Conference on the socio-economic trends and policies in southern Africa

UNITED FATIC ITS

AFRICAN INSTITUTE FOR ECONOMIC DEVELOPMENT AND PLANNING

DAKAR

CS/2528-9

/f

CONFERENCE ON

THE SOCIO-ECONOMIC TRENDS AND POLICIES IN SOUTHERN AFRICA

SOUTH AFRICAN SUBIMPERIALI3M

BY

Jane #oles and Robin Cohen

SEPTEMBER 1975

3E Ky co-authorship of this paper is purely nominal. I undertook simply

to present and edit the paper in a form that would he useful for the Lusaka Conference in Ipril 1975. Jane Coles is the true author. A full version of this _paper will he presented as a M.A. Thesis at the Centre of West African Studies, University of Birmingham. Academic footnoting

has been eliminated, hut a list of major sources can he found at the end.

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Page 1.

SOUTH AFRICAN SUBIMFERIALISM

Introduction

The concept of Sub-Imperialism is not well-defined in the aca demie literature. It refers essentially to the industrial develops

of a formerly underdeveloped country, whereby that country manages

gain a certain amount of control over, and economic independence fr

its ties with the industrially developed powers that were responsi"

for its colonisation and incorporation into the world capitalist system.

It refers also to a stage in the underdeveloped country's ^dee lopmont when that country manages itself to expand and create its

'colonial' satellites that supply it with raw materials and act as markets for its manufactured goods; and therefore analyses the oka ^. within the political economy of the underdeveloped country, and :.r .

relations to tho imperial

métropole,

that have combined to produce

that result*

Sub-imperialism is an extension of the debate about tiio poss'.

t'ios of industrialisation in tho Third World. On the one hand d♦G« Frank argues that the possibilities of autonomous development

(he

calls it "positive

involution")

^occur "classically" only if and when the satellite's ties with .the

métropole

arc weakened during per of war and depression, but that development can be restricted agar once the métropole recovers. On tho other hand, critics of Fran- particular Bill Warren, ^argue

that

the possibilities of successful capitalist development within a Third World country are greater tk

Frank and his followers allow and that obstacles to development c'

as much or more from internal contradications as from an imperiali: ,

World link.

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Rage 2.

South Africa is not normally discussed, in relation to this delate.

It is generally regarded as an advanced industrialised country much like

those in the west, hut with the added feature of'a racial policy that

denies the majority black population any participation in the running of

the country. There is no doubt that South Africa has achcved ^a remarkably high level of industrialization for what was once an underdeveloped colony Yet, within this state exist features that arc usually associated with

a colony: stagnant labour reserves struggling for

subsistence,

^a mi r at

labour system, the control of the political authority and economic n. :ourc

by a dominant alien minority, and the total absence of democratic ri, ntr.:

for the majority.

The _presence of underdeveloped regions within ^a developed one anu their interrelationship would suggest that a theory of sub-imperialism

has some considerable explanatory potential. When to this is added the

relationship that South Africa has

achieved,

or is trying to cement, with

countries within the Southern African region as a

whole,

the notion tf sub-imperialism booomos even more opposite.

The most coherent exposition of a theory of sub-imperialism appears in an article by Ruy Mauro Marini on Brazilian sub-imperialism. After the 1964 coup in Brazil, the military loaders advanced ^a political and economic strategy that involved a deliberate and extensive relationship with big, almost exclusively foreign capital. Sub-imperialism was both

a conscious strategy and, as Marini argues, "the form which dependent capitalism assumes

(we

think one should say can

assume)

^upon rea,ching the stage of monopolies and finance capital." Four critical areas are iden¬

tified by Marini:

m

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Page 3«

1)

^the problem

of tho market

2)

the state as consumer,

involving an increase in expenditure

on the military and on

infrastructura.1 development 3)

the alliance

with foreign capital

4)

an

introduction of

a

narrowly-based ''consumer society",

built on the superexploitation

of the unskilled segment

of the labour force#

No simple

transposition from Brazil to South ^frioa can be made,

but each aspect that

Marini identifies has

a

point of.reference in

the South African context

that needs exposition. Before this is

done,

however,

we

note some special factors in South Africa's deve¬

lopment.

Situâtionally—Specific

Factors

South Africa's history ^as a

land of European settlement has been

unlike that of any other

'white settler colony'

^-

a misleading des-

cription as it

conjures

up

images of the white dominions and pays

scant regard to

the complex political configurations that preceded

the establishment of a single

state. The unit which now constitutes

South Africa has not always

done

so.

