1. The Epoch of Capitalist Decay
When capitalist production first arose, its internal contradictions drove the system forward and to replace previous modes of production. As it aged, its contradictions grew less tractable and produced the convulsions and decay that plague the modern world. These fundamental changes have come to threaten the very existence of capitalism: they engender its epoch of decay.(1) In this epoch the proletariat emerges as a real alternative to capital as the harbinger and agent of socialist revolution.
For some left theorists, the new epoch signifies that classical Marxism is obsolete: the laws Marx described no longer apply, and therefore new laws and relations have to be put in their place. Inevitably this means that the proletariat is shunted aside as the revolutionary agent, to be replaced by third-world nationalists or middle-class elements. Others ignore the altered operation of the laws of capital in this epoch in order to make the reformist case that capitalism is not doomed to decay but can continue to expand the productive forces, as it did in its progressive epoch. They too reject the proletariat as the revolutionary agent of socialism.
In this chapter we consider first the theoretical foundations of the epoch of capitalist decay, and then Marxist theories and practice as the new epoch took shape around the turn of the century. This analysis is crucial for understanding Stalinism, a particular form of the capitalism of this epoch.
In 1859 Marx began the Preface to his Critique of Political Economy with a brief intellectual autobiography. It concluded with the passage he called “the guiding thread of my studies.” The first and best-known part of this passage summarizes the principles of historical materialism; the second part introduces the concept of a society’s epoch of decay.
In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material and productive forces. The sum total of these relations of production constitutes the economic structure of society, the real foundation on which rises a legal and political superstructure, and to which correspond definite forms of social consciousness. The mode of production of material life conditions the social, political and intellectual life process in general. It is not the consciousness of men that determines their being but, on the contrary, their social being that determines their consciousness.
At a certain stage of their development, the material productive forces of society come into conflict with the existing relations of production, or – what is but a legal expression of the same thing – with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution.
Marx’s discussion here is a general one, applicable to many forms of class society and their modes of production. It states that any such society that is progressive (capable of “development of [the] material and productive forces”) is bound to develop to a point where its own relations of production inherently hamper and retard the productive forces. At that point the social relations become reactionary, and an “epoch of social revolution” occurs: people strive to adopt new social relations compatible with the level of productive forces.
The case of capitalism, however, is different from that of previous class societies. First, Marx could look back on the decay of past societies historically, whereas the decay of capitalism had to be foreseen. His understanding of capitalist decay was based on his analysis of its recurring economic crises. As we saw in Chapter 1, in these crises a major part of capitalist production comes to a halt: the productive forces are held back. Thus the crises prefigure the epochal crisis of the system as a whole:
These contradictions ... lead to explosions, crises in which momentary suspension of all labor and annihilation of a great part of the capital violently lead it back to the point where it is enabled to go on fully employing its productive powers without committing suicide. Yet these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its violent overthrow.(2)
Short-term crises and epochal decay are intimately intertwined, but it is necessary to distinguish them clearly for the purpose of analysis. From time to time Marx predicted that the epoch of decay had actually arrived, that the productive forces of capitalism had been permanently fettered in the course of one of the system’s periodic crises – only to find his expectation falsified by a new burst of productive activity. Marx had in effect already explained these misjudgments:
No social order ever disappears before all the productive forces for which there is room in it have been developed; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society.(3)
Capitalism’s recurrent resurgences after its crises, the fact that it was not crippled by the bonds that regularly held back the productive forces, proved that this old social order was not yet used up: economic crises are not the same as the epoch of social revolution. Marx did not live to see the fulfillment of the revolutionary epoch he predicted.
Now to the second distinctive aspect of capitalism. Class society exists because of the prevalence of economic scarcity; that is its historical justification. Capitalism’s productive drive has the potential to do away with this justification: it points to the realm of abundance, the abolition of scarcity. When economic expansion reaches the point where there is no longer any need for class divisions, where expansion can continue without exploitation by a ruling class, then class society (and of course capitalism in particular) becomes superfluous – and reactionary. Capitalism is therefore the last class society necessary in human history.
