African Economic History Meetings, October 2017, Stellenbosch University

I seem to be having a Stellenbosch moment. This is the second talk I am giving in your town in as many weeks. Last week I was in this building addressing a conference hosted by the Institute of Futures Research. The title of my presentation was ‘Ancient Futures – Insights from the Past for the Collaborative Economy’. In that talk, I was interested in what the new Silicon-Valley driven shared economy can learn from age-old institutions of collaboration, particularly African ones. Iconic shared economy companies have come under fire lately – be it in the way they treat co-creators such as drivers or the assets of the community such as private information which is exploited for commercial ends. I believe that our contemporary tech entrepreneurs have unleashed institutions that require trust and ubuntu, but they are not attuned to institutional innovation. And that we can mine the past for answers because these are not new questions.

But today, I am more interested in the cautionary tales. My talk today asks: “Is South Africa doomed to repeat the mistakes of the past.” I would like to reflect on what appears to be an intractable ‘path dependency’ that the country is stuck in, and whether policymakers have absorbed the lessons from the country’s colonial and apartheid past. Democratic South Africa is only 23 years old, and so our expectations and aspirations have to be tempered by a dose of realism. However, it is important to ask if we are on the right path. Can we say that there has been a fundamental break with the extractive institutions of the past? A related question from all of this is: what do we need from economic historians to bring these lessons to the fore? That is something I would like you to reflect on as I deliver this address.

This feels like an awkward talk given the subject, the place and the time. The subject – is South Africa doomed to repeat the mistakes of the past – is it too soon to be contemplating such? Have we given the new regime, which is a reflection of our renewed selves, enough time to stumble and falter as we build a new society? The place – Stellenbosch – has become code word for ‘white monopoly capital’. In many ways, it represents the things that repel, but also attract the loudest voices of the moment. It is also, possibly, and as historians you can correct me, the home of some of the concepts I want to interrogate today. As for the time – 2017 – is the age of radical economic transformation – which may turn out to be rent-seeking dressed up in revolutionary garb – but which is hard to criticise if you consider yourself progressive.

Now – on to the lessons of the past: I am reminded of a conversation I had with a friend when I still worked for the Competition Commission, the body tasked with ensuring fair and competitive markets. The Commission is well-known for its work in busting cartels. This friend, however, was concerned that the post-apartheid government was destroying the food value chain with all this cartel-busting. He lamented the end of centralised marketing of agricultural produce through the various industry boards. Well, some of this liberalisation started before 1994 but he wasn’t much interested in details. It’s true that until the early 1990s, the apartheid government ran a fairly robust, interventionist and centralised agricultural development programme. My friend’s message was pretty simple – remember how the Afrikaners did it. Why was the new government not doing the same for black farmers and food producers?

This is a very powerful theme that emerges in discussions of economic development and empowerment. Afrikaner capitalism is held up as a model for how a group of people used the state to advance their economic interests.

Or let’s take the idea of the black bank. For some time, there have been advocates for the creation of a bank that would be sensitive to the needs, and also the constraints, facing black people who would like to have access to financial services, credit in particular. The incumbent banks face criticism not only for their fee structures, but also for the perception that they are not willing to advance credit to black entrepreneurs. There are practices such as asking for collateral, or even ‘red-lining’ of some areas where the banks simply won’t lend money, and these practises keep black entrepreneurs off the economic ladder. Would a black-owned financial services entity not do for black people what Sanlam or Volkskas did for the Afrikaner community?

I alluded to the apartheid government’s support for white entrepreneurs more broadly in a recent column when I pointed to the hypocrisy of some ‘self-made’ entrepreneurs, who I wrote, harvested from all that the apartheid government showered on white South Africans in terms of education, healthcare, silos, subsidies, cheap electricity, cheap labour and legitimacy only to turn around to say that black entrants don’t have what it takes to build businesses.

