The business of business news: South Africa’s financial press and the political process
(Paper presented at the annual conference of the International Association for Media and Communication Research, Mexico City, July 2009)
This paper explores the historical development of the financial press in South Africa, and theorises the role played by the financial news media in the political process, with particular reference to the development of economic policy. Using a new institutional approach, it traces the origins and development of the financial press from the early 19th century to 1996, when the ruling ANC adopted the Growth, Employment and Redistribution (Gear) strategy as its economic policy, a decisive moment in South Africa’s economic policy development. Focusing on the Financial Mail, South Africa’s first financial newspaper, as a case study, the paper argues that the financial media could be seen as an institution in the economic and political sphere, and that such a view aids an understanding of the political role of the financial media.
What is the role of the financial media in society? Are they simply providers of information for the business and investment sectors, or do they also have a broader political role? These questions have become especially pertinent in the light of debates about the role of the financial media in the financial crisis which lead to the current global recession.
This paper explores the function of the financial media both in the economic and the political sphere in South Africa. Such an exploration requires a historical approach, examining the development of these organisations and their practices over time within a changing economic and political context. Ryfe (2001, 2006) has linked historical research in political communication with the “new institutional” approach, which arose as a reaction to the behaviourist paradigm in economics, political science and sociology, and which helps us to understand how institutions, structures and processes interact and change over time. Cook (1998) and Sparrow (1999) apply this approach to the news media, equating news routines and practices to “institutions” in the sociological sense. They argue that the news media should be seen not as a collection of distinct organisations, but as an institution which not only constrains, but enables the production of news (Cook 1998: 15). Building on the work of Cook and Sparrow, this paper argues that the financial media could be seen as an institution; and that the financial media are more than an economic institution: through their influence on the opinions of elites, including policy makers, they play a crucial role in articulating a particular economic ideology and persuading governing elites to adopt this ideology in the policy-making process. The financial media could therefore also be said to be a political institution.
The financial media in South Africa
Journalism, James Carey has argued, was “invented” in the 19th century in response to “a particularly modern hunger for experience – for the new rather than the old, the surprising and original rather than the unexpected and unpredictable, the novel and original rather than the reproduction of the past” (2007: 6). Journalism and newspapers were a response to this hunger for new information (Schudson & Stephens 1997), most of which initially came from the business community.
The new class of merchants, bankers, and tradesmen were most in need of the new, the latest, the quickest, the most reliable, for their fortunes rose and fell with conditions in markets, and as for politics, they needed to know the likely actions of royal authorities that determined opportunities within markets.
(Carey 2007: 6)
The earliest newspapers were therefore purveyors of business intelligence; or, it could be argued, business newspapers. This was certainly true of South Africa’s earliest newspapers. The first South African newspaper, The Cape Town Gazette ad African Advertiser, established in 1800 and printed on a government-owned press under strict government control, stated its purpose as publishing “all government proclamations, orders, etc; a weekly report of the Cape Town Market for all colonial productions; the arrivals and sailings of ships; with such colonial occurrences as may be deemed interesting to the public” (De Kock 1982: 22); in short, the kind of information the port city’s merchants and agricultural producers needed to make business decisions. The first non-government newspaper, The South African Commercial Advertiser edited by Thomas Pringle and John Fairbairn, initially also concentrated on “topics … particularly such as are interesting to the commercial and agricultural parts of the community” (Hachten & Giffard 1984: 26).
