Macro mistakes

Monetary Architecture is alluring but dangerous

In Homer’s Odyssey, the Greek hero Odysseus encounters the Sirens – mythical creatures whose enchanting songs lure sailors to their doom on the rocks. Forewarned, he plugs his crew’s ears with wax and binds himself to the mast, resisting their temptation. Today, South Africa faces its own kind of Siren song: the seductive idea that a financial reconfiguration – what some call Monetary Architecture (MA) – can unlock economic transformation without consequence.

Mark Swilling is the latest proponent of MA-style macroeconomics. On Thursday, 27 March, he presented a ‘Masterclass’ talk at Stellenbosch University, titled: ‘After the budget debacle: is it time to rethink South Africa’s financial eco-system?’. The fact that Swilling, Distinguished Professor of Sustainable Development in the Centre for Sustainability Transitions, is venturing into macroeconomics matters. He sits on the National Planning Commission, tasked with implementing South Africa’s long-term development goals, and is highly regarded in ministries close to the president.

It is precisely this influence that makes his arguments worth engaging.