Chapter Eight—
The Economic System and Its Dysfunctions

In Chapter IV we have sketched the broad lines of the economic structure of South Africa. We shall now concentrate on the imbalances and contradictions relating to the system of production. For analytical purposes, we shall deal in turn with three types of factors:

1. The imbalances inherent to an economy in transition from "underdevelopment" to industrialization.

2. The economic dysfunctions arising from private and official discrimination and prejudice.

3. The tensions arising from the particular relationship between economic and political power.

The political dualism of South Africa as a "mother country" and a colony is also reflected in the country's economic structure. Side by side with destitute, stagnating, subsistence agriculture and herding, there coexists a prosperous, expanding money or market sector. The resulting imbalances are, to a large degree, typical of all "developing" countries going through the process of industrialization, and are thus found throughout Africa.^[1] The

scarcity of technical skills necessary to industry leads to high wages for specialized labour. Conversely, depressed rural conditions make for abundant and, hence, cheap unskilled labour. There results a wide wage discrepancy between levels of manual labour, and, more generally, a highly unequal income distribution. In 1953–1954, Spooner has estimated that the mean family income for South African Whites was £1616 a year, compared to £308 for Coloureds and Indians, and £119 for Africans (Table XXIII). Whites thus enjoyed a standard of living which was about five times higher than that of Coloureds and Indians, and thirteen times higher than that of Africans. The figures for Africans included families living in towns, in the Native Reserves, and on White farms. In cities, the mean African family income was £213 a year, compared to £120 for Africans living on White-owned farms, and £97 for Reserve Africans. The latter figure includes an estimated £30 as the value of subsistence agricultural production.^[2]

Moreover, indications are that, if one controls for increases in the cost of living, racial inequalities in the distribution of income have increased until the 1950's. Spooner estimates that, between 1938–1939 and 1953–1954, Whites enjoyed a 46 per cent increase in purchasing power, compared to an increase of 11 per cent for Coloureds and Indians, and a decrease of 6.5 per cent for Africans (Table XXIII). Out of a 1953–1954 Geographical National Income of £1,559,000,000, nearly three-fourths accrued to Whites who constituted one-fifth of the population. This racial disparity in earnings has somewhat decreased in the late 1950's. While, in 1954, the per capita income of Whites was 12.7 times higher than that of Africans, by 1960 the ratio had fallen to 9.0 (Table XXII). It is therefore clear that the Whites were practically the sole beneficiaries of economic prosperity

until 1954, and that the relative standard of living of Africans remained stationary for fifteen years. At last, since the late 1950's, rises in non-White wages are slowly reversing that trend, so that non-Whites may now look forward to being slightly better off vis-à-vis Europeans than they were after the Great Depression, some thirty years ago.

"Cheap" labour in itself entails a whole set of factors retarding economic development: lack of incentive to mechanize, a small internal market for consumer goods resulting from low purchasing power, and the vicious circle of low-wages-low-productivity. Cheap labour is generally improductive, first because it is often malnourished, fatigued, or debilitated by disease; but more importantly, because its very cheapness makes unprofitable the major means of increasing productivity, namely mechanization. In a nutshell, unskilled labour is cheap because it is abundant, it remains cheap because it is improductive, and it is improductive because it is cheap.

All the above factors are too common and too well-known to require further elaboration. However, several specifically African conditions aggravate the imbalances and tensions inherent to an economy in rapid transition. Unlike in Europe and in Asia, the economic transition in much of Africa was not simply from a rural to an urban way of life, but from a rural subsistence to an urban money economy. Whereas, elsewhere, the use of currency preceded by far industrialization and cushioned somewhat the latter's impact, it was unknown in many traditional African societies which thus had to make a double jump. To be sure, cash agriculture and herding have existed for some three centuries in South Africa, but wherever they appeared, they were practically monopolized by the White settlers.

The presence of the Whites complicates and aggravates transition problems. Indeed, overlapping with the agriculture-industry dichotomy, one finds in South Africa a "White" versus an "African" economy. These terms are somewhat misleading

because Africans also constitute a majority of the working force in the White economy. Yet the racial factor occupies a prominent place in the country's economic system, as well as in all other aspects of South African society. For all practical purposes, the Whites control all sectors of the money economy, whether in industry, mining, commerce, or agriculture.^[3] Although White cash agriculture is only engaged in by some 13 per cent of the Europeans, and although it is relatively unproductive compared with the other sectors of the White economy, it accounts for an overwhelming proportion of the total agricultural production. The some 400,000 Whites living on farms occupy some 87 per cent of the land, and produce at least twenty to thirty times as much as the 3.7 million Africans living on subsistence farming and herding in the Native Reserves.^[4] On a per capita basis, each rural White holds an average of 375 acres of land, compared with 6 acres per rural African.^[5] In addition to the enormous racial discrepancy in the size of land holdings, White farmers benefit from much easier credit (and, hence, higher capitalization), and from much heavier government subsidies than African farmers receive. In the 1960–1961 fiscal year, for example, the state spent £17,090,000 in subsidizing White agriculture, and in

1960 the Land and Agriculture Bank loaned European farmers another £17,463,896. By comparison, the total expenditure on "Native Administration" was only £16,616,000, of which only a small fraction was devoted to African agriculture.^[6] In the first twelve years of Nationalist rule (1948–1960), the government spent only £35,400,000 on the purchase and development of African land, a yearly average of less than £3,000,000.^[7]

As the Reserves fall far short of feeding their own population, the phrase "subsistence agriculture" has become a misnomer and a euphemism. In order to earn the necessary cash to feed their families in the Reserves, practically all able-bodied African men are forced to enter the White economy, either as quasi-servile^[8] labourers on the White farms, or as lowly paid urban or rural proletarians. As a result, Africans are obliged to spend their low wages on high-priced food grown by themselves on land which the Whites have appropriated mostly by force. In order to insure a high standard of living for White farmers, the government maintains the price of staple foods at an artificially high level. Large-scale land encroachment by the Europeans, combined with African population increase, has thus transformed the traditional African subsistence agriculture into sub -subsistence starvation. Thereby, new economic forces were set in motion: first, a continuous and abundant supply of cheap labour for the European economy, and secondly, a progressive deterioration of the remaining African land through the familiar sequence of overpopulation, overgrazing, and erosion.

