2
The Concentration of
Capital
A WAVE OF CORPORATE MERGERS AND TAKEOVERS
AND THE CONCENTRATION OF CAPITAL
Since the second half of the 1980s, there has been a large number of
corporate mergers and takeovers the world over. This wave has been
helped along by the neo-llberal policies described in Chapter 1. These
policies have meant privatisation and the elimination of government
controls on the acquisition of domestic firms by foreign capital. This
wave of mergers/takeovers can best be gauged by the rapid increase
in foreign direct investment (FDI) (see glossary).
Between 1985 and 1991, total FDI rose three times more quickly
than global trade. The vast majority of these investments have gone
into corporation takeovers and mergers. They have only been
responsible for a very small increase in productive capacity; usually
they involve property changing hands, leading to greater concen
tration of capital on an international level (Chesnais, 1994).
Table 2.1 shows that, in terms of value, foreign investment in the
United States has gone much more into buying up existing
companies than into creating new ones.
A study carried out by the US Federal Reserve has revealed that
more than a third of companies acquired between 1984 and 1989
were resold during the same period.
Table 2.2 shows that in a great number of economic sectors, a
handful of multinational corporations control the large part of
production (called a situation of oligopoly; see glossary). Though
oligopolies existed before, they have become much more common
since the 1980s.
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