Louis C. Fraina

Revolutionary Socialism

Problems of State Capitalism

IMPERIALISTIC State Capitalism emphasizes the fact of the state, of government, being an economic agency of the ruling class. State and capitalist industry, government and ruling class, become one and indivisible. This was not completely the case in the era of competitive Capitalism. The influence of persisting feudal remnants and bourgeois class immaturity, compelled the state to adopt a policy, so to say, of maintaining the “balance of power” between rival groups of the ruling class itself, a state of things determining the earlier manifestations of the workers’ struggles; and precisely because of these divisions the state was occasionally in the position of asserting its supremacy as against the diversity of ruling class interests. Today, the conditions of Imperialism have created a bloc of ruling class interests, an amalgam of Capitalism that functions through the state and which makes the state completely and consciously the agency of dominant Capitalism and the groups it has forced into its service. State Capitalism, accordingly, is not an abandonment of Capitalism: it is a strengthening of Capitalism – Capitalism at the climax of its development.

The larger part of Socialist propaganda and practice in the past have been making for State Capitalism, often euphoniously and misleadingly designated as State Socialism. Whenever the state nationalized an industry, whenever the state imposed its control over industry, the Socialist majority naively accepted this as an abandonment of Capitalism, as a symptom of the growing importance of Socialism and the transformation of Capitalism into Socialism. Simple souls! What was passing was not Capitalism, but the competitive laissez faire era of Capitalism; what came was not Socialism nor an “installment” of Socialism, but imperialistic State Capitalism, the most brutal and typical expression of capitalist power and supremacy. Socialist propaganda, including largely Socialist thought, did not adapt itself to the development of Capitalism, did not adapt itself to the new conditions and requirements arising out of this development. Socialism is not state ownership or management of industry, but the opposite: Socialism annihilates the state. Not even should Socialism conquer the state and maintain itself, proceeding to nationalize industry, would that be Socialism: when Socialism conquers, its first act is to abolish the state, its parliamentary regime and forms of activity. Socialism, it must be emphasized, annihilates the state; industry is not transformed into the state, but state and industry, as now constituted, are transformed into proletarian communism, functioning industrially and socially through new administrative norms of the organized producers, and not through the state. [1]

Revolutionary Socialism rejects the bourgeois policy of state ownership, rejects State Capitalism as a phase of Socialism, and insists upon proletarian management through industrial communism.

The conditions of State Capitalism emphasize this revolutionary policy; the antagonism between state and Socialism is intensified, compelling the separation of Socialism from an industrial policy of the imperialistic state, and in this sense directly promotes the revolution.

State Capitalism is not Socialism and never can become Socialism. It may promote the coming of Socialism, but only indirectly through intensifying the antagonism of the proletariat toward the bourgeois state, and by compelling Socialism to adopt a policy of industrial communism. The “nationalization” of industry is a Socialist measure, a measure making for Socialism, only when introduced as a temporary measure of the dictatorship of the proletariat, the first act of which is to lay a dictatorial hand upon the forces of production in the process of crushing the old regime and introducing the communist system of Socialism. State Capitalism makes for Socialism in this sense, as with Imperialism, that it climaxes the development of Capitalism and broadens and deepens class antagonisms; but as Imperialism must necessarily be struggled against for its overthrow, so State Capitalism is a factor in the coming of Socialism by arousing a new and more intense struggle against the whole of bourgeois society. The institutional developments of Capitalism do not bring, they never can bring, Socialism; they function in the process simply as they develop the proletarian struggle against these institutions and all institutions of capitalist society. State Capitalism is not Socialism and never can become Socialism precisely because it is a state proposition; Socialism is determined in a struggle to annihilate the state as a necessary instrument of revolution and as a means of developing the new communist society which negates the “state” in the bourgeois sense.

