South Africa's Victory Against Capitalism

Walter E. Williams

Far from being a consequence of capitalism, as the political Left believe, apartheid is in fact in conflict with a free market argues American economist Professor Williams.

South Africa is an excellent example of rule by men instead of rule by law and the market-place.  Our response to the difficulties faced by South Africa can tell us much that is flattering and much that is sinister and hypocritical about ourselves.

The South African Government's systematic and codified racial policy has rightfully won it the revulsion of most of the civilised world.  The minimum standard for human decency is universal franchise and equality before the law irrespective of race. ⁽¹⁾  South Africa has failed on both counts.

What goes completely unappreciated in the apartheid debate is that South Africa stands as a shining monument to the fact that the free market (alternatively called capitalism and laissez-faire) is no respecter of race, ethnicity, sex or nationality.  The evidence lies in the high degree to which race is codified in South Africa.  Though changing now, South Africa's racial regulation consists of jobs, housing, public accommodation and even marriage and sex conduct.

Job reservation laws, the "colour bar" now almost extinct, determined who could have what jobs:  blacks could not be employed as steam engine drivers, ambulance drivers and many other jobs;  moreover, they could never be employed in a capacity where they supervised whites.  The mere existence of job reservation laws is very strong evidence that the free market would not discriminate against the employment of blacks.  After all, if mining, manufacturing and construction employers would not hire blacks as steam engine drivers, bricklayers and foremen, why would a law have to be written prohibiting the same?  The mere presence of a law suggests there are some people who would not behave, under their own free will, according to what the law specifies.

This observation explains many of the efforts of the white labour movement in South Africa.  Whites felt that capitalism would not grant them privileged status over blacks, for example, giving them higher wages solely because of race.  They therefore set about to restrict the forces of the market-place.  This desire is reflected in a statement by Jan Christian Smuts, a former Prime Minister of South Africa, written in A Century of Wrongs, published in 1899:  "It is ordained that we (Afrikaners), insignificant as we are, should be amongst the first people to begin the struggle against the new world tyranny of Capitalism".

The leader of the white South African labour movement, and later the first secretary of the Communist Party, William M. Andrews, objected to what he called "dirty, evil-smelling Kaffirs", because they were threatening the jobs of white miners.  In 1921, inspired by Socialists, white miners marched through the streets of Johannesburg waving red flags and chanting, "Workers of the World fight and unite for a white South Africa". ⁽²⁾

As a result of considerable labour strife, the Socialist Labour Party and Afrikaner National Party formed an alliance, called the Pact Government, and unseated the South African Party in June 1924.  It was at this time apartheid policy began in earnest its fight against what was seen as "the tyranny of Capitalism".

The Industrial Conciliation Act of 1924 denied black workers the right to negotiate.  The Wages Act of 1925 introduced rate-for-the-job and minimum wages with the expressed purpose of keeping blacks, coloureds and Indians out of certain jobs.  Jobs for which whites had no interest were not covered by the Wages Act.  The Mines and Works Act of 1926 strengthened the job reservation provisions of the Mines and Works Act of 1911.

Despite the rhetoric and claims to the contrary, apartheid is not a result of capitalism.  It is a result of government ownership and/or control over the means of production inspired by white unionists -- in a word, socialism.  The market is colour-blind:  it would consider only productivity and price.  The government can afford to ignore these factors and pay more attention to politics, privilege and race.

DISINVESTMENT

In the United States disinvestment campaigns have been brewing for years.  College students, civil-rights organisations, trade unions, civic organisations and churches have demanded portfolio divestment of companies who do business in South Africa.  Cities like Washington DC, Los Angeles and San Francisco have adopted ordinances which deny or reduce the eligibility to tender from companies which do business in South Africa.

The Western call for disinvestment poses several moral dilemmas.  One is seen when it is recognised that a stock certificate must be owned by someone.  A church or college can purge its portfolio of IBM shares only if it first sells them to someone else via the stock market.  Disinvestment results in the fact that the church or college no longer owns IBM;  the share still exists, only its title has changed.  We may thus ask what moral purpose is served by the church's saving its soul by finding another "sinner"?  The only accomplishment (of dubious moral merit) is that its hands are clean.  The behaviour of disinvestors is somewhat like the born-again slave-owner who satisfied his craving for justice by selling his slave to another slave-owner.

One alternative for disinvestors is, of course, to destroy their portfolio holdings of companies that do business in South Africa.  Evidence suggests this alternative is not very attractive because their moral posturing exacts a cost in lost wealth they must pay themselves.  But even if disinvestors chose this course of action, there would still be a moral dilemma.  With fewer shareholders to account to, managers of IBM would have more freedom to pursue whatever company policy they pleased.

The US Congress, British Parliament and other Western legislatures are now beginning to call for economic sanctions and trade embargoes against South Africa.  Who is harmed and who is helped by these measures?  Part of the answer to this question requires an analysis of the behaviour of Western companies in South Africa.

