Seventeen Contradictions and the End of Capitalism (21 page)

Capital oscillates, as Giovanni Arrighi pointed out, between the two extremes of the supposedly ruinous effects of unregulated competition and the excessive centralising powers of monopolies and oligopolies.
⁴
The crisis of the 1970s (that on the surface exhibited a peculiar combination of stagnation and inflation) was widely interpreted as a typical crisis of monopoly capital, whereas the deflationary crisis of the 1930s, it can be said, was produced by ruinous competition. The state of the contradictory unity between monopoly and competition at any one historical phase has to be established, not presumed. While the neoliberal turn that began in the 1970s opened up new forms of international competition though globalisation, the current situation in many sectors of the economy (pharmaceuticals, oil, airlines, agribusiness, banking, software, the media and social media in particular, and even box retailing) suggests strong tendencies towards oligopoly if not monopoly. It is, perhaps, testimony to the moving character of this contradiction that a degree of monopoly power (such as that exercised by Google) is now deemed in certain circles a worthy departure from a state of pure competition. It allows for rational calculation, standardisation and advance planning rather than the chaos of unstable market coordinations in an uncertain world. On the other hand, Google’s abuse of its monopoly position (allowing the National Security Administration access to its data on private individuals) illustrates the negative potentialities that go with such a concentration of power.

The example of private property as monopoly power is particularly instructive in the case of land and property ownership. What are monopolised are not only the land and the property but a unique spatial location. No one else can put their factory down where mine is already located. An advantageous location (with privileged access to transport links, resources or markets) gives me a certain monopoly power in competition with others. The result, conventional economists ultimately had to concede when forced to study the matter, was a peculiar kind of competition called ‘monopolistic competition’. The term is apt since it describes a condition in which all economic activity is competitively grounded in particular spaces with unique qualities. Naturally, this form of competition is treated as a footnote in economic theory rather than as basic to economic life, even though all productive economic activity is ultimately grounded in space. Standard economic thinking prefers a model in which all economic activity occurs on the head of a pin and no monopoly due to spatial location exists. Differential spatial qualities – more fertile land, better-quality resources, superior locational advantages – do not apparently matter. Nor does the perpetually changing structure of spatial relations primarily brought about by infrastructural investments in things like transport systems.

These absences have serious consequences for understanding how the contradictory unity of competition and monopoly works. It is often presumed, for example, that multiple small enterprises producing a similar product indicate a state of intense competition. This is not the case under certain spatial conditions. Two bakeries 300 yards apart might suggest intense competition. But if there is a deep and fast-flowing river between them, then each baker will have monopoly power on their side of the river. This monopoly power will disappear if the king builds a bridge across the river, but it will then be reinstated if a local lord imposes a steep toll on the bridge or if the river becomes a political boundary and stiff tariffs on bread are placed upon commerce across it. For this reason, the eighteenth-century political economists waged a campaign against tolls and tariffs, understanding that they were a hindrance to competition. The
global regime of free trade sought by the USA after 1945 and culminating in the World Trade Organization agreements is a continuation of this policy.

But the role of transport costs as a form of ‘protection’ for local monopolies has long been diminishing. The reduction of these costs has been crucial to capital’s history. Containerisation from the 1960s onwards played a vital role in changing the geographical range of competition, as did reductions in political barriers to trade. The US car industry, with its big three companies located in Detroit, appeared to constitute an all-powerful oligopoly in the 1960s, but by the 1980s its power had been undermined by foreign competition from West Germany and Japan as the spatial conditions of trade relations changed dramatically both physically and politically. The 1980s saw the advent of the global car as parts could be produced all over the world and merely assembled somewhere like Detroit. The advent of fierce international competition plus automation left Detroit a wasteland. The history of the brewing trade is another of my favourite examples. Highly localised in the eighteenth century, it became regionalised thanks to the railways in the mid nineteenth century, before going national in the 1960s and global, thanks to containerisation, in the 1980s.

