Critical of Capitalism

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MONOPOLY CAPITAL, explained by 2 university professors

Two criterions functions in this gathering of nuggets:  One, to present their analysis, and two, to persuade the reader of how much better it would be if there was a planned economy.  Of course both capitalism and socialism would greatly benefit from solving the political problem.  The fundamental issue for those who work and those supported by workers, is how to obtain a greater share of the 57% economic surplus (the difference between what a society produces and the cost of producing it).  Profs. Baran & Sweezy develop topic by topic the unfortunate consequences of our for-profit system.  The condensation below presents their answer. 


On reading this analysis, put old ideas out of your head.  Pretend rather that you are an alien how has come to a strange, primitive world.  You are the ships anthropologist, and your assignment is to report on the economic system of the United States.  Your report develops the following topics:   (1) the cost of production, (2) cost of distribution, (3) percentage of capacity economy is running at, (4) distribution of goods, (5) utilization of surplus, (6) distribution of goods to meet essential needs, (7) effects of market-places forces as measured by the public weal.   Much of what economists produce is laced with academic twaddle and has been selected because it supports the perceived interests of those industrialists and bankers.  Reading this book is a great tool for understaning this system.


A brilliant description of the economic forces at work in the main centers of economic power—the giant corporations.  Monopoly Capital will be a munificent source of insights and ideas for many years to come—James O’Connor, The Nation.

Bracket {} indication comments by Jk, and a number in parenthesis () indicates the page of a nearly exact quote (sometimes exact), while quotations are always an exact quote.  “B&S”, Baran & Sweezy



1.          INTRODUCTION: 

Marx though aware of the concentration of capital, never analyzed it; there weren’t sufficient examples in his day.  Moreover, Marx believed that the time line was too short for the development of monopoly capitalism.  Lenin never addressed the issue.  For the second & third volumes of Capital, Engles, after Marx’s death, commented on the rapid growth of monopolies during the 1880’s & 1890’s, but he did not try to incorporate monopoly into the body of Marxian economic theory.  Hilferding, in Das Finanzkapital, 1910, treated monopoly capitalism as a quantitative modification of basic Marxian laws, and Lenin who was strongly influenced by Hilferding’s analysis of the origins and diffusion of monopoly, based his theory of imperialism squarely on Hilferding’s approach.  B & S are filling this gap in Marxist analysis.


Economic surplus (surplus capital, surplus value) the difference between what a society produces and the costs of producing it. In an ideal society the surplus, minus what is used for economic expansion and development of infrastructures ought to flow to the people in higher wages for labor.  The estimate for the US runs at about 50% (B&S 369 ff.) {which is close to JK’s estimates in Utopian Economics.}  Economic surplus was 47% in 1929 & 57% in 1963 (11).  Property income has declined from 58% in 1929 to 32% in 1963.  {This is income from owning resources, land, and buildings.  This is not essential.  A society builds a house or an office, should not the people own it, and who demonstrate need should occupy the office and house.}


2.               THE GIANT CORPORATION:

Control rests in the hands of management.  100 years ago banking exerted considerable control, but now these corporations have generated sufficient funds internally so as to take care of most of their financial needs internally, in most instances.  Thus a current model of monopoly capitalism does not need to include the influences of banking.  Management is self-perpetuating and comes either from internal promotion or from a career of being on the board of directors of other companies {in fact the typical director is on the board of several companies at the same time—the CEO just one company.}  It is the corporation, rather than the family which is the basic unit:  “All the men and families of great wealth are now identified with large corporations in which their property is seated.”[i]  B&S find wrong the claim of apologists that corporations demonstrate significant social responsibility and that maximization of profits has ceased to be the guiding principle of business.[ii]  {The principle goal of corporations—judging from actions—has been the enrichment of the CEO and the directory slate he picks.  They treat the corporation as their private game reserve which they raid periodically through voting for themselves millions of dollars in stock options and millions more in remuneration and by adopting policies which promote the short-term rise of their stock prices even when in such moves are in conflict with sound business policy.}   Traditional economists analyze economic trends on price and income; this would not be accurate according to the apologists, who in fact have developed a sociological model, organization theory, based upon group behavior.   B&S among others admit to social goals, but deny that they are sufficiently significant so as to necessitate a modification the traditional price earnings analysis method which consists of high managerial incomes, good profits, a strong competitive position, and growth.[iii]  Earley, whom they reprint an entire page of, in rebuttal of organizational theory, concludes that management’s principle function is “a systematic temporal search for highest practicable profits”(25).  B&S go on to list the various programs used to increase profits.


