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An Introduction to Marxist Economic Theory by Ernest Mandel

An Introduction to Marxist Economic Theory by Ernest Mandel

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Published by Seeing Red Radio
An Introduction to Marxist Economic Theory by Ernest Mandel
An Introduction to Marxist Economic Theory by Ernest Mandel

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Published by: Seeing Red Radio on Aug 21, 2009
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05/17/2013

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The concentration of capital is another permanent law of capitalist society
and is accompanied by the proletarianisation of a part of the bourgeois class,
the expropriation of a certain number of bourgeois by a smaller number of
bourgeois. That is why the Communist Manifesto of Marx and Engels emphasises
the fact that capitalism, which claims to defend private property, is in reality
a destroyer of this private property, and carries out a constant, permanent
expropriation of a great number of proprietors by a relatively small number of
proprietors. There are several industrial branches in which this concentration
is particularly striking: coal mining had hundreds of companies during the
19th century in a country like France (there were almost 200 in Belgium); the

automobile industry had 100 or more frms at the beginning of the century in

countries like the United States and England, whereas today their number has

been reduced to four, fve or six such companies at most.

Of course, there are industries where this concentration has not been carried
so far, such as the textile industry, the food industry, etc. In general, the greater
the organic composition of capital in an industrial branch, the greater is the
concentration of capital, and conversely, the smaller the organic composition
of capital, the smaller is the concentration of capital. Why? Because the smaller
the organic composition of capital, the less capital is required at the beginning
in order to enter this branch and establish a new venture. It is far easier to put
together the million or two million dollars necessary for building a new textile
plant than to assemble the hundreds of millions needed to set up even relatively
small steel works.

Capitalism was born of free competition and is inconceivable without
competition. But free competition produces concentration and concentration
produces the opposite of free competition, namely, monopoly. Where there
are few producers, they can readily reach agreements, at the expense of the
consumers, in dividing up markets and preventing any lowering of prices.
So in the span of a century, the whole capitalist dynamic appears to have
changed its nature. First we have a movement proceeding in the direction of a
constant fall in prices because of a constant rise in production and a constant
multiplication of the number of enterprises. At a certain point, the sharpening
of competition brings with it a concentration of enterprises and a reduction in
the number of enterprises. The remaining companies are now able to reach
agreement on preventing further price reductions and such agreement can only
be honoured, of course, by limiting production. The era of monopoly capitalism
thus displaces the era of free competitive capitalism at the beginning of the last
quarter of the 19th century.

Naturally, when we speak of monopoly capitalism, we must not in the least
presume a capitalism which has completely eliminated competition. There is no
such thing. We simply mean a capitalism whose basic behaviour has changed,
that is to say, it no longer strives for a constant lowering of prices by means
of a constant increase in production; it uses the technique of dividing up the
market, of setting up market quotas. But this process winds up in a paradox.
Why do capitalists who began as competitors now turn to concerted action in
order to limit this competition and to limit production as well? The answer is

that it is a method of increasing their profts. They only do so if it brings them
more profts. Limiting production permits increasing prices, bringing greater
profts and consequently increased capital accumulation.

This new capital can no longer be invested in the same branch, since
this would mean an increase in productive capacity, resulting in increased
production, and leading to a lowering of prices. Capitalism has been caught
up in this contradiction commencing with the last quarter of the 19th century.
It then suddenly acquired a quality which only Marx had foreseen and which
was not grasped by economists like Ricardo or Adam Smith; suddenly, the
capitalist mode of production took on a missionary role. It began to spread
throughout the world by means of capital exports, which enabled capitalist
enterprises to be set up in countries or sectors where monopolies had not yet
entrenched themselves.
The consequence of monopoly in certain branches and of the spread of
monopoly capitalism in certain countries is that the capitalist mode of production
has been reproduced in branches still free from monopoly control and in
countries which had not yet become capitalist. This is how colonialism in all
its varieties managed, toward the beginning of the 20th century to spread like a
powder train in the course of a few decades, starting from the small part of the
world to which the capitalist mode of production was limited, and eventually
embracing the whole world. Every country on the map was thus transformed

into a sphere of infuence and feld of investment for capital.

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