Going into 1994 and the new democracy, Eskom was given a grouping of Reconstruction and Development Programme (RDP) goals. He argued that people too often judge the merits of a policy or institution based on its immediate consequences, often ignoring the long-term consequences or the hidden opportunity costs. It was an “exit strategy”.  This was heeded, in theory, by GEAR later on, but as will be argued, GEAR did not make any substantive changes towards liberal free market policies in actuality.  Renfrew Christie, “Better than van der Bijl dreamed: Escom 1948-75,” in Electricity, Industry and Class in South Africa (State University of New York Press: Albany, 1984), 150.  This is another case of Eskom not understanding what it is. As supply and demand principles dictate, people will pay what they are willing and suppliers will charge what they must. Prices of electricity provided by Escom were only allowed to cover costs, loan repayments and a small amount to go towards reserve funds. led to a dangerous state where Eskom chose to downscale rather than raise prices. Peron, Jim. Escom eventually became a full monopoly in 1948 when the National Party nationalised the electricity industry. Commission of Inquiry into the Supply of Electricity in the Republic of South Africa.  In 1981, load-shedding occurred as Escom failed to effectively scale up production. “The significance of the minerals-energy complex in the light of South African economic historiography.” Transformation: Critical Perspectives on Southern Africa, no. As such, monopolisation of the industry was inevitable. Annual report.  One can see how this is unsustainable: simply, a decreasing supply with increasing demand – with no ability to check that without political lobbying.  To provide profundity to this point, Escom did have to undertake a huge rationalisation policy when World War 2 caused coal shortages.  Renfrew Christie (1984) expands on this by not only stressing the cheap coal, but also South Africa’s cheap labour.  It is true that Kimberly, a mining town, was the first town to be electrified in 1882. It is commonly argued in the historiography that Escom was an admirable institution that began to fall after it became Eskom. Analysis of this already insightful section established that Eskom fell due to its monopoly status, its dire pricing system, over electrification and government interference. The historiography and primary case material have been combined chronologically to present a timeline of events and how other historians have interpreted the material. With the principle of prices explained, this allows for the argument of the socialist calculation problem. En naviguant sur ce site, vous acceptez la politique d'utilisation des cookies, Stage thématique Chimie et Procédés verts, Accompagnement des étudiants internationaux, Quality Hygiene Safety / ToxicologyJoining.  Most notably in this year, plans to privatise Eskom were cancelled by government.  Kenny, “The rise and fall of Eskom – and how to fix it now,” 5. Accueil International Welcome at ESCOM Chimie.  Christie, “Better than van der Bijl dreamed: Escom 1948-75,” 157. As highly relevant historians go, Kantor (1988) is not an historian but an economist who condemned the De Villers Commission prescriptions.  The De Villiers Commission set out the overarching goal of improving the prices and effectiveness of electricity production in the country, as well as reshaping the leadership and functions of Escom itself.  Escom was not permitted to receive direct public funding, but was also not allowed to charge a market-rate for electricity, creating a dire combination. In this way, they are diametrically opposed to the position of this paper, that puts forward that it was public sector domination that led to Escom’s downfall. “Escom to Eskom: From racial Keynesian capitalism to neo-liberalism (1910-1994).” In Electric Capitalism: Recolonising Africa on the Power Grid. Cape Town: HSRC Press, 2007.  This further highlights the importance of cheap coal for Escom’s performance and may explain more recent difficulties in Escom’s functioning, as coal prices go up due to mismanagement and rising labour costs. Ces cookies nous permettent d'assurer le bon fonctionnement du site et sont strictement nécessaires à la fourniture d'un service que vous avez expressément demandé. As such, this paper will be examining Escom/Eskom under this lens, focusing on its founding in 1922, its troubled period during the mid-1980s and transition into democracy during the 1990s. The primary material of this study, from the legislation to the annual reports, reveals a policy and decision-making strata that didn’t understand economics. Electricity Act 42 of 1922. Eskom didn’t have this damage control and this meant that when Eskom did fail, nobody could pick up the slack. Because the price was unrealistic, it had to eventually rise – which shocked the economy.  This was just ceremonial in practicality, for the Electricity Act of 1922 had already granted regulatory power to Escom and prohibited profit-making, destroying any incentive for private competition anyway. Eskom. They produce incentive but, as explored in the theoretical section of this paper, they are most importantly used to produce price signals that the economy needs to plan and sustainably grow. Clark (2008) and Southall (2007) provide more interesting insight into the foundation of Escom, through an analysis of the ideologies influencing the founding.  While Escom was founded in the service of a few mining magnates and their government allies, this paper is analysing Escom as an economic entity with an intended purpose.  This argument sets forth the basis of an argument in this paper.  Roger Southall, “The ANC, black economic empowerment and state-owned enterprises: a recycling of history?” in State of the Nation: South Africa 2007, ed. The year 1997 saw the appointment of the first black chairman of Eskom, Reuel Khoza. Escom annual reports, during the late-half of the 80s, keep stating a desire to transform from a “bureaucracy” to a “meritocracy”. Southall, Roger. The government didn’t even give them this option, skewing the market and causing dire consequences.  An inability to take foreign loans also led to increased financial strain..  The Eskom Chairman at this time made some appropriate requests, calling for the government to enact more economically liberal policies to encourage foreign investment. This is explainable by its use of South Africa’s cheap and abundant coal, as discussed in the 1923 annual report.  Kenny, “The rise and fall of Eskom – and how to fix it now,” 7. LEARNING UNIT: Economic Engineering LEVEL: III AIM OF THE LEARNING UNIT: The student determines the specific economic … As Bastiat argues, we must not judge something on its initial consequences alone, but by a review of its effects in their entirety, as well as what could have been. The following case study will show this by way of analysis. Replace Escom’s leadership structure with a two-tier structure that allows increased involvement by government and consumers. What the Commission suggests here is merely a marketing campaign aimed at convincing consumers not to use as much electricity. As the main source of capital in the country, of course the MEC would wield political power.  Escom, Annual report, Johannesburg: Eskom, 1987 , 7. This means that while demand was rising due to economic growth and low prices, the ability to meet it was shrinking.