A Reply to Mac Parker
“There is no other possibility than either the order governed by the impersonal discipline of the market or that directed by the will of a few individuals; and those who are out to destroy the first are wittingly or unwittingly helping to create the second.”1
In “The Economic Limits of Racketology,” Mac Parker argues that racket theory is limited by its reliance on a periodization of capitalism that assumes a transition from competition to monopoly, in which the direct political rule of large capitalists replaces market competition as the defining feature of contemporary capitalism.2 Mac is right to be skeptical of this narrative as it appears in Adorno’s “Reflections on Class Theory.” However, contra Mac, I do not regard Adorno’s position as the final word on monopolization in racket theory. I argue that Horkheimer’s contribution to racket theory provides a stronger theorization that is less vulnerable to the critique of monopoly capital theory by Milios and Sotiropoulos that Mac invokes. Rather than viewing monopolies as displacing competition, Horkheimer sees monopolies as operating within, mediating, and intensifying competition. By both maintaining and downplaying the importance of competition, Horkheimer appears contradictory here, but I claim that what emerges from this tension is an expanded concept of competition rather than a story about its elimination.
Before dealing with Horkheimer’s contributions to racket theory on the topic of the transformation of competition, I want to provide some background on the developments in economic theory that Horkheimer is responding to. I claim that by attacking Baran and Sweezy’s predecessors, Horkheimer’s writings here contain a preemptive critique of the Monthly Review School, for whom starting with the absence of competition is necessary for an analysis of contemporary capitalism based in reality.3 Because the theorists of the MR School recognize this as the only possible way forward for economic theory, we find Bellamy Foster asserting the following: “the choice is a stark one: between dealing seriously with the problem of monopoly as a growing factor in the modern economy and thus undermining neoclassical theory, or denying the essential reality of monopoly and therefore preserving the theory.”4 Of course, dealing with the problem of monopoly means accepting that capital has managed to stabilize itself by banning competition between capitals.
Horkheimer denies the existence of neither monopoly nor competition. Instead, Horkheimer understands racketization as a process of expansion of the economic and continuous integration of subjects into the realm of competition accompanied by an expanded set of methods used in the struggle to capture surplus value such that the distinction between the economic and the extra-economic vanishes. To the extent that Horkheimer is a theorist of the decline of competition, this is the decline of the bourgeois concept of competition and the decline of the restriction of capitalist competition to the economic. And unlike in the Monthly Review School, Horkheimer’s theory does not demand a fundamental revision of Marx’s analysis of capitalism because Marx is read as an early critic of the bourgeois concept of competition.
Horkheimer’s theory of monopolization in “On the Sociology of Class Relations” is premised on the falsity of free competition. Far from reproducing the myth of the decline of competition, Horkheimer warns against overstating the differences between the present and earlier periods, complaining that economists now rely too heavily on non-economic factors to explain the current state of things. Here, he seems to be responding to the shift in thinking about competition in the ‘30s and ‘40s within economics, the devolution from a simple account of the absence of feudal institutions in Adam Smith to a rigid model of perfectly knowledgeable and rational agents in marginalism and finally to a fixation on institutional and cultural factors in imperfect competition theory.
The standard theory of competition in economic theory today is captured by what John Weeks termed the ‘quantity theory of competition,’ describing the tendency to associate competition and monopoly such that they are opposed poles on a spectrum, wherein monopoly is defined as a market with one firm and competition as a market with infinite firms.5 In this view, a decrease in the number and an increase in the size of firms within a market directly produces a decrease in the intensity of competition. The centralization of capital then becomes synonymous with a decline in overall competition, and subsequently firm competitiveness. It is accepted that competition generates optimal economic outcomes: increasing productivity, declining prices, and rising wages. These tendencies are thought to be dependent on the operation of competition, built on the assumption that firm behavior is determined by the degree of market concentration. As such, a rise in market concentration is seen to produce the inverse: stagnation, inflation, and inequality.
