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Sam Levy

The Étatist Stage of Capitalist Development

(December 1964)

From Socialist Current, Volume 9, no 10, December 1964.
Transcribed & marked up by Ted Crawford, Paul Flewers & David Walters for the Encyclopaedia of Trotskyism On-Line (ETOL).

A Socialist Current pamphlet, also numbered in the Socialist Current magazine series, Volume 9, no 10, December 1964. Scanned and prepared for the Marxist Internet Archive by Ted Crawford and Paul Flewers. Obvious minor spelling, punctuation and grammatical errors have been corrected without indication; two unclear passages have been reproduced as in the original, but with suggested clarifications in the footnotes.

Ted Crawford comments:

I was a member of the Socialist Current when this was written and associated myself with it. It was almost wholly written by Sam Levy as the convoluted English style suggests. Believe me, the original had to be hammered into some sort of sense by myself and Frank Rowe, though eventually I think I tended to throw up my hands in horror, and I note the English seems to get still worse towards the end. What input I had was in suggesting or providing examples of the trends then operating in capitalism. In retrospect, it was a fair enough snapshot of things which in a few years would change radically. It is noticeable that it seems to be, at base, an attack on Kidron’s ‘Permanent Arms Economy’ and on the Third Worldism prevalent in much of the left at the time. I am not sure what practical political conclusions flow from it since in today’s conditions. I fail to find any.


This pamphlet is just the first part of a larger work which when completed will provide a fundamental political position for Socialist Current and from which, if we are in any way consistent, our approach to politics will flow.

Structurally, in our analysis, the series will follow the normal common practice of sub-dividing the world into three major segments: the advanced capitalist bloc and its periphery, the Stalinist bloc in its entirety, and the neutralist one. This is, of course, not the basic division in society for that division is the one between societies resting on different economic foundations: the capitalist foundations of private property and the market economy in the ‘West’ and the socialist planned economy of the ‘East’. Nevertheless, it is necessary to examine broadly, but seriously, the important economic, social and political characteristics of the three ‘orders’ (which will be done in our first three pamphlets) because while there are important economic differences within some of the ‘blocs’, and these find their expression in politics, the immediate, measurable division between the blocs is a political one. Obviously it is logical to begin the study with an examination of the advanced capitalist countries, because they represent one of the two main pillars of the modern world and because they are the ones with the longest history and tradition in contemporary economic terms. This is what this particular and initial pamphlet is about.

The final pamphlet in the series, the fourth one, will be concerned with drawing the strings together, examining the roles of the various socialist movements in relation to the conclusions obtained from the analysis, and, above all, seeking to justify the need for a revolutionary tendency, which is perhaps the most familiar and important platform of Socialist Current.

Chapter One: An Introductory Note

The need to examine and understand the character of modern capitalist society in turn makes it imperative that we, as Marxists ourselves, should firmly reject the habit which has become so fashionable in recent years among many who use this label of ‘answering’ every problem of political thought that crops up with a definition or a phrase borrowed from the writings of past Marxist thinkers. We have to look critically at the world around us, ready to recognise new factors as they arise and, indeed, to go further than this and ask ourselves the key question as to whether or not this is essentially the same sort of period as that which people like Lenin and Trotsky were describing in the earlier decades of the century.

This approach is of course in complete conformity with the whole tradition and method of Marxism. Lenin, in his classic work Imperialism: The Highest Stage of Capitalism , came to the conclusion that the period in which he and his comrades were living and working was a different one to that about which Marx had written. He considered that, while the underlying capitalist property relationship analysed by Marx remained intact, the laissez-faire stage of capitalism had given way to a new and more advanced level of development which he termed ‘Monopoly Capitalism’ or ‘Imperialism’. Thus, when we assert, when we come to the conclusion as we have done, that present-day capitalism simply doesn’t conform with Lenin’s definition ‘Imperialism’, that in fact capitalist society has evolved onto yet another level of development, which we have called the ‘Étatist’ stage of capitalism, we commit no kind of political sacrilege — whatever the more pious and ritualistic may think. Our assertion must simply stand or fall on the basis of the facts and the argument which we put forward in the main body of the pamphlet.

A Mirage: By way of an incidental note here, we would point out that we use the French expression ‘Étatism’, rather than the English approximation ‘Statism’, so that our ideas on the subject are not confused with the concept of ‘State Capitalism’, the theory that the state is capable of taking over the functions of the individual capitalists and capitalist combines, through a programme of nationalisation and the like, to such a degree that the present forms of capitalist property ownership completely disappears, while the capitalists themselves continue to enjoy the prerogatives and privileges of being the ruling and exploiting class through their control of the state machine. In fact the concept of ‘State Capitalism’ is nothing but an intellectual mirage. Such a set-up would imply no ‘market’ in any capitalist sense, no economic cycles, and, in practice, none of the basic characteristics of capitalism itself either in relation to production or distribution. Whatever else it might be, it would not be capitalism in any conceivable sense at any conceivable stage of its development: a qualitative change would be involved. The theoretical possibility, under this imagined system, of individual ex-capitalists together constituting a stratum of wealthy coupon-clippers is neither a fundamental nor an economic criterion. At most, the gentlemen would be an extremely transitory social layer, remittance-men, with very poor prospects.

Those who talk about the direction in which the advanced capitalist countries are supposed to be going as ‘State Capitalism’ and those who label present-day Russia and the Eastern bloc in similar terms are just playing with words.

Let us, however, get away from these necessary ideological preliminaries and proceed with our main business, which is to examine the present-day characteristics of the advanced capitalist countries and then define what we have found.

Chapter Two: The State as a Consumer

Adam Smith in his time demanded loudly and vigorously that the state should abstain from any interference in the country’s economy. Today, however, the British economy, like the economies of all the advanced capitalist states, could not function without the interference and participation of this same state. The once spurned apparatus now directly intervenes in the entire framework of the economy, in production and in distribution, in scientific research and applied mechanics, and one could continue ad infinitum . It is true that the manner in which the state participates in the economy is determined by the political atmosphere at the given time in the given country, but the direction accumulatively is in one way only in all the advanced capitalist countries; it is in the direction of ever-increasing state intervention. The fact that nationalisation is a dirty word in American politics does not alter the fact that there too, as elsewhere, the state is taking an ever-larger role in the economy. The same senators who denounce most ardently ‘socialist’ measures in other countries vote for farm-price support programmes and the like.

