August 17, 2021
From Irish Marxism

Karl Marx’s alternative to capitalism part 39

Marx notes that a certain accumulation of capital is a precondition for the capitalist mode of production that it then develops accumulation enormously:

“The continual re-transformation of surplus-value into capital now appears in the shape of the increasing magnitude of the capital that enters into the process of production. This in turn is the basis of an extended scale of production, of the methods for raising the productive power of labour that accompany it, and of accelerated production of surplus-value.” (Marx Capital Volume 1)

This involves an increasing division of labour inside and outside the workplace; the introduction of machinery and development of large-scale industry; the application of science and knowledge to production; and the increasing transformation of the natural world, all of which can only be the work of many workers combined together.

While many Marxists have prioritised regard to the underdevelopment of imperialist dominated countries and the remaining industrial backwardness of many, they have been loath to also recognise the growth of capitalism which is a necessary feature of its existence. Instead of capitalist development being the grounds for socialism its relative lack of development is often considered to be the warrant for revolution.

This increasing accumulation of capital results in its concentration and centralisation, the former “only another name for reproduction on an extended scale.”  Centralisation of capital on the other hand allows the greater extension of capitalist accumulation: “a more comprehensive organisation of the collective labour of many people, for a broader development of their material motive forces, i.e. for the progressive transformation of isolated processes of production, carried on by customary methods, into socially combined and scientifically arranged processes of production.” (All quotes from Marx, Capital Volume III).

This centralisation accelerates accumulation and allows the creation of forces of production hitherto beyond the capacity of previous numerous smaller capitals, with Marx noting the example of the construction of railways in the 19th century.  These in turn add to the productive power of any particular capitalism, raising the standard of productivity required by any newly aspiring capitalist power; requiring it to match the already existing scale, division of labour and technology in order to successfully compete.  New capitalist enterprises or countries must aim to at least match this level of development in order to survive, even allowing for temporary protectionist measures it may adopt in then meantime.

The concentration and centralisation of production is but one aspect of the centralisation of capital, with capital in its money form also concentrated and centralised; through its expansion it becomes an enormous means for further development of production and accumulation.

As this accelerated accumulation becomes ever more powerful it heightens the contradictions of capitalism, including the elimination of smaller, or even larger, capitals by competitors, which becomes less and less acceptable to such capitals.

Cartels are formed that predetermine the level of production in order to support the prices and profitability of participating firms, and when even this is not enough socialisation goes further with the creation of monopolies.

“This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-abolishing contradiction, which presents itself prima facie as more a point of transition to a new form of production.”

Marx notes that expropriation as the starting point of capitalism – through depriving of peasants etc. of their means of production by severing their ties to the land so that they must sell their labour power to capital – becomes the expropriation of other capitals and the creation of monopolies.

The scope and scale of capital no longer allows for the great productive powers created to be the product of individual capitals but the combined power of socialised capital.  The financial system becomes one mechanism through which this socialised capital is concentrated, centralised and distributed.

The scale of production – including huge monopolies – and the power of the financial system require the intervention of the state to secure and regulate their workings, while the monopolies and financial system in turn intervene into the state to defend and advance its collective and specific interests.

This socialisation of production comes more and more into contradiction with the appropriation of production by individual capitals and tiny class of capitalists at its apex.  The massive planning of huge companies with internal economies larger than many countries stands in contrast to the uncontrolled gyrations of the economy as a whole.  The product of socialised labour is inimical to capitalist appropriation of its product, resulting in greater or lesser, but nevertheless permanent, inequalities due to class distinctions. 

The socialisation of production continues today, reflected in the growth of the concentration and centralisation of capital in monopolies and growth of the capitalist state.  Even after decades of ‘neoliberalism’ that supposedly relegated the importance of the state, in the US government spending as a percentage of Gross Domestic Product has reached around 40%, having been 34% in 1979 and 7% before World War I.

The expanding role of the state includes vital support for production as noted in the book of economist Mariana Mazzucato:

“Mazzucato lists twelve crucial technologies that make smartphones “smart “: (1) microprocessors; (2) memory chips; (3) solid state hard drives; (4) liquid crystal displays; (5) lithium-based batteries; (6) fast Fourier transform algorithms; (7) the internet; (8) HTTP and HTML protocols; (9) Global Positioning Systems (GPS); (11) touchscreens; and (12) voice recognition.  Every last one was supported by the public sector at key stages of development.” 

The extent of the concentration and centralisation of capital is recorded in a database of 37 million ‘economic actors’ from 194 countries (the Orbis 2007 marketing database reported on by New Scientist).  The socialisation of capital is illustrated by the 13 million ownership links involving ownership of shares etc. between these agents.  The study of these identified 43,000 transnational companies in 116 countries, plus an additional 500,000 other corporations and 77,000 individual shareholders to which the transnational corporations have direct or indirect ownership relations.  A core of 147 firms controls 40% of the value of the transnational corporations while 737 companies or individuals control 80%.

Such integration is also illustrated by the chance that any two firms in the S&P 1500 US stock market index will have a common owner holding at least 5% per cent of shares in both is 90 per cent, up from around 20 per cent only twenty years ago (People’s Republic of Walmart

In another academic paper (from 2018) the authors find that:

“In the last two decades, over 75% of U.S. industries have experienced an increase in concentration levels. We find that firms in industries with the largest increases in product market concentration have enjoyed higher profit margins and more profitable M&A deals. At the same time, we do not find evidence of a significant increase in operational efficiency, which suggests that market power is becoming an important source of value.”  The paper thus appears as another example of the view that monopolisation is at variance with the essential operation of capitalism.

This growth of the forces of production has relied upon the development of the labour of the working class, even if its powers have been turned against it; illustrated by notoriously anti-worker companies such as Amazon that are to the fore in developing unheard of levels of planning in their operations.

Nevertheless, the growing concentration and centralisation of capital, with its increased planning and networking of production and distribution, makes the potential for the working class to control such forces manifestly easier.  As Engels notes in an addition to Volume III of Capital, when speaking of the chemical industry, “competition has been replaced in England by monopoly, thus preparing in the most pleasing fashion its future expropriation by society as a whole, by the nation.” 

Back to part 38

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