Monopoly Capital

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Monopoly Capital: An Essay on the American Economic and Social Order
Monopoly Capital (book).jpg
Cover of the 1967 edition
Authors Paul Sweezy, Paul A. Baran
CountryUnited States
LanguageEnglish
Subject Monopoly
Published1966 (Monthly Review Press)
Media typePrint

Monopoly Capital: An Essay on the American Economic and Social Order is a book by Paul Sweezy and Paul A. Baran published in 1966 by Monthly Review Press. It made a major contribution to Marxian theory by shifting attention from the assumption of a competitive economy to the monopolistic economy associated with the giant corporations that dominate the modern accumulation process. Their work played a leading role in the intellectual development of the New Left in the 1960s and 1970s. As a review in the American Economic Review stated, it represented “the first serious attempt to extend Marx’s model of competitive capitalism to the new conditions of monopoly capitalism.” [1] It attracted renewed attention following the Great Recession. [2]

Paul Marlor Sweezy was a Marxian economist, political activist, publisher, and founding editor of the long-running magazine Monthly Review. He is best remembered for his contributions to economic theory as one of the leading Marxian economists of the second half of the 20th century.

Paul A. Baran American Marxist economist

Paul Alexander Baran was an American Marxist economist. In 1951 Baran was promoted to full professor at Stanford University and Baran was the only tenured Marxian economist in the United States until his death in 1964. Baran wrote The Political Economy of Growth in 1957 and co-authored Monopoly Capital with Paul Sweezy.

New Left political ideology

The New Left was a broad political movement mainly in the 1960s and 1970s consisting of activists in the Western world who campaigned for a broad range of social issues such as civil and political rights, feminism, gay rights, abortion rights, gender roles and drug policy reforms. Some saw the New Left as an oppositional reaction to earlier Marxist and labor union movements for social justice that focused on dialectical materialism and social class, while others who used the term saw the movement as a continuation and revitalization of traditional leftist goals.

Contents

Argument

Big business can maintain setting prices at high levels while still competing to cut costs, advertise, and market their products. The actual and potential economic surplus generated exceeds the existing outlets for investment and capitalist consumption. Private accumulation therefore requires the support of government spending geared primarily towards imperialistic and militaristic government tendencies, which is the easiest and surest way to utilize surplus productive capacity. Other forms of absorbing the surplus include expansion of the sales effort and the growth of finance, insurance, and real estate

Big business involves large-scale corporate-controlled financial or business activities. As a term, it describes activities that run from "huge transactions" to the more general "doing big things". The concept first rose in a symbolic sense after 1880 in connection with the combination movement that began in American business at that time. United States corporations that fall into the category of "big business" as of 2015 include ExxonMobil, Walmart, Google, Microsoft, Apple, General Electric, General Motors, Citigroup, Goldman Sachs, and JPMorgan Chase. The largest German corporations as of 2012 included Daimler AG, Deutsche Telekom, Siemens, and Deutsche Bank. Among the largest companies in the United Kingdom as of 2012 are HSBC, Barclays, WPP plc, and BP. The latter half of the 19th century saw more technological advances and corporate growth in additional sectors, such as petroleum, machinery, chemicals, and electrical equipment.

Economic surplus economic supply that exceeds demand

In mainstream economics, economic surplus, also known as total welfare or Marshallian surplus, refers to two related quantities. Consumer surplus or consumers' surplus is the monetary gain obtained by consumers because they are able to purchase a product for a price that is less than the highest price that they would be willing to pay. Producer surplus or producers' surplus is the amount that producers benefit by selling at a market price that is higher than the least that they would be willing to sell for; this is roughly equal to profit.

