The first edition of State Capitalism in Russia was written in 1947 and appeared in duplicated form. It was a time when Stalinism was at its peak: after Russia’s victory over Nazi Germany, after the Russian occupation of Eastern Europe and before the split between Tito and Stalin. Mao’s army was spreading quickly over China and was on the verge of total victory.
Forty two years later, in 1989, the Stalinist regimes collapsed in Eastern Europe and then in Russia. The death of the Stalinist economic, social and political order made it possible to test conclusively the validity of the 1947 theoretical analysis of this book. A post mortem reveals the sickness that affected a person when he was alive. The moment of death of a social order can also be its moment of truth.
The perception of the Stalinist regime as a socialist state, or even a degenerated workers’ state – a transitional stage between capitalism and socialism – assumed that it was more progressive than capitalism. For a Marxist this had to mean fundamentally that Stalinism was able to develop the productive forces more efficiently than capitalism. However, the deepening crisis in Eastern Europe and USSR cannot be explained except by reference to the slowing down of economic growth in the late 1970s and early 1980s. This led to stagnation and a growing gap between these countries and the advanced West.
In the USSR the annual rate of growth of gross national product was as follows: The first five year plan – 19.2 percent (probably an exaggerated figure); 1950-59 – 5.8 percent; 1970-78 – 3.7 percent. In 1980-82 it was down to 1.5 percent and over the last ten years there has been a negative rate of growth. Clearly then the productive forces were not developing efficiently.
If the productivity of labour had been more dynamic in Eastern Europe and USSR than in the West, there would be no reason for the rulers of these countries to turn to the market mechanisms of the West. If Eastern European economies were superior then the reunification of Germany, for example, should have seen the flourishing of East German industry in comparison with that of West Germany. In fact the economy of East Germany collapsed after unification. The number of workers employed in East Germany in 1989 was 10 million while today it has fallen to 6 million. Productivity of labour is only 29 percent of the Western level.  Thus the East German productivity level, though the highest in Eastern Europe, was still low compared with West Germany and the other advanced economies that it found itself openly competing with after 1989.
If the USSR was a workers’ state, however degenerated, then when capitalism assaulted it workers would have come to the defence of their state. Even Trotsky, the sharpest critic of Stalinism, always considered it axiomatic that if capitalism attacked the state the workers of the Soviet Union would come to its aid, however corrupt and depraved the bureaucracy dominating it.
But when it came to the crunch in 1989, the workers in Eastern Europe did not defend “their” state. If the Stalinist state had been a workers’ state one cannot explain why its only defenders were the secret police forces of the Securitate in Rumania and the Stasi in East Germany, nor why the Soviet working class supported Boris Yeltsin, the outspoken representative of the market.
If the regimes in Eastern Europe and USSR were post capitalist and in 1989 there was a restoration of capitalism, how was the restoration achieved with such astonishing ease?
The 1989 revolutions in Eastern Europe were remarkable for the absence of large scale social conflict and violence. Except for Rumania there was no armed conflict. In fact there were fewer violent clashes in East Germany, Czechoslovakia and Hungary during the fall of these regimes than there were between the police and striking miners in Thatcher’s Britain of the mid 1980s.
The transition from one social order to another is necessarily accompanied by the replacing of one state apparatus by another. The state machine was hardly touched anywhere in 1989. The Soviet army, the KGB and the state bureaucracy are still in place in Russia, as are many of their equivalents elsewhere. In Poland the military helped to promote the change from Polish state capitalism to a market based economy. General Jaruzelski, the architect of the 1981 coup and the Interior Minister and chief administrator of martial law General Kiszcak, played crucial roles in negotiating the round table with Solidarity and the formation of Mazowiecki’s coalition government. If a counter revolution had taken place, if a restoration of capitalism had taken place, there should have been a wholesale replacement of one ruling class with another. Instead we witnessed the continuity of the same personnel at the top of society. The members of the nomenklatura who ran the economy, society and state under “socialism” now do the same under the “market”.
The collapse of the Stalinist regimes in Russia and Eastern Europe created havoc in the world communist movement and amongst those on the left not armed with a state capitalist understanding. Millions of members and supporters of the communist movement across the world accepted the claim that the Stalinist regime embodied socialism. Millions who belong not to the communist movement but to the socialist movement, also accepted it. This did not only apply to those on the left of the movement. The right wing Fabians, Sidney and Beatrice Webb produced a book entitles Soviet Communism: a New Civilisation (1936) which was a massive panegyric to the Stalinist regime. For the majority of those who had identified Stalinism with socialism the collapse of these regimes led to a shattering ideological and moral crisis.
