interesting and important book. it represents sn attempt to explain the contemporary functioning of the capitalist system in the United States with the Marxist tools of analysis. yt it rasolutely breaks with the stercotype repetition of the Hilferding-Lenin snalysies which is, after all, wore than half a century old, and tries to apply the tools in an independent way to the reality of to-day. Monopoly Capitalism is pore than that- It is an attempt to explain all the typical aspecta of American aociety teday - its foreign polioy and the rise of mental illness; the crisis of the aducational system and the militant upsurge of the Negro movement - by the saoic=-saconomis roots of that soolety which the authors are convinced they hays discovered. Much of that analyais is atimulating and some of it ia a coursfeous advance compared with the positions which Sweasy defended in The Theory OF Capitalist Development and The Present js History. Sat intercating as it would be to oritically analyee many of these parts of Monopoly Capitslian, it would pat cos “t attention from what shovld be the mal i problem posed by + tha book! the discussion of tho problom of "surplus" absorption" and the political perspectives which tha suthora have drewn from their economic analysis. In The Political Boonos pony Of Growth. Paul A-Baran had shovm the operative usefulness of the notien of "economic “ surplus" for understanding thea eseonomic problems of the underdeveloped countries. Contrary to the current apologetic assumption about the "vicious eirole of poverty" - “underdeveloped countries are poor because they invest too littlejand they invest too little because, as a result of their poverty, too small a part of too small an income can be invested" - Baran proved that the potential investment fund of these countries (i+e.the part of the national income not consumed by the producers) is actually a larger part.of national income than in the industrialiged eountries. Thereby he counterposed to a tedious teautolegy (the backward countries are backward because thay are backward" tthat's what the "vioious circle of poverty” really aays) an emalytical and aceially critical a exuplanation: that there is a substantial potential investment fund in the backward countries, but this cannot be channe lled towaria speedad-1 economic growth because of apect ific social -forces{ the native ruling classes and foreign imperialism) with whose interests such a channelling would clash. The advantage of tha Baran thesis is 2 double ona: at one and the same tine it explains why there hea been no significant econonio growth in those samd-oolonial and colonial countrios which hava remained imprisoned in their Gld social strustures and in- the capitalist world market, and why-those countries which, thanks te a social reyolution heave broken those foatters, attually have experienced a process of economic growth st sometimes breathtaking speed- In Konopoly Capitalism, Swaezy and Baran now try to apply the same eategory of “economia surplus" to the moat advanocd industrialised eapitalist society of today: the United States of smorite- Their thesla oould briefly be summarised as follows:
at 2 certain stage of capital concentration thera cocurs a deaisivs change in the way the sarket operates. Under sonopoly capitalism, the , HONGPOLY CAPITALISM :an Essay or on the Amerioan Economie ana BSoaial Order, by Paul j-Baran & Paul N.Sweesy.1966. Monthly Review Frass,402pp- & &-75-
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capitalist entrepreneurs had to be content- JI drew the sonolusion that administered prices and high surplus profit;had cut loose the corporations Pron control by investment banka snd sade thom finansially autonomous, their main probles becoming one of disposal of surplus eapitel. I indicated that the main uses for this surplus capital were (1 }investment in sales effort and service industries (which have the great advantage of enjoying a lower orpanic composition oF capital, and gould thereby counteract the tendancy to= wards a declining rate of profit resulting from an increasing organic oomposition of capitel, (2) inerease in military expenditures and (3) foreign investmente-4+ Excess cspacity and surplus capital without outlets seamed for me as for Sweary and Baran the main oontradiotory features of monopoly capitalian. If? ona compares this analysis with that of Monopoly Canitslia= one sould get the impression, at Tirat- sight, that the only differeneas are tarninological: where I speak about the growth of surplus capital, Swaecy and Baran speak about the growth of “eoonomic surplus". It would be easy to arse of oourss that even that differance is not simply terminological, but strikes at the roots of Marxist economic theory. Sweeny and Baran define the catagory “economic surplus" as "the differsnes between what a soolety produces and the cost of producing it"(n-9) in 4 very loose ways If ons uses the definition in a literal sense, ona could conclude that the problem which they call "surplus absorption” ia just the old problen of "surplus-value realization". But the authors do not stick consistently to that definition. Suraly, depreciation costa — sbhstractions sade of excess allowances which are juat hidden profit, i-e- surplus value = ara not part of surplus value but reproduction of constant capital. Equally to take sales ooste ch bloo ag part of the aurplua is to indicate that this notion encompasses sozething sore than surplua value» Evidently, the part of asles costes which is just reproduction of capital invested in the service sector is not part of agedial capital. &o ons getea the impression that the authors haye mixed together surplus capital and surplus product, and that they would need at loast to disentangle thesas two categorias bafors they could prove conrinaingly that the "surplus" (and the rate of profit) has been tonstantly inoreasing ainca
