Skip to content

The Business of Business: An Analysis of the Political Behaviour of the South African Manufacturing Sector under the Nationalists

Literature › Works

Andrew Torchia (1988). The Business of Business: An Analysis of the Political Behaviour of the South African Manufacturing Sector under the Nationalists. Journal of Southern African Studies, Vol. 14, No. 3. Taylor & Francis (Oxford University Press).
Type journal article
Scope Economics and economic history of apartheid
Method archival narrative
Period studied 1948–1986
Regions South Africa
Themes business and state, manufacturing industrial policy, labour markets wages, unions strikes, politics ideology elections, education human capital, bantustans removals influx, transition post apartheid
Citation key torchia1988

Argument

Torchia tests two explanations for why South African manufacturers turned reformist: apartheid's growing economic inefficiency (Lipton) versus waves of political unrest (Greenberg). He argues that capital deepening raised the costs of apartheid (skill shortage, low labour productivity, small black purchasing power), pushing manufacturers to oppose the colour bar, black education policy, influx control and the exclusion of black unions even in quiet periods. But manufacturers kept an explicit dichotomy between 'economic' issues, where they would lobby the state, and 'political' issues, where they would not. Only unrest in 1960, 1976 and 1984 collapsed this dichotomy and led to calls for political reform. He concludes that both models have value and warns that, without unrest, business and state might have agreed a 'rationalisation of apartheid' that retained white political dominance.

Evidence and method

Business-sector publications and records, mainly the FCI Annual Reports, the manufacturers' magazine Industry and Trade, the Financial Mail, and SAIRR Surveys of Race Relations. Also government commission reports, Adam's mid-1960s poll of entrepreneurs, statistics on wages and capital intensity drawn from Lipton and Nattrass, and secondary works by Greenberg, Lipton, Hutt, O'Meara and Welsh.

Place in the debates

Findings

  • Manufacturing grew rapidly and became much more capital intensive after 1948. (p. 4)

  • Capital deepening produced a severe skill shortage that business saw as a critical constraint on growth. (p. 5)

    But the overall effect was a severe skill shortage, evident in strong inflationary pressure on skilled wages, high labour turnover rates, large numbers of vacancies in skilled private and public sector posts

  • Capital-intensive firms could afford higher black wages, but labour-intensive sectors such as textiles and clothing resisted. (p. 6)

    the pace-setting capital-intensive companies got their way, but they were opposed by low-wage sectors like textiles and clothing.

  • English- and Afrikaans-speaking entrepreneurs differed sharply on job reservation in the mid-1960s. (p. 9)

    only 16 per cent of English-speaking entrepreneurs wanted to retain job reservation and 77 per cent wanted to scrap it, 73 per cent of Afrikaner entrepreneurs wanted to retain it

  • Firms openly evaded job reservation and influx-control rules, showing covert opposition to the colour bar. (p. 8)

    'We don't apply for exemptions, since we know we wouldn't get them. We just break the law'.

  • After the 1973 Durban strikes, employers' opinion moved towards accepting black trade unions, and by 1980 there was a broad consensus for full black trade unionism. (p. 15)

    By 1980, there was a broad consensus concerning the desirability of full black trade unionism.

  • South African growth was resource-driven, and labour productivity actually fell between 1970 and 1982. (p. 18)

    such gains only accounted for six per cent of South Africa's growth in the period 1961 to 1983, the other 94 per cent being attributable to additional resources

  • In quiet periods, manufacturers explicitly separated 'economic' issues, on which they would advise the state, from 'political' ones. (p. 19)

    There was in fact an explicit dichotomy between 'economic' issues, where manufacturers had the right and the responsibility to advise the government, and 'political' or 'social' issues, where they did not.

  • Close, co-opting contact with government, in exchange for concessions, restrained the FCI's public criticism. (p. 23)

    it has to some extent lost for itself the freedom to criticise in open forum the independent actions of other partners.