Namibia was incorporated admi¬

nistratively into

South Africa under

a

League of Nations Mandate in

1919. The rest

of the present territory of South Africa was first

tenuously brought

together by the Act of Union of 1910. It had

previously

contained two Boer Republics, two English colonies, and

diverse African

societies. Prior to the Union, as Potholm says,

"British and Dutch colonial

authorities, independent African groups,

and large numbers

of European settlers formed and reformed politic-1

communities as they vied

for control of southern Africa."

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Pago 4»

The internal political antagonisms in tho region prevented its efficient and unified colonisation and hence •satellisation' by any

one power» Imperial domination was therefore weaker than in other parts of Africa» The most important contradictions were those which

developed in the late 19th century,

a)

between British Imperialism and the Boer Republics of the Transvaal and Orange Free State; and

b)

between British Imperialism and British and other European settlers.

The former was an essentially political contradiction, the latter, an economic one»

The conflict between British imperialism and the two Boer Repub¬

lics crystallized over the control of the gold and diamond deposits

found in the late 19th century, in the Transvaal and the Orange Free

State respectively. British capitalism had to"contend with organised political

institutions,

^— actual states — in their attempts to gain

control over these mineral deposits» Tho conflict came to a head with tho Boer War, and although Britain seemingly won the _war,

it

lost political control of the subsequent Afrikaner-dominated union of South Africa» This can be seen especially in the Afrikaner Nationalist reac¬

tion that followed after 1948» The effect of the constant antagonism between British imperial interests and Afrikaner political hegemony was to weaken the structural dependency relations in which South Africa

was tied, first to British, and then later to a more general Western imperialism.

In the case of

b),

^{the white} settler has been typified as essen¬

tially antagonistic to imperialism because ho benefitted from colonis- lism and wanted its benefit to accrue within the colony, and not to be exported to the imperial métropole»

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European emigration to

South

Africa was a

result of the economic

revolution brought about in the subcontinent by the

discovery of the ;old

and diamond deposits-** Immigrants poured into South

Africa, averaging

'

24,000

a year

between 1890 and 1913» Apart from providing skilled labour

for the new mines, those

imndgrants also provided the basis of

a new nr.nufcácturing class» Gold-miningv had stimulated the

local manufacture

of explosives and other mining requisites.

It "accelerated the

process of urbanization and provided a local market for industrial products,

and thus gave rise to

the" local manufacture of

a

variety of

consumer

goods»

It was in the expanding manufacturing class that

antagonism

to

imperial

interests was centred» From the formation of small pressure-groups such

as the South African Manufacturers' Association started in the Capo in the-.

l890s, developed the manufacturers* demands from the state for full

protection of their products. By 1917

the manufacturing class

was

already

powerful enough to have won

ideological support from the majority

or

M.P.s in the new union government»

(Legassick).

Bob Sutcliffo points out that economic development is possible

where an industrial bourgeoisie, develops that is supported

by

a

state

capable of defending its own

interests. This

was

the

case

in South

Africa. Its long—standing programme of

tariff protection for

new

^industry

has been One of the major contributing factors in. its industrial growth

Boosts tó South Africans Development

South African industrialisation made its greatest ^progress during

the years of

protection afforded by the Boer War, the two World Wars,

and the depression in.Europe that came in

between^thom. This

^was

the

period, of .?positive

involution* for South Africa's

economy.

During the

Bóer'War,

local

industries which processed local agri¬

cultural products or

imported

^{raw or} semi—processed

materials multiplied

in the Cape, an a,rba that whs

less directly effected by the

war

than

other parts of the territory. It was the

First World

War,

however, ta

^.

•»

CS/2528-9

Frigo

6.

provided South

African manufacturers witn a real oppurtunity of exp.-n-

ding into the local

market. A manufacturing infrastructure had already

developed, and

manufacturers

wore, as

I.-^yasciok

says,

"probahly in a

position to

make

more

of the protootion offered to them than equiva¬

lent classe in other unprotected

colonies; not only

were

they

a growing :nd

enterprising class, but they wore ideologically equipped

for expansion." Between

1915/16 and îyj/lôj 1700

new

factories opened.

From

1917/1'.

to

1919/20, the

gross

value of manufacturing output

increaso"• from £35.7

million to £76.8 ra'-llioa- arid the net value,

from £13-9 million to £27*9

million.

A significant change had

taken place

:n

the

economy.

It was

significant enough to

prevent

^a

backsliding to stronger dependency

ties w"»th Britain after the period of

protection

was over.