The understanding of competition as the antithesis of monopoly has its roots in classical political economy, especially in the work of Smith. But there is no systematic theory of competition and its relationship to monopoly until Cournot, and his theory was not particularly influential until it was rediscovered by the marginalists. Smith’s understanding of competition was one formed within the relatively small sphere of economic activity in eighteenth-century England, where trade was still conducted by independent artisans, merchants, and small-scale manufacturers.6 The monopolies he criticized—guilds, chartered companies, exclusive trading rights, and land privileges—were upheld by legal protections rather than purely economic forces. Rather than offering a theory of monopolistic behavior within a mature capitalist system, Smith was concerned with analyzing the barriers to capitalism’s expansion, examining the way in which it struggled against older forms of economic organization.7 As such, Smith’s theory of competition was largely negative, defined simply as not feudalism.8
With the marginalist revolution, the understanding of competition changed, redefined as a static market condition characterized by a lack of any monopoly power.9 Smith’s description of an immature capitalism is taken by neoclassical thinkers to be the ideal market condition.10 The competitive market becomes a perfect state wherein prices are determined entirely through supply and demand interactions, with each individual agent acting as a price-taker.11 Competition tends to be narrowly understood as price competition, with price-setting behavior taken as evidence of a lack of competition, typically due to the presence of barriers to the entry of new firms.12 The term ‘marginalist’ comes from the notion that in the ideal market, a marginal change leaves an individual actor no better off.13 In this formulation, then, any price-setting activity by firms is seen as evidence of a decline in competition.
Soon after the theory of perfect competition was introduced, it fell into crisis. Confronted with the reality that their science of autonomous and automatic market forces was incapable of grasping the reality of contemporary capitalism, and it thus became undeniable that firms were not mere price-takers, economists were compelled to refine their theory. None of the assumptions of what defined a competitive market—perfect knowledge, utility maximizing behavior by consumers and firms, perfect mobility of labor and capital, and a sufficiently large number of firms to justify the theory of price-taking—could be located in any real market.14 But rather than question these foundations, economists concluded that capitalism had simply become less competitive, as the neoclassical concept of competition was too closely bound with the actual process of competition.
While the marginalist revolution transformed Smith’s analysis of the decline of feudal institutions into an abstract model of infinitely many competing firms, the Keynesian revolution reconfigured the neoclassical theory of perfect competition into a theory of imperfect competition by piling on complexities. Influential economists like Sraffa, Chamberlin, Robinson, and Sweezy developed the concept of ‘imperfect competition’ in the ‘30s to capture the state between perfect competition and pure monopoly by beginning with the assumption of monopoly rather than competition.15 In imperfect competition theory, monopoly is foregrounded alongside factors such as asymmetric information, uncertainty, barriers to entry and exit, and state power in the quest to produce a more empirically true theory of competition.16 But in the Austrian backlash to imperfect competition theory, the ‘perfectionists’ were easily able to integrate the factors laid out by the ‘imperfectionists,’ particularly asymmetric information and fundamental uncertainty, which were later deployed to critique socialism. The doctrine of perfect competition came out stronger after the heterodox intervention.
Moreover, recalling Mill’s assertion that “only through the principle of competition has political economy any pretension to the character of a science,”17 the assumption of the decline of competition and the endless inclusion of complexities into the theory of imperfect competition actively undermines the possibility of actually theorizing capitalism. It tends to be accepted that there are simply too many factors within price competition to produce any sort of general theory, leading to a turn to econometrics to escape the incoherencies at the core of microeconomics.18 Economists today constantly refer to institutional, historical, and cultural particularities to excuse their inability to analyze economic phenomena: “But just as ‘national economy’ once veiled economic reality by hypostasizing market processes, now the increase of concentration on politics—or, at best, on technology—effectively prevents cognition of the facts of the matter.”19
Bourgeois economists are incapable of confronting the falsity of their understanding of competition: For the bourgeoisie, the fall of serfdom and mercantilism seemed to have abolished class distinctions, producing what they understand as the natural order of competition among free individuals. This order is supposed to be the correct way for human society to be organized, the realization of our innate propensity to truck and barter. In this vision of bourgeois society, every subject is both producer and consumer; there is no class. Anything that disrupts this picture is an intrusion of the non-economic into the sphere of the economic. To the extent that they are willing to acknowledge it, monopolization compels the bourgeoisie to admit that the unequal distribution of power continues to exist under their rule. Rather than accepting the falsity of their understanding of competition, however, the bourgeoisie understands monopolization solely as a regression to a prior mode of direct class rule. They admit that competition, as they understand it, no longer exists, but they believe that it once did, and that what exists today is no longer genuine competition.
Against this, Horkheimer understands pre-monopoly capitalism as characterized both by competition that reached all members of the population and by the unresolved problem of power. Whether by “birth or deceit, brutality or shrewdness, expertness in engineering machinery or human relations, by marriage or adulation,”20 there have always been groups that have managed the competitive processes within capitalism. Racketization is a reversion to more direct forms of domination, but these forms were always present, hidden behind the apparently rational market system, and this “was already clear to everyone except for the professors in the times of so-called liberalism.”21
The structure of every ruling class consists of competing rackets. This was more evident in earlier modes of production, visible in the struggles between the church and the nobility or the urban and rural gentries. In these forms of competition, laymen and commoners play no significant role and are excluded from the game. What seems to be the most dramatic change within contemporary capitalism, then, is the way in which the ruled are forced to racketize and enter competition alongside the ruling.
