particular political and economic contingencies that support minimum wages as policy. In this section we move to a discussion of the politics, policy and process relating to the development and implementation of minimum wages by looking at the recent example of South Africa. While there are important similarities across countries in the global South, there are some important differences, too. South Africa has persistent and signifcant levels of unemployment, and a relatively small informal sector (ILO, 2018b). It is then perhaps somewhat surprising that South Africa implemented a national minimum wage of R20 (US$1.42) per hour on 1 January 2019. The process which led to its adoption provides valuable and interesting lessons on the policy, politics and process of labour market legislation, and the important role that evidence plays in policy-making. In this section we chart the process which led to the adoption of the national minimum wage in South Africa. South Africa has the highest income inequality in the world, with a Gini coeffcient for income of 0.63 according to the most recent World Bank data (Sulla

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and Zikhali, 2018). By far the largest driver of income inequality in South Africa is wages, with wage income accounting for 90 per cent of total income inequality (Finn, 2015); see Table 11.1. Inequality in income is not the full extent of the labour market problems in South Africa. Strikingly, the country has a very high and growing level of unemployment, as shown in Table 11.2. In 1994, the narrow unemployment rate was 20 per cent, rising to 26.7 per cent in 2000 and falling to 22.5 per cent by 2007 (ILO, 2017). By 2017, unemployment had reached 27.7 per cent. The outcome of high inequality and of high unemployment is a labour market which produces inequality in two ways. The frst is among those who work, and the second is between those who work and those who do not. The result is very high inequality at the household level. It is important also to refect on the nexus of poverty and household composition. Leibbrandt, Woolard and Lilenstein (2018) note that there are two dimensions to understanding household poverty – the characteristics and employment conditions of the worker (assuming that the household has a working member), and the composition of the worker’s household. Household composition means that even relatively high-wage earners can fnd themselves living in poverty due to the composition of their household, while low-wage earners may be lifted out of poverty through other income sources. Poor households occupy this vulnerable nexus, where large household size, low employment and low wages intersect. Not only are poor households the largest on average, at 5.2 people for households in quintile one, but their average monthly household income is extremely low. As a result, per capita incomes for those in quintile one are very low, and the disparity in per capita incomes between those in quintile one and quintile fve is marked; per capita incomes for those in quintile fve are 38.7 times larger than those in quintile one (Bhorat, 2016). Table 11.1 Components of income inequality in South Africa Absolute contribution Relative contribution Wages Government grants Remittances Investment Total

0.6 –0.01 0.06 0.01 0.66

90.65% –1.04% 8.53% 1.87% 100%

Source: Finn (2015).

Table 11.2 Unemployment in South Africa Indicator (%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Unemployment rate 22.50 23.70 24.90 24.80 24.90 24.70 25.10 25.30 26.70 27.70 (narrow) Source: Statistics South Africa (2017).

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In 2014 the national minimum wage was put onto the policy agenda on the initiative of the Congress of South African Trade Unions (Cosatu), the country’s largest trade union federation. South Africa has a range of progressive labour legislation including the Labour Relations Act of 1995 (LRA), the Basic Conditions of Employment Act of 1997 (BCEA) and the Unemployment Insurance Act of 2001. The LRA regulates the organisational rights of trade unions, and promotes and facilitates collective bargaining at the workplace and at sectoral level, the protection of workers from unfair dismissal, strikes and lockouts, workplace forums and alternative dispute resolution. The BCEA governs the relationship between employer and employee by setting minimum regulations which must be adhered to, such as the right to maternity and other forms of leave, maximum working hours and so on. The Unemployment Insurance Act governs employer and employee contributions to the Unemployment Insurance Fund (UIF), and provides for paid maternity and parental leave as well as unemployment insurance. The labour legislation covers all workers – in households and in frms – and creates a framework for a decent work agenda. Vulnerable workers have added protection through sectoral determinations which empowers the Minister of Labour to determine working conditions and wages of workers in sectors where bargaining councils are weak or non-existent and where workers are most vulnerable to exploitation. Protection for domestic workers was recently increased by a Labour Court judgment that their exclusion from the protection afforded by the Compensation for Occupational Injuries and Diseases Act (COIDA) is unconstitutional. In addition to the legislation, a host of bodies were established in democratic South Africa to enforce and monitor these new rights of workers, such as the Commission for Conciliation, Mediation and Arbitration (CCMA), the Employment Conditions Commission (ECC) and the Employment Equity Commission (EEC). Despite all of these institutions and policies, however, the frst two decades of democracy saw an increase in both unemployment and inequality (Statistics South Africa, 2016; Sulla and Zikhali, 2018). The country had introduced a social grant scheme which saw a signifcant reduction in poverty levels but, despite a growth rate of 3.2 per cent per year between 1994 and 2008, levels of inequality did not decrease. Economic growth also failed to address the unemployment crisis in the country. By 2014 the offcial unemployment levels (as opposed to the expanded defnition which includes disillusioned job seekers) was over 25 per cent. Jobs that were being created were often temporary, insecure jobs, aided by a massive growth in labour brokers. The expanded unemployment rate is now estimated at 37 per cent (Statistics South Africa, 2019). Unemployment has been increasing consistently each quarter, with thousands of retrenchments across many sectors of the economy. Over the past 25 years a number of attempts have been made to stem job losses, but with little apparent success.2 At the start of South Africa’s democracy, the trade union movement played a leading role in the establishment of the country’s social dialogue institution, the National Economic Development and Labour Council (Nedlac) which aims to address socio-economic problems through policy engagement. Nedlac differs

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from many other social dialogue institutions in two signifcant ways. First, agreement is by consensus only. Also, the composition of the institution differs from most other countries, where most social dialogue organisations are tripartite, in that civil society is the fourth partner. However, civil society is only represented in one of the four policy streams, which deals with development issues. Civil society is not represented in the policy areas of labour market, trade and industrial policy, or public fnance and monetary policy, although it is an equal partner in the governance structures. The South African political landscape is further defned by a Tripartite Alliance between the ruling African National Congress (ANC), the South African Communist Party (SACP) and Cosatu. The debate about the strategic value of a trade union movement being in alliance with the governing political party resurfaces at every election, and the ANC has made numerous resolutions around job creation to address the concerns of its alliance partners, but with little success. In many ways, the trade union movement, along with civil society, is thought of as the sector that was decimated after 1994 when many of its leaders moved into government positions. The engagements around the national minimum wage did not see a strong drive by the NGO sector on issues such as the care sector and the informal sector, and the process largely lacked a gendered approach to using the minimum wage as a tool to address inequality. Nedlac was mandated by the Presidency in 2014 to engage on the national minimum wage policy, and to fnalise a recommendation on the level of the minimum wage and an implementation plan to be tabled in Parliament. A conference in October 2014 agreed to separate issues of the minimum wage and labour relations stability into two separate streams. In 2015 Nedlac hosted a panel of international experts who presented the South African social partners with technical evidence of their experiences of developing and implementing a national minimum wage. The task team used this as a resource in their engagements. A year later (and two years after the mandate from the Presidency), the task team had made almost no progress, and then Deputy President Cyril Ramaphosa appointed an Advisory Panel to break the deadlock at Nedlac and to present a clear proposal on a national minimum wage. The Panel engaged with the Nedlac social partners, researchers and interested parties, and examined the various pieces of research that informed constituency positions. Because of the urgency to reach agreement on a level, the Panel was given three months to conclude its work; most of what was recommended from this process was agreed to and eventually formed the basis of the National Minimum Wage Act of 2018. The scope of the Advisory Panel’s work was confned to the introductory level of the national minimum wage and the composition of the body which would monitor implementation and oversee impact evaluation. Because of its short timeframe, the Panel was unable to deliberate on a number of related issues including wage inequality, social wage policy, small business support, and the welfare sector and care work. The Panel proposed a national minimum wage of R20 per hour, and a new institution, the National Minimum Wage Commission, to oversee implementation and monitoring of the minimum wage. This recommendation

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was based on a careful and thorough review of all the available evidence, both in South Africa and from around the world. The proposal of the Panel, which was incorporated into the National Minimum Wage Act, did not see a uniform coverage of R20 per hour for all workers. It was agreed that the vulnerable sectors of agricultural workers, domestic workers and workers in the Expanded Public Works Programme (EPWP) would start at a lower rate of R18 (US$1.27) per hour, R15 (US$1.06) per hour and R11 (US$0.78) per hour respectively; this was to be increased incrementally to the level of the national minimum wage. The domestic and agricultural sectors have always been poorly represented, in part because the geography of workplaces has made it diffcult to organise these workers. This has left workers vulnerable to exploitation, and in these sectors wages are so low that even bringing them up to the R20 per hour at the beginning would likely result in massive job losses. Although these workers are now on a path to earning the national minimum wage, it is likely that challenges of monitoring and compliance will continue. The Department of Labour (DOL) has around 1,400 inspectors but out of the 3,000 referrals for minimum wage disputes to the CCMA in the frst 4 months of 2019,3 only 9 were referred by DOL inspectors. Civil society organisations and trade unions are weak in most of the vulnerable sectors, which effectively puts the burden on individual workers themselves to ensure that their wages comply with legislation. The CCMA has set up a dedicated department to manage queries and complaints, but the National Minimum Wage Commission was not fnalised at the time of enactment and so no clarity has been shared with the public around exemption processes, tip-off lines or reporting. Implementation of the national minimum wage is a challenge that all social partners will need to address; the government has largely failed to embark on a big media and awareness campaign around enactment and implementation of the policy. The business community has stated that while they encourage their members to comply, they are not an enforcement body and cannot guarantee enforcement. Implementation challenges notwithstanding, the national minimum wage in South Africa has the potential to move almost half the workforce closer to a living wage (Valodia et al., 2016). This of course does not necessarily impact on the gender wage gap, and there are currently no policy interventions about capping executive salaries. It is also not yet clear what, if any, will be the impact on employment. At best, the minimum wage will add to other policies aimed at pulling people out of extreme poverty. Coupled with other policies in the pipeline like Comprehensive Social Security and discussions on closing the wage gap, it has the potential to be an effective tool to eradicate the high levels of inequality in South Africa. One of the political lessons of the national minimum wage process is the importance of designing a clear process from the beginning, particularly the research component. This allows parties to work from the same terms of reference and to engage with evidence that will address concerns and serve to bring about the most acceptable solutions for all parties. Secondly, the failure of the social partners to fnd consensus on the level of the minimum wage, which necessitated the appointment of an Advisory Panel comprised of experts who were not part of the social

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partnership at Nedlac, raises the question about whether or not this approach strengthens or weakens the policy engagement, and it certainly demonstrates the risks involved in a process based on consensus between social partners. Third, following the minimum wage agreements, and the relatively high level of public attention which accompanied it, there was a tendency of all parties, particularly the government, to focus on the adoption of a minimum wage and little attention on the need to create public awareness about the new minimum wage. There was very little publicity on 1 January 2019, which was the offcial implementation date of the policy. Finally, the process shows the importance of attention to institutional details, which include the need to fnalise the National Minimum Wage Commission at the time of implementation, enforcement, and monitoring and review. What remains an important victory is that the legislation is now in place to raise the salaries of 47 per cent of workers in South Africa (Valodia et al., 2016). There is still an opportunity to build greater monitoring and evaluation mechanisms, and for all the social partners to put more weight behind implementation.

Conclusion In the past three decades, minimum wages have found new favour as labour market and economic policy instruments of choice, both politically and among academics. The minimum wage debates, globally and in South Africa as recent examples, show the important nexus between evidence, theory and policy. In the contested space of the politics of policy-making, examining the minimum wage allows us to interrogate the interactions between ideology, evidence and policy action. A new consensus has emerged, that the impact of minimum wages on employment is contingent on country-specifc factors, the level at which the wage is set, and the institutional confguration and political economy of a particular country (Belser and Rani, 2015). Minimum wages are particularly interesting when we think about inequality in the global South. Here, with a few exceptions, low pay is extensive, and the labour market is central to the production and reproduction of inequality. As we have argued, many states in the South do not have the capacity of the welfare states in the North to undertake substantial economic interventions to reduce inequality. In the absence of this state capacity, minimum wages can play an important role in addressing inequality by raising incomes for the poorest workers. The evidence that minimum wages can achieve this is compelling. Of course, successful implementation of minimum wages requires state capacity, but it does not require the welfare state apparatus necessary to affect redistribution after the fact. Instead, minimum wages alter the structure of the economy by transforming the wage distribution itself. The case of the implementation of a minimum wage in South Africa is interesting for several reasons. First, it highlights the importance of politics and process in economic policy-making and implementation. Second, it emphasises that for labour market policy-making, the particular political and intuitional context matters: the role of Nedlac was central to the successful negotiation and adoption

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of the national minimum wage. Finally, the appointment of an Advisory Panel, and its extensive reference to the economic evidence of minimum wages, highlights the important relationship between policy and evidence. The minimum wage process in South Africa was informed by the wealth of evidence, and theoretical advances relating to minimum wages around the world, and particularly in the comparable global South. This evidence moved the process of social dialogue away from an ideological battle and grounded it in the empirical realities of modern minimum wage regimes. The politics, policy and process of the implementation of the minimum wage in South Africa is thus a fascinating study of how impactful labour market policy can be developed and implemented.

Notes 1 The views presented in this paper do not necessarily refect the views of the International Labour Organization. 2 These attempts include two Presidential Job Summits and a Growth and Development Summit; the adoption of the Industrial Policy Action Plan (IPAP), which set up numerous Special Economic Zones across the country to promote industrial development leading to more job creation; the Training Layoff Scheme, which would train workers who were about to be retrenched in other skills so they could be absorbed elsewhere in the labour market; the Community Works and Expanded Public Works Programmes, which would give work opportunities (not jobs) to unskilled, unemployed job-seekers; and the Employment Tax Incentive Act, which gave tax breaks to companies that employ young job seekers, albeit at lower wages. 3 These data were presented to the National Minimum Wage Commission in Q2, 2019.

References Basu, Arnab K., Nancy H. Chau and Ravi Kanbur (2007) Turning a Blind Eye: Costly Enforcement, Credible Commitment and Minimum Wage Laws. IZA Discussion Paper 2988. Bonn: Institute of Labour Economics. Basu, Arnab K., Nancy H. Chau and Ravi Kanbur (2011) Contractual Dualism, Market Power and Informality. DP8485. CEPR Discussion Paper. https://ssrn.com/abstract=1890008 (accessed 20 April 2019). Belser, Patrick and Uma Rani (2015) Minimum Wages and Inequality. In Labour Markets, Institutions and Inequality, edited by Janine Berg. Cheltenham: Edward Elgar. https://do i.org/10.4337/9781784712105.00013 (accessed 20 April 2019). Bhorat, Haroon (2016) Investigating the Feasibility of a National Minimum Wage for South Africa. http://www.ilo.org/ilostat/faces/oracle/webcenter/portalapp/pagehierarchy/P age3.jspx?MBI_ID=2&_afrLoop=4957141712613&_afrWindowMode=0&_afrW indowId=loeqoumvd_1#!%40%40%3F_afrWindowId%3Dloeqoumvd_1%26_afrLo op%3D4957141712613%26MBI_ID%3D2%26_afrWindowMode%3D0%26_adf.ctrlstate%3Dloeqoumvd_33 (accessed 12 March 2019). Broecke, Stijn, Alessia Forti and Marieke Vandeweyer (2017) The Effect of Minimum Wages on Employment in Emerging Economies: A Survey and Meta-Analysis. Oxford Development Studies, 45(3): 366–91. doi:10.1080/13600818.2017.1279134. Card, David and Alan Krueger (1993) Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania. Cambridge, MS: National Bureau of Economic Research.

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Karabarbounis, Loukas and Brent Neiman (2013) The Global Decline of the Labour Share. Quarterly Journal of Economics, 129(1): 61–103. Leibbrandt, Murray, Ingrid Woolard and Kezia Lilenstein (2018) In-work Poverty in South Africa: The Impact of Income Sharing in the Presence of High Unemployment. In Handbook on In-work Poverty, edited by Henning Lohmann and Ive Marx. Cheltenham, UK/Northampton, MA: Edward Elgar. Levin-Waldman, Oren M. and Paul Lerman (2017) Is the Minimum Wage an Effective Response to Income Inequality? Challenge, 60(6): 574–95. doi:10.1080/05775132.201 7.1399635. Malloy, Liam C. (2016) The Minimum Wage, Bargaining Power, and the Top Income Share. Forum for Social Economics, 49(1): 75–98. doi:10.1080/07360932.2016.1155468. Maurizio, Roxana and Gustavo Vázquez (2016) Distribution Effects of the Minimum Wage in Four Latin American Countries: Argentina, Brazil, Chile and Uruguay. International Labour Review, 155(1): 97–131. doi:10.1111/ilr.12007. Organisation for Economic Co-operation and Development (OECD) (2015) Focus on Minimum Wages After the Crisis: Making Them Pay. Directorate for Employment, Labour and Social Affairs, OECD. http://www.oecd.org/social/Focus-on-Minimum-W ages-after-the-crisis-2015.pdf (accessed 21 April 2019). Rani, Uma and Patrick Belser (2012) The Effectiveness of Minimum Wages in Developing Countries: The Case of India. International Journal of Labour Research, 4(1): 45–66. Rani, Uma and Marianne Furrer (2016) Decomposing Income Inequality into Factor Income Components: Evidence from Selected G20 Countries. ILO Research Paper 15. Geneva: International Labour Offce. Soudien, Crain, Vasu Reddy and Ingrid Woolard (2019) Poverty and Inequality in South Africa: The State of the Discussion in 2018. In Poverty and Inequality: Diagnosis Prognosis Responses: State of the Nation, edited by Crain Soudien, Vasu Reddy and Ingrid Woolard. Pretoria: HSRC Press. Starr, Gerald Frank (1981) Minimum Wage Fixing: An International Review of Practices and Problems. Geneva: International Labour Offce. Statistics South Africa (2016) Labour Market Dynamics in South Africa, 2015. Pretoria: Statistics South Africa. Statistics South Africa (2017) Poverty Trends in South Africa, 03–10–06. Pretoria: Statistics South Africa. Statistics South Africa (2019) Quarterly Labour Force Survey: Quarter 4 2018. Statistical Release P0211. Pretoria: Statistics South Africa. http://www.statssa.gov.za/publicati ons/P0211/P02114thQuarter2018.pdf (accessed 15 July 2019). Sulla, Victor and Precious Zikhali (2018) Overcoming Poverty and Inequality in South Africa: An Assessment of Drivers, Constraints and Opportunities. Washington, DC: International Bank for Reconstruction and Development/The World Bank. http:// documents.worldbank.org/curated/en/530481521735906534/pdf/124521-REV-OUOSouth-Africa-Poverty-and-Inequality-Assessment-Report-2018-FINAL-WEB.pdf (accessed 12 March 2019). Valodia, Imraan, Debbie Collier, Ayabonga Cawe, Mamokete Lijane, Siphokazi Koyana, Murray Leibbrandt and David Francis (2016) A National Minimum Wage for South Africa. Johannesburg: Nedlac. http://new.nedlac.org.za/wp-content/uploads/2016/11/ NMW-Report-Draft-CoP-FINAL1.pdf (accessed 2 March 2019).

