Chapter 6 –  Monopoly Capitalism [From Class Society to Communism] 

 

The functioning of the capitalist mode of production has not remained the same since its inception. Leaving out manufacturing capitalism, which spans the Sixteenth, Seventeenth and Eighteenth Centuries, one can distinguish two phases in the history of industrial capitalism proper:

– the phase of free competition, from the Industrial Revolution (c. 1760) up until the 1880s.

– the phase of imperialism, from the 1880s to the present day.

1 From free competition to capitalist ententes

Throughout the first phase of its existence, industrial capitalism was characterised by the existence of a large number of independent enterprises in every sector of industry. None of them could dominate the market. Each one tried to lower its prices in the hope of selling its goods.

This situation was modified when capitalist concentration and centralisation in a series of industrial sectors permitted the existence of only a reduced number of enterprises, accounting for 60 to 80 per cent of production. From then on, companies could expand and try to dominate the market, to prevent a fall in the sale price by dividing the market amongst themselves according to their relative strengths at the time.

This decline in free capitalist competition was facilitated by an important technological revolution which came about at the same time: the substitution of the electric motor and the internal combustion engine for the steam engine as the principal source of energy in industry and in the main means of transport. A whole series of new industries developed – electricity, electrical goods, oil, motor vehicles, chemical industries- which needed far greater initial capital outlay than the old sectors of industry. This in turn immediately reduced the number of potential competitors.

The principal forms of agreement between capitalists are:

– the cartel and the syndicate in a particular sector of industry, in which each firm participating in the under- standing retains its independence;

– the trust and the merger of companies, in which this independence is ceded to one group of directors;

– the financial group and holding company, where a small number of capitalists control many companies and several branches of industry which, in the eyes of the law, remain independent of each other. 

2 The concentration of banks and finance capital

The same process of concentration and centralisation of capital that takes place in industry and transport also takes place in banking. After this evolution, a small number of giant banks dominate the financial life of capitalist countries.

The principal role of banks in the capitalist system is to grant credit to companies. When banking centralisation is very advanced, a small number of bankers have a de facto monopoly on the granting of credit. This means that they no longer tend to sit back passively, merely collecting the interest on the capital they have advanced while waiting for their loan to be repaid when it falls due.

In fact, the banks which give credit to companies engaged in identical or similar activities have a major interest in assuring the viability and solvency of all these companies. They want to avoid profits falling through cut-throat competition. They intervene therefore to speed up – and sometimes to impose – industrial concentration and centralisation.

In doing this they can take initiatives to promote the creation of big trusts. In the same way, they can use their monopoly of credit facilities to obtain a stake in the capital of big companies in exchange for credit. Thus finance capital develops, in other words, bank capital which has penetrated industry and is able to occupy a dominant position within it.

At the top of the power pyramid in the epoch of capitalism, monopolies grow from financial groups which simultaneously control banks, other financial institutions (e.g. insurance companies), big industrial and transport trusts, big chains of retail shops, etc. A handful of big capitalists, the famous ’60 families’ in the USA and the ‘200 families’ in France, possess all the levers of economic power in the imperialist countries.

In Belgium about ten financial groups control the key sectors of the economy, together with a few big foreign groups.

In the USA a few giant financial groups (in particular the Morgan, Rockefeller, Du Pont, Mellon groups, the Bank of America group, etc.) dominate the whole of economic life. It is the same in Japan, where the old zaibatsu (trusts), supposedly dismantled after the Second World War, have been easily reconstituted. The main groups are Mitsubishi, Mitsui, Itoh, Sumitomo, Maruberi. 

3 Monopoly capitalism and free competitive capitalism

The appearance of monopolies does not mean the disappearance of capitalist competition. Even less does it mean that each sector of industry is definitively dominated by a single firm. Most importantly, it means that in the monopolised sectors:

(a) competition no longer normally takes place through the lowering of prices;

(b) because of this, the big trusts obtain monopolistic super-profits – that is, a rate of profit superior to that of companies in the non-monopolised sectors.

