Introduction
Activists and academics who follow debates in radical political economy may be interested to hear how monopoly capital (MC) analysis has influenced political discourse in South Africa. Only recently the term ‘white monopoly capital’ (WMC) has emerged as a key term in the South African political debate regarding the nature of South Africa’s political economy.
The term has garnered international controversy because it was chosen and promoted (Caesar 2018) by the (since defunct) British public relations firm Bell Pottinger, in the lead-up to the presidential race inside the African National Congress (ANC) (Ibid.). Bell Pottinger were commissioned to do this work by the Gupta business family, who were the primary beneficiaries of state corruption under the Zuma regime. At a time of significant uncertainty over the character of the political transition into the post-Zuma era, the main proponents of the notion of WMC have sought to utilise popular anger towards South Africa’s striking inequality, and its clear racialised aspects, to mobilise public support for the kleptocratic Zuma faction, which, despite ruling for almost two complete election cycles, showed limited desire to challenge orthodox macroeconomic policy. The concept of WMC was further used in a campaign to portray Zuma’s rivals as the chief obstacle to ‘radical economic transformation’ (RET), through the argument that the Ramaphosa faction was backed by WMC.
However, the term did not fade away with the dawn of the Ramaphosa era: as the new president seeks to manage the stark chasm within the ANC that emerged after his narrow victory in December 2017’s elective conference, he has made frequent use of rhetoric concerning the need for RET. Ramaphosa has also hinted at a programmatic vision responding, in part at least, to the Zuma faction’s ‘radical’ rhetoric. Meanwhile, South Africa’s biggest and most militant trade union, the National Union of Metalworkers of South Africa (NUMSA), also views WMC as the arch-enemy of the South African working class (Peyper 2016).
More recently, key ANC figures such as former president Thabo Mbeki, who studied economics at the University of Sussex,1 and Joel Netshitenzhe, regarded as one of the ANC’s foremost intellectuals, have either rejected the term or identified that discussion around WMC in South Africa involves a bastardisation of academic research in the MC tradition (Dlamini 2017; Malefane and Hunter 2017). That said, the origins of the term and its continued relevance have received insufficient attention in South Africa’s political debates. It is pertinent to ask then: what do we mean when we speak of WMC and what are the implications of its use in contemporary debates on the South African political economy? My central claim in this piece is that theories of MC, and the bastardised conspiracy theories that it has spawned (as in Mngxitama 2017), provide a weak conceptual basis for tackling the problems of economic stagnation and inequality in post-apartheid South Africa.
In discussing these issues there are several relevant points to clarify: since it is obvious that WMC borrows part of its title (if not, necessarily, any substantive content) from the MC school, it is necessary first to outline the origins of this school and its earlier influence on political and economic discourse in South Africa. Second, to evaluate the accuracy of the term in characterising important aspects of the South African political economy. Third, how the South African Left should distinguish itself from the faux-radicalism of the demagogic Zuma faction. This latter aspect of the discussion is vital if the South African Left is to re-emerge as a political force in the context of: (1) cynical manipulation of Left analytical constructs and rhetoric: (2) an existing kleptocratic state–party infrastructure that is likely to continue in some form for some time; and (3) the absence of a Left with a clear vision of an alternative and a programme to realise it.
A Left that fails to develop a meaningful critique of this type of hollow radicalism will not be able to develop a political strategy capable of meeting the challenge of transforming South Africa’s system of domination, dispossession and distribution. If the Left does not develop a critique capable of meeting this challenge, it runs the risk of discrediting radical ideas in a country where there is significant desire for an alternative to the orthodox agenda that has consistently failed to challenge the socio-economic legacy of colonialism and apartheid. There is also the not-insignificant danger of a rising racial chauvinism that might occupy the political space for a radical politics in the future.
Origins of the monopoly capital approach
Theories of monopoly capitalism can be traced back to the work of theorists such as Hilferding, Lenin, Kalecki, Steindl, Baran, Sweezy and Cowling. According to Sawyer (1988, 47), the central idea that runs throughout these authors’ work concerns the prospects for chiefly developed capitalist economies to be dominated by firms operating in oligopolistic industries. Some of the impetus for this view may have been found in Marx’s writing where tendencies towards greater levels of concentration and centralisation were pointed out. Other central features of the tradition include the idea that monopoly capitalism generates stagnation, by undermining technical change and depressing aggregate demand. In detailing the contribution of specific thinkers to the MC approach, Lenin was one of the early progenitors of the school. He argued that the merging of finance and industry would lead to significant changes in firm behaviour, with the development of financial markets lifting financial restrictions on the growth of firms – leading to even greater levels of concentration. The growing dominance of finance capital is an important aspect of Lenin’s (and Hilferding’s) account of monopoly capitalism (Sawyer 1988).