The South African press subsequently became more focused on general and political news aimed at mass audiences. Nevertheless, the ties between South Africa’s English-language press and mining capital have been well documented (see, for example, Bozzoli 1981; Hachten & Giffard 1984; Potter, 1975; and Tomaselli et al 1987). In the late 19th and early 20th century, Bozzoli (1981) argues, newspapers aligned with mining capital not only reflected the views and ideas of the audience, but created and articulated the ideology underpinning the development of mining capital. An important newspaper in this regard was the South African Mining Journal, a weekly periodical established in 1891 and edited by E.P Rathbone, who “made the journal an influential and representative voice and, more importantly, an ideological vanguard, of the industry” (Bozzoli 1981: 26). Others include the South African Commerce and Manufacturers’ Record (1907 – 1917) and the Commercial Bulletin (1923 – 1937). The major 20th century daily newspapers such as the Rand Daily Mail and The Star carried business sections (Mervis 1989; Pogrund 2000), which focused mainly on covering the burgeoning and sophisticated mining industry. The business and finance pages of the country’s largest Sunday newspaper, the Sunday Times, retained the title Mining Page as late as 1966 (Mervis 1989).
The financial press as a distinct species of newspaper, however, has a much more recent history. The Financial Mail, South Africa’s first free-standing financial newspaper (i.e. not a supplement or section of a general newspaper), was launched by South African Associated Newspapers in 1959, to be followed in the ensuing decade by a spate of new titles including Business Times, the Financial Gazette and Finance Week (Mervis 1989).
The launch of the Financial Mail illustrates the continued close relationship between mining capital and the financial media, even though the journal was run as a commercial proposition, at arms-length from its owners. The idea for the journal came not from its parent, South African Associated Newspapers, but from Laurence Gandar, later editor of the Rand Daily Mail but then deputy public relations officer for Anglo American Corporation, South Africa’s largest mining group (Mervis 1989). Gandar noted that South Africa did not have a “quality” financial journal such as The Economist, and perceived that there was a need for in-depth financial and business journalism. He also foresaw the commercial potential of such a journal, which would derive advertising income from company notices and reports. He submitted the project on 28 May 1957 to the Anglo American Executive Committee as a “proposal to sponsor/participate in the establishment of a high class South African investment journal” in a joint venture with the Argus Company, one of the major newspaper groups in which Anglo held a stake. The Executive Committee approved the proposal in principle (Anglo American Corp. 1957a). However, after consideration, the company decided it could not publish the journal as that would represent a conflict of interest (Mervis 1989). As editor of the Rand Daily Mail later that year, Gandar submitted his proposal to Henri Kuiper, managing director of the Rand Daily Mail, who obtained board approval for the “monthly supplement”, as was then planned (Anglo American Corp. 1957b).
Kuiper persuaded the Financial Times of London to take a 50% interest in the venture, and procured the services of John Marvin, assistant editor of The Economist, as the first editor of the Financial Mail, with George Palmer, a merchant banker, as his deputy (Mervis 1989). Palmer succeeded Marvin as editor two years later. The first edition of the Financial Mail appeared on March 8, 1989, and by 1961 it had a circulation of more than 5 000 and achieved a trading profit of R15 500 (Anglo American Corp. 1961), largely on the back of company notices and reports, but also helped by “subsidy” advertising from Anglo American and its subsidiaries (Anglo American Corp. 1961). By the late 1970s, the circulation had climbed above 30 000.
A second important financial publication, Business Times, was launched in 1966 as a supplement to the Sunday Times. The newspaper, the brainchild of Stephen Mulholland, who became its first editor, rapidly became the Sunday Times’ most profitable section – Mervis (1989: 388) describes it as “the biggest single money spinner in the history of the Sunday Times” – and, with the Financial Times, came to define business and financial journalism in South Africa. The two newspapers ran a mix of “current affairs”, company and industry news with a focus, at least initially, on the mining industry, and economic news. Both avowedly steered clear of political news, except insofar as this, in their view, affected the economy or business. Mulholland also developed what would become a ubiquitous feature of South African business journalism: the so-called “survey”, a paid-for advertising feature article on a company or industry run as part of the publication’s news pages. This innovation did much to place financial journalism on a sound commercial footing, together with company notices and advertisements aimed at the investment community.
