State capitalism
State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are nationalized as state-owned enterprises. The definition can also include the state dominance of corporatized government agencies or of public companies in which the state has controlling shares. The term has been used as a pejorative by Marxists, liberals and neoliberals. However, it has also served as a programmatic label for developmentalist and neomercantilist projects in reaction to
imperialism.
A state-capitalist country is one where the government controls the economy and essentially acts as a single huge corporation, extracting surplus value from the workforce in order to invest it in further production. This designation applies regardless of the political aims of the state, even if the state is nominally socialist. Some scholars argue that the economy of the Soviet Union and of the Eastern Bloc countries modeled after it, including Maoist China, were state capitalist systems, and Eastern and Western commentators alike assert that the current economies of China and Singapore also constitute a mixture of state-capitalism with private capitalism.
The label "state capitalism" is used by various authors in reference to a private capitalist economy controlled by a state, i.e. a private economy that is subject to economic planning and interventionism. It has also been used to describe the controlled economies of the Great Powers during World War I. Alternatively, state capitalism may refer to an economic system where the means of production are privately owned, but the state has considerable control over the allocation of credit and investment. This was the case with Western European countries during the post-war consensus and with France during the period of dirigisme after World War II. Other examples include Singapore under Lee Kuan Yew and Turkey,
as well as military dictatorships during the Cold War and fascist regimes such as Nazi Germany.
The phrase "state capitalism" has also come to be used to describe a system where the state intervenes in the economy to protect and advance the interests of large-scale businesses. Noam Chomsky, a libertarian socialist, applies the term "state capitalism" to the economy of the United States, where large enterprises that are deemed by "the powers that be" as "too big to fail" receive publicly-funded government bailouts that mitigate the firms' assumption of risk and undermine market laws, and where private production is largely funded by the state at public expense, but private owners reap the profits. This practice is contrasted with the ideals of both socialism and laissez-faire capitalism.
There are various theories and critiques of state capitalism, some of which existed before the Russian October Revolution of 1917. The common themes among them identify that the workers do not meaningfully control the means of production and that capitalist social relations and production for profit still occur within state capitalism, fundamentally retaining the capitalist mode of production. In Socialism: Utopian and Scientific, Friedrich Engels argued that state ownership does not do away with capitalism by itself, but rather would be the final stage of capitalism, consisting of ownership and management of large-scale production and communication by the bourgeois state. He argued that the tools for ending capitalism are found in state capitalism. In Imperialism, the Highest Stage of Capitalism, Lenin claimed that World War I had transformed laissez-faire capitalism into monopolist state capitalism.
Origins and early usage
In Socialism: Utopian and Scientific, Friedrich Engels described state ownership, i.e. state capitalism, as follows:If the crisis revealed the incapacity of the bourgeoisie any longer to control the modern productive forces, the conversion of the great organizations for production and communication into joint-stock companies and state property shows that for this purpose the bourgeoisie can be dispensed with. All the social functions of the capitalists are now carried out by salaried employees. The capitalist has no longer any social activity save the pocketing of revenues, the clipping of coupons, and gambling on the stock exchange, where the different capitalists fleece each other of their capital. Just as at first the capitalist mode of production displaced the workers, so now it displaces the capitalists, relegating them to the superfluous population even if not in the first instance to the industrial reserve army.
Engels argued that the tools for ending capitalism are found in state capitalism, further writing:
But neither the conversion into joint stock companies nor into state property deprives the productive forces of their character as capital. In the case of joint-stock companies this is obvious. And the modern state, too, is only the organization with which bourgeois society provides itself in order to maintain the general external conditions of the capitalist mode of production against encroachments either by the workers or by individual capitalists. The modern state, whatever its form, is then the state of the capitalists, the ideal collective body of all the capitalists. The more productive forces it takes over as its property, the more it becomes the real collective body of the capitalists, the more citizens it exploits. The workers remain wage-earners, proletarians. The capitalist relationship isn't abolished; it is rather pushed to the extreme. But at this extreme it is transformed into its opposite. State ownership of the productive forces is not the solution of the conflict, but it contains within itself the formal means, the key to the solution.
