'!

,-_;
71
1'flE TENDENCY OF SURPLUS TO RISE
MONOPOLY CAPITAL,!
70 •
two decades, but the sales-hungry manufacturers of farm ma-
usually under new management and with new capital; or it can J
chinery, fertilizers, pesticides, etc., have also played an impor-
give up the ghost and leave the field to its more successful ,;
tant part in the process. Similarly, producers of machine tools,
rivals. This sort of thing happens very often in the business';
computers and computer systems, business machines, automa-
world, and every manager knows of numerous cases and lives ::
tic control equipment, loading and transfer machinery, new
in constant fear that a similar fate will overtake him if his ;
plastics and metal alloys, and a thousand and one other kinds
company falls behind in the cost race. The stick of failure thus ;.
of producer goods are busy developing new products which
complements the carrot of success in an oligopolistic system no·:
will enable their customers comprising literally the entire
less than in a competitive one. ;
business world to produce more cheaply and hence to make
There is an additional reason, in our judgment as important !
mo1·e profits. In a word: produce1·s of producer goods make
as it is neglected, why a tendency for costs of production to fall !
more profits by helping others to make more profits. The pro-
is endemic to the entire monopoly capitalist economy, even ·
cess is self-reinforcing and cumulative, and goes far toward
including those areas which if left to themselves would stag- ::
explaining the extraordinarily rapid advance of technology and
nate technologically. It stems from the exigencies of non-price :
labor productivity which characterizes the developed monop-
competition in the producer goods industries. Here, as in in- '.
dustries producing consumer goods, sellers must be forever : oly capitalist economy.
We conclude, then, that with regard to the cost discipline
seeking to put something new on the market. 19 But they are '.·
which it imposes on its members the monopoly capitalist econ-
not dealing with buyers whose primary interest is the latest ;
omy is no less severe than its competitive predecessor, and that
fashi~n. or keeping up with the Joneses. They are dealing with \
in addition it generates new and powerful impulses to innova-
soph1st1cated buyers whose concern is to increase profits. '.
1 tion. There can therefore be no doubt about the downward
Hence the new products offered to the prospective buyers must .
trend of production costs under monopoly capitalism.
be designed to help them increase their profits, which in gen- ·
On the face of it this would seem to be an argument for
eral means to help them reduce their costs. If the manufacturer
monopoly capitalism's being considered a rational and progres-
can convince his customers that his new instrument or material
sive system. And if its cost-reducing proclivities could some-
or machine will save them money, the sale will follow almost
how be disentangled from monopoly p1·icing and a way could
automatically.
be found to utilize the fruits of increasing productivity for the
Probably the clearest example of the cost-reducing effects of
benefit of society as a whole, the argument would indeed be a
the innovating activity of manufacturers of producer goods is
powerful one. But of course this is just what cannot be done.
to be found in agriculture. As Galbraith has pointed out, ''there
The whole m¢:ivation of cost reduction is to increase profits,
would be little technical development and not much progress
and the mon6polistic structure of markets enables the corpora-
in agriculture were it not for government-supported research '
tions to appropriate the lion's share of the fruits of increasing
.supplemented by the research of the corporations which devise
productivity directly in the form of higher profits. This means
and sell products to the farmer." 20 No doubt, as this statement
that under monopoly capitalism, declining costs imply contin-
implies, government research has been the main factor behind
uously widening profit margins. 21 And continuously widening
the spectacular· reduction in agricultural costs during the last
21
'Yhat is reported to be true of the country's largest corporation, the
We discuss the implications of this in the consumer goods field in
19
A.mer1can Telephone and Telegraph Company, is really typical of the
the next chapter. giant corporations which dominate the economy: "Striking testimony to
:ro J. K. Galbraith, American Capitalism, Boston, 1952, pp. 95-96.