Capitalism takes no prisoners and kills competition where it can.That “where it can” is doing a lot of work. There is no question that each individual capitalist tries to kill competition, by undercutting his rivals, offering a better product or - let’s face it - lobbying the government for special protection. Every businessman wants to be a monopolist - or at least, he should do.
However, it doesn’t follow that such efforts succeed. The empirical evidence suggests that Marx was wrong. There is no tendency for capital to become more concentrated. Studies show that firm growth is independent of size (or anything else!), and so the distribution of firm size doesn’t change much over time. The degree of competition or monopoly is roughly stable. Tesco or Wal-Mart might seem monopolistic, but they are less so than 19th century truck stores.
One macroeconomic piece of evidence for this is the share of profits in GDP. If capitalism tended to kill competition over time, you’d expect this share to rise over time. But it hasn’t. Aside from a fall in the 70s and recovery in the 80s, the profit share seems trendless.
One reason for this is that there are strong countervailing pressures against individual capitalists’ desire for monopoly.
Herein, though, lies a problem. The weakness of the banking system means that some of these pressures are weaker than normal. With banks unable or unwilling to lend, new businesses are less able to grow to compete against larger firms. And existing firms are less able to get the finance to expand into areas where incumbent firms enjoy super-normal profits.
Competition requires finance. But this is lacking.
And here, Cable is weak. He says:
Our agenda can be summed in seven words: make [banks] safe and make them lendThere is, of course, a contradiction between these two goals. And Mr Cable said nothing to show how he plans to overcome it.