The monopoly menace
THE CONCENTRATION OF CAPITAL IN THE HANDS OF A FEW BIG MEN IS MORE OF A THREAT TO BUSINESS AND THE FREE MARKET SYSTEM THAN ANY COMMUNIST MANIFESTO
The free market system is predicated on the principle of the free movement of goods and services in the marketplace, unconstrained by any superstructure. However, the entrenchment of monopoly capital – particularly white capital – in the South African context has barred the gates of industry and economic opportunity to many entrepreneurs and precluded them from competing fairly in the marketplace.
To illustrate this point, I remind readers of the destruction to entrepreneurship that was caused by the arrival of big monopoly retailers in the South African township market. Prior to that, retail in the townships was characterised by a multitude of small butcheries, supermarkets and spaza shops that provided a livelihood to thousands of families. Such entrepreneurship had allowed many families to escape the cycle of poverty.
The arrival of retail behemoths led to the closure of businesses on a scale and at a pace that communists and socialists could never rival. Township supermarkets didn’t close down because those retailing giants were unwilling to compete; they closed
“MULTI-BILLIONRAND MINES EXISTING LITERALLY NEXT DOOR TO COMMUNITIES BATTLING ABJECT POVERTY ARE A BETRAYAL OF THE PROMISES OF A FREE MARKET SYSTEM.”
because the power of monopoly makes competition inherently unfair and unsustainable for the small guy. They had no choice but to shut their doors.
The crushing of entrepreneurship is antithetical to the concept of the free market system, but it’s the inevitable result of monopoly capital. All theorists – from Karl Marx to Adam Smith and any honest thinker – agree that capitalism, by its very nature, leads to the eventual monopolisation of any industry.
Marx argues that the capitalist class will become ever-smaller, with wealth becoming concentrated in the hands of fewer and fewer men, resulting in monopoly capital either taking over its competitors or eliminating them completely. Monopoly capital destroys the premises of competition, consumer choice and entrepreneurship – the very foundations on which a free market system is built.
THE TRUE WEALTH OF OUR NATION
There are sections of our society who’d like us to believe that monopoly capital in Stellenbosch and Sandton creates wealth for our country and is therefore deserving of our protection, but that’s fallacious. The true wealth of SA lies in industry: in the platinum mines of Marikana, the coalfields of Middelburg, the automotive factories of Port Elizabeth, etc.
It’s incongruent with the fundamental ideals of a free market system that the areas in which productive economic output takes place should remain poor, while areas with no discernible productive economic output should expropriate the lion’s share of the profits. The phenomenon of multi-billion-rand mines existing literally next door to communities battling abject poverty is a betrayal of the promises of that system.
Adam Smith himself advocated for government intervention to prevent the ruthless greed and rapaciousness of monopoly capitalists. When these capitalists seek to circumnavigate the free market in the service of themselves, a responsible government needs to intervene through aggressive competition laws, progressive tax laws and other measures.
Lukhanyo Vangqa is a writer and analyst. He’s also the founder and convenor of the Technical & Vocational Education & Training (TVET) Debate Championships.