The Realisation of Profits

Abstract

In the previous chapter we have argued that increased market concentration will imply the emerging coexistence of rivalry and collusion, which in turn will lead to a higher sustainable degree of monopoly, as measured by the mark-up of price on marginal cost, and thus to an increased profit share. Thus any tendency for a rising level of market concentration over time allows for the potential existence of a rising profit share. Assuming the composition of marginal cost remains unchanged, that is that the ratio of expenditure on materials to expenditure on wages remains unchanged, then whether or not the share of profits actually increases will be dependent on the maintenance of the level and composition of output, or more accurately in a dynamic world, on the maintenance of the degree of excess capacity consistent with the increased degree of monopoly. If actual excess capacity exceeded planned excess capacity following the growth of monopoly or oligopoly, then although (Π* + F)/Y would tend to rise, this would be reflected wholly or partly in an increase in the share of overheads (F/Y), either as overhead costs were spread over a smaller than planned output, or as the degree of excess capacity increased faster than expected despite a constant or increased output.