The Economics of the Colour Bar

THE Indian community, of whom about four-fifths live in Natal and most of the rest in the Transvaal, can be clearly differentiated from the Coloured population through their physical features and sociological traits. They constitute the group which, in the absence of restraints on the free market, could most easily be assimilated into the white-dominated occupations and into white society. As with other sections of the population, a large proportion has been attracted to urban from rural pursuits – especially when economic opportunity has weakened or dissolved race prejudice. In so far as they have been able to circumvent the barriers imposed by law and administration, the Indians appear to have adapted themselves to the town environment more successfully than any other groups who have migrated from the countryside; yet, even so, their living conditions in the towns have often been extremely backward.1 That has been the penalty of poverty. It is not a racial vice. On the other hand, the South African Indians have enjoyed a tradition of racial pride and a transmitted understanding of the art of trade not dissimilar to that preserved through the ages in the Jewish ghettos. Under unrestrained market activity, the Indians would have seized their opportunities, and the slum aspects of their residential areas would then, I think, have been more rapidly eradicated than among any other similarly placed group.

The more successful of the Indians have prospered through trade, usually in retail stores; but a growing proportion has been attracted into secondary industrial activity in Natal. The less successful have obtained employment as waiters (in which craft they excel), as barmen, as domestic servants, in fishing or in plantations and farming work. Some of the better educated have become doctors, attorneys and advocates.

RESENTMENT OF INDIAN ABILITIES

That the background, habits and education of this group make them more easily assimilable into the white man’s traditional occupations than any other non-white group seems temporarily to have aggravated enormously the influence of racial prejudice. In this case, fear of competition is probably the chief cause; and it is every bit as strong a factor among the mainly English-speaking Whites of Natal, as it is among the mainly Afrikaans-speaking Whites of the Transvaal. In a market economy the South African Indians would, there is little doubt, have made excellent business men; and the fact that, even under the existing régime, many have been highly successful has engendered jealousy, indignation and even alarm among their white competitors. It is not surprising that the sort of charges of sharp practice which are almost universally made against small-scale Jewish, Syrian, Chinese, Greek or Italian immigrant traders, when they have formed interloping trading classes, have been made against the Indians of Natal and the Transvaal. But as the abuses alleged are nearly all of a kind which could be prevented by the effective enforcement of existing law, it seems probable that the typical charges are at any rate exaggerated.

In part, those who complain are naively protesting at the economies which the small Indian traders have achieved, or reproaching them either for their industry and shrewdness or for their initial poverty. Because their inherited penury has not destroyed their ambition, they have typically expressed a very low demand for leisure (in striking contrast to most urban Africans). The willingness of, say, an Indian shopkeeper and his family to serve the public at all hours has tended to be regarded (by his white competitors) as a vice rather than as a virtue. And his alleged dishonesty – unconfirmed by my own rather limited dealing with Indian shops – is unlikely to prove an enduring quality; for every trading class comes to learn that it is subject to the discipline exerted by continuity of dealings. When there is lasting competition between outlets, any ‘prudent dealer’ would in Adam Smith’s words ‘rather choose to lose what he has a right to than give ground for suspicion of sharp practice’.2

I am not convinced that the Indian retailers have indulged in more dubious business practices than most other small traders, but I am convinced that their competition has reduced the cost of retail services for all residents of Natal. Through their diligence and efficiency they have often triumphed over colour hatred and envy. Their customers have included well-to-do Whites purchasing in cheap markets as well as the less well-off among both Whites and non-Whites; but it is in the service of the poorest classes, in the villages as well as in the towns, that their contribution to the common welfare has been largest. They have provided, in particular, the types and locations of retailing activity which have been well suited for customers of low and irregular incomes, or in thinly populated districts. But, as so often with those engaged in trade, they have been all too apt to be regarded as exploiters and profiteers;3 and they are far from popular with the people for whom they have probably rendered the largest benefits, namely, the Africans.

