31.05.2000

The state and capital

Chris Jones of the Revolutionary Democratic Group defends the theory of state capitalism

Jack Conrad has recently written an extensive assessment of Tony Cliff in the columns of the Weekly Worker (April 20-May 11). This response will concentrate on state capitalism and Jack's proffered alternative analysis, bureaucratic socialism. It will not engage with the broader sweep of his assessment of Cliff as a 20th century revolutionary.

State capitalism

As Jack noted, state capitalism is a theory that has been developed in a number of different political currents. He noted Kautsky, Bordiga and Gorter, and we could add Bukharin to this list. Bourgeois textbooks of political economy would occasionally mention Djilas and The Economist magazine characterised "Russia" as state capitalist.

The ideas of state capitalism have been developed in the works of Raya Dunayevskaya (Marxism and Freedom), Paul Mattick (Marx and Keynes), Nigel Harris (The mandate of heaven), Mike Kidron (Capitalism and theory), Charles Bettelheim (Class struggles in the USSR), as well as the current leadership of the Socialist Workers Party (Britain). State capitalism is a tendency with a variety of expressions and is not dependent on the particular version of a single author. State capitalism has recently found a near ally in writings by István Mészáros who has argued in Beyond capital that the Soviet Union was 'state capital' if not state capitalist

The fundamental idea of state capitalism is that the social and economic system found in the USSR and the later 'communist' regimes was a form of capitalism. The roots of this idea lay in the development of state and municipal corporations prior to 1914. The DeLeonist-influenced Socialist Labour Party in the UK expressed these ideas: "The attempt of the state to control industry is therefore the attempt of the ruling class to dominate labour" (W Paul The state: its origin and function Edinburgh 1974, p196). The analysis began with the state, and capitalism was seen as a single world system.

In this way these early approaches far exceed what later passed for academic Marxism. Ralph Miliband (State in capitalist society: the analysis of the western system of power) and Bob Jessop (State theory: putting capitalist states in their place) assumed two systems and two state forms. Poulantzas (State, power, socialism) at least addressed the problem of general state forms, though he provided no full account of the state and suggested that the 'communist' regimes retained capitalist aspects in the state. The theory of state capitalism provides an analysis of the Soviet Union, but it is also the beginnings of a restoration of a general Marxist theory of the state in capitalist society.

State capitalism and the Soviet Union

The central insight of state capitalism is that the emancipation of the working class is the act of the working class and that there can be no workers' state without the working class being in power. The historical account given by Cliff is that the October revolution successfully established a workers' state. Despite bureaucratic distortions the state remained a workers' state until 1928 when Stalin introduced the first five-year plan. Cliff's position is that the state gradually divorced itself from the working class and that the bureaucracy was gradually transformed into a class.

The first five-year plan in 1928 marks this qualitative shift and Cliff provides a detailed account based on substantial evidence to show increased managerial control, use of piece rate payments, reduced ability to change jobs, prohibition of strikes, the introduction of death penalties for strikers and the swift development of forced labour. All this culminated in a rapid growth of productivity between 1928 and 1936 accompanied by a cut in real wages.

Cliff's account is explicitly reformist, albeit a reformism in reverse. The bureaucracy emerges as the ruling class without a counterrevolution. It is interesting to note that Jack's account agrees with Cliff in dating the change in form to the first five-year plan. In Jack's account this change is one that politically snuffs out the law of value and commodity production. It appears that the Soviet Union becomes post-capitalist from 1928, the exact opposite of Cliff's analysis, though the periodisation is common.

The impetus to develop a theory of state capitalism came with World War II. The Trotskyist account of the USSR had rested on the foundation of a successful revolution. In the new peoples' republics of eastern Europe a similar system arose, not from revolution, but from a carve-up of power between the victorious allies. The type of system rested not on the scale and success of the wartime resistance and revolutionary movements, but on where Churchill and Stalin drew a line.

What sort of state was this? Trotskyism split into various camps, as more or less orthodox Trotskyist accounts vied for dominance and new accounts were generated. The pressure of events was increased when the peasant-based revolution in China seized power through a revolutionary war in 1949. Another regime was built on Stalinist political foundations without a successful workers' revolution. The theory of state capitalism in these circumstances was more than an analysis of the Soviet Union: it was an attempt to analyse a developing form of the state that, far from being transitional, appeared stable and capable of rapid expansion.