3. THE TENDENCY OF SURPLUS TO RISE:  While a few economists acknowledge imperfect competition and monopolistic competition, the majority are apologetic towards the system and claim that capitalism “promotes a rational social order which serves to promote the welfare and happiness of its members” (56). The maximization of profits of a group of large corporations which comprise the industry is obtained not competing through pricing for they rather coordinate pricing through informal agreements and “price leadership”.  U.S. Steel sets price, while for tobacco the big companies take turns in initiating price changes, and for petroleum industry different companies take the lead in different regional markets.  Cutting costs provides for advantage within the oligopy for competition in advertising, research, product development, etc. 


4.  THE ABSORPTION OF SURPLUS CAPITAISTS’ CONSUMPTION AND INVESTMENT:  Profit margin fluctuates according to percentage of capacity.  In 1957 GM produced 3.4 million cars and sold them at an average price of $2,213.  Variable costs (labor & materials) were $1,350, while overhead amounted to $550, leaving a profit of $313 per unit.  If production declined 25%, profits would decline 58% to $130 per unit, but if production increased 25% then profits would by 35% to $423 per unit; and profits would disappear at 65% of the 1957 output.  R&D has become mainly a tool of marketing, body shape and design changes are measured by its impact upon the bottom line, and thus is in B&S’s analysis group with advertising, and thus not a capital expenditure (cost of production).  Foreign investment is looked at not as a way of pumping surplus into underdeveloped areas, but as a way of pumping it out (105).  Thus for example according to Craincross, estimates in the years form 1870-1913, net export of capital from Great Britain totaled 2.4 while income received totaled 4.1 billion pounds; and for the United States from 1950-1963, capital export $17.382, income received $29.416 billion.  Thus foreign investment aggravates rather than helps the surplus absorption problem.  {Surplus is wasted under capitalism when measured by the utilitarian standard of public weal, for it goes primarily towards dividends, advertising, and mergers.}

Monopoly capitalism is a self-contradictory system because of its failure to absorb an ever-increasing surplus.  {THIS PROBLEM IS CENTRAL TO B&S’S ANALYSIS.}  Surplus that cannot be absorbed will not be produced, it follows that the normal state of the monopoly capitalist economy is stagnation and chronic underutilization of available human and material resources (108).  {Troubling is the fact that though there are human needs:  for shelter, food, consumer items, and medical, and these are denied to those who cannot afford them.  Carpenters are under employed, factories are ran at less than capacity, fields left furrow, and enrollment to medical schools limited.}   There are surplus of manufactured goods, of labor, and of farm produce:  “always too much, but never too little” (109).  One solution is to cut back production; another to stimulate demand.  In the socialist society B&S point out that the government needs simply to cut price for the surplus caused by overproduction to vanished, and both the manufacturer and consumer benefit, but for a corporation to cut prices affects the viability of the industry as a whole {consider the price wars of the airlines--2001-2005--and the resulting bankruptcies.}


5.  THE ABSORPTION OF SURPLUS:  THE SALES EFFORT:  Nonproductive sectors, such as government, church, merchants all consume surplus.  Expenditures for advertising were in 1867 1/7th the $360 million of 1890.  In 1929, it reached $3.426 billion; in 1962 $12 billion.  It is a truly fantastic outpouring of resources… singing commercials, garish billboards… and at the same time as a formidable wall protecting monopolistic positions… a must for survival (119).  It does not served to any appreciable extent a constructive function such as to create a more informed and more perfect market (120).  Studies show that the consumer buys in his mind a superior product, and not what is superior in objective terms; moreover, studies show that the individuals are influenced by advertising without being aware of that influence, and the consumer pays prices markedly higher than those charged for physically identical products which are not backed by suitable advertising techniques (121).  It is beyond dispute that entertainment could be provided at a cost to consumers incomparably lower than they are forced to pay through commercial advertising (121).  Advertising is a massive waste of resources, a continual drain on the consumer’s income, a systematic destruction of his freedom of choice between genuine alternatives, and it reduces price competition (122). 

