By Roy Erickson Mamengko
State Monopoly Capitalism
Here we offer a very brief description of a theoretical position developed during recent years that has found great popularity in Eastern Europe and among western communist parties. This is not means to suggest that the positions originating from these two areas are the same. Indeed, a great deal of contention, particularly during recent years has surrounded the internal debate among communist parties about analysis of state monopoly capitalism.
The opening observation of this theory is that the central class of antagonism of modern capitalism has changed. On the one hand, the external relations of capitalism have changed due to the competition between the capitalist and socialist countries; on the other hand, there have been crusial changes in the form of class relationship internal to capitalism. Confronting capitalism during the post-war period, eastern Marxist theorists facing the enormous power of the states and its intervention into the capitalist economies developed an explanation whereby the capitalist class, no longer an autonomous body, became merged with the state as the dominant form of the late capitalist social formation. This new set of circumstances made all capitalism all the more strong in its struggle against other class segments within the society. Consider the following quotation: Capital and labor, Buorgeoisie and proletariat do not any longer stand as irreconcilable antipodes towards one another, today this central contraction between labor and capital is expressed more widely as the antagonism between the state monopoly political oligarchy and all non-monopolistic classes and strata. (Imperialismus in der BRD, 1968:178).[1]
Similarly, the French author’s collective in State Monopoly Capitalism develop a class concept that is derived by invoking Lenin’s central criterion for judging the relationship of classes to society: ownership or non-ownership of the means of production. As we have repeatedly noted, juridical ownership is but one of the important dimension of class definition. Relaying upon it solely as the juridical category defining class position seems a serious mistake. Indeed, the French communist party does view ownership of productive property as an element that is guaranteed by the reproduction of capitalist social relations of production. Thus, classes are seen in this perspective as an essentially economic relationship that through class struggle becomes ideological and political. As the PCF author’s collective puts it: “classes have the function of mediating the economic power structure to a political relation of domination.” (In Bollbrinker, 1975: 23). So, despite consideration of the political and ideological criteria do not enter into the definition of classes themselves.
Repeatedly, stamokap theorists place some notion of the primacy of economics at the forfront of their conceptualization of class. This point is made by Semjenow, Kucynski, Hess, and others. Similarly, the technical-scientific revolution is seen as most critical to the development of productive forces and thereby central to the presentation of class relationships during the present period. It is continued reference to this technical change in production relationships that leads to very broad definitions of the working class containing fine gradations that usually correspond solely with occupational categories.
While the working class itself is defined relatively narrowly as productive workers which make up around 44.5% of the work force (PCF estimate for France in Staatmonopolkapitalismus, 1973: ), the stamokap authors include also wage-dependent middle strata as part of the “general worker” category which experiences the similar conditions of exploitation as the productive worker. Moreover, the theory of exploitation becomes broadened to include those unequal exchanges between small and large capital. There is often reference to the “exploitation of non-monopolistic strata.” While this exploitation is not rooted in value production, it is considered as critical to the theory of state monopoly capitalism. It is exploitation, the authors argues, that takes place through monopoly pricing, activities of the state, etc. This position argues that there has been a “generalization or socialization of exploitation” is similar, they argue, to the notion of the “general worker” or “collective worker” whose labor and experiences of work are organized similar to all workers as mentioned in Capital. These “collective forms” of exploitation that bridge seemingly disparate class elements became critical to defining new stages of class struggle.
Labor and Capital: Class Structuration and Class Segmentation. (the capitalist class; the structure and consequences of class power)
Introduction
For many years, Marxism seemed to provide a fairly straight-forward theoretical approach to locating the basis of capitalist class power. In refuting the popular theories of 19th century political economy about the role of “entrepreneurial asceticism”, Marx had directed his inquiry towards exposing those positions of authority rooted in the appropriation of surplus value made possible through private property ownership and control over society’s productive operations. Identifying these representatives of capital in the market place seemed for many decades like the least complex of research and political questions posed by Marxist social science.
After World War I, the proliferation of changes in the organization of production and the activities of capitalists within and outside of the economic arena raised numerous questions. Were the terms capitalist and bourgeoisie interchangeable? Did the capitalist class operate as a “ruling class?” Had not changes in the organization of production through “scientific management” shifted the control of capital appropriation away from capitalist as owners of the means of production and into the hands of those trained n managing business enterprises?
While this theory of the “managerial revolution” was being cultivated during the Great Depression of the thirties in the United States, quite simultaneously bureaucrats achieved apparent control over production, distribution, and planning under Stalin in the Soviet Union. Many sociological theories inspired by earlier Marxist work came to wonder if indeed the technical demands of the production process had not created a situation where the complexity of control was shifted away from the hands of capitalists themselves. Surely, “capitalists” benefited disproportionately from their investments, but did not the fiscal demands of economic recovery require more “rationalized” business organizational criteria than pure and simple profit maximization. From the right, theorists such as Berle and Means developed the now famous managerialist thesis that found its way into the bulk of sociological work of Parsons, Lipset, Bell, and others doing the sociology of the period. From the left, theories of state monopoly capitalism developed in Eastern Europe to show how capital and the capitalist state had become merged in both daily operation and logic of development (Molnar, 1970). From other Marxist concerned with the nature of socialism in the East, doubt was cast upon whether or not the dissolution of capitalist property that might now be called commisars.
