Chris Harman


From Trotsky to state capitalism

(Summer 1990)

From International Socialism 2:47, Summer 1990.
Transcribed by Christian Høgsbjerg.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

Beyond Perestroika
by Ernest Mandel
London 1989, £10.95

The USSR today displays all the symptoms of a society entering a prolonged period of social and political turmoil. Such periods always represent a great challenge but also offer great opportunities to the revolutionary left internationally. But to meet them the left has to have a clear understanding of what is happening and why. It has to have a revolutionary theory to guide its revolutionary practice.

There are a number of different theoretical analyses of the USSR on the revolutionary left. Ernest Mandel is one of the best known proponents of the theory that sees it as a degenerated workers’ state, Tony Cliff of the theory that sees it as bureaucratic state capitalist. The appearance in the last few months of Mandel’s book Beyond Perestroika in an English translation and of Tony Cliff’s State Capitalism in Russia in French translation offers the opportunity to contrast the two analyses and to see which best comes to terms with current realities.

Both Mandel and Cliff come from the Trotskyist tradition. Cliff was a member of the Fourth International in Palestine and Britain during the 1930s and 1940s before playing a leading role in the Socialist Workers Party of Britain (previously the International Socialists), of which he is still a leading activist. Mandel has been a leading figure in the Fourth International since the mid 1940s.

Both started off by accepting the same analysis of Russia, that elaborated by Trotsky in the 1930s. But in the late 1940ws developments in Eastern Europe led to a period of intense discussion in the international Trotskyist movement which drew Cliff and Mandel in different theoretical directions.

Trotsky had argued in the 1930s that the bureaucracy in the USSR was a ‘caste’. It was a stratum of society which had been able to take advantage of the isolation of the Russian Revolution (to which it then contributed!), the poverty of the country and the weariness of the masses to concentrate power and privilege in its own hands. But it was only able to do so by balancing between the working class and bourgeois and petty bourgeois forces at home and internationally:

The Soviet (it would be more accurate to say, the anti-Soviet) bureaucratism is the product of the social contradiction between the city and the village; between the proletariat and the peasantry; between the national republics and districts; between the different groups of peasantry; between the different layers of the working class; between the different groups of consumers; and finally between the Soviet state and its capitalist environment ...Rising above the toiling masses, the bureaucracy regulates all these contradictions ... [1]

It was ‘not an independent class but an excrescence upon the proletariat’. [2] To this extent it could be compared with the trade union bureaucracy in the West: it betrayed the working class, it used the working class for its own ends, but was still to some degree dependent on the working class. It did not have its own independent roots in the ownership of property or in production, but was a parasitic outgrowth based on contradictions in the realm of consumption. As such it impeded the development of society, without substituting any new development based on its own class interests. ‘A tumour can grow to a tremendous size and even strangle the living organism, but a tumour can never become an independent organism.’ [3]

Because of this, it served to retard the development of the country. ‘The further unhindered development of bureaucratism must lead inevitably to the cessation of economic and cultural growth, to a terrible social crisis, and to the downward plunge of the entire society.’ [4]

In his early formulations of the analysis Trotsky drew the conclusion that the bureaucracy could still be brought to order peacefully by a resurgent working class:

The recognition of the present Soviet state as a workers’ state not only signifies that the bourgeoisie can conquer power only by means of an armed uprising, but also that the proletariat of the USSR has not forfeited the possibility of subordinating the bourgeoisie to it, of reviving the party again, and of regenerating the regime of the dictatorship – without a new revolution, with the methods and on the road to reform. [5]

But he was not afraid to change his account in the light of the harsh experience of what Stalinism in power meant. In October 1933 he wrote, ‘The bureaucracy can be compelled to yield flower into the hands of the proletarian vanguard only by force.’ [6]

The Revolution Betrayed, written three years later, was absolutely adamant that it was not possible to reform either the party or the state:

All indications agree that the further course of development must inevitably lead to a clash between the culturally developed forces of the people and the bureaucratic oligarchy. There is no peaceful outcome to this crisis. No devil has ever cut off his own claw. The Soviet bureaucracy will not give up its positions without a fight. The development obviously leads to the road of revolution. [7]

This revolution, he argued, was a ‘political’ not a social revolution, although it would be a political revolution with ‘deep social consequences’. [8]

Trotsky’s attitude to the bureaucracy hardened even more in the last four years before he was murdered. He insisted that it was a counter-revolutionary force, a product of the pressure of the bourgeoisie on the working class. But he still insisted it was a not a class. Powerful sections of the bureaucracy wanted to turn themselves into a class, but they could only do so by establishing private property of industry – and fear of the working class stopped them doing so. ‘It [the bureaucracy] only preserves state property to the extent that it fears the proletariat ...’ [9]

Just as the working class could not establish a healthy workers’ state without revolution, the bureaucracy could not establish itself as a ruling class without a full blooded counter-revolution. The bureaucracy seemed very powerful, Trotsky argued. But in reality its power could not last for long, ‘Bonapartism by its very essence cannot long sustain itself: a sphere balanced on the point of a pyramid must invariably roll down on one side or the other.’ [10]

One of his arguments against the ‘new class theory’ developed by Shachtman and others in 1939 was that as revolutionary socialists we would ‘place ourselves in a ludicrous position if we fixed to the Bonapartist oligarchy the nomenclature of a new ruling class just a few years or even a few months before its inglorious downfall’. [11]

