AFRICAN AND SOUTH AFRICAN ECONOMIC HISTORY

IPSU • 2011Johan Fourie

GEOGRAPHY AND LUCK

IPSU • 2011Johan Fourie

Die origin of man

Anatomically modern humans migrated out of Africa between 100 000 and 50 000 years ago – the so-called “Out of Africa” hypothesis There were already groups of proto-humans

(that moved out of Africa about 2.5 million years ago, Homo Erectus) in the rest of the wolrd (like the Neanderthals in Europe), but they were probably completely replaced by Homo Sapiens

All people are thus biologically almost identical – biology is thus not the reason why some are rich and others poor

Out of Africa

Source: Wikipedia 2011

Hunters

For 99% of our history, we were hunter-gatherers

Nomadic lifestyle Exploit natural resources with limited

impact on the environment; simple technology; low population density

Until about 10000 BCE…

Guns, germs and steel

History followed different routes because of geographical differences, not biological

Ultimate causes: animal and plant domestication and the geography of continents

The origin of agriculture

Source: Wikipedia 2011

Die first settlers

The agricultural revolution occurred because of dramatic changes in the environment (climate)

Some plants and animals were domesticated (as apposed to ‘tame’)

People were thus not forced to search for food, but could settle close to a permanent supply of energy

They were thus the first settlers

Domestication

Plants and animals

The Neolithic Revolution

Agriculture » settled homes » higher population density » surplus production » specialisation

Specialisation » soldiers, artists, magicians… and kings

Surplus » something to steal NR results in economic development (in

the long-run) but also inequality

The consequences of the NR The equality of the hunter-gatherer

disappeared Aside from the new threat to security,

the new towns required a new way of social organising – a gap between those that work and those that manage

In short: hierarchies of wealth, status and power are characteristic of the new societies

The consequences of the NR In the early agricultural villages of

10,000 years ago, the seeds of our own way of life were sown: economic specialization, the possibility of private as opposed to or complementary to communal life; the opportunity to accumulate wealth in material objects; the opportunity to accumulate new techniques and tools and knowledge

Development in the long-run

Societies adapt to changing environments Some adapt better than

others (Jared Diamond) After the fall of the Roman

empire in 476 CE, Europe in turmoil

Progress in the East Especially in China, 700 CE –

1400 CE

Questions from the session?

Answer a 12 year-old African kid in Zambia, who asks you why white people are rich and black people poor.

Some societies adapt better to changing environments. What lessons can we learn from these trends for the future?

AFRICA

IPSU • 2011Johan Fourie

Africa

How well do you know your continent? How many countries How many people

Jared Diamond: How Africa Became Black

Africa: Where did it all begin? Cradle of mankind – South Africa, Kenya? First wave moving out of Africa Second wave replacing first wave Within Africa, the diversity was/is

immense

What we do know

Five major human groups Blacks, whites, African Pygmies, Khoisan

and Asians Of course, unlike European history, Africa

has little written history Use of language can tell us much about

Africa’s past

The migration of the Banto

The Niger-Congo language family is distributed all over West Africa and most of subequatorial Africa

How do we know where it started? English example Same line of reasoning suggests a

significant migration of the Banto from Cameroon to the south

The Bantu migration

Since 1500 BCE Bantu settlers migrated east and south from modern day Cameroon and Nigeria

Better technology compared to existing inhabitants (Khoi and San)

Conflict or amalgamation?

Why? What was the Banto’s advantage?

All of the domesticated plants in Africa stem from north of the equator – coffee, yams, sorghum, oil palm and kola nut

Sole animal that was domesticated is the guinea fowl – all others came from Middle East/Asia through trade

Khoisan and Pygmies was thus at disadvantage

The Bantu migration

By 300 CE they reach South Africa, spread over the entire country (except the Western- and Northern Cape) Why not there?

Farmers but also cattle herders, especially in the dryer parts

Metal working possible – bronze tools – better technology than the Khoisan (who used stone tools)

Great Zimbabwe and Monomotapa

Great Zimbabwe 1100-1450 CE Monomotapa (1430-1760)

Pre-European civilizations

Mfecane

Mass migration of tribes in the North, East and Central South Africa

As a consequence of Shaka’s wars, who build the Zulu’s into a powerful tribe through military, social, cultural and political reforms Reduce the power of witchdoctors The iklwa – a spear, ‘bullhorn’-technique

Europeans in Africa

Shaka’s success – and the change that it brought – meant that large parts of the country were left vacant

Into this ‘emptiness’ after the Mfecane, a group of settlers arrived in the 1830s, claiming the land for themselves The Great Trek

But first, where did these settlers come from?

