66

p As monopolies came to dominate capitalist society, they greatly speeded up the concentration of production. It was the trusts, the concerns and the multifarious forms of amalgamation of big industrial, credit and commercial firms that made it possible to concentrate capital on a scale that was unthinkable not merely under the individual or family business, but even in the early years of the joint-stock companies. Lenin revealed the contradictory consequences for social development of this concentration of property in the hands of the monopolies: while it undeniably increased production, it also generated a tendency to social stagnation, expressed in militarisation, wars for a repartition of the world, establishment of a large coupon-clipping group, retardation of economic development in the colonies, etc. At the same time, he pointed out that this trend “by no means precludes an extraordinarily rapid development of 67 capitalism in individual branches of industry, in individual countries, and in individual periods".  [67•1 

p The half a century of the general crisis of capitalism has produced a number of new features in the pace and character of concentration of capital and production. These are bound up with the growth in productive forces and are vital to an understanding of the economic development of contemporary capitalism. Over the past fifty years, technology has made a tremendous leap forward, going well beyond any other advance in the 100-120 years since the English industrial revolution. Although technology had been steadily improving up to the First World War, there had been no radical changes in the mode of production. Industry had begun using electric power but steam engines still prevailed and the age of electricity lay ahead. Society had not yet entered the age of the motor-car and the tractor, of basic chemicals, electric means of communication and diesel engines. In other words, the machinery and technical methods employed in the 19th century underlay the transition from the era of free competition to that of monopoly capitalism. Concentration of production was largely quantitative and extensive, with growth implying longer payrolls.

p This augmented size gave the entrepreneurs untold advantages. However old-fashioned these turn-of-the-century monstrosities might look with their steam engines, cumbersome belt-drives, their extensive use of manual labour, they had an edge in labour productivity and production costs over the mass of small and medium, often cottage and semiartisan workshops. It was the growing share in output by the enterprises employing large bodies of men that Lenin used as a basis for his analysis of production concentration indicative of the switch from competition to monopoly.

p The first twenty years of the general crisis of capitalism— the 1920s and 1930s—signposted a new stage in the development of technology and concentration of production. Advances in electrical engineering, the internal combustion engine and industrial chemistry substantially altered not just the technology of industry and other economic spheres; they affected the organisation and structure of production as well. The electric motor emancipated the machine, made it 68 independent of other machines, and this in turn motivated progress in engineering—the kernel of all modern industry. This period is conspicuous for the vast increase in the range of finished products. The already invented motor-car, tractor, diesel locomotive, the industrial canning of food, the typewriter and the calculating machine, the radio, the telephone and a thousand other novelties broke the economic barrier and entered the lives of millions only as specialisation further advanced.

p The conveyer belt became the last word in technology. Once it had gained a dominant position in industrial technology, the conveyer belt made the next step obvious: cooperation and amalgamation of many factories. For the time being, however, the single factory held its own in creating a substantial, if not the principal, part of the value of the finished product.

p But a new era was dawning. Since the early 1950s, a scientific and technological revolution has swept the capitalist world; it has further intensified the ceaseless process of specialisation, gemmating ever new lines of production.

p Cardinal changes in the power industry have occurred in the course of the latest technological revolution. Oil and gas have come to the fore while coal has declined. There has been further mechanisation and much higher labour productivity in the extraction of all types of mineral ores, and equally significant technical improvements in fuel combustion and its greater efficiency. In 1949, hard fuels accounted for 41 per cent of America’s fuel consumption, liquid fuels and gas for 54 per cent. By 1962, the proportion of hard fuels had fallen to 24 per cent, but that of liquid fuels and gas had risen to 75 per cent. Similarly, between 1950 and 1965 the six Common Market countries reduced their consumption of hard fuels from 83 to 44 per cent and increased their gas and liquid fuels use from 10 to 49 per cent.  [68•1 

p Progressive shifts in both consumption and production of the objects of labour (primary products and other materials) have resulted in two parallel trends: economies on costs at each stage of production, and utilisation of more economical raw materials. The result (particularly with the aid of 69 chemicals and petrochemicals) has been the establishment of an industrial raw material base, involving greater use of synthetic and enriched materials, semi-finished products, and materials with preset properties. This reduced the dependence of manufacturing on the natural properties of primary products, and cut the cost of materials going into construction and hardware.  [69•1 

p Radical changes in the production of labour implements and factory equipment, progress in electronics and instrument-making are key links in the chain of the engineering revolution. Their contribution to automation is supplemented by many other items, including greater use of electronic computers, forge, hoisting and transport equipment, relative decline in importance of old-type metal-cutting equipment and greater mobility in the adjustment of the whole production process.

