Taimur Rahman Political Archive

Long Live Marxism-Leninism!

May Day 2006: monopoly and the working class

Posted by Taimur Rahman on May 8, 2006

Published in The Post 08/05/2006

Taimur Rahman

There was a time in the history of Pakistan when the workers movement had the requisite power to shake the very foundations of this society. Those who were young in the era of the 1960s and 70s will have witnessed the sea of red flags that engulfed the Mall Road on May 1st. With the break up of the Soviet Union, however, an entire era of revolutionary storms across the world came to a close. An unprecedented era of unfettered capitalist accumulation, euphemistically called neo-liberal globalization, followed for an entire decade. The triumphant “new world order” also implied the undisputed hegemony of the most powerful capitalist state in the world: the United States of America. Unions and working class parties shrank and shrank and the conditions of workers all over the world became little better than their position at the beginning of the 20th century. BBC reports that, “The income of the richest 1 percent (50 million people) is the same as the income of the poorest 60 percent (2.7 billion people). And all the gains in world income in the middle of the last decade went to the richest 20 percent, while the income of those at the bottom actually declined” (http://news.bbc.co.uk/1/hi/business/1442073.stm). How did this happen?

Taking advantage of this unmitigated hegemony, large companies undertook a historic number of mergers and acquisitions between 1995 and 2001, resulting in an enormous increase in the already extremely monopolized market. Today the top 1 percent of all multinational companies (MNCs) accounts for 70 to 80 percent of global trade (40 percent of which is merely trade between different MNCs). The top 15 MNCs control the world market in 20 key commodities: 90 percent of the world’s trade in iron ore, wheat, timber, cotton, tobacco, pineapples; 80 percent of the world’s trade in copper, tea, and coffee; 70 percent of the world’s trade in rice; and 60 percent of the world’s trade in oil. The top five MNCs accounted for 70 percent of consumer durables, 58 percent of cars, trucks and airlines, 55 percent of aerospace, 53 percent of electronic components, and 50 percent of oil, steel, personal computers and media industries. A mere 1 percent of all MNCs owned half the total stock of foreign direct investment (FDI) [United Nations World Investment Report, 1993 in Brar, 1997], 80 percent of all international investment, and accounted for 30 percent of the world’s output [Hawken, Paul, ‘The Power of Transnationals’, The Ecologist, July/August 1992 in Brar, 1997]. The top 200 MNCs that employed less than 0.05 percent of the world’s population controlled over a quarter of the world’s Gross Domestic Product [Anderson, Sarah; Cavanagh, John The Top 200 – the Rise of Global Corporate Power, Institute for Policy Studies, Washington, September 1996, in Brar, 1997. ‘A Survey of Multinationals: Everybody’s Favourite Monsters’, The Economist, March 27, 1993, Special Supplement in Brar, 1997]. And nearly two-thirds of all productive capital in the world is controlled by no more than the world’s 50 largest banks and diversified financial companies [Hoover’s Handbook of World Business, 1993].

To get an estimate of the monopoly power of these companies it is interesting to compare their earnings to the national income of countries.

The combined sales of the world’s 10 largest corporations are greater than the combined Gross National Product (GNP) of the world’s 100 smallest countries. General Motors’ sales are equal to the aggregate GNP of Pakistan, Bangladesh, Nepal, Nigeria, Kenya, Tanzania, Uganda, Ethopia – countries which together are host to 500 million people representing nearly a tenth of the global population.

The combined sales of the world’s top 200 corporations are far greater than a quarter of the world’s economic activity. Their combined sales are larger than the combined economies of all countries except the biggest nine. In other words, they exceed the combined economies of 182 countries – there being 191 countries at the latest count. Of the 100 largest economies in the world, only 49 are countries – 51 are corporations! US retailer Wal-Mart is larger than 161 countries including Israel, Greece and Poland. Mitsubishi is bigger than Indonesia, the fourth most populous country on earth. Toyota is bigger than Norway, Ford is bigger than South Africa, and Philip Morris is bigger than New Zealand. The top 200 companies posses an economic clout almost double that of the poorest four-fifths of humanity.

According to the UN Development Programme, 85 percent of world GDP is controlled by the richest one-fifth of humanity; only 15 percent is controlled by the poorest four-fifth. And that is why nearly a fifth of the world’s population continued to live in extreme poverty, a third of the world’s children remained malnourished, nearly a hundred million children live and work on the street, and half the world’s population lacked regular access to the most essential drugs.

These statistics powerfully demonstrate the monopoly power of large corporations and underscore that privatization, under conditions of monopoly, can only lead to one result: greater monopoly control by large corporations. The economic facts of the case are simply that as a society develops economically, the average scale of enterprises increases to take advantage of greater and greater economies of scale. This implies a higher financial bar on new entrants into the market, since a new entrant will have to be at least as large, if not larger, than those already present in the market. In this way, larger companies are not only able to dominate the market, they are also able to buy out smaller companies, and prohibit new entrants into the market. Companies with greater capital at their disposal are more likely to purchase privatized industries, thereby further increasing their monopoly control over the market. The claim that privatization creates competition is in fact utterly groundless. In fact, the reverse is true. Privatization gives monopolies an enormous opportunity to acquire new enterprises, mostly at throwaway prices, and further increase their market share and monopoly power.

This is precisely where the workers movement has played, and can continue to play, the most important role, not merely for themselves but for all those not blessed to be born in a family that controls empires of industry. It was precisely the strength of the workers movement in the 20th century that controlled, restricted and even reversed and ended some of the worst excesses of monopoly capitalism. This May 1st in Lahore was not only celebrated with greater gusto than before but the presence of left-wing trade unionists, in particular members of the All-Pakistan Trade Union Federation and Working Women’s Organization, was markedly stronger than previous years. If the ascendant trajectory of left-wing trade unions in Pakistan continues unabated, much like the recent nationalisation of the oil companies by Bolivia’s new President Evo Morales, it could be a portent of greater things to come. With the increasing rate of privatization, and the visibly disastrous results in the form of six hour blackouts in Karachi after the privatization of KESC, it might not be long before an Evo Morales or two emerge from within the indigenous soul of our own country.

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