Here, the conflict between the different concepts of competition that Horkheimer is working with is most obvious. There is the strictly economic concept of competition, which can be divided into its imagined form as free competition and its actual form as intra-class competition. The latter consists of two distinct spheres of competition, one among workers and another among capitalists, neither of which are captured by the bourgeois notion of competition as the universal struggle of all against all. These spheres are defined by a struggle over wages by workers and over the distribution of surplus value by capitalists. With the development of the racketized workers’ movement, organized labor enters into the capitalists’ intra-class competition, producing a state wherein “[the working class’s] relationships to the different capitalistic groups are no longer radically different from those prevailing among the capitalistic groups themselves.”22 The result of this integration—a unified, single sphere of competition—ironically resembles the bourgeois notion of competition more closely than the competition of early capitalism did (thus Horkheimer: “The regression, however, is not the repetition but the distortion of the original state of affairs.”23)
* * *
Throughout “On the Sociology of Class Relations,” Horkheimer appears to deliberately maintain two contradictory theses: first, that competition has undermined itself and been replaced by monopoly; and second, that the bourgeois concept of competition was invalid from the start and was always undermined by the existence of monopoly. It is this tension between what is a break with early bourgeois society and what is essential to all class societies that makes Horkheimer’s understanding of the racket distinct from other Marxist theories of the monopoly. I argue that what emerges from this tension, both materially and theoretically, is not the elimination of competition but rather an expansion of competition through the integration of the working class. Racketization is the movement from purely economic competition, wherein workers and capitalists are placed within distinct spheres of competition, to total competition: the competition between rackets. The reach and intensity of competition are greater than before, but strictly formal competition is just one among several methods, alongside robbery and swindling, employed in the “never ending fight over booty.”24 This is the true universal struggle of all against all, fought not by individuals but by their rackets. While not present in Horkheimer’s analysis, we can say today that financialization plays a crucial role here by transforming workers into small investors, thereby further binding their reproduction to the fluctuations of the stock market.
Regarding the implications of racket theory’s understanding of competition for Marx’s analysis of capital, it is first necessary to recall the role that competition plays in Marx’s system and challenge the pervasive belief that the labor theory of value holds only under conditions of perfect competition.25 The interpretation of Marx fails because it erroneously assumes that competition has the same status for him as it does for neoclassical theorists. Marx’s theory does not rely on the conditions of perfect competition; rather, he assumes the existence of multiple competing firms that set their own prices, though not wholly under conditions of their choosing, since they face competition both within and outside their sectors.26 While changes in competition may affect distribution and widen the gap between particular values and their prices, this is a flaw internal to capital rather than a flaw in its theorization.
Marx does not begin with the concept of competition and does not ascribe it the same duties as bourgeois economists do; this has resulted in much confusion from monopoly capital theorists who wish to explain stagnation through declining competition. In bourgeois economics, competition is foregrounded such that it is thought to be responsible for all economic phenomena.27 Marx is explicitly hostile to this theorizing of competition: “Competition executes the inner laws of capital; makes them into compulsory laws towards the individual capital, but it does not invent them. It realizes them.”28 As such, the concept of competition is largely absent in the first two volumes of Capital and is only introduced after the inner laws of capital are analyzed.29 Bourgeois economics grounds its theory of profit in circulation, whereas Marx locates it in production.30 Competition punishes less efficient capitals and establishes a uniform rate of profit, but it itself is not the source of growth. Total profits result from total social capital and competition mediates their distribution.31 As such, locating stagnation in changes to competition, as monopoly capital theorists tend to do, depends on the adoption of a non-Marxian theory of surplus. The confusion is due to the fact that individual firms often achieve profit through circulation and distribution, but total profit is only the result of exploitation within production.
Within distribution, while monopolization may allow large capitals to insulate themselves from competitive pressures, enabling them to escape price competition, the centralization of capital can also facilitate the equalization of profit rates. Unlike a Smithian monopoly, which maintains its position typically due to privileges granted by states, Marxian monopolies hold because of the competitiveness of the firms involved. Monopolists tend to maintain their market share because they retain their high levels of productivity, and in their effort to constrain competition, monopolists are forced to behave competitively to prevent new entrants.32 Far from being solely parasitic, the investment of trusts, cartels, and especially financial rackets in multiple sectors, and their ability to quickly enter new sectors, provides them with the ability to rapidly move capital from low-profit to high-profit areas, aiding the equalization of profit rates while expanding the gap between those who are able to compete effectively and those who cannot.33 This capacity only increases under globalization.