Jack Conrad's account of Cliff

The account of Cliff's theory of bureaucratic state capitalism given by Jack Conrad focuses on what he claims are its essential characteristics:

"Essentially the whole of Cliff's state capitalist thesis pivots on the notion that Soviet society developed not primarily through internal contradictions, but rather through contradictions, brought about by international competition: crucially competition in the sphere of arms. In point of fact the Soviet union is defined as capitalist because of its foreign policy impulses; as if form determines content and not the other way around" (Weekly Worker April 20).

I must say this is hardly how I would describe Tony Cliff's version of state capitalism, though it does identify one key component. The Soviet Union was never a separate system: it remained a constituent part of a world system. The development of the bureaucracy in the Soviet Union took place in the context of the failure to spread the revolution. Faced with external competition, the bureaucracy also developed in relation to the development of class conflict inside the Soviet Union. It was the decline of the organised working class that provided the vacuum within which the bureaucracy grew. The drive to accumulate expressed by the bureaucracy led to persistent conflict with workers and peasants.

In Cliff's account the Soviet system is described as containing class conflict and this conflict alone would account for an internal dynamic apart from international competition. Examples of state capitalist analysis applied to class struggle in the 'communist' states can be found in the 'Open Letter to the Party' written by Jacek Kuron and Karol Modzelowski in 1964 and in Class struggles in eastern Europe by Chris Harman.

Jack's development of this point is to portray the SWP as holding the position that the world system consists of more or less internally planned states whose military competition was the main manifestation of capitalist anarchy. This claim is at best dated, hinting at the position developed by Mike Kidron, and at worst a caricature. The theory of state capitalism does indeed point to the common nature of state planning in all modern states, but it does not imply that planning is consistent or that capitalist anarchy is only expressed between states. Cliff's analysis of the Soviet Union follows Trotsky in pointing to the irrationality of planning within the Soviet system. The plan, though intended to smooth out conflict and to organise production, became the focus of anarchy. Targets and the production norm became instruments of chaos, quality was sacrificed for numbers and irrationality became embedded in the rational process of planning. Internal planning, far from removing anarchy to the international plane, raised it to new heights within the most centrally planned states.

The theory of bureaucratic state capitalism advanced by the SWP clearly points to world capitalism as providing a primary drive to accumulate in the Soviet system. There is equally an identification of military competition as central. This is not an external or imposed account, as Stalin commented: "The environment in which we are placed at home and abroad compels us to adopt a rapid growth of our industry" (E H Carr, R N Davis Foundations of the planned economy, 1926-29, London 1969, p327). The Soviet Union, faced with increasing military threats, was indeed forced by military competition to compete, with Nazi Germany and later with the United States and others. The form competition took was not solely military and the entire 'communist' bloc had a more direct relationship with global capital through foreign trade. Though foreign trade was a tiny fraction of the Soviet economy, it became increasingly important and was always important to the east European states: Hungary, East Germany, Bulgaria and Czechoslovakia.

Capital and capitalism

The nub of Jack's criticism of the theory of state capitalism and Cliff's particular account of bureaucratic state capitalism is that, try as he might, Cliff cannot find capitalism in the particulars of the Soviet system. Hence Cliff resorts to 'abstraction' and locating the Soviet Union in the world system. This is an oddly undialectical criticism, as it suggests that something can be grasped in isolation from its context. This becomes plain if we examine Jack's analogy. He points out that if we ignore the particulars of Buckingham Palace it becomes "indistinguishable from 23 Railway Cuttings". Yet what makes Buckingham Palace what it is, is not the precise details found in a description of the building itself, but in its place in the UK's political system as the home of the monarchy. Taken out of context, Buckingham Palace becomes just another building; just as, taken out of context, the Soviet Union can be stripped of significance within a capitalist world economy.

Another charge against Cliff and the state capitalist analysis of the Soviet Union is that it never showed how the bureaucracy personified capital or the means by which capitalism operated as the dominant mode of production. To support this claim Jack provides us with his definition of "real capitalism": "Capitalism is generalised commodity production" (Weekly Worker April 20).

