22:52
Faizan
Concentration of Capital and Markets
"Market concentration" usually refers to the market share of the 4-5 biggest companies of a particular market. The question however is whether companies become larger in the Marxist sense i.e. that one capitalist eats the other and wealth is constantly concentrating in fewer and fewer hands, with the poor becoming poorer an the rich richer, or whether they became larger due to cost factors, in order for lower prices to be achieved thus making more and more products available for everybody, including the poor. Because it is not enough to say that there are fewer and bigger companies in a sector than they were some years ago, to prove that the Marxist analysis is correct. If socialists are right, the fewer and larger companies in a market must have caused the production of lower quality and more expensive goods. If on the other hand increasing concentration led to higher quality and lower prices for goods, the Marxist analysis must be wrong, and there must be other factors i.e. cost factors, that led to increasing concentration. So what do you think? What has happened to the quality and pricing of products since 1867 when Marx's "Capital" was published? Do workers today have access to more and higher quality or less and lower quality products than they had almost two centuries ago?
Therefore if socialists want to prove that Marx was right about capitalism, they have to prove that increasing market concentration leads to products that are of lower quality and higher prices. Steven Lustgarten, in his article "Productivity and Prices: The Consequences of Industrial Concentration" showed that for the period 1947-1972, price increases were lower in industries with the highest increase in concentration, and in industries with the highest decrease in concentration, as compared to price increases in industries with relatively stable levels of concentration over time. He claims that changes in industry concentration were due to technological development which caused changes in the market structure and increased productivity, thus putting downward pressure on prices. While he claims that in industries that did not experience significant technological progress, concentration and prices tended to remain stable over time.
There is a lot of research on whether higher industry concentration leads to higher or lower prices. You should know that for every academic article that claims that higher market concentration leads to price increases, there is another paper showing the opposite. You just need to Google expressions like "benefits of industrial concentration, benefits of market concentration, cost reductions-industrial concentration, why market concentration is good, which is the optimal market structure, benefits of mergers and acquisitions, prices and industrial concentration, innovation and industrial concentration" and you will find plenty of evidence.
"Market concentration" usually refers to the market share of the 4-5 biggest companies of a particular market. The question however is whether companies become larger in the Marxist sense i.e. that one capitalist eats the other and wealth is constantly concentrating in fewer and fewer hands, with the poor becoming poorer an the rich richer, or whether they became larger due to cost factors, in order for lower prices to be achieved thus making more and more products available for everybody, including the poor. Because it is not enough to say that there are fewer and bigger companies in a sector than they were some years ago, to prove that the Marxist analysis is correct. If socialists are right, the fewer and larger companies in a market must have caused the production of lower quality and more expensive goods. If on the other hand increasing concentration led to higher quality and lower prices for goods, the Marxist analysis must be wrong, and there must be other factors i.e. cost factors, that led to increasing concentration. So what do you think? What has happened to the quality and pricing of products since 1867 when Marx's "Capital" was published? Do workers today have access to more and higher quality or less and lower quality products than they had almost two centuries ago?
Therefore if socialists want to prove that Marx was right about capitalism, they have to prove that increasing market concentration leads to products that are of lower quality and higher prices. Steven Lustgarten, in his article "Productivity and Prices: The Consequences of Industrial Concentration" showed that for the period 1947-1972, price increases were lower in industries with the highest increase in concentration, and in industries with the highest decrease in concentration, as compared to price increases in industries with relatively stable levels of concentration over time. He claims that changes in industry concentration were due to technological development which caused changes in the market structure and increased productivity, thus putting downward pressure on prices. While he claims that in industries that did not experience significant technological progress, concentration and prices tended to remain stable over time.
There is a lot of research on whether higher industry concentration leads to higher or lower prices. You should know that for every academic article that claims that higher market concentration leads to price increases, there is another paper showing the opposite. You just need to Google expressions like "benefits of industrial concentration, benefits of market concentration, cost reductions-industrial concentration, why market concentration is good, which is the optimal market structure, benefits of mergers and acquisitions, prices and industrial concentration, innovation and industrial concentration" and you will find plenty of evidence.
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