South Africa's War Against Capitalism
South Africa's War Against Capitalism

South Africa's War Against Capitalism

July 1 st 1990

South Africa has rightly received world-wide condemnation for its system of apartheid which denies non-whites participation and economic rights enjoyed by its white population. However, one of the things we have to pay attention to is that moral condemnation is not enough in guiding us to long-lasting compassionate solutions to the problems in South Africa.

Indeed, blind moral condemnation has often brought about solutions more horrendous than the evil against which the moral condemnation was originally directed.

Moral Condemnation Can Foster Horrendous Results

The Russian revolutions which brought down the Czars and brought in Stalin, who had been in exile in Siberia, merely replaced one form of tyranny with another that was worse and led to the extermination of tens of millions of people. The injustices of Chiang Kaishek were replaced by the more brutal Mao Tse-tung. The injustices of the Shah of Iran were replaced by those of Khomeni. And all over the continent of Africa the injustices of the colonial governments were, for the most part, replaced by brutal regimes and unspeakable slaughter.

Such a history of the world should give South Africans some caution, and we should be guided by a frank and relentless attention to the realities. We in the West can precipitate a chain of events—through sanctions or disinvestment or other kinds of policies—from which we are immune to the cost. Whatever happens in South Africa, we will be watching it on the six o'clock news, and our children won't be dying or starving.

South African Race Laws Thorough

I've visited South Africa three times. In 1980 I spent two months lecturing at nearly every university in South Africa before many groups and associations. But it wasn't until 1986 that I decided to do the research for my book, South Africa's War Against Capitalism. In the process of doing this research, I was awed by the thoroughness and detail of South African laws regulating race. Let me give you a few examples of the kinds of laws South Africa has.

Before the turn of the century, there was a Transvaal ordinance which set limits on the number of blacks that could be hired in various mining jobs. In 1911, The Mines Work Act was created to stop mine owners from replacing white workers with blacks in certain jobs. In 1918, a status quo agreement was reached between white mine unions and mine owners freezing racial employment percentages. This status quo agreement kept the number of blacks in certain jobs small as the mine workers wanted. Emboldened by a favourable Supreme Court decision, the mine owners in South Africa reneged on the status quo agreement and started hiring more blacks. This precipitated the most violent strike in South Africa's history in 1922. It was led by socialists and communists in South Africa who went to Johannesburg and other cities killing blacks and destroying property. As they marched, they chanted:

Workers of the world unite, and fight to keep South Africa white.

The strike was so violent that the government had to use troops, artillery, and aerial bombardment to restore order. The strike led to the downfall of the Smuts government and the rise of the Hertzog government. Hertzog campaigned on the promise that he would protect white workers from competition with black workers.

In 1924 the Industrial Conciliation Act was written. It contained many restrictions against black employment. It excluded blacks from collective bargaining, and it outlawed black unions. In 1956 the Industrial Conciliation Act was modified so that the Labour Minister could make certain determinations reserving certain jobs for whites only. The stated purpose in the Industrial Conciliation Act for creating what were to become known as "job reservation laws" was to "safeguard against interracial competition." It meant that blacks could not be winch and steam engine drivers, dynamite blasters, ambulance drivers, and above all they could never be supervisors over whites. Determinations were also made in many other areas.

Why Race Laws Were Necessary

When we recognize that the businesses in South Africa are for the most part white owned or government owned and/or controlled, we are faced with a question. Why were racially discriminatory laws deemed necessary in the first place? If white mine owners would not hire blacks as winch or steam engine drivers or supervisors over white employees, why in the world would you need a law saying that they can't? The very existence of a law, whether it restricts speeding or hiring, is strong evidence that not all people would behave according to the specifications of the law.

As it turned out, the laws were necessary because white businessmen did hire blacks in jobs that whites wanted. White mine owners in South Africa didn't hire blacks because they did not share the ideology of white supremacy, as did their workers, but because their commitment to white supremacy was not as great as their commitment to profits. They hired blacks because blacks were willing to work for lower wages.

White workers and their unions were not sympathetic to the free market allocation of resources because the market would not confer privileges on them. It would not pay them what they ca1led civilized wages. The market was willing to pay the going wage. Therefore, recognizing that the market did not respect race, they sought privileges by having government write race into the law.