I do not believe that Horkheimer contests any of this. What racketization has produced is not a fundamental change in the nature of competition nor a decline in its prevalence, but rather a lifting of the veil of free competition to reveal the continued existence of direct rule in daily life, a continuous expansion of the realm of competition through the inclusion of non-capitalist participants, and a declining commitment to the old rules of competition, marked by the growing set of methods employed in the struggle to capture value.
This is perhaps the most prescient aspect of Horkheimer’s theory of racketization. Whether through fake job listings, crypto scams, phishing texts, or other schemes made possible by our dependence on the internet, swindling has become an increasingly common method for the capture of surplus value, especially amid an ever-growing reserve army of labor. What this contributes to is the state of general resentment in the “unsuccessful competitors” and “vanquished opponents,”34 with the mass shooting as its primary expression. This is the logical endpoint of total competition: the elimination of as many competitors as possible in the “chaotic war of all against all.”35
Friedrich A. von Hayek, The Road to Serfdom (Routledge, 2006), 205. ↩
Mac Parker, “The Economic Limits of Racketology,” CTWG, 2025, https://ctwgwebsite.github.io/blog/2025/Limits_of_Rackets/. ↩
Anwar Shaikh, Capitalism: Competition, Conflict, Crises (Oxford University Press), 329. ↩
John Bellamy Foster, The Theory of Monopoly Capitalism: An Elaboration of Marxian Political Economy (Monthly Review Press, 2014), 52. ↩
John Weeks, Capital and Exploitation (Princeton University Press, 1982), 153. ↩
Brett Christophers, The Great Leveler: Capitalism and Competition in the Court of Law (Harvard University Press, 2016), 31. ↩
James A. Clifton, “Competition and the Evolution of the Capitalist Mode of Production,” Cambridge Journal of Economics 1, no. 2 (1977): 144. ↩
John Weeks, “The Fallacy of Competition,” in Alternative Theories of Competition: Challenges to the Orthodoxy, ed. Jamee K. Moudud et al. (Routledge, 2013), 14. ↩
George J. Stigler, “Perfect Competition, Historically Contemplated,” Journal of Political Economy 65, no. 1 (1957): 14. ↩
Clifton, “Competition and the Evolution of the Capitalist Mode of Production,” 144. ↩
Weeks, “The Fallacy of Competition,” 18. ↩
Giulio Palermo, “Competition: A Marxist View,” Cambridge Journal of Economics 41, no. 6 (2017): 4. ↩
Benjamin Fine, Microeconomics: A Critical Companion (Pluto Press, 2016), 3. ↩
Shaikh, Capitalism, 357. ↩
Weeks, “The Fallacy of Competition,” 22; Shaikh, Capitalism, 358. ↩
Shaikh, Capitalism: Competition, Conflict, Crises, 4. ↩
John Stuart Mill, Principles of Political Economy: With Some of Their Applications to Social Philosophy (Hackett, 2004), 113. ↩
Fine, Microeconomics: A Critical Companion, 44. ↩
Max Horkheimer, “On the Ideology of Politics Today,” CTWG, 2025, https://ctwgwebsite.github.io/blog/2025/RacketTexts/#on-the-ideology-of-politics-today-ca-1942. ↩
Max Horkheimer, “On the Sociology of Class Relations,” CTWG, 2025, https://ctwgwebsite.github.io/blog/2025/ClassRelations/. ↩
Horkheimer, “On the Ideology of Politics Today.” ↩
Horkheimer, “On the Sociology of Class Relations.” ↩
Horkheimer, “On the Ideology of Politics Today.” ↩
Horkheimer, “On the Sociology of Class Relations.” ↩
Joseph A. Schumpeter, Capitalism, Socialism and Democracy (Harper Perennial Modern Thought, 2008), 24. ↩
Jamee K. Moudud, “The Hidden History of Competition and Its Implications,” in Alternative Theories of Competition: Challenges to the Orthodoxy, ed. Jamee K. Moudud et al. (Routledge, 2013), 31. ↩
Palermo, “Competition: A Marxist View,” 1. ↩
Karl Marx, Grundrisse: Foundations of the Critique of Political Economy, 752. ↩
Lefteris Tsoulfidis, Competing Schools of Economic Thought (Springer Berlin Heidelberg, 2010), 111. ↩
Weeks, Capital and Exploitation, 154. ↩
Palermo, “Competition: A Marxist View,” 13. ↩
Fine, Microeconomics: A Critical Companion, 102. ↩
Clifton, “Competition and the Evolution of the Capitalist Mode of Production,” 147. ↩
Horkheimer, “On the Sociology of Class Relations.” ↩
Franco Berardi, “New Heroes,” E-Flux, 2025, https://www.e-flux.com/notes/649956/new-heroes/. ↩