#Economic Challenges and Political Instability (1994-1997)

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

[pamporovo]

Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

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Science and Chemistry Classes

South Africa's economic growth affected by mismatch of electricity supply and demand

South Africa's electricity sector has faced a series of challenges over the last two decades. It started with inadequate grid infrastructure to provide electricity to the majority of the South African population in the 1990s. In 1994, only 36% of total households were electrified; 50% of the urban population and 12% of the rural population.

Particularly in the middle of the 2000s, the national utility, Eskom, ran into liquidity and profitability problems. It received frequent government bailouts. The 2022 national budget allocated R21.9 billion (about US$1.5 billion) to Eskom.

Meanwhile Eskom's ageing electricity generation plants have deteriorated, resulting in frequent breakdowns. Since 2007/2008, the utility has been unable to supply electricity to meet aggregate demand. It has implemented rolling power cuts. These are systematic, temporary power outages that help balance the supply and demand of electricity in the market to avoid national blackouts.

Electricity tariffs have risen by 14.73% year-on-year on average from 2008/09 to 2018/19.

In recent years, particularly since 2008/09, the instability in the electricity supply, combined with the rising tariffs, has had a dire economic impact. It has become a barrier to income generation, economic growth and development. South African businesses have suffered significant losses. Planned power cuts are expected to reduce 2021 GDP growth by three percentage points—and cost the country 350,000 potential jobs.

The political and academic debates about electricity and economic growth have tended to focus on the impact of either generation capacity or demand and consumption. We wanted instead to explore the impact on economic growth of a mismatch of electricity supply and demand. We initially thought that any mismatch—a shortage or a surplus—would probably be bad for economic growth.

Our study covered the South African economy from 1985 to 2019. We found that a rising surplus of electricity enhanced economic growth. And increasing economic growth contributed to the rise in the electricity surplus, by making resources available to increase generating capacity.

The mismatch of electricity supply and demand is conducive for growth only when supply exceeds demand. Reduced demand, for example through managed power cuts, undermines the potential for the electricity market to make a positive impact on the South African economy in the long run.

These results were not entirely what we expected.

Policy usually aims simply to expand power generation. Instead, our analysis suggests it will need to ensure that electricity demand can rise enough to facilitate economic growth while ensuring supply is always higher than this rising demand.

Analysing the variables

We used data on electricity supply and consumption, trade, fixed capital accumulation, gross domestic product and employment from a few sources. They include the World Bank, Statistics South Africa and the Council for Scientific and Industrial Research.

We analysed the data using a technique that examines long-run relationships among the variables over a selected time period.

In economics, a market is unbalanced when there is a difference between the supply of and demand for an item. In the South African electricity market, supply and demand were in a relative alignment—although not in full equilibrium—until the middle of the 1990s.

The first power shortage appeared in the second half of the 1990s. It may have been due to the mass electrification programme of 1991. Electricity access rose from below 50% in the beginning of 1990s to more than 80% in the middle of 2000s. Meanwhile the economy was in recovery after the lifting of sanctions and the coming of democracy. Households and the production sectors of the economy steeply increased demand for electricity.

In 1997, Eskom requested additional generation capacity to be able to cover the anticipated increases in demand. But capacity did not increase at the expected rate. As a result, Eskom did not meet electricity consumption from 2002 to 2008, and onward.

The electricity sector continued over the study period to be haphazard, with mismatches of demand and supply.

Overall, when there was a surplus of electricity, it enhanced economic growth in South Africa. And increasing economic growth contributed to the rise in the electricity surplus. But when demand was greater than supply, the mismatch was not conducive to economic growth. The impacts of positive and negative periods of mismatch are not the same.

A growing economy creates room for increasing electricity generating capacity. This may be through higher tax revenue, consumers' ability to afford electricity, a better financial position for the national utility, and better credit rankings which attract investment in the energy sector. Thus, potentially, space for a more significant surplus can be created. And when electricity supply exceeds electricity consumption, it enhances economic growth because there's less risk of power interruptions.

When the consumption of electricity rises, it must be met with a sufficiently rising supply for the market to maintain an increasing surplus. At the same time, demand must be increased at a conducive level for economic growth.

Policy goals

Economic and energy policymakers are responsible for increasing both demand for and supply of electricity in such a way that there is always a surplus of energy. This encourages economic growth.