Kalecki’s contribution, often seen as the seminal contribution to the tradition (Auerbach and Skott 1988), meanwhile, can be understood as emerging out of rejection of the assumption of perfect competition prevalent in much economic thought of the time. In the light of the departure from perfect competition in the real world, Kalecki brought notions of mark-up pricing, dependent on market power, into economic discourse. From the determination of pricing in Kalecki’s framework he developed conclusions about the relationship between the degree of monopoly and the distribution of income. He further argued that since the real wage is the nominal wage indexed against the price level, and with pricing determined as a function of market power in his work, the real wage is dependent on the market power of firms. With Kalecki’s expectation that the degree of monopoly would rise over time, with polarising implications for income distribution, Kalecki was able to derive the possible tendency towards stagnation in capitalist economies. This possibility was principally derived from the depressive effect of greater levels of income inequality on aggregate demand, resulting from the greater marginal propensity to consume out of wages than out of profits.
This stagnationist tilt was further developed by both Steindl, the Austrian post-Keynesian, and Cowling, the leading proponent of the MC approach in the UK, who argued that growth in market concentration may be inversely related to investment. The first basis for their argument relates to Kalecki’s argument above, where diminished consumption demand exerts downward pressure on the rate of capacity utilisation – a positive determinant of investment. The second relates to the danger of excess capacity under monopolistic conditions, which was said to make it harder for firms to take markets from rival firms. What further distinguishes Cowling’s analysis is its integration of conflict between shareholders and managers over the distribution of surplus. In Cowling’s explanation of how declining profit rates between the 1960s and 1980s were consistent with monopoly capitalism, he emphasised the rising power of managers. Baran and Sweezy, who popularised the MC school in the US, meanwhile, take a significant departure in their approach to monopoly capitalism. In the context of decreasing costs of production due to productivity gains, a monopolistic market structure allows firms to benefit from growing profit margins. The latter two authors thus differ from Steindl and Kalecki in their approach by emphasising falling costs rather than rising concentration in tendencies towards a growing profit share (Sawyer 1988).
In the South African context, MC-oriented analysis has entered a number of different contexts. One of the early examples is perhaps seen in the Freedom Charter, the 1955 document expressing the core demands of the Congress Alliance and popular will for an alternative to the apartheid system. The charter details, among others, the demand for the transferal of monopoly industry to the ownership of the masses of South Africa. However, it is not clear whether this demand was underpinned by any rigorous analysis by ANC and South African Communist Party (SACP) intellectuals regarding the structure of the South African economy at the time.
However, later in the 1970s and 1980s the work of non-SACP Marxist authors such as Saul and Gelb used a Regulation Theory and Social Structures of Accumulation approach to characterise the apartheid economy as conforming to notions of ‘racial Fordism’. The analysis of these authors on the crisis of South Africa during the mid 1970s hinged on, in part at least, an underconsumptionist argument regarding the restriction of mass consumption to the white middle classes and white labour aristocracy. Writing in the same period, Innes, the former president of the National Union of South African Students, explicitly pushed a thesis characterising the South African distributive regime as determined by monopoly capitalism (Innes 1983).
In the post-apartheid era, underconsumptionist economic discourse reared its head again, in a context of intense contestation of macroeconomic policy between the Macroeconomic Research Group (MERG), the Industrial Strategy Project, with which Gelb was associated, and more orthodox views associated with the World Bank. Padayachee and Zarenda, associated with the MERG, made arguments in favour of a Kaleckian approach (Padayachee and Zarenda 1996). Beyond this, in recent times, while some political figures in the ANC and SACP may have paid brief lip service to monopoly capitalism at political rallies, there has not been any meaningful work in the MC tradition in South Africa.
It is worth stressing here that the MC and WMC are not categories to be conflated in analysis of the South African conjuncture. In distinguishing between these two categories first one must recognise the distinction between a serious, if flawed, academic tradition and a sloganistic conspiracy theory. It hence becomes important to address more concretely what social phenomena and forces are behind the projection of WMC into South African discourse. Without being entirely speculative, it seems fair to interpret some part of what has emerged under the banner of RET as a fierce attempt at self-promotion by an aspirant black bourgeoisie that has remained largely outside of the halls of formal economic power. This is broadly in line with von Holdt (2019), where the role of patronage in class formation is outlined. But beyond von Holdt’s argument, this line of thought can be directly read into by the reference to ‘White’ monopoly capital in particular. If the argument against WMC were merely macroeconomic, confrontation of the racialised aspect would be moot. Instead, the rhetoric becomes about exclusion – but exclusion of who exactly?