These are not just semantic nicetieas In « market economy "surplus product” can be disposed of only through exchange: it assumes the physical form of sommodities for which there are no customers. "Surplus capital",on the contrary, is potential purshasing power which, for the moment, finds nothing to buy. One now seea the logical inocneiatency of adding aurplus pradust to surplus 8 lea there indeed an operation of subtraction would be more to ¢he point- The real problem is « double ona: to invest aastted in such a way aa not to further reduce the tharket for the existing monopolies which alresiy operate at leas than full capacity because of insufficient markets; to asaure & constant level of ospacity utilization for the existing industries, although the lawa of motion of capital tand to depress this level of capacity: thea answer to the firat problem has been till now: tha militery estetlishment, the seryica industries and capital export. The anawer to the 2nd problem has been easentially, oradit,i-e. « colossal privata and public debt structure, and constant inflation (ineidentally, tho question of transfer pay= mants of the state, of social welfare, and in general of the budeet as a source of income to realise part of the aurplus valus without immediately reducing either wages or profite has ite place in this chapter. !. The qyastion of visbility of the economic system in the long min car
dominant corporations ars so atrong that they can practically suppress price competition and price outting- But teshmologicel innovation continues at the fame tine, and the dominant corporstions continue to respond to strong inoent=ives for cutting produotion ocsta» Therefore there comes into being a widening gap between production costs and selling pricas, os a.result of which the rate of profit tends to increase sharply: Or, to put it in the author's words: the econonio surplus tonds: ‘to gron sonatantiy-
But the monopolists must now dispose of the aurplus+ And the normal outleta Tor surplus absorption seem to be blocked. Consumption by the depitelists themselves docs not grow at an ever increased pace (the authors use only one indicator to prove this,i-e. the fact that distributed dividends represent a declining portion of total net corporate profits; but the demonatration seems to us quits convineing). Productive investment cannot crow at such a paca either, for this would orgate an even bigger surplus asbearption problem and would rapidly snowball into a trometdous excess capacity. To put it in other words, the corporations don't inveat just beemuse they have funds available; they invest only if they oan be reasonably sure cf aalling ‘the products the newly invested capital will produce.
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Bo 4f normal means of surplus -absorption become more and more insuffiecient and inadequate, new means must be discoversd. ind tha authors quote three main forms of surplus absorption which hayes rigean to phenomenal pro= portions sinca tha first and especially tha socond world war,i-a- since monopoly capitaliam fully developed ita main traits: a etepping up of sales effort. an cxpansion of the maans put st tha dtaposeal of civilian government; and an expansion of military expenditures. The ganeral tandenoy, therefore, ta to continuously increase the irration wmiity of the syatem. More and more people are busy producing more and more Foods whith are aither useless or wasteful or outright Harmful. They can't find any satisfaction in this sort of activity. -<nd more and more paople are kept buay trying to convinces the majority of citigens that theso useless, wasteful or outright harmful things should be bought or paid for by all means. The international isplicaticons sf puch an irrational system ara cvident: more and more agereasions abroadamong other things to support the growing foreign investments of the larga imorican ¢orporations = eventually leading towards the brink of tetal irrationality - nuclear world war and solf-deateuction.
Much of this analysis is not news Gweezy and Baran drew heavily upon the most intelligent academic analysads of contemporary capitalism, especially Steindl and Kalecki.t The theory of the raversal of tha tandendy towards declining profits after the firet world war into an apparent tendenoy to increasing profit has been devaloped at length by the American Marxist soonomist,Joseph Gillman.“ And the same author has also highlichted the tremendous incresas in the sales ecsts since the appearance of ronopoly capitalian, although he draws from it quite another conclusion than Sweeay and- Baran: (For Gillman, in brief®, unproductive expenses auch sa salea effort at home and abroad are indispensable for the raalization of surplua value to déeternine "net profit" and. thereby the dealine of the rate of net profit continues to ba valid.) Ross Luxemburg cetablished mora than fifty years ago tho importance of military expenditure for surplus value realization. nd the reviewer arrived in the beginning of tha aixtics at a series af conelisions, part of which are similar to those which Bweesy and Baran draw today:
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I stressed the appearance of two average ratea of profit in the esonomy af monopoly cspitalism: the average rete of surplua profit enjoyed by the monopolist sorporations; the lower average ge tate with which the rest of the
only be answered if one examines the contradictions arlaing in beth these fields: the absorption of surplus capital and the ehsorption of surpius product.» And here wa have the key to the basic weakneas of the Sweesy-Baren analysia. By i mixing together surplus capital and surplus product in their sategory of “oeonomic surplus, and thereby being unable to disentangle problema of excess capital absorption and excess comeedities disposal, they slur ovar tha main contradictions of the aystem which undarzine it econgmice ily. On the one hand, tha U-3. corporations could only have a guaranteed erowing market for their gooda (a guaranteed rate of operation for their growing productive capacity). if one assumes completa control over technol ogieal innovation and complete disappearance of price competition. This assumption ~ which is at least in perts of Monopoly Cspitslian implicit in the authors’ analysia = is unwarranted and in fact contradicted by actual devralopmenta.