SLAVERY IN AFRICA

IPSU • 2011Johan Fourie

Ethnic diversity

Hard facts

Four trade routes Trans-Atlantic Indian Ocean Trans-Saharan Red Sea

Correlation

Instrument

Regression

Two regressions First explains the

instrument Second uses

instrument to test hypothesis

The stars indicate significance

Thus: causality proved!

Conclusions?

INSTITUTIONS

IPSU • 2011Johan Fourie

AJR

African underdevelopment is due to historical institutions

But how to measure historical institutions? Instrumental variable – settler mortality!

Mortality

Settler mortality determined the type of institutions that were imposed by the European settlers

These institutions would later result in lower growth

COLONISATION

IPSU • 2011Johan Fourie

Diverse experiences

Case study: Congo 10 million murdered or more from 1885 to 1908 when Belgium

took it over as a colony. has been virtually ignored in books on genocide. Yet, this genocide far surpassed in human corpses most every

gemocide in the 20th Century except that by Stalin, Mao, and Hitler.

But…

Jomo Kenyatta

We do not forget the assistance and guidance we have received through the years from people of British stock: administrators, businessmen, farmers, missionaries and many others. Our law, our system of government and many other aspects of our daily lives are founded on British principles and justice

Discussion questions

Its clear that atrocities have been committed in Africa in the name of development

If any, what were the benefits from colonisation?

If you could retell history, how would you change the European “invasion” of Africa?

SETTLERS IN SOUTH AFRICA

IPSU • 2011Johan Fourie

Die VOC 1602-1800 Goal: to undertake

trade voyages to the East Spices

4785 ships, nearly one million employees

An extremely brief overview of my PhD

The nature of wealth Size, growth and structure of wealth in the CC

Material culture and standards of living Specialisation and diversification of production

A measure of income (GDP) The causes of wealth

Supply: French Huguenots Demand: Ships

The distribution of wealth Wealth inequality Income inequality

45

The Cape Colony

Brief history of settlement European settlement in

1652 by VOC First 9 Company

officials released to become independent farmers in 1657

In 1688, roughly 150 French settlers (Huguenots) arrive

After 1700, immigration discouraged

Slow expansion until 795 British rule

46

The Cape Colony

Characteristics of Cape economy Three views

Earlier historians (De Kiewiet, De Kock, Theal): “Cape was an economic and social backwater”

Recent historians (Guelke, Giliomee, Shell, Feinstein): Cape was poor, but with pockets of wealth

Economists (Van Duin and Ross, Brunt): Cape was growing faster than previously thought based on quantitative evidence – though their evidence doesn’t support their case

Cape was based on slave labour (1658) Three groups: Officials and wealthy elite farmers,

middle-income farmers and traders in Cape Town, poor, mostly frontier farmers

VOC institutions/policies: monopsonist buying, prohibition on trade and manufacture

47

Institutions and colonial societies ‘Institutions’ matter

Capital accumulation, quantity and quality of labour and innovation and technology are merely the embodiments, or proximate causes, of growth and are themselves influenced by institutions

Colonial societies are the setting for three important contributions: Acemoglu, Johnson and Robinson (2001,2002) Engerman and Sokoloff (2000, 2002, 2005) La Porta, Lopez de Silanes and Shleifer (2008)

48

Institutions and colonial societies

What institutions? Extractive versus settler (AJR) Tropical versus temperate (ES) Legal origin (LLS)

First two theories assume settlers are homogenous LLS – only difference is legal origin

Surely settlers are not all similar? Modern trade theory and literature on

migration Can we show this using evidence from

the Dutch Cape Colony?