In short, the questions of the relationship between legal ownership and control over the means of production could no longer be assumed. At the same time they were even becoming more difficult to actually research given the strictures of information about socialist countries on one hand, and the secrecy maintained by corporate disclosure laws in capitalist countries.
If indeed, ownership and control had parted ways, did this mean that managers would behave differently than capitalists in the production process? If so, how? If not, were these managers then to be considered capitalists? Did the legal tie to property, considered so crusial to earlier theories of property and its relation to the political and economic order suddenly lose its salience? What separated the capitalists from other classes? During a period of changing consumption patterns for society as a whole and the declaration of the classes society of post-industrialism by sociological pundits, how could one distinguish, if indeed distinguishing characteristic existed, between the bourgeoisie and the bourgeoisified?
In dealing with this controversy, this discussion will concentrate upon the critical questions that have been raised in the Marxist theory historically in an attempt to: (1) specify the membership within the capitalist class; and (2) explicate the segmentation within the capitalist class. In exploring these questions, we will attempt to provide clearer conceptualization of the capitalist class and an outline of the turf of its class power.
Simply stated, the ability to dominate over the conditions of social production and the relations surrounding them is the central characteristic of the capitalist class. Domination, however, is not an absolute condition. Instead, it is a social relationship that appears according to specific conditions of different societies. The capitalist class possesses a monopoly over the decision-making power determining the course, allocation, and appropriation of the social production. Subsequently, it maintains certain technical conditions (development of productive forces, maintenance of terms of trade, etc.) necessary for capital reproduction and serving the general ideological functions of justifying the continuity of the unequal exchange between capital and labor.
Here one confronts the problem of distinguishing lines of divergence between the capitalist class and other positions within the class structure, along with identifying the role of the state. Is the state apparatus and the offices within it identical or rather part of the structure of the capitalist class? To what extent does any identity between the capitalist class and the capitalist state exist? This question is dealt with more thoroughly in a later chapter, but its relevance to this discussion should be noted. First, discussion will focus upon the analytic and practical criteria for capitalist class membership. What theoretically distinguishes that class from others? Which characteristics of that class are the most salient for analysis? Is the saliency of characteristics of class membership a source of variation under changing historical circumstances?
Secondly, it will be necessary to analyse how such criteria allow for differentiating various social forces interacting and conflicting within the capitalist class. By looking at the variety of literature which portend to show the gaps in class cohesiveness, we hope to arrive at some synthesis of a research agenda of historical studies of internal class differentiation.
My final section attempts to construct an argument for the structural sources of friction and segmentation within the capitalist class. Through identifying various sector of productive activity, we will suggest how the political, economic, and ideological forces apparent in the economy become expressed as opposing interest within the capital class.
Theoretical and Practical Criteria of Capitalist-Class Membership.
The most general theoretical criteria for capitalist class membership derives from that often noted central contradiction of capitalism – the rising socialization of labor accompanied by the decreasing number of people involved in the appropriation of labor’s value. On one side of the contradiction are the increasing numbers of the army of labor; on the other, the increasingly isolated ranks of the capitalist class. But while this contradiction is simply stated and often quoted by line and verse, the process to which it refers is wrought with complexities and historical qualifications that make it of immediate importance for empirical study. Marx is fairly clear that the power to appropriate the labor of others and convert it into capital is rooted in the early bourgeoisie’s ties to property – i.e., ownership of means of production. It is this exclusivity of rights associated with the disposition of property and the emergence of contractural relations dealing with property that are generalized in the process of early commodity production (MacPherson, 1972).
As labor ventures into market relations, the early employer comes to have certain rights upon the disposition of the purchased commodity – labor power. In so doing, the physical ownership of property becomes extended into social control and eventual legitimate authority over the relations of production taking place upon that property.
In this process, we come to see the theoretical distinction between the juridical/legal criteria of class membership (ownership of productive property, contractual power over hired labor, etc.) and the structural or substantive consequences of control over the means of production (the organization of work, the appropriation of society’s product, the development of institutions of authority and control, etc.) that was produced during the early periods of capital accumulation.
Another approach has been to examine the purely social criteria of capitalist class membership. Many Marxist have wanted to see how the juridical/legal or structural criterial of class membership become manifested as status differentiae. Thus, in an attempt to discern class borders between the capitalist class and all others, there has been research and theorizing that have sought to look beyond the notion that the “rich have more money” and to see what else they have.
C. W. Mills, Paul Sweezy, and Bill Domhoff, to name a few have looked at the capitalist class as a social class of corporate capital consisting of big businessman and their descendents who interact at private schools, exclusive social clubs, summer resorts, and similar institutions that provide the social substance of that class’s cohesiveness.