12 Building counter power in the workplace South Africa’s inequality paradox1 Edward Webster

Introduction Thomas Piketty (2014: 39) introduces his classic study of inequality with the massacre on 16 August 2012 of miners at the Marikana platinum mine in the North West Province of South Africa. For Piketty, “the tragedy of Marikana” reminds us that “what share of output should go to wages and what share to profts … has always been at the heart of distributional confict” (Piketty, 2014: 39). For Kate Alexander (2018: 270), on the other hand, in her critical refection on Piketty, Marikana was not just about inequality and a massacre; it was also an “egalitarian movement”. “Platinum workers fought for, and secured”, she argues, “a fat-rate increase, not a percentage adjustment, and this was consciously aimed at reducing income differences among workers, as well as closing the ‘apartheid wage gap’ more broadly”. Above all, for Alexander (2018: 274), Marikana showed that “having been foored by vicious repression, ordinary working people were able to fnd the resources to continue their struggle, and, eventually, to win. It will be battles like this that halt the advancing juggernaut of inequality and injustice”. By foregrounding the role of ordinary working people, Alexander was shifting our attention from the causes and consequences of inequality to the strategies on how to reach a more egalitarian society. Milanovic (2016: 4) draws a useful distinction between two types of forces driving greater equality: malign forces (wars, natural catastrophes and epidemics), and benign forces (more widely accessible education, increased social transfers, progressive taxation). Importantly, inequality for these writers is not just about the uneven possession or quantitative difference in which individuals, groups, or other entities are placed, writes Manoranjan Mohanty (2018). “It is about the conditions that allow certain groups to dominate others. Inequality is a power relationship” (Mohanty, 2018: 8). Adopting a similar approach, Michelle Williams (2020: 6) writes that “Fundamental to building these alternatives is building counter-power that is able to challenge the formidable concentration of power within corporations and their states”. In this chapter I draw on the rise of labour in apartheid South Africa to illustrate how counter organisational power was built and how this led to innovative institutions in the labour market with the potential to challenge workplace

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inequality.2 I show how, in the wake of the 1973 strikes, black workers began to build a counter power in the workplace that began a process of reform of the industrial relations system. These reforms allowed for the formal recognition of trade unions for black workers and their right to join the established collective bargaining system. If the 1973 strikes led to the reconfguration of the industrial relations system and the emergence of an independent workers’ movement for the frst time in South Africa, it was the massacre at Marikana nearly 40 years later that called into question the sustainability of the new post-apartheid workplace order (Alexander et al., 2012). To understand the rise of labour I draw on what has come to be known as the power resources approach (PRA). I identify four dimensions of workers’ power – structural, associational, institutional and societal – that were central to the rise of labour (Schmalz, Ludwig and Webster, 2018; Schmalz, Ludwig and Webster, 2019; see also Figure 12.1). Drawing on the approach outlined above I show how counter power was built incrementally, initially by winning recognition at the plant level of the democratically elected representatives of workers. But from the beginning there were two contesting approaches to the exercise of power that sharply divided the labour movement.3 On the one hand, there were those who emphasised legal means of struggle in their long-term goal of ending apartheid; they eschewed involvement in alliance politics. This strategy stood in marked contrast to the political and military struggle being waged by the African National Congress (ANC) and its internal allies in the labour movement. Their strategy aimed at overthrowing state institutions through sometimes violent tactics while at the same time building power from grass roots. Side by side with the existence of this approach was the emergence of grassroots movements in the townships, initially on the East Rand (now Ekurhuleni),

Structural (“Economic”) power Marketplace bargaining and workplace bargaining power

Institutional power Securing influence in institutional set-ups

Associational power Stability/vitality of unionisation

Societal power

Coalitional power and discursive power

Figure 12.1 Trade union power resources. Source: Schmalz, Ludwig and Webster (2018:120).

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South Africa’s industrial heartland. As Sitas argues, one needed to go beyond the workplace to identify “distinct working-class cultural formations, formations that were part of a profound social movement emerging on the East Rand” (Sitas, 1983). For Sitas, culture became a concept that he used to explain the supportive social networks that formed the bedrock on which workers collectively resisted their oppressive working and living conditions. The historical existence of a powerful movement of national liberation with support among workers as well as grass-roots social movements (Webster, 1979)4 complicated the organisational narrative of the PRA, suggesting the need to broaden the notion of societal power to include the power of social movements. Movement power, write Williams and Satgar (2020: 7), refers “to social movements, mass actions, protests, and other forms of collective action that popularise demands and put pressure on the state and corporations”. A distinctive feature of the global South is the existence of anti-colonial movements of national liberation and powerful social movements outside of established institutions. Williams and Satgar correctly suggest that “movement power is distinct from associational power in that the power does not lie in strong, coherent organisations, but rather through collective organising and networks of solidarity”. But rather than seeing movement power as a separate source of power, I see it as a way of deepening societal power by linking workplace demands to broader community struggles (Webster, 1988). To understand the signifcance of these strategic debates on the use of power, the PRA should not be understood as a universal and static formula, “but needs to be located within the strategic environment in which workers fnd themselves. As the historical, political and social context differs, the use of power also takes different forms” (Schmalz et al., 2018: 124). I argue that in South Africa, societal power – and the power of movements of national liberation in particular – has from time to time overshadowed associational (or organisational) power, leading to “insurrectionary tactics of ‘ungovernability’ while building grassroots organs of people’s power in the form of street committees and people’s courts” (Von Holdt, 2003: 22–3).5 Instead of societal power strengthening organisational power in the workplace, leading to a vital interaction between the four sources of power, the institutions created by the new labour regime became disconnected from the organisations that created them. Without a direct connection with the grass roots, “unions risk scenarios such as representation gaps or a loss of infuence over daily politics” (Schmalz et al., 2018: 121). I conclude by addressing what David Francis and I term the South African inequality paradox – namely, in spite of a powerful internal democratic movement driving opposition to inequality under apartheid, as well as progressive legislation and a constitution that foregrounds social and economic rights, inequality in post-apartheid South African workplaces has deepened (Webster and Francis, 2019).6 The question posed in this chapter is whether this outcome is the result of labour’s failure “to walk through the door when it opened” or whether it points to the need for a more context-dependent Southern approach to building counter power in the workplace.7

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Part one Important structural changes took place in the South African economy during the 1960s which prepared the ground for the emergence of new opportunities for black workers. The economy had expanded rapidly in the wake of the crushing of the liberation movements in the wake of the Sharpeville massacre of 21 March 1960, bringing important changes in the relations of production. The introduction of large-scale assembly-line production had increased the structural power of a new class of semi-skilled machine operators. The emergence of the assembly line linking together the workforce – so that when the line stopped every worker necessarily joined – was a key factor facilitating the growth of rank-and-fle militancy, refected in the rise of a shop-steward movement (Webster, 1985: 230–60). Structural power rests on the power to cause disruption (disruptive power), and as such interrupts or restricts the valorisation of capital (see Figure 12.1). It is mobilised by the refusal to continue working. This workplace bargaining power is not always exercised centrally, but sometimes spontaneously by smaller groups. This is what happened in January and February 1973 when over 100 000 workers went out on strike in the Durban/Pinetown area, breaking a decade of virtual industrial quiescence. The transformation of the division of labour caused by the rise of the mass production assembly line was a familiar story in the auto industry of North America (Arrighi and Silver, 1984). But the racial division of labour in South Africa created peculiar conditions, which provided additional sources of grievance for black workers and possible bases of collective action. Racially discriminatory practices affected every aspect of the employment relationship, creating what has been called the apartheid workplace regime. As Von Holdt argues from his case study of a steel mill: Apartheid existed not only in the residential and social segregation of the town … but also in the social and occupational structure of the Highveld Steel workplace. The workplace regime allocated skill and authority on a racial basis. The racial structure of power was characterised by racial insults and racial assault. This apartheid workplace regime had deep historical roots in the evolutions of the labour regime, work practices and racial structures of power within settler colonialism, and was underpinned by the educational and labour market policies of apartheid. There were no mechanisms for workplace incorporation of black workers: on the contrary, the broader political and social exclusions of blacks was mirrored by workplace exclusion and oppression. (Von Holdt, 2003: 27) The intersection of brutal working conditions and direct racial oppression in the workplace and in society served as a source of deep discontent among workers and increased their sense that the political and economic system was fundamentally

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unjust. Of course, there was some upward social mobility of black workers during apartheid, but it was an upward-foating colour bar. As workers of colour were promoted, white workers were promoted above them, thus retaining the system of white domination and black subordination in the workplace (Bezuidenhoudt, 2005: 82). These conditions created an ideal base on which workers could build industrial unions. The unoffcial erosion of race-based job protection was accompanied by a growing awareness and confdence by black workers in their economic power, encouraging efforts to revitalise and develop black trade unions. In contrast to structural power, the associational power of trade unions requires an organisational process to take place and actors to emerge who are capable of producing and executing collective strategies. (See Figure 12.1.) Gradually, a few older, independent black unions as well as newly formed ones began testing their strength, suffering numerous defeats but also gaining important victories. Growing labour militancy and deepening township protests culminating in the Soweto Uprising of 1976 propelled the state into an equivocal and hesitant reform project. Labour law reforms, introduced by the Wiehahn Commission of Enquiry between 1977 and 1979, opened civil society, allowing for the formal recognition of African trade unions within the offcial industrial relations system for the frst time in South African history. They sought inclusion of all workers within the industrial relations system and decided to register under the amended Labour Relations Act (LRA) giving workers legal rights – what we call institutional power. (See Figure 12.1.) Legal rights legitimised the unions and they grew rapidly. In the 1980s a powerful shop-steward movement emerged among South Africa’s metal workers, rooted in the idea of worker control (Webster, 1985: 231–60). They had begun, in 1981 to go beyond the factory foor to wider issues related to the reproduction of the workforce. These actions ranged from resistance, to the demolition of shacks in Katlehong, to demands for worker control over pension funds. This was to culminate in the November 1984 mass stayaway in Gauteng led by unions, students and township residents. Unions were reaching out to those sectors outside the formal proletariat and developing forms of social movement unionism or societal power. (See Figure 12.1.) The alliance that the unions were forming was a form of coalitional power enabling them to activate students and community organisations for mobilisation and campaigns. Coalitional power is based on boosting one’s own associational power by harnessing the resources of other players or on the trade union’s ability to mobilise support from these actors. Relevant literature cites social movements, social associations, non-governmental organisations, students and churches as typical allies. (Schmalz et al., 2018: 122)

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I have argued that the emerging unions drew on the four power resources illustrated in Figure 12.2. But these resources are a potential; for them to be realised you need strategies and this requires certain capabilities. Lévesque and Murray (2010, 2013) identify four of these capabilities. The frst is the ability to learn from the past and to diffuse learning throughout the organisation. In the past, attempts at organising black workers were crushed because they were seen as “political”. To overcome this obstacle, these new unions embarked on a systematic educational programme which included drawing lessons from the past. They focused their organisational efforts on the workplace in order to develop decentralised structures that could survive state repression. The newly formed Federation of South African Trade Unions (Fosatu) successfully combined a radical vision with a strategy of reform; we called this strategic use of power “radical reform” (Adler and Webster, 1995: 76). In pursuit of the long-term goals of ending apartheid and creating a socialist economy, the unions emphasised legal means of struggle. There were two important components we argue, to Fosatu’s approach to the strategic use of power: “(1) democratic processes to win voluntary consent from members for mobilisation and for restraint when necessary; and (2) tactical fexibility, which included a capacity to distinguish principles from tactics and to choose those tactics most likely to succeed, including negotiation and compromise” (ibid: 79). Tactical fexibility, or what the PRA calls organisational fexibility, is the second crucial capability for effectively realising labour power. A third crucial capability is framing, the ability to develop new strategies by defning a proactive and autonomous agenda. “In its emphasis on political

POWER RESOURCES Institutional Power Labour Relations Act Amended 1979

Societal Power

Trade Unions established

1984 Stay aways 1973 Strikes

Structural Power

Figure 12.2 The application of the power resources approach (PRA).

Associational Power

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independence, tactical fexibility and compromise with employers and the state, the union strategy stood in marked contrast to the political and military struggle then being waged by the ANC and its internal allies” (ibid: 81). This political strategy aimed at the state’s overthrow through a national democratic revolution: a sudden shift in the balance of power in which the old ruling class would be destroyed altogether. This strategy of revolutionary rupture stressed abstention from involvement in the apartheid state and all its institutions on the assumption that the leadership of any subject group would be co-opted and the status quo would remain. In contrast, the labour movement had developed a strategy of engaging rather than boycotting the state from an independent and disciplined power base resting on strong workplace structures, held together through practices of democratic accountability. The difference between these two strategic visions was to cause innumerable conficts between the emerging unions on the one hand and the exiled ANC and the developing internal political movement on the other. Indeed, the ANC and its trade union ally, the South African Congress of Trade Unions (Sactu), were initially highly critical of the independent unions and their strategy, having abandoned worker struggle for the armed struggle. The growth of union membership was paralleled in the townships and the schools by the development of powerful social movements such as civic organisations and student and youth congresses. From 1979, these movements launched community-linked unions, rejecting the strategy of radical reform in an attempt to bring workers into the national democratic struggle. By the mid-1980s, these new community-based formations in civil society began to challenge the state directly, at both local and central levels, creating conditions of near insurrection. As Von Holdt (2003: 92–3) describes in his ethnographic study of “transition from below” in Highveld Steel, “The comrades used violence against the repressive order imposed by the state. They also used coercion to impose a new order in the community, policing collective actions such as rent or consumer boycotts, and punishing those who broke ranks”. Indeed, Von Holdt writes, with increasing boldness workers forged and asserted their own notion of order and discipline: “The guys in the strike committee would be our police, checking on those who go to work when everybody is on strike, or when there is a stay-away. They would take you and sjambok [whip] you for doing that” (Von Holdt, 2003: 129). Violent intimidation had become widespread. This deepening crisis sharpened the differences in strategy between those in the labour movement committed to radical reform and the growing political movement; since 1983 the latter had taken the form of a national umbrella body named the United Democratic Front (UDF). In particular, the unions were forced to re-evaluate their policy of political non-alignment or face isolation in society. In the end, the industrial unions committed to radical reform forged an alliance with these social movements, and actively participated in the series of general and political strikes from late 1984. In 1985, drawing on the fourth capability, intermediation, a consensus was established between these two main currents in the labour movement and in December 1985 they merged to

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form Cosatu, signalling a strategic compromise in which the independence of the industrial unions was acknowledged while the new federation committed itself to participation in the national democratic struggle under the leadership of the ANC (Lambert and Webster, 1988). But it was a fragile consensus. “Opposition to alliance politics was to emerge openly in the months following the launch of Cosatu among a section of the leadership who were critical of the federation’s new direction. They charged that this new direction was ‘misdirected’, and that this ‘rush’ to espouse ‘alliance politics’ might result in a situation where years of painstaking organisational work might be swept aside, leaving the working class again without democratic trade unions” (Webster and Lambert, 1988: 33). The political differences that divided Cosatu in its frst eighteen months of existence were to become narrower. A strategic compromise had been forged on how transition to a post-apartheid society could take place through a broad anti-apartheid alliance. Implicit in this broad-front conception of unity was the view that class contradictions were secondary to the national democratic struggle (Fine and Webster, 1989: 272). In a post-apartheid society, we concluded, these class contradictions were likely to come sharply to the fore as the new state embarked on the task of national development.

