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What is State Capitalism?

Faline Bobier

December 15, 2021
Recent events on the global front have underlined the importance of what might have been seen as a dead theory, or at least a theory that was no longer needed to understand the post-Soviet world – the theory of state capitalism.
In the late 1940s Tony Cliff(Ygael Gluckstein) developed a path-breaking analysis of the Soviet Union. He argued that far from being socialist or (as Leon Trotsky contended) a “degenerated workers’ state”, Stalinist Russia was a variant of capitalism—bureaucratic state capitalism.
Tony Cliff was born over 100 years ago, on May 20 1917. Brought up a Palestinian Jew, he came to Britain in 1946. But his theory and understanding of what is meant by socialism seems very relevant today, particularly when looking at the international landscape – the increasing competition and rhetoric being ramped up between China and the US, for example, or the recent protests inside Cuba, mostly about the growing gap between Cuba’s ruling party and the mass of Cuban workers.
When Cliff began his analysis, he expected to shore up Trotsky’s assertion that what was needed in the USSR was a political but not an economic revolution. The contention was that even in the late 1940s there was still a workers’ state, albeit ‘degenerated’, and that what was needed was only a ‘political’ revolution to sweep out the Stalinist ruling class.
However, what Cliff came to realize from actually examining how Soviet society functioned, was that there had been a thorough-going counterrevolution in Russia and that it was not possible to argue, in the face of reality, that the working class was in any way in the saddle in the Soviet Union.
Why was this analysis so important then and why is it still important today? Claiming that socialism still existed inside Russia meant emptying Marxism and the notion of working class emancipation of any meaningful content. 
In a society where all decisions were made by the Stalinist bureaucracy and where those decisions were based, not on the needs of workers and peasants, but on the need to compete militarily with the West, Stalin’s insistence that he was building socialism inside one country was a farce and a travesty.
Lenin, Trotsky and the Bolshevik party had always insisted, along with Marx himself, that socialism could not exist in one country in isolation. Socialism must be international, or it could not survive. This was borne out in Russia and again in countries like China and Cuba later on.
There can be no revolutionary practice, Lenin once wrote, without revolutionary theory. Not understanding the nature of Soviet Russia meant that it was a small step from arguing that socialism could exist without the working class being in power as happened under Stalin inside Russia, to later on insisting that socialism could be brought in by Soviet tanks in Eastern Europe. It meant that you could somehow have socialism by decree with no involvement of the vast majority of society in bringing about their own liberation.
This lay the basis for claiming the mantle of socialism in countries such as China or Cuba where the working class had very little to do with bringing in the so-called socialist or Communist regimes. Mao led an essentially peasant army to take control in China. In Cuba, Castro and a small group of middle-class intellectuals were able to overthrow the corrupt Batista government.
This doesn’t negate improvements in conditions for working people and the peasantry that were made in some cases. However, you could argue similarly that improvements for workers in Western capitalist countries during the same period (universal healthcare, access to education and housing, etc.), although they were welcomed and often fought for from below, didn’t signal that these countries had somehow become socialist through this process. 
Nor does this negate sometimes mass support for these regimes, particularly in the case of Cuba, which has been under attack and embargo from the US, since the US-backed regime was thrown out in 1959.
However, although it’s true that the vast majority of Cubans support their government against American imperialism, and have made immense sacrifices to do so, recent protests inside Cuba against their own government show how much pressure is being brought to bear on working class and poor Cubans. 
Their lives are much more difficult and impoverished than those of the middle and upper classes in the state bureaucratic machine who have access to American dollars to buy the goods and services they need. This situation has only gotten worse, both because of the general economic crises affecting working class people globally and because of the way Cuba’s economy has been strangled by US imperialism.
Chris Harman, who wrote extensively on the collapse of Eastern Europe and the USSR from 1989-1991, explained in 2008 the importance of state capitalist theory in explaining the general crisis of capitalist societies, including western capitalism: 
“Some people will ask, is any of this relevant today? It is, in two ways. First, state capitalism as a theory never simply applied to the Eastern states. It also had relevance in the West, since at least a third of every Western economy is in the state sector. While otherwise excellent Marxists like David Harvey continue to see this sector as somehow standing outside capitalism, we see it as an integral part of the system.”
With the heating up of competition between China and the US, two imperialisms battling for hegemony, it should be clearer than ever that China has as little to do with socialism, if by socialism we mean working class control, than the US itself. 
China’s capitalists are among the richest and most powerful in the world. They are tied to the Chinese Communist Party by multiple visible and concealed links. And China is ever more clearly the US’s greatest rival. This is why president Joe Biden says the US must win the 21st century from Xi’s “autocracy”.
It matters what we define as socialist. If Xi’s China is socialist then socialism can be about a Communist ruling class riding roughshod over workers and peasants, creating a situation where workers have been committing suicide, rather than continuing to work in inhumane conditions in China’s humongous factories. 
Cuba is of course in a much different situation than China. It is a tiny country that has been constantly battered by US imperialism. However, you can’t explain away the discrepancies in wealth and living standards between Cuba’s Communist Party elite and the mass of Cuban workers and the poor, or the very real oppression of LGBT people in a society which claims to be socialist, by pretending these contradictions don’t exist.
Like other state­capitalist countries, Cuban society has been marked by repression and the crushing of dissent.
Workers’ struggle was actively discouraged, and land reforms were carried out, without the input of peasants or farmworkers.
Trade unions came under state control.
What were claimed to be elements of grassroots democracy became methods of transmitting orders from the top.
Socialists are always for Cuba against US imperialism. But crucially we are also for workers’ self-activity, the right to protest and to organise, and the right to fight for genuine socialism against the government.
One of the very real consequences of not understanding the nature of state capitalist societies and painting them as somehow socialist, simply because of the declarations of their leadership, is the disillusion that then arises as the real nature of these societies has been exposed – whether in the former USSR or Eastern Europe, in China or even in Cuba.
It can lead to the notion that actually existing ‘socialism’ is just as bad or worse than Western capitalism, which is the lesson some leftists, such as George Orwell, took from the brutal nature of the Soviet Union under Stalin.
This identification of socialism with state control misses the crucial question – who controls the ‘workers’ state’? For Marx socialism represented real democracy, not the sham of parliamentary democracy, where we get to elect our representatives every 3 or 4 years. Because in the end these representatives are controlled by, and answer to, the real rulers in society, the corporations and companies who control the capitalist, or state-capitalist, economy.
Workers’ control, as Marx saw it, would be real democracy for the first time – because it would be the vast majority in society making decisions about what to produce, how to produce it and for whom. But this democracy could only come about through the self-emancipation of this class itself. Through the process of self-emancipation workers would throw off the ‘muck of ages’ – the ideas of sexism, racism, homophobia – that divide us from each other and that help to keep our rulers in control.
This is why the first workers’ revolution in Russia was not simply concerned with economic democracy (the soviets, or workers and soldiers’ councils that began to take on decision-making within society) but also with liberation for the oppressed groups inside Russia: women, Jews, Muslims and other national minorities, lesbians and gays. 
The revolution saw some of the most progressive legislation in the world at the time, including in comparison with the so-called advanced capitalist nations of the West: the creation of communal childcare, laundries, etc., the legalisation of abortion and homosexuality. This was because the Bolsheviks understood that the creation of workers democracy necessitated the participation of the whole class in throwing off the chains of exploitation and oppression.
The International Socialists in Canada stand in the tradition founded by Tony Cliff and others. The theory of state capitalism and the understanding of workers self-emancipation as the heart of creating socialism continues to be critical to politics today.
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