Otherwise competition continues:

(a) within the non-monopolised sectors of the economy, which are numerous;

(b) between monopolies, normally by means of techniques other than the lowering of the retail price (usually by reducing the cost price, or through advertising, etc.), and occasionally by means of a ‘price war’, especially where the balance of forces between the trusts has been modified and it is a matter of adapting the distribution of markets to this new balance of forces;

(c) between ‘national’ monopolies on the world market, essentially by the ‘normal’ method of the ‘price war’. 

However, the concentration of capital can advance to a point where, even on the world market, some firms are the last to survive in an industrial field, which can lead to the creation of international cartels which share out these markets. 

4 The export of capital

The monopolies can only control the monopolised markets by limiting the growth of production in them, and therefore the accumulation of capital. But, on the other hand, these same monopolies are in possession of abundant capital, due mainly to the monopolistic super-profits which they have realised. The imperialist epoch of capitalism is therefore characterised by the phenomenon of surplus capital, in the hands of the monopolies of the imperialist countries, which seeks new fields of investment. The export of capital thus becomes an essential trait of the imperialist era.

This capital is exported to countries where it can reap a profit higher than the average in the competitive sectors of the imperialist countries, and can stimulate activities complementary to those of the metropolis. It is used above all to develop the production of mineral and vegetable raw materials in under-developed countries (Asia, Africa, Latin America).

As long as capitalism operated on the world market merely in order to sell its goods and buy raw materials and foodstuffs, there was no major interest in the conquest of new territories by military force (force was however used to overcome the barriers to the penetration of goods – for instance, the Opium Wars of Great Britain, carried out to force the Chinese Empire to lift the sanctions against the importing of opium from British India). But this situation was modified once the export of capital began to occupy a predominant place in the international operations of capital.

While a commodity sold is usually paid for in a few months at most, capital invested in a country is only recovered after many years. The imperialist powers therefore acquire a major interest in the establishment of permanent control over the countries in which they have invested this capital. This control is indirect in semi-colonial countries – through governments under a foreign thumb, while the state remains formally independent. In colonial countries it is direct – through an administration directly dependent on the metro- politan power. The imperialist era is therefore marked by a tendency to divide up the world into colonial empires and zones of influence of the great imperialist powers.

This division was carried out in a given period (especially between 1880-1905) as a function of the conjunctural balance of forces: the hegemony of Great Britain; the strength and importance of the French, Dutch and Belgian imperialists; the relative weakness of the ‘young’ imperialist powers: Germany, the USA, Italy, Japan.

A series of imperialist wars were the means by which the ‘young’ imperialist powers tried to use the change in the balance of forces to modify this distribution of the world in their favour: the American-Spanish war, the Russian- Japanese war, the First World War, the Second World War.

These were wars for pillage, for new fields of capital investment, for sources of raw materials, for control of markets, and not wars for a political ‘ideal’ (for or against democracy, for or against autocracy, for or against fascism). The same applies to the wars of colonial conquest which lie scattered through the imperialist epoch (in the Twentieth Century, the war of Italy against Turkey; the Sino-Japanese war; the Italian war against Abyssinia, in particular), or the colonialist wars against people’s liberation movements (Algeria, Vietnam, etc.) in which one of the participants is there to pillage, while the semi-colonial or colonial people defend a just cause and try to escape imperialist enslavement. 

5 Imperialist and dependent countries

Thus the imperialist era does not merely see the establishment of the control of a handful of financial and industrial magnates in the metropolitan countries. It is also characterised by the establishment of the control of the imperialist bourgeoisie in a handful of countries over the people of the colonial and semi-colonial countries, two thirds of the human race.

The imperialist bourgeoisie extracts considerable wealth from the colonial and semi-colonial countries. Capital invested in these countries reaps colonial super-profits which are brought home to the metropolis. The world division of labour based on the exchange of metropolitan manufactured goods for raw materials from the colonies leads to unequal exchange, in which the poor countries exchange greater amounts of labour (which is less intensive) for smaller quantities of (more intensive) labour from the metropolitan countries. The colonial administration is paid for by the taxation of the colonised peoples (a far from negligible part of this revenue is also sent to the metropolis).

