Neo-liberalism, varieties of capitalism, and the shifting contours of South Africa's financial system

This article focuses on the role played by both national and global finance in comparative economic performance. It critically examines financial economics, arguing that both the Efficient Markets Hypothesis and the New Financial Economics, with its emphasis on market imperfections, information asymmetries and financial systems, fail fully to explain theoretically the specific role played by finance in the economy and the emergence of specific financial systems. It cannot provide, therefore, an adequate account of variety in capitalism. Neither, however, can the Varieties of Capitalism literature which rejects excessively homogenising visions of institutional convergence but which foregrounds institutional variety without providing an adequate theory of institutions or a deeper theory of capital and capitalism. The argument is demonstrated through an examination of the changing nature of South Africa's financial system from the apartheid to the post-apartheid periods and its insertion in both national and global economies. Financialisation, it is argued, incorporates a global dynamic into the economic and social formation of class interests and national economies which is seen clearly in the South African case. The argument therefore provides a critique of both mainstream financial economics and the Varieties of Capitalism literature and sheds light on the relationship between finance and the real economy and the nature of contemporary capitalism.