The policy goal, therefore, is more complicated than only an increase in generation capacity. It also has to encourage energy efficiency, promote economic opportunities and meet environmental commitments.

Generation capacity needs to become more adaptable and flexible. A potential way to achieve this is through a more diverse supply mix, with a greater role for renewable energy sources.

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WILL CYRIL RAMAPHOSA BE SOUTH AFRICA’S FUTURE RENEWAL MAN?

One politician many South Africans believe is very well qualified to lead South Africa into a renewed future, is Cyril

Ramaphosa – the current deputy president. If the astute businessman and former revolutionary trade unionist manages to break speed limits and at the same time avoid serious political accidents, he may well write his name into the pantheons of South Africa’s undisputed political heavyweight champions. From Johannesburg, Pusch Commey finds out why.

Like the British Constitution, it is an unwritten rule that the elected deputy president of the party becomes the deputy President of the State, who automatically ascends to the throne of ultimate power in South Africa. That man now is Cyril Ramaphosa.

The Multi-millionaire business magnate and politician is largely credited for his role in steering South Africa from the abyss of a racial conflagration 20 years ago to the admirably functioning democracy that it is today. After a failed bid to succeed Nelson Mandela he disappeared in 1997 into the political wilderness. In this wilderness he made for himself a million dollars fortune through his business savvy and political connectivity. He is rated 61 in Africa according to Forbes Magazine’s rich list. Now he is back from the political cold to perhaps rescue a country and a party in dire need of new ideas.

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Africa’s oldest liberation movement, the African National Congress ( ANC) has been 82 years in the trenches, and 20 years in government (102 years). It has been  trying hard with varying degrees of success to fix the political, social and economic damage inflicted by apartheid.

Now, after a reduced majority in the last elections in May this year (2014), there is consensus that the Party needs renewal, and a strong hand to address the socio-economic transformation of a reeling economy. The pace of socio-economic change after twenty years in power has become the big issue for its electoral base. Poverty, unemployment and inequality are the three evils plaguing the country and its future.

Ramaphosa was elected the Deputy President of the party last year. In May this year President Zuma appointed him the Deputy President of the Country and heir apparent to the Presidency. His second coming is generating much interest. Years ago no one would have lost sleep if he had become the President of the country.

As fate would have it, he lost the battle to become Nelson Mandela’s Deputy in the ANC and in government 20 years ago. Instead he was elected General Secretary of the party, with Jacob Zuma as his deputy. It is reported that Zuma who felt he was more deserving regarded the election of Ramaphosa as a mistake. Now that is history. Thabo Mbeki inched past Ramaphosa for the coveted position of Deputy President.

None would have predicted the subsequent twists and turns that has brought the country where it is today. And there may yet be more to come.

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Cyril The Man

Cyril Ramaphosa, was a key figure in South Africa’s historical narrative towards democracy. Having formed the powerful National Union of Mineworkers (NUM) which led to the formation of the Congress of South African Trade Unions ( COSATU) in 1985, the Lawyer/Politician significantly altered the course of the apartheid debate. Leveraging black labour power he escalated internal pressure when he joined forces with various umbrella bodies that led to the epochal mass movement the United Democratic Front (UDF).

Apartheid reeled as rolling mass action, strikes and demonstrations made the country ungovernable sending it into an economic tailspin. UDF’s actions, coupled with several other events like the battle of Cuito Cuanavale in Angola, international and African pressure, the fall of the Soviet Union, and the pressure by international banks and capital, brought apartheid regime to its knees and the negotiating table. This led to the inevitable release of Nelson Mandela and the unbanning of all liberation movements.

And when good negotiating skills were sorely needed Cyril was the man. He was widely regarded as a formidable negotiator and strategist, having cut his teeth in the labour movement, negotiating with tough mine bosses. In partnership with the National Party’s Roelf Meyer, the country’s first democratic elections on April 1994 became a reality.

Ramaphosa has been made Leader of Government Business in the National Assembly. His responsibilities will include: The affairs of the national executive in Parliament; the programming of parliamentary business initiated by the national executive, within the time allocated for that purpose, and ensuring that Cabinet members attend to their parliamentary responsibilities.

As a businessman in the Private sector he was the executive chairman of Shanduka Group, a company he founded. Shanduka Group has investments in the Resources Sector, Energy Sector, Real Estate, Banking, Insurance, and Telecoms.