Without the levering of state institutions such as South Africa's state-owned enterprises to support patronage networks, a segment of under-qualified yet highly aspirant black elites are unlikely to find incomes in private sector employment to sufficiently support their desired consumptive standards. More likely then, the decision to weaponise and transform discussion of MC into the rhetoric of WMC signifies a regressive self-promotional politics for a would-be emergent elite trying to form a multi-class coalition by cynically speaking to the jarringly exclusionary and racialised aspects of South Africa’s political economy. This interpretation of the intent behind WMC is much strengthened by the character of the argument in Malikane (2017). Malikane, the academic economist appointed as adviser to former minister of finance Malusi Gigaba, argues in favour of a ‘broad anti-white monopoly capitalist united front’, of which the ‘tender-based black capitalist class’ is an important constituent with which the black working class must ally against WMC (Ibid., 6). While Malikane’s contribution to this debate leaves much to be desired, it comes the closest to a formal representation of a political economy argument about what WMC is and what an agenda against it signifies.
Critiques of the monopoly capital approach
The MC approach has been the subject of strong critique, particularly from authors in a Marxian tradition that see the MC approach as adhering somewhat to the reformist Keynesian tradition and, hence, deviating from enlightening aspects at the core of Marxian political economy. These critiques have been extended in a number of ways. At the core of some of them are, first, the problems of the ‘imperfect competition’ approach and its origins in orthodox notions of ‘perfect competition’ (Shaikh 1980); second, the emphasis on exchange relations as the fundamental source of inequality under capitalism and at the expense of recognition of relations in the labour process as an important source of maldistribution or of class struggle more generally (Fine and Murfin 1984); third, an incomplete and underdeveloped understanding of how to determine whether a market is competitive or not in the context of potential import penetration and doubts about whether the rise of large firms need imply the loss in competitiveness of markets (Auerbach and Skott 1988).
Some of these critiques, including more recent ones addressing the contemporary manifestations of MC-inspired thought like the ‘wage-led growth’ discourse, are worth exploring further, particularly amid renewed discussion of stagnation in advanced capitalist countries, both in the heterodoxy and mainstream. To engage more on the South African context, I will not detail these critiques here.
There are a number of reasons, aside from those theoretical and empirical issues addressed briefly above, to question the usefulness of an MC approach to the dynamics of the South African political economy. In investigating the applicability of MC insights in this context it’s worth getting some sense of the relevant empirical work on market structure in South Africa. Empirical work by Fedderke and Naumann (2011) on concentration levels in South African manufacturing shows a significant decline in manufacturing concentration in the immediate aftermath of the post-apartheid dispensation (between 1996 and 2001). It is notable that in this period the Growth, Employment and Redistribution (GEAR) economic programme was first implemented and significantly lifted restrictions on capital flows and barriers to trade.
More recent work shows a significant increase in traditional concentration measures in select manufacturing subsectors between 2001 and 2010, but there is little explanation of what is driving this development, due to lack of data for the years between 2001 and 2010 (Fedderke, Obikili, and Viegi 2017). It would be unwise to stake too much on the claim that rising concentration is to blame for stagnation and maldistribution in the context of this lack of evidence. It may be too hasty to cast increasing concentration as being behind South African stagnation if, for example, the state of higher concentration in 2010 than in 2001 is the result of the global financial crisis and the adverse economic consequences for South African manufacturing which resulted in small firms being driven out of the market.
Further research will be necessary to look into the complementarity between these fluctuations of concentration in sales and profitability. Indeed, some of the complexity at play here is illustrated by Fedderke, Obikili, and Viegi’s (Ibid.) lack of findings regarding a clear monotonic relationship between concentration and mark-ups in the South African context.2 There may be room to discuss some of these complexities with respect to the relationship between what has been dubbed ‘financialisation’ and shifting business strategy in the post-apartheid era. It seems possible that ‘downsize and distribute’ modes of corporate restructuring, and a putative shift of the firm’s objectives from growth to profitability, may undermine emphasis on the importance of market structure for understanding distribution and growth dynamics.
Second, there may be limitations to traditional underconsumptionist narratives in contexts where significant parts of the productive structure are geared towards the export sector or high-income consumer demand (Aboobaker [2019] provides a more detailed treatment). In particularly the latter context, a rising share of profits that may accrue to capitalists from heightened levels of market power (as MC adherents contend) may not be the source of stagnation it is held to be by underconsumptionists. Such a possibility runs against the vein of authors like Paul Baran, who in his development-oriented writing tended to see the consumption pattern of high-income earners as thoroughly wasteful. With regard to export orientation, South Africa has a relatively large minerals sector, in comparison to the advanced economies where MC analysis has traditionally been used. Insofar as the goods produced in this sector are almost certainly not wage-goods, there are even further diminished prospects for the traditional stagnationist argument.
