A new focus

> In Part 1 of this article, we argued that inequality in South Africa is a core structural constraint on economic growth. Despite sustained income redistribution since 1994, the South African economy remains stuck in a cycle of stagnation, high unemployment, and deepening exclusion. There is little transformative vision capable of shifting the underlying structures of economic power and production. This can be remedied by a shift in emphasis from income redistribution to the redistribution of assets and endowments, including land, housing, education, and access to capital.  From income to assets and endowments It has been observed that successful developmental states were built on a set of initial conditions that included a wide distribution of productive property (including land) and relatively high and broadly distributed levels of human capital [1].  In sharp contrast, South Africa's growth path relied on an extreme degree of accumulation by dispossession and environmental destruction [2]. Today, ownership of residential property or financial assets is concentrated in a small elite of affluent households and large corporations [3]. South Africa is also unusual because of the notable absence of a broader base of small asset owners and proprietors [4]. Extreme concentration of property ownership and a maldistribution of endowments have resulted in a cycle of economic stagnation, falling productivity, and rising mass unemployment.  The endogenous growth theories of the 1990s pointed to the mechanisms through which we might expect this concentration of ownership of productive capital retards economic growth [5]. Investment projects can only be financed by the wealthy few who have access to collateral or surplus income. This small, capital-rich elite faces diminishing returns on each new investment because their private capital stock is already so high. This results in investments with low productivity, high levels of conspicuous consumption, and idle