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Peter Binns

The Theory of State Capitalism

(January 1975)

From International Socialism (1st series), No.74, January 1975, pp.20-25.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Russia Today: A Workers’ State?

IN RUSSIA today workers exercise control neither over industry nor over the state. The last remnants of workers’ control over production, the Troika, was abolished in 1929. In its place stepped the manager whose orders were now to be ‘unconditionally binding on his subordinate administrative staff and on all workers’. [1] Trade unions were stripped of all functions, and particularly, the negotiation of wages at the same time. An internal passport system was introduced, and in 1930 all industrial enterprises were forbidden to employ workers who left their former jobs without permission. [2] Forced or slave labour was introduced on a massive scale as Stalin’s terror campaign against the working class gathered momentum in the 1930s. As the Russian authorities themselves cynically put it:

‘With the entry of the USSR into the period of socialism, the possibility of using coercive measures by corrective labour have immeasurably increased.’ [3]

In Russia the state owns the means of production, but who owns the means of production, but who owns the state? Certainly not the workers! The Russian state was supposed to be a union of Soviets in which delegates were elected from the workplace. In fact all efforts to start any independent workers’ initiatives, let alone workers’ councils, are now suppressed and are standardly rewarded with extreme forms of repression. As Kirov, Stalin’s henchman accurately prophesised: ‘We shall be pitiless [to] those lacking in firmness in the factory and the villages and who fail to carry out the plan.’ [4] Thousands of managers were imprisoned for not repressing their workers enough. In this situation it takes little imagination to understand the fate of workers who actually went as far as demanding some measure of workers’ power! For instance, hundreds of slave labourers were shot down in 1953 for striking over the failure of the authorities to carry out their promises of an amnesty. [5] The viciousness of the response is typical, and has been repeated many times before and since, but it gives us a good idea what happens to workers who actually demand something more than this.

Even in bourgeois parliamentary terms the ‘Soviet’ regime is a complete fraud: elections are a sham and even the ‘Supreme Soviet’ has formal and not real powers. For instance none of the five and seven year plans, and none of the sharp turns in foreign policy were discussed by this supposedly supreme organ of state until after they had already been implemented! ‘Elections’ for this body take place in constituencies where there is never more than one candidate standing (nominated from above), and where he never gets less than 93 per cent of the poll, but sometimes (like Stalin in 1947) is known to ‘receive’ as much as 100 per cent! [6] So while the state owns the means of production, it would obviously be complete nonsense to believe that the workers own the state.

Capitalism: A Process Continually Transforming Itself

WHAT KIND of society is it then in Russia? Certainly it is not socialist, and certainly it contains no private owners of capital competing with each other as is normally the case in the west.

First of all let us see what capitalism is. We encounter some difficulties when we attempt to define it. These arise because capitalism is a real process, continually in motion, not a fixed thing.

Capitalism in the middle of the last century was largely based on a free market and production by wage-labourers within independent enterprises. But this was not always the case. In fact capitalism began in England in the 17th and 18th centuries with slave-labour and looting in the colonies as part of its base. It also began with trade, but trade based on the vigorous intervention of the state and the denial of the free market (the so-called mercantile system).

In discussing the dawn of capitalism Marx stresses not only the growth of the wages system but

‘The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into the warren for the commercial hunting of black skins, signalised the rosy dawn of the era of capitalist production ... Great fortunes sprang up like mushrooms in a day: primitive accumulation went on without the advance of a shilling.’ [7]

And instead of the ‘invisible hand’ of the laws of supply and demand, in Britain there was ‘a systematic combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, eg. the colonial system. But they all employ the power of the state ...’ [8]

That is why Marx warns us:

‘If, then, the specific form of capital is abstracted away, and only the content is emphasised ... Capital is conceived as a thing, not as a relation ... (but) capital is not a simple relation, but a process, in whose various moments it is always capital.’ [9]

Because it is a process, and one which contains contradictions, it is always changing itself as it develops. We need to understand its dynamic – the underlying principle according to which it changes and develops. Capitalism remains capitalism throughout its various changes because its central dynamic, its internal motor, remains unchanged, and it is to this that we now turn.

