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Marx and Modern Capitalism

Myra Tanner Weiss, International Socialist Review

Fall 1962

From International Socialist Review, Fall 1962, from Tamiment Library microfilm archives
Transcribed & marked up by Andrew Pollack for the Encyclopaedia of Trotskyism On-Line (ETOL).

Review of MONOPOLY CAPITAL, by Paul A. Baran and Paul M. Sweezy, July-August issue, Monthly Review, 1962.$1.00.

This issue of the Monthly Review introduces the forthcoming collaborative work of Paul A. Baran and Paul M. Sweezy, tentatively called, “Monopoly Capital: An Essay on the American Economic and Social Order.” We are given two chapters of the book and an introduction by the authors, containing a brief summary of its objectives and contents.

In the bleak, dreary world of contemporary American economic literature, with its preoccupation with trivia and its pretentious gobbledygook, an attempt at a Marxist analysis of American society is indeed welcome.

The second chapter (Chapter 10 in the book), “On the Quality of Monopoly Capital Society,” is the more simple one, interesting and very useful. It deals with the poverty that exists in America. The “Affluent Society” of Galbraith is shown to mean “slow starvation for millions of people.” The modern American home, much publicized to the world in exhibitions, is shown for what it really is - a dilapidated, rat-infested slum. More than ten per cent of American dwellings lack even commonplace sanitary facilities. The new slums of suburbia and the tangled mess of transportation are discussed, and finally the unsolved and growing crises in the educational and cultural life of America.

These subjects are treated in popular style and with the objectivity of the scholar. The material is well documented.

However, the work as a whole tries more than to present a realistic picture of conditions in American society. It is an attempt to bring the science of Marxism up-to-date. In the introduction to their preview, the authors point out that Marx’s basic work was formulated a century ago when competition was characteristic of capitalist society. Hilferding and Lenin brought Marxism up-to-date in the period that followed, the era of monopoly capitalism. “Yet paradoxically enough,” say the authors, “the impact of this profound economic transformation was felt least of all in what might have been thought to be the area most affected: Marxian economic theory. Here, despite the pioneering work of Hildferding and Lenin, Marx’s Capital continued to reign supreme. Or, to put the point differently, the model of a competitive capitalist economy continued to serve as the basis of Marxian economic theorizing.

“It is, we believe, time to break with this tradition . . .”

The task of applying the science of Marxism to the analysis of contemporary capitalist society is indeed an important one. It is also a difficult one, as the authors well know. And they say, “We are under no illusion that we will have succeeded in exhausting the subject. We have no such ambitious goal. What we do hope to do is help people to see things differently and more realistically, to highlight some of the central problems which need to be solved, and to indicate the direction which further study and thought should take.”

In that spirit, and for our common objectives, we shall discuss some of the questions which the preview poses.

Sweezy and Baran find it paradoxical that Marx’s Capital continued to “reign supreme” after Lenin’s treatment of monopoly capitalism. But where is the paradox? Lenin did not regard the development of monopoly capitalism as a contradiction to the theories of Marx but a verification of them. And indeed, what else but monopoly could emerge from the laws of accumulation of capital, as elaborated by Marx.

Not only is concentration of wealth a direct product of capital accumulation, but centralization of capital (redistribution of capital - mergers, etc.) accelerates the tendency toward monopoly. As Marx pointed out, “Centralization in a certain line of industry would have reached its extreme limit, if all the individual capitals invested in it would have been amalgamated into one single capital. This limit would not be reached in any particular society until the entire social capital would be united, either in the hands of one single capitalist, or in those of one single corporation,” (Vol. I, Capital, Kerr Edition, p. 689).

The centralization of capital is one of the centripetal forces in the accumulation of capital. There are other, centrifugal forces which inhibit the realization of the absolute limit, discussed by Marx in Volume I and in more detail in Volume III.

Lenin saw that at the turn of the century, the tendency toward monopoly had developed to the point of imperialist, or international capital domination, with finance capital playing the primary role of centralizer. In crediting Marx’s analysis for his own understanding of the imperialist stage of capitalist development, Lenin was not being generous out of partisanship or inexact. He was simply being honest.