Within South Afiica, the

evidence provided by the

war

of the

ability of industry to grow

under protection, its relative cheapness,

and its employment

potential (a,

new

conr'.dcrntion with the urbanisa¬

tion of the previously

rural Afrikaner) all contributed to the now

desira„bilitj of

manufacturing. The positive period of growth during

the war was followed in the twenties ly

-ohc laying of the foundation

of futuro industrial expansion. This v-.m

prpeoially

seen

in the for¬

mation of the South African

Electricity Supply Commission (ESCCIi) and

the South African Iron and Steel

Corporation (ISCOR).

t . ..

Hcpghton classifies the period,

1933-45j

^as

the "take—off" point

into self—sustained growth of

South Africa's development• South

Africa.. wcariAcrod the depression more

oueiiy than, almost

any

other

country' This was

essentially booaus— of the gold—mining industry,

which had a powerful

"anti-cyclical" ef.cet

on

the

oconorry.

The deva¬

luation of chc South African pound-in 1Í13

and its offoct

on

the rice

of gold gov3 gold—rining a now

impetus. This led to

a

series ex econo¬

mic 'VAracles" that .laid the foundation for

profound changes. The

economy raxed ahead. The

National Incerto increased from £226,600,000

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Page 7.

in 1,932 "to

£585|600,000 in 1949* There

was a

vastly increased demand

for labour in all sectors of the economy and the employment of both

whites and non-whites in industry increased rapidly. The general

boom of the country attracted foreign

capital,

and

domestic capital

formulation increased markedly.

Similarly, the protection offered by the Second World War

cause

local industry to

expand, diversify, and increase in technical skill

and confidence.

The history of South

Africa's industrial growth centres around

the impetus given to its

developing industry by this long period of

protection? it own

protective policies; and its single greatest

asset - gold. Post-war

import curbs and other fiscal and monetary

controls have strcngthenûd previous

tariff protection policies, and

gold has

continued

to

be the mainstay of the

economy.

The value of South Africa's gold has net rested on the

amount produced, since in fact most of the mines

are

marginal producers of

low-grade ore. Its value

has been in the foreign exchange it has

earned; in the fact

that its sales bridge the'wide

gap

in South Afric

trade figures,

and in the tactical advantage that -it brings to South

Africa. This last factor is

(Especially

important

in relation to the

present monetary crisis

in the western world. Gold and foreign

cur¬

rency reserves in

South Africa

were

declining at a...rate of R.15

million monthly by May 1971. The now

dual price levels have, however

reversed this trend.

In 1972 the

unofficial price of gold

^was

38 U.S. dollars

an

ounce, and

the unofficial price

was

well over 70 U.S. dollars. The

oil crisis of October 1973 has

pushed the price ox"gold

even

higher.

The unofficial price of gold bullion on

the 6th IJOvember 1974

was

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Phge

8»

179 U.S.

dollars

^an.

ounce; the gold price reaching,200 U.S. dollars

an ounce on the London

market at the end of 1974» This is again a

reflection on the

international

currency

situation and the malaise in

the money

market, and shows how gold has become a protective invest¬

ment and thereby an even

greater advantage to South Africa. To anti¬

cipate a

later argument, it should bo said here that any contradictions

induced by the

increasing scarcity of mine labour and its increased

cost,

must be mitigated by the immense price gold can how command.

South African

Sub—imperialism (a) Labour

The factors that have

boosted South Africa's industrialisation

have been discussed above.

However, the character of that industriali¬

sation is also vitally

important. This is whore Marini*s theory of

subimporialism is

relevant to

a

study of South Africa. For South

Africa's development has

from the start exhibited certain subimpcrialist

characteristics. These

characteristics have been closely interconnected

They date

back to the discovery of gold and diamonds in the 19th century

and are connected

with Marini*s, third and fourth aspects of subimpc-

rialism i.e.

(a) the superexploitation of unskilled labour and (b) the

dependence on

foreign capital.

The discovery of rich

mineral deposits in South Africa gave rise

to la.rgo-sca.le

British and American investment. South Africa became

one of the major

investment

areas

of the world. Skilled immigrants

which poured in

with this investment had to be attracted by high wages.

From the first a labour

pattern

was

set up on the mines of a few white

skilled highly-paid,

and

many

black unskilled lowly-paid, workers. As

the

gold-mines

wore

marginal producers of low-grade ore they could not

have operated a,t

all if it had not been for the development of a special

extractive tochniquo

which utilised cheap labour.

CS/2528-9

Pago 9*

The pattern of

skilled and unskilled labour that was employed on

the mines was repeated in the

developing manufacturing industries. The

differentials between black and white

workers, the imposition cf the

colour bar,

-and the reservation of skilled jobs for whites only

-

South

Africa's infamous restrictive

labour policies.

