In his statement to the heads of state meeting at the World Summit on Sustainable Development in Johannesburg, South African President Thabo Mbeki once again called for an end to global economic apartheid. The president’s choice of words is unfortunate and incorrect. Apartheid in South Africa was a political system imposed by the whites to preserve their hold on power — a system of racial segregation that had a clear economic dimension. It was a socialist measure to preserve well-paid jobs, land, and good education for poor white Afrikaners. The free market was shunned because it encourages hiring on the basis of ability and not on economically irrelevant criteria such as race. The end of apartheid did not, however, bring about a genuine change in thinking of the South African government. The free market is still shunned and race is still a factor.
According to Mbeki, people across the world have to overcome “market fundamentalism” because it is akin to the “survival of the fittest.” Mbeki’s objection to the free market, in other words, is the same as that of his apartheid predecessors.
Ironically, Mbeki is best qualified to make this point. In the South African public sector today, hiring of employees is done along racial lines. The government has even started to mandate “racial composition” of the private sector. New government proposals currently under discussion include timelines for the redistribution of the entire economy — along racial lines. It is hypocritical of Mbeki to call for an end to global economic apartheid because he is practicing it at home.
At the global level, the situation could not be more different. There is no world government to impose economic constraints on the development of individual nations. No nation, provided it is willing to adopt rules conducive to economic growth, is prevented from succeeding. Countries such as Taiwan, South Korea, and Singapore were once poor. In the early 1960’s, Ghana had a higher Gross Domestic Product and higher standard of living than South Korea. Today, South Korea is as rich as many countries in the West. Its per capita income is 30 times higher than that of Ghana. Thanks to free market reforms that have undermined communism in the economy, China has experienced decades of impressive growth. Even India has grown in recent years.
Clearly, there is nothing “given” about the distribution of wealth in the world. Some countries prosper and some don’t. Some countries prosper at one time and stagnate at other times. At the beginning of the twentieth century, for example, Argentina was one of the richest countries in the world. This is no longer so. Conversely, as late as the 1950’s Hong Kong was a run down outpost of the British Empire. Today it has one of the highest standards of living in the world. This is true despite the fact that Hong Kong has no natural resources.
If, as Mbeki maintains, poor countries are victimized by global economic apartheid, why is the composition of this group of poor countries constantly changing? Why, for example, were the Asian Tigers able to succeed? The answer, of course, rests with the domestic economic policies that governments of under-developed countries pursue. Some are conducive to economic growth and some are not. Hong Kong, for example, compensated for its lack of natural resources by opening up to the world. Today, the Hong Kong economy is one of the freest in the world.
That is not to say that all is well with the current global economic arrangements. The developed countries are guilty of discriminating against foreign produce through protective tariffs and insistence on environmental and labor standards, which the poor countries cannot meet. The European Union’s Common Agricultural Policy, for example, subsidizes European farmers, thereby pricing foreign produce out of the European market. The American “Farm Bill” has the same effect, though its scope is slightly more limited. That is wrong, but it is only a minor impediment to under-development.
As with the Asian economies, change must come from within. Even the wealthy Europeans prospered only after some profound domestic changes. Long before they acquired their colonies, the European nations grew rich. This was a result of domestically generated and domestically invested capital, which, in turn, resulted from the increase of the rule of law and greater respect for private property. In those days, foreign investment was minimal and foreign aid, which the African leaders clamor for as a solution to their economic predicaments, was non-existent.
Of course, admitting that is what Mbeki cannot do. To admit that socialist economic policies and poor governance have been responsible for the poverty on the African continent would amount to something unheard of among African leadership: self-criticism. It would also undermine the moral basis for the financial transfers that African leaders are now demanding from the West. It is in Mbeki’s interest to perpetuate the myth of Africans as mere spectators in the world run in the interest of others. Worse, when the South African economy gets into trouble, Mbeki can stand up and say that it’s someone else’s fault.
Zimbabwean dictator, Robert Mugabe, has been doing so for years. His expropriation of the white farms, it is clear now, has less to do with correcting the injustices of the past and more with maintaining his hold on power. And when it comes to maintaining power, the best way of doing so is by finding a powerless scapegoat on which all the nation’s problems can be blamed. Thus, the communists blamed the bourgeoisie, Nazis blamed the Jews, Idi Amin blamed the Indians and Mugabe blames the white farmers. Sam Nujoma, the president of Namibia, who took Mugabe’s side at the Johannesburg summit, is but the latest African ruler looking for someone to blame. His decision to start expropriating white farmers in Namibia will result in a loss of confidence among potential investors. This will without doubt result in the decrease of economic activity and flight of capital from that country. Only time will show if Namibia experiences as big an economic contraction as Zimbabwe.
Ironically, therefore, the summit has succeeded in showing that world economies do evolve along a kind of two-tier system. But, this system is different from the one Mbeki spoke about. On the one side, there are those countries that are determined to succeed by promoting the free markets, extending the rule of law and defending the institution of private property. On the other side, there are countries whose leaders are determined to cling onto power by any means necessary, thus furthering the misery of their own people.