The Power of Monopoly Capital

I’m not at all somebody who wants to enshrine Monopoly Capital: An Essay on the American Economic and Social Order as the new centerpiece in the old “what Marx said” religion.  But, really, I do stand by my conclusion that Baran and Sweezy’s 1966 book was the #1 social science book of the century, Marxist or not.

The core argument is that corporate capitalism is a refinement and strengthening of classical capitalism, and, therefore, a heightening of the power of capital at the point of production and everywhere else.  The giant firm is a more rational and institutionally potent capitalist.  Hence, surplus-value tends to expand too fast for its own good, as judged by the standard of perpetual accumulation.

The results of this core process include an ever-expanding marketing race, constant growth of government spending even as government spending is demonized and conflicted and restricted in form, unending need for foreign enemies, progressive impoverishment of true public-sector needs, progressive degradation of culture, and a very strong tendency toward economic stagnation and recession/depression.

A decade after MonoCap, in Labor and Monopoly Capital, a work that every thinking expert admits was utterly seminal, Harry Braverman explained how the same core process described by Baran and Sweezy affects the division of labor, the character of jobs, and the geographic and social distribution of employment, all with the explicit acknowledgment by Sweezy that Braverman’s analysis was 100 percent part of the MonoCap argument, and that it was a mistake to leave it out of the 1966 book.

Five more years later, Magdoff and Sweezy were perhaps the first observers of the coming of the financial explosion, which they explained as a direct consequence of the core problem of the over-accumulation of capital/under-supply of new productive investment opportunities.

By the late 1980s, Paul Sweezy was also writing about how the environment was likely to be the ultimate limit to the continuance of the corporate capitalist world system.

So, excuse me, but I take umbrage at the continuing neglect of this remarkable and radically under-appreciated legacy.  In my opinion, the Baran and Sweezy legacy needs embracing and extending and refining, not fundamental “rethinking.”

When it comes to the continuing under-appreciation of Baran and Sweezy within Marxist circles, I’ll say this: Personally, I find it very hard to imagine that the model is somehow going to be improved upon by ruminating on technical considerations about the rate of profit, which, as Sweezy always said, is a mere statistical artifact that nobody in the real world pays any attention to, and which does not encompass the actual trends and problems in the allocation of money and assets by capitalists.  The system runs on gross profit margins, gross profits, cash flow, managerial and marketing expenses (the latter now recognized as just another form of investment), and ROI.  ROI is judged against money spent this period, not total firm assets.  Property incomes are profit plus interest income plus elite “salaries,” plus rent, plus a slew of new kinds of fees and fines and derivative flows, etc.  So profit is only one part (and a diminishing one at that) of what the overclass seeks and receives, and the Marxist rate of profit (profits divided by the value of fixed assets) is not only a partial diagnostic, but also one that plays basically no role in the way the world actual works.  In the business process, the overall value of past capital investments is treated as a sunk cost, and its overall value is in any event a matter of mere speculation, due to the difficulty of valuing assets in an age of stagnation, mega-mergers, and wild financial shenanigans.  What matters in practice is extracting maximum ROI, in whatever form, out of existing cash flows.  Increasingly, doing that means playing Wall Street games, for the very reason Magdoff and Sweezy diagnosed in c. 1979.  It’s all best tracked by thinking in the Marxian-Veblenian (and generally powerful and historically sensitive anthropological) terms of economic surplus, not “rates of profit” or any other profit category from the Marxian academic arcanery.

OK, that’s my view of things.  It’s my opinion, and it is merely one person’s conclusion, albeit one I’ve worked very hard to reach.

Again, I’m not trying to shout down anybody.  I’m just trying to make readers aware that what many academic Marxists say about Baran and Sweezy may be very highly questionable, and that Baran and Sweezy might be rather seriously under-valued by many of their own friends, not to mention their enemies.

And [WARNING] I’m not trying to make this next point personally: I certainly appreciate the difficulties of finding any kind of toehold for any kind of radical work in academia.  Yet, I also remain quite convinced of a point Noam Chomsky often makes: Sometimes, you can tell how close to the truth a particular type of work is by how anathema it is within the existing institutions.  I submit that, had any mainstream Harvard economist produced a body of work with half the diagnostic and predictive power that resides in Paul M. Sweezy’s thought, that person would have her or his own department at Harvard, and would be famous.  As we all know, Baran and Sweezy’s work was hardly mentionable in academia, let alone the object of a competitive bidding war for incorporation there.  Certainly, most of that is because of its unabashed Marxian nature.  But neither was MonoCap ever the basis for even a miniature academic niche industry.  To my eye, that’s because clear, direct, accurate, generally comprehensible Marxian economics that explains the big picture is, was, and until we have a new new left, remains, verboten in our universities.  MonoCap is too on-target and too effective to be allowed to stride openly through the door, even in the hinterlands.  Indeed, I would wager there’s not another school of thought that suffers from such a yawning gulf between its inherent utility and its degree of access to the teaching and research system.

That’s my view.  Meanwhile, as somebody once said, let a hundred flowers bloom. . . .

Michael Dawson is a writer and sociology teacher living in Portland, Oregon, author of The Consumer Trap: Big Business Marketing in American Life (University of Illinois Press, 2005) and Automobiles Ueber Alles: Capitalism and Transportation in the United States (a book forthcoming from Monthly Review Press).  Visit his blog: <>.

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