Democracy Born in Chains

February 13th, 2011
By Naomi Klein

The inspiring overthrow of Hosni Mubarak is only the first stage of the Egyptian struggle for full liberation. As earlier pro-democracy movements have learned the hard way, much can be lost in the key months and years of transition from one regime to another. In The Shock Doctrine, I investigated how, in the case of post-apartheid South Africa, key demands for economic justice were sacrificed in the name of a smooth transition. Here is that chapter.



Reconciliation means that those who have been on the
underside of history must see that there is a qualitative difference
between repression and freedom. And for them,
freedom translates into having a supply of clean water, having
electricity on tap; being able to live in a decent home and
have a good job; to be able to send your children to school and
to have accessible health care. I mean, what’s the point of
having made this transition if the quality of life of these people
is not enhanced and improved? If not, the vote is useless.

—Archbishop Desmond Tutu, chair of South Africa’s Truth and
Reconciliation Commission, 20011

Before transferring power, the Nationalist Party wants to
emasculate it. It is trying to negotiate a kind of swap where
it will give up the right to run the country its way in exchange
for the right to stop blacks from running it their own way.

—Allister Sparks, South African journalist2

In January 1990, Nelson Mandela, age seventy-one, sat down in his
prison compound to write a note to his supporters outside. It was
meant to settle a debate over whether twenty-seven years behind bars, most of it spent on Robben Island off the coast of Cape Town, had weakened the leader’s commitment to the economic transformation
of South Africa’s apartheid state. The note was only two
sentences long, and it decisively put the matter to rest: “The nationalisation
of the mines, banks and monopoly industries is the policy
of the ANC, and the change or modification of our views in this
regard is inconceivable. Black economic empowerment is a goal we
fully support and encourage, but in our situation state control of
certain sectors of the economy is unavoidable.”3

History, it turned out, was not over just yet, as Fukuyama had
claimed. In South Africa, the largest economy on the African continent,
it seemed that some people still believed that freedom included
the right to reclaim and redistribute their oppressors’ ill-gotten gains.

That belief had formed the basis of the policy of the African
National Congress for thirty-five years, ever since it was spelled out
in its statement of core principles, the Freedom Charter. The story
of the charter’s drafting is the stuff of folklore in South Africa, and
for good reason. The process began in 1955, when the party dispatched
fifty thousand volunteers into the townships and countryside.
The task of the volunteers was to collect “freedom demands”
from the people—their vision of a post-apartheid world in which all
South Africans had equal rights. The demands were handwritten on
scraps of paper: “Land to be given to all landless people,” “Living
wages and shorter hours of work,” “Free and compulsory education,
irrespective of colour, race or nationality,” “The right to reside and
move about freely” and many more.4 When the demands came
back, leaders of the African National Congress synthesized them
into a final document, which was officially adopted on June 26,
1955, at the Congress of the People, held in Kliptown, a “buffer
zone” township built to protect the white residents of Johannesburg
from the teeming masses of Soweto. Roughly three thousand delegates—
black, Indian, “coloured” and a few white—sat together in
an empty field to vote on the contents of the document. According
to Nelson Mandela’s account of the historic Kliptown gathering,
“the charter was read aloud, section by section, to the people in English, Sesotho and Xhosa. After each section, the crowd shouted its approval with cries of ‘Afrika!’ and ‘Mayibuye!'”5 The first defiant
demand of the Freedom Charter reads, “The People Shall Govern!”

In the mid-fifties, that dream was decades away from fulfillment.
On the Congress’s second day, the gathering was violently broken
up by police, who claimed the delegates were plotting treason.

For three decades, South Africa’s government, dominated by
white Afrikaners and British, banned the ANC and the other political
parties that were intent on ending apartheid. Throughout this
period of intense repression, the Freedom Charter continued to circulate,
passed from hand to hand in the revolutionary underground,
its power to inspire hope and resistance undiminished. In the 1980s,
it was picked up by a new generation of young militants who
emerged in the townships. Fed up with patience and good behaviour
and braced to do whatever it took to topple white domination,
the young radicals stunned their parents with their fearlessness.
They took to the streets without illusion, chanting, “Neither bullets
nor tear gas will stop us.” They faced massacre after massacre,
buried friends, kept singing and kept coming. When the militants
were asked what they were fighting against, they answered,
“Apartheid” or “Racism”; asked what they were fighting for, many
replied “Freedom” and, often, “The Freedom Charter.”

The charter enshrines the right to work, to decent housing, to
freedom of thought, and, most radically, to a share in the wealth of
the richest country in Africa, containing, among other treasures, the
largest goldfield in the world. “The national wealth of our country,
the heritage of South Africans, shall be restored to the people; the
mineral wealth beneath the soil, the Banks and monopoly industry
shall be transferred to the ownership of the people as a whole; all
other industry and trade shall be controlled to assist the wellbeing of
the people,” the charter states.6

At the time of its drafting, the charter was viewed by some in the
liberation movement as positively centrist, by others as unforgivably
weak. The Pan-Africanists castigated the ANC for conceding
too much to white colonizers (why did South Africa belong to “everyone, black and white?” they asked; the manifesto should have demanded, as the Jamaican black nationalist Marcus Garvey had,
“Africa for the Africans.”) The staunch Marxists dismissed the
demands as “petty bourgeois:” it wasn’t revolutionary to divide the
ownership of the land among all people; Lenin said that private
property itself must be abolished.

What was taken as a given by all factions of the liberation struggle
was that apartheid was not only a political system regulating who was
allowed to vote and move freely. It was also an economic system that
used racism to enforce a highly lucrative arrangement: a small white
elite had been able to amass enormous profits from South Africa’s
mines, farms and factories because a large black majority was prevented
from owning land and forced to provide its labour for far less
than it was worth—and was beaten and imprisoned when it dared to
rebel. In the mines, whites were paid up to ten times more than
blacks, and, as in Latin America, the large industrialists worked
closely with the military to have unruly workers disappeared.7

What the Freedom Charter asserted was the baseline consensus
in the liberation movement that freedom would not come merely
when blacks took control of the state but when the wealth of the
land that had been illegitimately confiscated was reclaimed and
redistributed to the society as a whole. South Africa could no
longer be a country with Californian living standards for whites
and Congolese living standards for blacks, as the country was
described during the apartheid years; freedom meant that it would
have to find something in the middle.

That was what Mandela was confirming with his two-sentence
note from prison: he still believed in the bottom line that there
would be no freedom without redistribution. With so many other
countries now also “in transition,” it was a statement with enormous
implications. If Mandela led the ANC to power and nationalized the
banks and the mines, the precedent would make it far more difficult
for Chicago School economists to dismiss such proposals in other
countries as relics of the past and insist that only unfettered free
markets and free trade had the ability to redress deep inequalities.