49

Research question

We compare wine and wheat production of the Huguenots and the other settlers If different, skills acquired in their country of origin may

explain these differences But maybe it’s not skills. Maybe it’s because they received

more land? Or capital or labour? Or technology? Maybe it’s language, or legal origin, or simply, French

institutions Or maybe it’s other forms of human capital (literacy)

We then split the sample into French from wine-producing regions and French from non-wine producing regions I.e. thus removing all claims of institutional, religious and

cultural differences

50

Data and Methodology

Opgaafrolle and dummies

51

Data

Opgaafrolle of the VOC spanning 1663 to 1773 Roughly first century of Dutch settlement

Tax records Information on assets rather than

consumption and income Wealth and income inequality (Fourie and Von

Fintel 2010a, 2010b)

52

Data

Agricultural indicators Tithe on grains which was often evaded

Rather: “inventory” captured grain sown (ST assets) Wine production taxed upon entry into Cape Town

Vines represent a more long-term asset Sheep and cattle ownership Horses

Transport Carriages a display of wealth by gentry

Pigs Unevenly distributed and low prevalence

53

Data

Non-agricultural indicators Large sample of individuals with zeroes on all

agricultural indicators Few variables that capture other commercial interests So non-farmers appear to flesh out a large bottom tail of

the wealth distribution Land – no information Slaves

Vital input into the production process Status symbol

Weapons Sporadic measurement and evidence of inferior products

54

55

RESULTS androbustness checks

Descriptives and regression analysis

57

Descriptive results

58

Group N HH SlavesKnech

ts Vines Wine

Wheat Reape

d CattleHorse

sNH 6848 M 3.57 5.04 0.15 3.80 2.28 22.98 35.55 5.80 SD 2.86 8.46 0.77 11.54 7.64 64.22 65.07 10.08NWH 1038 M 3.62 3.73 0.06 3.65 2.26 20.01 31.78 4.42 SD 2.82 6.28 0.29 8.81 6.55 55.14 44.15 6.69WH 1192 M 4.05 4.03 0.08 6.88 4.83 15.58 31.01 4.54 SD 3.16 6.70 0.36 12.87 10.92 41.05 40.86 6.81Total 9078 M 3.64 4.76 0.13 4.19 2.61 21.67 34.52 5.48 SD 2.90 8.04 0.69 11.49 8.08 60.71 60.32 9.39

Wine (leaguers) Wheat Reaped (muids)NH NWH WH NH NWH WH

1700 1.16 1.18 1.40 4.32 2.65 3.691709 0.98 0.55 0.83 17.45 7.30 8.141719 0.80 0.44 0.98 9.45 5.93 3.761731 0.75 0.55 1.13 8.68 6.65 5.461741 0.33 0.25 0.67 10.55 11.76 8.331752 0.49 0.54 1.18 4.72 3.54 4.201757 0.61 0.82 1.23 3.36 1.64 1.531773 0.63 0.93 1.89 3.73 5.51 2.82

TABLE 1: Average household ownership per type of asset, farmer sample

Note

s:

N

=

ob

serv

ati

on

s,

HH

= h

ou

seh

old

siz

e,

M =

m

ean

, S

D

=

stan

dard

d

evia

tion

. O

nly

fa

rmin

g

hou

seh

old

s are

in

clu

ded

in

th

e s

am

ple

.

TABLE 2: Mean household per capita production levels, by population groups over time

Note

s: N

= o

bse

rvati

on

s, H

H

= h

ou

seh

old

siz

e,

M =

mean

, S

D =

sta

nd

ard

devia

tion

. O

nly

fa

rmin

g

hou

seh

old

s are

in

clu

ded

in

th

e s

am

ple

.

Mean household per capita output of wine, 1700 - 1773

59

Descriptive results60

0.2

.4.6

.81

FGT(

z, a

lpha

= 0

)

0 8 16 24 32 40Poverty line (z)

Non-Hugenot Non-Wine Producing Hugenot Wine Producing Hugenot

FGT Curves (alpha=0)

Figure 1: Cumulative Density Functions of Wine Production by group - 1773

Results IDependent Variable: log(Wine per household member produced) (in leaguers), full farmer sample, OLS

(1) (2) (3) (4) (5) (6) (7)

NWH 0.191 0.482*** 0.510*** -0.128 -0.081 -0.343*** -0.516***WH 1.721*** 1.917*** 1.793*** 0.899*** 1.030*** 0.764*** 0.653***Slaves 0.168*** 0.166*** 0.044*** 0.068*** 0.068*** 0.067***Slaves*NWH -0.011 -0.022 -0.016 -0.009

Slaves*WH 0.014 -0.074*** -0.073*** -0.066***Knechts 0.416** 0.369** 0.008 0.096 0.093 0.106Knechts*NWH 1.468 -0.894 -0.84 -0.842Knechts*WH 2.218* 1.877** 2.004** 1.914**Vines 0.132*** 0.120*** 0.120*** 0.121***Vines*NWH 0.112*** 0.117*** 0.117*** 0.114***Vines*WH 0.03 0.048** 0.048** 0.047**

