A growing gap between the black elite and the black masses?: Elites and political and economic change in South Africa since the Anglo Boer War

By Moeletsi Mbeki, political economist

When there is talk in South Africa today of the “gap between the black elite and the black masses”, the underlying assumption is often that 1994 brought a radical historical break. Although one may speak of a radical symbolical break with the South Africa of before 1994, the fact of the matter is that South Africa is still underlied by the same structures that have been erected more than a century ago by the British, as Moeletsi Mbeki shows here. It can be argued that these structures – especially the colonial State – eventually also led to the demise of Afrikaner-nationalism, just like Afro-nationalism currently is not really succeeding in bridging the gap between the elite and the masses. For post-nationalist Afrikaners this issue is of the greatest importance, since it is they who will eventually have to search with Africans for a democratic South Africa beyond the cycle of repeating nationalisms for a country in which the gap is bridged – Johann Rossouw, editor

When the British eventually conquered all the independent communities in South Africa by crushing the Boer Republics in 1901, they gained the free run of the country’s mineral resources especially the gold deposits of the Transvaal.

The British however soon realized that they had gained a poisoned chalice as victory over the Boers did not give them access to the vast cheap labour they required to exploit the gold deposits with. To quickly recoup the massive investment they had made in fighting the Boers before the next eruption, the British imported labourers from China but they knew this was only a short-term solution as both white and black South Africans would soon oppose these importations.

The long-term solution was to mobilize rural Africans in South Africa and in the rest of Southern Africa to supply labour for the mines, agriculture and transport infrastructure development.

Faced with this challenge the British established the South African Native Affairs Commission in 1903, which for nearly two years criss-crossed Southern Africa investigating potential threats to their new colony from Africans as well as opportunities for labour supplies. So was born Wenela and the NRC, later renamed Teba, on the one hand and on the other hand poll tax, hut tax and eventually the Native Land Act and the Bantustans all leading inevitably to the demise of Cape (and Natal) liberalism.

In the brief five years from the signing of the Peace of Vereeniging in 1902 to the establishment of Responsible Government in the Transvaal and Orange Free State colonies in 1907 the British set South Africa on a political, economic and social trajectory that has survived virtually intact to this day. How did this happen?

South Africa’s elites

The strategies that the British put in place in 1902 – 07 that have looked after their interests in South Africa for 100 years were of course not a stroke of genius. They were the result of a century of their experience ruling South Africa since they first took over the Cape from the Dutch in 1795.

At the beginning of the 20^th Century after the Anglo Boer War, South Africa had three elites:

* Afrikaner elite

* African elite

* English commercial elite

In their years ruling South Africa, the British had long come to understand that they could not manage the affairs of the country without the participation of these elites. What was important about these three elites was that they were all the creation of the capitalist system and therefore saw their interest as being served by the entrenchment of the capitalist system. This is what distinguished the modern elites in South Africa and indeed in the whole of sub-Saharan Africa, from modern elites in Asia; the modern elites in Asia are a continuation of pre-colonial elites. Even in the case where Asian elites embraced the capitalist system they created their own capitalist system rather then reproduced the colonial capitalist model, as has been the case in South Africa and most of Africa.

These three elites were therefore potential allies of the British.

English commercial elite

As relative newcomers to South Africa who had arrived at different times, drawn to South Africa from 1820 onwards by different circumstances, this group had little cohesion and no independent political power base to speak of. The most powerful amongst them, such as the Randlords, represented mining investors in the City of London.

Elements of the English commercial elite thus had economic power but their economic power did not translate into political power, as the Jameson Raid and its outcome showed. Their economic rights therefore had to be underwritten by the British government. The English commercial elite could therefore not be an independent political force.

Afrikaner elite

It was a completely different story with the Afrikaner and the African elites. Both of these elites had the potential to be formidable independent political players. To the British this meant either or both of these elites were potential allies to manage South Africa on behalf of British commercial interests. The difficulty for the British was that the Afrikaner elite, especially the Frontiersmen, saw their interests as antagonistic to those of the African elite. The British therefore had to make a choice between these two elites and they chose the Afrikaner elite.

There were several factors that led to this preference. The Afrikaner elite, the core of whom as Frontiersmen had conquered South Africa, had military capacity, which they had demonstrated during the Anglo Boer War. Secondly the Frontiersmen had the capacity to establish and manage a State. This they had proved by establishing the Boer Republics. Lastly, but most importantly to British commercial interest the Afrikaner elite had a long history of exploiting Africans and African labour. In the era of gold mining, these skills were a premium.