On February 11, 1990, two weeks after writing that note,
Mandela walked out of prison a free man, as close to a living saint as
existed anywhere in the world. South Africa’s townships exploded in
celebration and renewed conviction that nothing could stop the
struggle for liberation. Unlike the movement in Eastern Europe,
South Africa’s was not beaten down but a movement on a roll.
Mandela, for his part, was suffering from such an epic case of culture
shock that he mistook a camera microphone for “some newfangled
weapon developed while I was in prison.”8

It was definitely a different world from the one he had left twenty-seven
years earlier. When Mandela was arrested in 1962, a wave of
Third World nationalism was sweeping the African continent; now
it was torn apart by war. While he was in prison, socialist revolutions
had been ignited and extinguished: Che Guevara had been killed in
Bolivia in 1967; Salvador Allende had died in the coup of 1973;
Mozambique’s liberation hero and president, Samora Machel, had
perished in a mysterious plane crash in 1986. The late eighties and
early nineties saw the fall of the Berlin Wall, the repression in
Tiananmen Square and the collapse of Communism. Amid all this
change there was little time for catching up: immediately on his
release, Mandela had a people to lead to freedom while preventing
a civil war and an economic collapse—both of which looked like
distinct possibilities.

If there was a third path between Communism and capitalism—
a way of democratizing the country and redistributing wealth at the
same time—South Africa under the ANC looked uniquely positioned
to turn that persistent dream into reality. It wasn’t only the
global outpouring of admiration and support for Mandela, but also
the particular way in which the anti-apartheid struggle had taken
shape in the preceding years. In the eighties, it had become a truly
global mass movement, and outside South Africa, the weapon that
activists wielded most effectively was the corporate boycott—both of
South African—made products and of international firms that did
business with the apartheid state. The goal of the boycott strategy
was to put enough of a squeeze on the corporate sector that it would lobby the intransigent South African government to end apartheid. But there was also a moral component to the campaign: many consumers
firmly believed that companies that were profiting from
white supremacist laws deserved to take a financial hit.

It was this attitude that gave the ANC a unique opportunity to
reject the free-market orthodoxy of the day. Since there was already
widespread agreement that corporations shared responsibility for the
crimes of apartheid, the stage was set for Mandela to explain why key
sectors of South Africa’s economy needed to be nationalized just as
the Freedom Charter demanded. He could have used the same argument
to explain why the debt accumulated under apartheid was an
illegitimate burden to place on any new, popularly elected government.
There would have been plenty of outrage from the IMF, the
U.S. Treasury and the European Union in the face of such undisciplined
behaviour, but Mandela was also a living saint—there would
have been enormous popular support for it as well.

We will never know which of these forces would have proved
more powerful. In the years that passed between Mandela’s writing
his note from prison and the ANC’s 1994 election sweep in which
he was elected president, something happened to convince the
party hierarchy that it could not use its grassroots prestige to reclaim
and redistribute the country’s stolen wealth. So, rather than meeting
in the middle between California and the Congo, the ANC adopted
policies that exploded both inequality and crime to such a degree
that South Africa’s divide is now closer to Beverly Hills and
Baghdad. Today, the country stands as a living testament to what
happens when economic reform is severed from political transformation.
Politically, its people have the right to vote, civil liberties
and majority rule. Yet economically, South Africa has surpassed
Brazil as the most unequal society in the world.

I went to South Africa in 2005 to try to understand what had happened
in the transition, in those key years between 1990 and 1994,
to make Mandela take a route that he had described so unequivocally
as “inconceivable.”


The ANC went into negotiations with the ruling National Party
determined to avoid the kind of nightmare that neighbouring
Mozambique had experienced when the independence movement
forced an end to Portuguese colonial rule in 1975. On their way out
the door, the Portuguese threw a vindictive temper tantrum, pouring
cement down elevator shafts, smashing tractors and stripping the
country of all they could carry. To its enormous credit, the ANC did
negotiate a relatively peaceful handover. However, it did not manage
to prevent South Africa’s apartheid-era rulers from wreaking
havoc on their way out the door. Unlike their counterparts in
Mozambique, the National Party didn’t pour concrete—their sabotage,
equally crippling, was far subtler, and was all in the fine print
of those historic negotiations.

The talks that hashed out the terms of apartheid’s end took place
on two parallel tracks that often intersected: one was political, the
other economic. Most of the attention, naturally, focused on
the high-profile political summits between Nelson Mandela and
F.W. de Klerk, leader of the National Party.

De Klerk’s strategy in these negotiations was to preserve as much
power as possible. He tried everything—breaking the country into a
federation, guaranteeing veto power for minority parties, reserving
a certain percentage of the seats in government structures for each
ethnic group—anything to prevent simple majority rule, which he
was sure would lead to mass land expropriations and the nationalizing
of corporations. As Mandela later put it, “What the National
Party was trying to do was to maintain white supremacy with our
consent.” De Klerk had guns and money behind him, but his opponent
had a movement of millions. Mandela and his chief negotiator,
Cyril Ramaphosa, won on almost every count.9

Running alongside these often explosive summits were the
much lower profile economic negotiations, primarily managed
on the ANC side by Thabo Mbeki, then a rising star in the party,
now South Africa’s president. As the political talks progressed,
and it became clear to the National Party that Parliament would
soon be firmly in the hands of the ANC, the party of South Africa’s elites began pouring its energy and creativity into the economic
negotiations. South Africa’s whites had failed to keep blacks from
taking over the government, but when it came to safeguarding
the wealth they had amassed under apartheid, they would not
give up so easily.

In these talks, the de Klerk government had a twofold strategy.
First, drawing on the ascendant Washington Consensus that there
was now only one way to run an economy, it portrayed key sectors of
economic decision making—such as trade policy and the central
bank—as “technical” or “administrative.” Then it used a wide range
of new policy tools—international trade agreements, innovations in
constitutional law and structural adjustment programs—to hand
control of those power centres to supposedly impartial experts,
economists and officials from the IMF, the World Bank, the
General Agreement on Tariffs and Trade (GATT) and the National
Party—anyone except the liberation fighters from the ANC. It was a
strategy of balkanization, not of the country’s geography (as de Klerk
had originally attempted) but of its economy.

This plan was successfully executed under the noses of ANC
leaders, who were naturally preoccupied with winning the battle to
control Parliament. In the process, the ANC failed to protect itself
against a far more insidious strategy—in essence, an elaborate insurance
plan against the economic clauses in the Freedom Charter
ever becoming law in South Africa. “The people shall govern!”
would soon become a reality, but the sphere over which they would
govern was shrinking fast.

While these tense negotiations between adversaries were unfolding,
the ANC was also busily preparing within its own ranks for the
day when it would take office. Teams of ANC economists and
lawyers formed working groups charged with figuring out exactly
how to turn the general promises of the Freedom Charter—for
housing amentites and health care—into practical policies. The
most ambitious of these plans was Make Democracy Work, an economic
blueprint for South Africa’s post-apartheid future, written
while the high-level negotiations were taking place. What the party loyalists didn’t know at the time was that while they were hatching
their ambitious plans, the negotiating team was accepting concessions
at the bargaining table that would make their implementation
a practical impossibility. “It was dead before it was even
launched,” the economist Vishnu Padayachee told me of Make
Democracy Work. By the time the draft was complete, “there was a
new ball game.”

