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- Herausgeber: Tracey McDonald Publishers
- Kategorie: Fachliteratur
- Sprache: Englisch
We must look beyond the now, the current economy on our doorstep, and … reach out to a humanity that lies dormant in all of us. While the depth and sophistication of South Africa's financial and capital markets are lauded by indices the world over, South Africa is also considered to be the most unequal society in the world. The Economy On Your Doorstep probes the reasons for this tragic paradox of South African life and tries to go through and beyond the graphs, margin calls, trading updates, indices and earnings reports to explain how economic 'actions' frame the lives of South Africans in a transitional society faced with the challenges of unemployment, poverty and inequality. The economy is and always has been primarily about people. How they live, what they produce, under what conditions and what social, political and environmental factors influence decisions of consumption, investment and distribution, and how they act under conditions of uncertainty, scarcity, need and crisis. After all, economies are about people coming together to produce, exchange, distribute and consume goods and services that emerge from their communities and those of others. How and under what conditions can we ensure the expansion of our productive forces, while expanding access to the base of assets, services and support that allow for the social reproduction of our entire society and workforce? Ayabonga Cawe outlines some key areas that can and should define a policy agenda towards a 'people's economy' in South Africa and the long-term objectives of such a policy programme, and engages with the political economy of 21st century South Africa through an analysis of a few selected areas of the economy and the implications of this for policy action. This is what this book is about, an exposition of what we see around us and an explanation and discussion of possible ways beyond it. In this well-researched book, Ayabonga Cawe, a development economist, columnist and broadcaster, makes sense of the post-apartheid political economy through the lives of the many people who live and survive in it every day.
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The political economy that explains why the South African economy ‘misfires’ and what we can do about it
AYABONGA
CAWE
First published by Tracey McDonald Publishers, 2021
Suite No. 53, Private Bag X903, Bryanston, South Africa, 2021
www.traceymcdonaldpublishers.com
Copyright © Ayabonga Cawe, 2021
All rights reserved.
No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission from the publisher.
ISBN 978-1-77626-094-2
e-ISBN 978-1-77626-095-9
Text design and typesetting by Patricia Crain, Empressa
Cover design by Tomangopawpadilla
Back cover photograph by Bunolo Dlisani
Digital conversion by Wouter Reinders
This book is dedicated to the African workers
– ‘the handlers of machines, drillers of rock,
the mantshing’ilane of conveyor belts, merchants of life, restoration and death’.
We are the children of workers and are workers ourselves.
CONTENTS
Title pageFOREWORD
Ayabonga Cawe’s bold and well-written book is a timely intervention in the ongoing conversation on South Africa’s combined and uneven development. The book responds to a multilayered question: what can be done to the South African economy that keeps ‘misfiring’?
Cawe’s book probes what can be done to ensure that the continued racialised combined and uneven development, which manifests through the widening racial disparities in income and wealth, can be discontinued to create a just and equitable economy. Grounded in critical theory and empirical data, Cawe analyses income sources in rural (Eastern Cape) and urban areas. The rural Eastern Cape, for Cawe, can be described as a social transfers-dependent province. These contradictions are well represented in terms of unemployment figures in the province.
According to the latest 2020 official Quarterly Labour Force Survey, the Eastern Cape recorded an unemployment rate of 47.9%, compared with 22.5% in the Western Cape. These figures paint a picture of a country pulling in opposite directions.
Cawe forcefully shows that without targeted policy interventions that encourage market linkages, capital investment and infrastructure, provinces like Limpopo and the Eastern Cape will never experience a robust economy that brings employment to their doorstep, especially for the youth.
The book argues that the reproduction of uneven and combined development shows that post-apartheid policies have been ‘misfiring’ in creating markets that will bring people together to produce, exchange, distribute and consume goods and services that emerge from their economies.
Cawe provides rich analytical tools to explore the relationship between money, identity, and power relations within the highly financialised economic context of South Africa. It does so by adopting a perspective that puts the role of the household, the firm, and the governance framework squarely in the context of contemporary capitalism and its colonial historical development.
As an astute development economist, Cawe shows how the South African economy has evolved across space and time, tracing its roots from the early colonial and apartheid years to what is today known as the post-apartheid economy under the democratic dispensation. Here, Cawe further shows that combined and uneven development has continued unabated through neoliberal transformation.
