Reproduction and convertibility: examining wealth inequalities in South Africa

Abstract

Inspired by Pierre Bourdieu’s notion of capital convertibility, this article investigates why wealth inequalities in South Africa under the African National Congress have remained so persistently stubborn and how it is possible that the revolutionary movement, ostensibly devoted to the ideals of the Freedom Charter, has not managed to radically improve matters 25 years after the fall of apartheid. Based on a series of interviews conducted with South African academics and members of civil society, the article seeks to provide some answers to this conundrum by tracing the roots of the problem to reproduction mechanisms that are deeply entrenched in the economy of South Africa, its politics and its educational system.

Keywords:

• inequalities
• South Africa
• apartheid
• BRICS and rising powers

Introduction

The problem of inequality has recently garnered a lot of attention. Specifically, after Thomas Piketty’s intervention,¹ the topic has enjoyed a resurgence and is now increasingly important within academic debates about the state of the world. Indeed, according to The Economist, ‘It is a golden age for studying inequality’.² Against this backdrop, South Africa is a particularly interesting example of inequality writ large. This is for several reasons.

Firstly, while some commentators have claimed that South Africa is an emerging global power,³ it is simultaneously the most extreme documented case of inequality, in terms of both income and wealth, in the world. Second, it is arguably the most stubborn case of inequality in contemporary history, with efforts to reduce this having largely failed.⁴ Finally, inequality has actually widened post 1994. Considering all the policy efforts to reverse this dismal trend, this is an additional puzzle and a source of embarrassment for the government for whom equality ideals laid out in the Freedom Charter⁵ remain a vital part of its political heritage and who fought the 1994 election campaign on the slogan ‘A Better Life For All’. Numerous scholars have offered a myriad of assessments of this conundrum, yet ‘no clear consensus has emerged on the causes of the post-apartheid increase in inequality’.⁶

This article aims to better understand and contextualise different factors shaping the problem of inequality in South Africa. It is passingly concerned with income inequalities, but since the debate in South Africa in this area has reached a dead end of sorts (in the sense that academics seem to have exhausted the list of explanatory variables),⁷ it is particularly sensitive to the problem of wealth inequalities, which are a related yet a qualitatively different measure of inequality. By concentrating on wealth, the article seeks to fill a gap in the literature in South Africa, where the topic remains still largely obscure. Indeed, African National Congress (ANC) parliamentarian Ben Turok has lamented that it is ‘strange that our universities have paid so little attention to these matters. They seem to prefer the safer terrain of poverty studies, labour markets and the rest, important as they undoubtedly are’.⁸ Our main argument is that wealth inequalities in South Africa are stubbornly high because there are entrenched mechanisms that reproduce them. Based on findings from field studies and inspired by the Bourdieu theorem of the convertibility of capital,⁹ we identify three distinctive types of capital: economic, human and political.

The creation and reproduction of inequalities have been of central importance for Pierre Bourdieu. He defined four types of capital (cultural, economic, social and symbolic) which he employed to understand the persistence of inequalities. For Bourdieu, capital can be understood as ‘accumulated labour in its materialized form or its “incorporated” embodied forms’ which can be exchanged one into another.¹⁰ Bourdieu’s concept of ‘capital’ should be seen in relation to his ‘field’ theory, and the concept of ‘habitus’.¹¹ Although there is reference to the ‘fields’ and ‘habiti’ in the text, the analysis of them are beyond the scope of this article, since its interest lies mostly in reproduction mechanisms which allow the convertibility of certain types of capital into others in terms of the wealth inequalities (ie the structural inability of the vast majority of South Africans to accumulate economic capital). It is believed that selecting explanatory ideas from Bourdieu’s thought and its use for understanding a given phenomenon is deeply consistent with the spirit of Bourdieu’s philosophy.

The remainder of the paper is organised as follows. The next section provides a brief literature overview of wealth inequality studies in South Africa. The reproduction mechanisms of wealth inequality in the three aforementioned dimensions are then detailed and analysed. The last section concludes.

‘Poor numbers’ and the study of inequality in South Africa

As has been noted by Morten Jerven,¹² statistics in Africa can be misleading, to say the least. This includes poverty and inequality figures, which are particularly difficult to collect.¹³ However, South Africa is renowned for having relatively good quality and wide-ranging data, which some scholars see as a legacy of the apartheid regime, which arguably had a ‘mania for measurement’ and was busy providing ‘absurdly detailed quantitative measurements’.¹⁴ At least in part, this can be explained by the fear of the swart oorstroming (‘black swamping’),¹⁵ which resulted in the National Party government’s obsession to possess all kinds of data. However, South Africa’s relative richness in data availability is not without problems. For example, scholars have long lamented that after 1996 the government has failed to continue certain race-based data series,¹⁶ such as the distribution of formal employment by race, thus making it challenging to do inter-race comparisons and comment on any race-based inequalities.

According to the Living Conditions Survey 2014/15, the Gini coefficient in South Africa in 2015 stood at 0.63, which is the highest documented inequality in the world.¹⁷ As noted by Piketty, ‘South Africa is really at the top of the class, so to speak’.¹⁸ There is no doubt that high inequality is a major legacy of apartheid; yet since 1994 income inequality has actually widened. The macroeconomic sources of persistent income inequality have been relatively well understood and traced back to the labour market, constructed under conditions of structural racial capitalism.¹⁹ According to many, the major driver of inequality in South Africa is high unemployment²⁰ and disturbingly high wage inequalities, a direct legacy of apartheid itself.²¹ Scholars have focussed on inequalities among black South Africans,²² although there is a growing trend to understand the problem of inequality in South Africa as one now ever more based on class rather than on race (although the two typically overlap). Having said that, although income inequality has been studied extensively, the distribution of wealth in South Africa remains a conundrum. Mbewe and Woolard, on the basis of two waves of National Income Dynamics Studies (2010–11 and 2014–15), presented the cross-sectional distribution of wealth in South Africa,²³ but the work of Anne Orthofer²⁴ is, to the best of our knowledge, the only study that attempts to address this topic thoroughly.²⁵

The scant available evidence shows that wealth inequality in South Africa is higher than income inequality, with the wealth Gini coefficient for South Africa at 0.95.²⁶ World Bank estimates that the share of wealth held by the top 10% in the distribution is 71%, while the bottom 60% hold 7% of the net wealth.²⁷ Orthofer also compiles data, which shows that 10% of the population owns more than 90% of all wealth. More strikingly, 80% ‘have no wealth to speak of’,²⁸ which implies that the emerging middle class, in terms of wealth, is practically absent in the country (even if, income-wise, the middle class – mostly white but increasingly black – has been growing in size).

