Concentrated Capitalism

The concentration of the economy isn’t only happening in certain sectors, such as media. It’s becoming the norm for only a handful of mega-corporations to control their respective markets and eliminate competition.

Is it unsurprising that at the same time that the US government has become increasingly corporatist, probably already having fully become inverted totalitarianism? No, not surprising at all. This is why the majority of Americans have positive opinions of free markets and small businesses while having negative opinions of capitalism and large corporations. The problem has become obvious to the average person.

This was researched by Gustavo Grullon, Yelena Larkin and Roni Michaely, in “Are US Industries Becoming More Concentrated?“:

“More than 75% of US industries have experienced an increase in concentration levels over the last two decades. Firms in industries with the largest increases in product market concentration have enjoyed higher profit margins, positive abnormal stock returns, and more profitable M&A deals, suggesting that market power is becoming an important source of value. In real terms, the average publicly-traded firm is three times larger today than it was twenty years ago. Lax enforcement of antitrust regulations and increasing technological barriers to entry appear to be important factors behind this trend. Overall, our findings suggest that the nature of US product markets has undergone a structural shift that has weakened competition.”

Jason Zweig wrote about it in the Wall Street Journal, Disturbing New Facts About American Capitalism (full access to the article can be found on his website). The amusing part, as expected from a WSJ article, is the optimistic note it ends on:

“Still, history offers a warning. Many times in the past, winners have taken all — but seldom for long.

“Perhaps the laws of creative destruction finally have been repealed once and for all. But sooner or later, capitalism has always been able to turn yesterday’s unstoppable winners into the also-rans of today and tomorrow.”

Don’t worry, folks! Capitalism is doing just fine. Or rather, capitalism is doing what it always has and will do, until something stops it. But what is to stop capitalism from its inevitable move toward concentration, if not some even more powerful force such as a functioning democratic government not beholden to capitalist interests? Don’t look for answer to that question from the concentrated corporate media.

* * *

Look, Ma, no competition
by David Ruccio
Real-World Economics Review Blog

The business press may have changed the language—they like to refer to such corporations as “superstar firms”—but the problem remains the same: corporations are growing larger, both absolutely and relative to the industries in which they operate.

What mainstream economists and the business press won’t acknowledge is those tendencies have existed since capitalism began. The neoclassical fantasy of perfect competition was only ever that, a fantasy.

Certainly one mid-nineteenth-century critic of both mainstream economic theory and capitalism understood that:

Every individual capital is a larger or smaller concentration of means of production, with a corresponding command over a larger or smaller labour-army. Every accumulation becomes the means of new accumulation. With the increasing mass of wealth which functions as capital, accumulation increases the concentration of that wealth in the hands of individual capitalists, and thereby widens the basis of production on a large scale and of the specific methods of capitalist production. The growth of social capital is effected by the growth of many individual capitals. All other circumstances remaining the same, individual capitals, and with them the concentration of the means of production, increase in such proportion as they form aliquot parts of the total social capital. At the same time portions of the original capitals disengage themselves and function as new independent capitals. Besides other causes, the division of property, within capitalist families, plays a great part in this. With the accumulation of capital, therefore, the number of capitalists grows to a greater or less extent. Two points characterise this kind of concentration which grows directly out of, or rather is identical with, accumulation. First: The increasing concentration of the social means of production in the hands of individual capitalists is, other things remaining equal, limited by the degree of increase of social wealth. Second: The part of social capital domiciled in each particular sphere of production is divided among many capitalists who face one another as independent commodity-producers competing with each other. Accumulation and the concentration accompanying it are, therefore, not only scattered over many points, but the increase of each functioning capital is thwarted by the formation of new and the sub-division of old capitals. Accumulation, therefore, presents itself on the one hand as increasing concentration of the means of production, and of the command over labour; on the other, as repulsion of many individual capitals one from another.