p Besides industrial, there has been a development of consumer durables. While the inter-war years saw the rapid spread of the radio, post-war history belongs to television and household appliances like the refrigerator, washing machine and a whole range of electric kitchenware. These appliances are mass consumer goods in all the industrialised countries, and along with the motor-car are no longer a North American preserve.

p The sphere of circulation has not remained unaffected either. Highly mechanised commercial and calculating equipment has facilitated the diffusion of the latest trading methods (supermarkets, mail order houses, etc.). It has also improved market research into supply and demand, and has 70 greatly boosted labour productivity in financial accounting and storage.

p Finally, farming, too, lias greatly benefited. From improved mechanisation, electrification and chemicalisation, increasing attention is being switched to the most intensive forms of stock-breeding and vegetable growing, etc. Since the latter 1930s, net growth in labour productivity in farming in the U.S.A. and other industrial countries has proceeded faster than in industry; this has been unique in the history of capitalism.

p These trends have been accompanied by a spurt in the capital intensiveness of farming, further coalescence of farm capital with industrial, banking and commercial capital, promotion of business farming entailing intensive monopolisation within agriculture and the simultaneous reduction in the labour force.

p Considerable changes in concentration of production and centralisation of capital have occurred concurrently with the technical and economic modifications. Of the two closely intertwined processes, centralisation of capital has gradually come to the fore.

p Running parallel to the rapid specialisation is diversification of production, establishment of inter-branch groups of firms and companies under single administrative or financial control.

p All this has had an effect on the status of the small and medium business. Specialisation and the constant application of new and improved machinery have engendered higher labour productivity, enhanced the competitiveness of these firms and enabled them to survive. On the other hand, the same processes of specialisation have turned the small firms into scattered workshops of the industrial and commercial oligarchies, i.e., they are now utterly dependent on the giant concerns.

p Many apologists for the bourgeois system persist in describing this increasingly social nature of production and interdependence of firms, companies and sectors as a process of abolishing, or at least of weakening, the private property basis of the economy. A superficial interpretation of the changes occurring at the monopoly stage of capitalism ( particularly in the period of its general crisis) is that they reduce the concentration of property. In the imperialist era, 71 commodity fetishism has precipitated a fetishism of securities. In the proliferation of stocks and shares held by hundreds of thousands of shareholders, it is more difficult to get to the root of the causes of increased exploitation than when firms patently belonged to a single family or a few families of financial magnates.

p But the real process is discernible. During the general crisis of capitalism, economic progress is accompanied by greater private appropriation, i.e., greater wealth for the monopoly bourgeoisie on the basis of greater exploitation of the working people. Statistics on distribution of national income in the capitalist industrial nations prove conclusively that the rate of surplus value has been rising while the proportion allotted to the workers has been falling. On the evidence collected by the Soviet Labour Research Institute, the rate of surplus value in the U.S.A. rose from 253 in 1919 to 341 in 1949, and to 397 in 1957. In the Federal Republic of Germany, the proportion of white- and blue-collar wages in the newly-created value within industry declined from 50 per cent in 1936 to 41 per cent in 1950, and to 40 per cent in 1960, with a corresponding increase in profits for all sections of the bourgeoisie. Between 1938 and 1952, the workers’ share of the national income in France fell from 54 per cent to 45 per cent. In Italy, the rate of surplus value rose from 216 in 1950 to 246 in 1960.

p Perhaps the increased rate and mass of surplus value are being paralleled by a more equitable distribution among the exploiting classes? An examination of the changes in the private fortunes of the biggest finance capitalists refutes this suggestion. The relevant statistics for the U.S.A. show that from the 1920s up to the early 1960s, the personal fortunes of 22 multimillionaire families greatly increased (some of them by as much as 15 or 20 times). During the same period, another score of families emerged with assets of over $100 million. Other capitalist countries tell the same tale. Even in Japan, West Germany and Italy, where defeat in the Second World War meant serious economic setbacks for the leading monopolies, the 20 immediate post-war years saw the finance magnates recoup their losses and build up new fortunes.

