Persistent protests might endanger the stability of young democracies because the economic legacies of the old autocratic regimes tend to outlive their political structures. This paper seeks to explore the micro-level predictors of protest potential in South Africa before and after the end of apartheid. The results of the cohort analysis reveal that the political consciousness of the anti-apartheid struggle has a lasting effect. The gap between actual income and expected returns to education explains protest potential better than comparison of one’s income with that of a reference group.
Popular protest in South Africa has increased sharply in recent years to the extent that it now seems to have pervaded the floor of parliament. In post-apartheid South Africa, economic slowdown is found to be a precursor of a rise in public protest. Young people are more ready than other age groups to take direct political action. Micro-level evidence shows that ‘unfulfilled expectations’ with respect to one’s own perceived income potential is the strongest predictor of propensity to protest. Limiting protest action to a ‘healthy’ level that does not lead to a downward spiral of instability requires framing the growth agenda as a political imperative. Medium-term remedies may include raising the quality of education, entrenching a meritocratic system of remuneration and promoting broad-based innovation.
The current structure of South Africa’s economy is partly a product of the terms of the country’s political dispensation. The availability of capital mobility as an exit option is a key aspect of South Africa’s negotiated democracy. As long as inequality remains high, capital continues to gravitate towards sectors emendable for expedient capital mobility such as finance. Promoting manufacturing investment in a high inequality environment may require tailor-made policy innovations that are compatible with existing political constraints. Such policies include weaving industry-specific property rights provisions with the industrial policy framework and creating a sizable political constituency for industry-led development.
This paper seeks to offer an economic explanation for the emergence of democracy in societies with high income inequality and narrow middle-class such as Apartheid South Africa. The presence of a credible threat of capital flight is shown to render democracy less unpleasant to the elites by making future tax concessions possible. However, inequality should be sufficiently low for the poor to have enough incentive to concede less redistribution to avoid capital flight.