State capitalism

Marxist Dictionary

The form that the organization of capital takes in decadent capitalism. It materializes the concentration of finance capital – the union of banking and industrial capital – and the monopolies within and around the state. Socially it promotes the integration of the remnants of the former exploiting classes with the bourgeoisie and the state bureaucracy. Politically it is based on the end of civil society and the integration of broad layers of the petty bourgeoisie as middle cadre in the state apparatus and big business.

Origins

It’s not that the bourgeoisie has no fatherland. It is that the “fatherland”, the national state, is theirs, it is they who are organized in the form of the fatherland in front of the rest of society.

Imperialism will promote a reorganization of the bourgeoisie. Little by little, capitalist competition is being replaced by small groups of large companies born of mergers and gigantic concentrations of capital. These companies, until then the owners of the banks, become the property of the banks. And they all merge with the state in what is nothing but a form of socialization, that is, the organized orientation of all society towards a single objective: the accumulation of capital. This socialization also meant a “socialization of the concept of capitalist” through, in principle, the generalization of the joint-stock company and the emergence of a “managerial” bourgeoisie.

What does the economic phenomenon of the joint-stock company ultimately mean? It represents, on the one hand, the unification of a number of small capitals into one large capital for production. It represents, on the other hand, the separation of production from capitalist possession. In other words, it shows that the capitalist mode of production has been won a double victory: but still on a capitalist basis.

What, then, do the statistics cited by Bernstein, according to which a growing number of shareholders are participating in capitalist enterprises, mean? The statistics show precisely this: today a capitalist company does not correspond, as before, to a single capitalist owner but to a series of capitalists. Consequently, the economic notion of “capitalist” no longer corresponds to an isolated individual. The industrial capitalist of today is a collective person, composed of hundreds, even thousands of individuals. The category of “capitalist” has become a social category. It has been “socialized”, within the framework of capitalist society.

Rosa Luxemburg. Reform or Revolution, 1901

This process, which starts in the early stages of imperialism and becomes more widespread and radical throughout capitalist decadence, changes the structure and composition of the bourgeoisie: the boundaries between the old landowning classes, the captains of industry, the bankers and the high state bureaucracy will become blurred. Much of the bourgeoisie will no longer have the legal ownership of large industry but will become shareholders in financial consortia. Others not even that. In a good part of the new states resulting from national liberation during decadence, starting with Turkey, the first country to reach it in the imperialist epoch, the new national bourgeoisie will be made up mainly of military personnel, high bureaucrats, managers, bankers and leaders of the very political apparatus of the new state… from which apparatus they will generate business bourgeoisies. The incomes that maintain and encourage the contemporary bourgeoisie all over the world, have in many cases lost their direct relation with a concrete part of the production that they had when the bourgeoisie was formed by individual factory owners. The ways in which rents are distributed within the ruling class are at this point so diverse and imaginative that they are sometimes classified simply as “corruption”.

Although it may seem distant today, it is something very similar to what was experienced during the 1914 war by the Spanish ruling class or, a little later, by the Argentinean ruling class, the matrix of today’s state capitalism in which the state bourgeoisie is described as an amalgamation of “castes”, “oligarchs”, “apparatchiks” and “power networks”.

This transformation of competition into a monopoly is one of the most important, if not the most important, phenomena of the economy of capitalism in recent times. (…)

(…)Competition becomes a monopoly. From there remains a gigantic progress of socialization of production. In particular, the process of inventions and technical improvements is also being socialized.

