Encyclopedia of Trotskyism On-Line: Revolutionary History: Volume 4, No. 4, South Africa: Baruch Hirson: The Economic Background to South Africa

Baruch Hirson

The Economic Background to South Africa

THE HISTORY of Southern Africa stretches back over millennia. It is a story of peoples who occupied lands before meeting with, and being conquered or incorporated by, peoples who moved from their original lands near the Cameroons across Africa and down the east coast. Some time after 300 AD the forebears of the African people entered the region now known as South Africa. Crafts were developed, metals mined, trade conducted and then seemingly abandoned until the predominant occupations became hunting, cattle herding and/or cultivation of crops.

This was the position when the first whites arrived to set up a refreshment station for the ships of the Dutch East Indian Company (DEIC) in their passage to the East Indies. In the seventeenth century merchant capitalism, assisted by the growth of shipping fleets, was the prevailing form of enterprise, and it was the might of the Heeren 17 (the directorate of the DEIC), not to mention their arrogance and aggression, that allowed the Dutch to take control of the Indies, and subsequently the Cape. The men who arrived at the Cape were servants of the DEIC, and were required to stay within the jurisdiction of the Dutch-appointed governor. Their task was to provision the passing ships and to feed and protect the local settlement. Men came first, and because there was a dearth of Dutch women, the earliest marriages or liaisons included many with the women of the local Khoi or San clans (known derisively as Hottentots and Bushmen respectively).

The story of the region was of the dispossession of the local inhabitants: of their cattle and their land, of their decimation and their reduction to servitude. The DEIC also sent prisoners from Malacca and the east (described later as Malay people) who were reduced to slavery. These people provided a labour force that was otherwise not available, and in time they rose to become the artisans employed in the Cape. More workers became available for the white settlers when the Khoi were subjugated and the African peoples conquered.

Ethnicity divided the growing Cape settlement, and yet, at first, the colour barrier was set aside for those who were converted to Christianity, and ‘free’ men and women arose from the baptismal font. Even at the topmost levels colour was a matter of small concern; one of the appointed Governors being of ‘mixed’ blood. Only later were rigid ethnic boundaries defined and hardened, and religious conversion was no longer a passage to ‘freedom’.

The Governors at the Cape could not, or would not, control the outward movement of the settlers, and extended the colony’s boundaries to maintain their control. Nor could the Governors stop trading, cattle rustling or clashes on the ever-moving borders, as the settlers met with African peoples, themselves moving down the coast. When the Xhosa people, moving down the south-eastern coast, were confronted by migrating settlers in what is now the eastern Cape, they were defeated in frontier wars. This was the beginning of the subjugation of an entire people and their absorption into the settler economy as a servile class. The possession of the Cape by the Dutch prevailed until Britain, during the Napoleonic wars, claimed that its sea route to India was in danger. It occupied the region and added the Cape to its Empire.

Marx has written in purple prose of the disastrous effect of the expansion of capitalism on the people of the colonies, and this needs no repetition. However, he argued that capitalism, with all its faults, transformed the world, established a single world market and undermined, if not destroyed, archaic social systems. This was the way of progress, and, concerned as Socialists might be for the colonised people, the sweep of capitalism across the globe was necessary and inevitable.[1] The task of the colonies was to supply raw materials for the European countries, act as military or supply bases, and trade with their ‘mother’ countries.

The settlers at the Cape were able to supply passing ships, but had little to trade, and they found no minerals to mine. This meant that the region that was to grow into the Cape colony was poor and remained poor, despite the development of its farmlands. Ostrich feathers, wool and hides and an inferior wine were not the basis for large-scale capital accumulation.

The first significant change in the nineteenth century occurred in or around 1836, when groups of Dutch in the eastern Cape, rejecting controls imposed by the new British administration—particularly on slavery and the status of Africans—crossed the coastal mountain ranges and moved into the interior of the country. Current research suggests that the interior had been emptied by slavers (of Portuguese or of Cape origin).[2] This revisionist view, still hotly denied by historians who maintain that the people of the interior had scattered because of Zulu expansionism, has still to be proven. But whatever the reason, large portions of the interior were desolate, and the trekkers occupied the land in what became the Orange Free State, carving out huge areas for themselves as farmland, and incorporating previous occupants as labourers or labour tenants.[3]