He was also chairman of The Bidvest Group Limited, and MTN. His other non-executive directorships included Macsteel Holdings, Alexander Forbes and Standard Bank. In March 2007 he was appointed Non-Executive joint Chairman of Mondi, a leading international paper and packaging group, when the company demerged from Anglo American plc. In July 2013 he retired from the board of SAB Miller plc.

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He has garnered several honorary doctorates and international accolades. He was included in the Time magazine annual list of 100 men and women whose power, talent or moral example is transforming the world.

He has now parked his money, giving up several of his business interests to focus on politics, a sign that he is positioning to lead South Africa. But will he be able to deliver economic freedom to the hapless masses as he has done for himself and for politics?

Ramaphosa’s street credibility took a serious dent with the advent of a deadly strike in the Platinum belt of North Western South Africa. It may come back to haunt him.

The Marikana Massacre as it came to be known, occurred when police broke up an occupation by striking Lonmin mine company workers of a ‘koppie’ (hilltop) near Nkaneng shack settlement in Marikana on Thursday, 16 August 2012. As a result of the police shootings, 34 miners died and an additional 78 miners were injured causing anger and outcry against the police and the South African government. Further controversy emerged after it was discovered that most of the victims were shot in the back and many victims had been shot far from police lines. The violence on 16 August 2012 was the single most lethal use of force by South African security forces against civilians since the end of apartheid.

During the Marikana Commission of enquiry set up by the government, it also emerged that Lonmin management solicited Lonmin shareholder and ANC heavyweight, Cyril Ramaphosa, to coordinate “concomitant action” against “criminal” protesters. Whether he in fact did so or not is in dispute. Much has also been made of the fact that he was reported to have paid a million pounds ( 18 million rand) for a bull at an auction, while the poor mineworkers whom he once represented, and who were striking for a living wage were mowed down over a pittance.

Cyril Ramaphosa, has however always maintained that, while not being a member of the South African communist party, he was a committed socialist.

South Africa has indeed woken up to some harsh economic realities. When it was knocked off the perch as Africa’s biggest economy by Nigeria this year, many South Africans who had long gloried in being Africa’s economic superpower were shell shocked. Wage sector strikes have become the order of the day. Service delivery protests have become a proverb. This year, the economy actually shrunk to 0.6 % in the first quarter, leading to fears of a recession.

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The gini co-efficient stands at 0.7 making it one of the most unequal countries in the world. There is an official unemployment rate of 25%. The unemployment rate among youth ( aged 15 – 34) has increased from 32.7% to 36.1 % between 2008 and 2014 according to the latest Statistics SA report on national and provincial labour market trends among the youth. Young adults make up between 52-64% of the labour force in South Africa. Besides, 33% of the populace live on government handouts, and black South Africans constitute 90% of the unemployed.

The serious structural defect in the erstwhile racially designed economy has not been sufficiently addressed. Racial tensions and social instability rears its head in the fact that ownership of the economy is overwhelmingly white, leaving room for the contestation for political power of parties like the Economic Freedom Fighters (EFF). Led by the enfant terrible of South African politics, Julius Malema, the barely 8 month old party managed to secure a respectable over a million votes out of 17 million, and 25 seats in parliament out of 400. This relative EFF success many belive, is because Its economic message resonated with the masses.

Inequality drawn along racial lines continues to be a pivot of unhappiness amongst the triple evils of poverty, inequality and unemployment. With respect to household income the average for whites is 365 000 rand ( $ 42 000 per annum), Indians 251 000 rand , mixed race 251,500 and Blacks 60 600 rand. 79% of the land is still effectively in the hands of about 10% of the white population. All are relics of colonialism and apartheid.

How to grow the economy, transform the ownership structure and get able bodied people to contribute has been a huge headache.

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National Development

Now the panacea, following on the heels of previous plans, is the National Development Plan. Essentially the NDP recognises nine primary challenges the government has to overcome by 2030: Too few people are employed, many black people are poorly educated, infrastructure under development especially in poorer areas remains high, diversifiying of the economy from dependence on natural resources, dealing with a poor public health system and public services, a bringing together adivided society that lacks cohesion, and high levels of corruption.

Underpinning the NDP, is a war on poverty and the need for education and skills are seen as vital. The lack of these lead to unemployment and which leads to poverty and inequality. The plan is to grow the economy such that employment increases with growth. Education and skills take a prominent place. Entrepreneurship is also emphasized. The aim, among others, is to eliminate poverty and create 11 million jobs by the year 2030.

