Abstract

Though the basic (late 1860s) Marxian model, under capitalist mode of production, assumes (more or less) perfectly competitive markets with a large number of small firms in each industry, Marx was cognizant of the growing size of firms, the consequent weakening of competition, and the growth of monopolistic power. Hence, capital has the inclination for concentration and centralization in the hands of richest capitalists. Actually, the concentration and centralization of capital are two capital accumulation techniques. Such concentration and centralization of capital can be clearly detected at this modern time—especially in the USA—in the massive occurrences of the mergers, acquisitions and conglomerates. In this assignment, henceforth, I will be trying to cultivate an analytical discussion about these two interlinked concepts and their implications and repercussions in this modern world of capitalism.

Prologue

The contemporary financial catastrophe of 2008 brings back the Marxian laws of concentration and centralization of capital in the modern form. They are often confused but must be clearly distinguished. Marx explained it most famously in chapter 25 of volume 1 of Capital. Though his dynamic intellectual exploration engrossed in the industrial capital, the same tendency holds with respect to financial capital in present scenario.

With the increasing mass of wealth which functions as capital, accumulation increases the concentration of that wealth in the hands of individual capitalists, and thereby widens the basis of production on a large scale and of the specific methods of capitalist production… It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already to hand, and functioning… Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is centralisation proper, as distinct from accumulation and concentration.

In brief, by concentration we make out the upsurge of capital that is due to the capitalisation of the surplus value originated through accumulation of surplus value of labour. Indeed, increasing concentration of capital occurs as individual capitalists accumulate more and more capital, thereby increasing the absolute amount of capital under their control. The size of the firm or economic unit of production is increased correspondingly, and the degree of competition in the market tends to be diminished; under centralisation we understand the joining together of various individual capital units which thus form a new larger unit. Actually, more important reason for the reduction of competition is the centralization of capital. Centralization occurs through a r