78

•
use wage increases as a pretext to increase profit margins;
monopolistic corporations unquestionably have the power to •

prevent wage increases from lowering them. As Levinson hasi

aptly put it, ''While collective economic power may be effec.J
tive in raising the price of labor, the potentialities of redistribu..
tion out of profits are very slight so long as producers remain':
free to adjust their prices, techniques, and employment so as to'; THE ABSORPTION OF SURPLUS:
protect their profit position."80 • CAPITALISTS' CONSUMPTION AND INVESTMENT

In the last chapter it was shown that under monopoly cap-

italism, owing to the nature of the price and cost policies of the
giant corporations, there is a strong and systematic tendency
for surplus to rise, both absolutely and as a share of total out-
put. We now come to the problem of the absorption or utiliza-
tion of the surplus.
In general, surplus can be absorbed in the following ways:
( 1) it can be consumed, ( 2) it can be invested, and ( 3) it can
be wasted. In this chapter we confine attention to the capacity
of monopoly capitalism to absorb surplus through private con-
sumption and investment.
2
To the extent that surplus is consumed by capitalists, the
amot1nt available for investment is correspondingly reduced. It
follows that by making appropriate assumptions about capital-
~sts' consumption, it is always possible to arrive at a rate of
investment which can be sustained. Given full employment
and a certain rate of increase of productivity, total income (or
output), including the sum of workers' and capitalists' con-
' ~umption, can be/assumed to rise just fast enough to justify the
investment of tfie part of the surplus not consumed by the
capitalists. The problem of surplus absorption can thus be
solved on paper. Whether capitalists' consumption offers any
solution in reality is an altogether different question.
H. M. Levinson, ''Collective Bargaining and Income Distribution,":~
30
Without going into the arithmetic of the matter, one can
American Economic Review, May 1954, p. 316. \
• 79