Page 13 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 2, 2014, pp. 5-20

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 2, 2014, pp. 5-20

attempts for the creation of monopoly unions in other sectors of German machine building

industry incurred due to this reason as well [Shasta I. 1991.p.170].

The new wave of combining companies and absorption of one company by another led to

the increasing the monopolization of production. This new wave of combination and absorption

widely spread in USA in 1926-1929. This wave is varies with an increase importance of vertical

integration equal to ongoing horizontal connection and absorption. This change on character and

form of implementation of centralization capital process objectively reserved with the need for

expansion of specialization of production, to develop cooperation and combination within the

vertical face of technology covering preparation of raw material production, primary processing

of raw materials, various intermediate products and etc.

This served to create the necessary organizational and manufacturing floors for

application methods of mass conveyor production and increasing role of vertical type of

concerns. Powerful industrial complexes are being formed covering a wide range of companies

associated with each other in a single technological stage. The basis of establishment of such

complexes formed based specialization of fabrics forming complexes (on the object, on parts and

on the technology) [Martynovsky S.V. 1985.p.75-79].

But development of concentration and centralization of production led to the collapse of the

market self-regulation mechanism. This clearly reflected itself during the economic crisis of 1929-

1933 years. ―Great Depression‖, laid for the foundation for intensive regulation of economy by the

state in accordance with the recommendations of Keynes. Objective need of regulation of economy

by the state, as a result have been created with the process of centralization of production in

monopoly coalition. Considering that the economy was manipulated by competition with ―invisible

hand‖ of market the liberal ideas were considered out-dated.

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