7. The Growth of Large Production. Syndicates and Trusts.

Side by side with the competitive struggle between individual and capitalist production rages the competitive struggle between large and small capitalists. Every day brings forth a new invention or a new discovery which increases the productivity of labor. Each of these renders useless, to a smaller or greater extent, former machines, and compels the introduction of new ones, often also the enlargement of establishments. The capitalist, who, at such a pinch, has not the requisite capital at his command, becomes, sooner or later, unable to hold his own in the competitive struggle and goes down, or is forced, at considerable loss, to invest his capital in some smaller industry not yet seized upon by more powerful capitalists than himself. In this way competition in large industry causes over-stocking of capital in small industry, and thereby renders the competition between the small capitalists all the more fierce and their ruin all the more rapid.

The industries conducted on a large scale constantly expand. Establishments that once counted their workmen by hundreds become giant concerns that employ thousands of hands. Day by day the small business establishments disappear; the industrial development instead of increasing, steadily decreases the number of individual enterprises.

Nor is this all. The industrial development leads steadily to the concentration of more and more capitalist undertakings into a single hand, be that the hand of a single capitalist, or of a combination of capitalists who legally constitute one person – the syndicate, the trust.

The paths that lead to this are manifold.

One of them is opened by the anxiety of the capitalist to exclude competition. Competition has been shown to be the mainspring of the modern system of production; indeed, it is the mainspring of all production of merchandise, i.e., production for sale. Nevertheless, however necessary competition is for the production of merchandise in general, there is no capitalist but is anxious to see his own goods free from competition in the market. If he is the sole possessor of goods for which there is a demand, if he has a monopoly of them, he can send their prices far above their actual value; then those who need his goods will be wholly dependent upon him. Where several sellers of the same goods appear in the market, they can establish a monopoly only by combining in such a way that they virtually become one seller. Such combines – rings, syndicates, trusts – are the sooner and more easily brought about the smaller the number of competitors whose conflicting interests are to be harmonized.

In so far as the capitalist system expands the market and increases the number of competitors in it, it makes difficult the formation of monopolies in production and commerce. But in every branch of capitalist industry the moment arrives, sooner or later, when its further development implies the lessening of the number of establishments engaged in it. From that moment on the march is rapid toward the syndicate and the trust. The time when, in a given country, the syndicate can ripen into a trust may be hastened through the protection of its domestic market against foreign competitors by a high tariff. In such a case the number of competitors is diminished and the domestic producers can more easily come together, establish a monopoly, and, thanks to “Protection of home industry,” fleece the national consumer to their hearts’ content.

During the last twenty years the number of trusts, through which the price and production of certain wares is “regulated,” has increased greatly, especially in “protected” countries, such as the United States, France and Germany. The trust, once formed, the several concerns that have combined constitute virtually only one concern. under the guidance of a single head.

The articles most necessary for the development of production, such as coal and iron, are the ones that become the first subjects of syndicates and trusts. Combinations usually extend their influence far beyond the monopolized industries themselves; they render the whole machinery of production dependent upon a few monopolists.

Simultaneously with the effort to bring together the several establishments of one industry into a single hand, there also develops the effort of the several establishments engaged in different branches of industry, but one of which furnishes either the raw material or the machinery needed by the others, to unite under one management. It is a common thing to see railroad lines owning their own coal mines and locomotive works; sugar manufacturers raise a par; of their own cane or beets; the producer of potatoes establish his own whisky distillery, etc.

There is still a third way, and that the simplest, by which several establishments are merged into one.

We have seen how important are the functions of the capitalist under the present system of production; under the system of private property in the means of production, large production is possible only as capitalist production. Under this system it is necessary, in order that production may be carried on smoothly, that the capitalist take the field with his capital and apply it effectively.

At the same time, the larger a capitalist undertaking becomes, the more necessary it is for the capitalist to relieve himself of a part of his increasing duties, either by passing them over to other capitalist concerns, or to some employee whom he engages to attend to his business. Of course, it makes no difference in the industrial process whether these functions are performed by an employee or by the capitalist himself; these functions produce no value when performed by the capitalist and they produce no value when performed by the employee. The capitalist, consequently, must now pay for them out of his surplus. This is another means by which the surplus of the capitalist, and accordingly his profits, are lowered.

While the growth of an enterprise forces the capitalist to relieve himself by the employment of lieutenants, it, at the same time, through the increasing surplus it yields, reduces the expense of the change. The larger the surplus, the more functions can the capitalist transfer to his employees, until finally he relieves himself of all his functions; so that there remains to him only the care as to how to invest profitably that portion of his profits that he does not need for personal consumption.

The number of concerns in which this final stage has been reached grows from year to year.

This is shown clearly by the increase of stock companies, in which even the dullest intellect can see that the person of the capitalist cuts no figure, and the only thing of importance is his capital.

Some have imagined that they saw in the rise of stock companies a means whereby to render accessible to the small holders the benefits of large production. But the stock company, like credit, of which it is only a special form, is rather a means to place at the disposal of the large capitalist the property of the small holders.