This book marks an important shift in analysing the South African economic puzzle by demonstrating that the historical underpinnings of the production structures have over time remained a contested territory as institutions grapple with the idea of resolving a conflict of interest and promoting issues of common interest.
Cawe meticulously recounts how the colonial social order was installed and reproduced at the expense of the black population, and also reveals the agency of the black population in fighting and seeking to transform the colonial social order. The Congress Youth League of 1944, for instance, spearheaded a programme of action around ‘the economy of the reserves or homelands’ which informed the Defiance Campaign of the 1950s that later defined the mass character of the liberation movement. The thrust of this campaign was centred around the idea of establishing industries in the homelands to create jobs for people.
Original in its perspective and rooted in people’s experiences, this book is a direct product of extensive conversations with the people and a rigorous assessment of microeconomic fundamentals to contextualise the persistent structural breaks in the South African economy that fail to address the challenges of unemployment, poverty, and inequality.
The author must be commended for presenting and outlining a set of ideas in which he makes a case for a new approach in confronting the South African economy that keeps ‘misfiring’. Cawe’s ideas will not only change the way we interpret contemporary South African society and how it relates to the economy and the state but will also provoke a debate about the social costs of development or lack thereof in the country.
I congratulate Ayabonga Cawe for putting together this important book which represents a critical body of knowledge in the field of the South African political economy. It deserves to be widely read and I strongly recommend it to policy makers, activists, researchers and development professionals.
Dr David Masondo
Deputy Minister of Finance, Republic of South Africa
PREFACE
CONNECTING
THE
DOTS
The economy is, and has always been, primarily about ‘people’. How they live, what they produce, under what conditions and what social, political and environmental factors influence decisions of consumption, investment and distribution. My interests have always been in how the analytical tools of economics allow us to explain the intersections of money, identity and power. This book in many ways is about using these ‘tools’ to best explain the economic environment around all of us.
The economy and how it functions first puzzled me as a high school pupil. The school I attended did not offer it but, in the words of one of our teachers Noel Gilbert, it seemingly ‘explained everything’. So, when I made the choices of what to study, after considerable uncertainty economics became something worth considering. If only to answer some of the political and social questions that remained ‘question marks’ in the world around me.
I trained in economics and finance shortly after the financial crisis of 2007-8. When I arrived at Wits University in 2009 for my undergraduate training, the staircase at the New Commerce Building, leading to the economics school admin block, was adorned with the pictures of prominent economists the world over: from Ricardo, to Malthus to Friedman. Even Marx joined the bearded and bespectacled men, dressed in 19th century Victorian ‘proper’ in most of the images. I do not recall seeing Joan Robinson, Rosa Luxemburg or Alice Amsden in those images. There were, unsurprisingly in my recollection, no women in those images. Let alone African women. Each frame had text below the sepia image explaining what the said economist was famous for.
The face of a black man from the Caribbean, whose keen eyes broke through the strong frame of his glasses, Arthur Lewis broke the monotony of white men in the two sets of stairs with pictures of the main actors in the History of Economic Thought. I would later take a course in my third year of undergraduate studies that would unravel the role many of those faces played in the development of the body of ideas we now call ‘economics’. But ‘economics’ still had not been able to speak to me, or speak of things that concerned me beyond the theory we all imbibed. It was yet to answer and explain the ‘mundane’ and the ‘significant’ in our lives. It was yet to explain the significant material want that lived alongside so much abundance and waste. The smoke-filled skies that stretched beyond the expanse of the factory and the mill, where the escape of liquor, mirth and fun could lead you to your death at the hands of the okapi Mafika Gwala saw raised under Umnqadodo Bridge. What system-wide motivations made such a milieu, and its economic character so persistent, continuous and able to reproduce itself over multiple generations? This is what this book is about – an exposition of what we see all around us, and an explanation and a discussion of possible ways beyond it. I guess there is also an immediacy to these reflections, not just as a form of intellectual rumination on the economy, but rather a way to assist all of us to ask some questions about the world around us; and one hopes that the tools I employ in the book go some way in assisting the interested reader to understand the economy on ‘their doorstep’.