No 1 Consumer: The state is now by far the largest consumer in every advanced country. In Britain, around 26 per cent of the Gross National Product is realised in the government’s own budget (£6,929m compared with £26,650m GNP last year) and this does not take into account spending by local authorities, etc, which in turn is becoming an increasingly substantial factor in overall consumption. This added another £2,846m to the public expenditure account last year, bringing the total for this class of spending to £9,775m or over 36 per cent of the GNP.

Though consumption by the state and local authorities doesn’t reach such a high proportion in all capitalist countries, it nevertheless remains a fact that the state and its agencies are the No 1 consumers in all these territories and account for an ever-growing proportion of consumption. Again, even in the United States the government is the consumer par excellence . It spends around 10 per cent annually of that country’s GNP on ‘Defence’ alone (10.2 per cent is the provisional figure for 1962, the latest year for which figures are available) besides a truly colossal civil expenditure by the Federal States and local government administrations.

While armaments and defence expenditure in all its forms are a major aspect of government consumption in all the advanced capitalist countries, there are other financial calls on the purse of the state as well, such as welfare and educational commitments, grants for scientific research, aid to private industry, and so on. The budget and local government expenditure figures for Britain quoted earlier, of course include this latter class of spending, now accepted by all as one of the facts of life. What, however, is not so patently obvious to many people here is the fact that this type of government intervention in the economy, this sort of state underwriting of industry and commerce, applies to all the advanced capitalist countries, including, again, the United States.

Chapter Three: The State as a Producer

In many countries of the Western bloc the state is not only the largest consumer but it is also the biggest producer. Even where this does not fully apply in the direct sense, and here once again the United States springs to mind, there are often subsidies for segments of private industry without which these particular branches could not adequately operate. In Western Europe, particularly Britain, France and Italy, the importance of the state in the field of production is unquestioned. The types of industry nationalised are of course generally those which are absolutely necessary for the functioning of the ‘market’ economy as a whole, but which for one reason or another are impractical as a preserve of the much-publicised ‘private enterprise’ sector. On the one hand, there are the declining and basically unprofitable industries like coal and rail transport, while, on the other hand, there are those which are either extremely risky or involve a very high amount of capital investment. Civil air transport, in the sense of the operation of a world-wide network of routes on scheduled basis, is an excellent example of an industry with a very high financial risk element and where ‘private enterprise’, at least in Western Europe, can only in fact successfully run a few very popular seasonal routes and the rather more predictable charter side of the business. The development of nuclear power is a good instance of a field where tremendous capital investments are called for and where profitability can only be visualised somewhere in the distant future or, here and now, as far as private industry is concerned, in the supply of equipment to the state, which not only has done the research but also is producing the end product, the power that comes from the reactor.

Over 40 Per Cent: In the last example, and for that matter in the others as well, the state is both a producer and a consumer. If we only take into account investments by the nationalised and other public corporations, that is expenditure on new equipment, etc, we find that last year in Britain this added another £1,135m to state spending, bringing the total to £10,910m or over 40 per cent of the GNP.

But to revert to the subject in hand, the state’s role in the area of production. This takes the form not only of direct nationalisation or public ownership but also, and in addition, of underwriting of segments of the private sector by way of subsidies, guarantees and the like. Though the latter aspect has been touched on earlier, as an aspect of state consumption, it is well worth now taking a second and closer look at it, because it often reflects an earlier phase of the state’s intervention in the field of production as well as an extension of it. Here, in Britain, we see this ‘underwriting’ activity of the state in the aircraft construction industry, in the subsidies given to ship-owners who place orders for new vessels with British yards, in the compensation scheme for ‘rationalising’ the cotton industry, in agriculture, where the state financially backs fertiliser purchases, farm improvement projects, the guaranteed price regulations, and so on, as well as in a host of other industries. As the ‘Good Samaritan’, the rescuer of sorely stricken ‘private enterprise’ in many sectors of production, it spends just under one-tenth of the budget on this activity alone: £665m is the exact figure for last year and this figure is of course included in the statistics already given for ‘public consumption’.

On the Continent: Underwriting by way of guarantees, subsidies, tax-exemption or tax rebate schemes is even more ardently pursued on the other side of the Atlantic, which is what one would expect, since there it is not an extension of direct public ownership, but a substitute, an alternative for politically unpalatable nationalisation. To a greater or lesser degree what has been said about the financial propping up of segments of the private enterprise sector applies to all the advanced countries and in particular to those of Western Europe. Two very recent examples cry out for mention. In France, during the winter of 1963-64, the government mounted what was virtually a rescue operation of the computer and business equipment firm of ‘Machines Bull’, while in Italy the government has virtually appointed the new managing director of the ‘Olivetti’ typewriter concern, which is heavily backed by state finance. In fact, in both these countries the state intervenes in the field of production to at least as great a degree as it does in Britain. Statistics show that 85 per cent of the banks in France and 90 per cent of those in Italy are owned by the state, for example.

Chapter Four: The Export of Capital

The new phase of capitalist development, which we have termed the ‘Étatist’ phase, is shown more sharply by the state’s role in the export of capital than in some other aspects of the state’s intervention in the economy. In fact, ‘the export of capital, as distinguished from the export of commodities’ by the monopolies was one of the key aspects of the periods of ‘Imperialism’, well at least in Lenin’s definition, and when this activity has to be undertaken, as it now does, primarily by the state instead of ‘private’ capitalist interests, and for political motives instead of economic, profit-motivated considerations, then this in itself strongly suggests that the period with which we are now dealing is not the same one as that which Lenin and his comrades were talking about.

Export of Capital: With the break-up of the old colonial empires, with the new emerging states either nationalising sectors of the economy, particularly the predominantly foreign-owned ones, or alternatively placing restrictions on the ‘repatriation of profits’, the tendency is more and more for investors in the old metropolitan countries to seek ways of withdrawing their capital from these new nations or, at least, to invest less readily new capital in them, to put it mildly. In face of the ‘unstable political conditions’ in the underdeveloped countries which once flew the Union Jack, in common with most of the ex-colonial territories of the other powers, the trend now is for investors to ‘export’ their capital to other industrialised, and therefore stable, countries, rather than the ones which once used to provide them with such unique opportunities for super-exploitation and super-profits.

The latest Board of Trade figures available for direct investments by British industrialists overseas are those for the year 1962, and these show that only just over one-third of such accumulated investments (£1,250m out of a total of £3,500m) are now sunk in the underdeveloped territories, the old stamping ground for the export of UK capital. Though the same BoT statistics are not too explicit on this point, they show, by implication, that the trend for new overseas investments is even more heavily geared towards other industrialised states. Calculations suggest that less than one-third of the ‘new’ overseas investments by British industrialists in 1962 went to the old colonial and semi-colonial areas and that rather more than half of this so-called ‘new investment’ is in fact ‘unremitted profits’, that is profits that the British investors were unable to bring out because of local currency regulations, for instance.

