Thursday, October 29, 2009

Bigness in Capitalism

In 1976 the former Deputy Prime Minister of Australia, Jim Cairns, wrote:

"....outside Australia, the 'economic crisis', the 'oil-food crisis', or 'inflation' whatever it is called is seen to be capitalist and third-world wide, deep seated, crucial, and to be a depression, not just inflation. Finally, there is acceptance that conventional economic thinking cannot deal with it. It looks like the end of an era, but why has it come?

There are, it seems, two main reasons*. First, there is the development of bigness in capitalism. Capitalism was once a very large number of small factories, shops, farms and other production units. Yet now in the USA, and it is little different in Australia, some 2 percent of the companies control about 50 percent of 'gross national product' in some way or another....The other main reason for the end of the era is the fact that the thrid world for a time could raise the price of raw materials and food it supplies to corporate capitalism...."[1]

A few years ago "fifty of the world’s one hundred largest economies [were] multi-national companies and not countries." [2]

When a private company grows to a size exceeding that of nations how can its vast resources not be viewed as social property? After all, the technology that these huge transnational corporations use has been "assembled with direct subsidies, tax write-offs, and other benefits traceable to the public treasury. The social capital of the nation - its air, water, and mineral treasure - has been expended in the process." [3]

Some observers may see (in addition) that many, if not most, of the risks taken by these global 'enterprises' are also, in fact, 'social'. Recent evidence of this is the hundreds of billions of dollars in TARP bailout money given to the large banks and the trillions of dollars that have been added to the US Federal Reserve’s balance sheet at huge social cost.

Part of this huge windfall for the big banks has been put into the acquisition of smaller banks by banks "too large to fail." The result is [even] more financial concentration."… [4]

And so it goes. For how much longer can we remain prisoners of economic labels and false dichotomies. 'Private enterprise' versus 'socialism'.

Corruption thrives in societies where the lines between 'private' and 'public' are blurred. 'Bigness' provides the open invitation.

[1] Jim Cairns 'Oil in Troubled Waters' Widescope International Publishers Pty Ltd, Camberwell Victoria. 1976. pp 133-134

[2] “No Nonsense Guide to Globalisation” p55. As quoted in:

[3] Richard J Barnet and Ronald E Muller, 'Global Reach - the power of the multinational corporations' 1974. page 374

[4] Assistant Secretary to the Treasury blasts economic policy, misleading data
October 7, 12:07 PMLA County Nonpartisan ExaminerCarl Herman

* A useful summary is provided by Geoffrey Barraclough in 'New York Times Review' 27 June 1974, 23 January 1975, 7 August 1975.

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