The Dutch also moved into Natal, where they came into conflict with the Zulu people, who were ultimately defeated in battle. The British followed, and there were further battles to secure the subjugation of the indigenous peoples. The control by white settlers led inevitably to the opening of the interior to trade. Sugar cane was tried in Natal, and its success led to the importation of labourers from Asia. First there were indentured Indian labourers, introduced to work on the sugar fields in 1860 in the colony named Natal. After serving their time they were repatriated unless they chose to stay, either to work their own plots of land or to move into the towns as labourers. Then in 1905, after the South African war, when Africans were reluctant to work at lowered wages, Chinese labourers were imported to work on the gold mines. This complicated the race question in South Africa even further, until they were repatriated after agitation in South Africa and Britain.[4]

This is jumping ahead. In the mid-nineteenth century there was a thin sprinkling of whites in the interior of the country, and a British administration and British police or troops in the Cape and Natal colonies. This was in keeping with the British policy of protecting the sea route to its imperial treasures in the East. The interior region was less important, although the Boer republics, named the Orange Free State and the South African Republic (SAR, later the Transvaal), were annexed and then freed. It is not always certain whether such moves were the result of local administration initiatives or were ordered from London. The Treasury in London wept crocodile tears every time more money was requisitioned for troop movements—but the money was always forthcoming.

Yet, it must be stressed, there was no unity in the subcontinent. Even the South African Republic consisted of semi-autonomous communities who policed their own regions and owed minimum allegiance to the central government. There was even less contact with scattered African peoples, and there were three regions, Basutoland, Bechuanaland and Swaziland, that gained autonomy outside the white controlled regions and maintained a tenuous independence by accepting, or appealing for, British trusteeship. The subjugation of those people who fell within the borders of white settlement was achieved through skirmishes or wars, and over several decades they were incorporated into the labour force for the whites. Ultimately everyone fell under the control of one overarching economy—but inside this economic control, local African peoples maintained aspects of their past social structures and their original polities. These ossified and were converted into branches of administrative control.

In 1868 diamonds were discovered at Kimberley inside the Orange Free State. In a diplomatic move that was little less than criminal, the region was annexed by the Cape. There was a massive injection of labour from across Southern and Portuguese East Africa as the digging commenced for these precious stones. With the discovery of diamonds the economic prospects of the country were transformed. These stones provided a sudden and instant source of finance for diggers, the diamond buyers and the Cape administration. The railway, which had not previously exceeded 10 miles in and around Cape Town, was extended to Kimberley, 500 miles away.

People from across South Africa, together with adventurers from around the world, flocked to the diamond fields, and although black labour was used to dig the extensive fields, there was a place at one end of the diggings for a small group of African and other entrepreneurs who mined on their own account. Most significantly, the diamond buyers, who concentrated this operation in fewer and fewer hands, acquired wealth on a scale not previously seen in South Africa.[5] Some of this money was to be used for opening up the gold mines in 1886 in and around Johannesburg (or Goli, the city of gold) on what became known as the Witwatersrand (the Ridge of White Waters). The discovery of gold brought in foreign finance capital, and transformed the subcontinent. This was the money commodity, and there was no shortage of investors. Yet there was a paradox in this new activity. The shaft sinking, which eventually took the miners a mile below the surface to the low grade ore, together with the equipment to recover the gold, required investments of millions of pounds. It was because gold was being mined that investors were attracted. This was because the demand for this commodity could not be exhausted, and dividends, low as they were, were assured. Yet this was capital accumulation with a catch. The low grade ore on the Witwatersrand had to compete with gold that was panned with little capital outlay as nuggets and with the store of gold that stretched back to antiquity. Consequently, the price set for gold coming onto the market was far below its value, that is, the price that would have been charged for any other product requiring the same amount of work. Also, as in all colonies (whether physically or economically dominated), dividends had to be shared between local entrepreneurs and foreign finance houses. More importantly, the price of gold was internationally determined and fixed with little regard to local conditions. Because the price was pegged at a level that would not upset the world’s money exchanges, the price per fine ounce was kept well below its value (measured in hours of labour required for its extraction) in South Africa.

The mineowners protested that the price was too low, and so did the government, but they were not going to stop production. Consequently, the one factor in production that could be kept low, that of wages paid to African labourers, was pared. Every means was employed to ensure that workers were paid the lowest possible wages. This was managed at several levels: labourers was imported, the work force was divided, and the white labour sector paid at levels that were adjudged well above the cost of labour in any other working class occupation. The African labourers, a large part recruited from outside the country’s borders, were employed for fixed short terms and then sent back home. The workers were housed in single sex compounds which were sealed to outside organisers. Even the African workers were divided, with specified tasks assigned to men of different ethnic origin, the division bolstered by separating dormitories, the heads of which were ethnically-based by installing tribal sub-chiefs. The manyfaceted means of dividing the workers extended from the differential use of men from different tribes in selected mines to the fostering of tribal dance teams and the weekly open air competitions sponsored by the mines.