These facts have been confirmed by careful surveys. A 1949

inquiry into the rural economy of the Ciskei (one of the Native Reserves of the Eastern Cape where rainfall and soil conditions are relatively favourable) revealed that only 6.8 per cent of the farmers' average income were derived from agriculture.^[9] Soil deterioration is reflected in steadily falling crops in the Native Reserves. In the 1923–1927 period, 620 million pounds of maize and 148 million pounds of "Kaffir corn" were produced; in 1935–1939, the corresponding figures were 478 and 122, a decline of about 20 per cent in a little over a decade. By 1949 average yields in maize in African areas were as low as thirty pounds an acre.^[10] South African Whites have, of course, conveniently blamed the "wasteful," "irrational," and "backward" agricultural techniques of Africans for the destitute condition of the Reserves, and for soil erosion. Available evidence, on the contrary, indicates that the introduction of Western methods of land exploitation are largely responsible for much of the damage. D.F. Kokot, a member of a committee of seven scientists appointed in 1948 to study erosion in South Africa, states unequivocally:

The indisputable and alarming fact is that there has been serious deterioration of the vegetation and hydrological conditions. And everywhere there has been almost terrifying erosion of the soil. The majority of the Committee were quite convinced that all the damage could be explained in terms of the impact of man, with his plough and his domestic animals, upon a land that was from the very start extremely vulnerable. . . . Throughout the Union of South Africa soil erosion is triumphantly on the march.^[11]

In short, Africans have not only lost most of their land to the Whites; they have also been forced out of their remaining Reserves, not fundamentally because of the "lure of the city," or opportunities for higher wages, but rather because migration was an imperative necessity for sheer physical survival. The

"push" factor away from the Reserves was certainly much more basic than the "pull" factor towards the cities. Left to themselves, these economic forces would already have had highly disruptive social consequences. But, as we shall see presently, government policies and private employment practices have further worsened the position of the Africans. Before we touch on these, however, we must emphasize another characteristic, common to many African countries, which makes the transition to industrialization particularly disruptive.

In the classical pattern of European urbanization and industrialization, the transition has been predominantly diachronic and unidirectional . Peasants have gradually moved to the cities, adapted to the urban environment, and settled there permanently. In Africa, on the other hand, there has typically been a long-range tendency towards increasing urbanization, but, simultaneously, there took place a constant, two-way, cyclical migration of workers to and from urban centres. Not only have African societies undergone a steady transformation over time, but large numbers of people are "commuting" at any given time between two widely different types of social environment. Through the large-scale use of migrant labour by much of White industry, the social change brought about by economic forces has been much more traumatic and disruptive of traditional peasant society than would have been the case with gradual, one-way migration. First, the African migrant worker is separated from his family for long periods; and, second, cyclical two-way migration necessarily involves a much greater proportion of the population in a shorter time space. We shall return to the causes and consequences of the African migratory labour system presently.

Let us review our argument so far. Industrialization inherently entails a number of disruptive consequences. South Africa shares these special conditions with the rest of colonial or formerly colonial Africa, but in a particularly extreme form. Indeed, the process of industrialization is far more advanced in

South Africa than in all the rest of the continent, and, hence, it has left practically nobody unaffected. Furthermore, local Africans have been dispossessed of their land to a greater degree than in any other part of the continent. The factors mentioned so far differentiate South Africa from all other countries only in degree. We must now turn to more specific conditions that make for uniquely South African sources of conflict and dysfunction.

As might be expected, the South African syndrome of racial prejudice and discrimination, in both its private and its governmental forms, makes a significant contribution to economic dysfunction. The bearing that racial legislation, executive action, and discrimination in private employment have on the system of production must, therefore, be examined in some detail. The measures and practices which we shall mention are all interrelated, but for purposes of analysis we shall have to deal with them singly.

At least one-third of South Africa's Black labour force consists of migratory workers who come from the Native Reserves, the British High Commission Territories, and the neighbouring countries, mostly Rhodesia, Nyasaland, and Mozambique, to complete a term of contract, usually of six-months duration. Almost all of the 500,000 African miners, as well as many of the workers in large-scale cash agriculture (such as most of the 100,000 people employed in the Natal sugar industry) and in secondary industry, are housed in military-type barracks where they are completely cut off from their families; on completion of their contract they return to the Reserves, usually for several months. In the case of the diamond mines, the African workers (but not the White workers) are locked inside the mine compound for the entire contract period.

In some rural areas, work conditions for Africans can only be described as involuntary servitude. The state co-operates with the White farmers in supplying the latter with Africans, who are locked up in prison out-stations, or in huts erected by the farmer. These Africans have generally been arrested for technical

offences, such as pass violations, and given the option of prosecution or a three- or six-months term on a White farm at wages of two shillings a day. Workers are often locked up at night in overcrowded huts, with insufficient water, "filthy blankets or sacks that were infested with lice," and "extremely inadequate" food. They are, furthermore, beaten by African "boss-boys."^[12] The Bethal district of the Transvaal is particularly notorious for the treatment of African farm labourers who work up to fourteen hours a day and are frequently beaten with sjamboks .^[13]

We have already mentioned the social and political effects of the migratory labour system, namely the disruption of the African family, the promotion of concubinage and illegitimacy due to the large excess of men over women in urban areas, the breakdown of customary authority, the escape from traditional kinship obligations, profound and disruptive transformations in the bride-wealth system (known as lobola ), the lowering of ethnic consciousness, and the promotion of proletarian consciousness along racial lines. All these processes add enormously to tension in South Africa; but the migratory labour system also has dysfunctions of a directly economic nature. The workers spend close to half of their economically active lifetime in the Reserves, where their productivity is almost nil. This results in a gigantic waste of labour force potential. In addition, the economy has to bear the cost of moving annually millions of workers over distances of up to a thousand miles. With high turnover rates, industry finds it unprofitable to invest in the training of its African workers, since most of them never return to the same employer. This is a further factor reducing productivity.

