To say that South Africa is a capitalist society is popular among journalists, politicians, and trade unionists. If capitalism is understood to mean a system of free and voluntary engagement without third-party interference, the notion that South Africa is capitalist is false. This false belief has been used to justify far more government intervention in the economy than is necessary, and has led to stagnated growth and destitution. The truth is that South Africa is a social democracy fast approaching socialism. It is more important today than ever before for us to apply the brakes to expanding government and adopt a free market.
Capitalism is a term that was given its meaning by those who oppose it – chiefly Marxists. A far better way to conceive of capitalism is to use the more descriptive terms “free market”, “free enterprise”, or simply “voluntarism”.
In its essence, a free market society is one where individuals and communities are free to engage with one another without interference from government or other aggressive third parties. The role of government, if any, is to ensure that the aforementioned engagement remains voluntary, and that voluntary agreements are adhered to. As Marxists correctly point out (but with a lot of flawed ideological baggage accompanying their conception), as a matter of course, this voluntary society would be characterised by private ownership of property – by ordinary people, companies, and workers – rather than ownership by some small cabal within the political class using violence to accumulate wealth. The latter is what the current government and its allies to the left are proposing with their plan to implement expropriation without compensation.
“Apartheid capitalism” is a term bandied about by the trade union movement. Little thought goes into the use of this term. If the definition offered above is accepted, it should be clear that Apartheid could never have qualified as a free market. Apartheid, as an ideology of social engineering, was only implementable because of socialised ownership of land in the hands of the political class. The homelands were accumulatively expropriated from their private owners and converted into various forms of ‘public’ property, such as trusts or ownership by homeland governments. Apartheid townships on the fringes of “white” cities were not privately owned by the inhabitants, but were and are today still owned by municipal governments.
In the late 1980s, and especially after the first democratic election in 1994, South Africa did embrace a freer market. This continued up to the year 2000, when South Africa scored its highest ever economic freedom ranking in the Economic Freedom of the World index, published by the Canada-based Fraser Institute. Prosperity was within grasp, yet evading us because of draconian labour legislation that adopted Apartheid logic almost verbatim.
After 2000, and especially during the Zuma presidency, South Africa tumbled down the rankings as the size of the public sector grew. More than 800,000 new positions were created, rivalling and surpassing that of the private sector. This channelled money from the productive sector into the unproductive sector. State debt and spending also ballooned during this time, to little effect. South Africa is one of the world’s biggest spenders on public education, yet has one of, if not the world’s worst public education system.
Today, South Africa hurtles toward adopting a State-centric property model, with the State being the “custodian” of all land. It is already the custodian of all minerals. Freedom of expression stands to be eviscerated with the Films and Publications Amendment Act and the Hate Speech Bill. Personal liberty is being eroded by the Western Cape alcohol policy and the national Liquor Amendment Bill, the latter of which raises the legal drinking age from 18 to 21, and both of which make operating an honest business very difficult for liquor traders.
In no reasonable mind can the state of affairs which currently exists in South Africa be considered a free market. We are unable to transact or communicate without some kind of involvement by government. Cars, homes, food, or entertainment cannot be bought or sold without the dead weight of government pressing down on our shoulders, especially on those of the poor. Any higher or new taxes, or regulations, raise compliance costs which are effortlessly shifted to the consumer. And these costs consume a greater proportion of a poor person’s limited wealth.
South Africa is not capitalist, but it certainly needs to be if we wish to escape the quagmire of stagnated growth and decreased happiness among the population. Whether critics of free markets agree with having an open, voluntary and peaceful marketplace or not is irrelevant to the question of whether South Africa has a free market. Such a state of affairs does not currently exist in this country, so, if we want a better society, let’s try freedom.
Martin van Staden is Legal Researcher at the Free Market Foundation and is pursuing a Master of Laws degree at the University of Pretoria