The explanatory power of that body of ideas has been at its sharpest and most incisive when it has been able to speak to and alongside other forms of knowledge, inquiry and study that inform and explain how humans behave. Economies are, after all, about people. How they act under conditions of uncertainty, scarcity, need and, more importantly, crisis. ‘Crisis’ is where the profession has also been called to leave behind its ‘data banks and dead ideas’, as Indian scholar activist, Arundhati Roy suggests, ‘(and) our dead rivers and smoky skies’. In crisis, we realise that cost-benefit or marginal analyses, technical analysis and the tomes and textbooks of old hold little explanatory appeal; when floods displace communities, viruses spread panic, bank crises foreclose homes and narrow interests ‘capture’ political space in ways that feed a rapacious culture of enrichment that lives uneasily alongside a sea of poverty.
Much of this book was written in the throes of another crisis – COVID-19. It is rather impressive that much was written at all among the endless Zoom and Teams calls, cabin fever and proposals written in panic that characterised much of how many of us have tried to respond to this crisis. Many of the contributions in the book pre-date COVID-19 and the devastation that this has wrought on the South African economy. What they indicate is that ‘crisis conditions’ in the South African economy are a persistent and enduring feature of socio-economic life.
These contributions indicate that the roots of the South African economic crisis pre-date and go beyond the spillovers of financial and epidemiological crisis. Rather than catalysing, these make more pronounced the structural features of the contemporary crisis. In ways that break bones, snuff out hope, spend pay packets and leave intergenerational traumas of living in an unequal society.
Economic ideas have to explain how, why and under what conditions these things happen. More importantly, they have to explain how, as people in the domain of ideas and political action, we can actually change these conditions which, far from being an outcome of divine action, are an outcome of human (in)action and the spaces created or closed by policy. This book tries to go through and beyond the graphs, margin calls, trading updates, indices and earnings reports to explain how economic ‘actions’ frame the lives of South Africans in a transitional society faced with the challenges of unemployment, poverty and inequality.
It is an outcome of extensive conversations with people. Reflections, as Paulo Freire would suggest, ‘with and alongside’ the people, drawn from radio conversations, research interviews, off the record reflections, newspaper columns, annual reports, statistical surveys, seminars, lectures and policy debates over the course of the last few years. There are a few considerations that serve as the ‘lens’ through which these reflections are undertaken in the following series of essays and narrative prose; the first is a concern with market and social structure – who lives where, produces what, that is sold by whom, to whom? Under what conditions and social relations? And why?
Part One is a series of four long form essays covering broad experiences and, at times, specific themes and episodes in the economic history, industrial development and financialisation of the South African economy. This, for more than any other reason, is about intentionally drawing out the contextual and enduring features of the South African economy, and their implications for policy action now and in the future. Just like the ‘dop system’ and its enduring legacy of alcohol abuse in many parts of South Africa, some economic ‘habits’ have been hard to break; so hard that we often forget that much of what we understand, for instance when it comes to migrant labour, has a basis in the ‘policy actions’ of the Cape Colony in the second half of the 19th century, which is where our discussion begins. Just as IB Tabata1 suggested that the start of the 20th century signalled ‘the end of resistance of the Blacks by military means’ and the opening of ‘new forms of struggle’, in many ways the policy imperatives of the Cape Colony towards the end of the 19th century signalled the embryonic stages of the path of ‘divorcing the (African) producers from the means of production’ and an early exposition of the nature the capitalist system would take on in South Africa.
The first chapter begins with a brief economic and political history that draws links between the 19th century settler economic interests in the Cape and the township political resistance of the 1980s, nearly 100 years later. I explore the role and use of ‘economic tactics’ of withdrawal (in particular consumer boycott) as something that runs in parallel to the imperatives of getting the natives to the plough. This analysis draws out the structural location of the communities rendered ‘surplus’ in the ‘reserves’ of colonial and apartheid South Africa. In sum, it outlines not only the experiences of legislated primitive accumulation in the 19th and 20th century Cape Province of South Africa, but the response of the oppressed subaltern classes, as captured in the economic tactics of ‘withdrawal’ pursued by the people of Mlungisi in 1985 and many communities much earlier. This analysis shows how the historical roots and continuities of economic contests for space, material and survival are, across space and time, determining features of the South African economic puzzle.