As one of the few classically trained economists active in the
ANC, Padayachee was enlisted to play a leading role in Make
Democracy Work (“doing the number-crunching,” as he puts it).
Most of the people he worked alongside in those long policy meetings
went on to top posts in the ANC government, but Padayachee
did not. He has turned down all the offers of government jobs, preferring
academic life in Durban, where he teaches, writes and owns
the much-loved Ike’s Bookshop, named after Ike Mayet, the first
non-white South African bookseller. It was there, surrounded by
carefully preserved out-of-print volumes on African history, that we
met to discuss the transition.

Padayachee entered the liberation struggle in the seventies, as
an adviser to South Africa’s trade union movement. “We all had the
Freedom Charter stuck on the back of our doors in those days,” he
recalled. I asked him when he knew its economic promises were
not going to be realized. He first suspected it, he said, in late 1993,
when he and a colleague from the Make Democracy Work group
got a call from the negotiating team who were in the final stages of
haggling with the National Party. The call was a request for them to
write a position paper on the pros and cons of making South
Africa’s central bank an independent entity, run with total autonomy
from the elected government—oh, and the negotiators needed it by morning.

“We were caught completely off guard,” recalled Padayachee,
now in his early fifties. He had done his graduate studies at Johns
Hopkins University in Baltimore. He knew that at the time, even
among free-market economists in the U.S., central bank independence
was considered a fringe idea, a pet policy of a handful of Chicago School ideologues who believed that central banks should
be run as sovereign republics within states, out of reach of the meddling
hands of elected lawmakers.*,10 For Padayachee and his colleagues,
who strongly believed that monetary policy needed to serve
the new government’s “big goals of growth, employment and redistribution,”
the ANC’s position was a no-brainer: “There was not
going to be an independent central bank in South Africa.”

Padayachee and a colleague stayed up all night writing a paper
that gave the negotiating team the arguments it needed to resist this
curveball from the National Party. If the central bank (in South
Africa called the Reserve Bank) was run separately from the rest of
the government, it could restrict the ANC’s ability to keep the promises
in the Freedom Charter. Besides, if the central bank was not
accountable to the ANC government, to whom, exactly, would it be
accountable? The IMF? The Johannesburg Stock Exchange?
Obviously, the National Party was trying to find a backdoor way to
hold on to power even after it lost the elections—a strategy that
needed to be resisted at all costs. “They were locking in as much as
possible,” Padayachee recalled. “That was a clear part of the

Padayachee faxed the paper in the morning and didn’t hear back
for weeks. “Then, when we asked what happened, we were told,
‘Well, we gave that one up.'” Not only would the central bank be
run as an autonomous entity within the South African state, with its
independence enshrined in the new constitution, but it would be
headed by the same man who ran it under apartheid, Chris Stals. It
wasn’t just the central bank that the ANC had given up: in another
major concession, Derek Keyes, the white finance minister under
apartheid, would also remain in his post—much as the finance ministers
and central bank heads from Argentina’s dictatorship somehow
managed to get their jobs back under democracy. The New York Times praised Keyes as “the country’s ranking apostle of low-spending
business-friendly government.”11

Until that point, Padayachee said, “we were still buoyant,
because, my God, this was a revolutionary struggle; at least there’d
be something to come out of it.” When he learned that the central
bank and the treasury would be run by their old apartheid bosses, it
meant “everything would be lost in terms of economic transformation.”
When I asked him whether he thought the negotiators realized
how much they had lost, after some hesitation, he replied,
“Frankly, no.” It was simple horse-trading: “In the negotiations,
something had to be given, and our side gave those things—I’ll give
you this, you give me that.”

From Padayachee’s point of view, none of this happened because
of some grand betrayal on the part of ANC leaders but simply
because they were outmanoeuvred on a series of issues that seemed
less than crucial at the time—but turned out to hold South Africa’s
lasting liberation in the balance.


What happened in those negotiations is that the ANC found itself
caught in a new kind of web, one made of arcane rules and regulations,
all designed to confine and constrain the power of elected
leaders. As the web descended on the country, only a few people
even noticed it was there, but when the new government came to
power and tried to move freely, to give its voters the tangible benefits
of liberation they expected and thought they had voted for, the
strands of the web tightened and the administration discovered that
its powers were tightly bound. Patrick Bond, who worked as an economic
adviser in Mandela’s office during the first years of ANC
rule, recalls that the in-house quip was “Hey, we’ve got the state,
where’s the power?” As the new government attempted to make tangible
the dreams of the Freedom Charter, it discovered that the
power was elsewhere.

Want to redistribute land? Impossible—at the last minute, the
negotiators agreed to add a clause to the new constitution that protects
all private property, making land reform virtually impossible. Want to create jobs for millions of unemployed workers? Can’t—hundreds of factories were actually about to close because the ANC
had signed on to the GATT, the precursor to the World Trade
Organization, which made it illegal to subsidize the auto plants and
textile factories. Want to get free AIDS drugs to the townships,
where the disease is spreading with terrifying speed? That violates an
intellectual property rights commitment under the WTO, which
the ANC joined with no public debate as a continuation of the
GATT. Need money to build more and larger houses for the poor
and to bring free electricity to the townships? Sorry—the budget is
being eaten up servicing the massive debt, passed on quietly by the
apartheid government. Print more money? Tell that to the
apartheid-era head of the central bank. Free water for all? Not likely.
The World Bank, with its large in-country contingent of economists,
researchers and trainers (a self-proclaimed “Knowledge Bank”), is
making private-sector partnerships the service norm. Want to
impose currency controls to guard against wild speculation? That
would violate the $850 million IMF deal, signed, conveniently
enough, right before the elections. Raise the minimum wage to
close the apartheid income gap? Nope. The IMF deal promises
“wage restraint.”12 And don’t even think about ignoring these commitments—
any change will be regarded as evidence of dangerous
national untrustworthiness, a lack of commitment to “reform,” an
absence of a “rules-based system.” All of which will lead to currency
crashes, aid cuts and capital flight. The bottom line was that South
Africa was free but simultaneously captured; each one of these
arcane acronyms represented a different thread in the web that
pinned down the limbs of the new government.

A long-time anti-apartheid activist, Rassool Snyman, described
the trap to me in stark terms. “They never freed us. They only took
the chain from around our neck and put it on our ankles.” Yasmin
Sooka, a prominent South African human rights activist, told me
that the transition “was business saying, ‘We’ll keep everything and
you [the ANC] will rule in name. . . . You can have political power,
you can have the façade of governing, but the real governance will take place somewhere else.'” , 13 It was a process of infantilization that is common to so-called transitional countries—new governments
are, in effect, given the keys to the house but not the combination
to the safe.

Part of what I wanted to understand was how, after such an epic
struggle for freedom, any of this could have been allowed to happen.
Not just how the leaders of the liberation movement gave up
the economic front, but how the ANC’s base—people who had
already sacrificed so much—let their leaders give it up. Why didn’t
the grassroots movement demand that the ANC keep the promises
of the Freedom Charter and rebel against the concessions as they
were being made?