-

gradually became insti¬

tutionalised and formalised. This

took plane mostly in tho 1920s.

Rural Afrikaners were moving to

the towns .in increasing numbers in

of jobs, and

there

was a

growing problem of 'poor whites'. Continuous

industrial unrest among those newly

urbanized white workers, and espe¬

cially the famous

strike

on

the mines in .1922 increasingly pressurized

the government of

the day to introduce policies that would prevent the

white workers from being undercut

by cheap skilled black labour* Tons

obviously was a

further obstacle to imperialist interests in South.

Africa. Britain's loss of

political control

over

the Union bocc.ee ere

• complote.

The South African government

intervened increasingly

on

boh- If of

the white worker. This trend was

reflected in the policies of the

Afrikaner Nationalist Party,

which

came

to

power

in. 1948 and introduced

most of thé legislation

that protects white workers

t

Legislation that

has been an important

basis of apartheid. Tho ideology behind it was

enunciated by Vorster in

1956: "we. know

one

person only to whom wc owe

an explanation, and

that is the white worker in South Africa who has

brought the

Nationalist Party to the position it occupies today out will

keep it in that

position

_î

in the future."

_{-bï \ . ii. j. ' rx..}

South Africa's industrialisation

has relied heavily

on a

system

of migratory

Labour. It is

a

further aspect of its labour policies and

has Served tò restrictthe

development of

a

settled, increasing!.;

skilled,

and

organized, African proletariat, and to reinforce the rrbrac -

tural underdevelopment of the areas from

which the migrants

come

es/2528—9

Rvgc 10.

In the early days of

mining and industry, the Africans coming

from their rural homes to work in the new

urban and mining centrer;

wore naturally migrants. The

first diamond mines provided closed

compounds for

African workers

^{as a}

security measure. Tho gold mines

followed suit. Tho mine compounds, now

notorious for their atro.cious

conditions and prison-like security,«

have helped to perpetuado the

migratory system.

Nevertheless an increasingly large and

settled urban African

proletariat has

developed. There is hardly

^a.

town of any considorabl

size-in South Africa that does not have a

greater African then white

population. By

designating all urban

areas as

"white" the government

hopes to avoid

security problems in the control of the African ponulr

tion. African workers in the towns have

the status of temporary

sojourners and are

supposed to return to their 'homelands' when unem¬

ployed or unemployable, even

if they have

never seen

those 'homelands

Similarly, wives

and children

are

considered 'unnecessary appendages'

who must ideally remain in the

'homelands'. In this

way

the

govornm.- falsoly maintains the status

of tho urban African worker

as

that ai?

a migrant labourer. It

a,lso avoids

expenses

that might otherwise be

incurred in the provision of social and

medical welfare, adequate

housing, or

education for the Africans.

The incorporation of foreign

African labour into this enforced

migratory pattern is

centred round the labour requirements of t a

African mines. In 1972 there were 300,000

Labourers in the gol.; ai;;.

and tho Transvaal coal mines. Of this .number,

21%

^were

from Moranteq 19$

from Lesotho,

22.5% from African countries to the North. Thai i.

37.5%

only were from

within South Africa. The majority of the :

Africans from the north are from Malawi. In 1971 there were

100,000

t ■

Malawians working in South Africa,

mostly

on

the raines.

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Page 11»

The significance of this input of foreign labour into South Africa. is in tho two—way dependency it entails, linking South Africa

to countries to the north. As South Africa's .Manufacturing industrie:-

have developed, so its African

workers

hove i-ncronsingly moved into

this sector of employment. Even in the

Witwatorsrand,

traditionally

the mining centre of South.Africa, the primary"sector employed loss

than

15$

of ^a regional work force of

738,250- Africans,

in 1970, ^as against

35$

in the secondary,

and 50$ in tho tertiary,

sectors. Manu—

facturing, commerce and transport together created

nearly 47$

of all

South African work opportunities in the arca»

As the manufacturing sector has increased in

importance, South

Africa's dependence on foreign labour for the mines has also increased.

This has meant that the countrios immediately to the north òf South Africa have been exploited as labour reserve to create white South

Africa's development. This has added to their ^own underdevelopment.

Lesotho has

50$

of all

its adult males

away

at

any one

time, mostly in

South Africa. Migrant workers are the single largest source of the country's income.

Malawi has also rolied to a large extent on the export

:of

labour to

South Africa as its main source of income. The government reaps tho

benefits in the form of foreign exchange revenues and taxes on

the mine-

workers.

