17 ways the financial sector must be reformed - Solly Mapaila

SACP 2nd DGS calls for abolition of ‘20 year death sentence' payment period unjustly imposed on our people on mortgage housing by the banks

Red Alert: Mobilise people's power to transform the financial sector and build a People's Economy!

On Sunday 5 October, as the SACP we launched our Red October Campaign 2014/5. We held a highly successful national rally, in Hammarsdale, Durban. Every year we launch the annual Red October Campaign, symbolically to reaffirm the inspiration that we draw from the Great October Socialist Revolution which took place in Russia, 1917. Most importantly, this revolution was not only against oppression. It was against economic exploitation. It was a revolution for socialism as the most sustainable solution to the problems facing both humanity and nature.

Our Red October Campaign identifies key challenges facing the workers and the poor, and seeks to tackle them directly through activist campaigning. As the Communist Party, our focus is not limited to the surface - it goes deeper - and directly challenges the root causes and driving forces of the problems that we seek to resolve. This year, our Red October Campaign intensifies our struggle to achieve the overhaul transformation of the financial sector to serve the people. This is not an event. It is rather a long-term and deep-going process.

In the 1970s the capitalist world economy suffered a major crisis since its Great Depression of the 1930s. As the solution, the capitalists, mainly through transnational corporations, reformed the system by remodelling it, creating what would become neoliberal capitalism. They used the United States and British governments first under Ronald Reagan and Margaret Thatcher, and changed the orientation of the "international financial institutions" created after World War II to drive economic solutions to resolve that imperialist war and its founding crisis of the Great Depression.

This, along with changing the rules of world trade through what became today's World Trade Organisation, were used, but not as the only, instruments to develop and impose the new version of capitalism globally. They called this "globalisation". But as we know it today, by "globalisation" they meant not any other, but neoliberal globalisation.

It was during this period more than in any part of human history that financial capital rapidly rose to dominance, financialising almost every aspect of economic activity, and impacting on social life and politics. Decisions over economic, social and public policy were turned towards favouring and supporting financial interests and markets which became the defining feature the new capitalist accumulation regime.

Among the decisions imposed were privatisation and commercialisation of state owned enterprises, and outsourcing or out-contracting both in the public and private sectors. This impacted on the public service and the delivery of basic services, and curtailed the role of the state in favour of private enterprise and capital accumulation. Underpinning this was an aggressive wave of economic, including financial and trade, liberalisation and deregulation.

Lack of the capital needed to implement transformation and pursue development, coupled with continuing economic control by the capitalist class forces of colonisation and imperialism in post-colonial societies, and the financial crises which became frequent, delivered many countries especially the former colonised world in the jaws of neoliberalism.

The United States which dominates the International Monetary Fund and World Bank, and ultimately with the support of its imperialist allies, imposed the neoliberal economic regime as the condition for development and crises "bail-out" loans issued by the two institutions. This is how many countries lost their sovereignty and democracy was watered down with its conditions destroyed before they were even born in many instances.

The neoliberal economic regime opened the floodgates of reckless and unsecured lending practices. Credit cards from banks and other "financial service providers" as well as retail stores filled wallets or purses to finance consumption and commit wages or salaries before they could actually be earned. Loans on top of loans were encouraged, including loans to pay off other loans.

At the same time, new financial dealings, including debt securitisation, derivatives, hedge funds, and rising exploitation in the sphere of finance, among others through insurance funds and insurance policies, increased at a rate never seen before. Individuals became indebted to many of these insurance policies as they were lured in taking one after another.

In the sphere of production and in the retail sector, financialisation reinforced and deepened exploitation and the subordination of labour to capital. It aggressively pursued neoliberal restructuring, hence the rise of the temporarisation of work to replace "permanent jobs", the rise of casualisation and labour brokering. This contributed to a fall in worker's share of national income. Together with other capitalist instruments of exploitation the fall in workers in workers income coerced them to turn towards credit and loans as "alternative" means to make a living.

