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Saturday, November 23, 2013

Big Business Versus Little Business


It is the historic function of Big Business is to expropriate Little Business. To survive a recession Big Business swallows up all the other businesses. It does this directly by forcing others into bankruptcy, or by mergers and consolidations. It does this indirectly by its control over government.

A recession, however, does not strike in all directions with the same force nor with the same effect. One factor which separates Big Business from all other businesses, and that is that within the framework of continued capitalist society it is practically invulnerable to bankruptcy - too big to fail.  It alone has the capital and reserves necessary to stand the strain. It has the full and complete support of government in any crisis. If Big Business goes, the whole economy goes. And so Big Business can not be allowed to go.

A typical small enterprise has usually expanded its plant on the basis of bank credit given it when times were good and turnover active.It has also given credit to others but when a slump arrives it greatly curtailed sales. It can only sell more if he can reduce prices, but if he reduces prices he must sell the material he has only hand below what he paid for it. The company might be willing to sell at a loss if it could collect its credits, but being in similar straits his debtors cannot pay either. They want an extension of time. Some may be worse off go out of business adding to the problem. In the meantime the bank is pressing for their loans to be re-paid. Finally, in desperation, the small producer decides to sell its goods at greatly discounted prices, even below costs, so as to clear at least part of its loans to the bank. Now the problem is to find customers for his special offers. Customers may buy more merchandise at the new sale price, but even if the raw materials, the fixed capital costs,  his plant and overhead expenses are far too heavy for regards the  reduced volume of sales even at the lower prices. Then the  the banks are no longer willing to make the same loans to him as before, at least, not on the same low-interest terms. The only alternative left is for the business to survive is to cut wages, increase the intensity of labor, lengthen hours, employ casual and temporary staff, and worsen working conditions. Which is exactly what all the other Little Businesses are doing, as well. Eventually there comes a time when the business goes under and the laid-off workers add to the lengthening unemployment lines, ready to under-cut one another for any opportunity for a job.

Big Business can cut costs not by simply cutting wages nor by worsening working conditions. A far better way is open to it: the way of new technology, and  the path of increased productivity though  the improvement of the means and process of production, so that labour can produce much more than before with the same amount of energy in the same time and for the same wage. There is a limit to the working day or to the speed of the laborer; there is little limit to scientific progress. Big Business is intimately interlocked in production sales and in finance. It controls the banks and financial institutions. It makes loans to itself, and, if necessary, the government will help it tide over any given situation with bail-outs.

 Big Business  takes advantage of the bankruptcy of others. It can buy out the auctioned materials or newly vacated factory sites for a song. It can expand its chain by purchasing all the branch outlets. It can merge and consolidate the smaller firms to itself. If can break the back of any rival. If extends the concentration and centralization of capital to the point that it manages the projects of the government itself. Big Business, in control, throws the effects of the recession , where it can, onto the shoulders of all others who do not possess the same amount of lobbying clout in government circles. In the case of the sub-prime mortgage scandal the Big Banks losses were underwritten by the government . The government will be left holding the bag, not Big Business.
Taxation is a universal necessity. The problem is not whether taxes should be raised, or the public debt increased, but rather who will contribute what share of the funds collected by government and through whom and for whose benefit will payments be made. It is one thing if Little Business is in control of government and wants to “sock the big corporations”, it is another matter when Big Business controls government, as it does and must under present-day circumstances. Is it no wonder that it is Big Business that ends up paying little corporate tax and using loop-holes to export its profits abroad? It is why it is the smaller businessmen who decry government spending and demand budget cuts for Big Business need not take a s trong position of cutting down government expenses during the crisis  since the burden will fall the heaviest on other sectors of the economy. Of course, Little Business will still  demand such measures as tax reduction and subsidies to help keep it going. They will demand protectionist policies to retain their domestic markets. Big Business, though, is already trans-national , they can beat off foreign rivals, they actively engage exporting and investing abroad. How can other countries pay for Big Business products unless  allowed to export themselves?

To pay social security and pensions, Big Business is once again more able to stand the tax strain than the other business groups. When they buy-out the smaller fish,  Big Business lays off hordes of workers. Thus, on the over-all picture, Big Business puts in less than its share and draws out more than its share. Why should it be opposed to such spending when once more the burden will be greater on Little Business?

Unable to defeat the influence of Big Business in the corridors of power, Small Businesses are left with the remaining way of cutting government spending and having what there is of it re-directed to their own benefit - by advocating slashing workers welfare benefits, of hurting those even more vulnerable than themselves!  So let us be clear what we say - A plague on both businesses.

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