Concentration and Centralisation of Capital
자본의 집적과 집중
Marx's distinction between two ways in which individual capitals grow. Concentration (Konzentration) is the growth of a capitalist's own capital by reinvesting surplus value; it is practically identical with accumulation and is limited by the growth of social wealth. Centralisation (Zentralisation) is the merging of capitals already in existence into fewer, larger ones through defeat in competition, mergers and joint-stock companies, and can take place without any growth of total social capital. Marx saw competition and credit as the most powerful levers of centralisation, and Lenin held that the tendency leads to monopoly.
In depth
How do capitals grow?
A capitalist does not spend all his surplus value. He lays out part of it again on means of production and labour-power and so produces on a larger scale the next year. This is accumulation. In chapter 23 of Capital, volume I, Marx described accumulation as the gathering of means of production in the hands of individual capitalists: "Every individual capital is a larger or smaller concentration of means of production, with a corresponding command over a larger or smaller army of workers. Every accumulation becomes the means of new accumulation."
Jedes individuelle Kapital ist eine größere oder kleinere Konzentration von Produktionsmitteln mit entsprechendem Kommando über eine größere oder kleinere Arbeiterarmee. Jede Akkumulation wird das Mittel neuer Akkumulation.
An example (the figures are assumptions): a firm with a capital of 10 billion won makes 1 billion won of surplus value in a year and reinvests half of it; the next year its capital is 10.5 billion won. Growth resting directly on accumulation in this way Marx called "concentration". He gave it two features. First, it cannot outrun the growth of social wealth. Second, the capital in each branch of production is divided among many capitalists competing with one another, and the number of capitalists also grows as fortunes are divided among heirs and new firms split off. Accumulation therefore appears on the one hand as growing concentration of the means of production and of command over labour, and on the other as the mutual repulsion of many individual capitals.
How does centralisation differ from concentration?
Against this works an opposite force: the attraction of capitals to one another. Marx said this is no longer simple concentration identical with accumulation: "It is concentration of capitals already formed, the abolition of their individual independence, the expropriation of capitalist by capitalist, the transformation of many smaller into fewer larger capitals."
Es ist Konzentration bereits gebildeter Kapitale, Aufhebung ihrer individuellen Selbständigkeit, Expropriation von Kapitalist durch Kapitalist, Verwandlung vieler kleineren in weniger größere Kapitale.
This process is not limited by the growth of social wealth. "Capital swells here in one hand to great masses because there it has been lost in many hands. This is centralisation proper, as distinct from accumulation and concentration." In the example above, if three of ten firms worth 10 billion won each merge into a single firm of 30 billion won, total social capital has not grown by a single won, but its distribution has changed greatly.
Das Kapital schwillt hier in einer Hand zu großen Massen, weil es dort in vielen Händen verlorengeht. Es ist die eigentliche Zentralisation im Unterschied zur Akkumulation und Konzentration.
What drives centralisation?
Marx did not develop the laws of centralisation in detail but pointed briefly to the facts. Competition is fought by cheapening commodities. The cheapness of commodities depends on the productivity of labour, and that on the scale of production. "The larger capitals therefore beat the smaller." As capitalism develops, the minimum capital needed to run a business under normal conditions grows, so smaller capitals crowd into branches large-scale industry has not yet taken over, where competition is fierce and many of them go under.
Die Wohlfeilheit der Waren hängt, caeteris paribus, von der Produktivität der Arbeit, diese aber von der Stufenleiter der Produktion ab. Die größeren Kapitale schlagen daher die kleineren.
Credit adds to this. The credit system creeps in at first as a modest helper of accumulation, drawing money scattered across society into the hands of individual or associated capitalists; it soon becomes a new and terrible weapon in competition and finally turns into an immense social mechanism for the centralisation of capitals. Marx called "competition and credit the two most powerful levers of centralisation".
Im Maß wie die kapitalistische Produktion und Akkumulation, im selben Maß entwickeln sich Konkurrenz und Kredit, die beiden mächtigsten Hebel der Zentralisation.
Centralisation is far faster than accumulation. Marx took the example of railways: "The world would still be without railways if it had had to wait until accumulation had brought a few individual capitals far enough to build a railway. Centralisation, by contrast, accomplished this in the twinkling of an eye through joint-stock companies." Centralisation proceeds both by the violent road of annexation, swallowing competitors, and by the "smoother" road of forming joint-stock companies, and the economic effect is the same.
How far can centralisation go?
Marx sketched the theoretical limit: in a given branch of industry centralisation would reach its extreme when all the capital invested there had fused into a single capital; in a given society, only when the entire social capital was united in the hands of a single capitalist or a single capitalist company. Engels added a note to the fourth edition of 1890: "The latest English and American 'trusts' are already striving towards this goal by trying to unite at least all the large-scale enterprises of a branch of business into one great joint-stock company with a practical monopoly."
Die neuesten englischen und amerikanischen "Trusts" streben dies Ziel bereits an, indem sie versuchen, wenigstens sämtliche Großbetriebe eines Geschäftszweigs zu einer großen Aktiengesellschaft mit praktischem Monopol zu vereinigen.
What does it mean for workers?
The great masses of capital welded together overnight by centralisation introduce machines and new techniques faster. Centralisation, Marx said, not only heightens and accelerates the effects of accumulation but also accelerates changes in the technical composition of capital that increase its constant part at the expense of its variable part, so reducing the relative demand for labour. The organic composition of capital rises, and while production grows, jobs do not grow as fast, so the industrial reserve army swells.
At the end of volume I Marx tied centralisation to the historical tendency of capitalism: "This expropriation is accomplished through the action of the immanent laws of capitalist production itself, through the centralisation of capitals. One capitalist always strikes down many." Along with this centralisation, he held, grow the cooperative form of the labour process, the conscious technical application of science and means of labour usable only in common, until the socialisation of labour reaches a point where it becomes incompatible with its capitalist integument.
Diese Expropriation vollzieht sich durch das Spiel der immanenten Gesetze der kapitalistischen Produktion selbst, durch die Zentralisation der Kapitale. Je ein Kapitalist schlägt viele tot.
How did Lenin build on the analysis?
Lenin devoted the first chapter of Imperialism, the Highest Stage of Capitalism (1916) to the concentration of production and monopolies. Half a century earlier, when Marx wrote Capital, he observed, free competition seemed to most economists a "law of nature", but Marx had proved by theoretical and historical analysis "that free competition gives rise to the concentration of production, and that this concentration at a certain stage of its development leads to monopoly". "Today," he added, "monopoly has become a fact."
свободная конкуренция порождает концентрацию производства, а эта концентрация на известной ступени своего развития ведёт к монополии. Теперь монополия стала фактом.
Lenin regarded this "transformation of competition into monopoly" as one of the most important phenomena of the latest capitalist economy and traced it in German, American and British industrial statistics. His Russian "концентрация" is used in a broad sense covering both Marx's concentration and centralisation.
The idea of accumulation and centralisation did not originate with Marx. Early socialists such as Charles Fourier, Louis Blanc, Victor Considerant and Constantin Pecqueur had already spoken of the concentration of capital, and Marx borrowed the idea and systematised it within the law of accumulation.