In short, one can probably say that the migratory labour system makes a greater contribution to economic waste, social disruption, and political tension in South African than any other

single factor. Why, then, has such a system perpetuated itself for about a century, and why do large segments of industry and government continue to join forces in preserving it, regardless of cost? The answer is fairly simple. The system arose spontaneously from the development of the diamond and gold mines in the nineteenth century. Single men, attracted by the opportunity of earning cash wages, were drawn to the mines, and the latter found it convenient for purposes of discipline and theft-control to house their workers in barracks. To insure a steady supply of labour, the mines soon set up a complex machinery of recruitment in the African Reserves. Discriminatory taxation and labour legislation also played a significant role in the institutionalization of the system. Every adult male African is forced to pay a poll (i.e., capitation) tax in money, and, thereby, to enter the wage economy. Laws prohibiting strikes by Africans and making breach of contract a criminal offence have likewise kept migrant labour cheap, docile, and reliable.

To be sure, most industrialists have realized for some years the wastefulness of the migratory labour system, and some have made efforts to stabilize the labour force. But a powerful combination of forces prevents the rationalization of employment practices. First, the initial capital investment in providing even rudimentary housing for entire families is much higher than that required for single men's barracks. Whatever long-range benefits might result from such a shift, most industries are either unable to carry the cost of family housing or reluctant to do so.

Secondly, the Chamber of Mines, which represents the gold industry and constitutes the most powerful economic group in the country, has a strong vested interest in the migratory system. The low gold content of the ore and the fixity in the price of gold would render exploitation unprofitable if wages were substantially raised, and migrant labour has proven the cheapest and most docile. The extractive industries, along with employers of domestic and agricultural workers, pay the lowest African wages, and it is in mining that the wage discrepancy between Whites and

Africans is the widest. While the average yearly wage of a White miner in 1962 was £1281, the corresponding figure for African workers was £77.^[14] This ratio of 16.6 to 1 is about four times higher than in secondary industries which employ non-migrant labour to a considerable degree (Table XXIV). While the migratory system makes for underutilization and low productivity of labour, it also contributes to the depression of African wages and to the subsidization of White wages. Any drastic change in employment practices would be a serious threat to gold mining as a private enterprise.

Thirdly, the government, for political reasons, throws its entire coercive force behind the migratory system with implicit support from the mining concerns. In its endeavour to enforce apartheid, the South African government wants to prevent Africans who live in the Reserves from settling permanently in the White parts of the country, and tries to send back to the Reserves the Africans already settled in the White areas. Officially, and with a few minor exceptions, an African may only stay in White areas on sufferance, and so long as he is employed by a White. A cumbersome state machinery of pass offices, labour bureaux, Native courts, and police endeavours to enforce this policy of mass removal, euphemistically known as influx control. In practice, the policy involves constant police raids in the African "locations," 300,000 to 400,000 arrests and convictions each year, forced expropriation of landowners and removal of squatters, "re-settlement" in already overpopulated Reserves, and forced labour for nominal wages in rural prison out-stations. Petty White officials of the Department of Bantu Administration and Development have almost unlimited power to "endorse" any African out of any area. The latest piece of legislation designed to tighten further the control of migrant workers is the 1964 Bantu Laws Amendment Bill, which has led the Anglican Bishop of Pretoria, Edward Knapp-Fisher, to denounce the "inhumanity"

of the law, and the Anglican Bishop of Kimberley, Philip Wheeldon, to declare that the bill "amounts to slave labour."^[15] This bill extends influx control regulations to the White rural areas; forbids Africans from seeking work outside Reserves except through state labour bureaux; and deprives the last few thousand Africans previously exempted from arbitrary deportation of their right of permanent residence in urban areas. It also empowers the Minister of Bantu Administration and Development to detain unemployed Africans under twenty-one in "youth camps" and to detain unemployed adult Africans in "labour depots." Thus, the principle that Africans are transient labourers in urban areas has been carried to its ultimate conclusion.

The Nationalist government is, of course, realistic enough to know that White industry could not exist without Black labour, and, hence, that total territorial apartheid is impossible. But the only form of African influx into the White areas which the government accepts as desirable, or at least unavoidable, consists of migrant labourers who leave their families behind in the Reserves, return periodically to the latter, and do not establish any permanent roots in the cities. The long-range plan involves the forced removal of all other Africans from White areas as "redundant Natives."^[16] In other words, the government favours and maintains the migratory labour system for political reasons which are quite extraneous to economics, and it does so with the tacit support and co-operation of the Chamber of Mines, and a number of other concerns which maintain or patronize recruiting agents throughout South Africa.

In spite of large-scale resort to force, the government has proven unable to check the permanent settlement of increasing numbers of Africans in towns. A 1957 estimate indicates that some 38 per cent of the Africans lived in the Reserves, 34 per

cent in White rural areas, and 28 per cent in cities.^[17] In 1951 the respective figures were 43 per cent, 30 per cent, and 27 per cent; and in 1911, 44 per cent, 43 per cent, and 13 per cent (Table VI). The 1960 census shows that the urbanization rate for Africans continues to be much faster than for the Whites, who are now outnumbered in all the large cities. Between 1951 and 1960 the number of Africans in urban areas increased by 45 per cent, or some 1,081,000 people. In Johannesburg alone, the African population rose by 32 per cent during that period while the European population declined by 13 per cent.^[18]

If government policies have not stopped existing trends, one can reasonably assume that they have at least exerted a retardative and interfering effect on normal mobility. More precisely, the state has fostered a type of labour mobility, namely the migratory labour system, which is economically wasteful in advanced industrial societies, as well as socially disruptive; at the same time it has hindered the "free" supply of labour in answer to the industrial demand. To the extent that the Africans are not free to move within the country, and to offer their services on a free labour market, wages are kept artificially low, and the expansion of secondary industry is hindered. Africans are not the only group to be restrained in their movements; Indians are likewise subject to stringent restrictions, and are totally excluded from residence in the Orange Free State. (Technically, Whites are also forbidden to enter most African "locations" and Reserves without permits, but these regulations are seldom enforced, except against political organizers and social scientists. Bona fide tourists, for example, are never interfered with when they visit Native Reserves.)

