Transition From Competitive Capitalism To Monopoly Capitalism

Competitive capitalism refers to the second stage of capitalism that existed after industrial revolution in Europe in 1750, where by European nations were competing themselves in Industrial production.

This was done in terms of production of raw materials, monopolizing trade and market. Therefore under industrial capitalism there rose bitter struggle/stiff competition among European capitalists for production, whoever in the course of this stage some capitalist were died while others who were able to compete grow richer and reached to a stage of monopoly capitalism

Hence in order to survive the capitalists increased labour productivity which was done through introduction of more efficient machines hence competitive capitalism was always progressive because of time and free trade and accelerated to the rise of monopoly capitalism.

CHARACTERISTICS OF COMPETITIVE CAPITALISM

The following are some of the characteristics of competitive Capitalism.

1. During this period the role of the state was minimal, this was because of the belief of free trade, and this sometimes was called “laissez faire policy”.

2. Most of the enterprises were small and competitive in nature hence there was no monopoly in market, area for investment, getting labor and monopoly of getting raw materials because each enterprise was competing with another to get economic motive.

3. During this period raw materials from Africa were important but not crucial because raw materials were only needed to be used in monopoly companies which had started to monopolize the market, areas for getting labor and raw materials.

4. The tariff policies (trade barriers) were still protective in nature because each nation was still protecting her home market in order to allow merchants to involve in trade at home without any competition from outside merchants.

5. Banks were not controlling production but they were only the agents of payment where by banks provided capitals, loans and credit to the merchants to continue involve themselves in trade for development of capitalism but not these banks but not these bans were involved in production.

6. Competitive capitalism was characterized by the growth of industries where by industries grew specifically for producing manufactured goods which were needed and sold by industrial capitalist in Europe (Britain).

FACTORS FOR TRANSITION FROM COMPETITIVE CAPITALISM TO MONOPOLY CAPITALISM

1. Emergence of monopoly companies that was able to swallow small companies. Due to emergence of big companies with huge amount of capital, the small companies could not fit in the competition hence monopolization of the major economic activities and the decline of competitive capitalism.

2. Export of capital, during this period there emerged big companies which were exported to industries, banks, and companies. These led companies to get double profit which accelerated the rise of monopoly capitalism.

3. Emergence of cut throat competition among the European countries. The stiff competition led weak companies to be swallowed by the strongest among European nations. Example Britain, Japan, France, Italy, etc. Therefore this competition resulted to the strongest to continue in monopoly stage while the weak died in the competitive capitalism.

4. The division of the world among the big imperialist nations which was done at the Berlin conference; this accelerated the colonization of Africa and big capitalist powers were able to get capitalist demands and be able to maximize profits and establish strong monopolistic companies which led them to transform from competitive capitalism.

5. Concentration of production and centralization of capital was another factor for transition from competitive capitalism to monopoly capitalism. Europeans concentrated in both manufacturing of goods and raw materials which led to acquisition of more capital which was invested and reinvested especially in big industries together with big monopolistic companies which enabled them to acquire more profit for trade circulation and for more investments in economic sectors hence transformed the form of capitalism.

6. The rise of philosophical ideas due to high education and research and this led unit almagation of European companies as a way to maximize profit. E.g. Small industries which were established during monopoly capitalism under one merchant was joined together and even the capital from those companies was joined together form a big finance.

7. The Rise of European nationalism. The unification of European nations example the unification of Germany and Italy and the rise of other European nationalism acted as a transition from competitiveto monopoly capitalism because the unification expanded market, labor, easy circulation of trade and the nations started to compete among themselvesby establishing big companies which all these led to the transition from competitive capitalism to monopoly capitalism.

8. Relate the subsequent division of the world between capitalist alliances with the development of monopoly capitalism.