Wages, Profits and Apartheid: 1939-1960¶
Nicoli Nattrass (1990). Wages, Profits and Apartheid: 1939-1960. History Workshop conference 'Structure and Experience in the Making of Apartheid', University of the Witwatersrand, 6-10 February 1990. University of the Witwatersrand, History Workshop.
| Type | conference paper |
| Scope | Economics and economic history of apartheid |
| Method | descriptive quantitative |
| Period studied | 1939–1960 |
| Regions | South Africa, Witwatersrand, Cape Peninsula, Durban |
| Themes | labour markets wages, business and state, manufacturing industrial policy, macro fiscal finance debt, origins segregation, methods data sources, mining migrant labour, unions strikes |
| Citation key | nattrass1990 |
Argument¶
Nattrass applies a simple wage-share/profit-share and rate-of-profit decomposition to test the 'radical' claim that apartheid raised profitability by depressing black wages. She finds that the profit share fell in the war years, rose in 1948-55 because falling black wages more than offset rising white wages, then fell again in 1955-60. The rate of profit in manufacturing fell throughout 1948-60 because of a falling output:capital ratio and adverse relative prices, which she attributes to import controls, devaluation, price controls and deflationary policy. She argues that the interests of capitalists should be distinguished from those of capitalism, and that liberal and radical claims can both be true. Much of the post-1948 wage depression is attributed to labour market conditions and state non-intervention, not active nationalist strategy.
Evidence and method¶
Official reports (Botha Commission UG 62-1951, Wage Board and Department of Labour reports, Viljoen Commission UG 36/1958), Union Statistics, unpublished Central Statistical Services and SA Reserve Bank national accounts data (consistent only from 1948), Hansard budget speeches, SARB Quarterly Bulletins, and secondary works (Spandau, Pursell, Moll, Webster, Hindson, Zarenda).
Place in the debates¶
- Radical vs liberal views on apartheid and capitalism / cheap labour thesis (see Liberal vs revisionist: was apartheid functional or dysfunctional for capitalist growth?). Tests the radical claim empirically. It is supported only for the profit share in 1948-55, and rejected for the rate of profit and for 1955-60. Argues the liberal point (slower structural change) and the radical point (state responsive to fractions of capital) can both hold.
- Apartheid as a solution to an 'organic crisis' of the 1940s (Saul and Gelb) (see Did the apartheid economy fail? Growth, productivity, investment and the post-1970s crisis). The 1948-55 reversal in wage trends is said to bolster the claim, but she stresses that much of the turnaround had economic and structural roots, not policy roots, such as demobilisation, women leaving the labour force and urbanisation.
- Whether state policy simply serves capitalists (see The state and capital: instrumentalism, autonomy and fractions of capital). Rejects this. Government macro policy (deflation, import controls, exchange-rate parity with sterling, hostility to foreign capital) harmed profitability, so the interests of capitalists and of capitalism diverge.
Findings¶
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The black:white wage gap narrowed in wartime, and unskilled black wages rose relative to white artisan wages in all regions. (p. 4)
black wages which rose as a percentage of average white wages from 20,1% in 1938 to 25,0% in 1948
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Wartime controls, wage freezes and dilution restrained white skilled wages and favoured black semi-skilled workers. (p. 6)
the evidence suggests that the Wage Board's actions were of secondary importance in bringing about changes in the wage structure, compared with the direct-control measures exercised by the Controller of Industrial Manpower
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In 1948-55 white wages rose while black wages fell, so capitalists and white workers gained at the expense of black, Coloured and Indian workers. (p. 8)
for the period 1948-55, capitalists and white workers benefitted at the expense of black, coloured and Indian workers.
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The Wage Board abandoned its earlier support for raising unskilled black wages, and the market did the government's work. (p. 9)
the depression of black wages was primarily the result of non-intervention rather than active and malevolent state strategy. To a large extent, the market did the government's dirty work for it.
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Apartheid labour controls were only partially effective in the early period, so black urban workers faced competition from rural migrants. (p. 10)
As Hindson has shown, up until the late 1950s apartheid labour controls were only partially effective (1987, p.65).