Since 1980, there has been almost explosive growth in the volume of financial news available to consumers in South Africa, as in other parts of the world (Kareithi & Kariithi 2005; Gavin 1998; Parker 1997). In South Africa, this expansion has seen the establishment of new print media titles, – including a business daily Business Day, launched in 1985 by Times Media Ltd. – radio and television broadcasts and online media. In addition, mass circulation newspapers have strengthened their business coverage, and economics and financial news has become increasingly central to the mainstream news agenda. Business journalism has also developed as a distinct genre, with its own narrative conventions. The financial media play an indispensible role in the market mechanism by providing information for market participants, investors and corporations (Parsons 1990; Parker 1997; Davis 2005). They also influence policy-making by informing political elites. (Besley & Burgess 2002; Besley & Burgess 2001; Stromberg 2001). It could therefore be argued that the financial media play a political role in addition to its economic role.
There is a vast body of research on the news media which shows that the news is remarkably homogenous. The reason, the literature asserts, is that journalists share organizational routines and practices. They cover the same stories; they speak to same sources; they share conventions such as “balance” and “fairness”; they use the same narrative techniques. The news, as Michael Schudson (2003) puts it, is above all conventional. News bias is due to organizational and professional factors rather than the beliefs and values of individual journalists.
This conclusion is well embedded in scholarly thought about the news media and informs much research into media effects on public opinion and policy-making and on the role of the media in the political process. But, Ryfe (2007: 135) argues, “theoretical work on news production stalled in the early 1980s”, leaving us without answers to a range of empirical questions around how these routines and practices originated and evolved and how they apply across news organizations and countries. The literature does not, for example, explain how shared routines and practices diffused across organisations that are formally and even ideologically differentiated, such as different news media or publications. The work of Cook (1998) and Sparrow (1999), offers a theoretical approach that captures “the essence of what scholars have learned about the news media over the last three decades” (Ryfe 2007: 135). They equate news routines to “institutions” in the economic or sociological sense, linking the study of news routines to “new institutionalism” in the study of social and political organisations.
Traditional approaches in political science and economics tend to see institutions as formally-constituted organisations, such as Parliament, and study these as formal mechanisms without examining how they operate in practice. A new institutional approach, by contrast, recognises the central role of unwritten and unquestioned rules, conventions, assumptions and routines within institutions (Cook 1998). New institutionalism in political science developed out of disillusionment with the behavioralist paradigm: at the core of all institutions, argues Cook (1998: 66), “is a denial that all social phenomena can be reduced to individual psychologism”. New institutionalism is therefore an attempt to accommodate agency and structure in an explanation of social and political processes (Goodin 1996). In addition, new institutionalism is inter-organisational in approach, examining the role of routines and practices across organisations.
Though not all new institutionalists agree on what constitutes an institution, they all work within a common framework for understanding social action, which has five key principles (Ryfe 2007: 137 – 138). Firstly, institutions are a product of interaction over time between macro-level forces such as the political or economic structures and micro-level actions. Secondly, institutions adapt to prevailing conditions and therefore evolve in a “path-dependent pattern”, sometimes referred to as the “stickiness” of institutions. Thirdly, path-dependency implies that the timing and sequence of events are important, with initial events having a greater impact than subsequent events. Fourthly, because of the importance of timing and sequence, knowledge about the historical origin and evolution of institutions is essential for an understanding of current institutions. And lastly, unless there is a “shock to the system”, institutional orders tend to reproduce themselves. Over time, institutions will go through long periods of stability, “critical junctures” which provide a shock to the system and opportunity for a change of direction, followed adaptation of the institutional order and a renewed period of stability.
Cook and Sparrow apply this approach to the study of news production, arguing that the news media should be seen not as a collection of distinct organisations, but as an institution – “a site of systematized principles of action enduring across time and supervising a central area of social and political life” which not only constrains, but enables the production of news (Cook 1998: 15). They see the routines and practices that produce the news as “crucial mediators of macro-level forces on the behaviour of individual journalists” (Ryfe 2007: 138), and they invite the study of the institution of journalism over time. Benson (1998; 2007) applies Bourdieu’s field theory to the news media and comes to similar conclusions.
