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-Woods: And welcome back everybody to the Peter Schiff show. Tom Wood in for Peter.
And very glad to be joined by, well as it turns out, another Peter.
Peter Klein is the executive director and Carl Menger research fellow
of the Ludwig von Mises Institute and also associate professor in the
division of Applied Social Sciences
at the University of Missouri, where he also directs the McQuinn Center for
Entrepreneurial Leadership,
and he holds a PhD in economics from the University of California at Berkeley.
Peter Klein, welcome to the program.
-Klein: Hi, Tom, great to be here. -Woods: Thanks a lot,
there are a lot of things that you and I can talk about, but
the item that I think precipitated your presence here was
a blog post you had the other day on the subject of Nelson Mandela,
and apartheid, and capitalism, et cetera, et cetera.
And what I found interesting about this post of yours is that
Mandela thought of apartheid- the racial apartheid system as being
some sort of form of capitalism, and so therefore
in order to get rid of apartheid, we're really involved in anti-capitalist
struggle. So, before we get into the details of that, why don't you define
for us, what capitalism is, so that we can better understand what is so
preposterous of an understanding like that.
-Klein: That's a great point. A great way
to set up the discussion.
You know, the word capitalism is kind of a potentially confusing term. This was
the term
that was popularized by Karl Marx, a critic of
the free market system. You and I, Tom, might talk about the free market
or a open economic system, laissez-faire something like that.
So, a true capitalist economy that we would support
would be one in which there is minimal, or even zero
government intervention in the economic system, private property rights are
secure,
the government doesn't interfere with prices, there's no central direction
of investment. In other words, capital markets are free,
but of course, labor markets are free, markets for land and other resources are free.
In other words, what you and I would support is the free market system.
People sometimes confuse that with a system in which
large companies are specifically singled out for support,
or capitalist somehow elevated of a labor,
and we wouldn't describe a free market system that way at all.
It's a system of private voluntary interaction
among all sorts of people; owners of capital, owners of labor, owners of raw
materials, entrepreneurs, and so on.
-Woods:Okay, having said that, I think it should be easy
to explain, why was the apartheid system not a capitalist system!
-Klein: Well, I want to back up a little bit,
I was college student back in the 1980s
when there's this big movement especially on college campuses, but
elsewhere
in the US and Europe, to divest or disinvest from companies
doing business in South Africa. So, this is when the plight
of South Africa became better known on the world stage,
when Nelson Mandela, who's still in prison at that point,
became an international celebrity,
and everyone wanted to do something about the apartheid system.
So, the South African apartheid system
was a system of legally
mandated restrictions on what various groups in the economy could do- what various
individuals
in the economy could do based on their race. So, there were official
racial classifications in the apartheid system,
white, black, and what they called colored, mixed-race,
and Indian. And whether you could own land
whether you could own certain kinds of capital, where you could live,
and what kind of jobs you could have were all
circumscribed by this racial classification.
So, everybody, of course, would see this as an unjust
and economically inefficient system. When these people began-
When the world took notice of this system, and people began the objecting to
and talking about it back in the '80s,
the the anti-apartheid movement was often
described as sort of an anti-capitalist movement.
In other words, South Africa,
which has a very unique history, we can talk about that too,
is a country, like many others in that part of the world, where you have
a small,
very wealthy elite mostly-white, controlling a lot of land,
most of the equity in private companies, and a large group of black colored
and Indian
individuals, who have much lower socioeconomic status.
So, because the white-minority
also was heavily involved in production, were owners of factories and so on, it
was assumed
that the apartheid system was not only a system of racial
prejudice, but also a system that favored capitalism
and capitalists at the expense of workers. So, the black liberation movement in
South Africa was conflated
was some kind of worker liberation movement. Rights of workers
and the disadvantage more generally against
the privilege of the capitalists and the wealthy. So, what really was
a legitimate protest against
a statist, socialist, or even some ways you could describe it as fascist economic
system,
was portrayed as a fight against capitalism.