Just as soon as a branch of industry can dispense with the person of the capitalist, everyone can engage in it, whether or not he knows anything of the business, provided only he possesses the necessary funds to buy stock. Owing to this fact a capitalist is able to unite in his own hands industries that are wholly disconnected. Stock companies are easily acquired by a large capitalist; all he needs to do is to secure possession of the majority of the stock, and the concern becomes dependent upon him and subject to his interests.

Finally, it must be observed that large masses of capital grow faster than the small ones, for the larger the capital, the larger, also, other things being equal, will be the profits, the smaller proportionately will be the quantity which the capitalist will consume personally, and the larger the portion which he can add to his previous investments as fresh capital. The capitalist whose business yields him a yearly income of $10,000 will be able to live but modestly according to capitalist ideas. On the other hand, the capitalist whose business is large enough to yield him $100,000 annually, may, even though he were to spend upon himself five times as much as the previous one, add annually $60,000, i.e., three-fifths of his profits, to his previous capital. While the small capitalists are compelled to struggle harder and harder for their existence, the large accumulations in the hands of the large capitalists swell faster and faster and within a short time reach immense proportions.

To summarize: The growth of large establishments, the rapid increase of large fortunes, the steady decrease in the number of establishments, the steady concentration of different concerns in one hand, – all these make it evident that the tendency of the capitalist system of production is to concentrate in the hands of an ever smaller number the instruments of production, which have become the monopoly of the capitalist class. The final result must be the concentration of all the instruments of production in the hands of one person or one stock company, to be used as private property and be disposed of at will; the whole machinery of production will be turned into a gigantic concern subject to a single master. The private ownership of the means of production leads, under the capitalist system, to its own destruction! Its development takes the ground from under itself. The moment the wage-workers constitute the bulk of the consumers, the products in which the surplus lies locked up become unsalable, that is, valueless.

In point of fact, a state of things such as here outlined would be as preposterous as it would be impossible. It will not, and cannot, come to that. The mere approach to such conditions would increase to such an extent the sufferings, antagonisms and contradictions in society, that they would become unbearable and society would fall to pieces, even ii a different turn were not previously given to the development. But although such a condition of things will never be completely reached, we are rapidly steering in that direction. At the same time that, on the one hand, the concentration of separate capitalist undertakings in few hands is progressing rapidly, on the other hand, the interdependence of seemingly independent concerns increases as the inevitable result of the division of labor. This mutual dependence becomes, however, constantly more one-sided, for the small capitalists grow ever more dependent on the big ones. Just as most of those workers who are now engaged in home industries and who seem to be independent are in fact wage-workers under some capitalist, so also is many a small capitalist who apparently enjoys independence tributary to other capitalists, and many a seemingly independent capitalist concern is, in fact, but an appendage of some gigantic capitalist establishment.

At the same time that the economic dependence of the bulk of our population upon the capitalist class is on the increase, there is also an increasing dependence within the capitalist class itself of a majority of its members upon a small set whose numbers become smaller, but whose power, because of their wealth, becomes greater.

But dependence brings no more security to the capitalist than to the proletarians, the small traders and producers. On the contrary, it means to him what it does to all the others; with his dependence increases also the uncertainty of his situation. The smaller capitalists, of course, suffer most, but even the largest accumulations of capital afford no absolute certainty.

Some of the causes of the increasing insecurity of capitalist undertakings we have already touched upon. One of these, the sensitiveness of the whole system to outward influences, is on the increase. In proportion as it draws sharper the antagonism between the classes; in proportion as it swells more and more the masses it arraigns against each other; in proportion as it places in the hands of each increasingly powerful weapons; the capitalist system of production multiplies the occasions for disturbances and increases the damages which these disturbances bring about. Furthermore, it is not only the surplus withheld by the capitalist that the growing productivity of labor increases; it increases also the quantity of goods that are thrown upon the market. Along with the exploitation of labor grows the competition among capitalists, which becomes a bitter contest of each against all. Together with this goes a steady revolution in the technical methods of production. New inventions and discoveries are incessantly made which render valueless existing machinery and make superfluous, not only individual workers, not only individual machines, but often whole establishments or even whole branches of industry.

No capitalist can depend on the future; none can say with certainty whether he will be able to keep what he has and to leave it to his children.

The capitalist class itself is splitting up into two sets. The one, which increases steadily, is superfluous to industrial life; it has nothing to do but squander the growing quantity of surplus which flows into its hands. The other set, which consists of those who have not yet become superfluous in their establishments, decreases steadily, but in proportion to this decrease the cares and burdens of their situation grow heavier upon them. While the former set is degenerating in wasteful idleness, the latter is wearing itself out in the competitive struggle.

To both the specter of uncertainty is a growing menace. The modern system of production does not allow even the exploiters, even those who monopolize all its tremendous advantages, to enjoy their booty to the full.