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state cap·i·tal·ism
stāt ˈkapədlˌizəm/
noun
- a political system in which the state has control of production and the use of capital.
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State capitalism is an economic system in which the state undertakes commercial (i.e. for-profit) economic activity and where the means of production are organized and managed as state-owned business enterprises (including the processes of capital accumulation, wage labor and centralized management), or where there is ...
State capitalism
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State capitalism is an economic system in which the state undertakes commercial (i.e. for-profit) economic activity and where the means of production are organized and managed as state-owned business enterprises (including the processes of capital accumulation, wage labor and centralized management), or where there is otherwise a dominance of corporatized government agencies (agencies organized along business-management practices) or of publicly listed corporations in which the state has controlling shares.[1] Marxist literature defines state capitalism as a social system combining capitalism with ownership or control by a state—by this definition, a state capitalist country is one where the government controls the economy and essentially acts like a single huge corporation, extracting the surplus value from the workforce in order to invest it in further production.[2] This designation applies regardless of the political aims of the state (even if the state is nominally socialist)[3] and some people argue that the modern People's Republic of China constitutes a form of state capitalism[4][5][6][7] and/or that the Soviet Union failed in its goal to establish socialism, but rather established state capitalism.[3][8][9]
The term "state capitalism" is also used by some in reference to a private capitalist economy controlled by a state, often meaning a privately owned economy that is subject to statist economic planning. This term was often used to describe the controlled economies of the Great Powers in the First World War.[10] State capitalism has also come to refer to an economic system where the means of production are owned privately, but the state has considerable control over the allocation of credit and investment[11][12] as in the case of France during the period of dirigisme after the Second World War. State capitalism may be used (sometimes interchangeably with state monopoly capitalism) to describe a system where the state intervenes in the economy to protect and advance the interests of large-scale businesses.
Libertarian socialist Noam Chomsky applies the term "state capitalism" to economies such as that of the United States, where large enterprises that are deemed "too big to fail" receive publicly funded government bailouts that mitigate the firms' assumption of risk and undermine market laws and where the state largely funds private production at public expense, but private owners reap the profits.[13][14][15] This practice is often claimed to be in contrast with the ideals of both socialism and laissez-faire capitalism.[16]
There are various theories and critiques of state capitalism, some of which existed before the 1917 October Revolution. The common themes among them identify that the workers do not meaningfully control the means of production and detect that commodity relations and production for profit still occur within state capitalism. In Socialism: Utopian and Scientific (1880), Friedrich Engels argued that state ownership does not do away with capitalism by itself, but rather would be the final stage of capitalism, consisting of ownership and management of large-scale production and communication by the bourgeois state. He argued that the tools for ending capitalism are found in state capitalism.[17]
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Origins and early uses of the term[edit]
The term was first used by Wilhelm Liebknecht in 1896 who said: "Nobody has combated State Socialism more than we German Socialists; nobody has shown more distinctively than I, that State Socialism is really State capitalism".[18]
It has been suggested that the concept of state capitalism can be traced back to Mikhail Bakunin's critique during the First International of the potential for state exploitation under Marxist-inspired socialism, or to Jan Waclav Machajski's argument in The Intellectual Worker (1905) that socialism was a movement of the intelligentsia as a class, resulting in a new type of society he termed state capitalism.[19][20][21][22] For anarchists, state socialism is equivalent to state capitalism, hence oppressive and merely a shift from private capitalists to the state being the sole employer and capitalist.[23]
During World War I, using Vladimir Lenin's idea that Czarism was taking a "Prussian path" to capitalism, the Bolshevik Nikolai Bukharin identified a new stage in the development of capitalism in which all sectors of national production and all important social institutions had become managed by the state—he termed this new stage "state capitalism".[24]
After the October Revolution, Lenin used the term positively. In spring 1918, during a brief period of economic liberalism prior to the introduction of war communism and again during the New Economic Policy (NEP) of 1921, Lenin justified the introduction of state capitalism controlled politically by the dictatorship of the proletariat to further central control and develop the productive forces:
Lenin argued the state should temporarily run the economy, which would eventually be taken over by workers.[27] To Lenin, "state capitalism" did not mean the state would run most of the economy, but that "state capitalism" would be one of five elements of the economy:[28]
Use of the term by the left[edit]
Socialists[edit]
The term "state capitalism" has been used by various socialists, including anarchists, Marxists and Leninists.
