The biggest 7 U.S. commercial banks control 50% of consolidated assets

21st century concentration of banking as a property of monopoly capitalism

Over the last 20 years, the 7 biggest U.S. commercial banks (here referred to as the “Big 7”):

• Chase
• Bank of America
• Citibank
• Wells Fargo
• US Bank
• Truist Bank
• PNC

have acquired 50% of all consolidated assets among all U.S. large commercial banks.¹ The animated pie chart above might give the illusion that from 2003-2009 the banks reached their peak equilibrium of dominance of consolidated assets at around 50%. However, the Big 7 banks continued to increase the amount of consolidated assets after this period:²

By developing a linear regression model on the trends in the consolidated assets of the Big 7, we see that they accumulated assets by $14.38 billion per quarter from 2003-2023. If we only take into account the biggest four commercial banks (Chase, Bank of America, Citibank and Wells Fargo, here referred to as the Big 4),the rate at which they accumulate consolidated assets is of $21.06 billion per quarter from 2003-2023.³ In fact, it’s just the Big 4 that control 42.15% of consolidated assets among the large commercial banks as of the first quarter of 2023:

The main reason that the Big 7 have a relative period of “stable” dominance of 50% over all consolidated assets from large commercial banks from 2010-2023 is because most large commercial banks were also able to consolidate more assets during this time period:

Note: The blue line represents the consolidated assets of all large commercial banks, while the blue line represents the consolidated assets of the Big 7 banks.

Analysis

What can we call the phenomena in which a smaller number of banks are able to consolidate assets in their hands over a period of time? The process of concentration of banking.

Concentration of banking, as a property and fundamental process in the growth of monopoly capitalism, is the tendency of capital centralizing more and more around a few financial institutions. The process creates a financial oligarchy where a small number of banks and industrial monopolies wield enormous power over production (or under-production), investment (or lack of it), and commerce (or its stultification). It subordinates the separated regional economies of a society into a singularity.

Through its control of connections, assets, credit and other financial operations, the financial oligarchy is able to observe the financial position of other capitalists, restrict their access to credit, and influence their decision making. Their influence allows them to bring together already cartelized industries into even bigger monopolized networks. The concentration of banking allows the financial oligarchs to further concentrate production through the fusion of bank capital and industrial capital into financial capital (which is capital controlled by the banks but employed by industrialists).

Another fundamental processes that leads to the rise of monopoly capitalism, and that is intrinsically and reciprocally connected with the process of concentration of banking, is the concentration of production. The concentration of production is the process in capitalism that leads to the growth of large enterprises, the creation of monopolies, and the global expansion of these monopolies. This concentration leads to monopolization, which inhibits free capitalist competition. Along the process of concentration of production, the banks also direct the consolidation of syndicates, cartels, trusts, and monopolies through the process of combination of production.

The combination of production is the grouping in a single enterprise of different branches of industry, which can encompass the consecutive stages of the production of commodities from the processing of raw materials all the way to the delivery of the final commodity to the customer. It allows the monopolists to take control of the various stages of its production process, rather than relying on external contractors or suppliers. The functions of the combination of production are:

• Levels out the fluctuation of trade. Therefore combination assures the combined enterprises a more stable rate of profit.
• Controlling and eliminating trade.
• Reinforcing and protecting the competitive edge of the combined firm during economic crises.
• Delivers technical improvements exclusively to the combined firms.

In this way, the concentration of banking, the concentration of production, and the combination of production are all processes and properties that give rise to monopolies and form part of the greater economic regulator of the modern monopolistic-imperialist capitalist system, the Law of Monopolization. However, we must note that the law of monopolization is the intermediary economic phase and regulator⁴ between the free-capitalist competition regulator, the Law of Value, and the economic regulator for worker’s states, the Law of Socialist Accumulation.⁵

The Social Character of Monopoly Capitalism

The Law of Value,⁶ which is the spontaneous regulator of the capitalist mode of production, is refracted and restricted by a new tendency, a new law in nature. V.I. Lenin writes in Imperialism, the Highest Stage of Capitalism that “…the rise of monopolies, as the result of the concentration of production, is a general and fundamental law of the present stage of development of capitalism.” ⁷

This Law of Monopolization, is the process through which free competition capitalism becomes monopoly imperialist capitalism. It’s the result of the concentration of production & banking, the combination of production, all processes driven by the Law of Accumulation.⁸ The result is immense progress in the socialization in the character of production but all under the private ownership of the means of production. Is the continuation of the law of survival but no longer between individual capitalists in a free-market Darwinian struggle but between clusters/groupings of capitalists subordinated by a financial oligarchy/singularity. Monopolists associations resort to the following methods to maintain their monopolies:

• Controlling and stopping supplies of raw materials.
• Stopping the supply of labor.
• Stopping deliveries (for monopolies often have control over the means of communication and transportation).
• Closing trading outlets.
• Agreements with buyers, excluding providers outside the cartel.
• Systematic price cutting to ruin outsider firms.
• Stopping credit.
• Boycotting.