In 1940 he spelt out the argument even more forcefully. The outbreak of war would constitute an increase in all the contradictory pressures within the USSR and there would be no chance of the bureaucracy being able to continue its balancing act. ‘In case of a protracted war accompanied by the passivity of the world proletariat the internal contradictions in the USSR not only might but would have to lead to a bourgeois-Bonapartist counter-revolution.’ [12]

The problem Trotsky’s followers had to face after the war was that, far from falling apart or even weakening, the Stalinist bureaucracy was stronger than ever. Its armies had extended the boundaries of the USSR and had established regimes virtually identical to the USSR in Eastern Europe – a feat soon to be copied by Mao Zedong’s army in China. If the USSR was a degenerated workers’ state, then logically these regimes must be some form of workers’ state as well. But what then happened to Trotsky’s contentions that the Stalinist bureaucracy was ‘counter-revolutionary’ – or to the general Marxist contention that revolution from below was needed to destroy capitalism?

The revolutionaries of the Fourth International wrestled with these contradictions in Trotsky’s analysis through 1947–9. Some (including both Cliff and Mandel briefly) attempted to fit the facts into the old analysis: Russia was a degenerated workers’ state, but the Eastern European states bourgeois dictatorships (a position still ostensibly held by Lutte Ouvriere in France). But soon two positions crystallised, both in their own way different to Trotsky’s.

The first was to use much of the phraseology of Trotsky’s formulations, but to accept that Stalinism could be a revolutionary force despite itself, and to proclaim the East European states ‘deformed workers’ states’. This was the position taken by Mandel, Pierre Frank, Michel Pablo and others.

It was this path which led some people very easily away from the spirit of Trotsky’s theory. Pablo, for instance, concluded that if the Stalinist parties could be revolutionary, then humanity faced ‘hundreds of years of deformed workers’ states’ and the job of revolutionaries was to help in their creation by entering the Stalinist parties. [13] Meanwhile, Isaac Deutscher, a pre-war Trotskyist who had opposed the formation of the Fourth International, argued that the growth of industry inside the USSR would automatically lead Stalinism to reform itself. Again, the logic was to abandon independent revolutionary politics. Deutscher wrote in 1953 that ‘the effect of the Berlin revolt was objectively counter-revolutionary and not revolutionary’ because it had contributed to ‘Beria’s downfall’ at a time when ‘Beria was one of those who stood for democratic reform’. [14] He later transferred his trust to Khrushchev, writing of the uprisings of the 1950s that:

Eastern Europe (Hungary, Poland, and East Germany) ... found itself on the brink of bourgeois restoration at the end of the Stalin era; and only Soviet armed power (or its threat) stopped it there. [15]

Meanwhile, a section of Pablo’s supporters backed the crushing of the Hungarian revolution by Russian troops. Of course, such people weren’t necessarily uncritical of Stalinism or of Khrushchev. Right to the end of his life in 1968 Deutscher continued to argue for a democratic version of socialism. But the important point was that he saw the Russian bureaucracy, acting from above, as an agent that could take us part of the way there.

The mainstream of the Fourth International managed to avoid such extreme conclusions. But they did tend to see the Russian bloc as a progressive historical force. Mandel, for example, would argue that the growth rate of the Russian economy alone was enough to demonstrate the superiority of its economy over any of capitalism (forgetting Trotsky’s prognosis nearly 20 years before of the imminent collapse of that economy!):

The Soviet Union maintains a more or less even rhythm of economic growth, plan after plan, decade after decade, without the progress of the past weighing on the possibilities of the future ... All the laws of development of the capitalist economy which provoke a slow down in the speed of economic growth are eliminated. [16]

And if Mandel never made Deutscher’s mistake of opposing the risings of 1953 in East Germany and 1956 in Hungary, he did tend to identify reform from above in Eastern Europe with the ‘political revolution’. So he expressed a clear preference in 1956 for the methods of Gomulka in Warsaw to those of the revolutionaries in Budapest. He could write that, although ‘socialist democracy will still have many battles to win in Poland, the principal battle, that which has permitted millions of workers to identify themselves again with the workers’ state, is already won’. [17]

This trend is continued today by many people who claim to base themselves on Trotsky’s analysis. Thus, for instance, Tariq Ali – who says his ‘political formation’ was ‘greatly influenced by Isaac Deutscher, Leon Trotsky and Ernest Mandel (in that order)’ – puts enormous faith in Gorbachev in his aptly titled book Revolution from Above. ‘In order to preserve the Soviet Union’, he writes, ‘Gorbachev needs to complete the political revolution which is already underway.’

Fortunately, the tone of Mandel’s book on perestroika is different. He tells us:

Gorbachev represents the response of the modernist wing of the bureaucracy to the threat to the stability of its rule represented by this crisis [of the Soviet system] and by the rise of public awareness. To channel these changes and to try to keep them under the bureaucracy’s control – this is the historic project of the Gorbachev wing of the Soviet bureaucracy. [18]

Underlying the apparent realism of Gorbachev is a profoundly conservative vision of reality, which corresponds perfectly to the social and ideological conservatism of the Soviet bureaucracy ... [19]

Mandel argues strongly against those who say what is taking place today is ‘a revolution from above’:

The point of the exercise is to prevent a revolutionary explosion, in other words, a ‘revolution from below’. But, for this very reason, these measures are radical reforms and not revolution in the proper sense of the word ... [20]

Yet the tone is not always so sure, as when he writes that ‘the only valid verdict’ on measures taken by Gorbachev ‘is a nuanced one, case by case, problem by problem ... Too bad for the over simplifiers.’ [21] It is as if Mandel, having taken a sharp turn against those like Tariq Ali, who would have us put our trust in Gorbachev, is still not fully convinced that they are wrong.

