Today the globe is completely dominated by big banks and multinational corporations. They own and control the economy and use their position of power and privilege to dominate the political process and control the world’s governments. Power is almost completely consolidated into the hands of the owners and large shareholders of these massive organizations – not in the hands of the regular working class people who constitute the vast majority of humanity. The obvious result of this is war, inequality, poverty and exploitation of both people and the environment.
People are beginning to realize this fact and their collective frustration has continuously been becoming more and more tangible. From Occupy Wall Street in 2011 to the 2012 Quebec “Maple Spring” to the $15/hour fast-food workers strikes in 2015, we can see that people are realizing their collective power in the struggle against a system ridden with poverty and inequality. But an increase in the minimum wage or a decrease in the cost of education won’t change the fact that corporations and big banks dominate over society. People are slowly realizing that the negative demand “End Crony Capitalism!” is not enough – we all know what we are against, now we must decide what we support. To do this, we must first look at the objective situation of the global economy.
The economy is dominated by a very small number of massive monopolies, and monopolization has only been increasing as companies merge or larger companies purchase smaller ones. In the United States, 6 corporations own 90% of the media, meaning that they control 90% of what we see and hear every day. The giant agricultural company Monsanto controls 80% of the US’s corn supply. In Canada, just 3 companies hold 91% of the market share of Canadian telecommunications. This is all without even considering the collusion between these giant companies for the purpose of keeping wages low and prices high, as was recently shown with the under-the-table agreement between Apple, Google, Intel and Adobe.
Right-wing politicians and economists enjoy telling us about the glories of the ‘free market’, but the fact is that the market is anything but free. It is clear that the market is dominated and controlled by an increasingly small group of monopolistic companies who collude together to guarantee maximum profits.
This process of monopolization means that more and more of the profits produced by humanity are taken by groups that have been continuously shrinking in size, making the class of ultra-rich billionaires become even more wealthy. These profits can only be attained if the labor involved in production is socialized – there needs to be millions of people involved in production and distribution, from the miners to the cashiers. Yet, the profit that results from this socialized process is privately appropriated by the owners. For example, one of the largest technology manufacturers in the world, Foxconn, employs 1.09 million people. The labor required for Foxconn to produce our iPhones and PS4s is socialized – it needs 1.09 million people for the production to happen – but the $3.55 billion in profits only goes to a small group of shareholders and business executives.
What is the Solution?
Bernie Sanders and his supporters believe that we should break up these institutions, especially the big banks. As he explains it: “the enormous concentration of ownership within the financial sector is hurting the middle class and damaging the economy by limiting choices and raising prices for consumers and small businesses.” He champions the idea of a competitive market that is free from the monopolistic domination of greedy companies, and admires Teddy Roosevelt’s noble fight to break up the massive Standard Oil. The company broke up into 34 companies 100 years ago, but now we are coming back to where we started – today, ExxonMobil is one of the most profitable corporations in the world and the descendants of Standard Oil, through mergers and acquisitions, now number 9 giant oil companies, not 34 small ones.
The merging process for the Standard Oil descendants was actually rather slow compared to what happened after the breakup of Bell in 1984. The chart shows that this breakup hardly proved to be useful considering that today we are constrained to only a few giant companies that charge exorbitantly high rates.
Break up the Banks?
Sanders is absolutely correct when he says that Wall Street has too much power and largely contributes to the extreme economic inequality we have today. He explains:
Today, just six huge financial institutions have assets of nearly $10 trillion which is equal to nearly 60 percent of GDP. These huge banks handle more than two-thirds of all credit card purchases, write over 35 percent of the mortgages, and control nearly half of all bank deposits in this country.
Because big banks dominate the financial sector, they have power over the entire American economy; and when fewer banks control more wealth, power becomes concentrated into the hands of fewer and fewer people. The chart below shows how it only took 20-years for 37 banks to merge into 4 of the most powerful banks in the world.
It is clear that free competition has led to monopolization and that, despite the best intentions of Sanders and Teddy Roosevelt, breaking up these monopolistic companies is merely a short-term fix that will eventually lead to re-monopolization. This is due to the nature of capitalism – it incentivizes people to maximize profits. Capitalists realize that competition actually limits their profits because it requires them to continually lower prices in order to compete and thus make sales. The best way to maximize profits is to have a monopoly, which would allow a company to set prices as high as it wants without fear of losing customers.
Governments have historically attempted to stop monopolies from developing through legislation and break-ups, but it is clear that those attempts have been fruitless. Karl Marx explained about 150 years ago that (as described by Lenin), “free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly”. A break-up would be a futile attempt to turn back the clock; it would take years of court battles, and all it would do is divide the economic power amongst a slightly larger group of shareholders and executives, and then they would eventually re-merge anyway! There is only one way to fully abolish the power of the executives of these banks and corporations.
Nationalize the Commanding Heights of the Economy!
The big banks and companies must be nationalized under democratic control. Our goal should not be to abolish power, but to seize the power that has already been created by capitalism in order to rationally build a society structured to benefit the majority of people, not the 1%. These banks have trillions of dollars in assets – with just a tiny fraction of that wealth we could abolish world hunger, poverty, and give free education to everyone. But we cannot accomplish these goals by simply breaking these massive corporations up into the hands of a slightly larger group of capitalists; only democratic control over economy can lead us to a society structured for the benefit of everyone.
The only way to ensure that we live in a society where socially created wealth is used for the benefit of everyone, is to have public ownership of the banks and large companies, the fundamental drivers of the economy. A nationalization would thus require true democratic control over the government, not the pseudo-democracy we have now where corporate lawyers and lobbyists dictate every decision our politicians make. This system of public control over the government and the economy is called Socialism.
The proposal to build Socialism is not idealistic. What is idealistic is thinking that capitalism, which has created the most stark inequality in world history, would somehow be capable of eliminating that inequality. We have already seen that, under capitalism, the productive process is socialized: millions of people need to perform labor in order produce even a simple computer, but the wealth that comes from our collective labor is privatized, appropriated by a small group of capitalists. Under Socialism, production is still socialized, but the profits generated by labor are also socialized. We would be able to use the immense amount of productive capacity and wealth that we see today to serve the needs of the majority, not the desires of a tiny corporate elite. This is because, under Socialism, the working class as a whole democratically controls the economy, unlike in capitalism where the economy is controlled entirely by the capitalist class, the owners of the means of production.
The task of building Socialism is actually easier than it was in Marx’s day. The capitalists, through their own actions, have centralized the means of production into a small number of multinational corporations. What socialists argue is that these huge levers of the economy that are now undemocratically controlled should be owned by the whole of society and democratically controlled by the workers themselves. No more would we have fat-cat CEOs who make 400 times as much money has their employees. No longer will the single owner of a company be able to decide the fate of thousands of workers; the workers would make decisions collectively.
To make Socialism a reality, for the people of the world to democratically decide their collective destinies, labor must fight back against capital. For too long have the forces of capital have been on a ruthless offensive, displacing millions of people into ghettos, and privatized prisons. For too long has death been the only option for those who can’t afford health insurance. For too long have we been sending tens of thousands of soldiers to die in violent wars, just to make money for military and oil companies. It is high time that the 99% realize their collective power and unite to form an organized opposition against this corrupt capitalist system – to fight, for Socialism!