For those of us brought up with the Marxism of the 1970s, all this stuff about white monopoly capital is a bit puzzling. Mzwanele Jimmy Manyi’s Progressive Professionals Forum (PPF) calls for the dismantling of the oligopolistic nature of white monopoly capital and talks of more than 90% of SA’s wealth being in the hands of a few white families and white-owned corporations.
We’re told UK public relations agency Bell Pottinger crafted the white monopoly capital narrative. Whoever did so seems sadly unfamiliar with the Marxist texts from which the notion of monopoly capital comes and unaware that in its original form monopoly capital could not, strictly speaking, have been white, black or any other colour. It was, rather, a particular stage of capitalism, and who owned the means of production didn’t have much to do with it.
US Marxists Paul Baran and Paul Sweezy, authors of the seminal 1966 book Monopoly Capital, went out of their way to emphasise that control of the oligopolistic "giant corporations" rested in the hands of management, not outside shareholders. Real power was now held by the insiders, the "company men".
But while shareholdings might not confer control, Baran and Sweezy argued that this didn’t mean great wealth or large family fortunes were unimportant. They were "tickets of admission" to the inside, the ranks of boards of directors and executives.
Monopoly Capital was very much a book of its time. Yet it does touch on some of the crucial questions around ownership and control of SA’s economy — such as who owns what, at least among the JSE-listed companies.
Institutional shareholders dominate the ownership of public companies in SA, just as they do internationally. The Banking Association’s submission to Parliament last week shows that foreign owners hold 49% of SA’s banking shares, with a further 34% held by "mandated investment schemes" — that is, the pension funds, unit trusts and life policies that invest the savings of millions of South Africans. Black ownership of banks, directly (mainly via black empowerment vehicles) and indirectly via institutional savings, hit a peak of almost 27% in 2014.
It’s all highly contested by the likes of the PPF. But the pattern across the top 100 listed companies is similar, with end-2013 figures showing 39% foreign ownership and about 37% institutional investors (the Public Investment Corporation alone holds about 12%). The JSE’s most recent survey showed black South Africans owned 23% at the end of 2013, of which 10% was direct and 13% indirect. White South Africans owned 22%.
The JSE is at the tail end of research on an updated survey, results of which are not expected to be dramatically different, with institutional ownership by black beneficiaries of pension, unit trust and life funds increasing again, as they did in the previous survey. JSE CE Nicky Newton-King argues this is something to celebrate.
And despite Baran and Sweezy’s dismissal, ownership, even by dispersed institutional shareholders, can confer significant influence if those owners choose to use the influence they have. So if black shareholders, direct or indirect, are to play a part in deracialising SA’s economy, those institutional shareholders need to become more activist.
The more profound question is how far all those costly efforts to get shares into the hands of black people through empowerment deals have taken SA towards deracialising the economy. It is almost three decades since the first empowerment deals were done in the financial sector and more than 13 years since the Financial Sector Charter was negotiated, with its targets for equity ownership as well as for banking the unbanked, financing small businesses, investing in infrastructure and employment equity.
The Banking Association’s submission shows the banks have made huge progress in many of these areas. And it raises an important question about whether the sector should be doing yet more equity ownership deals at the expense of financing transformation more broadly — given that for every R10 of capital a bank uses to finance a new black shareholder, about R80 is removed from financing a black business, because of the way banks’ capital is regulated.
But if we ask who are those "company men" the 1960s Marxists argued were the real power, the evidence is sobering. Senior executives in banks are overwhelmingly white and male. Only about 20% of executives and a third of directors are black. In part that reflects the education system. But it also reflects corporate SA’s failure to do enough to transform its own leadership. That leaves far too much space for the strident voices of Manyi and friends.
• Joffe is editor-at-large
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