3 Competition and Monopoly
Marx's historical materialist analysis demonstrates the way that commodity production and exchange implies competition. Each commodity producer competes with others, in that sphere, for market share, even if only to be able to sell all of their output. This competition brings it into conflict with the old feudal monopolies, organised via the guilds, which regulated production and prices. An equivalent was the use of Retail Price Maintenance, in the 1960's, operated by producers to determine the minimum price that retailers could charge for their products. Another example was the British Milk Marketing Board, which fixed the price of milk.
The old feudal monopolies, even backed by the power of the feudal state apparatus, could not, ultimately, survive against the lower cost production of the bourgeois producers. As Marx says in The Communist Manifesto, its low prices were the battering ram with which it broke down all Chinese walls. This competition, as Marx and Engels describe, here, and in A Contribution To The Critique of Political Economy, is the basis of “equality”. It reduces all heterogeneous, concrete labour to one single, abstract, universal labour, which, now, becomes the metric for determining the market value of commodities, and, consequently, their exchange-values. In the exchange of commodities, it replaces the unequal exchange, of the old feudal production, sustained by monopoly, with the equal exchange of values, based upon a free market of equals.
But, of course, these participants, in this market, based on competition, and exchange of equal market values, were not equal at all. As Marx sets out in The Critique of The Gotha Programme, if they were all equal/the same, they would not be distinct individuals. As Lenin describes, in his polemics against the Narodniks, and, graphically, in The Development of Capitalism In Russia, some of the small independent commodity producers, had larger families, giving them access to larger amounts of family labour, without resorting to the purchase of labour. Even at a small scale this family labour enabled a degree of technical division of labour.
These families of small commodity producers, thereby, were able to produce commodities on a larger scale, and more efficiently, enjoying economies of scale, for example, being able to sell their larger output, themselves, in more distant markets, without resort to merchants. In turn, that enabled them to become buyers-up of the output of their neighbours, who produced on a smaller scale, meaning that they obtained commercial profit, and even became merchants themselves.
So, competition, which enforces equality of prices, and exchange based upon average market values, necessarily results in differentiation, because not all producers are equal, and some produce commodities whose individual value is lower than the market value, giving them a competitive advantage, whilst others produce commodities with an individual value higher than the market value, putting them at a competitive disadvantage.
The former are then able to use their higher money income to buy additional and better equipment, so as to become even more efficient. They are able to employ labour profitably, even if, as described earlier, this is not yet wage labour. But, their less fortunate neighbours, thereby, become less able to compete and stay in business. They start by selling their labour in addition to their own production, and, then, having to abandon the latter, must become sellers of the only commodity they, now, own, their labour-power.
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