From the standpoint of socialism, the bureaucratic collectivist State is a reactionary social order; in relation to the capitalist world, it is on a historically more progressive plane.
... the alternatives facing mankind are not so much capitalism or socialism as they are: socialism or barbarism. Stalinism is that new barbarism.
The problem for the student of the early years of the Group is that there is no written account anywhere and memory is at best fallible and often partial. In this context, we can discount Ian Burchall’s small devotional work in IS Journal 75/76 old series and, while Martin Shaw’s 1978 Socialist Register article, The Making of a Party?, is very good, it restricts its coverage to the period 1965 to 1976.
Thus it is that speculation on the influences at work which were to produce the particular state capitalist analysis Cliff set out in his RCP Internal Bulletin, can be as far fetched as the imagination of whoever wishes to diminish that achievement. It is in this context, I am told, that Sean Matgamna, than whom no-one’s imagination ranges further or overreaches wider, takes the view that Cliff lifted his analysis from the “Shachtmanite” theory of bureaucratic collectivism. In fact, there is no good reason to believe that this was the case. Obviously, there are similarities in any two theories that are based in the conviction that Stalinist states are class divided societies, but it is not at all obvious that Cliff would have found these specifically in Bureaucratic Collectivist analysis more than anywhere else.
At the time, between late 1946 and 1948, when Cliff was making his sea-change from “workers’ state” to state capitalism, there was no fully set out coherent work on the bureaucratic collectivist case, merely a handful of articles by Shachtman and others in the New International. So far as I know, there is no such work published to this day. If, however, you know of such a work, please keep it to yourself. Of course, all the competing theories that purport to define the class nature of the Stalinist states leave an unsatisfied feel in the stomach, rather like a three course meal that is a starter, a pudding and no main course, but bureaucratic collectivism does not even get to the pudding.
A far greater influence on Cliff was Jock Haston and it is true that Jock was a very attractive personality whom Cliff often referred to as his father in the movement. For whatever reason, Cliff was unusually impressed by the arguments of Haston and Grant during the brief time these two were pursuing a state capitalist analysis. We know this to be the case because they changed his mind. This unprecedented achievement has yet to be repeated. What is quite clear is that Cliff is perfectly capable of putting together a workable, or an unworkable, theory: he has done both in his time.
There was, in any case, no good reason for Cliff to find his inspiration in the dubious verities of bureaucratic collectivism, when he was convinced in an argument, specifically about state capitalism, on which there was a long history of work, going back to before the October revolution. In his book, The Theory of the Imperialist State, published in 1916, NI Bukharin discussed the general trend to “... militaristic state capitalism ... a new Leviathan, in comparison with which the fantasy of Thomas Hobbes seems like child’s play”. He was to return to this theme several time in the 1920s. Also in the 1920s, the exiled Mensheviks produced a state capitalist analysis, as did Osinsky and Sapronov, of the Democratic Centralist faction of the Russian party.
Various members of the Trotskyist movement adopted state capitalism, Yvan Craipeau for one. Anton Ciliga, a Rumanian oppositionist, also defined Russia as an exploitative society where the bureaucracy controlled all the levers of power.
Bureaucratic collectivism probably has its origins in the work of an Italian, Bruno Rizzi who, in the 1930s, published his book The Bureaucratisation of the World. (Rizzi is usually known as Bruno R. He was a strange chap, an ex-member of the Left Opposition, reputed to be anti-Semitic and apparently able to move fairly freely in and out of fascist Italy.) The essence of the volume was that the world was being transformed into societies ruled by a new managerial class based in state institutions. Evidence for this was adduced not only from Russian Communism and German and Italian fascism, but also the American New Deal. The book did not make much a of a splash at the time, but it does seem to have come to the attention of Joe Carter (Joseph Friedman), who was a leading member of the Burnham/Abern/Shachtman faction in the [American] SWP. Carter convinced Burnham, but not Shachtman – who incidentally, always denied that the ISL theory had anything to do with Bruno Rizzi’s work, that he was correct and together they developed the theory. (Although it is quite unfair to Joe Carter, adherents of his theory have traditionally been referred to as “Shachtmanites” after the charismatic leader of the group. If only because it is a familiar usage, I will stick to this form of description.)
After the 1940 split in the SWP, Shachtman and his faction took nearly half the members and formed the Workers Party – it became the Independent Socialist League in the late 1940s. Burnham almost immediately deserted the new party, subsequently producing a non-marxist version of the theory in his book The Managerial Revolution.
In not very much time, Carter had convinced Shachtman and the WP majority that bureaucratic collectivism was the theory for them. At first Shachtman took the view that bureaucratic collectivist society was superior to capitalism, but later he decided that it was the ultimate barbarism. Eventually, he supported the US in Vietnam and at the Bay of Pigs. At the end of his life he was supporting Senator “Scoop” Jackson, a rabid cold warrior with a penchant for nuclear war. (One should add that although Shachtman was the best known exponent of bureaucratic collectivism, it is not the case that adherence to the theory leads inevitably to support for capitalism against Stalinism. Carter, Hal Draper and many others remained revolutionaries and supporters of the theory until they died.)
Perhaps of some significance for Cliff was the work of CLR James (JR Johnson) who led a state capitalist group in the Workers’ Party, the Johnson-Forrest Tendency, that included Grace Lee and Raya Dunayevskaya (Freddy Forrest). It was James, a man with a well developed sense of humour, who characterised bureaucratic collectivism as “Carter’s Little Liver Pill”. Both James and Dunayevskaya’s work appeared in New International and, according to Ray Challinor, Cliff met Dunayevskaya at an FI meeting in Paris in 1948.