Accumulation: The Key to Capitalism’s Development

THE THING which links the early stage of capitalist development based on monopoly, looting and slavery, with later stages like those of 19th century private capitalism and 20th century state monopoly capitalism, is the nature of the accumulation process.

Marx thus characterises capitalism in the Communist Manifesto as where

‘... the labourer lives merely to increase capital, and is allowed to live only in so far as the interest of the ruling class requires it. In bourgeois society, living labour is but a means to increase accumulated labour. In Communist society, accumulated labour is but a means to enrich, to widen, to promote the existence of the labourer. In bourgeois society, therefore, the past dominates the present; in Communist society the present dominates the past.’ [10]

In Capital Marx stresses that the motive force of capitalism is not the consumption of the capitalist, but the fact that in order to fulfill his role as a capitalist he has to accumulate:

‘[The capitalists] own private consumption is a robbery perpetrated on accumulation ... Accumulate, accumulate! That is Moses and the prophets! ... Therefore, save, save, ie. reconvert the greatest possible portion of surplus value, or surplus product into capital! Accumulation for accumulation’s sake, production for production’s sake ...’ [11]

The drive for accumulation as a means to still greater accumulation, which is the essence of capitalism, is due to two main factors.

  1. Workers are separated from the means of production. If they controlled production as a whole, it would be subordinated to use, to consumption. In so far as they decided to accumulate it would only be as a means for the further end of consumption.
  2. There is competition between the capitalists. Without it each capitalist could decide freely whether to consume the surplus product, to accumulate it, or even to return it to the workers who created it. It is competition which makes him accumulate and it does so by threatening him with extinction by rival capitalists if he doesn’t. That is why ‘competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws’. [12]

Competition: The Mainspring of Capitalism

BUT COMPETITION, which Marx saw as ‘nothing other than the inner nature of capital, appearing in and realised as the reciprocal interaction of many capitals with one another ...’ [13], is actually continually subverted by the accumulation process which it creates. For this increases the size of the capitals which confront each other, not only by ploughing back the maximum surplus, but also by reducing the number of independent owners of capital. Competition thus leads both to concentration and also centralisation of capital. Monopolies and trusts appear whose mutual competition for markets and funds is much reduced, and the more effective the monopoly the more it subverts the ‘inner nature of capital’. Marx remarked:

‘Today, therefore, the force of attraction, drawing together individual capitals, and the tendency to centralisation are stronger than ever before ... In any given branch of industry centralisation would reach its extreme limit if all the individual capitals invested in it were fused into a single capital. In a given society the limit would be reached only when the entire social capital was united in the hands of either a single capitalist or a single capitalist company.’ [14]

In Marx’s own life time the dominant means for the centralisation of capital was not the monopolistic merger, but the conversion of an individual’s capital into his part ownership of a joint-stock company. Of this process Marx said:

‘This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock insurance, and stock speculation. It is private production without the control of private property.’ [15]

Updating this passage to the 1890s, Engels commented:

‘Since Marx wrote the above, new forms of industrial enterprise have developed ... the old boasted freedom of competition has reached the end of its tether and must itself announce its obvious, scandalous bankruptcy ... in some branches ... competition has been replaced by monopoly.’ [16]

Yet in spite of these clear and obvious points, apologists for Russia’s present economic and social structure have taken an opposite view. They have taken one stage in the development of capitalism where there was individual ownership of capital and price competition, and then argued that since no such things exist in Russia today, no new social revolution is needed there. For instance Mandel justifies this conclusion by saying that planning is

‘a specific set of relations of production resulting from the suppression of the private property of the means of production and the beginning of the withering away of commodity production, through which the labour performed in collectively owned factories is recognised as immediately social labour.’ [17]

Taking the logic of this view seriously we would have to conclude that capitalism had ceased by the end of the 19th century, for as Engels commented against those who wanted to argue similarly in the Erfurt Programme:

