Re: [OPE-L] Centralization of capital

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Fri Feb 17 2006 - 10:46:26 EST

> Centralization and concentration can promote valorization, but I'm
> not sure that the centralization/concentration distinction easily maps
> onto the valorization/labor process distinction. The reason is that the
> last  mentioned pair of categories refer specifically to production, the
> former to asset holdings. Marx's own argument is that capital "valorizes"
> (verwertet)  itself only in production, i.e. in a value-creation process
> combining the  use-value and exchange-value aspects. But concentration
> and centralization  might refer only to the realisation of value in
> exchange.

Interesting point, Jurriaan.

1. The mapping suggested for concentration by Marx in Vol 25, Ch. 25  is
problematic in other ways:

a) "simple concentration" (where there is also control over labor) is
       *identical*  to  *accumulation*, he suggests ("The attraction of
        capitals no longer  means the simple concentration of the means of
        production and the command over labour, which is identical with
        accumulation",  Penguin ed., p. 777);

b)  concentration is *identical* to  *expanded reproduction*, he claimed
        ("concentration ... being only another name for reproduction on an
        expanded scale": 779);

c)  if a) is the case then it follows that concentration should also be
        *identical* to the increase in capital "as it passes from the
        circular to the spiral form" (780).

Hence,  concentration = accumulation = expanded reproduction =
increase of capital from circular to spiral form. And all of this in just
a few pages!

Let me go on to make some other comments which don't directly
respond to your own.

2.  While Marx claims that  *centralization* concerns a change in the
distribution of capital, he also claims that it increases the *technical
composition of capital* as a whole (780).   The claim here seems
to be that while centralization "may result from a mere change in the
distribution of already existing capital" (779), the "effects of
centralization" (780) include an increasing TCC and it "supplements
the work of competition by enabling industrial capitalists to extend
the scale of their operations" (779).   This distinction between what
centralization _is_ vs. what it _does_ or _makes possible_  needs
developing, imo.   Marx seems to recognize this himself when, right
after the sentence on "centralization proper" the next para. begins:
"The laws of the centralization of capitals, or the attraction of capital
by capital, *cannot be developed here*" (777, emphasis added).
Presumably, they were to be developed in Volume 3 (although, I think
he wrote the drafts for Volume 3 before he wrote Vol. 1, Ch. 25) or
the "special study on competition".

3. Marx's description of the "battle of competition" which leads to
increasing centralization (777-778) seems to assume that mergers
will take the form of *horizontal mergers*.   This is a reasonable
supposition given his other assumptions about competition _and_
the history of mergers at the time of his writing _Capital_.  I.e.
although there were some *vertical mergers* at that time, the wave
of vertical mergers came later (the penultimate example of vertical
integration happened in the early 20th Century in the automobile
industry -- the construction of the Ford River Rouge plant in
Dearborn, Mich.).  The spread of *conglomerate mergers* (which,
is tied to the process of *diversification*) happened still later.    The
tendencies for the  vertical integration of capital (and then in some
industries,  the _descending verticality_ i.e. the movement _away_
from vertical integration) and the diversification of capital could stand
further investigation by Marxians, imo.

4.  In recent years there has been discussion about recent trends
in *economic concentration*.    Economic concentration, within the
context of the way in which that term is ordinarily understood today,
refers to the extent to which an economic activity -- in an industry
or the overall economy -- is controlled by the largest firms.  Thus,
what Paul A and you refer to as centralization is referred to in the
literature as a type of concentration.  In any event,  it is claimed
that the data in recent decades, especially in the US, suggest  a
*decline* in concentration.   See Bowles, Edwards, Roosevelt
_Understanding Capitalism_ (3rd ed.,2005, pp. 280-281), which
draws heavily on a study by Lawrence J. White "Trends in Aggregate
Economic Concentration in the United States," _Journal of Economic
Perspectives_, vol. 16, #4, Fall, 2002, pp. 137-160) for some data on
this trend (if others are interested, I might be convinced into re-typing
parts of  this section of Bowles et. al for you).  The question then is:
*how is it possible that even with the wave of noteworthy mergers in
recent years, there has been a decline in concentration?*  And, then,
the question:  *is this trend towards declining concentration happening
in other nations and will it reverse itself shortly?*

In solidarity, Jerry

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