Document(s) 3 de 11

The effect of pass laws and migrant labour

In 1955, in one of his most angry and passionate articles, young lawyer and activist Nelson Mandela wrote about a woman whose fate epitomised the economic oppression of apartheid:

Rachel Musi is fifty-three years of age. She and her husband had lived in Krugersdorp [near Johannesburg] for thirty-two years. Throughout this period he had worked for the Krugersdorp municipality for £7 10s a month. They had seven children ranging from nineteen to two years of age. One was doing the final year of the junior certificate at the Krugersdorp Bantu High School, and three were in primary schools, also in Krugersdorp. She had several convictions for brewing kaffir¹ beer. Because of these convictions, she was arrested as an undesirable person in terms of the provisions of the Native Urban Areas Act and brought before the additional native commissioner of Krugersdorp. After the arrest but before the trial her husband collapsed suddenly and died. Thereafter, the commissioner judged her an undesirable person, and ordered her deportation to Lichtenburg [a distant rural town]. Bereaved and brokenhearted, and with the responsibility of maintaining seven children weighing heavily on her shoulders, an aged woman was exiled from her home and forcibly separated from her children to fend for herself among strangers in a strange environment (Mandela 1955: 46).

This was not an unusual story in South Africa between the 1950s and the 1980s. Sydney Mufamadi, now the ANC government's Minister of Provincial and Local Government, spent his early years oscillating between Venda in the far north of South Africa and Meadowlands in Soweto, near Johannesburg. As a youth he was known for his love of soccer. His mother brewed beer to supplement the family income. When she was raided by the police and her livelihood destroyed, Mufamadi found himself driven into student politics and black consciousness politics, and he became a founding member of the Azanian People's Organisation (AZAPO) in the late 1970s. Later he joined the ANC and the South African Communist Party (SACP) underground, and emerged as a dynamic and effective trade union leader (Harber and Ludman 1995: 111).

The position of African women in towns and cities was extremely tenuous – it was virtually illegal under the pass laws. Black men and children were almost as vulnerable, and many were also deported. Black people were prevented from making a living for themselves in the 'white areas', which included the towns and most of the rural areas. Even if Mrs Musi or Mrs Mufamadi had been caught making and selling bread, their activity could have been condemned as illegal, and they could have been deported.

Apartheid was a massively oppressive system that sought, amongst other things, to control the economic lives of all black people, and their residential location. Anyone without an approved job could be deported out of the urban areas. Most black workers in the urban areas, and all who worked on the mines, were annual migrants. These 'men of two worlds' were forced to reside with their families in distant rural areas, and to relocate themselves for 11 months of the year to work in the cities or on the mines.

Nelson Mandela was certain that the pass law (influx control) system had more to it than colonial racist sadism. All the major misdemeanours of apartheid, he said in 1955,

are weapons resorted to by the mining and farming cliques to protect their interests and prevent the rise of an all-powerful mass struggle. To them, the end justifies the means, and that end is the creation of a vast market of cheap labour for mine magnates and farmers. That is why homes are broken up and people are removed from the cities to ensure enough labour on the farms (Mandela 1955: 47).

The evidence strongly supports Mandela's hypothesis. Table 1.1 shows that African workers' wages on the gold mines actually declined in 'real' (accounting for inflation) terms between 1911 and 1971, from R225 (in 1970 rands, or US$300 in 1970 dollars) to an average of R209 per year in 1971. During the same period, especially during the phase of industrial development during and after the Second World War, and the phase of rapid growth in the 1960s, white mine workers' wages increased significantly. Not surprisingly, the relative number of white mine workers declined as the wage differential grew. For black mine workers, it was only after apartheid began to crumble with the recognition of black trade unions in the 1970s that black mine wages began to catch up.

Apartheid had also assisted in keeping wages low on South Africa's white/Afrikaner-owned farms. From the early years of the 20th century, black South Africans were restricted from entering the urban areas without permission: they had to have a valid 'pass'. At the same time, the rural 'reserves' where black South Africans were allowed to live (later also called 'homelands' and 'Bantustans') were restricted to a very small part of South Africa – 13% for three quarters of the population. The reserves, which were poorly located areas to start with, were deliberately held in poverty through the prohibition of private property and by a huge portfolio of restrictions on the economic development of black South Africans.