Cook and Sparrow disagree about the macro-forces which news routines are meant to mediate. Sparrow (1999; 2007) argues that news routines mediate primarily economic forces, a position which could be termed a “political economy” approach within new institutionalism. Routines are developed in response to a number of uncertainties, among which the profit motive is primary. Furthermore, news routines constrain journalists and have a hegemonic effect because journalists are “company men” who make “the strategic calculations that getting ahead means” (Ryfe 2007: 139). This means reproducing the status quo. This approach is similar to Bourdieu’s field theory, which asserts that the field of journalism “is largely defined by interaction of economic pressures and a status competition among journalists” (Ryfe 2007: 139).
Cook (1998; 2007) identifies the government, or more broadly speaking politics, as the primary macro-level influence on news production, though he recognises that economic pressures also play an important part. In his view, economic imperatives are too far removed from the day-to-day lives of working journalists to be the primary “shaping” force of news routines. Journalists are more than influenced by politics: they find themselves in a “complicated, uneasy” relationship with public officials and political culture, and it is this relationship that routines and practices mediate (Ryfe 2007: 139). Journalists are not principally motivated by self-interest (they are not first and foremost status-seekers) but by considerations of what they ought to do. In this way, routines – even ineffective ones – may take hold early on in the development of an institutional order, and in time shape “identities, behaviours, roles and values” that seem to be appropriate (Ryfe 2007: 140). These norms may then “crowd out” alternative forms of journalism.
The financial press as an economic institution
Cook (1998: 70) defines an institution as “social patterns of behaviour identifiable across the organisations that are generally seen within a society to preside over a particular social sphere”. The conventions and rules that constitute institutions are understood as “the quasi-natural way to get things done”, and therefore extend over time and across organisations. To assess, based on this definition, whether the news media constitute an institution, three questions should be examined: “First, can we conclude that the news media create the news based on distinctive roles, routines, rules and procedures? Second, have these practices evolved and endured over time and do they extend across news organisations? And finally, are the news media viewed by newspersons themselves, as well as those who are not, as together presiding over a given part of social and political life?”
Cook (1998) considers these questions in the context of the U.S. news media and concludes that they constitute an institution. Following Cook’s methodology, the same questions will be considered with regard to the financial press.
Rules, routines, procedures
A large body of research supports the assertion that news is an organizationally rather than individually produced; that journalists are socialised to the values, demands and routines of the organisations they work for (Schudson 2005). Cross-national surveys show that journalists from different countries and cultures share similar professional values and norms (Sparks and Splichal 1989; Gurevitch et al. 1994). A range of participant observational studies have also shown that the process of creating “news” is a collective process within a hierarchical organisation (the newsroom), which reacts to news events in predictable ways. This organisational context enables journalists “routinize the unexpected”, in Gaye Tuchman’s (1973) axiomatic phrase, by following established rules, conventions and routines to come up with and cover news. These rules and routines, which Tuchman (1972) famously described as “strategic rituals”, are often unspoken and hidden from readers and journalists themselves: giving both sides of a story, supporting factual statements with evidence, speaking through “experts” rather than personal opinion. Cook (1998) cites the organisational nature of news as evidence supporting his contention that the news media are an institution.
Studies asserting the organisational nature of news production were situated within general television and print newsrooms, but it would be reasonable to assume that the newsrooms of financial media operate in similar ways. In South Africa, financial journalists are often drawn from the ranks of general reporters (Rumney 2008). Although they operate in a different sphere, they hold the same professional values and follow the same unwritten rules and hidden routines as general news reporters. They share the same relationships with sources of news, and their stories are, similarly, constrained and enabled by an organisational context. Financial journalists, then, follow unwritten and uncritically accepted rules and routines in their journalism, and financial news is an organisational product.