-Woods: Now, you've got in this post of yours, this is over at the Mises Institute
blog, so you can check out mises.org, and I don't
mean to insult the intelligence of listeners to this program by spelling
mazes, but just in case,
M-I-S-E-S.org. And you quote Tom Haslett
saying, 'The conventional view is that apartheid was devised by affluent whites
to suppress poor blacks.
In fact, the system sprang from class warfare and was largely the creation of
white workers
struggling against both the black majority and white capitalist"- and by the
way, that's not
obviously an uncommon situation. I mean, if you look at
American labor history, it's interesting to see how
progressives try to deal with, on the one hand they love labor unions,
and on the other hand, they hate racism. And they gotta somehow
hold both opinions at once, when you look at how exclusionary
labor unions typically have been and they don't want the competition from the
lower wage blacks, so they
they try to get rid of them. They try to get the minimum wage increase to
completely
get them out the labor force, which they did, of course. You can see when you
correlate the minimum wage increases with black unemployment, it's
just
exactly the same line. This is a phenomenon everywhere and it's just- I always
think it's funny to watch progressives who
have such a simple view of the world, that there are good guys and bad guys.
Unions are good guys and anti-racist people are good guys,
but what happens when you have a situation like this, then they don't
know what to do or think.
-Klein:You're absolutely right, it's very common for people to take
somewhat, fairly complicated social and economic issues,
and try to decompose them into a- make them into a very simple morality
play
between very broad groups, you know, labor versus capital.
If you look at labor economics, history of the labor movement,
really all the interesting dynamics are
among different groups have labor. Labor unions representing
typically,
high-skilled, artisan occupations,
trying to keep unskilled, lower-wage
laborers out of the labor market.
And apartheid is a perfect example of that because this primary supporters, as
you already mentioned,
were members of the relatively affluent white
labor unions in South African cities.
There's also support from a the rural countryside- white farmers in the rural
countryside.
But the goal was to
minimize competition from lower-skilled,
black workers who were willing to work at lower wages, obviously to undercut
the higher wages of the white labor unions.
Capitalists, business owners in South Africa,
were not at all supporters of the apartheid system.
If you own a business, if you're an entrepreneur, financier, a capitalist,
you want to be able to hire the most qualified workers at the lowest
possible wages,
why on earth would you cut off the majority of the local labor force,
and be required to deal with a very small portion of the labor force
to which would have to pay higher wages? In no sense were the business people,
the business community, the capitalist community, the strongest supporters of the
apartheid regime. It was mostly middle class, white labor unions.
One other thing that's interesting about South Africa, and as I mention the blog
post
just so happens that I was doing a tour of South Africa
last month, I found out a lot more about its fascinating history,
even the the apartheid movement
is a relatively recent phenomenon.
South Africa was colonized by two separate European groups. By British
colonists
and also a little bit earlier, by Dutch traders.
The descendants of the Dutch colonists
became known as Afrikaners or Boers, a slightly
derogatory term, were mostly farmers mostly in the rural areas,
and were much more kind of
nativist, or likely to oppose mixing among the different racial groups and
ethnic groups in South Africa,
than the english-speaking descents of the
British colonists. So, there was always this
struggle between the British and the Dutch. The anglo-boer war of
the late 19th century, which is completely unknown to
most American students, to the American public, or whatever,
was a war between two different white
colonial interests, and the
apartheid movement, which was
instituted by the Afrikaner National Party,
this only happened after World War Two. It was 1948
when the upper counterparty came to power.
It's been argued by W.H. Hutt and other classical liberal scholars,
that the British settlers
in South Africa and the South African national polity when it was part
of the British Crown,
was much more classically liberal. that there was a movement to
institute more security for property rights,
more kind of emphasis on the rule of law,
and not a kind of centrally planned economic system.
The centrally planned economic system of government control not only of labor,
but also of investment,
was a relatively recent, post-World War two, socialist
phenomena, so the white, nationalist, Afrikaner government
widely understood that in the West, to be only about
racial issues combined a belief in
racial segregation with that socialist economic system.
And that's what what this story so interesting and complicated,
is that some of the resistance to the apartheid regime
was based on desire to
to eliminate the racial barriers, but a lot of it was also a fight against
socialism,
and an attempt to have a more decentralized system at something closer to a
free-market system.