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Opinion: Bell Pottinger did not invent 'monopoly capital'
11 August 2017

 

An advertisement is currently doing the rounds that asks the eternal question: 'When is enough, enough?' These words sound like a motto for capitalism. Enough is simply never enough, which is the reason for the success of capitalism and the reason why said success will/could eventually cause the extinction of natural life on the planet (take your pick).

This motto drives the never-ending dynamic of expansion that characterises capitalism. The impulse of expansion underpins imperialism, both old and new. It is also the driving force behind another determining characteristic of capitalism, that is, the concentration of capital, which leads to 'monopoly capital', the term that has sprung to prominence in the national discourse in recent times.

Seen from a political point of view, these two conflicting yet paradoxically complementary dynamics are what make capitalism an enduring system despite Marxists' best attempts and hopes over the past 150-plus years. 

In pursuit of the political goal of dismantling capitalism, leftists have for some time used 'monopoly capital' as a term to analyse the South African economy. Despite British PR company Bell Pottinger's 'ingenuity', they did not coin this term. South Africans haven't heard this term in a while because the ANC has somewhat forgotten its flirtation with Marxism. Economically speaking, the ANC is currently a centre-right party that uses leftist rhetoric to string along its poorer supporters. It is for this reason that leftists suggest that the problem with the ANC is that they 'talk left', but 'walk right'.

Historically, South Africa serves as an example of both the abovementioned dynamics. As part of the global expansion of capitalism, the discovery of gold, in particular, led to the war of 1899, the subsequent establishment of South Africa and its incorporation into the world economy.  Many billions have since flown from the country to London and elsewhere. 

This one-way flow was typical of colonial extraction and the concentration of capital in the metropolitan centres of the Global North. It reflected South Africa's position on the colonial periphery as an economy dependent on unprocessed minerals. 

With the rise of state capitalism, and later the apartheid welfare state for white people, more capital was ploughed back into the country and secondary and tertiary economic sectors were developed. State capitalism included the creation of monopolies in the form of state-owned companies, such as Eskom and the former Iscor.

Still, with the massive loss of capital over decades, not enough profit was ploughed back. Insufficient complexification of the economy meant that a handful of companies were dominant in each sector. In that sense the word 'monopoly' is, technically speaking, not absolutely correct. It would be more appropriate to speak of a limited number of big players monopolising capital. Emerging opponents are neutralised and small, medium and micro enterprises (SMMEs) remain underdeveloped as a sector.

Given the racial structure that the colonial state created after 1910 and reinforced during apartheid, South Africa has been described as an example of 'racial capitalism' dominated by 'white monopoly capital'. Policy interventions from the 1990s onwards diversified the tip of the income pyramid, but black ownership on the stock exchange remains insignificant when measured against the country's racial demography. Not to mention gender.

After years of economic isolation, South Africa has become firmly re-entrenched in the global economy, which is the result that Anglo American hankered after when they reached out to the ANC in the 1980s. Meanwhile, the state capitalism that brought so much advancement to white people has been replaced with a new form of capitalism.

This new form of capitalism is known as neoliberal capitalism – a term that refers to a specific set of policy changes that have been introduced since the 1970s across the world and entail deregulation, privatisation, liberalisation of markets, state restructuring that extends security functions and contracts welfare functions, and so forth. Internationally, the consequences have been sharpened socio-economic inequality due to high levels of unemployment, the informalisation of labour and the financialisation of the economy. Technologisation accelerates these processes.

Since state regulation is taboo in neoliberalism, the trend to monopolise capital has become even more intense. Too little money is made available for new capital investments and too much is spent on mergers and acquisitions of companies, creating massive conglomerates. A recent example is the 100 billion dollar merger between the world's two largest breweries, SABMiller and Anheuser-Busch InBev. 

In South Africa, an 'investment strike', as critics call it, has made the situation worse. Despite the policy emphasis on private investments and SMMEs since the 1990s, the historical trend of the monopolisation of capital has not sufficiently changed. High levels of liquidity characterise the economy. The established business sector has to invest this capital productively in brand-new initiatives to enable the diversification of the structure of the economy. This would mean more SMMEs, which promote job creation and growth. The bad news is that the crisis that the current kleptocratic elite has dumped the country in will exacerbate the problem of private investors' withholding of capital.

The monopolisation of capital also facilitates criminal activities in the private sector. During the past few years, South Africans have lost millions of rand to cartel conspiracies in industries ranging from bread and milk, to construction and emergency services. In the recent international conspiracy involving the manipulation of the value of the rand, banks played with the livelihoods of millions of people. States use competition legislation to try and prevent these white-collar crimes but the fines are laughable when compared to the profits and the massive bonuses that the top business brass continues to receive. Fines also seem like inadequate dissuasion in the context of unrestricted capital flows across national borders that create multiple opportunities for illicit profiteering.

Globalisation creates world markets. Distribution is therefore key, which means that the control and the money are concentrated at the end of value chains in the hands of those who own distribution and relevant platforms. The producers, that is, those who create the product or content, have relatively limited power and receive the smallest percentage of the profits. This is true for workers ranging from those in the clothing industry to coffee bean farmers in the Global South, as well as to musicians, writers, academics, journalists and artists in the Global South and the Global North. 

Furthermore, monopolies such as Facebook, Twitter and Instagram succeed in convincing us, the citizens of the world, to create their content free of charge. In return, we are 'compensated' with targeted advertising while local media lose that income. Meanwhile iTunes and Netflix collect the money that we used to spend in local music and DVD shops. Uber receives the money that was previously spent on local taxis. These faceless multinational companies are uncontactable except with online 'help' functions that rarely solve your problem. 

The cultural dimension of neoliberal capitalism buttresses these ground-shifting changes, because people accept them as natural, 'without an alternative' and even sacred. As the thinker Achille Mbembe recently remarked: 'We live in an era in which capitalism has become a religion.'

The old imperialist dream is once again being realised, in which capital is sucked to the Global North, as if by a powerful hurricane. This time it is not only ordinary citizens in the South that suffer but also local businesses – big and small. 

Hardened capitalists will argue that this is simply an example of Schumpeter's idea of capitalism as 'creative destruction', and, 'If you can't take the heat, get out of the kitchen.' However, the majority of those who do not benefit from this destruction probably have a more dystopian experience of the moment. The affective climate is reminiscent of George Orwell's book '1984'. But instead of totalitarian states we have totalitarian companies, unaccountable mega conglomerates created by capitalism's monopolising dynamic.

 

Christi van der Westhuizen (PhD) is an associate professor in Sociology at the University of Pretoria and a fellow of the Democracy Works Foundation. Another version of this article was previously published in Rapport.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Pretoria. 

 

 

- Author Prof Christi van der Westhuizen
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Prof Christi van der Westhuizen