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Theories of Russia
The wide world is all about you: you can fence yourselves in, but you cannot for ever fence it out. (Gildor Inglorion of the House of Finrod)
The theory of ‘bureaucratic state capitalism’ is most completely developed by Tony Cliff. [86] It is also developed by the West Indian Marxist, C.L.R. James, and by the American Raya Dunayevskaya. [87] It is also discussed and developed, by Chris Harman [88], Nigel Harris [89] and Peter Binns and Mike Haynes. [90]
According to this theory, like the previous two we have discussed, Russia is a class society. Those who head the state apparatus constitute a ruling class, and direct a process of exploitation of the direct producers. Unlike Bettelheim, the proponents of this theory do not hold that there is any predominant development of ‘market’ relations within Russia, considered in isolation; while the term ‘planning’ is hardly appropriate to describe the functioning of the Russian national economy, it is an administered economy. The Russian national economy (with the chief exception of the small private plots worked by the rural population in their spare time) constitutes a single unit of production, a single ‘enterprise’, directed and controlled by a bureaucratically organised ruling class.
Unlike the theorists of ‘state collectivism’, however, these writers argue that Russia today is ‘capitalist’. It has been so since the end of the 1920s, from the time of the initiation of the First Five-Year Plan and the forced collectivisation of agriculture. The state acts like any other capitalist, exploiting its workforce, which produces surplus-value (value greater than that required for its subsistence) which passes out of the control of the immediate producers into the control of the ruling class. What makes this class specifically capitalist is not the internal relations of the Russian national economy alone, however; its capitalistic character is determined by its relations with other capitals, in the world economy. It is these ‘external’ relations, between Russia and the rest of world capitalism, which impose on the ruling class the specific aim of accumulation.
Accumulation of capital is the key driving force of the Russian national economy, and to the aim of accumulation are subordinated all other social, political and economic relations. As against Trotsky, Cliff etc. insist that what characterises the relations between the bureaucracy and the rest of Russian society is not the urge of the bureaucrats to expand their personal consumption. Although the rulers of Russia are highly privileged, by comparison with the workers and collective farmers. But that is a secondary issue. The motor of capitalism is not the consumption of the capitalists, but the accumulation of capital. Marx insisted on this:
One part of the surplus-value is consumed by the capitalist as revenue, the other part is employed as capital, i.e. it is accumulated ... it is the owner of the surplus-value, the capitalist, who makes this division. It is an act of his will. That part of the tribute exacted by him which he accumulates is said to be saved by him, because he does not consume it, i.e. because he performs his function as a capitalist, and enriches himself. Except as capital personified, the capitalist has no historical value ... in so far as he is capital personified, his motivating force is not the acquisition and enjoyment of use-values, but the acquisition and augmentation of exchange-values. He is fanatically intent on the valorization of values; consequently he ruthlessly forces the human race to produce for production’s sake ... Moreover, the development of capitalist production makes it necessary to constantly increase the amount of capital laid out in a given industrial undertaking, and competition subordinates every individual capitalist to the dominant laws of capitalist production, as external and coercive laws. It compels him to keep extending his capital, so as to preserve it, and he can only extend it by means of progressive accumulation.
In so far, therefore, as his actions are a mere function of capital – endowed, as capital is, in his person, with consciousness and a will – his own private consumption counts as a robbery committed against the accumulation of his capital ...
Accumulate, accumulate! That is Moses and the prophets. Therefore, save, save, i.e. reconvert the greatest possible portion of surplus-value or surplus product into capital! Accumulation for the sake of accumulation, production for the sake of production: this was the formula in which classical economics expressed the historical mission of the bourgeoisie in the period of its domination. Not for one instant did it deceive itself over the nature of wealth’s birth-pangs. [91]
The less, in reality, the capitalist class consumes itself, the more capitalist its behaviour. What defines the capitalist qua capitalist is his function: accumulation, spurred on by competition.
Why should accumulation for the sake of accumulation be the specific motor of capitalism? For two reasons. Firstly, the workers are separated from the means of production; secondly, there is competition between capitalists. Each of these two conditions is necessary for capitalist production to be dominant. Without the first, the separation of the immediate producers from the means of production, it would be impossible to subordinate consumption to the needs of accumulation – the workers, if they controlled the means of production, would not condemn themselves to misery in the interests of capital accumulation. Without the second, competition, each capitalist (or ‘agent of capital’ as Marx calls him) would lack a motive to permanent expansion of his capital.
It is the argument of the proponents of the theory of ‘bureaucratic state capitalism’ that these two conditions exist as far as Russia is concerned, and that they provide the crucial explanatory element in an adequate history of Russia since the end of the 1920s.
In Russia, the workers have no means of control over the activities of the state, which ‘owns’ the means of production, determines their disposal and use, and directs the overall process of social reproduction. Thus, as in capitalism, they are divorced from the means of production. Thus far, Cliff etc. are in agreement with both Bettelheim and the ‘new class theorists’, and in disagreement with Trotsky and Mandel, who see in the existence of nationalised property the existence of a “workers’ state”. The first condition of capitalism is met.