Indeed, state-led investments by the apartheid government spurred on a period of industrialisation and wealth-creation, which has bequeathed to this and future generations the likes of Sasol, AFGRI and Mittal Steel, which now lie in private hands. The question has been asked – where are the post-apartheid equivalents?

About three years ago, when I still wrote a column for the Daily Maverick, I wrote a piece titled ‘the temptations of neo-volkskapitalisme.’ It begins with a quote from Sol Plaatje, who described the Afrikaner demands in the early years of the South African union: “concession after concession was wrung from the government by fanatically Dutch postulants for office, for government doles and other favours, who, like the daughters of the horse-leech in the Proverbs of Solomon, continually cried, ‘Give, give.’” Of course, the substance of Sol Plaatje’s book, Native Life in South Africa, is to detail the devastation that the Native Land Act wrought on black people, including those who were successful farmers. But it also speaks to the mobilisation of political power for economic gain, a strategy that came at great cost back then, and threatens to do the same today. Back then, the losers were black people, today, it is the poor who suffer.

There is some debate about the nature of volkskapitalisme. What seems clear to me is that the economic demands of Afrikanerdom were in part informed by a sense of victimhood in the aftermath of war. This was then corralled in the service of the creation of a violent, extractive economy. In a sense, genuine wounds were used in the service of elite advancement. Could this happen again in South Africa?

I think of volkskapitalisme – the people’s capitalism – as Afrikaner nationalism projected onto the economic sphere. The advocates of volkskapitalisme presented it as an economic framework to uplift ordinary white Afrikaners from poverty. The people were not English-speaking white South Africans, rich imperialists who got in the way of Afrikaner aspiration, and the people were not black people, with their threat to drive down wages and prices. Volkskapitalisme was supported by the state, and ran parallel to direct measures by the state to favour Afrikaners above everyone else.

The temptation is to look back at all this and think this is how a community advances. Every once in a while, someone will say that black people need a Broederbond. It is tempting to overlook the distortions that accompanied this growth model including state-sanctioned cartels in crucial input markets and the horrors of apartheid geography and job reservation. The fantasy is to re-enchant the present with a lost African Eden, usually in the form of an African, nationalist super-state that dominates economic activity and brings forth a generation of black oligarchs. This is an unashamed call for state-backed ‘black monopoly capital’. This is the trap that early black economic empowerment fell into.

These are the habits of mind we bring into the new dispensation. What post-apartheid South Africa demands of us – economic mobility based on open, inclusive institutions – economic mobility underpinned by equal opportunity – is something we have never witnessed. There is an unspoken scepticism at the idea of a society that frees the potential of each citizen, as the Constitution demands.

There are elements of volkskapitalisme that were about building co-operatives, and grassroots self-help. But these tend to get lost in the grand narrative of enrichment. Our history of racial capitalism has taught us that identity-based, state-centred economic strategies deliver results.

*

There is no denying that the past two decades of democracy have provided benefits for a lot of people, especially the previously oppressed. The post-apartheid state has invested significant resources into improving people’s basic living standards. But the overall trends show that society has not undergone a fundamental, or dare I say, radical shift from the past. The rate of those who live under poverty has, once again, shot above 50 percent of the population. Wealth and income disparities are some of the most glaring in the world. Educational outcomes are some of the worst in international comparisons against both rich and poor countries. Black people remain locked in the periphery of urban areas, travelling long distances to work if not blocked out of the labour market altogether, or they try to make a living in depressed rural areas. Past outcomes are reproducing themselves.

But whilst I talk about hankering for the wrong lessons from our recent past, there is also the problem of the mis-creation of the past.

In both rural and urban areas, most black people do not have clear, secure property rights. One of the grave mistakes of the colonial and apartheid past was to misunderstand, and then distort, the nature of traditional African institutions. The administrators of the time, and the historians that guided them, failed to appreciate the complexity and sophistication of these institutions, dismissing customary land-ownership, for example, as merely collectivist and not bestowing ‘real property’ rights on African people. The myriad ways in which rights and entitlements were understood, defended and transmitted through generations were beyond the grasp of the typical native administrator.