The monopolist corporations are in fierce competition with foreign rivals for shares of the world market, and. these shares oan fluctuate rather sharply. They are challenged in their own home market by foreign competitors and by"new industries". Furthermore,perindical dechizies of the industrial reserra arny (during and after tho second world war, in the sixtica) tend to exert upward pressure on wages which can only be sonbatted through steppedup automation, which reconstitutes the reserva arny and brings downward pressure to bear upon wages.
For these reasons, notwithstanding a growing outflow of capital: from productive to non—productive purposes (mélitery production being considered non=productive in this context),there ia tha distinot threat of a declining rate of utilization of productive capacity, gf « rate of increase in productivity out-stelpping the rate of growth of production, end therefore. of growing unemployment. The "automation explosion" sannot be contained within the framework of a stagnating but aelf-oontent sooiet}y as Sweesr and: Baran depict it- It poses problems which monopoly capiteliom cannct solve within the framawork of its economic modus oy mend One way out of course would be an inoreasing number of "conventional" wars. 8nd there is certainiy a relation between the escalation of imp eibie li at ageresalon in Vietns and the difficultiss of the American economy, unde to abeorh four million unenployed even after the unheamnl-of period of five yaers prosperity.
On the other hand; a temporary solution of the overproduction problem haa been poasibla only through the erection of a ocloasal dabt structure and of constant inflation. Eventually this would tend to disorgsnise any om italist economy - but it could take a very long tine to do so = provided the USA were insulated from the outside world. But, ot fourse, it ia nothing of the kind. Inflation inside the UBi - a5 a nacessary prop against recurrent erave orlses of ‘overproduction - has worldwide sconsequences of which the international capitelist clasa anc its economists are very well aware» The contradiction between the dollar as sn instrument for antirecession policies on the U-- market ani the dollar as a means of payment of the world market, is rapidly reaching an explosion point- tmd the grave international monetary crisis which fa in the making will: have ita coangequentes on the US seanomy toa.
We cannot therefore scospt the conclusion of tha authers that there are no internal forcea inaide the economy of conopoly capitalism which are strong enough to challenge the system+ This conclusion again rasts on the implicit assumption that monopoly capitalism om somehow guarentes the mass of the wage and salary earners = the yast majority of American sociaty - & constant and slowly rising living etandami.
Otherwise, the thesia of the authors that the “organized corealof the dAnerican working class) in the basio industries have to a laree extent bean integrated into the system as consumers and idealogleally oonditioned mexbers of tha society" (. 363 » avon if it is fairly accurate description of the situation today, would by no means ba a valid proposition for the future. If one assumes that thea dual forces of automation and inflation will introduca growing instability into the American sconony, there is at least a reasonable assumption that this instability will eventwelly undermine the stability of the union buresauoracy and the relative quiescence of the workera. Aotive opposition to monopoly capitaliem which is today lar galy confined to the nepgro moyatent, the mtiwar protest of tha atiudent youth, md relative milit-= a any of certain lower=-paid wage and salary earners, sould realily blossom — inte a powerful and unbeatable alliance sround the industrial working ~ olass-
Having lost sight of the main internal contradictions of contemporary monopoly capitalism, Sweesy and Barsn look, dove all,torwsrda world revolutionary developments as possible avenues for challenging and overthrowing american monopoly capitalism. Taken by itsalf this is « healthy development, for Harcism is internationslist by ite very nature, end we fully agree with Swoary and Baran thet the main task for the progressive forces of American society today ta to Link up with forces of world revolution whith are Shallenging the mle of Capital on all continents.
Having discovered world revolution, Sweosy and Baran correctly stross its permanent character,i-e- its tendency to grow into a aocisliat stare. Here again we can only agree with them. And further, that the erowing involvement of the U-S- ruling clasa in military confliotg, with world revolution, will bring about important transformations in “Gonsciousneas of parts of the Jdmerican population seems also obvious. There is a direst link between the revolt in the Negro ghetto and the jfrican revolution. The counter=-revolutionary at tions of the U3 momopolista against the Cuban snd the Vietnam revolutions are the major causes of the new radicalization among “merican students and dimerican intellectuals.