Anarchists[edit]
Perhaps the earliest critique of the Soviet Union as state capitalist was formulated by the Russian anarchists as documented in Paul Avrich's work on Russian anarchism.[29]
This claim would become standard in anarchist works. For example, the prominent anarchist Emma Goldman in an article from 1935 titled "There Is No Communism in Russia" said of the Soviet Union:
When speaking about Marxism, Murray Bookchin said the following:
While speaking about Leninism, the authors of An Anarchist FAQ say:
Russian communist left[edit]
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Another early analysis of the Soviet Union as state capitalist came from various groups advocating left communism. One major tendency of the 1918 Russian communist left criticised the re-employment of authoritarian capitalist relations and methods of production. As Valerian Osinsky in particular argued, "one-man management" (rather than the democratic factory committees workers had established and Lenin abolished)[33] and the other impositions of capitalist discipline would stifle the active participation of workers in the organisation of production—Taylorism converted workers into the appendages of machines and piece work imposed individualist rather than collective rewards in production so instilling petty bourgeois values into workers. In sum, these measures were seen as the re-transformation of proletarians within production from collective subject back into the atomised objects of capital. The working class, it was argued, had to participate consciously in economic as well as political administration. This tendency within the 1918 left communists emphasized that the problem with capitalist production was that it treated workers as objects. Its transcendence lay in the workers' conscious creativity and participation, which is reminiscent of Marx's critique of alienation.[34]
These criticisms were revived on the left of the Russian Communist Party after the 10th Congress in 1921, which introduced the New Economic Policy (NEP). Many members of the Workers' Opposition and the Decists (both later banned) and two new underground Left Communist groups, Gavril Myasnikov's Workers' Group and the Workers' Truth group, developed the idea that Russia was becoming a state capitalist society governed by a new bureaucratic class.[19][35] The most developed version of this idea was in a 1931 booklet by Myasnikov.[36]
Mensheviks and orthodox Marxists[edit]
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Immediately after the Russian Revolution, many Western Marxists questioned whether socialism was possible in Russia. Specifically, Karl Kautskysaid:
After 1929, exiled Mensheviks such as Fyodor Dan began to argue that Stalin's Russia constituted a state capitalist society.[38] In the United Kingdom, the orthodox Marxist group the Socialist Party of Great Britain independently developed a similar doctrine. Although initially beginning with the idea that Soviet capitalism differed little from western capitalism, they later began to argue that the bureaucracy held its productive property in common, much like the Catholic Church's.[39] As John O'Neill notes:
Rudolf Hilferding, writing in the Menshevik journal Socialist Courier April 25 1940 rejected the concept of state capitalism, noting that, as practiced in the Soviet Union, it lacked the dynamic aspects of capitalism such as a market which set prices or a set of entrepreneurs and investors which allocated capital. Thus, state capitalism was not a form of capitalism but a form of totalitarianism.[41]
Shachtmanite Trotskyists[edit]
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Leon Trotsky said the term state capitalism "originally arose to designate the phenomena which arise when a bourgeois state takes direct charge of the means of transport or of industrial enterprises" and is therefore a "partial negation" of capitalism.[42] However, Trotsky rejected that description of the Soviet Union, claiming instead that it was a degenerated workers' state. After World War II, most Trotskyists accepted an analysis of the Soviet bloc countries as being deformed workers' states. However, alternative opinions of the Trotskyist tradition have developed the theory of state capitalism as a New Class theory to explain what they regard as the essentially non-socialist nature of the Soviet Union, Cuba, China and other self-proclaimed socialist states.
