CAPITALISM, INEQUALITY, POVERTY AND PROFESSOR TERREBLANCHE

• DOI: http://doi.org/10.1111/j.1813-6982.2003.tb00098.x
• Date: 01 December 2003
• Published date: 01 December 2003
• Author: Joubert Botha

South African Journal of Economics Suid Afrikaanse Tydskrif vir Ekonomie

Vol. 71:4 December / Desember 2003

CAPITALISM, INEQUALITY, POVERTY AND

PROFESSOR TERREBLANCHE

PART II : ECONOMICS

Those who seek to improve the lot of mankind

believe they must undo the work of their predecessors-

Walter Lippmann, The Good Society (1937)

REVIEW ARTICLE

JOUBERT BOTHA1

I. THE ECONOMIC ORDER

1. Capitalism the Villain?

2. A Capitalist Enclave

3. Policy Measures of ANC Neo-Liberalism

4. A New Paradigm for Government Action

5. On Democratic Socialism

6. Specific Measures

II. A

N ALTERNATIVE APPROACH

1. Capitalism and Private Enterprise

2. Enriching the Rich

a Penalising the Borrower

b Interest Rates and Prices

3. Identifying the Blame

4. Development. The Four Blights of Africa

III. RESUMÉ AND CONCLUSION

____________

THE VERY EXTENSIVE DISCUSSION by Professor Terreblanche of the

history of master-servant relationships in South Africa since the

17th century was obviously intended to serve as a background to

an analysis of the economic situation in the country since the

election of 1994. However, these are two quite different subjects. It

is not clear why Terreblanche should have loaded his book with

so much historical material, most of which is of only peripheral

1 Editorial Note. Part I: History, appeared in the September issue of this

Journal.

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interest today. The excessive historical facts on one aspect only of

labour relations, especially those from the distant past, offer a

skew interpretation of a national issue that developed over time

within the broader dimensions of history. These include

economics and politics.

The economic aspects to the problem that he discusses is a

massive one in Development Economics, a field that calls for very

special expertise, and suggestions and advice that vary with the

circumstances. This is apparently not Terreblanche's field, which

is perhaps why he resorted to generalities and nebulous ideas and

accusations that left the field open-ended. In the process he seized

the opportunity of cooling his wrath on his old enemy, private

enterprise under a capitalist system

I. THE ECONOMIC ORDER

Terreblanche's argument is threefold: the country has become the

poorer since the ANC government took office in 1994; the

government has not paid sufficient attention to the problem of

widespread poverty and unemployment; the capitalistic system is

to blame for it.

He supplies a truly shocking diagram which shows that 72 per

cent of GDP went to the bourgeois elite in the country; 17,2 per cent

went to the petit bourgeoisie; 7,3 per cent to the upper lower classes

(all three representing only 16,6 per cent of the population each); 2

per cent went to the middle lower class, and 1,3 per cent to the

"lower lower class" (p.36). The latter two together represent 50 per

cent of the population.

These are indeed dramatic statistics. It means that one half of

the population earns only 3,3 per cent of GDP. Terreblanche,

reverting to characteristic terminology, calls them the

lumpenproletariat. It is a sobering thought that half of the South

African population is made up of lumpenproletariats, and that

there is no prospect of the situation improving in the near future.

The country is faced by a debilitating economic disease for which

there is no ready cure.

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Again, it stands to Terreblanche's credit that he should have

drawn attention to a state of affairs that is unacceptable, if not

fraught with danger. It is regrettable that he minimised the force

of this unassailable argument by presenting it wrapped up in

emotional details of past history, racial prejudices and warped

views on the nature of the economic system. Shorn of all these

trappings, the argument of poverty, unemployment and

maldistribution of income stands solidly on its own feet, as an

argument that invites very serious consideration by economists

and the government. It is a national calamity of the highest order

that calls for cool heads and sober judgement that leave little

room for emotional rhetoric and historical culpability.

There is an important side to the above figures which

Terreblanche mentions only in passing: "The top 15 per cent of

income earners in the country pay no less than 30 per cent of the

total tax revenue - but this is the result of the extremely unequal

distribution of income in South Africa" (p.117). Put differently, it is

the top 15 per cent that keeps the economy going. They do so in two ways.

They provide funds for distribution to the economy through the

annual budget. Second, as no one eats money, what is left is returned

to the economy in the form of private investment, directly or

through a financial institution. Investment, not saving is the

engine of economic growth.

This is an argument that is often neglected, partly because it is

so vastly overshadowed by the extent of the inequality of incomes,

which, in turn, is largely the result of the long series of legislation

which Terreblanche outlines in such detail. In time it led to the

shockingly skew development pattern and structural imbalances in

the South African economy that will take many years to correct.

Faced by a poor-white problem in the 1920s the first Nationalist

government introduced a policy of "civilised labour" as a

protection against the comparative advantage of black labour in

the mines and industry. Half a century later, with the labour

problem worse than ever, the black worker was faced with work

reservation, racial employment quotas by area, and influx control

in the cities. He was not allowed to do skilled work - not even to

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