Cattle -0.001 -0.003* -0.003* -0.002Wheat reaped 0.011*** 0.010*** 0.010*** 0.010***Horses 0.01 0.018 0.018 0.017Stellenbosch 1.419*** 1.403*** 1.399***Drakenstein 0.781*** 0.726*** 0.693***Swellendam 0.125 0.095 0.067Married to NWH 0.369*** 0.380***Married to WH 0.368*** 0.421***Born abroad 0.687***Coertzen -0.22Year dummies Yes Yes Yes Yes Yes Yes Yes

Constant -2.420*** -3.115*** -3.095*** -3.531*** -4.213*** -4.223*** -4.294***R-squared 0.104 0.296 0.297 0.542 0.564 0.565 0.566N 9078 9078 9078 9078 9078 9078 9078F statistic 48.121 148.702 129.223 134.253 217.507 204.4 197.634 N

OTES

: N

WH

= H

ug

uen

ots

fro

m n

on

-win

e p

rod

uci

ng

reg

ion

s. W

H =

H

ug

uen

ots

fro

m w

ine-p

rod

uci

ng

reg

ion

s. B

ase

cate

gory

: n

on

-Hu

gu

en

ots

an

d t

he y

ear

17

00

. W

heat

reap

ed

is

measu

red

in

mu

iden

, V

ines

in

nu

mb

er

of

thou

san

ds.

Con

vert

ed

to h

ou

seh

old

per

cap

ita levels

. Est

imate

s are

weig

hte

d b

y h

ou

seh

old

siz

e a

nd

sig

nifi

can

ce levels

are

b

ase

d o

n t

he u

se o

f ro

bu

st s

tan

dard

err

ors

.. *

** d

en

ote

s si

gn

ifica

nce

at

the 1

% s

ign

ifica

nce

level, *

* at

5%

an

d *

at

10

%.

Results II

(1) (2) (3) (4) (5) (6) (7)WH 1.509*** 1.430*** 1.286*** 0.998*** 1.003*** 1.029*** 1.140***Slaves 0.172*** 0.156*** 0.046*** 0.052*** 0.049*** 0.029Slaves*WH 0.025 -0.047** -0.053** -0.050** -0.034Knechts 2.148** 1.784 -0.541 -0.518 -0.357 2.651***Knechts*WH 0.785 2.490 2.559 2.292 -0.977Vines 0.236*** 0.237*** 0.235*** 0.257***Vines*WH -0.066* -0.068** -0.066** -0.088Cattle -0.001 -0.001 -0.001 -0.003Wheat reaped 0.011** 0.012** 0.013** 0.013*Horses 0.002 0.000 0.004 0.045Stellenbosch 1.076*** 0.982*** 0.923*** 0.852*Drakenstein 1.264*** 1.158*** 1.036*** 0.962***Swellendam 0.294 0.240 0.101 0.158Married to NWH 0.426*** 0.412** 0.33Married to WH 0.380** 0.419*** 0.285Born abroad 1.019*** 0.788***Coertzen -0.148 -0.158Non-numeracy 0.003Year dummies Yes Yes Yes Yes Yes Yes YesConstant -1.977*** -2.119*** -2.038*** -4.397*** -4.634*** -5.270*** -5.376***R-squared 0.092 0.212 0.213 0.602 0.604 0.611 0.596N 2230 2230 2230 2230 2230 2230 1675F statistic 16.349 26.165 23.828 95.992 90.772 91.677 70.06

NO

TES

: W

H =

Hu

gu

en

ots

fro

m w

ine-p

rod

uci

ng

reg

ion

s. B

ase

ca

teg

ory

: N

on

-Win

e H

ug

uen

ots

an

d t

he y

ear

17

00

. W

heat

reap

ed

is

measu

red

in

mu

iden

, V

ines

in n

um

ber

of

thou

san

ds.

Con

vert

ed

to

hou

seh

old

per

cap

ita levels

. Est

imate

s are

weig

hte

d b

y

hou

seh

old

siz

e a

nd

sig

nifi

can

ce levels

are

base

d o

n t

he u

se o

f ro

bu

st s

tan

dard

err

ors

.. *

** d

en

ote

s si

gn

ifica

nce

at

the 1

%

sig

nifi

can

ce level, *

* at

5%

an

d *

at

10

%.

