The Economics of Apartheid by Stephen R. Lewis,Review by: Somadoda FikeniCanadian Journal of African Studies / Revue Canadienne des Études Africaines, Vol. 26, No. 2(1992), pp. 368-370Published by: Taylor & Francis, Ltd. on behalf of the Canadian Association of African StudiesStable URL: http://www.jstor.org/stable/485893 .

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368 CJAS / RCEA 26:2 1992

n'est pas la quantit6 des interventions et des d6penses publiques qui a manqu6, mais la qualit6 des politiques. Les auteurs donnent par de tels 6nonc6s, des statistiques a

l'appui, une critique rafraichissante du module traditionnel d'intervention. Source d'id6es controvers6es, riche en variables de recherche et en statistiques, ce

document pourra etre utile autant aux dirigeants gouvernementaux, aux chercheurs qu'aux vulgarisateurs. Plusieurs besoins de recherche y sont exprim6s, entre autres pour l'entreposage des commodit6s, l'integration des marches, la stabilisation des revenus, l'efficacit6 du r6seau de mise en march6, tant sous l'angle du contenu, que m6thodologique. Les professionnels oeuvrant A l'identification de probl6matiques d'intervention ou de recherche seront bien servis par un tel document.

Tous ces thbmes ont fait l'objet de plusieurs recherches, mais rarement sous l'angle critique appuy6 d'un cadre 6conomique thdorique pertinent. C'est surtout cet apport qu'ajoute cet ouvrage synthetique. II constitue principalement un document de reflex- ion stimulant.

Jean-Claude Dufour Departement d'6conomie rurale Universit6 Laval

Stephen R. Lewis, Jr. The Economics of Apartheid. New York and London: Council on Foreign Relations Press, 1990o. 195 PP.

The general tendency of political analysts, policy-makers, and academics is to put more emphasis on the political aspects of Apartheid, obscuring its economic dynam- ics. Lewis claims that even the economists tend to analyze issues in a macro-economic framework, as if Apartheid did not exist, or to focus almost exclusively on micro-eco- nomic issues. If such is indeed the case, then Stephen Lewis' book breaks new aca- demic ground.

This book analyzes the Apartheid system and economic growth as well as the pol- icy constraints that it produces. Lewis acknowledges that discussion of this topic often produces "more heat than light" (I). His own approach is cautious and well-bal- anced, perhaps best illustrated by the claim that trade sanctions and disinvestment have had a more limited impact than pro-sanction opinion will admit. However, he acknowledges the effectiveness of some trade sanctions such as the oil embargo.

The argument starts from the hypothesis that racial segregation was a major stimulus for South Africa's initial economic growth, and is today a reason for stagna- tion. A corollary is that the South African economy has reached an advanced level and cannot sustain Apartheid without risking decline. This position is based on the assumption that irreconcilable contradictions exist between the inherent forces of the modern economy which promote greater integration, and the Apartheid legal frame- work which maintains white superiority through racial segregation. The economic downturn which began in the 1970s is hence mainly attributed to the legal constraints of Apartheid. These constraints include job reservation, the instability of migrant labour, the cost of maintaining duplicate bureaucracies and security establishments in the homelands and in the rest of South Africa, the low income of the black majority which limits growth of an internal market, and the costs of meeting the challenges posed by trade sanctions, disinvestment, and capital outflow.

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369 Book Reviews / Comptes rendus

Lewis describes the 970os as a turning point when the pressure for economic growth led to the erosion of "single-minded segregation" or grand Apartheid. The ten- sion between economic forces and racial segregation, Lewis argues, led to friction between the business community and the government, thus undermining their earlier marriage of convenience. Lewis asserts that these tensions led to trade, labour, and financial reforms intended to blunt economic pressure. These reforms included the partial lifting of job reservation, increases in black wages, industrial decentralization, and partial upgrading of the homelands. Lewis warns that economic factors, such as a decline of white living standards, will not necessarily lead to political changes by themselves, and suggests that other variables such as religion, ideology, and culture must also be taken into consideration.

Lewis' analysis employs a broader definition of economic pressure that goes beyond the restricted notion of sanctions which only account deliberate measures taken by the international community. He claims that such a broad definition leaves room for the inherent pressure generated by the Apartheid system. The short and the long-term effect of this economic pressure is discussed at length in Chapter 5. In this chapter, he makes a distinction between the effect of sanctions on trade in goods and services (such as technology) and its impact on the movement of capital.