This definition mirrors that of Ernest Mandel, and a more complete discussion of this view and Chris Harman's response from a state capitalist perspective can be found in International Socialism No 41, December 1969-January 1970. The central claim made is that there can be no accumulation without the realisation of surplus value as profit and profit expressed in money terms. This claim allows for a crude reduction of Marx to a simple formula.

Let us compare this formulation with that of Marx. For Marx it is not the money or commodity form which defines the process: it is the central dynamic of self-expansion that Marx places at the heart of the different varieties of capital, its general form (see Capital Vol 1, pp146-155).

The attempt by Jack to provide a simple, one-sentence definition distorts Marx's original theory. For Marx capitalist production is inherently social: this is intrinsic to the cooperative use of labour on a large scale. Capitalists are described as "the trustees of bourgeois society" and management is described as doing the work of capitalists. Most famously Marx contemplates the amalgamation of capitals in a particular branch of industry or a whole society: "This limit would not be reached in any particular society until the entire social capital were united either in the hands of one single capitalist or in those of one single corporation" (Capital Vol 1, p627).

How could this description be accepted by Jack, who has specified generalised commodity production as an essential prerequisite?

The Soviet system concentrated capital so that the state became a single capitalist corporation, and it was 'managed' by the bureaucracy. The attempt to suggest that political and economic extraction of surplus labour are different in their fundamental form in the Soviet Union is to ignore the contradictory nature of capitalist production.

Inherently social and cooperative, production has always included a 'political' or managerial element. Political or managerial control was always a central component in the extraction of surplus value alongside the mechanism of the market.

The evolution of capital and state capital

State capitalism places the Soviet Union and the development of its particular characteristics in terms of the overall development of world capitalism. Jack attempts to ridicule this strength by describing Cliff's theory as a vulgar evolutionary reading of history. Cliff maintained that either the Soviet Union was socialist or it was capitalist. Jack's own position is a variant of bureaucratic collectivism, though Jack uses the oxymoronic term 'bureaucratic socialism' to describe it. Both Tony Cliff and Jack Conrad agree that the bureaucracy ruled the Soviet Union. The question is, in whose interests did the bureaucracy rule? Cliff is clear that the bureaucracy acts as a collective capitalist. Jack's position is that the Soviet Union was neither capitalist nor socialist: it was an "ectopic" social formation with "unique" laws of motion.

State capitalism developed as a response to the failure of the Trotskyist attempts to explain the expansion of Soviet-like systems on a world scale. A state capitalist analysis preserved the specificity of this form, described as bureaucratic state capitalism, whilst seeing it in the context of a world system that had a general tendency toward state capital. The world system was composed of bureaucratic state capital, monopoly state capitalism and various forms of state capital in what was described as the third world. State capitalism locates itself in the development of world capitalism and this is far from vulgar evolutionism.

The Soviet Union was a particular and prominent form of capitalism that developed generally between the end of World War I and the mid-1970s in a symbiotic relationship with the nation-state. This development occurred alongside the continued development of international structures, the transnational corporation and an international division of labour. The recession of the mid-1970s saw the end of the period of the domination of the active nation-state and ushered in a period of 'globalisation'. This shift in the relationship between capital and the state was such that the state was significantly weakened. This process affected all states, but the Soviet bloc and China were particularly affected. The same process saw the demise of traditional social democracy based on Keynesian state planning. Chris Harman has developed these ideas in a series of articles on the economic crisis and directly in an article in International Socialism (summer 1991), 'The state and capitalism today'.

This capacity to deal with current and past developments contrasts to Jack's hesitant approach, which is "tentative" and highly specific to the Soviet Union. The aim for Jack is a Soviet Capital, but he is also tempted to generalise, claiming that the 'communist' regimes of Mao, Pol Pot, Ho Chi Minh and Castro all failed because of the "material squalor" they inherited. This is itself an evolutionary view amounting to a claim that these societies were simply not ripe for socialism.

State capitalist analysis of the Soviet Union and the 'communist' bloc points to a specific period of world capitalist development. It also prepares for the next stage of capitalist development analysing the changing nature of the relationship between the state and capital in the context of current globalising tendencies.