Why is the literature on wealth distribution in South Africa so relatively thin? ‘Poor numbers’, again, are partly to blame. Wealth inequality is notoriously hard to measure, with problems ranging from the way assets yield incomes and people’s cognitive inability to properly assess the size of their wealth, to the voluntary nature of the surveys, which typically under-estimate the wealth of the top wealth brackets as the rich often prefer to keep their real numbers out of the public eye. For the same sensitive issues, it also tends to understate liabilities, which constitutes a part of net worth. Measuring wealth is also far from straightforward due to the foreign ownership of large swathes of the South African asset base. On the other hand, due to its mobile nature, wealth has been subject to a significant outflow over the years, and it is generally very diversified internationally.²⁹ Another problematic issue is that a large part of national wealth does not have a formal, registered title; this is prominent in rural land and land allotments which in South Africa have the character of an ‘almost post-feudal tradition’.³⁰

We find Bourdieu’s social reproduction thesis³¹ and the idea of convertibility among various forms of capital useful for understanding wealth inequalities widening in South Africa. Due to the above-mentioned wealth concentration measurement issues, the metatheoretical approach proposed by Bourdieu seems rational for understanding why South Africa is the world’s most unequal state. Relations between social classes are always based on the domination of one class over the other; however, the balance of power between classes, mirrored in the social systems and the existence of a ‘market’ where various forms of capital can be converted into other forms, is hindering the ‘brute fact of domination as the principle legitimating’ the superiority of one class over the other.³² Below, we trace the processes of political elite reproduction, economic capital concentration and access to skills which are of crucial importance for unpicking the problem of wealth inequalities in South Africa. Nevertheless, we are fully aware that despite the wealth (understood as a part of economic capital), emphasis should also be put on symbolic violence and mechanisms that reproduce multidimensional inequalities, but this sociological study is beyond the scope of this paper.

Reproduction of political elites in terms of wealth concentration

At first glance, it is perplexing that the ANC – a movement closely associated with the South African Communist Party, with its focus on nationalisation, social justice and land reform – has, after a quarter century of being in power, overseen not the mitigation of inequality, but rather further social stratification. As various studies have demonstrated, during the transition from apartheid, the ANC went through an ideological transformation during which socialist ideals were largely dropped and neoliberal approaches adopted.³³ In Bourdieu’s lexicon, it might be said that the ANC habitus evolved rapidly during this period. For instance, immediately after release from prison, Nelson Mandela claimed that: ‘The nationalization of the mines, banks and monopoly industries is the policy of the ANC, and a change or modification of our views in this regard is inconceivable’.³⁴ However, just six years later, South Africa introduced the neoliberal Growth, Employment and Redistribution (GEAR) strategy, where the notion of wealth and its distribution was not a direct part of agenda.³⁵ This significant change in the ANC’s policies laid the groundwork for the preservation of apartheid-originated wealth inequalities and the subsequent development of new forms of wealth concentration, available to a relatively narrow group of politically well-connected citizens under the aegis of so-called Black Economic Empowerment.

There are two narratives explaining the ANC’s ideological shift. According to the first, Mandela, during his trip to Davos in 1992, was ‘convinced’ by the world leaders and leading economists that nationalisation and state-led wealth redistribution are ‘not the best’ solutions for South Africa in the global era.³⁶ In the words of Mandela himself, he faced a dilemma: ‘Chaps, we have to choose. We either keep nationalization and get no investment, or we modify our own attitude and get investment’.³⁷ Mandela chose the second option, extended with a component of the redistribution of national income to the most disadvantaged social groups under the Reconstruction and Development Programme (RDP). The main aim of the programme was poverty alleviation, through the provision of affordable houses, access to clean water, electrification, improving access to health care, land reform and opening a front of public works. There was a consensus that such an ambitious programme could only be put into practice if stable economic growth were assured simultaneously. On the other hand, there is a narrative which focuses on the South African white capitalist elite seeking, by any means necessary, to prevent the implementation of the Freedom Charter’s economic clauses. Two analysts belonging to very different realms, alter-globalist movements’ guru Naomi Klein³⁸ and defender of British imperialism Niall Ferguson, have been equally perplexed by a mysterious turn in the ANC's stand towards the Freedom Charter guidelines. To both of them, this shift should be considered a ‘trap’ pledged by the National Party and white business elites during the CODESA negotiation process (the ANC was not aware of the long-term economic consequences of decisions taken during the negotiations), or a mere result of the political ‘bargain’ (a price that had to be paid for a peaceful transition), or an effect of International Monetary Fund (IMF) pressure on the ANC.³⁹ Other authors emphasise the role of informal negotiations between the National Party and the ANC in the 1980s,⁴⁰ when the ‘ANC accepted the emasculation of its economic radicalism as the price of political power underpins the others’,⁴¹ that provided the grounds for the CODESA process to move forward. It is true that, technically, the new government could introduce the wealth tax; however, the ANC was not only socialised to accept the capitalist elite’s perception of the inviolability of property rights but, what is more, the apartheid and anti-apartheid political elites were merged during this process. We argue that the acceptance of non-interference with property rights laid the foundation for the maintenance and evolution of the exploitative principles of the apartheid system based on wealth concentration, and limited access to the means of production for the majority of the population. Using Sampie Terreblanche’s expression, South Africa was ‘lost in transformation’, but the white capitalist elite was exactly where it wanted to be – or, in the Bourdieuan sense, economic capital was effectively converted into political capital to allow further accumulation of wealth by a narrow (yet latterly racially diversified) capitalist elite. While the post-apartheid field of politics in South Africa was created, it was to a large extent subordinated to the larger field of economic interests, which influenced the convertibility of various forms of capital.