The second chapter considers the socio-economic structure of the Eastern Cape, one of the weakest performing provinces in South Africa on service coverage, social, economic and other welfare indicators. We consider the economic and industrial profile of the province, and drawing on firm level interviews, statistical and political economy analysis, I outline a few areas of policy intervention that can shift the investment, employment and output trajectory of the province. This chapter, recognising the heterogeneity of economic and industrial activity across the province, explores the uniqueness of key economic ‘Districts’ in the province – The Metros, rural areas (located in the former Transkei and Ciskei) and former ‘Border’ industrial decentralisation areas; and the contemporary economic possibilities of these areas. The chapter concludes with some key policy recommendations aimed at three missions – ‘securing the base, home and future’. All of these missions, as many a reader might ask, are unattainable without a clear plan on how we resource such a pursuit. With deep and sophisticated financial and capital markets, one might think it rather easy to finance such industrial policy.
The third chapter shows that such an assumption is not an easy one to make. It is a discussion of how the financialisation of the South African economy has allowed the distributional conflicts (between capital and labour) to be resolved in a manner that does not affect the ‘profit share’ of both financial and non-financial firms. Viewed in this way, finance and ‘credit markets’ in particular have been able not only to overcome ‘discontinuities in production’, as Hilferding argued, but, in the South Africa context, overcoming ‘discontinuities in consumption’ in a context of stagnant real wages and declining wage share. This, as the third chapter in Part One suggests, has had implications on further ‘financialising’ even the activities of traditionally non-financial firms, with implications for investment, output and employment.
Part Two is a selection of columns, focusing on economic policy, written for the Daily Maverick and Business Day over the last four years and covering a wide set of concerns – debt, the macroeconomy, the care economy, microeconomic policy, competition and telecommunications policy and market structure. These columns were written in response to rather specific developments and, as such, the context for each is explained at the start of each column. In many ways some pick up on the themes discussed in Part One, further echoing the implications of economic life under conditions of neoliberal economic restructuring and unequal market power relations.
Part Three of the book, drawing on the first two parts, outlines some key areas that can and should define a policy agenda towards a ‘people’s economy’ in South Africa, and the long-term objectives of such a policy programme.
In summary, the following pages are an engagement with the political economy of 21st century South Africa viewed through an analysis of a few selected areas of the economy, and the implications of this for policy action. While not lacking in analytical value, such an inquiry does not attempt to present facts of empirical nous that are an outcome of any macro-modelling, panel observations or deep inductive work over time; but rather the micro-observations and experiences that make sense of the economy around all of us.
This is what this book is about. The Economy on Your Doorstep.
Ayabonga Cawe
Johannesburg, January 2021
• | PART ONE
CONFRONTING
AND
OVERCOMING
THE
‘NATIVE RESERVE’
THREE ACRES AND A COW IN GLEN GREY DISTRICT
… The process therefore, that clears the way for the capitalist system can be none other than the process which takes away from the labourer the possession of his means of production; a process that transforms, on the other hand, the social means of subsistence and of production into capital, on the other, the immediate producers into wage-labourers. The so-called primitive accumulation, therefore, is nothing else than the historical process of divorcing the producer from the means of production … and the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire ...
– Karl Marx, ‘The Secret of Primitive Accumulation’, Chapter 26, Capital Volume 1, 1867
… Every black man cannot have three acres and a cow, or four morgen and a commonage right. We have to face the question, and it must be brought home to them that in the future nine-tenths of them will have to spend their lives in daily labour, in physical work, in manual labour. This must be brought home to them sooner or later … I would do away with locations on private farms, the defect of which is that we do not know where the natives are …
– Cecil John Rhodes, Speech on the Second Rereading of the Glen Grey Act, Cape House of Parliament, 30 July 1894
When Maggie Tyobeka left her grandfather’s funeral, it seemed like a normal Sunday afternoon as she made her way home. As she walked past Nonzwakazi Methodist Church in one of the main arterials of Mlungisi township built like many others, she noticed a South African Defence Force Casspir parked outside the yard of the church. She didn’t pay much attention to it. It wasn’t uncommon to see an army vehicle in the Mlungisi township in Queenstown (now Komani). This was 1985. Under the jackboot of the nationwide state of emergency, the Casspirs were outside the church observing a report-back meeting held by the Local Residents Association at the height of the consumer boycott that was under way.
