Tag Archives: cronyism

Government supports large businesses against small businesses (with federal contracts)

Continuing in our series on “Government as the cause of capital concentration“, let us look at how the US government supports large businesses in the way it awards federal contracts.  According to the SBA, 22.7 percent of federal contract dollars were awarded to small businesses in 2010 and the rest to large and international businesses.  There is strong evidence this is an overestimate of the actual share, due to improper classification of business size.  Meanwhile, the SBA reports that small businesses accounted for 44.5% of GDP in 2010.  That means the government awarded much more money to large businesses relative to their contribution to GDP.

Federal contracts by business size (2010)GDP contribution by business size (2010)

This is strong evidence that the government directly increases concentration of capital by supporting large businesses vs. small businesses.

Government meddling

Government as the cause of capital concentration

I lay out the following hypothesis: that government is the primary cause of the capital concentration that Marx blamed on capitalism.  I aim to test this by studying the facts of the present day and of history, so this hypothesis may turn out to be wrong or in need of modification, according to the evidence presented.  I also make the following corollary claims:

The hypothesis holds for the United States government of the present day and all similar mixed-market representative democracies.

The hypothesis also holds for governments of all types, past and present.

It is not private property, but the violation of private property, that causes the highest capital concentration.

The regimes implementing Marx’s Communist Manifesto increased the concentration of capital.