Endurance over time and extension across organisations
Cook (1998) argues that news organisations, though different in terms of audience, technology and periodicity, are so similar in terms of the news-making process and content that they could be regarded as a single institution. Three pressures conspire to push news organisations into these similarities: politics, uncertainty and professionalization. Organisations operate within the same political context and rely on the same bureaucratic and official sources for news and information. For that reason, their content is remarkably homogenous. Professionalization means journalists across organisations share values such as objectivity, and ways of working. Many journalists come from similar educational backgrounds and receive the same training. Codes of ethics apply across news organisations (and even those that apply to individual news organisations are similar across the board). Journalists operate in “packs”, spending much time talking to each other, discussing their stories, and reading each other’s output. All these factors contribute to the homogenisation of news output across organisations. Uncertainty, Cook argues, reinforces this consistency. Reporters turn to past coverage to inform their current work, learning to adopt approaches and angles that have been successful before. As a result, news is “highly formulaic, with a limited set of implicit ‘enduring values’ that make for repetition over time, producing ‘novelty without change’ … one hallmark of journalism is the long historical pedigree of its routines, roles, rules, norms, values, and self-concepts” (Cook 1998: 81).
Again, Cook’s argument applies as well to the financial media. Financial news organisations also rely on the same official sources, though these include corporate and market sources in addition to government sources. Financial and business news are drawn from three broad categories: companies and industries, financial markets, and the economy. Their sources of news are company financial reports, market data, presentations by investment professionals, economic data releases. As a result, their news coverage is homogenous, even more so than that of general news organisations. Another factor contributes to make financial news more homogenous across organisations than general and political news: financial news organisations see themselves serving a particular audience – the investment and business community (Davis 2005; Rumney 2008). Their audiences are therefore less diverse than those of general news organisations, resulting in a clearer focus in the kind of news they produce. As with the general news media, professionalization contributes to this process of homogenisation. Financial journalists come from similar backgrounds and receive similar training (Rumney 2008). They are socialised into seeing financial and business journalism as benefiting a particular audience, and therefore being of a particular kind. Reports on subjects such as company financial results or economic indicators follow similar formulas across organisations, and use the same expert sources. A generally shared code of ethics, addressing issues such as conflicts of interest, informs their reports. Again, uncertainty reinforces this process. Though much financial and business coverage is of routine events, financial news organisations adopt formulaic approaches to cover the unexpected: an announcement of the acquisition of one company by another, for example, takes into account the combined value of the merged entity, the premium paid by the acquiring company, the views of investors in both companies, the share prices movement of both companies after the announcement, and management and labour issues. The focus, however, is almost invariably on the consequences of the transaction for shareholders, rather than employees, customers or the wider community.
Presiding over a given social sphere
Just as the privately owned news media are relied upon to communicate information between government, politicians and the public, so the financial media are relied upon to disseminate information between corporations, market participants and policy makers. The financial media are a vital cog in the market mechanism; the price system and market economy cannot function without an information network. As Parsons (1990) has shown, the development of the financial press was an essential stage in the construction of the communications network that underlies the price system. Newspapers from their inception have been about “selling markets” and “providing information for businessmen” (Parsons 1990: 2).
Financial media undoubtedly affect the prices of individual securities such as stocks and bonds. Howard Kurtz (2000), for example, recounts how a single adverse report on the Bloomberg News Service resulted in a drop of more than a third in the share price of Xybernaut Corporation. A number of studies have found statistically significant correlations between media reports and stock market moves (for a summary of this research, see Davis 2005). Investors react to news about corporations, the economy or the markets by buying or selling stocks, bonds and other securities. The news media are embedded in the price-setting mechanism. Empirical research has also discovered “reinforcement” effects such as agenda-setting, framing and priming (Davis 2005). By focusing attention on particular issues or events, the financial media cause feedback loops and “attention cascades” among investors, contributing to market movements as investors seek reinforcement for their beliefs and try to anticipate what other investors may do (Shiller 2005).
These media effects are part of the normal functioning of the markets, which depend on the media for diffusion of information among market participants. But the financial media also contributes to what would be regarded as “abnormal” market developments, such as speculative bubbles. “The history of speculative bubbles,” writes Shiller (2005: 85), “begins with the advent of newspapers. . . . Significant market events generally occur only if there is similar thinking among large groups of people, and the news media are essential vehicles for the spread of ideas.” Krugman (2008) and Ferguson (2008), among others, have described how financiers such as George Soros skilfully manipulated the media to profit from market movements.
