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(en) Anarkismo.net - State Capitalism vs. Libertarian Socialism by Wayne Price - NEFAC

Date Sat, 01 Jul 2006 11:15:55 +0300

Part 3 of The Nature of Stalinist Societies
The Soviet Union and similar states are analyzed as State
Capitalist. These states had commodity production, the exploitation of
the workers, and internal competition. It is not enough to collectivize
property; it is necessary to abolish the capital-labor relationship. The
program of state socialism invariably produces state capitalism in practice.
Kropotkin and Engels on State Capitalism
As early as 1910, Peter Kropotkin declared, “The anarchists
consider... that to hand over to the state all the main sources of
economic life--the land, the mines, the railways, banking, insurance,
and so on--as also the management of all the main branches of
industry, in addition to all the functions already accumulated in its
hands (education, ... defense of the territory, etc.) would mean to
create a new instrument of tyranny. State capitalism would only
increase the powers of bureaucracy and capitalism.” (1975, pp.
109-110) The program of state socialism would in practice produce
state capitalism.

Karl Marx’s comrade Friedrich Engels predicted the growth of
giant corporations, trusts, and capitalist monopolies, which would
plan ever larger sections of the economy. The tasks of the
bourgeoisie will be increasingly carried out by hired bureaucrats.
“All the social functions of the capitalist are now performed by
salaried employees. The capitalist has no further social function than
that of pocketing dividends....” (1954, pp. 385-386; the whole of
Anti-Duhring had been gone over by Marx; this section was
included in Engels’ pamphlet Socialism: Utopian and Scientific.)
These trends culminate in state capitalism, wrote Engels:

“The official representative of capitalist society--the state--will
ultimately have to undertake the direction of production.... But the
transformation...into state ownership does not do away with the
capitalistic nature of the productive forces... The modern state... is
essentially a capitalist machine, the state of the capitalists, the ideal
personification of the total national capital. The more it proceeds to
the taking over the productive forces, the more does it actually
become the national capitalist, the more citizens does it exploit. The
capitalist relation is not done away with. It is rather brought to a
head.” (Engels, 1954, pp. 384--386)

Both Kropotkin and Engels believed that nationalization of industry
by the existing capitalist state (reformist state socialism) was not
socialism but state capitalism. However, Engels believed that
nationalization by a new, workers,’ state (revolutionary state
socialism) would lead to classless, stateless, communism. “The
proletariat seizes political power and turns the means of production
in the first instance into state property. But, in doing this, it abolishes
itself as proletariat, abolishes all class distinctions and class
antagonisms, abolishes also the state as state.” (Engels, 1954, p.

Kropotkin also wanted stateless communism but he did not believe
in the possibility of a workers’ state. He thought that centralized,
statified, property--even if created by a workers’
revolution--would lead only to state capitalism. Instead of the state,
he proposed that the workers take power through “...the
organization in every township or commune of the local groups of
producers and consumers, as also the regional, and eventually the
international, federations of these groups.” (1975, p. 110) This
program has historically been called “libertarian
socialism”--meaning antiauthoritarian or self-managed
socialism, anarchist or close to anarchism.
The Theory of State Capitalism
From the beginning of the Soviet Union, anarchists accused the
Bolsheviks of creating state capitalism. But it was Marxists who
developed state capitalism as a theory to apply to the Soviet Union
and similar states. This included the work of the anti-statist,
anti-Leninist, Council Communists (Mattick, 1969). Most of the
theorists of state capitalism were dissident Trotskyists. They rejected
Trotsky’s belief that Stalinist Russia remained a
“workers’ state” so long as it kept nationalized property.
These included the “Johnson-Forest Tendency” of C.L.R.
James (1998) and Raya Dunayevskaya (2000); Tony Cliff (1970), a
theorist of the British Socialist Workers Party and the U.S.
International Socialist Organization; and Cornelius Castoriadis
(1988) of the Socialisme ou Barbarie group in France. In the U.S.A.,
the Revolutionary Socialist League, of which I was a member,
evolved from dissident Trotskyism to anarchism, meanwhile
developing a theory of state capitalism (Hobson & Tabor, 1988). So
did a split-off from us which wished to remain Trotskyist (Walter
Daum, 1990).

Other socialists disagreed, even those who accepted that the
Communist Party-managed states were not workers’ or socialist
states but had an exploitative ruling class. Max Shachtman, theorist
of “bureaucratic collectivism,” wrote, “...The Stalinist
social system is not capitalist and does not show any of the classic,
traditional, distinctive characteristics of capitalism.... There
are...many embarrassments in conceiving of a capitalist state where
all capitalists are in cemeteries or in emigration....Nowhere can an
authentic capitalist class, or any section of it, be found to support or
welcome Stalinism, a coolness which makes good social sense from
its point of view since it is obvious...that Stalinism comes to power
by destroying the capitalist state and the capitalist class.” (1962,
pp. 23--24).