Resentment Against Capitalism

There is considerable resentment against the free market allocation of resources in South Africa. There is considerable resentment against capitalism. That is one of the problems we in the West and people in South Africa have in looking at the problems surrounding apartheid. Many of us in the West think there is a connection between capitalism and apartheid. Nothing could be further from the truth.

The resentment against market forces was shared by many whites. Let me quote an Afrikaner business publication which was typical of the times. "Every sober-minded Afrikaner is fed up to the top of his throat with so-called laissez-faire, let it be capitalism with its soul-destroying, materialism and its spirit of every man for himself and the devil for us all. We are sick of it because of its legacy of Afrikaner poor whiteism and the condition that makes the Afrikaner a spectator in the business of his own country."

Afrikaner merchants recognized that the free market did not respect race, and this particular quote refers to the Indian merchants who were out-competing Afrikaner merchants. They were selling goods at a cheaper price, and somehow Afrikaner customers, despite their belief in white supremacy, found lower prices more desirable than higher prices. Thus, they patronized the Indian stores. Afrikaners tried, through the Pegging Act, to put Indians out of business.

Similar socialistic sentiments were echoed by General Hertzog who ousted Smuts in 1924. He was a supporter of Bolshevism and said, "Bolshevism represents the will of the people to be free." He declared that some people want to "oppress and kill Bolshevism because it means death to capitalism and imperialism." Smuts, a very eminent Prime Minister of South Africa, expressed his view of capitalism early on when he said "it's ordained that we Afrikaners, as small in number as we are, break the new world tyranny of capitalism."

The apartheid agenda required the suppression of market forces, yet part of the South African agenda included things people in the West widely accept. For example, in 1909 Wilfred Wybergh, a white supremist, advocated that black workers be covered by the same industrial laws as white workers. F.H. Cresswell, a racist Labour Party minister, called for minimum wages to be paid to blacks. The mine workers union also supported minimum wages. And very interestingly, in the 19608 the South African Nurses' Association which consists of white workers only—they would never have a black worker in their association—condemned black nurses' wages as unfair. Some of the membership of the South African Nurses' Association refused to accept a wage increase until the wages of black nurses were also raised.

To the naïve and gullible people in the West, calls for minimum wages and equal pay for equal work laws by racist unions in South Africa would seem like long hoped for moral rejuvenation. However, the fact of the matter is that wage regulation is one of the most effective tools in the arsenal of racists everywhere. Keep in mind that when you call for equal pay for equal work laws or minimum wage laws it doesn't matter whether you intend to help the disadvantaged or whether you intend to hurt them as was the case in South Africa, the effect is the same—unemployment for the least-skilled workers.

A Tragic Mistake

One of my goals in writing a book on South Africa was to disabuse people of the notion that capitalism and apartheid go together. This notion must be disabused because in the eyes of many black South Africans and their sympathizers in Europe, the United States, and elsewhere, promotion of socialism is seen as a means to bring about a more just society. This is a tragic mistake.

I gave a lecture to about 200 people at the University of the North in South Africa, which is a black university. A black student stood up and said, "I'm a Marxist, I believe in Marxism and socialism." I said, "fine, may I ask you a few questions?"

I asked him: "do you think you ought to be able to open up a business wherever you want to?"

He said, "yes."

"Do you think you ought to be able to independently negotiate your wages with an employer?"

He said, "yes."

I said, "do you think you ought to be able to live wherever you want to live without interference by a third party?"

He said, "yes."

Then I said, "you're really for laissez-faire capitalism. The problem you have been fighting all these years is communism, because communism means government ownership and/or control over the means of production."

Economics Brings People to Their Senses

There is extensive government ownership and/or control over the means of production in South Africa. The government controls a lot. As a matter of fact, government control in South Africa is very similar to government control in Canada and the United States. Canada and the U.S., in my opinion—and maybe it's too flagrant a statement—just represent socialism or communism with a happy face.

In my opinion and in the opinion of racists in South Africa, market forces have been the friends of blacks and the enemies of privilege. Market forces have led to many apartheid laws being repealed through stealth before they were repealed de jure. In fact, throughout apartheid's history there have been all kinds of pressures to undermine apartheid.

Businessmen violated apartheid. If there was a law saying that blacks could not be dynamite blasters, businessmen would call the job "explosives man" if a black was dynamiting a hole. Even government officials violated apartheid laws. In some cases, government officials charged with enforcing apartheid laws would hire blacks. One case is almost comical. The Minister of Transportation in South Africa hired blacks to work at night doing white work on the railroad. He snuck them in to work under the cover of darkness so white workers would not get upset.