But there still remains the inescapable conclusion that ell these . forces are today minority forces in American soolety; that even thea conscicus option in fayor of sooialism, as = result of the example of the more efficient and Bore damocratic funttioning of tha muntries calling themaslyaa sooialtat,—some time in the future predicted by Baran ang Sweesy,- could only be «a mintrity action, as are all purely idealogical options in history. Thia much is certain = in the absence of powerful socio-economic motives growing from the basic instability of A American society, the hope for a revolutionary overthrow of monopoly capitalise by these forces remains lergely utopian.
Worse, if the procass of world revolution, with ita inevitable upa and downs, continues in the sense of an overall exmansion, and if the military involvement of JS inperialisan againeat this process likewiss grows}; and if at the aame time the majority of the “merican people remains passively integrated * in a society which pusarantess at Lleaat its basla wolfare, than-we came to the , terribla conclusion that no objective forces could in the long run prevent nuclear world war,i-e- prevant the American ruling clasa, when finally in extreme frustration and isolated in its own past of the world, to defend the Rast part of its empire by all the meana at ita disposal, including nuclear reapons weapons» Certain no guteide forge could prevent some 4merioan Hitler from doing ao-
But wea can see no basic reason to accept such a pessinistica conolusian, which flows mors or less logically from the Sweezy and Baran analysia-
Growing world revolution will also bring with it erewing esonomic difficultdes for many parte of the international capitalist syaten, and inevitebly for the US ssonomy too. Incresaed intertwining of the Amerioan and internetional Capitalist esonomy will ovyentuslly traneform the eriais of world capitalise inte 4 ¢risis of “merioan capitalism. The ctrisia of american crapitalian will Abeke up the passivity of the dmerican working olass as it-did-in the thirties:
Outside the general line of research of tho problems of automation and inflation - although intimately related to them - there appears the supp lan= entary problem of the internationsl fraguentation of the cycle of world canitalisme One of the mein"stabilising” factors of world capitalism after World War 2 has bean the shsence of « general reoassion- Since 1945, recess= ions in the U84 (and in a few countries intimately linked with US economy), have coincided with « continuous boom in most of the Western Burepean sapitalist countries and in Japan. #@nd in the last three years recesaiona which scourred successively in four major capitalist countries (France, Italy,Japan and now Britain) coincided with an uninterruptad boom of tho U3 economy. The fragmentary character of these recessions, of course, acted aa a powarful factor limiting both their depth and their duration.
But will this fragmentation last? Will not a receasion in Western Germany haya more Severs consequences for the whole international syaten? Would not the next US recession coincide with « phase of the eycle in Western Europe where fost of the fortes generating long-term growth have elready spent themselves, and thereby cause a general recession in the whole international cap= itelist economy? These questions and many others strike one as . revelant, and they should at least be reasclyad before one accepts the extrame conclus-= ions of Monopoly Capitalism that no basic inatability of tha system ‘will create a powerful spoial challenge to it from within the United States.
We admit that posing the question ts not anawerinc it. More time,more independent ang collective research, discussion and debate by all Warcista, on both sides of the Ocesn, will cartsinly be nacessary, before a desinitive anéwer will be Pound to these quoations. Oot.1.1956
i Hotes ‘l L- Jose? Steindl ‘Katurity and Stagnation in Ameriaan Capitalism,1952,
Hosil Blackwell, Oxford.
Wichal Kalecski: "Theory of Boonomic Dynamics", Lonion,195k. 2+ doseph Gillean: "The Falling Rate of Profit", London,Denis Dobaon,1957- 3-Ernest Kandel: "Traite @'Seonomie Marxista",Vol.2. Chapter lkypp-150-198, ed-Julliard,Paris,1962. An English edition will appear ain 1967,by Merlin Fress in Great Britain, and Nonthly Review Presa in the USA. he Sweery and Baran deny that forcien investmenta are an outlet for tha "surplus", because,;they sey,inflow of profit from foreign investam ta are greater than outflow of private capital in the US4-. They Porget,however, government expenditura in the form of forelgn loans and ¢ifta, in ite double role aa an outlet for aurplus capital in tha 'UGi and as additional purcraaing power usad by the resaiving countries to import additional arantitias and values of JS eonmoditics. 5. That such a substraction has o very real meaning oan be shown By the example of the war economy, under which the surplus produst tekes the physical form of weapons and the surplus capital ia transformed. inte govrernieant bonds to finance the purchssc of these weapons.
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