This has nothing to do with the old free competition of dispersed employers who did not know each other and who produced for an ignored market. Concentration has reached such a point that an approximate inventory can be made of all sources of raw materials (for example, iron ore deposits) in a country, and even, as we shall see, in several countries and throughout the world. Not only is this calculation made, but gigantic monopolistic associations take over these sources. A rough calculation of market capacity is made, which the above-mentioned associations “share out” by contract. Skilled labor is monopolized, the best engineers are recruited, and the railways and the media – the railways of America and the shipping companies in Europe and America – are taken over by the monopolists. Capitalism, in its imperialist phase, leads fully to the socialization of production in its most varied aspects; it drags the capitalists, against their will and against their conscience, to a certain new social regime, of transition from absolute freedom of competition to complete socialization (…)

We are in the presence, not only of the competitive struggle between large and small companies, but also between backward and technically advanced establishments. We are faced with the throttling by the monopolists of all those who do not submit to the monopoly, to its yoke, to its arbitrariness (…)

The development of capitalism has reached such a point that, although mercantile production still “reigns” as before and is considered the basis of the whole economy, in reality it is already broken and the main profits go to the “geniuses” of the financial machinations. These machinations and scams have their basis in the socialization of production; but the immense progress of humanity, which has reached that socialization, benefits… the speculators. Later on we will see how, “based on this,” the petty-bourgeois and reactionary critique of capitalist imperialism dreams of a return to “free,” “peaceful,” and “honest” competition. (…)

The suppression of the crises by the cartels is a fable of the bourgeois economists, who put all their efforts into embellishing capitalism. On the contrary, the monopoly that is created in various branches of industry increases and aggravates the chaos inherent in all capitalist production as a whole. (…)

The dispersed capitalists come to form a collective capitalist. By keeping a current account for several capitalists, the bank apparently performs a purely technical operation, only auxiliary. But when this operation grows to gigantic proportions, it turns out that a handful of monopolists subordinate the commercial and industrial operations of the whole of capitalist society, placing themselves in a position – by means of their banking relations, current accounts and other financial operations – first to know exactly the situation of the various capitalists, then to control them, to influence them by extending or restricting credit by facilitating it or making it more difficult, finally to decide entirely on their fate, to determine their profitability, to deprive them of capital or to allow them to increase it rapidly and in immense proportions, etc. (…)

At the same time, the personal union of the banks with the largest industrial and commercial companies is developing, as it were, and the merger of the one and the other by means of the possession of the shares, through the entry of the directors of the banks in the supervisory boards (or directives) of the industrial and commercial companies, and vice versa (…) The “personal union” of the banks and the industry is completed with the “personal union” of the one and the other with the government. The positions on the supervisory boards,” writes Jeidels, “are voluntarily entrusted to well-known personalities, as well as to former state officials, who can facilitate to a considerable extent (!!) relations with the authorities. (…)

The result is, on the one hand, a growing merger, or to use N.I. Bukharin’s apt expression, the pooling of banking and industrial capital, and, on the other, the transformation of banks into institutions of a truly “universal character”. (…)

In commercial and industrial circles one often hears complaints against the “terrorism” of the banks (…) In the end, it is the same complaints of small capital against the yoke of big capital, only in this case the category of “small” capital corresponds to a whole consortium! The old struggle between small and large capital is being reproduced at a new and immeasurably higher level of development (…)

Concentration of production; monopolies that derive from it; the merger or the joining of banks with industry: such is the history of the emergence of financial capital and what that concept entails. (…)

The management of the capitalist monopolies inevitably becomes, in the general conditions of mercantile production and private property, the domination of the financial oligarchy (…) [While] the apologists of imperialism and finance capital do not expose but conceal and embellish the mechanism” of the formation of the oligarchies, their procedures, the amount of their “licit and illicit” income, their relations with the parliaments etc., etc.

Lenin. Imperialism, the highest stage of capitalism, 1916

Stalinism and state capitalism

State capitalism is a general phenomenon in all states throughout the period of capitalist decadence. In Russia first and in its satellites later, it took a particular and characteristic form, however. The counter-revolution had been riding on precisely these tendencies in Russia, embodying itself in the managing layer of a state capitalism which, because of the effect of isolation and civil war, was no longer counterbalanced by the political power of the organized workers. This managing layer would capture the state and the Bolshevik party with a program of defense and subordination of class objectives to the national capital it represented. Its formula “socialism in one country”, first enunciated in 1924 and imposed as a dogma of faith in 1928, meant nothing more than the subordination of the interests of the world revolution to national capital, which the post-revolutionary state had laboriously concentrated.