I put the question to William Gumede, a third-generation ANC
activist who, as a leader of the student movement during the transition,
was on the streets in those tumultuous years. “Everyone was
watching the political negotiations,” he recalled, referring to the de
Klerk—Mandela summits. “And if people felt it wasn’t going well
there would be mass protests. But when the economic negotiators
would report back, people thought it was technical; no one was
interested.” This perception, he said, was encouraged by Mbeki,
who portrayed the talks as “administrative” and of no popular concern
(much like the Chileans with their “technified democracy”). As a result, he told me, with great exasperation, “We missed it! We missed the real story.”

Gumede, who today is one of South Africa’s most respected
investigative journalists, says he came to understand that it was in
those “technical” meetings that the true future of his country was
being decided—though few understood it at the time. Like many
people I spoke with, Gumede reminded me that South Africa was
very much on the brink of civil war throughout the transition
period—townships were being terrorized by gangs who had been
armed by the National Party, police massacres were still taking
place, leaders were still being assassinated and there was constant
talk of the country descending into a bloodbath. “I was focusing on
the politics—mass action, going to Bisho [site of a definitive showdown
between demonstrators and police], shouting, ‘Those guys
must go!'” Gumede recalled. “But that was not the real struggle—
the real struggle was over economics. And I am disappointed in
myself for being so naive. I thought I was politically mature enough
to understand the issues. How did I miss this?”

Since then, Gumede has been making up for lost time. When we
met, he was in the middle of a national firestorm sparked by his new
book, Thabo Mbeki and the Battle for the Soul of the ANC. It is an
exhaustive exposé of precisely how the ANC negotiated away the
country’s economic sovereignty in those meetings he was too busy to
pay attention to at the time. “I wrote the book out of anger,”
Gumede told me. “Anger at myself and at the party.”

It’s hard to see how the outcome could have been different. If
Padayachee is right and the ANC’s own negotiators failed to grasp
the enormity of what they were bargaining away, what chance was
there for the movement’s street fighters?

During those key years when the deals were being signed, South
Africans were in a constant state of crisis, ricocheting between the
intense exuberance of watching Mandela walk free and the rage of
learning that Chris Hani, the younger militant many hoped would
succeed Mandela as leader, had been shot dead by a racist assassin.
Other than a handful of economists, nobody wanted to talk about the independence of the central bank, a topic that works as a powerful soporific even under normal circumstances. Gumede points out
that most people simply assumed that no matter what compromises
had to be made to get into power, they could be unmade once the
ANC was firmly in charge. “We were going to be the government—
we could fix it later,” he said.

What ANC activists didn’t understand at the time was that it
was the nature of democracy itself that was being altered in those
negotiations, changed so that—once the web of constraints had
descended on their country—there would effectively be no later.


In the first two years of ANC rule, the party still tried to use the limited
resources it had to make good on the promise of redistribution.
There was a flurry of public investment—more than a hundred
thousand homes were built for the poor, and millions were hooked
up to water, electricity and phone lines.14 But, in a familiar story,
weighed down by debt and under international pressure to privatize
these services, the government soon began raising prices. After a
decade of ANC rule, millions of people had been cut off from newly
connected water and electricity because they couldn’t pay the bills.
At least 40 percent of the new phones lines were no longer in service
by 2003.15 As for the “banks, mines and monopoly industry” that
Mandela had pledged to nationalize, they remained firmly in the
hands of the same four white-owned mega-conglomerates that also
control 80 percent of the Johannesburg Stock Exchange.16 In 2005,
only 4 percent of the companies listed on the exchange were owned
or controlled by blacks.17 Seventy percent of South Africa’s land, in
2006, was still monopolized by whites, who are just 10 percent of
the population.18 Most distressingly, the ANC government has spent
far more time denying the severity of the AIDS crisis than getting
lifesaving drugs to the approximately 5 million people infected with
HIV, though there were, by early 2007, some positive signs of
progress.19 Perhaps the most striking statistic is this one: since 1990,
the year Mandela left prison, the average life expectancy for South
Africans has dropped by thirteen years.20

Underlying all these facts and figures is a fateful choice made
by the ANC after the leadership realized it had been outmanoeuvred
in the economic negotiations. At that point, the party could
have attempted to launch a second liberation movement and
break free of the asphyxiating web that had been spun during the
transition. Or it could simply accept its restricted power and
embrace the new economic order. The ANC’s leadership chose
the second option. Rather than making the centrepiece of its policy
the redistribution of wealth that was already in the country—
the core of the Freedom Charter on which it had been elected—the
ANC, once it because the government, accepted the dominant
logic that its only hope was to pursue new foreign investors who
would create new wealth, the benefits of which would trickle down
to the poor. But for the trickle-down model to have a hope of working,
the ANC government had to radically alter its behaviour to
make itself appealing to investors.

This was not an easy task, as Mandela had learned when he
walked out of prison. As soon as he was released, the South African
stock market collapsed in panic; South Africa’s currency, the rand,
dropped by 10 percent.21 A few weeks later, De Beers, the diamond
corporation, moved its headquarters from South Africa to Switzerland.22 This kind of instant punishment from the markets would
have been unimaginable three decades earlier, when Mandela was
first imprisoned. In the sixties, it was unheard of for multinationals
to switch nationalities on a whim and, back then, the world money
system was still firmly linked to the gold standard. Now South
Africa’s currency had been stripped of controls, trade barriers were
down, and most trading was short-term speculation.

Not only did the volatile market not like the idea of a liberated
Mandela, but just a few misplaced words from him or his fellow ANC leaders could lead to an earth-shaking stampede by what the
New York Times columnist Thomas Friedman has aptly termed “the
electronic herd.”23 The stampede that greeted Mandela’s release was
just the start of what became a call-and-response between the ANC
leadership and the financial markets—a shock dialogue that trained
the party in the new rules of the game. Every time a top party official
said something that hinted that the ominous Freedom Charter
might still become policy, the market responded with a shock, sending
the rand into free fall. The rules were simple and crude, the
electronic equivalent of monosyllabic grunts: justice—expensive,
sell; status quo—good, buy. When, shortly after his release,
Mandela once again spoke out in favour of nationalization at a private
lunch with leading businessmen, “the All-Gold Index plunged
by 5 per cent.”24

Even moves that seemed to have nothing to do with the financial
world but betrayed some latent radicalism seemed to provoke a market
jolt. When Trevor Manuel, an ANC minister, called rugby in
South Africa a “white minority game” because its team was an all-white
one, the rand took another hit.25

Of all the constraints on the new government, it was the market
that proved most confining—and this, in a way, is the genius of unfettered
capitalism: it’s self-enforcing. Once countries have opened
themselves up to the global market’s temperamental moods, any
departure from Chicago School orthodoxy is instantly punished by
traders in New York and London who bet against the offending country’s
currency, causing a deeper crisis and the need for more loans,
with more conditions attached. Mandela acknowledged the trap in
1997, telling the ANC’s national conference, “The very mobility of
capital and the globalisation of the capital and other markets, make
it impossible for countries, for instance, to decide national economic
policy without regard to the likely response of these markets.”26

The person inside the ANC who seemed to understand how to
make the shocks stop was Thabo Mbeki, Mandela’s right hand during
his presidency and soon to be his successor. Mbeki had spent
many of his years of exile in England, studying at the University of Sussex, then moving to London. In the eighties, while the townships
of his country were flooded with tear gas, he was breathing in
the fumes of Thatcherism. Of all the ANC leaders, Mbeki was the
one who mingled most easily with business leaders, and before
Mandela’s release, he organized several secret meetings with corporate
executives who were afraid of the prospect of black majority
rule. In 1985, after a night of drinking Scotch with Mbeki and a
group of South African businesspeople at a Zambian game lodge,
Hugh Murray, the editor of a prestigious business magazine, commented,
“The ANC supremo has a remarkable ability to instill confidence,
even in the most fraught circumstances.”27

Mbeki was convinced that the key to getting the market to calm
down was for the ANC to instill that kind of clubby confidence on a
much larger scale. According to Gumede, Mbeki took on the role of
free-market tutor within the party. The beast of the market had been
unleashed, Mbeki would explain; there was no taming it, just feeding
it what it craved: growth and more growth.