Comparisons: Comparison-wise, which admittedly contains all sorts of snags, we find that British overseas investments of the direct kind in 1914 amounted to around £200m per annum, a ratio of around 10 per cent of the Gross National Product, while in 1962 total new British direct investments overseas only amounted to £212m out of a GNP of £26,650m, an export ratio of little more than one per cent. What is more, as has already been mentioned, no more than about one-third of this new investment is in fact going to the underdeveloped countries, and over half of that is not really ‘new’ investment at all, while in 1914 the proportion was certainly over two-thirds. The weakness in these sorts of comparisons is in the fact that, on the one hand, ‘direct investments’ do not include investments by the banks, insurance companies or oil combines and never did, and, on the other hand, we don’t know the internal structural breakdown of some of the figures. Thus, they should be treated as reflecting trends rather than as giving a complete picture of the exact situation at the end of 1962.

What these figures and comparisons do point to, however, is the fact that the British capitalist class is finding it less and less profitable to invest in the old domains of ‘super-exploitation’ and is less and less inclined to do so. The same applies to the capitalist class in all the industrially advanced countries and, if the actual figures differ somewhat in respect of the different advanced countries, they nevertheless show the same trends in the export of capital to the underdeveloped areas of the world, and that includes the transatlantic trends as well.

State Intervention: This tendency towards a drying up of capital investment by the individual capitalists and the monopolies has in our period led to the state in the advanced countries taking over the main role of providing capital for the underdeveloped areas. The field in which the monopolies and oligopolies still continue to make such investments tends to be more and more restricted and is, in practice, often guaranteed and underwritten by the state in their own country. The state in the old metropolitan countries is now very much the principal source of capital exports, whether it be by way of grants or loans through such agencies as the Colombo Plan and the United Nations or directly through bilateral agreements with the governments of individual underdeveloped countries. The loans and grants made financially to back up India’s Five-Year Plan, Ghana’s Volta River project, Egypt’s development schemes, and the like, are illustrations of the point.

This sort of capital, because it comes under the control of the government in the importing country, is very much more directly related to the development of that country’s economy as a whole than the capital previously poured in by the monopolies, which often developed sectional parts of the underdeveloped country’s economy, at the cost of distorting the whole. The purpose behind the present type of capital export by the state from the industrially advanced capitalist countries is political rather than economic. Its primary purpose is to maintain close and friendly relations with the governments and the ruling strata of the new nations, to compete for the favour of these governments and the ruling strata, with the Soviet bloc who, equally, give loans and grants, as in the case of the Egyptian Aswan Dam scheme, to mention only one instance. Such exports of capital are, in fact, used as weapons by the capitalist class of the advanced countries of the ‘Western bloc’ in the struggle for maintaining a stable and basically capitalist form of society in the underdeveloped areas. This does not mean, of course, that the grant-giving, loan-providing state does not try to obtain economic advantages for its capitalist class, or relevant sections of it, in the course of negotiations leading up to the agreement. It does so in many cases. United States government missions in particular are often under considerable pressure from vested interests at home and to a frequently embarrassing degree. But, in our time and in our period, such purely economic calculations are secondary to the overriding political ones, that is to keep the underdeveloped areas of the world within the capitalist orbit and to halt the tendency that is now becoming discernible of capitalism contracting in on itself into a fairly limited geographical area, into the territories of the industrially advanced capitalist states of the ‘Western bloc’.

Of course, by far the larger amount of the export of capital is still done by the ‘private’ monopolies collectively than is as yet done by the state in the various advanced capitalist countries. But these exports, those of the ‘normal’ and old-style kind, are increasingly going to a more narrow and restricted area, namely the advanced capitalist countries of the ‘Western bloc’, and other ‘stable areas’. Some 65 per cent of all British direct investments abroad are now sunk in such territories (eight per cent in the USA, 18 per cent in Canada, 15 per cent in Western Europe, 11 per cent in Australia, 10 per cent in South Africa, three per cent in ‘others’, Japan, New Zealand, etc) and it seems that this trend to cross-invest in each others’ laundries applies to all the advanced capitalist countries and to an increasing degree. Investments in oil and certain minerals are the exceptions to this, for geographical reasons, but these may well be short-term exceptions. Oil, for example, is now being actively sought outside the underdeveloped countries, including the North Sea.

Chapter Five: The State and Technology

The state, in this period, has also become the centre and the stimulator of whatever dynamism there is in the capitalist economies of the ‘Western bloc’. Both nuclear research and the utilisation of nuclear energy owes everything to the state itself, which has been, if not always the actual creator, then at least the initiator and the subsidiser of a whole series of other scientific and technical innovations, such as radar, the special heat resistant metals now being developed, the complicated instrumentation needed for space exploration, to name but three of many more. The present ‘technological revolution’ would have been virtually out of the question without the state’s intervention in the economy, in the field of ‘consumption’ as well as in the field of ‘production’, as the initiator of technical development, and as the propulsive force in every respect.

The development of the Anglo-French supersonic passenger plane, the ‘Concorde’, which is still in the development stage, provides an excellent thumb-nail picture of the state’s many-sided role, or at least several facets of it. The plane, in theory being developed as a straight commercial venture jointly by a British and a French aircraft governments in three distinct ways [1]. First, the respective governments participated in the negotiations leading up to the deal between Bristol and Sud-Aviation and implicitly the companies benefit from the ‘technological fall-out’ and the ‘know-now’ acquired from their previous military contracts. Secondly, the respective governments have underwritten a large part of the ‘development cost’ of this aircraft, and, thirdly, both of them have placed ‘letters of intent’ to buy the Concorde through their respective state airlines. Thus the state, both in Britain and France, has intervened in this particular project as an initiator, as a subsidiser, as a producer and as a ‘consumer’, and, as if to underline the point, Sud-Aviation is itself state-owned. The American government is also being pushed by its aircraft constructors to play a similar role in the USA in the development of a competing supersonic plane, and Kennedy, later followed by Johnson, agreed that the American government would do so, though Johnson has since qualified this by saying, in effect, that this would depend on technical and social feasibility. This in the land of rugged ‘free enterprise’.

