Monopoly capital and the corrupt activities of the banks
The recent revelations of the manipulation of our economy by foreign and local banking and finance monopoly capital is a matter of great concern. The decision of the Competition Commission to refer a case of collusion by foreign and local banks and financial institutions to the Competition Tribunal of South Africa for prosecution must be supported.
The foreign and local private monopoly and oligopoly structure of the banking and financial sector dominant in our country must be brought to an end, by means of, among others, strongly asserting developmental state ownership and co-operative banks and financial institutions.
One of the key objectives of the SACP’s long standing financial sector campaign was to rollback the deregulation or liberalisation of finance, capital and currency markets that was imposed as part of the neoliberal shock therapy package of Growth, Employment and Redistribution (Gear) in 1996 under the stewardship of what we then called the 1996 class project.
The deregulation or liberalisation plunged our country in a currency crisis in the early 2000s due to the floodgates of massive capital outflows that it widely opened. It is this same neoliberal policy regime – in addition to lack of transformation – that has opened space for private banks and financial institutions to collude, wallowing in deregulated finance, capital and currency markets.
It must be acknowledged that the government shifted competition policy away from an administrative processing of mergers to an active tool to combat collusion and cartels (in key sectors like fertilisers, bread, poultry, construction).
The shift also saw a globally innovative approach to imposing employment and other developmental conditions when companies sought to buy or sell another company (Walmart, Coca-Cola, AB InBev, Clicks). Other mergers were blocked (Vodacom and Neotel) and abuse of market power was acted against (Sasol, Media 24). Monopoly capital abuses in other sectors have been investigated (private health, gas, grocery retail); and measures to criminalise cartels and collusion have been implemented.
The Financial Sector Campaigns Coalition (FSCC) has in the past strived to fight for transformation in the financial sector. The need to re-establish the FSCC in all the provinces in line with the policy of inclusiveness and broadening participation.
Investments of monies and assets in the hands of the financial sector institutions into Productive economy. Champion consumer issues particularly the core social issues like housing, education, (etc), and against unfair credit bureau listings.
Reclaim the streets and intensify mass mobilization against reckless lending by banks and micro lenders. Fight against evictions of people from their houses. Embark on financial and consumer education and rights programme. Co-ordinate a process to form co-operatives banks and other viable forms of collective banks.
Call for the speedy allocation of the full banking license to the Post Bank. Fight against securitization of credit and balancing the scale of justice between the banks and the consumers. Fight against the unlawful collection of debts including the garnishee orders.
In his work- Imperialism, the Highest Stage of Capitalism, Lenin’s analyzed the inter imperialist rivalry among the great powers that had led to the First World War. In the process of developing his analysis Lenin linked imperialism to monopoly capitalism, arguing that in its “briefest possible definition…imperialism is the monopoly stage of capitalism.
” He explored in that context a set of economic factors that went well beyond maldistribution of income or the profit-seeking goals of particular monopolistic corporations. Monopoly capitalism was seen as a new stage, beyond competitive capitalism, in which finance capital, an alliance between large firms and banking capital, dominated the economy and the state.
Competition was not eliminated but it continued mainly among a relatively small number of giant firms who were able to control large parts of the national and international economy.
Monopoly capitalism, in this sense, was inseparable from interimperialist rivalry, manifested primarily in the form of a struggle for global markets.
The resulting division of the world into imperial spheres and the struggle that this entailed led directly to the First World War
But Lenin’s sense of a new, more developed, form of imperialism, associated with the concentration and centralization of capital and the birth of the monopoly stage, has retained much of its significance in our age—characterized by monopoly capitalism at an advanced phase of globalization.
Indeed, it was the very success of Marxist theories of imperialism, which uncovered capitalism’s systematic exploitation of the periphery and the conditions of inter-imperialist rivalry in great detail—so that the emperor was seen in all of his nakedness—which resulted in the term “imperialism” becoming beyond the pale within mainstream discourse.
The 2nd Deputy General Secretary of the SACP, Cde Solly Mapaila this week wrote article- Radical Economic Transformation: Context, What it is and What it is not, where he argued that that democratic national sovereignty is fundamental to Radical Economic Transformation.
We must not allow it to be handed over or subordinated to monopoly capital, corrupt economic forces, oligarchies or oligopolies, Black or White. Radical Economic Transformation must eliminate private dominance, monopoly, oligopoly and deal more decisively with collusion.
It must build public and socialised ownership, collective and democratic worker control and management, including thriving co-operatives in all sectors of the economy.
In addition, thoroughgoing anti-monopoly institutional, legislative and regulatory changes are required, including anti-oligopoly, anti-oligarchy, anti-concentration, anti-collusion, anti-price fixing and anti-all other sorts of manipulative economic ownership structures and market conduct!
One of the biggest problems we have is that the current South African state is largely geared towards the regulation of the financial environment for the big four banks as well as the insurance companies.
What we need is a state that promotes effective people`s financial institutions geared towards competition with the big financial institutions, rather than subjecting the latter to the logic of the former.
The 1969 Strategy and Tactic of the ANC provides that our nationalism must not be confused with the chauvinism or narrow nationalism of a previous period. It must not be confused with the classic drive by an elitist group among the oppressed people to gain ascendancy so as they can replace the oppressor in the exploitation of the masses.
There can be no radical economic transformation without transformation of the banking and financial sector. SACP has been calling for transformation of the financial sector as a whole – including tightly regulating capital, finance and currency markets and ensuring more investment in productive activity to reduce inequality and create jobs and decent work.
The inclusion of a few Black individual faces in the ownership structures of the untransformed banking and financial sector is not radical economic transformation, and will not benefit the overwhelming majority of our people – the workers, unemployment and poor.
The act of manipulation of our economy by foreign and international banks through collusion, price-fixing and other criminal activities confirms barbaric and inhuman nature of the system of capitalism.
This is a system that is corrupt and it has brought nothing to the people of our country except misery. It is not just an accident that for banks to survive must collude in corrupt activities at the expense of our economy. But it is a nature of the system. Capitalist system has failed dismally and the struggle to replace it must be intensified.
One of the lessons learnt from the demise of the Soviet Union to our understanding of history is the confirmation of the fact that if socialism is not grounded in popular power, it in effect annihilates itself and capitalism is restored.
Mere state ownership of key productive forces is not enough to create a socialist society; the people must exercise a sovereign rule over these productive forces and society as a whole, and the society must be organized to promote collective needs.
Just as democracy is not an accomplished reality unless the vast majority of the people rule society, so socialism is not an accomplished reality unless the associated producers control the productive forms of society and use them rationally and sustainably in the collective interest. Socialism and democracy, in fact, require each other for their fulfillment.
Socialism, which offers the possibility of a more egalitarian, democratic, sustainable, and collective response to our problems, is a necessity on both social and environmental grounds if we expect to have a chance at a rational future—or indeed any long-term future at all.
The resources of our country should be directed to serving the needs of people, not the profit dictates of the few. It is the socialization (democratization) of the economic sphere, and the enlargement (de-privatization) of the political sphere.
There is a broad range of options, much to be debated, and enormous room for experimentation.
There is a role for markets alongside democratic planning (for example, consumer markets), but not for a market society—that is, self-regulating market, which becomes merely a disguise for the concentration of economic power and wealth.
Dr Lehlohonolo Kennedy Mahlatsi is an SACP Free State Provincial Executive Committee member and ANC member. He writes in his personal capacity