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The government's choice to deflate rather than train black workers and its protectionism shaped growth, and import substitution was the main stimulus up to 1957. (p. 10-11)
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The manufacturing profit rate fell in 1948-55 despite a rising profit share, because the output:capital ratio fell. (p. 13)
Between 1948 and 1955, the output:capital ratio in South African manufacturing declined by 2,5% p.a (Nattrass, 1990). This drop in the productivity of capital was so great as to neutralise the rise in the profit share.
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In 1955-60 both white and black wages grew faster than available output, eroding the profit share. (p. 11-12)
white and black wages rose faster than the output available for distribution between wages and profits. This time, the rapid growth of white wages was not compensated for by slower growing or declining black wages.
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Mining profitability boomed in 1955-60 but did not prevent the 'core' sector profit rate from falling. (p. 15)
The rate of profit in mining thus grew at a stunning 7,2% per annum.
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It is mistaken to argue that the profit rate rose in 1948-55, though the profit share did. (p. 16)
It is thus mistaken to argue that the profit rate rose between 1948-55.
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Published and unpublished Central Statistical Services and South African Reserve Bank data (national accounts series on wages, output, capital stock, manufacturing/mining/core sectors, 1948-60) | national accounts macro | 1948-1960 | Underlies the wage, available output, wage share and profit share growth rates in Tables Two to Five and the rate-of-profit calculations. |
| Wage Board Report for the year 1954 (UG 17-1956) | commission or official report | 1937 (manufacturing wage share); 1954 | Supplies the 1937 manufacturing wage share estimate of 48% and Department of Labour comments on white wages rising beyond productivity. |
| Union Statistics (1960) | official statistical series | 1933/4-1947/8 | Shows the metal products, engineering and transport equipment group's share of industrial output rising from 19.5% to 30.4%. |
| Department of Labour Report for 1946 (UG 62-1948) | commission or official report | 1937-1946 | Provides semi-skilled job shares in Wage Board industries and evidence of the Wage Board's shift against a 3 pound minimum wage. |
| Wage Board Report for 1940 (UG 45-1941) and Report for 1939 (UG 36-1940) | commission or official report | 1939-1940 | Documents the Board's wartime paternalist commitment to unskilled wages on a 'civilised basis' and its contrast with the prior year's policy. |
| Department of Labour Report for 1941 (no UG number) | commission or official report | 1941 | Evidence on the Controller of Industrial Manpower, Factories Act overtime limits and female emergency workers. |
| Wage Board Report for 1948 (UG 50-1950) | commission or official report | 1948 | Shows Wage Board hostility to the 3 pound weekly minimum and its shift to efficiency arguments by 1948. |
| Report of the non-European Bus Service Commission (1946) | commission or official report | 1946 | Cited for a black Johannesburg family's required weekly income, showing a large shortfall against wages. |
| Wage Board/Labour Board report for 1954 (UG 46-1954) | commission or official report | 1954 | Shows the Board's position that wage equality is desirable only if it raises productivity. |
| Viljoen Commission report (UG 36/1958) | commission or official report | 1958 | Quoted to illustrate the justification for protecting the domestic market for industry. |
| Department of Labour Reports for 1955 (UG 21/1957) and 1954 (UG 17/1956) | commission or official report | 1954-1955 | Evidence that the Department regarded white wage growth in excess of productivity as a problem. |
| War Measures Nos 9, 145, 38, 69, 80 of 1942/1945 and War Measures Further Continuation Act 1948; Factories, Machinery and Building Works Act 1941; Industrial Conciliation Act 1956; Native Labour (Settlement of Disputes) Act 1953 | legislation gazette | 1941-1956 | Establishes the legal constraints on strikes, wages, overtime and job reservation that shaped relative white and black wage outcomes. |
| Hansard, Budget Speeches (vol.66 1949, vol.78 1952, vol.84 1954) | parliamentary debates | 1949-1954 | Used for Minister Havenga's statements on inflation, austerity, deflation and distrust of refugee capital. |
| South African Reserve Bank Quarterly Bulletins (March 1950, 1953, 1954, 1955, 1956) | official statistical series | 1950-1956 | Evidence on macroeconomic conditions, investment projects, labour shortages on the mines and the causes of cyclical downswings. |
| Official Year Book of the Union, no.29, 1956/7 | official statistical series | 1956/7 | Describes the powers of the Controller of Industrial Manpower. |
| Commerce and Industry, April 1949 | newspapers periodicals | 1949 | Evidence that immigration alleviated skilled labour shortages only in some industries. |
| Lombard and Stadler 1980, The Role of Mining in the South African Economy | secondary literature compilation | 1948-1960 | Cited as reference for mining linkages with manufacturing. |
| Nattrass 1989 and 1990 (author's own profitability series) | secondary literature compilation | 1948-1960 (and after 1955) | Provides the output:capital ratio and rate of profit figures, and sources and data manipulations behind the tables. |
| Pursell studies of Wage Board determinations (1968; 1971) | secondary literature compilation | 1950-1960 | Evidence on Wage Board minimum wage determinations and real earnings changes for unskilled black workers. |
| Spandau 1972 and Moll 1987 (data used from secondary studies) | secondary literature compilation | 1933-1957 | Supply wartime black manufacturing employment growth and Wage Board and controller impacts. |
New data¶
Author's own calculation of growth rates of product wages by race, available output, wage shares, profit shares and rates of profit for manufacturing, mining and a 'core' sector, 1948-60, built from unpublished and published Central Statistical Services and SARB national accounts data; not reproduced in the paper.