In South Africa, the financial press throughout its history has been sponsored and subsidised by the markets and corporations it covers. Financial news organisations draw their advertising from the corporate world. One factor that has contributed more than any other to the financial viability of the financial press was a Stock Exchange regulation compelling listed companies to publish any company report or notice in a newspaper. The majority of print advertising in the financial press is drawn from this source.
The close relationship between South Africa’s financial press and capital – specifically mining capital – has already been mentioned. Until 1994, both of South Africa’s English-language newspaper groups were owned, via subsidiaries, by Anglo American Corporation, the country’s largest mining conglomerate. The connection was evident both in management of newspapers and in their editorial policy (Hachten and Giffard 1984). Newspaper companies shared directors with mining groups; in one case, the same person served as chairman of both the Argus Co., one of the two English-language newspaper publishers, and Rand Mines Ltd., a major mining company, for more than two decades (1926 to 1949). An editor of the Cape Argus, H.L. Smit, commented: “It has been the policy of the daily press … that ipso facto whatever is best for the gold mines is best for South Africa as a whole, and that end is kept ever foremost in mind” (cited in Hachten and Giffard 1984: 41).
That cosy relationship remained in evidence in the second half of the 20th century, as the country’s financial press grew. Scrutiny of Anglo American’s executive committee minutes of the period when the Financial Mail was launched provides an insight into this relationship. The decision by the board of the Rand Daily Mail to launch a fortnightly “investment journal” was recorded in the Executive Committee minutes of Anglo American on 17 October 1957, a sign that the company continued to take a close interest in the proposed financial journal even though it had declined to be a parent. On December 10, the executive committee recorded that the Rand Daily Mail had proposed to publish the first issue of the new journal in March 1958 (Anglo American Corp. 1957c). The minutes include the following note: “Agreed we should support in principle. (Committee member) A.N. Wilson will report on extent to which we should supplement or divert advertising.” For the next four years, Anglo American diverted advertising to the Financial Mail on what the company itself described as “a subsidy basis”, ensuring the survival of the new journal through its initial years until it reached profitability (Anglo American Corp. 1961).
The relationship did not end there. The content of Financial Mail was discussed at executive committee meetings on a regular basis, and the minutes of executive committee meetings provide direct evidence of editorial interference by Anglo America. In one instance, the minutes note “yet another attack on the mining industry” in the pages of the Financial Mail. Committee member A.N. Wilson, was delegated to “(make) enquiries to find out who is behind these attacks” (Anglo American Corp. 1963a). Two days later, another committee member was delegated to “speak to (Financial Mail editor George) Palmer about attacks on the mining industry in the Financial Mail” (Anglo American Corp. 1963b). Two days later again, the minutes record: “MWR (Board member M.W. Rush) spoke to Palmer about the article in the Financial Mail dealing with relations between the mining industry and the Stock Exchange Commission of Enquiry (sic). Palmer conceded that the article was inaccurate and apologised.” (Anglo American Corp. 1963c). Given the importance to the newspaper of Anglo American – which then controlled about 25% of the market capitalization of the Johannesburg Stock Exchange – both as a source of news and as an advertiser (and, indirectly, an owner), it is not surprising that Palmer toed the line.
It is clear, then, that the financial media not only function within the business or economic sphere, but constitute an integral part of that sphere. Furthermore, the financial news media may be said to be more than a group of organisations: taken-for-granted routines and procedures and similarities in content and methods of content production across organisations point to a single institution. The three criteria for an institution – distinctive roles, routines, rules and procedures, which extend over time and across organisations, to preside over a sector of society – are satisfied. The financial news media could therefore be said to be an economic institution; but do they also have a political role?