Similarly, Michael Albert, a founding theorist of “participatory
economics” (“Parecon”), rejects “state
capitalism” as a description of these societies, in favor of
“coordinatorism.” It would be a mistake, he claims, “to
say that the old Soviet economy was capitalist despite there being no
private ownership of the means of production....The absence of
owners and the elevation of central planners, local managers, and
other empowered workers to ruling status is what characterized
these economies as different. “ (2006, p. 158)

However, whatever their differences among themselves, theorists of
the Soviet Union as capitalist did not deny that the Communist
Party-ruled economies were nationalized and collectivized. They
were aware that the ruling class was a collective bureaucracy and not
a stockholding bourgeoisie. This is why Cliff made a point of calling
the Soviet Union “bureaucratic state capitalism,” not just
“state capitalism,” and why Castoriadis called his theory
“bureaucratic capitalism.” They insisted that what most
mattered was that the capital-labor relationship existed in the
Stalinist states. The relation between the workers and the bosses
remained the same in essentials. The workers were exploited by the
ste, not private corporations, but the state was, in Engels’ terms,
“the ideal personification of the total national capital...the
national capitalist.”

The old Soviet Union may be examined from one of two class
perspectives. From a ruling class perspective, the differences
between the shareholding bourgeoisie and the collectivist
bureaucracy are all-important. The bourgeoisie does not care, after
all, whether its wealth and power are taken away by the workers or
by totalitarian bureaucrats. Either way, it loses its wealth. So it hates
both alternatives and regards them as essentially the same:
“socialism.” This is also the viewpoint of those who regard
the Soviet Union as non-capitalist: either “socialist” or a
“workers’ state” or a new class society. It is a
fundamentally bourgeois viewpoint.

From a working class viewpoint, however, what matters is the
relation of the workers to the boss class--the method of their
exploitation. If this method is the same--if, as Engels said, “the
capitalist relation is not done away with”--then the system is the
same. How the rulers divide up the surplus value among themselves,
after pumping it out of the workers, is a secondary question. It is
only a state capitalist theory which starts from this proletarian

The classical Marxists who wrote about state capitalism, beginning
with Marx and Engels, did not expect traditional capitalism to
actually evolve into a stable form of state capitalism. There were too
many conflicts and contradictions within capitalism to overcome.
But what happened in the Soviet Union was that a working class
revolution overthrew a weak bourgeoisie. The workers were unable
to go ahead to socialism--due to the poverty of the country, the
failure of the revolution to spread, and the authoritarianism of the
Bolsheviks. Yet the bourgeoisie was too weak to restore its
traditional rule. Instead the Bolshevik state became the nucleus of a
new, statified, capitalism. This became a model for a few other
countries, such as China, where the national bourgeoisie was too
weak to hold on but the working class was not strong enough to
establish workers’ and peasants’ self-management. After
decades, the internal conflicts of state capitalism became too great. It
fell apart and restored the old capitalism.
In What Ways Was the Soviet Union Capitalist?
Contrary to Shachtman, the Soviet Union, Eastern European states,
China, other Asian states, and Cuba, did show the essential
“characteristics of capitalism.” To begin with, they were
commodity-producing economies. All noncapitalist societies
produced useful goods for consumption (of the tribesmembers, or
the serfs and lords, or the slaves and masters, or--someday--of the
freely associated producers under socialism). Only capitalism
produces commodities for sale. This includes the most important
commodity, the ability of the workers to work, by hand and brain:
the commodity labor-power. In the Soviet Union, the workers were
not simply given food and clothes, as were slaves, or soldiers, or
prisoners. Management paid them for their labor time--paid them in
money. Then they went to the shops to buy consumer
commodities--commodities which workers had produced. These
consumer goods were commodities being sold on a market. The
laboring ability which the workers sold to the bosses was also a
commodity. Labor power was sold at its value, its worth in
maintaining and reproducing the workers and their families. But the
workers worked for longer hours than was necessary merely to
reproduce the value of their wages. The worth of the commodities
produced in the extra hours they worked was the surplus value, the
basis of profit. The workers produced a greater value than they
themselves were, which is to say they were exploited in the capitalist

The operation of such markets, whether in consumer goods or in
labor, are quite distorted compared to some model of a perfectly
unhindered free-market of classical capitalism. But markets are also
distorted under the monopoly capitalist conditions of today’s
Western capitalism (what the bourgeois economists call
“imperfect competition”). Markets were also distorted under
the conditions of totalitarian Nazi Germany, where labor was
intensely regulated and the government was integrated with big
business--and yet there remained a stockholding, profit-making,
bourgeoisie. Markets would be even more distorted under the model
of state capitalism as developed by Engels. Buying and selling
continues--distorted markets are still markets.