Superficial: At first sight, it might seem that the development of automation techniques and the computers to which these techniques are linked has little or nothing to do with the growing dominance of the state in the economy because, after all, the ‘growth’ industries, like electronics, which have made the computers themselves possible are for the most part in ‘private enterprise’ hands and, anyway, progress in automation techniques has gone furthest in the United States where there is no ‘state sector’ in the recognised European or British sense. But that is a superficial estimate, and not a particularly accurate one, because much of the ‘know-how’ involved in the development of both electronics and computers is itself ‘technological fall-out’ (to use once again this favourite American expression) derived from the US government’s military and space programmes which are certainly state enterprises in several ways.

More important, perhaps, is that the state through its overall intervention in the economy, production-wise as a subsidiser of segments of industry, as the biggest single and most reliable buyer of industry’s products, and politically through its budgetary and financial policies, import controls, etc, has created the background conditions for technological breakthroughs such as automation techniques and computerisation. Automation involves tremendous capital expenditure, and this sort of capital is only obtainable under such conditions as those of a growing market and some degree of stability in the economy as a whole. This is precisely what the state, in the USA as well as in Western Europe, has been able to provide through, and as a result of, its already mentioned activities in the economic field.

The importance of the state’s role in technological development can be shown by inference through a comparison with this period to that before the war. In the 1920s and 1930s, in the heyday of the unquestioned power of the monopolies, technological development was largely stagnating, despite the fact that during that period a whole series of scientific ‘breakthroughs’ had been made and practical ‘know-how’ was steadily accumulating. To give the most striking example, the theoretical breakthrough in the field of atomic physics was made in the late 1920s but only utilised under the stimulus of war, a decade or more later, by the state. One could give dozens of other equally revealing examples — jet propulsion, antibiotics, synthetics, for instance — of the same thing. Compare that with the situation since the war, where every significant scientific innovation has passed rapidly into the technological pipeline, where this in turn has led to further pressure on scientists and technologists to come up with newer and more advanced ideas, and the climatic difference between the two periods stands out a mile.

Necessity is said to be the Mother of Invention, and the mother here is not only the demands made by competition between the giant combines in the ‘Western World’, but also the competition with the growing productivity of the Stalinist bloc. The struggle between the blocs, the struggle between social systems, has its technological as well as military and political aspects, and, in fact, it is this struggle which makes the state’s present dominant role in the economy a necessity for the capitalist class.

Chapter Six: The Boom-Slump Cycle

It is indisputable that the capitalist state, in all the advanced capitalist countries, is now involved and intertwined with the economy itself to a degree never seen before under capitalism since the industrial revolution. And this intertwining does, as it must necessarily do, affect the market structure of capitalism, resulting in a further modification of this structure with a consequent effect on the whole ‘boom-slump’ cycle which is one of its basic characteristics.

Étatism and Keynesian types of techniques are made for each other. For only under a state-influenced and partially-controlled economy can Keynesian technique be consciously and adequately applied. And under the postwar conditions, which have been relatively favourable, the Keynesian and semi-Keynesian methods have been applied with a certain, though limited, amount of success. The proud boast of the American government official that there has been 41 months of continuous and rising economic activity without a recession and with the future looking more prosperous and glorious then ever, makes one very much aware of the existence of the grand illusion that the complete answer to the problems of economic cycle has been found. The undoubted successes of these new techniques have been exaggerated whilst their weaknesses and limitations have been either shrugged away as misapplications of the techniques, or attributed to the need for further development or modifications of these methods within the capitalist society.

Marxism: There is a tendency on the part of reformists and the like (whose ideas we shall discuss more fully later on in this series) to contrast the sound, realistic Keynesian and semi-Keynesian economic remedies, which are said to have ‘overcome’ the serious consequences of trade recessions, with the so-called mechanical, mystical belief of Marxists about the inevitability of slumps. As it happens, the reformists for the most part have never had a clear idea of what the Marxist concept on this particular question really amounts to. Most of them seem to have read only the books written by critics of Marxism, whose authors in turn seem to have read only the works of other critics.

The truth is that, while Marxists have always pointed out that the boom-slump cycle is a basic and built-in element of the market economy, they have nevertheless always rejected the idea of a mechanical cycle that is somehow independent of the numerous factors, including the decisions and actions of men, which affect the market economy. The concentration of capital, the merging of banking and industrial capital and the rise of the monopolies combined to produce that stage in capitalist development which Marxists call ‘Monopoly-Capitalism’ and that, most certainly, had an effect on the basic market economy and resulted in turn in a different sort of boom-slump cycle to that experienced in the earlier laissez-faire stage of capitalism. So too does the intervention of the state in the day-to-day running of the economy, which we have been describing and which we have called the ‘Étatist’ stage of capitalism. It also affects the underlying market economy and again alters the pattern of the economic cycle from what it was in the previous ‘Monopoly-Capitalist’ or ‘Imperialist’ stage.

Diversified Forms: No Marxist who knew what he was talking about (that is perhaps a slight qualification) has ever argued that there is a ‘law’ for the boom-slump cycle that is independent of the factors that make up the market economy at a given time, or those which modify it. On the contrary, Marxists have always rejected the mechanical and mystical concepts of that kind as the following quotations from past Marxist thinkers show.

Engels in his introduction to Volume 1 of Marx’s Capital (1886) was already pointing to the changing pattern of the cycle when he said, ‘the decennial cycle of stagnation, prosperity, overproduction and crisis ever recurrent from 1825 to 1867 seems to have run its course’. And Lenin, some 28 years later, argued that:

This assumes the most diversified forms, and gives capital the possibility of expanding production at an exceptionally rapid rate. This possibility in conjunction with enhanced facilities for credit and with the accumulation of capital in the means of production, furnishes, among other things, the key to the understanding of the crisis of overproduction that occur in capitalist countries — first about every ten years on an average but subsequently in a more continuous form and with a less definite periodicity . [Our emphasis]

Again Leon Trotsky, in Whither France? , also pointed to the changing pattern of the cycle, to the lack of dynamism in the economy in his day, to the weakness of the boom-slump cycle, particularly the boom part of it, and to the decay of Monopoly Capitalism itself.

Boom-Slump Cycle: For the Marxist, the important thing is not that every crisis must be a 1929-style one, but the inevitability of the cycle, in some form or another, under capitalism. The intensity of the boom or the slump is determined by the phase of capitalist development in which it takes place, whether it be in capitalism’s explosive youth or in its decaying old age, and by the specific conditions that have given rise to and created the dynamic for the specific boom.

Despite the claims of the modern reformists, no real solution has been found for the boom-slump cycle. Before 1929, many were claiming that capitalism had overcome this problem, that the monopolies, by the intelligent use of their power, were able to iron out the worst aspects of it. For ‘Monopolyism’, in its heyday, seemed to be able to tame the monster slumps. That of course was before 1929, which put an end to that particular illusion.

