That is a theory stated as fact, and then numbers provided that happen to fit the theory.

There is no consideration of alternate theories that might explain those numbers and no attempt to provide an explanation of why capitalism should look like this. For instance I'd like to see his theory of how you could apply the techniques of the Industrial Revolution outside of a large organization. It is certain that the Soviet Union never succeeded.

Furthermore the theory is wrong, albeit for reasons that were only figured out long after Lenin wrote. Starting in the 1930s, economists (starting with Ronald Coase) developed a theory of why firms are the size that they are. Firms walk the line between the inefficiencies of communicating information by market mechanisms and organizing a centralized bureaucracy. Their size is set by which costs more at the current time for what they do. While it is true that large companies have economies of scale, small ones are more likely to notice and react to new opportunities.

You can find somewhat more detail on this theory at [link|http://www2.sjsu.edu/faculty/watkins/coase.htm|http://www2.sjsu.edu...watkins/coase.htm].

In fact, as was noted in The Innovator's Solution (which I read recently), there is a tendancy that, when a market is created, it consolidates around a handful (frequently 1) of major companies. But as the market matures, it almost looks like it goes through some kind of dicing machine because the market naturally tends to divide into submarkets along lines corresponding to the functional subsystems, which themselves repeat the process. And so what was one company becomes many.

Of course when Lenin wrote, his recent economic history was the Industrial Revolution, which was an immense concentration of wealth and companies. Since then we've had more time to observe how businesses grow, shrink, and generally evolve. Certainly the natural progression that Lenin postulated towards a single monopoly hasn't played out. For every monopoly created, another has faded. And somehow there remain opportunities for small businesses to exploit which the big fish can't seem to get a piece of.

Cheers,
Ben

Although not in a modus ponens form, he did use the (indisputable?) facts at hand to form a logical conclusion: that the hallmark of capitalism is "rapid concentration of production in ever-larger enterprises."

No, he did not. He made an assertion and provided figures that seemed to support it. He didn't consider other possibilities. He didn't provide additional predictions of his theory. He didn't even think of suggesting a mechanism by which his prediction would play out. In short he didn't do any of the things which are part of an honest attempt to analyze whether his ideas are actually right or merely suggestive.

Are you actually suggesting that we do not have ample evidence of this today? If your theory is correct, it should be that there are more companies/competition now than there were before in nearly every sector. (Looked at the computing industry lately? How about the discount retail chains? Airlines? Newspapers? Broadcast media? Petroleum? Anything?)

First of all it isn't my theory, it is Ronald Coase's theory. It incidentally has been put through a lot more tests than Lenin's rants.

Secondly you obviously didn't read it to understand what it said, you just saw that I disagreed with Lenin and assumed that that means that I'm saying the opposite of what he said. (Thereby demonstrating your own abilities at logical thought...) What the theory actually implies is that the size of companies should fluctuate through time depending on what the relative transaction costs are. As the transaction costs are, at least in principle, measurable, this is a testable theory.

Thirdly let's look at the examples that you gave:

1. computing industry In the late 50's, early 60's, the computing industry pretty much was IBM. Then IBM modularized the design of its systems starting with OS 360. With a modularized design, transactions costs for component suppliers went down, and component suppliers began to sprout and multiply. Sure, IBM managed to maintain its monopoly on mainframes, but IBM didn't manage to maintain monopolies in subsystems such as disk drives, printers, and data input devices.
   
   And the process repeated. The minicomputer market started with complete domination by Digital Equipment Corporation whose tight integration of hardware and operating system allowed them to perform better when minicomputers weren't as good as people needed. Then the design of mini-computers modularized and comptetitors like Data General, Wang, and Prime Computer became biggger players. Note that, contrary to Lenin's theory, the big capitalist monopoly, namely IBM, did not have significant presence in that market.
   
   Moving on to the personal computer market, the first big player was Apple. Again they were an integrated end to end supplier. Of course they lost out fairly early on to the modularized IBM architecture. But look what happened there. While the big monopolist, IBM, was a significant player, they never dominated personal computers. Furthermore the personal computer market is fragmented into many component industries, from disk drives to operating systems, to CPUs, to integrators, and on and on. In some of these markets there have been monopolies - most notably Microsoft. But others are very competitive, for instance disk drives and RAM.
   
   And so over the last few decades computing has gone from virtually complete dominance by one monolithic company, namely IBM, to being a whole slew of industries (many, admittedly, far bigger than all of computing had been) in which there are a few monopolies and a slew of competitive segments with many companies slugging away.
   


2. discount retail chains I won't do the rest in such detail. But remember that I just said that economic theory doesn't say that capitalism is just going in one direction? Instead you have to carefully look at the transaction costs?
   
   Well this is a good example.
   
   With the advent of computerized inventory systems, it is possible for a discount retailer to manage to watch many different product categories and analyze all of them in detail without fighting the bureaucracy and overhead that would have made this task unthinkable a few decades ago. The result is that the company that does this best, namely Walmart, is proving to have a powerful lock on the market. Competitors who screwed up, like Kmart, have been killed. And the economies of scale are such that, at this point, any newcomer is at a huge disadvantage.
   