This law of monopolization has the progressive element of socializing production to an even greater extent than was possible under free-competition capitalism. However, this socialization still is in the form of private ownership of the means of production. This is the essence of the Fundamental Contradiction of the Capitalist System, the contradiction between the private ownership of the means of production and the increasingly social character of production. This contradiction is the true source of the periodic economic crises of the world economic capitalist system. Frederick Engels writes:

“Their economic bankruptcy recurs regularly every 10 years. In every crisis, society is suffocated beneath the weight of its own productive forces and products, which it cannot use, and stands helpless, face-to-face with the absurd contradiction that the producers have nothing to consume, because consumers are wanting. The expansive force of the means of production bursts the bonds that the capitalist mode of production had imposed upon them. Their deliverance from these bonds is the one precondition for an unbroken, constantly-accelerated development of the productive forces, and therewith for a practically unlimited increase of production itself.”

Socialism: Utopian and Scientific by Frederick Engels. Pt. III Historical Materialism.1880. Link

This contradiction existed in the period in which free capitalist competition operated and in the period in which Karl Marx wrote Das Kapital.⁹ But under monopoly capitalism this fundamental contradiction not only does not disappear, but it worsens as capitalism continues to monopolize and the historical rate of profit continues to decline. Centralizing the credit system, the financial oligarchy does not resolve any one bit of the fundamental contradiction of the capitalist system. What the credit system does is simply over-extend production well beyond its capacity and worsens the economic crisis. Rosa Luxemburg writes:

“[The credit system] aggravates the antagonism between the mode of production and the mode of exchange by stretching production to the limit and at the same time paralyzing exchange at the smallest pretext. It aggravates the antagonism between the mode of production and the mode of appropriation by separating production from ownership, that is, by transforming the capital employed in production into “social” capital and at the same time transforming a part of the profit, in the form of interest on capital, into a simple title of ownership. It aggravates the antagonism existing between the property relations (ownership) and the relations of production by putting into a small number of hands immense productive forces and expropriating large numbers of small capitalists. Lastly, it aggravates the antagonism existing between social character of production and private capitalist ownership by rendering necessary the intervention of the State in production…In short, credit reproduces all the fundamental antagonisms of the capitalist world. It accentuates them. It precipitates their development and thus pushes the capitalist world forward to its own destruction.”

Rosa Luxemburg. Reform or Revolution. Part I, Ch. II, The Adaptation of Capital. 1900. Link.

Nevertheless, Marx wrote in Capital Vol. III, Part. II that the banking system “possesses, indeed, the form of universal book-keeping and distribution of means of production on a social scale, but solely the form.”¹⁰ And indeed, there can be no talk of a socialized form of investment, production, or labor expenditure for as long as the property form remains private:

• Investment: Demands of banks and the global market determine investment. In the period of monopoly capitalism, banks, de facto, practice the planning principle¹¹ in managing investment in society (determining its development) and serving as the medium of circulation of money (replacing the stock exchange).
• Reproduction of the means of production: Capitalist reproduction (or its regression) is determined by the task of obtaining maximum profits for the finance capitalists.
• Labor expenditure: Labor expenditure (or its idleness ) is determined by the maximum rate of return in profits to the financial oligarchs.
• Law of survival: although the Law of Value never truly stops operating even in the most trustified of societies (e.g. a fascist regime that has instituted state capitalism to centrally manage and plan a war economy), the law of monopoly changes the operation of the Law of Capitalist Competition.¹² Monopolies that have managed to consolidated their power domestically seek to expand to dominate the world market against other monopolies that seek to do the same abroad. This is why Lenin emphasizes that imperialism is, economically, monopoly capitalism.

Adding to this last point, Lenin expressed that politics is concentrated economics. In this way, we can say that:

Imperialism is, economically, monopoly capitalism, and monopoly capitalism is, politically, imperialism.

In this form, imperialism is the means through which financial oligarchs and monopolists compete against other imperialists; against bourgeois nationalist movements that seek national liberation against the whims of Wall St.; against revolutionary worker’s movements that establish or seek to establish worker’s states. In this form, war and destruction is not only a policy, but an economic necessity for the imperialists, it’s a fundamental tool and property for the law of monopolization. Monopoly capitalism and war are intrinsically bound together until the fundamental contradiction of the capitalist system is resolved by either the establishment of a world socialist system or until the destruction of the organization of human society.

