The Illusion of State Intervention in the Economy: The Eternal Anti-Working Class Weapon of Reformism

With each new jolt to the capitalist structure its crisis deepens. The disruption of production and distribution caused by the coronavirus pandemic has only added to the existing woes of the system. And, as ever, the working class is being fed illusions about the beneficial effect that state intervention would bring to their conditions and to the "community" in general, irrespective of class. According to the various political groups of the capitalist left, the massive injections of liquidity by the European Union (EU) and states around the world to prevent economic collapse is proof that, contrary to what we internationalist communists have been arguing for decades, there is still room within the capitalist system for the working class to satisfy its needs in the current historical period. Some, though near to us in terms of analysing the causes of the crisis, go further and assert that the capitalist state can be an instrument for solving the structural problems of capitalism, through the nationalisation of the means of production. One such is the Marxist economist, Michael Roberts. In his blog on the world capitalist crisis, he comes up with economic recipes which are no more than an old Chinese-style state capitalism touched up to meet the situation of the EU and the Eurozone. A post that appeared on his blog last April in the middle of the Covid-19 emergency is particularly illustrative of Roberts' vision.

In this post, Roberts described the serious difficulties of EU member states like Italy. He ends up noting that in the case of Italy, as in other states, the economic support measures adopted at the Eurozone finance ministers’ summit are not enough to revive a disastrous Italian capitalism. For this reason, allowing the Italian state to support temporary work schemes for the unemployed and to finance itself at low cost on the bond market, through purchases of public debt by the European Central Bank has only postponed the showdown for Italian capitalism. However, Roberts' response to this impasse is contradictory, given that, having previously discarded state intervention as a decisive factor, in the same article, he goes on to propose implementation of a Marshall Plan, complete with an increase in the EU budget to plan investments, and the harmonisation of taxation of large companies, in order to prevent, to paraphrase Roberts, a race for the lowest common denominator that would only benefit the Eurozone states with the lowest tax on capital flows. In short, the perspective of Roberts and others like him, but who do not share his analysis of the capitalist crisis, clearly aim to "reform" the EU economy in order to fix its imbalances and thus keep it, and the Eurozone, alive.

Needless to say, this state interventionism advocated by Roberts is cunningly and absurdly sold to us as a means to transition to a classless society, as if greater capital investment by the individual states of the EU and the Eurozone itself would change the nature of the capitalist mode of production, or could bring the working class to power, or could overcome the law of the tendency of the rate of profit to fall. This law was identified by Marx, and is often carefully analysed by Roberts himself to demonstrate its validity as the fundamental cause of the crisis that erupted in 2007-2008. However, the reality is that Marx was a communist revolutionary as well as a critic of political economy and not simply an academic Marxist like Michael Roberts, who sees socialism as an awakening of the "people" and a rehabilitation of capitalism.

In this regard we must not forget that political economy is a discipline – which can and must be studied scientifically – born with and alongside capitalism: this is the only way to explain how Roberts and his friends can imagine a "socialism" with capital, commodities, states and supranational organisations such as the EU. Communism is, despite what the various reformists eager to save capital may say, the real movement(1) which aims to abolish the present situation and not a capitalism with a strong dose of state intervention in the economy and/or a state that takes on the role of the capitalist class.

There is a good reason why, in a passage of the first volume of Marx's Capital, the formation of a monopoly of a single capitalist or of a capitalist association was proposed as an extreme consequence of the process of concentration and centralisation of social capital(2): this does not at all exclude the possibility that the capitalist association monopolising social capital can be the capitalist state itself, taking on the role of the collective capitalist or entrepreneur. Engels wrote on the role of the state as a collective capitalist in Anti-Dühring. He argued that the modern capitalist state would end up having to direct capitalist society in one way or another, because the level of development of capitalism itself would require state intervention in order to ensure the survival of capitalist exploitation. We can find confirmation of Engels’ argument in Anti-Dühring in the whole of capitalism's subsequent history, which has been characterised everywhere by nationalisations and/or by ever-increasing state intervention in the economy in general, especially in the era of imperialism.

