"state capitalism"?

I posted this to the discussion list, but forgot to post it here:

I want to make a few comments on the Critique Social articles. I think that the Russian revolution article is well-thought out and makes good points. But the whole notion of “state capitalism” is a dubious one. The Soviet Union and China before the “reforms” were clearly class societies, with a very clear difference between the group of people who made decisions and the vast majority—workers—who carried them out. But they differed from capitalist societies in major ways. Capital was not accumulated—there was no build- up of monetary capital, and that, as Luxemburg emphasizes, is the aim of capitalist society. Capital, indeed power to make decisions, could not be inherited, as it can be in capitalist societies.

If we call these societies “state capitalist” we make a mystery out of the very real differences to the populations themselves between theses economies and capitalist ones. Look at the major difference in development in China and India over the last sixty years, from similar states of devastation at the end of WWII. Look at the total collapse of standard of living and culture after the dissolution of the Soviet Union in 1991.

There is no law of human nature that says that capitalism is the only form of class society that can exist in the present. What I would call “bureaucratic society” is a distinct form of class society different from capitalist society. But unlike capitalist society, such bureaucratic societies are incapable of prolonged existence (they can last decades, not centuries) and cannot become, as capitalism as, global systems. They are a “meta-stable” form of society that can greatly accelerate the industrialization of a country, but hold back the development of a fully industrialized economy and inevitably decay back to capitalism.

There can be no real doubt that the people of the Russian Empire, China and Cuba benefited materially from the Revolutions that gave rise to the bureaucratic regimes. State ownership of industry, even with bureaucratic, dictatorial rule, can objectively develop countries, and raise standards of living much faster than capitalism can. Would these populations have benefited far more if there had been in 1919-23 or 1945-49 a world socialist revolution, giving power to a democratically organized global working class? Of course. And in that case, their gains would be secure, while with the bureaucratic regimes, the future is a return to capitalism. And in the case of the ex-Soviet states, that inevitable return has meant the loss of a huge part of the gains made by the earlier bureaucratic regime.

We have to be able to explain control both why bureaucratic rule could industrialize more quickly than capitalism, and why, once industrialization occurs, it holds productive force back even worse than capitalism, as occurred in the Soviet Union after 1965.

In a related way, the article on perspectives for emancipation seems very vague on what is the alternative to, on the one hand capitalism and on the other bureaucratic rule. We have to start talking about what democratic control of a global economy could possibly look like. We have to talk concretely about how bureaucratic rule can’t run an industrialized society and why. The problem of socialism is not just that the ruling class does not want to give up power. The working class does not know why they have to take power and why they can’t just give their trust to better people to run the economy—why that simply can’t work. Why do workers have to run the economy democratically if the economy is not to collapse into ruin?

These are some of the questions we have to address in future articles.

Comradely greetings on May Day!

Eric

While I agree that "there is no law of human nature that says that capitalism is the only form of class society that can exist in the present" , I still think that what used to exist in the former USSR and similar regimes is better described as "state capitalism" rather than as some new bureaucratic class society. The main reason for this is the glaring similarity between the economic system there and here which you overlook : the existence of the wages system. This shows that the producer class are excluded from the ownership and control of the means of production and so have to sell their ability to work on the labour market in order to live. The producers had to do this in Russia even if there was practically only one big employer, the State (which of course put that employer in a very strong position over wages and working conditions). I would also argue that the wage-working class in Russia was exploited in the same way as in "the West", and as described by Marx in Volume I of Capital. In other words, they produced value including a surplus value over and above what they were paid as wages. And that this surplus value was accumulated as capital (ie value invested in production with a view to extracting more surplus value). The main difference between "Western" capitalism and the Russian state capitalism was in the way the members of the privileged exploiting class owned/controlled the means of production and benefited from this. In the West they had legal property titles to different parts of the productive apparatus and drew a legal income from this in the form of profits, dividends, interests, etc. In Russia they didn't have legal entitlements but they did control the State, which was the legal owner of most of the means of production there, and this put them in a position both to decide production and to allocate themselves a share of the surplus value extracted from the wage-working class, in the form of bloated "salaries" and various benefits in kind (big houses, holiday homes, etc).

I think """socialist""" countries could and can be defined as "state capitalism", not something as "bureaucratic society", i. e. the existence of profit making (both of State and private actors), waged labor, and so on. However I'd ask a question to Eric: do you have learn Bruno Rizzi (La bureaucratization du monde) or Shachtmann to talk of "bureaucratic societies"?