State Capitalism accentuates and sharpens class divisions, by arraying against the industrial proletariat all other class groups merged and expressed in the new state. As against the general reactionary mass of ruling class interests, the proletariat stands as a class thrown by the very conditions of its existence against the unified capitalist regime. State Capitalism regulates and directs capital and labor; it seeks to realize the Utopia of peace between the classes, of the abolition, or at least suspension, of the class struggle. [2] This regulation may, in a measure, prove onerous to the capitalist, but is accepted as the necessary condition for the progressive promotion of his interests; it proves in large measure onerous to the proletariat, and as it cannot be merged in State Capitalism the proletariat is driven to revolt against the state and Capitalism as unified in the new scheme of things.

The policy of revolutionary Socialism is neither to oppose nor to advocate the coming of State Capitalism. Either policy would be futile, and reactionary. State Capitalism is a fact and Socialism must adjust itself to the fact. Socialism organizes the aggressive struggle against State Capitalism as the synthetic expression of the whole capitalist regime. The problem of revolutionary Socialism is to develop the consciousness and class power of the proletariat, to throw the proletariat against Capitalism in struggle after struggle determined by the immediate and ultimate requirements of revolutionary action. The antagonism between State Capitalism and Socialism is emphasized by sharply distinguishing between the two and by the action of the proletariat itself. The policy of State Capitalism of regulating labor, and in this way to prevent if not actually prohibit strikes, rouses the action of the workers; a strike under these conditions becomes a strike directed against the state; a strike, accordingly, becomes a class act of political importance. More and more it becomes clear that strikes are not simply directed against the employer or against the state, but against the unified capitalist regime as organized in State Capitalism, and that it is this regime against which the struggle must be consciously directed. The process of state regulation is met by the Socialist process of arousing in the proletariat the consciousness of its control of industry. The proletariat sets itself against the state, the state against the proletariat; the struggle becomes more intense and general, the antagonisms more acute and irreconcilable. As the state imposes its control over industry, the proletariat challenges that control, contests the authority and force of the state, and itself gradually acquires the power of control over industry. The challenge under the impulse of events develops into the Social Revolution.

The Social Revolution becomes a fact when the proletariat has acquired sufficient consciousness of its control over industry to establish that control in practice. The proletariat, accordingly, develops a state within the state, develops the norms of the future Socialist society within the structure of Capitalism. The central factor in this is the industrial organization of the proletariat, partly actual through industrial unions, partly ideological through the conception of the necessity of overthrowing the state and substituting for it a society of communistically organized producers, – the proletariat functioning in industry and becoming aware of its strategic power. [3] It is this proletarian control, organized and unorganized, that constitutes equally the force for the overthrow of State Capitalism and its social system, and the basis of the Socialist society of the future.

A lure that will be offered the workers is the struggle to “democratize” State Capitalism through Socialist parliamentary activity. This constitutes in a new form the old conception of “growing into” Socialism, – transforming State Capitalism into Socialism by “democratizing” the government, placing it in the hands of “the people.” This policy is equally condemnable as strategy and tactics, – as strategy, it dispenses with the necessity of overthrowing the state as an indispensable phase of the Social Revolution; as tactics, it strengthens the state and weakens the proletariat by obscuring the fact that its power resides in control of the industrial process. Moreover, State Capitalism is fundamentally and necessarily undemocratic; it cannot be democratized, it must be abolished by the proletarian revolution. The coming of Socialism is a process of violent and implacable struggles, not a dress parade of amicable transformation. The concept of “transformation” in practise doesn’t transform Capitalism, it transforms the proletarian movement into a caricature of Socialism and a prop of Capitalism. The proletariat is concerned, not indirectly with the forms of administration of State Capitalism, but directly in developing its forces for the immediate struggle against and the ultimate overthrow of State Capitalism. Socialism is not a struggle for democracy; it is a struggle for proletarian power. The only democracy compatible with the requirements of the proletariat is the democracy of communist Socialism, a democracy arising out of the total destruction of bourgeois democracy. The only immediate democracy that concerns the proletariat is the democracy of its dynamic struggles, the democracy of its own industrial unions and mass action.

