Professor Herbert Vilakazi.

South Africa is in the midst of a profound economic crisis, which is causing instability and deformations in our psychological, social, moral and cultural life, and which, if not resolved, shall cause severe political upheaval.

Not too long ago, the governor of the Reserve Bank stated that the economy was “deteriorating” fast. One South African economist warned that our economy was in “free fall”.

Inequality, high unemployment and poverty are registered as the main gigantic problems of South African society. The results of the 2011 census revealed that the average white household earns six times the income of the average black household. There is a vast structural disconnect within the national economy between the white community and the African community.

The proposals, which have come from the government and from our intellectual elite inside and outside the government, cannot solve this crisis because they work within the present structure of the economy; they merely want to improve how the present economy works, hoping that this will trickle down and solve the economic and social crisis.

The projected massive government investments in infrastructure development shall not eliminate the vast structural disconnect, just as the construction and operation of the Gautrain has not made a dent in solving the problem of inequality, high unemployment and poverty.

Capitalism produced not only the advanced industrial societies of the West and Japan, but also colonialism and underdeveloped countries. South Africa is a by-product of this twin process. To know how poverty, unemployment and inequality can be eliminated requires not only a correct knowledge of how the problem arose, but also of the economic history of the world.

Regarding the historical roots of our problem, it is not enough to refer to apartheid. It is simply an Afrikaner term for a policy and process that existed before 1948.

The roots of our problem lie in colonial conquest. Colonialism gave rise not only to a colonial state, but to a colonial economy and ideology. Here is a peculiar phenomenon: the death of the colonial state is survived by the colonial economy and the colonial ideology. The colonial state died in South Africa, but is survived by the colonial economy. Our economy bears the scars and shape of a colonial economy.

The representatives of England settled here together with a population from other parts of Europe, hence the designation “settler-colonial society”. The European population in this colony became the largest in Africa, giving rise to a strong emotional bond between this settler community and the West, which is untouchable.

This gave rise to two grossly unequal parts of South African society. One is black, forming the vast majority of society, a large part of which is in pre-industrial rural areas. Africans became the primary labourers, and this vast sector is poor, with the worst facilities and infrastructure.

The other part is the white community, a tiny minority, which is by and large wealthy. It has the best facilities and industrial infrastructure and is linked with the industrial Western capitalist economy.

Colonialism and the slave trade created the racial problem.

The colonial rulers brought people from India to meet the colony’s labour needs, and created a special status for them: thus the South African Indian emerged. Another status position was created for the children of sexual union between Europeans and Africans, from which South African coloureds emerged.

The identity and status of Indians and coloureds flowed from the tension between Europeans and Africans.

A recent creation is the black middle class and a black capitalist class, as protection for the capitalist social order. This is a very tiny slice of society, which is merging with the middle and upper classes of the white, Indian, and coloured communities, making up “non-racial” South Africa.

The black middle class and individual capitalists have become detached from the colonial economy in which the vast majority of blacks are trapped. By and large, they have also become detached from the black community, and have moved to formerly white suburbia.

The problems of inequality, poverty and unemployment remain. The World Bank has warned about the growing problem of inequality.

How can we eliminate these ills, and the racial problem?

The majority of blacks are trapped in deep underdevelopment in rural areas through the migrant labour system.

These millions of blacks constitute the colony in society and the economy. Figures indicate that most working-age urban blacks do not work in modern industry and commerce, but are in the “informal economy” – in our terms, are in the colonial economy. This is the country’s fundamental problem.

The underdevelopment of black rural communities, and of their offspring in urban areas, are pulling down the economy. It cannot develop any further as long as it contains this colony. In accounting terms, when conducting an audit of the national economy, the colony, comprising the vast majority of society, is simply entered in the loss column. The cost of the colony to the national economy is many times the value of the gross national product of the country.

The colony is now sapping and negating the vitality and growth potential of the national economy and society.

South African economists and statisticians often calculate and bewail the cost of a holiday to the national economy. The cost of the colony to the South African economy, the cost of unused capacity of tens of millions of black people, the cost of unused capacity of women, runs into trillions of rand: that is how big the South African economy can be if the colony were eliminated. That is the “potential economic surplus”, in Paul Baran’s terms.

We need a policy and plan to eliminate the colony within the South African economy, and develop one modern integrated economy. The next article proposes such a policy.


Professor Herbert Vilakazi is an independent scholar and contributed this article in his personal capacity.