Perhaps we shall learn what the authors mean by the tradition with which we are advised to break in the material that will follow. But the two chapters given us provide few clues. It would seem that they want to do more than emphasize monopoly. It would seem that they want to pronounce competition dead.

In the first chapter (Chapter 2 of the book), “The Giant Corporation,” the authors compare today’s giant industrial organization with its predecessor, the company or corporation headed by its owner. They construct an abstract paradigm and attribute to it two major new characteristics: 1) It operates with a “longer time-horizon” and 2) It is “a more rational calculator.” These are quantitative concepts, but the authors believe they make a qualitative difference. Most important, the “new” corporation has achieved a “systematic avoidance of risk” and has adopted a a policy of “live-and-let-live toward other members of the corporate world.”

The authors recognize that the dog-eat-dog principle of competition still applies for the giant corporations in relation to small business. But they apparently see an elimination of competition at the top. Unfortunately, their discussion of this new quality of amiability includes an example of the “corespective” behavior of the “Big Three” in auto. Before publication of their book, the Big Three are already threatening to become the Big Two. Chrysler, at this moment, is in a desperate struggle for survival.

There is an element of reality in the “new” qualities that Sweezy and Baran see in the giant corporation. When capitalism experiences growth, new products and new investments present less risk. Competition is minimized. More rational calculations are possible and all appears to be sweetness and light among the powers that be.

But as Marx pointed out long ago, this is merely the appearance. Any capitalist or corporation that doesn’t know its fleeting character will not survive the crisis that inevitably will follow. But the capitalists, big and small, do know, most of them, and under this surface of security and amiability is the struggle for supremacy. Even in periods of prosperity it never ceases.

The “new” characteristics of monopoly capital cannot in any way contradict Marx’s model of capitalism which consistently excludes the details of competition and assumes that the capitalists possess rationality and a long-time horizon. What has happened, at most, is the elimination of those aspects of nineteenth century capitalism from which Marx abstracts in his model.

Moreover in reality the ground of risk and competition has not been eliminated at all. It has simply shifted. The risk of the former capitalist owner of an enterprise is now the risk of an entire nation - risk of war and risk of revolution. Competition exists not only among the giants for control of the biggest of business, the capitalist government, but by these governments for competing national groups of corporations and financial powers.

It is not only small business that pleads with the giants for a policy of live-and-let-live, but entire nations. It is not only the Soviet world which pleads in vain for coexistence, not only the undeveloped nations (small business in the eyes of U.S. imperialists), but it is De Gaulle, it is Macmillan who plead for a policy of live-and-let-live.

Kennedy’s trade program with Europe is the biggest risk in our economic history. Whole trades as well as individual enterprises are expected to be wiped out and promises of public compensation and “re-training” have to be made in advance.

It is no longer possible to discuss American economy without discussing world economy. It has been estimated that a third of the capital of the world is owned by U.S. imperialists. Competition among the industrial and financial oligarchies is largely expressed through government financial struggles. Risk on this plane is not the risk of the wealth, status and power of a rich family. As I have pointed out, it is risk of war or revolution. The Pentagon takes these risks for the giants and holds its breath in suspense. At stake is human existence.

There are a number of other theoretical questions that are raised by the views expressed by Baran and Sweezy, not the least of which is their underconsumptionist view of the capitalist crisis. It is to be hoped that these serious theoreticians will not revise Marx’s theory of the falling rate of profit without specifically stating so and explaining their reasons. However, we must hold these questions in abeyance until the entire work is published.

Perhaps a suggestion is in order for the approach we should have in our analytical tasks. Our studies of modern capitalist economy might just as easily yield a verification of Marxist theory as the necessity to change it. The power of Marxist theory to prognosticate already has been tested and proved. Perhaps our difficulties are not with the theory of Marx, but with an inadequate grasp of it. In any event, Marxist theory and method should be our starting point in resolving the theoretical problems we confront.


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