The economic surplus

One of the key contributions of Monopoly Capital is its application of the concept of economic surplus. The economic surplus is most simply the difference between “what a society produces and the costs of producing it. The size of the surplus is an index of productivity and wealth, of how much freedom a society has to accomplish whatever goals it may set for itself. The composition of the surplus shows how it uses that freedom: how much it invests in expanding its productive capacity, how much it consumes in various forms, how much it wastes and in what ways.” [3] Although some scholars viewed the introduction of this concept as a break with the Marxist approach to value, later publications by Baran and Sweezy, as well as other authors, have continued to establish the importance of this innovation, its consistency with Marx's labor concept of value, and supplementary relation to Marx's category of surplus value. [4] [5] [6] [7] [8] [9] Baran and Sweezy argue that under the oligopolistic conditions of modern economies—dominated by big business—the surplus tends to rise. The vast extent of this increasing actual and potential surplus is visible in the underutilization of productive capacity, the level of unemployment, the waste embodied in the sales effort, and military spending. This is because monopoly/oligopoly conditions result in both insufficient opportunities for profitable reinvestment of the surplus (which shows up as excess capacity and unemployment) and forms of non-price competition involve large amounts of unproductive labor (e.g. in the sales effort and product differentiation). The overall result is a tendency toward economic stagnation and increased unproductive expenditures as a response.

Problems of surplus absorption and waste

Baran and Sweezy highlighted five aspects of the surplus absorption problem. First, that capitalist class luxury consumption could not rise as fast as the available surplus and monopoly conditions limited outlets for productive investment. Second, spending on the sales effort was an important outlet for surplus as large firms engaged in non-price forms of competition and sought to enlarge demand. However, such marketing expenditures (advertising, sales promotion, excessive model changes, etc.) do not provide any additional use-value and therefore may be treated as waste. Third, capitalist opposition to civilian spending as a threat to their class interests and class power limited the ability of such spending to provide effective demand. Fourth, military spending does not compete with capitalist interests in the same way as civilian spending and through imperialism serves to enhance those interests. Therefore, military spending is able to expand to a degree civilian spending is not, providing an important outlet for surplus absorption. Fifth, spending on finance can serve to absorb a portion of the surplus and boost the economy, at the expense of greater debt expansion and long-term instability.

The irrational qualities of monopoly capitalist society

In the book’s concluding chapters Baran and Sweezy highlight the growing disparity between the productive potential of US society and the waste and misuse of that potential. They point to racial disparities and the social and cultural costs of the current structure of the political economic system where real basic needs for human development such as education and housing are not met while a belligerent militarism and cultural traits associated today with “consumerism” are cultivated with great effort in the interests of profit. They see the primary weaknesses of the system to be in the imperial realm, as countries in the periphery revolt against the domination of monopoly capital over their economies, a revolt that is increasingly mirrored in the resistance of peoples of color, making up a critical part of the working class, within the United States itself.

Monopoly capital and the Great Recession

With the financial crisis of 2007-09 and the Great Recession of these years, followed by conditions of economic stagnation, some political economists have argued that Baran and Sweezy's analysis in Monopoly Capital is key to the theoretical and historical explanation of these events. This has led to an extension of theory to address what is called "monopoly-finance capital," the "internationalization of monopoly capital," the globalization of the reserve army of labor, and the growing monopolization of communications, most dramatically the Internet. [10] [11] [12]

See also

The history of economic thought deals with different thinkers and theories in the subject that became political economy and economics, from the ancient world to the present day in the 21st Century. This field encompasses many disparate schools of economic thought. Ancient Greek writers such as the philosopher Aristotle examined ideas about the art of wealth acquisition, and questioned whether property is best left in private or public hands. In the Middle Ages, scholasticists such as Thomas Aquinas argued that it was a moral obligation of businesses to sell goods at a just price

Marxism economic and sociopolitical worldview based on the works of Karl Marx

Marxism is a theory and method of working class self-emancipation. As a theory, it relies on a method of socioeconomic analysis that views class relations and social conflict using a materialist interpretation of historical development and takes a dialectical view of social transformation. It originates from the works of 19th-century German philosophers Karl Marx and Friedrich Engels.