Mozambiquan mine—workers have been the basis

f

an

agroement between

South Africa and Mozambique since 1903. South Africa

has been regularly

supplied with migrant labour in

return for increased

use

of the port of

Lourenco- Marques, and gold

payments for the labour. Those gold payments

took the form of diroct payments to the

Lisbon representatives in

Mozambique of half the value of

the migrants'

wages.

The migrants

wore paid half their wages in

South Africa, and half in Mozambique. Tho

gold went straight into

Lisbon's coffers. The degree to which the

CS/2528~9

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provisional government, headed by

Frelimo,

can, or chooses to, reduce

the flow of labour to the mines, will be a crucial index of its own

revolutionary capacity and or the degree of success which the South African strategy of sub-imperialism continues to command*

South African Sub-Imperialism

(b)

Alliance with Foreign Capital As South Africa1s industrial development has expanded, South Africa..has achieved greater control over its economy, and

hence,

more autonomy from the West. W.R. Duggan suggests that within the next five _years South Africa will be virtually self-sufficient in its heavy chemical

needs,

its

fertilisers,

synthetic rubber, plastics and phar¬

maceuticals. Such developments• . obviously question how dependentï , South Africa still is on the West*

South Africa's trade with the West still exhibits characteristics of an underdeveloped economy* Of its total exports to industrialised countries in

1967, 65%

were raw materials and fresh produce,

28*6%

were products of primary and extractive

industries,

^and only

5.8fo

were products of the manufacturing industry. South Africa still imports machinery, textiles, electrical and transport

equipment,

etcetera*

These trade patterns in

themselves, however,

do not signify much.

Australia and Now Zealand export mostly agricultural goods and import manufactured goods, yet they can hardly be described as structurally dependent on the industrialised countries in the _way that Third World

countries are. -■

Nor does the heavy reliance of South /.frica, on foreign investment necessarily signify structural dependencies of this sort. Throughout

its histoiy South Africa, has relied on foreign

investment,

the greatest

CS/2528-9

Page 13»

amounts coming from

Britain,

the U.S., and West

Germany,

in that .■rdor.

However,

with the increasing control ^over the economy, local capital accumulation has been possible and that capital has

increasingly

allied itself _with foreign capital in the country.

The alliance between South African and foreign capital has partly

been enhanced by the historical and cultural links between South Africa and the West. With the increasing immigration that accompanied early British mining investments in South Africa, the distinction between

i

foreign and local English mining interests was rapidly ^{blurred. The} interconnections between these two groups of interests became the basis

* of a future continued alliance. By 1970, of the seven major mining

houses in South

Africa,

the General Mining and Finance Corporation and the Rand Mines both had three British directors out of

thirteen,

Conso¬

lidated

Goldficlds,

three out of

eight,

and Anglo-American had a sopa-

v'

rate board of London directors.

United States and West German oapital in particular has been

vitally important in creating South Africa's economic boom of the sixties.

The events at Sharpeville in I960 led to a rapid outflow of capital from South Africa. The U.S. and West Germany helped significantly to balé South Africa out of the poagihle ensuing economic crisis. U.S.

direct investments _{in South} Africa in 1956 totalled 288 million dollars.

By 1968 they had 'risen to 700 million. If account were taken of indirect

investment,

they would have totalled about 1,000 million dollars. From

1963-1969 U.S. holdings in South Africa increased by

80%.

The sum

actually loaned to South Africa after Sharpeville was 150 million dollars,

of which IMF _gave 38 million, and the World Bank,

28

million.

Similarly,

West German investments rose from a value of Rll million in 1956 to R115 million in 1968. About 300 West German firms had established subsidiaries theia?by mid-1968.

-

CS/2528-9

Page 14»

Most

U.S.,

much

German, and muçh

recent

British,

investment lice been in the

manufacturing

sector ^- through ^the establishment of branches and subsidiaries of the foreign companies in South Africa. As foreign firms have set up subsidiaries in South

Africa,

the government has insisted on a gradual increase in the percentage of the local content

or components of products made by these firms. It has thereby been

able to increase its control of foreign

investment,

and become less simply dependent on it.

Since the second World War,

South

Africa has seen the rise of

Afrikaner economic- _power. Nationalist power

today

has ^{an economic}

based in the bulk of the farming

capital,

an expanding sector »f* private industrial and commercial capital, and a complete monopoly ^of state

capital. By I960 the amount of foreign capital invested in South- Africa was about the same as the total of state capital. The cntrv ^- Afrikaner capital into importar# sectors of the economy was nado oc -

t

sible by effective use of the Afrikaner political

machine,

which included

control on foreign capital.

