In South Africa, the capitalist system remains fundamentally shaped by the legacies of apartheid and colonialism.

 

As everywhere else in the world where the system dominates, it is rooted in the extraction of surplus value from labour by the private owners of business and industry. But in South Africa the system is based on the structural and racial inequality of the past, despite some attempts at economic transformation since the 1994 change to democracy.

 

White South Africans, who make up just over 7% of the total population of 63 million people, continue to control a disproportionate share of the country's wealth, corporate ownership, and high-paying professional positions.

 

Black and other people of colour in South Africa, who constitute the rest of the population, are largely concentrated in lower-income brackets, informal sectors and areas of high unemployment. Most of them live in townships, shack (informal) settlements on the fringes of the big urban centres or in rural villages and small towns.

 

South Africa consistently ranks as one of the most unequal societies globally. The Gini coefficient, a measure of income inequality, (where 0 represents absolute equality and 1 represents absolute inequality) remains exceptionally high at 0.67. By contrast, the current Gini coefficient for Finland is 0.28.

 

This inequality is not just a legacy of apartheid but is actively reproduced by current economic structures, with a small elite benefiting from global capital flows and resource extraction while most of the population struggles with poverty and limited economic mobility.

 

The capitalist system in South Africa depends heavily on mineral extraction and export, particularly in mining – gold, platinum and diamonds. This extractive model predates the rigid racial model of white minority rule (apartheid), introduced from 1948 onwards, and is rooted in the colonial character of the country of decades before. It continues to be a main component of the national economy. And is characterised by the highly concentrated ownership of mining companies and limited local beneficiation of raw materials.

 

Despite being a resource-rich country, South Africa exports the vast majority of its minerals in unprocessed or minimally processed forms. About 80% of platinum group metals (ruthenium, rhodium, palladium, osmium, iridium and platinum) are exported with minimal processing. Gold is mainly exported as raw ore or minimally refined bullion. Chromium, manganese and vanadium are also exported in unprocessed forms.

 

The lack of industrial development inside South Africa is a massive obstacle to the country’s ability to benefit from its natural wealth. If the country is to develop economically it would need to be able to dramatically transform the current situation to create a strong industrial processing capacity backed by a sustained industrial policy. It would need to be able to dismantle the economic structures inherited from colonialism and apartheid, and it would need to massively expand its overall industrial infrastructure based on strong capital investments.

 

None of the changes needed would automatically dismantle the capitalist system. But if they were being run by a strong state and not in private hands they could be part of an effort to socialise the wealth of the country so that the people would benefit. The current phase of capitalism in South Africa results only in loss of value for the country, persistently high unemployment, and technological under-development.

 

One barrier to change is that foreign monopoly capitalist ownership of South Africa’s natural wealth benefits tremendously from the current system. Foreign ownership dominates the mining industry, the major players being Anglo American (UK), Rio Tinto (Australia/UK), Glencore (Switzerland).

 

But it also dominates those areas of industry in the country that do exist, such as vehicle manufacturing, where the main owners are Volkswagen, BMW, Mercedes-Benz (Germany), Toyota (Japan), Ford (USA). And foreign ownership extends to financial services, retail chains and telecommunications, and – where it exists – the manufacturing of consumer goods under multinational ownership (Unilever, Procter & Gamble, Nestlé and others).

 

South Africa remains a good option for these companies because labour costs are low and there is a massive labour reserve in the form of unemployed young people. Nearly 60% of young people aged 16-24 are unemployed; the figure for 25-34 year-olds is just under 40%). Overall unemployment is just over 40%.

 

This takes us back to the way capitalism relies on the extraction of surplus value from labour and the fact that this is more intense in South Africa than in wealthy countries.

 

South Africa has one of the world's highest wage gaps between executives and workers. While CEO-to-worker pay ratios in developed economies might range from 20:1 to 350:1, South African ratios can exceed 500:1 in some sectors. This directly translates to higher rates of surplus value extraction.

 

Despite the presence of strong trade unions, mass unemployment creates a vast reserve army of labour that weakens workers' collective bargaining position. This allows for wage suppression and facilitates higher exploitation rates compared to economies with tighter labour markets. The problem is especially acute in the agricultural sector, which flourishes while farm workers live and work under conditions of extreme exploitation.

 

The racial stratification of the economy means exploitation follows racial lines, with predominantly black workers generating surplus value that accrues to predominantly white capital owners, creating intensified patterns of exploitation embedded in racial hierarchies.

 

Compared to rich countries, South Africa's social safety net is limited. Workers receive substantially less in social benefits, public services, and collective consumption, meaning a greater portion of the value they produce is extracted rather than returned through social spending.

 

As mentioned above, the economy remains centred on exporting unprocessed resources. This extraction-focused model maximises surplus value by minimising investment in processing infrastructure while exploiting low-wage mining labour.

 

While South Africa has progressive labour laws on paper, enforcement is often weak, especially in sectors like agriculture, domestic work, and informal employment where exploitation rates are particularly severe.

 

The legacy of spatial apartheid is also an important factor, as the geographic separation of townships from economic centres increases workers' transportation costs and time, effectively extending the working day without compensation.

Economic transformation since the start of democracy in 1994, following a long and bloody liberation struggle against apartheid, has resulted in an expansion of the black missile class and some changes to the management and ownership of small businesses. But the capitalist system remains solidly in place.

 

The African National Congress (ANC), which has ruled the country since 1994, once had a very different outlook on the transformation that would take place. In 1969, when the ANC was a liberation movement operating underground and in exile, it declared: “An ANC government shall restore the wealth of our country, the heritage of all South Africans to the people as a whole. The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole.”

 

By 1992, when the ANC – now unbanned – was in negotiations with the white minority government on the transformation to majority rule, Nelson Mandela and other top ANC leaders decided, after meeting the world’s business and political elite at the World Economic Forum, decided against pursuing radical economic policies. South Africa would be part of the global free market economy otherwise it would suffer economically, investors would be frightened off, and South Africa would face isolation like Cuba or become a failed state like Zimbabwe.

 

The rest is history, as the saying goes. As the global capitalist system (imperialism) is beset by ever-deeper crises and conflicts, South Africa will have to decide whether it remains under this system or takes a completely different direction, one that would see the material liberation of its people.