Dependent Variable: log(Wine per household member produced) (in leaguers), full Huguenot sample, OLS

Results III

(1) (2) (3) (4) (5) (6)NWH 0.26 0.249 0.100 -0.006 -0.097 -0.219WH 0.563*** 0.946*** 0.566*** 0.242 0.084 -0.028Slaves 0.198*** -0.002 0.01 0.01 0.009Slaves*NWH 0.060* -0.019 -0.019 -0.012Slaves*WH -0.04 0.012 0.011 0.016Knechts -0.096 -0.343 -0.242 -0.241 -0.229Knechts*NWH 2.379* 0.212 0.287 0.277Knechts*WH 2.836* 1.781* 1.918* 1.831*Wheat sown 0.317*** 0.312*** 0.311*** 0.312***Wheat sown*NWH 0.145*** 0.154*** 0.155*** 0.149***Wheat sown*WH 0.06 0.048 0.046 0.041Cattle -0.002 -0.003 -0.003 -0.003Wine 0.045** 0.007 0.006 0.006Horses 0.126*** 0.141*** 0.141*** 0.141***Stellenbosch 0.978*** 0.972*** 0.966***Drakenstein 0.975*** 0.981*** 0.952***Swellendam -0.371*** -0.372*** -0.392***Married to NWH -0.146 -0.142Married to WH 0.291 0.285Born abroad 0.572**Coertzen 0.06Year dummies Yes Yes Yes Yes Yes YesConstant -2.296*** -3.059*** -3.377*** -3.919*** -3.908*** -3.969***R-squared 0.124 0.278 0.545 0.558 0.558 0.559N 9078 9078 9078 9078 9078 9078F statistic 58.898 111.596 139.109 297.805 277.66 262.055 N

OTES

: N

WH

= H

ug

uen

ots

fro

m n

on

-win

e p

rod

uci

ng

reg

ion

s. W

H =

H

ug

uen

ots

fro

m w

ine-p

rod

uci

ng

reg

ion

s. B

ase

cate

gory

: n

on

-H

ug

uen

ots

an

d t

he y

ear

17

00

. W

heat

sow

n is

measu

red

in

mu

iden

, W

ine in

nu

mb

er

of

leau

gu

ers

pro

du

ced

. W

heat

reap

ed

is

con

vert

ed

to

hou

seh

old

per

cap

ita levels

. Est

imate

s are

weig

hte

d b

y h

ou

seh

old

si

ze a

nd

sig

nifi

can

ce levels

are

base

d o

n t

he u

se o

f ro

bu

st s

tan

dard

err

ors

.. *

** d

en

ote

s si

gn

ifica

nce

at

the 1

% s

ign

ifica

nce

level, *

* at

5%

an

d *

at

10

%.

Dependent Variable: log(Wheat produced) (in muiden) full sample, OLS

Interpretations and conclusionsSettler skills and colonial development

64

Location?

65

Approximate location of 37 Huguenot families in the Drakenstein/Franschhoek

area

Digital imprint, Map division: South African Library, Cape Town,

2008.

• “This valley is on account of its extraordinary fertility the best portion of the Cape. It was unusually well cultivated through the diligence and untiring industry of the first French colonists and has been maintained in this state by their successors. The fertility of this little district can be imagined from the fact that the first colonists arrived there destitute of all means, and like all others had to borrow from the Company their cattle, farm implements, seed and bread-corn and everything else they needed; yet were the first to repay their debt amounting to many thousands of gulden.”

– O.F. Mentzel

• Seems to be productivity rather than natural fertility

Controls

Land Region dummies

Capital Slaves, wheat reaped, horses

Labour Knechts, household size

Married to WH***, married to NWH*** Born abroad*** Coertzen’s dummy (seven farming families) Non-numeracy (only within FH, smaller sample) Time dummies***

66

Skills

We argue that it was because the Huguenots brought specific skills from France, skills that gave them an advantage in making wine There was always a market for the best wines in Cape Town; ships

needed wine that lasted their entire voyage, i.e. quality wine “It must be understood that not all Cape wines are suitable for

maturing. What is not good wine by nature and quality (or, as I think, has not been properly prepared) is not improved by long seasoning, but only becomes sharp and prickly as they say there. Really good, well prepared and well cellared Cape wines improve with age.” OFM