One of the most basic requirements for a complex capitalist economy is a freely mobile labour force which is responsive to labour demand. In South Africa such conditions exist only for

the Whites, and, to a limited extent, for the Coloureds. The least that can be said about the effect of government labour policy is that the vast machinery of influx control as well as the lost productivity resulting from mass deportations and arrests have involved a cost which is not less enormous for being impossible to assess, and have been contrary to any principle of economic rationality in a capitalist system of production. The state, the mining magnates, and the White farmers have, for different reasons, shared a common interest in maintaining such an anachronistic and repressive labour system.

Other forms of racial discrimination have contributed their share of economic dysfunctions. One of them is "job reservation," i.e., the set of laws and government regulations connected with the occupational colour-bar. Non-Whites have been excluded from all skilled work in the mines since the passage of the Mines and Works Act of 1911; since then, the legal colour-bar has been extended to an ever increasing number of occupations and industries. Even where the law does not debar non-Whites from certain jobs, the private prejudices of employers and White workers have the same effect. Non-Whites are also excluded de facto from many occupations through their being denied admission to the White trade schools, high schools, and universities, where they could acquire the necessary skills. In practice, then, except for a small Coloured artisan class in the Cape, and a tiny non-White elite of professionals and semiprofessionals (mostly nurses and teachers working in segregated hospitals and schools), it is virtually impossible for a non-White to be anything but a domestic servant, a subsistence farmer or farm worker, or an unskilled or, at best, semiskilled industrial labourer.

The economic consequences of such discrimination are obvious. Recruitment for jobs is largely on the basis of the ascriptive criterion of race, rather than of competence. More accurately, rational criteria of selection are operative only within rigid racial categories. The potential talent of 80 per cent of the population to fill skilled positions is wasted, while incompetent Europeans,

whose sole qualification is skin colour, occupy responsible jobs because there are not enough qualified Whites to fill all such positions. The civil service (in particular the railways, the police, and the post office) has become a field of protected employment for otherwise unemployable Whites (mostly Afrikaners) of substandard education and intelligence. Industry also suffers from the scarcity of qualified Whites to fill important jobs. A 1960 South African government survey disclosed labour shortages ranging from 12 to 18 per cent in such key occupations as engineers, physicists, and chemists. A 1956 statement by the Minister of Labour alleged that there was a 9 per cent shortage of artisans and a 16.2 per cent shortage of apprentices.^[19] Whites, in effect, have chosen to monopolize all skilled occupations in a complex industrial economy which supports a population that is five times larger than the pool of workers eligible to do practically all but the most menial jobs. The results, obviously, are vast underutilization of non-White skills, and a corresponding over-employment of Whites. Both of these take an enormous toll in industrial and administrative efficiency.

We have already referred to the great wage differences between skilled and unskilled labour. Legally, most minimum wage determinations are based on job categories rather than directly on race; but as race coincides almost entirely with occupation, the wage discrimination is, in fact, racial. Depending on the industries, White manual workers earn between five and fifteen times as much as non-White workers. Even when, through fictitious relabeling of jobs, Whites and non-Whites perform essentially similar tasks (as happens surreptitiously in many secondary industries), the Europeans are paid three or four times as much as the non-Europeans. In government service, equally qualified Whites and non-Whites performing similar jobs (e.g., policemen, teachers, nurses, etc.) are paid widely different salaries. The principle of unequal pay for equal work has even been adopted

by most religious denominations in the payment of teachers' and clergymen's stipends.

Aside from the occupational colour-bar, several other factors contribute to the perpetuation of this wage differential. While Whites are free to strike and to unionize, the Africans are not; breach of contract is a criminal offence for Africans but not for Europeans; pass regulations force Africans into the least remunerative jobs; severe educational restrictions on the non-Whites keep the average skill-level low; private discrimination by employers has led to an interpretation of minimum wage regulations as maximum wages for non-Whites, while White workers have successfully organized for continuously rising wages.

The wage gap is usually defended by Whites as being based on a productivity differential. To be sure, White workers are more productive, on the average, than non-White labourers, largely because they are more skilled, healthier, better nourished, and in more mechanized jobs.^[20] But the factors examined above depress non-European wages far below the productivity level, while the reverse is true for Europeans. In fact, cheap non-White labour subsidizes the high European living standard, not only of the entrepreneur, but also of White manual workers. While the existing wage gap results, thus, partly from the country's economic structure, racial factors have further increased it.

Another variant of White justification for paying Africans low wages, is that Africans are "target" workers, i.e., that they enter the money economy temporarily in order to buy specific items, to pay their poll tax, etc., and that, once they have accumulated the necessary sum, they return to the subsistence economy.^[21] Hence, the argument continues, there is an inverse relationship between wages and the supply of labour, and the only way to keep labour plentiful is to pay low wages. Of course, "target labour"

is well known to students of African economics, but the phenomenon is extremely limited in South Africa. Indeed, the existence of "target labour" presupposes a subsistence economy. In South Africa two-thirds of the Africans live outside of the Reserves, and the latter are below subsistence. The main "target" which most African workers have in South Africa is to ward off starvation, and this forces them to work for wages most of the time.

Besides the objective economic dysfunctions of a widely unequal income distribution (in terms of productivity, purchasing power, size of the internal market, and rate of savings, capitalization, and industrial expansion), the subjective consequences of racial disparities in wealth certainly add to tension. With no prospect of job improvement, non-Whites have little incentive to work better; on the other hand, the privileged, protected, European worker likewise has little incentive to improve his performance, because he is assured of remunerative employment. Non-White proletarians become totally alienated from their jobs, or indeed from the whole system of production, and respond to discrimination with output restriction, passive resistance, minor sabotage, and boycotts of shops and products. The frequent White argument that the "Natives" should be happy because they earn more than do "their brothers" elsewhere on the continent is not only racialistic but also entirely besides the point. Obviously, the African compares his position to that of local Whites, and not to that of foreigners who happen to have the same skin colour.

Racial stereotypes may also have an indirect economic effect, though there is little solid evidence for it. For example, the White view of the non-White worker as "unreliable" and "irresponsible" can easily become a self-fulfilling prophecy. A worker who has been reprimanded for showing initiative, and who is treated as a simpleton, is likely either to lose all interest in his job and perform his tasks unthinkingly and apathetically, or to exhibit his spite by deliberate irresponsibility, coupled with punctilious obedience to the letter of stupid orders. This method can be an

effective means of passive resistance and could have an appreciable effect on production.^[22] Fulfillment of role-expectation provides the non-White worker with a relatively safe and satisfying way of expressing hostility towards Europeans.

