State-Capitalism and American Stalinism

State-capitalism is a description of capitalist reality - not a theory. As we have seen with the course of events of the 20th Century that both "private" and "state" enterprises become victims of falling rates of profit. They become unprofitable as it becomes progressively harder to move an increasing mass of capital into circulation. That is as the constant element of capital, the "overhead" of production increases the variable element, the costs associated with labor and its reproduction tends to decrease. Falling rates of profit affect all capitalist enterprises. We have seen state-capital arise in the epoch of imperialism first as a means to build a military machine and then progressively, insidiously, as a means to prop up weak points in the national economy, nationalizing losses and privatizing gains. Thus as passenger rail in the US died, the state subsidized enterprise Amtrak was created. When US steel producers began complaining of the "dumping" of Russian and Japanese steel, the state again rushed to their protection with new tariffs. In states of the former Stalinist bloc, crises of state capital became more intractable in states with the highest concentrations of this form of capital that tended to progressively weaken economically unless they adopted a position of "reform". This requires freeing capital from state restrictions so that its concentration and accumulation can proceed unhindered. So the economic crises in the Stalinist bloc broke out in the Soviet Union and became visible in the lack of production of necessary commodities and in an increasingly apparent and persistent level of poverty among the working classes. It is a bitter lesson to learn, but events show us that the bourgeoisie is bourgeois by virtue of its exploitation of wage laborers, not by its relative proximity to, or distance from, the state governing bodies of capitalism.

As it is most commonly understood capital isn't simply an accumulation of money wealth, but it is also a social relation as Marx tells us. It is a relationship of exploitation of a labor "market" on the one hand and control of the productive process, for the ends of capitalist accumulation, on the other hand. The modern capitalist republic arose as the form of rule of the modern bourgeoisie, as the modern nation itself arose. It is the product of the collective needs and decision-making processes of the capitalist class as a whole, and not a tool that reformists would have us believe, can be picked up and put down like a mallet. As the necessary process of technological advance under capitalism, kept increasing exponentially, and mechanisms of spreading risk among capitalists became ever more complex during the course of the twentieth century, it fell to the state to fund those parts of the economy that had been hitherto neglected by the capitalist class. For American capitalism at the outbreak of WWI this meant state military production and a large and a yet larger and more permanent standing army. This wasn't an expression of the triumph of capitalism but a symptom of its adaptation to the crisis of capitalism and the first bloody flowering of the epoch of imperialism that opened with the First World War. Many intellectuals of the post WWII period fell for the thinking that their own contemporary conditions of capitalist society were permanent ones. Without realizing they were in the beginnings of a new cycle of accumulation that was signified by increasing reliance on debt mechanisms and state controls, they spoke as if state-capitalism in the USSR had overcome capitalist economic crises through direct party state control. While in the bourgeois democratic west many intellectuals believed that crises had been attenuated forever by the miraculous intervention of the democratic state through means of regulation of banks, through a system of labor laws and arbitration procedures to calm the turbulent working class, through an increasing complexity of mechanisms for speculation and use of credit that saw the advent of futures trading in a process eventually leading to such capital formations as hedge funds. It was thought by many that capitalism had finally stabilized permanently and that the working class no longer existed as a social class.

However, this turned out not to be the case. As the Soviet economy sputtered in the seventies and eighties and finally imploded, the "public" property of the state became something to be sold off and had never really been the property of the whole people but the property of the state and its gangster bourgeoisie. The answer of Chinese state-capitalists to the crisis that opened in the 1970s was to start yet another phase in the hyper-exploitation of the young Chinese proletariat. It was the Chinese Stalinists that transformed the Chinese proletariat into the workhorse of our capitalist world, holding them down with miserable wages and the piteous violence of their bourgeois state that no crumbling set of state-capitalist reforms can possibly justify.

In western nations formerly sacrosanct state entities and heavily protected sectors of the economy came under attack as well. Britain saw the nationalization and the privatization of Rover and its ultimate collapse, while they also were treated to the disastrous privatization of the Royal Mail under the moniker of Consignia. More recently the bourgeoisie in Britain nationalized Northern Rock in the wake of its own collapse due to exposure to the credit crisis. The answer for the bourgeoisie in the light of the outbreak of this current crisis of profit in the early seventies was simply an altered equation of state intervention, one that favored the military and the police and prison systems over the more benign application of state capital - the social wage received by the proletariat, in the form of state social services and infrastructure.

State-capitalism as it was understood by the Bolshevik party of the period of the early NEP was regarded as a step forward and a first step in the transition to a socialist society. The Bolsheviks of 1918 understood that state-capitalism was a phenomenon that had arisen out of the drive towards the imperialist war.

