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`State Capitalism' in the Soviet Union
M.C. Howard and J.E. King*
Introduction
The aim of this paper is to explore the reactions to the Bolshevik Revolution of one
group of critics from the left: those who saw it as ushering in a new form of
capitalism. The controversy over state capitalism had both theoretical and practical
significance. At the analytical level it presented an important test of Marx's
conception of historical materialism, which had been formulated in a largely
successful attempt to explain the transition from feudalism to capitalism in Western
Europe but had encountered difficulties when applied to other epochs and other
continents. In political terms, the class character of the Soviet Union was a crucial
question for those who wished to understand its internal dynamics, the nature of its
contradictions and the potential that it offered for revolutionary change. It remained
central, even after 1991, to any serious Marxian analysis of post-Mao China,
though this is not a topic that we develop at any length here.
Our treatment is broadly chronological. We begin by outlining the origins
of the state capitalism hypothesis before the October Revolution, and then describe
the use of the term by socialist critics of the Bolsheviks between 1917 and 1929.
Next we discuss the revival of interest in the idea during the 1930s experience of
Stalinism, show how Frankfurt School theorists extended it to denote contemporary
developments in Western capitalism, and consider the further evolution of the
notion of state capitalism that occurred after 1945. Finally we summarise the
arguments, for and against the hypothesis, that emerged from these debates, and
conclude by briefly considering the principal deficiencies of the state capitalist
hypothesis.
`State Capitalism' Before 1917
The conservative claim that socialism would inevitably degenerate into tyranny is
probably as old as the socialist ideal itself. What is often overlooked is that the
accusation came from the Left, no less than from the Right. The anti-democratic
views of Owen and Saint-Simon were frequently criticised by their socialist
contemporaries, while William Thompson charged Thomas Hodgskin
with
promoting the interests not of the masses but rather of an intellectual elite. Karl
Marx aroused similar suspicions. Long before 1917, some of the left (that is,
socialists and anarchists) were already claiming that there might be serious
problems with the Marxian project. Based on his experiences in the First
International, Mikhail Bakunin concluded that any regime led by Marx or his
followers was likely to be oppressive and dictatorial:
You can see quite well that behind all the democratic and socialistic
phrases and promises in Marx's program for the State lies all that
constitutes the true despotic and brutal nature of all states, regardless of
their form of government. Moreover, in the final reckoning, the
People's State of Marx and the aristocratic-monarchic state of Bismarck
are completely identical in terms of their primary domestic and foreign
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objectives. In foreign affairs there is the same deployment of military
force, that is to say, conquest. And in home affairs the same employment
of armed force, the last argument of all threatened political leaders
against the masses who, tired of always believing, hoping, submitting,
and obeying, rise in revolt. (Bakunin 1872 [1973], pp. 319-20)
Bakunin's own political practice may have been elitist, manipulative and
authoritarian, but he deserves credit, perhaps, for having been the first to
foreshadow the Bolshevik dictatorship. According to Alvin Gouldner his insights
went much deeper, leading him to formulate an original and incisive critique of
Marxism as `the ideology, not of the working class, but of a new class of scientific
intelligentsia...who would corrupt socialism, make themselves a new elite, and
impose their rule on the majority' (Gouldner 1982, pp. 860-1). The basis of their
domination would be knowledge or `cultural capital' (ibid., p. 867) 1 , together with
their monopoly of political power. Thirty years later the Polish anarchist Jan
Waclav Machajski reasserted Bakunin's position, arguing that the intelligentsia's
rise to power as a new ruling class might be facilitated by a Marxist dictatorship.
His analysis was taken seriously enough in Stalin's Russia for a campaign to be
mounted, in 1938, against `Makhaevism' (Avrich 1965). At about the same time as
Machajski, in 1904, Leon Trotsky expressed similar fears, this time in the context
of Lenin's assertion that the party should become a hierarchy of professional
revolutionaries. In what is with hindsight a chilling article, attacking Lenin's
Jacobin tendencies that led him towards `Substitutism', Trotsky predicted the
replacement of the revolutionary working class as the source of political authority
first by the party, then by its leadership, and finally by a single party dictator
(Deutscher 1954, pp. 88-97).
Control of the state was central to all these arguments, but none of these
writers speculated on the potential emergence of a new, statist form of capitalism.
The concept of `state capitalism' was not, however, entirely absent from the
socialist literature before 1917, though it was generally used to describe `the
takeover of industries by a state controlled by or for private capitalists' (Buick and
Crump 1986, p. 118). Marx himself had predicted an ever-increasing role for the
state as capitalism continued to evolve (Marx 1867 [1961], chapter XV, section 9),
and in Anti-Dühring Engels had written that
The modern state, whatever its form, is an essentially capitalist
machine, the state of the capitalists, the ideal aggregate capitalist. The
more productive forces it takes over into its possession, the more it
becomes a real aggregate capitalist, the more citizens it exploits. The
workers remain wage-workers, proletarians. The capitalist relationship
is not abolished, rather it is pushed to the limit. (Engels 1878 [1976], p.
360)
Later Marxists acknowledged the part played by the state in developing capitalism
in both Russia and Germany, with Lenin (for example) describing a `Prussian path'
by which the Tsarist regime hoped to save itself by incorporating some aspects of
the bourgeois system and thereby reconstructing the ancien regime from above
(Howard and King 1989, chapter 11). This process was seen to have deepened in
the early stages of the First World War, leading some Marxists to argue that the
extension of state involvement in the capitalist economy was not only irreversible
but also entailed a profound systemic change. Nikolai Bukharin, for example,
identified a new stage in the development of capitalism, in which all sectors of
national production and all important social institutions had come under state
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management; he termed this new stage `state capitalism' (Bukharin 1915 [1972], p.
158). Rudolf Hilferding's interpretation of the German war economy was very
similar, although he preferred the term `organised capitalism' (Howard and King
1989, chapter 14) and as we shall see later was always deeply critical of the
concept of state capitalism.
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