Internationalization of Capital 95 Internationalization of Corporations "When labour cooperates systematically,"Marx wrote,"it strips off the fetters of its individuality and develops the capability of its species." But in order for labor to cooperate,it must be brought together and linked through exchange.Under capitalism,the cooperation of laborers is entirely brought about by the capital that employs them.The history of social labor is the history of social capital since the number of laborers who can work together depends upon the degree to which capital is concentrated and centralized. The two powerful levers for concentrating capital into larger and larger aggregates and then integrating these aggregates into a unified whole are competition and credit.Competition drives firms to contin- uously reinvest their profits and extend their markets as a means of self-preservation.The credit system unites individual capitals and stimu- lates further increases in their size.It acts as an immense social mech- anism above that of the individual firm for the centralization of capital and the preservation of its collective interest.The market forces are now operating on a world scale and leading to the internationalization of corporations and capital. The Dynamics of Corporate Expansion Business enterprises usually are built around some special discovery or advantage.Before their innovation becomes general,they can under- sell their competitors and still sell at a price well above cost of produc- tion.But their position is constantly threatened by new entrants who may discover a new technology,a new product,a new form of organ- ization,or a new supply of labor.The dialectic of the product cycle gives capitalism its forward motion.An innovation is introduced;if it suc- ceeds,the product enjoys a high rate of growth as it displaces other products and more and more consumers come to use it.As the market becomes saturated,growth tapers off while profitability is squeezed. Simultaneously,other firms try to enter the market because the very success of the innovation provides tangible proof that the new product works and that a market exists.With the secret out,production costs begin to dominate.The competition of other firms using cheaper labor or accepting a lower rate of profit eats into the original innovator's profit. There are two ways of coping with the competitive threat.First,a continuous effort can be made to develop new products;when the rate of growth slows,the firm can switch tracks and continue at a high rate of profit.Second,the product cycle can be prolonged by gaining control of This content downloaded from 202.120.14.154 on Mon,04 Jan 2016 03:31:29 UTC All use subject to JSTOR Terms and ConditionsInternationalization of Capital 95 Internationalization of Corporations "When labour cooperates systematically," Marx wrote, "it strips off the fetters of its individuality and develops the capability of its species." But in order for labor to cooperate, it must be brought together and linked through exchange. Under capitalism, the cooperation of laborers is entirely brought about by the capital that employs them. The history of social labor is the history of social capital since the number of laborers who can work together depends upon the degree to which capital is concentrated and centralized. The two powerful levers for concentrating capital into larger and larger aggregates and then integrating these aggregates into a unified whole are competition and credit. Competition drives firms to contin￾uously reinvest their profits and extend their markets as a means of self-preservation. The credit system unites individual capitals and stimu￾lates further increases in their size. It acts as an immense social mech￾anism above that of the individual firm for the centralization of capital and the preservation of its collective interest. The market forces are now operating on a world scale and leading to the internationalization of corporations and capital. The Dynamics of Corporate Expansion Business enterprises usually are built around some special discovery or advantage. Before their innovation becomes general, they can under￾sell their competitors and still sell at a price well above cost of produc￾tion. But their position is constantly threatened by new entrants who may discover a new technology, a new product, a new form of organ￾ization, or a new supply of labor. The dialectic of the product cycle gives capitalism its forward motion. An innovation is introduced; if it suc￾ceeds, the product enjoys a high rate of growth as it displaces other products and more and more consumers come to use it. As the market becomes saturated, growth tapers off while profitability is squeezed. Simultaneously, other firms try to enter the market because the very success of the innovation provides tangible proof that the new product works and that a market exists. With the secret out, production costs begin to dominate. The competition of other firms using cheaper labor or accepting a lower rate of profit eats into the original innovator's profit. There are two ways of coping with the competitive threat. First, a continuous effort can be made to develop new products; when the rate of growth slows, the firm can switch tracks and continue at a high rate of profit. Second, the product cycle can be prolonged by gaining control of This content downloaded from 202.120.14.154 on Mon, 04 Jan 2016 03:31:29 UTC All use subject to JSTOR Terms and Conditions