At the same time they had all inherited the prejudice of the republic and the state as being an organization of the whole "people" and not a body of capitalists who increasingly, by virtue of their accumulation of wealth place themselves and their representatives far above the main body of their fellow "citizens", who are in fact then simply their subjects; their labor force, their cannon fodder. The confusion of Social-democracy and Stalinism everywhere penetrated people with the intractable idea, that everything nationalized by the state represented a form of property that, if not socialist, had at least some "progressive" characteristics.

The larger crumbs that fell to the tables of the working class of the capitalist metropoles during the twentieth century represented a temporary condition of capitalism necessitated by the needs of imperialist confrontation hiding behind the ideological masks of capitalist rule to tie workers into the apparatus of the state, to convince them that they need the very class of people who are exploiting them to continue their exploitation. Buried in all the fine phrases of Democratic, Stalinist, or Fascist republics, in the social welfare of the liberal democrats of the west and in the state control of the east is the assurance of an endless cycle of imperialist warfare and capitalist exploitation.

The political amnesia of defenders of state-capitalism set in over the course of decades. It progressed to the point where state-capitalism came to be considered a "theory" and abstract thesis not based in reality. Even where Mao once openly spoke of China as being a "state-capitalist economy of a new type", state-capitalism came to be considered as the end in and of itself. (1) So nationalization became socialization and nationalism became socialism. After all nationalism, or "patriotism", is the socialism of the capitalist class. China saw both stages of the Stalinist two-stage revolution - both of them capitalist.

Ygael Gluckstein (aka Tony Cliff), as Trotskyists will tell us, developed a unique theory of state-capitalism or that, according to his own autobiographical work, one day he just woke up and said to his wife that the USSR was state-capitalist. Any number of militants from both the Communist and Trotskyist Lefts had long been considering this basic question concerning the state and the nature of the capitalist class. Where the Trotskyist opposition rejected calling the USSR state-capitalist, the Communist Left did not.

Contained in Cliff's conception of state capitalism are the twin ideas that state-capitalism represents a partial negation of capitalism and a transition to socialism an erroneous belief shared by much of the early communist movement at the time of the introduction of the NEP in the USSR and the "Bolshevization" of the parties of the Communist International. (2)

For the left of today, all state ownership is equated with being socialist or a step towards socialism. Hugo Chavez, in Venezuela's re-nationalization of its oil industry and its anti-Washington populist rhetoric, with a handful of "drop-in-the-bucket" style government programs, yet another darling in a long line of heroic chieftains of state-capital who rise and fall from grace with an inevitable regularity. Thus placing himself as the successor to Khomeni, Qadaffi, Castro, Che, Mao, Tito, Stalin, and among the feted and fetid icons of the bourgeois left. It is this bourgeois left that has the tasks of shepherding the proletariat into supporting the capitalist state on the one hand and the task of finding a "great man" or leader to follow. For them Chavez has come as a lifeline, keeping alive their anti-working class, liberal-left nationalism.

It is ironic that the micro-parties of the left in the US, the heirs of Stalin's ideological creation, "Marxism-Leninism" along with Trotskyists will quote Lenin's work "Left-Wing Communism an Infantile Disorder", to us while they demonstrate themselves to be the very essences of "ultra-left" sects themselves. Not moving beyond their conception of revolutionary organizations as parties that support state-capitalism, or as sects that where workers need simply accept their holy mysteries and join. For all their self-proclaimed practicality and maturity the left in the US has presided over nothing more than its own organizational collapse, dissolution and self-negation. Their message is to build strong pro-capitalist trade unions for a narrow layer of the working class and then to use this layer in mobilizing their votes for "progressive" Democratic Party representatives in elections. The surest road to victory for this left will always be surrender, compromise or betrayal. Their surest path to future success will always be to repeat the failures of the past.

It is more ironic that those on the left in the US today who still sing praises to the gains of economic progress under state-capitalism that is, under the leadership of the Stalins, Maos and Fidels of the world, rarely bother to waste a single breath on the struggles and problems faced by our fellow proletarians today in the republics they once ruled. Clearly a "Free Tibet" is a far sexier issue for today's leftists who have little or nothing to say about workers struggles in other parts of China. What interests them is supporting "progressive" Democratic Party politicians and the capitalist management of the labor force by unions.