“By 2030 we must be able to declare that no South African lives below a poverty line and we can fix that line,” Trevor Manuel, the then Minister in the Presidency for the National Planning Commission, said in the introduction in 2011.

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President Jacob Zuma appointed the National Planning Commission in May 2010 to draft the NDP. An advisory body consisting of 26 people, the commission was drawn largely from outside the government, with members being selected for their expertise in key areas. It was chaired by Manuel, with Cyril Ramaphosa as Deputy Chairman.

Ramaphosa was a chief architect behind the National Development Plan. And he will be driving it to 2030. Is it a good plan? For a start, the trade unions he helped form when in Cosatu are strongly opposed to the NDP, complaining that the structural defect of a house cannot be rectified by extensions, plastering and painting. It has to be torn down and rebuilt or properly refurbished by first getting rid of those historical defects.

The white led official opposition The Democratic Alliance likes the plan however. Malema’s EFF will not sign on. The party belives the problem is the stranglehold of white monopoly capital and its ralliying call is for the nationalisation of major sectors of the economy. Julius Malema has called it a neo -liberal right wing and reactionary policy framework that will lead to more socio-economic problems. Cosatu likens the NDP to the short lived 5 -year Growth, Employment and Redistribution( GEAR) plan adopted by the ANC after 1996 to address the very same issues. It was about privatisation, removing exchange controls and linking output to labour. It brought macro economic stability to the country but failed to solve economic inequality or bring real black empowerment.

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The NDP has also was largely been described as the kind of trickle- down economics that asked the dispossessed to wait for the owners of land and capital to double or triple their wealth so that crumbs can fall to the workers who produce it. Cosatu points out that though the plan supports a long term vision and an interventionists approach it will not help South Africa to escape from the growth path inherited from the days of colonialism and apartheid, nor will it create large numbers of decent sustainable jobs which are desperately needed. Cosatu’s call is for a radical economic shift , a developmental state and a plan for a new growth path.

The political crystal ball

There are many contenders to the Presidency of the ANC in 2017, and Head of State in 2019. There is the Secretary General of the ANC Gwede Mantashe, who is said to have Presidential ambitions. Then there is the Ex-wife of President Zuma and Current Chairperson of the African Union, Dr Nkosazana Dlamini-Zuma. The current speaker of the National assembly Baleke Mbete is also touted as a possible candidate. And there are many wildcards. Zuma himself has openly said he would prefer a woman candidate for the Presidency.

The ANC will inevitably win the election in 2019, unless something cataclysmic happens. And come that day, many south Africans are already predicting Cyril Ramaphosa will be in the driving seat to steer South Africa to a desired destination.

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IP2039 ADVANCED PRINCIPLES OF ECONOMICS: FINANCIAL MARKETS AND CORPORATE SYSTEMS

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IP2039 ADVANCED PRINCIPLES OF ECONOMICS: FINANCIAL MARKETS AND CORPORATE SYSTEMS

IP2039 ADVANCED PRINCIPLES OF ECONOMICS:

FINANCIAL MARKETS AND CORPORATE SYSTEMS

  2018/19

Autumn term

    This module continues to analyse key concepts and approaches to economic theory . It is a progression from Principles of Economics 1 (markets and prices) and 2 (countries and systems).

APE focuses on two major areas of international politics economy: the firm/corporation and the financial market. The modules lays out existing competing theoretical approaches and traces the evolution of these ideas, focusing on the role of corporation in capitalism; and on the functions of the financial markets, money and banking in capitalism. Upon  completing the module you will be able to understand how changes in the nature of the corporate firm are related to the functions of finance, what are the key debates and issues surrounding the financial system in light of the GFC, and what challenges are posed by the structural and intuitional shifts  within the corporate and financial realm.

  ASSESSMENT

  In class (group) presentation (10-15 mins):      20% of module mark

In class exam (week 11):                                  30% of module mark

Written essay:                                                   50% of mark

    WEEK OUTLINE

Weeks Tutorial,

10:00-10:50

11:00-11:50

      Lecture 12:00-12:50, D220

Week 1

26

September

Introduction + Banking and the Monetary System.