What, though, of the second condition? Does competition determine the behaviour of the rulers of Russia? If Russia is considered in isolation from the rest of the world, the answer must be no (Bettelheim is wrong, empirically). But once Russia is set back in its place in world economy, the answer is yes.
It is the drive to accumulate which explains the overwhelming predominance of the production of means of production, which characterized the First Five-Year Plan and which has remained the central focus of Russian investment effort ever since. Consumer goods production has remained a very poor relation – whether one considers the production of goods for the consumption of the mass of the population or for the elite. Stalin himself explained very clearly the motive behind this drive:
To slacken the pace (of industrialization) would means to lag behind; and those who lag behind are beaten. We do not want to be beaten. No we don’t want to. The history of old Russia ... she was ceaselessly beaten for her backwardness ... by the Mongol Khans, ... by Turkish Beys, ... by Polish-Lithuanian Pans, ... by Anglo-French capitalists, ... by Japanese barons, she was beaten by all for her backwardness, for military backwardness, for cultural backwardness, for political backwardness, for industrial backwardness, for agricultural backwardness. We are fifty or a hundred years behind the advanced countries. We must make good this lag in ten years. Either we do it or they crush us.’ [92]
Or again:
The environment in which we are placed ... at home and abroad ... compels us to adopt a rapid rate of growth of our industry. [93]
Two factors combine to make the Russian rulers maintain a high rate of accumulation. The first of these is the internal division of labour in which agriculture is still very stagnant while heavy industry is continually expanding. This forces the Russians to enter the world market more and more. The low productivity of labour, and the difficulties Russia experiences with technological development, similarly force the regime to purchase high technology goods from the western capitalist powers. Although the Russian economy is still primarily autarchic (its imports and exports still form a very small proportion of GNP), the longer-run tendency is for is for Russia to become increasingly integrated into the world market. This tendency is much more marked in the case of the East European satellites, to the extent that the willingness of western banks to re-cycle Polish loans is a critical issue for the regime there. Another feature of this purely economic integration of the ‘state capitalist’ regimes into the world market is the growing number of ‘joint’ enterprises which bring together Russian and East European capital (and workers) with western capital – a famous example being the Russian-and-Fiat car factory at Togliattigrad (scene of a strike wave in 1980).
It remains the case, however, that the purely economic factor is of less significance than military competition. This factor was of decisive importance in the crash industrialization period in the 1930s:
As early as 1932, munitions accounted for 21.8 per cent of all iron and steel – a very high percentage, us may be seen by comparison with the percentage of 29.2 for 1938, a year when war preparations were in full swing. Munitions plants accounted for nearly half of a iron and steel used in the construction of machine-building plants, and by 1938 nearly all other machinery plant construction had ceased, munitions construction, accounting for 94.3 per cent of all iron and steel consumed in machine-building construction. [94]
In the postwar Russian economy, thanks to the arms race with the United States, armaments construction has continued to absorb a very high proportion of the investment resources available to the bureaucracy. Military projects always figure at the top of the ‘priority’ projects which are kept going when the ‘plan’ gets stuck in bottlenecks. Russia, of course, is not peculiar in its diversion of productive resources to the manufacture of ever more deadly means of destruction. In the early 1960s, the United Nations calculated that $43,000 million was being spent annually by the world on the military account. This fabulous sum was equivalent to between 8 and 9 per cent of the world’s total output of goods and services at that time, and was very near the value of the world’s annual exports of all commodities. ‘Even more breath-taking is the comparison with investment: arms expenditure corresponded to about one half of gross capital formation throughout the world.’ [95] Because Russia is still more backward than the United States, the domestic cost of maintaining anything approaching ‘parity’ with NATO in ever-changing weapons systems is even higher there than in the west. Bahro’s remark on this (above, p. ?) is all too accurate. [P]
The ruling class of Russia emerged in the 1920s, and consolidated its position, but still in a negative sense. It stood between the working class and political power, but did not yet assert against the rest of society any specific set of social goals of its own. The bureaucracy of party and state in this period was characterised, above all, by its relative inertia and complacency. It acquiesced domestically to pressures from the peasantry, it subordinated foreign communist parties to its own need for security. Both policies were justified by the slogan ‘Socialism In One Country’, a slogan which in the 1920s had a relatively passive meaning. One might, in the 1920s, apply the term ‘degenerated workers state” to the system of social relations in Russia. Workers’ interests still affected policy to some degree, the trade unions reserved some small element of independence of the state, the ‘troika’ still functioned to some extent in the management of the factories, strikes were still legal, the Party member’s wage was still restricted to that of the skilled worker in industry.
At the end of the 1920s these policies and this situation were abandoned, as the state responded in a quite new way to a dual crisis: the peasant problem erupted, and the international situation appeared to worsen. There followed the period of the Five-Year Plans, when a break-neck industrialization was forced upon Russian society, and when land was taken back from the peasantry in the form of a forced collectivisation of agriculture. The rulers of Russia asserted, against both the working class and the peasantry, a quite new policy departure which was uniquely their own. It is from this time that it is proper to speak of ‘bureaucratic state capitalism’ in Russia. The whole national economy was focused around a massive ‘primitive’ accumulation drive, with resources forced out of the population in an orgy of state-organized exploitation. The standard of living of the mass of the population, which had been rising steadily in the 1920s, was now sharply reduced, at the same time that the rate of industrial growth was stepped up to previously undreamed of heights. All the political and social gains made by the Russian workers and the Russian peasant in 1917 were destroyed in the fire of state-directed crash industrialization. The initiation of the Five-Year Plan was the signal for a counter-revolution, organized and led from the centre of the state-party apparatus.