The social interaction and overlapping social cliniques of the “upper class” of capitalism provide a complete socialization process through which recruitment into the ruling elements of the class are carried out. The status criteria of class membership rely upon the following characteristics of the capitalist class – its small size, its wealth, its sources of income, its schooling, leisure time, and a complex web of intermarriages which provide it with the social cement, and clear warning of demarcation, between itself and the rest of society (Domhoff, 1968, 1972).
While these writers provide us with careful operationalizations of class membership and careful listings of the social characteristics of that class, much less is explained about the economic basis and dynamics from whence that class springs. It is important to consider, as Sweezy (1962: 76) notes, that the “social classes that we currently observe are not identical to the economic classes of capitalist society; they are much more modifications of that class.” The empirical weakness of the Mills-Domhoff tradition of research on the capitalist class lies very much in the opaqueness of the structural imperatives of capitalism, even though we may well know who is doing them. The social structural constraints upon the transmission of capitalist class interests into states policies are not readily retreivable from the data on social class alone. In a sense, the complexities of competition come to obfuscate the demarcation points of inter-class. (labor vs. capital) struggle.
Similar type of problems arise when we consider legal and structural criteria of capitalist class membership. High level managers are considered by some to be capitalists. (Poulantzas, 1975) By others, they are considered to be either workers or “service-employees” of that class. Much of this confusion stems from a debate rooted in an argument developed forty years ago as social scientists sought to examine the root causes of the Great Depression of the thirties. At that time, Berle and Means (1932, 1967) and later Larner (1970) argued that control over the economy had been removed from the owners of corporations under modern capitalism and had been transferred to the trained and more rational judgements of managers. This famed (managerialist thesis” could account for much of the variation in microeconomic behaviour and brought a greater concentration upon the activity of firms, rather than the interaction of classes. The notion that capitalists had been displaced by managers at the helms of industry, society, and the state dovetailed nicely with the ideological tasks of the Cold War that sought to present the image of a more rational, less class fractioned capitalism. Indeed, according to the more hopeful proponents of this liberal theory, the demands of the complex organization and industrial society created conditions leading inevitably towards the convergence of capitalism and socialism into some new managerialism (Djilas, 1968).
Zeitlin (1974) has performed the most definitive criticism of the managerialist thesis. He has shown that indeed the separation of ownership and control criteria (the legal and structural criteria of the capitalist class position) was a largely unreflected claim and unresearched half-truth of social theory. Most recently, Pedersen and Tabb (1976) have shown that the ownership criteria have become even stronger in the last decade (through merger movements and horizontal, as well as vertical, integration of corporate units) in predicting the actual control of corporations.
In short, these research findings suggest that the expression of class power s by no means mediated totally through representatives of the capitalist class (i.e., managers), but rather capitalists, at least in the economic organization of society tend to represent their own interest directly. This does not mean that any high manager of a corporation may not enter the ranks of the capitalist class. Rather, it suggests that is individual claim upon the position of being a high level manager is dependent upon his ability to obtain some economic base within the class (through actual ownership interests) and a social base through the various institutions of social interaction for himself and his family.
While the managerialist thesis continues to suggest that corporate power has been wrested from the owners of capital, little evidence suggests that corporate control lies in the corporate manager. The Wall Street Journal recently reported that the turnover rate for corporate presidents is around 40% a year. (Wall Street journal, Jan. 15, 1976) This would seem to suggest that those managers that have staying power in their position as high-level management both take positions at the behest of corporate owners and experience little entry into the ranks of that class. Their tenuous claims upon mobility indeed place them in the highest levels of income, life style, and general benefits of wealth. Nonetheless, actual class membership is not made up of the trappings of wealth, but its exercise in the expansion of capital.
Differentiation Within the Capitalist Class: Conflict in the Higher Circles
Having attempted to briefly outline those criteria for membership within the class, the following question seems pertinent: Is the capitalist class monolithic? In short, no. while capitalists usually appear fairly cohesive regarding threats from below, this has never meant that haigh levels of competition for hegemony within the class occur. Sweezy has suggested that the capitalist class is diffrerentiated by any of the following criteria: “regional (based upon economic differences and buttressed by historical traditions and memories – e.r., north south division); industrial (coal capitalist vs. oil capitalists); corporate (GM vs. Ford); dynastic (Dupont vs. Mellons); political (Republicans vs. Democrats); and ideological (reactionaries vs. liberals).” (Sweezy, 1967: 137).
Certainly, in a time when the energy industry had integrated all fosil fuel resources or when the transportation industry operates as a “shared monopoly”, these criteria must run the test of empirical research. This much, however, can be said. Business interests often clash. The criteria of differentiation that are salient will be those that are structurally produced through shifts in patterns of accumulation in capitalist production. Competition does not disappear under late capitalism, rather it achieves a form where ascending capital fractions can threaten old ones. Or, as some have stated, where there is an overlap of new and old capital with regional distinctions, competition within the capitalist class becomes exacerbated.