(extended lecture in C318)

Presentations

sign-up

  Week 2

3 October

Functions and Tools of Finance  Banking and the Monetary System: competing visions Week 3

10 October

 Post-Keynesian Approaches to Finance Functions and Tools of Finance: competing perspectives Week 4

17 October

The GFC: lessons for orthodoxy and heterodoxy Post-Keynesian Approaches to finance and their limitations Week 5

24  October

The Rise of the Corporation The GFC: lessons for economic doctrines Week 6 Reading week Week 7

November

Transaction Cost Economics The Rise of the Corporation Week 8

14 November

New Institutional Economics Transaction Cost Economics Week 9

21 November

 Legal and Sociological Theory of the Firm

  NIE Week 10

28 December

Financialised Corporate Economy: a Systemic View Legal and Sociological Theories of the Firm Week 11

5 December

  Essay advice session In class exam

      Readings

      Week 1. Introduction. Orthodoxy vs heterodoxy in economics    AN

      Key Readings

Lavoie, M., 2009, Introduction to Post-Keynesian Economics, Palgrave. Introduction.

Minsky, H., 2008 (1986), Stabilizing An Unstable Economy, M.E. Sharpe. Chapters 5 and 6.

    Week 2. Banking and the monetary system                                            AN

  Key Readings:

  Mankiw, G, 2014, Economics. Chapter 26 (The Monetary System).

  Ryan-Collins, J. et al., 2011, Where Does Money Come From? (NEF). Chapter 1 (What Do Banks Do?)

  Lavoie, M., 2009, Introduction to Post-Keynesian Economics. Chapter 3 (e-book).

  Michael McLeay, Amar Radia and Ryland Thomas, 2014, “Money creation in the modern economy”, Bank of England.

    Further

  Minsky, H, 1957, “Central Banks and Money Market Changes”, The Quarterly Journal of Economics, 71:2.

  Keynes, JM, A Tract on Monetary Reform, Introduction.

  Wray, R., 2010, “Alternative Approaches to Money”, Theoretical Inquiries in Law, 11:1.

  Carruthers and Ariovich, 2010, Money and Credit. A Sociological Approach. Chapters 3 and 4.

              Bell, S. 2001, “The role of the state and the hierarchy of money”, CJE, 25:2.

  Davidson, P.; Weintraub, S. (1973). “Money as Cause and Effect”. The Economic

Journal. 83 (332): 1117–1132.  

    Week 3. Functions and tools of finance                                                           AN

  Key texts

  Mankiw, G., Economics Ch.25 (The basic tools of finance).

              Kent Baker and J, Nofsinger, eds. 2010 Behavioral Finance. Investors, Corporations,     and Markets. Part 1. (Foundation and Key Concepts). E-book online. 

    Further

  Bernstein, P., 2005. Capital Ideas, the Improbable Origins of Modern Wall Street. Ch. 1 (Are stock process predictable?).

  Toporowski, J., 1993, The Economics of Financial Markets and the 1987 Crash, Chapter 2 (How Capital Markets work).

  Shiller, R., 2012, Finance and the Good Society, Chapter 25 and 26.

  Kurztman, J. 1994, The Death of Money, Ch.

  Shiller, R., Irrational Exuberance, Part 4.

    Week 4. Post-Keynesian approaches to finance                                        AN

  Key Readings

  Minsky, H., 1986. Stabilising An Unstable Economy, Chapter 6.

  Mehrling, P. 2000, “Modern Money: Fiat or Credit?”, Journal of Post Keynesian  

          Economics, 22:3. pp. 397-406

  Lavoie, M. 2010, Introduction to Post-Keynesian Economics. Chapter 3. “A Macroeconomic Monetary Circuit” – ebook online.

  Further

  Marc Lavoie, 1984, “ The Endogenous Flow of Credit and the Post Keynesian Theory of Money”, Journal of Economic Issues, Vol. 18, No. 3 (Sep., 1984), pp. 771-797

  Minsky, H., 1975, JM Keynes, Chapter 3. Fundamental Perspectives.

  Ryan-Collins, J., Where Does Money Come From? Chapter 3.

  Davidson, P. 1972, “Money and the Real World”, The Economic Journal, Vol. 82, No. 325 (Mar., 1972), pp. 101-115.

  Clower, R. 1999, “Post-Keynes  Monetary and Financial Theory”, Journal of Post-Keynesian Economics, 21:3.