However, the links between Afrikaner capital and its West Gcr: an

ally have been crucial. West German monopoly capital has establishA.

some of its closest licks with South African _state trusts. With fcv,f

help of the Deutsche and Dresdner banks, ESCOM obtained advances

amounting to £348 _{million by the end of} 1964. SASCL's first lique¬

fying plant received

85$

of the machinery and technical equipment necessary from West Germany*

South African capital has tended to ally itself with manufactu¬

ring enterprises that, entered the. country at ^a later stage in its development and were therefor^ subject _{to greater controls.}

However,

the tendency in the mining sector has been for'South Africans to pu- more money into mining stocks and thus _{reduce the} proportion of forei ^r- to local capital involved. As far as banking and insurance go, Brit-:.n:s

role has been of some political significance. In

1968,

well ^over ?0 of South Africa's _domestic bank accounts were held in British owned : Jce,

CS/2528-9

Page 15»

and most loading British insurance companies and building societies had

a share in.-South Africa's-£400 million

insurance,

and

£680

million

building society, strength. At the end of 1970 two—-thirds of the commer¬

cial banks' assets in South Africa, which totalled

£1,962 million,

^were

controlled by two British banks. These were -Barclays National Bank Ltd.,

a subsidiary of Barclays Bank

International,

and the Standard Bank of

South Africa

Ltd.,

a

subsidiary of the

Standard Bank in London. These

banks ha.ve been expanding their interests. In 1961 Barclays had 340 branches in South Africa and Namibia. By 1969 it had 9^3. Over the

same period the Standard Bank increased its number of branches from 350

to 822. However, Afrikaner banks have also expanded and increasingly competed with the British ones. By 1970 the Volkskas,, set ^up in 1941»

and the Trust Bank, set up in 1955» were the third and fourth largest

banks in South Africa. Afrikaner businesses have always been encouraged

to use these banks.

The South African economy has since moved further in the direction

of strengthening

(a)

the alliance between local and foreign

capital,

and

(b)

^the homogeneity of South African

capital

itself.

(b)

^has resulted in a decrease in the conflict between the two

white communities in South Africa and to a convergence between the two

sectors of economic power. This has in turn provided part of the "back¬

ground to South Africa's increasing economic expansion into

black Africa.

(a)

This alliance is

outsido*South Africo,

as

well

as

inside, for

Xr

instance in projects such as the Cabora Bassa dam.

* The contract for the dam was awarded to ZAMC0 international consortium.

The executive direction and co-ordination is Anglo-American. Anglo- American, Shaft Sinkers Ltd.,

V.P.C. Ltd., Powerlines Ltd.,

are

all

South African companies involved in the consortium; with Fronoh, and

German based capital. The South African Industrial Development Corpo¬

ration has granted £10 million to the scheme;

ESC0M,

£22

million; and

a government loan,

£16 million.

es/2528-9

P^e

16.

South African Sub-Imperialism

(c)

The Consumer Ulite and the Market

Before turning to this critical phase in the development of

South African sub-imperialism, it is also necessary to comment, though briefly, on the other issues raised in the model of sub- imperialism presented at the beginning of this paper.

In protecting white workers from being undercut by cheap

black labour, South Africa's labour policies have given

the

whites

a standard of living comparable to that in American and the West.

The whites have become rich both through their exploitation of

black labour at home and through their tactical control of foreign capital. They have been able to wrench some of the profits of foreign investment in South Africa from the foreign investors them¬

selves. Foreign capital has remained in South Africa, and has increased, in spite of strict controls on it. This is because of

the amazingly high rate of return on investments there. The net earnings on U.K. investments in South Africa have been reported as

running at above

12$.

This is

50$

higher than on other U.K. in¬

vestments abroad.' Mining investment returns have been averaging

25$

or more, and manufacturing returns about

10$.

Similarly it is

estimated by the U.S. Department of Commerce that the net profit

on U.S. investments in South Africa have been ranging from

12-13$

after taxes. In 1972 the U.'S. Department of State Sources said

that they were averaging

17$.

.These high rates of return in spite of fiscal and tax controls

have in turn been possible because of the superexploitation of the

black workers in South Africa.

CS/2528-9

Page f?

The whites in South Africa therefore form a highly consumor- oriented elite that compares•with the consuming elite that Marini identifies- in Brazil. Unlike in Brazil, however, this South African

elite is not only differentiated on class grounds. It includes

the owners of South African capital;, hut South Africa's racialist policies have created a

race/class

pyramid that has meant that this

elite also includes a white labour aristocracy:

■i Ó.sCl L•'

A: whites ^- including a white labour aristocracy.

