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Book Review: South Africa’s War Against Capitalism

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Apartheid is ending in South Africa. The economic barriers and social restrictions that have stood in the way of greater black-African participation in South African society are being dismantled. The release of Nelson Mandela earlier this year symbolized this more than any other single event so far.

But what does the future hold in store for South Africa? The African National Congress wants a one-man, one-vote election to decide the fate of the country. But the ANC is not neutral concerning an economic agenda. ANC literature has equated apartheid with capitalism. And having learned their Marxist-Leninist lessons well, the ANC has declared that the new order should be a socialist one. Nationalization of industry, banking, and commerce has long been the central element in the ANC’s economic program.

Reinforcing the ANC’s position has been the white South African government. For decades the white authorities have also insisted that their government has been a bastion of western civilization on the African continent, including respect for and protection of private property rights. They point to a bustling market economy with productive trade and industry. If you like capitalism, they have claimed, then you should love white rule in South Africa.

However, as the old song goes, “It Ain’t Necessarily So.” Both the ANC and the proponents of apartheid have had it wrong. Yes, private ownership of the means of production has been permitted in South Africa. And as with any arrangement that allows a degree of connection between personal work and material reward, South Africa has had greater prosperity than any of the socialist economies to the north.

But private property does not by itself define a free market, capitalist economy. And this is the theme of Walter Williams’ recent book, South Africa’s War Against Capitalism. Professor Williams is one of the most articulate proponents of the free economy in America. And his study of how the South African economic and legal systems work is lucid and incisive. He both explains the historical evolution of South Africa’s institutions and analyzes their economic and political consequences.

In a nutshell, what Professor Williams demonstrates is that apartheid is not an example of capitalism but something much more akin to a mercantilist-interventionist state, in which government bestows privileges, favors, and monopoly positions on a select group at the expense of others in the society.

In instance after instance, whether in agriculture, trade and commerce, or the labor market, Black-Africans kept demonstrating highly capitalistic traits: entrepreneurial ability, a strong work ethic, and a willingness to make sacrifices in the present with the hope of material betterment in the future for themselves and their children.

And this was the heart of the problem: they out-competed the white South Africans in almost every line of endeavor they entered. But rather than put their own shoulders to the wheel to match their black neighbors, the whites turned to the State. Blacks are better farmers? Then you restrict their ownership of land to the least productive soil. Blacks are good businessmen? Then you ban them from entering many trades and professions. Blacks are willing to work longer hours and accept lower wages? Then you impose minimum wage laws and whites-only union membership for many jobs and occupations.

But isn’t South Africa a land possessing the rule of law and judicial protection of rights under the law? Explains Professor Williams: “The Constitution of 1961 emphasized the subordination of the courts to the South African ParliamentParliament is free to encroach on absolutely any area of human lifeIn South Africa, Parliament’s will is absoluteIt is a major personal liberty problem in South Africa that there is no such thing as judicial review of the legislative acts of Parliament.”

Is there less political barbarism and murder in South Africa than in many of the black, one-party states on the rest of the continent? Yes. Do even blacks have more economic opportunity in South Africa than on the rest of the continent? Yes. But that does not make South Africa a land of individual liberty under the law. And it certainly does not make South Africa a shining example of free market capitalism.

If the new South Africa is to become a land of peace, freedom, and prosperity, this is a lesson that both blacks and whites need to learn — and soon. Otherwise, the future may only offer an equality of tyranny and poverty for all.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).