In addition to the well-known passage where Marx outlines his view of the different epochs of social systems in general, elsewhere he describes the turning points of capitalism in particular. He brings out the epoch of decay through a historical development of capitalism in three stages:
As long as capital is weak, it still itself relies on the crutches of past modes of production, or of those which will pass with its rise. As soon as it feels strong, it throws away the crutches, and moves in accordance with its own laws. As soon as it begins to sense itself and become conscious of itself as a barrier to development, it seeks refuge in forms which, by restricting free competition, seem to make the rule of capital more perfect, but are at the same time the heralds of its dissolution and of the dissolution of the mode of production resting on it.(4)
That is, when capitalist production first arose within feudalism, it was hampered by barriers like the guild system, but it also depended on these structures to get itself off the ground. When capitalism reached its adult stage and came to dominate production, competition flourished and executed the inner laws of capital more fully. Finally, in its epoch of decay, capitalism has to rely on forms other than free competition – chiefly monopoly and the state – which seem to strengthen it. But these also distort its laws and erect barriers to the expansion of the productive forces.
Many Marxists take the mature progressive epoch of capitalism (the second of the three stages Marx described) as its normal, permanent condition, whereas Marx knew that the classical features of free competition and free markets were not permanent. As we will show, Stalinist society is an extreme case of the restriction of competition and other laws making capital a barrier to its own development. Marx obviously could not foresee the unique history of revolution and counterrevolution that created present-day statified capitalism, just as he could not predict the precise outlines of the imperialist epoch that became clear to Lenin and others after the turn of the century. But what he could see testifies to the clarity of his theory, in sharp contrast to the rationalizations that pass for Marxism today. We now take a closer look at these “heralds” of capital’s dissolution.
In the 1870’s Marx and Engels added a further element to their analysis of capitalism. They observed that the tendency for capital to centralize, present throughout the history of capitalism, was bringing about a qualitative change with the development of joint stock companies and the increasing role of the bourgeois state. In the 1890’s Engels added the element of trustification and monopolization. Here he sums up the matter in detail:
On the one hand, therefore, the capitalistic mode of production stands convicted of its own incapacity to further direct these productive forces. On the other, these productive forces themselves with increasing energy press forward to the removal of the existing contradiction, to the abolition of their quality as capital, to the practical recognition of their character as social productive forces.
This rebellion of the productive forces, as they grow more and more powerful, against their quality as capital, this stronger and stronger command that their social character shall be recognized, forces the capitalist class itself to treat them more and more as social productive forces, so far as this is possible under capitalist conditions. The period of industrial high pressure, with its unbounded inflation of credit, not less than the crash itself, by the collapse of great capitalist establishments, tends to bring about that form of the socialization of great masses of means of production which we meet with in the different kinds of joint-stock companies. ... At a further stage of evolution this form also becomes insufficient. The producers on a large scale in a particular branch of industry in a particular country unite in a trust, a union for the purpose of regulating production. ...
In the trusts, freedom of competition changes into its very opposite – into monopoly; and the production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society. Certainly this is so far still to the benefit of the capitalists. But in this case the exploitation is so palpable that it must break down. No nation will put up with production conducted by trusts with so barefaced an exploitation of the community by a small band of dividend-mongers.
We note only a few of the wealth of ideas here: the socialization of the productive forces, the organization and planning of production and the growing role of the state – all pointing to the danger to the continued existence of capitalism, as class rule becomes increasingly naked. Moreover, the passage is an exquisite portrayal of the contradictory connection that is possible between form and content. The invading socialist forms pose a lethal threat to capitalism, but are nevertheless initially used by capitalism to preserve itself.
The entire analysis is a frontal challenge to the notions that capitalism can exist only as a regime of free competition and that state planning is a defining characteristic of some new non-capitalist society. Life would be a lot simpler if today’s Marxists understood as much about their own epoch as did Marx and Engels before it arrived.
Because it has become common on the left since the time of Stalin to counterpose economic planning and the laws of capitalism as if they were incompatible, it is worth noting that Engels, in his Critique of the Erfurt Program of German social democracy (1891) specified that “When we pass from joint-stock companies to trusts which control and monopolize whole branches of industry, it is not only private production that ceases, but also planlessness.” (6) In place of “trusts” today we would say multinational corporations – or, for that matter, the imperialist state.