Kregel, J. 1998, “Aspects of a Post Keynesian Theory of Finance”, Journal of Post

Keynesian Economics, 21:1.

Mehrling, P. 2000, “Minsky and modern finance”, Journal of Portfolio  

             Management, 26:2.

  Cottrell, A, 1992,  Post Keynesian Monetary Economics: A Critical Survey

  Week 5. The GFC: lessons for orthodoxy and heterodoxy                     AS

    Key Texts

  Acharya V. et al. ,2009, “A Bird’s-Eye View. The Fc of 2007-09: Causes and Remedies”, in V. Acharrya and M. Richardson, eds., Restoring  Financial Stability. How to Repair a Broken System, NY: Wiley and Sons.

  Wray, R. 2009, “The rise and fall of money manager capitalism: a Minskian approach

Camb. J. Econ. (2009) 33 (4).

              Palley, T. 2010, “The Limits of Minsky’s Financial Instability Hypothesis as an    Explanation of the Crisis”, Monthly Review         http://monthlyreview.org/2010/04/01/the-limits-of-minskys-financial-instability-       hypothesis-as-an-explanation-of-the-crisis/

  Further

Leijonhufvud, A. 2009, “Out of the corridor: Keynes and the crisis”, CJE, 33:4.

  Ch. Whalen, 2016 Money Manager Capitalism: Still Here, but Not Quite as Expected,   Journal of Economic Issues  Volume 36, 2002 – Issue 2

Milberg, William (12/01/2013). “Implications of the recent financial crisis for firm innovation”. Journal of post Keynesian economics (0160-3477), 36 (2), p. 207.

  Charles J. Whalen, 1993, “Saving Capitalism by Making It Good: The Monetary Economics of John R. Commons”, Journal of Economic Issues, Vol. 27, No. 4 (Dec., 1993), pp. 1155-1179

    Lawrence, G. (07/01/2015). “Defending financialization”. Dialogues in Human Geography (2043-8206), 5 (2), p. 201.

  Week 6. Reading Week.

  Week 7.  The Rise of the Corporation                                                          RP

  Key Reading:

Philips, Richard, 2012, The firm, the corporation and contemporary Capitalism in Ronen Palan, ed. GPE: Contemporary Theories. London: Routledge.

Alfred D. Chandler, 1990, the Enduring Logic of Industrial Success, Harvard Business Review.

John H. Dunning, 2000, The eclectic paradigm as an envelope for economic and business theories of MNE activity, International Business Review, 9:2

Further Readings:

Richard R. John, 1997, Elaborations, Revisions, Dissents: Alfred D. Chandler, Jr.’s, The Visible Hand after Twenty Years, Business History Review, 71:2

  Chandler, Alfred. D. 1977. The Visible Hand: The Managerial Revolution in American Business, Cambridge, Mass.: The Belknap Press of Harvard University Press

Chandler, A.D. Jr.,1990, Scale and scope. Cambridge, MA: Belknap Press.

Clegg, 1987, Multinational Corporations and World Competition.

Robin Ed. The History of the Company: The Development of the Business Corporation 1700-1914.

  Week 8  Transaction Cost Economics                                                                     RP

  Ronald Coase, 1937, The Nature of the Firm. Economica, 16:4

Steven Tadelis and Oliver E. Williamson, 2012, Transaction Cost Economics. http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=2020176

  Further:

Stewart Schwab, 1989, Review: Coase Defends Coase: Why Lawyers Listen and Economists Do Not, Michigan Law Review, 87:6

  Hart, O, 1995, Firms, Contracts, and Financial Structure. Oxford University Press.

Sumantra Ghosha and Peter Moran, 1996, Bad for Practice: A Critique of the Transaction Cost Theory, Academy of Management Review, 21:1

  Week 9. New Institutional Economics                                                        RP

Oliver E. Williamson, 2000, The New Institutional Economics: Taking Stock, Looking Ahead, Journal of economics Literature, 38:3

  Douglass North, 1990, Institutions, institutional Change and economic Performance, Cambridge, Cambridge University Press

Further

  Mary Douglas, 1996, How Institutions Think. New York: Syracuse University Press

Oliver E. Williamson, 1981, The Economics of Organization: The Transaction Cost Approach, American Journal of Sociology, 87:3

  Oliver E. Williamson, 1975, Markets and Hierarchies. London, Routledge.

