Monopolisation — giant mergers and takeovers
This is Part 1 of a four part series taken from a longer article written by Harpal Brar and published in Lalkar. It deals with present day imperialism and the developments taking place in capitalist economies.
* * *by Harpal Brar It is just over four years since I published my book Imperialism — Decadent, Parasitic, Moribund Capitalism. In that book I proved, by reference to irrefutable statistics from impeccable bourgeois sources, the correctness of V I Lenin's theory on imperialism and its continuing validity in our own time. That "the rise of monopolies; as a result of the concentration of production, is a general and fundamental law of the present [imperialist] stage of development of capitalism" and that "Monopoly! This is the last word in the 'latest phase of capitalist development"' (Lenin Collected Works, [LCW] Vol 22, p 200. Imperialism, the Highest Stage of Capitalism). The monopolisation of the world economy is proceeding at an unprecedented speed. The frenzy of mergers and acquisitions (M&A) turned 1999 into a landmark year, with the total value of deals reaching the hitherto unthinkable sum of US$3,435 billion. Another US$3,495 billion worth of deals were announced worldwide in 2000. Just the top 17 M&A deals in 2000 accounted for US$775.6 billion — 22 percent of the total. These figures alone are further confirmation of the gigantic growth of monopoly. Not without reason did Mr Irwin Stelzer, writing in the Sunday Times" of (22/8/99) say that "There was a time when a billion-dollar deal was news, real news, generating feature stories and hours of television punditry. This is no longer so and with reason". The truth is that mergers of $50 billion or more seem two a penny. In an aside on the competition and regulatory authorities, supposedly the guardians of free competition, Mr Seltzer adds: "For one thing, mergers in the billion-dollar class are now so common as to be almost not newsworthy. "For another, any competition threat can easily be ameliorated by tinkering around the edges of a deal to please the competition authorities. When John D Rockefeller put together Standard Oil, muck-raking journalists were in full cry, and the trustbusters finally broke it up; when Exxon stitched its two largest components back together by buying Mobil, nobody paid much attention." Globalisation — imperialism with a new label Globalisation (the bourgeois professorial term for the scientifically precise term imperialism) is only a further manifestation of the over- accumulation of capital in the centres of imperialism, insufficient opportunities for its profitable investment and thus inadequate profits for financing a growing state sector as well as a fast, expanding, non- productive private-service sector. The chief features of this globalisation are: (a) extreme monopolisation of the economy through mergers, acquisitions and privatisation of the formerly state-owned enterprises; (b) further consolidation in banking and the further dominance of finance capital; (c) ever-increased export of capital; (d) formation at an unprecedented pace of international monopolist combines and a furious struggle for re-division of the world; (e) reduction in the social wage through cuts in welfare expenditure; (f) increased exploitation of labour power through deregulation of every kind, especially of the labour market; and lastly, (g) increased inequality between countries and within countries. Wherever you are, in whichever direction you look, whether you are at work or at home, whether you are awake or asleep, you cannot get rid of monopoly. The top 5 companies typically account for 35-70% of total sales across a range of products, such is the concentration of production and centralisation of capital. And with each passing day, the monopolisation of the world economy is proceeding at a furious speed in one sector after another. According to the World Investment Report (WIR) 1998, published by the United Nations Conference of Trade and Development, the total number of major global car makers is set to decline from the present 15 to between 5 and 10 by 2010. In many other industries this has already happened or is on the verge of doing so. For instance, in the pharmaceutical industry, which has still some distance to travel along the road of consolidation, many markets are now controlled by a small number of firms, with seven corporations having sales of over $10 billion each, accounting for a quarter of the $300 billion pharmaceutical market. From banking and insurance to defence and aviation; from oil, chemicals and the motor industry to mining, pharmaceuticals and utilities; from retail to telecommunications and media companies, even professional firms of accountants, lawyers and consultants — all are being swallowed up in the whirlpool of consolidation, through mergers, takeovers and acquisitions, with the aim of acquiring a global reach and beating rivals in the cut- throat competition for markets, raw materials, cheap labour and avenues for investment. Global reach is increasingly a condition of success. "You have to be in the three main markets of America, Europe and south-east Asia now if you are to have the scale to allow investment in a technological change process that is more rapid than it ever was", said Mr Nick Scheele, chairman of Ford Europe (Financial Times, (20/9/00). Economics and politics of monopoly capital Writing in the Financial Times (22/12/98), Peter Martin, although in disagreement with it, is nevertheless obliged to report: "The conventional wisdom is that today's giant mergers reflect the irresistible force of globalisation. Just as the turn of the last century saw the creation of dominant enterprises on a national scale, so today's mergers are giving birth to the companies that will achieve global domination... "The most ambitious big company bosses are seizing the opportunity to become still bigger, in order to obtain the scale that will forever set them apart from lesser rivals. Merge now, or be consigned to ultimate oblivion." This is how most bourgeois commentators perceive the frenzied monopolisation of the global economy — in terms of global domination. And yet, being the respectable bourgeois that they are, they are sure to declare Marxism-Leninism to be dead and buried. But how is this perception of "conventional wisdom" of the world of finance capital, any different from the perception expressed in the following words of Lenin: "Monopolist capitalist associations... ", said Lenin, "first divided the home market among themselves and obtained more or less complete possession of the industry of their own country. But under capitalism the home market is inevitably bound up with the foreign market. "As the export of capital increased, and as the foreign and colonial connections and 'spheres of influence' of the big monopolist associations expanded in all ways, things 'naturally' gravitated towards an international agreement among these associations, and towards the formation of international cartels. "This is a new stage of world concentration of capital and production, incomparably higher than the preceding stages". (LCW Vol 22, p 246. Imperialism, the Highest Stage of Capitalism) The creation of these international super-monopolies, which were already a fact in Lenin's day, has proceeded relentlessly since then with the resultant monopolisation and concentration of all sectors of the economy on a world scale. The capitalists from the principal imperialist countries are frenetically busy dividing the world. And they are doing so, according to Lenin, "...not out of any particular malice, but because the degree of concentration which has been reached forces them to adopt this method in order to obtain profits. And they divide it 'in proportion to capital', 'in proportion to strength', because there cannot be any other methods of division under commodity production and capitalism". (Ibid" p 253). Whatever the "form", the "substance", the "object", of the economic struggle between international monopolies is the division of the world. And as this division is based on the relative strength of the parties, in proportion to capital, it is but natural that changes in the strength, ever recurring, consequent upon the degree of economic and political development, should call forth a re-division and attempts, by means peaceful or otherwise, at such a re-division. One must never forget even for a single moment the significance of what has just been said, if one wants to make any sense not only of the two world wars in the last century, which slaughtered I00 million human beings just to decide which coalition of slave-owning imperialist bandits was to have what share of the booty. Then there were also the imperialist wars of aggression against Korea (4 million dead), Vietnam (also 4 million), the US-imperialist inspired Suharto coup in Indonesia (1 million), the Gulf War, the conflict in Palestine, the daily bombardment of Iraq, and US aggression against Colombia. Recent European attempts at imperialism include the NATO war of aggression against tiny Yugoslavia; the EU's attempt to create a European army; expanding the EU so as to enrol into it former socialist countries from Eastern Europe; and the frenzied development and production by the leading imperialist countries of the latest killing machines that technology can provide. Consolidation; both within and across national boundaries, is proceeding at an ever increasing tempo — with the number of major players in each sector of the economy shrinking. Each wave of mergers and acquisitions merely sparks off a new one, which in turn becomes a prelude to yet further consolidation. * * *To be continued next week Part 2: The ferocious battle for European capital