The financial press as a political institution
During the apartheid years, facing questions about the role of business in an iniquitous society, many South African business leaders eagerly embraced Milton Friedman’s famous dictum: the business of business is business. The financial press that served these business leaders reflected a similar world view. The Financial Mail in its early years steered clear of politics, except when it considered that a political issue would affect business. Thus it would not criticise the government’s racial policies, but would comment on specific policies that affected business, such as reservation of certain jobs for whites. “It is the Financial Mail’s aim to give impartial and objective comment on South Africa’s business life,” the journal noted in an editorial comment in its edition of March 20 1959, its second. “It has no political affiliation, but it has a public duty – to interpret and record policies which impinge on industry and commerce.” Under its first editor, John Marvin, and his successor, George Palmer, the newspaper expected its reporters to put aside their political preferences in favour of “accurate, timely news, information and analysis” (Mervis 1989: 425). Although Palmer was critical of the government’s racial policies, he did not express those reservations in the pages of his newspaper. Under Palmer’s successor, Graham Hatton, the Financial Mail briefly became more political in emphasis. Hatton “believed that serving the business community involved serving the process of (political) change as well” (Mervis 1989: 429). But Hatton’s successor, Stephen Mulholland, again turned the focus away from politics and back to business. Mulholland, whom a colleague described as “abrasively right-wing” and supportive of the political status quo (Pogrund 2000: 331), was an acolyte of Friedman – he co-edited a book on Friedman’s lecturing visit to South Africa in 1976 – and believed that the role of a financial journal was to give its readers what they wanted. This did not include criticism of the government’s race policies (Mervis 1989).
Given the Financial Mail’s self-conception as a “non-political” journal – was was shared by other financial publications of the time – as well as the fact that the financial media have never catered for mass audiences, the question arises whether the financial press played a role in the political process, and if so, how?
Political communication is often described as a flow of information between political agents, the news media and the public (Norris 2001; McNair 2007; Negrine 1996). The process operates vertically, from politicians to the public and back. This bi-directional model of political communication, which is rooted in the media effects research tradition and what Nimmo and Swanson (1990) have called the “voter persuasion paradigm”, is based on the assumption that the media exercise power only via public opinion: information flows from political agents to the public, which responds, thereby influencing policy-makers and policy. Obviously, this model only holds true in the context of mass media; media which cater for niche audiences, such as the financial media, cannot exercise this effect on public opinion.
This model, however, is flawed because it fails to take into account that political actors also get their information from the media and use the media as a forum to debate and discuss policies. Schudson (2002) goes as far as to assert that the news media “have always been a more important forum for communication among elites … than with the general population” (263). The media therefore influence elite opinion as much as they influence public opinion. Furthermore, political agents respond to and even anticipate the media’s response to policy initiatives “even before they decide what to do and how to do it” (Cook 1998: 10; for a description of this process at work in South Africa, see Bond 2000). In this way, Cook argues, the media play not only a political role but a governing role.