So, rather than calling for the nationalization of the mines,
Mandela and Mbeki began meeting regularly with Harry
Oppenheimer, former chairman of the mining giants Anglo-
American and De Beers, the economic symbols of apartheid rule.
Shortly after the 1994 election, they even submitted the ANC’s economic
program to Oppenheimer for approval and made several key
revisions to address his concerns, as well as those of other top industrialists. 28
Hoping to avoid getting another shock from the market,
Mandela, in his first post-election interview as president, carefully
distanced himself from his previous statements favouring nationalization.
“In our economic policies . . . there is not a single reference
to things like nationalization, and this is not accidental,” he said.
“There is not a single slogan that will connect us with any Marxist
ideology.” §, 29 The financial press offered steady encouragement for this conversion: “Though the ANC still has a powerful leftist wing,” the Wall Street Journal observed, “Mr. Mandela has in recent days
sounded more like Margaret Thatcher than the socialist revolutionary
he was once thought to be.”30

The memory of its radical past still clung to the ANC, and despite
the new government’s best efforts to appear unthreatening, the market
kept inflicting its painful shocks: in a single month in 1996, the
rand dropped 20 percent, and the country continued to hemorrhage
capital as South Africa’s jittery rich moved their money offshore.31

Mbeki convinced Mandela that what was needed was a definitive
break with the past. The ANC needed a completely new economic
plan—something bold, something shocking, something that
would communicate, in the broad, dramatic strokes the market
understood, that the ANC was ready to embrace the Washington

As in Bolivia, where the shock therapy program was prepared
with all the secrecy of a covert military operation, in South Africa
only a handful of Mbeki’s closest colleagues even knew that a new
economic program was in the works, one very different from the
promises they had all made during the 1994 elections. Of the people
on the team, Gumede writes, “all were sworn to secrecy and the
entire process was shrouded in deepest confidentiality lest the left
wing get wind of Mbeki’s plan.”32 The economist Stephen Gelb,
who took part in drafting the new program, admitted that “this was
‘reform from above’ with a vengeance, taking to an extreme the
arguments in favour of insulation and autonomy of policymakers
from popular pressures.” 33 (This emphasis on secrecy and insulation
was particularly ironic given that, under the tyranny of apartheid,
the ANC had pulled off a remarkably open and participatory
process to come up with the Freedom Charter. Now, under a new
order of democracy, the party was opting to hide its economic plans
from its own caucus.)

In June 1996, Mbeki unveiled the results: it was a neo-liberal
shock therapy program for South Africa, calling for more privatization,
cutbacks to government spending, labour “flexibility,” freer trade and even looser controls on money flows. According to Gelb,
its overriding aim “was to signal to potential investors the government’s
(and specifically the ANC’s) commitment to the prevailing
orthodoxy.”34 To make sure the message was loud and clear to
traders in New York and London, at the public launch of the plan,
Mbeki quipped, “Just call me a Thatcherite.”35

Shock therapy is always a market performance—that is part of its
underlying theory. The stock market loves overhyped, highly managed
moments that send stock prices soaring, usually provided by an
initial public stock offering, the announcement of a huge merger or
the hiring of a celebrity CEO. When economists urge countries to
announce a sweeping shock therapy package, the advice is partially
based on an attempt to imitate this kind of high-drama market event
and trigger a stampede—but rather than selling an individual stock,
they are selling a country. The hoped-for response is “Buy Argentine
stocks!” “Buy Bolivian bonds!” A slower, more careful approach, on
the other hand, may be less brutal, but it deprives the market of
these hype-bubbles, during which the real money gets made. Shock
therapy is always a significant gamble, and in South Africa it didn’t
work: Mbeki’s grand gesture failed to attract long-term investment;
it resulted only in speculative betting that ended up devaluing the
currency even further.

The Shock of the Base

“The new convert is always more zealous at these things. They want
to please even more,” remarked the Durban-based writer Ashwin
Desai when we met to discuss his memories of the transition. Desai
spent time in jail during the liberation struggle, and he sees parallels
between the psychology in prisons and the ANC’s behaviour in
government. In prison, he said, “if you please the warden more, you
get a better status. And that logic obviously transposed itself into
some of the things that South African society did. They did want to
somehow prove that they were much better prisoners. Much more
disciplined prisoners than other countries, even.”

The ANC base, however, proved distinctly more unruly—which
created a need for yet more discipline. According to Yasmin Sooka,
one of the jurors on South Africa’s Truth and Reconciliation
Commission, the discipline mentality reached into every aspect of
the transition—including the quest for justice. After hearing years
of testimony about torture, killings and disappearances, the truth
commission turned to the question of what kind of gestures could
begin to heal the injustices. Truth and forgiveness were important,
but so was compensation for the victims and their families. It made
little sense to ask the new government to make compensation payouts,
as these were not its crimes, and anything spent on reparations
for apartheid abuses was money not spent building homes and
schools for the poor in the newly liberated nation.

Some commissioners felt that multinational corporations that
had benefited from apartheid should be forced to pay reparations. In
the end the Truth and Reconciliation Commission made the modest
recommendation of a one-time 1 percent corporate tax to raise
money for the victims, what it called “a solidarity tax.” Sooka
expected support for this mild recommendation from the ANC;
instead, the government, then headed by Mbeki, rejected any suggestion
of corporate reparations or a solidarity tax, fearing that it
would send an anti-business message to the market. “The president
decided not to hold business accountable,” Sooka told me. “It was
that simple.” In the end, the government put forward a fraction of
what had been requested, taking the money out of its own budget, as
the commissioners had feared.

South Africa’s Truth and Reconciliation Commission is frequently
held up as a model of successful “peace building,” exported
to other conflict zones from Sri Lanka to Afghanistan. But many of
those who were directly involved in the process are deeply ambivalent.
When he unveiled the final report in March 2003, the commission’s
chairman, Archbishop Desmond Tutu, confronted
journalists with freedom’s unfinished business. “Can you explain
how a black person wakes up in a squalid ghetto today, almost 10
years after freedom? Then he goes to work in town, which is still largely white, in palatial homes. And at the end of the day, he goes
back home to squalor? I don’t know why those people don’t just say,
‘To hell with peace. To hell with Tutu and the truth commission.'”36

Sooka, who now heads South Africa’s Foundation for Human
Rights, says that she feels that although the hearings dealt with what
she described as “outward manifestations of apartheid such as torture,
severe ill treatment and disappearances,” it left the economic
system served by those abuses “completely untouched”—an echo of
the concerns about the blindness of “human rights” expressed by
Orlando Letelier three decades earlier. If she had the process to do
over again, Sooka said, “I would do it completely differently. I
would look at the systems of apartheid—I would look at the question
of land, I would certainly look at the role of multinationals, I would
look at the role of the mining industry very, very closely because I
think that’s the real sickness of South Africa. . . . I would look at the
systematic effects of the policies of apartheid, and I would devote
only one hearing to torture because I think when you focus on torture
and you don’t look at what it was serving, that’s when you start
to do a revision of the real history.”