Western companies in South Africa provide jobs, many of them going to black South Africans.  Moreover, many companies subscribe to the "Sullivan Code" that calls for integrated work facilities and equal employment practices.  In addition, some companies have adopted schools, built housing, maintained libraries and training facilities for blacks.  Furthermore, some companies have been repealing apartheid laws by stealth.  In open violation of the Group Areas Act, requiring residential segregation, some companies have purchased homes and in turn rented or leased them to senior black personnel.  Other companies have violated influx control laws by hiring "illegal" workers.

If these companies are required to leave South Africa as a result of their government's policy of sanctions, we know they are not going to take their building installations and other capital investments with them.  They will be sold to South African businessmen.  Will they have the same enlightened racial employment policy as their Western counterparts.  If not, the sanctions policy will make blacks worse off.  Moreover, should Western companies be forced to leave, they will sell their capital assets at depressed prices.  This will mean a once-off windfall gain to South Africa.

The biggest silence of the disinvestment and economic sanctions lobby is on the mechanism whereby the policy will accomplish its stated objective.  Can examples be produced where disinvestment and economic sanctions worked to change a recalcitrant government favourably?

Aside from these dilemmas of disinvestment and economic sanctions, there is the issue of Western hypocrisy.  From the shores of Tripoli to Capetown, the entire continent of Africa is a brutal place.  In the eight years of Communist rule in Ethiopia, one million people have been killed and 2.2 million have fled into exile.  Close to a million people have been slaughtered in Uganda.  The downfall of the racist Ian Smith regime in Zimbabwe was followed by a brutal Mugabe regime that has waged war, and possible genocide, with the Ndebele people.  More brutality has occurred in Ghana, Nigeria, the Central African Empire, Mozambique and Angola.  Despite this record of human slaughter, which places nearly the entire African continent on Amnesty International's Who's Who list, Western liberals have been strangely silent.

The logical inference is the West holds higher standards of behaviour for whites than it does for blacks.  In other words, blacks slaughtering and oppressing other blacks is seen as tolerable and understandable, but human rights abused by South African whites is unacceptable:  whites are civilised and therefore held to higher standards of conduct.  Such an attitude as that borders on simple racism.

The most flattering aspect of the Western response to South Africa's denial of basic rights to its black citizens is the West's wish to do something about it.  For too long the moral leadership of the West has accepted the deprivations of colonialism and brutal racism.  But the enthusiasm of Westerners to help their fellow man should be tempered by the truth that helping people is difficult.  We should be guided by the admonition given to medical practitioners upon graduation:  primum non nocere -- first do no harm.

Primum non nocere aptly applies to Western policy towards South African blacks.  They are not as badly off as they could be.  The evidence is abundant:

1. urban South African blacks have higher per capita income ($1,500) than blacks elsewhere on the continent;  by comparison,  per capita income in Communist China is $US 295 per year;
2. upwards of 1.5 million blacks from neighbouring countries legally enter South Africa to work each year;
3. another half million enter illegally;
4. urban black consumption of consumer goods like cars and televisions exceeds the per capita consumption of the same in the USSR.

Besides these strictly economic advantages, South African blacks have freedoms envied elsewhere.  Western television stations regularly interview South Africans such as Reverend Alan Boesak who roundly condemn the South African Government and after the interview go about their business.  Can Solidarity leaders Lech Walesa and Zbigniew Bujak do the same in Poland, or Sakharov in the USSR, or Bishop Muzorewa or Nkomo in Zimbabwe?  Under normal conditions, there is considerably more freedom of the press in South Africa than in many other countries on the African continent and elsewhere.  On top of these liberties there is freedom to leave South Africa, a freedom denied East Germans, Russians and Poles.

Far from minimising the problems of blacks in South Africa, these observations morally mandate us to proceed carefully.  Why?  Because it is possible for South African blacks to be worse off than they are.  Therefore, we who want to help must shed our natural emotional response and get down to dispassionate analysis if we are to generate a Western policy response that is compassionate.

The reader who expects me to supply the answer to "What should the West do about South Africa?" is bound to be disappointed.  I would parry that question with one of my own:  "What should Russia do about the human rights abuses in Ireland, or what should England and Russia have done during the black struggle in the 1960s for civil rights in America?"  I will claim a modicum of victory if I have laid the groundwork for what good people should not do in the name of helping.

ENDNOTES

1.  This is a declining standard in the United Kingdom and the United States because many of the "enlightened" now call for racism under another guise -- "positive" discrimination or racial quotas.  This domestic policy calls for race to be used as a criterion for employment, school and housing selection.

2.  Leon Louw and Francis Kendall, South Africa:  The Solution, Amagi Publications, Bisho, Ciskei, 1986, pp. 36-37.