This is a major work of scholarship that straddles the disciplines of history and economics, politics and ethics. It is brilliantly written, masterly in its synthesis, and passionate in its conviction that, in the light of historical inequality in South Africa, the country needs to move from a liberal-democratic capitalist system(what the author calls a British-American or BA system) to social-democratic capitalism (called here a Continental European or CE system. And here lies enormous controversy. The major part of the book describes the history of economic inequality in South Africa, an inequality underpinned by racism.
Drawing on an excellent base of radical historical scholarship, Sampie Terreblanche convincingly shows that the economic history of South Africa is one of succeeding elites monopolising political power and shamelessly exploiting the majority. Terreblanche divides South African history into eight stages of inequality, each stage representing particular elite interests. First there was Dutch mercantile colonialism, based on a slave economy and land dispossession of the Cape’s original inhabitants. The second stage saw British colonial ascendancy, slavery replaced with racial capitalism (indentured labour and a racial class system). The next stage, parallel with the second but situated in the Boer republics, was rooted in conquest of land and a kind of racial feudalism.The fourth stage, aligned with the ascendancy of British rule and the mineral revolution of the late 19th century, was a refinement of earlier racial capitalism. The fifth stage began in 1948 with Afrikaner hegemony: segregation was consolidated. Economic decline from the 1970s and increased black political resistance generated a crisis that forced political change by 1990. In this last stage (roughly 1990 to the present) we find the 1948-1990 white elite joined by a black bourgeoisie.
This perspective from the left will be controversial to those who claim that capitalism defeated apartheid because apartheid was against the free market. I concur with Terreblanche’s analysis: capitalism supported an end to apartheid because apartheid was, to put it crudely in layperson’s terms, bad for business. I would also agree that the present South African economy shows staggering income disparity. There is a very rich elite and a middle class that is comfortably off (though, I would observe, showing signs of strain). Terreblanche calculates this group to constitute the top third. The bottom two-thirds vary from poor to desperate. Based on percentages of income, he suggests that the top third earn roughly 89,2% of the country’s income. The bottom 25% of people earn 1,3%. Half the population earns 3,3%. Despite democratisation and an African National Congress government, the majority of the ”winners” are still white, the vast majority of South Africa’s ”losers” are black Africans.
Why is there still such inequality? Terreblanche lists key factors. Unemployment is up because of slow post-1974 economic growth, the growing capital-intensity (as opposed to labour-intensivity) of the economy, structural shifts in production from primary to service sectors, and the sharp rise in the African population since 1960. He sees poverty as rooted historically in land dispossession and deprivation, repressive labour systems, labour protectionism for white workers, discrimination in social spending and stagflation since 1974. This has been overlaid by systemic racism that has created a highly differentiated class structure among blacks themselves.
Terreblanche’s solution is that we break out of a BA model of democratic capitalism and embrace European social democracy. The new South African economy has in effect preserved the status quo; if anything the new black elite has been co-opted into the old system. Moreover, he argues, the neo-liberal globalism of the elite simply does not work. He sees globalisation (as currently practiced) as merely making South Africa more dependent on the rich North. Rather, we need to focus on South Africa’s domestic economy, deracialising it. The economy should stress people rather than elites, much greater state regulation of the economy, a revival of civil society and the renewal of the welfare system.
This is a challenging vision, and Terreblanche argues it with great passion informed by a dazzling marshalling of facts. But can his proposal work? The status quo cannot continue, but the past 10 years have seen the erosion of much of the CE social-democratic consensus. And social democracy is in decline or under threat in countries as diverse as Sweden, France and Germany, though to differing degrees. If South Africa were to shift to social democracy, we would face a further decline in foreign investment. Perhaps business could be convinced that it is in its interests to accept higher taxes, and the elite to accept higher personal taxes, in return for greater social stability. But I doubt it. There is also the threat of greater bureaucratisation, a condition of CE. Perhaps what we need is a new economic synthesis, drawing on both wealth-creation and a strong welfare safety net.