Volume 4 No 2 (2007)


SOCIAL CHANGE IS a complex, if not messy, process that cannot be engineered - or can it? Perhaps it is more acurate to say that there are processes and outcomes that can be more easily planned, predicted and controlled than others - and in some instances attempts at planning and control may not be desirable or justifiable (one only has to think of South Africa's recent past and the state's efforts at influx control). Of course, for development activists and practitioners it is important to make an impact, see a qualitative difference in the lives of people and direct capacity, resources, effort and institutional frameworks to achieve that purpose. It is also important to ensure that development practice - be it through policy formulation, strategy design, programme implementation - is informed by practical, theoretical and normative insights. This raises a challenge to those involved in research: how to ensure that research influences and, where necessary, challenges development practice? And, equally important, how can research add value to development practice by identifying the underlying assumptions, critical issues and trends that warrant investigation to ensure that the state and other development actors do not engage in 'bad' policy or interventions that have detrimental outcomes? The forthcoming conference 'Living on the margins: Vulnerability, social exclusion and the state in the informal economy' seeks to grapple with this challenge. The conference, co-hosted by PLAAS, Isandla Institute and the Chronic Poverty Research Centre, brings together international and local researchers, policy makers and practitioners with a view of sharing cutting edge thinking and applied research and reflecting on the implications for development practice.

To give you a foretaste of the conference to be held later this month, Andries du Toit, Senior Researcher at PLAAS and one of the main organisers of the event, interrogates the meaning of the 'second economy' in Thought Matters. He concludes that what has become a rather powerful metaphor in South African policy discourse is in fact quite problematic and undertheorised.



The power of metaphors: Interrogating the notion of the 'second economy'

By Andries du Toit

FEW NOTIONS IN South African policy discourse have been simultaneously as influential and as undefined as the notion of the 'second economy'. First introduced by President Thabo Mbeki in his now-famous August 2003 'Letter from the President', the term has become central to the way that the causes of persistent poverty are conceptualised in public discourse in South Africa. Conferences allude to the need to empower 'the second economy', and the business press confidently opines about its problems and its potential. But precisely what is meant by this term - what constitutes the second economy, and just what the characteristics are that make it 'second' - is generally not very clearly spelled out; and the policy implications are even more unclear. Important as the introduction of the notion has been, the time is ripe for a more searching exploration of what it really means to be marginalised.

Some of the importance of the concept of the second economy is related to the manner and timing of its introduction. The term entered the public realm at a time when the failure of GEAR as a job creation and redistribution strategy was becoming increasingly evident, and when crucial policy debates (on the RDP, on GEAR, on the stillborn idea of the Basic Income Grant) seemed to have reached an impasse.

In this context, Mbeki's letter played an important role in reframing the terms of official thinking about growth, poverty, race and national identity. Rather than simply being a racial divide and a remnant of the past, inequality and poverty were portrayed as the result of a present-day 'disjuncture' within the structure of the economy itself; and, crucially, Mbeki argued that "the interventions we make with regard to [the first word economy] do not necessarily impact on these areas, the 'third world economy', in a beneficial manner": What is needed, the letter argued, are interventions that could benefit those in the 'third world economy' directly.   

This was not a radical about-turn, but it was a significant shift. Clearly, in its disavowal of 'trickle down' theory, it indicated a move away from a narrowly orthodox assumption that GEAR on its own could serve to eradicate poverty and cleared the way for a much greater emphasis on the role of the developmental state. Within a remarkably short time the notion of the 'second economy' became a key organising concept in the public discourse about policy and implementation.

But although this has helped to create more space for debate about poverty and inequality, the notion of the 'second economy' itself has met with a mixed reception. At one end of the spectrum, conservative policy think tanks like the Centre for Development and Enterprise (CDE) were quick to adopt this language and use it as part of their case for an essentially neoliberal package of measures that would supposedly liberate the entrepreneurial potential waiting to be tapped in the informal sector. At the other extreme, Naledi's Isobel Frye roundly rejected the notion, suggesting that it was simply a sleight of hand intended to deflect critical attention away from the failings of the mainstream economy: rather than flowing from 'structural disconnection', she argued, large-scale unemployment and impoverishment is a byproduct of the normal workings of the capitalist economy. Others have adopted a position somewhere in the middle, warning against simplistic interpretations of the notion while affirming some of its key assumptions. While they have insisted that there is 'only one economy', they have seized on this language as an opportunity to highlight this economy's highly segmented nature.

This is one of the more interesting aspects of 'second economy' discourse. Its importance does not lie in the literal accuracy of what it says about the South African economy but, as Alan Hirsch has suggested, in its role as a metaphor: its ability to provide a suggestive shorthand that can serve to name or frame important problems.

Metaphors can be useful - but they can also be very problematic. While they may sometimes help us grasp a complex reality, they can also give rise to misunderstanding, and they direct attention away from what matters. And indeed there seem to be real problems here. While the notion of the 'second economy' is a powerful and appealing metaphor, it can also be very misleading. The notion of a 'third world economy', existing alongside but disconnected from the first, does not do justice to the very powerful ways in which even the most marginalised people are linked - indeed, shackled - to larger economic formation within which they are powerless and disadvantaged. Corporate power is felt strongly in even the 'deepest' rural areas. Shoprite, Vodacom and the big food companies continue to extract significant profits in even the poorest parts of the country; the transformation of commodity chains can hollow out the systems of local relationships upon which local economic development depend; and one of the biggest brakes on self employment is arguably not crime and the absence of micro-credit, but the power of big retail, which crowds many of the opportunities for informal sector operators. Rather than assuming that disconnection is bad per se, and that integration is inherently good, we should look much more carefully at the unequal power relations created by some of the connections that do exist.

If 'second economy' discourse is not a useful or appropriate way of thinking about the structural factors that keep poor people poor, what is? Simply pointing out how the wealth of some depends on the poverty of many is not enough. We need to know much more about the exact nature of life on the margins of the formal economy; about how some forms of connection can create benefit while others institutionalise disadvantage. It is time, then, to engage much more critically with 'second economy' discourse. The forthcoming Living on the Margins conference will seek to do just that.




THE LONG AWAITED publication 'Mainstreaming Local Government Responses to HIV/AIDS: A Case Study of the City of Cape Town's HIV/AIDS/TB Multi-Sectoral Strategy' is now available on our website. The report interrogates the City of Cape Town's response to HIV/AIDS by highlighting both the successes, weaknesses and impediments of the strategy and its implementation. The report extracts key lessons and recommendations, which have relevance not only for the City of Cape Town, but also for other municipalities seeking to formulate a coherent and effective response to HIV/AIDS.





THE DEVELOPMENT DIALOGUE on 'What makes a president? The succession debate revisited' has been postponed to 15 March. Invited speakers are Pregs Govender, Mazibuko Jara and Barney Mthombothi. As usual, the dialogue will take place at the Centre for the Book in Cape Town, between 16h30 and 18h00. For more information about the event, contact Letitia Manter on admin@isandla.org.za.

The international conference 'Living on the Margins' will take place between 26-28 March 2007. It is no longer possible to register for this event, but keep an eye out for conference-related publicity in the media. There will also be an opportunity to engage in an online discussion forum ('blog') during and after the conference, which is hosted on USAID's Poverty Frontiers website. A report of the conference will be available on the website in due course.



Contact details
PO Box 12263 Mill Street
Cape Town, 8001
Website: www.isandla.org.za.

Editorial collective: Edgar Pieterse, Mirjam van Donk