The rise of ‘Étatism’, in our period, is a factor of great importance, and that indeed is the reason why we are discussing it, but it has not, by any means, led to the elimination of the boom-slump cycle. It is true that there has not been, since the war, a thoroughgoing recession on a world scale, and that while some countries have had minor recessions, the USA for example, or Britain to a lesser extent, other countries, like West Germany and Japan, have kept some sort of boom going all along. The lack of uniformity here cannot be attributed to the particular division of capital within the states concerned, nor can it be attributed to the fact that the German and the Japanese states were better organised to deal with the situation than their British counterparts, because, in fact, the state in Britain has far greater control potentialities in relation to the economy, due to the greater degree of its intervention in the economy, than is the case in either Germany or Japan. The difference in the experiences of the USA and Britain on the one hand, and Germany and Japan on the other, is, in this context, due to the fact that, in a period when nothing was going radically wrong on a world scale to upset the forward movement of the economies internationally, the secondary, internal factors in each of the economies became the determining ones that decided whether or not the level of economic activity would recede or keep going. Of course, in the long run, the USA still remains the decisive key as to whether or not there would be a major slump, despite the fact that West Germany has nosed ahead of the USA as the world’s leading exporter of goods. The tremendous investments which the American capitalist class has in all other major countries, the level of technical development and productivity with which it leads the Western world, the very power of its internal economy, makes this unavoidable.

Yet the United States has no more than any other country overcome the cycle. In fact the United States has gone through a number of minor recessions and boomlets since the war, and all of the American government’s measures to tackle the downswings of the pendulum have been temporary and transitory in whatever effect they have had. Within three or four years of one recession being overcome another has followed.

What We Said: We said at the time of the 1957 recession (in our pamphlet The Character and Implication of the American Recession ) that:

While state financing has the effect of stopping the contraction of the market and tends to start it up again, this has a limited (as well as a distorting) effect, because (1) a major crisis has the effect of liquidating inefficient and archaic capital as well as having the effect of paring down the credit structure to near reality, cutting down and eliminating a large part of inflationary and fictitious capital and thereby laying the basis for a large-scale development of the economy and the credit structure as a part of the same; creating a much fuller development of the cycle movement towards the boom. Whereas the stopping of the process of liquidation by that fact limits the cycle from slump to boom because it limits the cutting away of the inefficient elements in the economy and makes further expansion that much more difficult. And (2) also, insofar as the state more and more participates directly in the economy, it becomes more and more a part of it, and therefore its recuperative value in developing the boom becomes more and more limited. Finally (3) the problem of the relationship between production and consumption is a continually expanding one, with a continual expansion of production and productive capacity, without a corresponding increase in consumption, and therefore the state has to intervene with increasing amounts of financial assistance in order that things may remain as they are.

Thus, on the one hand, we see that it has a diminishing effect as an instrument of expansion, and on the other hand, it becomes a more and more costly instrument: for deficit financing must grow, particularly during periods of crisis.

From that analysis we then drew the conclusion that:

We see state intervention creating a small upsurge of profitability and expansion of the market but, with the rapid growth of productivity, the impetus given by the creation of fictitious capital by the state is fairly rapidly exhausted, and the same problem is once again faced.

Affected By State: No one should really doubt that the economic cycle operates today just as it did in Marx’s day, though the pattern itself is different. The present pattern is largely affected by the state and its increased role in the economy. Therefore the question of a major slump is directly related to the issue of the state itself. For a really major slump is only likely to arise with the bankruptcy of the state, due to its complete involvement in the economy, and the complete lack of confidence in the increasing amount of fictitious capital being poured out in these conditions. Is that far-fetched? No, on the contrary, if the present pattern continues, such an eventuality is inevitable, particularly as the whole purpose of deficit financing has been to help the economy to get over its temporary difficulties, the assumption being that the normal dynamism of the economy will do the rest. But this assumption is continually proving to be incorrect and the increasing need of the state increasingly to intervene and bolster up the economy itself signifies a system over-ripe to the point of rottenness. For when the ‘free market’ and profitability itself are dependent on an instrument (with the best capitalist intentions) which must cut the ground more and more from underneath it then it has no viability. But, equally, the state, being bound to the capitalist economy, is affected by it, with the result that the state tends to be pulled down by the system it is trying to bolster up. For no capitalist state can be directly involved in the economy without being affected by the laws of that economy. The twin thorns of profitability and consumption may seem to be overcome by government financial liberality, but, whilst deficit financing may in the short run seem just book-keeping, in the long run it must rest on firmer foundations than that. For no one trusts a bankrupt firm — even if it is the state!

Chapter Seven: The Basis for Étatism

In touching upon and enumerating many of the factors which have given rise to the present dominance of the state in capitalist society, it is necessary to give the two basic causes which, intertwined, have given capitalism its present character as well as its present functions and the manner in which it carries them out. First, due to the natural organic development of capital and capitalism, the development of the productive forces created a need for larger and larger units of production and distribution, which in turn created the need for greater and greater quantities of capital, in which the growth of large monopolies (some have even reached the stage of being as wealthy as some small national states) become but a stepping stone to the end product — state ownership. This was clearly illustrated by both Marx and Engels in Capital and other writings. Engels presented the position simply and clearly in Anti-Dühring when he wrote:

Both the period of industrial boom, with its unlimited credit inflation, and the crisis itself through the collapse of great capitalist establishments urge forward towards that form of the socialisation of huge masses of means of production which we find in the various kinds of joint stock companies. Many of these means of production and communication are from the outset so colossal that, like the railways, they exclude all other forms of capitalist exploitation. At a certain stage of development even this form no longer suffices, the official representative of capitalist society, the state, is constrained to take over their management.

Indeed, if one had both the time and energy, it is possible to compile a tremendous historical catalogue of the process as to how laissez-faire has evolved into Étatism. But the really important fact is that, with the continued existence of capitalism, this development was inevitable, not in the sense of specific factories or industries, though of course some were more prone to fairly rapid evolvement, but in the broad trend and collective whole. In fact after the anti-monopoly and anti-trust laws in the United States during the latter part of the last century and the beginning of this, the monopolies have become bigger and more powerful than ever. It is true that today the giants are transcended even in the United States, not by the small man, however, but by the bigger colossus — the state itself.

