and cook on open fires. Life is certainly traditional, far from
the modern existence to the east of the river. By now you
will not be surprised that these differences are linked with
major differences in economic institutions between the two
sides of the river.
To the east, in Natal, we have private property rights,
functioning legal systems, markets, commercial agriculture,
and industry. To the west, the Transkei had communal
property in land and all-powerful traditional chiefs until
recently. Looked at through the lens of Lewis’s theory of
dual economy, the contrast between the Transkei and Natal
illustrates the problems of African development. In fact, we
can go further, and note that, historically, all of Africa was
like the Transkei, poor with premodern economic
institutions, backward technology, and rule by chiefs.
According to this perspective, then, economic development
should simply be about ensuring that the Transkei
eventually turns into Natal.
This perspective has much truth to it but misses the
entire logic of how the dual economy came into existence
and its relationship to the modern economy. The
backwardness of the Transkei is not just a historic remnant
of the natural backwardness of Africa. The dual economy
between the Transkei and Natal is in fact quite recent, and
is anything but natural. It was created by the South African
white elites in order to produce a reservoir of cheap labor
for their businesses and reduce competition from black
Africans. The dual economy is another example of
underdevelopment created, not of under