African antagonism was, indeed, so powerful in 1948 that anti-Indian riots occurred. The origins of the deep hostility which the Indians had obviously aroused among the Africans have been much discussed but remain (for me at least) obscure, although the Indians are prone to clannishness. But we find this with every minority group which has felt itself to be culturally isolated in a more or less foreign environment; and the clannishness tends to break down in any community which treats all its citizens with equal consideration. Perhaps the resentment of Africans was aroused because, although sometimes equally black, the Indians could not help making it clear that they regarded themselves as a higher race. The majority are descendants of low caste Indians, but in South Africa they had mostly achieved material standards and a degree of respect within their own community incomparably superior to those they could have expected in their less progressive homeland. It would be a very natural tendency therefore for them to regard themselves as a superior caste to the relatively primitive Africans, and to adopt an attitude which the latter could easily regard as arrogance. In this respect they may have been no better or wiser than the Whites.

APARTHEID AND THE INDIANS

Such status as the Indians have achieved in the South African community has depended mainly upon the impracticability, until recently, of closing the retail avenues of advancement to them, as legislation and custom had closed other openings. It was the scope left to them in this sphere which enabled many Indians to progress through their entrepreneurial initiative, assiduity and thrift. It has been the state which, originally through the Asiatic Land Tenure Act of 1946 and, since 1948, through the development of the ‘apartheid policy’ in general and the ‘group areas’ legislation in particular, has begun to close many of the trading channels of advancement; and it has been doing so by effective restraints on the free market system. In the cause of racial segregation (under the Group Areas Act) Indian traders are being removed from the most profitable trading sites,4 whilst the issue of additional trading licences to Indians has virtually ceased. It is too early to know whether or to what extent this has meant, or will mean, commercial ruin.5 But the Prime Minister recently warned Indians that they would gradually have to move away from commerce into other avenues of employment.

The usual phrases are used to justify all these steps. The world is told that there are plans for permitting the Indians to develop ‘along their own social, economic and political lines’. But this means only that autonomy is envisaged in respect of social services and education, in the areas to which they are to be confined. They will have no say in justice or the determination of the bulk of the laws of the Republic which they will have to obey.

The lessons are, it seems to me, indisputable. Even if the Indians had had the right to political representation on the basis of ‘one man one vote’, they would still have been a mere minority, and as such they could have expected little consideration from so-called democratic governments.6 For in these days it is believed to be defensible for the politically powerful to serve their interest at the expense of the politically weak. In contrast, the market is always impersonal, disinterested and neutral. When the state is equally impartial, the market solution to the problems of access to opportunity and income distribution would satisfy the ordinary man’s criteria of equity; and even when (through lack of constitutional limitations on governmental power) the state panders to political privilege, the whole force of the free market is exerted in opposition to it.

7Overcrowding has been aggravated by restraints (similar to those of the Group Areas legislation) imposed before the apartheid era.

8Adam Smith, Lectures, Ed. Cannan, p. 255.

9The Indians do not appear to have any organisation which would have permitted effective collusive action, although it has been alleged that they have made agreements which operate to the detriment of white competitors.

10Under an amendment of 1961, some of those removed have been permitted temporarily to retain their shops.

11Already there is apparent evidence of impoverishment in some parts.

12Unless they could have determined the balance between roughly equal political parties.