Part two During the late 1980s and early 1990s the labour movement played a key role in the transition to democracy. Through the disciplined and strategic use of its power, it effectively challenged inequality in the workplace and more broadly in the labour market. Through combining mass action with negotiations, it was able to build a powerful movement that entrenched workers’ rights in the law and created new labour market institutions giving labour a direct voice in policymaking. Trade unions had grown rapidly since the recognition of trade union rights for black workers; between 1979 and 1997 union membership increased from 700,000 to nearly 3 million, an increase in union density from 15 per cent to 58 per cent (Macun, 2000). The introduction of a new labour regime was a major step towards a more inclusive and participatory industrial relations system. Indeed, South Africa was celebrated globally for its “miracle” victory over apartheid and praised by the International Labour Organization (ILO) for its successful transition to a more rights-based and cooperative industrial relations system. Some innovations, such as the workplace forums, did not take off as workers already had workplace representation through shop-steward committees. But vulnerable workers, who were previously excluded from the industrial relations system – such as public sector, domestic and farm workers – now had the same rights as all other workers.8 However, although new labour legislation had been passed and innovative institutions introduced that laid the foundations for a corporatist-style industrial relations system at the macro level (through Nedlac, the National Economic Development and Labour Council), at the meso level (through centralised

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bargaining) and at the micro level (through workplace forums), the conditions for successful corporatism have not been realised in post-apartheid South Africa (Webster 1999: 47–8). The process of elite-pacting that led to South Africa’s “negotiated revolution” essentially conserved the pillars of the apartheid economy – the minerals–energy complex (MEC), a set of interlocking institutions that ensured continuity of the apartheid developmental path (Adler and Webster, 1995; Fine and Rustomjee, 1996). The rise of labour as a key component of the internal liberation struggle had laid the foundations for a new union-friendly labour regime. This vision of a new industrial relations system led to the creation of a range of innovative labour market institutions that were formalised in a raft of new legislation in the mid- to late-1990s. This was a moment of optimism in which the ANC was willing to satisfy many of the demands of the labour movement, opening up the possibility of a substantial challenge to the structures of inequality. The architects of this new path, I argue, were infuenced by what Hall and Soskice (2001) identify as the coordinated market economy (CME) of Germany, the Netherlands and the Nordic countries (Webster, 2019: 209–10).9 CMEs are defned by four characteristics: frst, centralised collective bargaining where both unions and employer organisations play a key role in national, industry-wide wage determination; second, unions and employers are centrally involved in the supply of skilled labour; third, the key stabilising role that banks play in fnancing and monitoring companies, including in some countries such as Germany and the Nordic countries, through full representation on company boards; and, fnally, a system of employee representation at the workplace level through works councils (Hall and Soskice, 2001: 6ff.; Feldman, 2006: 833). The new labour regime promoted centralised bargaining and, through the Sector Education Training Authorities (SETAs), unions and employers were involved in the supply of skilled labour. However, no systematic attempt has been made to introduce employees into company boards, and the introduction of employee representation at the enterprise level failed to develop (Webster, Masondo and Bischoff, 2019). From the beginning the new labour regime was a hybrid, caught between some of the characteristics of the CME approach grafted on the Liberal Market Economy (LME) approach of the Anglo-American countries defned historically in South Africa racial terms. The implementation of this hybrid approach proved complex and contested. For employers, labour market fexibility became a mantra as they grappled with intensifed international competition. For labour, on the other hand, democracy was not delivering on the expectations of more and better jobs, and employers were by-passing the new labour laws. Indeed, under the impact of outsourcing and casualisation, the government’s commitment to “decent work” seemed mere rhetoric designed for electoral campaigns. Increasingly, the government has become ambivalent towards this new labour regime, particularly after the rapprochement between leading fgures in the ANC and international and local capital. From the late 1980s, but particularly after the ANC was unbanned in 1990, far-sighted South African businessmen had been

230  Edward Webster courting black businessmen, intellectuals and politicians, offering them attractive directorships and shareholdings in established companies. For Bond (2000), this “elite compromise” determined the direction of macroeconomic policy in the country, redirecting it from the stated redistributive goals of the Reconstruction and Development Programme (RDP) towards a policy of dominant domestic and international class interests. Importantly, while labour, and Cosatu in particular, had shaped the direction of the transition to democracy, the transition had reshaped labour, revealing significant fault-lines. Firstly, organised labour had lost significant layers of leadership to government, political office and the corporate sector. It began in 1994 when the first batch of leaders went to Parliament with the intention of inserting a pro-worker agenda into the ANC, but it became clear quite early on that Cosatu leaders were being absorbed into the ruling party and, most decisively, into the corporate sector.10 Most dramatic was the creation of investment companies by the unions, leading to “a new culture of individualism and accumulation” among Cosatu members (Buhlungu and Tshoaedi, 2012: 14). The result of these changing values in the union, Past President of Cosatu Sdumo Dlamini (2016) suggests, is that union leaders are pursuing “a BEE-type business unionism on the basis of workers’ collective power”. Secondly, and related to the previous point, there had been a marked decline in the quality of service provided to members. Already by the late 1990s Baskin (2000: 50) would write that “cases frequently go unattended, collective negotiations are often conducted shabbily or not at all, and the quality of mandates and report-backs has generally deteriorated”. Significantly, labour’s share of income has declined since the early 1990s, coming under particular pressure between 1999 and 2008. More recently there has been an increase in the labour share (see Figure 12.3). But what this graph obscures is that the rising labour share has been driven by rising salaries at the higher end of the wage distribution; while 58% 56% 54% 52% 50% 48% 46%

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

44%

Figure 12.3 The labour share of income (current prices). Source: Quantec (2017), cited in Francis and Webster (2018).

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average wages have risen, there has been very low growth in the income of lowwage earners. This overall trend obscures an important dynamic – the rise in wages in the public sector compared to the private sector. Indeed, it has been argued that some of the public sector unions – such as the South African Democratic Teachers Union (Sadtu) – are “too powerful” and are using their power in a self-interested rather than a developmental way (Maree, 2017a: 212). Public sector union members are paid considerably more than private sector union members (Table 12.1). The minimum wage in the public sector is two-and-three-quarters times higher than in the private sector, the mean (or average) wage is 31 per cent higher, and the median wage is 69 per cent higher.11 It is only in the maximum wage that the private sector comes out on top (Maree, 2017b: 177). Thirdly, a growing gap has emerged between leadership and the base. Quite early on into the transition, studies emerged describing workplaces where shop stewards had been left on their own with little training or educational input from the union in the face of management’s sophisticated counter-offensives (Buhlungu, 2000; Von Holdt, 2000). The research gave increased validity to the prospect of a democratic rupture between leaders and led. The implication of this was profound. We wrote at the time, “Radical reform depends on union power, which in Cosatu historically derived from the close relationship between leaders, shop stewards, and the rank-and-fle” (Webster and Adler, 2000: 14). This relationship, wrote Bobby Marie, a long-standing education offcer for the National Union of Metalworkers of South Africa (Numsa), is being diluted by the emergence of an alternative set of relationships, between union leaders and the new economic and political elite. In his pithy phrase, they display as “increasing similarity not only in the style of dress, language and common pubs they begin to share, but also in the style of thinking and the approaches to basic political and economic questions” (quoted in Webster and Adler, 2000: 14–15). Writing nearly two decades later labour scholars, basing their conclusions on a nation-wide survey, confrmed that the idea that union leaders should only act on the shop foor when they have a mandate is entrenched in the culture of the South African union movement (Bezuidenhout and Tshoaedi, 2017: 1–17). But, the authors argue, when it comes to decision-making at the regional and national level, workers have little infuence or control over decisions. Indeed, Johann Maree (2017b: 167–9) speaks of a “democratic rupture” between workplace Table 12.1 Average earnings of Cosatu members surveyed (amounts in Rand) Wage level

Private sector unions

Public sector unions

Mean Minimum Median Maximum

10 761 1 086 8 000 45 000

14 109 3 000 13 550 42 000

Source: Bischoff and Maree (2017: 177).

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structures and national leaders. He attributes this decline in participatory democracy to a decline in trade union education of ordinary members. This lack of trade union education, Bezuidenhout and Tshoaedi (2017: 5) suggest, “disempowers the rank-and-fle membership in terms of their ability to actively take part in broader national debates of the labour movement”. “COSATU’s weakening of internal democracy”, they continue, “has serious implications for their role in the consolidation of democracy in post-apartheid South Africa”. Fourthly, Alliance politics, and the victory of the ANC-led Alliance in South Africa’s frst democratic elections in April 1994, was to shift the focus of Cosatu from workplace issues to a growing concentration on economic and industrial policy.12 Cosatu leadership embraced what some have called strategic unionism, an engagement in tripartite structures such as Nedlac, a peak-level social dialogue forum, and the concept of “progressive competitiveness”. This involved labour adapting to global competition by developing new skills and a more strategic engagement with capital and the state. But, as Karl von Holdt (2003: 198) demonstrates in his ethnographic study of Highveld Steel, “replacing ‘the culture of resistance’ with a ‘culture of productivity’ created an ‘organisational crisis’ in NUMSA”. The strategy failed for a number of reasons: the process through which it was adopted, its complexity and lack of union capacity, doubts about its internal coherence, and the possibility that it could increase members’ workload and lead to job losses (Von Holdt, 2003: 196–202). The ANC’s “non-negotiable” embrace of neo-liberal economic policies in 1996 through the Growth, Employment and Redistribution (GEAR) strategy led to a direct confrontation with Cosatu and sections of the South African Communist Party (SACP). This began a process of increasing marginalisation of the left from the ANC and growing tensions, articulated most strongly by then Cosatu General Secretary Zwelinzima Vavi, accusing the ANC leadership of being a “predatory elite”. Growing disillusionment with the ANC led to the re-emergence inside Numsa of the idea of a workers’ party and a new organising strategy, leading to the expulsion of Numsa from Cosatu in 2014 (Craven, 2016).13 Fifthly, trade union educationalist Dinga Sikwebu (2013: 66) has described Cosatu’s approach to democracy as “contingent democracy”, rather than a thoroughgoing commitment to a democratic project, because of its ambivalence towards the constitution, multi-partyism and indeed the liberal democracy embedded in the Constitution. A democratic project, he argues, would involve the expansion of second- and third-generation rights, prioritising the building of a web of democratic institutions, as well as civic education to build the democratic capacity of citizens. Instead, he suggests, Cosatu remains dominated by an unreformed or residual Leninism, which leads to an instrumental view of constitutional rights, and a culture of majoritarianism where the winner takes all. For example, with the exception of the South African Clothing and Textile Workers Union (Sactwu), no Cosatu affliate supports secret and compulsory balloting in a strike (Webster, 2017). The sixth and fnal fault-line is the informalisation of work, which has weakened both the structural and associational power of labour. Today, nearly

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half of the South African workforce (45 per cent) work either in the informal economy or as casual, outsourced or contract workers (Bezuidenhout, Bischoff and Nthejane, 2017: 53). Trade unions have failed to organise these workers, leaving most of them outside the traditional labour movement and the state regulatory system. Indeed, I have argued that in post-apartheid South Africa, associational power has become disconnected from institutional power. Instead of a vital interaction between the two, the institutions created by the new labour regime have become disconnected from the organisations that created them (Webster, 2017).14 This “representational gap” has led to the re-emergence of the two alternative models of industrial engagement developed during the apartheid period: the use of offcial, legal frameworks in which confict is institutionalised; and that of subaltern worker rebellions in which extra-legal, covert forms of power are mobilised. Drawing on the struggles of casual workers in the South African Post Offce, David Dickinson (2017) shows how, after extensive but unsuccessful attempts to resolve matters through legal means, casual workers embarked on alternative, violent forms of industrial action. It led to the formation of maberete, a series of informal worker committees who hunted down anyone delivering mail and beat them up. They eventually won their campaign for permanent contracts, but only after members of the maberete visited the homes of the labour brokers, threatening them and their families with violence. The use of violence in resolving power struggles in the workplace emerged most dramatically in the strikes on the platinum mines in Rustenburg in 2012. While not comparable to the violence used by the police in the Marikana massacre, the coercive tactics used by the mineworkers to maintain solidarity has been described by Chinguno (2015: 178) as a form of violent solidarity. This persistence of violence under democratic institutions is not a peculiarity of South Africa. Recent scholarship on violence in developing societies has challenged conventional views that democratic institutions necessarily lead to the observance of democratic norms. Violent pluralism, it is argued, may constitute a social order with its own kind of stability, characterised by endemic violence or cycles of violence (Arias and Goldstein, 2010: 9–13, 26–7).

Conclusion I have argued in this chapter that labour played a crucial role in constructing a new workplace order to challenge inequality in the workplace. The introduction of a national minimum wage in January 2019 is the most recent example of an important labour market intervention that is likely to improve the lives of millions of low-paid workers in South Africa (Francis and Massie, 2019: 36). However, in post-apartheid South Africa inequality has deepened: This is South Africa’s inequality paradox. On the one hand, a range of labour market institutions has been established to give a voice to workers, including new legislated mechanisms for reporting on pay differentials, in the form of section 27 (s27) of the Employment Equity Act (EEA). As Massie et al., (2014) argue:

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Edward Webster The strongest possibility for providing say on pay through labour market regulation is contained in the EEA provision that requires designated employers to report on “income differentials” within the organisation. Designated employers include those who employ 50 or more employees, or who earn above a threshold turnover, and public sector employers such as municipalities and organs of state. (Massie et al., 2014: 160)

At the time of writing, no one has used this provision. However, in spite of these institutional mechanisms, Wittenberg notes that while real wages have risen since 1994, the average wage has pulled away from the median wage, resulting in a notable rise in inequality (Wittenberg, 2017; cited in Francis and Massie, 2019). Among some of the larger private companies, for example Shoprite, the pay ratio between its average salary and its Chief Executive Offcer (CEO) is 1,332; that is, the CEO of Shoprite earns 1,332 times the average salary of a Shoprite employee. Part of the answer for this neglect to remedy the apartheid wage gap is that there has been a preoccupation with horizontal over vertical equality – that is, with race and gender rather than what was called the apartheid wage gap. The EEA has predominantly been used to challenge discrimination on the grounds of race and gender. At the heart of the national democratic struggle has been the creation of a black capitalist class as well as a stratum of black professional, managerial and supervisory individuals in the workplace. The result is that insuffcient attention has been placed on the transformation of class relations in the workplace manifested through the apartheid wage gap. But if the organisational/associational power of unions is to be strengthened and reconnected to institutional power, then the deeper structural violence that lies at the heart of South Africa’s inequality will need to be addressed in a more systematic way. Increasingly there is a recognition in the public discourse in South Africa, expressed through the demand for “radical economic transformation”, that the distribution of economic power (rather than the unequal distribution of capabilities) is the leading causal factor driving violence. This perspective requires that the distribution of economic power be addressed head-on, and requires a bolder and more integrated approach combining inclusive growth strategies, substantial social protection, capability development and labour activation on a scale suffcient to reconfgure structural defciencies in the distribution of power. Halfway through his book on capital Thomas Piketty turns to the forces that create greater equality, suggesting that it was “violent shocks” that led to the reduction in income inequality in Europe: To a large extent, it was the chaos of war, with its attendant economic and political shocks that reduced inequality in the twentieth century. There was no gradual, consensual, confict-free evolution towards greater equality. In the twentieth century it was war, and not harmonious democratic or economic rationality, that erased the past and enabled society to begin anew with a clean slate. (Piketty, 2014: 275)

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Goran Therborn (2013), in his classic study of inequality, acknowledges violent revolution and war but emphasises the peaceful reform that led to an “egalitarian moment” in the aftermath of World War II. “Under certain circumstances”, he writes, “far-reaching peaceful reform has been possible” (Therborn, 2013: 155). He cites as an example: virtually the whole of the capitalist world from the aftermath of World War II until about 1980, with egalitarian advances of existential rights and respect and a general equalisation of health and life expectancy, as well as major national equalisations of resources of income and education. (Therborn, 2013: 155) We have shown in this chapter how it is both “malign” forces (violent shocks) and “benign” forces (peaceful reform) that have built counter power in the South African workplace. We have identifed egalitarian advances that have been won through the peaceful exercise of the power of labour. Indeed, for many the early 1990s was South Africa’s “egalitarian moment”. But the South African story also refects a similar pattern to the “violent shocks” described by Piketty. I have identifed forms of violent labour protests which do not directly relate to the sources of labour power usually discussed in the power resources approach. The institutionalisation of industrial confict is increasingly being eroded not only in the global South but also in the North, and the labour market is fragmenting along new fault-lines. Alongside the decline of traditional unions, new movements and forms of organisation are emerging. Organisations of informal workers often differ from traditional unionism in their structures and strategies. Where trade unions have taken up the issues of informal workers, unions have also undergone fundamental changes. They often become “hybrid” organisations, which include different forms of organisation and blur the distinction between traditional unionism, informal workers’ associations and cooperatives (Gadgil and Samson, 2017; Fichter et al., 2018: 5f.). Whether South Africa can minimise the “malign path” of “violent shocks” in favour of the “benign path” identifed by Therborn and Milanovic remains uncertain. What is clear is that the key actors in the South African workplace could beneft from refecting on how labour power can be used more strategically if the South African inequality paradox is to be overcome.

Notes 1 Sakhela Buhlungu argues in his book, Paradox of Victory: COSATU and the Democratic Transformation in South Africa, that Cosatu’s victory was paradoxical as it was accompanied by the decline of its organisational power. I am taking the idea of paradox a step further as a way of approaching the persistence of workplace inequality in postapartheid South Africa. 2 In this chapter I revisit 40 years of research on the South African labour movement. I draw extensively on thirteen articles that I published – or co-authored – between 1979 and 2019.

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3 Parts of this paragraph are drawn from an article written with Glenn Adler (1995: 81). 4 In the survey I undertook in the townships surrounding Durban in 1975, one of the questions asked was, “Can you think of a leader present or past who can or could improve the position of African workers?” The results were: 44 per cent = Albert Luthuli; 19 per cent = Gatsha Buthelezi; 10 per cent = Nelson Mandela; 8 per cent = Moses Mabhida. When I presented the results of the research to the Institute for Industrial Education (IIE) in 1975, a member of the IIE Working Committee, questioned their validity. Who, he said, is Moses Mabhida? I soon “discovered” that Mabhida had been a prominent leader of the South African Communist Party, the ANC and the South African Congress of Trade Unions in the province of KwaZulu-Natal. The working class, I came to realise, was not some collective tabula rasa waiting for the white intellectuals to tell them what to think; they had their own history and political traditions, and this national political tradition had deep roots in Durban and the surrounding areas (Webster, 1979: 43–74). 5 Within the ANC a revolutionary perspective developed in the mid-1980s, based on insurrectionary notions of the “seizure of power”. It existed side by side with a different perspective in which such struggles were regarded as a form of pressure to compel the government into negotiations (Von Holdt, 2003: 23–4). 6 In this chapter I focus on resource inequality rather than a broader defnition of inequality that focuses on health and death – what Therborn (2013: 48) calls vital inequality – as well as existential inequality, which hits the individual’s personal dignity. Importantly existential inequality has been signifcantly reduced in South Africa through the removal of racist legislation. Therborn (2013: 145) suggests that “it has been able to move forward because – and to the extent that – it has been decoupled from resource inequality”. This aspect of the South African paradox is the subject of current research. 7 Interestingly, in 2008 Cosatu launched a project to develop its capacity to more decisively forward its strategies and policies. They called it the Walking through the Doors project. The title, they said, was inspired by an observation that Cosatu was very good at opening doors but not as good at walking through them. The meaning of this comment, they said, was that Cosatu achieved important advances through engagement but did not use the opportunity to turn these opportunities into real gains for their members (Cosatu, 2008). 8 There was a fatal loophole that enabled labour brokers to employ “temporary” workers, thus undermining the new labour regime (Runciman, 2019). 9 The next three paragraphs are drawn from Webster (2013: 209–10). 10 Startling evidence was led at the Commission of Inquiry into State Capture (the Zondo Commission) of union leaders being bribed to secure contracts for millions of Rand from BOSASA, a private service provider, in the companies where they were represented (Mahlakoana, 2019: 3). 11 It is too soon to tell whether the introduction of a national minimum wage in January 2019 will have any impact on the ratio between public and private sector wages. See Francis and Massie (2018). 12 The Tripartite Alliance consists of the African National Congress, the South African Communist Party and the Congress of South African Trade Unions. 13 Numsa eventually launched a political party, the Socialist Revolutionary Workers Party (SRWP), in April 2019. The new party did dismally in the May 2019 elections, receiving a paltry 24 000 votes nationally, or 0.14 per cent. 14 The next two paragraphs are drawn from a joint article with Schmaltz, Ludwig and Webster, 2018).

