Let it be admitted at the outset: If there is a theory of monopoly—in the sense of a unifying explanation with some factual basis of the gradual transformation of competitive into monopolistic market organizations—I do not know of it.
There is something like a theory of monopoly in Schumpeter, but neither Marxists nor non-Marxists have taken it very seriously. In academic economics there is nothing resembling such a theory, apart from a single ingredient, decreasing costs, which is also associated with Marxism, where it figures importantly in the theory of capitalist development.
Marx rightly insisted upon the distinction between “concentration” and “centralization.” Concentration is nothing more nor less than capital accumulation itself, having no real significance for the growth of monopoly (although it plays a major role in the theory of capitalist breakdown). Concentration may limit competition, but there is no obvious reason why it should, meaning as it does merely that over time the business unit tends to grow larger in absolute size. Defined in this way, no one could seriously maintain that concentration is not a permanent feature of capitalist development. According to a recent report of the Senate Subcommittee on Antitrust and Monopoly, Concentration in American Industry—a collection of figures on which I will draw freely throughout this essay— the largest fifty American firms did 23% of the nation’s manufacturing in 1954; in 1947, only 17%. The 200 biggest firms accounted for 37% of the business in 1954; seven years before, 30%.
There is nothing especially mysterious about this phenomenon; it is undoubtedly the inevitable outcome of the increasing complexity of product engineering together with the rise in demand stemming from growing real incomes and an expanding population. Clearly, an elaborate theory is unnecessary to explain why the average textile firm is ten (or twenty) times as large today compared with a hundred years ago.