Michael O’Dowd

Michael Conway O’Dowd (27 February 1930, Johannesburg – 15 March 2006) was a South African businessman and classical liberal intellectual known for his 1966 essay which became known as “the O’Dowd Thesis”. In the essay, O’Dowd argued that South Africa’s Apartheid system contradicted the tenets of capitalism, and that capitalism would inevitably lead to the demise of Apartheid (Cairncross 2011, 18). In O’Dowd’s (1996) own words, the thesis purported to assert “that South Africa would evolve into a democracy in the course of industrialisation” (33).

O’Dowd was the Executive Director of the Anglo American mining company and Chairman of the Anglo American and De Beers Group Chairman’s Fund between 1974 and 1997 (O’Dowd 1999, ix). He also served as Chairman of the Free Market Foundation between 1978 and 2005 (Louw 2006). He was a member of the Mont Pelerin Society (O’Dowd 1990, 25), the Human Sciences Research Council (HSRC 2013, 11), and a fellow at the Institute of Directors (O’Dowd 1999, ix).

O’Dowd was born in Johannesburg on 27 February 1930 (Louw 2006) and attended the prestigious St John’s College. He later obtained a Bachelor of Arts (BA) and Bachelor of Laws (LLB) cum laude at the University of the Witwatersrand (Keeton 2006).

In 1974, Anglo American pioneered corporate social investment in South Africa, under O’Dowd’s leadership of its Chairman’s Fund (Friedman et al. 2008), through its Rural Schools Programme. According to journalist Paul Pereira, the programme was responsible for building South Africa’s “first black technikons, the SOS Children’s Villages and backed Johannesburg’s African Children’s Feeding Scheme” (Pereira 2017). In the same year, O’Dowd and fellow Anglo executive W.D. Wilson “were leading lights” (Pallister, Stewart, and Lepper 1987, 20) in the establishment of the Association of Private Schools (APS), today known as the Southern African Heads of Independent Schools Association (SAHISA) (Lee 2014).

At an event of the South African Institute of Race Relations in January 1987, O’Dowd argued in favor of privatization of South Africa’s state-owned enterprises and deregulation of the economy, which would make it easier for black South Africans to join the “free enterprise system”. In the speech, he also came out against restrictions on street hawking, which he claimed led to commodities being more expensive (Sowetan 1987).

In 1991, O’Dowd received an honorary Doctor of Social Science (DSocSc) from the University of Natal (UKZN 2012), and two honorary Doctor of Laws (LLD) degrees, one from the University of the Witwatersrand in 1993 (Wits 2017) and another from Rhodes University in 1994 (Rhodes 2017).

O’Dowd opposed the inauguration of the Bram Fischer memorial lecture due to Fischer’s ties with the South African Communist Party, and was subsequently accused of being “anti-communist, anti-black and pro-Inkatha” by the Legal Resources Centre’s Felicia Kentridge in 1995 (Martens 2017).

O’Dowd’s daughter, Cathy O’Dowd, “was the first woman mountaineer to summit Mt Everest from both the south and north sides”. After retiring, O’Dowd moved to his family’s retreat in Sedgefield, Western Cape. He died at the age of 76 on 15 March 2006 (Discover Sedgefield 2019).

The O’Dowd Thesis

O’Dowd’s widely-circulated (Saunders 1988) essay was first developed in 1963 and later published in 1966 (O’Dowd 1996, 1). Before publication, the essay was privately circulated by the South African Foundation (today known as Business Leadership South Africa [Engineering News 2016]) (O’Dowd 1996, 39).

O’Dowd derived the thesis from Walt Whitman Rostow’s The Stages of Economic Growth, with O’Dowd calling his essay, “The Stages of Economic Growth and the Future of South Africa”. The essence of the thesis was that “apartheid and capitalism were inherently incompatible and that economic growth would eventually lead to the disintegration of apartheid” (Hirsch and Hines 2005, 14). Christopher Hill (1983) summarized the thesis as follows:

“… as the population of South Africa grows, the white percentage of the total will fall and it will be impossible for whites to continue to occupy all the responsible positions and provide most of the skilled labour which the economy requires. It will then become apparent that such practices as job reservation are incompatible with the rational operation of the economy and, having been exposed to their full absurdity, will fall away. The need for black labour at all levels in the economy will in turn lead to the improvement of black education; the rules governing the mobility of labour and the right to live in the white area will be scrapped and at that point South Africa will ‘take off’ on the road to self-sustaining growth.” (4)

The thesis was later promoted by the Free Market Foundation (founded in 1975), and was “widely accepted in liberal circles” (Vale and Thakur 2015, 1030). It also found favor with Harry Oppenheimer, the Chairman of Anglo American.

The thesis was revisited by O’Dowd in 1982 and 1991 respectively. In both cases, O’Dowd considered how the thesis withstood the test of time, i.e. where his predictions were supported and contradicted by events.

In his 1991 address to the Conference of the South African Historical Society, O’Dowd acknowledged that Rostow’s original theory – and consequently his original theory – had been discredited to an extent. This was because Rostow merely sought to explain how to achieve the “take-off” of industrialisation; but according to O’Dowd, he was later pressured by “people who wanted a theory that would guide political action” into theorising, incorrectly, that take-offs would result from a savings rate of 5 to 10% of national income (O’Dowd 1996, 33).

According to Edward Webster (2005) of the University of the Witwatersrand, O’Dowd was incorrect in saying that a “change of heart by management” would lead to the end of Apartheid. Instead, according to Webster, it was “forced onto management through the power of the black working class”. Furthermore, Webster writes that O’Dowd made use of “the same flawed” methodology underlying Marxism, i.e. that “history is seen as economically determined” (105).

In 1991, however, in his speech to the SA Historical Society, O’Dowd said that “we should note that the theory is not one of economic determinism in the Marxist sense”. Instead, theory merely explained that a “certain degree of industrialisation makes certain social and political arrangements possible” (or necessary) which had not been possible before (O’Dowd 1996, 33). Speaking of Rostow’s original work, O’Dowd said that it did not seek to explain either the distant past or distant future; instead, it sought “to describe what happens when, in the present-day world, using present-day technology, an unindustrialised country becomes industrialised.” In other words, it was a form of pattern recognition (ibid, 32).

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