Why were they doing this in the 1960s and 1970s? It was a very robust economy. There was rapid economic growth. Goods were sitting on trains, and they have to get them off. Economics was bringing people in South Africa to their senses.

Market Forces Weaken Apartheid

Market forces led to widespread violation and contravention of the Group Areas Act, the laws that designate certain areas as white areas—blacks, Indians, and coloureds can't live there. In South Africa in areas like Hillbrow and Mayfair and other places in Johannesburg, Durban, and Cape Town, you will see areas that are legally white wherein whites are now a minority. Market forces have led to a breakdown of the apartheid laws.

If we accept the notion that market forces weaken apartheid, then certain policies make sense and other policies are nonsense. In this light we can ask whether sanctions and disinvestment weaken or strengthen market forces? Will an expanding economy or a contracting economy help South African blacks most?

Let me give you some facts that are often misrepresented. All evidence suggests that South African blacks are overwhelmingly against sanctions and disinvestments. My book reports on 14 surveys, and in most of the surveys the majority of blacks were against disinvestment and sanctions—and most often that majority was 70 percent or more. Recently, a Gallup poll survey found 74 percent of blacks against sanctions and disinvestments. These findings say a whole lot about sanctioneers like Bishop Tutu or Boesak, who come to the West, and it also says something about Senator Ted Kennedy in the United States. Senator Kennedy said "throughout South Africa, sanctions are warmly welcomed by those they are intended to assist." That is a lie—which is not unusual, politicians do it a lot.

How Successful Are Sanctions?

Even if everyone agreed about sanctions and disinvestment, we might ask the question, how successful are sanctions and disinvestment in producing the desired results? One example we could look at is that the U.N. Security Council imposed sanctions against arms shipments to South Africa, South Africa is now one of the top ten arms exporters. Many people attribute that to the sanctions.

We shouldn't be surprised by these results of sanctions. The U.S. had embargoes against Cuba, prior to the Second World War, and against Japan. Can anybody say that they are pleased with the results? I don't think sanctions work.

Many people now say that sanctions brought about the release of Nelson Mandela. You have to worry about that kind of logic. I always suggest to my economics students that just because you hear the rooster crowing at 5:30 in the morning, it doesn't mean that he caused the sun to rise. This is called the post hoc ergo propter hoc fallacy.

Disinvestment Poses Its Own Problems

Disinvestment, which is very popular in the West, poses some problems. Several years ago I was invited to give a lecture to a church's leaders because the disinvestment issue was causing a lot of problems—it was splitting the church apart. Prior to going to the church I wrote "IBM" on 3 x 5 cards, and when I got to the church I distributed the cards to the church elders. Then I suggested, let's disinvest, what do you have to do? We all agreed that we had to call our brokers and sell the stock to get it out of our portfolios. I asked the church officials what they, as men of the cloth, thought of a process wherein in order to cleanse their souls they had to get others to dirty their souls? They had to get somebody to take the evil IBM stock.

Such behaviour would be very much like a slave owner coming to the conclusion that slavery was unjust and selling his slaves to another person. The more morally proper thing to do would be to free the slaves. Making the financial sacrifice of freeing the slaves would stand as testament to his moral convictions.

The analogy in terms of disinvestment is not to get others to dirty their hands by buying the IBM stock, rather you should put your holdings of IBM or other companies with business interests in South Africa into the fireplace or a shredding machine.

The ministers rushed to point out to me that that was impractical.

First, Do No Harm

That brings us back to the notion of moral responsibility and the idea that people who don't share in the costs of suffering can engage in moral posturing, sending messages written in somebody else's blood. When we look at South Africa we would benefit by following the physician's admonition, primum non nocere, which means, first, do no harm. When you set out to help somebody, first make sure you don't harm them.

If blacks in South Africa can be made no worse off than they currently are, then any hare-brained policy contains no downside risk. But if they can be made worse off than they are, we have to be a bit more careful. If a cadaver is laying on a table, you can let any fool intern work on it because the cadaver can't be made any worse off. But if there is a pulse, even if it is two beats per hour, you want somebody intelligent working on it because that person can be made worse off. Black South Africans can be made worse off.

