Differential Accumulation is a new approach for analysing capitalist development and crisis, tying together mergers and acquisitions, stagflation and globalization as integral facets of accumulation. The concept has been developed by Jonathan Nitzan and Shimshon Bichler. Jonathan Nitzan is a Professor of Political Economy at York University, Toronto Canada Shimshon Bichler teaches political economy at colleges and universities in Israel
The concept of differential accumulation emphasizes the powerful drive by dominant capital groups to beat the average and exceed the normal rate of return. Four regimes of differential accumulation are articulated in the theory: internal breadth by amalgamation, external breadth through greenfield investment, internal depth via cost-cutting, and external depth through stagflation. Consolidation or amalgamation is the act of merging many things into one A Greenfield Investment is the investment in a manufacturing office or other physical company-related structure or group of structures in an area where no previous facilities exist Stagflation is an economic situation in which Inflation and Economic stagnation occur simultaneously and remain unchecked for a period of time
Nitzan and Bichler make several broad conclusions. (1) Of the four regimes, the most important are amalgamation and stagflation, which tend to oscillate inversely to each other. Consolidation or amalgamation is the act of merging many things into one Stagflation is an economic situation in which Inflation and Economic stagnation occur simultaneously and remain unchecked for a period of time (2) Over the longer haul, amalgamation grows exponentially relative to green-field investment, contributing to the stagnation tendency of modern capitalism. (3) The wave-like pattern of mergers and acquisitions reflects the progressive break-up of socioeconomic ‘envelopes’, as dominant capital moves through successive amalgamation at the industry, sectoral, national, and, finally, global level. In this sense, they argue that the current global merger wave is an integral facet of differential accumulation. (4) Periodic lulls in amalgamation tend to be compensated for by stagflation, which appears as a crisis at the societal level, but which contributes significantly to differential accumulation at the disaggregate level. An end to the present worldwide merger boom could therefore trigger global stagflation. (5) Stagflation crises have been previously 'resolved' when dominant capital broke its existing envelope, pushing to amalgamate within a broader universe of takeover targets. Stagflation is an economic situation in which Inflation and Economic stagnation occur simultaneously and remain unchecked for a period of time Given that there is nothing more to conquer beyond the global envelope, Nitzan and Bichler argue that future stagflation crises may prove much more difficult to tame.
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