The Law of Concentration of Capital

Marx said that capital, that is, money and machinery, is nothing but the total amount of the past surplus value which the capitalists have appropriated. But the capital tends to grow and become concentrated in the hands of the fewer capitalists. This is because the capitalists try to expand their business, and squeeze out the unsuccessful rival capitalists. The successful ones become monopolists and acquire control of the markets to the exclusion of their lesser competitors.

This process is also helped by the better and more rationalised methods and means of production. As a result of this development of monopoly and rationalisation, the number of the capitalist class becomes smaller, but their capital greater. Those capitalists, who were impoverished and squeezed out of industry and business, join the ranks of the workers. They become politicised.

Thus the number of the working classes goes on increasing, while that of the capitalist class goes on decreasing. At the same time, the poor become poorer and the rich, richer. Marx has termed this process as the Law of the Concentration of Capital.