The discussion goes back to internal debates in the Left Opposition during the late 1920s and early 1930s. Ante Ciliga, a member of the Left Opposition imprisoned at Verkhne-Uralsk in the 1930s, described the evolution of many Left Oppositionists to a theory of state capitalism influenced by Gavril Myasnikov's Workers Group and other Left Communist factions.[43][19][44] On release and returning to activity in the International Left Opposition, Ciliga "was one of the first, after 1936, to raise the theory [of state capitalism] in Trotskyist circles".[19] George Orwell, who was an anti-Stalinist leftist like Ciliga, used the term in his Homage to Catalonia (1938).
After 1940, dissident Trotskyists developed more theoretically sophisticated accounts of state capitalism. One influential formulation has been that of the Johnson–Forest Tendency of C. L. R. James and Raya Dunayevskaya who formulated her theory in the early 1940s on the basis of a study of the first three Five Year Plansalongside readings of Marx's early humanist writings. Their political evolution would lead them away from Trotskyism.[45] Another is that of Tony Cliff, associated with the International Socialist Tendency and the British Socialist Workers Party (SWP), dating back to the late 1940s. Unlike Johnson-Forest, Cliff formulated a theory of state capitalism that would enable his group to remain Trotskyists, albeit heterodox ones.[46] A relatively recent text by Stephen Resnick and Richard D. Wolff, Class Theory and History, explores what they term state capitalism in the former Soviet Union, continuing a theme that has been debated within Trotskyist theory for most of the past century.
Compare with other left-wing theories regarding Soviet-style societies: deformed workers' states, degenerated workers' states, new class, state socialism and bureaucratic collectivism.
Use by later left communists and council communists[edit]
The left communist/council communist traditions outside Russia consider the Soviet system as state capitalist. Otto Rühle, a major German left communist, developed this idea from the 1920s and it was later articulated by Dutch council communist Anton Pannekoek, for instance in "State Capitalism and Dictatorship" (1936).
Use by Maoists and anti-revisionists[edit]
From 1956 to the late 1970s, the Communist Party of China and their Maoist or anti-revisionist adherents around the world often described the Soviet Union as state capitalist, essentially using the accepted Marxist definition, albeit on a different basis and in reference to a different span of time from either the Trotskyists or the left-communists. Specifically, the Maoists and their descendants use the term state capitalism as part of their description of the style and politics of Nikita Khrushchev and his successors as well as to similar leaders and policies in other self-styled "socialist" states.[47] This was involved in the ideological Sino-Soviet Split.
After Mao Zedong's death, amidst the supporters of the Cultural Revolution and the "Gang of Four", most extended the state capitalist formulation to China itself and ceased to support the Communist Party of China, which likewise distanced itself from these former fraternal groups. The related theory of Hoxhaism was developed in 1978, largely by Socialist Albanian President Enver Hoxha, who insisted that Mao himself had pursued state capitalist and revisionist economic policies.[48]
Most current communist groups descended from the Maoist ideological tradition still adopt the description of both China and the Soviet Union as being "state capitalist" from a certain point in their history onwards—most commonly, the Soviet Union from 1956 to its collapse in 1991 and China from 1976 to the present. Maoists and "anti-revisionists" also sometimes use the term "social imperialism" to describe socialist states that they consider to be actually capitalist in essence—their phrase, "socialist in words, imperialist in deeds" denotes this.