Under monopoly capitalism, attempts are made for a couple of international trusts to dominate the whole world market of an industry. Capitalist competition is severely restricted from operating as source of technical and cultural innovation (e.g. the music industry trying consolidate their hold on emerging artist on TikTok, or the film industry recycling old movie hits to secure profits at the theater). Prices of commodities are set at monopoly prices despite the social need of their universal distribution. For example, a study correlated the exponential increase in prices of insulin to the 90% domination of the insulin global market by three pharmaceutical companies (Eli Lilly, Sanofi Aventis, and Novo Nordisk):¹³

An even more “socialized” character of the production of monopoly capitalism is when the capitalist class itself can no longer manage its own economy because of war and economic crisis. The capitalist class has to rely on the bourgeois state to implement state capitalism. State capitalism is the intervention of the state on the basis of private property and with the goal of preserving it. It is the processes of using the capitalist state to place the crisis of capitalism on the backs of the poor. It’s a measure of control against the rebelling of the productive forces against the property form that chains them. It applies brakes on the development of technique and supporting unviable enterprisers. It manifests through nationalization and economic regularization. It manages enterprises, but does not own them or their profits. It becomes the sales clerk of the monopoly capitalists while putting the risks on the public and leaving the profits for the capitalists. Particularly during war, a de facto planning principle on the basis of private property is implemented:

• The demands of the war oblige the state to carry-out a universal accounting system of all productive potentialities of the country.
• After itemization, the state coordinates the distribution orders between the different monopolies according to a national plan.
• Individual enterprises are forced to cartelize into existing monopolies.
• The capitalist state directs the development or regression of certain industries according to the national plan (i.e. a planning principle in the distribution of the productive forces that prioritizes the needs of the monopolists and the war front ).¹⁴
• Forces the centralization of raw materials and their circulation towards the war front.
• State controls the prices and commodities, which regularizes the distribution of profits among the capitalists.

“Production which formally remained commodity production was transformed de facto into planned production in the most important branches. Free competition was abolished, and the working of the law of value in many respects was almost completely replaced by the planning principle of state capitalism…it showed clearly that the present-day economic system is objectively quite ripe for socialist planned production and that everything depends only on the coming of the master, that is, on the action of the working class.”

E. Preobrazhensky. The New Economics. Ch. III-The Law of Value in the Soviet Economy. 1926. Link

Together with the transformation of capitalism to state-capitalism, there comes the transformation of the political edifice of the capitalist state. It transitions from bourgeois democracy, to a social democracy (the political situation in which the capitalists have to rely on the misleaders of the working-class to apace the revolutionary impetus of the masses), and finally to Bonapartist fascism. Fascism, starting as a petty-bourgeoisie movement funded by finance capital, has the immediate tasks of:

1. The immediate destruction of the organizations of the working-class.
2. Frustrate the re-organization of the proletariat to fight back.

Fascists are the shock troopers of nationalist reaction to be unleashed when the normal police and military resources of the capitalist state no longer suffice to maintain bourgeois order. Fascism has to then metastasize into a Bonapartist police-state government system, as parliamentary means can no longer maintain the foundation of the capitalist mode of production.¹⁵ It is precisely in this horrific stage of monopoly capitalism where the law of value receives another blow : a degeneration in the relationship between the buyers of labor (capitalists) and their sellers (workers). By effectively destroying the defense bulwarks of the working-class and crushing them under the jackboot of fascism, they enslave a section of the working-class into compulsory labor. The decline of capitalism is such that the capitalists cannot afford-economically and politically-to buy organized labor-power (unions) or buy labor-power on the basis of the law of value (i.e. on the basis of the market).¹⁶ The fascist state disciplines labor in an attempt to help the capitalist class fight against the falling rate of profit. This means restricting the law of value on the labor market to the advantage of the exploiting classes. In this sense, state capitalism is the last economic and fascism is the last political resort for monopoly capitalism.