The pass laws were constantly resisted. Seventeen million black South Africans were prosecuted for pass offences between 1916 and 1986, when the pass laws were finally abolished (Ramphele and McDowell 1991: 5). During the Second World War the system had weakened as labour was in short supply in the cities, and the economy was expanding in response to the war. But in 1948, when the National Party (NP) came to power and created apartheid (Afrikaans meaning 'segregation'), the door was slammed in the face of black South Africans. The law was tightened, and pass law arrests doubled in the 1950s (Wilson and Ramphele 1989: table 11.01). As Verwoerd explained it at the time, 'emigration control must be established to prevent manpower leaving the platteland [white farming areas] to become loafers in the city' (Lipton 1986: 25). Many pass offenders were also put to work as prison labour on the farms.

The capitalist connection

The connection between apartheid and cheap labour is evident. In time, most historians have come to agree on this, though until the 1980s left-of-centre historians and social scientists were identified with this position. Mandela's statements on cheap labour in the 1950s were similar to the views expressed by contemporary communists and anti-apartheid unionists (see Bunting 1969; Mbeki 1984; Simons and Simons 1969). In the 1970s, the left intelligentsia revived and substantiated this analysis of apartheid in the context of resurgence of radical social analysis worldwide, and of the revival of the popular struggle in South Africa, now through worker and student movements.

Colin Bundy (1979) tells the story of how, in the second half of the 19th century, black South African cultivators were emerging as a competitive farming peasantry. However, the Prime Minister of the Cape Colony, mine-owner Cecil Rhodes, set out deliberately to eradicate what he saw as a threat to cheap labour on the mines. Harold Wolpe (1972) explains how the prohibition of private property and therefore land sales in the reserves inhibited the emergence of a large landless class, and helped prevent the full urbanisation of black migrant mine workers. He also shows how the workers' access to communal land-holdings subsidised the cost of labour for the mines. David Kaplan (1977) and Rob Davies (1979) show how the state balanced the interests of white labour, national capital and international capital against the black workers and peasants, and how power balances in the white elite shifted over time. Mike Morris (1976) shows how apartheid served the mineowners and the white farmers by dividing the labour force into convenient exploitable segments. Wolpe, Martin Legassick (1974) and Duncan Innes (1984) stretch the argument further, claiming that other segments of capitalism, notably manufacturing, were also served by apartheid's cheap labour.

The logical conclusion, especially of the Legassick/Innes version of the argument, was that capitalism and apartheid were essentially intertwined in South Africa, and that the end of apartheid would require a socialist revolution led by the black workers. This conception helped inspire the new black trade unions that emerged in South Africa in the 1970s and 1980s, which made a huge contribution to the anti-apartheid struggle, though not through socialist revolution.

The best-known response from the liberal camp (using 'liberal' in the South African sense of socially liberal but economically conservative) was Michael O'Dowd's 'thesis', first articulated in 1964. O'Dowd argued that apartheid and capitalism were inherently incompatible and that economic growth would eventually lead to the disintegration of apartheid. Liberals tended to argue that apartheid was a sectional power play, catering to the sectional interests of Afrikaner labour and backward forms of capitalism. The essence of the liberal/radical debate in the 1970s was between these two caricatured positions: radical: apartheid and capitalism are two sides of the same coin – to fight apartheid you should fight capitalism; and liberal: capitalism and apartheid are inherently contradictory – support economic growth in a capitalist context in order to challege apartheid.

The debate about the connection between capitalism and apartheid became more nuanced in the 1980s with the contribution of work by Dan O'Meara (1983), Sam Nolutshungu (1983), David Yudelman (1983), Merle Lipton (1986) and Doug Hindson (1987), amongst others. The liberal position softened to acknowledge that the form of capitalism that predominated until the 1960s – mainly mining and agricultural – was deliberately and well served by the cheap labour system produced by segregation and apartheid. Equally, the left came to acknowledge that some more progressive capitalists had opposed apartheid, and that apartheid was beginning to curtail prospects for future capitalist growth.

