Nelson Mandela

Did Economic Sanctions Help End Apartheid in South Africa?

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Nelson Mandela was one of Reason's "35 Heroes of Freedom" back in 2003. Among other things, we cited his "remarkable forbearance and amity in overseeing South Africa's post-apartheid transition, creating a model for how the world might finally push past centuries-old racial strife."

With the death Mandela—whose signal role in the battle against apartheid is only outmatched by his role in promoting peaceful transition to a post-racist regime—it's worth reflecting on the various things that helped end authoritarian rule in South Africa. Nothing, of course, was more important than the struggles fought by the people in that country.

I went to college in the 1980s, when the "disinvestment" movement was huge. The idea was that moral people should get rid of any investments or economic ties to companies either in South Africa or otherwise benefiting off the apartheid system. Disinvestment—especially by large, instutitional investers such as pension funds and universities—would send a clear message to South African leaders that they would suffer sanctions for oppressing people the way they did.

On campus, the disinvestment movement was largely a function of the left, which meant that demonstrations and teach-ins often included larger discussions of America's other actions against despotic regimes. I remember getting into arguments with people asking why was disinvestment morally right against South Africa but boycotting trade with Cuba was repugnant? Disinvestment proponents would explain that the Cuba embargo hurt poor people in Castro's autocracy; it didn't hurt the ruling class, which actually used the action to consolidate power and legitimate crackdowns. To which I would respond: Exactly. The fact is that by most empirical accounts, U.S. economic sanctions against South Africa might have felt good but they weren't particularly effective in destabilizing the racist regime there.

In a 1998 piece for Reason, Thomas W. Hazlett, now at George Mason University, explained what happened after the U.S. pulled out of the South African economy:

Eventually, the Reagan administration levied economic sanctions against South Africa in September 1985 (with Congress following suit a year later). The result was nothing–at best. In the wake of sanctions, the South African stock market soared as local investors picked up "fire sale" bargains. The pro-apartheid National Party gained political momentum it had lost years before, largely due to the intense "rally 'round the flag" boost that all sanctioned pariah governments–from South Africa to Iraq–tend to enjoy.

Reform in South Africa had to wait out a sanctions-era political retrenchment, including the imposition of martial law in 1985 and a 1987 increase in electoral power for the National Party. Liberalization was ultimately ushered in not by sanctions but by the collapse of communism, which eliminated the possibility of a radical left in South Africa.

More here. Hazlett notes elsewhere that sanctions failed to "lower South African trade flows from their previous levels, but GNP growth actually accelerated after the European Community and the United States imposed sanctions (in September and October 1986, respectively). Perversely, South African businesses reaped at least $5 billion to $10 billion in windfalls as Western firms disinvested at fire sale prices between 1984 and 1989." That's worth noting every time that sanctions are brought up as a way of undermining a regime or policy that somebody doesn't like. They rarely work as intended, if they even work at all.

As a number of observers have noted (including Reason's own Matt Welch), there's a real problem with viewing everything in the world through an American lens, especially when it comes to the Cold War era, when just about everything from chess matches to trade laws were deemed to be part of the twilight struggle between the Commies and the Free World.

However, it is accurate to note that Cold War politics infused domestic South African politics, as Hazlett suggests above. Whites who wanted to end apartheid balanced that against the likelihood that South Africa would become a Soviet satellite under the rule of Mandela's African National Congress (ANC), which had major ties with Soviet and other communists. The 1989 collapse of the Berlin Wall showed that Soviet style communism was in fact in its last days (the USSR would dissolve two years later), and that drag against reform disappeared.

It's negative effect on South Africa is one more way the US-Soviet relations affected other countries, typically in a negative way. As Hazlett explains in a different piece, this one for EconLib, Cold War alliances also allowed for the apartheid regime to be misunderstood as capitalistic and free-market-oriented when it was in fact nothing of the sort:

The conventional view is that apartheid was devised by affluent whites to suppress poor blacks. In fact, the system sprang from class warfare and was largely the creation of white workers struggling against both the black majority and white capitalists. Apartheid was born in the political victory of radical white trade unions over both of their rivals. In short, this cruelly oppressive economic system was socialism with a racist face.