What then are the myriad of forces cutting across the lines of class cohesiveness of capitalists? Answering this question requires some further elaboration of a theory concerning such differentiation. Zeitlin, Ratcliff, and Neuman have suggested the terms “class segment” to capture the repeated references in Marx to the “economic foundations of various parts of the bourgeoisie held together by great common interests and marked off by specific conditions of reproduction of different kinds of property.” (zeitlin, et. Al., 1976:1009). It is the different kinds of property that result from changing modes of production and phases within modes of production that often become expressed as antagonistic interests within the capitalist class. This much said, it is still difficult to distinguish class segmentation of this basis alone since there has never, especially in the United States, been a linear relationship between the rise of one mode of production and the decline of a landed feudal aristocracy. The root of segmentation lies in the fact that as capitalism rose, landed estates became organized capitalistically, and thus became segments of that rising bourgeoisie (Dobb, 1967).
Another trend in Marxist social science literature has been to categorize class segments according to various functions carried out within the capitalist class. Descriptively, it is interesting and important to know which capitalists are involved in financial matters, which are politically active, and which take care of various charities. However, noting the descriptive differences of functions by capitalists does not answer the more pressing analytical question ofhow they come to carry out such activities.
Quite early in socialist writings, Kautsky attempted to argue that division within the capitalist class could be defined by the various functions within the capitalist system of production. In this approach, banking capital fought against industrial capital regarding issues of international trade just as the rising bourgeoisie fought the landed aristocracy over the Corn Laws in England. Hilferding and later Lenin were careful to document a correction of this rather simple model of class segmentation by showing the combinations within economic units that allowed for the integration of banking and industrial capital into financial capital. (Gottschlach, 1962; Hilferding,1910).
The simple model of primacy of financial control of corporations arose again in the early 70s with a series of articles by Fitch and Oppenheimer asserting the control of banks of major corporations.[2] Their evidence for this position, which was indeed a great leap for this previously undocumented position, was primarily based upon the observation of the increase of institutional stock-holding through bank trust departments. They assigned autonomy to banks in these investments rather than investigating the actual operations and control of trust investment. O’Connor and Sweezy have successfully shown that channels of control between industrial and banking capital operated sufficiently well to counteract any notion of banking capital supremacy (O’Connor, 1973; Sweezy, 1967). More sophisticated analysis of corporate interlocks and social networks of corporate power have suggested the interpenetration of various sectors of capital within the segments of capital as a whole (Levine, 1972; Lieberson, 1971).
Another tradition is to look beyond sectoral differentiation of thecapitalist class and examine regionalism as a source of segmentation. Analyses of the Civil War and the Reconstruction period in the U.S. attempted to show how differences in the economic base of the industrial north and the agricultural south generated the bases for political conflict. Moreover, it has been argued, this regional difference persisted into the twentieth century with unequal terms of trade, investment, interest rates, and so on between northern and southern capital. (Moore, 1969).
Again, the observations are true. It did cost more, due to distorted freight rates to ship some finished products north than to ship them south-wards. Interest rates through the 19th century were higher in the south than in the north, thus discouraging capital investment. Until the New Deal, government transfers were more oriented towards industrialization in the North. While regional variations in policies and development existed, it does not require that the capitalist class controlling and fighting over policies was split. Business history suggests that those families which continued to rely solely upon agriculture became of decreasing importance in capitalist class, while those families engaged in manufacturing became absorbed through the interpenetration of regional capital. For instance, the emerging textile industry in the Carolinas, the steel and coal industries, and tobacco, to name a few, were largely taken over by northern based firms merged with traditional southern capital. (C. Vann Woodward, 1951).
Most recently, regionalism as a basis of capitalist class segmentation has been the root of the Yankee-Cowboys thesis. Briefly stated, the argument posed by Carl Ogelsby, Kirkpatrick Sale, and others begins with the observation of increasing disinvestment in the industrial northeast and a meteroic rise in the industrialization of the south and west. This shifting economic base along with a historical ideological antagonism between the American Heartland and the “east coast financial establishment” has produced a split within the ranks of the capitalist class. Ogelsby argues that old/eastern capital has been supplanted by new/southwestern cowboy capitalism rooted in the expansion of energy and military industries in that region. Moreover, this struggle for hegemony has produced the major manifestations of imperialist policies (in Viet Nam) and has been a constant source of intique by competitors for the position of top capitalists (conspiracy theories of the Kennedy assassinations, etc.). (Ogelsby, 1976)
This sunbelt argument received much air time since demographic patterns indeed reveal ashift, though not necessarily a recent one, in the uneven growthpatterns of various regions. Moreover, a theory that comfortably explains political assassinations, imperialist wars and the presidential corruption of Watergate through an argument based on the prosaic images of Yankee and Cowboy capitalists shooting it out makes the sociological imagination real.[3]
Nonetheless, Peter Johnston (1975) has thrown a telling blow to the Yankee-Cowboy thesis. In examining the interlocks between military contracts, defense industries, banks, law firms, and traditionally dominant industrial firms, he found the confluence between Yankee and cowboy capital to be impressively close. Again, there was less evidence of a regional split in capital than in the structural tendency of capital to take advantage of uneven regional development for the purposes of its self-expansion. In short, it was not so much a case of Yankees vs. Cowboys as one of Cowboys becoming Cowboys.