Consequences for the 'beloved country'

In the meantime, apartheid had wrought havoc with South Africa, socially and economically. By critically injuring the black majority and by forcing the economy to conform to the increasingly contorted strictures of white rule, recovery from apartheid was made all the more difficult.

The great red hills stand desolate, and the earth had been torn away like flesh. The lightning flashes over them and the clouds pour down upon them, the dead streams come to life, full of the red blood of the earth. Down in the valleys women scratch the soil that is left, and the maize hardly reaches the height of a man. These are valleys of old men and old women, of mothers and children. The men are away, the young men and girls are away (Paton 1948: 13–14).

This is how Alan Paton described the ravaged hills of Natal in the late 1940s. Conditions continued to deteriorate in the reserves as the pass laws were tightened, as towns and cities were effectively policed, and as three million people were forcibly relocated to the reserves by the apartheid government between the early 1960s and the mid-1980s. By 1980, while 88% of the white population was urbanised, only 33% of the black South African population lived in the towns and cities. Population density in the black reserves was many times that in the white rural areas. The key reason was what South Africans called 'influx control'. As Colonel Stallard had put it in 1922, 'the black man' should only be in the urban areas 'to minister to the needs of the white man and should depart therefrom when he ceases to minister' (cited in Lipton 1986: 18).

The reserves, planned as labour reservoirs, and to deflect political conflict from the 'white areas', were filled beyond overflowing. Great tracts of land had become vast rural slums. The prohibition of private property meant that the land could seldom be rationally used, and human and physical degradation escalated. As Peter Fallon and Robert Lucas of the World Bank noted: 'In most developing countries, unemployment is lower in rural areas as agriculture tends to soak up excess labour supply, but this is not true in South Africa. Among Africans in particular, the probability of unemployment is much higher in rural than in urban and metropolitan areas' (Fallon and Lucas 1998: iii).

'The government [was], of course,' as Mandela saw it in 1959, 'fully aware of the fact [that] the people [in the reserves were] on the point of starvation.'

They have no intention of creating African areas which are genuinely self-supporting (and which could therefore create a genuine possibility of self-government). If such areas were indeed self-supporting, where would the Chambers of Mines and the Nationalist farmers get their supplies of cheap labour (Mandela 1959: 64)?

Access to transport services, communications, water and power was extremely unfavourable for black rural dwellers. As late as the 1990s, 74% of black rural dwellers had to fetch their daily water, many over great distances, and almost none had access to electrical power. Less than 14% of the black South African population had access to telephones, while more than 85% of white households had access to telephones. Roads and rail lines favoured white rural producers and urban commuters. In the urban areas, blacks were often forced to live a great distance from industrial and commercial centres through a residential land law called the Group Areas Act. As a result, blacks were forced to spend 40% more of their income on transport than whites, coloureds, and Indians, though the latter two groups also bore some of the brunt of 'population resettlement' (May 1998: 139–163).

Perhaps the most powerful economic restriction on black people was that they could have no private ownership of immovable property. They were totally banned from ownership of any property or business in the 'white areas' that made up 87% of the country. They were not even allowed to own shares in public companies. In the remaining 13% of the country, communal property rights, under the management of traditional leaders – chiefs and headmen – prevailed through apartheid law. The restrictions on black business ownership even in 'black areas' were also prohibitive. Essentially, black South Africans were allowed to own a small number of small businesses of certain categories in scattered locations, and not at all beyond the black townships and reserves. The most successful black entrepreneurs were those who operated within the interstices of the law, some using white 'owners' for cover. But the restrictions on property ownership meant that the controls on black competition were overwhelming in practice, and few black businesses broke beyond the survivalist stage.

What about black advancement through salaried employment or the professions? This was blocked through the 'job colour bar'. First formally introduced on the mines in 1893, the job colour bar, which prevented black workers from advancing beyond semi-skilled occupational classes, was entrenched throughout the economy during the early decades of the 20th century, and extended during the 1950s. Outside of teaching black children, preaching to black congregations, and some professions where racial restrictions nevertheless applied, the opportunities for black economic mobility did not exist.