But if Mandel’s conclusions are not fully coherent, the analysis on which he bases them is even less so. It is not just that the book contains an infuriating number of elementary factual errors. [22] More importantly, the theoretical underpinning of the argument is fundamentally flawed.

The most basic problem with the analysis concerns Mandel’s understanding of the bureaucracy. He insists that the bureaucracy is not a class: ‘The nomenklatura is not a ruling class but a fraction of a class which has usurped power from the working class ...’ [23]

This leads him into all sorts of contradictions. He writes that ‘the bureaucratic layer monopolises political power just as it does economic power’ [24] and that ‘the interests of the mass of producers, the workers and peasants ... are opposed to those of the directors/managers ...’ [25]

He applies to it what he calls ‘the essential law which emerges from the history of different societies’, that ‘the social group (social class or major section of a social class) which controls the social surplus because of its place in the production process, controls to a large extent all other activities too.’ [26] It follows from ‘the materialist interpretation of history’ that:

Relations of domination flow from relations of production. These relations of domination cannot, except during brief periods of dual power, be in fundamental opposition to the relations of production.

But if the bureaucracy ‘controls the social surplus’ because of ‘its role in the production process’, then ‘its role’ involves it exploiting the direct producers. And a ‘group’ which exploits the direct producers is, by definition, an exploiting class.

Of course, there have been many cases historically when a section of an exploiting class has concentrated power into its own hands and, thereby, creamed off much of the surplus previously disposed of by other sections of the ruling class. This was true, for instance, of the late feudal monarchy and, according to Marx, of the regimes of both Louis Philippe and Louis Bonaparte. But in these cases the surplus came, in the first place, from the class exploitation of the direct producers. The ‘section of the class’ was a section of an exploiting class.

It is a complete travesty of Marxism to claim that a section of the working class, ie of an exploited class, can control the surplus from exploitation. But Mandel does not pursue this line of argument. Three pages after putting it, he denies his own argument:

Unlike a real ruling class, the bureaucracy is unable to base its material privileges on the coherent functioning (i.e. the reproduction) of the economic system, of its role in the production process ... [27]

So on one page the bureaucracy ‘controls the social surplus’ because of ‘its role in production’. Three pages later ‘its material privileges’, which presumably are part of the surplus, do not come from ‘its role in the production process’. The confusion of the whole argument is increased still further when we are told later, ‘In reality, a socialist society, a society without classes, does not exist in the USSR.’ [28]

This confusion over whether the bureaucracy is a ruling class is part of a wider confusion. In Mandel’s account there is no explanation of the dynamic of the Russian economy. Mandel, as we have seen, used to hold the view that planning made the Russian economy able to expand indefinitely. Now empirical reality has made him change his mind. He talks of economic ‘crisis’, and says, ‘The most striking manifestation of this crisis is the slowdown in the rate of economic growth.’ [29]

He explains this in three ways.

  1. Mandel argues:

The contradictory development of Soviet society is precisely a product of the combination of dynamism and immobility. The dynamism results from economic and social growth (a product of what remains of the October revolution) which is impressive in the long term, even if it is slowing down year by year. The immobility results from the bureaucratic stranglehold on the state and society as a whole. This is an obstacle to further growth. [30]

Elsewhere he makes the same point in a slightly different way:

The dominant layer in society seems incapable of developing the system. [31]

… the material interests of the bureaucracy [are] the principal, if not the only, motor force of plan fulfilment, of the daily functioning of the system. This robs the entire economy of any form of economic rationality. The material interests of the bureaucracy push in the direction of increasing access of goods and services to the bureaucracy itself and not in the direction of optimising the output of enterprises – and certainly not in the direction of maximising the rate of accumulation. [32]

  1. He goes on to argue:

Technically the fall in the growth rate expresses the regular increase in what, in the capitalist economy, we would call the ‘capital coefficient’. The investment mass necessary to increase the national income by 1 percent increases from one five year plan to the next. [33]

  1. Finally, Mandel claims:

The plan/market relations, or what amounts to the same thing, the bureaucratic despotism/law of value relation ... [is] the fundamental contradiction of the economy ... [34]

Let’s look at each in turn.

In his first point Mandel’s talk of a ‘combination of dynamism and immobility’ only makes sense if what is meant is that the economy used to seem very dynamic, with growth rates higher than most advanced Western countries (although not all: Japan has probably done better on average), but that it is increasingly prone to stagnation. But it is completely misconceived to try to explain the dynamism by ‘what remains of the October revolution’ and the stagnation by the ‘bureaucratic stranglehold’. Such an explanation implies that the ‘bureaucratic stranglehold’ was less and the ‘remains of the October revolution’ greater at the time of the Moscow trials and the five to ten million slave labourers than today.

In fact, as every serious study of the five year plans and industrialisation has shown, the drive to industrialisation and collective agriculture was carried through by the Stalin wing of the bureaucracy (assisted, it is true, by ex-Zinovievites, capitulationist left oppositionists like Preobrazhensky and Radek and the great mass of repentant Bukharinites). It came after what has sometimes been called ‘the Stalin revolution’ – the final and complete bureaucratisation of the party, the state machine and the trade unions, and the use of the GPU to obliterate every expression of opposition. [35]

This bureaucratisation did not simply, or even mainly, lead ‘in the direction of increasing access to goods and services for the bureaucracy itself. Above all it led, despite Mandel’s claim to the contrary, to a massive rate of accumulation. And this accumulation was not of the ‘goods and services’ consumed by the bureaucrats, but, above all, of heavy industry – of iron, steel, cement, electricity generation, coal, oil.