‘I know of capitalist production as a social form, as an economic stage: and of capitalist private production as a phenomenon occurring one way or another within that stage. What does capitalist private production mean then? Production by a single entrepreneur, and that is of course becoming more and more an exception. Capitalist production through limited companies is already no longer private production, but production for the combined account of many people. And when we move on to the Trusts, which control and monopolise whole branches, then that means an end not only to the private production, but also to the planlessness.’ [18]

The message is clear. Not only are such apologies for Stalinism quite mistaken, but they are also exactly the same as the arguments mounted by extreme right-wing social democrats like Anthony Crosland to support the non-existence of western capitalism, which after all has also passed beyond the privatised and planless stage.

The real position is rather different. Planlessness and private production is but one stage in the development of capitalism, and yet for all that competition is capitalism’s ‘inner essence’. Obviously competition must be able to take on other forms than price competition between commodities produced by private capital for an anonymous market.

Such considerations as these formed the starting point for the most fruitful developments of marxist economic theory in this century, in particular Lenin and Bukharin’s theories of monopoly and imperialism. Based upon these premises they argued that ‘peaceful’ competition more and more turned into war, taking the form of physical seizure of raw materials, exclusion of rival capitalists by the erection of tarif walls etc.

It is quite impossible to understand the fantastic expansion in the role played by the capitalist state in the 20th century unless one also understands that it serves to create competitive coercion.

Russia Considered in Isolation from the Rest of the World

HOW THEN does the Russian economy and state appear in this context? Two features, as we saw earlier, were necessary for the specifically capitalist tendency of accumulation for the sake of accumulation: 1. Separation of the workers from the means of production, and 2. Competition between the capitalists.

Obviously the first of these exists in an extreme form in Russia. It is more developed than in the west due to the increased powers of repression of a totalitarian police state.

But what about the second feature? Overwhelmingly it is the case that within the Russian economy there is centralised administration of production. Individual productive units have rarely been autonomous or in competition with each other. In western capitalism we are used to the attempt to plan and cooperate within any given enterprise, coupled with competition outside it. Russia, considered purely on its own, lacks the mechanisms for introducing this competitive element. As Cliff puts it:

‘The division of labour within Russian society is in essence a species of the division of labour within a single workshop.’ [19]

If any one capitalist enterprise, General Motors or IBM say, had successfully managed to take over the whole of the world economy, capitalism would have ceased to exist. Competition between capitals would end, and therefore so too would accumulation for the sake of accumulation and production for the sake of accumulation. This would not be socialism of course but a new class society – one which Bukharin characterised as an industrial ‘slave-owning economy where the slave market is absent’. [20]

This gives us an accurate picture of what Russia might have been like had it been possible to remain in isolation from the rest of the world – just like this but on a smaller scale.

What this means is that if Russia were unaffected by the world around it, it could no longer be a society explainable by the laws of capitalism. Enterprises in Russia would not be forced by mutual competition to accumulate or increase the organic composition of capital. The purpose of production would be the creation of use values rather than the revenue obtained from selling them. Russia would have become a gigantic corporation in which the state had become the repository for all the means of production. In these two respects, ie. 1. state ownership of the means of production, and 2. use values as the purpose of production, and in these respects alone, it would resemble a workers’ state. It would also resemble Egypt of the Pharoehs and the ancient civilisations of Assyria and the Indus Valley, not just in these two respects, but also by being a hierarchical class society in which the producers themselves did not control production.