  Week 10. Legal and Sociological Theory of the Firm                   RP

Key Texts

Neil Fligstein, 1996, Markets as Politics: A Political-Cultural Approach to Market Institutions, American Sociological Review, 61:4

  Robé, J.-P. (2002). Enterprise and the Constitution of the World Economy. International Corporate Law, 2, 45-64.

Further

Neil Fligstein, 1993, The Transformation of Corporate Control, Cambridge: Harvard University Press

Ronen Palan, 2015, Futurity, Pro-Cyclicality and Financial Crises, New Political Economy 20:3

Foss, N. J., & Klein, P. G. (2013). Organizational Governance. In R. Wittek, & T. A. Snijders, The Handbook of Rational Choice Soical Research.

Lamoreaux, N. R. (2004). Partnerships, Corporations, and the Limits on Contractual Freedom in U.S. History: An Essay in Economics, Law and Culture. In K. Lipartito, & D. B. Sicilia (Eds.), Constructing Corporate America: History, Politics, Culture (pp. 32-54). Oxford: Oxford University Press.

    Week 11. Conclusion: a systemic view of the financialized corporate economy

  Required

  Nesvetailova, A. 2010, “Money and Finance in a globalised economy”, in R. Palan, ed., GPE: Contemporary Theories.

  Sawyer, Malcolm (12/01/2013). “What Is Financialization?”. International journal of political economy (0891-1916), 42 (4), p. 5.

Bolton and Schatfstein, Corporate finance, the theory of the firm and organisation” J of Economic perspectives, 12:4 (autumn 1998).

  Davis, Gerald F. (01/01/2015). “Financialization of the Economy”. Annual review of sociology (0360-0572), 41 (1), p. 203.

  Further

  Kent Baker and J, Nofsinger, eds. 2010 Behavioral Finance. Investors, Corporations, and Markets. Part 4. (Behavourial Corporate Finance). E-book online. 

  Lazonick, William (12/22/2010). “Innovative business models and varieties of capitalism: financialization of the U. S. Corporation”. Business history review (0007-6805), 84 (4), p. 675.

  David A. Zalewski & Charles J. Whalen, 2010, “Financialization and Income Inequality: A Post Keynesian Institutionalist Analysis”, Journal of economic issues, 44:3.

Prasch, R. 2014, “The Rise of Money Manager Capitalism and Its Implications for Economic Theory and Policy”, Journal of Economic Issues, 48:2.

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Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

[bookinghotelbg]

Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

[bookinghotelbg]

Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

[kazanlaktravel]

Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.

[kazanlaktravel]

Economic Challenges and Political Instability (1994-1997)

Fragility and Failures of the Berov Government

The new government, led by Prof. Lyuben Berov, faced significant challenges in the mid-1990s, including economic reforms, privatization, corruption, and organized crime. However, the administration proved fragile and struggled to address these pressing issues. The anticipated transition to a market economy increasingly seemed like an illusion amid growing social tension. Factionalism emerged within the two major parliamentary groups, the Bulgarian Socialist Party (BSP) and the Union of Democratic Forces (UDF). Dismissals in the army and police, coupled with a lack of financial support for sports, gave rise to “groupings of force”—semi-criminal organizations linked to various business lobbies. The Berov Cabinet lost parliamentary support and resigned in October 1994, leading to the appointment of a provisional government until extraordinary parliamentary elections could be held. Five years after democratic changes, some began to express nostalgia for the communist past Guided Turkey Tours .

Socialists’ Resurgence and Videnov’s Troubled Leadership

In December 1994, the Socialists claimed a decisive victory in parliamentary elections, forming a new government with the young leader Zhan Videnov at the helm. Over the next two years, Videnov and his cabinet faced a series of challenges, and their attempts to address urgent matters proved inefficient. Inflation rates soared, banks went bankrupt, a grain shortage emerged, and corruption and crime continued to escalate. The era witnessed a proliferation of “financial pyramids,” which exploited trusting Bulgarian citizens, resembling scenes from a Western movie. The government failed to protect citizens from unscrupulous individuals operating as “pharaohs,” leading to widespread disillusionment. Many lost hope and their life savings amid the economic turmoil. During Videnov’s rule, the USD/BGL exchange rate surged from 50 levs per dollar in the fall of 1994 to an alarming 3,000 levs per dollar in January 1997.