About Capitalism and State capitalism... we can also say that differences between two systems have reduced quite to disappear, so we can say today that yesterday's differences have collapsed into a unique Capitalist System, cause of new statalization of different economic activities in the "West" (i.e. Science and Research, Military, and so on), and cause of privatization of others activities in the "Socialist" countries.

While I have to admit I have never read Rizzi and it is a very long time since I read anything of Schachtman, what I was saying in the first post is very different than the idea of a bureaucratic state as an independent form of class society that could become world-wide and last for an historical epoch the way capitalism has. Bureaucratic rule is instead a transitional form that emerged only in predominantly agrarian economies. Because the process of industrialization can, in fact, be accelerated by a bureaucratically-directed economy, there was an objective potential for revolutions that gave rise to such societies. But bureaucratic rule can not develop an industrialized economy, which is far more complex than an industrializing one, even as rapidly as capitalism could in its periods of growth. So there was no objective potential for bureaucratic rule to take control of the industrialized capitalist states.

Within the context of the dominant global capitalist economy, it was only a matter of time before the bureaucratic class converted itself to a capitalist class and integrated the bureaucracy economies back into the capitalist one.

But to say that the bureaucratic economies and capitalism are the same thing ignores the primary characteristic of capitalism, which is the accumulation of monetary capital. As a capitalist famously said “US Steel does not exist to make steel—it exists to make money.” In the Soviet Union, bureaucrats could have a high lifestyle (relatively) but they could not accumulate billions or even far less. Billionaires suddenly came into existence only AFTER the collapse of the Soviet Union, when a section of the bureaucracy converted itself into capitalists by expropriating state property.

If we think capitalism basically is about investing resources to expand production, as Mondialist apparently argues, then we can’t differentiate capitalism from any other mode of production. All human society, at least during periods of growth, involves producing a surplus and using that surplus to expand production. What is unique about capitalism is converting that surplus into money, re-investing that money and then accumulating monetary capital. That does not happen in any other form of economy and it did not happen in the USSR or China prior to the “reforms” and privatization. Nor did the Soviet state accumulate monetary capital to any significant extent. The 4,000 tons of gold that the Soviet state held and that disappeared into Boris Yeltsin and friend’s Swiss bank accounts only amounted to a few tens of billions of dollars—not even a couple of hundred dollars per capita.

This discussion is closely related to the one about RL’s ideas on accumulation. The problem is not with characterizing the USSR, but with understanding the nature of capitalism. If we are not clear on what capitalism is, we can’t understand why it is failing now, and why it is doomed in the long run.

(By the way, just to be clear, of course China is today a capitalist society with a privately-held economy and a capitalist authoritarian party which just happens to have the ironic name of the Chinese Communist Party.)

If we think capitalism basically is about investing resources to expand production, as Mondialist apparently argues, then we can’t differentiate capitalism from any other mode of production.

No, this is not what I think. Capitalism is about the production of surplus value by wage workers and the accumulation of this value, expressed as money, as capital. It implies the exclusion of most people from the ownership and control of the means of wealth production so that they have to sell their ability to work for a wage or salary in order to live. This was the situation in the former USSR and similar countries. In fact, it was the policy of the government of these countries to try to extend wage-labour as rapidly and as widely as possible. Also, of course, money, banks, investment funds, etc, etc. existed in these countries. The main reason I would say they were capitalist was the existence of the wages system : wage-labour produces capital, irrespective of who personifies capital. The difference between capitalism in the West and capitalism in the USSR was merely in the nature of the group who personified capital. See, for instance, http://bataillesocialiste.wordpress.com/2008/06/14/the-good-old-class-struggle-1980/

This discussion is closely related to the one about RL’s ideas on accumulation. The problem is not with characterizing the USSR, but with understanding the nature of capitalism.

This is the really intriguing part of your come-back. Are you saying that the economies of the former USSR, etc did not suffer from the same flaw (who to buy the accumulated part of surplus value) as Luxemburg claimed to have detected in capitalism? And that they constituted a new part not foreseen by Luxemburg of the non-capitalist world that could provide a market for the capitalist part? Also, if their economies could overcome Luxemburg's problem and develop, should the people in underdeveloped parts of the world support the coming into being of such "non-capitalist" economies as being better for them than capitalism? In which case what becomes of Luxemburg's opposition to "national liberation" movements?

(By the way, just to be clear, of course China is today a capitalist society with a privately-held economy and a capitalist authoritarian party which just happens to have the ironic name of the Chinese Communist Party.)

Yes of course. But what was it between 1949 and the death of Mao?