Maggie lived quite close to the church, and within a few minutes’ walk found her way home. ‘I then met my granddaughter,’ she recounted to the Truth and Reconciliation Commission’s hearings in 1996, ‘and I wasn’t aware that there had been a shooting at the Methodist Church.’ From the inside of her home she could hear the loud sound of the moving Hippo. As she lifted up the toddler, the unexpected happened.
‘I felt a loud sound on the window,’ she told Advocate Ntsiki Sandi at the hearing, ‘the baby fell, and I also fell on the other side.’ Maggie and her granddaughter were speedily driven to a nearby hospital in two separate vehicles, she recalled, where she discovered what had happened to her. ‘I had three holes on my thigh,’ she said, ‘(and the doctors) had a blade, they would cut the wound, press very hard and the bullet would come out.’2 She was later taken home.
On her arrival home, she started bleeding beneath the light nightdress she had worn on her arrival. She found herself back in hospital. She had another bullet in her stomach. Unfortunately, this one could not be removed. She was operated on; and went into a deep sleep. She woke up to the image of two policemen (one black and the other white) standing alongside her bed. ‘The white policeman said in English that I should be handcuffed as I was lying there,’ she said. While she lay on her back, her leg was handcuffed to the steel frame of the hospital bed. Advocate Ntsiki Sandi asked the question that many of us reading her testimony would later ask – what had Maggie been accused of?
It is the same question Maggie had asked the black nurse who was instructed to handcuff her. The nurse responded, ‘They said you were seen throwing stones at a Hippo.’
• • •
Thirteen people were killed at the Nonzwakazi Church that afternoon; and much like what occurred in Marikana, many of the victims were charged with the shooting of their dead comrades. In instances where such deaths couldn’t be pinned on the unsuspecting, reality was ‘manufactured’ to give a rationale for the random and wanton shooting of unarmed and defenceless people. Maggie was handcuffed to her bed as a way to corroborate the story that she had been shot because, between holding her one-year-old granddaughter and settling in on her return from her grandfather’s funeral, she had ostensibly picked up a stone and thrown it at an armoured vehicle. That was why the young SADF soldiers had to shoot through the window and lodge bullets in the bodies of Maggie and her young granddaughter.
I grew up in Queenstown, and very few of us knew of the fate that had befallen Maggie Tyobeka and others. She just was not ‘important’ enough to live on the scrolls on the walls, to be saluted at a war commemoration or even to have a book published about her in the local library. Her proximity and locational distance to power meant that the decisions made around her and over her life could be made without her, even when they had the impact of lodging bullets in her body. I knew, rather, of figures like Cecil John Rhodes long before I knew of the injustice visited on Maggie Tyobeka and her granddaughter Cebisa.
• • •
Industrialist, politician and arch-imperialist, Cecil John Rhodes’ concern in the late 1800s was a similar ‘economic’ concern to that which drove the murderous frenzy in November 1985. The consumer boycott that led to the shootings at Nonzwakazi Church, and across the township of Mlungisi, were in response to the withdrawal by the local African community of their ‘buying power’ over the preceding four months. Just over nine decades earlier, Cecil John Rhodes’ early plans of ‘primitive’ accumulation would respond to the difficulty of getting the same community to engage in waged labour in the neighbouring commercial farms and in the mines further afield.
These acts, in both instances and beyond, are never short of narratives to give credible justification for an extractive economic system that responds with violence when confronted with resistance. Much of this resistance is based on contests over the resources required for the social reproduction of life. The stuff we all need to survive.
Social reproduction occurs in three interrelated processes. The first is the regeneration of workers and their livelihood; the second is the maintenance of those outside the labour market or rendered ‘surplus’ to it, children, the elderly and the unemployed; and lastly through ‘childbirth’ as the natural reproduction of the next generation of the workforce. American philosopher, Nancy Fraser3 draws out the link between social reproductive ‘work’ and its links to waged labour in the formal labour market:
… non-waged social-reproductive activity is necessary to the existence of waged work, the accumulation of surplus value and the functioning of capitalism as such. None of those things could exist in the absence of housework, child-rearing, schooling, affective care and a host of other activities which serve to produce new generations of workers and replenish existing ones, as well as to maintain social bonds and shared understandings. Social reproduction is an indispensable background condition for the possibility of economic production in a capitalist society …
What Fraser suggests here, is that there are a host of activities that serve to produce multiple generations of ‘workers’ and economic actors central to capitalist accumulation, without which economic production in a capitalist society would be impossible.