In its essentials, the pattern or social relations established at the end of the 1920s, and the social goals explicitly attached to those social relations, have remained intact up till now. Far from demonstrating the instability that Trotsky expected, the system has survived the shocks of the Great Purges, the Second World War, the expansion of its territory, the development around it of a series of satellite nations in Eastern Europe, the death of Stalin, Kruschev’s ‘secret speech’ revelations, and the continuous burden of ‘Cold War’ expenditure, etc. Bureaucratic state capitalism in Russia has proved capable of reproducing itself, and on an expanded scale, over a half century of crises and dangers.
What happened at the end of the 1920s was not, in reality, a completely unique event. Those who ruled Russia were facing a dilemma that has been faced by by other non-capitalist ruling orders from the second quarter of the nineteenth century onwards. The world expansion of capital, based on the massive productive increases which capital achieved through industrialism, threatened the position of every ruling order. The capitalist powers of Europe and North America, thanks to the industrial revolution, were possessed of the economic and political means to impose an urgent choice on the rulers of the remainder of the world. They might simply submit to the new powers in the world, and become their agents at best, allowing ‘their’ populations and their wealth to be directed and exploited for the benefit of Atlantic capitalism. Their own integrity as ruling classes would thereby be destroyed. In formal or informal terms, they would become nothing more than sub-regions of someone else’s empire, satraps, compradors, servants of alien powers. Alternatively, they could resist this subjection. But, to do so, they must enter the new system of capitalist world economy on its own terms: they must themselves become centres of capital accumulation, re-ordering the mode of exploitation of their own subjects. It is characteristic of pre-capitalist exploitation that its prime motive is the personal consumption of the ruling classes. To maintain their integrity against the massive threat posed by capitalism, that motive must be altered: the accumulation of capital, the expansion of production, the enforcement of industrialism upon their subject population must become predominant. They could only oppose capitalism’s threat by themselves adopting capitalist production. And, to do so, they must measure themselves against the already established capitalist powers, and seek, in Stalin’s own phrase, to ‘catch up and outstrip’ their powerful rivals. To catch up, from a position of backwardness (a relative concept), must mean imposing on their populations an even higher rate and a more organized and ruthless pattern of exploitation than the labouring classes of western Europe and the United States were currently experiencing. From he beginning, a higher degree of centralisation of political power, and the mechanisms by which capital might be accumulated and re-invested, was required.
Some succeeded, some did not. An early attempt to achieve this goal in Egypt failed. In Russia, the Tsars attempted to promote a major industrialization, but the tensions this provoked finally brought them down. In Germany, after the failure of the 1848 revolution, the rulers of Prussia forcibly unified Germany from above and promoted – with the help of a highly centralised banking system – a tremendous industrialization in Germany. In Japan, a section of the ‘feudal’ ruling class – faced with the very tangible power of the United States, especially in the shape of a gunboat – carried through a seizure of state power and used their control to subordinate the people of Japan to the development of industry on the new, capitalist basis. In each case, of course, the particular history is a different one; in each case, however, the general logic was the same.
This was the logic of Stalinist industrialisation. There were two alternatives to it, given the particular history of Russia and its experience of a workers’ revolution in 1917. The first was the ‘Bukharinist’ possibility, whose effect would, in reality, be to maintain the weakness of Russia in an ever more dangerous world environment, and in the end to allow Russia to become the formal or informal colony of another power or powers. The second was the ‘Trotskyist’ possibility, which alone would have meant challenging the very rules of the game: abandoning ‘socialism in one country’ as an aspiration, and seeking by the most effective means possible to assist communist parties in the advanced countries to lead their working classes to seize power, in order to form an international alliance of workers’ states that would aspire to destroy capitalism in the world. The actual, historical rejection of both ’Bukharinism’ and ‘Trotskyism’ left open only the Stalinist path: crash industrialisation and militarisation, the entry of Russia into the world capitalist system – no longer as a subverter, but as a challenger to equal membership with the other great competitors.
The Russian development was, of course, unique in one respect: its particular historical background. In 1917, briefly, the workers of Russia took political power into their own hands through the soviets. They dispossessed the former ruling classes, and centralised industry in the hands of the state (initially, though briefly, their state). The definitive switch to capital accumulation as the driving force of Russian national economic and social and political life, from, the end of the 1920s, required that all remnants of the workers’ achievements in 1917 – and the peasants’ too – be obliterated. It happened: the ‘totalitarian’ regime systematically destroyed every last vestige of workers’ power.