Related Research Articles

State capitalism is an economic system in which the state undertakes commercial economic activity and where the means of production are organized and managed as state-owned business enterprises, or where there is otherwise a dominance of corporatized government agencies or of publicly listed corporations in which the state has controlling shares. Marxist literature defines state capitalism as a social system combining capitalism with ownership or control by a state—by this definition, a state capitalist country is one where the government controls the economy and essentially acts like a single huge corporation, extracting the surplus value from the workforce in order to invest it in further production. This designation applies regardless of the political aims of the state and some people argue that the modern People's Republic of China constitutes a form of state capitalism and/or that the Soviet Union failed in its goal to establish socialism, but rather established state capitalism.

Anti-capitalism political ideology

Anti-capitalism encompasses a wide variety of movements, ideas and attitudes that oppose capitalism. Anti-capitalists, in the strict sense of the word, are those who wish to replace capitalism with another type of economic system.

<i>Monthly Review</i> socialist journal published monthly in New York City

The Monthly Review, established in 1949, is an independent socialist magazine published monthly in New York City. The publication remains the longest continuously published socialist magazine in the United States. The journal has an impact factor of 0.460, ranking 107th out of 161 journals in the category "Political Science".

Environmental sociology The study of interactions between societies and their natural environments

Environmental sociology is the study of interactions between societies and their natural environments. The field emphasizes the social factors that influence environmental resource management and cause environmental issues, the processes by which these environmental problems are socially constructed and defined as social issues, and societal responses to these problems.

Harry Magdoff economist, author, and publicist

Harry Samuel Magdoff was a prominent American socialist commentator. He held several administrative positions in government during the presidency of Franklin D. Roosevelt and later became co-editor of the Marxist publication Monthly Review.

State monopoly capitalism

The theory of state monopoly capitalism was initially a Marxist doctrine popularised after World War II. Lenin had claimed in 1916 that World War I had transformed laissez-faire capitalism into monopoly capitalism, but he did not publish any extensive theory about the topic. The term refers to an environment where the state intervenes in the economy to protect larger monopolistic or oligopolistic businesses from threats. As conceived by Lenin in his pamphlet of the same name the theory aims to describe the final historical stage of capitalism, of which he believed the Imperialism of that time to be the highest expression.

Criticism of capitalism

Criticism of capitalism ranges from expressing disagreement with the principles of capitalism in its entirety to expressing disagreement with particular outcomes of capitalism.

Harry Braverman American economist

Harry Braverman was an American Marxist, worker, political economist and revolutionary. Born in New York City to a working-class family, Braverman worked in a variety of metal smithing industries before becoming an editor at Grove Press, and later Monthly Review Press, where he worked until his death at the age of 55 in Honesdale, Pennsylvania. Braverman is most widely known for his 1974 book Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century, "a text that literally christened the emerging field of labor process studies" and which in turn "reinvigorated intellectual sensibilities and revived the study of the work process in fields such as history, sociology, economics, political science, and human geography."

The tendency of the rate of profit to fall (TRPF) is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Capital, Volume III. Economists as diverse as Adam Smith, John Stuart Mill, David Ricardo and Stanley Jevons referred explicitly to the TRPF as an empirical phenomenon that demanded further theoretical explanation, yet they each differed as to the reasons why the TRPF should necessarily occur.

John Bellamy Foster is a professor of sociology at the University of Oregon and also editor of Monthly Review. He writes about political economy of capitalism and economic crisis, ecology and ecological crisis, and Marxist theory. He has given numerous interviews, talks, and invited lectures, as well as written invited commentary, articles, and books on the subject.

Ellen Meiksins Wood American marxist scholar

Ellen Meiksins Wood was an American Marxist historian and scholar.