Revolutionary Socialism rejects “co-operation” with the capitalist, in industry as in politics. One phase of State Capitalism is the policy of trying to maintain industrial peace, and this is attempted alternately by coercion and cajolery. One means of cajolery is an arrangement by which the workers may “co-operate” with the employers in the consideration of matters affecting a particular industry or factory. [4] The state tries to compel this co-operation, making it an impliedly compulsory affair, and it becomes the function of the government to bring the workers under the sway of the capitalist in ways that strike at the independent action of the proletariat. Autocracy in government is supplemented by a sham democracy in industry, by apparently giving the workers a share in the regulation of their conditions, but which actually is an illusion, as the power of the employers sets it at naught. The purpose is to run the militant spirit of the workers into the ground, to disorganize their independent action.

A development of this character is the proposal, recently adopted by the British government, for the formation of National Industrial Councils, to be established in each industry by the government and which are to consist of employers and employees, acting under the control of the state. This is an attempt at general and definite “class co-operation” which would inevitably react against the proletariat. Moreover, it is in a measure prompted by the hope that through this means British capital may cajole labor to accept lower wages after the war on the plea that it is necessary to meet the new competition. These councils would be dominated by the capitalist interests, as against the workers would be arrayed state and employers and their joint power; they would strengthen the reactionary influence of the bureaucracy within the craft unions, and as a matter of fact many British union officials are enthusiastic about the proposal, while there is considerable opposition developing among the workers and the more radical unions. Finally, such industrial councils would obviously and dominantly be used by the skilled minority against the unskilled workers, and this is undoubtedly one of the driving purposes behind the proposal. In its attitude toward the workers, State Capitalism adopts and emphasizes the policy of “divide and conquer.” All proposals for a sham industrial democracy are useless and dangerous; they are schemes directed at the independence and action of the proletariat, aiming to subordinate the proletarian to the capitalist. They foster the illusion of a measure of industrial democracy under Capitalism granted by grace of the capitalist: the only measure of industrial democracy that the proletariat can secure under Capitalism must be conquered by itself, maintained and extended through its industrial unions, strikes and general mass action, which impose its will upon employer and government.

The revolutionary proletariat, accordingly, rejects equally the lure of “democratizing” the government of State Capitalism and the lure of a “share” in the regulation of labor conditions through the fraudulent pretense of “industrial democracy.”

The proletariat uses all its action, industrial and parliamentary, to develop its class power and strike at State Capitalism, and to secure an immediately partial and ultimately complete control of industry.

State Capitalism emphasizes the fact that Capitalism is not transformed into Socialism by the development of bourgeois institutions, but by the development of proletarian consciousness and class power out of which arise the norms of the institutions of the oncoming communist society.

It is only because the meaning of political action has been misunderstood or disguised by petty bourgeois Socialism that its function is conceived as being the “democratizing” of State Capitalism into Socialism. Political action, in the Marxian sense, is the general revolutionary action of the proletariat. An industrial revolt, a mass strike, are as much a political act as participation in the parliamentary activity of the state. There is no more complete proof of the petty bourgeois character of the dominant Socialism than its narrow interpretation and practice of political action. [5] In the actual practice of the Socialist movement, political action has become a dead and deadening parliamentarism, – the “parliamentary idiocy” bitterly satirized by Marx, “that fetters those whom it infects to an imaginary world, and robs them of all sense, all remembrance, all understanding of the rude outside world.” Parliamentarism is simply one phase of political action; political action is a process which, in the revolutionary sense and as a factor in the overthrow of Capitalism, is and includes all forms of militant class action of the proletariat. Socialist political action is a process of revolution; it is in this sense that “all class struggles are political struggles,” political in the sense that the class struggle is directed against the existing social system and its governmental expression. The conquest of political power is not the parliamentary penetration of the state, but the developing class power of the proletariat that yields it social supremacy. Parliamentarism is a phase, and not at all a dominant phase, of revolutionary political action; it is utterly reactionary when it separates itself, as it has done, from the general action of the proletariat, when it seeks to dominate, instead of being dominated by, the general struggles of the workers. Under the conditions of State Capitalism, parliamentarism alone and of itself becomes even more incomplete than in the past, because State Capitalism carries with it the collapse of parliaments as a real governing force.