In fact, in the last fifty years the capitalist state, faced with a very serious structural crisis due to a tendential fall in the rate of profit, has also resorted to measures to support the economy even in its supposed neo-liberal phase, while also proceeding with privatisations and the divestment of certain enterprises or groups of enterprises previously directly controlled by the state. Even if the forms of this state intervention have sometimes differed from that of the thirty years following the end of the Second World War, nevertheless we have seen important interventions. Specifically, state intervention has ranged from the "bailout" of unprofitable companies and banks by increasing public debt, to the so-called structural reforms of the labour market, to methods of exploitation of the working class more functional to the needs of capital, lowering the price of labour-power below its value, as well as investments made in research and development. Not forgetting the flood of money provided by the state to support the "demand" for goods to ensure the loyalty of its petty-bourgeois electoral clientele and to secure "social peace".(3)

The capitalist state has never made "improvements" to the social conditions of the proletariat if they harm the general interests of capitalism. On the contrary: in addition to promoting a reduction in wages below the value of labour-power with so-called “reforms” of the labour market, the capitalist state has also made considerable cuts in social services, health and pensions (i.e. indirect and deferred wages) thus creating the most suitable conditions for the flare-up of the pandemic linked to the Covid-19 virus. It is simply absurd to think that the capitalist state itself, which has implemented brutal cuts to the welfare system due to the structural crisis caused by the fall in the rate of profit, can take measures to benefit the whole "community". In fact the situation for wage workers has worsened due to the stoppages and limitations of production which governments have been forced to impose in order to curb the spread of the pandemic.

Besides, it has always been the proletariat that has paid the price for the capitalist state’s support of an economy gasping for profits. The working class, whose labour is the source of the surplus value that feeds capitalism, will experience a worsening of its living and working conditions this time too. This is how the bill for this state "charity" will be settled. It is a charity which some reformists even expect will end in the construction of "socialism" or a generally more just society. In fact, public and private debt is nothing more than a bet on the production of future wealth that will only be lost when capitalism’s operating mechanisms fail. Even Michael Roberts admitted that the measures adopted at the Euro summit of the Eurozone finance ministers last June would not put an end to the crisis, thus ending up increasing indebtedness.(4)

From the point of view of the proletarian revolution and the emancipation of the proletariat, on the one hand, the damage done by the illusions nurtured by reformism does not just undermine class combativity in the everyday struggle. Such trust in the capitalist state undermines any attempt at autonomous political organisation on the part of the working class and with it any prospect of emancipation of the proletariat through an international revolution, which can only be achieved through the uncompromising overthrow of the capitalist state and the formation of workers’ councils.

State intervention, in the guise of the supposed welfare of the "community”, on the other hand, has proved very fruitful for stabilising capitalism in phases of acute systemic crisis or economic revival built on the backs of the working class. It has served the capitalist states’ media and propaganda offensives well in maintaining social peace and preparing the ground for inter-imperialist clashes, which will necessarily require support on the "home front".

Finally, if certain illusions were understandable in the days of Marx and Engels(5), these are now dangerous anachronisms. For more than a century we have seen how, in the imperialist era of capitalism, the interventionism of the capitalist state constitutes a very powerful counter-revolutionary weapon. Moreover, even in their day, Marx and Engels harshly denounced exponents of the socialist movement who, like Ferdinand Lassalle and his followers in the nascent German Social Democracy, believed that socialism could be achieved via a capitalist state which suddenly and inexplicably came under the control of the working "people”.(6) Just as Marx wrote in the Critique of the Gotha Programme, a working class that believes in a democratic state super partes (7) proves to be not up to its revolutionary tasks and the diffusion of these convictions within the working class, mutatis mutandis (8), confirms the depth of the counter-revolutionary phase we are still experiencing and the overwhelming need to build a revolutionary party that takes root in the class.


November 21, 2020

Translated from the Italian section of our website.


(1) See The German Ideology

(2) Obviously, it was a purely didactic hypothesis, nothing to do, it goes without saying, with Kautsky’s ultra-imperialism.

(3) As well as the general passivity of the proletariat.

(4) Nor did he explain at all how the new Marshall Plan he hoped for could heal capitalism from the fall in the rate of profit. This is not the only time that Roberts’ “solutions” have been to call for state capitalism (i.e the idea that “public ownership” can do away with the law of value per se). In an article on Modern Monetary Theory (MMT) in Weekly Worker he wrote:

Unless the MMT proponents are then prepared to move to a Marxist policy conclusion – namely, the appropriation of the finance sector and the ‘commanding heights’ of the productive sector through public ownership and a plan of production, thus curbing or ending the law of value in the economy – the policy of government spending through unlimited money creation will fail.

For our critique of MMT see:

(5) Among other things, Marx and Engels always said that the capitalists are not just the stereotypical "bosses of ironworks in double-breasted jackets". The left of capital has always ignored the fact that whatever form the ownership of the means of production takes, the capital-wage labour relationship is central to the system of exploitation.

(6) They were familiar with this kind of controversy within the labour movement as evidenced by Anti-Dühring.

(7) Translator’s note – impartial.

(8) Translator’s note – used when comparing two or more things to say that although changes will be necessary in order to take account of different situations the basic point remains the same.

Monday, December 7, 2020