Engels described state capitalism as a new form or variant of capitalism. In 1896, following Engels, the German Social Democrat Wilhelm Liebknecht said: "Nobody has combated State Socialism more than we German Socialists; nobody has shown more distinctively than I that State Socialism is really State capitalism."
It has been suggested that the concept of state capitalism can be traced back to Mikhail Bakunin's critique during the First International of the potential for state exploitation under Marxist-inspired socialism, or to Jan Wacław Machajski's argument in The Intellectual Worker that socialism was a movement of the intelligentsia as a class, resulting in a new type of society he termed state capitalism. For anarchists, state socialism is equivalent to state capitalism, hence oppressive and merely a shift from private capitalists to the state being the sole employer and capitalist.
In Imperialism, the Highest Stage of Capitalism and Imperialism and World Economy, both Vladimir Lenin and Nikolai Bukharin, respectively, had similarly identified the growth of state capitalism as one of the main features of capitalism in its imperialist epoch. In The State and Revolution, Lenin wrote that "the erroneous bourgeois reformist assertion that monopoly capitalism or state-monopoly capitalism is no longer capitalism, but can now be called "state socialism" and so on, is very common". During World War I, using Lenin's idea that tsarism was taking a Prussian path to capitalism, the Bolshevik Nikolai Bukharin identified a new stage in the development of capitalism in which all sectors of national production and all important social institutions had become managed by the state—he termed this new stage state capitalism. After the October Revolution, Lenin used the term state capitalism positively. In spring 1918, during a brief period of economic liberalism prior to the introduction of war communism and again during the New Economic Policy of 1921, Lenin justified the introduction of state capitalism controlled politically by the dictatorship of the proletariat to further central control and develop the productive forces, making the following point:
Reality tells us that state capitalism would be a step forward. If in a small space of time we could achieve state capitalism, that would be a victory.
Lenin argued the state should temporarily run the economy which would eventually be taken over by workers. To Lenin, state capitalism did not mean the state would run most of the economy, but that state capitalism would be one of five elements of the economy:
By the left
As a term and concept, state capitalism has been used by various socialists, including anarchists, Marxists, Leninists, left communists, Marxist–Leninists and Trotskyists.Anarchists
Perhaps the earliest critique of the Soviet Union as state capitalist was formulated by the Russian anarchists as documented in Paul Avrich's work on Russian anarchism.The Russian anarchists' claim would become standard in anarchist works. Of the Soviet Union, the prominent anarchist Emma Goldman wrote an article from 1935 titled "There Is No Communism in Russia" in which she argued:
Such a condition of affairs may be called state capitalism, but it would be fantastic to consider it in any sense Communistic Soviet Russia, it must now be obvious, is an absolute despotism politically and the crassest form of state capitalism economically.
When speaking about Marxism, Murray Bookchin said the following:
Marxism, in fact, becomes ideology. It is assimilated by the most advanced forms of state capitalist movement — notably Russia. By an incredible irony of history, Marxian 'socialism' turns out to be in large part the very state capitalism that Marx failed to anticipate in the dialectic of capitalism. The proletariat, instead of developing into a revolutionary class within the womb of capitalism, turns out to be an organ within the body of bourgeois society Lenin sensed this and described 'socialism' as 'nothing but state capitalist monopoly made to benefit the whole people'. This is an extraordinary statement if one thinks out its implications, and a mouthful of contradictions.
While speaking about Leninism, the authors of An Anarchist FAQ say:
Rather than present an effective and efficient means of achieving revolution, the Leninist model is elitist, hierarchical and highly inefficient in achieving a socialist society. At best, these parties play a harmful role in the class struggle by alienating activists and militants with their organisational principles and manipulative tactics within popular structures and groups. At worst, these parties can seize power and create a new form of class society in which the working class is oppressed by new bosses.