Apartheid as a system did not spring fully formed from the brow of racist Dutch and English descended colonists. Rather its final stages only appeared gradually and over time, as changes in technology and economic status of marginalized groups kept disrupting the status quo. Hazlett notes:

Postwar economic growth in South Africa so deeply integrated the nonwhite population within the "white" society that the very idea of "separate development" became ridiculous as a practical proposition, quite apart from its odious moral implications. Without skilled black labor, white living standards would fall precipitously. The inevitable economic synergy between the races drew people physically and socially closer together. Whereas the median white voter of the 1920s insecurely viewed black workers as substitutes, the majority of whites in the 1980s saw racial cooperation as increasingly beneficial. At the same time, the dramatic growth of an educated, urban African population, including a sizable black middle class, served to enormously raise the cost of enforcing apartheid. Indeed, the old African tribal system, which was cynically manipulated by apartheid policymakers under the notorious homelands policy, was eclipsed by the rise of urban townships closely tied to industrial job centers.

Between 1970 and 1980, he writes, the white share of GDP fell from 70 percent to 60 percent, both showing the power of market forces to disrupt the status quo and inspiring a backlash by the power elite.

Read his whole article for an excellent history of race, politics, and economics.

NEXT: Joe Biden in South Korea: US to Play Leading Role in Security, Prosperity of Asia

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  1. Mandela post.

    Drink.

    1. I bet the over/under last night at 8 posts, I think I was being too stingy.

      We’re at four already.

      1. I was getting ready to ask for a Mandela post count. I have an idea: reason should ask each staffer/contributor/intern their opinion of Mandela and what lasting impact he might have on society then publish this as one article, like they do with the who voted for who articles. Then repeat whenever a famous person dies.

        1. Does the first one count for the betting pool? It was just a news blip without any explicit opinion attached.

          1. The line is still 12.5, and any post that has Mandela in the first paragraph counts.

            1. Are those Vegas odds or some off-shore garbage account?

              You can’t trust those Nassau betting lines, they are total bullshit.

      2. What’s the line on shreeky posting another “Reagan vetoed an anti-apartheid bill” comment?

        1. Mendela post * 9/5 + 32

      3. I get that his passing was big news in the national and world news segments, but why is it on every channel? ESPN, NBA TV, CNBC, etc?

    2. This one is better than the others though. The ineffectiveness of sanction policies is a signature issue of libertarians, and nowhere do we come under greater scrutiny than when we didn’t support them for the Apartheid era South Africa. Really, you should bookmark this one for future reference. Thanks, Nick.

      1. And support of apartheid is not a libertarian issue?

        1. If you mean civil liberties instead of trade policy, the gap favors libertarian over progressive concerns because the later are okay with state surveillance and bullying tactics when used for the right reasons. Say, frog marching an innovator like Michael Milken before the show trial.

  2. Disinvestment proponents would explain that the Cuba embargo hurt poor people in Castro’s autocracy…

    Also, check out this cool Che t-shirt I’m wearing.

    1. Did they have those in the 80s?

  3. Did they end alt-text?

    1. Alt-text died with Nelson Mandela.

  4. I thought the “I won’t play Sun City” boycott ended Apartheid…That and Space Mutiny.

    1. Not enough credit is ever given to Big McLargehuge.

      1. Dave Ryder has too many names for just one to get credit.

    2. Ice Pirates, you big, fat space herpy!

  5. It’s mighty fun to finish the quote “Workers of the world, unite” with ” and fight for a white South Africa” for my May Day friends.

  6. I remember getting into arguments with people asking why was disinvestment morally right against South Africa but boycotting trade with Cuba was repugnant?

    Because Communism.

    1. Exactly. Che looks much cooler on a t-shirt than Paul Kruger.

  7. Disinvestment proponents would explain that the Cuba embargo hurt poor people in Castro’s autocracy; it didn’t hurt the ruling class, which actually used the action to consolidate power and legitimate crackdowns.

    I’m surprised that they bothered to go that far. Typically, once a dictatorship got the label “leftist” or “anti-American,” it instantly became exempt from any criticism, no matter how thuggishly it behaved.

  8. In the mid-eighties, I was back in college and advocating war against South Africa to end Apartheid. Sort of a What Would Lincoln Do approach. Glad I was wrong and changed my ways, and views, toward both.

    1. Blue bellies and Lincoln’s coming….
      Many dead in U.S.A.

  9. Look, economic sanctions definitely helped end apartheid, just like they toppled authoritarian regimes in Iran, Iraq, Syria, Libya, Afghanistan. And economic sanctions have been going strong against Cuba for decades, and that regime should probably crumble tomorrow. Next week at the latest.

    1. Look, Hugh, these things take time. The poor are harder to wear down than you think.

    2. It did crumble Capitalism and give us Obama. The economic sanctions by the Beats and their successors who refused to buy soap, new cloths, or spend money until after they got their big media contracts. Wait…

      1. who refused to buy soap,

        Hippies hate water.