Another cost comes from product design and innovations being little more.  Marketing ploys:  How does not separate production costs from the costs resulting from changes in body style done for the sake of sales?  How do you figure in the costs of the frivolous modifications to the car such as a soft fabric rather than a durable one?  Calculations showed that the cost of model changes came to about $700 per car (more than 25 percent of model purchase price) or about $3.9 BILLION PER YEAR OVER 1956-1960 PERIOD (136).  This is not all the whole story since there are accelerated obsolescence of repair parts, higher repair costs stemming from certain changes in car design and construction and additional gasoline consumption (about 20% of total gasoline costs)[iv] (136-7). If we add the other unnecessary costs such as dealership (30-40%) and profits of the automaker, “a 1949 automobile built with the technology of 1959-1960 would have been less than $700.  Automobile changes were costing this country about 2.5 percent of its Gross National Product!” (137).  The greater part of the sales effort is carried out not by obviously unproductive workers such as salesmen and advertising copy writers, but by seemingly productive workers:  tool and die makers, draftsmen, mechanics, assembly line workers (138).  B&S in their analysis are separating socially necessary costs from those that though part of the system, such as rent, advertising, interest, that are not necessary.  They hold up as a standard rational social output and the optimal conditions for its production (139). 

      A second consumer of surplus is finance, insurance, and real estate (140).  In 1960 this sector of the economy accounted for income totaling $42.3 billion, equal to 10.2 percent of aggregate national income of that year (140).  This is almost as much as the combined income generated in agriculture, mining, and contract construction (140).  While both insurance and finance are necessary, they could be operated much more simply (like social security) and they would consume only half of the $42.3 billion.  The same for the transfer of real estate.  Thus most of our outlay in these sectors is a form of surplus absorption characteristic of capitalism {not under socialism} in general.  Marx described the corporate system as: “It reproduces a new financial aristocracy, an new variety of parasites in the shape of promoters, speculators, and merely nominal directors; a whole system of swindling and cheating by means of corporate promotion, stock issuance, and stock speculation’ (Capital, V. 3, Ch. 27).



Government consumes surplus in ways narrowly circumscribed by the nature of monopoly capitalist society and as time goes on becomes more and more irrational and destructive.  Keynesian economics holds that the strength of the government stimulus is proportional not to the level of government spending as such but to the magnitude of the deficit, and thus no amount of government spending could exercise an expansionary effect on total demand if it was match by an equivalent amount of taxation {taking form one pot to put in another} (143-4).  B&S hold this to be wrong, yet their argument at 144 utterly fails for it assumes that raising taxes will not affect consumer and corporate spending.

      The percentage of GNP has risen from 7.4% in 1929 to 28.8 in 1961.  Most of what government absorbs would not have been produced otherwise.  Other countries play a similar role:  UK (1953) 35.7%, Belgium (52) 31.2%; West Germany (1953) 30.8%; Canada (1953) 26.6%.  Government spending B&S claim reduces surplus for which the public couldn’t do, and thus business does not forcefully oppose the ever-rising percentage of GNP.  Corporate profits have steadily risen since 1939, while after taxes profits have been essential constant 1939-1948 11.9 before & 6.3 after; and 1949-1957, 12.5 before and 6.3 after taxes.  A trend of ever greater preferential treatment of corporations for taxes had been noted in Pressure Groups and the Revenue code:  A Requiem in Honor of the Departing Uniformity of the Tax Laws, William L. Carry, Harvard Law Review March, 1955.  B&S reason that if it weren’t for the consumption of government there would be more of both idle plants and workers.  Though an ever greater portion comes from the workers as the burden of taxes is shifted away from corporations, the spending like a demand system brings into being that which would not be.  The big question is not the consumption of GNP by government, but on what.  Next B&S ask what good is done with this increase in the tax burden.  Of this proportionate increase in the ratio of government spending to GNP, almost nine tenths was transfer payments and defense purchases, little more than one-tenth non-defense purchases…. The 1/10th goes for public education, roads and highways, health and sanitation, conservation and recreation, commerce and housing, police and fire protection, courts and prisons, legislatures and executives…. Increased non-defense purchases of goods and services have thus made almost no contribution to the solution of the surplus absorption problem (152).  Transfer payments, on the other hand, have grown significantly, expanding from less than 2 percent to nearly 6 percent of GNP, which includes interest payments to banks and various forms of social security payments (152-3). [In 05 interest payment to banks and treasury bond holders amount to 35% of the federal budget—thanks primarily to the Bushes and Reagan.} Defense purchases have grown from less than 1 percent of GNP to more than 10 percent, accounting for about two thirds of total expansion of government spending relative to GNP sine the 1920s.  VOTES ARE THE NOMINAL SOURCE OF POLITICAL POWER, AND MONEY IS THE REAL SOURCE (155).  Given the success and stability of this type of system, the moneyed oligarchy prefers democratic to authoritarian government.  Challenges such as by radical labor movement are meet by a few concessions, anti-union legislation, and by a media which generates anti-union feelings.  By fragmenting power between federal, state, and local governments, the U.S. system makes it difficult to effectively deal with many local issues such as urban development.  A single government is broken down into independent bureaucracies.  1400 Governments, by Robert Wood of MIT describes the 1,400 separate governmental authorities operating within New York metropolitan area, each with its vested interests.  Until the New Deal period of the 1930’s, there was not even any pretense that promoting welfare of the lower classes was a responsibility of government:  the dominant ideology held that any reliance on government for income or services was demoralizing to the individual, contrary to the laws of nature, and ruinous to the system of private enterprise (159). 