Lenin’s commentary on the same point is also relevant to present-day discussions of the “Russian question”:
The trusts, of course, have not created, do not create now, and cannot create full and complete planning. But to whatever extent they do plan, to whatever extent the capitalist magnates calculate in advance the volume of production on a national and even on an international scale, and to whatever extent they systematically regulate it, we still remain under capitalism – capitalism in its new stage, it is true, but still undoubtedly capitalism. The ‘proximity’ of such capitalism to socialism should serve the genuine representatives of the proletariat as proof of the proximity, ease, feasibility and urgency of the socialist revolution, and not as an argument in favor of tolerating the repudiation of such a revolution or in favor of making capitalism look more attractive, an occupation in which all the reformists are engaged.(7)
Although capitalism exists under conditions of “creeping socialism,” the circumstances of the new epoch make it a reactionary social system. The central factor that brings the change in epochs about is the growth and development of the proletariat. The new epoch can be said to be inaugurated when the industrial working class approaches its maximum strength in society, when it becomes organized and disciplined both through its enforced role in industry and through its own parties and trade unions – when, in short, it becomes a threat to the property of the bourgeoisie. The proletariat’s development is the major factor that drives capitalism to become a barrier to its own productive forces – but it also makes possible a qualitative advance beyond capitalism.
Once the developed proletariat appears on the scene as a potential alternative, the bourgeoisie turns to centralization in the political sphere as well as the economic. Surplus value has to be turned away from productive accumulation and expended increasingly on means of repression. Measures have to be taken to forestall new crises, lest turbulence and additional misery drive the masses to revolution; these measures inevitably weaken the system’s growth. The state apparatus expands to control and (in part) buy off the masses; militarization and nationalism are stepped up to divert the class struggle; ideologies like racism and the sanctity of the family are broadcast to keep the proletariat divided; ultimately the bourgeoisie turns to world war and fascism. All this is not a bourgeois plot, although capitalists do conspire. It derives from capital’s laws of motion.
The deepening role of the state in the epoch of capitalist decay is not just a consequence of the system’s economic laws: it also effects the operation of these laws. For example, the state intervenes into the economy in order to ensure the production of specific use values for its own purposes, above all the weapons of repression and conquest. This does not mean, as Cliff says, that use values have replaced value in general as the aim of capitalist production. On the contrary, the state makes use of a variety of economic levers (contracts, taxes, etc.) to motivate the capitalists to produce what it needs. Production for value is by no means abolished, even though whole sectors now produce for the state.
Moreover, whatever the use-value motivations of social engineers, value inevitably operates behind their backs and frustrates their intentions. The United States, for example, would love to be the only Western power producing arms – it would make fortunes selling them and would not have to fear military threats from its present allies – but four post-World War II decades of unrivaled arms production have undermined its economic strength in comparison to Japan and West Germany. (We will say more on this in Chapter 6.) As Engels and Lenin observed, the bourgeoisie can plan, but its planning is still subject to the uncontrollable laws of value.
Another significant effect of the trustification and statification of capital is the growth of the industrial and state bureaucracy. This layer of society is part of the expanding “middle class” of salaried employees standing between proletariat and bourgeoisie. As the centralization of capital gradually reduces the proportionate weight of the traditional petty-bourgeoisie, the capitalists increasingly have to rely on hired subordinates to manage businesses and discipline workers. The same happens as the state expands its economic powers and develops a vast apparatus of functionaries. These bureaucracies are structured as rigid hierarchies in order to maintain their subordination to higher authority. It is not the advance of technology that makes them indispensable but the class struggle: the need to maintain exploitation as the ruling class itself diminishes. The state and industrial bureaucracies are matched by a developing labor bureaucracy, of which we will see more later.