The Russian economist, Vasily Selyunin, has recently provided figures on accumulation in the USSR since the late 1920s. He begins with figures from Agabegyan showing 25 percent of present national income going to ‘saving’ and 75 percent to consumption. He then recomputes them to take account of price distortion and concludes, ‘the consumption fund accounts for 60 percent of income and the savings fund for 40 percent. Such a high composition of savings is, essentially, a wartime standard.’ [36] It compares with an average level of gross accumulation in Western states of 15–20 percent.

Selyunin goes on to show how the real level of accumulation in the USSR has grown continually since the 1920s, giving the following figures: in 1928 consumer goods were 60.5 percent of output, in 1940 39 percent, in 1960 27.5 percent, in 1985 25.2 percent. He concludes that the officially given figures for the rate of accumulation must be a gross underestimate:

Is it really conceivable that, according to official figures three quarters of net income goes to consumption while consumer goods are only one quarter of industrial output? You can’t help wondering what goods are being bought with the consumption fund.

Shifts towards the manufacture of producer goods have put us in the paradoxical situation where accelerated rates of development and more rapid growth in national income have very little effect on the standard of living. The economy is working more and more for itself, rather than for man. [37]

This might be irrational from the point of view of the mass of Russian workers, whose labour is accumulated without them gaining. But it is certainly not a policy based on producing goods for the consumption of the bureaucracy alone – unless you believe that ‘steel hard cadres’ actually eat the stuff!

The bureaucracy has, in fact, overseen a policy of massive accumulation and industrialisation, and it is completely wrong to claim that it has prevented this occurring.

Secondly, Mandel claims that growth in the ‘capital coefficient’ is a product of ‘the growing non-utilisation of resources, resulting from the general malfunctioning of the economy, as well as by the low productivity of human labour’.

But this is to beg the question. If the non utilisation of resources is ‘growing’, why? There is ‘general malfunctioning of the economy’ and ‘low productivity of labour’. But is there any reason for these things to be worse today than in Stalin and Khrushchev’s time?

One might expect a Marxist to look more closely at a growth in the ‘capital coefficient’ than Mandel does. For the coefficient is closely related to the Marxist concept of the organic composition of capital. The coefficient is the ratio of means of production to output, the organic composition the ratio of means of production to labour power (all measured in value terms). If one increases, then the other is likely to do so.

The rising organic composition of capital was, of course, for Marx the basis of the fundamental contradiction of the capitalist economy, the tendency of the rate of profit to decline and of the economy increasingly to stagnate. If it also underlies the crisis of the USSR, then the finding is very significant indeed, and not to be explained away simply by a claim that inefficiency and irrationality are greater now than at the height of Stalin’s terror in the 1930s

Finally, what of the attempt to see the ‘fundamental contradiction’ as between ‘the plan’ and ‘the market’, or between ‘bureaucratic despotism’ and the ‘law of value’?

Mandel’s formulation here is both theoretically flawed and politically dangerous.

The law of value operates in societies where there is commodity production – and, in particular, the most developed form of commodity production, capitalist production. The function, necessary to any society, of allocating labour between different productive tasks, is not carried out consciously in such societies, but rather through the blind interaction of the products of different acts of labour which are organised independently of each other. The organisers of these different acts of labour are in competition with each other, and this competition forces them to try to keep ahead of each other in forcing up the productivity of the labour – both through imposing harder work and investing in ever more advanced means of production. By behaving in this way, they are continually relating each act of concrete labour to every other act of concrete labour carried out in the system, or, as Marx put it, transforming concrete individual labour into abstract social labour.

The law of value is the pressure that exists in such a system forcing each individual unit of the system to relate to productivity in every other unit. It is the coercive economic force which overrides the desires and intentions of those who run individual parts of the system. Under capitalism, it is certainly not something which is necessarily opposed to ‘bureaucratic despotism’ or, for that matter, to planning within individual firms. Quite the opposite – it compels managers to be despotic, to tighten the screw on workers. It also compels them to ‘plan’ the internal arrangements inside the firm so as to meet the requirement of competition outside it. As Marx put it, ‘the anarchy of the market determines the tyranny of the factory’.

What is true is that capitalism is a continually developing system, with innovations and technical progress taking place in some parts of the system before others. Elsewhere in the system the old forms of ‘tyranny inside the firm’ – the old methods of capitalist planning – then no longer correspond with what is needed to keep abreast in the struggle for increased productivity. The law of value then comes into contradiction with the existing forms of organisation of production.

The contradiction between ‘bureaucratic despotism’ and the ‘law of value’ occurs because society is subject to the law of value. Can this be true in the USSR? Only if you accept that the USSR is a commodity producing society, a variant of capitalism.

This was no problem for Trotsky and Preobrazhensky writing in the mid-1920s. Although the state controlled big industry in the USSR, virtually the whole of the agricultural sector, a sizeable portion of trade and much handicraft production were in private hands. The state traded with the private sector and with capitalist countries abroad, and therefore was subject to the pressures of commodity production itself. In this situation Trotsky and Preobrazhensky could write about conflicts between the pressures on the one hand from the requirements of commodity production (‘the law of value’) and on the other from the attempts of the state to plan the economy in the interests of one or other social group.

