>>> dhenwood at panix.com 02/11/01 03:22PM >>>
Charles Brown wrote:
>Doesn't most of the evidence support the notion that state-monopoly
>is the data shape of capitalism in 2001 ? Why is it that the hedge
>fund couldn't go bankrupt if it wasn't in a monopoly category
>qualitatively different than millions of small businesses ?
That the failure of a big financial institution could cause a cascade of failures leading to systemic crisis is hardly a new development.
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CB: Yes, state-monopoly begins around 1900, so it is hardly new. But you seem to doubt whether it is.
Being too big to fail is the status of an elite minority of companies. This seems a clear continuing expression of Lenin's claim that monopolies play a decisive role in economic life.
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Using the word "monopoly" to describe the situtation is just a little misleading. There are thousands of hedge funds and thousands of banks in the U.S. alone.
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CB: You haven't offered a better word. What do you see ? A return to free competition ? Chaos and accident ? a giant cascade of patternless numbers in the national income statistics ?
There are millions of companies , but they don't all get treated like Chrysler back some years when it was bailed out, or Continental Illinois or this particular hedge fund.
On Lenin's specfic sense of monopoly below. Lenin's theory on monopoly was not his, rather a development predicted by Marx.
(((((((((( Half a century ago, when Marx was writing Capital, free competition appeared to the overwhelming majority of economists to be a "natural law". Official science tried, by a conspiracy of silence, to kill the works of Marx, who by a theoretical and historical analysis of capitalism had proved that free competition gives rise to the concentration of production, which, in turn, at a certain stage of development, leads to monopoly. Today, monopoly has become a fact. Economists are writing mountains of books in which they describe the diverse manifestations of monopoly, and continue to declare in chorus that "Marxism is refuted". But facts are stubborn things, as the English proverb says, and they have to be reckoned with, whether we like it or not. The facts show that differences between capitalist countries, e.g., in the matter of protection or free trade, only give rise to insignificant variations in the form of monopolies or in the moment of their appearance; and that the rise o! f monopolies, as the result of the concentration of production, is a general and fundamental law of the present stage of development of capitalism.
For Europe, the time when the new capitalism definitely superseded the old can be established with fair precision; it was the beginning of the twentieth century. In one of the latest compilations on the history of the "formation of monopolies", we read:
"Isolated examples of capitalist monopoly could be cited from the period preceding 1860; in these could be discerned the embryo of the forms that are so common today; but all this undoubtedly represents the prehistory of the cartels. The real beginning of modern monopoly goes back, at the earliest, to the sixties. The first important period of development of monopoly commenced with the international industrial depression of the seventies and lasted until the beginning of the nineties." "If we examine the question on a European scale, we will find that the development of free competition reached its apex in the sixties and seventies. It was then that Britain completed the construction of her old-style capitalist organisation. In Germany, this organisation had entered into a fierce struggle with handicraft and domestic industry, and had begun to create for itself its own forms of existence."
"The great revolution commenced with the crash of 1873, or rather, the depression which followed it and which, with hardly discernible interruptions in the early eighties, and the unusually violent, but short-lived boom round about 1889, marks twenty-two years of European economic history ... .. During the short boom of 1889-90, the system of cartels was widely resorted to in order to take advantage of favourable business conditions. An ill-considered policy drove prices up still more rapidly and still higher than would have been the case if there had been no cartels. and nearly all these cartels perished ingloriously in the smash. Another five-year period of bad trade and low prices followed, but a new spirit reigned in industry; the depression was no longer regarded as something to be taken for granted: it was regarded as nothing more than a pause before another boom.
"The cartel movement entered its second epoch: instead of being a transitory phenomenon, the cartels have become one of the foundations of economic life. They are winning one field of industry after another, primarily, the raw materials industry. At the beginning of the nineties the cartel system had already acquired-in the organisation of the coke syndicate on the model of which the coal syndicate was later formed ― a cartel technique which has hardly been improved on. For the first time the great boom at the close of the nineteenth century and the crisis of 1900-03 occurred entirely ― in the mining and iron industries at least ― under the aegis of the cartels. And while at that time it appeared to be something novel, now the general public takes it for granted that large spheres of economic life have been, as a general rule, removed from the realm of free competition." [6]
Thus, the principal stages in the history of monopolies are the following: (1) 1860-70, the highest stage, the apex of development of free competition; monopoly is in the barely discernible, embryonic stage. (2) After the crisis of 1873, a lengthy period of development of cartels; but they are still the exception. They are not yet durable. They are still a transitory phenomenon. (3) The boom at the end of the nineteenth century and the crisis of 1900-03. Cartels become one of the foundations of the whole of economic life. Capitalism has been transformed into imperialism.
Cartels come to an agreement on the terms of sale, dates of payment, etc. They divide the markets among themselves. They fix the quantity of goods to be produced. They fix prices. They divide the profits among the various enterprises, etc.