What is called in social science literature and commonly understood under the term of “capitalism”, is also not entirely straightforward in terms of its timing. From the point of view of property relations, this terminology can only be applied to that period of capitalism in its traditional understanding, which was connected with social monopolization of capital as of production factor. If such period ever existed, it ended up completely with massive State interventions in economy and society of 1920-1940th. A period of Grand Cartels in late nineteenth and early twentieth centuries probably reveals the last attempt to save exclusive property rights associated with capital. When this attempt failed, social domination of the State as of production factor monopoly, which is characterizing the entire modern system of property relations beginning from 1920th, brought something new in societal structure and in the system of property relations. Significantly weakened by that time, production factor monopoly of capital started to dissolve. Under capitalism an overall economic and social strength of the State monopoly, probably for the first time in history was temporarily (up until 1920th) in decline - at least in most advanced capitalist countries such as United States and British Empire. However, after a while, a new type of production factor monopoly – the State one and simultaneously a new type of social formation – socialism - have emerged rather peacefully especially in comparison with the other types of social formations. From the point of view of property relations, the new social formation enclosed stronger and more powerful social monopoly comparatively with monopoly of capital by that time. State monopoly started to expand its power right away, while production factor monopoly of capital was permanently loosing its strength. This new modern type of societal construction must be identified and marked separately from “capitalism”. The term “socialism”, besides stressing a level of sociality in society, to certain extent is logically approximating this new formation to communism. First of all, according to Marx and Lenin - socialism is an initial stage of communism. This fact is also having somewhat rational reflection from the point of view of property relations since socialism means “more State” while communism - “only State”. Secondly, communism can be considered as certain modification of modern socialism since both of them are based upon the State production factor monopoly and both of them exactly mean “more State” and more State domination in society. Term “socialism” seems rather suitable for social formation currently dominating the world and particularly economically developed countries; moreover that it has already acquired certain degree of popularity. 

Idea of State interference in economy and society in modern history gains its popularity particularly starting from the 1930th. Though, there are indications and researches, which demonstrate that this process started even earlier than that and can be attributed to the late 1920th.³⁷ In 1920th the general situation what concerns social and property relations worldwide was rather complex. From one side, have existed leftovers of various structural capital monopolies with concentrated property rights or, otherwise, mostly with private property rights. From the other side, to some negligible extent, probably still existed odds and ends of the production factor monopoly of capital. Finally, as a response to these two types of social monopolies or rather to ideological call connected with their illusion, have emerged the structural labor monopolies in a form of various labor unions. Therefore, we are having at least three types of social monopolies in this case and accordingly we have property rights imperfections in society. Opposite sides of capital-labor conflict were eager to oppress one another and basically considered their interests to be one hundred percent contradictory. Owners of capital monopolies, both structural and production factor, were eager to make the most in terms of accessible exclusive benefits by establishing monopolistic prices of output in case of structural monopolies and monopolistic prices for labor input in case of capital production factor monopoly. On the other hand, workers in order to fight an appropriation by capitalists of what they considered to be a part of their labor have united in different unions and thus created social monopolization of labor supply. There were basically two weak points what concerns free flow of production resources. Firstly, barriers existed inside certain structurally monopolized industries. Secondly, certain impediments for free production factors’ flows were arising as a result of somewhat limited possibilities for economic flows from labor to capital or of somewhat limited possibilities for workers to become entrepreneurs or capitalists and to acquire productive or economic property. Both types of capital monopolies, however, were significantly weakened by 1930th owing to accelerating social and economic access for a large mass of population to the capital as a production factor.

We will not go into analysis of causes and reasons of the Great Depression; there are a lot of exceptionally comprehensive studies on that. Rather we will look at what happened after the Great Depression and mostly as its direct consequence in terms of property relations. Typical explanation of a long-term influence and of the profound effects of Great Depression is that the price of labor as a result of labor supply monopolization by labor unions and prices of certain products of structural monopolies were quite rigid and failed to adjust to deteriorated demand. Apart from two clashed with one another social groups - unionized workers and monopolistic proprietors – the other groups of people such as farmers and non-unionized workers have suffered from both monopolies. The main consequence of this severe crisis is extraordinary consolidation of the State as of economic agent and as of production factor, which in a little while is becoming to be a gigantic production factor monopoly. Thus has been created quite controversial situation when one type of social monopoly is expected to counteract the other types of monopolies both social and economic ones (antitrust regulation never does differentiate between them). In either case, accordingly an amount of existing social monopolies increased and reached a number of four.