The residents of Mlungisi in 1985, as the demands that underpinned the consumer boycott later showed, undertook political action to lay claim to the schooling, care, sanitation and recreation crucial to any society and economy built on ‘social bonds and shared understandings’.
Viewed in this way, the social milieu that gave rise to the shooting that left bullets in Maggie’s stomach (and her life in a society that allowed that to happen) is central rather than ‘tangential’ to the pursuit of capitalism in South Africa. Moreover, South African capitalism, as scholars such as Harold Wolpe4 have shown in their work, has been brutal in disproportionately shifting the ‘costs’ of social reproduction (of birth, rearing, caring and death) to the ‘reserves’ and ‘homelands’ – to the ‘margins’. At many times the law has been the ‘transmission mechanism’ for such ‘cost-shifting’. The Bantu (Urban Areas) Act of 1952, promulgated a few years after the advent of apartheid in 1948, is well known for clearing the way for the forced removals that occurred in Sophiatown, District Six, Duncan Village, Cato Manor and, later, Mlungisi5 and many other areas.
What is less theorised, perhaps in the public discourse rather than in the academy, is the role of such legislation in shifting the costs of social reproduction to overcrowded settlements in the countryside, in the homeland reserves and townships, whilst confining the ‘benefits’ of the resultant labour power and the surplus extracted to the white minority and its needs to socially reproduce itself. This asymmetrical social cost-benefit paradigm underscored the economic basis of segregation and apartheid; and Cecil John Rhodes was one of its earliest and most fervent advocates in the political and economic life of the Cape in the late 19th century.
The Glen Grey Act and the resolution of the ‘native labour challenge’
Rhodes in 1894, introducing the Glen Grey Act (in reference to the Glen Grey Area – an area alongside Queenstown covering towns such as Lady Frere, Elliot and Indwe) before the Cape House of Parliament furthered the idea of controlling the lives of the ‘natives’ through a combination of taxation and coercion, and making this foundational to South African capitalism rather than coincidental:
… we must give some stimulus to these people to get them to go on working … these young natives live in the native areas and locations with their fathers and mothers, and never do one stroke of work. But if a labour tax of 10s were imposed, they would have to work …6
What Rhodes suggested here as a solution to the ‘sloth and laziness’ of the young natives in the Glen Grey area is also the solution he presented in the same speech to the ‘labour problem of the colony’. Furthermore, another related concern emerged, pre-dating the later introduction of formalised segregation and ‘separate development’ under apartheid: the political impulse of maintaining the ‘supreme race’ thesis in the face of the incontrovertible fact of white poverty:
Are you going to sanction the idea that, with all the difficulties of the poor whites before us, that these people should be mixed up with white men, and white children grow up in the middle of the native locations? In the interest of the white people themselves we must never let this happen.7
Viewed in this way, resolving the labour, poor white and accumulation challenges of early South African capitalism were interlinked, and Rhodes drew heavily from the classical theories of political economy and the linear path from agriculture to secondary industry that characterised the development path of many Western nations.
In the South African (and initially Cape Colony and later Southern Africa) context; he saw the role of what Arthur Lewis would later call the ‘unlimited supply of labour’ as central to taking Southern Africa away from being a contested agricultural backwater towards an industrial economy, as ‘there has always been a period’, as Rhodes told Cape parliamentarians, ‘when a country could not be supported by agriculture alone’.
Rhodes was suggesting, as he would later state in his speech, that he viewed the future of the Africans of the colony as ‘future labourers’ who would be sent to a labour bureau to ‘come and ask to be provided with masters’; as without work they would be liable to pay the ten-shilling tax. This one piece of legislation in the Cape changed not only the framework for the qualified African franchise in the Cape but laid the ‘economic’ basis and rationale among the white society for formalised segregation decades later. Apartheid would institutionalise much of the means proposed by Rhodes to integrate Africans into a system of wage-labour that, as IB Tabata from the Non-European Unity Movement suggested, ‘(was) the flywheel of the economic structure’ of South Africa’. Therefore the reflections of Rhodes in 1894 were the early ruminations on the kind of social and economic control of black life that would be required for the entrenchment of capitalism and its value system in South Africa.