Use by liberal economists[edit]
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Murray Rothbard, an anarcho-capitalist philosopher, uses the term interchangeably with the term state monopoly capitalism and uses it to describe a partnership of government and big business in which the state intervenes on behalf of large capitalists against the interests of consumers.[49][50] He distinguishes this from laissez-faire capitalism where big business is not protected from market forces. This usage dates from the 1960s, when Harry Elmer Barnes described the post-New Deal economy of the United States as "state capitalism". More recently, Andrei Illarionov, former economic advisor to Russian President Vladimir Putin, resigned in December 2005, protesting Russia's "embracement of state capitalism".[51]
The term is not used by the classical liberals to describe the public ownership of the means of production. The Austrian School economist Ludwig von Mises explained the reason: "The socialist movement takes great pains to circulate frequently new labels for its ideally constructed state. Each worn-out label is replaced by another which raises hopes of an ultimate solution of the insoluble basic problem of Socialism—until it becomes obvious that nothing has been changed but the name. The most recent slogan is "State Capitalism." It is not commonly realized that this covers nothing more than what used to be called Planned Economy and State Socialism, and that State Capitalism, Planned Economy, and State Socialism diverge only in non-essentials from the "classic" ideal of egalitarian Socialism".[52]
Use by Italian Fascists[edit]
On economic issues, Italian Fascist leader Benito Mussolini claimed in 1933 that were Fascism to follow the modern phase of capitalism, its path would "lead inexorably into state capitalism, which is nothing more nor less than state socialism turned on its head. In either event, [whether the outcome be state capitalism or state socialism] the result is the bureaucratization of the economic activities of the nation".[53] Mussolini claimed that capitalism had degenerated in three stages, starting with dynamic or heroic capitalism (1830–1870), followed by static capitalism (1870–1914) and then reaching its final form of decadent capitalism, also known as supercapitalism beginning in 1914.[54]
Mussolini denounced supercapitalism for causing the "standardization of humankind" and for causing excessive consumption.[55] Mussolini claimed that at this stage of supercapitalism "[it] is then that a capitalist enterprise, when difficulties arise, throws itself like a dead weight into the state's arms. It is then that state intervention begins and becomes more necessary. It is then that those who once ignored the state now seek it out anxiously".[56] Due to the inability of businesses to operate properly when facing economic difficulties, Mussolini claimed that this proved that state intervention into the economy was necessary to stabilize the economy.[56]
Mussolini claimed that dynamic or heroic capitalism and the bourgeoisie could be prevented from degenerating into static capitalism and then supercapitalism only if the concept of economic individualism were abandoned and if state supervision of the economy was introduced.[57] Private enterprise would control production, but it would be supervised by the state.[57] Italian Fascism presented the economic system of corporatism as the solution that would preserve private enterprise and property while allowing the state to intervene in the economy when private enterprise failed.[57]
In Western countries[edit]
An alternate definition is that state capitalism is a close relationship between the government and private capitalism, such as one in which the private capitalists produce for a guaranteed market. An example of this would be the military–industrial complex in which autonomous entrepreneurial firms produce for lucrative government contracts and are not subject to the discipline of competitive markets.
Both the Trotskyist definition and this one derive from discussion among Marxists at the beginning of the 20th century, most notably Nikolai Bukharin, who in his book Imperialism and the world economy thought that advanced, imperialist countries exhibited the latter definition and considered (and rejected) the possibility that they could arrive at the former.
State capitalism is practised by a variety of Western countries with respect to certain strategic resources important for national security. These may involve private investment as well. For example, a government may own or even monopolize oil production or transport infrastructure to ensure availability in the case of war. Examples include Neste, Statoil and OMV.
There are limits according to arguments that state capitalism exists to ensure that wealth creation does not threaten the ruling elite's political power, which remains unthreatened by tight connections between the government and the industries while state capitalist fears of capitalism's "creative destruction", of the threat of revolution and of any significant changes in the system result in the persistence of industries that have outlived their economic usefulness and an inefficient economic environment that is ill equipped to inspire innovation.