All four monopolies were rather different both in their nature and in terms of concentration of the property rights. Capital structural monopolies were represented by economic agents with high concentration of property rights and with mostly private proprietors. Capital production factor monopoly at the time was already significantly socially dispersed and at the stage of its complete disintegration. After the World War I its strength is critically diminishing and by now apparently it can be considered as dissolved, at least in modern economically developed countries. Among four types of social monopolies existed at that time, production factor monopoly of capital seems to be the weakest. Labor supply monopoly was represented by a row of structural monopolies with quite concentrated economic property rights and with even less dispersed social property claims. Economic property rights were considerably concentrated because informally labor unions were controlled by a limited number of top executives. Social property claims were rather concentrated because non-unionized labor often had limited access to labor market owing to restrictions occurred as a result of labor unions’ actions and policy. Today labor supply monopoly although still exists is far from being as strong as it used to be. Its strength varies, of course, in different countries and in different economic sectors. And finally, there is the State production factor monopoly with formally dispersed, but in reality rather concentrated property rights and with significantly concentrated social property claims. Generally speaking, modern economically developed countries by now to substantial degree have outgrown sharp conflict between labor and capital described by Marx. Today, almost everybody can get a bank loan, start his own business and become a “capitalist” in Marxist sense of the word. On the other hand, in our days, significant part of population owns one or another kind of productive or economic property including stock and other financial assets and therefore those people are also capital proprietors in the Marxist sense. There is no such clear division between capital and labor anymore as it used to be in the middle of 19th century, when Marx proposed his principal social conclusions. Today taking into account diversified capital markets, available bank loans, various grants and subsidies, relatively accessible venture capital and other types of financing available to practically everybody, production factor monopoly on capital hardly exists at all at least not in economically developed countries. On the other hand, certain types of occupation being actually somewhere in between labor and capital (such as for example engineer, lawyer, doctor, actor etc.) quite often are closer to understanding of business or self-employment rather than to understanding of “employee”. Concentrating significant amounts of initially invested capital, knowledge and practical skills, these types of occupation are often providing incomes, which are much higher than those of small and even of medium-size entrepreneurs.

During the first half of 20th century a number of significant clashes between the State from one side and capital structural monopolies from the other has taken place. Little by little, structural monopolies were significantly weakened by three fundamental factors. First of all, structural monopolies diminished in number and were significantly destroyed by social property rights dispersion and by general social access to monopolized property. On the other hand, a growth of demand for capital and overall process of incorporation were leading to conventional property rights dispersion and have significantly reduced economic concentration of property rights. And finally, have developed practices of physical liquidation of structural monopolies (both of social and of economic ones) including also through application of the antitrust policies. Ultimate liquidation of structural monopolies is a direct consequence of the process of social counteraction - initially between structural monopolies and the people and afterwards between structural monopolies and the State. Today we do not see many structural monopolies with profound social and economic influence. State, on the contrary, established itself as a single giant monopolistic structure in the modern world. Because all other monopolies by now are almost completely dissolved, today the State is the strongest social monopoly. More than that, it is incomparably more powerful than all other social monopolies taken together.

If monopolies are practically destroyed and markets are close to perfect competition, why do we need a giant State monopoly, which every year is growing in size and in power? One would think that if the State will stop to interfere in society and will be suppressed in its economic strength, it might loose its power and in this case the other strong social monopolies might emerge. This is more or less rational notion from the point of view of property relations as well as from the point of view of the balance of power in society. Nevertheless, we must not forget that social monopolies are materializing only with the support of the State as of fundamental source of power and coercion. The stronger is the State the higher is the level of social monopolization and of property rights imperfections in society. Economic monopolies, as we have seen, generally must not be counteracted unless appearing attempts of their preservation at social level relying on mechanisms of power and coercion and first of all upon the power of State. Since generation and maintenance of social monopolies can only be realized at societal level and since the State is a final source of power and coercion, emergence of social monopolies is only possible either with direct (of government, parliament or judiciary) or indirect (of particular State employees) participation of the State. On the other hand, as we know by now, it is not the State but people’s counteraction to any exclusive non-socialized privileges what is eliminating social monopolies. Counteraction of social monopolies by the power of State looks rather problematic because initially they have to be created with participation of State and then the State suppose to fight them. First of all we have to realize that the State being an ordinary economic agent or otherwise being conventional commercial enterprise (which single purpose is to extract financial resources from the people and to redistribute them to top-level State bureaucracy) with its incorporated egocentric interests is never directly oriented neither against any social monopolization nor even against any property rights violations. Those are the people who are making the State to do that through the process of social counteraction.