Understanding the process of political elite reproduction in South Africa requires also taking on board a myriad of external factors. The ANC ideological turn was initiated under the zeitgeist of the 1990s, when liberal democracy intertwined with the free-market ideology and was perceived as the only viable form of political and economic governance. The sudden collapse of the communist systems in Eastern Europe seemed to confirm this thesis. Both the ANC and the National Party experienced pressure from the USA and Western Europe to pursue a peaceful political transition, and it was taken for granted that the collapsing Eastern Bloc would not be able to provide any meaningful support for the ANC during and after the transition process.⁴² It therefore seems rational that the ownership structures remained intact, especially in terms of the above-mentioned plans to attract foreign capital in the form of foreign direct investments (FDI).

Nevertheless, it was the amalgam of the old and new political elites – a new political field – that provided the basis not only for the preservation but also for the development and entrenchment of the exploitative structures based on wealth concentration. It is striking how many anti-apartheid activists and former members of the ANC-led governments perceive the current situation as a betrayal of the party’s revolutionary ideals – acting against the ANC’s habitus. Among many, the most vocal are the former minister of intelligence Ronnie Kasrils, brother of the former president Moeletsi Mbeki (he, however, has no leftist views), the former president Kgalema Motlanthe, and the author of the economic part of the Freedom Charter, Ben Turok. They all admit that during the transition period, there was no plan for how to navigate the entire process peacefully, and the threat of a civil war was very real. The idea of peacefulness, and the axiom according to which the future ANC-led government would not be devoted to its revolutionary ideals, provided a base for the processes of political elite reproduction. These elements, together with the guarantees of political agency for the National Party after 1994 and the ANC’s new role, constituted the base for the South African political mental habitus, by which we mean durable dispositions and ideational structures, responsible for both organised and semi-conscious practices in South African politics. Rejection of wealth redistribution plans and maintaining the patterns of wealth accumulation paved the way to the ‘state capture’ phenomenon which became rampant under Jacob Zuma.

An obvious objection to such argumentation may be that applying judgement categories of 2019, while discussing political transitions from a quarter of a century ago, is not appropriate. In the early 1990s, there was no recipe for how to navigate political transition; the threat of civil war was real (especially after Chris Hani’s assassination), and peacefulness was the major guideline during the post-1994 political elite formation. Ben Turok, while ruminating on the power transfer, aptly pointed out:

The ANC had no idea how to run a country. There was not a single document of how we will run the country – and the best brains were in Lusaka – many people in the government had no experience. The compromise dictated the transition. This country was a complicated developed country, and we did not have engineers, architects … we were not ready to run the country. The compromises were massive and half-baked. [The] apartheid regime made sure that the black people were incompetent.⁴³

In other words, there was an enormous need for reliance on former regime civil servants and specialists if South Africa were to function after 1994. This reliance was legitimised by the so-called ‘sunset clause’ proposed by the Communist Party leader, Joe Slovo, during the CODESA negotiations.⁴⁴ According to the sunset clause, every party receiving 10% or more of the votes during the 1994 election should be included in the government, and the apartheid regime Afrikaner civil servants obtained a guarantee that they would not be removed from their positions for at least five years. Simultaneously, the new black civil servants had to be granted the same wages and privileges as employees of the apartheid regime, who remained in the administration⁴⁵ – so, basically, despite the political regime change, material benefits created during the apartheid system continued. The same logic, once used, proliferated into other fields of social activities. The above-mentioned compromise not only paved the way for the maintenance of the wealth inequalities but also constituted the base for later kleptocratic behaviour since the process of new political elite formation took place in parallel with the emergence of the black capitalist elite, which could enrich itself on the basis of political connections.

On the other hand, the wealth accumulated by the white minority was used as a vehicle to create a new class of rich black people, a nominal expansion of the South African economic field. In the final years of apartheid, selected members of the black political elite were perceived as junior partners for white capital. On the basis of affirmative action and Black Economic Empowerment policies, a new class of rich black entrepreneurs was forged. As argued by Roger Southall, large white-owned corporations protected their interests by ‘drawing key individuals from the ANC into the corporate elite, [so] the democratic settlement was simultaneously based upon the confirmation of the capitalist basis of accumulation and the consolidation of corporate power’.⁴⁶ However, besides the white capitalist elite’s desire to sustain its political influence, the Mandela administration had to manage tremendous social expectations, and the rapid creation of a class of super-rich black people was perceived as a visible sign of changes that South Africa under the ANC was experiencing.⁴⁷ Some South African scholars argue that without this, the political transition would have been threatened because people would not see any change in the ownership structure of the economy. The rich black economic elite became a new force – a new field – beside existing international capitalist forces and internal representatives of the so-called mining energy complex (see next section) which put pressure on the administration not to return to the ANC’s revolutionary ideals. Also, various black economic empowerment (BEE) schemes (often introduced voluntarily by white-owned corporations) were seen by the business elite ‘as an additional form of taxation’,⁴⁸ which might explain why introducing new forms of taxation, particularly the wealth tax, was difficult for the Mandela and Mbeki administrations.

The issue of the wealth tax was raised by Sampie Terreblanche during his testimony in front of the Truth and Reconciliation Commission (TRC) in 1997. Terreblanche’s view of the wealth structure in South Africa was one of a ‘symbiotic relationship between white business and the apartheid state’, emphasising that ‘a large part of the structures of racial capitalism are still very much in place’.⁴⁹ He also emphasised the moral dimension of business responsibility for benefiting from the apartheid system and to this end proposed a ‘wealth tax (of say 0.5 per cent annually), for ten or twenty years, on all persons with net assets of more than R2 million’ which should at least partly eradicate ‘systematic injustices’.⁵⁰ However, his proposal was fiercely criticised by South Africa’s largest corporations. Ann Bernstein from Anglo-American, for instance, replied that ‘Corporations are not institutions for moral purposes’, and South African business simply adapted itself to the conditions of apartheid. In our view, South African business should not be perceived as a passive player, taking the apartheid or post-apartheid circumstances as exogenous. Due to the economic capital it possesses, business actively creates the circumstances for further accumulation of economic capital.