Impeding Obstacles: If one may digress a little, yet emphasise the point even further, the productivity which has created the drive towards bigger and bigger units has reached such a stage that national boundaries themselves are now too small for these productive forces. Thus the modern national states, particularly those of Western Europe which are based on high levels of technology and productivity, with their narrow geographical boundaries have become impeding obstacles to the fullest development of the productive forces inherent in the technology itself. The very attempt to create and establish a multinational bloc as an economic unit, such as the Common Market, emphasises this point. It is true that it was at the prompting of the big monopolies that the six Western European countries created the ‘Common Market’, nevertheless, this emphasises the curbing effect of the politico-geographical units, the national states, on the developing productive forces, and the resultant conflict between these. It also points to the consequent long-term tendency of political fusion. (Yet the logical action of attempting to eliminate national divisions within the area is, in the case of the Common Market, at the expense of the external world.) The attempt to create even larger than national units shows to what extent modern productivity, with its need for huge capital, as well as the necessity of a continental-scale market, creates the drive forward, towards state ownership.

Unrecoverable Blow: The second basic causative factor which has shaped the present character and has determined the role of the bourgeois state today, is the existence of Russia and the other workers’ states. The initial breakthrough and social transformation of backward Russia, to which must now be added vast areas containing well over a third of the world’s population, despite its present bureaucratic structure and undemocratic character, has been a major and an unrecoverable blow against capitalism. These states with their relatively rapidly developing production and increasing modernisation are becoming a powerful and growing economic force. Therefore the struggle of conflicting social systems is no longer a theoretical one, nor just a potential source of conflict, but is a factual manifestation of a basic and absolute division of fundamental interests which is an immediate and constant source of conflict. For whilst Russia as a socialistic state has been in existence for 47 years and therefore the struggle of conflicting social systems has existed since then, only since the end of the war has this conflict had a sense of immediacy and urgency. But since then any examination of the modern capitalist economy is impossible without taking into account as a major factor the existence of these socialistic economies. For whilst twenty or thirty years ago it was quite possible to examine capitalist society and not take into consideration this basic conflict, today this is utterly impossible. The conflict will increase with the increasing intervention and competitiveness of Russia and Eastern Europe in particular. The economic struggle is still relatively in its early days, with many a happy businessman making commercial deals in Moscow, but the competitiveness, which is already showing in oil, will become increasingly a fundamental part of the struggle. And for political allegiance, economic bribery to the backward and neutral states will increase. So, this growing and powerful source of conflict has necessitated, and has created a greater impulse for, the dominance of the state in capitalist society. Furthermore, this conflict has played a major part in determining the pattern of behaviour and policy of these capitalist states.

The twin impulse of concentration of capital and struggle of social systems are the parents of Étatism.

Chapter Eight: The State and the Class

The state has always been the conscious element of the ruling class insofar as it attempts to establish a collective purpose for that class. Its first and foremost function has been to defend the existing property relationships, that is the maintenance of the economic power of the ruling class. Another normal function has been the overwhelming tendency to intervene, under pressure, very often sectional pressure, as the regulator, during various conflicts amongst different vested interests, particularly between the monopolies themselves: sometimes supporting one vested interest against another, sometimes attempting to alleviate and modify the conflict, but at all times acting as the representative of the ruling class as a whole. Furthermore, as an extension of these functions both abroad and at home, it defends ‘national’ interests by its support of the national monopolies against those of foreign interests, foreign monopolies and even foreign states. This in the past has been the normal historical pattern of state policy in capitalist class society. The intervention has been, as it were, from on high, reacting to pressure, with commitments as far as possible being limited to the necessary measures for the maintenance of the structure of capitalist society and its normal functioning. Today, however, the pattern and the function is somewhat different, the involvement is more direct and intimate. Though already in the past the tendency has been for all states to rise slightly above the direct influence of the class upon which it rests, the growth of state involvement directly into the economic as well as the political field has further sharpened this partial divorcement between the ruling class and its state.

Gunboat Diplomacy: In this period, the epoch of conflicting social systems, the tremendous increase in economic and political power of the state is consciously used for the overall interests of capitalism, often overriding sectional national monopoly interests. Now when the governments of, say, the newly-independent states seize by nationalisation or other measures of expropriation the wealth and property of the monopolies from the wealthier industrial powers, military countermeasures are, normally, no longer the order of the day. Gunboat diplomacy is not or, more accurately, cannot be used. In fact what very often happens is that the defence of the interests of the expropriated or restricted monopolies are overridden by other powerful considerations. The Western capitalist state has not become more moral or high-minded than it was in the past, but as the conscious representative of the ruling class, the state, today, cannot determine its course of action in the international arena without taking into account the existence of the Stalinist bloc, the roles of the neutralist states in maintaining the balance of power, and also any possible pressure at home. It defends the interest of its national bourgeoisie, as well as sections within the ruling class, as far as it can in the context of the new situation. For now the actions of the major capitalist governments are being increasingly affected by the overall needs of the class, not just nationally but internationally too.

Internationally: Internationally speaking, the defence of capitalism as a world society and the defence of the capitalists as an international class, whilst still not the conscious dominant criterion, is a major and growing consideration. Very often the conflicts amongst the capitalist states are not just conflicts based on defence of sectional monopoly interest, but flow from differing interpretations of international class interests. For instance, the ‘stab in the back’ at Suez, in 1956, probably was the most decisive of the factors that determined the fate of the Anglo-French military actions against Egypt, which was not perpetrated by the American government for the purpose of taking over British and French investments there, but flowed from the American interpretation of the international interests of capital. It would be impossible to understand the policies of the capitalist West if we did not realise the reasons and motives behind them. For example, the difference between France and USA over Vietnam may partly be explained by the national ambitions and ego of De Gaulle; nevertheless, underlying it is the different interpretations of what is best for capitalism.

The growing general trend for state policy to be determined by considerations of the struggle of social systems should not, however, blind us to the sectional struggle which still continues between capitalist states in the interests of their own national sections. Conflict between national governments in defence of their own monopolies still take place. Two recent examples spring to mind. First, the action of the American Maritime Board, with reference to foreign ships conveying cargo to and from American ports, and, secondly, the action of the British government in restricting SAS flights to Prestwick in order to limit the picking-up of passengers. In defence of national interests, such actions as these are still taking place and, no doubt, will continue to do so, but the scope is becoming limited and is open to compromise. The general trend now, for increasingly powerful states apparatuses, is to use their overall control in defence of capitalism itself.

Chapter Nine: Bonapartist Trends

The growing economic, as well as political, power of the state is causing a greater degree of centralisation of power and as a consequence the class whose representative is the state is more and more losing direct control. Thus, the foundations of bonapartism are being laid, and under these circumstances, when such a phenomenon does arise, as in De Gaulle’s France, it has a measure of stability arising from the character of the state.