Precisely because of the background of 1917, the turn to capitalist industrialization in Russia was an event of world significance. 1917 had been an inspiration to millions of workers internationally, and had provoked a major re-orientation of working-class politics across the globe. In every country, Communist parties had appeared, linking their understanding of the world and their own fates to the Russian revolution. The degeneration of the revolution of 1917, and its final destruction from 1929, affected them deeply. They remained attached to Moscow, hut to Moscow whose ‘communism’ was now national, and oriented to world capitalist competition. Moscow was now counter-revolutionary. And they became counter-revolutionary too; despite their formal ‘communist’ title, these parties became parties of ‘order’, manifesting their reorientation in major crises in a whole host of countries: In Spain in 1936, in France in 1936, in Italy, Greece and France in 1944–45, in Algeria in the 1950s, in France in 1968, in Chile in 1973, in Portugal in 1975, in Spain in 1980.
Additionally, a capitalist Russia which could survive the terrible shocks of the second world war could also expand its territory and its are of imperial control in the circumstances of its victory. As the Red Army drove Hitler’s forces back across Eastern Europe in the closing stages of the war, it reorganised the governments of those countries, establishing regimes of its own kind and subordinating them to the overall control of Moscow. For a period after the war, indeed, these economies were quite systematically plundered for the benefit of Russian post-war reconstruction [97]; until now, none of them has succeeded in breaking out of the political embrace of the Kremlin. In all essential respects, their economies are imposed copies of the Russian model, their peoples subordinated to the same imperatives.
In the countries of Eastern Europe, the system of ‘bureaucratic state capitalism’ was established without benefit of any workers’ revolution. The end-result was similar, but the historical process was different. In Yugoslavia, by contrast, the Communist Party took power without the aid of Moscow, but again established (until the Stalin-Tito split) a similar form of national economy. In China in 1949 Mao’s army finally came to power without immediately destroying the existing state, but using it to new, state capitalist purposes. Again the routes were different, but the destinations were similar.
In other countries of the ‘Third World’ today, the tendency to state-controlled production is more or less developed, sometimes in formal connection with a ‘Communist’ regime, sometimes not.
The implication of all this is that bureaucratic state capitalism is not peculiar to Russia. Indeed, the phenomenon of state ownership of means of production, state direction of investment, state-controlled exploitation of the work – force is a world phenomenon. Modern world economy is incomprehensible without reference to the role of the various nation-states as agents of capital, of capital as process, of capital accumulation. Far from being an exceptional element in the world, Russia today is a normal part of the contemporary world capitalist system. That system has itself undergone important internal transformations and developments since the 19th century – indeed, since its birth in the later period of European medieval society. The very phenomena which are taken by some to be distinctive elements of the Russian national economy are, in reality, increasingly common elements of capitalist production everywhere. We may briefly identify a few of these.
Firstly, the direct role of the state in production has everywhere expanded massively. Nor is it by any means the case that shifts in the direction of state ownership and direction of capital accumulation are only associated with working-class parties or ‘left-wing’ governments. In Britain, for example, it was the government of Stanley Baldwin which nationalised the electricity generating system, and another Conservative government that nationalised the international airlines. In 1971, Edward Heath’s government nationalised the aero-engine business of Rolls Royce. The constant tendencies towards centralisation and concentration of capital which Marx and Engels noted in the 19th century, and which Lenin, Luxemburg and Bukharin further analysed in the period of the First World War, have continued to an extraordinary degree in our own period. The state is now, in most countries, the largest single employer of wage-labour, not merely in warfare, administration and welfare, but in the sphere of material production itself.
Secondly, the very motive which Marx insisted was the key to understanding capitalist production – the accumulation of capital – has everywhere become the predominant motive. The personal enrichment and the personal income of the legal owners of capital, even in the private sector, are no longer the key determinants of the behaviour of large corporations. In Britain in the period before the First World War, the majority of company profits were still distributed directly to share-holders as dividends. For a long time, now, this has ceased to be the case: the greater part of net profits in large corporations are now not distributed as dividends to share-holders, but ‘ploughed back’ as investment capital into the expansion of the corporations that make these profits.
Thirdly, even within the ‘private’ sphere (let alone the extensive nationalised and semi-nationalised sectors) in western capitalist countries, the clear tendency has been for the formal legal owners of company stocks and shares to pass control over corporate investment, management and development policy to salaried managers. These men undoubtedly act, in Marx’s term, as ‘the personification of capital’, as the agents of capital accumulation, even though in many cases their personal wealth is relatively incidental to their main social function.