Compared to the U.S., South Africa comes up short in protecting individual rights, even for its white population. However, if we compare South Africa to the rest of the continent, South Africa doesn't look that bad. Between 1900 and 1975, according to Abbie Sachs, a government dissident in South Africa, roughly 7,000 blacks lost their lives in civil conflict with the government of South Africa. That's a bad record. It's a bad record even if it is 100 percent or 200 percent understated. But it looks good if we look at Burundi where the Tutsis in 1972 in a matter of two or three months slaughtered 200,000 Hutus. Just last year the Tutsis slaughtered 30,000 Hutus in two weeks. In Uganda it is estimated that between Ide Amin and Milton Mobuto, one million blacks have been slaughtered. Similar tales of genocide can be told in Ethiopia, Chad, Central African Empire, and elsewhere. In Zimbabwe, for example, Mugabe 's Shona people have been accused of genocide against Nkomo's Ndebele people, and a state of emergency has existed in Zimbabwe since independence. The state of emergency is very similar to the state of emergency that now exists in South Africa.

Two hundred thousand people were slaughtered in a couple of weeks in 1972 and 30,000 last year, and I will wager that most of you did not know anything about it. If as many elephants and zebras had been slaughtered last year, the world would have been in an uproar—the entire Commonwealth would have descended on the U.N. Given the experience in some other places in Africa, blacks in South Africa can be made worse off, so we have to be intelligent about our policies.

In my view, black Africans, including those in South Africa, have been used as guinea pigs and have suffered enormously from the disastrous economic experiments of western intellectuals. Sanctions and disinvestments are just the latest forms of these experiments. I personally think that the best thing the West can do for people in South Africa is just to mind our own business. If the western people's help for South Africa matches anything that was done in the way of help for the rest of the continent, I'm even more convinced of that position.

Between 1950 and 1985 western foreign aid to Third World countries totalled $2 trillion. All that money has gone down the tubes. It hasn't helped those countries; they are still poor. Such a large amount is difficult to put into perspective, but in 1985 prices, the Third World could have bought the Fortune 500 companies in the United States and all of the U.S. farmland with that $2 trillion. Compare that to what they have now. So another thing the West can do for the people in Africa is, keep their money.

Discussion Period

Given Mandela's longstanding tradition as a communist, what effect will his participation in the discussion about the future of South Africa have on the process you are talking about? Will he propel us toward even more well-meaning but disastrous interventionism?

I think Mandela is convinced that communism can't work. One or two weeks prior to being released from prison, Mandela was quoted in Business Day, a prominent South African newspaper, as saying that what must be done in South Africa is to strengthen its beleaguered free market system. The ANC went completely ape when they read that Mandela had made that remark, and he was forced to retract and come out for more intervention and for the nationalization of industries. But I believe at heart Mandela has realized what the world is beginning to realize—that communism can't work.

What is the significance of the release of Nelson Mandela?

Mandela's release is very important because most respected South African black leaders would not enter into negotiations until Mandela was released. Buthelezi, who the government has been courting for years to try to start negotiations, has refused to enter any negotiations with government until Mandela and other political prisoners were released and the ANC unbanned. Mandela's release is a very important step in the process.

Does Mandela speak for the majority of blacks in South Africa?

The world should not see Mandela as "the black leader" in South Africa. When we use the phrase "the blacks of South Africa" it has all the meaning of saying "the whites of Europe." And if you said "the whites of Europe," it would conceal all sorts of ethnic differences as well as the fact that the whites of Europe have been trying to slaughter each other for centuries.

You find the same ethnic differences in South Africa. Nelson Mandela is Xhosa, and they number 3 to 4 million people. Buthelezi is Zulu, and they number 7 million people. There is no way in the world—I guarantee it—that the Zulus would see themselves as being ruled by the Xhosas. This is no more likely than the Japanese being ruled by the Koreans. One of the large problems is how to evolve a system that can accommodate the massive ethnic differences that exist in South Africa.

In your visit to South Africa, did you have the opportunity to talk with Gatsha Buthelezi? And now that Nelson Mandela has been released, what does this mean to Buthelezi's Zulus? Do you see more or less violence between the two groups?

I've met Buthelezi a number of times. According to reports I've heard on the news, Buthelezi has accused Nelson Mandela of giving rise to the ongoing black ethnic conflict in South Africa. I don't know whether that accusation is true, but the escalating conflict in South Africa among blacks is a fact of business that the West chooses to ignore. The West wants to think that the conflict is between whites and blacks in South Africa; that's more psychologically comforting.

