STUDY IN MODERN MONOPOLY
By John Marshall
Nowhere is the overwhelming preponderance of U.S. capital in today's world so pronounced as in the computer industry. Its monopolistic grip on this field has just been highlighted in the October 21 announcement that Paris had worked out an agreement with Washington to lift its ban on the sale of eeverat advanced computers to France.
In the last two years, Washington has refused to grant export licenses on French orders. for at least ten units of sophisticated equipment whose value runs to many millions of dollars. Several pretexts were given for the turndown: first, that the machines were not available; and , later, that Washington would not permit the use of American machines to assist in the production of atomic weapons. The real reason was the Johnson administration's wish to exert pressure on ad Gaulle to revise his posture of independence in foreign policy.
The computers on order can be used for scientific and civilian as well as military purposes. The biggest machine on the French list, an IBM 360-92, of which there are only three in the world, is for the big nuclear research center at Saclay, outside of Paris. Another is for Electricité de France, the government-owned national power company. .
The blocking of these sales by the U.S. prodded the French Government to develop its own computer. technology. Recently de Gaulle launched a top-priority Operation Computer and appointed a computer czar to speed the creation of a purely French computer industry, privately owned but government aided.
However, French interests have a long way to go, even in their own country, to catch up with U.S. competition. At present the French subsidiary of the International Business Machines Corporation (IBM France) dominates the market and Machines Bull -- General Electric, of which the American General Electric corporation owns one-half, is second. GE's takeover of Bull three years ago threatened to impose total American control on the West European market.
The making of computers, an offspring of wartime research and development, especially in the United States, has become the prime “growth industry" of the postwar period. As the basis for cybernation and automation, it is vital to modern technology. It serves indispensable functions in space exploration, nuclear developments and missile warfare. Its applications in science, industry and business are radiating in many directions. .
“In the past decade, American corporations have secured a stranglehold on the world market. Britain is the only capitalist country whose computer industry is not completely annexed by American manufacturers. Yet despite the combined efforts of the government, business and unions, even the British computer market is split between native and U.S. companies.
The two leaders in the battle for the multimillion computer market in England are International Computers and Tabulators of Britain and IBM. Although ICT is large by British standards, it is only moderate-sized compared to the Yankee giants. It is smaller than any major U.S. computer manufacturer. It had.sales of $150,000,000 in 1965; IBM rolled up a $3,500,000,000 volume!
IBM is the General Motors of the computer industry. It stands heads and shoulders above all other companies at home and abroad -- and its lead keeps increasing. Its paramount position was facilitated by its prior predominance in tabulating or punch-card machinery. It has been assured by big orders from the U.S. government and Defense Department and its access to unmatched reservoirs of capital generated by its favored status among investors in the New York stock market, its tremendous sales volume, influx of cash and superprofits. This has enabled IBM to generate much of its own capital and to finance the expansion of its far-flung operations without undue strain.
The computer business requires immense sums of capital for research, development, manufacture and service that can press hard upon the resources of the ordinary company and even of governments. This was recently emphasized by a British banker,
S.S. Griffiths, who observed: "It takes a great deal of money to develop computers, -it takes money to market computers, and it takes even more money to service computers -- and American companies have the money."
The English firm, ICT, has managed to get along up to now thanks to state aid through research subsidies and direct government grants to companies which buy computers to modernize their operations. About one-third of ICT's new computers are sold to foreign customers -- and it takes large quantities of money to finance such sales in overseas markets. Here IBM and other American companies have assets that render ICT's prospects uncertain.
The computer industry most graphically expresses the main tendencies of contemporary capitalist development. Most noteworthy among its features are:
(1) The unassailable supremacy of the American monopolies on both the domestic and foreign markets. :
(2) The multinational character of the U.S. monopolies, marked by the conquest | of the markets of the most advanced as well as the most backward nations.
(3) The international centralization of capital represented by the dominance of a single firm like IBM which sets the pace and towers over all rivals. .
(4) The important role of the U.S. military budget plus government tax and depreciation policies in stimulating the swift growth of an industrial monopoly.
(5) The immediate monopolization of a new type of industry by a giant corporation, skipping over a prolonged stage of competition among numerous firms.
(6) The advantages accruing to the most efficient and highly capitalized companies which, through price-fixing and superprofits, can build up enough reserves of capital to handle large-scale expansion. :
As it unfolds within the framework of corporate ownership, the current indus- trial revolution serves to speed up the concentration of capital at an unprecedented pace and to promote its centralization to the limit. "Free enterprise" in this key branch of the new. technology means in reality free sway for the IBM empire, headquartered in the United States, to capture control of the whole world market.
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