Concentration of Production

the process of growth in the number of large-scale enterprises and the concentration in these enterprises of an increasing share of the society’s means of production, work force, and output.

Concentration of capital and production is a law of capitalism. Under capitalism the condition for concentration of production is concentration of capital. The capitalist can only expand an enterprise if he accumulates more and more capital. Concentration of production intensifies the concentration and centralization of capital. Large enterprises have advantages over small ones in both the production and circulation spheres; therefore, the rate of profit for their owners is always higher than that of small business owners, who are thus at a competitive disadvantage. This is the basis of the complex interdependence between the concentration of capital and the concentration of production.

At the turn of the 20th century the concentration of capital and production led to the appearance of monopolies. The joint-stock company became the prevalent form of capitalist enterprise. Imperialism brings monopolistic concentration, which means that economic power is increasingly concentrated in the hands of the largest monopolies. The competitive ability of the monopolies is exceptionally high. As they acquire more capital, the degree to which they exploit workers becomes greater, the efficiency of use of fixed capital becomes higher, expenditures for marketing goods become lower per unit of output, and profits become greater. The vast production and marketing networks both within the country and abroad ensure stable growth in the monopolies’ incomes. The profitability of operations of the largest monopolies is especially high, and the more profit monopolies receive, the greater their opportunities to capitalize it and to absorb less powerful competitors. Capital investments per worker are approximately ten times as high at an automated enterprise as at an unautomated one. Ownership of the results of scientific research and the ability to change the product line to accommodate changes in demand have become primary aspects of the competitive struggle. The economic advantages of monopolistic firms are growing.

Government incentives have become a powerful factor in promoting concentration of production. Consolidated companies receive special state subsidies and tax breaks. Monopolistic concentration is intensified by militarization of the economy: the state gives its military orders primarily to the large military-industrial combines on exceptionally advantageous conditions.

International competition develops particularly in connection with imperialist integration, and it accelerates monopolistic concentration of production. For example, within each of the coun-tries of the European Economic Community (EEC) and the European Free Trade Association (EFTA), monopolies are trying to consolidate their forces to counter competition from other countries, whether members or nonmembers of these groups. New mergers are taking place and new agreements are being concluded among the monopolies. In addition, associations and agreements among the monopolies of particular countries of the EEC and EFTA have become necessary. All these factors increase the level of world concentration of capital and production. The present level of monopolistic concentration of production can be judged by the following figures: in Germany in 1907 enterprises with more than 50 workers constituted 0.9 percent of all enterprises, whereas in the Federal Republic of Germany (FRG) in 1966 they were 24.1 percent. The figures on the largest enterprises are especially revealing. In the FRG the largest enterprises are those with total annual turnover of 250 million marks and more. In 1965 they made up 0.4 percent of the total number of enterprises, but they employed 28.1 percent of the total number of production and office workers and had 34.6 percent of the total turnover of all enterprises in the country.

The process of concentration of production has also engulfed agriculture. In the United States in 1967 there were 3.2 million farms. Their total proceeds from sale of goods and from services came to $35 billion. But just 157 agricultural corporations of various types had total earnings of $14.3 billion from such sales and services.

The level of monopolistic concentration of industry cannot always be judged by figures on the size of the larger production units and their share of gross production. Sometimes monopolies do not attempt to increase their enterprises to the largest size technologically possible but rather aim at determining the optimal size for their production units. As units grow larger, production costs decrease; however, since the rate of profit also depends on expenditures to transport output to the buyer, a point is reached where it becomes more advantageous for the monopolies to build new enterprises closer to marketing centers rather than to increase the size of existing enterprises. Therefore, the level of monopolistic concentration is characterized not so much by the sizes of individual production units, no matter how large they may be, as by the total volume of production concentrated in the hands of the monopolies, which is determined by the number of enterprises the monopolies own. In the United States the General Motors Company has 125 basic enterprises, not counting the many subsidiary production units. According to figures for 1969 the company’s enterprises employed 757,000 workers and had a total annual turnover of $22.8 billion. Such centralization of the means of production in the hands of the largest monopolies has carried concentration far beyond the bounds of individual production units to a level unprecedented in history.

As concentration and centralization of capital and production proceed, the basic contradiction of capitalism and the entire set of contradictions that characterize it become deeper. A broad antimonopolistic coalition is taking shape. The material prerequisites for socialism are growing, and the sociopolitical conditions for new socialist revolutions are developing.