If there is but one reason to read Season of Hope, the ultimate insider’s account of South Africa’s economic transition since 1994, it is to remind oneself about just how distorted an economy was inherited by President Nelson Mandela’s government.

Written by Alan Hirsch, The Presidency’s chief director of economic policy, the book is a compelling read for anyone keen on South Africa’s recent economic history, but is also helpful for those seeking to understand the evolution of the African National Congress’s (ANC’s) economic-policy thinking.

From the outset, Hirsch argues that, despite the indisputable mutually-supportive link between apartheid and capitalism, many of the apartheid-era distortions also had ‘long-lasting’ negative consequences for the competitiveness of the capitalist economy. Some of these distortions live with us today and manifest themselves most acutely in the unemployment and skills crises. They are also apparent in the strain being placed on South Africa’s largest cities as a result of rapid urbanisation – a phenomenon accentuated partly by the demise of a range of perverse policies, such as influx control, which sought to keep black South Africans out of the urban centres.

The book highlights the scepticism of the media and white-dominated business about the ability of the left-leaning ANC to deliver investor-friendly economic policies. And it contrasts that mistrust with the now-amazing degree of calm about the ability of the ANC to deliver macro- and microeconomic policies that encourage growth and investment (ironically, the main question now is whether the ANC can really be effective in delivering greater social equity, the focus of its initial economic blueprints). That new atmosphere, Hirsch shows, was hard won and the result of several well-considered compromises, ranging from the selection of finance ministers to the fiscal choices made. It is now even difficult to recall how different it was during those first months of democracy, when Mandela had to move with lightning speed to replace the then Finance Minister, Derek Keys, with a non-ANC-aligned, white, ‘predictable banker’ in the form of Chris Liebenberg in a bid to quell what Hirsch coins as the ‘racially-tinged pessimism’ of the time.

Equally, South Africa’s first black and ANC Finance Minister, Trevor Manuel, had an incredible credibility battle when he succeeded Liebenberg in March 1996. But fight he did, particularly with those in the tripartite alliance opposed to the fiscally-conservative Growth, Employment and Redistribution (Gear) macro-economic policy launched in 1995. While not overtly mentioned in the book, it appears that the intra-alliance fault lines that emerged during the economic-policy debates of 1996 and 1997 have more or less held to this day. It was also during this period that then Deputy President Thabo Mbeki waded heavily into the debate. In a speech to a Cosatu meeting in December 1997, Mbeki acknowledged the tensions and the divisions over Gear, stating baldly: “When we speak of this strategic alliance, are we speaking of something that continues to exist, or are we dreaming dreams of the past?”.

Hirsch admits some mistakes and highlights the underperformance of Gear, particularly in the areas of employment creation and investment facilitation. However, on the whole, he argues that South Africa’s economic policymakers made the correct choices in the circumstances and that the foundation has been laid for ac- celerated growth and job creation.

Hirsch is, arguably, South Africa’s foremost economic-policy buff, and his account of the reforms tends to play the ball rather than the player, even when he is critical, as he is of former Reserve Bank governor Chris Stals, who Hirsch believes continued to fight the ‘old war’ of capital flight, ahead of the new one, being unemployment. He suggests that Stals’s fixation with a strong rand and low inflation at the expense of co- ordination with Gear was possibly the main reason for the underperformance of the macroeconomic policy.

Another good reason to read the book is that it does not remain strictly focused on macroreform, the Treasury and the Reserve Bank, but also seeks to explain and unravel some of the key micro- economic-reform initiatives post- 1994. Here, Hirsch brings direct insight from his days working at the Department of Trade and Industry. He shows that, like Gear, South Africa’s chosen trade-reform path was also fairly unpopular within the alliance. In fact, he points out that it led to the first intra-alliance protest in 1995, when the South African Clothing and Textile Workers’ Union protested against South Africa’s tariff-reduction strategy. In the area of industrial strategy, meanwhile, there had been significant labour, government and business interaction, which highlight some of the key constraints. It became common cause that South African firms and industries were generally inefficient and that an overhaul was required. However, the generic- policy instruments adopted have also only been modestly successful and there is now work under way to define a far more targeted industrial policy.

The final reason to read the book, copublished by University of Kwa-zulu-Natal Press and the Inter-national Development Research Centre, is also possibly the most important, and that is the in-sight Hirsch offers into the new policy questions and models cur-rently being assessed by government.

It is widely known that Hirsch himself is part of the team lead- ing the development of the accelerated and shared growth initia- tive, or Asgi, which will be unveiled by Deputy President Phum-zile Mlambo-Ngcuka early this year.

This intervention may be more about a change of emphasis than a fundamental policy shift, but it is designed to raise average yearly growth to 4,5% from 2006 to 2009, and then, to six per cent from 2010 to 2015.

Hirsch argues that there are various policy levers available to achieve better levels of growth and employment creation and poses several questions that need attention by policymakers: Is it possible to fix the regulatory and governance environment in the administered-prices sectors? Should there be more competition or better governance and regulation? And how does the recipe vary from sector to sector, for example, from electricity to telecommunications? In achieving relative currency stability at a suitable level, what combination of exchange-control reform, foreign-reserve management, and interest-rate management tools is optimal? And, stemming from this question, while inflation targeting is now widely accepted and endorsed, to what extent should monetary policies take other factors – such as growth and employment – into consideration, and should this be built explicitly into the monetary-policy mandate? Regarding fiscal policy, there are two questions. How should government finance the much-needed revival in public-sector investment: through rand- or foreign-denominated bond issues, project loans, privatisation sales, or sacrificing other spending priorities? At the same time, can the cost of capital for the private sector be lowered further, especially for smaller businesses? Answers to some of Hirsch’s questions will, no doubt, be answered once Asgi is announced, perhaps foretelling a second edition, or a Season of Greater Hope.