The Afrikaner elite however presented a number of problems for the British. Firstly, they had the potential to ally with Britain’s enemies, especially the Germans, Russians, French and Americans, as they had tried to do during the Anglo Boer War. At the turn of the 20^th Century British naval power was however such that they could contain such a threat. Secondly and more importantly was that the Afrikaner elite had a number of clearly defined factions some of which could be problematic to British interests.

After the Anglo Boer War there emerged three main factions among the Afrikaner elite. Firstly there was the accomodationist faction. This faction was led by Generals Louis Botha and Jan Smuts. The second faction was the nationalist faction most prominently represented by General J.B.M. Hertzog. Lastly the Bitterenders who were led by Generals De la Rey and De Wet. The British gambled on the strength and staying power of the accomodationists faction. As the British army and navy continued to be based in South Africa for many years after 1907, this was an insurance policy that became useful from time to time when the power of the accomodationists was challenged, for example, by Bitterenders in 1914 and by white workers in 1913 and 1922.

African elite

The African elite, on the other hand, at the beginning of the 20^th Century had none of the strengths that the British wanted but had several weaknesses, which made them a potential weak link.

At the beginning of the 20^th Century the African elite as a new elite had none of the strengths that the British wanted, which they found among the Afrikaner elite. The old African aristocratic elite that had ruled the African societies prior to colonisation and had led resistance to colonisation was physically annihilated by the British during the 19^th century. The African elite that existed at the turn of the 20^th Century was therefore a new elite that had emerged during the colonial era as part of the British colonial project. These were the new acculturated and Christianized elites that had emerged in the Cape and Natal Colonies, promoted firstly by missionaries and later by the British Government as valuable allies in the military campaigns to defeat the independent tribes in South Africa.

The African elite, like the Afrikaner elite also had had their factions but unlike the Afrikaner elite they had only two factions; the accomodationist faction and weaker nationalist faction. The accomodationist faction saw itself as an ally of the British and hoped the British would reciprocate. The position of this accomodationist faction was summarized by one Macah Kunene, a prominent farmer from Natal, when he was asked by the South African Native Affairs Commission in 1905 if he wanted the British to leave South Africa.

He said:”If the white people and the King were to desert us now and leave us here, there is a great section of us who have approximated to a great extent to the white man’s ways of living, and to the white man’s way of doing things; and there is a large number of us who have not advanced at all, who have remained as they were practically in former days. I am afraid that those who have remained in their former state would kill us all, particularly civilized Natives, because we have bought lands, they do not approve of the ownership of lands. They know too, that whenever there has been a war, against Natives like ourselves, we have always been with the Government, and gone out to assist them in those wars … Therefore, we feel that we are far better under our Government, and are far better than if we were deserted and left to the mercies of our people”.

The weaker nationalist faction, which at the beginning of the 20^th Century was believed to be under the strong influence of the black Americans especially the African Methodist Episcopal (AME) Church, never gained much ground amongst the African elite in South Africa.

Drivers of change in 20^th Century South Africa: Rise and fall of Afrikaner nationalism

From this brief sketch of South Africa’s elites at the beginning of the 20^th Century it should be clear who shaped South Africa during most of the 20^th Century. It was primarily British capital on one hand and on the other it was the Afrikaner elite, especially the nationalist faction. The primary interest of the British was in South Africa’s minerals, especially diamonds and gold. To a lesser extent it was in the supply to the domestic South African market of consumer goods and financial services in cooperation with the English commercial elite. This was how the South African economy has operated for the last hundred years.

The Afrikaner elite were primarily interested in State power and in using that power to advance its economic interests particularly its agricultural interest and also in developing an Afrikaner professional class that would provide the skills required by the public and parastatals sectors. To achieve the latter objective the Afrikaner elite promoted the emergence of State-owned enterprises – Eskom, SAR&H (Transnet), Land Bank, SABC, Iscor, IDC, Telkom, DBSA, Armscor, and Sasol. Thes State–owned enterprises were however dependent largely on imported UK technology and loans. The upliftment of the poor whites was therefore part of the effort of creating a pool of skills of a supervisory, managerial and technical class.

A commonality of interest thus existed for most of the 20^th Century between British commercial interest (later opened up to other Western investors), Afrikaner elite and English commercial elite. Investors in the mineral resources sector shared a common agenda of promoting cheap labour supply with the Afrikaner elite who were also major owners in the grain production sector, especially maize and wheat. The grain production sector also required a large supply of cheap labour.

A hundred years of political discourse dominated by issues of race and ethnicity has led most South Africans into thinking that politics is independent of social structure. Nearly half a century of apartheid has convinced many people that it is (race) consciousness and other ideologies that determine politics rather than socio- economic structures.