There were historic factors that allowed for the division between white and black workers. There had been a large importation of skilled workers from Europe and a much larger number of unskilled African labourers from local territories. The whites were housed separately from blacks and were paid 15 or more times the rate received by Africans. Even the work skills were defined on ethnic grounds, excluding Africans from certain tasks. There were also differential tasks given to tribesmen and these came to acquire a particular status. Quite how this evolved is uncertain, but the effect was clear: there was intense intertribal rivalry.

The opening of the goldfields led to a further expansion of the railways, and with them the docks. They carried goods, both exports and imports, across the 1000 miles from Johannesburg to Cape Town and the 500 miles to Durban, displacing dispatch riders and wagons alike. As the system expanded and went even further towards Portuguese East Africa and Rhodesia, the labour force grew, bringing in thousands of men. Once again, segregation was imposed. Engine driving and even stoking was reserved for whites, whilst blacks were relegated to permanent way repairs or to cabin services.

Originally the mines were in the hands of Uitlanders (foreigners), but the sites were in the South African Republic (SAR), a Boer territory. This led to the infamous Jameson raid in 1895, with the minefields as the target. Backed by Cecil Rhodes and Joseph Chamberlain, in the best tradition of age old pirates, this failed. That left only one option for the gung-ho imperialists: the SAR was conquered and annexed by Britain in the war of 1899-1902.[6] It is one of the myths of the time that the war of 1899 was waged across an ethnic divide of Boer against Brit, in which blacks were excluded. But this is a gross oversimplification. Several European powers gave moral backing to the Dutch, and a section of the more militant white workers supported the Boer government, whom they saw as their protectors against the mine magnates. Blacks intervened at various levels. However, the crucial fact is that the British army prevailed in the war even though the cost in men and money was high. Britain gained firm control of the territories and also of the source of gold—the money commodity of the era in which sterling (linked to gold) reigned supreme.

The war between Britain and the Boer republics has been a centre of historical attraction for many authors. That is understandable. However, the description of military action in 1900, interesting as it may be and important for an understanding of the origins of trench warfare, does not provide any insight into the events leading to that war, or of its social consequences. There can be little doubt that the war was fought in order to gain control of the country which contained these crucial gold fields, and that after the conclusion of hostilities political power over the country was replaced in the hands of the Boer leaders. The bitterness left by the war, however, led to the unfolding of an Afrikaner nationalism and a legacy of hatred of the British and foreign financiers. It was during the war that JA Hobson developed his ideas on parasitic rentier capitalism. It was Hobson who wrote vitriolic attacks on imperialism, and the message was taken up by some Afrikaner leaders. It was thus no accident that Dr DF Malan, future leader on the National Party, spoke in 1913 in favour of Socialism and praised Marx for his insight into capitalism.[7]

The single greatest factor that motivated the mineowners was the need to depress the wages of the black workers, both before the war and in the construction of the subsequent state. They saw that a movement of black workers between mines allowed them to bid up wages, and they consequently set out to minimise competition among themselves and stop the free movement of the workers. It was for this reason that the Chamber of Mines and the Witwatersrand Native Labour Association (Wanela) were formed. The latter had recruiting agents at every main centre to find labour, and obtained an annual levy of men from the Portuguese.

The Chamber set about imposing an internal pass (the notorious pass law) on a reluctant SAR administration. This was the basis of the law that restricted black movement until revoked in recent years. There were other factors that motivated the mineowners in their attacks on the Boer states. The mines needed a unified state, both for the recruitment of labourers and for their control, and for a unified transport system. The Boers, predominantly farmers, had little interest in supplying black labour to the mines—in conflict with their own needs—and their resources were too slender to allow them to police the pass laws or the liquor laws as demanded by the mine management.

The British state was called in to clear out Boer obstacles, and Milner, an agent of the state, created the centralised unified bureaucracy to enforce the regulations required by the mineowners. He and his imported officials (Milner’s ‘kindergarten’) laid the foundations of the modern South African state, and imposed some of his own racist laws on the country, in particular the discriminations against Indians that were to trouble that community through the coming years.