Bankruptcy of the bourgeoisie, rottenness of the workers’ leaders and elements of cynicism that have crept into the working class have made full fruition of this tendency of bonapartism possible in France; nevertheless, aspects of this trend are also discernible in other countries. In Britain the parliamentary institutions (the vehicle used by the bourgeoisie to wrest power from the monarchy) are becoming more and more empty façades, controlling and deciding nothing. They are divorced from the growing economic power of the industries owned and run by the state and they know very little about these industries, and they have few facts in their possession. These state-owned industries are, in fact, run by the nameless bureaucrats who are, in turn, very loosely controlled by the government, and, in this context, the parliamentary institution is becoming more and more of an anachronism.

In the USA: In the United States the increased power of the national state finds its expression in the growing centralisation of all aspects of power into the hands of the Federal government. The economic power of the Federal government by virtue of its control of the vast national budgetary income is a major factor in the development of this trend. Many a state is dependent on Federal government allocations in order to maintain, let alone increase, the present condition of industrial development. States like Arizona would be nothing more than poor white areas if the Federal government decided to cut off all spending on them. This has resulted in the weakening of the power of the individual states. The very weakness of the struggle for states’ rights is shown in the fact that its main defendant is Goldwater, who represents the most backward and reactionary elements within the American capitalist class whose ideas he reflects.

The basis of modern bonapartism rests not on the sword alone, but also on the growing state ownership and control of segments of the national economy. This gives modern bonapartism, though it is a transitory phenomenon, a greater stability than most of the past bonapartisms had.

Chapter Ten: The State and the Combines

In pointing to the increasing economic power of the state, with its increased and distinctive role and function in the economies as well as the politics of the economy, it would be a mistake however to form too rigid an idea of the pattern of the economy as a consequence of this development. For state control and intervention is taking place in a complex economy where there are not only major and powerful elements of monopoly, but where even some elements of laissez-faire still exist, from which very often there emerges a conflict of interests between the state and the monopolies with a corresponding conflict of policy. Furthermore, government action is often confused, reflecting sectional interests within the overall structure of the various state bureaucracies, both the civil and industrial.

In spite of the government’s growing economic power and dominance, it has, despite the rhetoric, no overall fixed sense of purpose, no real sense of carrying out a pattern of action which has a specific final purpose in mind. Again, within its sphere of direct influence and control, whatever internal consistent pattern emerges is very often by accident. For it not only is the centre of conflicting sectional interests but also reflects the external pressures of the capitalist monopolies. The struggles between nationalised industries, or the action of bolstering up private concerns or industries against nationalised ones, or against another partially-aided private concern or industry, are all taking place under the same umbrella, the so-called guidance of the state. This is no accident but is inherent in the framework of the so-called mixed economy. It is true that the party in office, feeling strongly the pressure of the capitalist monopolies, may try to use the state purely as a milch cow, or distort it in some way or another. On the British scene, the Tory party are trying as best they can to turn back the tide of growing economic state preponderance, causing confusion on confusion because the real criterion is that the state’s role is moulded and bound by the capitalist society in which it operates. Any future social democratic or Labour government, on the basis of capitalism, will no more overcome this clash of sectional bureaucratic interests, the lack of a sense of end-purpose, or the lack of democratic control, than any right-wing government.

Again there is a growing divergence between government policy and the empirical interests of the monopolies. For if the conflict within the state-controlled or influenced industries is of major importance, its contradiction with the direct interests of many of the monopolies is more expressive of the problems that are emerging today within capitalist society. In the international arena as an economic extension of their political policy, the advanced capitalist states are prepared to make unfavourable deals or even help to stabilise the newly-created national states, in order to maintain a foothold, so that some possibility remains of carrying on friendly and capitalist relationships. But the needs of the individual monopoly are not identical with the capitalist state itself, and they are not prepared to accept the expropriation of their investments as a mere detail and pour forth fresh capital in the same area. Therefore the monopolies, because of the series of blows they have received in their formerly exploitable and backward areas, are withdrawing from many of them and are changing their pattern of trade, investments and finance. As a result there is a growing policy of finding alternative sources, as well as creating substitutes for the raw materials that were originally found in the old colonial and semi-colonial empires.

Terms of Trade: One aspect of these measures is that they have an important bearing on the terms of trade. That is to say, the trade price relationship between the export of raw material and semi-raw material, and those of the finished product based on highly technical and highly skilled labour, as well as those products which demand a tremendous amount of capital equipment to produce, is causing a disadvantageous price relationship for the exporters of raw materials, etc. This in turn naturally weakens those countries who rely mainly on the export of these products. The heaviest sufferers of these unfavourable trade terms are the newly-independent and backward countries of Africa and Asia, and this increases in turn the disparity of wealth between the richer countries and the poorer ones. Whilst the actions or reactions of the monopolies are not the only reasons for this unfavourable position for the backward areas, nevertheless their actions must be considered as one of the basic ingredients in this problem.

Other Effects: The effect of this policy on terms of trade is only one aspect, for the withdrawal of commitment takes a number of forms. It has created a greater impetus for the advanced capitalist powers to become more self-supporting as a whole, either by more extensively exploring and exploiting their own mineral resources or creating alternatives or substitutes, thus adding a further incentive to the scientific technological revolution that has been taking place in the West.

Such minerals as oil where no satisfactory substitute has as yet emerged, a two-fold action is taking place as a consequence of Suez and because the threat of nationalisation is constantly hanging over their heads. First the highly technical and automated plant necessary to process the crude oil and utilise to the maximum the oil products are consciously being built in the industrial centres of the major powers, with very little refining done at the source, and second, a constant search for oil and gas fields in the major capitalist countries themselves is being made with some growing success. Pockets of oil are being found all over Europe and the latest country where oil has been found in unknown quantities is Spain, whilst the North Sea area has been carved up between Britain, France, Germany and others as a hopeful field of exploration. As far as gasfields are concerned, a few years ago France found a large one in the Lacq area, which has since been extensively exploited, and recently off the Dutch coast they have found a gasfield which is estimated to be the second largest in the world. It is true that the Middle East (including Algerian Sahara) contains by far the largest known quantity of oil reserves, but the question at the moment is not of insufficiency of oil but, on the contrary, too much. And yet the search for alternative and substitute sources of fuel still carries on. Canada, for example, is reckoned to have vast quantities of oil-bearing sands of which there has been limited exploitation because of the cost of extracting the oil. It is interesting to note in this context that George Tugendadt, a leading fuel expert, in a series of articles in The Times , bitterly complained that not enough was being done to develop these fields and thus bring down the cost. [2]

