Mammon: South Africa

Few people in world history had nearly as obvious reasons for practising racial discrimination as white South Africans did.

Or so argues Steve Farron in “Prejudice is free, but discrimination has costs: The holocaust and its parallels” (pdf).

What went wrong for white South Africans? Farron argues that economic self-interest of individual actors in a capitalist system always trumps collective interest.

The rest of this entry is quoted from Farron (boldface added).

[… (p. 19)]

Farmers had much more political influence than other employers. They were more numerous than other employers, and their numbers were magnified by the overrepresentation of rural districts in parliament. Moreover, most farmers were Afrikaners, while most other employers were English-speaking; and farmers benefited from romantic associations among Afrikaner nationalists. In 1910 over half of the members of parliament (MPs) of the ruling SAP were farmers; in 1948 nearly half of the MPs of the victorious National Party were farmers, as were 20% of the opposition United Party MPs. Because of their political influence, farmers were the only employers who managed to avoid any government intervention in their employment practices. Consequently, agricultural employees, even in skilled and managerial jobs, came to be nearly all black despite high Afrikaner rural unemployment

[… (p. 20)]

ISCOR’s management, like most white South Africans at the time, regarded racial discrimination as the “humanitarian” policy, but was prevented from pursuing it by economic considerations. Since economic considerations exercised such a powerful influence on a government corporation, it is no wonder that private businesses could not be forced to put morality above profits.

[… (p. 21)]

The government’s Riekert Commission (1979) estimated that most of South Africa’s clothing factories were employing illegal black workers. Businesses “even made provision in their tender prices for the payment of fines”. It reported that nearly all employers complained that bureaucratic control of the black labour supply meant that they could not hire “suitable workers…within a reasonable time”, that hiring black workers involved “cumbersome procedures linked with voluminous documentation” and that this problem was particularly acute for small businesses because they could not hire special staff to deal with labour recruitment, so it absorbed much of the time and energy of management. The Riekert Report concluded that government control of labour was an “absolutely essential social security measure; even though… the abolition of such control would lead to faster economic growth”

The situation was the same in the employment of non-manufacturing labour. For example, in 1951 blacks were legally barred from skilled construction jobs, and this bar was re-enacted in 1970. Nevertheless, the Industrial Tribunal reported in 1974 that it found “alarming malpractices” on visiting building sites, with blacks “openly engaged” in nearly all types of skilled work. Hundreds of building employers were prosecuted, but the illegal employment of blacks in skilled construction jobs kept increasing.

The government knew who its enemies were. It accused them of being “prepared to sacrifice white civilization” because of their “blind worship of die Mammon van die geldmag” (Mammon of the money power)

[… (p. 22)]

Businessmen shared the dislike and fear of most white townsmen of the problems [especially crime] associated with rapid [black] urbanization and supported some controls over entry, even while they complained about restrictions on the size of the labour pool and the mobility of their own workers. Despite this ambivalence, their pressures were consistently for the erasing of controls (Lipton 1986, p.150; her italics).

[… (p. 23)]

White individuals acting as consumers were as eager as white individuals acting as employers to violate laws that they thought desirable for social reasons. “To build a house in Johannesburg meant either waiting for months for a white, expensive, legal building gang, or finding a black gang…Most customers opted for the quicker, cheaper service” (Sowell 1970, p.30). Whites acting as individuals even thwarted the one social goal that nearly every white South African thought was crucial: maintaining residential segregation. When in 1950 the national Group Areas Act systematized the hodgepodge of local segregation laws, Prime Minister Malan called it “the kernel of apartheid” (Williams 1989, p.32). But social considerations, even when enforced by Draconian legislation, could not withstand the craving of white businesses and individuals for employees. The urban non-white population tripled between 1951 and 1980, when it was eleven times what it had been in 1911 (Lipton 1986, p.401). This caused a severe housing shortage in non-white areas and consequent willingness of non-whites to pay high prices for houses in legally white areas. By the middle 1980s about half of urban non-whites lived in legally white neighbourhoods. Most of these neighbourhoods were lower-class and lower-middle-class and most of their white inhabitants voted for right-wing political parties, but they eagerly used subterfuges to circumvent the Group Areas Act to sell their houses to non-whites who offered above-market prices (Williams 1989, pp.112-14).

[… (p. 24)]

[Under] NP rule, from 1948 until 1994, all South Africa’s heads of state, most cabinet ministers, most NP members of parliament and nearly all heads of civil service departments and government corporations were members of the Broederbond (Band of Brothers) (Giliomee 1979, pp.247-9). One of the requirements for membership in the Broederbond was, “Does he give preference to Afrikaner…persons and companies in economic, public and professional life?” (Moodie 1975, p.102)

Nevertheless, the Broederbond, (and the NP, with which it was intertwined) completely failed to accomplish the goal it set itself in the 1930s: to “mobilize the volk [(Afrikaner) people] to conquer the capitalist system and to transform it so that it fits our ethnic nature”. This Volkskapitalisme would subordinate economic considerations to the aim of Afrikaners investing in and buying from Afrikaner-owned businesses (Moodie 1975, pp.203-6). Before the NP attained power, Afrikaner nationalists tried to implement this goal with boycotts of Jewish and Indian retailers, especially in small towns. However, as always, “while patriotic Afrikaners made some effort to ‘buy Afrikaans’, the rank and file have been more interested in prices, quality, design…credit terms and the location of the business” (Giliomee 1979, pp.156, 167). So, “despite all the demagoguery, the Afrikaner masses traded with Indians rather than with the less competitive Afrikaner businesses” (Williams 1989, p.107).

Coloured (mixed-race) retailers also constantly complained of “unfair” Indian competition; and hostility was even greater among black customers, who saw Indians as “exploiters”, than among white and Coloured competitors. The only major race riot in South African history was a black anti-Indian riot in Durban in 1949, in which 142 people were killed. However, as always, when non-Indians made economic decisions they chose self-interest over morality, patriotism and indignation at perceived exploitation. Consequently, competitors had to resort to government legislation. In 1950, over half a century of laws designed to curb Indian business success culminated in the provisions of the Group Areas Act that restricted Indian businesses mostly to Indian areas. But Indian businesses continued to prosper, obviously because whites, Coloureds and blacks, who collectively composed 97% of South Africa’s population, bought from them. Between 1950 and 1976 the number of moderate-sized Indian businesses in Natal, where most South African Indians live, rose from 120 to 900.

[… (p. 27)]

At the beginning of this section I quoted Nelson Mandela’s statement that an “important element of our policy…is [that] in its ownership and management, this economy increasingly reflects the racial composition of our society”. But the post-1994 black South African government has been no more successful than the Afrikaner-nationalist government that preceded it. The front-page headline of the Johannesburg Star of November 7, 1997 was “Affirmative Action Scams Exposed”. It reported that it is “commonplace” for South African “corporations [to] use black front companies and hire ‘ghost’ black directors to win contracts”. These scams have been extremely lucrative for some blacks. Between 1996 and 1999, the net income of blacks who earned over 300,000 rands a year jumped from 5 billion rands to 13.5 billion rands. But the income of middle-income blacks did not change and that of low-income blacks fell. By 1999, thanks to below-market-price sales and gifts by South African conglomerates, black-owned businesses accounted for 6% of value of shares traded on the Johannesburg Stock Exchange. That fell to 2% by February 2001; and most of that 2% was one company, Johnnic Holdings, owned by Cyril Ramaphosa, the man in charge of enforcing black economic “empowerment”.