A Reply to Callinicos on the State & Capital

Kim Moody

ALEX CALLINICOS SAYS that a dialectics deficiency has led me to overlook an historic period in which the needs of capital as a whole “may require the state to invade the domain of private accumulation.” In fact, I have no objection to the idea that the capitalist state invades the domain of private accumulation daily, let alone during certain periods.

I don’t even question of the oft-cited fact that the general direction of the first half or more of the twentieth century was toward a deeper intervention by the state into the affairs of the economy or capitalist accumulation.

I do, however, object to Callinicos’ equation of state intervention with the type of fusion of the state and economy or accumulation described by Bukharin, and employed by the British SWP as evidence for its theory of state capitalism. I object to the equation of Nazi Germany and the Soviet Union as essentially the same social formation, not from some weakness for the former Soviet Union, but from analytic rigor.

Despite the aggressive role of the state in Nazi Germany, most of German capital remained in the same private hands it had been before (and has been since) Nazi rule. The state remained violently autonomous and drew its ability to bully capital from that fact.

In fact, it is precisely this relative autonomy of the state that underlies the theory of Bonapartism, originated by Marx in the Eighteenth Brumaire, that Trotsky drew on to analyze fascism.

Bonapartism, it will be remembered, emerges where the state rises above capital to discipline it in its own best class interest. This most invasive form of capitalist statism rests entirely on the reality of relative state autonomy. This is the dialectical core of Marx’s theory of the state and Trotsky’s application of it.

Callinicos wishes to blur the distinction between intervention, as in real capitalism, and the absorption (or fusion) of economic ownership and control by the state, as in real Stalinism (by whatever name you choose to call it).

The reality of the former Soviet Union and the derivative bureaucratic economies is that the state and the means of production and distribution were one and the same so far as ownership, control, and operation are concerned. My objection here, to repeat, is not the reality of this particular fusion, which did occur, but to the notion that this was still a capitalist society!

On grounds of historic reality and dialectics, I also object to Bukharin’s notion of a “state-capitalist trust” where giant trusts merge with the state to make the nation a single economic unit. While this idea was in line with much of the speculative thinking of the pre-First World War era, it never happened. If it had, this would certainly have amounted to a negation of the capitalist system we have known and hated for decades.

Trusts, cartels, joint-stock companies and corporations all remained organizations of capital distinct from the state, if never free from its intervention — nor from, in turn, their meddling in the affairs of the state. The capitalist state maintained its ability to intervene selectively in the national capitalist economies by virtue of its ability to discipline or favor different factions of capital. In our own time, Korea provides a clear example of this type of intervention at its most vigorous.

A Crucial Difference

What happened in Russia in the years following the decay and overthrow of the early workers’ state was hardly an example of state intervention or even invasion of private accumulation. Rather, the state owned, controlled, administered and operated industry and the economy in a way no capitalist society has.

Whatever one wishes to call this society, its operation, ownership system and decision-making processes were not simply an extreme example of war-time fascism or, for that matter, state-led export-oriented development, a la South Korea.

As it turned out, this very fusion of state and economy, which distinguished the bureaucratic economies from capitalism, was one of the fatal weaknesses of the system. The crises of the economy and the state were one and the same. There was no distinct institution like the capitalist state to regulate, mediate, or intervene in this crisis.

From Eastern Europe to Russia and beyond, the state apparatus fractured as the economy faltered or collapsed. The short historic life and fragility of this society stem from the inflexibility that comes from the fusion of the state, the ruling class, and the economy.

Capitalism’s tragic longevity, on the other hand, is at least partly the result of the flexibility of the partially autonomous state and adroitness of sections of the ruling class in manipulating that reality — sometimes as hegemony, sometimes as force.

Of course, I agree with Callinicos that the actually existing capitalist states continue to be a major force in economic as well as military affairs. My interpretation of the recent history of capitalism, however, is that the role (not the size, cost or presence) of the state has changed to, as another British writer put it, “the authorized agent of the international system,” in which the international system is understood to be the competition of capitals on a world scale.

Today, in a dialectical fillip, transnational corporations demonstrate their autonomy from the state daily. It is they and their ruthless competitive regime, not some international state system, that penetrates every corner of the earth, including the former Communist countries, bringing the crisis, chaos and misery of real capitalism to the world’s vast majority. Which leads to my last point.

Callinicos says I offer “no direct argument” for my assertion that, “To substitute the state, much less the vaguer `international state system,’ for the competition of capitals is to do fundamental damage to the entire theory of the falling rate of profit.” I offered no direct argument because it seemed so evident. That is, the theory of the falling rate of profit, as well as much else in Marx’s theory of capitalist dynamics, is based on the law of value and the competition of capitals.

Callinicos’ theory of state capitalism forces him to move back and forth between the truth of this theory of capitalist dynamics (on which point two or three in the SWP catechism, Kidron’s theory of the Permanent Arms Economy, is based), on the one hand — and on the other, the idea that at some point in history the invasion of the state in the domain of private capital became a direct occupation and the world market became an international state system.

The march of history, however, has saved Callinicos and the SWP from this zigzag path now that real capitalism is functioning in its more and less familiar, if still distorted, forms everywhere. Now we should all be able to agree at least on just who the enemy is, what the fundamental dynamics of this system are today, and even, perhaps, what to do about it.

ATC 56, May-June 1995