Education and social policies

Along with economic restrictions came a string of social restrictions on black people, which not only damaged their dignity, but also weakened the apartheid economy and made a successful democratic economy more difficult to attain. By far the most serious of these acts was in the field of education. Apartheid education policy set back human capital creation more than a generation, unconsciously forming the most serious of all economic constraints on the future expansion of the economy of a democratic South Africa.

Speaking in support of the 1953 Bantu Education Act, Dr H.F. Verwoerd, the Minister of Bantu Affairs, spelt out clearly the reason why blacks were to get a separate education:

There is no place for [the Bantu] in the European community above certain forms of labour... it is of no avail for him to receive a training which drew him away from his own community and misled him by showing him the green pastures of the Europeans, but still did not allow him to graze there... [This led to] the much discussed frustration of educated natives who can find no employment which is acceptable to them... it must be replaced by planned Bantu education... [with] its roots entirely in the Native areas, and in the Native environment and community (cited in Lipton 1986: 24).

The result was that the standards that applied to the education of black children fell rapidly – education was not compulsory, schoolbooks were not free (unlike the arrangement for white children) and subject policies in languages, maths and science limited career options. In 1959, university segregation followed, with similar results. The damage done by the Bantu Education system has been far worse than South Africa's school attendance and literacy figures suggest.² In fact many of those allegedly literate are functionally illiterate for an industrial society, and many of those listed as attending school make little real progress over many years due to low attendance and pass rates.

Apartheid in public facilities and amenities was called 'petty apartheid' by liberal whites, though it was not petty. It could be the butt of humour of the absurd, though it was not funny. As apartheid collapsed in the early 1990s, Ben McClennan, a political journalist, compiled a collection of 'petty apartheid' incidents and reports that he called Apartheid: The Lighter Side. Here is one example from a 1953 newspaper report:

If a Native [black] nurse carrying a European [white] baby has to travel by South African railways, what section of the train should she enter? The question arose at Grosvenor Station on Tuesday evening. A Native nurse carrying a European baby got into a non-European carriage in a Johannesburg-bound train. She was immediately told to alight by a conductor and, while she was stating her difficulty, the train went off without her. A senior railway official interviewed last night said: 'All I can say is that the mother of the European baby should not have left it in the care of a Native in the first place' (McClennan 1990: 27).

In 1965 the Cape Times reported on the then unfolding beach apartheid programme:

A witness asked the beach apartheid commission yesterday to declare about seven miles of Onrust River coastline White, and added that if White visitors took Coloured nursemaids to the beach, he would not like to see the nursemaids wear bathing suits. Mr PH Torlage, chairman of the commission, asked Mr H Whitely, secretary of the local Village Management Board how he would feel if a 'nanny was dressed in a bathing suit'? Mr Whitely replied: 'I would prefer to see them dressed as nannies' (McClennan 1990: 34).

The absurdity of petty apartheid did not stop the NP government from establishing a plethora of duplicated, inefficient and inferior institutions and facilities to satisfy the purity of the apartheid design and the racist selfishness of its constituents. The cost to society of building new townships, roads, railway stations, police stations, post offices, schools and management institutions was enormous. The cost to the new government of rebuilding unified institutions was very high – perhaps the most difficult was uniting nineteen separate racially and ethnically defined education departments into one national and nine provincial departments.

The apartheid economy

The economic effects of apartheid were not only the social consequences of its racial policies. Apartheid rule had long-lasting consequences on the broader characteristics and competitive capabilities of the South African economy too.

But first, the point must be made that the apartheid economy did not run into obvious problems until the 1970s. Racist capitalism seemed to work quite effectively during the period up to the end of the 1960s. By all normal indicators – rate of growth, rate of inflation, rate of job creation, rates of savings and investment – the South African economy was successful (Gelb 1991a). If one ignores the issues of the degree of equality and the standard of living of the majority, the one notable exception was the rate of profit in the manufacturing sector (Nattrass 1990a).

