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January 1992

No More Martyrs Now: Apartheid Economics

Caldwell argues that the South African apartheid regime was racialized socialism.

Caldwell, Don.  No More Martyrs Now:  Capitalism, Democracy, and Ordinary People.  Johannesburg:  Conrad Business Books.  1992.  27-37.  Excerpts.

2.  Apartheid Economics

Apartheid was Socialism

…Everything about apartheid smacked of socialism—from the spirit behind it to the laws passed to carry it out.

Apartheid might not be the kind of socialism that the left likes.  But, like socialist experiments in eastern Europe and elsewhere in Africa, apartheid was another example of the misery that is created when a strong, centralized government tries to plan an economy and a society.

In a free, capitalist society—under the liberal institutions of private property, contract, and the rule of law—people enjoy a wide range of rights and freedoms:

  • The right to own and exchange private property.
  • The freedom to move within the country in search of better living conditions or jobs.
  • The freedom to work where you choose at wages you negotiate.
  • The right to keep the fruits of your labour.
  • The freedom to travel overseas or emigrate.
  • Diversity and choice in education.
  • Free trade and unrestricted flows of foreign investment.
  • The freedom to start companies and run shops.
  • Equal treatment under the law.

Under apartheid, these and other liberal-capitalist rights were either absent or severely restricted.

The Substance of Apartheid

The list of socialist-style reuglations and controls imposed by the National Party government since 1948—and by the white governments that preceded it—shows just how far removed from capitalism South Africa’s economy has been.  Many of the anticapitalist laws were racist, like those that prohibited black ownership of land in vast areas of the country.  But many were not particularly racial at all—like today’s local-content programme that tells car manufacturers how to build their vehicles.  South Africa’s rulers have shown both a love of racism and a hatred of the market.

District Labour Control Boards determined whether black farmworkers could get permission to work in town (local white farmers served on the boards).  Wage Boards set high minimum wages to prevent blacks from getting jobs by undercutting white wage earners.  The Livestock and Meat Industries Control Board curbed the sale of black farmers’ produce.  The Publications Control Board censored the country’s newspapers, magazines, books, and movies.

The Customs Tariff Commission recommended import protection for companies that hired sufficient numbers of white workers.  The Physical Planning Act dictated acceptable ratios of black workers to white.

The Land Acts and Group Areas Act prevented blacks from owning property in most of the country and led to forced removals of families and businesses.  Blacks were prevented from managing or controlling businesses in white areas.  Even in areas reserved for blacks, such as urban townships, blacks were generally not allowed freehold title to land until 1986.

White property rights were also restricted.  The Subdivision of Agricultural Land Act prevented farmers from breaking off pieces of land and selling them, and laws restricted white investments in black homelands.

Pass laws, influx control, and homeland citizenship prevented blacks from moving freely around South Africa, looking for work or shelter.  The government withdrew passports from critics.

The central government determined what language students would learn in, who could teach them, and what subjects they would be taught.  It shut down private missionary and farm schools.  It outlawed television until 1976, when it introduced TV as a state monopoly.  

Import controls, tariff barriers, and exchange control severely restricted the movement of goods and capital in and out of the country.  Historically, protection was granted to companies that best complied with racist labour legislation.

Assaults on enterprise included:  shop-hour laws, licensing laws, a ban on Sunday movies, segregation in movies and restaurants, movie and book censorship, laws preventing blacks from opening businesses in city centres, and liquor-licensing laws.  Other statutes prevented entrepreneurs from starting telephone, postal, TV, radio, airline, and electricity services to compete with state-protected monopolies.

The government set up and subsidized the Industrial Development Corporation to finance favoured industrialists.  It staffed the state monopolies with political supporters—“jobs for pals.”  It set up two dozen agricultural control boards to restrict the growing and marketing of food, and it controlled hundreds of consumer prices.  It decided which remote areas needed industrial development and then paid decentralization subsidies to companies that located in them.

Tariffs propped up uncompetitive firms and drove up consumer prices on a wide range of goods.  And the government raised taxes to punitive levels and imposed dozens of hidden taxes and duties.

No area of potentially capitalist activity was too minor for the government’s economic police to restrict.  Anekie Lebese, who grew up in Johannesburg’s Alexandra township, had to raise three sons alone when her husband died.  Crippled in both legs, she could have begged but didn’t want to.  So she sold goods on Noord Street in Johannesburg:

I sold fruit and vegetables.  This selling took all my three sons to school and made sure they had food and a place to live.  But to the police, my working for my children was breaking the law.  I slept in jail many times.

Very little was left untouched by the apartheid state:  transport, communications, investment, labour, prices, banking, agriculture, energy, construction, travel, movement, housing, arms, education, retailing, entertainment, land, and the hawking of vegetables by crippled widows.  This was capitalism?…

When the state owns or controls property and industry, freedom is crushed.  And in South Africa, successive white governments have waged a long war against private ownership, personal freedom, and a free market. 

Blacks suffered most under apartheid socialism because their liberties were the most severely curtailed.  AS the great liberal economist William Hutt, author of The Economics of the Colour Bar, noted as early as 1964:  “The African himself is as dependent upon the whim of politicians and officials as he would be in a totalitarian country…”

Why the Myth Persists

Arbitrary use of the words capitalism and socialism perpetuates the myth of apartheid capitalism.  Socialism does not mean caring, sharing, and compassion.  In the real world, it means state ownership or control.  And capitalism does not mean greed and nastiness.  It means private ownership and control.