This splitting-up of the total social capital into many individual capitals or the repulsion of its fractions one from another, is counteracted by their attraction. This last does not mean that simple concentration of the means of production and of the command over labour, which is identical with accumulation. It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already to hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation. Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is centralisation proper, as distinct from accumulation and concentration.

Those of us who have actually read that text are not at all surprised by the contemporary reemergence of the concentration and centralization of capital. We have long understood that the forces of competition within capitalism create both the incentive and the means for individual firms to grow in size and to drive out other firms, thus leading to the concentration of capital. The availability of large amounts of credit and finance only makes those tendencies stronger.

And the limit?

In a given society the limit would be reached only when the entire social capital was united in the hands of either a single capitalist or a single capitalist company.

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9 thoughts on “Concentrated Capitalism

  1. You’re right, but consider this also: why then are these people not in solidarity with other traditionally marginalized groups? Why can’t they see themselves reflected in poor blacks, Syrian refugees, women agitating for equal pay, Mexican immigrants, all the other economically depressed people living on the fringe? Surely they have more in common with them than the wealthy demagogues they vote for?
    Status quo, baby. Hanging on to that one little shred that let’s you say “I am better than you.” And what that so often boils down to is “I am better than you because I am white and/or slightly wealthier than you.”
    Now, that’s not to say that anyone should be discounted. A lot of these folks have had their empathy burned out of them by their experiences, and it makes a twisted sort of sense to take the most pride in being the second-to-last rung on the ladder.
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    [–]ryegye24 34 points 19 days ago
    They can, but they also see it as a zero sum game. If those other marginalized groups are “winning” then they themselves must be “losing”. Hence the whole “America First” thing which really just means “working class white Americans First (then maybe later we can help people who are not me)”.
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    [–]potatolicious 9 points 19 days ago
    I spent a lot of time angry at Trump voters after the election, and my thoughts on this are a work in progress – your question is a good one, and here are my current thoughts on this:
    (Note that I separate Trump supporters from Trump voters – I think it’s important to distinguish between the rabid supporters for whom Trump can do no wrong, and people who voted for him without necessarily being fans… The latter group is, I think, much larger than the former)
    why then are these people not in solidarity with other traditionally marginalized groups?
    Because they don’t know any of them. Sure, there are Trump supporters that hate Black people, or Hispanic people, etc etc, but I’m willing to wager the average Trump voter doesn’t have a particularly negative opinion about these groups, but they have a hard time identifying with people they’ve literally never met.
    What are the odds that a Trump voter has met a Syrian refugee? Hell, many of them live in places where the number of Black residents can be counted on one hand. Why are urban voters – across party lines, across income lines, overwhelmingly more supportive of these groups? Because they have these groups in their lives to a significant degree. Inclusion and integration really are inoculations against bigotry – intentional or otherwise.
    They can’t stand in solidarity with these groups because – where they are – these groups largely do not exist. (Side note: the question of if they’re intentionally segregating themselves is a good one, but is a whole ‘nother can of worms)
    Surely they have more in common with them than the wealthy demagogues they vote for?
    I think you’ll find some Trump voters who’d agree with that – but it matters very little, because they feel no kinship to either wealthy demagogues or marginalized minorities. It’s been surprising seeing the number of Trump voters who openly dislike Trump, but voted for him because they found no other candidate to like (whether or not this conclusion is reasonable is, of course, another can of worms).
    It certainly feels like a lot of these voters exist on the continuum of minority rights being “not a big deal” as well as “he won’t be that bad anyways”. We in urban areas have seen first-hand the impact of the social progress we have made, and we have seen first-hand the fear and suffering in our friends and loved ones as these rights are stripped away. These issues are close to us.
    But in parts of America where the Black population largely doesn’t exist, or where the gay population largely doesn’t exist (openly), these issues feel far away. I think you will find many Trump voters who bear no particular malice towards these groups, but feel that these issues are “nice to haves” that pale in importance to economic policy.