Our struggle to achieve the transformation of the financial sector is therefore in a very real way much broader. It is directed at the centre of the exploitative system of capitalism. This is the struggle for economic justice. It is the struggle for social justice, complete political liberation and full social emancipation, and the elimination of economic and social inequality. This is the struggle to address unemployment and poverty. Most importantly, this is the struggle to overthrow the conditions and forces of oppression and economic exploitation.

Let us take this struggle forward, let us unite at least for a minimum programme!

Let us push forward with structural transformation and take up the struggle on the problems facing consumers - these are, in their very essence, the result of lack of transformation both in the financial sector and production. Let us:

1. Defend the gains that we have achieved since launching our ‘Make the banks serve the people' campaign in 2000:

Affordable banking services, in this regard the Mzansi Banking Account through which we achieved access to affordable banking transactions for millions who were excluded; 

Financial service regulation and institutional enforcement, in this regard the National Credit Act, which must be strengthened further, and the National Credit Regulator;

Regulatory legislation and the Co-operative Banks Development Agency to support the establishment and development of Co-operative Banks.

2. Take up the struggle for a living and social wage, and intensify the struggle against economic exploitation in all fronts.

3. Roll back neoliberalism in all its facets and policy terrains, including macro-economic policy, and deal with its phenomenon of financialisation.

4. Review National Planning in line with the outcomes of our last Alliance Summit based on the principle that the plan already developed is not cast in stone, and that it is subject to continuous engagement.

5. Break the investment strike that the bosses have embarked upon, push for taxation of liquid capital above a defined ceiling and for prescribed assets to guide investment towards production and fund development.

6. Ensure consistent implementation of consumer and financial education.

7. Bring to an end the bail-out of the banks that implode as a result of reckless and unsecured lending practices that plunge our people into debt.

8. Ensure that our Development Finance Institutions are reoriented towards a transformative developmental mandate.

9. Abolish the prohibitive cost of, and universalise access to communication; and ensure the immediate implementation of drop call rates reduction.

10. Push for an end to commoditisation and financialisation of basic services, including healthcare; defend and ensure that the National Health Insurance Scheme is successfully implemented.

11. Intensify the struggle to eliminate private monopoly in the financial sector and the economy in general, by disrupting the logic of the profit motive, and by diversifying the banking sector: through the creation and support for co-operative banks, a state bank and the licencing of the Post Bank to offer full banking services - most importantly- all of these must be human centred and developmental in approach as opposed to profit.

12. Fight to reduce the exorbitant bank charges and interest rates; ensure priority for production development, economic and social transformation; combat consumerism and the selfish individualism imposed by neoliberalism.

13. Abolish the ‘20 year death sentence' payment period unjustly imposed on our people on mortgage housing by the banks, along with the compounded interest rate regime which underpins this death sentence.

14. Bring to an end the reckless and unsecured lending practices that sink our people, especially the workers and the poor, into unsustainably high levels of debt and eliminate the many social problems associated with it.

15. Overhaul the credit bureau regime that has proven to be dedicated to the super-exploitation and blacklisting of our people.

16. Fight against financial discrimination suffered by people living with HIV, and advance alternative, caring policies.

17. Engage and work with the progressive trade union movement, to ensure worker control of their investment vehicles and retirement funds and the use of these capital to advance developmental goals. This would require the defeat of business unionism, including the use of monies from the union investment companies for factional and even counter-revolutionary purposes.

The SACP has called on all our people, especially the workers and poor, to join forces and use our Red October-Financial Sector Campaign as a platform for change in our economy, politics and social lives.

We have already laid the basis for an advance towards progress in building a progressive, working class-led financial sector transformation and activist consumer movement! We will use our Red October-Financial Sector Campaign to deepen this work and unite the broadest range of organisations towards a prosperous South Africa.

Above all, the success of this campaign will contribute invaluably in raising the quality of life of our people.

The SACP says: Mobilise people's power to transform the financial sector and build a People's Economy!

Comrade Solly Mapaila is SACP 2nd Deputy General Secretary and National Chairperson of the Financial Sector Campaign Coalition. He presented this statement at the SACP Mpumalanga Provincial Red October Campaign Launch, Bushbuckridge, 12 October 2014

This version first appeared in Umsebenzi Online, the online journal of the SACP.

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