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How Capitalism Concentrates Power
By : Grace Blakeley : https://twitter.com/graceblakeley
Originally posted in "Tribune" : How Capitalism Concentrates Power
"For decades, we've been sold the myth that capitalism gives working people more power over their lives – but in reality, it's concentrated power into fewer and fewer hands."
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Capitalism has ushered in a period of profound concentration of power and wealth — and it is more likely to be associated with terms like inequality, corruption, or crisis. The Covid-19 pandemic has accelerated these trends, delivering super-corporations like Amazon monopoly shares over the retail sec-tor and extraordinary profits, with Jeff Bezos’ wealth growing by $75 billion in 2020 alone.
>Firstly, firms are not simply production functions converting inputs into outputs automatically. Firms are political entities aiming to maximise profits in the context of uncertainty, which involves planning. Corporations have some autonomy when deciding not only what prices to set, but also how much to pay workers, where to invest, how to innovate, how to advertise, and how to lobby.
>Secondly, market power exists, and it is not, as Schumpeter argued, temporary. Larger firms have more market power, and therefore more power to plan. The decisions made by large multinational corporations have implications for the whole of society: these firms shape the direction of innovation, how our political systems work, and our relationship with the natural world. They are not all-powerful — the market does impose some constraints — but neither are they powerless.
>Thirdly, the state is not a neutral entity whose sole purpose is to construct and maintain the conditions necessary for free market competition. Instead, the state is likely to be influenced by the power relations in wider society — and in an economically centralised society, they will be influenced by firms with market power.
Marxists begin their analysis of capitalism from entirely different assumptions than those made within neoclassical economics. First, Marxists study the production of commodities, rather than simply exchange. The firm is not a ‘black box’ converting inputs into outputs; it is the foundation of the capitalist system and it exists to facili-tate the control of labour power by capital.
Portraying the firm as a black box allows economists to avoid confronting the political relationships of exploitation that exist within it. In fact, those economists who have developed ‘theories of the firm’ have accidentally ended up coming to conclusions that sound almost Marxist.
According to the free market model, firms are all just small producers responding automatically to market signals. In this view of the world, no one has any power — in-stead the market is all-powerful, and our equal participation in it creates a kind of democracy.
But ‘the market’ is not some sort of natural, ethereal phenomenon — it is constructed. States, corporations, and financial institutions set the rules of the game, as well as being powerful players within that game.
But in reality, states construct markets, and market outcomes influence the nature of the state.
The centralisation of capital — the concentration of power within the capitalist world system into an ever smaller number of hands — generates contradictory tendencies.
As Marx notes in volume one of Capital, the centralisation of capital augments the ‘mass of misery, oppression, slavery, degradation, exploitation’. In a system in which power is so concentrated those at the top of the hierarchy are able to extract more than ever from those below them: wages stagnate, rents increase, and corruption becomes endemic.
The concentrated power that exists today within imperial states and multinational corporations seems all but impossible to resist.
A movement filled with people who realise the true extent of their collective power might quickly realise that, in this age of profound crisis, monopoly capital is far weaker than it appears.
By : Grace Blakeley : https://twitter.com/graceblakeley
Originally posted in "Tribune" : How Capitalism Concentrates Power
"For decades, we've been sold the myth that capitalism gives working people more power over their lives – but in reality, it's concentrated power into fewer and fewer hands."
-------------------------------------------------------------------
Capitalism has ushered in a period of profound concentration of power and wealth — and it is more likely to be associated with terms like inequality, corruption, or crisis. The Covid-19 pandemic has accelerated these trends, delivering super-corporations like Amazon monopoly shares over the retail sec-tor and extraordinary profits, with Jeff Bezos’ wealth growing by $75 billion in 2020 alone.
>Firstly, firms are not simply production functions converting inputs into outputs automatically. Firms are political entities aiming to maximise profits in the context of uncertainty, which involves planning. Corporations have some autonomy when deciding not only what prices to set, but also how much to pay workers, where to invest, how to innovate, how to advertise, and how to lobby.
>Secondly, market power exists, and it is not, as Schumpeter argued, temporary. Larger firms have more market power, and therefore more power to plan. The decisions made by large multinational corporations have implications for the whole of society: these firms shape the direction of innovation, how our political systems work, and our relationship with the natural world. They are not all-powerful — the market does impose some constraints — but neither are they powerless.
>Thirdly, the state is not a neutral entity whose sole purpose is to construct and maintain the conditions necessary for free market competition. Instead, the state is likely to be influenced by the power relations in wider society — and in an economically centralised society, they will be influenced by firms with market power.
Marxists begin their analysis of capitalism from entirely different assumptions than those made within neoclassical economics. First, Marxists study the production of commodities, rather than simply exchange. The firm is not a ‘black box’ converting inputs into outputs; it is the foundation of the capitalist system and it exists to facili-tate the control of labour power by capital.
Portraying the firm as a black box allows economists to avoid confronting the political relationships of exploitation that exist within it. In fact, those economists who have developed ‘theories of the firm’ have accidentally ended up coming to conclusions that sound almost Marxist.
According to the free market model, firms are all just small producers responding automatically to market signals. In this view of the world, no one has any power — in-stead the market is all-powerful, and our equal participation in it creates a kind of democracy.
But ‘the market’ is not some sort of natural, ethereal phenomenon — it is constructed. States, corporations, and financial institutions set the rules of the game, as well as being powerful players within that game.
But in reality, states construct markets, and market outcomes influence the nature of the state.
The centralisation of capital — the concentration of power within the capitalist world system into an ever smaller number of hands — generates contradictory tendencies.
As Marx notes in volume one of Capital, the centralisation of capital augments the ‘mass of misery, oppression, slavery, degradation, exploitation’. In a system in which power is so concentrated those at the top of the hierarchy are able to extract more than ever from those below them: wages stagnate, rents increase, and corruption becomes endemic.
The concentrated power that exists today within imperial states and multinational corporations seems all but impossible to resist.
A movement filled with people who realise the true extent of their collective power might quickly realise that, in this age of profound crisis, monopoly capital is far weaker than it appears.