    • Let me respond to this bit:

      “why then are these people not in solidarity with other traditionally marginalized groups?
      Because they don’t know any of them. Sure, there are Trump supporters that hate Black people, or Hispanic people, etc etc, but I’m willing to wager the average Trump voter doesn’t have a particularly negative opinion about these groups, but they have a hard time identifying with people they’ve literally never met.
      What are the odds that a Trump voter has met a Syrian refugee? Hell, many of them live in places where the number of Black residents can be counted on one hand. Why are urban voters – across party lines, across income lines, overwhelmingly more supportive of these groups? Because they have these groups in their lives to a significant degree. Inclusion and integration really are inoculations against bigotry – intentional or otherwise.”

      The first question is odd. Poor whites are also ‘traditionally’ marginalized. Many of these whites descend from poor, disenfranchised families and communities for longer than anyone could trace. Many of them descend from immigrants who were escaping violent oppression and purposely sought out rural areas and ethnic enclaves in order to escape ruling elites or simply gain some autonomy.

      I don’t get the assumptions made here. Haven’t these people ever lived in or traveled around different parts of the country? Most whites, including most poor whites, don’t live in rural areas these days. The majority of blacks remained in rural areas longer than did the majority of whites, by almost a century. I went to public schools that were fairly even mixes of whites and blacks, and such racially-mixed public schools are common throughout the Deep South. It’s the poor whites, not the upper class whites, whose kids attend those racially-mixed public schools.

      It’s amusing to hear these people trying to analyze Trump supporters and voters. As for his earliest supporters, they were actually above average in wealth, compared to the general population. There is no particular reason to assume these whites of above average wealth are isolated from blacks, immigrants, and the openly gay. And as for poor whites, most of them are urban and most of them don’t vote for anyone. Poor urban whites probably have more contact with and understanding of poor urban blacks than do many middle-to-upper class blacks.

      There are a lot of assumptions being made here based on very little. That is highly problematic. This is yet more of what I’ve been complaining about. These people are trying to understand people they perceive as being disconnected from the rest of society, but they can’t understand much of anything because these people are themselves disconnected.