But where do the pressures to satisfy the requirements of commodity production come from today? Stalin virtually eliminated the rural and urban petty bourgeoisie. The state sector completely dominates the economy. If, as Mandel argues, the USSR is a ‘post capitalist society’, one no longer dominated by commodity production, then it is difficult to see why the law of value should conflict with the bureaucracy’s ways of running the economy. It is rather like expecting the laws of aerodynamics to operate in empty space – unless he is inadvertently admitting what he denies throughout the rest of his book, that the bureaucracy is forced to behave like a capitalist class.

There is one dangerous interpretation which can be put on his formulation: that the bureaucratically administered economy ‘contradicts the law of value’ through being innately less efficient than a market based capitalist economy. This, of course, is the contention of a whole host of ideologists of Western capitalism. It is also the contention of many of those who consider the USSR to be a new form of class society, neither capitalist nor socialist: they see it as an ‘oriental despotism’ or a ‘bureaucratic collectivism’ with a completely different dynamic to capitalism – indeed, usually with no dynamic at all, and therefore to be regarded as inferior to capitalism. This today, for instance, is essentially the attitude of the group of intellectuals around the magazine Critique in Britain. It was also the analysis which led the former American Trotskyist Max Shachtman to support the Bay of Pigs invasion of Cuba. Mandel is not, of course, moving to such horrendous practical conclusions. But he does resort to formulations which might lead others to, as when he argues, ‘Clarity and unimpeded dissemination of information ... is guaranteed within capitalist enterprises by private property. [38]

In fact, precisely because the anarchy of the market does lead to the tyranny of the factory, it also leads to bureaucratic inefficiency within the firm, attempts to stifle innovation, a lack of control of top management over shopfloor management. The functioning of any capitalist firm is characterised by a whole range of practices which are not wiped out by some smooth running automatic mechanism, but only periodic readjustment of internal production to the external law of value through crisis and ‘restructuring’. What is more, the increasing concentration and centralisation of capital means that firms get ever larger, the bureaucratic despotism within the firm ever stronger, and the degree of restructuring and crisis required to satisfy the law of value ever greater and more traumatic.

The point is important. All the time we are faced with propaganda from the media telling us that the ‘crisis of communism’ shows the efficiency of Western capitalism. We should not give an inch on this argument.

Unfortunately, this is not the only point at which Mandel gives ground. At another point he says the reason the USSR’s health service is worse than that of the US is that ‘doctors in the USSR spend a lot of their time form filling.’ [39] Yet American health provision is notoriously inefficient (consuming three times the proportion of the national product compared with the USSR’s, or six times the total funds) precisely because American doctors spend a lot of time checking the bank balances of their patients!

The lack of theoretical coherence in Mandel’s analysis is revealed most starkly when he writes that the approach of ‘Stephen Cohen and Moshe Lewin’ is ‘similar to that of the present author’. [40] Both Cohen and Lewin have produced useful historical works. But both are also unreconstructed Bukharinites, who believe that reliance on the market would have solved all the USSR’s economic problems in the 1930s and who see their task as to advise the USSR’s leaders to follow a policy of such reliance today.

A final, practical point on Mandel’s analysis. Trotsky viewed the bureaucracy as an unstable, parasitic growth. This led him to conclude that the great crisis he expected in ‘a few years, if not a few months’ would result in the main sections of the bureaucracy opting to transform themselves into a bourgeois class based on private property, ‘not organically through degeneration, but through counter-revolution’. [41]

Those who base themselves on the letter of Trotsky’s analysis today are split into three camps. There are those who see the present crisis in the USSR as the one he warned of (ignoring the 55 year time lag, during which the bureaucracy has presided over a massive advance in the forces of production). They draw the conclusion that the reformers inside the USSR and Eastern Europe who talk today about the market represent the forces of ‘bourgeois restorationism’ and that the task of revolutionaries is to oppose them. The logic of that position is to give critical support to the Ligachevites – the most reactionary forces in the USSR.

The second interpretation is to say that Gorbachev’s reforms constitute the ‘political revolution’, and to offer him critical support.

The third view, the one which Mandel mostly holds to in his book (although, as we have seen, not consistently), is to seek to exploit the openings provided by glasnost to organise the working class independently of Gorbachev and his conservative opponents.

But Mandel can only do so by downplaying those of Trotsky’s arguments which insist on the strength of the ‘restorationist’ forces. Mandel insists, ‘It is not capitalism that Gorbachev wants to introduce in the Soviet Union’ [42] – although with typical inconsistency he writes elsewhere that ‘there has emerged within the bureaucracy a fraction which is clearly “restorationist”’ [43] and that ‘Gorbachev’s real economic dilemma ... is ... the maintenance of a socialised and planned economy or the restoration of capitalism in large scale industry’.

The fact that such completely different perspectives can emerge from the same ‘orthodox Trotskyist’ analysis of the USSR must raise questions about the correctness of the analysis itself – just as the crisis of the Trotskyist movement did back in 1947–8.

Cliff reacted to that crisis very differently from Mandel. He argued, in the first, cyclostyled, edition of his book, which appeared early in 1948, that the revolutionary movement faced an enormous danger. Standing by the letter of an old analysis of reality could lead to abandoning the revolutionary spirit which originally motivated that analysis. The only way to avoid the danger was to carry through a fundamental re-analysis of Russian society ‘rooted in the teachings of the great Marxist teachers’.

