Fernand Braudel said that capitalism is constituted by a structure of three levels: a lower layer, the wider of an extremely elementary economy and essentially self-contained, which he called living material, the layer of non-economics, soil into the capitalism plant its roots, but which can never penetrate. Above this layer, comes the field of market economy, with its many horizontal communications between the different markets in which there is an automatic coordination linking the supply, demand and prices. After this layer and above it, is the anti-market zone where operate large predators and there is the law of the jungle. This - today as in the past, before and after the industrial revolution - is the real home of capitalism (Braudel, Fernand Civilisation matérielle, économie et capitalism- Vol 1, 2, 3. Paris: Librairie Armand Colin, 1979).
The anti-market zone cited by Braudel is the true home of monopolies and oligopolies where the law of the jungle prevails. Monopoly (from the Greek "monos," one, and "polein" sell, means "one to sell") means the absence of competitors in a given sector of the economy, resulting in the existence of only one supplier. This single vendor has in his hands the advantage to impose the price of their goods in the market. In addition to force a rise in prices of its products to increase their profits, the monopolist can also lower the price of their products to prevent the entry of a competitor in the same market segment that dominates. Anyway, the monopolist has, except specific cases, a domain so of the industry in which it operates that become the "owner" of the market.
In the oligopoly (from the Greek "oligoi" few, and "polein" sell, it means "few to sell") are few suppliers, each holding a large share of the market, and being sensitive to price changes in the market, representing an imperfectly competitive market structure. In oligopoly, there is a tendency to form cartels or market division between the oligopolists. It is through monopolistic and oligopolistic practices that companies maximize their profits to the extreme. One of the sectors where there is a flagrant oligopolistic practice is banking in Brazil and worldwide.
Economist François Morin, emeritus professor at the University of Toulouse and member of the board of French Central Bank, says in his book L'Hydre Mondiale- L'oligopole bancaire (The Worldwide Hydra - The banking oligopoly) that 28 world-sized banks are a oligopoly totally distanced of the public interest. To bring humanity safe from future financial disasters, François Morin considers that it´s necessary to destroy these banks, which he compares to a hydra, and redeem the currency for the domain of the public sphere (MORIN, François. L'Hydre Mondiale- L'oligopole bancaire. Montréal: Lux Editeur, 2015).
It is important to note that the hydra is a beast of Greek mythology with several snake heads, one of them immortal, and dragon body. It was created by Juno and was one of the twelve labors of Hercules. It was known as "Lernaean Hydra". The blood of the Lernaean Hydra as his breath was poisonous. If their heads were cut off, they returned to be born. While the hydra is not dominated, the heads continue to grow increasingly.
As a handful of banks took the form of global hydra? François Morin says that after the liberalization of the financial sphere that began in the 1970s (when the exchange rates and interest rates are set by the market and not by national states and capital movements are liberalized) the monetary and financial markets become global themselves in mid 1990. The largest banks then had to adapt its size to this new exchange space, through mergers and restructuring. The conditions were met for the emergence of an oligopoly on a global scale, which quickly becomes gigantic: the balance sheet total of 28 banks oligopolistic (50.341 billion dollars) was higher than the total public debt (48.957 billion dollars) in 2012.
According to François Morin, these very large banks made agreements among themselves fraudulently from the mid-2000s constituting a cartel. Since then the banking oligopoly became a hydra devastating for the world economy. These 28 banks were declared "systemic" at the G20 meeting in Cannes in 2011. The analysis of the causes of the financial crisis that began in 2007-2008 did not leave any doubt about the responsibility of these banks in triggering the process. It´s being put into question the "financial derivatives", which have become common at this time and continue to be circulated worldwide. Let us remember that derivatives are products that are designed to provide guarantees to their owners and some of them are highly speculative. The activation (cash conversion) may become catastrophic in the event of a crisis. It should be noted that only 14 systemic banks 'manufacture' these products whose value is more than 10 times the world GDP.
Multiple analyzes showed that these banks hold dominant positions in several major markets (foreign exchange, debt securities and derivatives). It is characteristic of an oligopoly. But since 2012 the judicial US, the UK authorities and the European Commission increased investigations and levied fines that demonstrate that many of these banks - especially 11 between them (Bank of America, BNP-Paribas, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Royal Bank of Scotland, UBS) - set up systematically "scams in organized gang". There have been applied fines of many millions of dollars, by manipulation of the exchange market or LIBOR (interbank interest rate of reference established in London).
François Morin says in his book that the world is sitting on a mountain of financial time bombs mounted solely by this handful of banks. It is quite clear that there are many financial bubbles that can burst at any time. The bubbles in the stock market can only be explained by the massive liquidity injections by central banks. But above all, there is a bubble in public debt that hit all major economies. Toxic private debt of the banking oligopoly was massively transferred to the national states in the last financial crisis. The excessive public debt due exclusively to the crisis and these banks explains the austerity policies adopted in more and more countries. This excessive public debt is the main threat, as seen in Greece and potentially in Brazil.
According to François Morin, from the 1970 national states lost all monetary sovereignty because the currency is now created by banks at the proportion of about 90%, and the central banks (which became independent from national governments) for the remaining 10%. In addition, the management of currency through its two core prices (exchange rates and interest rates) is entirely in the hands of the banking oligopoly, which has all the conditions to manipulate them. So, the big banks get their hands on the monetary conditions for financing of investments, but also, and above all, the financing of public deficits domain. National states are not only regulated by the markets but above all hostages of the world hydra, according to François Morin.
The relationship between banks and national states is indeed devastating. Representative democracy empties gradually because the banking oligopoly exploits the powers of the states for their own benefit. Everything indicates that conditions are ripe for a new financial earthquake in the world, now that the nation states are on the verge of bankruptcy and unable to intervene in their economic systems. The next financial earthquake will be even more severe than occurred in 2008 whose economic and financial effects will be disastrous and its political and social consequences could be dramatic.
The centralization of capital lays the foundation of the dominance of monopolies and oligopolies in the political field. In all countries, capitalist monopolies and oligopolies control the activity of the rulers. At the present time are the large financial corporations that control governments. In any capitalist power can be formed a government against the will of the great financial wolves. This is the real control of the government, the control of banks, and not the alleged control by the parliaments. The presidents of the United States, for example, are, as a rule, the instruments of a small group of monopolists. It is impossible to govern United States without the consent of monopolies and oligopolies. Even if the national states to strengthen the state banks of their property will not have enough capacity to face the powerful national and international banking oligopolies. Given this fact there is only to the peoples of the world to act politically to destroy the banking oligopolies or wait that financial bubbles explode to erect a new world order after the debacle of the financial dictatorship of global banking oligopolies.
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial Planning and Regional Development from the University of Barcelona, a university professor and consultant in strategic planning, business planning, regional planning and planning of energy systems.