Nonetheless, the colonial and apartheid regimes held a fascination with kings and chiefs, and also saw an opportunity to reshape them in a way to serve their interests, and not those of their communities. This changed the power dynamic between traditional leaders and their communities, and turned what were once consensus-based regimes into despotic ones.

To compound the problem, even when black people decided to participate in the mechanisms of ownership that were more familiar to Western eyes, the state hit back. Where black people decided to buy farms with the expectation of receiving title deeds in the 19^th and 20^th centuries, a slew of legislative and regulations were put up to prevent this, and to force black people into forming ‘tribes’ to purchase land, or to use white missionaries as fronts, or to live on land held in trusteeship by the state. There is a little-known novel, The People of Welgeval, by Botlhale Tema, which is a fictionalised account of a community in what is now the North West, as it grappled with land dispossession and having to enter into contorted relationships with missionaries to acquire land. Not only did the pre-apartheid and the apartheid state not recognise and respect customary law notions of ownership, but it also precluded black people from acquiring title to land according to its own logic.

The Constitution recognises customary law, and the Constitutional Court has pronounced, in various judgements, its conception of a constantly evolving, consensus-based customary law. This is a model of customary law where the land is owned by the people, and not by kings and chiefs. The democratic government seems to have misdirected itself in following a version of customary law that is hierarchical, with unprecedented powers placed in the hands of male traditional leaders. Some of these notions of customary law have more of their roots in colonial interpretation of African life than in history and practice.

Once again, it seems, black people in rural areas have to contend with a splintered citizenship. We’ve been here before.

*

It is fallist season. That phrase would have made no sense a few years ago, but that was before university students took up their place in the long line of our country’s struggles for social justice. Their demands – decolonisation, free, quality higher education, even the fall of patriarchy – are admirable in my eyes. So you will imagine my horror when I started reading on social media about the fractures between male and female student leaders, and also witnessed scenes of violence.

Of course, violence is all too present in contemporary South African protest. This country not only has a deep history of violence, but it has come to be understood that violent protest gains attention. I witnessed that dynamic at play this very morning. Though I am critical of uber’s practices, and the revelations of its toxic internal corporate culture are disturbing, I still enjoy the convenience of that service. Throughout the world there are protests against uber, but in South Africa, they quickly turned to violence. This morning, there was another instance of this long running battle between uber and cab drivers, with reports of cars torched on the highway, blocking access to the airport. Well, that got my attention. I had to quickly change plans to take the Gautrain, which made for a very colourful morning running barefoot through the airport. Despite the niceties of institutions like Nedlac and our country’s famous reputation for negotiation, economic and service delivery disputes still devolve into burning tyres and torched libraries. We can’t help but expect the student movement to be different, but this is the template that has been set in this country.

I was invited to a small summit soon after the early student protests, which was attended by SRC members from about six universities, twelve young men and one young woman. There were some veteran activists there giddy at the opportunity to share notes with the younger generation. But I worried that they glossed over the problematic aspects of the movement.

My contribution was to share some ideas about how to fund free higher education. I did not have any definitive solutions, other than to put some ideas on the table and to highlight some trade-offs. I couldn’t ignore the fact that the country’s finances were headed in the wrong direction. We didn’t even enjoy the possibility that free higher education could be financed out of economic growth.

The students did not want to hear this. I could live with that. What I couldn’t live with is that some of these students, NOT ALL I must emphasise, but too many, in their march towards decolonisation, held some deeply troubling ideas about what it means to be African. I was happy to endure the usual insults about neo-liberalism and being a puppet for my ‘bosses’. As I wrote at the time, what got to me is the way in which any economic concept or calculation was dismissed as un-African. I tried to argue that every society, African or not, thinks about trade-offs and resource allocation and strategies for prosperity. As the discussions evolved beyond student financing over lunch, the image of Africa that emerged (at least from the more vocal members of the group) was not very different from colonial caricatures. These young people had somehow bought into those patronising accounts of noble African peasants, untainted by money and trade, living the simple life.

One student explained to us that he was having his lunch by hand because that is the African way. This was challenged by a lone dissenter who argued that some ancient African societies may have used utensils. He also made the point that we don’t know what inventions may have arisen had African societies had the opportunity to evolve organically. To place such definitive limits on what being African is given that historical context is not wise.

As many have written, including economist Samir Amin, precolonial Africa enjoyed thriving and equal trade with the rest of the world. This changed with the European industrial revolution and its form of colonial outward expansion, which changed the terms of trade for African economies. It is only at this point that African societies lost their autonomy, and innovation and progress came to a halt. This impoverished and oppressed state, and the survival mechanisms that arose out of it, are often taken as ‘tradition’. Our notions of what is African can be incorrectly shaped by this diminishment.

In a disturbing strain of the current narrative, authentic Africans are not economically savvy, they do not build empires, they do not have questionable power relations in their societies nor have diverse economic viewpoints. The only strategies that are acceptable are those where the African surrenders all economic agency to a government or central authority. In decolonising economic thought, progressive and radical movements have to question this limited narrative of Africanhood.

And you can see how this conception of authenticity feeds into the way the current government continues to act in ways that diminish the property rights of rural, black people, which I discussed earlier.

*

There is a school of thought in economics that some of you might be familiar with – German ordo-Iiberalism. At the centre of this school, also known as the Freiburg school is the notion of an economic constitution. These are the basic agreements that a society holds about the type of economy it will have and how it is to be run. The economic constitution also addresses how gains and losses are distributed and managed. The economic constitution or less formally an economic order, usually implicit and unwritten, is informed by the political constitution.

I am convinced by constitutional scholars like Pierre de Vos and former constitutional court judges such as Albie Sachs and Dikgang Moseneke, who argue that the Constitution as it stands today is expansive enough to allow for economic policies that lead to meaningful human development. The current economic order was forged under the ‘nervous conditions’ of the early nineties; with the central anxiety being about preserving property rights and free markets. It’s clear that today the critical challenge is that of poverty and lack of opportunity. Property rights become meaningless when a country explodes. The country can no longer focus on preservation; energy should be directed towards the kind of society we would like to build. This is an incomplete conversation, emerging as we are from the initial and fragile phase of our transition.

The trouble is that the country is being nudged towards an economic order that continues to deal with race and state in outdated and narrow-minded ways. We have government interventions that are constantly captured by the elite. Under volkskapitalisme, it was the Afrikaner capitalists who advocated for state support and lobbied for policies that exploited black South Africans. In the emergent neo-volkskapitalisme order, it is tenderpreneurs but also established elites aided by corrupt officials that seek to direct government resources in favour of their private accumulation of wealth. A network of interests has captured the state at the expense of broad-based economic development.

We have some blueprint for moving forward in the National Development Plan. The future demands that we do things differently and make difficult trade-offs, in a society that exhibits low levels of trust. The challenge for the next administration is two-fold. The first is to articulate the fundamental principles that will govern all economic policies and legislation that emanate from its term. The second is to commit credibly to those principles. The economy can no longer afford inconsistent or mixed messages from the economics cluster. Much as certain government actions can be found to be in conflict with the Constitution and set aside, a similar approach should apply to actions that violate the fundamental principles of the new economic order built on the vision of an efficient, inclusive economy that delivers broad-based prosperity.

In Conclusion…

I should note that I can’t think of any economic historians in South Africa who have entered public discourse, in the way that, to give a controversial example, Niall Fergusson has. But it’s clear from debates in the media that there are grave misunderstandings about even the recent past. There are some stubborn, and largely wicked ideas, that persist. Is the concept of a Broederbond really salvageable in an open, democratic society? What is the proper role of kings and chiefs in economic governance? How do we make a clean break with the past? Which aspects of the past are worth preserving? These appear to be some of the questions that the current moment demands answers to.