Peter Petroff June 1934

State Capitalism or Socialist Commonwealth?

Source: Labour, June 1934, p. 236;
Transcribed: by Ted Crawford.

Marx, Engels, and generally the elder generation of socialists, visualised Socialism as the highest stage of human society, economically, socially, morally and intellectually.

All the accumulated treasures in machines and technical appliances created by the genius of man, all that science and art had given to the human race in generations is to be utilised, not for the few, but for the benefit of mankind as a whole.

Based on the common ownership of the means of production and distribution, a new and higher economic system is to be built up, raising production to a higher economic level, and ending all social oppression by dissolving the hostile classes into a community of free and equal producers striving not for sectional interests, but for the common good.

Basis of Liberty

This socialist commonwealth, liberating the individual from all economic, political and social oppression, would provide the basis, for real liberty and for the full and harmonious development of the personality, giving full scope for the growth of the creative faculties of the mind.

The pioneers of socialist thought believed that in fighting for this great ideal, socialists will rise to a high moral level inspiring the masses with love of liberty and hatred against any kind of oppression.

In the post-war period there is noticeable a persistent tendency to vulgarise the idea of Socialism, to reduce the meaning of Socialism to a mere mechanical alteration of the property system and the introduction of planned economy on the basis of a barrack-like collectivism. The idea of Socialism is thus divorced from the idea of liberty.

State capitalism has always been regarded as a stage on the way to Socialism. At present there prevails a great confusion of thought, and certain forms of state capitalism arc often referred to as Socialism.

State capitalism is perhaps a necessary transitional stage.

Before the war we all believed that this was a very progressive and desirable stage. The experiences of the Russian Revolution have revealed to us the grave innate dangers of State capitalism.

State capitalism concentrates an overwhelming power in the hands of the state, and places the citizen completely at the mercy of the State.

If this State is not run by the working-class there is the grave danger that the ruling class may use this tremendous power to subjugate the people and oust the working-class front all the positions they have conquered in a century of struggle.

If this State is in the hands of a working-class party there is the danger that, under certain conditions, an all mighty bureaucracy might grow up. From a sheepdog it may turn into a wolf, becoming a danger to the very flock it should guard.

Under private capitalism in a democratic State the government has no substantial direct income. It raises revenue and makes expenditure by the authorisation of Parliament. This gives to Parliament a great power of control over the executive.

Under State capitalism the government derives its income automatically from the economic enterprises of the State. It thus has a tendency to free itself from parliamentary control, to become the master of Parliament and to turn the Members of Parliament into obedient civil servants.

The State, as the owner of banking industry, agriculture and transport becomes the universal employer, the universal landlord. It controls everything on which the fate and happiness of the individual citizen depend.

Danger of State Capitalism

The citizen is dependent on the State as regards his employment, his housing, his supplies, his amusement, his educational and transport facilities. A conflict with the State might affect the citizen as an employee, tenant, etc.

This enormous power of the State over the individual citizen must needs call forth or strengthen tendencies towards a dictatorship.

Therein lies the chief danger of State capitalism. It hides an abyss into which the nation may easily tumble, sinking back into barbarism instead of making its way further towards the sunny heights of Socialism.

State capitalism does not yet solve any of the outstanding problems. It does not abolish crises, the classes, the wage system. Under State capitalism there is production of commodities for sale, not production for use. Between production and consumption there still remains the partition wall of the purchasing power.

Nowadays, in view of the collapse of private enterprise the tendencies towards State capitalism are very strong. It may prove an essential stage in the further development. The dangers emanating from state capitalism can be avoided. Its poison teeth can be extracted.

The remedy against the evils accompanying State capitalism is a thorough democratisation of the State and all its service.

A certain decentralisation of power can be attained under State capitalism by allocating important spheres of economic management to thoroughly democratic municipalities and co-operative bodies.

Misuse of power, and public corruption, can be avoided by safeguarding the widest possible liberty of speech, press and organisation.

The Right to Strike

This can be achieved and maintained only by a strong and democratic Labour movement, strong and active Trade Unions and co-operatives, and a live and democratic political organisation of the working-class.

In nationalising any branch of industry the public interest and its democratic administration may be safeguarded through an effective control by the Trade Unions. The right to strike is under State capitalism even more essential than under private capitalism.

The strengthened co-operative movement may play a very great part by taking control of the distribution of the essentials of life for the people.

At all events, in view of the strong tendencies towards State capitalism, the working-class has the greatest interest in developing and strengthening democracy in the central and local government, and inside the Labour movement.