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The South African Developmental State under the Helm of the National Party 1948-1990

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Bill Freund (2012). The South African Developmental State under the Helm of the National Party 1948-1990.
Type working paper
Scope Economics and economic history of apartheid
Method synthesis review
Period studied 1939–1990
Regions South Africa, Eastern Cape (Ciskei/King William's Town), Natal (Durban, Hammarsdale, Richards Bay), Bantustans/border areas
Themes manufacturing industrial policy, business and state, comparative theory, bantustans removals influx, macro fiscal finance debt, sanctions divestment, labour markets wages, politics ideology elections
Citation key freund2012

Argument

Freund argues that the Smuts-era (1939-48) state already had the main features of a developmental state, and that National Party rule after 1948 kept and extended its institutions, especially the parastatals (ISCOR, ESCOM, SASOL), the IDC and the CSIR. These were redirected toward Afrikaner employment, homeland development and later security and self-sufficiency. He tests the apartheid economy against four labels: racial Fordism, the minerals-energy complex, import-substitution industrialisation and the military-industrial complex. He finds the ISI label fits best, and that the military-industrial label holds only for procurement. The coordination and planning structures of the 1940s were weakened, and the state-business relationship stayed one of lobbying and consultation, not corporatist partnership. By the 1980s the project had become 'gone pear-shaped': it was export-weak, technologically backward, dominated by security concerns and abandoned by divided big business.

Evidence and method

Secondary literature (Posel, O'Meara, Pretorius, Kaplan, Grundy, Henk, McWilliams, Clark, Fine & Rustomjee, Gelb), contemporary articles in the South African Journal of Economics, IDC and CSIR institutional histories, speeches (van Eck 1951), and a few private papers (Gluckman, Smit). Scattered statistics on parastatal employment, IDC investment, export shares and Armscor staffing.

Place in the debates

Findings

  • Smuts-era policy already approximated a developmental state, with commissions and new statutory bodies. (p. 1)

    During the final Smuts United Party government of 1939-48, government policy, subject to wartime constraints, tried to take on most of the characteristics of a developmental state

  • The National Party kept and expanded the pre-1948 parastatal and institutional structure. (p. 4)

    Continuity with the pre-1948 policy spectrum also is highly notable in support for the parastatals and the further development of the institutions created before 1948.

  • The parastatals were large employers by the late 1950s and provided jobs for whites. (p. 5)

    By this time ISCOR employed some 20,000 workers, ESCOM 13,000 and SASOL 4,000.

  • African skill acquisition was blocked even as white workers were upgraded, which underpins the 'racial Fordism' label. (p. 7)

    the acquisition of skills by Africans was, and remained, largely blocked.

  • The ISI model fits South African industrialisation well, apart from the lesser role of foreign direct investment. (p. 8)

    because in fact the South African industrialisation model fits ISI quite well.

  • Manufactured exports stayed very small throughout, a classic ISI weakness. (p. 9)

    grew but very slowly only from 4,4% in 1939 to 7% in 1950 and (surely a modest figure) 10% of exports, in 1982.

  • The Reserve Bank under de Kock prioritised currency strength and the private sector over any developmental agenda. (p. 10)

    Michiel de Kock, its head from 1948 to 1961, was probably the most powerful figure in the government with regard to economic policy, and he also certainly saw himself serving the private sector first and foremost.

  • Afrikaner capital was still small as late as 1975, so English capital remained dominant. (p. 10)

    Afrikaner businessmen were estimated as late as 1975 in possessing barely one-fifth of South African business capital

  • Verwoerd's economic councils were only consultative, not genuine planning partnerships with business. (p. 11)

    His Council did not succeed in mediating and evolving policy between interests and really served as an advisory and consultative body only.

  • The link between the state and the military-industrial complex was logistical rather than strategic. (p. 12)

    On logistical matters the interaction is undeniable. Whether it extends to larger strategic questions is doubtful

  • The arms industry never became an exporter or a driver of civilian technology. (p. 14)

    exports were very hard to achieve and never reached even one per cent of value.

  • By the 1980s the developmental project had lost direction and coherence. (p. 16)

    This was a developmental state gone pear-shaped in ways that had been apparent for some time.

