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From International Socialist Review, Vol.31 No.2, March-April 1970, pp.58-64.
Transcribed & marked up by Einde O’Callaghan for ETOL.
The American Corporation: Its Power, Its Money, Its Politics
by Richard J. Barber
E.P. Dutton, 1970. 309 pp. with index, $7.95.
This book describes the “expansion, merger, internationalization and diversification” of US corporations in the postwar period, particularly since the “conglomerate boom” that erupted in 1967. The book shows that the last three years have seen a rapid acceleration of the concentration of capital and power in the hands of the dominant US trusts. Moreover, it provides useful information about the effects of this process on government, business, the labor force and educational institutions. Barber, who is an expert on corporate law and a former counsel for the Senate Anti-Trust Subcommittee, also adds an informative chapter on the significant failures of anti-trust legislation in the 1960s.
Barber’s central theme is summarized in the chart reproduced on page 60.”In closely examining the industrial terrain of the United States,” he writes, “one feature is paramount: the degree to which a very few firms rule most of the principal manufacturing sectors” (emphasis added). There are some cases where a single firm has a total monopoly:
“General Electric continues to make most of the light bulbs, Western Electric produces virtually all of our telephone equipment for its parent, American Telephone & Telegraph, and General Motors sells all but a few of the diesel locomotives ...”
But for most industry “power is shared by a handful of large companies. Result: what the economists call an oligopoly (Greek for a ‘few sellers’).”
Contrary to popular belief, Barber argues that oligopoly price control is virtually the same as monopoly control.
“No formal price-fixing is necessary. Where there are, say, three companies producing most of the industry’s output (automobiles for example), ... each seller knows that it both affects and is affected by the market choices of its rivals. If, therefore, company A establishes a significantly lower price than what has prevailed, its share of the market will increase considerably; its rivals B and C, can thus be expected promptly to match A’s newly announced price. Whatever gain A might originally have anticipated by cutting its price is lost. Under these conditions, it does not take long for the parties, independently, to price in a uniform non-competitive fashion.”
The result is that the oligopolies have been able to obtain monopoly profits and to establish a firm grip on the given industrial sector, which becomes relatively immune to penetration by “outside” capital “Data for the 1960s show that in industries where concentration was already high (where the top four firms accounted for at least half the industry’s sales) there was no significant net change at all.” Instead, throughout the postwar period the corporations have expanded through the parallel processes of merger and internationalization.
Barber shows that the industries involved in the “merger mania” of the last three years have included the largest.
“Once it was common – probably typical – for competing or related enterprises to join together, often for the principal objectives of gaining sufficient size to match the strength of a rival or simply to gain dominance over a market. Such mergers still occur, but we are finding that the acquirer and often both partners are already large firms. Moreover, they are frequently in completely unrelated industries ...
“From 1948 through 1968, 1,275 firms with assets of $10 million or more were acquired – in more than half the cases by a company with assets of more than $100 million. Of the 500 largest corporations listed by Fortune in 1962, eighty have since disappeared through mergers. As many as thirty of the companies which appeared on Fortune’s top-500 list in 1968 did not appear in 1969 because of merger.”
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CHART 1 Industries Dominated by a Few Big Firms |
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* Only the names of leading firms in each industry are identified. In some cases there is only a single dominant company, in others there may be two, three, or four. |
The result is that corporations are now competing with each other for control of the non-monopolized (”non-ologopolized”) sectors of industry outside their own sectors. Barber asks,
“Remember US Rubber? It’s now Uniroyal, and behind that name change stand two features common to much of recent industrial activity: the corporation is no longer a maker of rubber products nor is it a US-based firm. Fewer than half the things it makes have anything to do with rubber. With twenty-eight research and manufacturing centers in twenty-three countries, it has also lost its exclusive or principal ties with the United States ...
“Coca-Cola [it’s not on the chart, but could be – D.R.] still sells around the globe ‘the pause that refreshes,’ but it also makes instant coffee, cattle feed, and Minute Maid concentrated orange juice ... Pepsi Cola is another organization that found it expedient to change its name ... Pepsico, as it is now called, offers a wide assortment of snacks to go with your soft drink; it will also move your goods across the country, or around the world, in its North American vans.”
These quotations illustrate the magnitude of the internationalization of US firms. Barber points out that US direct investments abroad “now increase at the rate of about $10 million a day. The result is that the biggest corporations have substantially increased their share of international production by even more than they have within the United States.”
A number of the giant corporations derive more than half their income or earnings from foreign sales. These include Standard Oil of New Jersey, Mobil Oil, Woolworth, National Cash Register, Burroughs, Colgate-Palmolive, Standard Oil of California and Singer. Eastman Kodak, Pfizer, Caterpillar Tractor, International Harvester, Corn Products and Minnesota Mining make from 30 to 50 percent of their sales abroad.
Oligopoly conditions are created in foreign markets with US corporations occupying dominant positions:
“In England, Ford (which in 1961 paid out $360 million to acquire the remaining interest in its UK subsidiary) and GM challenge British Motors, and are not far ahead of Chrysler, which bought its way in by acquiring control of Rootes Motors, once a major independent factor in Britain (and, indeed, in America). In the big German auto market, GM’s Opel and Ford’s Taunus contend aggressively with Volkswagen. A new $100 million plant built by GM at Antwerp and a vast new Ford plant located in the Saarland will make these companies, along with Chrysler, even larger factors in European car sales. One major consequence of all these moves is that Ford at present makes 40 per cent of its cars outside the US, Chrysler over 30 per cent, and GM 25 per cent”
The comparative figures Barber offers show how US corporations tower over their foreign competitors.