Divergent Trends: Here are the elements of the two divergent trends of trade and development within the advanced capitalist countries, practical in form, but political in implication. The conscious state policy of helping and even bolstering up a number of new national states for the purpose of maintaining the world framework of capital, and the empirical, though practical, activity of the monopolies in withdrawing from the unstable areas, in turn, constitutes, collectively if unconsciously, a policy diametrically divergent to the government’s action. [3] Of course the various governments have tried, and are still attempting, to overcome this conflict by putting pressure on the monopolies, as well as tempting them by guarantees, to alter their course of action. But, so far with limited success, for after all the rhyme and reason of capital exports is profit, and under present conditions, with large-scale and continuous nationalisation, the newly-developed states are sticky wickets. In its economic role the state does not resolve and overcome the problems of capitalism, but rather modifies and alters the pattern of development, without transforming its fundamental foundations.

In its politico-economic role, despite its increased power, the state cannot radically overcome the divergent trend.

The only way it could carry out this would be to institute a fascist type of regime, which would put the monopolies in a straitjacket, acting in this context not as the representative of big business, as in Nazi Germany and fascist Italy, but as its master and persecutor.

Chapter Eleven: Why Call it Étatism?

It is now necessary for us to draw together the various important and basic factors that we enumerated, based though they are on innumerable and conflicting threads, in order to give a definite form to the society we are discussing. For the purpose of this document is that it should be a guide to understanding and from that a guide to action. Not for the Marxist is the ‘method’ of the social democratic reformist, whose theoretical equipment is both limited and unnecessary as he proudly boasts of his pragmatism. Not for the Marxist is the world a very slow-moving series of lantern slides seemingly separated by both time and place, where to be practical and scientific is to enumerate various characteristics of the status quo, in almost fixed arbitrary positions, and the golden words ‘mixed economy’ are repeated a million times, as if Gaitskell and now Wilson have brought them down from Mount Sinai, shows a philosophy that is merely groping empirically behind trends and events and worshipping yesterday’s tables of statistics. The reformist ‘practical’ conclusions resulting from this philosophy becomes, in reality, a reactionary outlook in a revolutionary and changing world. For without a theory and an attempt to understand the underlying causes of world development, workers’ parties become at best flotsam and jetsam, and at worst reactionary obstacles to the working-class struggle for emancipation.

The Definition: To define this stage of capitalist development is difficult, or rather the terminological phrase for the present reality — but it is necessary. For by our definition we show our understanding and draw our practical political conclusions from it. To call it Imperialism is to use a term of abuse, and not a scientific evaluation as used by Lenin and Trotsky in their day. From a factual and scientific point of view an examination of Lenin’s Imperialism with his concluding abbreviated definition of that society, shows a different world to the one existing today — with the struggle of social systems, the breakdown of the colonial empires, and the rapid growth of the economic role, as well as the power, of the state. If not imperialism what then? For to point to the conflicting social systems and then define modern capitalism as a permanent war economy is, to us, incorrect, unsatisfactory and one-sided.

War Economy? The main characteristics of capitalism remain because the struggle between systems is imposed on this structure without altering its fundamentals. The term ‘War Economy’ implies that the entire economy is geared to or for the war. In a War Economy production is restricted to a certain channel, restricting the market economy to an absolute minimum, affecting and almost completely overriding the trade cycle, movement of labour, etc, in military interests. To equate that type of economy with the present-day conditions of small booms and slumps, and with relatively free labour, is basically untenable. Of course it may be argued that the above mentioned conditions of War Economy were not entirely true of the United States during the Second World War. But, even dealing with the ideal, and the United States was the ideal, because of its large army of unemployed and with its tremendous amount of capital resources that was being underused, the argument is still unsatisfactory. Of course these exceptional circumstances enabled the USA to double her production in a few years and, therefore, in spite of being the ‘Arsenal of the World’ that country was able to maintain a relatively high standard of living. Nevertheless the main emphasis was the war — all else was subordinate to it — and the characteristic dictatorial actions of a government geared to war, although performed with a light hand, were unmistakably there. Therefore in our opinion the defining of the present period as a permanent War Economy is incorrect. And we repeat again that any definition must have a definite relationship with the policy flowing from it, and an erroneous definition leads to an erroneous policy. And if such a definition is seriously believed then the emphasis is that the world is bordering on war, that the internal aspects of the economy are secondary and soon enough one slips down the slippery path of supporting one side or another, rejecting any major role for revolutionary parties.

Epoch of Étatism: Nevertheless war production does play a role and has become an increasingly integral part of the economy. The permanence of massive arms productions, with related and connected governmental spending such as on space research, increasingly acts as an inflationary and unstable element under capitalism. This is due to their almost totally parasitical nature, absorbing a growing proportion of the increased productive wealth produced by the workers without creating any material return they are a blind alley of production, not a part of its circuit. This is a heavy burden to bear which creates a permanent inflationary tendency in the capitalist economy. Again, the involvement of the state in the country’s economic developments and the increase in political and economic competition with the socialist (Stalinist) world have not only greatly enhanced the role of the state, but also have increased the tension within the capitalist society. This tension, in turn, is expressed by the actions of the state. Furthermore, the backward and ex-colonial areas are constantly adding their quota of instability and crisis to the crisis of world society. All of these show that capitalism, in spite of its relatively high standard of living, remains essentially a crisis society.

Therefore our definition of modern capitalism must be that it is a crisis economy based on the over-ripeness of capitalism, with increasing state intervention and control during the period of conflicting social systems. The epoch of Étatism .


1. There appears to be some words missing here. To make sense, the sentence should read roughly thus: ‘The plane, in theory being developed as a straight commercial venture jointly by a British and a French aircraft company, is in practice being guaranteed by the British and French governments in three distinct ways.’ [MIA note]

2. For an amplification of the argument about the monopolies’ decreasing interest in the underdeveloped world, see ‘Trends Towards Fortress Capitalism’, Socialist Current , March 1964.

3. This sentence appears to be missing some words. To make sense, it should read roughly thus: ‘There is, on the one hand, the conscious state policy of helping and even bolstering up a number of new national states for the purpose of maintaining the world framework of capital, and, on the other, the empirical, though practical, activity of the monopolies in withdrawing from the unstable areas, which in turn constitutes, collectively if unconsciously, a policy diametrically divergent to the government’s action.’ [MIA note]

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