“This is the really intriguing part of your come-back. Are you saying that the economies of the former USSR, etc did not suffer from the same flaw (who to buy the accumulated part of surplus value) as Luxemburg claimed to have detected in capitalism? “

Yes, that is right. The USSR clearly did not suffer from the realization problem because it did not accumulate capital. There was no unsold surplus, unused productivity, unemployment (or very little). There was no search for new markets.

The economic problems that the bureaucracy created were different—mainly the huge overdevelopment of means of production as opposed to means of consumption. Factories provided sources of power for the bureaucracy, so it was better to produce factories than to produce goods for workers. There are other economic problems created by the bureaucratic states, but none of them are due to capital accumulation, because it did not go on there.

“And that they constituted a new part not foreseen by Luxemburg of the non-capitalist world that could provide a market for the capitalist part?”

NO! They only provided a new market for world capitalism to the extent that the bureaucracy converted the economies into capitalist ones. The USSR, and pre-reform China, carefully insulated their economies from the capitalist world by the state monopoly on trade. Trade was restricted to a very great extent. That was essential, because capitalist trade with non-capitalist sectors leads to dis-accumulation in the non-capitalist sectors. It was only with the destruction of the Soviet Union that the economy and that of Eastern Europe was opened up for capitalist trade, which rapidly developed. But the state sector was destroyed and expropriated by the ex-bureaucrats and pals. The result was a drastic fall in the standard of living for the ex-Soviet workers.

China is a more complicated case because after China converted back to capitalism, the CCP has preserved a very large state manufacturing sector which over the past decade has indeed acted as a large market for world capitalism. But even here the state sector employment is rapidly shrinking. A couple of us are writing an article about this which will soon be ready.

“Also, if their economies could overcome Luxemburg's problem and develop, should the people in underdeveloped parts of the world support the coming into being of such "non-capitalist" economies as being better for them than capitalism? In which case what becomes of Luxemburg's opposition to "national liberation" movements?”

Clearly the USSR up to about 1970, China under Mao and Cuba did develop more rapidly than was possible under capitalism. But at a certain point, the bureaucratic society could not continue to develop even as fast as capitalism and started to hurt the workers standard of living even relative to capitalist societies. (It had always hurt the standard of living relative to the potential of the forces of production.)

But this has nothing to do with “national liberation” as nationalism. The revolutions in Russia, China and Cuba promised socialism, or in the Cuban case the overthrow of the dictatorship, not national liberation. The CCP certainly used their war against Japan to further the revolution, but the goal was always clear—at least what was promised.

Today, the choice in no part of the world is whether or not to support a revolution leading to a bureaucratic state. The CPs of the world are all pro-capitalist. The only revolution that can succeed today would be a global democratic socialist one. I think the struggle in Venezuela is symptomatic of this. If the movement there is ultimately bureaucratized, Venezuela will remain capitalist. If it becomes a true democratic socialist workers movement, it can serve as a spark to revolution elsewhere.

Yes, that is right. The USSR clearly did not suffer from the realization problem because it did not accumulate capital. There was no unsold surplus, unused productivity, unemployment (or very little). There was no search for new markets.

I agree that the USSR "did not suffer from the realization problem" but not that "it did not accumulate capital". Clearly it did. The wage-working class there produced value, only a part of which returned to them as wages. The rest -- surplus value -- went to those who effectively owned and controlled the means of production who sought to maximise this surplus and which was used by them to accumulate as capital as well as to give themselves a privileged lifestyle. Just as in the West, the difference being that whereas in the West there were many capitalist employers in Russia there was only one, the state.

I can see now why you are reluctant to concede that the USSR had a capitalist economy : to concede this would be to concede that Marx not Luxemburg was right about capital accumulation (ie that there is not an insoluble problem of where is the money to come from to buy that part of surplus value destined for accumulation). You are in effect saying that because the USSR "did not suffer from the realization problem" it cannot have been capitalist.

I would argue the opposite that because capitalism in the USSR "did not suffer from the realization problem" that showed that capitalism does not suffer from this problem. I know that, in this respect, I am not a "Luxemburgist" but it was her, not Marx, who argued that it did.

A whole section of Luxemburg's Accumulation of Capital is devoted to a discussion of the debate between the Russian Narodniks and "Legal Marxists" in which the first argued that an independent capitalist development in Russia was impossible (because of "the realization problem") and the second who argued that it was (because there was no realization problem). Lenin ("Ilyin" in Luxemburg's book) in his book The Development of Capitalism in Russia took up the same position as the Legal Marxists. Luxemburg said that the Narodniks had a point.

The independent development of capitalism in Russia (ironically initiated by Lenin after 1917) settled the issue. The Legal Marxists and Lenin were right. The Narodniks and Luxemburg were wrong.