[OPE] Trends in Aggregate Concentration of Capital in the United States and the Economic Crisis

From: Gerald Levy <jerry_levy@verizon.net>
Date: Sun Sep 28 2008 - 10:04:25 EDT

Trends in Aggregate Concentration in the United StatesBrief comment:
I don't think it's too soon to say that one of the most important consequences of the
current crisis will be an increase in the aggregate concentration of capital. We have already seen
increased concentration in the financial sector (e.g. JP Morgan Chase acquiring Bear
Stearns and Washington Mutual; Bank of America's acquisition of Merrill Lynch;
Barclays acquired Lehman Brothers, etc.) - although, the merger activity in that sector
has been going on for many years now. I will make what Marxians will find to be a rather
unsurprising and undramatic prediction: there will be a significant increase in
aggregate concentration by the time the dust settles and the macroeconomy recovers.
As unsurprising as this is to Marxians, it flies in the face of current thinking and studies
by mainstream economists, many of whom talk about the increasing importance
of small firms to the US economy.

See 'abstract' below of White's 2002 article.

In solidarity, Jerry

Trends in Aggregate Concentration in the United States
Lawrence J. White
I assemble two rarely used data sets to measure aggregate concentration in the U.S. in the 1980s and 1990s. Despite the merger waves of those decades, aggregate concentration declined in the 1980s and the early 1990s, but rose modestly in the late 1990s. The levels at the end of the decade were at or below the levels of the late 1980s or early 1990s. The average size of firm and the relative importance of larger size classes of firms increased, however. Gini coefficients for employment and payroll shares of companies showed moderate but steady increases from 1988 through 1999.
Article provided by American Economic Association in its journal Journal of Economic Perspectives.
Publisher Info
Volume (Year): 16 (2002)
Issue (Month): 4 (Fall)
Pages: 137-160

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