South Africa's War Against Capitalism.

South Africa's War against Capitalism

* If you were a white South African businessman, one with entrepreneurial proclivities and without racist blinders, you might very well despise apartheid. You'd realize how surely the system picks your pocket. Because that nation's black majority is unable to function actively as either a profit-aiding consumer market or as a cost-reducing labor market, whites receive diminished return on investment, and spend more to acquire goods and services; that's the cost of protecting white "privilege." The mechanisms of this protectionism are at the heart of apartheid, and they define, as Walter E. Williams summarizes in the title of his new book, (Praeger, 160 pp., $37.95).

This "war" is a part of South African history. Both J. C. Smuts and J. B. M. Herzog, two of South Africa's leading statesmen in the first half of this century, saw apartheid as the bulwark in a struggle against the "tyranny" of capitalism. More recent South African leaders have learned to soften anti-capitalist rhetoric, and to emphasize the "struggle" against the Communist leanings of the African National Congress. Professor Williams traces the economic history of apartheid, concluding that it "has been an attack on free markets and the rights of individuals, and a glorification of centralized government power."

But does it work? Yes and no. About 50 per cent of South African industries fudge apartheid restrictions in order to operate more efficiently, and such responses to market forces as have managed to flourish are in large measure responsible for the advances made by blacks, coloreds, and Asians. The market will probably be the death of apartheid, which is why disinvestment has been such a debacle for blacks and, in some ways, a boon to Afrikaners. American proponents of sanctions and disinvestment (Jesse and Teddy) ignore the very positive effects foreign companies have had in diminishing the reality of apartheid.

Some examples demonstrate how wrong-headed liberal good intentions (which, remember, pave the road to hell) have been: The twenty-year-old UN embargo on arms sales has succeeded in creating a booming arms industry in South Africa, thus strengthening its police powers. And the pullout of American and European corporations has meant that white South Africans have been able to acquire enterprises at deeply discounted prices, and have then been able to run the companies without regard for the free-market principles which were the hallmarks of the former American and European managers.

In the book's best chapter, "Apartheid: Rhetoric versus Reality," Williams observes that the "protection of white workers from open market competition with blacks was a costly proposition.... [W]age differentials ... gave business considerable inducement to find ways to substitute black for white labor." The economic protection of whites produced - and it is ever thus in any "planned" system - unintended consequences. Most paradoxically, it created, sub rosa and de facto, the opposite of its intent: demand and opportunity for black labor. The market's momentum is unstoppable, and yet apartheid laws endure. Many whites refuse to do "kaffirwerk" at the very time when blacks, for market-oriented reasons, are making inroads into previously restricted areas of labor and enterprise. (Will white South Africans become redundant when, finally, all work is kaffirwerk:) Governments can legislate market restrictions," Williams writes, "but - try as they may - governments cannot legislate market forces completely out of existence." No, they cannot. American liberals might have helped end apartheid had they recognized the transforming power of markets, even when the markets aren't wholly free.