Using these definitions as a guide, we can better judge who’s a capitalist and who’s not.  When people who call themselves capitalists run to the government for subsidies and protection, they are no longer capitalists in any meaningful sense.  Call them industrialists or business people or farmers or bankers, but not capitalists.  Thus, a sentence like “Capitalists used state power to kick blacks off their land” is a contradiction.  It’s important to recognize that many of the complaints the left makes about so-called capitalist power are actually complaints—often valid—about state power.  Behind apartheid laws was the power of the government, not the power of the market…

If everyone were more aware that apartheid was a form of socialism, the job of the socialists would become a lot more difficult.  They wouldn’t be able to discredit capitalism simply by running down apartheid.  They would have to make a case for socialism, rather than saying it is the natural alternative to apartheid and capitalism.  They would have to explain how their socialism is going to be better than the socialism of the past.

The sham label “apartheid capitalism” also helps to hide the consistent, principled opposition to apartheid by liberal capitalists.  The socialists would have us believe that there are only two positions:  either you support apartheid/capitalism or you support liberation/socialism.  In fact, the most logical position to support is liberation/capitalism—because oppression will continue unless the economy is freed.  Capitalism would mark a clean break from the apartheid past, whereas much of what passes for a revolutionary agenda is nothing but warmed-over national socialism.  Rather than offering dramatic change, the liberationists offer a conservative solution:  the same policies carried out by new people.

If we use principled definitions of capitalism and socialism, we can tackle the important questions. What is the proper role of government in a free society?  What was at the root of past problems in South Africa?  Is implementing a new variation of state ownership and control what the freedom struggle has been all about?

The Interventionists’ New Line

The new line about apartheid and capitalism is that labels don’t matter, because capitalism and socialism are outdated terms.  This is the new line mainly of socialists and interventionists, who want to deflect attention from the disastrous track record of socialism and intervention worldwide.  But labels do matter.

Author and journalist Allister Sparks complains that “dogmatic socialists and theological free marketeers continue to talk past each other in the heat of an increasingly sterile debate.”  Natal University philosopher James Moulder says:  “The debate between capitalists and socialists is sterile and futile.”  Sparks and Moulder must be going to the wrong debates.

True, the socialist side of the debate is often sterile.  The champions of socialism habitually refuse to define, defend, or explain socialism and switch to a new topic whenever the discussion gets too specific.  But the capitalist side of the debate—the radical capitalist side—is vibrant.  Free-trade zones, choice in education, one-person-one-share privatization, the ending of government monopolies, the distribution of state-owned land, across-the-board tax cuts:  unashamed capitalists do not shy away from debating the specifics of the free, prosperous, democratic society they want.  And they don’t hesitate to call their policies capitalism—principled, thoroughly debated, anything-but-sterile free-market capitalism.  Do those why shy away from labels have something to hide?

The Newest Line

Now comes the even newer line.  It correctly argues that South Africa has never had a free-market system.  But it then concludes, perversely, that because there was no free enterprise in the past, it’s no big deal that there won’t be free enterprise in the future.

The ANC’s Albie Sachs says business people and government officials are being hypocritical when, faced with the prospect of majority rule, they are suddenly concerned about private property rights and a free market:

Yet the reality is that enterprise has never been free in South Africa.  For the majority of the people (black), it has been totally under (white) state control, totally regulated (by whites), and totally monopolized (by whites).

So Sachs concludes that enterprise should remain unfree, just as it was under the Nationalists.  Apartheid’s bankrupt economic policies led to a litany of disasters, from uncompetitive industry to a gravy train for bureaucrats.  But the ANC doesn’t promise to get rid of these policies.  Rather, it looks to them for inspiration.

Shortly after his release, ANC leader Nelson Mandela said:  “The government has presently nationalized many things in the country, and it should come as no surprise that our policy is that of nationalization.”

After his return to South Africa from exile, Joe Slovo said:  “On the question of redistributing wealth, the ANC is acting in a tradition which was actually set by the NP when it first came to power in the 1940s.”  Slovo said the National Party government used state power and state industries to uplift its followers, but:  “Now it appears that the sauce that was good for that goose is not so good for the gander.”

Patrick Lekota, an ANC executive member and former UDF publicity secretary, said:  “The Afrikaner government maintained the economy with major sectors of the economy nationalized…We won’t do anything new, although we may add a bit.”  And ANC economist Vella Pillay says a new government must reduce inequalities and boost industrial employment through “managed pricing and marketing policies—no different to what is practiced now” but “made more extensive.”

This is liberation?

Finally, Slovo, explaining the ANC’s policy of controls and selective nationalization, writes:

These economic policies will continue to be criticized as statist and contrasted with free market policies.  That is an unnecessary polarization.  The South Africa we have known is not a free market system.

It has been a tightly knit economy dominated by State industries, State regulations, and a few all-powerful conglomerate trusts…

The terms free enterprise, a free market, capitalism, and private enterprise are interchangeable, all describing a liberal market order.  So Slovo, in effect, was saying:  “The South Africa we have known is not a capitalist system.”  This is correct.  But it puts a leader of the South African Communist Party in the position of supporting the revolutionary overthrow of a capitalist system that by his own admission has never existed.

If enterprise hasn’t been free, apartheid hasn’t been capitalism.  The country’s would-be liberators ought to reconsider what they’re fighting against.

This is part of a series