Thinking politically about capital controls: a class perspective


The recent global financial crisis sparked renewed debates, both within academia and policy-making circles, about regulating highly mobile cross-border money-capital flows. A particular type of policy tool has received considerable attention: capital controls (CC). Within mainstream economics and policy-oriented circles (including policy-makers in central banks, finance ministries, and international organisations such as the IMF and the G20) there has been a growing recognition that unregulated cross-border money-capital flows can considerably disrupt capital accumulation, and debates have accordingly focused on the potential role and effectiveness of temporary CC in limiting the destabilising potential of those flows, while maintaining a long-term commitment to an open capital-account and free capital mobility.[1] By contrast, the Left (including organised labour, progressive economists, and civil society organisations) has been largely critical of capital-account liberalisation, and has denounced its detrimental effects in terms of constraining policy options for development and long-term industrial development.[2]

Consequently, there has been a growing consensus on the Left that CC can play a key role in designing more progressive and development-friendly forms of financial governance, and in empowering labour vis-à-vis capital. While those debates are welcome, there has been remarkably little research on the role that those measures have historically played in the specific national contexts where they were implemented, particularly with regards to prevailing social relations of production. There have also been very few attempts at understanding in class terms the actual role of the diversity of CC currently in place across the Global South. This is particularly problematic, given that CC are not ready-made, neutral, technical measures, which fulfill similar objectives irrespective of where they are implemented. By contrast, CC have historically played an important role in broader class-based strategies and in sustaining particular forms of capital accumulation.[3] In fact, the lack of critical analyses of CC sensitive to class dynamics is quite surprising, given the now widespread view on the Left that curbing the power of capital over labour will involve CC. My contention is that if progressive forms of CC are to be designed in the future, it is necessary in the first place to understand the role and function that CC have played in particular national contexts, within the broader role of the capitalist state in the antagonistic and crisis-ridden process of capital valorisation, and to uncover the class dynamics associated with them. This is especially important in those countries which have a long history of CC, and where there have recently been some debates on implementing new forms of CC, like South Africa.

What is the role that CC have historically played in reproducing particular forms of capital accumulation and capitalist class rule in South Africa? What does this say about the CC policies currently implemented by the South African National Treasury and the Reserve Bank? In a recent article published in Review of African Political Economy, I draw upon Marxist political economy and Post-Keynesian/Minskian economics in order to explore those questions. I offer a historical analysis of CC in South Africa (from the 1930s to 2014) with particular reference to the historically and geographically specific material conditions of capital accumulation and associated configuration of social relations in South Africa. The analysis draws upon a range of sources: quantitative data from the national accounts, descriptive data on CC from policy documents released by the Reserve Bank, and interviews conducted during a period of extensive fieldwork between September and December 2016.

My main claims are the following. Firstly, by contrast with capitalist elites’ usual framing of the CC debate in highly technical terms, a class analysis sheds light on the active (though indirect) role of working classes in shaping CC policies. This has primarily taken two forms in South Africa: 1) events of the class struggle triggered acute episodes of capital flight, forcing the state to design and implement CC to prevent the large-scale outflow of resources, help managing the balance-of-payment, and facilitate the regulation of money and the public debt; 2) working classes also had an indirect influence on the design of CC, through the various state attempts at controlling and integrating them. Secondly, CC have been the concrete historical forms through which the South African state has mediated the following contradiction: from the perspective of the state, global money-capital flows constitute both a source of social wealth that can be distributed to various social subjects for the purpose of fostering accumulation and managing class relations, and an expression of the disciplinary power of capital-in-general. The following quote by Mandela (from a 1992 speech), is an excellent recognition of this contradiction, and how it is experienced by policy-makers as a trade-off: ‘In order to attract foreign investment we will abide by all internationally recognised standards that are consistent with our objectives of growth with equity’ (emphasis added). Varied forms of CC have been deployed and adjusted to both attract money-capital flows (depending on their availability on the world market), and to facilitate the crisis-led reproduction of money and the state (for instance, by occasionally curtailing large-scale capital flight). As a whole, the article shows that there has been nothing inherently progressive about South African CC, and concludes by drawing political implications for the Left and working classes in South Africa and elsewhere.

More generally, those results demonstrate the importance of a class-based perspective in thinking politically about CC. This is crucial in order to prevent the depoliticisation of the renewed debates about CC by the IMF, mainstream economists, and state managers, and ultimately its domestication by powerful capitalist interests. Thinking politically about CC is also necessary if we are to push for ‘transformative’ forms of CC, that is, CC that aim at transforming social relations and class configurations, and that empower labour vis-à-vis capital.[4]

Ilias Alami is a PhD researcher in Politics at the University of Manchester. He tweets at @IliasAlami.


[1] IMF. 2012. “The Liberalization and Management of Capital Flows: An Institutional View”, IMF position note, International Monetary Fund, Washington DC.

[2] Chang, H. J., and I. Grabel. 2004. Reclaiming Development: An Alternative Economic Policy Manual. London: Zed Books.

Gallagher, K. P. 2015. Ruling capital: Emerging Markets and the Reregulation of Cross-border Finance. Ithaca, NY: Cornell University Press.

[3] Soederberg, S. 2004. “Unravelling Washington’s judgement calls: The cases of the Malaysian and Chilean capital controls”, Antipode, 36(1), 43-65.

Dierckx, S. 2015. “Capital Controls in China, Brazil and India: Towards the End of the Free Movement of Capital as a Global Norm?” PhD Thesis, Department of Political Science, Ghent University.

Alami, I. 2016. “Post-crisis Capital Controls in Developing and Emerging Countries: Regaining Policy Space? A Critical IPE Engagement.” Paper presented at the Conference of Socialist Economists, University of Manchester, March 2016.

[4] Epstein, G. 2010. “Marx, Keynes and Crotty: The Case for Capital Controls Revisited,” in Jonathan Goldstein and Michael Hilard, (eds) Heterodox Macroeconomics: Keynes, Marx and Globalization. eds. New York: Routledge.


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