The political settlement of the 1990s created a situation where the new political elite did not remove the exploitative nature of South African capitalism, and measures such as various BEE schemes and land reform based on the willing buyer, willing seller rule did not reduce wealth inequalities, although without redistributive measures such as social grants the inequality level would arguably be much worse. Currently, the symbiotic relationship between business and political elites is frequently exposed by the revolving door from business to politics and vice versa. The performative dimension of this process is visible during annual ANC fundraising dinners when places around the dinner tables bought by businessmen symbolise their political influence. A literal description of business–politics symbiosis was provided by President Jacob Zuma in 2013, when during a meeting with benefactors he encouraged them to join the political elite, saying: ‘Support is fine, we love it. But if you just go beyond that and become a member, you’ll realise everything of yours will go very well. If you are a businessman, business will thrive. Everything you touch will multiply’.⁵¹ Intuitively, one can assume that the conversion of economic capital into political capital is supposed to be easier than political into economic, although the concept of political capital is ill-defined and not as easy to quantify as its economic equivalent, in South African conditions. As argued by Jeremy Seekings, it ‘is definitely easier to transform political capital into economic one than the other way round’.⁵² This situation occurred due to the reproduction of the political elite, based on the lack of contestation of wealth relations and former white capitalist elite determination to empower a small proportion of black South Africans. Thus, when the majority of the population has minimal wealth, those who have it can multiply it effectively, which leads to a further widening of inequalities.

Wealth and economic capital concentration

Wealth can be perceived as the most visible manifestation of economic capital. Wealth is accumulated over time through either reduced consumption in relation to income (savings) or preservation between generations. In South Africa, this process has been arrested for large swathes of society because of serious historic systemic distortions of both labour and capital markets. In the post-apartheid South Africa, these distortions have largely remained in place, which, as we argue, leads to the reproduction of inequalities. Three post-apartheid developments should be taken into account in this respect. First, white corporate elites have been pursuing opportunities that have taken them ‘outside the borders of any delineated ethnic business group or class’.⁵³ Second, the emergence of the new black middle class, particularly the upper middle class, means that the capitalist class in South Africa is no longer white. Third, while economic concentration continues to be high,⁵⁴ as superbly demonstrated, for instance, by numerous studies of the Centre for Competition, Regulation and Economic Development (CCRED), there have been quite significant changes in ownership.⁵⁵

Interestingly, though, the existence of a new middle class may matter more for income than for wealth distribution, largely because higher incomes and often well-paying jobs, through a combination of high consumption and large indebtedness,⁵⁶ their net worth is very little or even negative. This, as noted by Orthofer, renders much of the new middle class essentially propertyless⁵⁷ and as a result ‘floating’ (ie their status can be very quickly reversed). Also, one should bear in mind that the very definition of the middle class in South Africa and Africa in general is subject to controversy and yields different results in terms of racial profile.⁵⁸

Wealth inequalities are reproduced through labour markets. Under apartheid, labour markets excluded the majority of the population through a combination of limited work opportunities in urban areas (1967 Physical Planning Act), job reservations along racial lines (The Job Reservation and Colour Bar Acts) and, most importantly, depressed wage incomes (the ‘apartheid wage’). Although legal restrictions are long gone, there are still many elements of the labour market that inhibit wealth accumulation among the majority of South Africans. First, there is a notorious problem of rampant unemployment, which has attracted a great deal of scholarly attention in South Africa.⁵⁹ This does two things to wealth accumulation: either it removes people altogether from the process of wealth accumulation or, in spells of unemployment, wealth is drawn down. The second issue which affects people’s propensity to save, thus adversely impacting wealth accumulation, is depressing wages. According to recent estimates, South Africa has the highest wage inequality among low-income and middle-income countries, which was, and still is, largely informed by race.⁶⁰ Yet the problem goes deeper than the nominal wage level,⁶¹ and might be further explained by Bourdieu’s notion of habitus – dispositions of certain group members to behave in certain conditions in certain ways. The so-called black tax⁶² or the problem of the so-called ‘sandwich generation’ (having many dependents including parents and children)⁶³ in South Africa means that income generated per capita through wages is lower, since ‘in South Africa, one wage sustains many’.⁶⁴ These within-community income transfers may be additionally explained using the concept of ubuntu⁶⁵ (‘black tax’ is also known as ‘ubuntu tax’) and a sense of responsibility for community or family relatives.⁶⁶ In the low-wage environment, high dependency ratios and culturally driven obligations towards the extended family⁶⁷ make saving difficult and – in effect – wealth accumulation continues to be heavily constrained for the majority of South Africans.

This depressed income as a result of low wages, unemployment and the ‘black tax’ is further aggravated by the spatial legacy of apartheid, which is very much alive. As a result of the geographical engineering of apartheid, of which Cape Town with its topography is a disturbing example⁶⁸ of ensuring the racial ‘apartness’, South Africa is now a very expensive place for the poor (who happen to be non-white). High transport costs, which can be considered an implicit tax on the poor,⁶⁹ along with housing, absorb a large proportion of incomes. High work-associated costs also work as disincentives for the poor, as when these exceed, or come close to exceeding, the wage level it does not pay to work.

