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The dynamics of inequality in a newly settled, pre-industrial society: The case of the Cape Colony

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  • Johan Fourie

    (Department of Economics, University of Stellenbosch)

  • Dieter von Fintel

    (Department of Economics, University of Stellenbosch)

Abstract

One reason for the relatively poor development performance of many countries around the world today may be the high levels of inequality during and after colonisation. Evidence from colonies in the Americas suggests that skewed initial factor endowments could create small elites that owned a disproportionate share of wealth, human capital and political power. The Cape Colony, founded in 1652 at the southern tip of Africa, presents a case where a mercantilist company (the Dutch East India Company) settles the land and establishes a unique set of institutions within which inequality and development evolve. This paper provides a long-run quantitative analysis of trends in asset-based inequality (using Principle Components' Analysis on tax inventories) during the seventeenth and eighteenth century, allowing, for the first time, a dynamic rather than static analysis of inequality trends in a newly settled and pre-industrial society over this period. While theory testing in other societies has been severely limited because of a scarcity of quantitative evidence, this study presents a history with evidence, enabling an evaluation of the Engerman-Sokoloff and other hypotheses.

Suggested Citation

  • Johan Fourie & Dieter von Fintel, 2009. "The dynamics of inequality in a newly settled, pre-industrial society: The case of the Cape Colony," Working Papers 17/2009, Stellenbosch University, Department of Economics.
    • Handle: RePEc:sza:wpaper:wpapers90
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    References listed on IDEAS

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    Cited by:

    1. Johan Fourie & Jan Luiten Zanden, 2013. "GDP in the Dutch Cape Colony: The National Accounts of a Slave-Based Society," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 467-490, December.
    2. Sophia du Plessis & Ada Jansen & Dieter von Fintel, 2014. "Slave prices and productivity at the Cape of Good Hope from 1700 to 1725: did all settler farmers profit from the trade?," Working Papers 17/2014, Stellenbosch University, Department of Economics, revised 2014.
    3. Julio Martinez-Galarraga & Marc Prat, 2022. "Pre-industrial inequality in Catalonia," UB School of Economics Working Papers 2022/430, University of Barcelona School of Economics.
    4. Jerven, Morten & Austin, Gareth & Green, Erik & Uche, Chibuike & Frankema, Ewout & Fourie, Johan & Inikori, Joseph & Moradi, Alexander & Hillbom, Ellen, 2012. "Moving Forward in African Economic History. Bridging the Gap Between Methods and Sources," Lund Papers in Economic History 124, Lund University, Department of Economic History.
    5. Auke Rijpma & Jeanne Cilliers & Johan Fourie, 2020. "Record linkage in the Cape of Good Hope Panel," Historical Methods: A Journal of Quantitative and Interdisciplinary History, Taylor & Francis Journals, vol. 53(2), pages 112-129, April.
    6. Links, Calumet & Green, Erik & Fourie, Johan, 2018. "Was Slavery a Flexible Form of Labour? Division of Labour and Location Specific Skills on the Eastern Cape Frontier," African Economic History Working Paper 42/2018, African Economic History Network.
    7. Rulof Burger & Rachel Jafta & Dieter von Fintel, 2016. "Affirmative action policies and the evolution of post-apartheid South Africa's racial wage gap," WIDER Working Paper Series wp-2016-66, World Institute for Development Economic Research (UNU-WIDER).
    8. Johan Fourie, 2020. "The settlers of South Africa and the expanding frontier," Working Papers 14/2020, Stellenbosch University, Department of Economics.
    9. D.P. von Fintel, 2018. "Long-Run Spatial Inequality in South Africa: Early Settlement Patterns and Separate Development," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 42(2), pages 81-102, August.
    10. Piraino, Patrizio & Muller, Sean & Cilliers, Jeanne & Fourie, Johan, 2013. "The transmission of longevity across generations: The case of the settler Cape Colony," SALDRU Working Papers 113, Southern Africa Labour and Development Research Unit, University of Cape Town.
    11. Johan Fourie & Dieter Fintel, 2014. "Settler skills and colonial development: the Huguenot wine-makers in eighteenth-century Dutch South Africa," Economic History Review, Economic History Society, vol. 67(4), pages 932-963, November.
    12. J. Fourie, 2018. "Cliometrics in South Africa," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 42(2), pages 1-14, August.
    13. Jörg Baten & Johan Fourie, 2015. "Numeracy of Africans, Asians, and Europeans during the early modern period: new evidence from Cape Colony court registers," Economic History Review, Economic History Society, vol. 68(2), pages 632-656, May.
    14. Rulof Burger & Rachel Jafta & Dieter von Fintel, 2016. "Affirmative action policies and the evolution of post-apartheid South Africa's racial wage gap," WIDER Working Paper Series 066, World Institute for Development Economic Research (UNU-WIDER).
    15. Ekama, Kate & Fourie, Johan & Heese, Hans & Martin, Lisa-Cheree, 2021. "When Cape slavery ended: Introducing a new slave emancipation dataset," Explorations in Economic History, Elsevier, vol. 81(C).
    16. Dieter von Fintel & Sophia Du Plessis & Ada Jansen, 2013. "The Wealth Of Cape Colony Widows: Inheritance Laws And Investment Responses Following Male Death In The 17th And 18th Centuries," Economic History of Developing Regions, Taylor & Francis Journals, vol. 28(1), pages 87-108, June.
    17. Johan Fourie, 2011. "Slaves as capital investment in the Dutch Cape Colony, 1652-1795," Working Papers 21/2011, Stellenbosch University, Department of Economics.
    18. Johan Fourie & Dieter von Fintel, 2010. "The Fruit of the Vine? An Augmented Endowments-Inequality Hypothesis and the Rise of an Elite in the Cape Colony," WIDER Working Paper Series wp-2010-112, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    South Africa; settler societies; Kuznets; income distribution; asset index; institutions; mercantilism; Dutch East India Company;
    All these keywords.

    JEL classification:

    • N37 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Africa; Oceania
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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