Max Shachtman
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WE HAVE seen that capitalist production is subject to an irresistible tendency toward monopoly. The results of this tendency are even more far-reaching than those already recorded.
Modern production is no longer carried on in tens of thousands of little enterprises employing two or three or four workers. Where such enterprises continue to exist, their influence and effect on the economic life of the nation are very small. Their place has been taken, because of the process that operates unceasingly under capitalism, by huge enterprises, employing tens and even hundreds of thousands of workers at one time, under one roof, so to speak.
What else could have happened? It is possible, presumably, to produce an automobile in a small machine shop with a few skilled workers. But the total man-hours spent in producing it would be enough to turn out a few dozen or even a few hundred automobiles in a modern, highly efficient automobile factory. It was inevitable that the tiny shops and factories, the little independent stores and the like, should be overwhelmed and replaced by huge factories and mills with allied factories and mills all over the country, by elaborate packing plants, food processing factories and chain grocery stores.
By virtue of the same basic process, it was likewise inevitable that the larger plants should come together. Seeking to escape from the murderous threat of cut-throat competition, declining prices and the uncertainty of the market, they gradually establish secret agreements among themselves. They divide the market into so many and so many shares for each enterprise, pledge themselves not to undersell each other or at least not to go below a certain price, and not to monopolize the raw materials they require for production. Such secret agreements are not satisfactory, however. The greed of each partner to the agreement burns it up like a consuming flame. Behind each other’s back they try to cheat their way to a dominant position in the industry and therefore in the market. The competitive war is carried on the day after the agreement is signed.
A more advanced stage of centralization of capital is the outright formation of a trust, a single capitalist enterprise which has absorbed all or practically all of the other enterprises in a given industry. Such an organization of capital in a given industry is known as a horizontal trust – all the steel companies together or all the oil companies together. The larger the capital required to launch a company in a given industrial field, the more difficult it becomes for a newcomer to break into it. When the field is dominated by a monopoly trust it becomes practically impossible to enter it, unless the effort is undertaken by a powerful rival trust.
The horizontal trust tends to spread out as a vertical trust as well. In a vertical trust, the central industry seeks to establish its control over the industries that supply it. For example, when steel controls iron ore and coal which it needs for its fabrication, it is developing a vertical trust. The same holds for those automobile magnates who own plate-glass factories, iron ore and coal mines, soy-bean plantations and other original sources of supply for automobile manufacture. The idea of a “little man” breaking into such fields as an independent producer with a few hundred or even several thousand dollars is simply preposterous.
In the development of these big monopolies, the banks have played a tremendous part. In the old days, the banks were primarily interested in making loans to merchants or manufacturers engaged in a comparatively small operation. A merchant might want to add a wing to his store or buy a few extra carloads of merchandise. The bank would extend him sufficient credit to swing the deal. A manufacturer would need credit in order to change over to more modern equipment. The bank would accommodate him at its usual interest rate and, of course, on the basis of sound security put up by the borrower.
The establishment of the large, modern enterprises was, however, beyond the financial strength of the average capitalist. The banks, especially the big ones, had at their command tremendous amounts of money with which to found and carry through the large enterprises. Or else they were in a position to raise large amounts from investors by the sale of shares on the market. The profit from the issuance of such industrial shares has almost always been enormous. But this is not all.
Very often, especially in the case of those enterprises that looked profitable, the banks would retain some of the shares of the enterprise established. In other cases, banks would come into control of enterprises indebted to them and unable to meet their obligations. In still others, banks would make partnership a condition for credit. In one way or another the big banks have come to be equally big industrial powers. Through the ownership of stock, a big bank may be represented on dozens of big industrial corporations, if it is not in complete control of them. Through the notorious institution of “interlocking directorates,” a centrally-controlled capital can dominate any number of industrial and financial organizations.
The result has been the development of a new form of capital arrived at by a merger between industrial capital and bank capital. The industrialists are now in the banks and the bankers in industry. This new form we call finance capital. It is now the dominant power in the economic life of every capitalist country. And this gives it the most colossal power in every sphere of political and social life.
The increased domination of economic life by finance capital brings about important changes in society. Haying more and more industrial enterprises under a single control tends to wipe out competition among them. Finance capital presses constantly for the organization of horizontal and vertical trusts in order to reduce the destructive effects of cut-throat competition. Finance capital, in other words, continually promotes monopolization.