Inference¶
Quantification: Descriptive tables.
Share-of-output accounting decomposition (wage share, profit share, output:capital ratio) applied to national accounts data across the cycles 1948-55 and 1955-60, set against official reports (Wage Board, commissions) to interpret policy and test 'radical' and 'liberal' hypotheses; no regression.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| During the war the manufacturing wage share rose (48% in 1937 to 63% by 1948) and the black:white wage gap narrowed, eroding the profit share. (p. 4) | Wage Board report 1954 and Botha Commission (UG 62-1951) estimates of wage shares and relative wages; Table One. | Partial data |
| Between 1948 and 1955 white wages grew while black, coloured and Indian real wages fell, so the profit share rose, supporting the limited 'radical' claim for this period. (p. 8) | Author's manufacturing wage/output/profit share calculations from CSS and SARB data (Table Two). | Systematic data |
| The 1948-55 fall in black wages stemmed mainly from market conditions (urbanisation, inflation) and Wage Board non-intervention, not active state strategy alone. (p. 9) | Wage Board reports 1946/1948/1954, Pursell on determinations, Hindson on weak labour controls, inflation data. | Partial data |
| The manufacturing rate of profit fell in both 1948-55 (1.8% p.a.) and 1955-60 (2% p.a.), driven by a falling output:capital ratio and input price squeeze early on. (p. 13) | Author's rate-of-profit decomposition from national accounts (Nattrass 1989, 1990); 'preliminary statistical investigation' on relative prices. | Systematic data |
| In 1955-60 both white and black wages rose faster than available output, eroding the profit share, while the racial wage gap widened. (p. 11) | Table Three calculations; Pursell on Wage Board determinations from 1957. | Systematic data |
| Mining profitability rose strongly in 1955-60 (7.2% p.a.) but the profit rate of the 'core' sector still declined in both periods. (p. 15) | Tables Four and Five from national accounts data for mining and core sectors. | Systematic data |
| Government macro policy (deflation, import controls, exchange rate, distrust of foreign capital) worked against capitalist profitability even while labour policy served short-term capitalist interests. (p. 16) | Hansard budget speeches, SARB bulletins and history, Viljoen Commission, secondary literature; asserted reasoning. | Illustrative or anecdotal |
The author's caveats¶
Notes that national accounts were consistently estimated only from 1948, so the war years are analysed in less detail; the price-squeeze finding rests on 'preliminary statistical investigation'; statistics cannot resolve the capitalism-apartheid question and only show consistency with theories; capital stock measurement is unreliable in some sectors, which are excluded from the core sector.
Gaps in the evidence¶
The profit-share and rate-of-profit series are not reproduced, so the numbers cannot be checked; disaggregated firm-level profit data or tax returns would test the findings better. Mining analysis ignores the Chamber of Mines wage and recruiting records, which exist in archives. Wartime wage-share estimates rely on commission figures rather than a consistent series, and causal claims about the Wage Board and policy rest on report quotations rather than archival evidence on decisions.
Replicability: Data described but not public.