The rise of bureaucracy is not the trans-historical phenomenon perceived by bourgeois sociologists, occurring now under capitalism just as it did under the Roman and Chinese emperors. Capitalist bureaucracy represents the bourgeoisie’s attempt to organize society and production in a planned way; it is a historically specific relationship within late modern capitalism, flourishing just when the system turns from its entrepreneurial heyday to its socializing but anti-socialist epoch of decay. It substitutes organizational hierarchy and ruling-class discipline for the voluntary human consciousness that will be the central determinant of planning under socialism. (The Stalinist nomenklatura is the extreme example of such bureaucratic hierarchy.) But bureaucracy cannot help reflect capitalism’s underlying social anarchy. It is an object of hatred and ridicule because, despite its rigid structure and regimen, it is inevitably wasteful, inefficient and parasitical on productive labor.
In a passage that further illustrates capitalism’s cyclical crises prefiguring its epochal decay, Engels wrote:
Their political and intellectual bankruptcy is scarcely any longer a secret to the bourgeoisie themselves. Their economic bankruptcy recurs regularly every ten years. In every crisis, society is suffocated beneath the weight of its own productive forces and products, which it cannot use, and stands helpless, face to face with the absurd contradiction that the producers have nothing to consume because consumers are wanting. The expansive force of the means of production bursts the bonds that the capitalist mode of production had imposed upon them.
... The socialist appropriation of the means of production does away, not only with the present artificial restrictions upon production, but also with the positive waste and devastation of the productive forces and products that are at the present time the inevitable concomitants of production, and that reach their height in the crises.(8)
The fact that socialization of the means of production is the method for doing away with periodic crises of overproduction confirms that for the founders of Marxism the cause of such crises is the independence of capitals, the uncoordinated nature of production – that is, the “anarchy” of capitalism, its private and parochial nature.
Marx linked the epochal change directly with the falling rate of profit tendency. After presenting the FRP as “the most important law from the historical standpoint” (Chapter 1), he elaborated:
The development of the productive forces brought about by the historical development of capital itself, when it reaches a certain point, suspends the self-realization of capital instead of positing it. Beyond a certain point the development of the powers of production become a barrier for capital; hence the capital relation a barrier for the development of the productive powers of labor. When it has reached this point, capital, i.e. wage labor, enters into the same relation towards the development of social wealth and of the forces of production as the guild system, serfdom [and] slavery, and is necessarily stripped off as a fetter. The last form of servitude assumed by human activity, that of wage labor on one side, capital on the other, is thereby cast off like a skin ...
The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone and to give room to a higher state of social production.(9)
Marx did not spell out the connection between the falling rate of profit and the epoch of decay, except to observe that declining capitalist profits led understandably to violent crises. Our interpretation of the FRP provides a theoretical link.
We saw that the FRP dominates its countertendencies during the expansion periods of the business cycle, whereas during crises the chief countertendency (the cheapening of constant capital) takes over, and the rate of profit’s fall is offset. To recapitulate: firms calculate the value of their capital according to what they originally paid for it, minus depreciation due to its physical wear and tear. But there is also the “moral” element of depreciation – capital has been devalued because rival capital serving the same use has since been produced with less labor, and therefore the reproduction of the same capital requires less. As a result, the old capital is overvalued.
So the value of older, obsolete capital has a fictitious component: its value is not based solely on labor time socially necessary for reproduction. The capitalists involved, however, bought their capital at its old, higher, value and have to suffer the consequences, a lower rate of profit. Marx studied the phenomenon of fictitious capital in Volume 3 of Capital in connection with the growth of credit, but he did not connect it to the falling rate of profit. For Marx, the FRP tendency depended only on the actual, material value of capital and did not require taking fictitious valuation into account.
Under classical competitive capitalism, a firm whose capital had a large fictitious component would have a low profit rate and would lose the competitive struggle to survive. But in the new epoch it is the big monopolies that create fictitious capital, and they are not so easily disposed of. For one thing, they can use their size, cartel arrangements and governmental influence to maintain their market position even at the cost of holding back technical progress in some sectors. Their incentive to do so is the fear of self-competition: if they were to allot new investments to a sphere of industry where they are already active, that could mean competing with their own units. Of course, competitive pressures among monopoly firms compel modernization. But their power over the market prolongs the life of equipment that would otherwise be destroyed as obsolete.