Depression stats, 1929-1939:  government spending $10.2B-17.5; GNP 104.4-91.1. unemployment 3.2%-17.2%.  Government spending as % of GNP increased in non-defense purchases 7.5-13.3; transfer payments 1.6-4.6; defense purchases 0.7-1.4.  However these changes were inadequate to end the depression; war spending accomplished what welfare spending hadn’t (160-1).  By 1944 government spending increased form $1.5-103.1B and unemployment declined from 17.2-1.2%.  Because military purchases does not compete directly with private industry—as does public house for example—its effects as an economic stimulus is much greater—jk.  B&S hold that a tripling of government spending from 17.2B would have created full employment.  B&S hold that the forces opposing further expansion of public spending were too strong.  Because state and local services are funded by property taxes, which falls more squarely on the power elite, there is both less room for increase and stiffer opposition.  State and local expenditures constituted 7.4 percent of GNP in 1929 and 8.7 in 1957 (163).  The great disparity in spending for military versus for public services has been determined by the moneyed oligarchy.  In other words a government under a capitalist economic systems sees its social contract differently (red above) and thus allocates its resources differently.  Because of the general resistance to spending in public sector and the need for this to be increased several fold if it is to replace the role of military spending in consuming surplus production, this sort of shift is not and will not be made given the moneyed oligarchy. 


THE TVA & WHY IT HASN’T BEEN REPEATED:  The TVA was an outstanding success both when measured by the impact upon development and that it made electricity available by the late 50s at about half the price of the rest of the nation (166).  Nevertheless business opposed similar project being started elsewhere.  B&S conclude “the oligarchy stands in stark opposition to the satisfaction of social needs” (173).  They go on to describe the nightmare of private transportation with its consumption of resources, pollution of air, and its usage of land for wider streets and parking areas.  Public transit has been effectively kept minimal by the oligarchy. 