The Beginning of State Capitalism in Russia

BUT OF course Russia never could have been isolated from the rest of the world. Lenin was an internationalist not just because he wanted world socialism, but because he knew that the only way to get socialism anywhere including Russia, was for the working class to seize power in the dominant industrial capitalist countries:

‘We always staked our play upon an international revolution and this was unconditionally right ... We always emphasised ... the fact that in one country it is impossible to accomplish such a work as a socialist revolution.’ [21]

Or again in March 1919, Lenin repeated:

‘We do not live merely in a state but in a system of states and the existence of the Soviet Republic side by side with imperialist states for any length of time is inconceivable. In the end one or the other must triumph.’ [22]

Lenin made it clear that the source of the incompatibility was not just the military intervention of the imperialist powers, but Russia’s economic dependence upon the surrounding capitalist states; for he refers to the ‘... international market to which we are subordinated, with which we are connected and from which we cannot escape’. [23]

The extreme backwardness of Russia in an age of imperialism forced it to industrialise rapidly. If the revolutions in Germany and elsewhere had succeeded, plenty of means of production and skilled labour could have flowed into Russia to accomplish this task. But when the perspective changed from stressing the need to spread the revolution internationally to stressing the building of ‘socialism’ in a single country, as proposed by Stalin in 1924, the situation was completely reversed. If industrialisation was to take place in Russia in isolation it could only be by extracting huge surpluses from the peasantry, and by forcing many of these peasants off the land into the mines and the steel mills.

The bureaucracy could only retain power in so far as it could succeed in this task. It required a vast terror apparatus to subordinate the consumption of the masses to the accumulation needs of the Russian state. For a time Stalin tried to avoid this logic. He allied with the right wing in the Bolshevik party which spoke of ‘proceeding towards socialism at a snail’s pace’ without attacks on the peasantry. But this meant that what accumulation there was in the years 1923-8 went into the social services, education, agriculture and food, rather than heavy industry. Very little progress was made in these years towards catching up with the west.

An increase in international tension in 1927 showed the danger of the policy: without a more rapid rate of accumulation there was no way (other than international revolution, already ruled out by Stalin) of defending Russia. Stalin was forced to break with Bukharin a year later and follow a policy which went for all-out accumulation, regardless of the interests of Russian workers or, for that matter, individual bureaucrats.

The last vestiges of workers’ control were eliminated from the factories. Real wages were slashed and a general speed-up was introduced. Peasants were forcibly driven off the land to become factory fodder in the cities. The bureaucracy thus began a massive, primitive accumulation of capital. The results were immediate. Investment in industry expanded six times its 1923-8 level in the years 1928-33, and thereafter doubled in each of the succeeding five year periods. [24]

Capitalist Relations of Production Imposed Through Primitive Accumulation and the Arms Race

IN RUSSIA, the subordination of consumption to the needs of accumulation took on an extreme form. From the beginning of the first 5-year plan capital accumulation absorbed more than 20 per cent of the National Income, and it increased in subsequent plans. [25] This was higher than any of the developed capitalist countries outside Russia (but about the same as the USA and Japan in their equivalent periods of development), and shows clearly that this most characteristic symptom of capitalism – the domination of society by capital accumulation was fully developed in Russia.

Accumulation and not consumption thus became the goal of production in Russia. Acting as the agent for the accumulation of capital, the bureaucracy emerged as the collective capitalist at the same pace as the economy itself took on the same features of the giant corporations in the nations of the west that Russia was competing against.

The bureaucracy’s monopoly of foreign trade enabled it to seal off Russia from price competition. But strategic and military competition completely dominated the process of capital formation in Russia from the moment accumulation became the bureaucracy’s central concern in 1928.

From the beginning of the 5-year plans armaments dominated the accumulation process. For instance in machine-building plants, which are probably the best gauge of the development of accumulation, already by 1932 munitions plants accounted for as much as 46 per cent of total iron and steel consumed. By 1938 this figure had risen to the staggering sum of 94 per cent [26], and virtually all other machinery plant construction had ceased!

Accumulation in the pre-war period was dominated by strategic and military competition with the western nations. This was even more true for Russia after the war. Between 1950 and 1965 approximately twice as large a percentage of the national income was spent on armaments as in the 1930s, even though the proportion of total income accumulated throughout the economy remained largely unchanged. [27] The effect this had was for armaments to be directly responsible for around two thirds of all capital accumulated in this period. [28] Since 1928 therefore, not only has consumption been subordinated to accumulation, but in addition we can find the reasons for this in the competitive, coercive structure of world capitalism which accounts for the vast bulk of Russia’s tendency for accumulation for the sake of accumulation. It is not their own desires therefore, but the logic of world capitalism which forces the bureaucracy to accumulate.

