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‘Steel Industry’
Monopoly Capitalism and Socialism

by Gerhard Papenfus

It is rare that I agree with any of Mr Irvin Jim’s views on political, economic and labour issues, and how South Africa is to be taken forward. Although we may agree to the existence of certain challenges, we differ fundamentally on how to address those challenges.

I found Mr Jim’s recent opinion piece, ‘Steel Industry, struggle for memory also a struggle for power’, thought provoking and, in certain aspects, spot on. For instance, I agree:

  • that thousands of jobs in the ‘Steel’ Industry may be lost (Mr Jim mentions a figure of 50 000) unless a solution is found;
  • that the steel value chain is the single most important value chain for industrial development;
  • with Mr Jim’s strong views on Import Parity Pricing (IPP); he calls it ‘a form of corruption – an exploitation of [sic] a monopoly to extort money from customers who had no alternative source of steel, the costs of which then had to be passed on to their customers: the people of South Africa’; and
  • with Mr Jim’s quote of a Business Times article that ‘ArcelorMittal…is demanding protection from a pricing strategy it forced on local steel producers for the past decade’.

But this is where any agreement between us on these issues ends.

Mr Jim advocates that the ‘deep crisis’ caused by ‘monopoly capitalism’ be addressed through the introduction of ‘state power: the power to allocate resources and to therefore determine their use’. What Mr Jim is proposing is the ‘ownership and control of production’. His solution is simply to nationalise.

Mr Jim wants to replace one form of control (he calls it ‘monopoly capitalism’) with a different, yet more destructive, form of control, namely state control. Although what Mr Jim proposes here has not worked anywhere else in the world, he somehow believes that South Africans can make it work. What on earth makes him think that South Africans, by applying the same outdated policies, can somehow manufacture a better outcome? Is he blind to the millions of people who flee from countries, where the ramifications of state control are experienced, to countries where political and economic freedom exist? He must be well aware that state control (socialism) always goes hand-in-hand with the curtailing of all the elements of freedom, simply because socialism goes against the very nature of man, and therefore has to be enforced. Why is it that nations often have to experience the misery of socialism first-hand before they turn their backs on it?

In his attempt to devise a solution for the ‘Steel’ Industry, he conveniently fails to mention that the labour dispensation in the Metal and Engineering Industry Bargaining Council (MEIBC), where the National Union of Metalworkers of South Africa (NUMSA) – of which Mr Jim is the General Secretary – and the ‘Captains’ of the Metal Industry (or ‘monopoly capitalists’ as he calls them), has made the ‘Steel’ Industry by far the most expensive, uncompetitive and hostile Industry in which to conduct business. His Union has constantly made unreasonable demands, and through violence and intimidation, forced their negotiating partners, the ‘Captains’, into surrendering. This has led to the demise of this Industry. The latest events, caused by the cheap China imports, are just another nail in the coffin.

I hope that the parties now discussing the rescuing of the ‘Steel’ Industry, the ‘Captains’ – with the exclusion of the 11 000 downstream manufacturers – and government, realise what the cost of agreements with NUMSA will amount to; that they will not settle for anything less than their ultimate socialist ideas; to quote Mr Jim: ‘What has not been won in the boardroom shall be won on the streets’.

Business needs to wake up!

Mr Jim sees the current battle as a ‘battle to the death between forces of capitalist reaction and forces of socialism’. I disagree. Monopoly capitalism, crony capitalism and socialism are intertwined. They are all a threat to political and economic freedom. I am not comfortable with any of them. I am a proponent of the free market, a model which has proven over the ages to be the only solution for sustainable improvement of living standards; it simply brings out the best in people.

NEASA implores Government and stakeholders (in the ‘Steel’ Industry) to:

  • include representatives of downstream manufacturers in all discussions in which the current ‘Steel’ Industry crisis is addressed;
  • subject the prevailing illegal and unconstitutional dispensation in the Metal and Engineering Industry Bargaining Council (MEIBC), which has led to hundreds of thousands of job losses, to high level scrutiny; and
  • withdraw the current Industry Main Agreement, which was blatantly illegally and unconstitutionally obtained and which is currently the subject of litigation.

This opinion piece is by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA)