State capitalism

(wikipediaState capitalism has various different meanings, but is usually described as a society wherein the productive forces are controlled and directed by the state in a capitalist manner, even if such a society calls itself socialist.[1] Corporatized government agencies and states that own controlling shares of publicly listed firms, thus acting as a capitalist itself, are two examples of state capitalism. State capitalism has also come to refer to an economic system where the means of production are privately owned and the state exerts considerable control over the allocation of credit and investment. State capitalism is a term that is also used (sometimes interchangeably with state monopoly capitalism) to describe a system where the state is intervening in the markets to protect and advance the interests of Big Business. This practice is often claimed to be in sharp contrast with the ideals of both socialism and laissez-faire capitalism.[2]

Within Marxist literature, state capitalism is usually defined in this sense: as a social system combining capitalism — the wage system of producing and appropriating surplus value in a commodity economy — with ownership or control by a state. By that definition, a state capitalist country is one where the government controls the economy and essentially acts like a single giant corporation.[3] Friedrich Engels, in Socialism: Utopian and Scientific, states that the final stage of capitalism would consist of ownership over production and communication by the bourgeois state.[4]

There are various theories and critiques of state capitalism, some of which have been around since the October Revolution or even before. The common themes among them are to identify that the workers do not meaningfully control the means of production and that commodity relations and production for profit still occur within state capitalism. Other socialists use the term state capitalism to refer to an economic system that is nominally capitalist, where business and private owners reap the profits from an economy largely subsidized, developed and where decisive research and development is undertaken by the state sector at public cost.[3]

This term is also used by some advocates of laissez-faire capitalism to mean a private capitalist economy under state control, often meaning a privately owned economy that is under economic planning. Some even use it to refer to capitalist economies where the state provides substantial public services and regulation over business activity. In the 1930s, Italian Fascist leader Benito Mussolini described Italian Fascism’s economic system of corporatism as “state socialism turned on its head.”[5] This term was often used to describe the controlled economies of the great powers in the First World War.[6] 

Origins and early uses of the term

The term itself was in use within the socialist movement from the late nineteenth century onwards. Wilhelm Liebknecht in 1896 said: “Nobody has combatted State Socialism more than we German Socialists; nobody has shown more distinctively than I, that State Socialism is really State capitalism!” [7]

It has been suggested that the concept of state capitalism can be traced back to Mikhail Bakunin‘s critique within the First International of the potential for state exploitation under Marxism, or to Jan Waclav Machajski‘s argument in The Intellectual Worker (1905) that socialism was a movement of the intelligentsia as a class, leading to a new type of society he called state capitalism.[8][9][10] For anarchists, state socialism is just state capitalism, hence oppressive and merely a shift from private capitalists to the state being the sole employer and capitalist. [11]

During World War I, taking as his cue Vladimir Lenin‘s idea that Tsarism was taking a “Prussian path” to capitalism, the Bolshevik Nikolai Bukharin identified a new stage in the development of capitalism, in which all sectors of national production and all important social institutions had come under state management; he termed this new stage ‘state capitalism.’ [12]

After the October Revolution, Lenin used the term in a positive way. In spring 1918, during a short period of economic liberalism prior to the introduction of war communism, and again during the New Economic Policy (NEP) of 1921, Lenin justified the introduction of state capitalism under the political control of the dictatorship of the proletariat to further central control and develop the productive forces:

Reality tells us that state capitalism would be a step forward. If in a small space of time we could achieve state capitalism, that would be a victory. (Lenin 1918)[13][14] 

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