Nelson Mandela, public face of the anti-Apartheid movement and South Africa’s first post-Apartheid president, has died. Much will be written about Mandela in the coming days, but little of it will deal directly with the Apartheid system, particularly its economic aspects. Apartheid is widely misunderstood as a system based purely on racial prejudice, while it was actually a more complex mix of economic controls (primarily, restrictions on capital ownership and movements of labor) and racial separatism — what Tom Hazlett calls “socialism with a racist face.” Apartheid’s political support came primarily from working-class (white) Afrikaners and their labor unions eager to suppress competition from unskilled black labor. As Hazlett notes: ”The conventional view is that apartheid was devised by affluent whites to suppress poor blacks. In fact, the system sprang from class warfare and was largely the creation of white workers struggling against both the black majority and white capitalists.”
The classic treatment of Apartheid as an economic system is W. H. Hutt’s Economics of the Color Bar, first published in 1964. Hutt advocated free markets for capital and labor and strict limits on government intervention in economic affairs. (Hutt, a student of Edwin Cannan at the LSE, was a distinguished labor and monetary economist and a well-known opponent of Keynes; see Peter Lewin’s essay on Hutt for more information.) Leon Louw and Frances Kendall’s 1986 book South Africa: The Solution (republished in 1987 as After Apartheid) offers a thoughtful analysis of South Africa’s economic system, proposing a highly decentralized alternative modeled after the Swiss cantons (see Bettina Bien Greaves’s review here).
Unfortunately, the leaders of the anti-Apartheid movement, Mandela included, viewed Apartheid as a “capitalist” system, turning to Marxism-Leninism as the only viable economic (and political) alternative. When the African National Congress came to power in 1994, it dismantled Apartheid’s system of racial separation, opening up land ownership and labor-market opportunities for all South Africans, but continued to embrace the socialist economic principles that underlie the Apartheid model. As Murray Rothbard pointed out, economic freedom is a better path to racial reconciliation: “Free-market capitalism is a marvelous antidote for racism. In a free market, employers who refuse to hire productive black workers are hurting their own profits and the competitive position of their own company. It is only when the state steps in that the government can socialize the costs of racism and establish an apartheid system.”
The good news is that there are several libertarian groups in South Africa working to bring about secure property rights, freedom, and peace, including the Mises Institute South Africa, Solidarity, Afrisake, and the Free Market Foundation. I had the pleasure of visiting these groups and their supporters last month during a visit to Johannesburg and Pretoria. To the right is a picture of me with the leadership team of the Mises Institute South Africa. And below is a picture I took of the Mandela house in Soweto, now a museum dedicated to Mandela’s life and the anti-Apartheid movement.