Reparations in Reverse

The fact that the ANC dismissed the Commission’s call for corporate
reparations is particularly unfair, Sooka pointed out, because
the government continues to pay the apartheid debt. In the first
years after the handover, it cost the new government 30 billion rand
annually (about $4.5 billion) in servicing—a sum that provides a
stark contrast with the paltry total of $85 million that the government
ultimately paid out to more than nineteen thousand victims of
apartheid killings and torture and their families. Nelson Mandela
has cited the debt burden as the single greatest obstacle to keeping
the promises of the Freedom Charter. “That is 30 billion [rand] we
did not have to build houses as we planned, before we came into
government, to make sure that our children go to the best schools,
that unemployment is properly addressed and that everybody has the dignity of having a job, a decent income, of being able to provide
shelter to his beloved, to feed them. . . . We are limited by the debt
that we inherited.”37

Despite Mandela’s acknowledgement that paying the apartheid
bills has become a disfiguring burden, the party has opposed all suggestions
that it default. The fear is that even though there is a strong
legal case that the debts are “odious,” any move to default would
make South Africa look dangerously radical in the eyes of investors,
thus provoking another market shock. Dennis Brutus, a long-time
ANC member and a former prisoner on Robben Island, ran
directly into that wall of fear. In 1998, seeing the financial stress the
new government was under, he and a group of South African
activists decided that the best way they could support the ongoing
struggle was to start a “debt jubilee” movement. “I must say, I was
so naive,” Brutus, now in his seventies, told me. “I expected that the
government would express appreciation to us, that the grassroots are
taking up the issue of debt, you know, that it would reinforce the
government taking up debt.” To his astonishment, “the government
repudiated us and said, ‘No, we don’t accept your support.'”

What makes the ANC’s decision to keep paying the debt so infuriating
to activists like Brutus is the tangible sacrifice made to meet
each payment. For instance, between 1997 and 2004, the South
African government sold eighteen state-owned firms, raising $4 billion,
but almost half the money went to servicing the debt.38 In other
words, not only did the ANC renege on Mandela’s original pledge
of “the nationalisation of the mines, banks and monopoly industry”
but because of the debt, it was doing the opposite—selling off
national assets to make good on the debts of its oppressors.

Then there is the matter of where, precisely, the money is going.
During the transition negotiations, F.W. de Klerk’s team demanded
that all civil servants be guaranteed their jobs even after the handover;
those who wanted to leave, they argued, should receive hefty
lifelong pensions. This was an extraordinary demand in a country
with no social safety net to speak of, yet it was one of several “technical”
issues on which the ANC ceded ground.39 The concession meant that the new ANC government carried the cost of two governments—
its own, and a shadow white government that was out of
power. Forty percent of the government’s annual debt payments go
to the country’s massive pension fund. The vast majority of the beneficiaries
are former apartheid employees.**, 40

In the end, South Africa has wound up with a twisted case of reparations
in reverse, with the white businesses that reaped enormous
profits from black labour during the apartheid years paying not a cent
in reparations, but the victims of apartheid continuing to send large
paycheques to their former victimizers. And how do they raise the
money for this generosity? By stripping the state of its assets through
privatization—a modern form of the very looting that the ANC had
been so intent on avoiding when it agreed to negotiations, hoping
to prevent a repeat of Mozambique. Unlike what happened in
Mozambique, however, where civil servants broke machinery, stuffed
their pockets and then fled, in South Africa the dismantling of the
state and the pillaging of its coffers continue to this day.


When I arrived in South Africa, the fiftieth anniversary of the signing
of the Freedom Charter was approaching, and the ANC had decided to mark the event with a media spectacle. The plan was for
Parliament to relocate for the day from its usual commanding home
in Cape Town to the far more humble surroundings of Kliptown,
where the charter was first ratified. The South African president,
Thabo Mbeki, was going to take the occasion to rename Kliptown’s
main intersection the Walter Sisulu Square of Dedication, after one
of the ANC’s most revered leaders. Mbeki would also inaugurate a
new Freedom Charter Monument, a brick tower in which the
words of the Charter had been engraved on stone tablets, and light
an eternal “flame of freedom.” Adjacent to this building, work was
progressing on another monument, this one called the Freedom
Towers, a pavilion of black and white concrete pillars designed to
symbolize the charter’s famous clause that says, “South Africa
belongs to all those who live in it, black and white.”41

The overall message of the event was hard to miss: fifty years
ago, the party had promised to bring freedom to South Africa and
now it had delivered—it was the ANC’s own “mission accomplished”

Yet there was something strange about the event. Kliptown—an
impoverished township with dilapidated shacks, raw sewage in the
streets and an unemployment rate of 72 percent, far higher than
under apartheid—seems more like a symbol of the Freedom
Charter’s broken promises than an appropriate backdrop for such a
slickly produced celebration.42 As it turned out, the anniversary
events were staged and art-directed not by the ANC but by an odd
entity called Blue IQ. Though officially an arm of the provincial
government, Blue IQ “operates in a carefully constructed environment
which makes it look and feel more like a private sector company
than a government department,” according to its very glossy,
and very blue, brochure. Its goal is to drum up new foreign investment
in South Africa—part of the ANC program of “re-distribution
through growth.”

Blue IQ had identified tourism as a major growth area for investment,
and its market research showed that for tourists visiting South
Africa, a large part of the attraction is the ANC’s global reputation for having triumphed over oppression. Hoping to build on this powerful
draw, Blue IQ determined that there was no better symbol of
the South African triumph-over-adversity narrative than the
Freedom Charter. With that in mind, it launched a project to transform
Kliptown into a Freedom Charter theme park, “a world-class
tourist destination and heritage site offering local and international
visitors a unique experience”—complete with museum, a freedom-themed
shopping mall and a glass-and-steel Freedom Hotel. What
is now a slum is set to be remade “into a desirous and prosperous”
Johannesburg suburb, while many of its current residents will be
relocated to slums in less historic locales.43

With its plans to rebrand Kliptown, Blue IQ is following the free-market
playbook—providing incentives for business to invest, in the
hope that it will create jobs down the road. What sets this particular
project apart is that, in Kliptown, the foundation on which the entire
trickle-down apparatus rests is a fifty-year-old piece of paper that
called for a distinctly more direct road to poverty elimination.
Redistribute the land so millions can sustain themselves from it,
demanded the framers of the Freedom Charter, and take back the
mines so the bounty can be used to build houses and infrastructure
and create jobs in the process. In other words, cut out the middleman.
Those ideas may sound like utopian populism to many ears,
but after so many failed experiments in Chicago School orthodoxy,
the real dreamers may be those who still believe that a scheme like
the Freedom Charter theme park, which provided handouts to corporations
while further disposessing the neediest people, will solve
the pressing health and economic problems for the 22 million
South Africans still living in poverty.44