Cliff’s own analysis began by examining the material realities of the USSR. Sifting through vast masses of empirical material, he drew out the contrasts between conditions in the post-revolutionary period and those after 1928, when Stalin finally consolidated his power.

Trotsky had come to the conclusion in 1935 that Thermidor, the decisive bureaucratisation of the regime, had occurred ten years earlier with the defeat of the left opposition. But he had then gone on to point out that Thermidor represented, in the French Revolution, the establishment of a non-revolutionary regime which still preserved essential advances of the revolution, and was different from counter-revolution.

Cliff argued that an examination of material realities showed that further qualitative change had taken place after the Russian Thermidor of 1924. In the winter of 1928–9 the bureaucracy, which had previously balanced between the working class and the peasantry, hit out viciously against both.

The last elements of workers’ control were destroyed in the factories; trade union independence was completely abolished; real wages fell 30 or 40 percent; the GPU was given a free hand to obliterate the last remnants of discussion inside the party; the fight against ‘egalitarianism’ became state policy as differentials between bureaucrats and workers increased massively; the peasants were driven from the land through so-called ‘collectivisation’; the number of prisoners in labour camps rose 20 fold in two years (rising tenfold again in the next decade); Russification was used to destroy the autonomy of the non-Russian Soviet republics.

The fact that all these changes occurred at once was no accident. They were all by-products of the response of the Stalinist wing of the bureaucracy to the economic crisis which hit the country with the threat of war in 1927 and the ‘scissors crisis’ of 1928. As its old policy – the Bukharin-Stalin policy of 1924–7, of ignoring the rest of the world and hoping for the best – fell apart, the bureaucracy used all the forces at its disposal to impose a new policy. It sought to respond to threats from the West by copying the very means used by Western capitalists to build up industry and, with it, military potential. It destroyed the independence of the working class and the peasantry and attacked their living standards so as to gain a surplus for industrialisation. If its methods were even more vicious than those used in the industrial revolution in, say, England it was because the Stalinist bureaucracy sought to do in a couple of decades what had taken 300 years to accomplish in England.

The most impressive part of Cliff’s book was where he showed, by meticulous examination of the USSR’s official statistics, how the official talk of ‘planning’ (accepted at the time by Mandel and other ‘orthodox Trotskyists’) concealed the reality of the continual subordination after 1928 of the production of consumer goods to means of production. While before 1928 consumer and producer goods production both rose together, after 1928 their paths diverged completely. While ‘plan’ targets for producers goods were over-fulfilled, those for consumer goods were simply ignored.

This, incidentally, shows the sharp contrast between the notion of planning and industrial development which Trotsky had fought for in the years before 1928 and that which Stalin had implemented. Trotsky had based himself on the need to speed up the rate of industrial growth so as to improve the living standards, the confidence and the social weight of the working class. Stalin based himself on cutting living standards, using the GPU to terrorise the working class into submission, and swamping old, class conscious layers of workers in a sea of raw, inexperienced and terrified ex-peasants.

There were formal similarities between Stalin’s policies and Trotsky’s. These confused Trotsky himself for a time and led people like Radek and Preobrazhensky to capitulate to Stalinism. But, as Trotsky himself came to realise, from a working class standpoint they were opposites.

Under Stalin the overall picture was of an economy in which the drive to accumulate means of production dominated everything else. This drive to accumulate pitted the bureaucracy against the workers and peasants. It gave the different members of the bureaucracy interests, rooted in the production process itself, which forged them into a class in unrelenting historical opposition to other classes. It meant they were no longer a stratum of the working class, or a group simply balancing between other classes, but the protagonists of developing a mode of production at the expense of other classes. As Cliff put it:

Why was the first five year plan such a turning point?

It was now, for the first time, that the bureaucracy sought to create a proletariat and to accumulate capital rapidly. In other words, it was now that the bureaucracy sought to accomplish the historical mission of the bourgeoisie as quickly as possible. A quick accumulation of capital on the basis of a low level of production, of a small national income per capita, must put a burdensome pressure on the consumption of the masses, on their living standards. Under such circumstances the bureaucracy, transformed into a personification of capital, for whom the accumulation of capital is the be-all and end-all, must get rid of all remnants of workers’ control, must substitute conviction in the labour process by coercion, must atomise the working class, must force all socio-political life into a totalitarian mould. It is obvious that the bureaucracy, which became necessary in the process of capital accumulation, and which became the oppressor of the workers, would not be tardy in making use of its social supremacy in the relations of production in order to gain advantages for itself in the relations of distribution. Thus industrialisation and technical revolution in agriculture (‘collectivisation’) in a backward country under conditions of siege transforms the bureaucracy from a layer which is under the direct and indirect pressure and control of the proletariat into a ruling class, into a manager of the ‘general business of society: the direction of labour, affairs of state, justice, science, art and so forth.’ [44]

Cliff refers to the bureaucracy as ‘state capitalist’. This has caused his theory to be attacked by a host of commentators – of which Mandel is just one – who claim there cannot be capitalism without private owners of the means of production competing with each other to sell goods.

Cliff deals with this argument at length in his book. He bases himself on the analyses of the imperialist stage of capitalism developed during the First World War by Lenin and by the young Bukharin. These showed how the concentration and centralisation of capital leads to the replacement of ‘free market’ capitalism by ‘state monopoly capitalism’. Horizontal and vertical mergers lead to huge firms which dominate whole industries, planning their operations with meticulous care and not just leaving them to the accidents of the market. The heads of these industries work increasingly closely with the state bureaucracies. There is, so to speak, a ‘merging together’ of industry and the state. This merging finds its fullest development in all-out imperialist wars, in which the state and capital work together to plan the war economy internally, while seeking to destroy rival capitalisms physically.