The population of South Africa was always small, estimated at four million at the end of the nineteenth century (one million of them white). The country attracted few immigrants, and the local growth rate was small. To the Dutch were added French Huguenots and German immigrants, British settlers (after 1814), and a trickle of immigrants from Europe. Separately at first, and then together, the whites -whatever their internal differences—reduced the colonised people to an inferior status. Even growing class divisions among the whites that came with the development of the economy only reinforced ethnic divisions as each group specialised (or indeed, had no option but to take on certain trades).

The importation of skilled craftsmen and miners from Europe led almost automatically to the importation of trade unions, with many of the original sections being branches of British unions. This right to organise which helped to advance the workers’ rights and allowed for strike action stood in vivid contrast to the illegalisation of black strike action and a refusal to grant them state recognition under (much later) industrial legislation. If there had been no colour bar in employment this would have opened up that differential anyway. As it was, the already existent racial differences (in wages, housing, social and sporting activity, and so on) were buttressed by the protection or advances of white living standards relative to those of Africans.[8]

Even more significantly for the period that followed, the capitalists who owned the gold mines made one crucial concession over labour policy. Though the white miners were defeated in two strikes in 1907 and 1913, and bombed into submission in the general strike of 1922, and had their claims negated in a subsequent court case, they were allowed to retain their privileged position even when it was no longer justified economically. This helped bolster the new form of racism that was associated with the control of a sector of the labour market.

During the first decades of the twentieth century, there were three main centres of economic development: on the white owned farms, and in the two mining areas: Kimberley for diamonds and the Witwatersrand for gold. Elsewhere, the economy of the country was stagnant. The internal market was small and relatively poor, with the African population unable to purchase anything but essentials.[9] There was a small expansion of manufacture during the First World War, and then stagnation again until after the lifting of the depression of 1929-31.[10] The finance houses associated with mining capital saw little reason for investing in manufacture. It was cheaper to import goods from Europe, including materials for building, bricks excepted. Consequently, African men who came into (or were allowed into) the towns were employed generally as domestic servants and gardeners, and even as washermen. Only a small number entered trades, and then merely as unskilled workers, the main occupations of whom consisted of carrying tools and materials, digging trenches, storing or distributing goods, or making tea and running errands. This was the beginning of a workforce but not yet a working class. When the African working class was being formed in the 1930s, it was concentrated along the Witwatersrand and in small pockets around the ports of Cape Town, Durban and Port Elizabeth. The workers in the western Cape were predominantly Coloured, and Indians were a significant force in Natal, although here too they were dominant as waiters or barmen in the hotels.

African women played almost no part in the early industrial period. Where they came into town (and they were restricted both by regulations of government and control by African tribal chiefs), they were confined to domestic service, replacing the African men. Others brewed beer illegally, and some were full or part time prostitutes.

There was a growing informal sector. Africans became hawkers or even shopkeepers, craftsmen who made furniture or offered services in the black townships. A small number entered the church (and in particular the independent churches), became teachers (with a primary school plus two years teacher’s training qualification), or found some place in the police force, prison service and so on. This was barely a petit-bourgeoisie, and there were never more than a handful that could be called well-to-do.

If the mines and later the industries constituted the crowning heights of the economy, agriculture was always a source of exports, earning a large portion of foreign exchange, and also growing food for the population. Furthermore, the white agricultural region was collectively the largest employer of labour in the country. However, as in all colonies, the pattern of farming activity was not simple. Until 1936 Africans were allowed to own land—mostly on a communal basis—on about seven per cent of the land area of the country. Legislation in 1936 provided for the doubling of this area, but only as Trust Land under tight government control.[11] An African peasant class, supplying produce for the market, had come into existence at the end of the nineteenth century, but had been squeezed out by the white farmers. Thereafter, only a minority, mostly associated with chiefly families, acquired wealth. Most of the rest (about one-third of the African population) were reduced to subsistence farming, and lived in the Reserves only when they were not seeking employment in the towns. An even larger number of Africans were squatters on the white farms, in the Transvaal and Orange Free State, providing labour in exchange for the right to farm plots for part of the year, or they were farm tenants or labourers. Among the latter were men removed from the towns after breaking segregatory laws, and who were used as cheap convict labour. In the western Cape Coloured labourers were employed, paid in part by the notorious tot (liquor) system. In Natal Africans had largely replaced Indian labourers in the cane fields.

The demands of the rural population were diverse, but most demanded the enlargement of land holdings in the Reserves, or in the white controlled farms, and the return of what the tenant farmers and squatters saw as their own land. The complaints of the farm labourers and the people on the Reserves took in the need for better social amenities, for schools and health, for more time to tend their own plots, and for the right to leave the farmer or indeed the rural areas.