Fourthly, as is all too apparent from the particular form taken by the world economic crisis of the early 1980s, the crisis mechanism which Marx analysed in the 19th century has altered its functioning, precisely as a result of the changing character of the capitalist world economy. In the past, the onset of economic crisis, of over-production and mass unemployment, was associated always with a collapse of prices. Recession and deflation were almost synonymous phenomena. Today this is no longer the case: rather, the world economy is characterised by the new phenomenon of ‘stagflation’: stagnation and recession go hand in hand with rising prices. This change is only comprehensible if we take account of the immense centralisation and concentration of capital that has occurred in the world – not only into the hands of the huge corporate enterprises that now straddle the globe as ‘multinational corporations’ but also into the hands of nation-states. In the past, one of the ‘functions’ of economic crisis was, in a sense, to cleanse the economic system of a surfeit of capital: bankruptcies, devaluations of capital, the removal of weaker capitals from the competitive system were the effect of the crisis, which then opened the way to a revival of production and trade. The same logic is of course at work at present: the level of bankruptcies in Britain in the 1980–81 period has been extraordinarily high. But, it has not been ‘high enough’. Companies and concerns which, in world terms, are totally obsolete still survive despite immense financial losses and despite being altogether too small to survive in world competition on their own. British Leyland is a famous example. However, that companies and capitalist accumulation units of this character do survive is due to the willingness of nation-states to keep them going, with massive injections of money capital which have two simultaneous effects: first, the purging effect of the economic crisis is prevented from working fully; and, second, the result is a spiral of inflation that characterises the whole world economy. The real bankrupts today are no longer simply corporations, but nation-states. The scale of state debt today is astronomical, whether we consider the states of the west or the east alike. To date, the stability of the system has depended on the willingness of the national banks and the national governments to continue to lend money to the bankrupts – whether of Italy, or Zaire, or Brazil, or Poland – a willingness which is motivated by a fear of the world consequences of a series of national failures. In all the discussion about the possibility of a Russian invasion of Poland, it has been little noticed that the decision of western bankers have been much more significant, up till now, in determining the fate of the Polish regime than have Russian tanks.
The Russian economy is irrevocably bound into the crisis of the world economy, and suffers from all its major manifestations. The rate of growth in Russia, and in the other East European countries – once the supposed index of their ‘superiority’ over capitalism – have been falling with each successive ‘plan period’. The major sources of ‘surplus population’ which these national economies were able to draw upon in their periods of high and extensive growth are now more or less exhausted; the inefficiency of the internal economic mechanisms, and the mass alienation of their work-forces, hold back their productivity growth, drawing these economies more and more rapidly towards stagnation. If their growth rates, at best, still match the western growth rates (they are better than Britain, but worse than West Germany or Japan), these growth rates are only achieved on the basis of twice the level of investment (in other words, crudely, their rate of profit is about half that obtaining in the west). And the rate of profit in Russian industry is falling – according to figures produced by the Russians themselves. Unable to jack up their productivity by internal means, the rulers of Russia have become more and more dependent on imports of western high technology, imports which have placed an increasing strain on their international payments balances – especially as they have also been forced every few years to purchase large quantities of grain on the world market thanks to the continuing inefficiency of their collectivised agriculture. Increasingly, too, the economies of the East European economies, and of Russia itself, are forced to move in cycles of growth and stagnation. [98]
In some respects, the crisis in the Russian economy is a part and an example of the general crisis of the world economy, to which we referred briefly on the previous page. Nowhere is it more true than in Russia that inefficient units are kept going rather than being allowed to go to the wall. The whole internal bureaucratic mechanism, the extreme centralisation of decision-making and allocation, are more and more an impediment to any kind of economic development. Far from being crisis free, the whole national economy is in a state of permanent crisis. On top of that, there is additionally a specific form of crisis which affects an ‘autarchic’ national economy like the Russian, which tries to ‘go it alone’ – there is a specific crisis, if you like, of ‘socialism in one country’. To understand this, we have to remember that not only is the historical tendency of capitalism to develop the centralisation and concentration of capital, but also capitalism tends to develop a worldwide division of labour. Bureaucratic state capitalism is a response to the first tendency, in that it centralises all national capital into one set of hands, into one unit of capital. But, as it does this by the method of economic autarchy, it also deprives itself of the benefits of an international division of labour. The principle of autarchy means that Russia must manufacture, for itself, all the material inputs into production that it needs. In many cases, the ‘production runs’ involved are relatively tiny, and thus relatively costly in world terms. At a time when world production is increasingly becoming a reality, through the establishment of world production lines (intersected, with increasing irrationality, by national boundaries) in a whole series of fundamental industries (cars, computers, petro-chemicals, food and drink, aircraft, etc., etc.) access to the widest possible markets is the condition for effective and competitive production. If the whole of the Russian and East European economies were to be combined, they would amount to less than 20 per cent of total world production. [Q] The west, with access to the remaining 80 per cent, maintains an insuperable lead in productivity. The original ‘advantage’ which Russia held under Stalin, namely its more advanced centralisation of capital, has been lost through the continuing and enormous degree of centralisation of capital in the West. Today the effect of the policy of autarchy is to intensify the effects of the crisis inside Russia.
And reform is extraordinarily difficult. Any significant movement for reform within Russia immediately confronts the entrenched interests of the managers and beneficiaries of the existing organisation of production. As in Czechoslovakia, Hungary and Poland, no significant reform process can be initiated from the top without bringing into action the mass of the population. And, once in movement, the working classes of Russia and eastern Europe are liable – as every experience to date has suggested – to raise their own demands against both the existing regime and against the reformers. The danger of reform, from the standpoint of the ruling classes in these countries, is that behind it lies the real threat of social revolution, Increasingly, these countries are poised between two stark alternatives: on one hand, instability and stagnation, and on the other hand social revolutions that may try to put into practice the very ideas that in public utterances the regime supports but that in practice it utterly negates.