The field of monopolistic competition has clearly been changing and, as in the case of uneven geographical development, the spatial and geographical organisation of production, distribution and consumption is itself a way of orchestrating the contradictory relation between monopoly and competition. I now eat vegetables from California in Paris and drink imported beers from all over the world in Pittsburgh. As spatial barriers diminished through the capitalist penchant for ‘the annihilation of space through time’, many local industries and services lost their local protections and monopoly privileges. They were forced into competition with producers in other locations, at first relatively close by, but then much further away.

Capitalists should presumably welcome such a restoration of competition. But as has already been noted, it is a peculiar fact that most capitalists, given the choice, prefer to be monopolists. They
have therefore had to find other ways to construct and preserve a much-coveted monopoly position.

The obvious answer is to centralise capital in mega-corporations or to set up looser alliances (as in airlines and cars) that dominate markets. And we have seen plenty of that. The second path is to secure ever more firmly the monopoly rights of private property through international commercial laws that regulate all global trade. Patents and so-called ‘intellectual property rights’ have consequently become a major field of struggle through which monopoly powers more generally get asserted. The pharmaceutical industry, to take a paradigmatic example, has acquired extraordinary monopoly powers in part through massive centralisations of capital and in part through the protection of patents and licensing agreements. And it is hungrily pursuing even more monopoly powers as it seeks to establish property rights over genetic materials of all sorts (including those of rare plants in tropical rainforests traditionally collected by indigenous inhabitants). The third path is by ‘name branding’ so that a monopoly price can be charged for a shoe with a swoosh on it or a wine with a certain château name on the label.

As monopoly privileges from one source diminish so we witness a variety of attempts to preserve and assemble them by other means. There continue to be, however, some spatially circumscribed markets that facilitate monopoly pricing for certain activities: a hip operation in Belgium costs $13,360 (including the round-trip airfare from the USA) while an identical procedure in the USA costs over $78,000! There is, obviously, a lot of monopoly pricing going on in the US case relative to that of Belgium (almost certainly due to different state regulatory policies). Personal services of this sort have remained partially immune from spatial competition in spite of the rise of medical tourism and the outsourcing of many services to call centres like those in India. These protected markets may crumble, however, in the face of the application of artificial intelligence.

Capital is, we can conclude, in love with monopoly. It prefers the certainties, the quiet life and the possibility of leisurely and cautious changes that go with a monopolistic style of working and living
outside of the rough and tumble of competition. For this reason also, capital loves commodities that are unique, so particular that they can command a monopoly price. Capital goes out of its way to appropriate such commodities and to foster their production, frequently garbing them in the raiments of pure aesthetic pleasure. The capitalist class builds an art market as an investment sphere where monopoly pricing reigns supreme, just as it does with investments in professional sports like football, hockey and baseball. It even commodifies, if it can, the unique qualities of nature and gives them monetary value subject to the regime of private property. As the anarchist geographer Elisée Reclus complained as long ago as 1866:

At the seashore, many of the most picturesque cliffs and charming beaches are snatched up either by covetous landlords or by speculators who appreciate the beauties of nature in the spirit of a money changer appraising a gold ingot … Each natural curiosity, be it rock, grotto, waterfall, or the fissure of a glacier – everything, even the sound of an echo – can become individual property. The entrepreneurs lease waterfalls and enclose them with wooden fences to prevent non-paying travelers from gazing at the turbulent waters. Then, through a deluge of advertising, the light that plays about the scattering droplets and the puffs of wind unfurling curtains of mist are transformed into the resounding jingle of silver.
⁵

The same applies to unique cultural objects and cultural and historical traditions. The commodification of history, culture and tradition may appear obnoxious but it underpins a vast tourist trade in which authenticity and uniqueness are highly valued, even as they are subject to the hegemony of market valuations. And more significant is the systematic branding of many consumer commodities as unique and special (even when such claims are dubious at best) so as to allow a monopoly price to be put upon them. The items or effects produced cannot be so unique or special as to be entirely outside of the monetary calculus of course, so even Picassos, archaeological
artefacts and aboriginal art objects must have their price. For more common commodities, the aim is to set one brand apart as a superior toothpaste, shampoo or car. The idea is to use product differentiation as a way to secure a monopoly price. The reputation and the public image of a commodity becomes just as if not more important than its material use value. From this arises the immense importance of advertising, which is nothing more than an industry struggling to squeeze monopoly prices out of an otherwise competitive situation. Nearly one-sixth of the jobs in the United States are now in advertising or selling, an industry that is dedicated to the production of monopoly rents through the production of image and reputation of particular commodities.

