Working paper // World Institute for Development Economics Research 2010,112
The arrival of European settlers at the Cape in 1652 marked the beginning of what would become an extremely unequal society. Comparative analysis reveals that certain endowments exist in societies that experience a 'persistence of inequality'. This paper shows that the emphasis on endowments may be overstated. A more general explanation allows for 'non-tropical products' to contribute to the rise and persistence of an elite, and consequently inequality. The focus shifts to the production method used in the dominant industry - in this case, slave labour in viticulture - and the subsequent ability of the elite to extend these benefits to products that were typically not associated with elite formation in other societies (such as wheat). The Cape Colony is used as a case study to show how the arrival of French settlers (with a preference for wine-making) shifted production from cattle farming to viticulture. A large domestic and foreign market for wine necessitated an increase in production volume. Given differences in fixed and variable costs, this resulted in knecht (wage) labour being supplanted by slave labour, an event which institutionalized the elite and ensured that the Cape remained a highly unequal society, with ramifications for present-day South Africa.
Elites South Africa inequality VOC role of government Engerman and Sokoloff