In European studies[edit]
Several European scholars and political economists have used the term to describe one of the three major varieties of capitalism that prevail in the modern context of the European Union. This approach is mainly influenced by Schmidt's (2002) article on The Futures of European Capitalism, in which he divides modern European capitalism in three groups: "Market", "Managed" and "State". Here, state capitalism refers to a system where high coordination between the state, large companies and labour unions ensures economic growth and development in a quasi-corporatistmodel. The author cites France and to a lesser extent Italy as the prime examples of modern European state capitalism.[58] A general theory of capitalist forms, whereby state capitalism is a particular case, was developed by Ernesto Screpanti, who argued that soviet type economies of the 20th century used state capitalism to sustain processes of primitive accumulation.[59] In their historical analysis of the Soviet Union, Marxist economists Richard D. Wolff and Stephen Resnick identify state capitalism as the dominant class system throughout the history of the Soviet Union.[60]
State monopoly capitalism[edit]
The theory of state monopoly capitalism was initially a neo-Stalinist doctrine popularised after World War II. Lenin had claimed in 1916 that World War I had transformed laissez-faire capitalism into monopoly capitalism, but he did not publish any extensive theory about the topic. The term refers to an environment where the state intervenes in the economy to protect large monopolistic or oligopolistic businesses from competition by smaller firms.[61] The main principle of the ideology is that big business, having achieved a monopoly or cartel position in most markets of importance, fuses with the government apparatus. A kind of financial oligarchy or conglomerate therefore results, whereby government officials aim to provide the social and legal framework within which giant corporations can operate most effectively. This is a close partnership between big business and government and it is argued that the aim is to integrate labour-unions completely in that partnership.
State monopoly capitalist (stamocap) theory aims to define the final historical stage of capitalism following monopoly capitalism, consistent with Lenin's definition of the characteristics of imperialism in his short pamphlet of the same name. Occasionally the stamocap concept also appears in neo-Trotskyist theories of state capitalism as well as in libertarian anti-state theories. The analysis made is usually identical in its main features, but very different political conclusions are drawn from it.
Political implications[edit]
The strategic political implication of stamocap theory towards the end of the Joseph Stalin era and afterwards was that the labour movement should form a "people's democratic alliance" under the leadership of the Communist Party with the progressive middle classes and small business against the state and big business (called "monopoly" for short). Sometimes this alliance was also called the "anti-monopoly alliance".
Neo-Trotskyist theory[edit]
In neo-Trotskyist theory, such an alliance was rejected as being based either on a false strategy of popular fronts, or on political opportunism, said to be incompatible either with a permanent revolution or with the principle of independent working class political action.
The state in Soviet-type societies was redefined by the neo-Trotskyists as being also state-monopoly capitalist. There was no difference between the West and the East in this regard. Consequently, some kind of anti-bureaucratic revolution was said to be required, but different Trotskyist groups quarreled about what form such a revolution would need to take, or could take.
Some Trotskyists believed the anti-bureaucratic revolution would happen spontaneously, inevitably and naturally, others believed it needed to be organised—the aim being to establish a society owned and operated by the working class. According to the neo-Trotskyists, the Communist Party could not play its leading role because it did not represent the interests of the working class.
Criticism[edit]
When Varga introduced the theory, orthodox Stalinist economists attacked it as incompatible with the doctrine that state planning was a feature only of socialism and that "under capitalism anarchy of production reigns".[63]
Critics of the stamocap theory (e.g. Ernest Mandel and Leo Kofler) claimed the following:
- Stamocap theory wrongly implied that the state could somehow overrule inter-capitalist competition, the laws of motion of capitalism and market forces generally, supposedly cancelling out the operation of the law of value.
- Stamocap theory lacked any sophisticated account of the class basis of the state and the real linkages between governments and elites. It postulated a monolithic structure of dominationwhich in reality did not exist in that way.
- Stamocap theory failed to explain the rise of neo-liberal ideology in the business class, which claims precisely that an important social goal should be a reduction of the state's influence in the economy.
- Stamocap theory failed to show clearly what the difference was between a socialist state and a bourgeois state, except that in a socialist state the Communist Party (or, rather, its central committee) played the leading political role. In that case, the class-content of the state itself was defined purely in terms of the policy of the ruling political party (or its central committee).
In popular culture[edit]
- WALL-E has the "Buy n' Large" corporation, which acted as the de facto and possibly de jure government in the decades before, and after, the evacuation of Earth.
- The Druuge, an alien race in Star Control, are governed by the Crimson Corporation, which owns the Druuge home planet and everything on it. All Druuge are employees and/or shareholders of this corporation and Druuge who lose their jobs are immediately executed for stealing the planet's air, which the company owns, by breathing it.