References Adler, G. and E. Webster (1995) Challenging Transition Theory: The Labour Movement, Radical Reform and Transition to Democracy in South Africa. Politics and Society, 23(1): 75–106.

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Alexander, P., T. Lekgowa, B. Mmpoe, L. Sinwell and B. Xezwi (2012) Marikana: A View from the Mountain and a Case to Answer. Johannesburg: Jacana. Alexander, P. (2018) Thomas Piketty and the Marikana Massacre. In Facing an Unequal World, edited by Raquel Sosa Elizage. Los Angeles, CA: Sage. Arias, E.D. and D.M. Goldstein (eds.) (2010) Violent Democracies in Latin America. Durham, NC: Duke University Press. Arrighi, G. and B. Silver (1984) Labor Movements and Capital Migration: The U.S. and Western Europe in World-Historical Perspective. In Labor in the Capitalist WorldEconomy, edited by C. Bergquist. Beverly Hills, CA: Sage. Baskin, J. (2000) Labour in South Africa’s Transition to Democracy: Concertation in a Third World Setting. In Trade Unions and Democratization in South Africa, 1985–1997, edited by G. Adler and E. Webster. London: Macmillan Press. Bezuidenhoudt, A. (2005) Postcolonial Workplace Regimes in the Engineering Industry in South Africa. In Beyond the Apartheid Workplace: Studies in Transition, edited by E. Webster and K. von Holdt. Pietermaritzburg: University of KwaZulu-Natal Press. Bezuidenhout, A. and M. Tshoaedi (2017) Democracy and the Rupture in South Africa’s Labour Movement. In Labour Beyond Cosatu: Mapping the Ruptures in South Africa’s Labour Landscape, edited by A. Bezuidenhout and M. Tshoaedi. Johannesburg: Wits University Press. Bezuidenhout, A., C. Bischoff and N. Nthejane (2017) Is COSATU Becoming a Middle Class Movement? In Labour Beyond Cosatu: Mapping the Rupture in South Africa’s Labour Landscape, edited by A. Bezuidenhout and M. Tshoaedi. Johannesburg: Wits University Press. Bischoff, C. and Maree, J. (2017) Public Sector Unions in Cosatu. In Labour Beyond Cosatu: Mapping the Rupture in South Africa’s Labour Landscape (170–90), edited by A. Bezuidenhout and M. Tshoaedi. Johannesburg: Wits University Press. Bond, P. (2000) Cities of Gold, Townships of Coal. Trenton, NJ: Africa World Press. Buhlungu, S. (2000) Trade Union Organisation and Capacity in the 1990s: Continuities, Changes and Challenges for PPWAWU. In Trade Unions and Democratization in South Africa, 1985–1997, edited by G. Adler and E. Webster. London: Macmillan Press. Buhlungu, S. and M. Tshoaedi (eds.) (2012) COSATU’s Legacy: South African Trade Unionism in the Second Decade of Democracy. Cape Town: HSRC Press. Chinguno, C. (2015) The Shifting Dynamics of the Relations Between Institutionalisation and Strike Violence; A Case Study of Impala Platinum, Rustenburg (1982–2012). Unpublished PhD dissertation, University of the Witwatersrand, Johannesburg. Congress of South African Trade Unions (Cosatu) (2008) Press Release: Walking Through the Doors Project. 11 November 2018. Craven, P. (2016) The Battle for COSATU: An Insider’s View. Johannesburg: Bookstorm. Dickinson, D. (2017) Institutionalised Confict, Subaltern Worker Rebellions and Insurgent Unionism: Casual Workers’ Organisation and Power Resources in the South African Post Offce. Review of African Political Economy, 44(7): 415–31. Dlamini, S. (2016) Unite Against the Primary Opponents of Our Struggle and Their Collaborators, the Enemy Within. Advance the National Democratic Revolution, SACP Gauteng Political and Ideological Commission, Benoni, 13 February. Feldman, M. (2006) Emerging Varieties of Capitalism in Transitional Countries: Industrial Relations and Wage Bargaining in Estonia and Slovenia. Comparative Political Studies, 30(7): 15–23. Fichter, M., C. Ludwig, S. Schmalz, B. Schulz and H. Steinfeldt (2018) The Transformation of Organised Labour. Mobilising Power Resources to Confront 21st Century Capitalism. Berlin: FES. http://library.fes.de/pdf-fles/iez/14589.pdf (assessed 11 January 2019).

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Fine, A. and E. Webster (1989) Transcending Traditions: Trade Unions and Political Unity. South African Review, 5: 256–74. Fine, B. and Z. Rustomjee (1996) The Political Economy of South Africa: From MineralsEnergy Complex to Industrialisation. London: Westview. Francis, D. and K. Massie (2019) Tackling Wage Inequality; Pay Ratios and Capping Pay. In Confronting Inequality: The South African Crisis, edited by M. Nassen Smith. Johannesburg: Fanele, imprint of Jacana Media. Gadgil, M. and M. Samson (2017) Hybrid Organisations, Complex Politics: When Unions Form Cooperatives. In Crossing the Divide: Precarious Work and the Future of Labour, edited by E. Webster, A.O. Britwum and S. Bhowmik. Pietermaritzburg: University of KwaZulu-Natal Press. Hall, P. and D. Soskice (2001) Introduction. In Varieties of Capitalism, edited by P. Hall and D. Soskice. Oxford: Oxford University Press. Lambert, R. and E. Webster (1988) The Re-emergence of Political Unionism in Contemporary South Africa. In Popular Struggles in South Africa, edited by W. Cobbet and R. Cohen. Trenton, NJ: Africa World Press. Lévesque, C. and G. Murray (2010) Understanding Union Power: Resources and Capabilities for Renewing Union Capacity. Transfer: European Review of Labour and Research, 16(3): 333–50. Lévesque, C. and G. Murray (2013) Renewing Union Narrative Resources. How Union Capabilities Make a Difference. British Journal of Industrial Relations, 51(4): 777–96. Macun, I. (2000) Growth, Structure and Power in the South African Union Movement. In Trade Unions and Democratization in South Africa, 1985–1997, edited by G. Adler and E. Webster. London: Macmillan Press. Mahlakoana, T. (2019) Agrizzi’s Testimony Exposes How Union Leaders Score Huge Bribes. Business Day, 28 January, page 5. Maree, J. (2017a) Are COSATU’s Public Sector Unions Too Powerful? In Labour Beyond COSATU: Mapping the Ruptures in South Africa’s Labour Landscape, edited by A. Bezuidenhout and M. Tshoaedi. Johannesburg: Wits University Press. Maree, J. (2017b) Internal Democracy in COSATU: Achievements and Challenges. In Labour Beyond COSATU: Mapping the Ruptures in South Africa’s Labour Landscape, edited by A. Bezuidenhout and M. Tshoaedi. Johannesburg: Wits University Press. Massie, K., D. Collier and A. Crotty (2014) Executive Salaries in South Africa: Who Should Have a Say on Pay? Johannesburg: Jacana Media. Milanovic, B. (2016) Global Inequality: A New Approach for the Age of Globalization. Cambridge, MS: The Belknap Press of Harvard University Press. Mohanty, M. (2018) Inequality from the Global South. InThe Oxford Handbook of Global Studies, edited by Mark Juergensmeyer, Saskia Sassen, Manfred B. Steger and Victor Faessel. Oxford: Oxford on-line. Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MS/London: The Belknap Press of Harvard University Press. Runciman, C. (2019) “Double-Edged Sword” of Institutional Power: COSATU, NeoLiberalisation and the Right to Strike. Global Labour Journal, 10(2): 142–58. Schmaltz, S., C. Ludwig and E. Webster (2019) Power Resources and Global Capitalism. Global Labour Journal, 10(1): 84–90. Schmalz, S., C. Ludwig and E. Webster (2018) The Power Resources Approach: Developments and Challenges. Global Labour Journal, 9(2): 113–34. Sikwebu, D. (2013) Notes from a Trade Unionist: COSATU and Its Affliates as Democratising Agents or Contingent Democrats? Rethinking Development and Inequality, 2: 78–89.

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Sitas, A. (1983) African Workers’ Responses to Changes in the Metal Industry on the East Rand, 1960–1980. Unpublished PhD thesis, University of the Witwatersrand, Johannesburg. Therborn, G. (2013) The Killing Fields of Inequality. Cambridge: Polity Press. Von Holdt, K. (2000) From the Politics of Resistance to the Politics of Reconstruction? The Unions and “Ungovernability” in the Workplace. In Trade Unions and Democratization in South Africa, 1985–1997, edited by G. Adler and E. Webster. London: Macmillan Press. Von Holdt, K. (2003) Transition from Below: Forging Trade Unionism and Workplace Change in South Africa. Pietermaritzburg: University of Natal Press. Webster, E. (1979) A Profle of Unregistered Union Members in Durban. South African Labour Bulletin, 4(8): 43–74. Webster, E. (1985) Cast in a Racial Mould: Labour Process and Trade Unionism in the Foundries. Johannesburg: Ravan Press. Webster, E. (1988) The Rise of Social Movement Unionism: The Two Faces of the Black Trade Union Movement in South Africa. In State Resistance and Change in South Africa, edited by P. Frankel, P. Pines and M. Swilling. North Ryde, NY: Croom Helm. Webster, E. (1999) Defusion of the Molotov Cocktail in South African Industrial Relations: The Burden of the Past and the Challenge of the Future. In The Institutionalisation of Industrial Relations in Developing Countries, edited by S. Kuruvilla and B. Mundell. New York: JAI Press. Webster, E. and G. Adler (2000) Introduction: Consolidating Democracy in a Liberalizing World – Trade Unions and Democratization in South Africa. In Trade Unions and Democratization in South Africa, 1985–1997, edited by G. Adler and E. Webster. London: Macmillan. Webster, E. (2013) The Promise and the Possibility: South Africa’s Contested Industrialisation Path. Transformation, 81/82: 208–35. Webster, E. (2017) Marikana and Beyond: New Dynamics in Strikes in South Africa. Global Labour Journal, 8(2): 138–59. Webster, E. and D. Francis (2019) The Paradox of Inequality in South Africa – A Challenge from the Workplace. Transformation: Critical Perspectives on Southern Africa, 101(1): 11–35. Webster, E., T. Masondo and C. Bischoff (2019) Workers’ Participation at Plant Level: The South African Case. In The Palgrave Handbook of Workers’ Participation at Plant Level, edited by S. Berger, L. Pries and M. Wannoffel. London: Palgrave. Williams, M. (2020) Democracy as a Transitional Compass; Women’s Participation in South Africa and Kerala, India. Globalisations, 17(2): 338–51. Williams, M. and V. Satgar (2020) Transitional Compass: Anti-capitalist Pathways in the Interstitial Spaces of Capitalism. Globalisations, 17(2): 265–78.

13 Global inequality and human rights Radhika Balakrishnan

Introduction There is growing recognition that inequality is a problem and that steps need to be taken to address the negative consequences of the extreme polarisation evident in the global economy. These levels of global inequality are a consequence of decades of neo-liberal economic policies and have been heightened by the increase in the role of fnancial institutions and fnancialisation of the global economy. The human rights framework provides an important yet, to date, incomplete entry point to address the structural issues behind existing inequalities, the role for international cooperation, and the need for global redistribution. The neo-liberal framework and the underlying assumptions of neoclassical economics are largely silent on questions of inequality, focusing instead on defning the conditions under which an effcient allocation of resources emerges and output is maximised. This has resulted in a focus primarily on increasing economic growth without attention to the distributional consequences and outcomes. The Keynesian policies that were followed in the 1960s, which emphasised a much larger welfare and economic role for the state, have actually shown higher levels of economic growth than the policies of the neo-liberal era starting in the 1980s with increasing levels of volatility and inequality (Stone, 2016). At the global level, the neo-liberal agenda, often labelled as the “Washington Consensus”, has promoted the following: “free” markets, with an emphasis on export-led growth and incorporating economies, especially of the global South, into the international trading regime; prioritising the private sector over the public; deregulation of the fnancial markets, making labour markets more fexible and changing labour laws to beneft businesses; regressive tax policies, decreasing taxes on the wealthy and on corporations; limiting the use of monetary policy to focus only on infation; and fscal policies that focus on cutting government expenditure (Balakrishnan and Zard, 2017). This chapter will examine how human rights norms and standards can provide a lens to check the level and extent of global inequality in terms of global governance and cooperation. It looks at the role of international institutions and the differential power that countries have in conducting economic policy, where differential in policy autonomy can reinforce existing inequalities between countries that limit the realisation of economic and social rights.

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Human rights as an alternative There is a need to rethink economic policy at the global level, and the human rights framework approach constitutes an alternative evaluative and ethical framework for assessing economic policies and outcomes. Human rights principles have potentially important implications for economic governance at the global level. The human rights framework allows us to move beyond the narrow focus on Gross Domestic Product (GDP) and can stress progressive realisation of economic and social rights over time. The notion of human rights focuses on progressive improvements in a range of outcomes, with effciency being important if it leads to greater enjoyment of rights (Balakrishnan, Heintz and Elson, 2016). Efforts to realise social and economic rights – such as the rights to food, housing, an adequate standard of living, health and education – are currently taking place in an extremely polarised world. In 2017, 82 per cent of all wealth created went to the top 1 per cent and nothing went to the bottom 50 per cent. There has been a stark difference in what company executives make versus the average worker. In four days a CEO from one of the top fve global fashion brands earns what a Bangladeshi garment worker will earn in her lifetime (Oxfam, 2018). According to estimates developed by Oxfam, in 2015 the 62 richest people owned as much wealth as the bottom half of the world’s population; similar estimates from 2010 suggested that it took 388 of the wealthiest individuals to own as much as the bottom half (Oxfam, 2016). Although the rapid growth of countries like India and China has narrowed the gap in average incomes between some high-performing developing economies and the high-income world, income inequality across countries remains stark. The record on within-country inequality is mixed – inequality has been rising in most high-income and emerging-market economies, but this trend is not universal. There are some cases in which within-country inequality has fallen (Dabla-Norris et al., 2015). Nevertheless, the extreme degree of inequality in today’s global economy is an inescapable facet of the economic environment within which human rights are realised. Inequality at the global level is also a human rights issue. Taking a global view, changes in inequality are due to two factors: a widening or narrowing of the gaps that exist between the households within countries, and positive or negative shifts in the extent of inequality between countries. Though most of human rights law focuses on the nation-state there are parts of the framework that speak to global issues. The International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises that a country has obligations with regard to the realisation of economic and social rights beyond its borders – often referred to as extraterritorial obligations (Carmona, 2006; Coomans, 2011; Coomans and Kamminga, 2004). Specifcally, Article 2(1) of ICESCR states that states should take steps, individually and through international assistance and cooperation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means. (United Nations, 1966: section 2[1])

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Article 2(1) suggests that better-resourced countries have an obligation to assist poorer countries. In other words, countries in more privileged positions should support the realisation of economic and social rights elsewhere in the face of global inequalities. The Committee on Economic, Social and Cultural Rights further emphasises this commitment in its General Comment 3 (3: 13) with regard to the principle of maximum available resources: The Committee notes that the phrase “to the maximum of its available resources” was intended by the drafters of the Covenant to refer to both the resources existing within a State and those available from the international community through international cooperation and assistance. (quoted in Balakrishnan and Heintz, 2019) The Declaration on the Right to Development, adopted in 1986, is the human rights document that comes closest to directly addressing inequalities between countries. This is partly because the way “development” is conceived in the Declaration is as a collective process rather than a specifc individual right. Therefore, the Declaration emphasises both rights at the national level and rights at the individual level. The preamble to the Declaration states: development is a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefts resulting therefrom … The right to development is an inalienable human right by virtue of which every human person and all peoples are entitled to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realized. (United Nations, 1986: Article 1.1) Distribution is clearly a central concern of the Declaration, both at country and individual levels. The distribution of benefts refects an outcome of the process of development, including government policies that support the realisation of rights. However, the Right to Development also emphasises equality of opportunity at the collective level: “the right to development is an inalienable human right and that equality of opportunity for development is a prerogative both of nations and of individuals who make up nations” (United Nations, 1986: Article 1.2). The human right to development also implies the full realization of the right of peoples to self-determination, which includes, subject to the relevant provisions of both International Covenants on Human Rights, the exercise of their inalienable right to full sovereignty over all their natural wealth and resources. (United Nations, 1986: Article 1.2)1

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The UN Offce of the High Commission for Human Rights summarises the importance of the Declaration as follows: The right to development provides a comprehensive framework and approach to the policies and programmes of all relevant actors at the global, regional, sub-regional and national levels as this right: integrates aspects of both human rights and development theory and practice; encompasses all human rights – civil, political, economic, social and cultural; requires active, free and meaningful participation; involves both national and international dimensions of State responsibilities including in the creation of an enabling environment for development and favourable conditions for all human rights; demands comprehensive and human-centred development policy, participatory development processes, social justice and equity; embodies the human rights principles of equality, non-discrimination, participation, transparency, accountability as well as international cooperation in an integrated manner; implies the principles of self-determination and full sovereignty over natural wealth and resources; facilitates a holistic approach to the issue of poverty by addressing its systemic and structural causes; strengthens the basis for propoor growth with due attention to the rights of the most marginalized; fosters friendly relations between states, international solidarity, cooperation and assistance in areas of concern to developing countries, including technology transfer, access to essential medicines, debt sustainability, development aid, international trade and policy space in decision-making. (United Nations, undated) There is a potential tension between guaranteeing national sovereignty and pursuing the kind of international cooperation needed for the realisation of rights in today’s globalised economy. For instance, uncoordinated, independent actions by individual states are consistent with preserving national sovereignty but may undermine global cooperation. Similarly, true cooperation may require states to give up some degree of sovereignty to act in ways that promote the common good. Some balance between preserving sovereignty and promoting international coordination is needed. One approach would be to equalise the degree of sovereignty across nations in a way that is consistent with global cooperation. As the Declaration on the Right to Development states, there is a need “to promote a new international economic order based on sovereign equality, interdependence, mutual interest and cooperation among all States, as well as to encourage the observance and realization of human rights” (United Nations, undated). In order to achieve this outcome, existing global inequalities would need to be addressed as would the structures of the global economy that maintain these inequalities over time (Balakrishnan and Heintz, 2019). Though there has always been inequality between countries, policy changes, particularly in the governance of international trade and fnance, have taken on a new dimension in which global inequalities become legally sanctioned at the international level. The current structures of global economic governance are shaped