It is the author’s opinion that the theory of ‘bureaucratic state capitalism’ is fundamentally correct. The discussion of this theory will therefore consider one or two of the theoretical implications of this approach, and will attempt to counter a few of the objections that have been raised against this conception.
The most apparent implication of the theory is that there is a need for further development of the Marxist theory of the state, in particular in terms of the relation between the state and capitalist society. Those who reject the theory of bureaucratic state capitalism do so, usually, on two grounds: they reject the idea that the state can itself play the role of a class; or, while accepting this, they deny that the state can play the part of a capitalist class. We have already discussed the first objection, in our consideration of Trotsky’s theory. The second still awaits a reply, although it is already implicit in our discussion of the ‘new class’ theories.
What is at issue is the question of the boundaries of the social system. So long as the geographical borders of a nation-state are taken to be the boundaries of the system of social relations, or of the mode of production, then clearly a country like Russia cannot be considered to be a capital, at least not in the sense in which that term is employed in Marxism. For capitalist production implies the existence of many capitals, interacting with each other through competition, and thereby imposing – through their competitive interaction – the ‘laws’ of capitalist production onto each other. Capitalism without competition is like an omelette without eggs. It is competition which forces each capital to accumulate on an ever-expanding scale, on pain of death. If Russia and its economy are treated in isolation, then it cannot be capitalist.
But this methodological issue is crucial to the argument. It was, Marx argued, a fundamental aspect of the ‘mission’ of capital to create a world market. National frontiers can no longer contain the dynamic productive forces developed by the capitalist mode of production. Capital’s development is the development of a world society, the development to dominance of a mode of production which is global in its scope. It is the world economy as a whole, and not simply as a sum of its parts, that must be grasped conceptually. At the level of world economy, broad phases of development may be distinguished a ‘mercantile’ phase, up to the late 18th century; a ‘competitive’ phase up to the latter part of the 19th century; perhaps a ‘monopoly’ phase [R] from the turn of the century up to the 1930s; and a state-monopoly phase now. The notion of ‘phases’ is obviously one to be used with caution, and there will be arguments as to the boundaries between any such ‘phases’, their characterisation, etc.
Once account is taken of the significance of the question of world economy, in any case, the question of the state requires to be conceptually transformed. There is a powerful tendency for Marxist (and non-Marxist, for that matter) discussion of the state to limit itself to precisely that: the state. One would think, from a perusal of most critical writing on the question of the relation between state and capital [99], that the problem of the state in capitalist society is a singular one, that capitalism is a form of society with a state. Yet this is obviously not so. It is characteristic of capitalism, as a world system of production and division of labour, that it does not have a single-state system of political rule. Rather, it lacks a single political centre, possessing instead a fragmented, competitive system of states. This political system of nation-states first emerged at the same time that capital first became dominant as an organising principle of economic life, in the late Middle Ages in Europe. (Among historians sensitive to this question, especial note might be taken of the work of Otto Hintze [100] and Immanuel Wallerstein. [101] The system of relations within and between states assumed, from the start, a dual form, replicating in politics the dual relation which Marx noted as characteristic of capitalist production: within the boundaries of the state (and of the factory or enterprise) there prevailed more or less ‘despotic’ relations, through which surpluses were extracted from the working populations; between the various states (and between capitals) reigned ‘anarchy’, an ever-shifting balance of competitive struggle. ‘Anarchy’ and ‘despotism’ (or competition and exploitation) provided the defining features of the economy and of the politics of the emerging capitalist order. From the beginning, therefore, there was a structural homology between the principles of capital formation and those of state formation.
Every state – like every capital – is defined within the capitalist world order by its ‘two-faced’ character. The state is ‘Janus-faced’: it is an agent of both domestic control, of internal ‘order’ and of external competition. Its activity in either sphere, internal or external, is crucially influenced by its activity in the other.
It is this structural homology between state and capital, which has been theoretically ignored or under-emphasised for too long, which precisely makes possible state capital. One factor which has made the state a centre of capital accumulation of increasing significance is the tendency noted before, to the centralisation and concentration of capital, which defines the movement of the whole world system. Another is the particular character of state power itself. Every state is an apparatus, as both Marx and Weber noted, which characteristically disposes not merely of purchasing power, but of force. The very coercive power of every state (perhaps the defining feature of the state qua institution) makes the state unique as an economic actor in its ability to enforce the collection of taxes from its subject population. [102] It is the tax-power of the state which is the key to its borrowing power, and of the power of the state to intervene in its domestic economy. In turn, the power of taxation and intervention possessed by every genuine state is legitimated by two related, but analytically distinct, functions that every modern state fulfils: within its own sphere, it maintains ‘law and order’, in the widest sense, and on the world scale it defends the ‘national interest’ against other states and other, externally-based capitals. [S]
Even so, the key argument of those who oppose the idea that Russia can be considered – as it is by the proponents of the theory of bureaucratic state capitalism – as if it were a single corporation of a capitalist type is, fundamentally, that what Marx termed ‘the law of value’ cannot be said to be operative in the case of Russian production. He who says capitalism, says this critic, says market, commodity, price, labour-market. These cannot be identified as key economic mechanisms in Russia, hence the law of value cannot operate there either. In this sense, whatever Russia might be, it cannot be capitalist.