The resources extracted from the dependent countries are all at once unavailable when it comes to financing their own economic growth. Imperialism is thus one of the principal sources of the under-development of the southern part of the globe. 

6 The era of late capitalism

The imperialist era can itself be divided into two phases: the era of ‘classical’ imperialism, which covers the period before the First World War as well as the inter-war years; and the era of late capitalism, which begins at the end of the Second World War.

In this era of late capitalism, the concentration and centralisation of capital extends more and more on an international scale. While the national monopolistic trust was the ‘base unit’ of the era of classical imperialism, the multinational company is the ‘base unit’ of the era of late capitalism. But, at the same time, the era of late capitalism is characterised by the acceleration of technical innovation, by the quicker depreciation of capital invested in machines, by the need for big firms to calculate and plan much more precisely their costs and investments, by the tendency towards state economic programming which is the natural result of this.

The economic intervention of the state grows because the bourgeoisie needs state aid to rescue industrial sectors which have become chronically deficient; needs state financing for new and not yet viable sectors; needs to make the state guarantee the profits of the big monopolies, mainly by providing them with state orders (above all, but not exclusively, in the military field), subsidies, etc.

This growing internationalisation of production on the one hand, and the growing intervention of the national state in economic life on the other, leads to a series of new contradictions in the era of late capitalism, of which the crisis of the world monetary system, fed by permanent inflation, is one of the principal expressions.

The era of late capitalism is also characterised by a generalised disintegration of colonial empires, the transformation of colonial countries into semi-colonial countries, a reorientation in the export of capital – which now mainly moves from one imperialist country to another, and not from the imperialist countries to the colonies – and the first steps towards industrialisation (mainly restricted to the consumer goods industries) in the semi-colonial countries. This is not only an attempt on the part of the native bourgeoisies to hold back popular movements of revolt, but also a result of the fact that the export of machines and equipment today constitutes the major part of exports from the imperialist countries themselves.

Neither the transformations which have occurred in the functioning of the capitalist economy within the imperialist countries, nor those which concern the economy of the semi-colonial countries and the functioning of the imperialist system as a whole, can leave us in any doubt about the correctness of the conclusion drawn by Lenin more than half a century ago as to the historical significance of the imperialist epoch. It is the epoch of the heightening of all inter-imperialist contradictions. It is an epoch of violent conflicts, imperialist wars, wars of national liberation, civil wars. It is the epoch of revolutions and counter-revolutions, of more and more explosive confrontations, and not an epoch of gradual and peaceful progress for civilisation.

It is extremely important to do away with the myth that the present Western economy is no longer a real capitalist economy. The 1974-75 generalised recession of the inter- national capitalist economy dealt a death blow to the theory which says that we are living in a so-called ‘mixed economy’, in which the regulation of economic life by the state guarantees uninterrupted economic growth, full employment, and a high standard of living for all. again shown that the requirements of private profit continue to dominate the economy, periodically provoking massive unemployment and overproduction, and that we are still living in a capitalist economy.

It is the same with the theory which says that it is no longer the most powerful capitalist groups but managers, bureau- crats and even technocrats and academics who run Western society. This theory is not based on any serious scientific proof. Many of these alleged ‘masters’ of society have found themselves out on the streets during the two recent recessions. The delegation of power which big capital accepts and perfects in the giant companies it controls covers most of its traditional prerogatives except the most essential: the final decisions on the forms and fundamental direction of the accumulation and investment of capital. Safeguarded is everything to do with the ‘holy of holies’: the priority of the monopolies’ profits, to which the distribution of dividends to shareholders can be sacrificed. Those who see this as proof that private property no longer counts for very much are forgetting the predominant tendency from the beginning of capitalism to sacrifice the private property of many little fish to that of a handful of big fish. 

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