  • Political unrest dissolved the economic/political dichotomy and made business politically assertive. (p. 24)

    In short, political upheaval destroyed the dichotomy between 'economic' issues on the one hand and 'political' or 'social' issues on the other; every issue became 'economic'.

  • Conclusion: without unrest, business and the state might have reached a rationalised apartheid without political change. (p. 26)

    the surgical removal of the system's anti-economic features, combined with the retention of white political dominance and control.

Evidence ledger

Sources used

Source Kind Period How used
Industry and Trade (monthly magazine for manufacturers, Cape Town), issues 1960-1970 newspapers periodicals 1960-1970 Editorials and articles are quoted to show manufacturers' shifting views on the colour bar, education, labour productivity, markets and political reform, and the 'economic' vs 'political' dichotomy.
Federated Chamber of Industries (FCI), Annual Reports 1971, 1972, 1974, 1975, 1977, 1982, 1983 employer association records 1971-1983 Establishes the FCI's official positions on job reservation, influx control, training, black unions, political reform and its relations with the government.
South African Institute of Race Relations (SAIRR), A Survey of Race Relations in South Africa, 1961-1981 editions secondary literature compilation 1961-1981 Source of dated facts on industry wage proposals, job reservation, training concessions, employer surveys, AHI and FCI statements and union recognition.
Financial Mail (Johannesburg), various issues 1972-1978, 1985-1986 newspapers periodicals 1972-1986 Cited for business opinion on productivity, influx control, works committees, the Durban strikes, post-Soweto politics and business-government relations.
Adam's mid-1960s poll of entrepreneurs (in Heribert Adam, ed., South Africa: Sociological Perspectives, 1971) secondary literature compilation mid-1960s Poll results show English-speaking and Afrikaner entrepreneurs' views on job reservation and on the franchise for blacks.
Lipton, Capitalism and Apartheid (1985) data on black wages and Afrikaner ownership share secondary literature compilation 1936-1976 Provides black real wage increases in manufacturing and construction and the Afrikaner ownership share, used to show capital deepening raised the capacity to pay.
Natrass, The South African Economy: Its Growth and Change (1981) data on manufacturing output, capital intensity and black wage share secondary literature compilation 1951-1979 Supplies manufacturing growth, share of GDP, machinery per man and black share of value-added to describe capital deepening.
Board of Trade and Industries, Investigation into Manufacturing Industries in the Union of South Africa (Report 282), 1945 commission or official report 1945 Cited to show the effect of capital deepening on demand for skilled workers was noted early.
Report of the Commission of Inquiry into the Export Trade of the Republic of South Africa (R.P. 69/1972) commission or official report 1972 Used for limits on export growth and for the finding that entrepreneurs' resistance to employing non-whites hindered growth.
Report of the Native Laws Commission of Inquiry (U.G. 28/1948) commission or official report 1948 Evidence of the engineering federation's early 1948 testimony against migrancy and on the cost of urbanisation as an obstacle to ending influx control.
Muriel Horrell, Race Relations as Regulated by Law in South Africa 1948-1979 legislation gazette 1948-1979 Used for legislation: the Bantu Affairs Administration Act 1971 and the 1979 increase in fines for employing Africans without permission.
Greenberg, Race and State in Capitalist Development (1980), quoted interviews and statements secondary literature compilation 1950s-1970s Relied on for employers' interview quotations about evading job reservation and for AHI and FCI statements.
Finance Week (Johannesburg) special survey, 5 September 1985, on productivity share of growth newspapers periodicals 1961-1983 Provides the growth-accounting figures showing productivity gains explained only 6% of growth 1961-83 and -18% in 1970-82.
South Africa Foundation News (April 1985, July 1973) newspapers periodicals 1973-1985 Source for Oppenheimer's 1973 speech on the end of extensive growth and a 1985 commentator on business anger.
Afrikaanse Handelsinstituut (AHI) statements, including Volkshandel and congress speeches (via Greenberg and SAIRR) employer association records 1957-1985 Traces Afrikaner business movement from supporting job reservation to backing black unions and reform.
Secondary works used for quoted material: O'Meara, Welsh, Hutt, Schlemmer, Sadie, Houghton and Dagut source material, Unit on Apartheid secondary literature compilation 1940s-1980 Quoted statements by business bodies and commentators on union organisation, Afrikaner business, state power and the post-1960 mood.
National Development and Management Foundation of South Africa, The Effective Utilisation of Labour with Particular Reference to Non-White Labour (1972) commission or official report 1972 Cited for examples of manufacturers' attempts to improve labour productivity.