WH produced higher quality wines, i.e. wines that would last longer

These skills they protected, either deliberately – “Many colonists at the Cape do indeed know the secret of

preparing good wine, but they are not such fools as to give away their secrets” – OFM

or accidentally due to the high costs of transfer – years of learning-by-doing

Importantly: a handful of farmers at the top of the distribution drive results, protecting their skills in wine (but not wheat) production

67

Interpretations

More broadly, the results also suggest: A re-evaluation of the idea that settler

groups are homogenous I.e. that it is only the conditions in the settler

economy that determine their “success” Settlers’ skills may shape the “production

function” of the new settlement A rethinking of the Engerman-Sokoloff

hypothesis; with implications for long-run inequality

68

SA ECONOMIC HISTORY

IPSU • 2011Johan Fourie

Mfecane

Period of tribal warfare (before the collision with whites)

Stronger coastal tribes (including the Zulu and Xhosa) shifted the relatively stable balance of power in the region – forced coalitions or war

By the turn of the century (1800), the Mfecane had started, of continuous warfare between tribes

Many areas of the country was left deserted as clans fled or were killed

Shaka Zulu

Using new techniques (the bull-head technique) his reign united the tribes of Natal

After his assasination in 1828 by his own brothers, he was followed by Dingane (which we meet again later)

1795 – 1806 Cape

British protectorate (1795-1803) Batavian rule (1803-1806) British rule (1806) British colony in 1814

The eastern border

Frontier farmers move to the east checked by the Xhosa

Frequent Xhosa-wars, small raids between the farmers and the Xhosa, resulting in low human loss

Andries Stockenstrom

1820 British settlers

Due to overpopulation in England and rapid increases in poverty and the unemployment rate – British government decides to send settlers to SA to anglicanize and stabilise the frontier border

Many of these settlers not farmers – traders, craftsmen

1820 Settlers

80 000 applicants, 4000 arrived Settled in eastern Cape – Cradock,

Grahamstown Many moved to urban areas soon after

their arrival

“Die Groot Trek”

The Great Trek – 1836 Who? Afrikaners Reasons:

Lack of land Security, continuous trouble with Xhosa Political marginalisation Oliver Shneider: they felt that they were

treated as second-class citizens

“Die Groot Trek”

Logistics: 6000 people left by 1840 (about 10% of the

white population in the Cape Colony) By 1845, 15000 Afrikaners and 5000

servants had left Traveling in groups with one leader: Hendrik

Potgieter (Tarka), Gerrit Maritz (Graaff Reinet), Piet Uys (Uitenhage)

“Die Groot Trek”

Extremely dangerous: Battle of Vegkop: 35 trekkers vs. 6000

Ndebele warriors – only 2 trekkers were killed, but they lost all their cattle

Inter-Trekker rivalry Destination unknown: Potgieter wanted to

go to the North, Piet Retief to Natal

Piet Retief

Typified as the “hero” of the Afrikaners

Very little on his CV suggests hero status

He, and his party was killed by Dingane when trying to sign treaty in 1838

“Bloedrivier”

The Trekkers (only called Voortrekkers after 1880) were motivated by the fact that Zulu chief Dingane kaSenzangakhona had killed one of their leaders, Piet Retief, after negotiating a treaty with him. Dingane's impis had also attacked Voortrekker encampments, killing an estimated 500 women, children, and men, including servants, most notably at Blaukraans.

“Bloedrivier”

“Bloedrivier”

After two hours and four waves of attack, Pretorius ordered a group of horsemen to leave the encampment and engage the Zulu in order to disintegrate their formations. The Zulu withstood the charge for some time, but rapid losses led them to scatter

Cilliers noted later that " 'we left the Kafirs lying on the ground as thick almost as pumpkins upon the field that has borne a plentiful crop”

By the 1860s

Large parts of South Africa had been settled by white farmers – many of them very poor

Cape Town and areas close to it had developed rapidly since the establishment of British rule

But in 1867 something happened that would set the future of South Africa on a totally different course…

1867 - 1899

Diamonds (1867) Kimberley founded

Gold (1886) Johannesburg founded

Massive shift in economic power of South Africa Severe political, cultural and social

consequences Results in Anglo-Boer War

Before the war

1894 – Glen Grey Act 1896 – Jameson Raid 1899 – Anglo-Boer War begins

After the war

South Africa becomes Union in 1910 Free-market policy until 1924 Pact-government of Hertzog – more

government involvement Industrialisation Poor white problem Great depression Afrikaner nationalism Second World War

