p Free competition gave way to monopolies and associations of monopolists in the main capitalist countries at the turn of the century, as the capital of giant industrial enterprises coalesced with the banks into finance capital, which soon entered into an alliance with the capitalist state.

p Traditionally, the position of individual capitalist countries in world economics and politics is often assessed in the light of the strength and potential of their nationally framed imperialisms, but the fact is that concentration and centralisation of capital are processes which do not halt at the national borders. That is precisely what Lenin predicted about the monopolies’ entering upon a "new stage of world concentration of capital and production"  [66•1 . Transnational corporations (TNCs) and transnational banks (TNBs), whose growing strength is a direct outcome of the capitalist concentration and internationalisation of production, as the new edition of the CPSU Programme says, became its typical form.

p In the middle of the 1980s, the TNCs controlled over onethird of industrial output, more than one-half of foreign trade and about 80 per cent of the patents for new hardware and technology in the capitalist world; some 400 TNCs, with a turnover of more than $2 billion each, control the lion’s share of international operations. The TNBs now handle funds that are larger than the state budgets of some major capitalist countries.

p In imitation of the bards of the colonialist epoch, TNC and TNB managers like to say that the "sun never sets" on their sprawling empires. Indeed, in the closing decades of the 20th century, the TNCs and the TNBs appear to be the most typical capitalist economic enterprises, exerting an influence not only on economics but also on politics. The capitalist world has made no secret of the hopes it pins on the TNCs and the TNBs for a “renewal” of 67 capitalism and a turn in its favour in the competition between the two systems. However, the TNCs and the TNBs are not only an embodiment of the international strength of present-day monopoly capital, but are also a reflection of the contradictions and defects of capitalism, the price the society has to pay for capitalist domination.

p A relatively small group of superlarge industrial companies and banks has now taken control of the commanding heights in the economy and finances of the capitalist countries. In the United States, for instance, 200 major corporations control nearly 50 per cent of the industrial output; in Japan, four giants in 96 industries control 60 per cent, in 67 industries—70 per cent, and in 46 industries—80 per cent; in Britain, 2 companies make 75 per cent of the computers; and in Italy one company turns out 90 per cent of the cars, and another, 94 per cent of the pig iron.

p The accelerated accumulation of capital by the big companies leads to growing concentration, but centralisation of capital has an equally important role to play in these processes. It is not only the small and middle business that falls victim to the takeovers and mergers, which have now also reached the top monopoly echelon. Like all other firms, the monopolies are forced to keep joining in the competitive fight and feel the blows of the crises. "Of the top 500 companies of 1900, only 70 are still on the scene [in the United States]. Of the top 100 of 1917, only 43 are among the top 100 today... Of the 200 fastest growing companies of 1940, only 30 were still in existence.”  [67•1  In other words, no monopoly is everlasting, and can stay alive only if it keeps beating back the competition.

p At the early stages of concentration, competition—and takeovers and mergers with it—was mainly intra-sectoral, but the demands of continued accumulation began to drive capital into inter-sectoral competition. The indices of sectoral concentration have not changed perceptibly since the 1960s, and no longer serve as an adequate indicator of the process. Indeed, diversification by the major corporations, which means their simultaneous penetration of several sectors, has come to the fore. Apart from the objective need to combine modern production, that is due to the monopolies’ urge to minimise the risks of narrow specialisation and to facilitate the transfusion of capital so as to benefit from the sectoral differentials in the rate of profit.

p Accordingly, each of the 200 major corporations in the United States in the early 1980s operated, on average, in 22 sectors, as compared with 13 in the late 1960s, while for 140 corporations of the 500 leading ones, the basic and initially specialised field accounted for only about 40 per cent of the sales. It would be more correct, therefore, to assess such inter-sectoral concentration by the major companies’ share in the country’s GNP as a whole. In the mid-1980s, 30 companies in Great Britain and 180 corporations in 68 the United States accounted for almost 40 per cent of these countries’ GNP.