A similar type of argument, though with completely opposite conclusions about the composition of the capitalist class has emerged out of the popular literature about multinational corporations and the nation-state. In this perspective, much is made of the fact that the development of transnational business organization has dissolved the saliency of the nation state distinctions when discussi the capitalist class and its power (Vernon, 1974, Wilkins, 1970). Thus, the development of capitalism has led to the dissolution of regional or national distinctions of capitalist class segments.
Again, the utter paucity of actual research done to demonstrate this thesis makes it frustrating to discuss. Nonetheless, certain criticisms can be made. First, the extensity of multinational organization of corporations has not lessened the salience of national corporate ownership, and, we would argue, national control, while U.S. capital is invested abroad, the ownership and control lies in the U.S. headquarters. Secondly, while there is certainly an increase in the planning and cooperation of capitalists across nations, it does not obviate the potential destablizing competitive interest between them. Indeed, most governmental and trading operations negotiated transnationally (the European Community, international monetary agreements, etc.) always seem to end up producing differential advantages for the most dominant national capital. For instance, recent monetary agreements between the capitalist nations have served, through floating exchange rates, not to stabilize the monetary standards of less developed capitalist nations, but rather to increase their exposure to inflationary pressures. Similarly, trade agreements within the EEC have often given de facto preference to industrial goods from West Germany. Finally, while multinational organization becomes more extensive, there is a little that has been said about the contradictory implications of that development upon national capital that is not integrated into the framework of multinational investment. For instance, Zenith still maintains most of its manufacturing in the U.S. and accounts for most of its profits from T.V. sales. On the other hand, General Electric holds extensive plant operations abroad and diversified into numerous technical fields. The competition between these firms becomes reflected in the current debate over protective tariffs. G.E.’s very organization of investment creates the basis for divergent where increasing inter-class antagonism becomes focused on such issues within the U.S.
In this section, I have attempted to review some of the often noted sources of tension in the dominant class. While I have discussed these approaches and criticized them, it should not be understood that their observations have been refuted. That the rather one-dimensional Yankee-Cowboy thesis may be wrong does not infer that some multidimensional approach to analyzing the capitalist class would ignore regionalism as a source of conflict within that class. My attempt to present some synthesis from this theoretical exegesis of approaches to capitalist class research must now broach the following question: Considering all the possible dimension of the capitalist class (regional, dynastic, industrial, etc.), what structures their particular presence in any given historical capitalist class?
In short, which “cross-cutting pressures” in the organization of the capitalist class affect its course of political mobilization during various phases of capital accumulation? It is in this question that political sociology meets political economy to create the potential for the most cogent analysis of society. Answering that question assumes another step in the research agenda of class analysis, discovering the articulation of these processes in shaping class structure.
The Structure of the capitalist Class: Sectoral Economic Analysis and the Process of Class Segmentation
One of the more traditional approaches to differentiation within the capitalist class is to classify corporations, economic sectors, and economies by size. This may be a sort knee-jerk positivist reaction to look at the most obvious physical manifestation of the class actors on the economic scene. Looking at the corporate giants is one thing: understanding their operation and interaction in the larger framework of the world system is another.
There are many variants of research that approaches the capitalist class by its size. Most recently, many state monopoly capitalism theorist suggest that small capital, as a category of analysis, is not substantively a different category than petit-bourgeoisie. In an attempt to build a theory for popular anti-capitalist struggle, the main identity of the class enemy is that solely of monopoly firms which dominate the market and assure the “exploitation” of smaller capital units which merely supply or distribute in the production process of big capital (Boccara, 1971; Hess, 1971).
Size is a broad proxy, however, for many other types of characteristics that should be expanded upon in any analysis of class segmentation. Certainly, noting size alone is useful descriptively, but it is helpless to answer question about the associations between small and big firms (perhaps they are commonly owned?), the differential interests of those firms (do they politically represent different sectoral interests?), and how size should be measured (by assets, by market shares, by % contribution to the GNP, etc?).
Proceeding from the observation of size differentials of capital units, we will try to construct how this structures the capitalist class itself. In noting the economic, political, and ideological tensions often related to large and small capital, it is necessary to understand on the one hand, the forces creating and reproducing such a division, and on the other hand, the effect of such divisions upon class structuration. Thus, in attempting to distinguish various sectors of capital, we hope to identify the major contour of the class positions that are related to or somehow derived from those sectors.