To take the last issue first: by definition, and in reality, the terminology of the ‘labour market’ can hardly be applied to the case of Russia. There is but one employer, the state, although that employer has many branches and factories and enterprises. The worker may (indeed, does, to a very high degree, to the constant worry of the state) move about from one employment situation to another, but the worker cannot change employers. If there is no labour market, i.e. no possibility of the worker freely altering his or her employer, says the critic, then we have to do with a situation that cannot be capitalist, for. capitalism implies the freedom of the worker, implies a labour-market. There is just one snag with this argument – for a Marxist, anyway – which is that Marx thought quite differently, as did Lenin. For Marx, the slave plantations of the United States were, despite the inability of the slave to change masters, capitalist enterprises. And the reason they were to be counted as such was precisely that they produced for the world market. Similarly, Lenin argued that despite the continuation of servile relations in the Russian countryside, the predominant relations in the Russian countryside were already capitalist, and for the same basic reason. The logic of treating the legal freedom of the worker to change employers as a fundamental feature, a defining element, of capitalist production would be to suggest that in Britain and much of Europe, in the period of the two World Wars, capitalist production was suspended because of the introduction of limitations on the rights of workers to change their jobs. It would also be necessary to argue that the children whose parents effectively sold them into bondage to early capitalist employers were not wage-workers.
More serious is the objection concerning the application of the ‘law of value’ to Russian production. This objection needs to be answered, not merely in relation to Russia, etc., but actually in relation to the whole of world capitalism today.
The law of value, according to Marx, is the key to understanding the workings of the capitalist economy. Value relations, however, are not immediate determinants of ‘surface’ relations such as prices. Indeed, Marx argued in Volume III of Capital that for capitalist production to function at all, there must be a significant distinction drawn between ‘value’ (determined in terms of socially necessary labour-time) and ‘price’ (money equivalent). While prices cannot be understood without reference to values, they can also not be identified with values. The two are systematically different, within any capitalist economy. This distinction between value and price is only magnified by the developments that have occurred within capitalism since Marx’s own time. The tendency for markets to be monopolised increases the ability of firms to manipulate prices to their advantage: large corporations are able, through a kind of ‘monopoly rent’, to so raise prices that they draw to themselves more than their ‘normal’ share of total surplus value. In any case, an increasing proportion of transactions (for example, those registered in national import and export statistics) in the world are transactions occurring within rather than between corporations. (Fully half of all US trade, for example, is between different subsidiaries of the same corporations. [103] Prices are now determined by companies’ needs to jump tariff walls, to transfer profits from high tax to low tax countries, etc. Additionally, in every country the state now intervenes, more or less directly, in the process of price fixing of a whole series of goods. Indeed, many ‘prices’ are – in economists’ terms – hardly prices at all, but better understood as taxes or rents: consider bus and train fares, gas and electricity prices, drug prices etc. ‘Market’, ‘commodity’ and ‘price’ are terms whose applicability in immediate terms to capitalism in the west becomes increasingly problematical. The distance between ‘value’ and ‘price’ is now immense.
Yet the law of value still operates, and still provides the key to understanding the workings of the capitalist system. A simple example may suffice to make the point. It is common in modern supermarkets for the managers to nominate what are sometimes termed ‘loss leaders’, commodities which are offered at ‘bargain prices’ to induce the shopper to enter the store. It may indeed be that the ‘loss-leader’ is indeed sold at a ‘loss’. Is this a ‘de-commodification’ of the loss-leader, and a sign that the supermarket is moving away from capitalist principles? The answer, obviously, is decisively not. What matters is the overall relation between capital invested and profit received in the whole supermarket chain, not the price of an individual commodity. The law of value is determinant only at the aggregate level.
It is necessary to understand what the law of value is really about. ‘Valorisation’ – the reduction of goods to their ‘values’ – is a process by which different, qualitatively different activities are reduced to different quantities of their common substance: socially necessary labour time. It is the process by which a labour activity with a particular use-value (say, tailoring) is reduced to what it has in common with another (say, tank manufacture). The ‘labour time’ in whose terms values are assessed is not a concrete, particular labour activity, but ‘labour in general’, or ‘abstract, general labour’. This process of reduction, of ‘valorisation’ is not merely an accounting device, nor a mere conceptual process in economic theory. It is a real process, through which the products of labour activity force their producers to act in certain very definite ways. The process of valorisation occurs through competition, which is the confrontation of one set of the products of labour with another. In order to remain in competition, each separate producer or collection of producers must maintain their production at a level which enables them, overall, to match those of their competitors. For valorisation to occur, i.e. for the law of value to be predominant, the various products of labour must be forcibly compared with each other, must be systematically piled up against each other.
