Sainsbury-ASDA

Liberals are already bleating about the merger between Sainsbury's and ASDA.  It will be bad for consumers they whine, but will be allowed to go ahead because the competition authorities had failed in the past to prevent TESCO getting too big.  All of this moaning from Liberals is reactionary nonsense.  The concentration and centralisation of capital is a normal feature of the way capital accumulates, and the way capitalism works.  Indeed, far from it being something we should oppose, it is something, as Marx set out more than a century ago, we should welcome, because that development is part of the process, by which capitalism itself creates the forms, and material conditions required for society to move beyond the limitations of capitalist production and distribution towards socialism.

The Liberals complain that the development of large oligopolies - rarely do actual monopolies exist - leads to a lack of competition, and so higher prices, for consumers.  Actually, as Marxist economists described during the 1980's, that is not true.  Marx himself, in "The Poverty of Philosophy", set out the way monopoly led to competition, which led to monopoly, which led to competition at a higher level.  Oligopolistic competition, between huge companies does not proceed on the basis of the penny-pinching competition that characterised early 19th century, free market competition, between a plethora of tiny capitals.  The competition between large companies proceeds rather on the basis of trying to avoid reducing prices, but to obtain instead higher profits by reducing costs, via higher levels of efficiency, more effective investment, and economies of scale.  The competition is driven by a desire to retain and win market share on the basis of improvements in the quality of the goods and services provided, which often goes along with the technological improvements that these large companies - and often it is only very large capitals that can fund such technological research and development - bring about so as to reduce their own costs, and increase their profits.  But, as Marx sets out in Capital III, and in Theories of Surplus Value, these very same technological improvements, that these very large companies bring about, which reduce the cost of production, themselves, thereby, reduce the market value of those goods and services, and consequently reduce their price of production.

The consequence is that rather than prices rising, they fall in real terms over a period.  The large companies avoid destructive price wars in terms of reductions in nominal prices, where possible, but that is precisely why social-democratic, capitalist states introduced central banks at the start of the last century, which were able to manipulate the supply of money tokens and credit, so as to enable real prices and wages to fall, whilst nominal price levels rose.  The large companies are usually able to obtain a higher than average rate of profit, and these surplus profits then provide rents.  Some of that rent goes to the workers employed by the large companies, which can afford, as one of the economies of scale, to pay higher than average wages, especially where the size of the firm facilitates workers organising into effective unions; it means they can afford to provide better working conditions, training and so on.  Indeed, it is one of the reasons that Liberals have always opposed such large companies, because it facilitates other forms of collective organisation, such as trades unions, whose members are thereby enabled to obtain advantages over the atomised, individual workers who are the building blocks of the bourgeois liberal ideology.

The lesson that socialists draw from the natural development of capital, into larger, more effective units is not that such units should be broken apart, or prevented from forming, by some kind of reactionary, anti-monopoly legislation, but that it should be welcomed as a harbinger of the future, more rationally organised, more efficient future.  What the development of huge socialised capitals like Sainsbury-ASDA shows, is not that such such companies should be broken up into smaller, less efficient units - which history shows, as with the introduction of similar anti-monopoly policies at the end of the 19th century, will only result in those separate units themselves once again forming into huge companies - but that we need workers control over these companies.  Alongside social-democracy in society, that provided millions of workers the right to vote, on issues relating to life outside their workplace, what we need is also social-democracy, industrial democracy in the workplace.  As Marx set out in Capital III, Chapter 27, in the worker-owned co-operatives, that industrial democracy automatically exists.  But, in joint stock companies, in economic terms, there is no difference to a co-operative.  The capital in a joint stock company, as with a co-operative, is socialised capital, not privately owned capital.  The capital belongs to the firm itself, not to any individual or group of individuals.

The only difference is how the different types of socialised capital raise money-capital to be able to acquire the productive-capital of the company.  A worker-owned co-operative raises money from the workers it employs, each having a share in the company, as well as the co-operative borrowing money-capital on the money market.  A consumer co-operative issues shares to its members, on which they get divi, in proportion to how much they spend, again as well as borrowing money-capital in the money market.  A joint stock company borrows money, by issuing shares, bonds and debentures, as well as borrowing money-capital in the money market.  But, in each of these cases, those who lend money to the companies, are thereby only creditors of the company, entitled to receive interest on the money they lend, and nothing more.  Yet, the political power of the shareholding class, has enabled them to exercise control over capital they do not own, capital they gave up possession of in return for being paid interest.

What the Sainsbury-ASDA merger shows is not the need to prevent such progressive developments of capitalism, but the need to bring the social relations of society into alignment with these new productive relations that capitalism has established.  It means it is time for social-democracy to extend democratic control from society into an effective industrial democracy in the workplace.  Rather than committing to a reactionary breaking up of these large companies, or a pointless, and expensive programme of nationalisation, what a progressive social-democratic government should propose is to simply end the undemocratic and unjustified control over social capital, that a tiny group of money lenders - shareholders, not even other forms of money lender - currently exercises.  Progressive social-democratic parties, such as Corbyn's Labour, should commit to a reform of the laws on Corporate Governance.  They should build upon the move in that direction that Germany took decades ago with its co-determination laws, that the EU put forward in the Fifth Draft Company Law Directive, and that the Bullock Report proposed in Britain in the 1970's, before the conservative reaction put a halt to such social-democratic development.

The unjustified ability that shareholders have to vote and control capital they do not own, to elect Boards of Directors to further the interests of shareholders, as against the interests of the company, is an anachronism.  Not even other forms of money lender to companies have that right, and the idea that control over property should be exercised by those that do not own it, is fundamentally contradictory to bourgeois property laws themselves.  Yet, that is exactly the right that shareholders currently exercise.  Progressive social-democratic parties should commit themselves, and this is something they could co-ordinate and propose across Europe, quite easily, to removing that right from shareholders, and requiring that company boards be elected entirely by and from the workforce within the company.

On that basis, the progressive nature of these large capitals, and the ability to move beyond them to a more rational, co-operative coordination of their investment and business planning with other such large capitals could be extended across the global economy, and thereby begin to organise production and distribution of goods and services to meet workers and consumers needs, not simply to meet the demands for creating profits.