In the extreme, if a monopoly firm as a whole faced collapse, it would threaten to bring others down too, even efficient ones – since such a firm employs thousands of workers and is financially and commercially tied to every major sector of the capitalist class. Allowing it to go under would add greatly to social instability and threaten the national economy. Hence the state often has to revive large firms in danger of collapse; “survival of the economically fittest” is replaced by survival of the politically strongest. The monopoly epoch destroys capitalism’s last self-justification: that despite its rampant inequities it is the only way to produce goods efficiently. Thus the epoch is indeed one of decay. As Marx noted:
... as soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished.(10)
Analogously, under Stalinism unprofitable enterprises are allowed to remain in operation. Here too the fratricidal drives of capital conflict with the system’s desperate need for stability in the face of an organized and combative proletariat. That is why Stalinism, now forced to bankrupt firms that have long been unprofitable, faces a real peril.
In the modern epoch of capitalism, therefore, the system’s traditional crises cannot so easily be used to restructure capital and counter the falling rate of profit tendency. But crises whose resolution is suppressed on the national level or postponed by state action reappear in more frightening form internationally. The result is that the 20th century has witnessed a new form of crisis cycle: the buildup of contradictions that expresses itself in the explosion of world wars and great depressions.
The laws of capital in the monopoly epoch interfere in particular with the tendency for profit rates to equalize. Surplus value is no longer shared in proportion to the value of each capital’s investment; monopolies get a disproportionate share, whatever their relative organic composition. (Monopolization in the modern era is common in the most capital-intensive industries, where the sheer cost of fixed capital is a powerful barrier to the entry of competitors.) Monopolies that do not keep up with technical progress are nevertheless able to claim a share of total surplus value reflecting the price they originally paid for their capital – not just a price proportional to its present value, its cost of reproduction.
This does not mean, however, that the monopolies’ rate of profit will necessarily appear on the books as higher than average. Some Marxists have challenged the idea of “monopoly profits” by citing statistics showing that monopoly firms’ profits are no higher than others’.(11) Their figures may be accurate, but they are irrelevant. Capital markets evaluate a given capital chiefly according to its expected return. So when a monopoly appropriates a disproportionate share of surplus value, the price of its stock goes up, out of proportion to the capital’s material value. Thus its rate of profit appears to be no higher than average, because higher surplus value is balanced by a higher capitalization (the fictitious value given the capital in the market). As a consequence the overall rate of profit leans toward an apparent average, not the genuine average that characterizes the epoch of “capitalist communism.” Of course, the chief owners of such monopoly firms did not pay inflated prices for their shares, and their rate of profit, accordingly, is much higher.
Another argument against the inequality of profit rates is the following: true, monopolies obtain a monopoly profit rate higher than average and consequently force down the profit rate of non-monopoly capitals below average. But with the further development of capitalism, the degree of monopoly control of the market increases; as the monopoly sector grows and approaches 100 percent of production, its average rate of profit dominates the overall average profit rate and eventually the two rates coincide – bringing the monopoly profit rate back down to the average.(12) This argument presupposes a tendency for the size and strength of capitalist firms to equalize, a virtual impossibility in the epoch of decay. While monopolization does affect more and more spheres of capital, the strongest firms continue to expand, branching from one sector and from one country to another. At the same time, small capitals continue to come into existence, while some monopolies and cartels break down under the pressure of competition that is never totally eliminated. The tendency toward growing inequality of power (and of profit rates) is by no means over.
In sum, in the modern epoch the FRP tendency is not regularly balanced by the cheapening of constant capital; rather this countertendency conflicts with another, the fictitious valuation of fixed capital. Hence the FRP wins out over its major countertendency. One important result is that the rate of economic growth (accumulation) declines: in the non-monopoly sectors because they have less surplus value to invest, and in the monopoly sectors because further investment contains the threat of self-competition mentioned above.
The falling rate of profit law reflects the contradictions between use and value, as well as between the expansion and the preservation of value. It is not the cause of the epoch of decay; rather, in this epoch capitalism’s own resistance to the contradictions of capital brings the FRP tendency to full flower. The FRP therefore symbolizes the barrier to the expansion of the productive forces that capitalism has erected in this epoch. The violent consequences that Marx foresaw (and reality confirms) rest on a solid theoretical foundation.