B: coloured and Asians.

C: an increasingly stable Black urban _group - a labour ^_ -

aristocracy in1

comparison to other black workers.

D: rural African in the Bantustans - the dispossessed.

E: migrant workers, and foreign migrants.

Broadly speaking ;the consumer elite Marini deems characteristic

: of a sub-imperialist power would exist only above the horizontal

line indicated in the diagram. To extend the consumer elite

"downwards", below the line, would contradict the other characteris—

• . tic ofa subimperialigjbe- power, viz suporexplpitaiiont-at -that level.

Tfy as many capitalists in.-South- Africa argue-,-the traditional in¬

ternal market has been sated,., the only, way, to -resolve this cc-nrr-: -

diction is to abandon &upBrejsplod4$bt-i,on-

(an

-option that- has boon accepted only fer a minute-.fraction of the

«UaJxLiie-edfiaok^-gpo

1 ^_ta-

riat)

or to exp-and-heyend. interwufirontiers: in short adopting

an 'outward-looking' strategy.

C3/252S-S

Page 18

Components of South Africa's

New-Strategy- of Sub-imperialism (a)

Military

One important result of South

Africa's historical connections

has "been a military alliance between South

Africa and the West.

Unlike Brazil, South Africa has not

been refused military aid. It

has been able to develop a munitions industry,

utilising both

local and foreign capital, that now includes a

nuclear reactor at

Palundaba.

It has been in the West's strategic interests to

largely ig¬

nore the U.N. embargo on sales to South Africa. France

and

West Germany have given consistent military aid.

France has

supplied it with numerous"weapdnsj

dozens-of Frenchrtechnicians

participate permanently in the

development of various

arms

and

military-industrial projects in South

Africa: South African

officers 'train1in France. The West German Hõechst works stated

in June 1969 ^that they had started a new firm

outside Johannesburg

that was developing poisonous gases

original-ly manufactured in

Nazi Germany towards the end of World War II.

South Africa is of strategic importance to the West partly be¬

cause of its geographic placement at the base of the African continent.

It stands beside the sea lanes that connect the Atlantic and Indian Oceans. Its ports provide fuel, provisions, and the possibilities

of shore-leave, for NATO naval enterprises in the area. This is the basis of naval agreements with South Africa, such as the

Simonstown one. The British governments public renunciation of this agreement will coincide with the opening of the Suez Canal and the conclusion of a secret agreement

(or

^{so reliable rumour has}

it)

along the same lines as Simonstown.

CS/2528-9

Page 19

Internally, militarism, a further defining element of a

sub-imperialist power

("witness

^{Iran and}

Brazil),

grows apace. In 1967 South Africa was spending more on military and paramilitary

forces than at the height of the second World War. Of the white population #f 3

1/2

million there were

21,700

men in the armed

forces, 55>000 reservists, 43,600 armed police, and further commando

•"and citizen forces. The growth of militarism is signified by the spectacular growth in size of the armed forces in South Africa.

This trend continues. There is now compulsory military training

for all adult white males. South Africa can muster a force of several hundreds of thousands of men and officers. Moreover, puppet forces, composed of units drawn from the oppressed peoples

themselves have also been built _up, and have already ^seen action

in Namibia. In the 1973-74 budget,

Defence

was the biggest single

item. There were large increases in the amounts allocated for both external and internal defence, the latter including a

63^

incrèase for the Bureau of State Security

(BOSS).

0*)--

-Political

The formal inauguration of the new 'outward' phase in foreign policy was marked by the visit of Chief Leabua Jonathan of Lesotho to Bretoria in September, 1966. South Africa reciprocatéd by sending representatives to the independence celebrations of the three former High Commission territories - Lesotho, Swaziland, and Botswana.

The economic integration of these states with South Africa

has been a brutal, inescapable fact of life since the creation of it® Union in 1910. Their admission to formal independent status could not significantly affect their critical dependence on

South Africa. Given Britain's traditional indifference to their

underdevelopment and poverty, their leaders have had little alterna¬

tive but to bargain for the best terms of co-existence with

South Africa that were available.

CS/2528-9

Page 20

As "black enclaves in a white-dominated, southern Africa, these

countries have served as useful testing grounds for South

Africa's

"Outward" policy, in

which."dialogue"

and

increasing trade with

V

independent countries is sought. The

benefits^ accruing to South Afric

from this policy have, so far largely been

ideological

or

political,

rather than economic. Chief Jonathan's enthusiasmfor

-closer links

with Pretoria was hailed as tangible proof of South

Africa's willing¬

ness to live in peace with its black neighbours.