   And so we've seen a huge monopoly grow.
   
   However stop and think. As big and powerful as Walmart may be, are they going to be inclined to actually replace their various suppliers? I submit not. Why not? Because doing those jobs themselves would be more expensive than their current strategy - they would have to aquire the skills that their current suppliers have and they've already managed to squeeze virtually all of the profit margin out of those segments.
   


3. Airlines For years conventional wisdom in airlines has been that there is going to be a big shakeout, and the last one left standing is going to be left with a profitable monopoly.
   
   What has been the result of capitalists trying to apply Lenin's theory of how to do business?
   
   All major airlines have lost money for years with no end in sight. Furthermore now that it looks like some of the major players actually will fail, consolidating that market, the entire segment is being eaten up from the bottom by discount airlines like Jet Blue and Southwestern.
   


4. Newspapers I don't know much about the newspaper industry, but here's my impression from afar.
   
   All newspapers publish similar national stories and syndicated columns. The result is economies of scale that lead naturally to consolidation. This consolidation is limited by the fact that, in a democracy, we'd like multiple sources of news. Therefore there are media ownership rules (which are steadily being eroded). The result is sadily predictable.
   


5. Broadcast media My understanding is that this industry looks a lot like the newspaper industry. In fact some people (like Rupert Murdoch) are big players in both.
   


6. Petroleum Once there was Standard Oil.
   
   Today, to name a few of the big players, there are Shell, Mobil, Chevron, Getty, Texaco, Gulf, Socal, and so on. And in many parts of the world you have tons of little wildcat operators. Heck, one George Bush used to run one named Arbusto. (It was a failure of course.)
   
   Sure, Standard Oil was broken up by anti-trust law. But, once broken up, I don't think that it naturally would have reformed in today's economy.
   


7. Anything Isn't that category kind of broad? :-)
   

I think that my point is made. The natural progression that Lenin predicted hasn't played out. Sometimes monopolies have advantages. Sometimes the industry naturally divides into competitive segments. It isn't simple to figure out which will happen in a given case, but economists believe that you can generally work it out by taking a careful look at transaction costs.

Certainly the natural progression that Lenin postulated towards a single monopoly hasn't played out.

Nice hand-wave there. Has capitalism fully matured yet? Hardly. There are so many new worlds to conquer (Iraq, Afghanistan, Iran, Russia's on its way but still has far more to exploit, etc.). And surely you agree that at least the goal of every enterprise is to become Lenin's single monopoly, yes? (Think MSFT for example here)

Nice hand-wave yourself. If capitalism survives another millenium you'd still be able to say that if we just wait long enough that capitalism would fully mature into Lenin's prophecy. No amount of history or evidence can address the argument because capitalism is not yet over. You can therefore hold your worldview immune to evidence for as long as capitalism survives.

Now I agree that companies generally would like to grow forever at rates above the market. And this would eventually lead to an all-encompassing monopoly.

But there is nothing in history to suggest that they have any reasonable hope of succeeding in that (unless, perhaps, they get control of the government). To cite one study, Stall Points was a report from the Corporate Strategy Board in 1998. It found that of the 172 companies that spent time on Fortune's list of the 50 largest companies between 1955 and 1995, 95% saw their growth stall to rates at or below the rate of GNP growth. Of those who stalled, only 4% were able to successfully reignite their growth even to a rate of 1% above GNP growth.

This strongly suggests that companies have a natural lifecycle. They spot an opportunity. They grow. They may be successful in entering related businesses. Their corporate overhead calcifies, the opportunities that they depend on stagnates, and the company reaches a peak. They then stall and either fade away slowly, or eventually collapse.

You don't even have to focus on the details of growth rates to see this. Over that 40 year period, 172 companies managed to get to within the 50 largest. At the end only 50 were there. All would have liked to be and certainly tried. But over 70% of them failed.

With the evidence at hand, I'd vastly prefer defending Lenin's theory to yours.

Now that you've been given a better picture of the evidence, would you still say that?

As I mention above, no matter how long we wait, you can always say that capitalism hasn't played itself out. But the existing evidence doesn't indicate to me or to economists in general that there is a natural progress of capitalism towards a dominant monopoly.

Don't get me wrong. At any given time there will be monopolies out there, some of which are very abusive. And their aims will make communists like yourself rather smug and self-satisfied. But both history and the underlying economics strongly suggests that they are a self-limiting problem. The limits may not be where we'd like (and hence I'd like legislation to make the limits be more to my taste), but they are implicit in capitalism and are extremely effective in the long run.

The result is that the monopolies that you complain about today are generally not the ones that you would have complained about a few decades ago and are not the ones that you will complain about in a few more decades. For instance in computing you would have complained about IBM 20 years ago the same way that you're complaining about MSFT today. I'd be willing to bet you $100 that in 20 years there will be another evil monopoly in computing with dreams of taking over the world, and it won't be MSFT that we'll be bitching about. (In fact I believe that MSFT has already stalled, and it is likely that within 10 years it will be abundantly clear that the best days of their monopoly have come and gone.)

Cheers,
Ben