Third, the experience of late industrialisation in countries with quite high levels of concentration and conglomeration might highlight the importance of rejecting competition fundamentalism to attain dynamic growth (Amsden and Singh 1994). If anything, the dramatic de-concentration in ownership that took place post-implementation of GEAR, which accompanied large-scale capital flight by allowing conglomerates to unbundle and seek dual listings on the London Stock Exchange, suggests that stagnation in the South African economy may be unrelated to growing power of individual firms. Furthermore, without any clear empirical work showing that concentration has increased alongside mark-ups, it is unclear how an MC approach might explain the secular decline of labour’s income share between the end of apartheid and the global financial crisis a decade ago.
In short, contrary to what intuitively follows from MC-type analysis, in countries like South Africa where the distribution of income is extremely polarised, there may be strong limits on underconsumptionist explanations of stagnation. Furthermore, theory based on assumptions regarding the role of domestic concentration in determining the pricing power and income distribution may be faced with new challenges in the context of changing business strategy in a financialised global economy. That levels of manufacturing concentration and labour’s income share declined in the period after implementation of the much-maligned (on the Left, at least) GEAR, raises challenges for those who see high levels of concentration as driving South Africa’s poor distributive outcomes and premature de-industrialisation. It is worth briefly adding that the radical academic tradition is still challenged by the absence of a complete and coherent framework for addressing questions of concentration, competition, income distribution and industrial development.
Why are these critiques important?
If the MC approach can be interpreted as suggesting the greater importance of exchange relations, at the neglect of production relations, in determining distributional outcomes, a similar charge may be analogously levied against participants in the Ramaphosa project.
All signs point to greater use of competition policy under the banner of the Ramaphosa programme. This is evident from an array of sources, be it the manifesto Ramaphosa used to run against Dlamini-Zuma in last year’s ANC presidential race3 or reports on a shift in the Department of Economic Development’s focus towards competition policy (Joffe 2018). At the same time, Ramaphosa has been instrumental in ushering in a wave of amendments to South Africa’s labour legislation, alongside a national minimum wage, to erode the strength of labour’s bargaining position, by introducing, among others, restrictions on the right to strike (Aboobaker and Budlender 2018).
The message implicit in this combination of proposed competition policy and labour legislation to achieve ‘inclusive growth’ is that class struggle in the sphere of production is irrelevant for dismantling the structures of inequality that exist in South Africa. That Ramaphosa rejects the significance of class struggle as an important way of addressing demand for higher wages and lower-income inequality should not be any great surprise, given his embeddedness in the capitalist class. But it should certainly be a caution to Left discussants on South Africa’s political economy who may be adopting analysis with similar undertones.
What should hopefully be clear from these points is that South Africa needs to initiate a coherent and rigorous, theoretically and empirically informed discussion into the nature of the country’s political economy. We need this so that we can develop our political debate, with a view towards furthering a cogent Left political project.
Conclusions
A programme for sustained growth in high-productivity growth sectors, which runs counter to the finance-oriented trajectory of the post-apartheid era, is needed in South Africa. For this programme to be ‘inclusive’ it must take seriously the challenge of absorbing surplus labour in sectors amenable to high rates of unionisation. Furthermore, it will be necessary to push back and reverse the attacks on the labour movement that the Ramaphosa presidency has initiated to undermine the strength of trade unions. The focus on competition policy as a means for narrowing the tremendous social disparities of the South African context is potentially misplaced. In this policy context, discussion around realising ‘inclusive growth’ must be exposed as ill-formulated at best and disingenuous at worst.
Further, it seems likely that cynical operators like Mzwanele Manyi, who has taken over the Gupta family’s media network ANN7 and relaunched it as ‘Afro Worldview’, will continue to use radical-sounding discourse as a means of channelling popular demand for an alternative dispensation, to fuel a bankrupt political project. A similar charge might be cautiously laid against the Economic Freedom Fighters, who have shown a penchant for chauvinistic racial interventions ahead of coherent critique of macroeconomic policy choices (Ensor 2018). It is the responsibility of the Left to illustrate the shallowness of these cynical interventions by putting forward rigorous analysis of the South African political economy. A starting point for this might be a critical analysis of the weak MC-inspired analysis that seems implicit in South African political economic discourse and, potentially, forthcoming policy formation.