Sunday, December 8, 2013

Nelson Mandela and the Economics of Apartheid

Peter Klein writes:

Nelson Mandela, public face of the anti-Apartheid movement and South Africa’s first post-Apartheid president, has died. Much will be written about Mandela in the coming days, but little of it will deal directly with the Apartheid system, particularly its economic aspects. Apartheid is widely misunderstood as a system based purely on racial prejudice, while it was actually a more complex mix of economic controls (primarily, restrictions on capital ownership and movements of labor) and racial separatism — what Tom Hazlett calls “socialism with a racist face.” Apartheid’s political support came primarily from working-class (white) Afrikaners and their labor unions eager to suppress competition from unskilled black labor. As Hazlett notes: ”The conventional view is that apartheid was devised by affluent whites to suppress poor blacks. In fact, the system sprang from class warfare and was largely the creation of white workers struggling against both the black majority and white capitalists.”[...]

Unfortunately, the leaders of the anti-Apartheid movement, Mandela included, viewed Apartheid as a “capitalist” system, turning to Marxism-Leninism as the only viable economic (and political) alternative. When the African National Congress came to power in 1994, it dismantled Apartheid’s system of racial separation, opening up land ownership and labor-market opportunities for all South Africans, but continued to embrace the socialist economic principles that underlie the Apartheid model. As Murray Rothbard pointed out, economic freedom is a better path to racial reconciliation: “Free-market capitalism is a marvelous antidote for racism. In a free market, employers who refuse to hire productive black workers are hurting their own profits and the competitive position of their own company. It is only when the state steps in that the government can socialize the costs of racism and establish an apartheid system.”


  1. Klein is right. Less coercion encourages more production. More production equals more prosperity. More prosperity encourages less racism.

  2. The ANC dismantled the lower class whites' system of separatism, did it? But not the communistic* aspects? How very interesting. So, what exactly did the leaders of the ANC hope to achieve through "democracy" given that blacks comprised, and continue to comprise, a majority?

    Mr. Mandela and his allies were too clever by half.

    * Communism is a better word for the leftists' programs, even when we are talking about social democracy, so called. Their attitudes and policies are always antisocial, as even they are sometimes aware. So the word "socialism" is merely lipstick and rouge on a nasty, gluttonous pig. Leftwing usage of "liberal", too, is motivated by similar concerns about the radical illiberalism of leftwing politics. We could do a lot worse than to smudge the pig's makeup and to block further usage of such makeup.

  3. When Mandela was released he sought the advice of financial sector leaders in SA and the business leaders to seek a road map for financial stability and transition for the isolated SA economy. Many of them gladly outlined the path of ruin if Madiba followed the nationlisation agenda in the ANC Charter> Madiba agreed. He with de klerk put together an economic programme that effectively opened up the SA economy to POI. an international banking system, and an international education system. the fight against corruption and graft was something Madiba knew had to happen , but it was to go hand in hand with improving the workforce, expand the production base that would lift income levels and a massive programme of social housing.

  4. madiba embraced the open economic model of trade and banking, and investment into SA.
    His advisers were the establish leaders of the financial sectors who clearly told him about the likely ruin of SA if he followed the nationalisation programme of the ANC Charter. They showed him saw the many historical lessons as proof enough. Madiba agreed. the programme of DFI and increasing productivity base, and a world class education system continues.

  5. Free-market capitalism is a marvelous antidote for racism? Evidence for that? Gary North says we've never had a free market so good luck finding evidence to support that claim.

    Black workers raised under Apartheid can't be expected to compete with white workers. The black workers are denied skill training, work experience and education. A free market will simply reinforce the impact of past discrimination.

    1. Rothbard explained his reasoning in his next sentence: "In a free market, employers who refuse to hire productive black workers are hurting their own profits . . ." Richard Epstein treats this issue at length in his book, Forbidden Grounds: The Case Against Employment Discrimination Laws." The free market tends to break down long-held prejudices because arbitrarily limiting one's labor pool and customer base is the surest way to lose business to those who don't. And a free market, contrary to reinforcing the impact of past discrimination, is the surest way to unwind such impact.

      Regarding whether never having had a truly free market means we can never find empirical evidence to support these arguments, Epstein does a pretty good job of marshalling the empirical evidence we do have and Rothbard's body of work brings the full force of the Austrian deductive reasoning to these economic issues. There is no doubt that black workers have been disadvantaged by Apartheid and slavery, but the most telling point is that both of these were State-sponsored and enforced institutions. What better empirical evidence can exist for abolishing the evil State.

    2. All the praise heaped on the late Nelson Mandela is really not justified. The ANC is inflicting a perpetuation of the massively interventionist state of the Apartheid government on the nation, with substantially increased intervention. Labour laws are totally slanted towards labour at the demand of trade unions, the close partners of the ANC. The education system is in absolute shambles with only 3% of pupils achieving marks of 50% or better in mathematics. Average marks nationally are 14% for mathematics.

      We have only 3.5 million taxpayers but 16 million receive government handouts. Real unemployment is somewhere between 40 and 50%. Corruption in government saw some $3 billion being wasted this year. The ANC installed president's private home had some $20 million "improvements" done by the government, supposedly for security reasons. It is now subject to an investigation by the Public Protector.

      To claim that South Africa is a modern economy with a world class education system demonstrates a total lack of understanding reality. As a 75 year old South African citizen I have lived through all the lunacy and it did not get better. The millions of impoverished SA citizens can, for the past 20 years, thank Mandela's ANC for the economic mess hampering any possibility of improving their lot. This is what the West forced on the SA nation in the name of democracy.