Wealth accumulation among black Africans is also constrained by property ownership and real estate market dynamics. As a result of apartheid policies and the lack of viable solutions to address this problem, it is alleged that 60% of the South African population hold land ‘outside the formal property system’.⁷⁰ Restrictions regarding owning property for black people have a two-fold effect. They prevent the intergenerational transmission of wealth, which is at the very centre of the Piketty argument, but also restrict access to credit, for both individuals and small and micro enterprises, which are predominantly owned by blacks. The government has been trying to redress the issue of inequality with regards to real estate assets. Most famously, since 1994, it has provided three million houses to the South African poor.⁷¹ Problematically, though, for many people, these are still ‘dead assets’, as they have not been given the legal title deeds because of a Treasury Department backlog.⁷² As a consequence, reportedly, about five million people benefiting from the Reconstruction and Development Program (RDP) houses lack proper title deeds, on top of many more millions in the former Bantustans who lack a title, as they live on land owned by the state and controlled by traditional authorities.⁷³ Uncertainty with regard to security of property rights has recently been drastically aggravated as land redistribution without compensation was placed on the agenda by the current South African leadership. Land ownership in South Africa has been studied heavily⁷⁴ and often held up as an example of the reproduction of inequalities in the post-apartheid era. Yet land in South Africa has a mostly symbolic value⁷⁵ (dignity), and land redistribution has been used as a political propaganda tool for public consumption rather than as a viable solution to redress social imbalances.

A slightly different picture emerges from the structure of capital ownership, as reflected by the Johannesburg Stock Exchange (JSE) capitalisation. As pointed out in a number of studies, the roles of both domestic and foreign institutional investors in the JSE have grown exponentially, from 4% (each) in the period 1995–2000 to 18% and 42%, respectively, in 2016.⁷⁶ Also, black ownership of JSE has undergone a shift, even though the pace of increasing participation of black South Africans, as well as the exact figure, is subject to controversy, with former president Zuma famously quoting 3% in the 2015 State of the Nation Address⁷⁷ and JSE claiming that it is in fact 23%.⁷⁸ According to the most recent data, black ownership stands at 25.2% on average across different sectors.⁷⁹

In general, wealth concentration has also been driven by the way the South African economy is structured. It has historically disadvantaged the accumulation of capital outside of its core. A high degree of concentration of both ownership and activities has favoured big business in particular, since the transition.⁸⁰ As Terreblanche notes, ‘although the new government has enjoyed political hegemony since 1994, economic hegemony is still in the hands of the corporate sector’.⁸¹ The fields of economic activity and politics have started to interact, but the pre-1994 power and class relations subordinated politics to economy.

Corporate capital concentration in South Africa has been, to a large extent, a result of the capital-intensive growth path of the economy. Arguably, such a path was hardly a coincidence as ‘powerful interests have coalesced around it’.⁸² It should not come as a surprise as ‘the maturity of South Africa’s capitalist class, and the tremendous amount of political influence it wields, is widely acknowledged’.⁸³ Relative to its peers, but also to some advanced economies, the South African economy is unusually capital intensive.⁸⁴ On a general level, this is explained as a legacy of apartheid, but, more specifically, it may be a result of more primacy given to capital-intensive sectors in the apartheid era, a natural consequence of a well-developed mineral sector, and distorted factor prices (ie real wages being too high relative to capital or underinvestment in labour-intensive sectors).⁸⁵ This ‘revealed’ comparative advantage exacerbates inequalities as labour income is depressed relative to capital income. It may also be behind the notorious jobless growth,⁸⁶ but also explains why there is so little employment associated with exports,⁸⁷ as the job-creating capacity of the economy is heavily constrained, particularly for low-skilled Africans. The high labour-unit costs in South Africa, which is the result, among other things, of an extensive wage bargaining system (in the private sector, but more importantly in the public one), promotes even more capital-intensive economic activity, favouring capital owners over labourers. Faced with high labour costs, firms tend to substitute labour for capital, increasing capital intensity even more in the process. Naturally, capital intensity of the South African economy can be also seen as a skills trap in the sense that it is a result of a lack of skills and poor education of the labour force, which prevents labour-intensive manufacturing from taking off, further compounding capital intensity.

Capital concentration, along with the market power of upstream giants such as Sasol,⁸⁸ Denel and Eskom, disadvantages local labour-intensive downstream producers. Capital-intensive heavy industries have also enjoyed generous direct and indirect support of the state (eg preferential pricing arrangements between Eskom and BHP Billiton).⁸⁹ More importantly, this support has largely remained in place in the post-apartheid era, and the ANC has long been accused of serving powerful capitalist interests. This is not to say that there was no attempt to shift industrial policy towards non-traditional manufacturing and labour-intensive activity,⁹⁰ yet it failed to yield clear results. Nattrass laments that labour-intensive firms have been stigmatised in government circles and ‘destroyed’ as a result of misplaced policies, those regarding setting minimum wages included.⁹¹

All this shows that capital concentration in the capital-intensive sectors, magnified by consolidation and mergers, yields economic structures that favour capital over labour. This in turn limits wealth accumulation in large swathes of the population, and, through the accrual mechanism, multiplies wealth in the hands of the owners of economic capital. This very situation became reality because of the non-contestation of property rights in the course of the political transition of 1994 and the relatively easier conversion of economic capital into political capital in the 1990s.

Reproduction of the patterns of access to skills and knowledge

The role of education systems in the maintenance and reproduction of social inequalities was central to Bourdieu’s philosophy. In this part, we focus only on the channels of economic capital convertibility into social capital in terms of wealth inequalities. In official narratives, the stubbornly high unemployment rate is often considered a key reason behind high inequalities in South Africa. Skills required by the labour market are, by and large, available to those who can pay to obtain them. Despite formally granted equal access to the labour market for all races, and large-scale affirmative action, the post-apartheid South Africa has reproduced multiple barriers around the knowledge–skills nexus (social capital), which makes it difficult for a large part of the population to engage in capital accumulation. The most visible manifestation of this tension was visible in the course of the Fees Must Fall campaign.

Apartheid created a highly distorted system of education. The Bantu Education Act of 1953 proposed by Hendrik Verwoerd was aimed (in Verwoerd’s ‘Biblical’ narrative) to educate black people only enough to be ‘hewers of wood and drawers of water’.⁹² Ben Turok, in describing skills and knowledge obtained from the former Black Universities in the context of new black cadres in state administration, labelled them as ‘worth less than nothing’.⁹³ A relatively high level of education for blacks was available under apartheid in church-run schools, but many of them were replaced by the state schools in the post-apartheid period,⁹⁴ in which education quality deteriorated.