The left we see today was molded in the style of thinking evinced by one of the founders of US Stalinism, William Z. Foster, when he said, "The A.F. of L. is the American labor movement". (3) Foster was able to simply dismiss the experience of a whole generation of leaders of the American working class who viewed the A.F of L. as Bill Haywood did, "that the A.F. of L. is nothing but a board of officials which strangles every sign of revolutionary life in the American labor movement. " (4) For the political heirs of such leaders as William Foster and Earl Browder one could not be a proletarian outside a union and that workers who found themselves outside unions could organize along no other basis than within these unions that view non-unionized workers as a threat.

It was this sterile, mechanistic and sectarian centrist thinking that lead early communists in the US to enter into the Farmer-Labor Party thinking that a "Labor Party" in the US was an inevitability and that to be outside this party meant not being with the working class at a time when the workers were supposedly about to flock to its banner. There is a sterile, narrow and sectarian-centrist thinking among leftists that the unions are the final sole form of proletarian organization possible. The leaders of the left as a whole placed the interests of the whole of the working class in a dusty corner in their attic, as just another single-issue movement subordinated to a management contract negotiation apparatus

This opportunist and reformist approach is itself the very essence of a sectarian theoretical abstraction that is imposed on the much larger and more complex reality of the working class today. It wasn't until the Passaic Strike of 1926 that the Communists in the US actually took the leadership (specifically Albert Weisbord and Vera Buch) in a strike. This opportunistic approach to the A.F of L. then was based entirely on an abstract idea of what the A.F. of L represented and was not based on the experiences of working class militants in and around the union organization itself. There was a reason that generations of militants of the old Socialist Party, the Socialist Labor Party and the Industrial Workers of the World looked on the A.F. of L. union apparatus of their time as backstabbers and traitors.

The timeworn panacea that all problems can be solved by a successful struggle for the leadership of unions didn't work in the 1920s and won't work today because of their greater incorporation into a capitalist labor management apparatus, their diminishing overall strength in numbers and their greater representation of federal, state and municipal employees who by the nature of their jobs wont go on strike as often as workers in "private sector" unions do, and by the atomization and relocation of the industrial workforce into smaller concentrations of workers that are easier to control. These things have led to the diminishing use of the strike as a weapon. Thus workers in the US today have largely lost this primary weapon of the defense of their own interests.

The US census figures on the historic decline in the use of strikes by workers, with practical considerations like a shrinking workforce taken into account, represent a huge historic collapse and cannibalization of what had started as a movement of labor. From bargaining agent for the labor aristocracy to a second tier of management - labor crisis management. Bureau of Labor Statistics data shows that 21 strikes occurred in 2007 and this was up from the current all time low point of strikes, in 2003, when only 14 strikes occurred, according to BLS criteria in workplaces with more than 1000 employees. Historically this decline in strike activity accelerated particularly rapidly after 1981. The year 1981 was a fateful year for unions in the US. It was the last year that more than 100 strikes were waged during the course of the year, with 145 strikes. By 1982 the numbers of strikes decreased to 96 during the course of the year. This was due in part to the chilling effect that the crushing of the PATCO air traffic controllers strike had on workers strikes. The current small upswing in strikes is not indicative of some huge surge in strike activity, nor is it a sign that the union has changed its nature as a class collaborationist management tool. (5)

Marx's injunction in his writings on the Paris Commune against the idea that one can simply take hold of the readymade machinery of the state stands out in stark contrast to such conceptions as the reform of the capitalist state or the conquest of union leadership by would-be revolutionaries. The idea that the state, or an institution operating within the confines of the capitalist nation-state, is simply a tool to be taken up and used by workers, that governments and unions can be made and remade until they represent workers, is patently false. Marx in his Third Address on the Paris Commune writes:

During the subsequent regimes, the government, placed under parliamentary control - that is, under the direct control of the propertied classes - became not only a hotbed of huge national debts and crushing taxes; with its irresistible allurements of place, pelf, and patronage, it became not only the bone of contention between the rival factions and adventurers of the ruling classes; but its political character changed simultaneously with the economic changes of society. At the same pace at which the progress of modern industry developed, widened, intensified the class antagonism between capital and labor, the state power assumed more and more the character of the national power of capital over labor, of a public force organized for social enslavement, of an engine of class despotism.
After every revolution marking a progressive phase in the class struggle, the purely repressive character of the state power stands out in bolder and bolder relief. The Revolution of 1830, resulting in the transfer of government from the landlords to the capitalists, transferred it from the more remote to the more direct antagonists of the working men. The bourgeois republicans, who, in the name of the February Revolution, took the state power, used it for the June [1848] massacres, in order to convince the working class that "social" republic means the republic entrusting their social subjection, and in order to convince the royalist bulk of the bourgeois and landlord class that they might safely leave the cares and emoluments of government to the bourgeois "republicans". (6)

This increasing counterrevolutionary terror that took place after the collapse of every revolution since the French Revolution culminated in the greatest counterrevolutionary slaughter of all time - Stalinism. It was this same counterrevolutionary immune response of the capitalist class to the most far-reaching revolution ever attempted by the working class, the period of the first world revolution, 1917-1921. Today it is up to the tiniest of revolutionary minorities to reaffirm the very soul of revolutionary politics, that proletarians have no country and that they should unite to overthrow their exploiters.