The success of the apartheid economy was based on a development model that ultimately proved fragile. One important element was the strength of gold as a foundation for the economy. Until 1971, the price of gold was fixed in US dollar terms under the Bretton Woods arrangement. This made gold different from other commodities; as the price was given, the only factor affecting the rate of profit was the cost of inputs. As we have seen in this chapter, the cost of the key factor – labour – was stable and low. Gold contributed more than a third of South Africa's exports, which, together with other mining, came close to half of South Africa's exports, and South Africa's share of 'western bloc' gold output remained as high as 75% with the development of a new group of mines in the 1950s and 1960s in the Free State gold fields.

The other major sector of the economy, manufacturing, had a totally different character. Built behind an increasingly complex protective barrier against imports, few South African manufactured goods, other than semi-processed primary products, were competitive enough to export. The manufacturing sector rested on an import substitution regime where consumer goods were highly protected, were consumed by the privileged white middle class and working class, and where capital and intermediate goods were imported at low or negative rates of effective protection, paid for by minerals exports. In sectors such as clothing, protectionism was so extreme, even in the 1990s, that while more than 90% of domestic consumption in clothing was locally manufactured, the local industry exported less than 10% of its output.

What caused the economic crisis that began in the early 1970s, and continued until 1994? In some respects it was no different from that of comparable developing countries at the time; the world was thrown into turmoil by the end of the 'golden age' of Keynesian capitalism, with falling growth and rising inflation (Moll 1990). However, there were factors that made South Africa different, and in some senses made it much more difficult to recover.

The fall in gold price

With the end of the gold standard in 1971, the ball game began to change for South Africa. The price of gold could fluctuate. With the onset of the oil price crisis in 1973, the price began to gyrate wildly. During the second oil crisis, which began in 1979, the gold price rocketed again, approaching US$900 per fine ounce. The Bretton Woods price had been US$35 per fine ounce. In spite of this, gold production in South Africa was declining from an annual peak of 1 000 metric tons of fine gold in 1970 to under 600 metric tons by the 1990s, due to rapidly falling ore yields. Instead of a foundation, gold had become a wild card.

Had the wild card been played well, South Africa could have protected its economy from excessive price shocks, possibly by creating special foreign exchange deposit arrangements for gold exporters. Instead, the fluctuating price was allowed to play havoc with the balance of payments and the value of the South African currency, which was floated during the late 1970s. Exchange control, and a dual rand which operated from 1960–95 with a brief break in the early 1980s, sometimes softened the fluctuations, but they were still severe.

Worse still, after the second oil crisis ended in the early 1980s, the role of gold in the global asset market changed. Under the Bretton Woods system from 1945–71, gold had been the standard of value, measured in US dollars. In the era immediately after the abandonment of the gold standard, gold remained a refuge during periods of uncertainty – and uncertainty there certainly was between 1971–84, with the oil crises, worldwide inflation, and the debt crisis that began in the late 1970s. In the mid-1980s everything changed. The liberalisation of international capital markets (alongside the liberalisation of trade barriers) meant that the role of gold as a store of value, as a refuge in uncertain times, greatly diminished. This was confirmed during the stock market crisis of 1987, and doubly confirmed during the Gulf War of 1992. The effects of these crises on the demand for gold were minimal. The gold price continued the downward drift that began in the early 1980s.

Not only had demand conditions changed, so had supply competition. New discoveries and new technologies meant that gold production elsewhere in the world, including the United States, Canada and Australia, grew during the 1980s and 1990s. Most of the new technologies could not be applied in South Africa's exceptionally deep mines. In addition, Russia, which is a major gold producer, rejoined the global market in the 1990s. South Africa's share of world gold sales fell rapidly. If this weren't enough, central banks and the International Monetary Fund (IMF) began selling gold off in the 1980s, and are continuing to do so – the creation of a European central bank sparked off yet another round of gold sales.

In short, gold had become a commodity, like wheat, coal or oil. Like most commodities in the modern industrial era, its relative price, or terms of trade, tended to drift downwards in the long run.

