As monopolisation developed in the late 19th and early 20th centuries, small enterprises and shareholder companies were increasingly taken over by large capitalist combines, known as syndicates, cartels, and trusts. How did these combined enterprises form?
In certain industries, the smaller capitalists were entirely “mopped up” until all that remained were a handful of large firms. Initially, these firms continued “competition as usual”, lowering prices in an attempt to starve out their competitors. However, finding themselves nearly matched in strength, these struggles became ever greater and more exhaustive. At this point, the capitalists recognised the benefit of banding together and formed combines, syndicates, and trusts to exercise almost complete control over the market.
This shift away from free competition ushered in a new stage of capitalism, known as monopoly capitalism, which was facilitated by the growing dominance of a few great banks. Often, a single bank would supply capital to several enterprises or combines and, seeking to stamp out any competition disruptive to its profits, would unite them all under its influence. Thus, entire countries became dominated by combined enterprises united behind banks. To ensure returns on their investments, the banks directed their now colossal capital reserves towards industry.
Here we have the growth of finance capital, defined by Lenin as “capital controlled by the banks and employed by the industrialists.” The major banks and industrial monopolies became intertwined, with banks controlling industry through capital investments and shareholdings, and the economy at large through the control of resources, investments, and production. As Lenin explained, “As banking develops and becomes concentrated in a small number of establishments, the banks grow from modest middlemen into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and sources of raw materials in any one country and in a number of countries.”
Crucially, Lenin noted that the nature of wealth accumulation underwent a change during this period. Profits, traditionally derived from manufacturing, were increasingly drawn from speculative activities such as stock manipulation, things like price inflation or deflation, spreading misinformation, coordinated buying or selling, issuing bonds, and earning interest on loans. As money flowed into the stock market and stock prices rose, bankers paid a huge part of the rise to themselves through bonuses. This meant that profits could be generated without investing in assets or production, detaching financial gains from real economic growth. In other words, the rentier and banking classes became able to make vast sums of money through speculation and “capital management” rather than production. Thus, finance capital takes capitalism to its highest and most decayed stage.
This rings true for Britain today. The financial oligarchy, composed of a small group of wealthy individuals—often referred to as “the 1%”—exercises unchecked control over capital flows. Their pursuit of limitless financial accumulation through speculative activities extracts value from the economy without contributing to it. Finance capitalists also wield huge political influence, exerting pressure on the state to shape policies in their favour.
For example, weapons manufacturers, pro-Israel groups, and all other manner of imperialist organisations lobby the governments of western nations for genocide and war. The economic and political dominance of finance capital reproduces and sharpens wealth divides, regional disparities, instability, and economic crises, which together accelerate the decay of capitalism. Although the government is often perceived as an independent body standing “above classes”, in truth, its actions are determined by lobbying groups, placing it at the mercy of the financial oligarchy—of finance capitalists.
The City of London represents the heart of our financial sector. Home to a number of financial institutions, banks, investment firms, insurance companies, and stock exchanges, this regional concentration of power exemplifies the role of finance capital in moulding the British economy. Our “Big Four” banks—Barclays, HSBC, Lloyds, and NatWest—not only provide traditional banking services but also exert huge control over capital and investments, both domestically and internationally. The housing market is a sufficient example to demonstrate how the interests of these institutions are at odds with working people. The extension of mortgage credit brings huge profits to the “Big Four” banks but drives up the price of houses and rent, diverting more of workers’ incomes into paying rents or for owner-occupiers paying interest to the banks.
Only by following in the footsteps of the Bolsheviks by promoting the transfer of control over the banks to a workers’ state and calling for an immediate cancellation of all debts accrued to this financial oligarchy under capitalism can we effectively rally the mass of the people in revolutionary action against them and end the practice of financial oligarchs growing wealthy without contributing anything to society themselves. As Lenin explained, “our task is merely to lop off what capitalistically mutilates this excellent apparatus”, meaning the big banks, “to make it even bigger, even more democratic, even more comprehensive. Quantity will be transformed into quality… This will be country wide book-keeping, country-wide accounting of the production and distribution of goods, this will be, so to speak, something in the nature of the skeleton of socialist society.”
Discussion Questions
- What have been the different phases or stages of capitalist society?
- Finance capitalists now dominate other capitalists through their control of banking and investment. What other types of capitalists are there and how do their interests differ?
- Is there any potential to split the ranks of the bourgeoisie as a result of these differences?