So much is the war economy planned, that those who base themselves on a simple, ahistorical view of capitalism do not see it any longer as capitalist. This was, for instance, the conclusion which the famous Austro-Marxist economist, Hilferding, came to about the Nazi German economy. For inside the war economy production is planned from above and does not depend upon the ups and downs of the market, upon the interplay of commodities. And its external trade is necessarily limited.

Cliff insists, however, that the war economy remains a species of capitalism. For if old-style ‘free market’ competition plays a very little role, a new form of competition dominates it completely. This is military competition between the rival state capitalist ruling classes of different countries. This competition has similar effects on the organisation of production inside each country to those economic competition has on the organisation of production inside each firm.

To compete militarily with each other the rulers of each country have to make sure that the productivity of the labour under their command does not fall below that of their rivals. Every time their rivals invest in new equipment and more advanced technology they have to try to do the same. Every time their rivals succeed in getting a bigger surplus for investment by increasing the rate of exploitation of their workers, they have to try to match their efforts.

In this way, the different acts of concrete labour carried out in different factories in different parts of the world are related to each other, are measured against each other, are transmuted into expressions of a common abstract labour. The threat of military defeat compels the giant state capitalist ruling class to impose the law of value on its enterprises just as the smallest individual entrepreneur is forced to by the threat of bankruptcy.

It is this analysis which Cliff uses to decipher the puzzle of Stalinist Russia. Stalin’s policies after 1928 involved transforming Russia into a massive arms economy, dominated by the drive to accumulate the economic basis of military power, above all heavy industry. Stalin was subordinating the USSR’s economy as a whole to the pressures of a particular form of international capitalist competition (to the law of value on a world scale), even while preventing competition between different sections of the economy inside the USSR.

It is this domination by competition which explains the most remarkable feature of the USSR’s economic development: the way in which it has displayed the very dynamic which Marx argued was unique to capitalism – the endless pursuit of accumulation. In the Communist Manifesto Marx makes a sharp distinction between ‘bourgeois society’ in which ‘living labour is but a means to increase accumulated labour’ and ‘communist society’ where ‘accumulated labour is but a means to widen, to enrich, to promote the existence of the labourer.’ The USSR lies on the side of ‘bourgeois society’ in this respect and not on the side of socialism. Cliff shows why.

But that is not all he seeks to do. His aim in exposing the dynamic of the USSR’s economy as one of endless competitive accumulation is to draw conclusions for the struggle for socialism.

Those who do not identify such a dynamic can come to one of two equally disastrous conclusions. The first is to see the bureaucratic ruling stratum as more progressive than the capitalist classes of the West. The logic is then to subordinate the struggle for socialism to giving assistance, or at least advice, to these rulers. It is a logic that leads to horror at the thought that social upheavals might threaten their rule, and to paralysis in the face of the present crisis in the USSR through fear of it leading to a ‘restoration of capitalism’.

The second conclusion is to see the bureaucracy as less progressive than Western capitalist classes, as a totalitarian force preventing human development for the indefinite future. Such was the path of Shachtman in the 1940s and 1950s. Such is the path that many ‘new class theorists’ are tempted towards today.

Cliff’s theory, by identifying such a dynamic, comes to a radically distinct conclusion. It is that the Stalinist bureaucracy, like the Western capitalist classes, creates its own gravedigger. The more successful it is in accumulating capital, the more it builds up the size and strength of a working class that has the potential to overthrow it.

The bureaucracy increases the working class on the basis of the highest concentration history has yet known. And, try as it might to abridge the abyss between concentrated wage labour and concentrated capital, the bureaucracy is bringing into being a force that will sooner or later clash violently with it. [45]

When these words were written in the late 1940s, they seemed much less impressive than those who talked of ‘hundreds of years of degenerated workers’ states’ or those who claimed the Russian bureaucracy ruled over some new variant of slave society which was not subject to the contradictions of capitalism. They are vindicated today by the scale of unrest which is sweeping the USSR.

One last point. Only Cliff’s analysis enables us to account for the character of the present economic crisis in the USSR. It is because the USSR is part of a world system based on military and economic competition that the bureaucracy finds its old methods of running the economy no longer fit.

The USSR’s rulers try to maintain military parity with a state which has twice their GNP – and so have to spend twice the proportion of their own GNP on arms. They are obsessed with modernising their engineering industries so that they match technical advance elsewhere in the world. They see the relative fall in the price of their major export, oil, in recent years as a threat to their whole economic strategy by making it more difficult to import the most advanced machines. Above all, they are deeply afraid that they cannot raise the productivity of labour inside the USSR closer to the US level.

Mandel used to deny that external circumstances could exercise such pressures on the Russian economy, writing that this was to claim ‘that the tail of one percent of output imported from and exported to advanced capitalist countries is wagging the dog of the Russian economy.’ [46] Now he admits they exist, but cannot integrate them into a total analysis. And so, as we have seen, he sees a contradiction between ‘the law of value’ and ‘bureaucratic despotism’ without explaining how that law operates and why the contradiction should come to the fore now.