Current forms in the 21st century[edit]
State capitalism is distinguished from capitalist mixed economies where the state intervenes in markets to correct market failures or to establish social regulation or social welfare provisions in the following way: the state operates businesses for the purpose of accumulating capital and directing investment in the framework of either a free market or a mixed-market economy. In such a system, governmental functions and public services are often organized as corporations, companies or business enterprises.
China[edit]
Many analysts assert that China is one of the main examples of state capitalism in the 21st century.[64][65][66] In his book, The End of the Free Market: Who Wins the War Between States and Corporations, political scientist Ian Bremmer describes China as the primary driver for the rise of state capitalism as a challenge to the free market economies of the developed world, particularly in the aftermath of the 2008 financial crisis.[67] Bremmer draws a broad definition of state capitalism as such:[68]
Following on Bremmer, Aligica and Tarko[69] further develop the theory that state capitalism in countries like modern day China and Russia is an example of a rent-seeking society. They argue that following the realization that the centrally planned socialist systems could not effectively compete with capitalist economies, formerly Communist Party political elites are trying to engineer a limited form of economic liberalization that increases efficiency while still allowing them to maintain political control and power.
In his article "We're All State Capitalists Now", British historian and Laurence A. Tisch Professor of History at Harvard University Niall Ferguson warns against "an unhelpful oversimplification to divide the world into 'market capitalist' and 'state capitalist' camps. The reality is that most countries are arranged along a spectrum where both the intent and the extent of state intervention in the economy vary".[68] He then notes:[68]
Analysis of the "Chinese model" by the economists Julan Du and Chenggang Xu finds that the contemporary economic system of the People's Republic of China represents a state capitalist system as opposed to a market socialist system. The reason for this categorization is the existence of financial markets in the Chinese economic system, which are absent in the market socialist literature and in the classic models of market socialism; and that state profits are retained by enterprises rather than being equitably distributed among the population in a basic income/social dividend or similar scheme, which are major features in the market socialist literature. They conclude that China is neither a form of market socialism nor a stable form of capitalism.[70]
Norway[edit]
The government of Norway has ownership stakes in many of the country's largest publicly listed companies, owning 37% of the Oslo stockmarket[71] and operates the country's largest non-listed companies including Statoil and Statkraft. The government also operates a sovereign wealth fund, the Government Pension Fund of Norway, whose partial objective is to prepare Norway for a post-oil future.[71]
Modern Norwegian state capitalism has its origins in public ownership of the country's oil reserves and in the country's post-World War II social democratic reforms.
Singapore[edit]
Singapore's government owns controlling shares in many government-linked companies and directs investment through sovereign wealth funds, an arrangement commonly cited as state capitalism.[72] Singapore has attracted some of the world's most powerful corporations through business friendly legislation and through the encouragement of Western style corporatism, with close cooperation between the state and corporations. Singapore's large holdings of government-linked companies and the state's close cooperation with business are defining aspects of Singapore's economic model.
Taiwan[edit]
Taiwan's economy has been classified as a state capitalist system influenced by its Leninist model of political control, a legacy which still lingers in the decision-making process. Taiwan's economy includes a number of state-owned enterprises, but the Taiwanese state's role in the economy shifted from that of an entrepreneur to a minority investor in companies alongside the democratization agenda of the late 1980s.[73]
Some Taiwanese economists refer to Taiwan's economy model as "party-state capitalism".
See also[edit]
- Bureaucratic collectivism
- Constitutional economics
- Corporate capitalism
- Corporatism
- Corporatization
- Crony capitalism
- Developmental state
- Dirigisme
- East Asian model of capitalism
- Economy of Singapore
- Economy of the Soviet Union
- Government-owned corporation
- Indicative planning
- Market socialism
- Mixed economy
- New class
- Political economy
- Raya Dunayevskaya
- Rentier state
- Socialism with Chinese characteristics
- Đổi Mới
- Socialist-oriented market economy
- Sovereign wealth fund
- State socialism
- Statism
- Types of capitalism