Photo 1. Retrenched workers and other work-seekers queue outside the labour office in Roodepoort’s industrial area on 10 June 2020. Many of these workers had been retrenched during the COVID-19 wave, but moreover many were joining an ‘age-old’ tradition of, as Cecil John Rhodes suggested, ‘(of being) sent to a labour bureau to come and ask to be provided with masters’, albeit under very different conditions nearly one hundred years later. (Photo – Author)
Decades later, migrant labour and the creation of the ‘reserves’, where natives were to be settled ‘not to be mixed’ with whites, became a key feature of South African life. The basis of these ‘institutions’ in South African life, aside from being based on irrational notions of racial superiority, were also designed for and bound up with the economic imperatives of expanding industry after the discovery of diamonds and gold. Rhodes, more than anyone, would have been alive to the inevitable need for labour at low wages to spur on the accumulation path of the next few decades. In his address to the Cape House of Parliament he underscored this point, making reference to labour costs across the continent:
… in Nyasaland (now Malawi) where good coffee is produced, wages are 4s a month, including a food per diem … but the wage of the English agricultural labourer averages about 12s per week, and he lives certainly at a higher standard of civilization than our raw Kaffir; and yet the Kaffir is paid almost 50 per cent more than the Englishman.8
These comparisons from Rhodes (and one can assume others of his class at the time) would later inform the South African economic path, based on the ability not only to suppress wages but also through the creation of a social milieu with little alternative but to work for these wages. In economic terms, the task of Rhodes’ solution to the native problem lay in lowering the ‘reservation wages’ of Africans through social control that would ensure unparalleled accumulation and the entrenchment of white exclusivity in benefiting from the gains accumulated from that labour.
Controlling the African ‘reservation wage’
The theory in labour economics of ‘reservation wages’ refers to the lowest wage level at which a worker would be willing to accept a certain job. A job offer beneath that level would not be desirable for that worker and would be rejected. One key determinant of the level of a reservation wage is the alternative income or survival means available to the worker alongside the prospect of working on a particular job. If these are numerous, the reservation wage will have to be higher to incentivise these workers to take the jobs on offer. If the alternatives are limited, the reservation wages will be lower as the relative wage level needed to ‘incentivise’ workers to enter the labour market is lower than what would have been the case in a context of abundant alternatives.
The colonial and apartheid policy actions that followed from the 19th century – from poll taxes, to restrictions on trade union activity, to influx control and its ‘lodger’s permit’ – all sought to reduce that reservation wage to sub-subsistence levels through the combination of taxation, legislation and restrictions on mobility. The theoretical justification for this (among many) was what South African activist scholar and leader Govan Mbeki referred to as the ‘backward (bending) supply curve for African labour’. The theory of the ‘backward (bending) supply curve for African labour’ was a justification for slave-like wages. In neoclassical economics, this argument suggests that wages be brought as close to subsistence as possible, or else above a certain level a worker will substitute leisure for paid work, and thus higher wages lead to a decrease in labour supply as people ‘opt out’ of the labour market.
This theory explains the stripping of Africans of all the endowments to disincentivise such a proclivity for leisure. Rhodes suggested before the House of Parliament at the Cape that Africans in the reserves ‘simply loaf about in sloth and laziness’. This served as the theoretical, ideological and moral justification for the subsequent encroachment of territory and codified dispossession of land after the Union of 1910 into areas held by Africans. This programme was given legal and political credibility by Rhodes’ earlier insistence on notions of African ‘vagrancy’, ineptitude, laziness and reserving land in the interests of his key constituency in the Cape – white farmers.9
… Glen Grey is not suitable in many respects and it is mixed up with white farmers, and so we have had to reserve in Glen Grey those parts of the country which are in the occupation of white farmers.
Other considerations mentioned by Rhodes were the Indwe railway, which would have been a key commercial transport node in the Cape at the time, ferrying key agricultural outputs from the area such as wool; and in the interests of Rhodes – coal. The De Beers Consolidated Mines had an interest in the coalfields of Indwe.
The earliest examples of ‘state capture’
The primacy of the economic interests in the ‘political’ policy of key actors in the Cape is one of the earliest examples of the ‘capture’ of political institutions for narrow economic interests. The economic challenge at the time, was a ‘labour shortage driven by the abolition of the slave trade in the British Empire in 1807’10