Other African

leaders followed suit and accepted the principle and idea

of dia¬

logue. In

1967

three Malawian cabinet ministers

visited Pretoria and

signed a trade pact. President

Banda, who

^was

to follow Chief

Jonathan as an avid supporter of closer links with

South Africa,

stated: "being a good African does not mean

cutting

your

economic

throat..."I have to be realistic. Colonial geography and history are against us. We cannot boycott South Africa,

Rhodesia

or

Portuguese

Mozambique- that would mean the breakdown of

Malawi's economy". By

197O Malagasy, Niger, Upper Volta, Ghana, Ivory Coast,

Gabon, Dahomey,

Togo, C.A.R. and Mauritius had also accepted the

principie of dia¬

logue with South Africa.

The more recent, and ongoing, exchanges with African countries cannot, however, be simply represented as further evidence of the

success of South African policy, and no explicit analysis of these

event is presented here.

(c)

^Economie

The economic aspect of South Africa's new sub-imperialist

strategy is conditioned by the contradictions presently

visible with¬

in South Africa between, economic growth and the maintainance of apartheid. A substantial digression is necessary to explain the

character of these contradictions.

CS/2528-9

Page 2i>

As South Africans economy has expanded its manufacturing sector-

has became increasingly'impotant. The following table

of

the

Sector

Distribution of the National Income shows this change in the

economy: •

Sector 1930 1940 1950

1960

Agriculture ^.

13.9$ 11.8$ 13.1$ 11.7$

Mining

17.3$ 22.8$ 13.6$ 13.3$

Private manufacture 15.4

$ 17.5$ 22.1$ 24.6$

The importance of the agriculture sector has

remained relatively

constant. The mining sertoc, however, has decreased

in significance

from its high paint

«fu22.£8$:

of'theenation?ú.ôincome in

1940

to

18.35-

in 196O. The manufacturing sector has assumed

24.6$

of the

national

income by i960 and is of greater importance than the mining sector.

In thé Witwatersrand the number of people employed in mining dropped

from 300,210, or

30.9$

of "the work force in 1951? "to

93?f>90?

or

7*73$

of the work force in 1970. The

number of people employed in

the •manufacturing-. elector rose fr«m 235

>620,

or

24.23$

of

the work force in 1951? 452,890, or

37-39$

of the work force in 1970, and became the largest sector of the regional economy

in terms

of employment. As Houghton argues; "The impertance of

manufacturing

in the future economic development of South Africa cannot be toe greatly

stressed

because all the indications are

that it must be the

cornerstone of future expansion."

The further expansion of this sector is, however,

restricted by

the policies of apartheid. These restrictions can be

roughly classi¬

fied as follows:

(a)

the problem of

the migratory labour system,

(b)

^the Shortage of skilled

labour, and (c) the need for wider markets.

CS/2528-9

Page 22

(a)

The artificially maintained, system of migrant labour re¬

duces the efficiency of the manufacturing industry. Migrant workers

do not form a stable labour force. The discontinuity does not en¬

sure an efficient learning and application of new skills required

in the expanding industries. The conditions under which migrant

workers., live in^. the. -urban areas do not aid productivity. The trans¬

ference of a part of the migrant's wages to his family in the 'homeland' does not aid the development of a black proletariat as

a potential market for manufactured goods.

(b)

More significant, however, is the actual shortage of

skilled labour that is artificially created by the policies of job

reservation. There is a chronic

shortage of skilled labour in the

manufacturing industries, and this obviously inhibits their further- growth. A long-term prediction by the Prime Minister's Economic Advisory Council revealed that if the _economy continues to grow

at an annual rate of

5«8$ (the

rate achieved between 1965 and

1969),

by

198O

South Africa will be short of half a million skilled workers.

While skilled jobs have traditionally been reserved for whites, there has been an increase in the number of Africans in skilled

employment. The proportion of economically active Africans in un¬

skilled jobs has fallen from

84$

in

196Õ

to

68$

^{in 1970 - an} increase

of

16$

in skilled employment. Job reservation is also being avoided by what First, Steele and Gurney term a 'floating colour bar'. This

mechanism breaks down skilled jobs previously reserved for whites into component parts which ^are then re-classified. A white worker is retained at one of the new levels, while African workers are employed

at the other levels, doing skilled work for unskilled wages. This practice has spread quite widely.