After more than a decade since South Africa made its decisive
turn toward Thatcherism, the results of its experiment in trickledown
justice are scandalous:

  • Since 1994, the year the ANC took power, the number of people
    living on less than $1 a day has doubled, from 2 million to
    4 million in 2006.45
  • Between 1991 and 2002, the unemployment rate for black
    South Africans more than doubled, from 23 percent to 48 percent.46
  • Of South Africa’s 35 million black citizens, only five thousand
    earn more than $60,000 a year. The number of whites in that
    income bracket is twenty times higher, and many earn far more
    than that amount.47
  • The ANC government has built 1.8 million homes, but in the
    meantime 2 million people have lost their homes.48
  • Close to 1 million people have been evicted from farms in the
    first decade of democracy.49
  • Such evictions have meant that the number of shack dwellers
    has grown by 50 percent. In 2006, more than one in four South
    Africans lived in shacks located in informal shantytowns, many
    without running water or electricity.50

Perhaps the best measure of the betrayed promises of freedom is the
way the Freedom Charter is now regarded in different parts of South
African society. Not so long ago, the document represented the ultimate
threat to white privilege in the country; today it is embraced in
business lounges and gated communities as a statement of good
intentions, at once flattering and totally unthreatening, on a par with
a flowery corporate code of conduct. But in the townships where the
document adopted in a field in Kliptown was once electric with possibility,
its promises are almost too painful to contemplate. Many
South Africans boycotted the government-sponsored anniversary celebrations
completely. “What is in the Freedom Charter is very
good,” S’bu Zikode, a leader of Durban’s burgeoning shack dwellers’
movement, told me. “But all I see is the betrayal.”


In the end, the most persuasive argument for abandoning the redistribution
promises of the Freedom Charter was the least imaginative
one: everyone is doing it. Vishnu Padayachee summed up for me
the message that the ANC leadership was getting from the start from
“Western governments, the IMF and the World Bank. They would say, ‘The world has changed; none of that left stuff means anything any more; this is the only game in town.'” As Gumede writes,
“It was an onslaught for which the ANC was wholly unprepared.
Key economic leaders were regularly ferried to the head offices of
international organizations such as the World Bank and IMF, and
during 1992 and 1993 several ANC staffers, some of whom had no
economic qualifications at all, took part in abbreviated executive
training programs at foreign business schools, investment banks,
economic policy think tanks and the World Bank, where they were
‘fed a steady diet of neo-liberal ideas.’ It was a dizzying experience.
Never before had a government-in-waiting been so seduced by the
international community.”51

Mandela received a particularly intense dose of this elite form of
schoolyard peer pressure when he met with European leaders at the
1992 World Economic Forum in Davos. When he pointed out that
South Africa wanted to do nothing more radical than what Western
Europe had done under the Marshall Plan after the Second World
War, the Dutch minister of finance dismissed the parallel. “That was
what we understood then. But the economies of the world are interdependent.
The process of globalization is taking root. No economy
can develop separately from the economies of other countries.”52

As leaders like Mandela travelled the globalization circuit, it was
pounded into them that even the most left-wing governments were
embracing the Washington Consensus: the Communists in
Vietnam and China were doing it, and so were the trade unionists
in Poland and the social democrats in Chile, finally free from
Pinochet. Even Russians had seen the neo-liberal light—at the time
the ANC was in its heaviest negotiations, Moscow was in the midst
of a corporatist feeding frenzy, selling off its state assets to
apparatchiks-turned-entrepreneurs as fast as it could. If Moscow had
given in, how could a raggedy band of freedom fighters in South
Africa resist such a forceful global tide?

That, at least, was the message being peddled by the lawyers,
economists and social workers who made up the rapidly expanding
“transition” industry—the teams of experts who hop from war-torn country to crisis-racked city, regaling overwhelmed new politicians with the latest best practice from Buenos Aires, the most inspiring
success story from Warsaw, the most fearsome roar from the Asian
Tigers. “Transitionologists” (as the NYU political scientist Stephen
Cohen has called them) have a built-in advantage over the politicians
they advise: they are a hypermobile class, while the leaders of
liberation movements are inherently inward-looking.53 By their very
nature, people spearheading intense national transformations are
narrowly focused on their own narratives and power struggles, often
unable to pay close attention to the world beyond their borders.
That’s unfortunate, because if the ANC leadership had been able to
cut through the transitionology spin and find out for itself what was
really going on in Moscow, Warsaw, Buenos Aires and Seoul, it
would have seen a very different picture.

Excerpted from Chapter 10 of The Shock Doctrine: The Rise of Disaster Capitalism (Picador, 2008, paperback edition)


* Milton Friedman often joked that if he had his way, central banks would be based so purely on “economic science” that they would run by giant computers—no humans required.

It was the Chicago Boys in Chile, fittingly, who pioneered this process of
democracy-proofing capitalism, or building what they called “new democracy.” In
Chile, before handing over power to an elected government after seventeen years of
junta rule, the Chicago Boys rigged the constitution and the courts so it was legally
next to impossible to reverse their revolutionary laws. They had many names for this
process: building a “technified democracy,” a “protected democracy,” or, as
Pinochet’s young minister José Piñera put it, ensuring “insulation from politics.”
Alvaro Bardón, Pinochet’s undersecretary of the economy, explained the classic
Chicago School reasoning: “If we acknowledge economics as a science, this immediately
implies less power for government or the political structure, since both lose
responsibility for making such decisions.”

The question of whether more people have been cut off from new services than
connected to them is highly contested in South Africa. At least one credible study has
found that the cutoffs outnumber the connections: the government says it has connected
nine million people to water, the study calculated ten million disconnections.

§ In fact, the ANC’s official economic platform, on which it had been elected, called for
“increasing the public sector in strategic areas through, for example, nationalisation.”
Then there was the Freedom Charter, which continued to be the party’s manifesto.

** In fact, this one apartheid-era burden is simultaneously driving the growth of the
country’s overall debt and putting billions of rand of public money out of reach every
year. A “technical” accounting change in 1989 switched the state pension fund from a
“pay as you go” system, in which benefits are paid from contributions made in any
given year, to a “fully funded” system, in which the fund has to have on hand enough
capital to pay out 70 to 80 percent of its total liabilities at any given time—not a scenario
it will ever face. As a result, the fund ballooned from 30 billion rand in 1989 to
more than 300 billion rand in 2004—certainly qualifying as a debt shock. What this
means for South Africans is that the huge pool of capital administered independently
by the pension fund has been cordoned off and placed out of reach for spending on
housing, health care or basic services. The pension agreement was actually negotiated
on the ANC side by Joe Slovo, the legendary leader of the South African
Communist Party, a fact that continues to be a source of great resentment in the
country today.


