Why na­tion­al­i­sa­tion makes sense, by Julius Malema

Sunday Times - - FRONT PAGE - By JULIUS MALEMA Malema is pres­i­dent and com­man­der-in-chief of the EFF

This week, the EFF led a de­bate in the Na­tional Assem­bly on the na­tion­al­i­sa­tion of banks with­out com­pen­sa­tion.

We did so be­cause state own­er­ship and con­trol of fi­nan­cial in­sti­tu­tions such as banks un­der cur­rent cir­cum­stances is not just an ide­o­log­i­cal po­si­tion, but also su­pe­rior logic.

South Africa’s econ­omy has since 1994 been fi­nan­cialised, and all ob­ser­va­tions point to the fact that this trend will con­tinue.

An elected gov­ern­ment, as a rep­re­sen­ta­tive of the peo­ple, should there­fore play a lead­ing role in the own­er­ship of this key sec­tor of the econ­omy.

If the state does not own banks, it will be re­duced to a spec­ta­tor in the econ­omy while huge fi­nan­cial cor­po­ra­tions de­ter­mine the pace, con­tent, di­rec­tion and form of re­source al­lo­ca­tion in so­ci­ety.

It is al­ready ev­i­dent that the big­gest providers of com­par­a­tively bet­ter-qual­ity hous­ing in South Africa are banks. The state pro­vides lousy houses that largely do not im­prove the qual­ity of life for the ma­jor­ity.

Bank loans are the only way or­di­nary cit­i­zens can buy cars, with one of the ma­jor ve­hi­cle fi­nanciers stat­ing in its bill­board ad­ver­tise­ments that “we own seven of 10 cars on the road in South Africa”.

Seem­ingly the only way South African chil­dren can gain ac­cess to qual­ity ed­u­ca­tion is through banks, which fi­nance ac­cess to pri­vate schools whose fees go up to R200 000 per year.

Banks have cre­ated a huge in­debted mid­dle class, which is eco­nom­i­cally pow­er­less and can’t even ex­plore en­tre­pre­neur­ial ac­tiv­i­ties be­cause the amount of dis­pos­able in­come is neg­li­gi­ble.

Banks fi­nance even the clothes many peo­ple wear. For Africans, it is even worse be­cause they bor­row money to pay for lobola — and as long as lobola money is owed to the bank, the bank in­di­rectly owns the wives of many African hus­bands.

In sum­mary, banks own our cars, houses, clothes, food, wives and ed­u­ca­tion, and de­ter­mine who gains se­cure ac­cess to these ba­sic needs. Banks run and con­trol many peo­ple’s lives and this is rea­son enough that a much more demo­cratic means of own­er­ship of these in­sti­tu­tions should be in­tro­duced.

That is the rea­son why we ar­gue that banks should be na­tion­alised with­out com­pen­sa­tion.

Of course, a lot of peo­ple will panic over our call for na­tion­al­i­sa­tion, par­tic­u­larly given the con­di­tion of state-owned com­pa­nies un­der the gov­ern­ment of Pres­i­dent Ja­cob Zuma.

That is why we used the op­por­tu­nity in par­lia­ment to in­tro­duce a de­bate on the model that should be adopted in the man­age­ment and con­trol of sta­te­owned com­pa­nies.

The EFF rec­om­mends that state-owned com­pa­nies should be listed en­ti­ties and should ac­count to a va­ri­ety of in­ter­ested in­vestors, in­clu­sive of in­sti­tu­tional, co-op­er­a­tive and even pri­vate own­ers.

This will pre­vent a sit­u­a­tion where board meet­ings are called late at night to ap­prove fam­ily deals, like when Eskom il­le­gally pur­chased a mine on be­half of the Gup­tas.

This will pre­vent a sit­u­a­tion where R600-mil­lion can be de­posited with a man­age­ment con­sul­tant for noth­ing, and with­out a con­tract.

List­ing state-owned com­pa­nies could be an­other way of en­sur­ing their ef­fi­ciency and re­spon­sive­ness to in­ter­ested and at times af­fected share­hold­ers. It could be a su­pe­rior route to­wards democrati­sa­tion of own­er­ship.

Chi­nese state-owned com­pa­nies are listed, have a cer­tain de­gree of mar­ket dis­ci­pline and gen­er­ate ad­di­tional in­come for the state.

In the global top 500 com­pa­nies, China has more than 100 com­pa­nies and 80% of those are sta­te­owned. China has built ef­fi­cient and prof­itable sta­te­owned com­pa­nies that gen­er­ate prof­its from around the world and rein­vest the pro­ceeds back home.

Prior to the in­tro­duc­tion of strict in­ter­nal con­trols and the list­ing of these com­pa­nies, none were in the global top 500 and China’s econ­omy was rel­a­tively in­signif­i­cant in the world econ­omy.

It is cur­rently the sec­ond-big­gest econ­omy in the world. Its eco­nomic ex­pan­sion was ig­nited and an­chored by state-owned com­pa­nies.

The whole world boasts suc­cess­ful cases of sta­te­owned fi­nan­cial in­sti­tu­tions, in­clud­ing com­pa­nies in the West, which is associated with the ne­olib­eral pro­pa­ganda that de­vel­op­ing economies should al­low pri­vate mar­kets to take care of the com­mon good.

Na­tion­al­i­sa­tion is not a call for chaos, it is in­stead a call that the com­mon good should be com­monly con­trolled, and not by few in­di­vid­u­als.

The con­tin­ued own­er­ship of par­tic­u­larly banks by pri­vate in­di­vid­u­als is the big­gest con­trib­u­tor to the mas­sive and im­moral in­equal­i­ties that de­fine South Africa to­day. Al­most all of South Africa’s rich­est are in one way or an­other in­volved in the fi­nan­cial ser­vices.

State own­er­ship of banks will in­su­late our coun­try from fi­nan­cial crises sim­i­lar to the one caused by banks that bor­rowed more than was eco­nom­i­cally sen­si­ble, sound or per­mis­si­ble.

Banks are plat­forms for tax avoid­ance and mas­sive il­licit fi­nan­cial flows, and the state — the big­gest loser in the fi­nan­cial flows syndicate — has to in­su­late it­self.

The other view against na­tion­al­i­sa­tion of banks comes from the racist cap­i­tal­ist class. These re­ac­tionary forces hoist a nar­ra­tive that no black gov­ern­ment should be al­lowed to gain strate­gic own­er­ship and con­trol of any sig­nif­i­cant sec­tor of the econ­omy, par­tic­u­larly the fi­nan­cial sec­tor.

What these forces do not men­tion is that the global eco­nomic cri­sis that led to the loss of many jobs all over the world was trig­gered by pri­vately owned banks.

Pri­vately owned banks have caused much eco­nomic mis­ery be­cause they are only in­ter­ested in quick prof­its, and not in the de­vel­op­ment of our peo­ple.

The EFF’s car­di­nal pil­lar in this re­gard, in­clud­ing its per­spec­tive on banks’ own­er­ship as a means of en­sur­ing that our peo­ple par­tic­i­pate in the econ­omy mean­ing­fully, will lead to gen­uine eco­nomic eman­ci­pa­tion.

Pic­ture: Gallo Im­ages

From cra­dle to grave, the route to a bet­ter life of­ten lies through banks. Isn’t it time, says Julius Malema, that such crucial in­sti­tu­tions were made to pri­ori­tise so­ci­ety’s needs?

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