p Diversification has changed the economic face and system of corporate management, so that their typical form today is a concern under decentralised management by groups of products (or regions), and a large volume of intra-firm deliveries, with investments, R&D and finance alone remaining centralised. Diversification has also helped to uncover some new reserves in production, but since it developed according to the laws of capitalism, it has also produced an ugly form, known as conglomerates. Their founders and owners specialised in a collection (including some for future use) of highly profitable companies without any regard for their technological compatibility, endlessly shuffling these sets of enterprises as they would a portfolio of stocks and shares. As a result, the laws governing the movement of fictitious capital began to gain the upper hand within these conglomerates over the laws governing the movement of productive capital, while technical and industrial policy was crowded out by the practices of stock-market speculation. It is not surprising, therefore, that these mixed-bag speculative congeries were hardest hit by the crises of the 1970s and the 1980s, forcing them either into bankruptcy or into the reverse process of divestment.

p The industrial and banking monopolies realised their dominant position in the economy through monopoly price-formation and restrictive business practices (artificial curbs on competition). Individual companies controlling large segments of the market are in a position to regulate to a considerable extent the balance between supply and demand, and so also prices. Such regulation is made easier when several major firms prefer to make a deal with each other rather than to engage in ruinous competition. By means of patent, credit, marketing and other policies, they keep other rivals out of the market and so are able to build into their operations the desired rate of profitability on the level of monopoly profit. In other words, they are in effect engaged in a constant and purposeful intervention in the distribution of surplus-value, not only realising all the surplus-value created at their own enterprises and the additional profits to be had from technical improvements, but also taking over a part of the surplus-value of non-monopolised business, and also of the incomes of the main mass of the population.

p The concentration of production and the growing capitalist socialisation has been paralleled by the establishment of ever closer economic ties between the major industrial companies and credit institutions. Under the entrenched monopoly domination, such ties have led to the coalescence of industrial monopolies with banking monopolies and to the formation of finance capital. The intertwining of joint-stock capital (the share-holding system) and personal union (interlocking directorates) are at the present time the most widespread forms of such coalescence. The ramified credit system now also provides new channels and forms of economic ties between the major industrial corporations and the credit monopolies. Under the STR, members of financial groups are knitted together 69 by, among other things, joint investments in high technology, research, development and engineering projects in which various industrial firms are also involved, backed with funds from the “head” bank. Computerised settlement of accounts, a procedure which “automatically” helps to concentrate the crucial economic information at the computer centres of the major banking monopolies, tightens up the economic ties within financial groups. Industrial and banking monopolies have been lately coordinating their operations for the more profitable use of high-cost specialised hardware, the joint production of software (now a highly desirable commodity), the arrangement of a system of production and financial telecommunications, and so on.

p Let us note that while the progress of capitalist concentration is entirely law-governed, its extent and degree are not boundless and have historical limits. There is no question at all—as there has never been in the past—of some kind of “ultra-imperialist” trust emerging to dominate the capitalist world all alone. No concentration can ultimately escape beyond the boundaries dictated by the degree of socialisation of the productive forces and their readiness for such socialisation. It has become clear by the mid-1970s, for instance, that in many industries enterprises had already reached the limit of their optimal unit capacity, at the then existing technical level. What is more, structural shifts in the capitalist industry, including producer re-specialisation, are now frequently proceeding by the trial-and-error method, through the establishment of small enterprises and mini-plants capable of reacting more sensitively to the demands of the market. Despite the spate of bankruptcies in the capitalist countries, small and middle businesses keep regularly reproducing themselves. In some countries, the general democratic and anti-monopoly movement has secured the nationalisation of some monopoly-owned enterprises. Under pressure from the whole class of capitalists, the state has established some rules of competition and limits to concentration whose breach is unlawful ( antitrust legislation).

This means, among other things, that there are limits to the potentialities for monopolisation within the state, which is why business increasingly looks beyond the boundaries of the national markets, a process also induced by the growing trend towards the internationalisation of economic life. That is why virtually every modern monopoly now seeks to operate beyond the country’s borders, so developing into a transnational corporation or a transnational bank.