During the political transition, universal access to education had a symbolic meaning. Nelson Mandela once famously stated that ‘education is the most powerful weapon which you can use to change the world’, and education indeed became a budget priority for consecutive ANC-led governments. Viewed from the fiscal perspective, South Africa should have achieved high schooling rates by now. After 1994, South Africa had the largest educational budget in Africa,⁹⁵ and relative to gross domestic product (GDP), the country spends more on education than the United Kingdom or the USA. Current education expenditure amounts to 6% of the South African GDP, while the EU average in 2017 was 4.6%.⁹⁶ In 2016 over R213 billion or 15% of the budget was allocated to basic education. These indicators increased in 2017/2018 to 17% of the budget (R230 billion). Despite all this funding, the educational results for young South Africans are startling; students are on average far less educated than their peers from the region. Additionally, there is a visible correlation between race, class, place of living and the educational standards a given student can hope to achieve. Taylor, van der Berg, Reddy and van Rensburg estimated that in 2011 only 44% of black South Africans completed secondary school, while this ratio for Indian South Africans was 83%, and it was 88% for the whites.⁹⁷ Moreover, the quality of education also varies among regions. The Mail and Guardian calculated that there were more than 21,000 vacant teacher posts in 2012, and over 12,000 of the vacancies were in the three poorest provinces (Eastern Cape, Mpumalanga and Limpopo). This resulted in larger class sizes and subsequently adversely affected the quality of teaching.

Geography, similar to its role in economic capital accumulation, is also a key to understanding the unequal access to education. In South Africa, ‘field’ and ‘habitus’ are most often correlated with the place of settlement. In the apartheid era, the best schools were situated in the areas inhabited by the white population – places where the wealth was concentrated. Currently, the dividing line runs between public, so-called Model C⁹⁸ and private schools. The latter often define themselves as the perfect binary opposition of the government-owned schools. It must, however, be noted that there are public schools, especially in the areas inhabited by the new middle class, which are high performing, thus making comparisons in such a diversified country always a challenge.⁹⁹ Some of the Model C schools are considered to be the best in the country. Nevertheless, public schools performing better than the private ones or Model C schools, in a given area, is an exception rather than a rule. It is the private school system, and the Model C system that is partially financed by the parents, which generally gives a better chance of being admitted to university, and as rightly noted by Jansen, in this small group of privilege you find the majority of mathematics and physical science passes, a group of students who annually reproduce the class inequalities of South Africa where a small privileged minority are again destined to rule, economically at least, over the failing (or poorly passing) masses.¹⁰⁰ Even the neoliberal newspaper The Economist admitted that Nelson Mandela’s government effectively ‘replaced a school system segregated by race with one divided by wealth’.¹⁰¹ Wealth became a pass to good education and then to a job, which in consequence created a new dividing line in South Africa – between the employed and the unemployed. This dividing line can also be associated with race and class, since black graduates are three times more likely to be unemployed than white graduates are – even though the unemployment rates among graduates are substantially lower than the South African average (27%) – standing at 9% for black graduates and 3% for white. In Bourdieu’s lexicon, economic capital (wealth) allows one to acquire the social capital (knowledge, skills, connections) necessary for further multiplication of wealth. Due to the lack of accumulated wealth, the majority of South Africans are structurally excluded from the abilities to accumulate cultural capital and subsequently from the changes in their social status.

The state creates regulations that theoretically allow all citizens to apply to good schools; nevertheless, private schools also create regulations that aim to exclude those who do not have a sufficient material status. One such example is the principle that students who attend kindergartens run by a school have priority in the recruitment process. In other words, those who cannot afford private kindergarten are effectively excluded from the recruitment process. Another form of wealth-related exclusion at the universities is the high cost of basic textbooks. Although both examples are anecdotal, they illustrate how possession of economic capital is converted into institutionalised cultural capital, embodied in professional qualifications gained and certified by schools or universities, which, in turn, allows one to gain economic capital.

Unequal access to knowledge caused by wealth inequalities led to the ‘fees must fall’ campaign, which resulted in President Zuma’s announcement that free higher education will be provided for all students from families that earn less than R350,000 per year. Although ‘fees must fall’ proved that organised social pressure might prompt the government to take certain actions, the core problem of wealth being a pass to acquiring the knowledge and skills necessary to further wealth creation has not been removed. Besides university tuition fees, the major causes of unequal access to high-quality higher education are the inequalities reproduced in elementary and secondary education.

Conclusions

Wealth inequalities in South Africa have remained off the radar of academia for far too long. We argue that South African inequalities are entrenched in three reproduction mechanisms. Firstly, the political settlement of the 1990s created a new political elite, but in order to reproduce itself, the uneven distribution of wealth was not contested. Subsequently, capital concentration along with the characteristics of the labour market has led to a further widening of inequalities. Thirdly, unequal access to wealth affects access to the schooling system and therefore prevents the majority of the population from obtaining the skills and knowledge needed by the labour market.

Bourdieu’s idea of convertibility among various forms of capital is useful for understanding why South Africa has become the world’s most unequal state. The lack of contestation of the distribution of wealth was the basis of the South Africa’s political transformation. Besides the growing role of political capital, which in South African conditions can be relatively easily transformed into wealth, the post-apartheid economy still favours capital over labour, leading to the further growth of inequalities. Simultaneously, economic capital (money, assets and property) was crucial for obtaining the cultural capital (knowledge and skills) necessary to find a job which would allow – more slowly than by multiplying wealth, but still possible – economic capital accumulation.

The current South African habitus is characterised by large barriers to entry into the capital-multiplying class, which produces social frustration, reflected in ‘fees must fall’ campaigns and multiple protests all over the country. It is unlikely that, having remained in power for over a quarter of a century, the ANC will make any changes in terms of wealth distribution, despite the fact that the postulate of fast-track land reform has been included in the party programme. Wealth disparities, and the fact that a minority of black South Africans benefitted from the transition process, recreated and created multiple new divisions in South Africa. The old divisions connected with race, social status and place of settlement have been deepened and widened by divisions in terms of access to employment, access to the political class and access to education.