Evidence ledger

Sources used

Source Kind Period How used
Harry Gluckman Papers, Gubbins Library, University of the Witwatersrand state archives 1940s Read to show Gluckman's commitment to improving black social conditions but within segregation.
Douglas Smit Papers, Albany Museum, Rhodes University, Grahamstown state archives 1940s Shows Smit's paternalism, love of the countryside and anxieties about tribal disintegration, linking 1940s thinking to later separate development.
Native Laws (Fagan) Commission Report, UG 28/1948 commission or official report 1948 Quoted to show even the United Party's most liberal commission rejected assimilation of races.
Opinion polls of white soldiers during WWII (E.G. Malherbe, Never a Dull Moment, 1980) secondary literature compilation 1940s (wartime) Cited for survey results showing support for state planning but under 10% support for a common society across race lines.
C.S. Richards, 'The Growth of Government in South Africa since Union' (1957) secondary literature compilation 1950-57 Source for parastatal employment, capital costs, white share of staff and state investment as percentage of national income.
B.C. Brayshaw, The IDC, Its Work and Influence 1940-1965 company records or reports 1940-1965 Source on IDC investment by sector (chemicals, textiles) and the IDC's role in planning versus implementation.
A.L.P. Cartwright, IDC history (1971 Afrikaans translation) company records or reports to 1970 Source for IDC capital allocation and number and value of projects financed as of 1970.
Palmer 1954 and Black 1991 (manufactured export share data) secondary literature compilation 1939-1982 Provides the share of manufactures in exports (4.4% in 1939, 7% in 1950, 10% in 1982) to show weak manufactured exports.
Styger & Saayman 2011 and Padayachee & Rossouw 2011 on the Reserve Bank / de Kocks secondary literature compilation 1948-1961 Support the claim that the Reserve Bank under de Kock dominated economic policy and favoured the private sector over developmentalism.
Louwrens Pretorius, 'Interaction Between Interest Organisations and Government in South Africa' (Politeia 1982) and 1996 corporatism article secondary literature compilation 1950s-1980s Evidence on business-state consultation structures, including the ASSOCOM quote and the economic advisory councils' limited effectiveness.
O'Meara, Forty Lost Years (1996) estimate of Afrikaner share of business capital secondary literature compilation 1975 Used to show Afrikaner capital held only about one-fifth of business capital as late as 1975.
D.G. Kingwill, The CSIR: The First Forty Years (1990) company records or reports 1945-1971 Documents the decline of the CSIR's policy role after the shift to ministerial control.
G.W.G. Browne, 'The Application of the Economic Development Programme in the Public Sector of South Africa' (SAJE 1971) with discussant comments newspapers periodicals 1960s-1971 Used to characterise the Economic Development Programme as merely indicative and ignored by business.
James McWilliams, Armscor: South Africa's Arms Merchant (1989) and Grundy 1986 secondary literature compilation 1960s-1989 Supplies Armscor employment, procurement, export figures and the debate on the military-industrial complex.
Dan Henk, South Africa's Armaments Industry (2007) and Batchelor 1998 secondary literature compilation 1968-1990s Source on the arms industry's elite, personnel numbers, firms involved and weak exports.
A.D. Wassenaar, Assault on Private Enterprise (1977) secondary literature compilation 1977 Used as a contemporary business critique of the IDC and the developmental state, as evidence of Afrikaner capital's stance.
Afrikaanse Handels Instituut report (1966) employer association records 1966 Cited for the claim that 35% of gainfully employed whites worked for government.
IDC Special Survey, Finance Week, 22-28 June 1980 newspapers periodicals 1980 Cited to show the IDC shifting its attention back to mining and infrastructural projects.
H.J. van Eck, 'Some Aspects of the South African Industrial Revolution' (1951 speech) other 1951 Quoted to show the developmental planners' inward-looking orientation towards the domestic market.
Kaplan (1986, 1990, 1991) studies of capital goods and telecommunications industries; Draper 1996 secondary literature compilation 1970s-1980s Establishes that South African industry and state were slow to adapt to new technologies.

Inference

Quantification: Illustrative figures.

Interpretive historiographical synthesis: applies developmental-state, racial Fordism, minerals-energy complex and ISI frameworks to the Nationalist period through a qualitative narrative of institutions and leading personalities, drawing on secondary literature, selected archival papers and scattered figures from other studies.

Key claims

Claim Basis Strength
Nationalist policy showed substantial continuity with the Smuts-era developmental project, especially in parastatals and social policy, though segregation hardened into separate development. (p. 4) Archival papers of Gluckman and Smit, the Fagan Commission report and secondary studies (Posel, van Niekerk, Marks) used to show continuity. Illustrative or anecdotal
State parastatals and IDC finance created the metal and chemical industries and brought white employment, with private and foreign capital building on them. (p. 5) Brayshaw and Cartwright on IDC; Richards 1957 on parastatal employment and costs; Sparks on SASOL. Partial data
South African industrialisation fitted the import-substitution model and suffered weak manufactured exports and recurrent balance of payments crises. (p. 8) Export share figures from Palmer and Black, van Eck 1951 speech, de Kock and Mohr et al. on the balance of payments. Partial data
The post-1948 state never achieved genuine corporatist or shared developmental governance with business; advisory councils were formal and ineffective and the Reserve Bank and private-sector interests dominated. (p. 11) Pretorius (1982, 1996), Browne 1971 and SAJE comments, Styger & Saayman on de Kock, Kingwill on the CSIR. Partial data
The Botha-era securocracy created a military procurement relationship benefiting heavy industry but did not become a full military-industrial complex, and arms exports and technology spillovers were limited. (p. 12) Grundy 1986, McWilliams 1989, Henk 2007, Batchelor 1998, Kaplan 1986. Partial data
Black skill acquisition remained blocked while the white labour force was upgraded, a feature of racial Fordism that was disastrous as the global economy changed. (p. 7) Crankshaw's study and Gelb's concept; no new data. Asserted
By the 1980s business had become divided and hostile to developmentalism and was seeking international investment outlets and freedom from the security state, so the developmental state decayed. (p. 15) Wassenaar 1977, O'Meara, Kaplan and Draper on technology, IDC Special Survey 1980, Innes on Anglo American. Illustrative or anecdotal

The author's caveats

The author notes the paper is 'overly ambitious', a 'first overarching attempt' at a more substantially researched project with 'numerous lacunae and problems to be resolved'.

Gaps in the evidence

The argument rests mostly on secondary literature and a few quotations; it lacks systematic quantitative series on parastatal and IDC investment, state spending, employment by race, and sectoral profitability to test claims of continuity, crowding-out or business–state alignment. Archival records of the IDC, Board of Trade and Industries, Reserve Bank, Armscor and the advisory councils, plus national accounts and census data, existed and are accessible, and could test the claims. Comparative data on developmental states in other countries would also be needed to support the characterisation.

Replicability: Data poorly documented.