The empirical evidence suggests that Marx was wrong. There is no tendency for capital to become more concentrated. Studies show that firm growth is independent of size (or anything else!), and so the distribution of firm size doesn’t change much over time. The degree of competition or monopoly is roughly stable. Tesco or Wal-Mart might seem monopolistic, but they are less so than 19th century truck stores.
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It's obviously disappointing to hear from the Business Secretary, but the view that capitalism leads to an increasing concentration of capital is very common. Warren Nutter's empirical work on the USSR* should have conclusively demolished this Marxist myth but sadly it remains.
The problem here is the term "capitalism". To free marketeers it means a system of private property rights and voluntary interaction. To most people it means the status quo. This reminds me of the fairtrade debates, with illogical statements such as:
my thesis that the problem with free trade is that it's not free.
Similarly if Cable's problem with capitalism is that it allows large companies seek (and get) regulatory protection (i.e. stifle competition), then it's not capitalism. It's abundently clear that when people use "capitalism" they mean different things, therefore if anyone *does* use it, without revealing how they're defining it, debate is futile.
Finally, I give a talk each year in Cambridge on the concept of compeition and monopolies. Competition means "trying to gain what your rivals are trying to gain". Remember that.
*Nutter, G. Warren. 1962. The Growth of Industrial Production in the Soviet Economy. Princeton, N.J.: Princeton University Press.
It's so nice to have you do all of the research for us. It makes our decision making so much easier!! Thanks.
Posted by: MBT Shoes | July 14, 2011 at 11:10 AM