How BEE ends

‘Economics will not obey racial blueprints’ indefinitely

Last week’s post, The cost of BEE, opened this three-part series on the economics of black economic empowerment in South Africa. Today’s instalment turns to a harder question – how BEE is likely to end. Next Friday I’ll discuss a possible alternative policy. If you’d like to read the full series and support this work, please consider a paid subscription.

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South Africa’s history has a way of circling back on itself. Four decades ago, an oppressive racial order began to crack under the weight of economic pressure. Today, a very different policy – Black Economic Empowerment (BEE) – faces scrutiny as its own unintended consequences mount.

It is crucial not to confuse the two. Apartheid was a heinous system designed to entrench racial oppression; BEE was conceived to counteract those injustices by promoting black participation in the economy. One was built to separate and exclude, the other to include and uplift. Yet both, for all their differences, are subject to the same hard logic of economics and politics. Systems survive while enough powerful groups still benefit from them. They erode once their costs – economic, political, administrative – begin to outweigh those benefits.

That is the core hypothesis here: the mechanisms that helped push apartheid towards its end can tell us something about the conditions under which BEE will be reformed, replaced, or even abandoned.

A first line of explanation for why apartheid fell is simple: the system became too expensive to sustain.