In Capital Vol. 1 Marx posits that as competition carries on and capitalists fight to grow and capture market share, the larger firms that can produce at a lower cost eventually push out smaller firms who can’t compete. The survivors gain from pushing out rivals, but society loses as competition lags. Also, as more capital is needed to maintain larger operations smaller firms aggregate to survive. The result is a few very powerful and valuable entities that are difficult to reign in.

“The cheapness of commodities demands, caeteris paribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller […] with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production […]It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish.”

Also stated in Capital Vol. 1, Marx argues that as firms produce value at an ever-increasing surplus they are also accumulating wealth. This in turn leads to greater means of producing value, creating a cycle. This will increase the accumulation of both the capitalists and the laborers. However the capitalists gain more, at an increasing rate, than the laborers. As this cycle continues over time, the gap between accumulation of capitalists and the laborers gets wider.

“But all methods for the production of surplus-value are at the same time methods of accumulation; and every extension of accumulation becomes again a means for the development of those methods. It follows therefore that in proportion as capital accumulates, the lot of the labourer, be his payment high or low, must grow worse.”

In the United States, many examples exist of giant firms emerging to control huge shares of their respective markets. The media industry poses as a prime example. In 1983, fifty companies controlled 90 percent of American media (print, film, news, music, radio). By 2011, the number of companies controlling 90 percent of American Media had fallen to just six. Across the board, the number of large and powerful firms has been rising. Both in and manufacturing and retail more industries are being controlled by fewer firms, and at a greater share.

Percentage of Sales for Four Largest Firms in Selected U.S. Retail Industries

Industry (NAICS code)  1992    1997    2002    2007
Food & beverage stores (445)  15.4    18.3    28.2    27.7
Health & personal care stores (446)  24.7    39.1    45.7    54.4
General merchandise stores (452)  47.3    55.9    65.6    73.2
Supermarkets (44511)  18.0    20.8    32.5    32.0
Book stores (451211)  41.3    54.1    65.6    71.0
Computer & software stores (443120)  26.2    34.9    52.5    73.1


This information supports Marx’s claims that concentration of economic power would continue to increase under capitalism. As firms have grown and a select few become huge, controlling parties, a small group of individuals have benefitted greatly. The leaders of these industry giants have seen a huge increase in their share of income and wealth as their firms have boomed. This has led to a divergence in growth between the elite and the working class, as predicted by Marx. In 2013, the top 10 percent of American families held about 76 percent of total family wealth; this represents a 54 percent growth from 1989. To contrast that, the bottom 50 percent held just 1 percent of total wealth. As should be expected, the share of income follows a similar trend line. In 2015, the share of total income going to the top 10 percent of families was 50.5 percent. The top 1 percent of families earned 22 percent of the total income. Beyond that, the income of families in the top 1 percent of the distribution grew at a rate nearly double that of the bottom 99 percent.

While Marx (or any other economist) should not be held as a profit, some of his predictions seem to hold water. The data supports his predictions that many capitalists would give way to a few very powerful capitalists, reducing competition and stagnating growth. Also that wages and quality of life of the working class would lag behind those of the capitalists that employ them. While I don’t suspect the rise of the proletariat and the fall of capitalism is eminent, growing inequality and rampant giant firms are surely an issue worth looking into.

Where Marx May Have Been on to Something: Economic Power and the “Relative Immiseration” of the Working Class