Special Hearings — Business Hearings — 1997-11-11

DR RANDERA: Professor I'm sorry, can I stop you there?

PROF TERBLANCHE: It's only a paragraph.

DR RANDERA: Last paragraph.

PROF TERBLANCHE: I'm in full agreement with Mr Mbeki that the stability of the new South Africa can be at stake if we fail to find a satisfactory of solution of inequality.  A satisfactory degree of systemic justice can perhaps be attained by imposing a wealth tax of say 0,5% annually for 10 or 20 years on all persons with nett assets of more than R2 million and to use the yield of this levy for the upliftment of say the lower 40%.  A levy on wealth for redistributive purposes is preferable above any form of taxation. Such a taxitation would be levied on wealth accumulated during the apartheid century.
 I will stop there thank you.

DR RANDERA: Professor thank you very much for all the work you've put into this submission and for the co-operation that you have had with the Commission, not only for this hearing but other hearings as well.  I just want to ask a few questions really for clarification rather than to amplify what you've said already.  You mentioned earlier the reasons why political  supremacy and racial capitalism impoverished Africans and enriched whites undeservedly.  Can you give a short summary of those seven points?

PROF TERBLANCHE: Yes, firstly the Africans were deprived  of  a large part of land on which they conducted successful traditional farming for centuries.  White farmers on the other hand had the privilege of property rights and access to very cheap and docile African Labour, my father included.  Secondly, for decades, millions of Africans were paid exploitative wages, in all sectors of the economy but mainly in gold mining and agriculture.
 The fact that the Africans were political powerless and economically unorganised might make them easy prey for super-exploitive for the white workers.  
 Thirdly, a great variety of discriminative legislation, not only deprived Africans from the opportunity to acquire skills, but also compelled and humiliated them to do really unskilled work at very low wages.  While discriminatory measures were often to the disadvantage of business, they were very much to the disadvantage of white employees.   
 Fourthly, perhaps the greatest disadvantage which the prevailing power structures had had for Africans is that these structures deprived them from opportunities to accumulate human capital, the most important form of capital in the twentieth century.  For the first three quarter of the century, social spending, on education, pension etcetera, on Africans, was per capita more or less ten to eight times smaller than on whites.  In 1970, the per capita spending on white education was twenty times higher than the per capita spending on Africans.  
 Fifthly, the fact that a legal right to own property and to conduct a business was strongly restricted in the case of Africans, also deprived them of the opportunity to accumulate property and to develop entrepreneurial and professional capabilities.  The position of white was again the complete opposite, they enjoyed property rights, they deprived Africans from their land, they had access to capital and the opportunity to develop business organisations, entrepreneurial capabilities etcetera.
 Sixthly, the liberation struggle and the resistance against it had a devastating effect on the poorer sixty- percent of the African population; their income.  Already very low in 1975, decreased by more or less thirty five percent from 1975 till 1991.  The fact that the poorer forty to fifty percent of the total population, more or less eighty million people, cannot satisfy their basic human needs on a regular basis, making it so much more urgently necessary to do at least something meaningful to improve the quality of their poverty.   Seventhly, it was not only individuals that have been impoverished and destroyed by the racist system, but also African societies, while it also prevented the South African people from becoming a society.  We can put forward a strong argument, that the depravation, the repression and the injustices, inherited in the racist system, not only impoverished the African population but also brutalised large numbers of Africans.  After decades of apartheid and the struggle against it, the South African society is a very disrupted and divided society.  Not only along racial and ethnic lines but also because of seemingly unreconcilable values and attitudes.

DR RANDERA: Thank you, but I have just one other question, and that's the common perception that that made some people believe that apartheid was destroyed by economic growth but you in fact say that it was destroyed by the lack of it.  Can you enlarge on that point?

PROF TERBLANCHE: Yes, I think the so called 'Oppenheimer thesis'  was originally formulated in the 1950's.  According to this thesis, all that South Africa needs, is a high growth rate for quite a long period.  And then this high growth rate, will generate all kinds of powers and sources of labour etcetera, etcetera; and then in the end it will destroy apartheid.  Now the way in which the coloured and perhaps the Asians were introduced to the higher ranks of labour in the sixties, is perhaps an example of that.  But as you know from 1973 to 1994 South Africa experienced a period of stagnation, the growth rate was only 1.7 percent annually and the per capita income declined by more or less 0,7 percent.  It was twenty years of creeping poverty, and it was in these pressures that in 1989 South African economic situation, with the disinvestment especially after PW Botha's rubicon speech, the outflow of fifty billion rand out of the country.  That South Africa was politically and economically so to speak on it's knees when Mr FW De Klerk made his famous speech in February 1990.

DR RANDERA: Thank you Professor, I have no further,

CHAIRPERSON: Thank you very much.  Russel?

UNKNOWN: Just a very short question, Professor Terblanche and its linked to what Dr Randera asked you, but slightly different.  Not the question of whether there is growth or non-growth.  The more so fundamental argument is the question of free enterprise.  Capitalism is anti-thetical  in the long run, because it needs free labour, needs flexibility, needs investment and that is the more fundamental part of the argument.  How do you respond to that?

PROF TERBLANCHE: Yes, as I said, it is a very controversial argument.  A very controversial question, was 'racial capitalism' I call it, dysfunctional?  Were the racist system dysfunctional for capitalism?  As I say, we can make quite a strong case that more or less until 1960, the racist system may have proved very conducive for capital accumulation, due to the low wages that were paid,  it was possible for South African corporations, to accumulate capital at quite a high rate.
    I granted the point that in the first third of the century one or other system, not necessarily a racist system, of labour repression may have been necessary for the so-called 'take of faith' as has happened in other countries.  But the problem remained institutionalised.  Yet, if the oil crisis did not arise in the beginning of the seventies, and we experienced a five percent growth until ninety nine, then perhaps it would have happened that capitalism would have destroyed racial capitalists.  But the fact of the matter is, it did not happen in the South African case. The lack of economic growth, as I say, was the main reason why all kinds of pressure arised and in this connection disinvestment and as I said the whole economy on its knees played quite and important role when the important transformation started to take place.

CHAIRPERSON: Any other - Hlengiwa?

MS MKHIZE: Thank you, professor.  You seem to have apply your mind a great deal on the issues around economic development and the apartheid policy.  Have you thought much about the (word unclear)?