In its infant stage, capital seeks to win market share by lower prices, including lowering prices by adulteration of its products. But, by even the latter part of the 19th century, it sees that such methods are unnecessary and counterproductive.
“Though not expressly stated in our recognised treatises, it is still a law of modern Political Economy that the larger the scale on which capitalistic production is carried on, the less can it support the petty devices of swindling and pilfering which characterise its early stages. The pettifogging business tricks of the Polish Jew, the representative in Europe of commerce in its lowest stage, those tricks that serve him so well in his own country, and are generally practised there, he finds to be out of date and out of place when he comes to Hamburg or Berlin; and, again, the commission agent who hails from Berlin or Hamburg, Jew or Christian, after frequenting the Manchester Exchange for a few months, finds out that in order to buy cotton yarn or cloth cheap, he, too, had better drop those slightly more refined but still miserable wiles and subterfuges which are considered the acme of cleverness in his native country. The fact is, those tricks do not pay any longer in a large market, where time is money, and where a certain standard of commercial morality is unavoidably developed, purely as a means of saving time and trouble. And it is the same with the relation between the manufacturer and his “hands.””
(Preface to the English Edition of “The Condition of the Working Class in England)
The same was true with the clean up of the towns and cities.
“Again, the repeated visitations of cholera, typhus, small-pox, and other epidemics have shown the British bourgeois the urgent necessity of sanitation in his towns and cities, if he wishes to save himself and family from falling victims to such diseases. Accordingly, the most crying abuses described in this book have either disappeared or have been made less conspicuous. Drainage has been introduced or improved, wide avenues have been opened out athwart many of the worst “slums” I had to describe.”
(ibid)
The development of welfare states, and of large-scale, Fordist socialised healthcare meant that it too helped protect the bourgeoisie from the rampant spread of diseases, but also meant that all of the techniques of large-scale production could now be applied to the production of drugs, and medical science, paid for out of workers wages (via tax and social insurance), which vastly reduced the cost, and increased the availability of such treatments for the bourgeoisie too.
And alongside these changes comes political changes as the industrial bourgeoisie recognises that it cannot hold power without the support of the industrial proletariat.
“The manufacturing capitalists set about the realisation of this their great object with that strong common sense and that contempt for traditional principles which has ever distinguished them from their more narrow-minded compeers on the Continent. Chartism was dying out. The revival of commercial prosperity, natural after the revulsion of 1847 had spent itself, was put down altogether to the credit of Free Trade. Both these circumstances had turned the English working class, politically, into the tail of the ‘great Liberal Party’, the party led by the manufacturers. This advantage, once gained, had to be perpetuated. And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class.”
(Preface To The Second German Edition of “The Condition Of The Working Class)
The male industrial working-class obtained the vote, meaning that it was only a matter of time, before the reality of their preponderance had to be manifest in the form of a social-democratic party, rather than the Liberal Party, even though, ideologically, there was no difference between them. It simply reflected that the underlying economic and social relations were now those of social-democracy, of this alliance between large-scale industrial capital, and the organised industrial proletariat. It reflected the fact that the economy was dominated by this large-scale industrial capital, which itself had now assumed the form of socialised capital.
“Capitalist production by joint-stock companies is no longer private production but production on behalf of many associated people. And when we pass on from joint-stock companies to trusts, which dominate and monopolise whole branches of industry, this puts an end not only to private production but also to planlessness.”
(Engels, Critique of the Erfurt Programme)
The economy was now dominated by this large-scale socialised capital, organised in large oligopolies and trusts, with production now planned, and along with this planning went a social-democratic state, which also acted to plan and regulate the economy as whole, including via the welfare state, both as a regulator of the supply of labour-power, and, because it accounted for around 40% of the economy, acted as a set of automatic stabilisers upon it. Alongside this fiscal regulation and planning of the economy went monetary planning via the central banks. All of these social-democratic measures were extended on an international level, following WWII, as a result of the decisions made and institutions created at Bretton Woods.
In the 20th century, and particularly after WWII, as the capitalist economy becomes one based upon the domination of oligopolies and planning and regulation, in place of free market competition, so the competition between these large firms itself changes. Competing for market share, on the basis of price, is destructive for these oligopolies, because, whilst a price cut, by one firm, will inevitably be followed by a price cut by all others, thereby, reducing the profits of all, a price rise, by one, will not necessarily be followed by a price rise by others. This is one reason that central banks intervene to prevent nominal falls in prices. Now, oligopolies compete for market share, not on the basis of price, but on the basis of quality, whether real or perceived. In order to increase market share, firms attempt to prove to consumers that they are offering something more than their competitors, which may be only a consequence of branding and clever advertising, using sophisticated psychological methods.
But, its clear that this process has resulted in very real improvements in the quality of products that firms have brought to market in order to gain market share. Its not just a question of clever design of cars and other products, but that there have been continual and significant improvements in engine technology to improve fuel efficiency and so on. There has been significant improvement in the safety of cars, and in their durability, compared to the cars of fifty years ago that were notable for rusting away within a period of just a few years. Oligopolistic competition takes the form of this continual drive to improve quality so as to win market share. That in itself drives technological development, so that the same forces described by Marx as underpinning The Civilising Mission of Capital continue to operate. And, although firms do not compete on price, they still seek to reduce their own costs, by technical innovation, because by that means they also increase their own profits.
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