Wealth inequality is one of the three core areas of the Julius Baer Foundation (for further information, please refer to the box at the end of this article). Even though it is a problem that does not spare the rich, industrialised nations, it is an even more burning issue in less developed countries of Latin America, Asia and Africa. Many people across the globe have started their individual battle against the persisting divide between rich and poor. One of them is Mark Solms, who has found a very bold and innovative way to bridge the gap.
In 2001, after the end of Apartheid, the renowned professor of neuropsychology returned to his homeland near Cape Town, in South Africa, where his family owned a big farm. He was shocked to see in what precarious conditions the 180 employees of the farm lived, often lacking the most basic goods and sanitary installations. After a thorough analysis of the situation at the farm, which looks back at a 327-year history of slavery, Solms and his neighbour decided to run their farms in a rather different way, empowering their workers through co-ownership. Nowadays, Solms-Delta is a prize-winning producer of fine wines with the farm’s staff owning 50% of the enterprise.
Mark Solms’ next project is to create a ‘Cape Winemakers’ Equity Accelerator’ (CWEA), where he will develop a training curriculum and mentoring programme including all aspects of wine production (viticulture skills, access to vineyards, cellars and equipment) and its distribution (financial and business planning, administration and marketing). Additionally, he will establish an endowment fund that will help emerging black wine makers to purchase wine estates and wine making equipment. Ultimately the aim of the CWEA is to fast-track the equitable redistribution of resources and expertise and thereby increasing the number of black wine producers in the Western Cape Province of South Africa.
Full interview with Prof. Mark Solms:
The system of inequality
I felt it's not an equal situation on my farm, because it's not an equal situation. I'm the owner of the land, I live in a big, beautiful house in the centre of that farm, but on the same piece of land there are other families living in very small houses that belong to me, and they are completely dependent on me in order to provide a decent quality of life for their children. Thus the owner of the land is in a position very different from the workers who, as it were, come with the land. They’re part of the land. You inherit the farm with the people who live on that land, and I think it's difficult to live with such a situation. I left South Africa during the bad old days of apartheid, and then everything changed in my absence. And I wanted to go back, with the idea that I wanted to participate in the reconstruction and development of the new democracy in South Africa. I saw my own property as the vehicle through which I could do this.
People who look like me, white South Africans, benefited from that old system. I think we owe a debt to black South Africans to try and help put things right, now that we have a democracy. It's very hard to look at yourself in the mirror in the morning and recognise that you have everything that anyone could practically need, and much, much more than you really need, and in the immediate vicinity around you there are people who have less than they need – not less than they want, but less than they need. And how can you hold on to everything in a situation like that? It's unsustainable, it's unstable, it's dangerous to have so many people with so little, who see somebody just down the road who has so much. I think this creates a precarious social structure. If we can do anything to ameliorate that, it would be in all of our interests, including the interests of those with wealth.
When I first returned to South Africa, I met with the families who lived on the land. I wanted their ideas about what's wrong with the way it was in the past, what is most urgently in need of change. And what I found was that they could not discuss it with me. They would not talk to me. And it's not that they were angry or that they were stubborn – it was that they were… I think more than anything else they were intimidated. They were scared, you know, they weren't used to having a conversation with the owner about how things should run.
As a result, I had to institute some changes by myself, because they couldn't cooperate with me in drawing up our plans. And when they saw that I really meant it, that I really wasn't the same as my predecessors, that I was trying to take care of everybody's needs on the farm alongside my own and not only my own needs, the strangest thing happened, something I could never have predicted - they came to the conclusion that I was an idiot, that I didn't know what I was doing, that I must be a fool. And they started to take advantage of me, arriving late for work, not coming to work at all on Mondays after a bad weekend, even stealing things on the farm, and I got angry.
And I thought, “How can this have happened? I came here with the best of intentions, and so quickly we’re at war with each other.” And that was when I realised that the main thing I was up against was the weight of history. You can’t just come and wave a wand and say, “Things are going to be different in the future”. It just doesn't work like that. There's a built-in structure on a South African farm under which somebody is exploiting somebody else. The farmworkers have had this bred into their culture over generations, and they thought, “Well if this chap doesn't realise that he's entitled to exploit us, let us exploit him.”
Ability to change
The things I did when I first arrived in South Africa were obvious things like renovating the houses. As I renovated my own house to prepare for the arrival back in South Africa of my family, I renovated the workers’ houses at the same time. I also gave them free electricity and better sewage. I changed their working conditions – it’s hard perhaps for a European to believe that such a thing can exist, but there were no employment contracts. We then made a very big adjustment when I decided to bring in historians and archaeologists from my university. I said, “I want us to collectively dig up the history of what happened on this farm so that together we can face this weight of history that is burdening us, making it impossible for us to trust each other and to forge a common future.”