1.“South Africa; Tutu Says Poverty, Aids Could Destabilise Nation,”,
November 4, 2001.
2. Martin J. Murray, The Revolution Deferred (London: Verso, 1994), 12.
3. “ANC Leader Affirms Support for State Control of Industry,” Times (London), January 26, 1990.
4. Ismail Vadi, The Congress of the People and Freedom Charter Campaign, foreword by Walter Sisulu (New Delhi: Sterling Publishers, 1995),
5. Nelson Mandela, A Long Walk to Freedom: The Autobiography of Nelson Mandela (New York: Little, Brown and Company, 1994), 150.
6. “The Freedom Charter,” Adopted at the Congress of the People, Kliptown, on June 26, 1955,
7. William Mervin Gumede, Thabo Mbeki and the Battle for the Soul of the ANC (Cape Town: Zebra Press, 2005), 219—20.
8. Mandela, A Long Walk to Freedom, 490—91.
9. Simple majority rule was actually delayed until 1999. Until then, executive
power was shared among all the political parties that won more than 5 percent
of the popular vote. Unpublished interview with Nelson Mandela by the filmmaker
Ben Cashdan, 2001; Hein Marais, South Africa: Limits to Change: The
Political Economy of Transition
(Cape Town: University of Cape Town Press,
2001), 91—92.
10. FOOTNOTE: Milton Friedman, “Milton Friedman—Banquet Speech,”
given at the Nobel Banquet, December 10, 1976,
11. Bill Keller, “Can Both Wealth and Justice Flourish in a New South Africa?” New York Times, May 9, 1994.
12. Mark Horton, “Role of Fiscal Policy in Stabilization and Poverty Alleviation,” in
Post-Apartheid South Africa: The First Ten Years, ed. Michael Nowak and Luca
Antonio Ricci, (Washington DC: International Monetary Fund, 2005), 84.
13. FOOTNOTE: Juan Gabriel Valdés, Pinochet’s Economists: The Chicago School in Chile (Cambridge: Cambridge University Press, 1995), 31, 33, quoting Pinochet’s
minister of economy Pablo Baraona’s definition of the “new democracy;” Robert
Harvey, “Chile’s Counter-Revolution,” The Economist, February 2, 1980
(Harvey was quoting Sergio Fernandez, the minister of the interior); José Piñera,
“Wealth Through Ownership: Creating Property Rights in Chilean Mining,”
Cato Journal 24, no. 3 (Fall 2004): 298.
14. James Brew, “South Africa—Habitat: A Good Home Is Still Hard to Own,” Inter Press Service, March 11, 1997.
15. David McDonald, “Water: Attack the Problem Not the Data,” Sunday
(London), June 19, 2003. FOOTNOTE: Ibid.
16. Bill Keller, “Cracks in South Africa’s White Monopolies,” New York Times, June 17, 1993.
17. Gumede cites Businessmap statistics asserting that “around 98 percent of executive directors of JSE-listed companies are white, and they preside over 97 percent
of the exchange’s total value.” Simon Robinson, “The New Rand Lords,”
Time, April 25, 2005; Gumede, Thabo Mbeki and the Battle for the Soul of the
, 220.
18. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 112.
19. Moyiga Nduru, “S. Africa: Politician Washed Anti-Aids Efforts Down the
Drain,” Inter Press Service, April 11, 2006.
20. “Study: Aids Slashes SA’s Life Expectancy,” Mail & Guardian (Johannesburg), December 11, 2006.
21. The rand recovered slightly by the end of the day, closing 7 percent lower. Jim Jones, “Foreign Investors Take Fright at Hardline Stance,” Financial Times
(London), February 13, 1990.
22. Steven Mufson, “South Africa 1990,” Foreign Affairs [Special Edition: America and the World], 1990/1991.
23. Thomas L. Friedman, The Lexus and the Olive Branch (New York: Random House, 2000), 113.
24. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 69.
25. Ibid., 85; “South Africa: Issues of Rugby and Race,” The Economist, August 24, 1996.
26. Nelson Mandela, “Report by the President of the ANC to the 50th National Conference of the African National Congress,” December 16, 1997.
27. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 33—39, 69.
28. Ibid., 79.
29. Marais, South Africa, 122. FOOTNOTE: ANC, Ready to Govern: ANC Policy Guidelines for a Democratic South Africa Adopted at the National Conference,
May 28—31, 1992,
30. Ken Wells, “U.S. Investment in South Africa Quickens,” Wall Street Journal, October 6, 1994.
31. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 88.
32. Ibid., 87.
33. Marais, South Africa, 162.
34. Ibid., 170.
35. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 89.
36. Ginger Thompson, “South African Commission Ends Its Work,” New York
, March 22, 2003.
37. ANC, “The State and Social Transformation,” discussion document, November 1996,; Ginger Thompson, “South Africa to Pay $3,900 to Each Family of Apartheid Victims,” New York Times, April 16, 2003; Mandela unpublished interview with Cashdan, 2001.
38. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 108.
39. Ibid., 119.
40. South African Communist Party, “The Debt Debate: Confusion Heaped on Confusion” November—December 1998,; Jeff Rudin,
“Apartheid Debt: Questions and Answers, “Alternative Information and Development Centre, March 16, 1999, FOOTNOTE: Congress of South Africa Trade Unions, “Submission on the Public Investment Corporation Draft Bill,” June 25, 2004,; Rudin, “Apartheid Debt”; South African Communist Party, “The Debt Debate.”

41. “The Freedom Charter.”
42. Nomvula Mokonyane, “Budget Speech for 2005/06 Financial Year by MEC for Housing in Gauteng,” Speech made in the Guateng Legislature on June 13,
43. Lucille Davie and Mary Alexander, “Kliptown and the Freedom Charter,”
June 27, 2005,; Blue IQ, The Plan for a Smart Province—Guateng.
44. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 215.
45. Scott Baldauf, “Class Struggle: South Africa’s New, and Few, Black Rich,”
Christian Science Monitor, October 31, 2006; “Human Development Report
2006,” United Nations Development Programme,
46. “South Africa: The Statistics,” Le Monde Diplomatique, September 2006; Michael Wines and Sharon LaFraniere, “Decade of Democracy Fills Gaps in South Africa,” New York Times, April 26, 2004.
47. Simon Robinson, “The New Rand Lords.”
48. Michael Wines, “Shantytown Dwellers in South Africa Protest the Sluggish
Pace of Change,” New York Times, December 25, 2005.
49. Mark Wegerif, Bev Russell and Irma Grundling, Summary of Key Findings from the National Evictions Survey (Polokwane, South Africa: Nkuzi Development
Association, 2005), 7,
50. Wines, “Shantytown Dwellers in South Africa Protest . . .”
51. Gumede, Thabo Mbeki and the Battle for the Soul of the ANC, 72. Internal quotation: Asghar Adelzadeh, “From the RDP to GEAR: The Gradual
Embracing of Neo-liberalism in Economic Policy” Transformation 31, 1996.
52. Ibid., 70.
53. Stephen F. Cohen, Failed Crusade: America and the Tragedy of Post-Communist Russia (New York: W.W. Norton & Company, 2001), 30.