Acknowledgements

The authors wish to extend their thanks and appreciation to all the persons who willingly agreed to participate in the interviews conducted in South Africa in February 2019 for their time, kindness and valuable comments. The contents of this publication are the sole responsibility of the authors.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This research was funded by the National Science Centre, Poland, under grant number UMO- 2017/25/B/HS5/00929.

Notes on contributors

Andrzej Polus

Andrzej Polus, PhD, is a Professor at the Institute of International Studies, University of Wroclaw. He is the former president of the Polish Center for African Studies. His research work focuses on the political economy of hydrocarbon management and the current political situation in sub-Saharan Africa. In his work, he also looks for paradoxes in international relations theories. He participated – as principal investigator or co-investigator – in 14 research projects devoted to development studies in sub-Saharan Africa. He has conducted field research in Botswana, Ghana, Namibia, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. He recently published: “David versus Goliath: Tanzania’s Efforts to Stand Up to Foreign Gas Corporations” (Africa Spectrum), “The Norwegian Model of Oil Extraction and Revenues Management in Uganda” (African Studies Review) and “Extraction Equation in Uganda” (African and Asian Studies).

Dominik Kopiński

Dominik Kopiński holds PhD (2009) and Habilitation (2015) degrees in Economics from the Faculty of Economics, Wroclaw University of Economics, and is an Assistant Professor in the Institute of Economics at the University of Wroclaw. He is a cofounder of the Polish Centre for African Studies. He was a Fulbright Fellow at the Elliott School of International Affairs, George Washington University (Senior Advanced Research Award 2015–2016), and a visiting scholar at Fudan University (China), Orfalea Center for Global & International Studies, University of California, Santa Barbara (United States), Universidade de Lisboa (Portugal), and University of Plymouth (United Kingdom). He has published extensively on sub-Saharan Africa, development aid, China–Africa relations, natural resource policies and global public goods. His work has appeared, among other publications, in African Affairs, the Journal of Contemporary African Studies, Africa Spectrum and Global Governance. He has conducted field research in Angola, Botswana, Ghana, Namibia, South Africa and Zambia. Outside the academic realm, he has provided consulting services for Polish business and authored several reports on investment and trade opportunities in sub-Saharan Africa, including a series of reports published by the CEED Institute (funded by Jan Kulczyk). His recent work includes the book Global Public Goods and International Organisations: The Case of World Bank and IMF (Warsaw: Difin, 2020).

Wojciech Tycholiz

Wojciech Tycholiz graduated from the University of Wrocław in 2008 and from the Wrocław University of Economics in 2010. In his research work, he focuses on capital flows to and within sub-Saharan Africa, natural resource revenue management (including the resource curse phenomenon), and inequalities in the least-developed countries. He is the President of the Board and a Senior Research Fellow at the Polish Centre for African Studies, where he regularly publishes papers and comments on the contemporary economic developments in the sub-continent. He leads several research projects and oversees relations with other research centres across the globe. He is the author of several academic publications, in both Polish and English, which were published in peer-reviewed journals (including African Affairs, Africa Spectrum, African Studies Review, African and Asian Studies, and Third World Quarterly), and has authored reports, working papers and newspaper articles. One of his most recent publications (“The Norwegian Model of Oil Extraction and Revenues Management in Uganda”) discusses the questionable adaptability of the Norwegian model of resource revenue management to the Ugandan socio-economic context. During the last few years of his academic career he has conducted research projects in Angola, Ghana, Namibia, Uganda, South Africa, Tanzania, Zambia and Zimbabwe.

Notes

1 Piketty, Capital in the Twenty-First Century.

2 The Economist, “Globalisation and Inequality: The New Wave.”

3 Westhuizen, “South Africa’s Emergence as a Middle Power.”

4 Leibbrandt et al., Trends in South African Income Distribution.

5 Mazibuko, “Freedom Charter,” 436–49.

6 Acemoglu and Robinson, “Rise and Decline of General Laws,” 3–28.

7 Interview with Jeremy Seekings, University of Cape Town, Department of Sociology, 19 February 2019; Interview with Roger Southall, University of Cape Town, Department of Sociology, 19 February 2019.

8 B. Turok, “South Africans Should Not Be Polite,” 5.

9 The authors are grateful to Jeremy Seekings for drawing their attention to the problem of convertibility.

10 Bourdieu, “Forms of Capital,” 241–58. The overall idea of various forms of capital convertibility is sometimes pictured as a ‘methodological conundrum’. One must simultaneously accept the economic dimension of various forms of capital that are being converted and the fact that the other than economic forms of capital are what they are due to its non-economic character. Fine, Social Capital versus Social Theory, 61–2.

11 Bourdieu defined habitus as ‘systems of durable, transposable dispositions, structured structures predisposed to function as structuring structures, that is, as principles which generate and organize practices and representations that can be objectively adapted to their outcomes without presupposing a conscious aiming at ends or an express mastery of the operations necessary in order to attain them,” Bourdieu, Logic of Practice, 53. In our view, research on habitus should focus on durable dispositions and conscious and unconscious ‘structured structures’, and their influence on social practices.

12 Jerven, Poor Numbers.

13 Jerven, “History of African Poverty by Numbers,” 449–61.

14 Posel, “Mania for Measurement.”

15 Terreblanche, History of Inequality in South Africa, 1952–2002, 298.

16 Berg and Louw, “Changing Patterns of South African Income.”

17 World Bank, Overcoming Poverty and Inequality in South Africa.

18 Piketty, “Nelson Mandela Annual Lecture.”

19 Leibbrandt, Bhorat, and Woolard, Understanding Contemporary Household Inequality, 79–94; Leibbrandt, Finn, and Woolard, “Describing and Decomposing Post-Apartheid Income Inequality,” 19–34.

20 Interview with Seekings.

21 Berg, Current Poverty and Income Distribution.

22 Leibbrandt et al., Trends in South African Income Distribution.

23 Mbewe, Woolard, Cross-Sectional Features of Wealth Inequality.

24 Orthofer, Private Wealth in a Developing Country; Orthofer, Wealth Inequality in South Africa.

25 In 2019 the issue of wealth tax was raised by Mbewe, Woolard, and Davies in an edited volume on inequalities in South Africa. Aroop Chatterjee also in 2019 published a working paper where he ponders the importance of wealth inequality measurement for the sake of understanding multidimensional inequalities in South Africa. See Mbewe, Woolard, and Davies, “Wealth Taxation as an Instrument,” 169–83; Chatterjee, “Measuring Wealth Inequality in South Africa.”

