Butchers, tinsmiths, and candlestick makers are dependent on their daily sales for the earnings to buy (or trade for) their daily bread (made by bakers), and are thus motivated to do whatever it takes (including slashing their prices which lowers their profit margin) to sell their products in order to get money to continue living. Producing superior products and offering them for sale at lower prices gets them more sales, and provides shoppers with the best goods at the lowest prices (not everyone "shops": we patronize businesses because the store is close or we like the owner or the salesperson, and all kinds of other non-economic reasons). The market behavior of insecure independent small businesspeople is disciplined by their personal existential need for other people to want to buy what they have to sell, in order to earn daily income from their work.
The corporate class, by contrast, does not accept the existential insecurity of individualistic market competition. Men band together in collectives (labor collectives like trade guilds, or capitalist collectives like joint-stock business corporations) in order to collectively exert market power over the provision of essential goods or services, and to shut out competitors and thus secure their high profits. In Smith's day corporations like the British East India Company and the Hudson's Bay Company sought and were granted territorial and commercial monopolies by the Crown, and the Crown lent its military might to secure the monopoly rights it had granted.
Today the US military provides the same services to America's transnational capitalists. After 35 years of opening foreign markets to American conquest and investment, Marine General Smedley Butler described his role as "a gangster for capitalism, for bankers, for Wall St."
The Wealth of Nations enumerated the many virtues of utopian market economics, and Smith presented a harsh indictment against the actual political economy of his time: the form of state-corporate collusion that in Smith's day practiced mercantilism, the policy of exporting the national economic output for sale abroad, in order to earn mercantilist corporations (and their wealthy, politically influential owners) money profits to aid in their accumulation of money (gold, the global payments currency of the era). The home economy is poorer in goods (the goods are exported) so the capitalist class can get richer in money. Britain rose to great power status on a state-corporate policy of free trade imperialism, which enriched the mercantilists at the expense of the powerless working class and domestic producers in the home economy. (The Wealth of Nations, Book IV, Chapter VIII: Conclusion of the Mercantile System)
Arrighi describes Braudel's conception of capitalism,
"Braudel's notion of capitalism is the non-specialized top layer in the hierarchy of the world of trade. This top layer is where large scale profits are made. Here the profits are large, not just because the capitalist stratum monopolizes the most profitable lines of business; even more important is the fact that the capitalist stratum has the flexibility needed to switch its investments continually from the lines of business that face diminishing returns to the lines that do not."
Jill, by contrast, has all of her small business capital, and all of her daily labor, invested in Jill's Bakery. When Luigi opens his Baked Yummies Emporium down the street, Jill loses sales to the competition and her business is worth less money as an investment because it now earns less profit. Small business owners' capital is the opposite of flexible, liquid and mobile. It is fixed and hard to sell, and is typically tied to the specialized knowledge or skills or popularity of the small business owner.
Arrighi quotes Antonio Gramsci on the roots of a ruling elite's power,
"...the supremacy of a social group manifests itself in two ways, as "domination" and as "intellectual and moral leadership". A social group dominates antagonistic groups, which it tends to "liquidate", or subjugate perhaps even by armed force; it leads kindred and allied groups. A social group can, and indeed must, already exercise "leadership" before winning governmental power (this indeed is one of the principal conditions for winning such power); it subsequently becomes dominant when it exercises power, but even if it holds it firmly in its grasp, it must continue to "lead" as well. (Gramsci, 1971, pp. 57-58)
In his 1922 book, Triumphant Plutocracy: The Story of American Public Life From 1870 - 1920, Richard Franklin Pettigrew documents the political machinations by which robber barons came to power during and after what Mark Twain and Charles Dudley Warner's eponymous 1873 book dubbed, The Gilded Age. In his 1935 book, The Lords of Creation (the recent Forbidden Books edition adds the subtitle, The History of America's 1%), Frederick Lewis Allen documents the financial and corporate machinations by which the robber barons and their progeny and acolytes consolidated their controlling ownership of America's financial and industrial wealth (money and corporate stock) into their own hands.
In Pettigrew's day politicians, who by legislation and by regulatory and legal forbearance aided, abetted and otherwise enabled robber baronhood, were consistently reelected because a democratic majority of the American people believed robber baron wealth was trickling down and enriching them, too. Or at least the people were dazzled by the glory of "America's" capitalist and imperial conquests, and imagined themselves in the beneficial limelight of that reflected glory. Pettigrew presents himself as a lonely champion of constitutional republicanism and free markets against the plutocratic imperialism of the US capitalist state in his era.
Same thing in Allen's day, where J.P. Morgan and the titans of Wall St. were the "men of business" whom the public looked to for moral and ideological leadership into the Promised Land of stock market riches for all. In reality robber barons were converting public property and state debt into private capital, and the Lords of Creation were converting corporate conglomeration and stock issuance into million dollar fortunes for the Lords, reaped by flogging liberally watered stock to the bedazzled investing public.
Today a majority of Americans continue to believe their exploiters, indebtors and oppressors are their saviors, the "leaders" whose knowledge of how to acquire ownership of personal fortunes of money will enrich them all. The trick is that the leaders acquire their fortunes by openly robbing the awestruck masses who have been brainwashed to see legalized robbery as "legitimate business". The best thieves become the kleptocrats who become the nation's ruling class. As Arrighi writes,
"The claim of the dominant group to represent the general interest is always more or less fraudulent. Nevertheless ... we shall speak of hegemony only when the claim is at least partly true and adds to the power of the dominant group. A situation in which the claim of the dominant group to represent the general interest is purely fraudulent will be defined not as a situation of hegemony but of the failure of hegemony." [i.e. a descent into overt tyranny]
By this standard the US corporate state today is a hegemony, not an outright tyranny, because the top 20% of the income and wealth ladder are enriched by the activities of the corporate state. For the top 20%, the government's deficit spending of evermore new bank-issued money becomes their personal earnings, when their business or employer sells stuff and earns that money and keeps the money as personal savings and readily liquifiable financial investments (in government bonds, bank CDs, stocks, etc). Winners get the money. Losers owe the debt. The US corporate state still creates enough winners to maintain its political legitimacy as a hegemon.
In, Capital, Karl Marx wrote,
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