Special Hearings — Business Hearings — 1997-11-12

MR CASSIM: Thank you, Mr Chairman.  I want to start by raising a controversial point and I don't think this is the appropriate time, but nevertheless I think it is important particularly in so far as the point emerged in the discussion between Ann Bernstein and Dr Boraine.
 I want to say that, quite explicitly, that the business sector is not a homogeneous category.  That it is very difficult to classify the business sector as a (indistinct) and we have to look at it as heterogeneous, as made up of different groupings, different interests within the business sector and if one wants to arrive at a (indistinct) hear and view, one has to do that sort of analysis which I think is necessary if one is aiming to arrive at a coherent picture.
 Now, that doesn't mean that at the same time we cannot address or analyse the link between the Apartheid Government and the economy.  Yes, clearly we can and there are ways of doing that, because Apartheid by definition laid the ground rules of the thing which business operated and the environment within which business accommodated itself.
 So there are clear links, but at the same time we have to be careful about how we do that.  If we do that historically and if we look at two key periods.  If we look at the period from 1960 - 1973, then the contrast in characteristics stand out spectacularly.  In particular we had a massive generation of wealth and simultaneously the intensification of Apartheid.
 Now, that - during that period the growth rate was about 5.5 percent per annum and it was a period in which the dividends of a high growth rate produced very little benefit to the majority of people.  In fact it laid the bases for conditions which restricted the accumulation of capital on the part of Black people.
 When one looks at a later stage, particularly from 1974 onwards, we had the South African economy suddenly experiencing a decline in its growth rate.  It obviously became more difficult to finance the economy.
 To put it differently, what happened was that the Apartheid growth model began experiencing problems and the growth process was being arrested and thereby the growth capacity of the economy.  In other words, the cost of Apartheid began to outweigh the benefits or the gains.  Only in this stance its success was its undoing.  So the - if one is looking for a relationship with the business sector, yes, one has to look at particular policies and this unfortunately did not emerge from the discussions that - from the submissions that I heard today.
 In particular the relationship and the role of parastatal corporations, because if one looks at the history and development of the way Apartheid policy worked, what we had, we had a highly interventional state and a highly interventionalist economic policy which on the one hand stripped Blacks of economic rights, political rights and economic rights and conferred privileges and benefits to business.
 This happened through the protection of local manufacturing industry by tariffs and import controls.  The establishment of state corporations, the role of the state corporations, the expansion of these corporations, like ISCOR, FASCOR, ARMSCOR.  
 The role of the IDC.  The role of the IDC was expanded and it invested in mining, in finance.  So the success of Apartheid economic policy of the - the success of the historical project of Apartheid was quite remarkable in the way it penetrated the economy and benefitted the economy, because if one looks at a particular example.  If one looks at the example of tariffs.  Tariffs were deliberately used to keep out low cost food imports and farm production was controlled, priced and distributed by a series of control boards.
 I'm using this example, because this example stretches in the field of finance and in the field of industry, but I think it's a pertinent example.  Farm production was stable as domestic prices were stabilised above world prices.  While we exported surpluses at loss.  So clearly in that sense the result is that the agricultural sector prospered while millions of Black South Africans were not able to afford a balanced diet and even suffered from malnutrition.   So, there's a clear contradiction in outcome and in the way in which the state intervened in economy.  This process certainly did not stop with agriculture.  It expanded into industry, into commerce, finance and its undisputable that the Nationalist Government used the power of Government to promote the power of the business sector.
 In other words it gave oxygen to one sector of society and it suffocated the other sector.   ....(tape ends)