Advocates of noncapitalist analyses of the Communist Party-run
countries claim that these countries are devoid of competition. They
are supposedly run by “central planning” and therefore
cannot be capitalist, it is argued. But even if this were true, the
Soviet Union or Cuba would be just one firm in a capitalist world
market. Under Stalin, it is true, the Soviet Union made an effort to
be as self-sufficient as possible. But even then there was always
some international trade; it could not be totally cut off. At other
times, these regimes bought and sold much on the world market and
borrowed international loans. When urging Mexican businesspeople
to invest in Cuba, in 1988, Fidel Castro told them, “We are
capitalists, but state capitalists. We are not private capitalists.”
(quoted in Daum, 1990, p. 232)

Besides trade, the Soviet Union always had to build up military
forces to defend the wealth of its rulers from other nations’
rulers. While intercontinental nuclear missiles were not traded
among the major powers, they were “compared,” both in
firepower and in cheapness. In short, there were international
competitive pressures on the “firm” of the Soviet Union to
produce as much as possible, to exploit its workers as much as
possible, and to accumulate as rapidly as possible--all capitalist
processes. (These points were emphasized by Cliff, 1970. The
weakness of his theory is that he only looked at such international
pressures and therefore denied internal sources of competition which
drove the internal market and the law of value. This makes his
theory essentially a third system/new class analysis, with its
concomitant weaknesses, as discussed in Part 2. )

Despite its monolithic appearance, the Soviet Union had a great deal
of internal competition for scarce resources. Factories competed with
factories, enterprises with enterprises, regions with regions, and
ministries with ministries. The central plan, such as it was, was
developed under the competing pressures of different agencies, each
seeking as many resources as possible and as low production goals
as possible. Once developed, the plan was more a wish list than the
controlling guide to the national economy. The plan of the Soviet
Union was never, ever, fulfilled--not once! Torn by internal
conflicts, and needing to hold down the workers, the ruling
bureaucracy could not integrate the economy in a harmonious
fashion. Lacking workers’ democracy, it was incapable of truly
planning the economy.

The competitive aspects of the economy were officially built in.
Firms made legally binding contracts with each other for raw
materials and productive machines, which were paid for by credits
(money) in the central banks. Therefore, not only were consumer
goods and labor power commodities, but means of production were
also commodities, bought and sold among firms. Also, collective
farms were not state farms but were legally cooperatives. They
produced food for the market (this is aside from the permitted private
plots which produced a disproportionate share of food). That was the
legal market. Additionally the whole system was tied together by a
vast system of black and gray markets, of illegal and semi-legal
trading. Individuals did extra work, factories made deals with each
other through special expediters, there was organized crime, and the
wheels were greased throughout the society by off-the-books
trading. The bureaucratic management would have collapsed
without this very real wheeling and dealing, that is, market
(capitalist) relations. (This can be studied in detail in any book on the
Soviet Union’s economy. For Marxist analyses, see Hobson &
Tabor, 1988, and Daum, 1990. Daum feels that “state
capitalism” gives a false impression that there was a centralized
single capital; he prefers “statified capitalism.” )

At this point I could give a more detailed critique of various theories
of state capitalism, but I lack the space. What is significant is that
most of the “state capitalist” theorists have some version of
libertarian socialism--either socialist-anarchism or autonomist
Marxism. But Cliff (1970), of the International Socialist Tendency,
still advocated a “workers’ state,” a nationalized and
centralized economy, a “vanguard party,” and other elements
of the Leninist and Trotskyist tradition--and the same is true of
Daum (1990) of the League for the Revolutionary Party. Regardless
of intentions, these concepts reflect the capital-labor relationship: the
relationship between order-givers and order-obeyers, between
exploiters and exploited, between mental and manual labor.

The third-system/new-class theorists reject “state
capitalism” because the Soviet Union-type of system is ruled by
a collectivist bureaucracy (or “coordinator class,” as per the
Pareconists). They correctly note its roots in the class of salaried
professional managers under traditional capitalism. As I have
demonstrated in this and the previous part, Marx and Engels had
foreseen this as part of the development of capitalism. As Engels
said, “All the social functions of the capitalist are now performed
by salaried employees.” But these remain the social functions of
capitalism! Under traditional capitalism, this bureaucratic middle
layer is a part of the system. It is created under corporate/monopoly
capitalism in order to serve capitalism, to help pump surplus labor
out of the workers. The bourgeoisie would not hire it otherwise. The
managers are the higher servants of the bourgeoisie and yearn to join
it. The upper layers usually do, being rewarded with stock options,
insider knowledge, and such.