<i>Capital, Volume III</i> book by Karl Marx

Capital, Volume III, subtitled The Process of Capitalist Production as a Whole, is the third volume of Capital: Critique of Political Economy. It was prepared by Friedrich Engels from notes left by Karl Marx and published in 1894.

<i>Labor and Monopoly Capital</i>

Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century is a book about the economics and sociology of work under monopoly capitalism by the political economist Harry Braverman. Building on Monopoly Capital by Paul A. Baran and Paul Sweezy, it was first published in 1974 by Monthly Review Press.

The terms neo-Marxian, post-Marxian and radical political economics were first used to refer to a distinct tradition of economic thought in the 1970s and 1980s. Many of the leading figures were associated with the Monthly Review School.

<i>The Theory of Capitalist Development</i> book by Paul Sweezy

The Theory of Capitalist Development is a 1942 book by the Marxian economist Paul Sweezy, in which the author expounds and defends the labor theory of value. It has received praise as an important work, but Sweezy has also been criticized for misrepresenting Karl Marx's economic theories.

Surplus value is a central concept in Karl Marx's critique of political economy. "Surplus value" is a translation of the German word "Mehrwert", which simply means value added, and is cognate to English "more worth". Surplus-value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cost of the materials, plant and labour power. Conventionally, value-added is equal to the sum of gross wage income and gross profit income. However, Marx uses the term Mehrwert to describe the yield, profit or return on production capital invested, i.e. the amount of the increase in the value of capital. Hence, Marx's use of Mehrwert has always been translated as "surplus value", distinguishing it from "value-added". According to Marx's theory, surplus value is equal to the new value created by workers in excess of their own labor-cost, which is appropriated by the capitalist as profit when products are sold.

Marxian economics school of economic thought

Marxian economics, or the Marxian school of economics, refers to a heterodox school of economic thought. Its foundations can be traced back to the critique of classical political economy in the research by Karl Marx and Friedrich Engels. Marxian economics refers to several different theories and includes multiple schools of thought, which are sometimes opposed to each other, and in many cases Marxian analysis is used to complement or supplement other economic approaches. Because one does not necessarily have to be politically Marxist to be economically Marxian, the two adjectives coexist in usage rather than being synonymous. They share a semantic field while also allowing connotative and denotative differences.

Crisis theory, concerning the causes and consequences of the tendency for the rate of profit to fall in a capitalist system, is now generally associated with Marxist economics.

References

  1. Sherman, Howard J. (1966). "Monopoly Capital-An Essay on the American Economic and Social Order". American Economic Review. 56 (4): 919–21.
  2. "Monthly Review | Baran and Sweezy's Monopoly Capital, then and Now". November 2015.
  3. Baran, Paul A.; Paul M. Sweezy (1966). Monopoly Capital. New York: Monthly Review Press. pp. 9–10.
  4. Baran, P.A. & Sweezy, P.M. (2012). "Some Theoretical Implications". Monthly Review. 64 (3).
  5. Sweezy, P.A.; H. Magdoff (1972). The Dynamics of U.S. Capitalism. New York: Monthly Review Press.
  6. Sweezy, P.A.; H. Magdoff (1977). The End of Prosperity. New York: Monthly Review Press.
  7. Sweezy, P.A.; H. Magdoff (1981). The Deepening Crisis of U.S. Capitalism. New York: Monthly Review Press.
  8. Sweezy, P.A.; H. Magdoff (1987). Stagnation and the Financial Crisis. New York: Monthly Review Press.
  9. Sweezy, P.A.; H. Magdoff (1988). The Irreversible Crisis. New York: Monthly Review Press.
  10. Foster, J.B.; F. Magdoff (2009). The Great Financial Crisis. New York: Monthly Review Press.
  11. Foster, J.B.; R.W. McChesney (2012). The Endless Crisis. New York: Monthly Review Press.
  12. McChesney, R.W. (2013). Digital Disconnect. New York: Monthly Review Press.

Further reading

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