Returning to more objective sources of economic dysfunctions, several further aspects of government policy have an adverse effect on the economy. The most obvious, but not the most important, of these is the financial cost of racial segregation in all public amenities. In some cases, the duplication of facilities is, of course, a complete waste of money. However, the direct cost of segregation to the government or to the White taxpayers is minimal, for, in most cases, an amenity is segregated in the sense that it is available only to Whites. An effort, or even a serious pretence, to establish "separate but equal" facilities has hardly ever been made. If a given amenity is available at all to non-Whites, it is generally of such an inferior quality as to represent a saving over what it would cost to offer all citizens adequate facilities. Furthermore, each racial group is expected to finance its own segregated amenities such as schools, hospitals, churches, beer halls, etc. In practice, then, the non-Whites, and particularly the Africans who are the most destitute, bear the main cost of segregation, and are forced to pay (under strongly regressive taxation) for a system they abhor. This situation is accepted as "natural" by most Whites. The argument that the White electorate is going to stop supporting apartheid because of its financial cost is consequently devoid of substance.

A number of government projects are, nevertheless, quite costly and senseless, insofar as they run counter the most elementary principles of economic rationality, although their political motivation is both transparent and "rational" in terms of the government's premises. For example, the government spends con-

siderable sums in promoting European immigration to South Africa, while at the same time deporting thousands of "foreign Natives," forbidding Indian immigration, and encouraging the "repatriation" of South-African-born Indians to India. South Africa is said to need more people (i.e., Whites) and to be a land of unlimited opportunities, while the government also complains about the presence of "redundant Natives" and the danger of "Asiatic invasion."

The geographical situation of African urban townships likewise bears no relation to economic realities, and it is determined almost purely by political and military factors, irrespective of cost. These African "locations" are often built ten to twenty miles from the White cities, in part to maximize physical segregation as an end in itself, and in part for reasons of security and repression in case of revolt. That hundreds of thousands of Africans have to pay up to 20 per cent of their already insufficient wages for transport, and waste up to three or four hours a day in commuting to their place of employment where they arrive tired and incapable of efficient work, is of little concern to the government, although many industrialists complain of lowered productivity and increasing tardiness and absenteeism among their African workers. The indirect cost of this form of segregation to the economy as a whole is certainly quite high.

Of a similar anti-economic nature are government plans to "rehabilitate" the Native Reserves, and to establish "border industries," townships and "university colleges" in or next to the Reserves. These schemes are part of the apartheid master plan whereby most Africans will live in prosperous, self-sufficient, autonomous Bantustans. In the White areas, there would remain only the necessary minimum of Black labour. So far, the amount spent on this totally impracticable plan does not remotely approximate the £104,000,000 recommended in 1956 by the Tomlinson Commission, even though such an estimate was then considered grossly insufficient by most economic experts. It is clear, however, that whatever money has been spent has largely been

spent on schemes which bore little relationship to economic contingencies.

What could be the purpose of establishing "Bantu university colleges" in the middle of the bush, except to isolate the students from "dangerous" currents of thought in the cities, and keep them out of the political struggle? What economic reason could one advance for artificially developing towns in the middle of destitute Reserves with no economic infrastructure, or even transportation system to support them? The "border industries" scheme is similarly questionable. In order to "decentralize" industry, the government is encouraging the building of factories on the border of the Native Reserves. The true reason for the scheme ties in again with the general apartheid blueprint; but the pseudo-economic rationalization for the plan is that industry will benefit through the proximity of the labour supply. In other words, the location of industry will be determined by proximity to the most mobile of its prerequisites, namely labour. Such considerations as transport of raw materials over a non-existent road or rail network, proximity to harbours, availability of a reliable water supply, location of the consumer market, etc. are regarded as secondary, provided that the scheme fits into the political master plan.

We still have to examine another repercussion of racist policies on the South African economy, namely the internal consequences of the external reactions to political events in South Africa. These reactions affect adversely the economy in two different ways. First, evidence of racial unrest in South Africa or in neighbouring countries leads to a loss of confidence in the country's stability, and hence to a flight of foreign capital through panic sales of South African stocks. In 1960 there was a net outflow of £97,000,000 of private capital, mostly foreign-owned, from South Africa (Table XIX). As the internal buying capacity to compensate for heavy sales on foreign stock exchanges is limited, prices of South African stocks are very sensitive to political events. After the manifestations and police shooting of

March-April, 1960, for example, the value of South African shares declined by nearly £600,000,000 between February and April, 1960, some stocks going down by as much as 50 per cent. Foreign reserves were also adversely affected, and went down from £157,000,000 to £85,000,000 by December, 1960.^[23] Since then, the repressive measures introduced by the government and the relative absence of major outbreaks of violence have again convinced overseas investors that South Africa is a good risk, and the stock market has recovered, but any new wave of revolt would have an immediate economic effect. Political instability in the rest of the continent further heightens South Africa's vulnerability in this respect.

Of another nature are the economic repercussions of foreign indignation at apartheid. A number of countries have imposed economic sanctions against South Africa or have threatened to do so. While these sanctions have so far had little noticeable effect on the economy, because none of the countries involved has been a major trade partner of South Africa, they are likely to increase in gravity. A more detailed discussion of this point will be reserved for Chapter Ten.

There is, however, another side to the importance of foreign investments. The Western countries, and most particularly the United Kingdom, have been reluctant to adopt economic sanctions against South Africa at the United Nations, at least in part because of their sizeable trade with, and investments in, the Republic. It is certainly no accident that the countries that have the most important financial and trade interests in South Africa have also been the most restrained in their condemnation of apartheid.^[24] Possibly, the restraining aspects of foreign trade and investments overbalance their disruptive effects through flight of capital in periods of crisis.

We are left now with the task of analysing the third class of dysfunctional factors involving the economy, namely the tensions

arising from the particular relationship between economic and political power. In a nutshell, we find, once again, the basic triangle of forces contending for supremacy in South Africa: the Afrikaners, who detain the monopoly of political power; the English, who dominate the economic scene; and the African masses, who threaten to overthrow the existing system.

