7 
competition supposes that profits are adjusted to the 
needs of the accumulation process: If they are higher 
than the rate of accumulation ( which is somehow determined 
by the past development and by exogenous influences ) 
warrants then excess capacity will appear and will, 
via competition, bring about a corrective squeezing of 
the margins. 
It is only plausible that the momentous structural change 
of the economy which led to the dominance of oligopolies 
would fatally weaken the mechanism just described. 
The oligopolies would tend to increase the profit margins 
( for example by failing to pass on cost reductions to 
the prices ) but owing to the great risk of a struggle 
between giants and the difficulty of new entry there would 
be no suffient corrective action of competition. In 
consequence effective demand would be depressed. 
An alternative version of this stagnation theory assumes 
that the oligopolistic concerns anticipate the effects 
of declining competition on excess capacity. They become 
more cautious in their investment decisions even before 
excess capacity actually appears.Thus a weakening of the 
investment incentive ocpurs as a direct consequence of 
the economy's shift from a competitive to an oligopolistic 
regime. 
The above theories were intended to explain the decline in 
the rate of growth of accumulation in U.S. which was shown 
by S.Kuznets' data to have taken place between the 1880s 
and the beginning of world war two.