THE LAW OF CONCENTRATION
The stages of capitalism: The period of domestic industry in which, the guild organization having broken down, the mass of craftsmen were employed under the wage system by masters who were no longer craftsmen themselves, may be considered as the first stage of capitalism. This period was characterized by what Marx calls merchants' capital-- capital invested in raw materials and finished goods rather than the tools of production. In some industries the massing of large numbers of workers in factories had already begun, but they still remained hand workers.
The second stage of capitalism began with the age of machinery. Industrial capital in the various forms of factories, machinery, and means of transportation became more important than merchants' capital. Competition between capitalists on the one hand, and between wage- workers on the other, was the rule. The policy of laissez- faire was the accepted ideal and competition was regarded as the life of trade.
The third and last stage of capitalism is marked by the concentration of industry and the elimination of competition. Writing before this stage had fairly opened, Marx predicted that competition would destroy itself, that the business units would continuously increase in magnitude until at last monopoly emerged from the competitive struggle. Competition being self-destructive inevitably breeds monopoly. This monopoly becoming a shackle upon the system of production which produced it, must in turn give way to something else, namely, the socialization of industry. Says Marx: "The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with it, and under it. Centralization of the means of production and socialization of labor at last reach a point