After overcoming the limits of England itself, the Industrial Revolution established the insertion of other countries in the conquest of consumer markets spread throughout the world. In this aspect, we realized that the demand for new technologies was not only necessary to increase and lower production costs. Technological renewal was also of fundamental importance in overcoming the commercial competition imposed between companies in the same field.
If it did not have access to new technologies, a company would be gradually doomed to ruin. Industries armed with larger inventories, cheaper products, and better machines snapped up their competitor's markets overnight. In this way, we realize that technological development has opened doors for the formation of monopolies and oligopolies in which smaller companies could not stand up to large industries established.
The term monopoly is used whenever we perceive the inexistence of commercial competition in a certain branch of the economy. In this case, a single industry or economic group dominates all trade in a given industrialized product. In other cases, when a group of companies controls the sale or production of a given good, influencing its availability and prices, we observe the formation of an oligopoly.
The controlling power of a monopoly or oligopoly can vary according to the situations that define the observed concentration process. In the truste, we have an economic group that absorbs its smaller competitors and after that negotiate with the remaining competitors for domination of the consumer market. In this case, there can be horizontal trusts, where companies that manufacture the same product enter into an agreement, and vertical trusts, where companies from different branches join together.
Another simpler and more common form of concentrating action can be seen with the formation of cartels. In this situation, companies in the same field maintain their administrative autonomy, but decide to “slice the market” by setting the same price, which puts an end to commercial competition. In many countries, such as Brazil, this practice is considered a financial crime that violates the fundamental principles of free competition.
Being a little more recent, there is yet another monopolistic practice developed from the frank expansion of financial capitalism. In the holding, we witness a financial institution or a bank that, through the purchase of shares, controls different branches of the economy. In this type of situation, we observe that the “parent company” starts to manage the policies and investments of the various companies that are part of the same “business group”.
These types of practices usually occur in periods where the possibility of economic growth is noticeable. However, in times of crisis, we can observe that these centralizing policies end up seriously destabilizing various sectors of the economy at the same time. Thus, we observe that it is only with the rearrangement of economic policies that these monopolies and oligopolies manage to overcome the impacts suffered by a possible consumption retraction.
By Rainer Sousa
Master in History
Source: Brazil School - https://brasilescola.uol.com.br/historiag/a-concentracao-capital-industrial.htm