The analysis of centralization and the state leads to the phenomenon of state capitalism. We show here that state capitalism is inherent in the system’s epoch of decay and has an ample heritage in Marxist theory. First an observation by Marx:
In any given branch of industry, centralization would reach its extreme limit if all the individual capitals invested in it were fused into a single capital. In a given society the limit would be reached only when the entire social capital was united in the hands of a single capitalist or a single capitalist company.(13)
Elsewhere Marx characterized joint-stock companies as “the abolition of the capitalist mode of production within the capitalist mode of production itself,” or “private production without the control of private property.”(14) Marx’s paradoxical language made clear that he did not regard such socialization of ownership as the abolition of capitalism. It is only the capitalist mode in the narrowest sense that is transcended, the age when the individual owner was boss. The paradox was the contradictory and unstable relationship maturing within capitalism itself.
Marx also observed that the combined capitalist function of ownership and management had broken down into separate tasks for different individuals, and that profit became “mere compensation for owning capital that now is entirely divorced from its function in the actual process of reproduction, just as this function in the person of the manager is divorced from ownership of capital.”(15) The divided role of the capitalist arises again when we study the economy of the modern USSR.
Engels took the analysis further by bringing in the state:
The transformation either into joint-stock companies and trusts or into state ownership does not do away with the capitalist nature of the productive forces. In the joint-stock companies and trusts this is obvious. And the modern state, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments of individual capitalists as well of the workers.
The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers – proletarians. The capitalist relation is not done away with; it is rather brought to a head. But brought to a head it topples over. State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.(16)
Engels’ explanation for the growth of “the modern state” omits one cause. Not only is a powerful state needed to wage the class struggle against the workers and discipline individual members of the bourgeoisie; it is also needed to protect the capitalists at home from those abroad. Of course, the state today commands even greater power than in the late 19th century when Engels wrote. That is both a result of the epoch of decay and a determinant of certain of its characteristics.
Capitalism’s tendency towards centralization and therefore statification brings out the social character of modern production – but in bourgeois form, because the means of production remain in private hands, those of the ruling bourgeoisie or its state. The “solution” of the conflict that Engels refers to is the socialist revolution that places industry, already largely socialized, into the hands of the workers’ state.
Engels’ remark that capitalism when “brought to a head” through statification “topples over” (or in another English translation, “turns into its opposite”) has been interpreted to mean that full statification automatically means the end of capitalism and therefore the existence of a workers’ state – even where the workers had little directly to do with the transformation (as in East Europe after World War II).(17) Engels effectively denies this meaning in the next sentence, but what then does he mean by the cryptic phrase “topples over”? To decide, we first note that the bringing to a head has never actually occurred: no bourgeoisie has gone so far as to abolish private property by completely entrusting its ownership function to the state. Trotsky explained why:
Theoretically, to be sure, it is possible to conceive a situation in which the bourgeoisie as a whole constitutes itself a stock company which, by means of its state, administers the whole national economy. The economic laws of such a regime would present no mysteries. ... Such a regime never existed, however, and, because of profound contradictions among the proprietors themselves, never will exist – the more so since in its quality of universal repository of capitalist property, the state would be too tempting an object for social revolution.(18)
That is, taking capitalism’s centralization and statification tendency to its limit would be conceivable theoretically but not practically – not because of any structural barrier inherent in the organization of capital, but because of the opposing classes’ antagonistic relations and the fratricidal nature of the bourgeoisie. Engels’ remark undoubtedly meant the same thing: if the capitalist class were to take the road of complete statification, that would quickly lead to the proletarian “solution” of abolishing, not extending, capitalist power. He said as much in the discussion of trusts already quoted: “the exploitation is so palpable that it must break down. No nation will put up with ... so barefaced an exploitation of the community by a small band of dividend-mongers.”