But one of the first effects of monopoly is to eliminate that very competition which was such a powerful stimulant to the expansion of production in the race for the market. With monopoly more and more dominant, capitalist production tends to stagnate. New inventions, eagerly seized upon in the earlier days to be used by one competitor for the purpose of winning over another, are either discouraged or else are bought up by the big monopolies and locked away. The monopolies deliberately limit production. In the case of the looser syndicates the individual producers also agree to limit production. The object of such limitation is to reduce the supply and maintain artificially high prices. The ordinary consumer is thereby made to bear an additional burden, which has the effect of reducing the living standard of the worker. Monopoly capitalism is capitalism in stagnation!
The idea that the monopolies can be destroyed and replaced by “free competition” among numerous small-scale independent producers, is an idle dream. Monopoly is not the creation of “evil men” which can he undone by “good men.” It is an inescapable product of capitalist development. If by some supernatural miracle, the various “trust-busters,” who have been working at their job in vain for many decades, should succeed in breaking up these big centralizations of capital and restore the small-scale producers of the “good old days” of a century ago, the same process would start working all over again and before long we would have the monopolies ruling as before. “Trust-busting” is a middle-class dream which can never become a living reality. We shall see later on what it is that can be done about the problem of monopoly.
Another important change brought about by monopoly capitalism is in the function of the capitalist class. There is no denying that the capitalist was originally, as a rule, a man of enterprise. That is not altered by the fact that he acquired his original capital by the most sordid and unscrupulous means. He not only launched production on its way but was very often the active manager, superintendent and organizer of production. In that capacity, he had an important and valuable function to perform.
Those days are far behind us. The actual work of management and superintendence, which is necessary and valuable in any society, is no longer done by the capitalist or owner of industry. It is performed by “hired hands.” They are simply highly skilled workers in the profession of organizing production. Naturally, they are paid far better than the average or even the skilled worker, so as to tie them to the ideas and interests of capital and keep a gulf between them and the ordinary workers. The capitalists themselves have become largely divorced from production. They have become owners of stocks and bonds. They used to claim that, like the rest of the working force, they were “drawers of water and hewers of wood,” only better ones, abler ones, and therefore entitled to their higher economic position. Now the only thing they draw is dividends.
With the growth of monopoly capitalism, the capitalists move further and further away from the actual process and management of production and become more and more the clippers of coupons. The capitalist has decayed to the position of a social parasite. In this position he shows that if he ever had a use in society he is now certainly superfluous. Production and exchange can be organized – and organized rationally – without the capitalist parasites, and only without them.
(It is interesting to note, by the way, that the capitalists always used to speak of themselves frankly as the owners. Now, increasingly conscious of the fact that they are nothing but owners, they try to impress people with the idea that they are nevertheless indispensable to industry. They have therefore taken the new name of “management.” In this way they hope to make people think they are not the superfluous social parasites they have become, but are useful and necessary as the “managers” of industrial production. There are people in the labor movement who fall in with this game and also speak of the parasite crew as “the management.” They should know better, and if they do not, it is high time they learned!)
Thus far we have dealt with the growth of monopoly capitalism within each country. But the reduction of competition within a capitalist country only sharpens the competition among the capitalist countries to the extreme.
Capitalism is a world system. It has created a world market. It has brought the entire world (excepting Russia, for reasons set forth later) under its complete domination. But capitalism is divided into a number of more or less independent national powers. It is among them that the struggle for world control goes on fiercely. It is a struggle frightful in its consequences. By virtue of its political power, monopoly capital gets the tariff walls of its country raised as high as possible. By this means it is able to keep up the monopoly prices it imposes upon the people at home, without fear of having to compete with cheaper priced commodities exported by other nations. The tariff walls raised at the national boundaries thus become a barrier to the further development of production. That is, monopoly capital acts like a brake on production.
Each monopolist nation raises walls around itself in order to break down the walls erected by the others. As in the case of the conflict between large-scale and small-scale production, the stronger usually wins. A monopoly will sell at a high price at home but will “dump” its products abroad at a low price in order to beat its foreign competitor on his own soil. Sometimes the monopoly will sell abroad at a price lower than its cost of production. It makes up for this temporary loss in two ways. One, by maintaining artificially high prices at home. And, two, by raising the prices abroad later on, once it has brought its foreign competitor to his knees. There is also an additional way: the monopolists often get “export subsidies” from their governments.