Lewis claims that analyses of the impact of trade sanctions and disinvestment are prone to inaccuracy, such as exaggerating the value of South Africa's strategic miner- als. He asserts that the country provides only a small proportion of the strategic miner- als imported by the industrialized western countries. He goes on to predict that trade restrictions would not occasion major disruptions in the import of such goods since the former Soviet Union is an alternative source for many of them. In addition, recy- cling and stockpiling would also minimize the effects of trade restrictions. But Lewis' argument fails to consider the strategic political role played by South Africa in the sub- continent.

This book also demonstrates that the South African government has found ways to neutralize the effect of sanctions. These include: import substitution and investment in strategic industries such as SASOL's coal gasification plant which meets one third of the demands of liquid fuel; the devaluation of the rand and the adoption of financial policy which insulates the foreign exchange reserves.

Lewis sums up his assessment by admitting that it is difficult to disentangle the impact of sanctions from constraints caused by the inefficiencies inherent in the Apartheid system. He closes his argument with the assertion that the critical factor in future economic growth is the level of productivity, and not the volume of foreign investment, since domestic investment and savings are sufficient to sustain the econ- omy.

The last three chapters of the book are more speculative or predictive and the con- cluding chapter focuses on the post-Apartheid economy. The discussion of the post- Apartheid economy is of vital importance in the light of current political develop- ments. Lewis predicts that the economy will benefit from a "post-Apartheid dividend" resulting from the elimination of the costs and artificial barriers imposed by racial seg- regation. Other predictions suggest that the new government will also face demands and challenges, including the redressing of socio-economic imbalances as well as the prevention of a massive emigration of skilled white labour.

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370 CJAS/RCEA 26:2 I992

Lewis prefers a mixed economy in which government intervention coexists with the private sector. This choice is based on two assumptions. The first is that a new government will inherit a statist economy characterized by a high level of government intervention in economic activities and a large parastatal economic sector. The second assumption grows out of Lewis' contention that government intervention is a realistic strategy for stimulating economic growth; as evidence he points to the newly industrialized countries. The critical questions, Lewis argues, are not whether the gov- ernment must intervene, but how to regulate the economy and what to leave to market forces.

Lewis' emphasis on economic factors allows him to gloss over the political forces, but in reality the two are inseparable. For instance, the book makes little mention of the significant role played by the internal struggle of South African blacks. An analysis of the role(s) of social classes in the process of socio-economic transformation ana- lyzed here would have enriched the book. Lewis' predictions on the post-Apartheid economy would have had have more weight had he put them in the context of the Afri- can National Congress' Constitutional Guidelines and the policy positions of South Africa's political organizations and parties. Without this linkage, Lewis' predictions or speculations seem to be adrift.

The analysis of "statism" would have been enriched by analysis of the current pol- icy of privatization. It is suggested that the South African government is engaged in clandestine sanctions-busting activities, but little evidence is presented to back up these claims. This is not to suggest that these data are easy to come by, but Lewis could have used data compiled by monitoring organizations. This book tends to limit itself to reports or data produced by the South African government. Despite these short- comings, this book is a valuable source of information for scholars and policy makers interested in the South African economy.

Somadoda Fikeni Queen's University Kingston, Ontario

Markus Link. First National Development Corporation of SWA Ltd. als Entwicklungsbank in SWA/Namibia. Bonn: Deutsche Afrika-Stiftung, 199o. 185 pp. (Shriftenreihe 56).

As part of the practical requirements for his Diploma (Master's) thesis at the Univer- sity of Nuremberg, Markus Link spent several months at the South West African Bank in Windhoek where he initiated this study - the first and so far only one of its kind - of the First National Development Corporation of SWA (FNDC).

Based on a thorough review of primary and secondary literature as well as inter- views with bank officials (though scarcely with the peasants, artisans, and other small entrepreneurs affected by the FNDC's operations), this study makes a modest but important contribution to the comparative literature on development banks in Africa and the South.

About a third of the text (Chapters i and 2) presents the country's historical, geo- graphical, political, and economic background and describes its fiscal institutions; an extensive appendix presents many maps and documents, some of marginal relevance to the study. Since most of this material is

ui•ore or less readily available elsewhere

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