The Dynamic of Russian Society Determined by the World Around It

BASICALLY RUSSIA is like one big factory, and although if it had existed in a vacuum the laws of capitalist development would cease to apply to it, that is obviously not the present case. Its actual behaviour is therefore based upon the same laws which govern the actions of other corporations. Of course we know that when corporations get very big and monopolise markets etc, we have to modify these laws. But the modifications are always on the basis of the original laws, and because of this they always preserve the basic tendencies and contradictions even if in a distorted form.

All this is another way of saying what we remarked upon at the beginning – capitalism is a process in continuous movement, not an unchanging thing. We identify it by its inherent tendencies, by its dynamic. That is why we look to Russia’s accumulation for accumulation’s sake based upon competition with western capitalism as the key to explaining changes in its internal structure rather than the other way about.

In just the same way Marx explained the southern states of the USA, whose economy was not based upon wage-labour, but on slavery, in terms of the capitalist social relations in the surrounding states. ‘Negro slavery’, he tells us, ‘presupposes wage labour, and if other, free states with wage labour did not exist alongside it, if, instead, the Negro states were isolated, then all social conditions there would immediately turn into pre-civilised forms.’ [29]

So in spite of the fact that there was no free wage labour for the slave in the southern USA in the 19th century, for Marx there was never any question of looking for a completely separate set of laws to explain its economy. In exactly the same way we can only begin to explain the dynamic of Russia today by relating it to the structure prevailing in the surrounding capitalist world economy.

Use Values and Exchange Values in Russia and the West

IT IS often argued that Russia cannot be capitalist because the internal organisation of the economy is not based upon competition of goods on the market. Firms produce according to instructions laid down by a central authority. It is said that therefore by definition they cannot be turning out commodities and Russia cannot be capitalist.

Marx says that the production of goods which are not exchanged with other goods on the market is the production of use-values not exchange-values: ‘To become a commodity a product must be transferred to another, to whom it will serve as a use-value, by means of an exchange.’ [30] Therefore Russia cannot be capitalist.

If this argument were correct much of production in the west would not be capitalist production either. Competition between the monopoly corporations in the west has increasingly been not so much over prices. The capitalist state has played an ever increasing role in the economy.

If Russia cannot be capitalist because production is organised by the state, very much under the influence of military considerations, then huge chunks of the western economy cannot be capitalist either, since they also produce for the state according to prearranged ‘plans’ without facing real competition. Furthermore many countries in the west have a substantial state sector to the economy. In Italy today the state owns or controls nearly half the economy. [32]

Finally, the non-state sector in the west is increasingly dominated by massive monopolies: in Britain today a hundred firms, dominated by interlocking directorships, control half the private sector production.

Within both the state sector and the monopolies, the individual productive units do not in the main produce for the market, but for other sections of the same enterprise, according to instructions laid down in advance. A single plant may well produce goods not for exchange, but for use by other plants inside the same combine.

Yet in the long run, all the different stages of production within the factory tend to obey the laws of capitalism. The individual capitalist is under pressure to impose the laws of capitalism within his own factory, even though there is planning within the factory, to maximise his profit. Although workers in one part of the factory are producing use values for workers in other parts of the factory - not exchange values - their production is regulated by similar considerations as if they were producing commodities for the market. The external relations of the factory to the rest of the economy transform the different stages of production within the factory into stages of capitalist production.

The same considerations apply when we look at the operation of the giant monopolies. Although vast areas of their operations are planned and very remote from the market, in the last analysis their competition with other monopolies ensures that capitalist laws prevail.

