Africans shared the living standards of people of Western
European countries, while black South Africans were
scarcely richer than those in the rest of sub-Saharan Africa.
This economic growth without creative destruction, from
which only the whites benefited, continued as long as
revenues from gold and diamonds increased. By the
1970s, however, the economy had stopped growing.
And it will again be no surprise that this set of extractive
economic institutions was built on foundations laid by a set
of highly extractive political institutions. Before its overthrow
in 1994, the South African political system vested all power
in whites, who were the only ones allowed to vote and run
for office. Whites dominated the police force, the military,
and all political institutions. These institutions were
structured under the military domination of white settlers. At
the time of the foundation of the Union of South Africa in
1910, the Afrikaner polities of the Orange Free State and
the Transvaal had explicit racial franchises, barring blacks
completely from political participation. Natal and the Cape
Colony allowed blacks to vote if they had sufficient property,
which typically they did not. The status quo of Natal and the
Cape Colony was kept in 1910, but by the 1930s, blacks
had been explicitly disenfranchised everywhere in South
Africa.
The dual economy of South Africa did come to an end in
1994. But not because of the reasons that Sir Arthur Lewis
theorized about. It was not the natural course of economic
development that ended the color bar and the Homelands.
Black South Africans protested and rose up against the
regime that did not recognize their basic rights and did not
share the gains of economic growth with them. After the
Soweto uprising of 1976, the protests became more
organized and stronger, ultimately bringing down the
Apartheid state. It was the empowerment of blacks who
managed to organize and rise up that ultimately ended
South Africa’s dual economy in the same way that South
African whites’ political force had created it in the first
place.
D EVELOPMENT R EVERSED
World inequality today exists because during the nineteenth