ABSTRACT
Economic activities in modern American society may be classified into two broad groups: industries organized by private capital and those organized by the state. Production and distribution in the private sector fall into two subgroups: competitive industries organized by small business and monopolistic industries organized by large-scale capital. In the competitive sector the physical capital-to-labor ratio and output per worker, or productivity, are low, and growth of production depends less on physical capital investment and technical progress than on growth of employment. Competitive sector wages, prices, and profits are determined chiefly by market forces. The essence of the competitive market mechanism is the process by which productivity increases are transformed into higher standards of living via changes in prices and profits. In all capitalist economies the creative powers of the producing class are harnessed to private profit. Monopoly sector growth tends to generate surplus capital in the form of surplus goods and surplus population.