Methodology

Data was collected from the Board of Governors of the Federal Reserve System data on large commercial banks.¹⁹ Linear regression modeling was used to see the trend in concentration of banking in the form of consolidated assets for the Big 7 and Big 4 banks. The linear model was executed using Scikit-learn Machine Learning algorithms. This allowed for the creation of a linear function to see the rate of change across these two banks groups (in the equation “B” stands for billions in dollars):

V.I. Lenin’s Imperialism, the Highest Stage of Capitalism is the theoretical basis to scientifically conceptualize monopoly capitalism as an economic regulator and law in human society. Additionally, the theoretical contributions of E. Preobrazhensky (Old Bolshevik and member of Leon Trotsky’s Left Opposition) on monopoly capitalism in his book The New Economics were used.²⁰

Limitations

BlackRock, Vanguard, Fidelity and State Street are the banks that control the Big 4:

Ownership of Giga-Banks on the Big 4 Banks
Big 4 Banks	Vanguard	BlackRock	State Street	Fidelity	Sum per Big 4 Banks
Chase	17.07%	6.62%	4.34%	2.81%	30.84%
Bank of America	14.15%	5.98%	3.61%	3.58%	27.32%
CitiBank	17.26%	8.38%	4.31%	1.11%	31.06%
Wells Fargo	32.77%	14.75%	8.34%	12.01%	67.87%

In fact, these giga-banks are, arguably, the real economic centers of the American capitalist monopolistic system. As such, to have a more accurate measurement of the concentration of banking (and the concentration and combination of production), its necessary to analyze these giga-banks, their hold on shares on other banks, industries, their assets under management. However, the quantification of the consolidated assets of large commercial banks like the Big 4 is still a good measurement of this phenomena under monopoly capitalism.

1. The Federal Reserve defines large commercial banks as those with $300 million or more in consolidated assets. Link.
2. Note that Chase and Bank of America increased their consolidated assets at a faster rate during the COVID-19 pandemic.
3. Juancho.”Concentration of Banking as a Property of Monopoly Capitalism: The big 7 U.S. commercial banks control 50% of consolidated assets”. Sept. 2023. Github. Link to Big 7 model and Big 4 model
4. By economic regulator, I refer here to the driving mechanisms that control and direct the economic activity of the organism of human society dependent on its mode of production.
5. The Law of Socialist Accumulation simply means that we are recognizing the existence of a tendency for the worker’s state to concentrate production and investment towards reproducing (i.e. expanding) the socialized means of production in the form of collectivized property. Is the struggle to accumulate investment for the reproduction of socialized industry at the hands of the workers state at a certain level of development of the productive forces. By concentrating production it concentrates workers, industry and increases labor productivity.
6. By the Law of Value, we mean the Labor Theory of Value, which states that “the exchange-value of a commodity is determined by the quantity of socially necessary labor to produce it.” Axiomatically, we use this term to discuss the market prices, exchange & production relations under free-competition capitalism as contrary to monopoly capitalism and the planning principle under a planned economy.
7. V.I. Lenin. Imperialism, the Highest State of Capitalism. Ch. 1 Concentration of Production and Monopolies. 1916. Link.
8. Which is the tendency of transforming surplus-value into further capital driven by capitalist competition.
9. Karl Marx’s foundational theoretical magnum opus study of the capitalist system.
10. Karl Marx. Capital. Vol. III Pt. V. Ch. 36. 1894. Link.
11. The planning principle is the role of human consciousness, foresight and practical calculation in regularizing the economy into equilibrium. The highest expression of the planning principle can only be achieve under a world socialist system, but its operation de facto exists under monopoly capitalism regularizing the anarchy of production into a temporary equilibrium in particular industries
12. The Law of Capitalist Competition is the “Darwanian struggle of the individual [capitalists] for existence transferred from nature to society with intensified violence” (Engels, Anti-Dühring, Ch. II. Link). It compels capitalists to compete against each other to improve technique in production and methods of exploitation of labor to transform surplus-value into further capital.
13. JAMA Internal Medicine. “Trends in Medicaid Reimbursement for Insulin From 1991 Through 2014.” Oct. 2015. Link.
14. The high degree of the operation of the planning principle is possible because war temporarily unifies the economic interests of the capitalists. With the bourgeois political system, this is mostly impossible under peace time.
15. For more on the Historical Law of Fascism developed by Leon Trotsky read Fascism What It Is and How To Fight It. Link.
16. And of course we must recognize labor-power as another commodity as explicated by Marx in Wage-Labor and Capital. 1847. Link.
17. Britannica. “Hear about the Nazi use of forced labor at Krupp’s weapon production and the Dora Central Works and the miseries and the poor working conditions of the laborers.” Link.
18. Wikipedia. “Siemens.” Link
19. Board of Governors of the Federal Reserve System. Large Commercial Banks. Link.
20. Yevgeni Preobrazhensky. The New Economics. Ch. III-“The Law of Value in the Soviet Economy.” 1926. Link