Production for the military needs of the state is not qualitatively different from monopoly production. Although the goods involved are never going to be exchanged on a competitive market (in Britain only 10 per cent of arms are sold to anyone but the British government), those who plan production are still compelled to impose the laws of capitalism on it.

Normally they do this by using various devices to compare the performance, costing and so on in the arms sector with other sectors. On the basis of such measurements, the state agrees to the arms barons receiving a certain level of remuneration. So although the arms companies rarely compete for markets with anyone, they have to behave as if they do. Capitalism continues to exist – even though the state bureaucracy acts as a substitute for the market.

In each case the mechanisms that are employed internally are similar. Labour has to be exploited as efficiently as by the rival, productivity has continually to be jacked up. Although the individual firm or country may plan its operations, the content of this ‘plan’ depends on its relationship to its rival: if it cannot match its rival’s increases in the rate of exploitation or advances in technology, then it will be in danger. What determines the internal organisation of each country, as of each firm, is its relationship to a total system outside itself.

That is why the huge arms sector of the US economy today is a capitalist sector: it has to compare its productivity, its level of technology and its labour costs with those of the rest of the western countries and with the Russian economy because of economic competition with Europe and Japan and in military competition with Russia.

Similarly for the Russian economy as a whole. If it is dominated by arms production (as we have shown above) then it is dominated by its relationship with production outside Russia. What matters to the rulers of Russia is not how many use values they pile up in the abstract, but how these use values compare with the use values piled up by the American arms economy.

But when two piles of use values are measured up against one another, they cease to be merely use values. They begin to behave like exchange values: their value no longer depends upon their intrinsic qualities, but upon their relationship to production throughout the world system.

The very things which the rulers of Russia worry about show how they are dominated in all their calculations by such considerations just as much as any western monopolist is. When they talk about rates of growth, it is rates of growth compared with the west. They are not worried about the outputs of labour as such, but labour productivity compared with the west. They are obsessed with their low rate of innovation, again, compared with the west.

The key areas of economic decision making which affect workers are made according to the same sorts of calculations that apply in the west: how can the profitability of different sectors be improved? How can workers be persuaded to accept a cut in the labour force and increased output in return for more pay? What level of wages is needed to ensure that workers produce at the greatest possible speed? The consequences of the competitive relationship with the west are inescapable.

Marx moves from an analysis of individual commodity production at the beginning of volume 1 of Capital to the dynamic of capitalism, accumulation, towards the end. We begin by showing that in Russia, as in the west, everything is subordinated to accumulation. Now we can see that accumulation is in turn the result of the competitive relationship between the Russian ruling class and its rivals, which transforms the output of Russian industry as a whole into production dominated by the essentially capitalist criterion of exchange value.

The Contradictions of State Capitalism

IF RUSSIA is economically speaking just like one huge corporation, then the familiar contradictions of capitalism must appear there too. That means that sooner or later the rate of profit must decline.

In the west this has in the past signalled the beginning of a slump. Investment ceases, demand declines, overproduction begins, and then capital values collapse. Out of the crisis the weakest units of capital become bankrupt and are absorbed at bargain prices by the stronger units of capital. This restructures capital and makes it possible for it to function again. With rivals bankrupt and capital values much lower, the rate of profit temporarily recovers and the cycle begins anew.

But in Russia there is no such mechanism connecting overproduction with the restructuring of capital. Major investment decisions are centrally administered, and there is no means whereby the bureaucrat who makes the decisions will change them automatically. For the factory manager too, it is a matter of indifference whether his goods get consumed or remain untouched in a warehouse, or whether his new factory premises are completed or left unfinished. This is hardly a sign that the Russian economy is crisis free – exactly the opposite is the case; it is a clear indication that the economy is in a state of permanent crisis. Western capitalism has mechanisms of a greater or a lesser efficiency for restructuring capital in crisis, but Russia has no such internal means of doing so. So further accumulation at this point actually does continue, but it fails to expand the sum total of use values in the economy. It has reached a state of permanent stagnation.