Inference

Quantification: Illustrative figures.

Qualitative, interpretive comparison of two competing models. The author traces manufacturers' public statements across apartheid policy areas and across periods of unrest versus relative peace (1960, 1976, 1984) to see whether opposition grew with economic costs or with political unrest. There is no formal test and no control for other variables.

Key claims

Claim Basis Strength
Capital deepening in manufacturing after 1948 produced skill shortages, low labour productivity and a need for larger black domestic markets, raising the economic costs of apartheid. (p. 423) Natrass and Lipton figures on machinery per man and black wages; Industry and Trade editorials; the 1945 Board of Trade report; the Export Trade Commission. Partial data
Manufacturers opposed the economic colour bar, pressed for training and modified influx control and eventually backed black unions, even in periods of relative political peace, but only within the framework of apartheid. (p. 438) FCI annual reports, Industry and Trade, SAIRR Surveys, Financial Mail and Greenberg's interview quotes, read chronologically. Illustrative or anecdotal
Business drew an explicit dichotomy between 'economic' issues, on which it would oppose government, and 'political' issues, on which it would not; political unrest (1960, 1976, 1984) broke this dichotomy and led to political reform demands. (p. 443) FCI statements of 1951, 1963, 1976, 1977 and 1983 and Industry and Trade editorials, contrasted before and after the unrest. Illustrative or anecdotal
Before 1976 most manufacturers favoured a qualified franchise for blacks but were passive on political reform; English and Afrikaner entrepreneurs differed sharply on job reservation. (p. 435) Adam's mid-1960s poll of entrepreneurs, with Industry and Trade editorials and FCI silence. Partial data
South Africa's labour productivity record was abysmal: productivity explained only 6% of growth in 1961-83, and productivity declined in 1970-82. (p. 437) Finance Week special survey growth-accounting figures, 1985. Partial data
Manufacturers' political caution stemmed from their weakness and dependence on the state and from racial ideology, and from continued profits and concessions through close government-FCI consultation. (p. 439) FCI presidents' speeches and annual reports, Hutt, the Jan Marais episode, the Export Trade Commission and Industry and Trade quotations. Illustrative or anecdotal
Absent unrest, economic pressures alone would eventually have produced business support for reform of anti-economic aspects of apartheid, but not for transferring political power to blacks. (p. 444) Inference from the pattern of statements in the preceding sections and from government policy in the late 1970s and early 1980s. Asserted

The author's caveats

Admits that 'it will be impossible to control rigorously for other variables affecting capitalists' political activity.' Also notes the capital-intensive and labour-intensive subsectors differed, that Asians and Coloured people are excluded for simplicity, and that some points rest on his own inference ('I have not heard this argument advanced elsewhere').

Gaps in the evidence

The argument rests on public statements by business organisations and does not use FCI or company internal minutes, firm-level wage and productivity data, or interviews with managers, which would test whether costs actually drove positions. A subsector-by-subsector comparison of capital intensity with political stance, such as textiles and clothing against chemicals and metals, using the Census of Manufactures, would test the economic-cost model; the counterfactual about 'no unrest' cannot be tested with these sources. Much of this material existed in the 1980s in FCI and Chamber archives and is available now.

Replicability: Data described but not public.