Financial Groups

Financial Groups

 

the principal form for the organization of finance capital; the highest stage of capitalistic monopolization. Financial groups come into being with the transition to imperialism through the concentration and centralization of capital and the development of monopolies and state-monopoly capitalism. Financial groups result from the mergers of financial monopolies (banks, insurance companies) with commercial, industrial, and transportation monopolies. These conglomerates have vast amounts of capital at their disposal. Thus, financial groups in the United States controlled more than 30 percent of all corporate shares in the early 1970’s. One or more extremely wealthy families are at the top of the pyramid of each financial group. Representatives of the financial oligarchy, these families exercise total control over their groups.

The character and structure of the financial groups underwent substantial modification in the postwar years. Groups with a clearly defined structure that were headed by a holding company (with each element seeking to maximize profits) were joined by financial groups that lacked a single coordinating center. In the latter groups, unity is achieved through mutual ownership of stocks and through amalgamation around large financial institutions (commercial banks, investment banks, insurance companies).

State-monopoly capitalism promotes the diversification of the major financial groups, thereby increasing the degree of monopolization of the economy in the hands of the plutocracy. Most groups no longer focus on a particular sector of the economy. Thus, the Rockefellers, whose dominance before World War II was felt mainly in the oil industry, diversified into machine building, weapons production, transportation, and finance. The Morgans, originally magnates in banking, extended their influence to oil, natural gas, and electronics. Similar changes have also occurred in Western Europe and Japan, where the financial groups have diversified and set up a network of enterprises and companies spanning several economic sectors. The majority of the financial groups control large companies in machine building, electronics, and finance. In addition to these groups, there are also financial groups that continue to focus on a particular sector of the economy. These groups grew out of the intensified exploitation of the natural and human resources of former colonies; a number of financial groups in Great Britain, Belgium, and the Netherlands were formed in this way. Thus, a considerable percentage of the revenue of such groups as the Rothschild branch in Great Britain, the Banque de l’Indochine (absorbed by the Suez financial group in the 1970’s) in France, and the Société Générale de Belgique for many years derived from the activity of these companies in former colonies. As a rule, these groups have concentrated on mining, commerce, and the service sector. As the economies of the developing countries take shape, these groups seek to extend their influence to the new branches of industry.

An important feature characterizing the development of financial groups during the general crisis of capitalism (especially with the scientific and technological revolution) has been the rise of the groups’ influence on the newer branches of industry. As a consequence, the importance of older financial groups has declined, as seen in the New York groups in the United States, and that of newer groups connected with the electronics, chemical, and defense industries has grown. These new groups include the regional groups in the United States and the Suez group in France.

The diversification of the major financial groups hampers the formation of new monopolistic groupings; hence a few dozen financial groups continue to occupy a decisive position in the economies of the United States, Western Europe, and Japan. In the mid-1970’s, they numbered approximately 30 in the United States and 15–20 in Great Britain, France, the Federal Republic of Germany, and Japan. Three or four financial groups dominate the highly developed smaller countries of Western Europe (Sweden, the Netherlands, Switzerland, Belgium). On a world scale, the American financial groups are the most prominent.

Despite the relative stability of the major financial groupings in the contemporary capitalist world, important changes occurred in the 1960’s and 1970’s when certain oligarchical families gave way to alliances of financial magnates, alliances cemented by family as well as business ties. There is a fierce struggle among financial groups for control of economic resources, political organizations, and the state apparatus. The trend toward interpenetration and intertwining of financial groups has become more pronounced, as seen in the credit relations that important commercial and industrial corporations of one financial group establish with the banks and insurance companies of another. Monopolistic groups in California and Texas, for example, frequently apply to Wall Street banks for credit.

The operations of financial groups commonly extend beyond national borders. A considerable part of the groups’ assets is placed in other countries, and at home the groups cooperate with foreign monopolies. This trend has been typical of American financial groups and of financial groups in Western Europe (especially within the Common Market) and Japan.

The economic integration of the major capitalist countries has generated a new type of international monopolistic coalition of finance capital, a type comprising multinational industrial corporations and international banking conglomerates, which include the major banks of a number of countries. In the mid-1970’s, these conglomerates controlled the international credit institutions of a number of large West European banks (Deutsche Bank AG in Germany, the Amsterdam-Rotterdam Bank in the Netherlands) that specialized in the financing of the international activity of major European electronics concerns (Siemens, Philips).

The new forms of the capitalist division of labor have created the prerequisites for international amalgamations of financial groups. These groups have professional ties in common, and they may also be linked by common interests in production (concentrating on a particular branch of industry) or in such endeavors as scientific and technological research, management, sales, or services (Ampen-Westinghouse, Crédit Lyonnais-Bank of Commerce).

In the postwar years, the coalescence of financial groups and the bourgeois state has intensified. This process has been particularly evident in Western Europe (France, Italy, Sweden), where central banks are the principal creditors of the financial groups. As a rule, the coalescence of the state apparatus and the financial groups is the result of joint ownership in production or finance and of state support to monopolies in foreign economic expansion and conquest of world markets.

Bourgeois economists and sociologists try to conceal the financial groups’ domination of the economic, political, and social life of capitalist countries by resorting to such theories as those of people’s capitalism, the “democratization” of capital, and the diffusion of ownership. The sale of shares to the population, the development of self-financing, the government regulation of banking and finance, and the nationalization of the major banks and insurance companies in a number of West European countries are cited as proof that the power of finance capital and financial groups has been checked. Nonetheless, analysis of the activity of monopolistic groups shows that despite certain changes in form and activity brought about by processes of development in contemporary capitalist society, financial groups retain their dominant position.

REFERENCES

Lenin, V. I. Imperializm, kak vysshaia stadiia kapitalizma. Poln. sobr. soch., 5th ed. vol. 27.
Anikin, A. V. Kreditnaia sistema sovremennogo kapitalizma. Moscow, 1964.
Men’shikov, S. M. Millionery i menedzhery. Moscow, 1965.
Men’shikov, S. M. Sovremennyi kapitalizm. 1974.
Chernikov, G. P. Finansovaia obligarkhiia Frantsii. Moscow, 1966.
Zhukov, E. F. Strakhovye monopolii v ekonomike SShA. Moscow, 1971.

E. F. ZHUKOV

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