7.  THE ABSORPTION OF SURPLUS:  MILITARISM AND IMPERIALISM:  Capitalism from its earliest Medieval beginnings has been an international system and a hierarchical system with its dependent colonies and conquered territories.  From this need arises the importance and size of the military.  The American Empire (those countries to which the US exerts a hegemony): 19 Latin American countries (except Cuba); Canada; 4 Middle Eastern (Turkey, Jordan, Saudi Arabia, and Iran); 4 South, and South East Asian (Pakistan, Thailand, Philippines, and South Vietnam; 2 East Asian (South Korea, Formosa); 2 African (Libya, Liberia), European (Greece).  To justify militarism is the claim of Soviet aggression, and example of which is their European buffer states and their support of the Cuban revolution and the revolution in South Vietnam; “yet, paradoxical though it may seem, we know of no serious analyst of Soviet society and Soviet policy who really believes it…. Soviet policy has always been essentially defensive…. The Soviet threat is not military but economic, political, and ideological” (185).  Militarism and conquest are completely foreign to Marxian theory, and a socialist society contains no class or group, which like the big capitalists of the imperialist countries, stand to gain from a policy of subjugating other nations and peoples (186).  “Whenever a Communist rebellion developed the United States would suppress it” (188) In order to contain communism:  (1) the US adopted a policy of building up allies (the Marshall Plan was one example); (2) military posts around the world and treaties; (3) an arms build up for war with socialist countries.  There are 275 major US base complexes and 1,400 bases either occupied by or prepared for American forces (203).  The reason they and the governments they control are opposed to the spread of socialism is not that it necessarily reduces their chances of importing or exporting (though of course it may), but that it does necessarily reduce their opportunities to profit from their doing business with and in the newly socialized area (193).  Foreign investments generally pay a higher rate of return.  Consider for 1958 the (percentage of investment)/(percentage of return) for Standard Oil of New Jersey:  US & Canada 67/34, Latin America 20/39, Eastern Hemisphere 13/27.  Standard Oil owned 275 subsidiaries (50% + stock) in 52 countries. After a small initial, foreign investment, the remainder was financed from their profits.  In 1962 of its profits of $841M, $538M was paid out to shareholders, the vast majority of whom resided in the US.  Profits from US operations were $309M, thus 40% of what was paid in the US was derived from foreign investments.  {This brings an interesting point, namely that dividends today is less than half what it was in 1952, the shift has been to Stock buy backs, which raise the price of shares traded.}  The most rapidly expanding markets are abroad.  Standard Oil of NJ had $62M in Cuba, plus its refinery their bought crude oil at an inflated price from its Venezuelan subsidiary at an inflated price, and then sold finished products to its Cuba market.  All this was lost with the revolution.  The dollar shift in military spending from soldiers to weaponry entails that such spending has less an effect upon employment, and similarly given the high dollar items, less people will be employed.  The production of a million AR 22 rifles will employ many more people than one Saturn rocket.  The arms budget is losing its potency as an economic anodyne (214).   Moreover, the military build up of the US rather than promoting national security, threatens it because it has causes a similar build up in the Soviet Union and China. 


8.           ON THE HISTORY OF MONOPOLY CAPITAL:  {The primary advancement has come in increased productivity.  It began when the steam engine was utilized in factories and on the railroads.}  Between 1880 & 1900 the railroads consumed 40-50% of private capital formation.  The primary absorptions of surplus have been the steam engine ran factories, railroads, and automobiles, followed later by electricity. 

Wars increase production to the limits of resources and changes the pattern of economic life (224).  Following the war, because of the lack of domestic production of consumer goods and industrial goods, there is a boom of continued high utilization of industrial capacity.  During the great depression the very workings of the system were laid bare because the avenues for consumption of surplus (war, new consumer & industrial items, and foreign markets)[v] had all greatly contracted.  The depression was a period of low productivity without developments to stimulate production other than increased government spending.  But B&S had shown in the previous chapter, that though significant, it was insufficient to lift the country from depression and stagnation.  Capacity utilization went from 83% in 1928 to 53% in 1931 and 42% in 1932, and was only 60% in 1938; and 84.5% for the 1920s, 63.4% for the 1930s.  B&S point out that because of the great expansion, the figures for employment and capacity utilization greatly underestimate the potential for production and the people available for the work force: accepted statistical methods greatly understate the extent to which human and material resources are underutilized in a monopoly capitalist economy” (242-3).  Though the industrialization built upon deficit military spending for WWII, ending the decade-long depression, a number of processes absorbed surplus following the war, especially the need to again produce consumer goods and refurbish factors, the automobilzation, the sub-urbanization, and the tremendous growth of mortgage and consumer debt.  During the war consumers paid off debt and accumulated vast amounts of liquid savings (245).  These differences, especially consumer purchasing power, distinguish 1945 from 1937, when a financial rally briefly ended the depression.  Using WWII as a standard for the number of people unemployed as the number who would work with full employment, which occurred during WWII, when unemployment dipped to 1.3%, the unemployment figure would be 50%.  The government method is counting only those who are actively searching.