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by the vested interests of elites throughout the world and in the national interests of the richest countries. In international fnancial institutions, such as the World Bank and the International Monetary Fund (IMF), the governance structure mirrors the unequal relationship in the global economy, where the voting is based on their economic shares in these institutions. The policies that are developed by these institutions and imposed on countries of the global South often hinder the realisation of human rights (Salomon, 2007). The economic dynamism of countries such as India and China has affected the global balance of power, but decisions that are made at the global level remain the purview of a handful of infuential countries (Balakrishnan, Heintz and Elson, 2016: chapter 3). In addition to the international fnancial institutions, bilateral and multilateral trade treaties provide an example of unequal power, often limiting the policy choices available to governments for the realisation of human rights. For example, agreements on trade in services, such as those refected in the General Agreement on Trade in Services (GATS), and provisions regarding intellectual property rights, as refected in the Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips) could affect governments’ ability to pursue policies that support the right to health (Verger and van Paassen, 2012). Provisions for intellectual property rights protect the interests of pharmaceutical companies, mostly located in high-income countries, and often undermine efforts to provide low-cost medicines to people who need them. Many examples of this struggle can be found in access to drugs for HIV/AIDS and the Doha negotiations of the World Trade Organization (WTO) (WHO, undated). The processes whereby these trade agreements are negotiated are characterised by unequal power relations at the global level, linked to inequalities between countries (Balakrishnan, Heintz and Elson, 2016: chapter 3). Global inequalities also affect a country’s ability to implement independent macroeconomic policies that affect the realisation of rights through their impact on maximum available resources – such as the revenue available to fnance government spending, the latitude to pursue goals such as improving employment outcomes, or managing important prices such as the exchange rate. International fnancial institutions often impose macroeconomic policies on countries that might have balance of payment problems, and more globally infuential economies have a wider range of policy options available to them when responding to economic shocks compared to smaller, more dependent economies (Ocampo and Vos, 2008). For example, China and the United States were able to respond to the 2008 crisis by implementing counter-cyclical stimulus policies – that is, increasing government spending to encourage economic growth – in an effort to offset the negative consequences of the fnancial shock (ILO, 2011). Economies in less infuential positions experienced different effects of the crisis, including capital outfows as fnancial investors sought safe havens. These developing economies often adopt policy positions such as raising interest rates and cutting government spending in an effort to stem fnancial outfows (Ocampo and Vos, 2008). However, high interest rates and lower spending have a negative effect on economic performance, exacerbating the effects of a negative shock. These

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types of reactions stem from “pro-cyclical” policies. The austerity programmes implemented in countries such as Greece after the 2008 global fnancial crisis represented a type of pro-cyclical policy – drastically cutting spending after a country has already received a substantial negative shock (Balakrishnan, Heintz and Elson, 2016: chapter 3). These asymmetries in the policy responses to economic shocks are not preordained, but rather are a result of the ways in which capital fows between countries are managed. A coordinated policy response – one that tries to safeguard the policy space available to countries in more vulnerable positions – would open up the possibility for alternatives to a pro-cyclical response. A coordinated approach to global economic governance is indispensable to make this happen. International institutions could play a coordinating role so that countries experiencing capital outfows are not disproportionately affected by a global shock. Currently, this kind of macroeconomic cooperation does not exist, and global institutions have done a poor job at trying to address these imbalances. Extraterritorial obligations provide one framework that could, if seriously adopted and applied, go a long way to promote broad-based international cooperation to realise rights and address structural inequalities between countries.

The role of fnancial markets High global levels of inequality have consequences for economic stability and have been a contributing factor to economic crises, such as the 2008 global fnancial crisis (Rajan, 2011). The infuence of fnancial institutions and interests has expanded signifcantly in the decades since the 1980s, a time of farreaching changes to the regulatory environment that has altered the landscape of global economic governance. This increasing role of the fnancial markets is caused by the ways in which the state uses regulation for the public good. All too often the debate is about regulation versus deregulation, when in fact the issue is more about biased regulation which privileges powerful vested interests over those of the public. The current dominant narrative often decries economic costs that are claimed to be associated with regulation. The challenge going forward is to demonstrate and emphasise the cost of not regulating or of regulating in the interest of the public, especially in terms of violation of human rights. Many of the regulatory decisions take place in countries of the global North and have dire implications for countries of the global South; in the case of the 2008 fnancial crisis decisions made by US policy-makers have had enormous consequences in Europe and the entire world (Balakrishnan, Heintz and Elson, 2016: Chapter 3). The growing infuence of fnancial markets has enormous implications for the realisation of rights. Despite the centrality of fnancial markets in contributing to economic instability, controls on fnancial institutions have been loosened in recent years rather than tightened, indicating that policy regimes are tilted towards the interest of fnance rather than the fulflment of basic rights. Moreover, the process of fnancialisation means that fnancial incentives, motives and dynamics affect the markets for non-fnancial goods and services in

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ways that undermine the realisation of human rights. Financial and economic crises are bad for the realisation of rights – leading to high rates of unemployment, loss of homeownership, cutbacks to government spending and reductions in living standards. The poor are more vulnerable to the negative effects of crises and have fewer resources at their disposal to weather a severe downturn. This implies that economic volatility can further worsen inequalities – in terms of both income and the enjoyment of rights (Stiglitz, 2012). Therefore, economic instability represents another channel through which inequality affects the enjoyment of rights. There are a few basic human rights obligations and principles that can be used to address the issue of the regulatory framework and economic policy decisions. • • • •



The obligation to protect requires the state to take steps in order to protect rights from actions by third parties that interfere with the enjoyment of those rights. The principles of progressive realisation and non-retrogression mean that the state must take steps to progressively realise economic and social rights over time and to prevent an erosion of those rights. The principle of maximum available resources requires the state to undertake steps to use the maximum available resources to progressively realise economic and social rights. The principle of non-discrimination and equality means that the state must ensure the equal enjoyment of rights in terms of both its conduct and the outcomes of its policies. Because of the focus on substantive outcomes, “raceblind” or “gender-blind” policies are not suffcient for compliance with this principle. Non-discrimination also implies that positive steps must be taken to reduce already existing inequalities. The principle of accountability participation and transparency obliges governments to provide mechanisms through which people can hold the state accountable, can participate in policy-making, and can access the information required to do so.

These obligations and principles imply a very different way of regulating fnancial markets and responding to fnancial crises than the dominant approach that has been used over the past several decades. These norms also provide a lens by which to judge the actors involved in creating the crisis. If the changes in regulation could be addressed as a violation of the obligation to protect, those policy-makers would be subject to accusations of human rights violations. The reason for the 2008 fnancial crisis was biased regulation in favour of the fnancial industry, which created conditions of volatility and in the long run slowed the entire global economy. This created the conditions where states did not have the resources to fulfl rights and therefore a retrogression of economic and social rights. The change in regulation that created the crisis was a clear violation of the obligation to protect. The lack of any systematic mortgage regulation in US markets, which allowed predatory lending to fourish, also represents a failure

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with regard to the obligation to protect and, given the demographics of those caught up in the subprime mortgage crisis, a violation of the principle of nondiscrimination and equality in the United States. The use of resources by many governments and central banks to bail out fnancial institutions without demanding greater accountability of the rescued banks and investment frms could be said to violate the principle of maximum available resources as well as the principle of accountability, participation and transparency. The use among many countries of austerity measures that decreased spending on economic and social rights was a violation of the use of maximum available resources, progressive realisation and non-retrogression. The human rights framework suggests a fundamentally different approach to fnancial governance that begins to address these concerns. The actual implementation of the principles and obligations associated with economic and social rights is more diffcult, especially at the global level. The power dynamics in an integrated global economy in which fnancial interests have signifcant power limits some states from taking steps to support the realisation of economic and social rights. Global and international institutions need to be held accountable to the same set of human rights obligations as individual governments. The obligations that states have with regard to other countries need to be much better defned, explicitly recognising power differentials in the global economy. Effective mechanisms for coordination across countries must be developed, including the creation of a common set of rules for regulating transnational businesses and fnancial players (Balakrishnan, Heintz and Elson, 2016: Chapter 5).

Global governance In an increasingly globalised world, governments are also constrained by global markets, multinational corporations and multilateral lending institutions. Though the security role of the state seems to be expanding around the world, the social welfare role of the state has been going in the opposite direction. The fnancial crisis of 2007–2008 and its aftermath exemplifes the limitations of the neo-liberal approach. Deregulation of fnancial markets led to highly risky speculative fnancial investments, and a fnancial crisis that had negative impacts well beyond Wall Street. The political power of the fnancial sector meant that banks were bailed out and poor people bore most of the costs. After a brief period (2009–2010), in which some governments increased spending in order to provide a stimulus to the economy during a time of economic downturn, the neo-liberal approach was re-asserted. There was a drive to reduce crisis-induced budget defcits by cutting government spending on programmes that were often vital to the realisation of human rights. Fiscal space (the room for manoeuvre that governments have for spending on public services and infrastructure) has been limited by external actors such as private fnancial businesses that can rapidly move money out of a country whose fscal policies they do not like, and international fnancial institutions like the IMF. The infuence of the IMF may be direct, through specifc policy conditionalities linked to external fnancing, or it may be indirect, through their provision

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of advice and knowledge. Often, it is both. Given the concentration of the power of capital and the global nature of capital and fnancial fows, it is diffcult for governments acting alone to expand their fscal space. So there is a need to look at global coordination and global collective action, including cooperation on tax policy and capital fight. The rules by which governments are able to make laws that provide them revenue are often determined by control over their ability to tax people and companies operating within their borders. Global coordination around intentional tax law is needed to allow adequate revenue to fulfl human rights (Balakrishnan and Heintz, 2019). There are inequities in terms of power dynamics and policy space that are beyond the control of most individual countries in their pursuit of the realisation of rights and development objectives. The economic interdependencies that structure the global economy mean that the actions of policy-makers from more powerful economies frequently constrain the ability of other countries to meet economic social rights obligations. For example, countries like the United States continue to subsidise their agricultural sector, thereby depressing prices in other countries and making it very diffcult to compete; this can depress global agricultural prices and lower incomes of small-scale farmers elsewhere. A failure to adequately regulate markets in the world’s few major fnancial centres can create conditions of instability and raise systemic risk for countries worldwide (Balakrishnan and Elson, 2011). The human rights framework represents one approach for evaluating economic policies with regard to widely accepted principles of social justice. Therefore, the relationship between global inequality and the fulflment of human rights is important to unpack. The human rights discourse has tended to pay greater attention to inequality between groups within a particular country, but has focused less on the relationship between human rights and global inequalities. Inequality affects the enjoyment of rights worldwide, and the human rights framework has implications for how we think about global inequalities. Global inequalities can also be defned with respect to vertical inequalities – if we step back and consider the income distribution of the entire world economy. Global inequalities defned this way – from the richest individuals to the poorest worldwide – are more extreme than measurements of inequality based on average per capita incomes between countries. The human rights framework has less to say about vertical inequalities than horizontal inequalities – the latter being directly linked to the human rights principles of non-discrimination and equality. Nevertheless, vertical inequalities have important implications for the realisation of rights (Balakrishnan et al., 2016). This is partly because poorer countries (or households) have fewer resources to support the realisation of rights. But even among countries with similar levels of income, inequality impedes the enjoyment of basic rights (Balakrishnan et al., 2016). Therefore, reductions in vertical inequality are justifed, from a human rights perspective, when they lead to greater enjoyment of human rights (Balakrishnan and Heintz, 2019). Regardless of whether global inequalities are defned as between countries or between individuals (or households), the unequal distribution of income and

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resources has important implications for economic policy and the realisation of human rights. Here we focus on between-country inequalities. One issue is the need for redistribution in order to support the realisation of rights in countries where the lack of resources is a constraint. However, there is a second policy area that deserves attention. The current structure of the global economy creates a situation in which countries have signifcantly different policy options available to them (Ocampo and Vos, 2008). This differential in policy autonomy can reinforce existing inequalities that limit the realisation of economic and social rights. Addressing both these concerns – the unequal distribution of resources and inequalities with regard to policy space – requires coordination and cooperation between countries. This raises challenging questions of how to develop a framework, consistent with human rights principles and obligations, that supports the global realisation of rights (Balakrishnan and Heintz, 2019). The Declaration on the Right to Development addresses inequalities between countries. It emerged from demands from post-colonial countries for a framework that supports a more just system of international economic governance (Fukuda-Parr, 2012). It is the only international human rights instrument with the status of a Declaration that addresses the need for joint international action to address the human rights consequences of current global economic arrangements (Fukuda-Parr, 2012). However, the question of who is the duty bearer and who is the rights holder remains unresolved. The way development is conceived in the Declaration is as a collective process, rather than focusing exclusively on a set of individual rights; therefore, the Declaration emphasises both rights at the national level and rights at the individual level. The preamble to the Declaration states: development is a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefts resulting therefrom … the right to development is an inalienable human right and that equality of opportunity for development is a prerogative both of nations and of individuals who make up nations. (United Nations, 1986: Preamble) Distribution is a central concern of the Declaration. It attempts to address the issue of global inequality between countries and the process by which those inequalities came about. In addition, the Declaration considers the distribution of the benefts of the process of development and the right of peoples to selfdetermination and to full sovereignty over their natural wealth and resources. As the Declaration on the Right to Development states, there is a need “to promote a new international economic order based on sovereign equality, interdependence, mutual interest and cooperation among all States, as well as to encourage the observance and realization of human rights” (United Nations, 1986: A/ RES/41/128). But what exactly should this international order look like? And

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how are issues of sovereignty reconciled with greater interdependence and cooperation (Balakrishnan and Heintz, 2019)? The idea of extraterritorial obligations is one approach for addressing these challenges. Extraterritorial obligations refer to acts and omissions of a government that affect the enjoyment of rights outside of the state’s own territory (ETO Consortium, 2012). Given the current levels of global inequality and the structural inequalities that are refected in the process of globalisation, the question of extraterritorial obligations is central to understanding the barriers to realising human rights. Early reference to what is now referred to as extraterritorial obligations can be found in the International Covenant on Economic, Social and Cultural Rights (United Nations, 1966). The ICESCR recognises that a country has obligations with regard to the realisation of economic and social rights beyond its borders. Article 2(1) of the ICESCR states that governments should take steps, individually and through international assistance and cooperation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means. (United Nations, 1966: Section 2[1]) The ICESCR recognises the need for “international assistance and cooperation” but it falls short of providing a detailed interpretation of the scope of this obligation or how it can be operationalised. Importantly, the ICESCR does not give clear guidance on critical aspects of international law, such as state sovereignty and jurisdiction (Skogly and Gibney, 2010). “International assistance” is frequently interpreted as a justifcation for high-income countries to provide fnancial and other resources to poorer countries, in the form of offcial development assistance (ODA) (Künnemann, 2004). With regard to the redistribution of resources to support the realisation of rights, development assistance has a role to play. However, even if we accept a narrow interpretation of “international cooperation” to mean a need for development assistance, the amount, modalities and form of such assistance still need to be determined (Balakrishnan and Heintz, 2019). For example, ODA does not always come in the form of grants. Instead, assistance is given as loans that must be paid back with interest (Balakrishnan et al., 2016). Infows of ODA are often accompanied by outfows of debt-servicing payments, which include the interest owed and the repayment of the principle (Balakrishnan et al., 2016). If governments are very dependent on ODA as a proportion of government revenue, their budgets become vulnerable to the volatility of aid fows, making it hard to plan expenditures in the long run. The positive impact of ODA on public resources will be reduced if ODA is tied to the purchases of imports from donor countries that cost more than goods and services available locally. Often, technical assistance continues to be procured from donor countries, with the result that some of the ODA that has fown into a recipient country immediately fows back out again to the donor (Clay, Geddes

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and Natali, 2009). Additionally, large amounts of ODA could act as a disincentive for governments to improve tax collection, which in turn minimises the impact that ODA aims to achieve (Balakrishnan et al., 2016). Critically, it is important to recognise that the scope for international cooperation extends well beyond ODA and could potentially include international sanctions, international trade, global capital fows, immigration, corporate conduct and macroeconomic governance. International law implies a commitment to international cooperation, yet the nature and extent of this cooperation with regard to economic and social rights has not been clearly spelled out (Coomans and Kamminga, 2004). The need for international coordination of economic policies, including fnancial policies and regulations, has been broadly recognised, yet there is a need to examine in much greater detail how policy choices made by one country affect the realisation of rights elsewhere (Salomon, 2007). In addition, the obligations of states as members of international organisations that infuence the policies adopted by governments, such as the IMF and the World Bank, are an area of concern (Salomon, 2007; Balakrishnan and Heintz, 2019). Treaty bodies have elaborated extraterritorial obligations with regard to human rights in a number of cases. For instance, General Comment 12 of the Committee on Economic, Social and Cultural Rights focuses on the right to food and explicitly recognises the importance of international cooperation to address issues of food security, hunger, famine and lack of basic nutrition (Künnemann, 2004). Similarly, in the General Comment on the Right to Health, the Committee recognises a collective responsibility to address the risks associated with diseases that can be transmitted across international borders (Coomans, 2011). Although the General Comment is about global public health challenges, there are important parallels to economic governance, such as the need to prevent the spread of fnancial crises from one country to another. Given the need to elaborate the nature of extraterritorial obligations, in 2011 a group of experts on international law and human rights convened in Maastricht in order to develop a core set of principles on extraterritorial obligations in the area of economic, social and cultural rights. The outcome was the Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights. This document explicitly recognised that the policies adopted by governments affect the realisation of rights beyond their own borders: The human rights of individuals, groups, and peoples are affected by and dependent on the extraterritorial acts and omissions of States. The advent of economic globalization in particular, has meant that States and other global actors exert considerable infuence on the realization of economic, social, and cultural rights across the world. (International Commission of Jurists and Maastricht University [ICJMU], 2012: Preamble) The Maastricht Principles elaborate the concept of extraterritorial obligations with regard to jurisdiction, responsibilities and existing human rights obligations.

