Black economic empowerment 30 years hence: addressing black economic inequality

When black economic empowerment is generally assessed it is always with regard to what needs to be done to make it more efficient and effective. The problem is, nobody questions its capitalist roots as the foundation for persistent black economic inequality.

A cursory look at South Africa’s state of inequality makes for interesting reading. According to the World Bank, South Africa is one of the most unequal societies in the world with the top 10% of the population (4,8 million) receiving 58% of income and the remaining 90% of the population earning 10%. Significantly, income within the African population group has a Gini co-efficient of 0.58. This statistic fell within the period between 2003, when the Broad-Based Black Economic Empowerment Act was promulgated, and 2014.

So, roughly over a 10-year period, inequality amongst the African demographic was consistent despite the promulgation of the BBBEE Act, which was intentionally designed to address black economic inequality. Since then the inequality average within the African population group is consistently pegged at 0.59, according to the Institute of Race Relations. In 2024, it has increased and is pegged at 0.63.

Presently, there are 27.4 million South Africans who are social grant recipients living in abject poverty. As of 2023, around 18.2 million people in South Africa are living in extreme poverty, with the poverty threshold at R35 daily. It is envisaged that by 2030, more than 19.1 million South Africans will live on a maximum of R35 per day.

Despite these stark facts, writing in his weekly open letter to the public, President Cyril Ramaphosa said his government’s commitment to entrench and deepen economic empowerment is ‘unwavering’ and “…black economic empowerment is an integral part of our economic reconstruction … there are important private sector initiatives and deliberate measures by the state to facilitate greater and more meaningful participation of black people in the economy”.

He furthermore stated, “The continued exclusion of the black majority from the economy’s mainstream constraints economic growth, which ultimately impacts all businesses. Therefore, expanding the country’s entrepreneurial base is fundamental to growth.”

These utterances are in keeping with a statement he made when, as general secretary of the National Union of Mine Workers, he stated that, “capitalism with a human face” was a capitalism which was more responsive to the needs of the people – a human face with compassion not underpinned by greed. And that it is possible to achieve compassionate ends from a capitalist system.”

These statements illustrate Ramaphosa’s ‘unwavering’ commitment to capitalism despite the fact that it could develop into greed; and, more so, he is ‘unwavering’ in his support for capitalism in its racial rendition as formulated within the understanding of black economic empowerment.

Former Minister of Trade and Industries, Rob Davies too, in 2013, attested to the importance of BEE when he stated that achieving broad-based black empowerment was a political imperative and a matter of equity. Furthermore, he stated that plans were in place to improve the system where the next step would be to groom more black industrialists.

Adding weight to this thinking, Blade Nzimande, Secretary General of the South African Communist Party (SACP), stated: “The BEE policies… is imperative to create a ‘patriotic (meaning essentially black) bourgeoisie’ to drive growth and development in our country.” Furthermore, that the SACP characterised the national democratic
revolution as the period of normalising South Africa capitalism and central to it is emergence of the African capitalist.

Therefore, for Ramaphosa, Davies, Nzimande and the SACP, BEE is still a viable and worthy strategy to pursue in the quest to economically empower all black people, to eradicate inequality. This unwavering commitment to capitalism, the creation of a “patriotic bourgeoisie”, the “grooming of black industrialists”, “expanding the entrepreneurial base”, the belief in “capitalism with a human face not underpinned by greed”; and, the production of “African capitalists” contradicts the claim that black economic empowerment empowers all black people.

Jeff Rudin does not agree with Ramaphosa, Davies, Nzimande and the SACP. He believes that black economic empowerment has turned racial capitalism on its head. From originally being a racial capitalism that benefitted white capitalists it is now a racial capitalism serving the interests of a black elite (Black elite read to mean “black industrialist”, “capitalist with a human face”, “African capitalist”)

Rudin graphically illustrates that the logic of capital is based on the exploitation of labour with the appropriation of labour’s unpaid surplus labour the basis of capitalist profit, the hidden basis, the inner secret of capitalism. He shows that the history of South African capitalism with the mineral discoveries resulted in the creation of a black working class, the foundations of a cheap labour system based on economic exploitation and racial oppression.

Importantly, for Rudin, race is instrumentalised by the class imperatives of the capitalist class, which for him pivots upon the “innermost secret, the hidden basis of the entire social structure” that being the specific economic form wherein the “unpaid surplus labour is pumped out of the direct producers”, namely, the capitalist mode of production.

And it is in this exploitative environment where race is instrumentalised to effect this pumping out of unpaid surplus labour, the basis of capitalist profit from a black working class, the veritable abode of inequality, the history of South African capitalism. In short, now too, it is the modus operandi of black economic empowerment. By deploying a reverse racial capitalism, it reinvigorates the exploitation of the black working class which is the foundation of black economic inequality, Rudin argues.

The very logic of capital that Rudin presents above is now turned on its head. What was set in train during the mineral discoveries is now perpetuated in democratic South Africa under the auspice of black economic empowerment. The unpaid surplus labour is still pumped out of a black working class but those who now also appropriate black labour’s unpaid surplus labour are the “African capitalists”, “black industrialists”, “capitalists with a human-face” spoken about.

These new capitalists are no different than the old capitalists in that they too perpetuate black economic inequality. They operate by the same logic, a capitalist logic which rather than eradicate inequality, it perennially produces it by appropriating the surplus labour/surplus value which is the basis of capitalist profit. And this is the state of black economic empowerment in 2024 – an instrument of black capital.