What is certainly the case is that one of the theoretical underpinnings of the SRG at its formation was Cliff’s article against the theory of bureaucratic collectivism. It is, of course, true but unsurprising that some of the critical framework used to describe Stalinist society in bureaucratic collectivist writing is much the same as that used by the theoreticians of state capitalism. Indeed, much of the data also fits a critique made by a conscientious Marxist who saw Russia as a “worker’s’ state”. Analysis of the texts does not suggest that Cliff’s state capitalism was either lifted from, or a deviated species of, bureaucratic collectivism.
This is not to say, however, that the ISL did not have its effect on the British group. For example, the Shachtmanite journals New International and Labour Action were distributed in the UK by the SR Group; Stan Newens acted as the agent for some years. The slogan, “Neither Washington Nor Moscow But International Socialism”, was appropriated by Socialist Review from the ISL. In the 1960s, several of the younger ex-ISL comrades came to Britain and joined IS, but the only significant visitor from the ISL I can discover, was probably Felix Morrow. Bill Ainsworth recalls such a comrade arriving in Birmingham in the very early 1950s. Unfortunately, the comrade was suffering from a severe case of diarrhoea. Bill writes: “I think it may have been Felix Morrow. We tried to discuss with him over the lavatory wall, but without success – he was totally obsessed with the state of his bowels. Departed on the next train.” 
As we have already noted, in the early days, the SRG was a standard Trotskyist group with heretical views on Russia and Eastern Europe. The ISL was a much more relaxed organisation, whose disputes and discussions were carried on in the open press. After 1948 (when they realised what a sorry pass the Fourth International had come to), the ISL became progressively less Trotskyist. In 1958 they dissolved the League and joined the Socialist Party-Social Democratic Federation, the pale corpse of the Norman Thomas socialists. The dissolution statement was embarrassing in its submission to social democracy and the disowning of any revolutionary past. In the meanwhile, however, they had passed on the outlines of the theory that was to become the Permanent Arms Economy.
Under the title The Permanent War Economy, six long articles appeared in the New International between January and December 1951 by TN Vance (one of the pseudonyms of Ed Sard). The first article begins with the bold announcement, “With the beginning of World War II, both American and world capitalism entered a new epoch – the era of the Permanent War Economy ...”. Here, Vance was asserting, was a new and decisive factor in world economy that would seriously amend economic theory, “both bourgeois and Marxist”. In his articles Vance quotes lavishly from government statistics but the main burden of proof rests on his ingenious projection of these figures into the future. Quotation from other sources is minimal, with just the odd reference to Marx and Keynes. Due, not to say fulsome, credit is afforded to Walter J Oakes, author of a seminal article in Politics in February 1944, entitled Towards a Permanent War Economy. Vance quotes Oakes approvingly as follows: “A war economy exists whenever the government’s expenditure for war (or `national defence’) becomes a legitimate and significant end purpose of economic activity.” Arms expenditure, he says, is responsible for a high level of economic activity and reduces unemployment to negligible levels. In addition, it provides for, “...the maintenance of stable and safe economic equilibrium for the bourgeoisie...” (NI, Vol.XVII No.1, p.41) For Vance, the critical level of arms expenditure is when, “... the ratio of war outlays to total output exceeds 10 per cent...” (Ibid., page 34). Vance also speaks of Keynes’ “Multiplier” where indirect outlays equal and thus double the economic effects of arms production. All of this he says is so much more effective than public works, as in Roosevelt’s WPA, because the high levels of taxation required to finance arms production for defence against communism are politically acceptable to the capitalists, whereas the WPA, an expensive and ineffective Keynsian style mechanism for reducing the unemployed figures was highly unpopular with the bourgeoisie.
Writing in 1951, Vance had in fact no contemporary statistics that supported his thesis. The latest he could muster were for 1948, were significantly lower than those for 1946 to 1947 and a statistically negligible amount higher for 1949. (See Table, Ibid., p.35) In his tables, the really impressive increases are for the years 1950 to 1953, which are all based on Vances’ own calculations.
One might feel more satisfied with all this if most of his conclusions had not been vitiated by time and experience, but also one feels a little suspicious when looking closely at his sources. The theory of 1951 rests heavily on the 1944 article by Walter J Oakes; a prophet well before his time maybe, but authoritative as all get out. A close examination, however, reveals that TN Vance is not Ed Sard’s only pseudonym. It appears that Ed’s other nom de plume is Walter J Oakes: perhaps he only used this one for writing authoritative, highly quotable articles in Politics.
This then is the theory appropriated by Cliff and rechristened the Permanent Arms Economy by Michael Kidron. In their hands, particularly Kidron’s, it became an altogether more convincing piece of work. Duncan Hallas has a reference to arms economy in an article in the Socialist Review of April 1952, but the full version did not see light until Cliff’s article, The Permanent War Economy; in the May 1957 issue of Socialist Review (Incidentally, Cliff’s table supporting this article is rubbish, even if it has a footnote “* approximate figures”. It suggests, for instance, that Britain could prosecute the war for the whole of 1943 for 9.5 million quid. For that money you could not run a decent war for a fortnight.) Until 1968, when Mike Kidron published his book, Western Capitalism Since the War, there was very little written about the theory, which is odd as it offered an answer to the problem of the long post-war boom, which was quite beyond the brains of orthodox Trotskyism. In preparing this book, I had occasion to speak to Mike Kidron, who told me in passing that the really serious work of validating the theory had at no time been undertaken. Perhaps, then, it is not surprising that Kidron, the man most associated with the PAE, should, in 1974, have dismissed it with the telling phrase, Two Insights Do Not Make A Theory. Oh well, PAE – RIP.
1. Letter to Jim Higgins from Bill Ainsworth, June 1996.
Last updated on 2.11.2003