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Because of this, the Maastricht Principles have far-reaching implications for the formulation and conduct of economic policies for the realisation of rights and for addressing global inequality. One goal of the Maastricht Principles is to shed light on and clarify the legal parameters in which obligations with respect to social and economic rights are met (Salomon and Seiderman, 2012). The Maastricht Principles have been further supported by expert commentary that identifes the existing treaties, agreements and covenants which provide a legal foundation for them (De Schutter et al., 2012). It is important to note that the Maastricht Principles are not, at the current time, legally binding on governments, but represent an interpretation, rooted in existing international law, of the extraterritorial human rights obligations of states. One of the central issues associated with extraterritorial obligations is the question of jurisdiction: whether human rights agreements extend to situations outside of the state’s territory (Skogly and Gibney, 2010; De Schutter et al., 2012; Salomon and Seiderman, 2012). An essential contribution of the Maastricht Principles is to clarify when jurisdiction for human rights obligations applies beyond territorial borders. With regard to economic policy choices, the extraterritorial dimensions of the obligation to fulfl rights, as spelled out in the Maastricht Principles, include the requirement that states should create an environment conducive to realising rights through international cooperation in a range of different areas: international trade, investment, fnance, taxation, environmental protection and development cooperation (ICJMU, 2012: Principle 29). This includes actions within international organisations – such as the United Nations, UN agencies, the World Bank, the IMF and the WTO among others – that contribute to the realisation of rights within and beyond a country’s own territory (ICJMU, 2012: Principle 29). The extraterritorial aspects of the obligation to protect also have signifcant implications for economic policy and regulating the actions of businesses operating across national boundaries (ICJMU, 2012: Principles 23–7). The obligation to protect includes the obligation to establish a regulatory framework that prevents international organisations and transnational corporations from taking actions that undermine the realisation of rights beyond a state’s borders (De Schutter et al., 2012). These obligations include omissions by the state, such as one state’s failure to adequately regulate the actions of third parties in ways that have negative consequences for rights elsewhere (ICJMU, 2012: Principle 24). Civil society organisations have used extraterritorial obligations in organising against certain excessive and unsustainable kinds of development. A clear example is the work done by Pratirodh Samiti (the Anti-POSCO People’s Movement), which formed in 2005 to contest a partnership between the POSCO corporation, based in the Republic of Korea, and the government of the north-eastern Indian state of Odisha. The Movement fought to retain members’ lands so they could continue their sustainable farming practices. Members of the Economic, Social and Cultural Rights Network (ESCR-Net) across India, the Republic of Korea, the United States and the European Union undertook collective advocacy based

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on the existing human rights obligations of the Indian Government, the human rights responsibilities of the POSCO corporation and the extraterritorial human rights obligations of the Government of the Republic of Korea. Their advocacy ended with the cancellation of the project and became a key example of activists using existing human rights obligations to chart a sustainable development agenda (ESCR-Net, 2017; Balakrishnan, 2019).2 The extraterritorial obligations of states with regard to economic governance are not limited to the regulation of corporate behaviour, but also include the policy choices that governments make (ICJMU, 2012: Principles 23–7). Actions by one country in the conduct of economic policy, particularly a large and infuential economy, can affect the economic environment of other countries in ways that potentially undermine the realisation of economic and social rights. Similarly, a failure to adequately regulate markets can have global consequences. As Mary Dowell-Jones (2012: 467) points out, “Problems that emerge in esoteric fnancial markets like credit derivatives can rapidly contaminate broader fnancial markets and the global economy, causing huge human costs”. To give a concrete example of how policy choices are interdependent, suppose the central bank of a large, infuential country – for example, the Federal Reserve in the United States – decides to raise interest rates to meet its own policy objectives. Other countries will suddenly face pressures to also raise their interest rates. This occurs because fnancial fows tend to move out of economies with low interest rates and into economies with higher interest rates, other things being equal. To prevent these fnancial outfows, countries may have to take steps to raise their own rates – with possible consequences for economic growth, the affordability of debt, and the ability to mobilise resources for the realisation of rights. Higher interest rates make borrowing – both public and private – more expensive. If smaller, less infuential and poorer countries are the ones that raise interest rates in response to policy moves elsewhere, this can reinforce existing inequalities by raising the cost and reducing the supply of credit (Balakrishnan and Heintz, 2019). Similar dynamics are evident with exchange rates. If one economy devalues its exchange rate (that is, makes its currency less expensive relative to other currencies), the goods and services it exports will become relatively cheaper while imports will become more expensive. As a result, other countries may experience a decline in the volume of goods and services they are able to sell – the actions of one country affect economic outcomes elsewhere. In order to counteract the devaluation, central banks may respond by lowering their own exchange rates. Policy choices and real outcomes in different countries are connected through various channels, often involving infows and outfows of fnancial capital. Empirical studies have uncovered evidence of these linkages. Foreign interest rates have been shown to have a negative impact on growth in a set of highincome developed economies, with this relationship being sensitive to exchange rate policies (Di Giovanni and Shambaugh, 2012). This demonstrates that interest rates in one country can affect real economic performance elsewhere, and this in turn will affect the realisation of economic and social rights (Balakrishnan and Heintz, 2019).

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These issues are relevant to the extraterritorial dimensions of the obligation to fulfl, as described in the Maastricht Principles. Principle 20 emphasises the need to create an “enabling environment” for the realisation of rights. Applied to monetary policy, for example, this would imply that those conducting interest rate and exchange rate policy in one country should consider the effects that it has on the macroeconomic outcomes in other countries. Pushed further, the ICESCR’s language on international cooperation and the Maastricht Principles’ discussion of obligations with respect to economic policies imply that there is a need to coordinate economic policies across countries in ways that facilitate the enjoyment of economic and social rights. This would also include the need to coordinate policies to reduce global inequalities, particularly when those inequalities impede the realisation of rights (Balakrishnan and Heintz, 2019).

Conclusion There is growing recognition – for example, as refected in the United Nations Sustainable Development Goals – that inequality is a problem and steps need to be taken to address the negative consequences of the extreme polarisation evident in the global economy. This chapter has argued that the human rights framework provides an important entry point to address the structural issues behind existing inequalities, the role for international cooperation and the need for global redistribution. Human rights instruments and principles, such as those contained in the Declaration on the Right to Development and particularly with regard to the Maastricht Principles, provide a frm foundation for moving forward. Equally importantly, the human rights approach, which can be used as a normative framework for evaluating economic policies and development strategies, needs to engage more directly with the pressing challenge of global inequality.

Notes 1 The right to development was proclaimed in the Declaration on the Right to Development (United Nations, 1986). This right is also recognised in the African Charter on Human and Peoples’ Rights and the Arab Charter on Human Rights, and re-affrmed in several instruments including the 1992 Rio Declaration on Environment and Development, the 1993 Vienna Declaration and Programme of Action, the Millennium Declaration, the 2002 Monterrey Consensus, the 2005 World Summit Outcome Document and the 2007 Declaration on the Rights of Indigenous Peoples. 2 See ESCR-Net work on corporate responsibility and advocacy on business and human rights for civil society organising on ETO at www.escr-net.org/escr-net-listservs/corp orate-accountability.

References Balakrishnan, R. and D. Elson (2011) Economic Policy and Human Rights: Holding Governments to Account. London: Zed Books. Balakrishnan, R., J. Heintz and D. Elson (2016) Rethinking Economic Policy for Social Justice: The Radical Potential of Human Rights. London/New York: Routledge.

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Balakrishnan, R. and M. Zard (2017) Why Macroeconomics Matters for Realizing the Right to Health. https://cwgl.rutgers.edu/docman/economic-and-social-rights-p ublications/823-why-macroeconomics-matters-for-realizing-the-right-to-health/fle (accessed 11 June 2019). Balakrishnan, R. (2019) How Human Rights Can Strengthen Prospects for GenderEquitable Inclusive Growth. In Gender Equality and Inclusive Growth: Economic Policies to Achieve Sustainable Development, edited by D. Elson and A. Seth. New York: UN Women Publication. Balakrishnan, R. and J. Heintz (2019) Human Rights in an Unequal World: Structural Inequalities and the Imperative for Global Cooperation. Humanity: An International Journal of Human Rights, Humanitarianism, and Development, 10(3): 395–403. Carmona, M.S. (2006) Obligations of “International Assistance and Cooperation” in an Optional Protocol to the International Covenant on Economic, Social, and Cultural Rights. Netherlands Quarterly of Human Rights, 24(2): 271–303. Clay, E., M. Geddes and L. Natali (2009) Aid Untying: Is It Working? London: Overseas Development Institute. Coomans, F. and M.T. Kamminga (eds.) (2004) Extraterritorial Application of Human Rights Treaties. Antwerp/Oxford: Intersentia. Coomans, F. (2011) The Extraterritorial Scope of the International Covenant on Economic, Social, and Cultural Rights in the Work of the United Nations Committee on Economic, Social, and Cultural Rights. Human Rights Law Review, 11(1): 1–35. Dabla-Norris, E., K. Kochhar, N. Suphaphiphat, F. Ricka and E. Tsounta (2015) Causes and Consequences of Income Inequality: A Global Perspective. IMF Staff Discussion Note, June 2015, SDN/15/13. www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf (accessed 17 July 2017). De Schutter, O., A. Eide, A. Kalfan, M. Orellana, M. Salomon and I. Seiderman (2012) Commentary to the Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social, and Cultural Rights. Human Rights Quarterly, 34(4): 1084–169. Di Giovanni, J. and J. Shambaugh (2012) The Impact of Foreign Interest Rates on the Economy: The Role of the Exchange Rate Regime. Hannover, NH: Dartmouth College. Dowell-Jones, M. (2012) International Finance and Human Rights: Scope for a Mutually Benefcial Relationship. Global Policy, 3(4): 467–70. ESCR-Net (2017) Annual Report 2017. www.escr-net.org/about/what-we-do (accessed 28 August 2019). ETO Consortium (2012) Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social, and Cultural Rights, (2012). http://www. etoco nsortium.org/nc/en/library/maastricht-principles/?tx_drblob_pi1[downloadUid]=23 (accessed 16 December 2016). Fukuda-Parr, S. (2012) The Right to Development: Refraining a New Discourse for the Twenty-First Century. Social Research: An International Quarterly, 79(4): 839–64. International Commission of Jurists and Maastricht University (2012) “Preamble” of Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights, Adopted on 28 September 2011. Maastricht: Maastricht University. www.fdh.org/IMG/pdf/maastricht-eto-principles-uk_web.pdf (accessed 1 August 2019). International Labour Organization (ILO) (2011) A Review of Global Stimulus. EC-IILS Joint Discussion Paper Series Number 5. Geneva: ILO. Künnemann, R. (2004) Extraterritorial Application of the International Covenant on Economic, Social, and Cultural Rights. In Extraterritorial Application of Human Rights

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Treaties, edited by F. Coomans and M.T. Kamminga. Antwerp/Oxford: Intersentia, pp. 201–31. Ocampo, J.A. and R. Vos (2008) Policy Space and the Changing Paradigm in Conducting Macroeconomic Policies in Developing Countries. BIS Papers No. 36. Basel: Bank for International Settlement. Oxfam (2016) An Economy for the 1%: How Privilege and Power in the Economy Drive Extreme Inequality and How This Can Be Stopped. Oxfam Briefng Paper, 18 January 2016. www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp210-economy-onepercent-tax-havens-180116-en_0.pdf (accessed 16 December 2016). Oxfam (2018) Reward Work, Not Wealth: To End the Inequality Crisis, We Must Build an Economy for Ordinary Working People, Not the Rich and Powerful. Oxfam Briefng Paper, January 2018. https://www-cdn.oxfam.org/s3fs-public/fle_attachments/bp-re ward-work-not-wealth-220118-en.pdf (accessed 31 July 2019). Rajan, R. (2011) Fault Lines: How Hidden Fractures Still Threaten the World Economy. Princeton, NJ: Princeton University Press. Salomon, M. and I. Seiderman (2012) Human Rights Norms for a Globalized World: The Maastricht Principles on Extraterritorial Obligations of States in the Area of Economic, Social, and Cultural Rights. Global Policy, 3(4): 458–62. Salomon, M.E. (2007) International Economic Governance and Human Rights Accountability. LSE Law, Society and Economy Working Papers, Department of Law, London School of Economics and Political Science. London: LSE. Skogly, S. and M. Gibney (2010) Introduction. In Universal Human Rights and Extraterritorial Obligations, edited by M. Gibney and S. Skogly. Philadelphia, PA: University of Pennsylvania Press, pp. 1–9. Stiglitz, J.E. (2012) The Price of Inequality: How Today’s Divided Society Endangers Our Future. New York: W.W. Norton & Co. Stone, J. (2016) Neoliberalism Is Increasing Inequality and Stunting Economic Growth, the IMF Says. Independent, 27 May 2016. www.independent.co.uk/news/uk/politics/ neoliberalism-is-increasing-inequality-and-stunting-economic-growth-the-imf-saysa7052416.html (accessed 22 July 2019). United Nations (1966) International Covenant on Economic, Social, and Cultural Rights (ICESCR). GA Resolution 2200A (XXI) (Adopted 19 December 1966; Entered into Force 3 January 1976). 993 UNTS 3 (ICESCR). New York: United Nations. www. ohchr.org/EN/ProfessionalInterest/Pages/CESCR.aspx (accessed 26 September 2015). United Nations (1986) Declaration on the Right to Development. A/RES/41/128, Adopted 4 December 1986. www.un.org/documents/ga/res/41/a41r128.htm (accessed 16 December 2016). United Nations (Undated) The Right to Development at a Glance. www.un.org/en/e vents/righttodevelopment/pdf/rtd_at_a_glance.pdf (accessed 20 July 2019). Verger, A. and B. van Paassen (2012) Human Development vis-à-vis Free Trade: Understanding Developing Countries’ Positions in Trade Negotiations on Education and Intellectual Property Rights. Review of International Political Economy, 20(4): 712–39. World Health Organisation (WHO) (Undated) The DOHA Declaration on the TRIPS Agreement and Public Health. www.who.int/medicines/areas/policy/doha_declaratio n/en (accessed 20 July 2019).

14 Conclusion David Francis, Edward Webster and Imraan Valodia

Overview It is our hope that this book broadens and deepens inequality studies in the global South conceptually, methodologically and empirically. Our intention is to introduce a Southern inequality studies which is interdisciplinary, historically grounded and centred on a focus on power. Of course, a book of this nature cannot be exhaustive. Rather, it is our aim that the chapters in this volume raise and address new methodological and substantive questions about how we think about inequality, and about studying inequality, in the global South. In essence, then, the book operates on two levels. The frst relates to the development of inequality studies as a feld of study. The book raises important questions about how, and frames from where, we approach the study of inequality. While this volume comprises research and writing from authors both in the global North and South, the majority are located in the global South. Grounding inequality studies in the global South geographically is an important step towards developing a Southern approach to inequality studies. In addition to shifting the geographical locus, the chapters in this volume also broaden the defnition of inequality beyond a money-metric focus on inequality of income and wealth, to include theoretical and empirical contributions looking at space, households, education and informality, among others. This book arises out of a concerted process of Southern knowledge creation: The chapters in this book were presented at two conferences hosted by the Southern Centre for Inequality Studies in September 2018 and April 2019, where scholars from across the global South gathered to share conceptual, methodological and empirical work on inequality studies. This process of Southern knowledge creation has been crucial for the development of a book which is interdisciplinary, located in historical context, and grounded in the realities of the global South. From the beginning, the book has been designed to be accessible and affordable, and this is refected both through its pricing, and through its co-publishing in South Africa by Wits University Press. The second level on which the book operates entails a focus on the mechanics of the production and reproduction of inequality in the global South. Through careful case studies examining space and infrastructure, work and the household,

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and capital accumulation, the book illuminates the specifcs of the production and reproduction of inequality. The labour market in the South continues to be one of the key drivers of the reproduction of inequality, and deserves particular focus, as argued in the chapters by Edward Webster on counter power, and Patrick Belser, David Francis, Kim Jurgensen and Imraan Valodia on the national minimum wage in South Africa. But a focus on labour markets alone often obscures the important role of economic power in shaping unequal outcomes, as is so persuasively argued by Sumayya Goga, Pamela Mondliwa and Simon Roberts in their examination of economic power in the metals, machinery and equipment industries. It is also important to understand that the mechanisms which reproduce inequality exist in particular historical moments, and so history and context matter. In this regard, Vishnu Padayachee presents a survey of trends in macroeconomic policy and development in the global South from World War II to the global fnancial crisis and beyond so that we can contextualise the current challenges. Similarly, Alexandre de Freitas Barbosa, Maria Cristina Cacciamali and Gerry Rodgers compare the economic trajectories of Brazil and India in recent years in order to understand how local contexts shape unequal (or equal) outcomes. Furthermore, the relationship between education and inequality is a central and enduring question in inequality studies, and there is a need to approach it from the South. To what extent does education reinforce or rupture the reproduction of inequalities? In her chapter, Stephanie Allais shows that the weakness of technical and vocational education and training (TVET) systems has deep roots in colonialism and the extractive nature of economies established by the colonial powers, as well as the government administrative systems they created and the ways in which education systems interacted with sub-elite jobs.