LESSONS FROM THE POOR WHITE PROBLEM FOR BLACK POVERTY TODAY

IPSU • 2011Johan Fourie

88

Overview

Introduction Depth and severity of the problem Causes of poverty Economic growth Solutions to poverty Two important lessons

More successful Less successful

Policy proposals Conclusions

89

Introduction

The “discovery” of poor whitism by the turn of the century

Major economic, political and social crisis by the 1930s

Due to various reasons, poor whitism largely eradicated in five decades

Black poverty is major economic, political and social problem

Again a number of policies have been implemented to address the problem

What can we learn from the poor white experience of the 1930s?

90

Depth and severity

Poor quantitative sources make comparisons difficult (Carnegie report does present us with some useable info)

Data about poor whites in Natal Result: Black poverty is today much larger and

more severe than white poverty of the 1930sClass 1(R3571)

Class 2(R7143)

Class 3(R10714)

White poverty (Carnegie 1932) 19.35% 60.22% 83.33%

Black poverty (AMPS 2000) 59.32% 84.41% 94.74%

91

Causes of poverty

Many reasons for poor white problem Including poor education system Urbanisation The Anglo-Boer War Livestock losses Droughts Culture and language differences Government policy

Compare with reasons for black poverty today Poor education system Urbanisation Culture and language differences Government policy

92

Economic growth

93

Solutions

Various government policies to eradicate white poverty Includes an improved education system Higher social spending Industrialisation A repressive and discriminatory labour

system Government policies to eradicate black

poverty today Improving education and skills training High social spending Infrastructure and industry development A discriminatory labour system

94

Two important lessons

Most important factor that contributed to the eradication of white poverty before 1970 was the high economic growth rates achieved in SA

For the poor to participate in this higher economic growth, government policies was necessary

95

Successful government policies

Improvement in both the quantity and quality of education

Higher social transfers to the poor to ensure a basic living standard

Protection of property rights in cities for poor whites

A programme of industrialisation – such as the founding of ESCOM (1923) and ISCOR (1928)

96

Less successful government policies

The discriminatory labour legislation after 1924 that intended to protect white workers

This legislation, labeled “temporary discrimination by Verwoerd in 1934, did little to alleviate white poverty

97

Policy proposals for government today

Possible policy strategies to implement: Improve the quality of education (and the

institutional culture, maybe through cooperation from NGO’s or churches).

Provide property rights to the poor (on the land which they already live on, not land redistribution as practiced today)

Develop high-technology industries and economic infrastructure – such as investment in broadband and biodiesel

Relax labour laws

98

Concluding remarks

Where Afrikaner nationalists proclaimed 40 years after the poor white problem that the nation was cured by its own policies, it is not entirely true

Economic growth (and the potential to make use of that growth) is what saved the poor white

Similarly, BBEE (Broad-based Black Economic Empowerment) will not solve the massive black poverty problem

The government can only implement strategies to ensure that a large part of the poor population will benefit from higher economic growth

TWENTIETH CENTURY

IPSU • 2011Johan Fourie

After the war

South Africa becomes Union in 1910 Free-market policy until 1924 Pact-government of Hertzog – more

government involvement Industrialisation Poor white problem Great depression Afrikaner nationalism Second World War

1948

Election victory for Afrikaners – NP wins parliament (with little more than 40% of the votes)

Little quirks of history – Smuts and Cambridge

DF Malan head NP – rapid changes follows

7 decades of economic performance

Policy of Apartheid

Groups Act (1950) Bantu Education (1954) Homelands (1956) 1958 – Hendrik Verwoerd becomes prime

minister

1960s – Great Apartheid

1960 – Sharpeville, Winds of Change, Referendum

1961 – Republic of South Africa 1963 – Rivonia trial 1966 – Hendrik Verwoerd assassinated

Rough and tumble decades

1972/73 – Oil crisis, first strikes (Durban)

1976 – Soweto uprising

1977 – Steve Biko dies in prison

Rough and tumble decades

1985 – Rubicon speech (PW Botha)

1990 – FW de Klerk releases Mandela

Instability before 1994

1990 – ANC unbanned 14 000 – 16 000 people die between

1990 and 1994, mostly in fightings between ANC and Inkatha members

Chris Hani assassinated (1993)

1994 first democratic elections