"Marxist-Leninism" Opposes Revolutionary Overthrow of the Washington Regime

As strange as this may sound to those not familiar with the perennial American Stalinist institution the CPUSA, their constitution actually forbids talk of revolution. In Section 2, Article VII of the Constitution of the Communist Party of the United States of America, amended at its national convention in Milwaukee in July 2001, we read:

Subject to the provisions of this Article, any member shall be expelled from the Party who is a strikebreaker, a provocateur, engaged in espionage, an informer, or who advocates force and violence or terrorism, or who participates in the activities of any group which acts to undermine or overthrow any democratic institutions through which the majority of the American people can express their right to determine their destiny.

Thus those who might even consider speaking of revolution are lumped together with scabs, provocateurs, informers and terrorists. The democratic institutions spoken of refer to the US government and the Democratic Party that the CPUSA has supported in every election since Roosevelt was president with the exception of the 1948 election. Even in those years, prior to 1984, when the party ran its own candidates as a protest vote, they were still advocating that workers vote for the DP. When would-be Social Democrats around Tony Mazzochi, attempted to form the Labor Party in the 1990s, the CPUSA was central in killing this attempt at reformism in order to swing them back into voting for the DP. Today, the CPUSA, gushes over Barack Obama, as much or more than any of the most mind-numbingly insipid "progressive" capitalist media. Contrary to ideas that workers can use this election to effect real change, this capitalist election intends to use workers to continue its mandate for continued war, austerity and repression. The real sectarianism on the left in the US emanates from the center that seeks to crush any manifestation of political independence on the left and suck into the orbit of the junior war party, whose leading candidates both assure us of the continuation of the permanent war.

For the IWG, we intend to be more than simply a sterile sect with a platform divorced from present reality or that uses activism as a shield to hide support for capitalism. On the contrary our platform is based on our own experience as individual militants, in unions and in our attempts to break free from left-capitalism. Where unions became agents of capitalist management, we say so. Where national liberation movements lead to greater exploitation and oppression for proletarians, we say so. Where Stalinists and Maoists to this day attack us verbally in their press, they who once sought to physically exterminate our comrades all over the world, we feel perfectly justified in stating that they are enemies of the working class as well. Workers need to form their own organizations of struggle that fight in their interests and their interests alone. The IWG has as its aim the attempt to address this need when and where we are able. To this end we ask our readers and sympathizers for support.


(1) Mao Tse-Tung. Selected Works of Mao Tse-Tung. On State Capitalism. 1953-07-09

This came from a written comment on a document for the People's Republic of China National Conference on Financial and Economic Work held in 1953.

The present-day capitalist economy in China is a capitalist economy which for the most part is under the control of the People's Government and which is linked with the state-owned socialist economy in various forms and supervised by the workers. It is not an ordinary but a particular kind of capitalist economy, namely, a state-capitalist economy of a new type. It exists not chiefly to make profits for the capitalists but to meet the needs of the people and the state. True, a share of the profits produced by the workers goes to the capitalists, but that is only a small part, about one quarter, of the total. The remaining three quarters are produced for the workers (in the form of the welfare fund), for the state (in the form of income tax) and for expanding productive capacity (a small part of which produces profits for the capitalists). Therefore, this state-capitalist economy of a new type takes on a socialist character to a very great extent and benefits the workers and the state.

(2) Cliff, Tony. State Capitalism in Russia. 1955

(3) Eastman, Max. Foster. The Liberator, April 1921.

(4) ibid.

It is interesting to compare the attitudes of William D. Haywood and William Z. Foster on the matter of revolution and the A.F. of L. Haywood says - in an interview reported on another page - that the A.F. of L. is nothing but a board of officials which strangles every sign of revolutionary life in the American labor movement.

The A.F. of L. is the American labor movement -- says Foster -- and you don't gain anything by shouting as though that movement were any more revolutionary than it is.

(5) Bureau of Labor Statistics, work stoppages 1947-2007

(6) Marx, Karl. Civil War in France, March-May 1871