Yet once you recognise the USSR as a bureaucratic state capitalist country, it is very easy to complete the analysis. The Stalinist bureaucracy responded to the world crisis of the 1930s and the growing threat of war by seeking to accumulate capital inside the country while cutting to a minimum its external trade links. In this respect, it was not behaving very differently from ruling classes in many Western and Third World capitalist countries. The whole period was one of relatively self contained economies in which the state intervened in order to prevent the onset of violent crises within the internal economy – the period of Keynesianism in the West, of import substitutionist growth in countries like Argentina and Brazil, and of attempts to copy Stalinist ‘planning’ in China and even India.

But in the 1960s and 1970s such approaches everywhere ran increasingly into contradiction with the internationalisation of the world economy. The concentration of capital meant that the resources required to keep ahead in the most advanced industries began to exceed the internal resources of nearly all states; keeping up with advances in technology increasingly meant forging links with the largest multinational corporations. The industries which had developed within the confines of national boundaries could now only survive if they were restructured as part of a new international division of labour.

The restructuring could be painful even for relatively open and limited state capitalisms like that of Britain. In the more autarchic and complete state capitalisms of the East it can be devastating. It threatens not only the conditions and livelihoods of many workers, but whole sections of the bureaucratic-managerial apparatus itself. And there can be no guarantee that even if it is successfully completed conditions in the outside world won’t have shifted in the interim, leaving the USSR’s economy still uncompetitive.

The Russian ruling class faces the problem that periodically besets every capitalist ruling class. The very methods that allowed successful accumulation in the past no longer do so. Because it is part of a world system it has to try to change its ways. But its attempts to do so are unleashing social forces which it cannot control. As Marx wrote in the Communist Manifesto:

The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of productions and with them the whole relations of society ... Constant revolutionising of production, uninterrupted disturbances of all social conditions, everlasting uncertainty and agitation distinguishes the bourgeois epoch from all earlier ones. All fixed fast frozen relationships, with their train of ancient and venerable prejudices and opinions are swept away, all newly formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his conditions of life and his relations with his kind. [47]

The Stalinist state bourgeoisies of the East can no more escape from this violent, capitalist dynamic than can the ‘private’ (more accurately, the state monopoly capitalist) bourgeoisies of the West and Third World. That is what is so exciting about what is happening in the USSR today. But to understand why, you have to move beyond the vague, inconsistent, self contradictory formulations of Mandel, and the best way to do so is to base yourself on Cliff’s book.


1. The Workers’ State and the Question of Thermidor and Bonapartism (London n.d.), p. 8.

2. The Class Nature of the Soviet State (London 1962), p. 13.

3. Ibid., p. 13.

4. Ibid., p. 12.

5. Problems of the development of the USSR, Writings of Leon Trotsky, 1930–31 (New York 1973), p. 215.

6. L. Trotsky, The Class Nature of the USSR, Writings, 1933–4 (New York 1972), pp. 117–118.

7. The Revolution Betrayed (London 1957), p. 286.

8. Ibid., p. 288.

9. In Defence of Marxism (New York 1942), pp. 63–70.

10. L. Trotsky, The Workers’ State and the Question of Thermidor and Bonapartism (London n.d.), p. 19.

11. L. Trotsky, In Defence of Marxism, op. cit., p. 14.

12. The War and the Fourth International, in Writings, 1939–40 (New York 1973).

13. Pablo’s articles from these years are to be found in International Secretariat Documents, vol. 1 (New York 1974).

14. Letter from Deutscher to Brandler, 15 July 1953, in Correspondence between Brandler and Deutscher, New Left Review 105, September–October 1977.

15. I. Deutscher, The Prophet Unarmed (Oxford 1959), p. 462. See also Universities and Left Review, vol. 1, no. 1, p. 10.

16. Quatrième International, année 14 (1956,) nos. 1–3.

17. E. Germaine (i.e. Mandel), Quatrième Internationale, December 1956.

18. E. Mandel, Beyond Perestroika (London 1989), p. xii.

19. Ibid., p. 116.

20. Ibid., p. 187.

21. Ibid., p. 134.

22. For instance: when he twice locates the ‘Kosygin reforms’ as beginning in the mid 1970s, whereas in fact they started ten years before that (see, for instance, Michael Ellman, Socialist Planning, Cambridge 1989, pp. 73, 80, and Marshall Goldman, Gorbachev’s Challenge, New York,1987, pp. 53–54); when he refers to Grigoriants as a ‘left oppositionist’, whereas he is a right wing liberal; when he says that ‘the Congress of the Writers Union threw out the conservative apparatchiks in 1987’, whereas in fact the Writers Union remained for a long time the most conservative of all the cultural unions.

23. Mandel, 1989, op. cit., p. xii

24. Ibid., p. 33.

25. Ibid., p. 33.

26. Ibid., p. 31.

27. Ibid., p. 34.

28. Ibid., p. 109.

29. Ibid., p. 3.

30. Ibid., p. 3.

31. Ibid., p. 32.

32. Ibid., p. 35.

33. Ibid., p. 8.

34. Ibid., p. 21.

35. For an account of this based on research in previously inaccessible archives, see M. Reiman, The Birth of Stalinism (London 1987).

36. Vasily Selyunin, Sotsialistischeksaya industria, 5 January 1988.

37. Ibid.

38. Mandel, op. cit., p. 11.

39. Ibid., p. 15.

40. Ibid., p. 44.

41. Trotsky, 1962, op. cit., p. 13.

42. Mandel, op. cit., p. 62.

43. Ibid., p. 42.

44. Cliff, op. cit., p. 154.

45. Ibid.

46. The Inconsistencies of ‘State Capitalism’ (London 1969), p. 13.

47. The Communist Manifesto.

Last updated on 1.5.2012