Only comparatively recently has this become of crucial importance. Until the 1950s underutilised labour was so freely available that primitive accumulation could proceed and absorb new investment profitably. Until then Russia could continue to devote its principle accumulation resources to expanding the means of production. But because all means of production must, after an initial lag, contribute to the means of consumption, this merely delayed the crisis. It cannot stop the state of permanent stagnation occuring, but only delay the time when it appears.

The arms economy, apart from being the main source of competition with the west, also delays the appearance of the crisis of state capitalism. Armaments are paid for out of the proportion of the national economy remaining after wages and wear and tear of fixed machinery have been deducted. So they compete with accumulation for funds, the more arms the less there is for accumulation. Armaments therefore reduce the amount accumulated, and thus slow down the rise in the organic composition of capital. This leads to the rate of profit declining more slowly than otherwise, and causing the crisis to be delayed further.

Both of these temporary ‘solutions’ to the contradictions of Russian state capitalism have now largely outlived their usefulness, and this has become increasingly clear even to the ruling strata in the bureaucracy itself. In recent years they have therefore made desperate attempts to incorporate the missing features of western capitalism, and to graft them on to the structure of state capitalism itself. Their attempt to do so is no more and no less contradictory than the ‘conversion’ of upholders of the western capitalist state to the principles of national planning and incomes policy.

In both cases they are attempting to resolve the contradictions of the world capitalist system without abolishing capitalism itself. In both cases they are attempting the impossible.


1. CPSU Central Committee Resolution, September 1929. Quoted in T. Cliff, State Capitalism in Russia, Pluto Press 1974, p.13.

2. Ibid., p.23.

3. T. Cliff, Russia – A Marxist Analysis, London 1965, p.31.

4. V. Serge, From Lenin to Stalin, Pathfinder, p.68. The quotation is from 1933.

5. T. Cliff, Op. Cit., p.286.

6. Pravda, 22.12.47. Quoted in T. Cliff, State Capitalism in Russia, p.109.

7. K. Marx, Capital, Moscow 1961, Vol.1, pp.751-3.

8. Ibid., p.751.

9. K. Marx, Grundrisse, Penguin 1973, p.258.

10. K. Marx, Manifesto of the Communist Party, Moscow, p.73.

11. K. Marx, Capital, Vol.1, p.592-5.

12. Ibid., p.592.

13. K. Marx, Grundrisse, p.414.

14. K. Marx, Capital, Vol.1, p.626-7.

15. K. Marx, Capital, Vol.3, p.429.

16. Ibid., p.428-9.

17. E. Mandel, Readings in State Capitalism, IMG,1973, p.34.

18. F. Engels, Critique of the Erfurt Programme, in Marx/Engels, Werke, Berlin 1963, Vol.22, pp.231-2 (Engel’s emphasis)

19. Cliff, Op. Cit., p.203.

20. N. Bukharin, Imperialism and World Economy, Merlin, p.157 (note).

21. T. Cliff, Op. Cit., p.144-5.

22. Quoted in L. Trotsky, The Third International After Lenin, Pathfinder, p.13.

23. Ibid., p.46.

24. T. Cliff, Op. Cit., p.39.

25. T. Cliff, A Socialist Review, London 1966, p.116-7.

26. T. Cliff, State Capitalism in Russia, p.46.

27. Cohn, Economic Development in the Soviet Union, Mass. 1970, p.71.

28. Schwartz, The Soviet Economy since Stalin, Gollancz, pp.45-6.

29. K. Marx, Grundrisse, p.224 (Marx’s emphasis).

30. K. Marx, Capital, Vol.1, p.41.

31. A. Zauberman, Industrial Progress in Poland, Czechoslovakia and East Germany, OUP, p.3. (This reference seems to have been left out in the published version. – ETOL)

32. Figures aggregated from tables to be found in S. Clough, The Economic History of Modern Italy, 1964, p.372, G. Podbielski, Italy: Development & Crisis in the Post-War Economy, 1974, p.105, and V. Lutz, Italy – A Study in Economic Development, 1962, pp.268-84.

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