This book appears to have been ready to go to press when its author, Charles Feinstein, died on 27 November 2004. It is based on lectures he delivered at Cambridge University earlier that year. Feinstein was born in Johannesburg in 1932. At the University of Witwatersrand in 1950 he took a course given by Helen Suzman in South African economic history and then had done nothing further on the subject for more than 50 years. His unpublished 1959 Cambridge University dissertation was on “Home and Foreign Investment: Some Aspects of Capital Formation, Finance and Income in the United Kingdom, 1870–1915.” Its aim was “more accurate or more complete measurements, to establish causal relations which others have assumed … .” His subsequent work on U.K. national accounts and on international capital movements represented major contributions. Throughout his career, he sought measures of economic activity. This economic history of South Africa is no exception. His arguments are documented by appropriate explanatory tables.

The book covers the people and economy before 1652 (when the Dutch East India Company set up its base at the Cape of Good Hope) and then the subsequent history to 1994 (with the end of apartheid and the transfer of power to the first democratically elected government). It has good (and essential) maps as well as an invaluable list of original and present-day location names. Feinstein has no sympathy for the European colonizers who seized land, through conquest and dispossession.

Initially, in 1652, the Dutch intention had been to set up an outpost at Cape Town that would allow the ships of the Dutch East India Company to restock themselves with vegetables, meat, and water for the remainder of the trip to the East Indies. Soon, the small colony was planting and growing food—wheat and other grains—and breeding cattle and sheep. The company employed Germans in its settlement. In the late 1680s French Huguenots settled in the Cape. This group of Dutchmen, Germans, and French became the nucleus of the Afrikaans-speaking Boer population (Afrikaners). Settlements took hold with huge farms for cattle raising. By 1806, when the British obtained control of Cape Town, the European colony numbered merely 27,000. As the white population expanded, political reorganizations took place, so that by 1865, 250,000 Europeans peopled the two British colonies of the Cape and Natal and the two Boer republics of the Orange Free State and Transvaal. Everywhere, the Africans (blacks) were pushed out of the way.

As the white population spread it clashed with different indigenous peoples, the Europeans always assuming that the land was theirs for the taking. At first it was the white farmers, who had plenty of land and already not enough labor. And then after the 1870s, as the diamond fields and the gold mines were developed, a large, regular supply of labor became essential. Blacks were brought in from outside the region. Feinstein argues that farmers (whether English or Dutch), British imperial administrators, and mining interests united “in their brutal denial of human rights to black people,” sustained by “their conviction that Europeans represented a superior civilization” (p. 35). Feinstein quotes a Britisher's comments in 1877: “wherever a civilized power is brought in contact with an uncivilized, where law and order find themselves unavoidably neighbor to anarchy, civilization cannot stand still, it must for its own preservation be aggressive lest if law and order be not forcibly imposed anarchy may haply render both impossible” (p. 36).

The culmination was the Natives' Land Act of 1913, which made it illegal for Africans to acquire or rent any land outside the existing reserves that had been set up for them (the reserves would later—after World War II—be renamed “homelands”). Policies toward land were designed to accommodate the labor needs of farmers and the mining interests. Much of the book deals with the genesis of and development of policies that kept Africans from developing skills: “black labour for white masters.” Feinstein explains the paradox of scarce labor and low wages. There is a chapter on creating the color bar: “formal barriers, poor whites, and ‘civilized’ labour” (Chapter 4). Feinstein defines the term “coloured” and throughout uses the word “black” as a collective noun for the African (Bantu-speaking) inhabitants, the heterogeneous group in the category of colored, and Asians.

Gold was not just any commodity, and Feinstein believes that it was responsible for the good growth rates in South Africa in the years 1913–1950. Manufacturing was slow to start. It got some encouragement during World War I, and then further governmental assistance from the mid-1920s. By the 1920s a poor white group was developing in South Africa. Feinstein argues that unique to South Africa were tariff and other policies to spur manufacturing designed specifically to create employment for labor of European descent. What emerged was low-paid unskilled African workers and relatively high-paid white workers (see p. 133 for international comparisons, 1938–1939). Feinstein explains how this was accomplished.

During 1950–1973 South African economic growth was better than in the years 1913–1950, but wanting when compared with Feinstein's sample of 30 countries. In 1948 the Afrikaners' National Party was elected, with a strong endorsement of apartheid. Rules on racial separation were strengthened; the African was left further behind. In 1970, 63.4 percent of Africans in rural areas had no education whatsoever. Moreover, following the dictates of apartheid, millions of blacks were forced off farms and also out of urban areas, making the reserves even more crowded. Industrialization went forward during the 1960s and early 1970s, encouraged by government protectionist policies. Though some skills were learned by Africans, on the whole the sharp division between white and black remained. The government, most of the white electorate, radicals, and Marxists all were convinced that apartheid was consistent with a successful capitalist economy. Feinstein shows how wrong they were.

From 1973 to 1994, in both relative (to Feinstein's sample countries) and absolute terms, the South African economic record was abysmal. In the century prior to 1973 South Africa had been transformed from a country dependent on agriculture to a modern economy. After 1973 stagnation in real gross fixed capital formation, declining output per unit of capital, rising unemployment, high inflation, a sharp depreciation in exchange rates (after 1983), and serious balance of payments problems set the economy awry. The surge in oil prices hurt a country that did not produce this vital commodity. Gold, which had driven the economy, encountered soaring costs of production, which world prices did not offset after the 1980 spike. Low levels of efficiency and high costs of production in the industrial sector meant that nongold exports could not substitute “and launch the economy into a new orbit propelled by exports of manufactured goods” (p. 220). Low-income black workers provided no adequate domestic market for the goods produced by the new industries. Ineffective government policies could not cope with the economy's woes. Added to all this, there was “seething political discontent and militant activity by black people in mines and factories… .” (p. 202). The failure of the economy, made worse by the international situation (from African governments in neighboring nations, to financial sanctions from abroad after 1985, to the end of the cold war), climaxed in the democratic elections in 1994. Although the change was sudden, over the past decades there had been a general awareness that the system of apartheid was flawed, that blacks needed to acquire skills, and that black access to education should be improved. Feinstein explores the mistaken notion that low-paid workers with low skill levels are compatible with successful development—the fallacy of “cheap” labor. Economic development, he argues, is achieved by technical progress, better human capital, and advances in productivity.

The book ends in 1994 with the downfall of apartheid. Feinstein does not deal with the performance of the South African economy under black leadership. This volume should be required reading for all students of South African economic history; other students of economic development will also find many lessons to be learned.