In South Africa, particularly in the period 1990 – 1996, when the African National Congress (ANC), which became the governing party in 1994, developed its economic policy, the news media, and in particular the financial press, played at least a contributory role in influencing the opinions of policy-making elites (Marais 2002; Bond 200). When the ANC was unbanned in 1990, the organisation did not have a coherent economic policy. The Freedom Charter, a manifesto drawn up in 1956, provided the framework for ANC thinking on the economy and envisaged an economy in which the state would own the means of production. Shortly after his release in February 1990, ANC president Nelson Mandela declared in a statement to the press: “The nationalisation of the mines, banks, and monopoly industry is the policy of the ANC, and a change or modification of our views in this regards is inconceivable” (cited in Marais 2002: 84). However, through a process of interaction with local and foreign businessmen and investors – notably in a series of scenario planning exercises and in meetings such as the World Economic Forum, as well as private talks between ANC leaders and prominent business representatives in South Africa – the ANC quickly became “acutely sensitive to the shrunken horizon of economic options available in an era of globalisation marked by the ascendancy of neo-liberalism” (Marais 2002: 84). The financial press, argues Marais, played no small part:
A barrage of briefings, seminars, and junkets ensured that ANC leaders were brought up to speed with the ‘hard truths’ that faced a developing country in a world that was being reshaped by neo-liberal globalisation. The print media joined this pedagogic exercise with sweaty enthusiasm.” (85)
Against this background of “re-education”, the ANC moved in the space of six years from a policy based on state ownership of private assets and central planning to one recognising private ownership, free markets, and the Washington Consensus principles of fiscal policy with the adoption of its Growth, Employment and Redistribution Strategy (GEAR) in June 1996. While the financial press no doubt advocated and lobbied for such a policy, the question remains whether it had an influence on thinking within the ANC. Anecdotal evidence suggests it had. “Every day, we read in Business Day about how our policies influenced investor perceptions … we became worried about capital flight and getting in hock with the IMF,” said one politician who was a member of the ANC’s economic commission from 1990 to 1994 (Anonymous 2007). Individual journalists also played a part. Alistair Sparks, former editor of the Rand Daily Mail, recounted how he responded to Mandela’s statement, quoted above, with an article explaining why nationalisation is not the appropriate policy for South Africa. According to Sparks, on the day the article was published he received a phone call from Nelson Mandela, who invited him to a meeting. The two spoke for three hours, after which, Sparks claims, Mandela seemed to have softened his stance on nationalisation (Sparks 2003). Although Sparks may be exaggerating the significance of his own role, he and other prominent journalists took part in scenario planning exercises and formal and informal meetings with ANC leaders about the economy.
The adoption of the fiscally responsible Growth, Employment and Redistribution strategy – a dramatic departure from the more statist Redistribution and Development Policy that preceded it – was a turning point in South Africa’s economic history, and came about without the support of the ANC’s labour and communist allies. It was a policy developed by elites within the ANC, without consultation of their broad membership. It was based on a growing consensus about economic principles that suited the business and investment sector and was ardently advocated by the financial press, and it never became popular among the broader public. By providing a forum for debate among elites about the future shape of the economy, the financial press therefore helped influence policy without necessarily having an effect on broader public opinion.
The financial press throughout its history has reflected and interpreted not mass opinion but the values of views of a narrow elite, including businessmen, economists and political agents. In this way, the financial media play a crucial role in spreading economic ideas and ideologies and setting the parameters of debate about economic issues. The ideas of Milton Friedman, and before him John Maynard Keynes, for example gained currency and legitimacy through their intelligent use of the news media rather than debate within academic journals (Parsons 1990). The financial media therefore play an important role in legitimating economic ideas and opinions. In particular, Parsons argues, the financial news media in the 20th century played a key role in propagating the values, myths and discourses of the “free market”. They “purvey(ed) and reinforce(d) the values and ideas, language and culture, which underpin the existence of the market economy” (2) and are “a crucial mediator between the price system and the political system” (3). Through this process of legitimizing a particular economic system and culture the financial press in South Africa helped cement consensus among political elites (but not the broader public) about the shape of the economy, and provided the context and justification for some of the practices that lead to the financial crisis and the current global recession. This is at present no more than a hypothesis, which may be empirically substantiated by future research.
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 Paper delivered at the annual conference of the International Association for Media and Communications Research, Mexico City, 20 July 2009. Robert Brand is a senior lecturer and holds the Pearson Chair of Economics Journalism in the School of Journalism and Media Studies, Rhodes University, Grahamstown, South Africa. Email: firstname.lastname@example.org.
 The term “financial media” is used in this paper to describe any media organisation specialising in the coverage of financial, business or economic news, and is used interchangeably with other terms such as “business media”. “Financial journalism” Is used interchangeably with “business journalism” and “economics journalism” and covers journalism about the economy, business and the financial markets.
 The author’s experience of working as a journalist at general news and financial news organisations supports this assertion.
 The author’s personal experience as a correspondent for Bloomberg confirms that this is not an isolated example. The news service specialises in what it describes as “market-moving news”.