For example, in February 1990 Eric Hobsbawm, the guru of the British Communist Party, was asked: “In the Soviet Union, it looks as though the workers are overthrowing the workers’ state.” Hobsbawm replied, “It obviously wasn’t a workers’ state, nobody in the Soviet Union ever believed it was a workers’ state, and the workers knew it wasn’t a workers’ state.”  Why hadn’t Hobsbawm told us this 50 years ago, or even 20 years ago?
The extreme ideological disorientation of the British Communist Party is clearly demonstrated by the minutes of their Executive Committee meetings in the wake of the collapse. Nina Temple, General Secretary of the Party said: “I think the SWP was right, the Trotskyists were right that it was not socialism in Eastern Europe. And I think we should have said so long ago”
Chris Myant, International Secretary of the CPGB, went further. He said that the October Revolution was “a mistake of historic proportions ... Its consequences have been severe.” He went on to blame Lenin and the Bolsheviks for the Second World War, the Holocaust, the Gulag, the show trials, third world fascist dictatorships and the arms race, famine in Ethiopia, world poverty and the Vietnam war!
The ideological collapse of the British Communist Party in effect has led to its total disintegration. From some 60,000 in 1945, with very broad influence in the working class, it dwindled to a tiny group of a couple hundred, old and passive. Similar stories could be told about Communist Parties world wide.
The ideological crisis also very much affected the British Labour left. While in 1981 Tony Benn received some 3.2 million votes in the deputy leadership campaign for the Labour Party and probably had a couple of hundred thousand active supporters, in April 1995 the total number of individual members of the Labour Party who voted for the retention of Clause 4 was only 8,500. Of course, the bankruptcy of Stalinism was only one factor, although a significant one, in the decline of the Labour left.
Socialism is the child of the self activity of the revolutionary emancipation of the working class. Stalinism has been a constant drain on that self activity and the gravedigger of the revolution. The idea that Stalinism was socialism has now ended in calamity for those taken in by it.
I am convinced that the analysis of Stalinist Russia as state capitalist, as elaborated some 48 years ago, has proved its value and is a necessary rebuttal of Stalinism and the reaction to its decay.
This book was first distributed in duplicated form in June 1948, under the title The Nature of Stalinist Russia. An amended version was published in 1955 as Stalinist Russia: A Marxist Analysis. In 1964, it appeared as the first part of a larger work, Russia: A Marxist Analysis. The book was first published with the title State Capitalism in Russia by Pluto Press in 1974.
The main text of this edition is based on that of 1955 which differed in many ways from the original duplicated version (mainly in terms of chapter order, but also by the addition of material referring to the split between Yugoslavia and Russia in 1948, and amendments to the section dealing with crisis in state capitalism).
What is here published as the first appendix, on Trotsky’s view of Russia, was an integral part of the original text. It remains a devastating reply to those influenced by Ernst Mandel or Isaac Deutscher, who claimed to hold Trotsky’s analysis throughout the post war period.
The second appendix was written as a separate essay in 1948, just after the completion of the original text, and deals with the view that Russia is a new sort of class society, quite distinct from both socialism and capitalism. At that time the view was mainly associated with the American ex-Trotskyist Max Shachtman; it has been revived in recent years by various writers such as Rudolf Bahro, Antonio Carlo, Hillel Ticktin, and George Bence and Janos Kis (writing jointly under the pseudonym Rakovski). It showed signs of being the “common sense” of a whole section of the non Stalinist intellectual left. Cliff’s critique destroys both the old and the newer versions of the argument.
One final point. As the 1964 edition of Cliff’s classic work warned: “The reader unused to the conceptual scheme of Marxist theory may experience some difficulty in reading the following pages from cover to cover. Chapters V, VI and especially VII are liable to present some difficulty and should be left till the end.” It only needs to be added that these are nonetheless important chapters where Cliff grapples with the key issues facing those who want to fit Russia into Marx’s account of the dynamics of capitalism.
1. Financial Times, 12 May 1992
2. Independent on Sunday, 4 February 1990
Last updated on 27.7.2002