The economic warfare among the various nation monopolies is exceedingly sharp. It becomes sharper when the capitalists of every country seek new markets abroad. The question of new markets is closely combined with the question of colonies.
Most of the big capitalist countries inherited colonial possessions and even whole colonial empires from the pre-capitalist days of colonial conquest, rapine and plunder. Some countries had larger empires and some smaller – the colonies were not “evenly distributed,” so to speak. In the latter part of the 19th century and the first part of the 20th, the grabbing up of the backward countries of Asia, Africa and Latin-America and their transformation into colonies of the big nations of Europe, of the United States and Japan, was completed. The world was divided into a handful of modern capitalist nations, with a minority of the global population, and a mass of colonial or half-colonial countries, with the majority of the global population.
There had been empires and imperialist rule for a thousand years back. What we have in our own time is modern capitalist imperialism.
Capitalist production, we have seen, means the accumulation of capital, production for the market. We have seen further that it means the over-production of capital and the crippling of the market. The colonies offered the advanced countries exceptionally favorable conditions for extending their market by the export of goods and capital.
In the first place, profits made by the exploitation of colonial labor are extraordinarily high. This can be seen if we remember that a higher rate of profit usually comes with a lower composition of capital, that is, where the capital allotted to machinery, raw materials, buildings and fuel is lower in relation to the capital allotted to the payment of labor; and that the mass of profit increases with the increase in the number of workers and the increase in the rate of exploitation.
From this standpoint, the exploitation of colonial workers, carried on as if they were the most defenseless slaves, is ideal for the exporters of capital. They are employed in far greater numbers than they would be in similar enterprises in the advanced countries. They are made to work incredibly long hours, and paid at incredibly low rates. In many cases, they work not as wage-earners, but as outright slaves. The conditions under which they were, and still are, exploited, has caused them to perish tragically in vast numbers.
In the second place, the colonies are a rich source of raw materials which may be obtained cheaply. Where these sources could not be obtained from native rulers by trickery, wheedling or cheap bribes, they were simply seized and kept by brute force. The acquisition of new sources of raw material, produced by hordes of cheap labor, is of threefold benefit to foreign capitalists. It furnishes them with raw materials that cannot be found at home, thus rendering them independent of the rival countries from which they formerly imported these materials. It replenishes their own decreasing sources of these materials if they originally did have a supply of them. Or, even if they do not need them for their own purposes, the acquisition makes their rivals dependent upon them for their supply.
To make sure of continuing to suck wealth out of these backward countries, the imperialists add to the barbaric exploitation of the natural resources and the people of these countries an equally barbaric oppression. They are deprived of national independence, the right to govern themselves, and converted into dependent colonies. Resistance to imperialist rule is drowned in the blood of the peoples. The atrocities of imperialist rule in the colonies have few equals in the gloomier annals of mankind.
No capitalist nation can possibly rest content with the markets and colonies it already has. This is especially true of the nations which, for one reason or another, do not have as large a share of the world market and the colonies as others, or as large a share as they think befits their economic power – and appetite.
Before the world was divided up among the big powers, each of them had at least some chance of getting something in the scramble, without colliding very violently with the others. But once the world was already divided, and there were no more defenseless nations and peoples that could be seized, occupied, dominated and exploited, the situation changed. No big nation could expand its share of the world market without cutting down the share of some other imperialist power. And inasmuch as it is an iron law of capitalism that you must expand or stagnate and die, the stage was all set for the most violent imperialist conflicts.
Economic warfare between different national capitalist groups has already been referred to. It is the kind of warfare that goes on at all times. Each group of monopolist tries to shove the others out of their positions, not only in the colonies, but right on their home territories! In this drive, the government of each country is the zealous assistant of its capitalist class. It would be more accurate to say that it is its obedient servant.
For a time, it is possible to continue the rivalries in the field of mere economic warfare. But that is only one side of modern imperialism, and not its most deadly side, either. For inevitably the point is reached where, on the one side, economic pressure is not enough, or on the other side, the economic pressure is too menacing. The economic struggle develops into the military struggle.
That is the origin and the character of modern imperialist wars. They are wars for the defense of imperial power acquired in the past, or for imperial power to be acquired from those who have it. They are wars for a larger share, and eventually the domination, of the world market. They are wars for sources of raw material and cheap labor. They are wars for lucrative fields of capital investment. They are wars to decide which imperialist monopoly will dominate more of the highways and sea-lanes of the world, which will enslave more of the emaciated, scarred and bleeding colonial peoples of the world. The masses of the people fight them and are maimed and die in them. Capital wins them.
