In his book Imperialism, Lenin remarked: “The concentration of production; the monopolies arising therefrom; the merging or coalescence of the banks with industry – such is the history of the rise of finance capital and such is the content of that concept”.
This quote encapsulates the dynamic of capitalism in the past century and is vindicated by modern research. Three systems theorists at the Swiss Federal Institute of Technology in Zurich have used a database listing 37 million companies and investors worldwide to extract information about all the 43,060 multinational corporations and the share ownerships connecting them to construct a model of the web of interlocking shareholding networks, coupled with each company’s operating revenues, creating a representation of where economic power rests today. Of these 43,060, 1,318 companies stood at the heart of this network. Every one of the 1318 had ties to two or more companies and on the average had ties with 20 companies. Although counting for 20% of global operating revenues, this core collectively owned through its shares the majority of the world’s large blue chip and manufacturing firms, representing a further 60% of global revenues. At the center of this core they found a super-entity of 147 even more tightly knit companies (all of their ownership was held by other members of the super-entity) controlling 40% of the total wealth in the network. Most of them are financial institutions.
The results can be seen here: http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf.
The top 20 multinational corporations are Barclays plc, Capital Group Companies Inc, FMR Corporation, AXA, State Street Corporation, JP Morgan Chase & Co, Legal & General Group plc, Vanguard Group Inc, UBS AG, Merrill Lynch & Co Inc, Wellington Management Co LLP, Deutsche Bank AG, Franklin Resources Inc, Credit Suisse Group, Walton Enterprises LLC (holding company for Wal-Mart heirs), Bank of New York Mellon Corp, Natixis, Goldman Sachs Group Inc, T Rowe Price Group Inc and Legg Mason Inc.
The romantic dream of the self-made, hard-working industrial capitalist is thus shattered by the hammer of reality. This heroic figure is exposed as no more than a shareholder in gargantuan corporations, the motor force of capitalist imperialism. The profits of large-scale production and international exploitation of the resources of oppressed nations guarantee that capital breaks out from the shell of individual property.
The investments required by large (and especially multinational) companies go beyond the accumulated capital of any single individual, and banks become necessary to mobilize the capital needed by productive enterprises. Capitalism is hence provided with a mobilization of credit which keeps the quantity of idle money to a minimum and mobilizes the largest amounts for productive purposes. The increasing mass of credit leads to a change in its very nature, which goes from the provision of short-term finance, or circulating credit, to long-term investment projects, or investment credit, which provides banks with higher interest in enterprises’ long-term prospects. This of course ends up cutting into entrepreneurial profits, and increases finance capital’s share in the economy, as can be seen in the following graph:
On top of this, banks and their role as capital mobilizers reinforce the tendency towards growing concentration and centralization of capital. Banks come to dominate companies, increasing their stake in productive enterprise through the acquisition of share capital (it is no coincidence that the top companies in the global network of capital are banks or financial services corporations, like Barclays, Capital Group Companies and FMR Corporation). As capital centralizes and banks push up the profit rate on their investments by sponsoring larger and monopolistic companies, free competition is thwarted. “Not real capitalism” is indeed the purest expression of the laws of motion of capitalist society and the product of the logic of this mode of production.
As financial capital is transferred from competitive enterprises to multinational oligopolies, the rate of profit is systematically pushed up for big businesses and the three primary contradictions of global imperialism, outlined by Stalin, are brought to their highest point under the existing conditions of social polarization, where capital, concentrated in the hands of few giant capitalist associations manifests itself in direct opposition to the world proletariat:
“The first contradiction is the contradiction between labour and capital. Imperialism is the omnipotence of the monopolist trusts and syndicates, of the banks and the financial oligarchy, in the industrial countries. In the fight against this omnipotence, the customary methods of the working class-trade unions and cooperatives, parliamentary parties and the parliamentary struggle-have proved to be totally inadequate. Either place yourself at the mercy of capital, eke out a wretched existence as of old and sink lower and lower, or adopt a new weapon-this is the alternative imperialism puts before the vast masses of the proletariat. Imperialism brings the working class to revolution.
The second contradiction is the contradiction among the various financial groups and imperialist Powers in their struggle for sources of raw materials, for foreign territory. Imperialism is the export of capital to the sources of raw materials, the frenzied struggle for monopolist possession of these sources, the struggle for a re-division of the already divided world, a struggle waged with particular fury by new financial groups and Powers seeking a “place in the sun” against the old groups and Powers, which cling tenaciously to what they have seized. This frenzied struggle among the various groups of capitalists is notable in that it includes as an inevitable element imperialist wars, wars for the annexation of foreign territory. This circumstance, in its turn, is notable in that it leads to the mutual weakening of the imperialists, to the weakening of the position of capitalism in general, to the acceleration of the advent of the proletarian revolution and to the practical necessity of this revolution.
The third contradiction is the contradiction between the handful of ruling, “civilised” nations and the hundreds of millions of the colonial and dependent peoples of the world. Imperialism is the most barefaced exploitation and the most inhumane oppression of hundreds of millions of people inhabiting vast colonies and dependent countries. The purpose of this exploitation and of this oppression is to squeeze out super-profits. But in exploiting these countries imperialism is compelled to build these railways, factories and mills, industrial and commercial centers. The appearance of a class of proletarians, the emergence of a native intelligentsia, the awakening of national consciousness, the growth of the liberation movement-such are the inevitable results of this “policy.” The growth of the revolutionary movement in all colonies and dependent countries without exception clearly testifies to this fact. This circumstance is of importance for the proletariat inasmuch as it saps radically the position of capitalism by converting the colonies and dependent countries from reserves of imperialism into reserves of the proletarian revolution.”
Imperialism is then nothing other than the highest stage of capitalist development, where gargantuan concentrations of capital compete for dominance over the world, and especially over the oppressed people. It is a capitalism that is forced to admit its own contradictions and its own desperation, as sweat-stained profits become blood-stained profits.