        1. Thanks! Never heard that song.

          And then I saw ’em,
          Like a herd of sheep callin’,
          “Gimme a ride to the Dead show man”

  10. Let us not understate the effect of the “Free Nelson Mandela” t-shirts and stickers we had in high school.

    Funny how times change. At one time high school kids were all into “stop the Vietnam War”, then later, “stop Apartheid”. Now it’s “Give me more free stuff!”

    1. Interestingly enough, at their rallies where loads of Che gear are on display, none of it is free. Not even the newsletters.

      1. When they sell things for money it’s good and noble. When icky KKKORPORASHUNZ do it it’s teh EVUL. Because KKKORPORASHUNZ R EVUL.

    2. Political types were treated like unwashed street preacher vermin in the late 80s campuses I attended. I would get strange looks from people when they found out I was good friends with one guy who was infamous for getting arrested at protests. Jesse Walker probably knows him. Jesse if you are reading this, does the initials DM stand out to you?

      1. Depeche Mode?

        1. Nailed it one! Nay, this guy came from Zimbabwe.

  11. Topic: Bitcoin is the new Krugerrand, but without the messy totalitarian state part. Discuss. Just to get it going, from Wik:

    “The Krugerrand was introduced in 1967 as a vehicle for private ownership of gold. Unusually for bullion coins, the Krugerrand was given the status of legal tender[3] or currency.”

    So, it was a contrivance to allow private ownership of gold, that they then “disguised” as a currency? Then of course we got into the act with the American Eagle coins after 85, the gold just had to come from “wink, wink, nod, nod” domestic sources.
    You would think one obvious distinction would be that of fiat vs. non-fiat, however there is another complication, intrinsic value. One of the definitions of fiat money, again from Wik: “money without intrinsic value.[3][4]”

    Which seems to be what a Bitcoin is:

    “Bitcoins are often traded as an investment[58] by speculators who expect the currency to increase in value as its popularity widens.[43][59] Bitcoins have been described as lacking intrinsic value as an investment because their value depends only on the willingness of users to accept them.[60]”

    So, given that anything being traded depends on the willingness of users to accept it, is the only good definition of fiat that it is recognized as legal tender by some government somewhere?

  12. I was arguing with the resident neocons about the efficacy of sanctions vis-?-vis Iraq. I think it’s quite arguable that they worked in the case of SA and that passive resistance worked to speed up Britain’s decolonialisation of India. In general sanctions and passive resistance doesn’t work and historically haven’t been shown to work against regimes that don’t care about repressing their own people, quite the opposite, sanctions are great for retrenching such regimes.

    The counter-argument, other than SA, given by Cytotoxic I believe, when asked for an example of sanctions working against an extremist regime, was Italy being sanctioned for invading Ethiopia.

    1. How about the sanctioning of journalists via government retraction of support for their First Amendment rights?

      That seemed to work for a while. Post-Snowden, though not so much.

      Although the British sanctions do seem to be kicking into high gear (Alan Rusbridger hauled before Parliament), so I guess we’ll have to wait and see

      1. That’s a whole different can of worms. I’m not sure how it is relevant to the argument about the efficacy of sanctioning countries in order to make them play nice or respect human rights.

        1. You’re correct about it being substantially different in the particulars of the application.

          However, in the sense that it is another attempt to employ the tactic of withholding a vital resource with the aim of influencing behavior, we might be able to get an additional evaluation of its efficacy, in this other context.

    2. What the Italy-Ethiopia example shows is how sanctions can make a country less effective at warmongering by limiting access to resources and expertise. It is an extraordinarily poor example for how to cause regime change.

      Generally speaking, sanctions are only effective when they are 1) agreed to by all major trading partners of a targeted country, 2) when their policy goals are limited, and 3) when the regime is already inclined to move in a certain direction. The Iran/Iraq/N Korea sanctions have never worked because they have not satisfied any of these criterion.

  13. A different question was when did American anti-Apartheidism become little more than a fashion statement?

    Anti-Apartheidism was something that was picked up and promoted largely by Hollywood types, Richard Donner being one of the more transparent and shallow participants, which then worked it’s way into the popular culture. Soon everyone had to be anti-Apartheid, and support the popular solutions, or you were a bad person.

    What galled me the most, being in college in the 80s, was that there were far greater crimes being perpetuated by black-led governments in Africa against their populations, but that was all but ignored by the fashionistas.