The source of the fractioning of capital sectors rests ultimately on the process of capital accumulation which results in greater concentration (absolute size) and centralization (relative size) of capital.[4] The effects of this fractioning must be analyzed at the economic, political, and ideological levels. Monopoly firms achieve some degree of economic control of competitive firms through subcontracting, control of technology, finance, and so on. Monopoly capital completely dominates some areas of production (e.g., aerospace, chemicals, metals), while leaving other areas for more competitive industries (e.g., retail, services, apparel). To the extent that monopoly and competitive capital exist as two distinct sectors of capital, they will diverge and conflict in their interests and capacities; their relations to the state; and their political activity. As we shall see below, the effects of the economic segmentation of capital are seen by some writers to having consequences for the determination of fractions within the working class as well.
Some analysts regard the competitive sector of monopoly capitalism as merely a survivor of competitive capitalism which is today undergoing a continuing process of being swallowed up by monopoly capital. Other writers view the competitive sector as being continuously reproduced in accord with the changing structure of monopoly capitalism. Both approaches agree that the nature of ‘the competitive sector’ under monopoly capitalism is very different from the nature of capital under competitive capitalism. Moreover, there is agreement that capitalist class positions are becoming fragmented in accord with this segmentation of capitalism. Competitions occur in all spheres of activity. Economically, there is the struggle over different immediate interests concerning production and markets (e.g., protectionism vs. free-market arrangements). Politically, struggles over the state become manifested through the electoral and legislative processes. Ideologically, the struggle over different issues of business and state policy can be seen (e.g., entrepreneurial spirit vs. the system planner).
In attempting to tease out a more precise description of the economic organization of modern capitalism, Averitt (1968) has gone a long way towards identifying the ‘core’ economy of large firms in the United States whose economic organization is substantively different from the older ‘periphery’ sector.
The new economy is composed of firms large in size and influence. Its organizations are corporate and bureaucratic, its production processes are vertically integrated through ownership and control of critical raw material suppliers and product distributors; its activities are diversified into many industries, regions, and nations. Financial support is readily available from both internal and external sources. Firms in the large economy serve national and international markets using technologically progressive systems of production and distribution. The affairs of such enterprises are conducted with a view to survival in perpetuity as they meet economic crises with successive strategies of firm expansion. We shall call this network of firms the ‘center’.
The other economy is populated by relatively small firms. These enterprises are the ones usually dominated by a single individual or family. The firm’s sales are realized in restricted the center; long-term borrowing is difficult. Economic crises often result in bankruptcy or severe financial retrenchment. Techniques of production and marketing are rarely as up to date as those in the center. These firms are often, though not always, technological followers, sometime trailing at some distance behind the industry leaders. Let us designate the firms in the small economy by the term ‘periphery’. (Averitt, 1968: 7)
For Averitt, the sectors are differentiated in terms of the size of capital, marketing and finance, technology and control of the factors of production with the latter being most determinant. Here, the standpoint for analysis is the enterprise and the differentiation is between firms able to control their environments and firms caught in the anarchy of economic competition. The starting point of Averitt’s analysis is neither the process of capital accumulation nor the relations of production. However, he does provide us with a way of categorizing the economic relation of control and dependence among different categories of productive enterprises.
The heart of this analysis in his specification in the relationship between three categories of peripheral enterprises and core sector firms. Satellite firms are located above or below core firms in the vertical integration of production. For example, some satellite firms manufacture subsystems for the use of core firms while others “channel the enter firm’s output toward its final buyer” (Averitt, 1968: 63). The core firms benefit from this relationship by (1) transference of business risk, (2) reduction of maintenance costs of excess capacity during economic downswings, (3) the freeing up of capital for the most profitable investment, (4) transference of labor intensive production in order to eliminate possible problems with labor unions. The second category of peripheral firms is the ‘loyal opposition’ which “is made up of non-dominant firms providing competition for center firms within their home industry” (Averitt, 1968: 65). The third category of peripheral firms is that of “free agent”. “This is a residual category encompassing firms ‘free’ of center affiliation, formal or informal” (Averitt, 1968: 65). These firms are typically on the fringes of the productive system.
The first of these categories of peripheral firms is determined by its relation to monopoly capital. The latter two are better understood as remnants of a previous mode of production, residues still active, but not expansive during the present period. Unfortunately, Averitt’s work is relatively static with little emphasis devoted to the process whereby this fractioning of the capitalist class came into being as the result of successive phases of capitalism. Also missing is a discussion of the common fundamental interests of all the fractions of the capitalist class and how this might set the limits upon intra-class frictions between core and peripheral firms. Finally, no attempt is made to investigate differences in the relations of production at the level of the productive unit which might correspond to the different working class fractions.