‘The Civil War was not fought by Northern ruling class to free the slaves, as many mistakenly believe.  It was fought to check the ambitions of the Southern slave-owning oligarchy which wanted to escape from what was essentially a colonial relation to Northern capital’ (252).[vi]  {This chapter is of little interest for it neither reveals the workings of the capitalist system, but rather the workings of man, for man has throughout written history formed social hierarchies, and in our country the Negro occupies the bottom rung along with hillbillies, bikers, Indians, and criminals.  To criticize capitalism because a particular segment of society is stuck at the bottom misses the point.  It is not who is at the bottom, but rather that the bottom is so onerous; viz., a diminution of the disparity between the higher rungs and the bottom would go a long way to eliminating behavior problems so common to the bottom rungs, and at the same time increase the overall happiness & thus ameliorating the reasons for the existence of the social cage that limits mobility and promotes asocial behavior. {I certainly don’t favor lifting the Negroes from the bottom only to have others to fill the vacuum.}


10.  ON THE QUALITY OF MONOPOLY CAPITALIST SOCIETY:  “Disorientation, apathy, and often despair, haunting Americans in all walks of life, have assumed in our time the dimensions of a profound crisis…. The malaise deprives work of meaning and purpose; turns leisure into joyless, debilitating laziness; fatally impairs the educational system and …” (281).  {This is the standard socialist criticism of corruption of values and actions by the for profit system due to its dollar value system which results in the alienation of the worker from his production, his place of employment, and his community.  {Though true, it is dauntingly true that there is in a socialist society these same types of psychological problems--though possible to a lesser extent--along with economic stagnation, lack of consumer items, and a service sector that is inordinately upsetting to those they serve.  Socialist nations successfully address some problems such as wage disparity, medical services, prostitution, media content, educational opportunities, unemployment, and social services.  Socialism creates efficiencies in finance, in production, in repairing of goods, and in distribution.  {But having politicians oversee planning and the common man implementing the plans is disaster. The ending of the socialist experiment in Russia has been a disaster for those peoples.} 

      Analysis of crime rates, suicides, divorce and such have limits as to reporting and thus make interpreting a trend dubious.  Poverty is a measure of capitalism’s failure to distribute both the burdens of labor and adequate rewards.  In the 1960 Census of Housing, there were 53 million occupied units, of which 8.8 million (16.6%) lacked private toilet or bath or running water; moreover nearly two-thirds were deteriorating or dilapidated or over crowded (289).  Assuming the national average of 2.9 people, there were 25.5 million Americans living in substandard housing.  “An estimated 400,000 of the 2,250,000 dwelling units [in NY] are in slum buildings…. About 282,000 lack private toilet or bath, are cold water flats or have no running water, or are in a bad state of physical deterioration.  Another 118,000, though meeting the Census Bureau’s low structural requirements, are so overcrowded and so violate the city’s health, sanitation, or occupancy standards….” (The New York Times, 11/30/1958).  {Two weeks in Philadelphia in 04, has shown me that things have not changed.}  “It is misleading to argue that inadequate support for the public sector as a whole is a major cause of the tragic condition of housing” (294).  {A for-profit system does has a fundamental conflict with intervention, nor has the system been able to eliminate the problem of surplus so as to have like in WWII, full employment.   The principle cause is the lack of economic opportunity.  A booming economy, like during WWII creates the employment opportunities and high that would eliminate the slums.  There would be a gradual and steady reduction in the populace who are minimally employable, the lumping proletariat.}[vii]  Urban development is slum shifting, and affordable housing is only changing the address, as proven by the redevelopment apartments in the inner cities which did little to improve the quality of life of those who qualified for such housing.  In the capitalist system there are funds for malls and office buildings, for new housing for the upper 40% of the society, but only 2.5% of housing construction goes towards (1959) replacing housing for the bottom 20% of society. 

There is an irony to the results of the automobile, which through its popularity entails the failure to develop in most cities and efficient and popular mass-transit system.  Lacking an efficient and convenient system, the streets in cities built before the advent of the automobile become clogged with automobiles, and parking becomes inconvenient and prohibitively expensive.  {This lack of adequate transportation planning has resulted in billions of hours per year lost in traffic jams with the resulting billions of dollars lost in fuel and the air ever more foul even more with its environmental and health consequences.}

      In 1960 the outlay for education was $23.1 billion, 5.5% OF the GNP; however, the Soviet Union spends between 10 & 15% if it GNP (307).  Given that their GNP is only half of the US, this burden is far heavier.  The in 1960, the military establishment costs more than twice as much as the entire educational effort” (308).  The average expenditure per pupil in 1958 was $341. The inequality of neighborhood schools is based upon variation of neighborhoods as to property value and density of population per dwelling.  Those at the top of the pyramid rely upon private school.  This inequality continues through colleges.  