p The private character of appropriation has a direct effect on the capitalist process of reproduction. Under monopoly 72 capitalism, this means that reproduction goes forward in a clash between competition and monopoly. Even before capitalism entered its monopoly stage, Karl Marx had revealed the peculiarity of this process. In the late 1840s, when monopolies were still rare, Marx noted in his book The Poverty of Philosophy: “In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists are made from competition; competitors become monopolists.... The synthesis is of such a character that monopoly can only maintain itself by continually entering into the struggle of competition."  [72•1 

p Somewhat later, in April and May 1917, Lenin, who carefully followed the evolution of monopoly capitalism, wrote: “Imperialism is moribund capitalism, capitalism which is dying but not dead. The essential feature of imperialism, by and large, is not monopolies pure and simple, but monopolies in conjunction with exchange, markets, competition, crises.... In fact it is this combination of antagonistic principles, viz., competition and monopoly, that is the essence of imperialism, it is this that is making for the final crash, i.e., the socialist revolution."  [72•2 

p This clash of contradictory “principles” brought about an acute aggravation of capitalist contradictions even at the initial stage of its general crisis—covering the period from the October Revolution to the Second World War. Soviet economists in the 1920s and 1930s proved that, highly uneven in the various countries and sectors, the economic crises of the period of incipient monopoly capitalism (late 19th century) and of imperialism (up to the Second World War) had on the whole become more destructive than the crises of the previous 50 years.

p The 1929-33 crisis has a special place in capitalist history. Economic and technological progress had brought in its wake not merely great all-round growth in production, but essential changes in its structure as well. Until the First World War, all advanced countries had had a faster growth in 73 producer than in consumer goods. With the lower assets- toproduct ratio after the First World War there arose a trend to a higher growth rate in the production of consumer goods, and its approximation towards the growth rate of the production of producer goods. This process was particularly intensive in the U.S.A., where in 1919 the rate of growth of the consumer goods industry began to outstrip the rate of growth of the producer goods industry. This meant that an increasing amount of consumer goods was being produced with the same amount of producer goods. But this trend, which is progressive in itself, came into conflict with the social conditions of monopoly capitalism. The more rapid increase in the output of consumer goods required a corresponding expansion in the market for these goods.

p But consumer demand depends on purchasing power, i.e., the size of real wages and level of employment. Wages, in turn, are to some extent dependent on workers’ successes in the class struggle and on the relation of supply of and demand for labour. The October Revolution was a great contribution to the class struggle of the labouring classes in the industrial countries. Its impact speeded the separation of the revolutionary from the reformist forces and facilitated the emergence and consolidation of the Marxist-Leninist Parties, which in some countries soon won over a great number of working people and became political forces to be reckoned with. Their influence grew within the trade unions and other mass organisations, giving them greater strength in fighting for better working conditions, shorter working hours, and so on. But even where, for various historical reasons, the Communist Parties lacked mass support, the October Revolution and Soviet progress made a tremendous impact on labour movements and helped them to make headway.

p During the inter-war years, however, this failed to make any great impression on wages. Technical progress then went hand in hand with chronic labour unemployment and chronic underemployment of capital. In other words, the rate of capital accumulation was altogether inadequate to compensate for the slight increase in consumption capacity and, as usual, even in the boom periods there was latent overproduction which ultimately came to the surface.

p In 1930, the capitalist world’s industrial output fell by 74 14.6 per cent, the following year by 13.9 per cent, and in 1932 by another 15.1 per cent. For the U.S.A. and virtually every other industrial nation this was the greatest drop in production in the whole history of capitalist crises. In the course of the crisis, U.S. coal production was set back 28 years, pig iron 36 years, steel 31 years, and cotton consumption by 11 years. Between 1928 and 1932, employment in U.S. manufacturing dipped virtually by 40 per cent; the overall unemployment in the industrial nations reached 30-40 per cent and more of the pre-crisis employment figure.

p However startling these figures are, they cannot reflect the true dimensions of the 1929-33 crisis. One significant fact is that it broke out just when the Soviet Union was successfully fulfilling its First Five-Year Plan and was making steady headway in industrialising the country along socialist lines. Already by the start of the 1930s unemployment in the U.S.S.R. had been abolished and the planned economy had secured high and stable rates of growth.

p An economic crisis of such duration and scope, occurring as it did against a background of successful socialist construction in the U.S.S.R. and the upsurge and sweep of the working-class movement sparked off by the October Revolution, threatened the very existence of the capitalist system. Never before had economic problems in peace-time taken on such a politically acute form for bourgeois society.  [74•1  The slump had stemmed from the natural development of monopoly capitalism, but measures to extricate industry from it quickly were largely dictated by the circumstances of competition, and the struggle between the capitalist and socialist camps. State interference in the capitalist economy— the active pervasive influence of the state on the reproductive process—had now become an economic and political necessity and, for the first time, the state began widespread intrusion into economic affairs, far beyond its previous role of militarising the economy.