A Southern approach: developing a research agenda Theory from the South What, then, is required to develop inequality studies from the global South? The Southern approach which we suggest in this book is founded on four principles: Southern theory; historical context; interdisciplinarity; and a theory of power. Firstly, as Banerjee (2018) suggests, a theory of the South needs to begin by thinking across multiple traditions of thought – traditions that do not exclude the European and the Northern, but that include others from across the global South. Thinking across traditions is based on the realisation that the division of thought into territorially bound “national” traditions is a colonial phenomenon, which systematically repressed earlier cross-cultural geographies of intellectual exchange. This book has suggested ways in which this could proceed. For example, Dilip Menon, in his chapter on thinking about inequality in the global South, highlights important differences between hierarchy and inequality, and how these differences shape our approach to thinking about, and studying, inequality in the South. Going forward, there is a need for a systematic review of

Conclusion 259 Southern theories to discover how they can assist us in understanding the production and reproduction of inequality. History and context matters Secondly, we have argued that it is vital that inequality studies are grounded in historical and material context. This will require much careful empirical work, both to locate the trajectory of inequality in historical contexts across a divergent global South, but also to develop an accurate picture of the current state of inequalities in the South. One example is the current focus on the future of work, and the impacts of technological change on the world of work and inequalities. While there is much new and exciting research in this area, it is largely, if not exclusively, founded on the empirics of the future of work in the global North. There is a notable gap in data on how technology impacts work in the global South, which is different from the North in many important ways, most notably in its high level of informalisation. This can best be addressed by a systematic study of technological change and the future of work in the global South. The introduction of new technology to the world of work is leading to new types of vulnerabilities among workers, and these need to be better understood if they are to be addressed. The South is characterised by a signifcant informal economy, widespread unemployment and high levels of precariousness in work. It is imperative that the dynamics and implications of the future of work are better understood, and that economic and social policy is designed to confront and address these challenges. For these reasons, the South is also where the inequality effects of technological change will be largest and most keenly felt. Furthermore, while gender inequalities and a patriarchal order are global phenomena, there are unique gender inequalities in the global South, including very low labour force participation by women in many countries, and pronounced occupational segregation – for example, the highly gendered nature of domestic work and care work. This gendered nature of work is explored by Hibist Kassa in her examination of the crisis of social reproduction in petty commodity production and large-scale mining in Ghana and South Africa. Relatedly, Akua O. Britwum and Ben Scully draw on the recent revival of work on Social Reproduction Theory, which allows us to think about inequality in a way that includes but extends beyond income. But in many other instances, current discussions on the future of work are being conducted with very little, if any, consideration of the specifcities of employment and unemployment in the global South. Indeed, the discussions to date view the developing world as a passive recipient of technological change, whose labour markets will need to adjust to the trends in the major capitalist economies of the global North. Moreover, the debate pays little attention to the implications for the inequality of these processes of technological change and associated labour market adjustments – between different employed and unemployed groups, within and between households, between women and men, between urban and rural, between young and old, and between countries. There

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is therefore a need to locate this debate frmly in the global South, both geographically and methodologically. An interdisciplinary inequality studies Thirdly, we have proposed that inequality studies must be interdisciplinary. To date, the feld of inequality studies has largely, although not exclusively, been dominated by quantitative analysis by economists. However, as the chapters in this book show, inequality manifests in various ways and in various spaces across the life of an individual, and it is important that inequality studies moves beyond a narrow economic focus to transcend traditional academic boundaries, and incorporate work across the social sciences. The reason we argue for an inequality studies that is interdisciplinary is because the social and historical contexts are crucial, and in order to understand these, we need to draw on the skills in disciplines such as sociology, anthropology, development studies, politics, history, geography and law. This approach, of course, raises some important methodological and conceptual questions which we have not explored in this book: What do we mean by interdisciplinarity in inequality studies, and how is this different from a multi-disciplinary or multidimensional approach? Does interdisciplinarity go far enough, or should we instead aim for a transdisciplinary inequality studies? Inequality studies is an emerging feld of study, and its exact parameters are not yet clearly defned. This book is the frst step, bringing together economics, sociology, anthropology, history, geography and urban studies, law and education in a multi-disciplinary collection. This approach allows the bringing together of a chapter on urban studies – in the form of the investigation of infrastructures of urban inequalities by Margot Rubin, Melanie Samson, Sian Butcher, Avril Joffe, Stefania Merlo, Laila Smith and Alex Wafer – and a chapter on the links between human rights and inequality – as highlighted by Radhika Balakrishnan. Without at least multidisciplinarity, it would not be possible to draw together work with such divergent theoretical and methodological approaches, that together offer a richer account of the reproduction of inequality and some of its possible solutions. Beyond multi-disciplinarity, how necessary is interdisciplinary work? The book has presented a number of instances of interdisciplinary work between sociologists and economists – most notably the introductory chapter – and we believe this theoretical and methodological link builds on an emerging approach to thinking about inequalities. As Antonelli and Rehbein (2018: 2) argue: the sociology of inequality can teach economics a humbler empirical approach as well as more refexivity. Economics, in turn, can teach sociology the aim of drawing a broader picture, and the recognition of the inevitably political character of a topic like inequality. But this is only the beginning, and there is much more interdisciplinary work needed to understand the multiple dimensions of inequality in all its complexities.

Conclusion 261 Foregrounding power in inequality studies Finally, we propose that the concept of power must sit at the heart of inequality studies, because inequality is primarily a power relation. Power is, of course, produced and reproduced at the intersection of race, class, gender, sexuality and other aspects of identity. An intersectional approach is necessary in order to understand the way in which these different dimensions of power interact to reproduce inequality. While power underpins all social relations, it is often taken for granted or completely overlooked as it is often hidden behind other social relations. Resistance to power emerges through engendering counter-hegemonic projects that are intertwined with alternative everyday practices. In his chapter, Edward Webster traces the origins and development of counter power in the workplace through the rise of a militant and powerful labour movement. Inherent in a power-centric approach is the understanding that structures matter, and this emphasises the importance of class, both as a unit of analysis and as an intellectual approach.

Concluding thoughts The chapters in this book present a persuasive argument that while inequality is a global problem, we cannot assume that the forces which drive its production and reproduction are universal. Due to the current geographical and fnancial landscape of the academy, inequality studies have so far been grounded in the North, with the result that a Northern understanding of the causes and solutions to inequality has dominated the feld, and has even been adopted as universal. We are not suggesting that a Southern approach be developed in isolation from Northern studies. It must, instead, be built in dialogue with the North. Inequality studies must be as much about challenging inequality as it is about understanding it. This requires that inequality studies be rooted both in the policy process and in the lives of those who experience inequality as well as those who struggle against it. Inequality studies must both inform and be informed by the experiences of those most affected. This can best be achieved by anchoring our Southern project in a range of strategic partnerships covering government departments, non-governmental organisations and the grass-roots social movements that are emerging in the workplaces, informal settlements and townships in the rapidly changing landscape of the global South.

References Antonelli, G. and B. Rehbein (eds.) (2018) Inequality in Economics and Sociology: New Perspectives. Abingdon, Oxon/New York: Routledge. Banerjee, P. (2018) Theories from the South 1: An Interview with Prathma Banerjee. 6 November 2018. www.borderlines-cssaame.ort/posts/2018/11/6/theories-from-the-sou th-i-an-interview-with-prathama-banerjee (accessed 3 March 2019).

Index

Page numbers in bold refer to tables. Page numbers in italics refer to fgures. accumulation 77–8, 82; capital 185; MME sector 92; petty capitalism 125, 134–6; social reproduction 123, 136–7; strategies 184; system of 91, 93 accumulation regime 99–100 Acerinox 79 Africa 26, 27, 48–9, 62, 104, 173; decolonisation 4, 57; development 55, 57, 147, 155n5; education 141, 145–6, 148, 151, 154–5; extractive industries 123, 136; growth 149; inequality in 22, 48, 145; rural economies 184–5; subSaharan 60, 149–50; see also individual countries African Charter on Human and Peoples’ Rights 254n1 African Development Bank (AfDB) 135 African National Congress (ANC) 67, 236n12; economic policy 68–9, 229, 232; labour movement 229; national liberation struggle 222, 223, 227; negotiated settlement 88, 89–91, 93, 229; Tripartite Alliance 215, 232, 237n9; union movement 228 African National Resources Centre (ANRC) 135 African Tiger 67 Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips) 244 Ahmedabad 115 alliance politics 228, 232 Ambedkar, B.R. 30 Anglo American Corporation 88, 89, 132 Anglo Gold Ashanti (AGA) 124, 132, 134–6, 137 Anti-POSCO People’s Movement 252

apartheid: capitalism and 10; colonialism 147; colour bar 225; culture 168; hierarchy 25; housing 174; industry 146; labour reserves 197; migration 126; minerals–energy complex 78; power of labour 221–2; power relations 203; rents and accumulation 82; resistance to 227; rural economies 188–9; social reproduction 184, 186; wage gap 234; water and sanitation 166–7 apartheid workplace regime 14, 224 Arab Charter on Human Rights 254n1 ArcelorMittal 83 ArcelorMittal SA (AMSA) 79, 83, 84, 85, 86, 89–91, 95n8; see also Mittal Argentina 47, 49, 69–70, 172, 209, 212 artifcial intelligence 211 artisanal mining see informal mining Ashanti Goldfelds Corporation 132 Asian Tiger 143 associational power; see power resources approach Augmented Kuznets Curve 46, 46 austerity measures 60, 61, 62–3, 245 Australia 207 Austria 36, 143 auto industry 224 Baran, Paul 59 bargaining: centralised 229; collective 207, 212, 214, 222, 229; workplace 224 bargaining power 94n1, 203, 205, 209, 210, 211, 222 Basic Conditions of Employment Act (1997) 214 basic income grant 211

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Index

Bengaluru 115 Benoni 128 Bharatiya Janata Party (BJP) 111, 114, 115 black economic empowerment (BEE) 91, 230 Bolsa Escola 106 Bolsa Familia 9, 64, 106, 108 Bolsonaro, Jair 64, 111, 113–14 BOSASA 236n10 boycott campaigns 128 Brakpan 128 Brazil 9, 15, 42; agrarian system 108; economy of 62–4, 102, 258; growth regimes (1940–80) 103–4; growth regimes (1980–99) 104–5; growth regimes (2000–13) 105–8; growth regimes (since 2014) 111–16; inequality in 69–70, 110, 112–14, 116–17; labour markets 107–8, 111; measures of inequality 100–3; minimum wage 207, 208, 209, 212; political forces 112; poverty in 109–11; vocational training 143 Bretton Woods system 48, 56, 58, 63, 68 Bus Rapid Transit (BRT) 171 Bush, George W. 49 Business Assistance Agreement (BAA) 90 Buthelezi, Mangosuthu (Gatsha) 236n4 Cambridge Capital Theory 37 Canada 38 capabilities 16, 226–8, 234 Cape Verde 208 capitalism: apartheid 10, 91; comparative 145; core-periphery view 47; elites 26, 28; Golden Age 55–6, 58; pathdependency 147; petty 124, 125, 126, 129, 134, 136–7; political economy 59; rural areas 185; varieties of 100, 144 Capitation Grant 192 Cardoso, Fernando Henrique 106, 113 care work 124–5, 259; aged care 94–6, 196, 197; child care 186, 192, 196, 197, 198; Ghana 129; global South 126; state capacity 135 cartels 86 caste 23, 24, 25, 28–31 casualisation 229 certifcation systems 143 Ceylon 207 Chatterjee, Partha 13 Chicago School 23 child care see care work Chile 47, 49

China 35, 46, 47, 49, 70, 105; economy 244; global crisis (2008) 244; growth 241; minimum wage 208, 212 civil society 215, 227, 252 class: caste 25; education 148, 150; inequality 10, 161, 185, 260; infrastructure 166; Marxism–Feminism 161; South Africa 234; spatial separation 172; workplace 234 class formation 184–7 coalitional power 225 Cobb–Douglas distribution theory 33 collective bargaining 207, 212, 214, 222, 229 colonialism: accumulation strategies 184, 186, 198; anti-colonial movements 223; development 57–8; education 147–9; global South 25; hierarchy 25; inequality 22; infrastructure 166, 172; legacy of 14, 206; path-dependency 147–9; racism 177; rural economies 188–9, 197; settler 98, 224; social reproduction 126; TVET 142, 258 Colonial Development and Welfare Act (1940) 57 colour bar 225 Columbus Steel 84 Commission for Conciliation, Mediation and Arbitration (CCMA) 214, 216 Commission of Enquiry into State Capture 236n10 Committee on Economic, Social and Cultural Rights 242, 251 community arts centres (CACs) 168–9 community-based cultural facilities (CBCF) 168 Compensation for Occupational Injuries and Diseases Act (1993) 214 Competition Act (1998) 86 Competition Commission 86 competition law 85–6, 89, 93 competition policy 88–9 Competition Tribunal 90 Comunidade Solidaria 106 Confucianism 26 Congress of South African Trade Unions (Cosatu) 214, 215, 228, 230, 231, 232, 236n7, 237n9 contingent democracy 232 Convention on the Protection and Promotion of the Diversity of Cultural Expressions 168 coordinated market economies (CMEs) 144–5, 229

Index core-periphery concept 6–7, 7, 47 Corridors of Freedom 171–2 corruption: Brazil 112; India 114; South Africa 90, 91, 236n12 Cosmo City 174, 178n3 Costa Rica 207 counterhegemony 13, 16 counter power 203, 221–2, 223, 235, 258, 260 Cuba 207 culture: and inequality 22, 168; and struggle 223 Czech Republic 208 Dalits 28–31 decent work 211, 212, 214, 229 Declaration of Human Rights 4 Declaration on the Rights of Indigenous Peoples (2007) 254n1 Declaration on the Right to Development (1986) 242–3, 249, 254, 254n1 decolonisation theory 13 de-industrialisation 33 De Kock Commission 68 democratic rupture 231 demonetisation 114 Denmark 143 Department of Arts and Culture 168 Department of Labour 216 Department of Trade and Industry (DTI) 87, 89, 90 dependency theory 13, 59 depreciation of currency 50 deregulation 245, 247 devaluation 50 developing countries 259; economies 55, 58–61, 70, 149, 244–5; education 142; growth 9, 56–7, 103; human rights 242, 243; inequality in 33, 42, 43; minimum wage 207–10; political economy 76, 94n3; social production 84 development: concept of 249; right to 242–3, 254n1 developmentalism 71 development assistance 250 developmental state 136, 143, 146, 154 Development Bank of Southern Africa 88 development economics 58–9 Deininger/Squire data set 41 disruptive power 224 division of labour 224 domestic work 214, 259 Du Bois, W.E.B. 23, 31

265

East Africa 36 East Asian Miracle 35 East Asian Tigers 49 East Germany see German Democratic Republic ecology 168 economics: Treasury (orthodox) view 61; types of 33; see also macroeconomics; microeconomics Economic, Social and Cultural Rights Network (ESCR-Net) 252–3 economy: structure of 53–4 education: class 148, 150; colonialism 147–9; general 142; higher 143, 150; inequality 11, 153, 154, 258; labour markets 149–51; massifcation 142, 144, 152, 154; post-colonial 150; see also TVET egalitarianism 23, 24, 25 Emergency Management Schemes 192 Employment Conditions Commission (ECC) 214 Employment Equity Act (1998) 234 Employment Equity Commission (EEC) 214 employment levels 209–10, 216, 217 endogenous enforcement 210 energy pricing policy 83 equality: existence of 23 Eskom 83 Estimated Household Income Inequality (EHII) 41–2 Estonia 208 Ethiopia 66–7, 141, 145–51 Europe 207, 252–3 Eurostat 40 Eurozone 49 exchange rates 50 existential inequality see inequality Expanded Public Works Programme (EPWP) 216 expansionary fscal contraction 61 extraterritorial obligations 241, 250, 251 extraversion 7 Exxaro 89 Fanon, Frantz 13 fault lines 230, 235 Federation of South African Trade Unions (Fosatu) 226 fnancialisation 245–6 fnancial markets 245–7, 253 foreign direct investment (FDI) 94, 104, 105

266

Index

fourth industrial revolution 210–11, 259 Frank, Andre Gunder 59 free trade 34 future of work 210–12, 259 G20 countries 57 galamsey see informal mining Gauteng 123 gender: division of labour 197–8; economic liberalisation 123; social reproduction 194–6; women’s status 187 gender inequality see inequality General Agreement on Trade in Services (GATS) 244 German Democratic Republic (GDR) 35, 47 Germany 37, 46, 143, 208, 229 Germiston 128 Ghana: care work 129; employment patterns 124; higher education 151; household income 190; inequality 186; kinship networks 193–4; mining 123, 128–9, 132–4; poverty 146; precarious work 187; rural economies 188–92; social grants 191–2, 192, 197; social reproduction 184–7, 194–6; TVET 141, 145–51 Ghana Chamber of Mines 135 Ghana Health Service 135 Ghana School Feeding Programme 191 Gini coeffcient 8, 9, 41–2, 100, 100–1, 101, 110; Brazil 109, 110, 113; India 110; South Africa 212 global boom: 1970s 49 global commodity chain 126 global crisis: 1980s 49, 56, 104, 148; 2008 50, 56–7, 105, 106, 111, 114, 244–5, 245, 246, 247, 258; effects of 246–8; see also individual countries Global Fund 135 global governance 247–54 globalisation: capital fows 78, 79; deregulation 104–5; economics of 43, 83; global South 206; human rights 251; neo-liberal 100; precarious work 208; rents 92; South Africa 78–9, 88 global North 259; characteristics of 4, 5, 8–9; inequality 1, 22, 50, 57, 137; inequality studies xv, 17, 59, 257, 259, 260; labour 34, 155; macroeconomic policy 56; proletarianisation 184; regulation 245; social reproduction 125, 129

global production networks 76 global South: anti-colonial movements 223; approach to inequality 13–17; care work 126; characteristics of 4, 8; colonialism 25; economies of 125; fnancial institutions 244; future of work 211; gender inequality 123; geography of 22; globalisation 206; hierarchy 22–3; inequality in 1; inequality studies xv, 257–61; internationalisation 92; minimum wage 205, 217; neo-liberalism 240; regulation 245; skills shortages 141; social change 3; theory of 13–14; urbanisation 161, 170–1 global value chains 63, 82; Africa 154, 155n5; MME sector 83, 92; power relations 76–7, 93 Great Depression 207 Greece 49, 245 Green Revolution 103, 108 Group Areas Act (1950) 129 growth: developing countries 56; inequality 35, 241; interest rates 253; regimes 99–100, 102–4, 111–17; see also individual countries Growth, Employment and Redistribution (GEAR) 69, 88, 232 Growth for All 88 Guedes, Paulo 113 habitus 10–11 Haile Selassie 66 Hani, Chris 186 Harmony Gold 86 Harris–Todaro model 36 heritage 173–4 Hicks-neutral technical change 33 hierarchy 1; ambition 27–9; inequality 22–4, 258; relationships 24–7, 30–1; spirituality 29–31 Highly Indebted Poor Country Initiative (HIPC) 191 Highveld Steel and Vanadium 84, 95n7, 95n8, 224, 227, 232 Hindu fundamentalism 114, 115 HIV/AIDS 244 hlonipha 27 holism 25, 26–7 households 121, 125, 190, 194, 213, 248 housing: RDP houses 174–5, 178n2; social 175 human rights: economic policies 248–54; fnancial markets 245–7; framework and