I think some of the western attitudes toward the continent of Africa are almost racist. When it is said that it is unacceptable for whites to mistreat blacks, it is often said from a position of moral superiority—we hold whites to higher standards of civilization, they are a civilized people. We don't expect them to behave in uncivilized ways. But blacks, on the other hand, are uncivilized. They are animals, and what can you expect. That is the inference that can be drawn from the western response to the slaughter that exists on the continent in general and from the violence that exists in South Africa.

How does your analysis apply to North America? Can we take it that all so-called minority laws are designed to suppress the minorities?

The so-called affirmative action and quota laws are a variance of the same theme that we see under apartheid. Thomas Sowell and I have worked together often, and we talk about the failure of affirmative action and quota laws. We have been criticizing them for years because they do not deliver on their promises.

Quite recently we had to acknowledge an error in our statements, because South Africa is the only place in the world where affirmative action has worked for the ostensible beneficiaries of affirmative action. That is, South Africa created quotas to help the poor white problem. The Afrikaners were very poor uneducated people in the 1920s and 19308. South Africa had a poor white problem, and they created a quota system which did uplift the Afrikaners—but at the expense, as we all know now, of the black, Indian, and coloured populations.

The quota system in North America is a variation of the same thing; it's using race as the criterion for selection. And it is just as despicable. When we judge individuals by race, sex, or nationality—when that becomes an official criterion—it is despicable and worthy of condemnation.

What is it about Tutu's and Boesak' s views that make them such popular spokesmen in the West?

I don't want to be overly cynical, but I think they provide titillation and theatre for the West. They make the argument for dependency. They are therapeutic for white guilt all around the world. Buthelezi doesn't make white people feel guilty, so he is not going to be as important. Now, that could be overly cynical. Another reason that explains Tutu's popularity is that he won the Nobel Prize, and that gave him some status. But in my opinion, the Norwegians and Swedes need to get their act together in terms of who they award a Nobel Prize to.

What do you think of Leon Louw's and Francis Kendall's ideas of decentralized governments as a solution to the current situation? And what are the chances of success of such ideas?

Leon Louw and Francis Kendall, his wife, wrote a book called The Solution, the American version was called After Apartheid. They suggest a Swiss canton system for South Africa where central government is virtually impotent and all governmental powers lie at the local level. I think it is a wonderful idea.

The United States was supposed to be a canton or a republic—I use those terms interchangeably. I doubt that anyone can call us a republic now. We have massive centralized government. So one can ask, how stable is a canton system? The central government is so impotent in Switzerland that you could probably walk along the street and ask, who is the president of Switzerland, and that person wouldn't know because the central government just isn't important.

There are high tax cantons and low tax cantons—some that are very socialistic and others that are relatively free market. If there is a solution that can deal with the massive ethnic and economic problems in South Africa, it is the devolution of central government power. That is the hope.

I might also add that when you take decisions out of the political arena, it minimizes conflict. The conflict between human beings all over the world is in areas where decisions are made in the political arena. In the United States and Canada there is relatively little conflict in religion because religious decisions are not made in the political arena. But look at other areas of our lives where the decisions are made in the political arena, and it makes us fight one another.

What is your estimate of the percentage of blacks in South Africa who support the ANC?

A very large number, possibly 75 percent. But black support for the ANC does not mean that all these blacks are communists in their orientation. Being for the ANC or being a Marxist is the same to many blacks in South Africa as being anti-apartheid.

The government of South Africa characterizes itself as a capitalist government. Blacks have been told this for so long that they see a connection between apartheid and capitalism. If they are going to be against apartheid, they are going to be communists or for the ANC. It's difficult to answer the question, how many blacks in South Africa are really intellectually aware communists or socialists? Most of the blacks in South Africa that I have talked to and asked these questions are really free market people. But at the same time they call themselves supporters of the ANC . . .

Reprinted with permission of Heritage Features Syndicate.

Walter Williams
Walter Williams

Born in Philadelphia, Pennsylvania, Dr. Walter E. Williams holds a B.A. in economics from California State University, Los Angeles, and M.A. and Ph.D. degrees in economics from UCLA. He also holds a Doctor of Humane Letters from Virginia Union University and Grove City College, Doctor of Laws from Washington and Jefferson College and Doctor Honoris Causa en Ciencias Sociales from Universidad Francisco Marroquin, in Guatemala, where he is also Professor Honorario.


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