South Africa: The Solution - published by Amagi Publications in 1986

Extract from Chapter 4: White capitalism

That government is best which governs the least because its people discipline themselves.    Thomas Jefferson

South Africa is a country of immense, wasted potential. It has the richest endowment of mineral resources per capita in the world; it is extremely well-located geographically with natural harbours, fertile agricultural land, low population density and easy access to western markets, capital and technology.

This country started industrialising in the late nineteenth century, at the same time as Japan. Japan is an economic miracle and South Africa is one of the less developed countries of the world. Why?

Economists posit many different and contradictory preconditions for prosperity: a country needs to be small; it should be big; it needs a homogeneous population; it must have natural resources; it needs to be near western markets - and so on and so on. But none of these conditions correlate with what is actually happening around the world.

Most countries that are well-endowed with natural resources are economic failures. Successful countries, on the other hand, are often conspicuously devoid of natural endowment; many are land-locked, small and mountainous, some have no mineral resources, and they are often heterogeneous. Consider, for example, Switzerland, Singapore, Hong Kong, Britain during the Industrial Revolution, Lichtenstein, Luxembourg, Taiwan, Sri Lanka, South Korea, Japan and Iceland. All of these are economic success stories, while richly endowed countries such as Angola, Zaire, Zambia, Mexico, Nigeria, the USSR, North Korea, China and India are dismal performers.

The reason for this apparent anomaly is strikingly simple. Countries with free or relatively free markets do well, countries with unfree or controlled economies do badly. Hong Kong, originally little more than a rock in the sea, even has to import water, but it has a free economy. Mexico has vast oil reserves, but the oil industry is nationalised and the country is impoverished.

South Africa should be out-performing Japan. In this chapter, we will attempt to show that the reason we are lagging so far behind is that our economy has been throttled by policies which would have prevented any country in the world from being a great economic success story; and that these policies have not only prevented blacks, Indians and coloureds from realising their potential, but have also shackled whites.

Are white South Africans free?

It is generally agreed by South Africans of all races, as well as the international community – critics and sympathisers alike – that, in this country, whites are free and blacks are not. The assumption is that if one simply extends whatever whites have to blacks, blacks will be free. This is not true.

Certainly blacks enjoy far, far less freedom than whites and, equally certainly, they would be very much better off than they are now if they had the same rights as whites. But the economic activity of whites in South Africa is extremely heavily regulated and controlled, and if all racially discriminatory legislation were repealed tomorrow, the people of this country would still be far from free, and South Africa's problems would still be a long way from a satisfactory solution.

Economic factors - the root cause

Economic factors have a more powerful effect on the course of events than any other consideration. Almost everything else – politics, law, education, unemployment, poverty, unrest and so on – tends to be a consequence of economic processes. The real issues behind virtually every piece of legislation are economic: the motives are economic, the means are economic and the consequences are economic.

When a chain store gives evidence to the government in favour shop-hour legislation; when a manufacturer is in favour of minimum standards; when a trade union is for a certain labour policy; when a bank supports a particular monetary policy or an industrialist favours certain tariffs – the measures which they propose always and inevitably coincide precisely with their self-interest.

But none of those who call for legislation will ever admit that they do so in their own self-interest. Not one will say, I believe you should introduce the following law because it is good for my company, or my business, or the members of my union, or because it gives me a competitive advantage over others in my field. Instead, they conceal their real motives under a pretence of concern for the 'public interest', or the 'national interest', or the 'common good'.

Cabinet Ministers often observe, legitimately, that it is not the government that wants a particular intervention but the private sector. ‘We were asked by the estate agents to pass the Estate Agents Act,’ they say, ‘so don't blame us. The private sector wanted these laws.’

Behind every single intervention there is a vested interest which benefits from that intervention at the expense of competitors and the general public.

Authors: Frances Kendall and Leon Louw.This article may be republished without prior consent but with acknowledgement to the authors. The views expressed in the article are the authors' and are not necessarily shared by the members of the Foundation.

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