Eskom illustrated in its annual reports a desire to act like a business, while ignoring the fundamental virtue of business – that it has to compete for a profit. Analysis of this already insightful section established that Eskom fell due to its monopoly status, its dire pricing system, over electrification and government interference. While private electricity producers were still allowed, the Electricity Act of 1922 began the process of nationalising electricity. ESCOM also allows students to earn their engineering degree through apprenticeship. Costs might rise, but that is a small price to pay for sustainability and the avoidance of crisis. The historiography and primary case material have been combined chronologically to present a timeline of events and how other historians have interpreted the material. Number 5 suggests a sounder income structure that enables profit, but number two wants to prevent any rise of prices. To do this, it will be utilising a school of economics often ignored by economic historians – the Austrian school of economics. As Eskom entered the 90s, politics was shifting to try and reconcile a possible new dispensation. Austrian economics provides a theoretical framework from which to examine Escom/Eskom. It tried to price according to what it thought the market could bear[76] – but it could never properly know this. led to a dangerous state where Eskom chose to downscale rather than raise prices. [50] Cooling international relations also saw a tightening of Escom’s ability to receive foreign loans, integral for its expansion.[51]. David MacDonald (HSRC Press, 2008), 52. [134] Kenny, “The rise and fall of Eskom – and how to fix it now,” 7. Kantor, Brian. It is no wonder this system fell apart! Accueil International Welcome at ESCOM Chimie. 4 (1988): 301-309. [106] Escom, Annual report, Johannesburg: Eskom, 1993, [1994], 9. “That which is seen and that which is not seen.” In The Liberal Tide: From Tyranny to Liberty, edited by Jim Peron, 59-80. [138] This may be the case, but their leadership definitely was not competent in matters of economics, as will be seen in the subsequent section. This paper ultimately found Escom/Eskom’s downfall to be inherent in its existence as a state company and its flawed price structure. [21] Leonard Gentle, “Escom to Eskom: From racial Keynesian capitalism to neo-liberalism (1910-1994),” in Electric Capitalism: Recolonising Africa on the Power Grid, ed. Not only will this act as damage control against the dying parastatal, but will lead to a more sustainable industry led by an incentive to do well and to keep the business afloat. It was their obsession with cheap prices that led to them shrinking their business rather than raising prices. “The significance of the minerals-energy complex in the light of South African economic historiography.” Transformation: Critical Perspectives on Southern Africa, no. A monopoly was the inevitable way forward, especially keeping in mind the Apartheid government’s strategy of securing the state sector to enforce its social engineering policies.[42]. [126] Kenny, “The rise and fall of Eskom – and how to fix it now,” 6. [17] As a state institution, even if unique in its structures, Escom was still state-owned and thus did not have the incentives that a free market alternative would have. Electricity Act 42 of 1922. [121] Escom, Annual report, Johannesburg: Eskom, 1996 [1997], 8-9. [20] Andrew Kenny, “The rise and fall of Eskom – and how to fix it now,” @Liberty 18, no 2 (2015) http://irr.org.za/reports-and-publications/atLiberty/files/liberty-2013-the-rise-and-fall-of-eskom-2013-and-how-to-fix-it-now, accessed April 5, 2017. White paper on the Energy Policy of the Republic of South Africa. [12] Leonard Reed, “I, Pencil,” in The Liberal Tide: From Tyranny to Liberty, ed. Pretoria: Government Printer, 1922. They were artificially low and this prevented the economy from being able to adjust to real world pricing. Escom faced trouble throughout the 50s, as it failed to meet demand, constructing new power stations funded by debt in response. All the aforementioned historians have concerned themselves mainly with the MEC. Now, this may have been necessary due to a need to uplift much of the people of South Africa, but Eskom could have done it while retaining economic sense. In 1996, while celebrating South Africa’s new status as having the cheapest electricity in the world, the government opened considerations to privatise Eskom. Many historians, such as Fine (2008), Gentle (2008) and Freund (2010), among others, cite the MEC as the prime factor in Escom’s establishment and decision-making. They should have raised their prices so that richer consumers could subsidise expansion into rural areas. If the market wants it, they’ll pay for it. If left alone, hopefully Eskom would have seen the writing on the wall and built more power plants. [128] Rather, all the White Paper accomplished was the government strangling Eskom’s already struggling ability to keep up with the demand generated by its electrification. Electrification of areas is sufficient to generate demand. As a monopoly, it is effectively blind to the market. https://www.gsb.uct.ac.za/files/BusinessDay_newspaper_article.pdf.
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