75
TBE TENDENCY OF SURPLUS TO RISE
74 MONOPOLY CAPITAL
corporations which behave toward each other in the manner
24
which Schumpeter himself characterized as ''corespective."
These corespecters, as he well knew, are not in the habit of
threatening each other's foundations or lives or even profit
margins. The kinds of non-price competition which they do
engage in are in no sense incompatible with the permanence of
monopoly profits and their steady increase over time.
We are by no means arguing that all, or nearly all, innova-
tion originates in a handful of giant corporations. As was
pointed out in the last chapter, there is good reason to believe
that many of the giants follow a deliberate policy of allowing
smaller firms to experiment with new ideas and new products
and then copy 01· take over those which prove successful: after
all, it saves money and is in keeping with the principle of bet-
ting only on the sure thing. But even if the policy is not delib-
erate, even if one assumes with T. K. Quinn that small com-
panies are inherently more capable of innovating, the giants
can still move in and buy out and absorb the smaller creators.
Indeed, to be bought out and absorbed is often the ultimate
ambition of the small business.
All this means that Schumpeter's perennial gale of creative
destruction has subsided into an occasional mild breeze which
is no more a threat to the big corporations than is their own
corespective behavior toward each other. One can understand
why Schumpeter clung to his own theory after it had become
obsolete, but the popularity which it has attained in recent
years is another matter. As Galbraith has said, ''the present
generation of Americans, if it survives, will buy its steel,
copper, brass, automobiles, tires, soap, shortening, breakfast
food, bacon, cigarettes, whiskey, cash registers and caskets
' theory, it is refut~ by the statistical record. This, we submit, is
from one or another of the handful of firms that now supply
these staples. As a moment's reflection will establish, there
hasn't been much change in the firms supplying these products
for several decades." 25 This should be obvious enough, and it
24
Ibid., p. 90n.
25
American Capitalism, p. 39.
shot1ld dispose once and for all of any theory of creative de-
strt1ction through innovation.
A second objection to the theory of rising surplus is thus
stated by Kaldor:
Marxist economists would probably argue that ... not only the
prodt1ctivity of labour, but also the degree of concentration of pro-
duction can be expected to rise steadily with the progress of capital-
ism. This causes a steady weakening of the forces of competition, as
a result of which the share of profit would go on rising beyond the
point where it covers investment needs and the consumption of
capitalists. Hence, on this argument ... the system will cease to be
capable of generating sufficient purchasing power to keep the mech-
anism of growth in operation.
The plain answer to this is that so far, at any rate, this has not
happened. Though the growing concentration of production in the
hands of giant firms proceeded in much the same way as Marx
predicted, this was not attended by a corresponding growth in the
share of profits. On the contrary, all statistical indications suggest
that the share of profits in income in leading capitalist countries
such as the United States have shown a falling rather than a rising
trend over recent decades, and is appreciably below the level of the
late nineteenth century; and despite the extraordinary severity and
duration of the depression of the 1930's, the problem of ''realising
surplus value'' appears no more chronic to-day than it was in Marx's
day.26
In this statement, Kaldor appears to agree that the advance
of capitalism has been accompanied by a weakening of the
forces of competition and an increase of labor productivity,
and he does not deny that these forces should logically lead to
a rising share of profit. In other words, he apparently does not
reject the theory which he attributes to Marxist economists.
But he then asserts, in effect, that no matter how sound the
an. unsatisfactory way to leave the matter. There must be some-
thing wrong with either the theory or the statistics.
Where Kaldor has gone wrong is, first, in identifying re-
26
l Nicholas Kaldor, ''A Model of Economic Growth," The Economic
ournal, December 1957, p. 621.