The manufacturing sector

Meanwhile, what had happened in the rest of the economy? The manufacturing sector grew rapidly during the post-Second World War era under an import substitution regime. Consumer industries thrived behind protective barriers on booming white incomes, and diversified into more complex durable products. Foreign investment, aimed at exploiting South Africa's protected domestic market, rose to nearly 30% of investment in manufacturing. At least as important was the investment by the government in parastatal corporations such as Eskom (electricity from coal), Iscor (iron and steel), Sasol (oil from coal) and several other producers of key inputs, such as fertiliser. The private sector also invested in input sectors, especially suppliers to the mines and energy sectors.³ Manufacturing output grew at an annual rate of between 4.5 and 10% throughout the period 1946–75. With the exception of the late 1950s, employment grew at between 3.2 and 6.6% per annum (Black 1991; Nattrass 1990a).

The rate of growth of output and employment in the manufacturing sector fell steadily from the early 1960s. By the 1980s, both output and employment in manufacturing were declining on a broad front, the only exceptions being several plants making processed primary products, such as paper and bulk chemicals. Manufacturing remained protected behind tariff and non-tariff barriers, and remained essentially uncompetitive.

In the isolated conditions of the 1980s, compounded by growing disinvestments by foreign firms, a small number of South African conglomerates seized almost total control of the economy. By the end of the decade, five groups controlled companies worth close to 90% of the stock market value of all public companies based in South Africa. Just as government had indulged business in constantly acceding to pleas for higher protective barriers around local markets, government looked the other way as competition and rivalry melted away.

The beginning of the end

The imposition of sanctions on South Africa aimed at the apartheid regime further encouraged inward-looking policies. Government, the state-funded science councils, and the parastatal companies committed considerable resources – deploying the windfalls of high gold price revenues – towards domestic self-sufficiency in food (through roads and huge dam projects), power, weapons and telecommunications equipment. The commercial spin-offs of these projects were negligible; they were barely considered in the design. Not only were the windfalls largely poorly spent, they created financing commitments that lasted long after the gold price windfalls were distant memories.

The rising costs of maintaining the apartheid state, and the weakening economy and tax base meant that from 1984 to 1994 when the democratic government was installed, current government expenditure exceeded current revenue. The government's contribution to domestic savings was negative, while government consumption spending rose from 15% of GDP (gross domestic product) in 1983 to 21% of GDP in 1993 (McCarthy 1991). Some in the political opposition saw this as a deliberate debt trap set for the new government, but the simpler explanation of fiscal irresponsibility and hubris seems more pertinent.

The private sector and parastatals had gone on an equally irresponsible foreign borrowing binge in the early 1980s, particularly in the period 1983–85 when foreign exchange controls were lifted. Foreign debt to GDP rose from 20% in 1980 to 50% in 1985. As a percentage of exports of goods and services, the debt rose from 56% to 149%, meaning that debt servicing through export revenues was under threat. Most problematic was the fact that US$14 billion out of the US$24 billion debt was short term. Heavily dependent on short-term foreign borrowings, the economy was vulnerable.

Several events precipitated a crisis. First the gold price fell from over US$500 to under US$300 per fine ounce between 1983–85 and fiscal and monetary policies failed to adjust. The rand fell fast, and borrowers who had not covered the currency risks adequately encountered payment difficulties. In 1985 President P.W. Botha made it clear in his widely publicised Rubicon speech that the government was not considering any significant political reforms. Within weeks foreign banks, led by Chase Manhattan, pulled the plug (Hirsch 1989; Ovenden and Cole 1989).

The result was a huge haemorrhaging of capital from South Africa, some of it through the withdrawal of credit lines and sales of South African assets, most of it done illegally by South African individuals and firms usually through various forms of transfer pricing. Some analysts of anomalies in the current account of the balance of payments estimate the illegal flows at more than R50 billion for the period 1985–92 (Rustomjee 1991). The bleeding only stopped in 1993 when the capital account of the balance of payments turned positive. Not surprisingly, gross fixed domestic investment shrunk every year bar two between 1983 and 1993, after which it turned positive.