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p The second stage of the general crisis of capitalism spans the years of the Second World War and post-war reconstruction. After the war, the ongoing scientific and technological revolution reaffirmed the political need for state intervention in the economy; this was now linked with an economic need that was even more pressing than it had been in the 1930s.

p After the war, fresh traits again appeared in the process of capital accumulation. For all the great distinctions between the various countries and periods, there was on the whole a trend towards a situation where the monopoly firms were ploughing back more of their own capital, increasing their depreciation and undistributed profit accounts. This marked a further centralisation of capital and showed the increasing urge of the monopolies to rid themselves of dependence on credit on the basis of their own larger financial resources.

p At the same time, another process was at work: an increasing amount of social reproduction was falling beyond the immediate reach of the private monopolies.

p Even in the heyday of laissez faire, private capital had as a rule kept away from some economic sectors catering to the needs of reproduction. Engels wrote: “In any case, with trusts or without, the official representative of capitalist society—the state—will ultimately have to undertake the direction of production. This necessity for conversion into state property is felt first in the great institutions for intercourse and communication—the post office, the telegraphs and the railways.. ..” Engels added in a footnote by way of explanation: “I say ’have to’. For only when the means of production and distribution have actually outgrown the form of management by joint-stock companies, and when, therefore, the taking them over by the state has become economically inevitable, only then—even if it is the state of today that effects this—is there an economic advance, the attainment of another step preliminary to the taking over of all productive forces by society itself."  [75•1 

p This formulates the economic necessity of state property.

p From the very start, overland communications required 76 such large investment that in most cases private capital could not oblige. For a number of reasons (including the long-term capital turnover and the strong dependence on outlook), there was no guarantee here of obtaining an average profit. Finally and most importantly, transport and communications are sectors of production in which its social (state and international) character first became most prominent. Since the transfer of any single sector to private capital might undermine the whole system, it was in the interest of capitalist reproduction to employ state property. The sacred principle of private property now came under fire. It had to be bolstered by state property.

p In the imperialist epoch, as the productive forces increased and production became even more concentrated, so enhancing its social character, the monopolies either were unable to participate in other sectors of reproduction, or their participation was limited. And the need for state participation was becoming urgent. When Engels was writing, he included the railways, posts and telegraphs in the means of communication; today the whole world network of communications—the infrastructure—has expanded to take in modern road and rail transport, the ports requiring vast investment, and gas and water pipelines. Then came hydroelectric and nuclear power schemes that are as capital- intensive as the means of communication, without any immediate prospect of profit.

p Substantial changes have occurred in the extractive industry. On the one hand, the richest and most accessible natural resources are gradually being exhausted; on the other, the new industrial raw material base has rendered less competitive and less profitable the big industries of coal, iron ore and some non-ferrous metals. Added to that, the new and less favourable areas for the extractive industry require vast sums of capital to develop and equip. This explains the mounting state involvement in the extractive industry.

p After the Second World War, science began to take a big hand in the economy. It is important to realise, however, that science (fundamental theoretical research, in particular) is neither profitable for, nor in the direct interest of, capitalist enterprise—despite it being the most potent factor of progress and the strongest productive force. Scientific 77 research is usually associated with such a high portion of risk that it is unattractive to the capitalist with his eye on average profit.

p U.S. scientific research, for example, had relied primarily on private funds set up and operated on a non-profit basis. But in the modern age, these funds can no longer satisfy the urgent need of the monopolies to expand scientific research, particularly from the standpoint of their economic and politico-military interests.

p In the United States, research outlays went up from $3,000 million in 1950 to $26,000 million in 1968, an increase of 8.7-fold. The growth was almost as rapid in the other monopoly-capitalist countries, with the cost of research amounting to 2-4 per cent of the national income. In the major capitalist countries, up to two-thirds of the outlays going on research come from the government.

p The social character of production takes on a new quality with the growing concentration of production and formation of monopolies. As the major economic sectors come under the control of a few powerful companies, the bankruptcy of just one big company is bound to set off a chain reaction throughout the economy. The mutual dependence of the various economic sectors implies the need and inevitability for joint effort, implemented by the state, to obviate any possibility of one monopoly dragging the whole economy with it. The state has, therefore, become much more responsible to monopoly capital for the condition of the entire credit system; and this has meant a substantial increase in the share and functions of state credit institutions.

p The conditions of reproduction of labour power have also altered greatly due to the growth in the productive forces, the conversion of socialism into the decisive force of our day, and the fresh upsurge of the working-class movement. One result of labour’s enhanced value is that it has created a social and economic need for improved education, health and insurance. It is the state that must bear an increasing part of these costs.

These are the principal features highlighting the development of capitalist productive forces during the general crisis of capitalism, and the nature of the contradictions forcing monopoly capitalism to intensify state intervention in the economy.