The dichotomy between the holders of political and economic power is a recent development arising from the Nationalist election victory of 1948. Under most previous governments, the dominant note has been one of reconciliation between the English and the Afrikaners, and of close co-operation between the state and large-scale finance and industry. To be sure, the 1924 Nationalist-Labour government under Hertzog led to a temporary estrangement between big business and the state, and was a prelude to the present situation; but the Hertzog-Smuts coalition of 1933 re-established the general community of interests between business and political elites.

The present clash between business and government does not result so much from ideological disagreements between the Nationalist Party and the official opposition, as appears on the surface from a reading of the daily press. This conflict is rather the incidental consequence of class distribution between the Afrikaners and the English. Economic issues occupy a distinctly secondary position on the platforms of all the major White political parties, except insofar as the United Party attacks apartheid as detrimental to business, economically unsound, and impractical. Party affiliation is determined almost entirely by ethnic membership, but the latter overlaps in considerable degree with class distinctions: the majority of the White farmers and manual workers are Afrikaners, while the bulk of big business and finance is English-controlled. The Labour Party's attempt to organize White opinion along class rather than linguistic lines has failed, partly because the racialism and the privileged position of the White working class prevented the Party from taking a leftist position. The Labour Party thus became a White trade-union

lobby to protect European workers against non-White competition. This anomalous position of the Labour Party made its 1924 coalition with the old Nationalist Party a logical development. Even the small Communist Party had an all-White membership in the early 1920's; during the 1922 Rand strike, it favoured the European workers as the "vanguard of the proletariat" whose slogan was: "Workers of the world fight and unite for a White South Africa."^[25]

The Nationalist Party is certainly not anti-business per se. Indeed, some of its prominent members occupy important business positions, and the government makes every effort to promote Afrikaner economic interests. At the same time, there is a strong undercurrent of anti-capitalism in Afrikaner Nationalist ideology. To view that undercurrent as a sign of economic radicalism, however, would be a complete distortion of facts. Big business and finance have been historically linked with the English and the Uitlanders in South Africa. Consequently, Afrikaner anti-capitalism is a secondary derivative of anti-English attitudes, and, even more generally, of the romantic idealization of rural life and distrust for corrupting cosmopolitanism which are still part of the Afrikaner ethos. By the same token, the opposition United and Progressive parties are not anti-labour organizations. They are English parties drawing their membership and support from the English working class, as well as from the middle and upper class. This is true in spite of the fact that these two parties, along with the English daily press which propagandizes their platforms, are financed and controlled by the English business elite.

However, although the paramount salience of racial issues has largely driven class and economic issues within the White group out of the political arena, the power conflict between the two White elites, namely the Nationalist politicians and the English capitalists, is nonetheless quite real. Two views on the

relationship between these two groups must be rejected at the outset, one as too naive, and the other as too simple. The naive view consists in accepting verbal statements and press propaganda at face value, and in assuming from them that the two groups are irrevocably opposed to one another, and engaged in a bitter fight for supremacy. The simplistic, Marxist view, on the other hand, sees the two groups as disagreeing overtly while quietly co-operating behind the scenes. The true relationship between the two elites must be analysed in terms of co-operation-in-conflict. To understand this complex and delicately balanced relationship, we must once more introduce the third side of the triangle, namely the Africans.

The English business elite is bitterly opposed to the Nationalist government, not only at the overt level, but also in a deep emotional way. It shares for the most part a conviction in the superiority of English over Afrikaner culture, and typically looks on the latter with disdain. The "Nats" are considered as uncouth political parvenus .^[26] The English business class perceives the Nationalist government as threatening in several ways. In the strictly political sense, big businessmen notice with alarm the gradual erosion of the civil liberties and privileges which they have so far enjoyed as members of the dominant White group. Culturally, they fear the eclipse of the English language and way of life, and witness with dislike the gradual Afrikanerization of the country. Economically, they view government policies as interfering with free enterprise, and with almost every rational principle of industrial development, as well as endangering export markets through increasing isolationism and unpopularity abroad. Finally, they attack Nationalist racial policies for a variety of reasons that we must examine more closely.

Most English businessmen do not oppose apartheid because

they are liberals. While a minority of them support the cautious programme of gradual change advocated by the Progressive Party, the majority still adhere to the racialist, segregationist platform of the United Party. Some have even recently begun to attack the Nationalists on the right, by accusing Verwoerd of wanting to create hostile "Native" states in the midst of "White" South Africa. The English elite and the English press, which it controls, attack apartheid as impractical, costly, harmful to their own economic interests, and politically dangerous. Ethical objections to apartheid, if mentioned at all, appear as an afterthought thrown in for good measure.

The English capitalist and managerial class would probably be willing to pay a certain economic cost for apartheid if it were convinced that Nationalist racial policies could maintain or at least prolong the status quo . But, for the most part, that class perceives that tensions are mounting, and is convinced that the inflexible repressiveness of the Nationalist regime constantly aggravates the situation, and is likely to precipitate a revolutionary upheaval. At the same time, the English elite, through its own conservatism and racism, fails to comprehend that mounting conflicts have resulted, at least as much, from external developments in the rest of Africa, and from the internal dynamics of South African society, as from aggravating Nationalist policies. It therefore believes, for the most part, that the minor palliatives and the somewhat more flexible and empirical methods of White domination advocated by the United Party would be sufficient to alleviate tension and perpetuate the economic status quo . A less conservative segment of the English managerial and business group, whose most prominent spokesman is Harry Oppenheimer, supports the Progressive Party.

The Nationalists, on the other hand, are hostile to English capitalism as epitomizing to them the force which, in conjunction with aggressive British imperialism, has oppressed and frustrated Afrikanerdom throughout South African history. While only pathological English-haters like Albert Hertzog openly express

virulent anti-English sentiments in public, such feelings occupy a prominent place in the thinking of leading Afrikaner Nationalists, most of whom belong to the militant Broederbond . At the more overt level, the business-controlled English press is the main target of Nationalist innuendo in speeches and in Afrikaans newspapers. The English press is constantly castigated for "unfairly" attacking the government and subverting the non-Whites. The Nationalists also view the United Party approach to race as leading to gradual integration, and selling the "White man's heritage" for the sake of the selfish short-range interests of the English business class.

