Capital III, Chapter 27 - Part 5

Engels goes on to describe the way that this process thereby leads from competition to monopoly – not the monopoly now of the private capitalists, but the monopoly of giant socialised capitals – in the form of the trusts and cartels, and in the ultimate form of the state capitalist enterprise. In Chapter 15, Marx had written,

“The rate of profit, i.e., the relative increment of capital, is above all important to all new offshoots of capital seeking to find an independent place for themselves. And as soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished. It would die out.” (p 259)

But, the process he and Engels are now describing, of the development of these huge socialised capitals, amongst which, today, we would also include the multinational and transnational corporations, are ones where the mass of profit compensates for a reduced rate of profit. They do dominate the formation of new capital.

And so, Marx is led to write of this process, unfolding before his eyes, even then in 1865,

“This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property.” (p 438)

As Marx says, this process is necessarily contradictory. On the one hand, labour and ownership, which existed directly for the direct producer, and also existed for the functioning private capitalist, is abolished by the joint stock company. The workers are paid a wage, but even the functioning capitalist, the manager, is now just a worker paid a wage too. The firm's capital belongs to no one individually, but belongs to the company itself, as a legal corporate entity, in its own right. It is the property of the “associated producers”, i.e. all of the workers, from the manager down to the unskilled labourer. On the other, as socialised capital, every worker from the manager down to the day labourer, can buy shares, either in the company they work for, or some other, and thereby claim a share of the profits of that company, as interest on the money-capital they advance.

Money-capitalists have to periodically keep their
bureaucrats in check.

On the one hand, everyone is a worker within the company, but on the other, as Marx set out earlier, the contradiction implicit in this leads money-capital, in the form of the main shareholders, to establish their own tiers of management, above the actual managers, whose sole function is to monitor the managers, in the interests of the shareholders. In turn, these Boards of Directors, whose remuneration is in inverse proportion to the amount of time and work they contribute, form a sort of capitalist bureaucracy, with its own interests, and which, as was seen at Enron, Tyco etc., will, if left unchecked, further its own interests at the expense of the company and the shareholders.

And, as events at the Co-op Bank showed, in Britain, its not just the capitalist joint stock banks where this problem exists. Wherever such bureaucracies exist, which generally means wherever ownership and control is separated, they will always tend to pursue their own interests. Where that separation of ownership and control is most pronounced, in state capitalist enterprises, is where the bureaucracy is most enabled to pursue its own interests, and where inefficiencies that flow from that are most pronounced.

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