Ideological part of social infrastructure related to the State interventionist theories is ideally suitable for the State in its power struggle with the other social monopolies for societal domination. Monopoly elimination function or antitrust regulation is providing the State with the power to fight any monopoly and very often simply any inconvenient economic agent and private interest with non-economic methods based on pure coercion. Growth boosting function is providing the State with possibility to repress any business organization economically by tying it up to various State purchases, orders and expenditures. Previously advocated by social infrastructure, nationalization of strategically important industries in the very recent past was supplying the State with the power to destroy economic agents directly through nationalization of any strong not subordinated to the State economic interests or of any kind of economic opposition to the State. Income redistribution function is granting to State the power to directly expropriate companies’ financial resources and consequentially to diminish compound strength of all other monopolies taken together as well as private strength of every one of them taken separately. Direct regulation of business and economic activities is endowing the State with even more elbow space for companies’ oppression or sometimes, vice a versa, for their maintenance, support and development in the interests of particular State officials or of particular State regulation units. Philosophy and infrastructure of the State interventions is a precious gift to the State bureaucracy from theorists and advocates of social welfare. Philosophy of social welfare is exceptionally convenient for fighting any economic opposition to the State, for escalation of State’s own non-socialized monopolistic power and for disallowing any other powerful groups to control the State property. Any kind of social monopoly and the State one in particular are very professional in creation of specific social infrastructure in order to prove and to emphasize its necessity, in order to justify its existence and in order to hide the nature of underlying it material interests. We can be sure that if one day the State bureaucracy will recognize an absolute similarity of its interests with communist ideas, people will be convinced to vote for legislative or lawful introduction of communism. We are already doing it step by step.

Twentieth century brought a number of remarkable paradoxes in economic development and social evolution. From one side, it is a century of widespread establishment and affirmation of democracy especially in the western world. From the other side, it is a century of people’s permanent loss to the State monopoly. Communism, Nazism, State socialism, various dictatorships as well as colossal escalation of the State social domination and economic power are negative results of our battle with the State. Capitalism of the 19th century was still somehow in opposition to half-monarchial absolutist governments, while social divergences and inconsistency of interests between the people and the State associated with absolute or partly constitutional monarchies and with the power of land aristocracy were quite evident. Capitalism of the 20th century, on the contrary, was left alone with masses of relatively poor people, who assumed, that their major enemy is wealthy individuals rather than the State. State did everything in its power in order to preserve and to cultivate this opinion and in order to antagonize rich and poor aiming at spreading its control over both. Today we might say that it has overwhelmingly succeeded in this task.

Current stage of economic, technological and social progress as well as corresponding evolutions in division of labor inevitably create preconditions for existence of a wider range of economic monopolies, or of businesses and occupations more or less exclusive in their nature and in technical skills. Back in history, for example in times of Adam Smith, number of occupations and number of economic sectors were quite limited while capital and labor were able to easily flow from one sector to another. A person could be a baker today and a construction worker tomorrow, without any serious re-qualification or additional sophisticated education required. However, social evolution generally and technological progress in particular are carrying a division of labor on such a height, where practically every single qualification is more and more unique, while fewer and fewer people possess necessary skills and knowledge in order to accomplish any particular kind of job. The same is also relevant for capital and for the State. Technology and technological investments acquired the same degree of sophistication as labor did. And if we are thinking about the State, it became so complicated and diverse, that sometimes even for professionals it is very difficult to follow all aspects of an overall governance mechanism. Today we are witnessing a much heavier accent on specialization, which is leading us to more and more exclusive qualifications, with fewer and fewer competitors on particular small “niche” markets and in particular lines of occupation. There is a strong tendency of economic exclusivity or of economic monopolization of skills and technology conveyed by specialization. On the other hand, exclusivity is what technological progress is all about – it would be no any inventions if their proprietors cannot think about their exclusive utilization. The tendency of exclusivity is appearing yet at the earliest stages of social history (for example certain shaman’s or special curing qualifications inside primitive tribes). Then, it is constantly evolving together with specialization of labor, accelerating during industrial revolutions and gaining its peak mainly starting from the twentieth century. Emerging qualifications are of more and more complicated nature and require either substantial amount of knowledge, significant capital or sophisticated technology, or even more often all these three factors in combination. In line with those developments fewer and fewer competitors are remaining on particular markets as well as within particular qualifications. In future, this tendency might accelerate even further along with scientific and technological progress. This tendency is absolutely objective; proclaiming that it poses a threat to competition cannot reverse it. On the other hand, exclusivity appearing in consequence of specialization does not represent a social type of monopolization and therefore cannot be considered as property rights imperfections, even though any economic monopoly might seek to support itself with social tools of power and coercion. Trying to follow State intervention doctrines moreover does not seem to do any good, because the State in its nature is merely another outstandingly colossal and the strongest social monopoly in the modern world. Following interventionist doctrines we are actually strengthening the larger social monopoly on account of the smaller economic ones. After the World War II the State monopoly worldwide barely started its way towards real conventional property rights dispersion or towards democracy per se after thousands of years of various dictatorships and cosmetic democracies. Even commonly renowned ancient Roman democracy was not really a democracy in its nature.  From the point of view of slaves, it was a joint monopolistic force of the slave-owners directed towards their oppression, coercion and enslavement. From the point of view of slaves, it rather represents the most severe dictatorship in a form of ruling aristocracy (or simply more economically dispersed type of dictatorship), which embraced all citizens of Rome. We are not even mentioning here different social and economic limitations for conventional property rights dispersion upon the State, which have existed and still exist throughout the entire human history. Perfect competition, free market or laissez faire today or any time before neither means a lot of buyers and a lot of sellers, nor does it necessarily reject any price influence situation, nor even it implies a total lack of any monopolies. All these factors are only over-simplifications suitable for particular historical time periods of one single fundamental criterion for laissez faire – the lack in society of any property rights imperfections.