These, then, are the main areas and sources of conflict between the economic and political power groups. While this conflict is real and not simply verbal, the presence of the third force, the Africans, also makes for a wide area of agreement and co-operation between the two conservative elites, both of which have a vested interest in the status quo . The two dominant White elites have thus developed over the years an uneasy modus vivendi based on compromise, behind-the-scene negotiations, and tacit agreement on basic aims.

English capital is undoubtedly in a weaker bargaining position than the government in this process of co-operation-in-conflict. The fundamental, tacit rule of the game between Nationalist and English leaders is that, given agreement on the issue of White domination, the English opposition (both in its political and business form) will not resort to any "dangerous" action (such as in industrial shutdown), and will keep exclusively to ineffective parliamentary action, negotiation, and restrained verbal attacks in the press. In return for English "self-restraint," i.e., self-condemnation to political impotence, the government tacitly promises to interfere with business as little as is consistent with the gradual implementation of apartheid, and not to use the wide dictatorial powers at its disposal to muzzle the English press and ban the United Party.

The English leaders, both politicians and businessmen, have little alternative but to "play the game," unfavourable as the rules are. Politically, an "opening to the left" entails the prospect of losing the conservative English vote, as shown by the failure of the dissident Progressive Party to win more than one seat in the 1961 parliamentary elections. Moreover, any deviation from opposition methods that the government considers "fair" would bring immediate retaliatory action under the existing arbitrary legislation. Finally, such economic protest action as an industrial shutdown has no likelihood of being used, because the English industrialists fear that it could trigger off a revolution, and that the only realistic alternative to White Afrikaner Nationalism is Black African Nationalism. Conversely, the government knows that, faced with the threat of African Nationalism, the English opposition will support the existing system.

In other words, the existence of militant and growing African Nationalism not only condemns English economic interests to political impotence, but even insures the government of active English support in periods of crisis. During the 1960 State of Emergency, for example, the United Party supported most repressive measures of the government, and it has fairly consistently continued to do so since that time; when the Congress Alliance called for a three-day "stay-at-home" strike in protest against apartheid in May 1961, almost all industrial concerns adopted a "business-as-usual" policy, and many of them threatened would-be strikers with dismissal. This happened in spite of the fact that the demonstration was timed to coincide with the official proclamation of South Africa as a Republic outside the Commonwealth, a move which the overwhelming majority of the English electorate bitterly opposed. A few of the more "progressive" English industrialists have established informal contact with leaders of both the Pan-African Congress and the African National Congress, and would probably show enough flexibility to throw their weight quickly on the side of any

future, non-leftist, African government. However, it is highly improbable that such a shift will occur before a successful African revolution.

Let us analyse now the role of African Nationalism in its relation to the system of production. As a result of political oppression and economic exploitation, practically all Africans share a common interest in drastic social change. A few marginal groups such as African policemen and chiefs do, of course, have a vested interest in apartheid, but their role is negligible. In Marxist terms, the African group is characterized by the almost total absence of a bourgeoisie, even of a petty bourgeoisie, and consists almost entirely of a large peasantry, a large urban proletariat, a small white-collar class, and an even smaller intelligentsia. None of these four classes has much to lose in the status quo, and all four are alienated from both the state and the system of production. The nearest thing to a "bourgeois" outlook among Africans is found in the white-collar class of petty clerks, civil servants and the like, who have some job security and live above the starvation level. The urban proletariat stands to gain political power, and hopes to improve its economic position. The fact that revolution is not likely to result in rapidly improving standards for the African masses is irrelevant here. Indeed, the expectation rather than the prospect of such an improvement creates revolutionary attitudes.

The intelligentsia probably stands to gain most through change. Its skills and its dominant role in the liberatory movements destine it to occupy command positions in any future Black government. Before the emergence of mass political consciousness, and as long as the educated African elite was offered any hope of assimilation to the dominant group, the intelligentsia remained relatively conservative, and saw the future in terms of compromise, reforms, and gradual concessions. This was true of the African National Congress and the All-African Convention until the post World War Two years, when the Youth League of the ANC was founded, and the militant

1949 ANC Programme of Action was proclaimed. The 1955 Freedom Charter represents a further step towards increasingly militant demands. Now, with a mass following and no prospects of reform, the intelligentsia is necessarily turning to radicalism, either in the Black racialist or in the leftist direction.

Even the African peasantry, usually a conservative group, has little to lose by change. Roughly half of the peasants live as quasi-serfs on White farms, while the other half vegetate on insufficient Reserve land, which they merely occupy, but do not own in freehold. While, in the more isolated areas, the peasantry is still very traditional in such things as cultivation methods, and resists technological innovations, most African farmers would probably support land redistribution and a change from "communal" to individual land tenure.

A word must be said about the Coloureds and the Indians. Neither group is likely to play a leading role in future political development, not only because of demographic and historical factors already mentioned, but also because each group contains a sizeable and influential bourgeoisie (the Indian business class and the Coloured petty bourgeoisie) with some vested interest in the economic status quo . Both groups are probably going to be pushed increasingly on the African side, because of White rejection and a desire to propitiate the growing Black Nationalism; at the same time, they are likely to remain in the sidelines of the African movements, except, perhaps, at the leadership level.

To review briefly the complex interlocking of economic and political forces in South Africa, and the resulting dysfunctions for the society as a whole, we identified three broad sources of tension. The first source is inherent in the internal dynamics of an economy in transition from underdevelopment to industrialization. Special conditions make that transition particularly traumatic in Africa, and even more so in South Africa. Apart from the strains intrinsic in economic development, a second class of aggravating factors is related to the peculiarly South African

complex of race. Both government colour policies and private discrimination introduce into the system of production elements of tension and malfunction, which are extraneous to economic processes. Finally, the particular distribution of economic and political power along ethnic lines led us back to the basic three-cornered struggle which we had already encountered when we dealt with South Africa from the political angle.

