In recent years. South Africa’s business and union leaders have often been called on to replicate the country’s substantial political achievements, in the economic sphere. Two important documents released in mid 1996 discuss the establishment of structures to facilitate dialogue between government, labour and business. The purpose of this would be to try to find ways of generating the growth and employment sorely needed in the country if democracy is to lead to any improvement in the living conditions of the majority. The government’s macroeconomic strategy paper - ‘Growth, Employment and Redistribution,’ commonly referred to as GEAR, was released first, followed by the report of the Labour Market Commission (LMC) convened by the President to investigate labour policy. The GEAR document proposes ‘a broad national agreement to create an environment for rapid growth, brisk investment and accelerated delivery of public services’ (1996: 26). The agreement would be needed to prevent the recent depreciation of the Rand from triggering a vicious cycle of wage and price increases which would destabilise financial markets and undermine the competitiveness of local industry. This could be achieved, GEAR argues, if labour and business were willing to consider the restraint of wages and prices. The idea of a national agreement is further elaborated in the LMC report, which proposes a ‘National Accord’ (1996). This proposal follows from the LMC’s belief that the negotiation of economic issues through institutional structures, as opposed to direct regulation by government statute, is both socially desirable and economically efficient (ibid, 219). Price restraint, wage restraint and investment decisions, together with tangible commitments from government on training, social welfare provision and industrial promotion would be the main issues covered by the accord. South Africa’s economic policy framework has been subject to heated debate since the release of GEAR. The union movement has expressed serious reservations about the market orientation of the government’s macroeconomic strategy. Given this position, together with the complex and fragmented structure of interest organisation in South Africa, the prospects for an accord or national agreement are not promising. Yet, the government has expressed the desire to set one up. This paper provides a review of political theory on interest groups. The purpose of this is to draw concepts and ideas from contributions in this area to see if they can shed any light on the nature of interest group interaction in South Africa, particularly with respect to the possibility of establishing a social accord. The review draws from two bodies of thought. The first is the theory of corporatism and the second that of public choice (often referred to as rational choice). Corporatist theory has enjoyed a fair degree of popularity amongst South African social scientists. However, the debate between them has not progressed very far, mainly due to confusion over terminology. Further, as argued Section 1, some local contributions have misread the international literature, ignoring aspects which might be of relevance to South Africa. These omissions are re-examined, but the section concludes that there are limitations in the extent to which corporatist theory is able to explain the dynamics of interest group formation and behaviour. Section 2 tries to find alternative explanations in the theory of public choice. The methodological integrity and general value of public choice theory has been strongly questioned (Green & Shapiro, 1994). While the paper provides a synopsis of public choice literature and a review of its critics, the focus is on the analysis of collective action. Despite the shortcomings which it shares with general public choice, this analysis provides useful theoretical pointers which can assist in developing an understanding of interest group dynamics which goes beyond corporatist theory. In the third section, the paper comes back to South Africa and looks at the recent history of interest organisation to establish whether any of the theoretical tools picked up in previous sections are helpful in understanding the local experience. After a general background, the section goes into the discussion of three particular issues, being: community participation in policy formation, trade policy and the labour market. Section 4 acknowledges that there is potential to build the capacity of interest organisations in South Africa and to restructure their interaction in socially beneficial ways. However, a number of issues are identified which mitigate against the conclusion of an effective social accord. These include the weaknesses evident in interest group organisation, the alliance between the African National Congress and the union federation Cosatu,1 and the absence of competition in South Africa at party political level. It is concluded that electoral reform might be a better means of democratising the country’s political environment than attempts at managing interest groups. / Working paper (South African Network for Economic Research) ; v. 1

Bibliography: pages 316-351. / In both scholarly and popular literature on the South African business sector, a high premium is commonly placed on the role of business in promoting political reform. This study investigated the perceived extent of such influence on political and socio-political aspects of public policy in the period 1978 to 1989. Using the "elite" and "group" approaches in Political Science as a point of departure, the perceptions of government and business elites in this regard, in particular the perceptions of the Afrikaner business elite, were analysed. Data from the government elite was gathered by means of postal questionnaires, and the business elite's input was obtained via interviews. The government elite's attitude towards, and perceptions of, interest groups were examined in the light of the premise that the latter's influence is largely determined by their legitimacy in the eyes of the decision-makers. These attitudes were established by moving from an assessment of the government elite's general perception of interest groups, to more specific perceptions of, amongst others, the business sector's access to decision-makers, and their perceived influence. The second part of the study primarily focused on the perceptions of the Afrikaner business elite vis-a-vis the influence of the business community on various dimensions of public policy. It was found that the government elite's attitude towards the existence of interest groups was largely dependent on the latter's utility with regard to the implementation and maintenance of policy, via mainly "positive" and "constructive" research. Government perceptions confirmed that several elite groups exercised specific influence on various dimensions of public policy. The Afrikaanse Handelsinstituut (AHI), for example, was found to have the greatest influence on economic policy formulation, whereas the Afrikaner Broederbond and the Dutch Reformed Church exercise more significant influence on socio- political policy than the AHI. Apart from these traditional Afrikaner elite-groups, the "insiders" were found to include those whose economic ideologies, amongst other variables, were reconcilable with those of government Due to the fact that the National Party was compelled to enlarge its power base in the early 1980s, certain English business organisations such as ASSOCOM and the FCI and the black political organization, lnkatha, have to some extent, been included as "insiders" despite divergent political convictions or cultural differences. Both the government elite and the business elite felt, however that the Afrikaner businessmen and their organizations still retained the decisive influence on aspects of economic and socio-political decision-making. With regard to political decision-making, that is the forms of state, government and authority, the business elite did not express a desire to have a role in this arena. The government elite, on the other hand, was prepared to grant the business sector a role in this regard, on the condition that business input exercised a reactive legitimising role to their policy, rather than initiating change.