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Book Review: South Africas War Against Capitalism by Walter E. Williams

OCTOBER 01, 1990 by MATTHEW B. KIBBE

Praeger, One Madison Avenue, New York, NY 10010 • 1989 • 159 pages • $37.95 cloth

Many people are justifiably outraged by South Africa’s apartheid system. Others offer apologies. What often unites these two seemingly disparate views is the belief that apartheid is somehow the result of profit-seeking under free-market capitalism. Starting from this belief, one must either rationalize the existence of a government-imposed system of legalized racial discrimination or embrace some form of socialism. These extremist views are reinforced by the statements of South African leaders such as former President P. W. Botha, who proclaimed that South Africa “is a symbol of . . . free enterprise,” and black anti-apartheid activist Bishop Desmond Tutu, who declared that he is fundamentally “opposed to capitalism.”

This book cuts through the emotionally charged rhetoric surrounding racism to get to the root of the apartheid system. Professor Williams shows that the problem in South Africa is not the free-market process, it is the existence and dominance of centralized government power. As he puts it, “. . . South Africa’s apartheid is not the corollary of free-market or capitalist forces. Apartheid is the result of anticapitalistic or socialistic efforts to subvert the operation of market (capitalistic) forces.”

To prove this thesis, Williams develops a broad, interdisciplinary study of South Africa’s apartheid system, weaving theoretical economic analysis into a rich historical, legal, and institutional cloth. This interdisciplinary approach makes Williams’ findings all the more persuasive.

Still, as one might expect from a Walter Williams book, this volume is driven by the logic of markets and prices. “Under market allocation of resources,” he observes, “price is the major determinant to resource usage—which is not to say that racial discrimination is absent. It is recognized that market allocation tends to exact a penalty from those who engage in racial discrimination. As such, the free market is no respecter of race, eth nicity, religion, sex, or nationality.”

Unfortunately, it has been special-interest poli-tics-not the market—that has held sway in South African racial affairs for the better part of this century. The policy of apartheid, a term made popular by South African Prime Minister Daniel Francois Malan in 1948, originated in a myriad of government-imposed laws designed to keep nonwhites from participating and competing in the market process. As early as 1911, under the coercive influence of white labor unions, the South African government passed the first in a series of restrictive labor laws which became known as the “color bar.” The Mines and Works Act of 1911, under the guise of safety, required “certificates of competence” for many types of work. Such certificates were largely unavailable to nonwhite natives.

The white labor unions and other white supremacists lobbied for other regulations which, in effect, prohibited blacks from being hired. These groups demanded that the hiring of blacks and other nonwhites be subject to the same compulsory employer compensation and minimum wage requirements granted to white union members. The intent of such legislation, Williams contends, is obvious. Such labor laws took away the only bar-gaming chip available to the blacks and other non-whites—their willingness to work for a lower wage. Many whites recognized this. In 1925, for example, the report of the Mining Regulations Commission proposed a mandatory system of minimum wages per job “in order to rescue the European miner from the economic fetters which at present render him the easy victim of advancing native competition.”

Contrary to the view accepted by many on the political left, apartheid is not the result of white businessmen attempting to maximize profits by enslaving cheap black labor. It is instead a product of political privilege. Says Williams:


The mere existence of South Africa’s extensive racial regulatory laws is evidence enough that racial privilege is difficult through free market forces. Consider South Africa’s job reservation laws, which mandate that certain jobs be performed by whites only . . . . The presence of job reservation laws suggests that at least some employers would hire blacks in the “white jobs.” The fact that they would hire blacks to do white jobs neither requires nor suggests that these employers be necessarily any less white supremacist than anyone else. It does suggest that those employers who would hire blacks considered such a course of action to be an attractive alternative because blacks were willing to work for lower wages—“uncivilized wages”—than white workers. The business pursuit of profits—which caused employers to be less ardent supporters of the white supremacist doc-trine-has always been the enemy of white privilege. This is why South African white workers resorted to government.

“The whole ugly history of apartheid has been an attack on free markets and the rights of individuals, and a glorification of centralized government power,” Williams concludes. Only when South Africa’s people—black, white, or colored—“de-dare war against centralized government power” will there be genuine progress toward freedom. Walter Williams’ new book provides powerful intellectual ammunition for that war.

Matthew B. Kibbe is Director of Federal Budget Policy at the United States Chamber of Commerce, and a doc toral student in economics at George Mason University’s Center for the Study of Market Processes. Nothing written here is intended necessarily to reflect the views of the United States Chamber of Commerce.

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October 1990

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