The trend of recent years emphasizes the fact of parliamentary impotence, and State Capitalism strengthens this trend. As government more and more adapts itself to the requirements of regulation of industry, the parliament breaks down in trying to cope with the new problems. The constituent and geographical basis of parliamentary government disqualifies it from performing industrial functions. The complexity of forces expressed in State Capitalism, independent of the necessity of a centralized autocracy in the struggles of Imperialism, renders parliamentary control futile and demoralizing. [6] The powers of the state centralize in the administration, while formally they may remain legislative. The regulation of industry becoming the dominant function of the state, experts and extra-parliamentary commissions are put in charge of this function of regulation, responsible to the administrative power, and not to the parliament. Parliaments may talk, but they do not act; they have no real control over events and the functions of government, becoming convenient forms for maintaining the illusion of democracy. This tendency toward an administrative autocracy is strengthened by the belligerent character of Imperialism, but fundamentally it is an expression of the industrial facts of State Capitalism, and necessary even if military considerations were excluded.

The capitalist state must not be strengthened but weakened by Socialist parliamentary criticism and action; the state must be undermined and dragged down by the developing class power and struggles of the proletariat by all the general means of action at its disposal.

Parliamentarism showed itself utterly futile in the European crisis, except in the revolutionary criticism of a few rebels such as Liebnecht, Rühle, and Morgari. The supreme utility attached to parliamentarism was a strong factor in destroying the morale and taming the fighting energy of Socialism. Even had the Socialists had the will to organize actual opposition to the war, what could they have done? Parliament had no real control over events; all the Socialist parliamentarians could have done was to vote against the war credits. The unions had no initiative, the parliamentary movement having always played the dominant role. A General Strike? But a General Strike implies a conscious and virile industrial proletariat and organization, aware of its power and accustomed to act without being subservient to a parliamentarymad bureaucracy. The Social Democracy had always conceived the unions as an auxiliary of minor importance, denying them any decisive function. Moreover, the dominant unions had become imperialistic. The actual sources of power were centralized in an administrative autocracy, and only revolutionary mass action could have undermined these powers, – that general mass action out of which revolutionary struggles arise, but which was bitterly opposed by parliamentary, petty bourgeois Socialism.

Parliamentarism may become an expression of proletarian class power: it can never become class power itself.

As an expression of the general struggles of the proletariat, as a means of developing proletarian consciousness, as an integral phase of proletarian struggle as a whole, parliamentarism is necessary and of value. But it must relate itself to other forms of struggle; it must abandon the policy of social-reformism. The revolutionary Socialist does not abandon the struggle for immediate demands to the opportuniist; on the contrary, the final and only answer to the misleading “immediate demands” of the opportunist is for the revolutionary Socialist to concentrate on immediate demands that imply an aggressive struggle against Capitalism and that are phases of the developing Social Revolution.

The revolutionary proletariat and Socialism, accordingly, organize against State Capitalism, against the bourgeois state and parliamentary government, preparing to substitute in their place an industrial, communist administration by and of the proletariat.


1. The growth of state ownership in Europe and the complete lack of any developing Socialism, compelled a pondering of the problem. In a lecture on Socialism versus the State (reprinted in the New Review, August 1914), Emile Vandervelde, prominent opportunist and now a social-patriot, said: “We see, with Guesde, as with Marx and Engels, that there is no confusion possible between Socialism and state ownership. They will have nothing to do with the capitalist state, except to fight it. If they wish to master it, it is only that they may abolish it. At most, they would use it during a transitory period of working class dictatorship.” The latter statement is urtrue; Marx recognized, and the proletarian revolution in Russia confirms the fact, that the proletariat cannot seize hold of the bourgeois state and use it for purposes of the revolution; the state is destroyed, and the dictatorship of the proletariat functions through a new “state,” as in the Soviets, which is simply the organized workers and peasants, and no other class in society.