Naturally it would be practically impossible to get the common people of different countries to kill or cripple each other, if the simple truth about the wars of imperialism were told to them. That is why the imperialists keep filling the heads of the people with lies and poisonous ideas. The Americans are taught that the Germans are born militarists, that their blood is made of gunpowder. The Germans are taught that the Americans are born bankers and Shylocks, that gold flows in their veins. The Americans are taught that Japanese are an inferior race, a “monkey-people.” The Japanese are taught that the Americans and British are lowly devils, not of divine origin, and that anyway they hate all Orientals. Even in peace-time, the imperialist mind, the imperialist way of thinking, is systematically bred into the people, in order to stimulate national contempt, national hatred and chauvinism between the people of different lands and origins.
In addition, the imperialist diplomats are polished experts in the business of creating “incidents.” The whole business of diplomacy, especially as armed conflict draws closer, is to maneuver and manipulate matters in such a way as to make it appear that “the other” country was the aggressor, and that “we” were forced into the war in sheer self-defense. In imperialist war, there is no such thing as aggressor and defender. Imperialism itself is by its very nature aggressive. The question of who fires the first shot has very little to do with the issues in an imperialist war. If you are arming against me, and if I redouble my armament against you, you may find yourself compelled to shoot first before I have become so strong that it will be too late for you to shoot at all.
The imperialist wars of our time, and the part that each side plays in them, are determined by the fundamental nature of imperialism itself. In every capitalist country, imperialism is aggressive. It always seeks to expand at the expense of an imperialist rival, for it must expand or shrivel and die. The wars are fought merely to decide by force of arms, who is to expand and who is to shrivel and die. That was the meaning of the first imperialist world war, from 1914 to 1918. The second world war, which began in 1939, has the same fundamental meaning. Everything else that is said, is so much cunning capitalist propaganda – and even if it is not cunning, it is always poisonous.
Another consequence of the development of monopoly capitalism, therefore, is the cruelest exploitation and oppression of colonial peoples and the bloody devastation of imperialist war brought on by rivalry for world domination.
Modern wars are carried on with appallingly destructive results. All economic life becomes organized to produce the means of destruction. At one time, capitalism was the great builder, and as such it accomplished veritable miracles. It set up the great modern nations, uniting the people in a new national life. It built cities which were marvels of achievement. It built up factories and mills and dug up new riches from the earth. It built highways, canals, railroads, opened up the whole world to commerce, brought all the peoples of the earth within easy reach of each other, laying the ground for understanding and brotherhood. All this was done to such an extent that it is now possible to produce the necessities and comforts of life in abundance for all.
Now the only marvels capitalism can accomplish are in the field of destruction. Whole cities are destroyed overnight. Millions of people live in caves, like the savages of old. New plants are put up to produce the means of destroying other plants at a single blow. Railways and trains are blown into junk-piles of twisted metal. Magnificent highways become pockmarked trails. More ships lie at the bottom of the sea than sail upon it. Fields are flooded or scorched. Civilians die like soldiers, and soldiers die like flies. Children are seared for life, and life is taken from millions. On the land, under the land, on the sea, under the sea, in the air and in the stratosphere, capitalism wreaks the horrors of scientific devastation.
When men hungered and were willing to work, capitalism declared that it could not open the factories and start the wheels of industry moving. There was use for goods, but capitalism is not production for use. All the scientists, all the statesmen, all the industrialists, the bankers, all the politicians and economists of capitalism, were unable to make capitalism operate to serve the needs of the people. There were consumers at hand, but not profits. Therefore there were millions of unemployed, but no production for them.
For war, capitalism functions splendidly. Every factory works, some of them around the clock. New factories are set up. Money flows like water. There are consumers aplenty and undreamed-of profits. Enemy ships consume our torpedoes and shells. Enemy cities consume our blockbusters. The legs, hearts and brains of enemy soldiers consume our bullets. Capitalism has found an almost inexhaustible market for its wares. It now works like a clock, ticking of blood and ruin with every second.
We have a social system that stands self-condemned. Its usefulness of the past is now long outlived. If it is allowed to continue, the world will only plunge deeper into slavery, suffering, degradation, exhaustion and death.
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Last updated on 23.4.2005