The expropriation of the capitalist expropriators is both an objectively demanded consequence of historical development and a proletarian task requiring subjective revolutionary consciousness. Without the latter, the objective tendency would inevitably be blunted and humanity would fall into barbarism.
We have seen that Marx considered a multiplicity of capitals to be a necessity; as he said, “a universal capital, one without alien capitals confronting it, with which it exchanges ... is therefore a non-thing.”(19) The possibility of a lasting “single capital” exists only under a workers’ state in the course of its transition to socialism – that is, on the road to finally abolishing capital in the course of abolishing itself (see Chapter 3). Only in this sense would a society of one capital mean the end of capitalism.
Of course, capitalist states have been able to move far down the road to state capitalism when they needed to, especially in wartime. Even that bastion of private property, the United States, imposed national planning during World War II: firms were told what and how much to produce, some were forced out of business and supplies were regulated centrally. When the war emergency was over the planning powers of the state declined, although of course the state retained a major economic role.
Despite the clear anticipation of state capitalism by Marx and Engels, many Marxists have argued that such a system is impossible – not just as an analysis of the Soviet economy but in theory as well. They overlook that the laws of capital, even under state capitalism, are perfectly compatible with state ownership of enterprises.(20) They only require a measure of practical independence, as we will see in Chapter 5.
A basis for the “impossibility” reasoning was provided by the Bolshevik economist Evgeny Preobrazhensky in the 1920’s, in a discussion of German state monopoly capitalism in World War I:
The regulation of the whole of capitalist production by the bourgeois state reached a degree unprecedented in the history of capitalism. Production which formally remained commodity production was transformed de facto into planned production in the most important branches. Free competition was abolished, and the working of the law of value in many respects was almost completely replaced by the planning principle of state capitalism.(21)
Preobrazhensky drew back from concluding that the near-replacement of the law of value in Germany had abolished capitalism, or even nearly so. But his claim that state capitalist planning cancels the law of value relies on the misconception we encountered earlier: that the law of value is defined by competition rather than simply being carried out through it.
Preobrazhensky’s misunderstanding of value in relation to state capitalism set the tone for others. A co-thinker of Mandel writes that “When this competition [between private capitals] slackens as a result of concentration of capital or state protection, the law of value loses some of its strength.”(22) And Cliff says that “Monopoly capitalism means a partial negation of the Marxian law of value but on the basis of the law of value itself. ... The partial negation of the law of value borders on its total negation.”(23) Cliff’s theory of use values as the aim of capitalist production (Chapter 1) shows that he means the total negation of the law of value.
But the law of value is not negated in the epoch of decay, not even partially – not, that is, in the sense of Preobrazhensky and Cliff of being almost completely erased or replaced. Just as under capitalist communism (a phenomenon that predates this epoch), it is apparently violated, but that is a different matter. As Cliff recognizes, the change in the appearance of the law occurs on the basis of the law itself – which ought to mean (but does not for Cliff) that value is still the dominant principle of capitalist production. Commodity production is still decisive, and the value of a commodity is still determined by the socially necessary labor time it embodies, despite the growing variety of distorting factors.
In fact, if we understand the law of value to be the basis of capitalism’s inequality, violent contradictions and crises – and that in this epoch the capitalist system of exploitation extends itself across the globe through the destruction of competing modes of production – then it is clear that the law of value still operates, and if anything more intensively. The abolition of the law of value or even its weakening would amount to a tremendous victory for the oppressed and exploited of the world. But that it not what happened in the Kaiser’s wartime Germany or Stalin’s Russia.
In sum, the possibility of state capitalism flows from the operation of capitalism in its epoch of decay. Although none of the great Marxists could possibly foresee the specific combination of revolution and counterrevolution that led to Stalinist capitalism, their theoretical analysis of the nature of capitalism allows us to see it for what it is. Trotsky, in his discussion of state capitalism, discounted the likelihood of the bourgeoisie nationalizing the entirety of capitalist property itself. But the modern USSR arose through a different historical process. The incredible paradox is that only the victorious proletariat could take the centralizing drive of capital to its unified conclusion. Through the Stalinist counterrevolution that victory was turned into a statified capitalism that no bourgeoisie could ever have achieved on its own.