Index law 204, 241–3, 254; global governance 247–54; inequality 241, 248, 260; principles 232–3, 246–7 hybrid organisations 235 Imperial Crown Trading (ICT) 91 import-parity pricing 86 import substitution industrialisation (ISI) 62, 63, 68, 128, 144 income inequality see inequality India 9, 13, 46, 47, 49; agrarian system 108; caste 23; Dalits 28–31, 114; economy 64–6, 102, 114, 244, 258; Empire 25; global crisis (2008) 50; growth regimes (1940–80) 103–4; growth regimes (1980–99) 104–5; growth regimes (2000–13) 105–8; growth regimes (since 2014) 111–16; human rights 252–3; inequality 70, 110, 112–17, 241; labour markets 107–8, 111, 115; measures of inequality 100–3; minimum wage 207, 212; NREGA 9, 106, 114, 209; political forces 114–15; POSCO Corporation 252–3; poverty in 109–11, 114; Scheduled Tribes 114 Indian National Congress 106, 109, 111 indigenous knowledge 128 individualism 24, 26 Industrial Conciliation and Arbitration Act (1894) 207 Industrial Development Corporation (IDC) 89 inequality: accumulation 77; alternatives to 203–4; anti-competitive conduct 86; causes of 16, 33–4, 99, 241; class 10, 161, 185, 197–9; Constitution 12–13; culture 22; economic structure 53–4, 94; education 11, 121, 153, 154, 258; exchange rates 50; existential 3–4, 17n2, 236n6; fnancial markets 245–7, 253; forms of 3, 165, 184–7, 221; gender 10, 126, 176, 197–9, 259; geography of 43–50; global nature of xv, 240, 254; global South 1, 3, 60, 205; growth regimes108–11; hierarchy 22–31; human rights 248–54, 260; infrastructure 161, 169, 175–6; income 1, 4, 8, 8–11, 41–3, 44–5, 46, 57, 60, 62, 75, 79, 100, 101, 116, 141, 184, 203, 205, 209, 212–13, 213, 235, 241; labour markets 213, 217, 229, 258; macroeconomics 69–71; measuring 1, 33–5, 38–42; minimum

267

wage 203, 205–6, 208, 209, 212, 216, 217; policies against 91–22; politics 47–50, 112–14; poverty 3, 205; race 10; rents 93; reproduction of 5, 257–8; rural 12; skills levels 141; spatial 161, 167, 170, 176; structural adjustment 60–1; trends in 48–50; urban 176, 260; wage differentials 234, 241; wealth 11–12; workplace order 233–6; see also individual countries inequality paradox 223, 235 inequality studies 260; focus of 17, 205; global South xv, 1, 257–61; lessons from 9–13; Southern approach 13–17; status quo 5–9 informal economy 209, 259; see also precarious work informal mining: artisanal 123, 124, 127; galamsey 123–4, 128–9, 132–4, 188; women in 136; zama zama 123–4, 129–31 infrastructure: class 166; Corridors of Freedom 171–2; cultural 168–9; defnition 163–4; inequality 161, 164, 169, 175–6, 260; and people 175–8; politics 165–9; rents 166; spatial 169–72; the state 166; temporality 172; waste management 177–8; water and sanitation 166–9 Institute for Industrial Education (IIE) 236n4 institutional power see power resources approach Integrated Agricultural Support Programme 192 interdisciplinarity 1, 15, 258, 260 international cooperation 251 International Covenant on Economic, Social and Cultural Rights (ICESCR) 241–2, 250, 254 International Covenant on Human Rights 242 international fnancial institutions see IMF; World Bank internationalisation 83, 92 International Labour Organization 211, 228 International London Metals Exchange 87 International Monetary Fund (IMF) 56, 59, 70–1, 88, 244; Brazil 62; Ethiopia 67; fscal space 247; Ghana 191; global South 94; human rights 252; international cooperation 251

268

Index

International Trade Administration Commission (ITAC) 87 intersectionality 16, 260 Iran 8, 47, 49 Iraq 47, 49 Ireland 36, 49, 208 Iron and Steel Act (1928) 94n6 Iron and Steel Industrial Corporation (Iscor) 79–80, 81, 83, 84, 89–90 Israel 208 Japan 46, 143, 144 Johannesburg Development Agency 171 Johannesburg Stock Exchange (JSE) 78 Joint Economic Committee (1982) 33 Katlehong 225 Keynes, John Maynard 58 Keynesianism 68, 71, 240 kinship networks 187, 193–4, 197 knowledge production xv, 1, 6–7, 257 Korea 35, 143, 252–3 Kumba Iron Ore 89, 91 Kuznets Curve 46, 50, 70 Kuznets, Simon 33, 34, 35, 46, 49, 59 KwaThema 123, 129–31, 137 KwaZulu-Natal 27, 236n4 labour brokers 214, 233, 236n8 labour markets 259; Brazil 107–8, 111; fault lines 235; fourth industrial revolution 210; education 149–51; Ethiopia 147; gender 123; Ghana 147; households 121; India 107–8, 111; inequality 213, 258; institutions 234; nature of 209–10; reproduction of inequality 203; segmentation 209; skills formation 144–5 labour foors 209 labour movement see trade unions labour regime (post-apartheid) 229 Labour Relations Act (LRA, 1995) 214, 225 labour reserves 197 labour segmentation 132 labour share 230, 230 land 14, 173–4 Lao People’s Democratic Republic 208 large-scale mining (LSM): Ghana 128, 134; social reproduction 123, 259; the state 126–9 Latin America: dependency theory 13, 59; education 143–4, 154, 156n11; global crises 56, 104, 105; global South 4;

governance 50; inequality 28, 69; minimum wage 207 Leninism 232 liberalisation see trade liberalisation liberal market economies (LMEs) 144–5, 153, 229 lighthouse effect 209 Livelihood Empowerment Against Poverty (Leap) Social Grant Scheme 191–2 livelihood strategies 193, 197 Luthuli, Albert 236n4 Lula da Silva, Luiz Inácio 63, 106, 111, 112, 117n7 Luxembourg Income Study 35, 38, 40 Maastricht Principles 251–2, 254 Mabarete 233 Mabhida, Moses 236n4 Macao 208 Macroeconomic Research Group (MERG) 67, 68–9 macroeconomics: Brazil 62–4; defnition 33, 71n2; Ethiopia 66–7; India 64–6; inequality 60–1, 69–71, 244–5; ideological paradigms 57–62; Keynesian 58–9; periodisation 55–7; policy 55, 258; South Africa 67–9 Mahalanobis, P.C. 58 Mahatma Gandhi National Rural Employment Guarantee Act see NREGA Malaysia 208 Mandela, Nelson 236n4 Marikana 221, 222, 233 Marxism–Feminism 161, 185 Mbizana Municipality 195 metals, machinery and equipment (MME) sector 75–6, 80, 81, 258; description of 77–82; global dynamics 84–5; policy levers 85–7; political economy 91–4; power relations 87–9; rents 89–91, 93; structure and ownership 82–4 Mexico 42, 207, 212 microeconomics 33 migration 126, 128 Millennium Declaration 254n1 millennium development goals (MDGs) 134 Minamata Convention 138n5 minerals–energy complex (MEC) 77–8, 80, 83, 94n5, 229 minimum wage 258; basic income grant 211; development of 212–17;

Index employment levels 209–10, 216, 217; fourth industrial revolution 210; history of 206–8; impact of 208–12, 217, 234, 236n11; India 109; inequality 203, 205–6, 209, 212, 216, 217; legislation 205; purpose 206; welfare state 217 mining see informal mining; large-scale mining Mittal 81, 83, 84–5, 89; see also ArcelorMittal Modi, Narendra 65 Modinomics 115 monopsony 210 Monterey Consensus (2002) 254n1 Movimento Democrático Brasileiro (MDB) 113 Myanmar 208 National Commercial Training Service (SENAC) 143 national democratic revolution 277 national democratic struggle 234 National Economic Development and Labour Council (Nedlac) 214–5, 217–8, 228, 232 National Health Insurance Scheme (NIHS) 191 National Industrial Participation Programme 87 National Industrial Training Service (SENAI) 143 National Labour Relations Board 33 national liberation struggle see ANC national minimum wage see minimum wage National Minimum Wage Act (2018) 215 National Minimum Wage Commission 215, 216, 217 National Party 91 national qualifcations framework 144 National Rural Employment Guarantee Act (NREGA, 2005) 9, 106, 114, 209 National Union of Metalworkers of South Africa (Numsa) 231, 232, 237n10 National Youth Employment Programme 192 Natives (Urban Areas) Act (1923) 127 negotiated revolution 229 Nehru, Jawaharlal 64 neo-liberalism 30; agriculture 188; birth of 61–2; Brazil 116; economic policy 187, 207–8; Ethiopia 66; globalisation 100; import substitution industrialisation 63;

269

India 116; inequality 240; infrastructure 176; Latin America 69–70 neo-Marxism 59 Netherlands, the 143, 229 New Developmentalism 63–4 New Jersey 210 Newly Industrialised Countries (NICs) 59 New Zealand 207 Nkrumah, Kwame 189, 191 Nordic countries 229 Oakbay Investments 91 Obama, Barack 49 Obuasi 123, 124, 128–9, 132–4, 136, 137n1; social reproduction 186; women in 196 Obuasi Malaria Control Centre (OMCC) 135 Obuasi Malaria Control Program (OMCP) 134–5 offcial development assistance (ODA) 250 Okun’s Law 33 organisational power see power resources approach Organisation for Economic Co-operation and Development (OECD) 46, 89, 208 ornamentalism 25 outsourcing 229 overvaluation 50 Pakistan 115 participatory democracy 232 Partido do Movimento Democrático Brasileiro (PMDB) 112, 113 Partido dos Trabalhadores (PT) 106, 107, 109, 111, 112, 113 path-dependency 147–9, 154 patronage 22, 24, 26, 28, 29, 30, 167 Pennsylvania 210 Penn World Tables 34 Pentecostalism 30 petty commodity production 123, 124, 125, 126, 259; Ghana 128, 134, 136–7; South Africa 137; women 129 Phillips Curve 33 Poland 208 political settlements framework 77, 93–4 Portugal 49 POSCO Corporation 252–3 positional goods 151–2 postcolonialism 170 poverty xv; development 242; feminisation of 129; households 213; inequality 205;

270

Index

reduction of 60, 205; see also individual countries Poverty Reduction Support Programmes (PRSPs) 61 power: access to 22; bargaining 94n1, 203, 205, 209, 210, 211, 222, 224; of capital 248; coalitional 225; despotic 166; disruptive 224; economic structure 53–4; global governance 248; global value chains 93; hierarchy 24; holding 77; inequality xv, 4–5, 6, 10, 16, 203, 205, 221; inequality studies 260; intersectionality 11; infrastructural 165–6; labour markets 205; policy decisions 92; policy frameworks 76–7; MME sector 82–91; racial structure 224; radical reform 226; typology of 77, 94n1, 258; and value 23, 228 power resources approach (PRA) 222, 222–8, 235; associational (organisational) power 222, 223, 225, 233, 234; institutional power 222, 223, 225, 233, 234; societal power 222, 223, 225; structural power 222, 224, 233; see also capabilities Prebisch, Raul 59 precariat 15 precarious work 123, 187–8, 197, 233, 259; and minimum wage 206, 208, 210–11 Preferential Procurement Policy Framework Act (2000) 87 Price Preference System (PPS) 86–7 Principal Instigator, Goldman Sachs (PIGS) 49 privatisation 83 pro-cyclical policy 245 progressive competitiveness 232 PRONAF (Programa Nacional de Fortalecimento de Agricultural Familiar National) 108 public–private partnerships (PPP) 123, 135–6, 137 Purchasing Power Parity (PPP) 34, 38 quantity theory 33 racial Fordism 68 racism 10, 25, 177, 224 radical economic transformation 234 Ramaphosa, Cyril 215 Real Plan (1994) 101, 105 reclaimers 176–8 Reconstruction and Development Programme (RDP) 174, 230

recycling value chain 177; see also reclaimers regulation: vs. deregulation 245; frameworks 252; MME sector 82–7 Regulation School 99–100 remanence 25 rents 82, 83, 87, 89–91, 92, 93, 132, 166 representational gap 233 reproduction see social reproduction retirement 186, 192, 198 Rio Declaration on Environment and Development (1992) 254n1 Rostow, W.W. 58 Rousseff, Dilma 64, 111, 112 rural economies 196–7, 199 rural inequality see inequality Russian Federation 47, 49, 208 Rustenburg 233 Sabalele 186 Sabalele Development Centre 186 Saldanha Steel 84, 85, 90 Samiti, Pratirodh 252 sanitation 167 Scandinavia 36, 46 Scaw Metals 95n7, 95n8 Sector Education and Training Authorities (SETAs) 229 settler colonialism 224 Sharpeville Massacre 68, 223 Shoprite 234 shop-steward movement 224, 225, 228 Singapore 143 Singh, Manmohan 65 skills formation 141, 142–3, 154–5, 155n5 slave trade 147 Slovak Republic 208 Slovenia 208 social foor 208–9 social grants: Ghana 191–2, 192, 197; minimum wage 209; South Africa 190–1, 197, 198, 214 Socialist Revolutionary Workers Party 237n10 social movements 223, 227 social movement unionism 225 social reproduction 259; accumulation 136–7; class formation 184–7; crises of 134–6; gender 126, 194–6; land 198; precarious work 187–8; production 121, 124–6; trade liberalisation 129; TVET 142 Social Reproduction Theory (SRT) 161, 185, 259

Index Social Security and National Insurance Trust (SSNIT) 191 societal power see power resources approach South Africa: boycott campaigns 128; class 234; democracy in 232; economy 67–9, 75–6, 83; higher education 151; household income 190; industrial relations system 228; inequality in 3, 17, 42, 70, 75–6, 212–13, 213, 223, 234; inequality studies 9–13; infrastructure 167; kinship networks 193–4; minimum wage 203, 206, 207, 212–17; mining 123, 126–8; MME sector 75–94; postapartheid period 87–9, 91–4, 167, 175, 189, 203; post-apartheid workplace order 222, 223, 229; precarious work 187–8; rural economies 188–92; social grants 190–1, 197, 198, 214; social reproduction 184–7, 194–6; TVET 141, 145–51; unemployment 146, 213, 213, 214; waste management 176–8; White Paper on Arts, Culture and Heritage 168 South African Bureau of Standards (SABS) 90 South African Clothing and Textile Workers Union (Sactwu) 232 South African Communist Party (SACP) 88, 215, 232, 236n4, 237n9 South African Congress of Trade Unions (Sactu) 227, 236n4 South African Democratic Teachers Union (Sadtu) 231 South African Foundation (SAF) 88 South African Post Offce 233 Southern African Development Community (SADC) 81 Southern Centre for Inequality Studies (SCIS) xv, 42, 257 Soweto Uprising (1976) 225 Spain 49 Springs 128 Sri Lanka 207 Standardized World Income Inequality Database (SWIID) 42 the state 166; Brazil and India 100, 107, 109, 116; capital 37, 230; education 143, 145; housing 173; human rights 245, 246–7, 250, 252; inequality and 26, 175; infrastructure 163, 165–6, 167, 169, 176; labour 207, 227, 232, 233; mining 126–9, 134, 136; MME sector 77, 82–7, 89, 90, 93; role in economy 56, 61, 63–4, 211, 240;

271

social movements 223, 225; social reproduction 123, 124, 126, 135, 137; space 170, 172; water meters 167 state capture 91, 236n10 strategic unionism 232 stratifcation 23, 25; see also caste strikes: 1973 (Durban) 222, 224; 1984 (stayaways) 225 structural adjustment 56, 148; Ghana 128, 191; inequality 60–1; see also International Monetary Fund structural power see power resources approach subaltern school 13 survivalist improvisation 27 sustainable development 135–6 Sustainable Development Goals 168, 254 Sweden 36 Switzerland 143 tailing storage facility (TSF) 129–30 Taiwan 35, 143 tariffs 83, 84, 85, 86, 90 taxation 37–8, 248, 252 tax collection 251 technical and vocational education and training (TVET): attitudes to 154; development of 142–5; ftness for purpose 151–5, 258; higher education 150–1; nature of 141, 142; postcolonialism 148–9, 150; systems of 121 Techno-politics 166 Temer, Michel 111, 113 temporality 172–5, 177 Theil statistics 40, 41 thinking tools 164–5 trade liberalisation 91–2, 123, 124; effects of 136; Ghana 146; labour patterns 125; post-apartheid 128; social reproduction 129; South Africa 146 trade treaties 244 trade unions 260; African (black) 225, 228; education in 232; independent 227; informal workers 235; lack of power 88; leadership and base 231–2; membership 208; mining 128; MME sector 90, 93; post 1973 strikes 222; social dialogue 214–5 ; transition to democracy 228, 230–3 transition from below 227 Transit Oriented Development (TOD) 171, 172

272

Index

transnational corporations (TNCs) 76, 83, 84; growth 104; regulatory frameworks 252; rents 87, 92; skills formation 155n5 Transnet 87, 90 Tripartite Alliance 215, 237n9 Truth and Reconciliation Commission (TRC) 9, 10 Turkey 212 Ubuntu 27 ukusela 30 unemployment 213, 213, 214, 259 Unemployment Insurance Act (2001) 214 Unemployment Insurance Fund (UIF) 214 ungovernability 203 Union of Soviet Socialist Republics (USSR) 35, 47, 49 United Democratic Front (UDF) 227 United Kingdom 37, 38, 46, 207, 208, 209 United Nations 4, 252 United Nations Industrial Development Organization (UNIDO) 40, 41 United States of America: Bretton Woods institutions 48; Federal Reserve 253; global crisis (2008) 50, 244, 246–7; global economy 248; human rights 252–3; inequality in 8, 37 42, 46; minimum wage 207, 209; taxation 38; trade unions 208 universal basic income 211–12; see also basic income grant University of Texas Inequality Project (UTIP) 39–50 Urban Foundation Think Tank 88 urbanisation 161, 170–1 Uruguay 209 Vavi, Zwelinzima 232 Vienna Declaration and Programme of Action (1993) 254n1 Village Savings and Loans Schemes (VSLS) 186, 192 violence 233, 234, 235 violent pluralism 233 violent solidarity 233 vocational education see TVET

Vocational Training Institutions (VTIs) 143–4, 154 Wage Act (1925) 207 wage foor 210 wage indexation 62 wages: gap 234; public vs. private 231, 231 Walking through the Doors Project 223, 236n7 Washington Consensus 240 waste management 176–8; see also reclaimers water meters 167 water and sanitation 167 wealth creation 93 wealth inequality see inequality welfare states xv, 17, 217 Wiehahn Commission of Enquiry 68, 225 Women’s League of Justice 128 Workers Party (Brazil) see Partido dos Trabalhadores workplace bargaining power 224 workplace forums 229 workplace order 224, 233–6 works councils 229 World Bank 70–1, 88; Ethiopia 66; Ghana 191; global South 94; human rights 252; inequality 34, 38, 41, 244; international cooperation 251; structural adjustment 56, 59, 148 World Health Organisation (WHO) 135 World Inequality Database 101 World Inequality Report 8 World Institute of Development Economics Research (WIDER) 38 World Summit Outcome Document (2005) 254n1 World Trade Organisation (WTO) 244, 252 World War I 37 World War II 37. 55, 100, 128, 235, 258 zama zama see informal mining Zevenfontein 174 Zimele programme 136 Zondo Commission 236n10