I have concentrated attention on the black population, because they were in the majority, and because they alone could form the mainstay of an opposition to the ruling class. But there were obviously other people who filtered into industry, both from abroad and from the whites already resident in the country. The latter included large numbers of young women, and some men, who left the rural areas and sought work in the towns. They came from families of white labour tenants who were the first victims of the depression in the late 1920s.[12] When they entered the towns they were employed as domestic workers or as waitresses, in the sweated clothing trade, and in sweet, canning, tobacco, chemical and other burgeoning workshops. The men found employment on the trams and the railways, and in the trades. They were small in number, but they played a significant role in the working class movement in the 1930s, and were among the more militant white workers.

White immigrants came to South Africa throughout the twentieth century, always in smaller numbers than those who went to the Americas or Australasia, but they arrived and included in their ranks entrepreneurs and workers. They brought with them some capital or their ability to work, and among the latter there were many with experience in the European labour movement. There were others, particularly Jews, who brought with them a tradition of Socialism. Many immigrants joined the impoverished white farm workers in the newly established manufacturing plants in the early 1930s. Their work conditions were miserable and their wages were low. These establishments were dwarfed by the mining houses and state enterprises, which now included the railways and docks, the water and electricity industries, the state steel enterprise, and the enterprises controlled by municipal, provincial and state bodies. But it was the small industries that provided the base for a new and militant trade union movement. However, with few exceptions, the workers were indelibly divided by colour, and the few instances of collaboration across the colour line are noteworthy as exceptions to the rule.

Although the number of black workers grew, and there was significant organisation during the 1930s, their position in production only altered appreciably during the Second World War when they replaced the whites who had volunteered for service in the army. There was an increase in the number of small workshops to replace previously imported goods, road building was accelerated for potential defence purposes, and gold production was increased to pay for Britain’s war machine. Indeed, some of the specie was shipped direct to the USA on Britain’s account. Agriculture also expanded to feed the troops in Africa, for export to West Africa and for the local market. These were all areas of increased black employment.

An urbanised black working class, as distinct from a labour force (and migrant at that), was coming into existence. The time for organisation had arrived, and among those actively engaged in organising the trade union movement in the Transvaal were Trotskyists. Some of that story is told in the pages that follow.


1. Marxists got it wrong. The ‘archaic’ social systems were undermined and transformed but survived to become instruments of colonial control. Rosa Luxemburg in her Accumulation of Capital was particularly faulty on this issue.

2. If correct, this will replace earlier beliefs that the country had been left desolate by a warring Zulu people.

3. Families who had to work for the farmer in exchange for small plots of land which they could work on their own account.

4. It seems most likely that the factor leading to the repatriation of the Chinese was their increasingly militant protests—a factor that is not mentioned in most texts. White workers were in the forefront of the agitation for the removal of the Chinese. This helped protect the privileged position of the mineworkers by removing potential competitors.

5. The concentration of buying, ultimately in the hands of Cecil Rhodes. kept control of the market supply. This maintained the price of gem stones at an artificially high level.

6. This was not the first such annexation. The British had annexed the Orange Free State and the SAR in the late 1870s, and had relinquished them after an inconclusive war, with clauses that were a constant source of irritation.

7. Malan, a doctor of theology, was a publicist and Afrikaner National Party leader. He served in the government in the 1920s, and was Prime Minister in the National Party government in 1948—hence the use of the name Malanite to describe narrow white nationalism.

8. The system was made more complex in the 1920s by the governments policy of promoting the employment of whites during the periods of economic stagnation and depression, and the use of such policies to replace Indian workers on the railways.

9. This included manufactured goods like primus stoves, oil lamps, candles, bicycles and suitcases, gramophones and records, foodstuffs like condensed milk, cigarettes and, illegally until the 1970s, wines, beer and liquor.

10. In the 1930s South Africa was able to get out of the depression by going off the gold standard and benefitting by the rise in the price of gold. The tact that in the current depression South Africa has not been able to repeat its past practice is an indication of the changing role of gold within the world monetary system.

11. The extra land was only partly acquired, and there was no relaxation of land control despite the growth of the rural population and evidence of gross overcrowding.

12. The depression in the countryside started in South Africa, as elsewhere, about twoyears before the Great Crash in 1929. This was the final straw for most farm tenants, and in the first instance young Afrikaner women, who did not can money in the rural areas, left home to earn money in the towns. Their wages were miserable, but part of what they received was remitted to their families on the farms. They became the mainstay of the militant unions in the light industries.

Updated by ETOL: 12 January 2009