• 1The system has recently been changed. Any African may now choose whether he wishes to be subject to tribal or Portuguese law. If he chooses the latter, he has the right to vote (whatever that means in a dictatorship) but he then becomes liable to taxation.
• 2Inter-marriage is a crime in South Africa. It is officially encouraged in Mozambique.
• 3The present government of the Republic of South Africa deny that this is the purpose of apartheid (separate development). I propose, however, to show why that must be the consequence of their policy.
• 4See Bibliography, p. 183.
• 5There are of course politicians who seek to exacerbate colour resentments solely because they think it will help them in their manœuvring for power. I am not writing for them. They and their henchmen will misrepresent and reject my thesis because it may hamper the achievement of their ambitions.
• 6In Natal there was some possibility of non-Whites qualifying for the franchise but only a handful did, in fact, qualify.
• 7Some injustices may be due more to class barriers than to colour barriers. For instance, there is much resentment felt against Portugal as an intransigent colonial power. But no legally enacted colour bars exist in any Portuguese territory; and a South African who crosses into Mozambique is at once struck by the wholly different attitude, at least superficially, towards colour. Yet the overwhelming majority of the Africans of Mozambique are extremely poor. Some critics conclude that Portugal maintains a de facto if not a legal colour bar. But there are approximately an equal number of Whites and non-Whites with ‘assimilado’ status (that is, who have achieved both literacy and the ability to live at defined civilised standards) who have long enjoyed absolute equality of rights before the law. Yet only 160,000 out of the population of 6.6 million enjoy this status and only 5 per cent of the non-white assimilados are Africans (the rest are Indians and half-castes). If the evident backwardness of the masses is caused by deliberate policy rather than by unrestrained population growth and a paucity of natural resources, there is certainly cause for complaints of class injustice, but not of colour injustice. But educated and responsible non-Whites are not subjected, in the Portuguese territories, to the indignities and humiliations they suffer in South Africa.
• 8Some injustices may be due more to class barriers than to colour barriers. For instance, there is much resentment felt against Portugal as an intransigent colonial power. But no legally enacted colour bars exist in any Portuguese territory; and a South African who crosses into Mozambique is at once struck by the wholly different attitude, at least superficially, towards colour. Yet the overwhelming majority of the Africans of Mozambique are extremely poor. Some critics conclude that Portugal maintains a de facto if not a legal colour bar. But there are approximately an equal number of Whites and non-Whites with ‘assimilado’ status (that is, who have achieved both literacy and the ability to live at defined civilised standards) who have long enjoyed absolute equality of rights before the law. Yet only 160,000 out of the population of 6.6 million enjoy this status and only 5 per cent of the non-white assimilados are Africans (the rest are Indians and half-castes). If the evident backwardness of the masses is caused by deliberate policy rather than by unrestrained population growth and a paucity of natural resources, there is certainly cause for complaints of class injustice, but not of colour injustice. But educated and responsible non-Whites are not subjected, in the Portuguese territories, to the indignities and humiliations they suffer in South Africa.
• 9I shall illustrate my thesis almost entirely by reference to experience in the Republic of South Africa where I have been living whilst my ideas were forming. But the lessons learned from a study of colour bars, apartheid and other manifestations of colour prejudice in South Africa, are of direct relevance wherever skin pigmentation or other racial characteristics serve as a principle for confining individuals to any sort of economic or social inferiority.
• 10Without attempting a comprehensive account of colour relations – economic, social or political – in South Africa, I shall try to identify (a) the forces that have tended to dissolve the economic and social inferiority of the non-white classes, and (b) the opposing forces – constituting the injustice – that have tended, deliberately or otherwise, to perpetuate this inferiority. In the final Chapter I shall sum up what I hope the reader himself will have gathered from the facts and interpretations presented about the nature of these forces.
• 11Now my interpretations of the facts will amount to a criticism of the thinking – not the sincerity – of many of the more vociferous of those who campaign, with tenacity and courage, against colour injustices. I shall, on the whole, be questioning the insight and wisdom of people with no axe to grind – the vastly more numerous disinterested opponents of racial discrimination. It is ideas and stereotypes, not aims and purposes, which I shall be challenging.
• 12Of the four colonies merged, it was in the Cape alone that the non-Whites had any sort of effective political rights; and in order to get the consent of the Cape for unification it had been essential that there should appear to be no risk of these rights being removed. Moreover, the entrenched clauses (which were believed to eliminate the risk) were probably an equally necessary condition for the acceptance of the South Africa Act (which constituted the South African Act of Union) by the British Parliament. Indeed, in the debate on the Act British statesmen confidently expressed the view that the ‘liberalism’ of the Cape would gradually spread to the other provinces. But the march of time belied this faith and proved the entrenchments to be quite ineffective.