'
74 MONOPOLY CAPITAL ;
•
corporations which behave toward each other in the manner >
which Schumpeter himself characterized as ''corespective."2 4 · •·
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 1
that many of the giants follow a deliberate policy of allowing ·
smaller firms to experiment with new ideas and new products .:
and then copy or 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 refuted 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.
'J'lIE TENDENCY OF SURPLUS TO RISE 75
shot1ld dispose once and for all of any theory of creative de-
str11ction 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
prodtictivity of labour, but also the degree of concentration of pro-
dtiction 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 ~ising share of profit. In other words, he apparently does not
re1ect the theory which he attributes to Marxist economists.
But he then asserts, in effect, that no matter how sound the
a;:. unsatisfactory way to leave the matter. There must be some-
t 1ng Wrong with either the theory or the statistics.
Where Kaldor has gone wrong is, first, in identifying re-
26
Jo Nicholas Kaldor, ''A Model of Economic Growth," The Economic
urna,1 December 1957, p. 621.