Monopoly Capital

Monopoly Capital: An Essay on the American Economic and Social Order

Cover of the 1967 edition
Authors	Paul Sweezy, Paul A. Baran
Country	United States
Language	English
Subject	Monopoly
Published	1966 (Monthly Review Press)
Media type	Print

Monopoly Capital: An Essay on the American Economic and Social Order is a book by Paul Sweezy and Paul A. Baran published in 1966 by Monthly Review Press. It made a major contribution to Marxian theory by shifting attention from the assumption of a competitive economy to the monopolistic economy associated with the giant corporations that dominate the modern accumulation process. Their work played a leading role in the intellectual development of the New Left in the 1960s and 1970s. As a review in the American Economic Review stated, it represented “the first serious attempt to extend Marx’s model of competitive capitalism to the new conditions of monopoly capitalism.” It attracted renewed attention following the Great Recession.

Big business can maintain setting prices at high levels while still competing to cut costs, advertise, and market their products. The actual and potential economic surplus generated exceeds the existing outlets for investment and capitalist consumption. Private accumulation therefore requires the support of government spending geared primarily towards imperialistic and militaristic government tendencies, which is the easiest and surest way to utilize surplus productive capacity. Other forms of absorbing the surplus include expansion of the sales effort and the growth of finance, insurance, and real estate

One of the key contributions of Monopoly Capital is its application of the concept of economic surplus. The economic surplus is most simply the difference between “what a society produces and the costs of producing it. The size of the surplus is an index of productivity and wealth, of how much freedom a society has to accomplish whatever goals it may set for itself. The composition of the surplus shows how it uses that freedom: how much it invests in expanding its productive capacity, how much it consumes in various forms, how much it wastes and in what ways.” Although some scholars viewed the introduction of this concept as a break with the Marxist approach to value, later publications by Baran and Sweezy, as well as other authors, have continued to establish the importance of this innovation, its consistency with Marx's labor concept of value, and supplementary relation to Marx's category of surplus value. Baran and Sweezy argue that under the oligopolistic conditions of modern economies—dominated by big business—the surplus tends to rise. The vast extent of this increasing actual and potential surplus is visible in the underutilization of productive capacity, the level of unemployment, the waste embodied in the sales effort, and military spending. This is because monopoly/oligopoly conditions result in both insufficient opportunities for profitable reinvestment of the surplus (which shows up as excess capacity and unemployment) and forms of non-price competition involve large amounts of unproductive labor (e.g. in the sales effort and product differentiation). The overall result is a tendency toward economic stagnation and increased unproductive expenditures as a response.