In the process of us researching the history of the farm… I have to first tell you that the farm was established in 1690, so it’s 327 years old as a farm, but when we brought the archaeologists there and we dug the farm up, 50 metres from my front door we found a settlement site of the indigenous Bushmen who had lived there. Now these were partly the ancestors of the farm workers. My ancestors took the land from the indigenous people, so there we had the proof on my own farm that their people were there before mine, and yet now I'm the owner and they are beholden and dependent and vulnerable in relation to me.
We not only found the Bushmen's history on my farm, but also the history of the slaves that were brought to the farm. There were almost 200 years of slavery, and not just on my farm alone – it applies to all the farms around here. But there was slavery on my farm, and we had to face this fact. The reason why they’re poor, and why they’re living on my land, is because of that history. So it was a very important process to face together. It no longer felt as if I was a generous philanthropist; it felt more as if I actually owed a debt, as if something wrong had happened here and had to be put right. So I think that we were on a slightly more level playing field after going through that process than before.
The crux of the matter that I had to face was the question: if my ownership of this land is the result of this history where so much wrong was done, then to undo those wrongs I need to answer the question of who owns the land. Should I be giving the land back? And that's when you start to realise the limitations of your own goodness. That was the turning point for me, I think, in the process of what we did next.
What I did was not to give away some of my land. Rather, I used my land to raise a loan so that the farm workers could buy the land next door. No bank would lend money to such poor people, but they would lend money if it was secured by my asset. So that's how we did it. I persuaded my friend Richard Astor, who owns the farm next door to me, and the two of us mortgaged our farms to raise a loan on behalf of the farm workers to buy a third farm. And then we joined those three farms together into a partnership, and we formed a company where each took one third of the shares in the company, and the company held all three farms together, and we had a joint operation with one wine cellar where we make the Solms-Delta wine collectively.
There’s a lot of unhappiness among the general population in South Africa, most of whom are black and poor as a result of our history, and they were saying, “But this isn't freedom, because you’ve kept all the assets.” So because what we did was a potential solution to that problem, and we didn't have to give up our assets but rather used our assets, geared our assets, in such a way as to help the victims of our history to improve their material circumstances in partnership with us, the government thought this might be a model that could be used generally by farmers. We joined forces with the government, and the government took over the bank loan that we took out to buy the farm next door for our workers. This relieved us of an enormous debt burden. Hierarchical financial inequality can be reduced. We're hoping that ours will be a model example of that.
Our quantities and our quality of productivity have increased substantially over this period of time. I live there. These are the people who I see every day. They work with me, their families live on the same piece of land as I do, and we see each other, we have to talk to each other, we have to look each other in the eye – the kind of relationship that we have with each other makes a great difference to the quality of my life and all of their lives, too. The fact that we’re on the same side, that we’re pulling in the same direction, that there's something in it for all of us, just makes life better. Although there is a philanthropic and a humanitarian incentive behind what we did, we didn't have to sacrifice commercial viability – in many ways you actually enhance the commercial viability of an enterprise by recognising that you can't just focus on your own self-interest. Of course you can't sacrifice your self-interest, but if you only think about yourself and you don't recognise that everyone else in the enterprise has self-interest too, it’s a much less viable, much less sustainable and much less pleasant place to be.
A role model
Our farm workers use the money they earn from our enterprise to put their children in better schools, to pay for better healthcare etc. So the farm workers on the surrounding farms started saying, “We want our children to go to those schools, too”. Fortunately, the outcome has been that the neighbouring farmers also improved the working conditions of their workers because they could afford to. I think they started to feel a little bit ashamed, and, although they did not follow the structure of what we've done, it has still improved living standards and working conditions on the farms around us. There's a small population with enormous wealth, and a large population with terrible poverty. It's an unstable situation. I therefore try to convey to my fellow landowners that it's really in our own enlightened self-interest to lessen this inequality, to find ways in which the future can be brighter for all of us.
Wealth inequality – one of the three core areas of the Julius Baer Foundation
Following its repositioning, the Julius Baer Foundation focuses on three core areas, one of which is ‘wealth inequality’. The Foundation systematically encourages the voluntary exchange between various social classes that are characterised by inequality in terms of means and opportunities by accompanying and investing in inspiring initiatives and projects that create added value to the local communities.
After thorough evaluation of the above-mentioned project, the Julius Baer Foundation has decided to support Solms-Delta for the next three years, as the concept of the company is fully in line with the Foundation’s goals.
Further information about the Julius Baer Foundation and the project it supports can be found under the link below.