A response from the South African Reserve Bank

For the late sanctions period when monetary policy recognised that the only way to counteract capital flight was by maintaining a high real interest rate policy that attacked inflation while preserving the value, or overvaluing the currency, monetary policy did not help improve the country's economic performance. Before 1989, when Dr Chris Stals became Governor of the South African Reserve Bank (SARB), the currency was allowed to drift to compensate for fluctuations in the gold price. In other words, as the US dollar price of gold declined, so did the rand in order to keep the rand profits of the gold mines healthy (Gerson and Kahn 1988).

One problem for the rest of the economy, especially potential exporters in the non-gold and platinum sectors, was that the fluctuations of the currency made the outcomes of export strategies unpredictable. The other was the overall trend for the terms of trade of non-gold products to deteriorate. As Brian Kahn pointed out, 'the effects of the gold price masked the underlying decline in the country's competitiveness'. He added that 'the terms of trade excluding gold declined consistently since the early 1970s, and by the end of 1986 they were approximately 43 per cent lower than their 1970 levels' (Kahn 1991: 62).

Governor Stals clearly indicated that his objective was to maintain the internal and external value of the rand. Stals faced a balance of payments crisis when a mini-boom in the late 1980s sucked in imports without the compensation of inward flows of capital. It was normal for South Africa to go into deficit on the current account during periods of growth, but the political and economic isolation of South Africa in the late 1980s inhibited any inflows of capital. Stals had to hike the interest rate, and add other emergency balance of payments measures. Though he usually justified high interest rates as an anti-inflationary measure, it clearly also helped slow imports by stalling domestic demand.

Until 1994, the assumption that seemed to underpin this approach – that because long-term capital would seldom enter South Africa policies had to protect short-term money – was justified. However, in the post-1994 period, long-term and direct foreign investment entered South Africa in significant volumes. It may be that Stals erred in maintaining these policies too long after 1994. These issues are explored in Chapters Three and Four. But we first need to review the apartheid legacy.

The economic inheritance from apartheid

Modern South Africa was built on one of the most vicious forms of labour exploitation in the history of capitalism. The evolution of segregation and the migrant labour system into an apartheid system, which sought to crush all black initiative and to protect all white interests, created a social system that soon fell behind world economic trends and was increasingly vulnerable to international economic shocks. The ending of the de jure gold standard and the oil crises in the early 1970s led to wildly fluctuating gold prices, foreign receipts and the exchange rate. Then the disappearance of a de facto gold standard – gold being seen as a refuge in times of international crisis – and, finally, the tightening of the sanctions noose in the early to mid-1980s, all helped to end apartheid, but left the South African economy battered and bleeding.

At great present and future cost, government social policy had turned the clock back to an era of racism and slavery when workers were seen as costs and as potentially dangerous enemies, not as human capital that rewards high levels of investment. Government economic policy helped further cripple the economy through protecting the increasingly monopolistic private sector at the expense of improvements in productivity and competitiveness, through investing in expensive political and strategic projects without reference to market considerations, and through irresponsible fiscal and monetary policies.

Not everything the apartheid government did was disastrous in all its effects. A review of South Africa's ranking in international competitiveness ratings systems in the mid-1990s indicates that South Africa was poorly rated in labour-related indicators, but relatively strong in physical infrastructure, science and technology, and finance. In these three areas, the NP government had made major investments during apartheid, some of which remained economically valuable into the democratic era. But even in these strong sectors, the assets of the country were very poorly distributed – for example, white farmers in remote rural areas had access to tarred roads and highways of the very highest quality, while the majority of black rural and urban dwellers had to use rough-and-ready unpaved tracks to get to school or to work.

Notes

¹ 'Kaffir' is a pejorative term used to demean black South Africans. At the time, white readers might not have understood the Xhosa word for corn (maize) beer, uqombothi.

² The World Bank (1996) gave figures of 84% of the population in secondary school and 18% illiteracy in 1993, which fail to reflect the poor quality of education received in the Bantu education system.

³ Fine and Rustomjee (1996) argue that investments in support industries for minerals and energy sectors characterises post-Second World War South African manufacturing more accurately.

Document(s) 3 de 11