“Among the world’s companies, US businesses are on the average five times larger than the leading British or German corporations, and ten times larger than the French companies. Based on the 1968 experience Belgium’s largest concern would not even rank among the top 100 US industrial companies in terms of sales; France’s would be number forty-six; Germany’s would place only number twenty-three; and Italy’s number thirty-four. When grouped by industries the comparison is even more striking.
“In 1968 US Steel’s profits were seven times greater than those of August Thyssen-Hutte, Germany’s biggest steel producer. Du Font’s profits are nearly twice those of Imperial Chemical Industries and three times greater than those of Farbenfabrikan Bayer ... General Motors’ sales are almost eight times those of Volkswagen and are bigger than the Gross National Product of the Netherlands and well over a hundred other countries. Indeed, the aggregate sales of VW, Fiat, Daimler-Benz, British Motors and Renault are equal to only three fourths of Ford Motors’ sales, which in turn are only about two thirds those of GM.”
The American Corporation includes a number of chapters on the ramifications of the power of US trusts in American society. Particularly interesting are the chapters on the “emerging alliance” of industry, universities and government in order to carry out “R& D” – “research” and development – above all in the military, aero-space and electronics fields. (The quotation marks around the word research are unquestionably merited since, as Barber shows, theoretical inquiry receives a tiny fraction in comparison to the funds devoted to applied research and development principally for military purposes.) Accordingly,
“The aircraft and missile industry does 35 per cent of all the R& D performed in American industry, yet it accounts for less than 3 per cent of the total value added by the country’s manufacturers. Similarly, electrical equipment and communication firms do about another quarter of the country’s research, but they provide barely 10 per cent of the amount added by manufacture”
At the same time,
“while Federal agencies fund about 60 per cent of US research, they conduct less than 15 per cent of the work. Conversely, industrial firms carry out 70 per cent of all the research that is done, but provide only a third of the financial support ... Universities conduct 10 per cent of our R&D, but finance barely 2 per cent.”
And, what sometimes misses the eye, while universities carry out only 10 per cent of the “research” undertaken by Americans (all this measured in dollars and cents), and this university “research” is largely financed by the government, a large percentage of ‘university’ research is privately contracted to corporations!
A typical center of such learning is the University of Michigan,
“bolstered by more than $50 million yearly in Federal research and grants ... Its Institute of Science and Technology, operated by the College of Engineering, is aimed specifically at harnessing the talents of the engineering faculty to the needs of industry. A Bureau of Business Research and a Bureau of Industrial Relations provide additional skills, as does the Institute of Social Research ... Through these special centers, and on their own, hundreds of U of M professors regularly engage in extensive consultation with industrial firms around the country ...
“Bethlehem Steel has gone so far as to insist on a ‘body for a buck’ – rewarding colleges with a grant of $4,000 for each live graduate hired by the company as a management trainee.”
But Barber is collosally naive about the implications of his own research. At one point he writes, corporations “have enormous power and will use it, not out of any preconceived imperialistic desires of the sort that worried Karl Marx, but to further their own goals” (emphasis added), to which one is tempted to respond with a shrug of the shoulders.
Barber fails to see that precisely “their own goals,” which have driven the multinational conglomerates to their present positions of world economic and political power, will also prove their undoing – namely, their quest for profits. One would think that Barber would foresee difficulties even on empirical grounds. What is most likely to happen now that the world trusts have “oligopolized” all or most of the world markets – a condition of the present economic situation which is becoming increasingly apparent? It is one thing when a number of corporations are eaten up on a national scale; it is quite another when this prospect faces corporations internationally, and Barber seriously underestimates the explosive ramifications of this difference.
Does he think that a Volkswagen or a Toyota will willingly become subsidiaries of Ford and General Motors, even granting the greater size of the latter? Or does he believe that Ford and GM, unable to achieve the first alternative, will willingly give over significant portions of their markets to these foreign competitors?
The answers to these questions are being demonstrated by the impact of the murderous competition between the international automobile trusts right here in this country. It is not one-sidedly advantageous only to US corporations. There has been a massive upsurge of foreign car sales, a spectacular slide of domestic auto production and this is setting the stage for a knock-down battle between the US auto corporations and the United Auto Workers later in the year.
Barber misses completely this “third” arena of the effects of corporate expansion besides internationalization and conglomeration. That is, its impact upon the wages of workers. He nowhere shows understanding of the fact that in the last analysis labor power itself is the source of all corporate profits. He does not see that by driving down the wages of “their own” workers, whether domestically or internationally, the trusts can individually better their own positions in world competition and that they are doing this on a world scale.
This is the central meaning of Wilson’s “austerity” program in Britain, the May-June 1968 general strike in France followed by Pompidou’s “austerity,” the massive upsurge of Italian workers and the strike wave in Europe generally, and the Nixon administration’s recessionary policies in this country. But the connection between the tightening of international corporate competition and the intensification of the class struggle in the advanced capitalist countries finds no explanation in The American Corporation.
This is a severe weakness in a book which sets out to extrapolate the present power of US corporations indefinitely into the future.
“In [the year] 2000,” writes Barber, “the GNP will exceed $2.7 trillion By the end of the century a labor force of 129 million will be working an average thirty-three hours a week. It will be a super-super-affluent economy, with each civilian employee turning out $21,000 worth of goods and services a year and earning an average family income in excess of $20,000. What all this means to business is an almost incredible growth ...”
What a splendid prospect this author holds out for the American (and world) working class – toiling for US corporations and the tiny coterie of billionaires who own them for another three decades! It is also an unlikely prospect The flaw is that it misses the other side of the accumulation of capital: the exploitation of wage labor. The fact is that the intensified concentration and consolidation of capital has intensified the clashes between big business and an increasingly politicalized and radicalized world working class. Predictions about the future of American corporations should take this fact into account.
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