When the counterrevolution finally takes full power in 1928, it will give free rein to all the trends generated by that national capital. Tendencies that were the same as those of any other national capital in capitalist decay: imperialism, nationalism, militarism, pauperization of the working masses…

There’s an important difference though. The new Russian bourgeoisie did not emerge organically from the transformation of business ownership driven by finance capital. It was born of the state itself. And it was not just any state: it was the state that had been formed to defend the revolution during the civil war. It was therefore a bourgeoisie that justified itself politically as a continuation of the October revolution and would therefore try by all means to sell its particular form of state capitalism as socialism. Moreover, its origin would unite it around the capture and domination of the party of the revolution, which would completely remake itself in its image and likeness, preserving only its external symbols and massacring the generation of revolutionaries that had been the protagonists of October.

State capitalism and totalitarianism

The totalitarian trend is a direct consequence of the concentration of state and capital. During the counterrevolution, the state tries to absorb all the bourgeois “civil society” and to destroy or subordinate the spaces of “workers democracy” created during the ascending capitalism by the II International. This is the central objective of the rise of fascism.

Fascism is not only a system of repression, violence and police terror. Fascism is a particular state system based on the extirpation of all elements of proletarian democracy in bourgeois society. The task of fascism is not only to destroy the communist vanguard, but also to keep the whole class in a situation of forced atomization. For this it is not enough to physically exterminate the most revolutionary layer of the workers. All free and independent organizations must be crushed, all the bases of support of the proletariat destroyed and the results of three quarters of a century of work by social democracy and the trade unions annihilated. Because it is on this work that the Communist Party ultimately rests.

Leon Trotski, “The Turn of the Communist International and the Situation in Germany,” 26 September 1930

Exactly the same thing will be done by the Stalinist counterrevolution in Russia first and then in the countries integrated into its imperialist bloc after the second great war. The whole tissue of workers’ socialization will be nipped in the bud and replaced, as in the fascist states, by parodies dependent on the ministries and watched from within by the state’s terrorist apparatus. Moreover, in the European democracies, Socialist Parties and Communist Parties will be fundamental to produce a “democratic” version with similar results. Not only the trade unions, which had developed a trajectory of integration into the state by themselves since the beginning of the imperialist era, but also cultural associations, cooperatives, neighborhood groups… will be taken, controlled and integrated into formal state bodies on which they will end up depending ideologically and financially.

The state will not stop its rampage in the organizations that brought together the workers. The political expressions of particular factions of capital and the petty bourgeoisie – parties, associations, research centers… – everything that liberal democracy had articulated under a framework that emulated the market, representing competition/conflict of interests and ideas, came to be defined from the new functions of the state. They became more or less autonomous organs of the state.
The analogy of state capitalism is no longer the “perfect competition” between parties and interests whose aggregation is beyond their powers, but the “table” on which the large monopolies “plan” and “agree”. As a consequence, “social groups” -trade unions, employers, etc.- are no longer expressions of the different fractions of society vis-à-vis the state, but rather expressions of the state vis-à-vis the different layers of society. This is particularly clear in the case of the trade unions, which are recognized as monopolists of the labor force on the model of the energy companies or heavy industry. The same is true of territorial administration. For example, until then the difference between an elected official and a governor or government delegate is that the former represented the citizens vis-à-vis the state and the latter represented the state vis-à-vis the elected officials. Under state capitalism, elected officials become representatives of the state in the territory, and are held accountable even legally. Only in moments of acute political crisis will the “systemic” social fabric be called into question, if not redirected by a petty bourgeoisie in revolt.

But this does not negate, on the contrary, the main tendency: state capitalism consciously seeks to instrumentalize and occupy all political and social space, integrating when possible expressions of discontent and silencing and repressing them when necessary. This is clearly seen in the space of “opinion”, where the “pluralism” that once represented the difference of interests and the subjects of political conflict, now serves, above all, to affirm “in diversity”, the consensus of power around the management of the system.

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