2. President Wilson, during the early days of his first administration, used the phrase, “The Constitution of Peace,” as covering a policy of class harmony. The harmony did not materialize; it was during this administration that the bloody struggles occurred at Ludlow, the Mesaba Range, and Passaic through strikes crushed ruhlessly by armed force. Moreover, not even the President’s declarations against Big Capital were put into practice; the administration was compelled to accept the fact of the dominance of Big Capital, the basic factor in any program of State Capitalism.

3. Capitalism is the last expression of Class Rule. The economic foundation of Class Rule is the private ownership of the necessaries for production. The Social structure, or garb, of Class Rule is the political State – that social structure in which Government is an organ separate and apart from production, with no vital function other than the maintenance of the supremacy of the ruling class. The overthrow of Class Rule means the overthrow of the political State, and its substitution with the Industrial Social Order, under which the necessaries for production are collectively owned and operated by and for all the people ... Industrial Unionism is clear upon the goal – the substitution of the political State with the Industrial Government ... While Class Rule casts the nation, and, with the nation, its government, in the mold of territory, Industrial Unionism casts the nation in the mold of useful occupations, and transforms the nation’s government into the representations from these ... Industrial Unionism is the Socialist Republic in the making; and the goal once reached, the Industrial Union is the Socialist Republic in operation. – Daniel De Leon, Industrial Unionism.

4. Scheme after scheme is being tried by the capitalist class to insure a satisfied and subject class of workers. Profit-sharing, welfare work, and other schemes having proven miserable failures, and democracy novr being the slogan of the day, “industrial democracy” is being used instead. As political democracy is simply a form of authority of the bourgeoisie over the workers, so this “industrial democracy” perpetuates the authority of the employers over the workers. This “industrial democracy” assumes the grandiloquent iorm of a “republic of labor.” And, peculiarly, this “republic” is being introduced by the Rockefeller interests, which ruthlessly refuse to tolerate unionism or any independent action of the workers. The “republic” will be introduced in the plants of the Standard Oil Co. of New Jersey on April 1. It means that the workers will select, by secret ballot, a committee of their own number “who will treat with the directors of the company in all matters concerning health, conditions, wages and situation of labor.” The New York Mail says: “While in the last analysis the plan fails to give the men real control over their own working conditions, it has been tried in Colorado with success and has given the men there a practical labor government, maintained by themselves.” And: “In Colorado, once the scene of labor troubles of magnitude, the Standard Oil Companies have found the new plan has assured a co-operation which has almost automatically ended serious disputes.” The “republic of labor” leaves the workers a disorganized mass, wasting their energy in the election of committees and making recommendations which the directors don’t have to accept. It cannot and will not end the struggle between labor and capital. At the best, it will simply increase the privileges of a small group of skilled workers as against the great mass of the unskilled. The only republic of labor that the proletariat will consider is an industrial communism organized and managed through the industrially organized producers, functioning in a new Socialist state that will supplant the bourgeois political state. – Louis C. Fraina, The Republic of Labor, The New International, April 1918.

5. The climax of this emasculation of Socialist political action was reached at the Indianapolis convention of the Socialist Party, which, in the notorious Section 6, Article II, defined political action as “participation in elections for public office and practical legislative and administrative work along the lines of the Socialist Party platform.” This utterly reactionary and unscientific measure was repealed at the St. Louis Convention in 1917, but the practice and policy it defines have not yet in practice been completely repealed.

6. Our governmental machinery – city, state and national – is not geared to deal with serious economic problems. It breaks down when a demand is made on it for aid in regulating big economic forces. It does not know how to compel economic and social efficiency. – New York Tribune, February 25, 1917. Moreover, the arch-Imperialist London Times recently proposed, as an after-the-war measure, the reconstruction of the House of Commons, favoring the abolition of political representation based on geographical divisions, and insisting upon elections by trades, industries and occupations. Of course, such a reconstruction would proceed on a capitalistic basis.


Last updated on 14.10.2007