A leading proponent of this view was the late Andrew Asheron in his famous 1969 article, Race and Politics in South Africa.

Asheron argued that while capitalism was dominant in South Africa, at the social and political level, and ultimately inhibiting the further development of the capitalist economy itself, was the racial division of society which was fostered by the Afrikaner State. He argued that even the powerful capitalist stratum – ‘mining magnates and English speaking politicians’ had to submit to this particular form of social organisation. Asheron attributed the extra-economic power of the Afrikaner State to ‘an historical process whereby race discrimination, prejudice and ideology has, at one level, cut loose from its original economic and political functional aspects to become an autonomous entity which in itself circumscribes any movement towards reforms by the white elite’. In other words, ideology (racism) was the final determinant on which further social change depended.

In the three decades since the above exposition was made and became conventional wisdom, significant changes have happened to South Africa. Afrikaner nationalism has been crushed and so has the Afrikaner State which according to Asheron was practically unchangeable. What happened? Why did Afrikaner nationalism succeed when it did, and why did it fail when it did?

Afrikaner nationalism succeeded because it found a formula to deliver to world markets South Africa‘s vast mineral resources at world competitive prices. Equally important, Afrikaner nationalism was able to deliver the mineral resources with a minimum use of violence against the labour force. The converse was however also true. Afrikaner nationalism failed when it could no longer deliver product to world markets without a greater and greater use of violence against the labour force.

Two things therefore happened. When Afrikaner nationalism had the right formula for delivering to world markets, it received the qualified support and co-operation of both domestic and foreign owners of capital, especially of mining capital but also of the multi-national corporations invested in manufacturing and financial services sectors. Things started to change however when Afrikaner nationalism could no longer deliver to world markets without a greater use of violence against the black labour force. From mid-1970s onwards, due to the re-emergence of militant trade unionism amongst the black labour force, Afrikaner nationalism had to resort more often to the greater use of force to deliver labour capital. Not only was this disruptive of production processes, it also attracted the disapproving attention of international public opinion towards South Africa. This led a growing movement in OECD countries for sanctions against South Africa.

Gradually sections of domestic capital also started to withdraw their support from Afrikaner nationalism and to demand changes in industrial relations legislation. By the mid-1980s domestic capital opened discussions with exiled political parties in an effort to identify a replacement for Afrikaner nationalism.

These initiatives culminated in the refusal of American banks to roll over South African loans and, after public campaigns, in the US Congress passing the Comprehensive Anti-Apartheid Act over a veto by the president, Ronald Reagan. On the other hand they culminated in the legislation of banned political parties, the release of their leaders from prison and the return of others from exile.

From this brief description of what led to the demise of Afrikaner nationalism, it should be clear that it was first and foremost the major social forces that make up present day South Africa’s social structure – in particular organised labour, big business and foreign investors – that in the final analysis destroyed Afrikaner nationalism. Many prominent individuals and political parties of course played their role in that drama but their efforts could have effect only because of the antagonistic positioning of the dominant social forces in the country’s social structure towards Afrikaner nationalism.

African elite back on centre stage

The African elite, as we have seen, were abandoned by their British 19^th Century allies, in 1907 to the tender mercies of the Afrikaner elite and of British capital. For most of the 20^th Century the African elite was therefore marginalized and was pushed out of centre stage of South African political and economic life except for brief moments, for example in the 1950s, when by mobilizing the urban masses in protest movements they got some attention. It was therefore only in the mid 1980s that the African elite reoccupied centre stage as the leading candidate to replace Afrikaner nationalism.

Here then was something of history repeating itself. In 1906 – 07 the Afrikaner elite were anointed by the British to rule South Africa. In the 1980s the African elite were once again being anointed first by South African big business, by foreign investors and by the British and Americans.

The African elite have however been handed something resembling a poisoned chalice. In the early 20^th Century when the Afrikaner elite were handed political power by the British, South Africa was an undeveloped country with an enormous potential to grow because of its mineral and agricultural resources. During the 20^th Century part of this potential was realized and South Africa became a middle income country.

The country that the African elite is inheriting is a stagnant middle income country that is threatened with de-industrialisation as a result of competition pressure on its manufacturing sector from Asia, especially China. Twenty five years ago a quarter of South Africa’s gross domestic product was generated by manufacturing; today it has dropped to only 16%. The gold deposits which acted as the backbone and growth pole of the economy in the 20^th century are now largely depleted. Lastly, South Africa is also threatened by a major demographic dislocation as a result of the progress of the HIV/AIDS pandemic.

The South African economy is caught in a long cycle of stagnation which started in the 1970s. This stagnation manifests itself in two important ways;

* Falling and/or stagnant per capita incomes especially for the poor.