  2. I don’t have much to say except I agree with you pretty much all the way.
    One idea, though, that I’d like to extend, is this:
    they have a hard time identifying with people they’ve literally never met.
    That’s the crux of it right there. You’re right, a lot of them aren’t actively racist, but more complacent and unthinking, as a lot of of thinkers have pointed out. It’s a function of systemic racism (and here sub in any “ism” you’d like that essentially boils down to “marginalization”). It’s something I like to call “cultural racism.”
    My own father, who was, for the most part of his adult life, a poor drug addict, would always talk about niggers this and niggers that. “There are black people,” he would say, “and then there are niggers. White people can be niggers too!”
    Vile shit, but he really believed the logic, you know? Didn’t understand how it could be hurtful And what’s more, one of his best friends was a fucking black guy. He came to our Thanksgiving like every year and said grace.
    That kind of weird, paradoxical thinking seems to me to be a function of lack of exposure. Yourself and anyone reading this probably has a billion anecdotes about someone who was a raging bigot until their kid turned out gay or whatever. No exposure to crazy exposure.
    Isn’t it odd to think of a lack of exposure in this, the most connected age of all mankind? Even a poor wage-slave in Alabama has a smartphone that can get them almost unimaginable amounts of information. That’s what a lot of people forget, though — you can’t just dump facts into people’s lap. You need the personal element, that connection.
    I, like you, and like an awful lot of people, have been doing a lot of thinking about shit these last couple of months. The conclusion I’ve seemed to arrive at is simply empathy. Guarded empathy. Responsibly enacted empathy, but empathy on a personal level. That’s where exposure comes from. Never met a Syrian refugee? Fuck it, let’s go say hit to some. Whatever practical, real, physical thing would help, that’s what needs to be done.
    We need to talk to folks. And what’s more, we need to thread the needle in terms of letting people hear and listen and not letting them dominate the conversation or be hurtful. I come from a very working-class background, you know? I know a lot of people like the one’s we’re talking about here. They’re no more monsters than you or me, but they do monstrous things because they feel fucked up and they are fucked up.
    The left’s got a lot of work to do in this country. It’s not going to be easy. But what’s gonna make it easier: think of that one person you really, truly love who just doesn’t fucking get it. You know they’re not a bad person. What are their reasons? What can you do to help? Start with that and then apply it as many people as you effectively can. That doesn’t mean we let people run roughshod over other’s because they feel shitty. Nazis are gonna get punched and they’re gonna fucking deserve it. But in a truly responsible humanist sense we could use all of this magical technology, all of this energy, to reach out where reaching out is the hardest. And that, in my estimation, is the best way to get to a better place.
    Whoa, sorry, got a little long there.
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    [–]potatolicious 4 points 19 days ago
    I agree. One thing I’m struggling with right now is how much of my thoughts fly in the face of established activist doctrine – and I’m increasingly coming to the conclusion that too much of the left leans on empty rhetoric rather than enacting change (to be fair, this describes the right as well).
    I agree with you that we need to be out there talking to people. I’m a visible minority who’s always lived in major cities, I want to go talk to people. I want to convince them that I matter, that I’m real and not a policy statement on a piece of paper.
    But suggesting this in many corners of the left will result in “it’s not your job to educate bigots”, or a statement on the injustice of expecting the marginalized to convince the privileged of basic humanity.
    I mean, sure, yeah, it shouldn’t be the job of the marginalized to assert the fact that they’re human… But yet, here we are. And increasingly it feels to me that many parts of the activist left are more comfortable being strictly correct, than they are in making the world better. You know what? If I need to be someone’s Minority Friend to yank them back from the cliff of bigotry, I’ll fucking take it. I would rather swallow my pride in favor of a better tomorrow for everyone, than sit on a useless moral victory.

    • These comments are slightly better. But they still miss the point.

      Racism is rarely if ever the real issue. If you create a society that doesn’t completely fuck over most of the population of all races, there will be no attraction to or power in demagogues using racist rhetoric. Instead, we have a two party system where both parties have a history of using dog whistle rhetoric and fucking over most of the population.

      If you want to reach people who have been endlessly fucked over, well ensure that you stop supporting the ruling elite that fucks them over. When you vote lesser evil, you are telling the victims of this evil that they don’t matter. Don’t be surprised then when they vote for the other side.

      This isn’t hard to understand. If good liberals hadn’t been worthless pieces of shit and instead had fought hard to ensure Sanders was nominated and almost certainly elected president, racism wouldn’t now be a political football to distract the masses from the real issues.

  3. I don’t know about you, but the hardcore Hillary partisans have been/are way way WAY ruder and more awful to me than trump voters, republicans, libertarians, leftists, etc ever have. Like if I didn’t know better than to not let things get to me it would be maddening. They’re AWFUL. Absolutely AWFUL

    • Like the disconnect between “tolerant anti-trump love trumps hate progressive” and the sheer vitriol, condescension and rudeness is insane

    • I get the sense that Hillary Clinton supporters are among the most disconnected Americans. They think that they aren’t disconnected because they know some people who are minorities, immigrants, gays, etc. But the fact of the matter is most of these people they know are like them, grew up and have lived in the same kind of communities, went to school colleges and work at the same places. It’s a superficial diversity built on class and ideological differences that isolate them from the rest of the population. It is this disconnection that makes them act the way they do.

    • This is what bothers me most: “Inequality is not only about money, but also about politics, the quality of neighbourhoods, and access to public services.” Wealth means political power and influence, economic opportunity, access to resources, social capital, high quality healthcare, avoidance of toxic post-industrial communities, and so much more. As inequality increases, the life of those on the bottom gets shittier and social problems in general grow worse.

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