In parallel with specialization has emerged and in our days is extensively accelerating a relatively new type of competition - cross-industrial competition, which is complementing a competition inside particular industry or inside particular economic sector. This new competition is a technological competition, which designs and invents new technological processes instead of the old ones and which aiming at particular need and at satisfying particular demand rather than at manufacturing of specific products is creating new solutions, new products and new processes. A very simple example would be an invention of aircraft. Before its invention a major carrier used to be the railway industry. Then, as a new solution, came an airplane, being a strong outside competitor for the railway business, which, however, is not in the railway business, but in transportation business. This new type of competition is a competition of ideas on the contrary to an old competition in organization, price and quality. It is introducing new solutions, new products, new organization, new price and new quality simultaneously in one package and on such a level that old technology, production methods and even old products are becoming obsolete and non-competitive right away. It creates a new level of efficiency, which is destroying traditional habits and understandings and which is redesigning human life. Technological innovations consolidating economic competition as well as untying and even removing the very dependence of competition on large number of producers in particular economic sector are simultaneously destroying the entire variety of arguments invented by social infrastructure in favor of the State interventions as of the way to enhance economic competition.  

The world in globalization is having one more chance in its struggle with different kinds of social monopolization. With the globalization of markets and of economic processes, multinational corporations do not look as huge as they do on particular national markets, while a number of competitors is becoming significantly larger. On the other hand, States and governments are loosing their overall economic and political influence. If they are trying to apply exceptionally inefficient measures (simply inefficient are almost all their measures) or particularly tight economic regulations, this is working less today than it used to work before. With internationalization of labor, capital and technology, economic agents are having a big global unregulated hole, where they can move their operations fleeing to the countries, which offer more attractive comparative advantages. This is definitely stimulating economic competition between different States for attraction of the production factors and economic resources. From the point of view of the top-level State bureaucracy, such competition is a competition for more State revenues associated with the new residents and the new businesses from one side, and against evaporation of social idealism or of social illusions of population as a result of fleeing away businesses and industries and of consequential unemployment and reduction in personal incomes from the other. Globalization in all probability will lead to one single huge world economy without national states or at least without their present day significance at the macroeconomic level. At certain point in time, however, globalization will most likely generate instead some kind of economic and social governance at global macroeconomic level. When this will come up, monopolization will critically escalate once again. If until that time we will not be destroyed by our comprehensive and all-embracing socialism (which is most unlikely), if our planet will not find trade partners somewhere outside, and if human beings will not evolve into some other biological specie, we will be stuck face to face with global gigantic State monopoly. But, we have to remember that for this order – order of global governance and global economy without national states – will not take centuries to come as it took mankind to approach the gates of globalization. With technological developments skyrocketing, piling up, pushing and pulling each other as well as with acceleration of global interdependence it will probably take much shorter period of time.

³⁷ Randall J. Holcombe. The Growth of the Federal Government in 1920’s