26 Orthofer, Private Wealth in a Developing Country.

27 World Bank, Overcoming Poverty and Inequality in South Africa, 51.

28 Orthofer, Wealth Inequality in South Africa.

29 Interview with Andrew Donaldson, former Deputy Director-General in the National Treasury, Cape Town, 20 February 2019.

30 Ibid.

31 Bourdieu and Passeron, Reproduction in Education, Society and Culture.

32 Ibid., p. 14.

33 Mckinley, “Democracy, Power and Patronage,” 185.

34 Hickel, Democracy as Death, 119.

35 South African Government, Growth, Employment and Redistribution. GEAR aimed at the creation of large-scale employment opportunities, which technically might have reduced inequalities, but the strategy did not take into account redistributive measures.

36 I. Taylor, Stuck in Middle GEAR, 68.

37 Sampson, Mandela: The Authorized Biography, 428.

38 Klein, “Democracy Born in Chains.”

39 Ferguson, The Square and the Tower, 312–3.

40 Guelke, Rethinking the Rise and Fall of Apartheid, 168–9; Bauer and Taylor, Politics in Southern Africa, 246.

41 Guelke, Rethinking the Rise and Fall of Apartheid, 175.

42 Interview with Ben Turok, Institute for African Alternatives, Cape Town, 20 February 2019.

43 Ibid.

44 Mangcu, “State of Race Relations,” 106.

45 Interview with Turok.

46 Southall, “South Africa’s Fractured Power Elite.”

47 Interview with Pieter Fourie, Political Sciences Department, Stellenbosch University, 17 February 2019.

48 Interview with Andrew Donaldson, former Deputy Director-General in the National Treasury, Cape Town, 20 February 2019.

49 Terreblanche, Wealth Tax for South Africa, 19.

50 Ibid.

51 Schorr, “No Longer the Party.”

52 Interview with Seekings.

53 Davies, Afrikaners in the New South Africa, 52.

54 Mondliwa and Roberts, Structural Transformation, Competition and Economic Power.

55 Bosiu, Goga, and Roberts, “Concentration, Profits and Investment.”

56 James, Money from Nothing.

57 Orthofer, Private Wealth in a Developing Country.

58 Visagie and Posel, “Reconsideration of What and Who Is Middle Class,” 149–67.

59 Klasen and Woolard, “Surviving Unemployment without State Support”; Baldry, “Graduate Unemployment in South Africa”; Anand, Kothari, and Kumar, South Africa: Labor Market Dynamics and Inequality.

60 ILO, Global Wage Report 2018/19; Bhorat, Wage Premia and Wage Differentials; STATS SA, Living Conditions of Households in South Africa.

61 Interview with Eleanor du Plooy, The Institute for Justice and Reconciliation, Cape Town, 22 February 2019.

62 Lemon, “New Black Middle Class,” 241–3.

63 Smallhorne, “Challenges of the Sandwich Generation.”

64 World Bank, Incomplete Transition, 36.

65 Ibid.

66 Ratlebjane, “How ‘Black Tax’ Cripples.”

67 Interview with Urszula van Beek, Political Sciences Department, Stellenbosch University, 17 February 2019.

68 Wainwright, “Apartheid Ended 20 Years Ago.”

69 Kerr, Tax(i)ing the Poor?

70 Hornby et al., Untitled: Securing Land Tenure, 8.

71 I. Turok, “What Will Housing Megaprojects Do to Our Cities?”; Tomlinson, “South Africa’s Housing Conundrum.”

72 Rueckert, “More Than 1 Million Poor.”

73 Crouse, “Keeping the Poor in Their Place.”

74 Walker, Landmarked: Land Claims and Land Restitution; McCusker, Moseley, and Ramutsindela, Land Reform in South Africa.

75 Interview with Cheryl Walker, Stellenbosch University, Department of Sociology, 16 February 2019.

76 Bosiu, Goga, and Roberts, “Concentration, Profits and Investment.”

77 Zuma, “Response to Debate on State of the Nation Address.”

78 Johannesburg Stock Exchange, “JSE Statement on Black Ownership on the JSE.”

79 B-BBEE Commission, National Status and Trends.

80 Davies, Afrikaners in the New South Africa, 96.

81 Terreblanche, History of Inequality in South Africa, 1952–2002, 29.

82 Black, “Industrial Policy and Unemployment.”

83 Davies, Afrikaners in the New South Africa, 52.

84 Black, Craig, and Dunne, Capital Intensity, Industrial Policy and Employment; Subramanian, Serge, and Alleyne, What Does South Africa's Pattern of Trade Say.

85 Kaplinsky, “Capital Intensity in South African Manufacturing,” 179–92.

86 Samson, Mac Quene, and Niekerk, “Capital/Skills-Intensity,” 10–2.

87 Cali and Hollweg, How Much Labor.

88 Sasol’s entrenched market position is thoroughly discussed in Mondliwa and Roberts, “From a Developmental to a Regulatory State?,” 11–29.

89 Black, “Industrial Policy and Unemployment.”

90 Black, Craig, and Dunne, Capital Intensity, Industrial Policy and Employment.

91 Nattrass, “Abandoning Labour-Intensive Growth.”

92 The Economist, “South Africa.”

93 Interview with Turok.

94 Interview with van Beek.

95 Jansen, “South Africa’s Educational System,” 99.

96 Eurostat, “Government Expenditure on Education.”

97 S. Taylor et al., “Evolution of Educational Inequalities,” 425.

98 Model C schools are located between private and government schools. They receive funding from the government but are also financially supported by the parent body.

99 Interview with Steven Robins, Stellenbosch University, Department of Sociology, 15 February 2019.

100 Jansen, “South Africa’s Educational System,” 113.

101 The Economist, “South Africa.”