EUSTACE DAVIE: Economic freedom is foundation of all other freedoms

There is a common misconception that SA, both during apartheid and today, has been a capitalist country. This is far from the truth. In fact, both the apartheid-era policies and today’s socialist-leaning government interventions have eroded economic freedom, leaving the country both economically and politically unfree.

As the late great African American economist Walter E Williams argued in his book, SA’s war against capitalism, apartheid was “the most extreme form of governmental control over people’s lives”. Today’s socialist policies continue this destructive legacy. 

An important lesson from apartheid, and from today’s government policies, is that when one group oppresses another it eventually imprisons everyone. During apartheid, white South Africans thought they were protecting their interests by oppressing black South Africans, but they ultimately suffered as well. The economy was held back and the country became morally and politically isolated. 

Similarly, the current government’s economic policies, which claim to uplift the poor, are actually trapping all South Africans in stagnation. High unemployment, listless economic growth and a struggling economy affect everyone. By limiting economic freedom the government is locking the country in a prison of poverty, just like apartheid’s interventions limited economic potential for all. True prosperity will come only when the economy is free from these heavy-handed restrictions. 

Economic control is political control 

One of the clearest lessons from SA’s history is that when a country is not economically free it is not politically free either. During apartheid government control over people’s economic opportunities directly restricted their political rights. Today, under the current government’s socialist policies a similar pattern has emerged. When the state dominates economic life through regulations and controls it inevitably extends its influence into politics, limiting personal freedoms. 

The 2023 Economic Freedom of the World report illustrates this clearly. SA ranks 94th out of 165 countries, reflecting a significant decline in economic freedom over the past few decades. The report highlights how increasing government intervention through regulations, state monopolies and land expropriation policies has systematically eroded the country’s economic freedom. As economic freedom declines, political freedom inevitably follows — this is not a coincidence.

Countries that rank higher in economic freedom, such as Singapore and Switzerland, also enjoy greater political freedoms. In contrast, SA is experiencing rising authoritarianism alongside its economic woes. 

Apartheid was not capitalism 

Apartheid was never about free markets or capitalism. When the Free Market Foundation hosted Walter Williams on his fact-finding visit to SA in 1980 he witnessed the effects of apartheid’s draconian interventionist policies first hand. His observations led him to conclude that apartheid was fundamentally an anti-capitalist system that used the heavy hand of government to oppress black South Africans and restrict their economic freedoms. 

Williams wrote that true capitalism was about voluntary exchange, competition and the protection of private property rights for all individuals, regardless of race. Apartheid, on the other hand, was a system where the government dictated who could work where, who could own property, and who could engage in business; distorting market forces and curtailing economic freedom. “Apartheid’s restrictions were the furthest thing from capitalism,” Williams said. “It was a state-driven system of control, not a free market.” 

A new form of control 

The current government is pushing SA even further away from a free-market system. Policies such as expropriation without compensation, National Health Insurance, the Basic Education Laws Amendment Act and excessive labour regulations, all reflect a growing trend of ever more state control. These policies don’t just limit economic freedom, they also weaken political freedom by concentrating more power in government hands. 

When the state controls critical parts of the economy it limits choices for citizens while giving politicians and bureaucrats greater arbitrary power to impose their will. As Williams aptly put it, “economic freedom is the foundation of all other freedoms”. Without the ability to make free economic choices people lose the independence to challenge government over-reach and stand up for their rights. 

SA, prosperity and freedom 

The good news is that SA can still change course. By embracing the principles of free markets by reducing government interference, protecting private property rights and encouraging competition, we can create a society that is both economically and politically free. 

Williams was right when he said “the free market is the most effective path to prosperity and justice for all”. It is time for SA to leave behind its history of government control and embrace the freedom a free market provides for the benefit of all. 

• Davie is a director and board member of the Free Market Foundation.