The example of this process which is most commonly discussed, for obvious reasons, is price competition. But it is not necessarily the only form of competition. Within a given price range, for example, competition by delivery date, or by quality of output, may play an equally significant role – indeed, in the modern world economy, price competition is of declining significance in respect of a whole range of products. What is crucial is that there should be this significant ‘piling up of products’ against each other. If we are to call the USSR Ltd. capitalist, i.e. if it is true that valorisation occurs in Russian production, it must be because Russian products of labour are indeed ‘piled up’ against those of its competitors. Unless this is the case, Russian labour can be called concrete and specific only, but not ‘abstract, general labour’. To be still more specific, it must be the case that living labour (the Russian workers) be dominated by the need to produce surplus-value in competition with their brothers and sisters elsewhere in world capitalism.
It is the argument of the theory of ‘bureaucratic state capitalism’ that precisely this crushing necessity dominates Russian production. Only the predominant form in which the competition occurs is military competition (with purely ‘economic’ competition becoming of increasing significance in the 1970s and 1980s). The products of human labour that are piled up against each other are – to the growing peril of life on the planet – modern armaments. The entire Russian economy is subordinated, ultimately, to the demands of this sector of production. The pressure of military competition forces the rulers of Russia to squeeze ever greater surpluses out of the population, and to direct them to producing ever more costly and ever more sophisticated means of destruction, the final guarantee of Russia’s place in the world. It is this military competition – above all with the west, but also not insignificantly with China – which enforces the rule of surplus-value production throughout the Russian economy. That same rule is also, at base, the cause of the crisis of growth in the economy.
To such an end has ‘socialism in one country’ come.
P. For both domestic and international reasons, the real weight of the arms expenditure is concealed in Russia even more than in the west. In the official ‘budget’, a good part of ‘defence’ expenditure is hidden in the very large ‘research’ budget. The very distorted Russian price mechanism is a further source of concealment. [96]
Q. I say ‘if they were to be combined’ for the tendency is increasingly for the east European economies to be more and more integrated into western trade and investment flows. Poland and Hungary are prime examples, but the trend is the same, if more muted, in East Germany and Czechoslovakia, Bulgaria and Rumania.
R. This was the theme of Lenin’s Imperialism: Highest Stage of Capitalism (1915), a work whose accuracy as an account of the world in his own time has been questioned. A rather different account of the same period was produced by Bukharin, in his Imperialism and World Economy (1915). Bukharin stresses much more than does Lenin, even in the First World War period, the role of the state in the concentration and centralisation of capital, and this emphasis is continued in his The Economics of the Transformation Period, a work written during the Civil War in Russia. My own view is that Bukharin’s work is much superior to Lenin’s, in its relevance both to its own time and to ours.
S. Talking of structural homologies, it might be noted that this places the state in a situation very like that of a protection racket – a comparison of more than humorous significance which I hope some time to develop more fully.
86. Tony Cliff, Russia: A Marxist Analysis, 1964. The first part of this book was originally published in 1955 as Stalinist Russia: A Marxist Analysis, and has been reprinted as State Capitalism in Russia, Pluto, 1974, which is the only form in which it is now in print. Two other works by this author, under a different name, are Ygael Gluckstein, Stalin’s Satellites in Europe, Allen and Unwin, 1952, and Mao’s China, Allen and Unwin, 1957.
87. C.L.R. James, State Capitalism and World Revolution; Raya Dunayevskaya, Marxism and Freedom.
88. Chris Harman, How The Revolution Was Lost, International Socialism, 1970 (?) [Note by ETOL: Actually it was first published as an article in 1967; since then it has been reprintend several times as a pamphlet.]; Bureaucracy and Revolution in Eastern Europe, Pluto, 1974; Poland, The Crisis of State Capitalism, International Socialism (1st series) 93, 1976.
89. Nigel Harris, Beliefs in Society, Penguin, 1971; The Mandate of Heaven: Marx and Mao in Modern China, Quartet, 1978.
90. Binns and Haynes, op. cit. (above, note 58).
91. Marx, Capital, vol. I, Penguin edition, pp. 738–42.
92. Stalin, Problems of Leninism, cit. Isaac Deutscher, Stalin, 1961, p. 328.
93. Stalin, cit. E.H. Carr and R.W. Davies, Foundations of a Planned Economy, Vol. 1, p. 327.
94. Cliff, Russia: A Marxist Analysis, p. 41.
95. Michael Kidron, Western Capitalism Since The War, Weidenfeld and Nicolson, 1968, pp. 39–40.
96. Cliff, op. cit., p. 40.
97. Gluckstein (see note 86) provides a wealth of documentation on this.
98. All the matters discussed in this paragraph are documented by Binns & Haynes, op. cit. (see note 58).
99. For example, Engels, The Origin of the Family, Private Property and the State; Lenin, The State and Revolution; Miliband, The State in Capitalist Society; Poulantzas, Political Power and Social Classes; the authors brought together in Holloway and Picciotto, op. cit., with the exception of von Braunmühl (see above, note 80).
100. Felix Gilbert, ed., The Historical Essays of Otto Hintze, New York: OUP, 1975.
101. Especially Immanuel Wallerstein, The Modern World System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century, Academic Press, 1974.
102. There are very useful discussions of the significance of taxation in the essays by Gabriel Ardant and by Rudolf Braun in Charles Tilly, ed., The Formation of National States in Western Europe, Princeton UP, 1975.
103. Cited from Binns and Haynes, op. cit., p. 33.
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