O’Connor (1973) follows Averitt closely in placing emphasis upon monopoly and competitive firms which correspond closely to core and periphery firms in the analysis above, but he adds an additional component, the state, as the mediator between the various sectors. However, the state is not unbiased; it almost inevitably serves as a direct and indirect subsidizer of the monopoly sector which successfully exports the contradictions of its production process to the state and competitive sectors. The state intervenes to preserve the competitive sector mostly for ideological reasons for legitimating free enterprise in anti-trust legislation and other forms of regulation.
The state sector falls into two categories: production of goods and services organized by the state itself and production organized by industries under contract with the state. Examples of the first are mail service, education, public health, welfare, and other social services, and military service (excluding arms production). Examples of the second are military equipment and supplies, capital construction, and highway construction…. In state-organized activities the ratio of capital to labor and productivity is relatively low (and increases slowly), and production growth depends mainly upon increased employment…. In the second category the ratio of capital to labor is relatively high, and the production growth depends on capital investment and technical progress and the number of workers employed. Nevertheless, productivity here also tends to be low and to increase sluggishly. First, the outputs of many state contractors are original, one-of-a-kind products – for example, new weapons system, research and development, airbases on unfamiliar terrain – and hence it is difficult to make sectoral or temporal comparisons of labor’s physical productivity and to regularize production planning and coordination and other aspects of the work process. And second, neither the market nor the drive for profit maximization disciplines state contractors because they are producing under government contract (this is particularly true under coat-plus contracts) (O’Connor, 1973: 17).
A weakness of O’Connor’s discussion of the segmentation of capitalism is his implicit treatment of the competitive sector as a remnant of an earlier phase of capitalism. The relations of production which continually recreate and transform this sector are left unalyzed. Moreover, ties of ownership and control between monopoly, competitive, and indeed, state sectors are left unexamined.
Another recent attempt to contribute to this controversy is made by Poulantzas (1975). He identifies three groups of capitalists which he analyzes as separate classes or class fractions. The two classes Poulantzas identifies are the capitalist class and the petit-bourgeoisie. Within the capitalist class are the two class fractions – monopoly and non-monopoly capitalists. He defines these groups at the level of production and shows how they take on unique relations with each other. For example, he argues that, “it is thus quite possible to speak of a massive process of pauperization and proletarianization of this petty bourgeoisie, quite different to the forms of domination of monopoly capital over non-monopoly capital” (Poulantzas, 1975: 152).
Poulantzas is very clear in starting that both the monopoly and non-monopoly sectors “belong to the same structure of extended reproductions of monopoly capitalism” (Poulantzas, 1975: 144). In other works, this segmentation of the capitalist class is continually reproduced within monopoly capitalism. The non-monopoly sector is not a remnant of competitive capitalism.
Under monopoly capitalism, non-monopolistic units are dependent upon monopolies. In essence this takes place “through the indirect and diverse forms of dependence of non-monopoly on monopoly capital, although this is always accompanied by forms of legal absorption through formal expropriation (as after bankruptcies)” (Poulantzas, 1975: 146). This increasing dominance of monopoly capital over non-monopoly capital takes place both at the level of economic ownership and economic possession. At the level of economic ownership, it is increasingly the case for non-monopoly capital that “the power to assign the means of production to given uses and so to dispose of the products obtained” (1973c: 28) has been taken over by monopoly capital. As Poulantzas says: Under the appearance of a maintenance of independent legal ownership by non-monopoly capital, the powers deriving from economic ownership are frequently taken over, in whole or in a part, by monopoly capital; this is particularly so in the case of many sub-contracting agreements, as a result of which non-monopoly capital scarcely retains any powers of its own regarding the employment of the means of labor and the allocation of the resources of its enterprise. (Poulantzas, 1975: 147)
The powers deriving from economic possession, that is, the capacity to put the means of production into motion, are also being taken over by monopolistic units. This follows several paths including: standardization of the labor processes as a whole by monopoly capital; technological dependence of non-monopoly capital on monopoly capital through patents and liscences; subjection of non-monopoly capital to a social division of labor which to a considerable extent confines it to sectors with a low level of productivity and an inferior technology. (Poulantzas, 1975: 147)
Like Averitt, Poulantzas recognizes the particular functions of non-monopoly units for monopoly capital: (1) non-monopoly capital undertakes business risks in pioneering new areas of production; (2) non-monopoly capital occupies sectors that are of limited profitability; (3) non-monopoly capital functions as a staging post in the process of subjecting labor-power to monopoly capital; (4) non-monopoly capital undertakes secondary and non-integrated lines of production; (5) non-monopoly capital, because of its higher production costs, must charge relatively high prices to make a profit and therein legitimizes monopoly capital’s superprofits obtained by monopoly pricing of inexpensively produced goods. (Poulantzas, 1975: 142-143)
In an analysis of particular social formation, however, Poulantzas’ approach shows little fit with the historical record. He argues in his study of German Fascism that the main antagonism producting fascism was the level of competition between larger and smaller units of capital. Pressure by monopolies drove smaller non-monopolistic units of capital (here difficult to distinguish from the petit-bourgeoisie) into a more independent and reactionary stand during the Weimar period. In short, non-monopoly capital ceased to be mobilized as a mass base of support for the big bourgeois parties and shifted its allegiance to the autonomous fascist movement. (Poulantzas, 1973b) Daniel Guerin (1969) and a tradition of recent German fascism research (Kuhnl, 1970; Das Argument) have shown fascism to have been much more a function of competition between class segments within big or monopoly capital in an attempt to gain domination in accumulation policies that would encourage their particularistic interests.