    Yes, Apartheid sucked, but being ruthlessly oppressed or massacred by your government did so even more.

    1. You don’t think apartheid qualified as ruthless oppression?

      1. You don’t think apartheid qualified as ruthless oppression?

        The number of blacks killed by the “apartheid government” is estimated by human rights groups to be c. 7000. Compare that to the thousands of blacks who were killed by the ANC in terrorist attacks, and the tens of thousands of South Africans of all races who have been murdered in criminal attacks since the end of white rule.

        And toss in the millions of people who have been slaughtered under black majority rule regimes through the rest of post-colonial Africa. Care to talk about liberty in Congo or Uganda or Rwanda or Sudan or Ghana or Angola or Zimbabwe or Somalia or the Central African Empire/Republic these last several decades? How did one-man-one-vote work out in any of these places? Freed of the heavy hand of the white oppressor, did these countries become miracles of the marketplace? Or did they turn into dictatorships and human rights disasters?

        You tell us.

        Apartheid policies was a defensive measure by whites to preserve civil order and economic progress in a South Africa created by Western civilization.

  14. The more important question is whether South Africa is better off today because of Mandela – especially the African African black people. According to the BBC (a year ago), South Africa is now the most unequal country in the world, exceeding Brazil. All that has changed is the skin color of the people harvesting all the money from looting the country’s mineral riches.

  15. Back then, the SA rand was trading at around par to the US dollar, nowadays it trades at around 10 rands to the US dollar.

    The radical trade unions continue their communist policies, so unemployment is around 25%. It’s so difficult to fire someone that no-one gets hired in the first place. Small companies in Newcastle unable to pay the centrally mandated wages have closed with many losing their jobs – known in South Africa as the Newcastle Effect. see http://www.freemarketfoundatio…..egislation

    The “cruelly oppressive economic system was socialism with a racist face” continues…

  16. What were we left with ? A libertarian state ? Not at all. We now have a country that is socially liberal, but fiscally oppressive. I pay 40% personal income tax, 14% VAT , capital gains tax, levys on fuel, etc.
    We are moving more and more towards a socialist state where the majority is promised free everything in exchange for their vote and a shrinking minority is excessively taxed to pay for it. Trade unions are devastating the mining industry and “employment-equity/affirmative action” laws exclude people from job opportunities on the basis of the color of their skin (doesn’t that sound familiar?).

    1. I do not recall anyone predicting that South Africa would become a state with the same freedoms as the U.S., let alone a libertarian paradise.

  17. You might have better believability if you would recall that Mandela didn’t “oversee a post-racist South Africa.” He oversaw a South Africa in which the “racism” switched from white South Africans to black South Africans. The Boers and their descendants and other white South Africans built SA into an African, economic powerhouse. Black Africans from neighboring countries flooded into SA because that’s where the only good jobs were to be found in the southern half of the continent. They soon outnumbered white South Africans by a factor or 7 or 8 and started demanding “equality.” Mandela headed the African National Congress (ANC), which was an organization funded and originally organized by the KGB. Mandela was an avid communist for most of his life–although he eventually saw “the light” and became an advocate of capitalism…after it started benefiting HIM personally.

    He should be admired for his EFFORTS to affect a peaceful transition from apartheid government to a more democratic form, but he wasn’t the “saint” the American press makes him out to be. Today, SA is the carjacking capital of the WORLD and many black South Africans still believe that having sex with babies will “cure” AIDS. They are only a generation away from tribalism and could slip back into it at the drop of a hat.

  18. How’s that liberty working for you in post-colonial Africa?

    Care to tell us about how ending white minority rule has led to countries with impartial courts, honest cops and armies which actually protect their peoples instead of being pretorian guards for warlord Big Men?

    How’s liberty faring in the new rainbow nation of South Africa? Care to move there and experience its astronomical rates of crime, its government mandated affirmative action, its looting of resources by multinationals, its anti-white agitprop?

    As for the anti-apartheid movement in the USA back in the 1980-90s: the people running it were betraying Western civilization. They promoted a marxist terrorist organization–the ANC–at the expense of a legitimate Western government. For all the blather about “freedom” for South African blacks, there never was any similar movement to oppose the hellholes often created by black majority rule.

    Objectively speaking, “black majority rule” in post-colonial Africa has usually meant either a one party police state, or a breakdown of civil order and ongoing human rights debacles. None of this is conducive to liberty,

    So what’s the point of your article? Yeah, I know, you need to run stuff like this for minority “outreach.”

    How’s that working?

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