* Inability of formal sector to absorb labour.

Enclave economy

South Africa therefore suffers from extremely high unemployment levels estimated at between 30% and 40%. The economy that the African elite has inherited has therefore been described as an enclave economy whereby the great majority of the population lives in poverty while those inside the modern enclave prosper. In contrast the Afrikaner elite had inherited a growing economy which explains the longevity of their rule.

The present crisis facing the South Africa economy is caused by the limits of the economic development model developed in the Inter-War Period. This model consisted of the following:

• Import substitution industrialisation driven by foreign multinational corporations and parastatals.

• Focus on exploitation of mineral resources for export through Mineral Energy Complex (MEC) and its related infrastructure.

• Large-scale commercial agriculture driven by State subsidies and related subsidized infrastructure services and cheap labour.

• Independent financial service sector dominated by the British banks.

Features of the above model include the following:

• Dependence on imported technology, for example all platinum group metal related research for Anglo Platinum is even today done mainly outside South Africa largely in the UK.

• Dependence on imported capital. This was the justification for several leading South African companies moving their primary listings to London.

• Dependence on plentiful supply of cheap unskilled labour.

• Dependence on limited white South African and imported management and technical skills.

Results of limits of model:

• High structural unemployment estimated between 30% and 40%.

• Economic stagnation.

• Volatile exchange rate.

• Crime.

• High poverty levels/ high income inequality.

• Capital and skills flight.

Will the African elite who now control political power in South Africa be able to develop an economic model that can break down the inherited underdevelopment that an enclave economy entails for the great majority of the population? On the strength of the policies pursued since the mid 1990s the answer must be negative.

Conclusion

Development analysts have pondered long and hard why some countries develop and others do not. There is no mystery as to what a country needs to do in order to develop; the imponderable is why some countries do what must be done and others do not. The US and Haiti provide a good example. Both countries became independent at about the same time. One, the US, is the richest country in the world and the other Haiti, is the poorest. South Africa provides us with something of a controlled experiment in this regard.

The Afrikaner elite that the British handed State power to in 1907 – 10 were a class of property owners, latifundists who owned vast tracks of largely undeveloped land. In order to develop their land, the owners needed cheap and plentiful labour, markets, transport to markets, finance and knowledge. The Afrikaner elite used State power to address these bottlenecks. The labour they already had in the form of labour tenants and sharecroppers settled on their farms. The new gold mining towns provided the markets.

The Afrikaner elite therefore used State power to develop the vast rail, road and grain storage system South Africa has today. They also used their control of the State to create the Land Bank, Sanlam and other Afrikaner and State financial institutions. On top of all that they established educational institutions to strengthen farmers’ expertise as well as to undertake research into a wide number of issues pertaining to agriculture such as animal diseases control, irrigation, development of high yield and diseases and drought resistant crops etc. The Afrikaner elite thus created a developmental State albeit it, a racially skewed one.

The African elite, on the other hand are not property owners. They cannot therefore use State power to create systems and structures that advance the property they do not have. In the hands of the non-propertied African elite State power thus becomes an instrument used to re-distribute wealth to the favour of the elite, rather than to re-direct wealth from consumption to productive investment. The growing inequality between black middle class and the black masses is a clear manifestation of this wealth re-distribution.

The South African State today is more of a distributive State than a developmental State. Black Economic Empowerment is the centerpiece of this distributive strategy. As the African elite are not an entrepreneur class the wealth diverted to them is used for consumption, not investment.

The major challenge, as we have seen, is that South Africa has a relatively stagnant economy. The distributive State thus has limited or declining wealth to re-distribute. The implications of this are many; we have already referred to growing competition between the black middle class and the black masses over State revenues.

The most dramatic result of the failure of the distributive State is the declining life expectancy in South Africa which in a few years is expected to lead to a declining population overall. Declining life expectancy is mistakenly construed as caused by the progress of the HIV/AIDS pandemic. The reality is actually the reverse. Lack of investment in health services, health research, etc has led to the mach of the HIV/AIDS pandemic.

Another important result of wealth re-distribution for elite private consumption are the growing imports of goods and services at the expense of South Africa producers.

All these trends that go with a distributive State, and there are many others we need not go into here, ultimately accelerate the shrinkage of South Africa’s productive capacity.

Not all is lost however. There has been instances where non-property owners have created a developmental State that succeeded to industrialise the country. The most notable example was the Communist Party of the Soviet Union. The Soviet industrialisation model was however based on transferring wealth from the well off, for example Kulaks, to productive investment rather than to elite consumption. Another example is South Korea where it was the army that created a developmental State.