There is an interesting geographical version of this same phenomenon. Cities like Barcelona, Istanbul, New York and Melbourne get branded, for example, as tourist destinations or as hubs for business activities by virtue of their unique characteristics and special cultural qualities. If there are no particularly unique features to hand, then hire some famous architect, like Frank Gehry, to build a signature building (like the Guggenheim Museum in Bilbao) to fill the gap.
⁶
History, culture, uniqueness and authenticity are everywhere commodified and sold to tourists, prospective entrepreneurs and corporate heads alike, yielding monopoly rents to landed interests, property developers and speculators. The role of the class monopoly rent that is then gained from rising land values and property prices in cities like New York, Hong Kong, Shanghai, London and Barcelona is hugely important for capital in general. The gentrification process that is then unleashed is, worldwide, a critical part of an economy based as much on accumulation through dispossession as on creating wealth through new urban investments.

In cultivating monopoly power, capital realises far-reaching control over production and marketing. It can stabilise the business environment to allow for rational calculation and long-term planning, the reduction of risk and uncertainty. The ‘visible hand’ of the corporation, as Alfred Chandler terms it, has been and continues to be just as important to capitalist history as Adam Smith’s ‘invisible
hand’.
⁷
The ‘heavy hand’ of state power exercised broadly in support of capital also plays its part.

Monopoly power is strongly associated with the centralisation of capital. On the other hand competition generally entails decentralisation. It is useful here to consider this cognate relation between the centralisation and decentralisation of political-economic activities as a subset of the contradictory unity between monopoly and competition. In this instance it is also vital to see the relation between centralisation and decentralisation in terms of a contradictory unity. It has often proved the case, for example, that decentralisation is one of the best means to preserve highly centralised power, because it masks the nature of this centralised power behind a veneer of individual liberty and freedom. In a way this was what Adam Smith was advocating: a centralised state could amass far greater wealth and economic power by liberating decentralised individualised market freedoms. This is something that the Chinese state has recognised over the last few decades. In this case the decentralisation has been political (the decentralisation of powers to regions, cities down to townships and villages) as well as economic (the liberation of state and village enterprises and the banking system in both wealth creation and rent seeking). Giovanni Arrighi’s book
Adam Smith in Beijing
dwells on this point at length.
⁸
But in this instance the crude assumption that decentralisation is inherently more democratic has to be seriously questioned, since there is no sign of the centralised Communist Party relinquishing any of its powers.

There are two ways in which we can think about the contradictory unity between decentralisation and centralisation in political-economic life. The first is sectoral. It focuses primarily on the power of associated capitals – the visible hand of the capitalist corporation in particular – and the massing of money capital as ‘the common capital of the class’ (in Marx’s words), particularly within the credit and financial system.
⁹
The latter cannot function, however, without the singular backing of state power. The ‘state–finance nexus’ (the unity of the Central Bank and the Treasury Department in the case of the USA) sits at the apex of this structure. It is endowed with
supreme monopoly power designed to support the banking industry and the financial system at the expense, if necessary, of all else, including the people. It is backed ideologically by the innumerable think tanks (the Heritage Foundation, the Manhattan Institute, the Cato Institute, the Ohlin Foundation) that promote pro-capitalist and right-wing views. Critiques of this vast centralisation of class monopoly power abound on both left and far-right wings of the political spectrum. That the Federal Reserve and the IMF have been totally dedicated to the protection of the class monopoly power of a financial oligarchy is now undeniable. Although the evidence for this is overwhelming, the mask such think tanks and the media construct around these institutions as the grand protectors of individual market freedoms goes a considerable way to successfully hiding their class character from the general public. The organisation of ‘the common capital of the class’ through the centralisation of the financial system takes us back to the central contradictions in the money form.