But if the monopoly/non-monopoly distinction for class segmentation is weak, the category is also weak in its treatment of the articulation of economic sectors of capital into the class structure in general. In short, an analysis of the structure of capitalist class interests as manifested in its contradiction to the working class makes the distinction seem incomplete.
Conclusion
While revolutionaries must be “audacious” (in the spirit of the French Revolution), revolutionary theorists must stay ambiguous. But the ambiguity of the various criteria for distinguishing the capitalist class and its fractions may well stem from the ambiguity of historical experiences from whence they are observed. Elements of accuracy lie in many of these criteria. Indeed, competition lies very much at the source of much of the process of differentiation. Indeed, as in the market theories, capitalists often times try to run each other out of business. In so far as that process leads to thinning cut the rank of businesses each year, it is part of some process of proletarianization (which is not simply some demoting of positions in the class structure, but rather a reorganization of them). On the other hand, in so far as it leads to a further consolidation of capitalists within broader units, it can be called a process of market diversification which leads to monopolization.
To rephrase a Gracian notion: a class segment does not a hegemonic fraction make. In order to ascertain the extent to which capitalist class become rigidified or dependent upon other positions and more specifically, an institution of position like the state, careful empirical analysis must occur of the concrete conditions of intra-class competition within the capitalist class.
Answering these questions is difficult. We must first understand that economic concentration and monopolization are not only economic, but political struggles of power in the organization and division of markets. Then, the struggle within the capitalist class over the very social and economic correlates of its political participation in the relationship between state and society define, to an even larger extent than for the class structure as a whole, the definition of who is and who is not a member of the capitalist class. This may appear to be a closing attempt to beg the question about the composition and articulation of the capitalist class and its interests. Rather, it is an attempt to direct our critical sociological inquiry towards tapping the specificity of numerous experience of class segmentation – particularly vis-a-vis the capitalist class – and towards a variety of political experience where the basis of segmentation became transformed into the emergence of genuine hegemonic fractions in the state and society.
The previously discussed writers in the Marxist tradition who have dealt with the monopoly/competitive split in monopoly capitalism have in general been very clear in locating their analysis at the general level of analyzing phases in the transformation of the capitalist mode of production. They have also been insightful in understanding the process whereby these economic divisions result in conflicting immediate interests within the capitalist class and the process whereby these conflicting immediate interests became transformed into political struggle (e.g., conflicts over state regulatory agencies).
However, the tradition remains weak in analyzing how working class fractions correspond (or fail to correspond) to their counterparts in capital. Question of the different directions and impact of class struggle in the two sectors are largely ignored as is an explicit analysis of differences in the immediate interests of workers of the monopoly or competitive sectors.
If there is a difference between the monopoly and competitive sectors according to their interests and capacities for political mobilization; their relation to the mode of production; and their organization of control, it is yet to be thoroughly researched. Meanwhile, a clear understanding of what structures the relations of capitalism and the organizations and activities of capitalists remains illusive.
[1] This position is echoed in many recent restatements of this theory in the current political debates in Europe. For instance, examine this response by Michel Rocard, national secretary of the French socialist party: “Question: And what weight do you give to the bourgeoisie in your country and electorate? Rocard: The concept ‘bourgeoisie’ contains no analytical clarity. There are bourgeoisie, that receive no salary, and there is a bourgeoisie that is salaried. The salaried people within the middle class demand more order in the economy and meaningful planning because they have a great fear of unemployment and figure out that many branches of industry are poorly managed.” Der Spiegel, 6. June 1977.
[2] Much of this attempt to assign primacy to commercial, banking, industrial, agricultural, or some other type of capital comes from the reification of these various categories of capital in their presentation in Vol. III of Capital. Certainly, interms of exposition, Marx presents these as distinct units of capital that are abstracted from the actual organization of the economy for analytic purposes. However, it would be a mistake to attempt, as many have, to juxtapose abstract with empirical categories of analysis.
[3] Anagously, Dimitroff, in 1936, proposed a theory of fascism which was based primarily upon some notion of splits within the capitalist class. He called fascism the political movement culminating in a coup d’etat of the most reactionary elements within finance capital. This story held dominance in Marxist circles until more empirical studies of fascism began during the 1960s.
[4] Using size criteria alone often confuses the notions of economic concentration and consolidation. That firms become increasingly large, does not tell us anything about the level of competition between them. That concentration occurs in given economic sector does not infer there is a consolidation of firms across sectors. Nor does it tell us anything about the lines of dependency and control between smaller and larger firms.
