Capitalism by Geoffrey Ingham

Author:Geoffrey Ingham
Language: eng
Format: epub
Publisher: Wiley
Published: 2012-02-01T05:00:00+00:00

Some early family capitalists attempted to extend capital’s control over labour beyond their firm’s gates. In 1853, for example, Sir Titus Salt built a large textile factory and a small town alongside the river Aire, near Bradford, England, to house the 3,000 workers it employed. Although Salt genuinely wished to better the appalling living conditions of the working class in the new industrial towns, he was primarily intent on improving the quality of his labour force and, most importantly, on countering the growing opposition to capitalism expressed by the Chartist movement. Most ordinary streets in Saltaire contained one or two larger houses for the higher-level management in order that they could keep the workers under surveillance outside working hours. Public houses were prohibited, not so much from an opposition to alcohol but on the grounds that they could be used as meeting places for discontented workers. Recreation was organized in the parks, billiard hall and library built by the Salt family.

However, such local monopolies were atypical and temporary features of mid-Victorian capitalism, which was characterized in Britain and elsewhere by small- and medium-size enterprises and, by today’s standards, high levels of competition. And as Adam Smith had surmised and Marx observed, high rates of return on relatively small amounts of money-capital in small-enterprise production attracted many new entrants to the industries. The resulting intensification of competition required the continuous reduction of capital costs through mechanical innovation, which led to falling rates of profit, over-production and a series of deflationary spirals, culminating in the protracted stagnation of the Great Depression between 1873 and 1896. In what was arguably the first global process of ‘creative destruction’, Britain’s capitalist hegemony, based on its family enterprise and workshop capitalism, was partially superseded by a new form of enterprise and market structure.

(iii) After this Great Depression in the last quarter of the nineteenth century, the modern corporation emerged at the upper levels of all the capitalist economies – but most extensively in the United States. First, family capitalism, incapable of raising enough capital for large-scale mass production technology, was gradually replaced as the main form of enterprise by ‘joint stock’ corporations – that is, enterprises financed by the public sale of stocks and shares. Second, the vertical integration of production chains in large corporations and horizontal combination in cartels were the means of avoiding the earlier competition that had reduced profits to intolerable levels and induced the Great Depression. Thus modern capitalism assumed its typical structure of large enterprises, organized as oligopolies or monopolies, with a hierarchy of bureaucratic management separated to some degree from owners.

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