However, there is a radical section of the professional bureaucracy
which dreams of replacing the bourgeoisie altogether. This is what
they did in the Soviet Union and similar countries. Anarchists and
certain Marxists had discussed the bureaucrats’ role in the
Soviet Union. Rather than using stock ownership, they divided up
the surplus wealth by official position, but they remained a capitalist
class for all that. They served as the agents of capital accumulation
through the exploitation of the workers. In Engels’ terms, they
managed “the modern state, a capitalist machine, the state of the
capitalists, the ideal personification of the total national capital.”
As a class they are themselves what Marx called the bourgeoisie,
“the personification of capital.”

Whether the Soviet Union, etc. were capitalist or noncapitalist is a
question which has been settled by history. After 1989, the Soviet
Union and its satellites changed over to traditional capitalism. Had
this been the transfer of power from one class to an alien class (from
the workers or the third-system new class to the bourgeoisie), then
we should have expected a terrible upheaval, a revolution or
counterrevolution. Instead, the old bureaucracy morphed into the
new bourgeoisie, going from one capitalist form to another. There
were popular upheavals, but topdown maneuverings managed to
avoid a workers’ revolution. The internal competitive tensions
within the bureaucracy permitted it to transform itself peacefully into
another variety of capitalist rule. (For the workers there were both
gains--expanded freedoms--and losses--shredding of the social
services.) This was even clearer in China, where there still exists the
old bureaucracy, the Communist Party’s dictatorship, the
Marxist-Leninist ideology, the “People’s Army,” and a
great deal of nationalized industry. Yet the state has plainly adopted
traditional capitalism and eagerly participates in the world capitalist
Political Implications of State Capitalism: Libertarian Socialism
Collectivized property is necessary--is essential--but is not sufficient,
if socialism is to mean the emancipation of the working class and all
oppressed. Instead, the revolutionary workers must COMPLETELY
be an end to order-givers and order-takers, to those who live well
while others do the work, to those who manage and those who do
the physical labor. This means doing away with the state, an
institution over and above the rest of society. The same goes for the
utopia (in the bad sense) of a centralized planned economy which
won’t need a state (or so we are told by Engels and Marx)
because it will be the “management of things and not of
people,” as if these could be distinguished in practice. The
program of state socialism--even if phrased in a revolutionary
manner (as did Engels and Marx)--would invariably produce state
capitalism in reality. Instead, all the tasks of a classless society must
be carried out through the self-management of all the working
people, in which everyone participates, democratically deciding and
planning social and economic life, at all levels and in all ways.


Albert, Michael (2006). Realizing Hope; Life Beyond Capitalism.
London/NY: Zed Books.

Castoriadis, Cornelius (1988). Political and Social Writings; Vol. I,
1946--1955. (David Ames Curtis, trans. and ed.). Minneapolis:
University of Minnesota Press.

Cliff, Tony (1970). Russia; A Marxist Analysis. London:
International Socialism.

Daum, Walter (1990). The Life and Death of Stalinism; A
Resurrection of Marxist Theory. NY: Socialist Voice Publishing.

Dunayevskaya, Raya (2000). Marxism and Freedom; From 1776
until Today. NY: Humanity Books.

Engels, Frederick (1954). Anti-Duhring; Herr Eugen Duhring’s
Revolution in Science. Moscow: Foreign Languages Publishing

Hobson, Christopher Z., & Tabor, Ronald D. (1988). Trotskyism
and the Dilemma of Socialism. NY/Westport CN: Greenwood Press.

James, C.L.R. (1998). “The USSR is a Fascist State
Capitalism.” The Fate of the Russian Revolution; Lost Texts of
Critical Marxism, Vol. I. (Sean Matgamna, ed.) Pp. 319--324.
London: Phoenix Press.

Kropotkin, Peter (1975). The Essential Kropotkin (Emile Capouya &
Keitha Tompkins, eds.). NY: Liveright.

Mattick, Paul (1969). Marx and Keynes; The Limits of the Mixed
Economy. Boston: Extending Horizons Books/Porter Sargent

Shachtman, Max (1962). The Bureaucratic Revolution; The Rise of
the Stalinist State. NY: The Donald Press.

Written for www.Anarkismo.net
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