11.  THE IRRATIONAL SYSTEM: Having profits as the standard of commerce, this measure influences the relationship between individuals.  Marx in Critique of Gotha Program wrote that evolution of socialism into communism requires the unremitting struggle against this principle with the view of replacing quid pro quo (one thing for another) with from each according to his ability, to each according to his need (337).  Quid pro quo is not actually the system for exchange is done in order to maximize profits.  This exchange principle breaks down with people and materials remaining idle.  Poverty is created because of a break down in the system for organizing production, and in the third world “millions suffer from disease and starvation because there is no mechanism for affecting an exchange of what they could produce for what they so desperately need” (338).  

      To justify our system, it is referred to as a “free enterprise.”  It is not really free except in the sense that giant corporations are free to manipulate the market place essentially as they see fit.  Instead of addressing the issue of the merits of monopoly capitalism and thus revealing “its manifest evils, absurdities, and irrationalities” (340), they shift the debate to a repudiation of socialism and revolution. Instead of competition in the market place between 2 types of economies, there has been embargos and the Cold War. 

         Adam Smith saw the division of labor as a key to the wealth of nations, but this comes with the development of a class society and the dehumanization of labor—or rather its continuation from its medieval structures. 



1.           Reinforces class division and disparity of wealth. 

2.           Production not related to human needs.

3.           Conditions of work are made severe for the sake of increased profits.

4.           Alienation from work and work place.  {B&S are measuring the present human condition against the imaginary communist utopia with its enlightened citizenry, with its just distribution of wealth, and with government policies that in all ways promotes the public weal.}   

5.           There is a general lack of values which is expressed in leisure activities and consumer purchases.

6.           The dehumanization of the individual lessens the worker’s solidarity with his fellow workers and lessens his sense of compassion, and thus makes him fit more willing to exploit and to be exploited.

7.           B&S adopted a Freudian view and its criticisms of capitalistic society (364 ff.)

8.           The contradictions in the system have a deleterious impact upon lovers and families.

9.           Economically, children are a strain upon the family, and continue to be after divorce. 

10.       At the root of these emotional problems is the “profound irrationality and moral bankruptcy of monopoly capitalism” (363). 

11.      The inordinate allocation for the production of weapons and cars does is contrary to the public weal.



Monopoly Capital: An Essay on the American Economic and Social Order by Professors Paul Baran & Paul Sweezy, Monthly Review Press, New York, 1966

[i] C. Wright Mills, The Power Elite, New York, 1956, p. 116.  Very possibly the most influential book published about the United States’ social-economic structure of the last century.

[ii] “No longer the agent of proprietorship seeking to maximize return on investment, management sees itself as responsible to stockholders employees, customers, the general public, and perhaps most important, the firm itself as an institution. . . . there is no display of greed or graspingness; there is no attempt to push off onto workers or community at large part of the social costs of the enterprise.”  Carl Kaysen in a paper delivered at the 1956 annual meeting of the American Economic Association and published in The Social Significance of Modern Corporation,” American Economic Review, May 1957, pp. 313-1

4.[iii]  Having extensively studied the behavior of the stock market, looked at numerous debacles such as Enron and the S&L collapse, I find that it is managerial income comes first and  that profits, strong competitive position, and growth derive are sought because of the stocks and stock options that the directors have.  Manipulation of accounting and fraud also drive the price of stock up. 


[iv]   Miles per gallon, 16.4 in 1949; it fell to 14.3 ten years later, then rose to 15.3 in 1960-61.  The gasoline average 1949 car would have risen to 18.0 per gallon in 1959 and 18.5 in 1961 had the 1949 model been continued.  Figures from Journal of Political Economy, October 1962.

[v]  All of these have been prior discussed, of the new consumer items there was the automobile whose product had diminished during the depression.  Similarly there was little investment in railroads, factories, weapons, electric power plants (with the exception after 1937 of the government financed TVA).  

[vi]   My own research (and others) confirms this conclusion.  Thus we find in an effort the Southern politicians sought to remove tariffs so as to obtain cheaper imports from England, as well as to establish banking through relationships with European banking houses for the sake of financing an industrialization there. 

[vii]  Proletariat used by socialist (from the Romans as a designate of the lowest class of their society) to mean factory workers.  Lumping proletariat  were those whose behavior made them minimally employable, such as criminals, alcoholics, bikers, prostitutes and like (used by Marx).

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Philosophy teaches the skills to see how the world ought to be.  Mathematics is the Queen for science, and logical analysis the Queen for skepticism.