Before concluding this chapter, let us try to reach a higher level of synthesis in relating the South African economy to the rest of the society. The South African process of industrialization, looked at from a strictly economic point of view, offers nothing startling to the analyst. A straightforward description of economic changes does not reveal anything basic that most other countries in a comparable stage of development have not experienced, except for the very special role of gold mining. A classical theoretical model of dynamic equilibrium would serve adequately to describe the adjustments and transformations that have taken place within the system of production. As in other industrializing countries, changes in the mode of production have set in motion a complex set of trends in other parts of the social system: urbanization, spacial or horizontal mobility, a rise in material and educational standards, secularization, the breakdown of traditional peasant cultures, a tendency towards greater cultural homogeneity, the shift from extended to nuclear family structures, the politization and "proletarianization" of the urban masses, social mobility on the basis of achievement, and the decay of rigidly ascriptive criteria of stratification.

We have hardly touched on these trends in South Africa because their detailed description would have offered nothing new. In its economic dynamics of change, South African society has behaved very typically, in a way which a conventional equilibrum model would satisfactorily approximate. The great empirical contribution of our case study comes in, however, where South Africa has deviated from the "expected" pattern. Far from adjusting to the trends set in motion by economic changes, the

political system has reacted in a maladjusting direction. South Africa thus presents the spectacle of an equilibrium system that has "run amok," and where the polity, by introducing reactionary change, attempts to reverse the social, political, and cultural tendencies brought about by industrialization.

The trend towards social mobility and the breakdown of traditional status barriers was countered by racial legislation to transform the colour groups into rigid, ascriptive castes. The tendency towards Westernization and the decay of African cultures was met with counteracculturative measures to revive traditional institutions. Rigid segregation in education attempts, among other things, to hinder the acquisition by non-Whites of universalistic values, including "dangerous" notions of freedom and equality. Far from extending the franchise and other civic rights, the state gradually deprived the non-Whites of the few rights they possessed in the nineteenth century. Examples of political reaction could be multiplied to the point of boredom. The result of such policies has, of course, been a cumulative maladjustment between a modern, expanding economic system on the one hand, and a political dinosaur coupled with a racial caste system inherited from an agrarian society on the other hand. How long this basic vicious circle of ever deepening tension can subsist is an open question. That South Africa has survived so long in such an acute state of disequilibrium is indeed highly problematical for sociological theory.

To close this chapter we must answer an obvious question that seems to invalidate our analysis. If the South African economy is so ridden with conflict and malfunction, why does it, far from collapsing, even continue to expand? One may, of course, point to the fact that, during the late-fifties, the rate of expansion has slowed down, but that phenomenon is typical of all economies once they have reached a certain degree of industrial maturity. Industrial expansion from a low-production base line is necessarily more rapid than when production has reached a high level. One may also cogently argue that the rate

of expansion would have been much more rapid of it had not been for the "irrational" factors introduced by the government, but this ex post facto statement is unprovable, and, hence, can at best reach the level of plausibility without answering the question. The latter must be faced squarely.

Geographical and geological factors place South Africa in a privileged position. Among these are the presence of two of the best natural harbours (Durban and Cape Town) in Africa, a mild Mediterranean climate in the southern hemisphere permitting the cultivation of fruits for out-of-season export in the European market, and the availability of minerals, mostly gold, diamonds, and coal. Among the minerals, gold has played the most important role, as we already saw. The whole industrial complex of the Witwatersrand developed around gold mining, and indirectly Durban greatly benefited from Rand industry, as it constitutes the major sea outlet for Johannesburg. Furthermore, the special position of gold as a fixed-price commodity in constant demand has had a strong stabilizing influence on the South African economy. However, environmental factors do not provide a satisfactory answer to the problem of continuing prosperity. One can also plausibly point to unfavourable and limiting influences such as low rainfall in most of the country, lack of any internal waterways, low hydroelectric potential, and large semidesertic areas such as the Karoo.

The real crux of the problem must be sought within the social system. First, the abundance of cheap labour and high custom barriers have enabled South African industry to expand in spite of inefficiency, and of inability to compete in many fields with foreign products. The same applied earlier to agriculture and animal husbandry. Even though Boer methods of cultivation were highly wasteful, there was abundant land into which to expand after the aborigines had been pushed back. In other words, the supply of human and natural resources has been plentiful enough to allow for both expansion and inefficiency, and has not yet put a premium on the more intensive

exploitation methods used in more advanced and densely populated industrial countries.

Secondly, the relatively high level of skills and training of the population, both White and non-White, has put South Africa at an advantage, compared with other African countries where technical skills are still scarce, and where technical competence still creates an important bottleneck in the process of industrial expansion. In fact, South Africa, through its occupational colour-bar, underutilizes the available skills of its non-White population.

Thirdly, the process of uneasy compromise and negotiation between the government and industrial leaders has generally had the effect of mitigating the economically deleterious aspects of apartheid policies. The government has been stopped, or at least slowed down, by budgetary considerations, in the implementation of some of its schemes. As to business firms, they have tried to delay or circumvent compliance with inhibitive government regulations (for example, by reclassifying and renaming job categories so as to enable cheaper non-White labour to occupy them). When forced to comply, they have obviously attempted to minimize cost and disruption. Whereas the moral considerations and the socially disruptive effects of apartheid have rarely if ever hindered its implementation, economic cost has undoubtedly played an important delaying and mitigating role. There is no question that a rigid application of apartheid (in the sense of macro-segregation) would quickly bring the entire economy to a standstill.

To accept the fact of industrial expansion as evidence invalidating our analysis is, however, erroneous. The fact that the economy has expanded does not mean that it is not inefficient, ridden with dysfunctions, and generative of mounting conflicts. The very process of expansion, as we saw, inherently contains many disruptive forces. The apparent contradiction just raised is thus easily resolved. We still face, however, a much more fundamental question already suggested by our analysis of social and political conflicts, namely: How can societies in a

state of acute disequilibrium continue to exist for long periods without showing any tendency towards adaptive change?^[27] While we must reserve the treatment of theoretical problems for the final chapter, we may at least anticipate an answer. Clearly, the functionalist model of society as characterized by a high degree of integration, normative consensus, and equilibrium must be regarded as one-sided, and revised to incorporate the concepts of conflict, malintegration, and disequilibrium. Although there are probably limits to the amount of tension and internal contradictions which a society can take without disintegrating, the South African case suggests that these limits are quite wide.