Posts Tagged: state capitalism


“Moral Crime” in the Total State

… Market anarchists appreciate the link between all kinds of freedoms, and are committed to a comprehensive understanding of liberty that accounts for their causal interconnectedness. The entire economic system of the present moment is built upon prohibitions against perfectly peaceful and consensual activities, and not just those such as drug use that some regard as “vices.” …


Last Tuesday’s vote to recall (or not) Wisconsin governor Scott Walker is just the latest illustration of a positive feedback loop we’ve been in for some time.

Capitalism — the 500-year-old historic system of political economy we actually live under — had heavily depended on the state since the beginning. It was founded on expropriation of peasant land and military conquest of free cities in the original European homelands of capitalism, and expanded through land expropriation and enslavement of peoples around the world. Industrial capitalism was founded, in Britain, on Enclosures and the imposition of totalitarian social controls on the working class. Modern American corporate capitalism was created by the industrial policy of the American state from the Civil War on.

The current model of global neoliberal capitalism is enabled by a legal framework pushed through under Clinton in the 1990s: NAFTA, the Uruguay Round, the WIPO Copyright Treaty, TRIPS, the Digital Millennium Copyright Act, and the Telecommunications Act. This last upward ratcheting of state intervention led to an explosion of corporate profits. Corporate management and the rentier classes have found it a profitable investment to secure the state policies they need to become even more wealthy.

Which takes us back to that positive feedback loop. To repeat, the wealth of the ruling class is derived from rents enforced by the state. And they use part of that wealth to tighten their control of the state, which further increases their state-enabled rents, and so on.

The state has always been “the executive committee of the ruling class.” But in many times and places, it’s had the autonomy to promote the long-term interests of the ruling class as a whole, and the long-term stability of the system, even if it meant lowering short-term profits or the profitability of particular economic sectors.

One function of the state, when it functions ideally on behalf of the ruling class as a whole, is to overcome prisoners’ dilemmas in which individual capitalist rapacity undermines the sustainability of capitalism as a whole. A good example was the Ten-Hour Day legislation in Britain, as described by Marx:

"These acts curb the passion of capital for a limitless draining of labour power, by forcibly limiting the working day by state regulations, made by a state that is ruled by capitalist and landlord. … [T]he limiting of factory labour was dictated by the same necessity which spread guano over the English fields."

The problem is, as capitalist control of the state becomes increasingly direct and day-to-day, the more state policy approaches the character of strip-mining or slash-and-burn agriculture: Maximizing short-term profitability at the risk of destabilization. And that’s what we’ve been seeing in recent years: The most reckless and rapacious wing of corporate capital has politically defeated the more “progressive” wing, thrown off all self-control, and begun milking the system for all it can get. As privilege leads to more money to more privilege to more money, ad nauseam, the system takes on the character of a runaway machine without a governor.

The good news is, all this means corporate capitalism is unsustainable. The reason for the shift from the “progressive” model of New Deal or Consensus Capitalism to the more exploitative neoliberal model is that the older model failed. It was only able to save corporate capitalism from the Depression in the first place because FDR, Hitler and Churchill “solved” the problem of excess production capacity by blowing up most of it.

FDR and Truman built a permanent war economy that persists to this day for occupying much of the surplus capacity that remained. But even so, Japan and Europe rebuilt their productive capacity by 1970. Since then corporate capital has become increasingly dependent on state-subsidized export of capital, depression of wages, increasingly draconian “intellectual property” law, ever-larger bubbles in the FIRE economy, ever-larger military budgets, and other similar expedients, to remain nominally profitable.

It’s now reached the point where it can only remain profitable by abandoning even the pretense of democracy and asserting naked control of the political system, as demonstrated in the recent ALEC scandal and Tuesday’s vote in Wisconsin. The plutocracy is transforming the American political system into an undisguised banana republic on the model of the Marianas Islands under Abramoff and Delay. Michigan’s undertaken the kind of kleptocratic looting associated with Boris Yeltsin, forcing municipalities into receivership and giving away tax-funded infrastructure to crony capitalists.

So at the very time corporate capital is most dependent on the state for subsidies and to suppress competing self-organized economic models, and the state itself is being bankrupted by these demands, the system is stripping itself of the legitimizing veil that has heretofore secured public compliance. This won’t end well for them.


It was inevitable, argued English liberal Oliver Brett in his 1921 work A Defence of Liberty, that so-called “state socialism” would become simply another class society — this time with the state bureaucracy in the position of privilege. “So long as Government exists at all” — so went his brilliant quip on the principle — “a governing class is inevitable.” Just as everyone who attended Eton — regardless of their class of origin or what rustic access they originally spoke — “bore the stamp of Eton,” everyone who exercises state power bears the stamp of that power. Government molds everyone who wields its authority into a governing type.

What’s more, Brett argued, it was questionable whether the state bureaucracy would really be a new ruling class at all:

"English history is full of the chameleon qualities of the rich. How quickly the feudal Baron is metamorphosed into the landed aristocrat, and the landed aristocrat into the mine owner and the railway director. We find often the same family names cast for these varied parts across the centuries. And these people will control the new bureaucracy. They know which way the wind is blowing, and they are preparing for the change of direction."

Brett was part of a larger current, in the early years of the 20th century, of writers who applied Pareto’s “circulation of elites” theory to the state socialist movement. It included writers on the Left, like Robert Michels and William English Walling, who drew pessimistic conclusions from the socialist parties’ growing tendencies toward authoritarianism and collusion with the state and capital.

Michels argued that genuine majority or rank-and-file control of a large hierarchical institution was impossible, because it would be subverted by the “Iron Law of Oligarchy”: Representatives or delegates would transform their full-time inside control over information and agenda-setting to reduce the de jure authority of those they represented into a mere rubber-stamping function.

Walling argued (as did the Distributist Hilaire Belloc in “The Servile State”) that state socialist parties like the Social Democrats and Fabians were being coopted into the service of capital. Democratic socialist movements would by and large give up on the herculean political task of actually seizing control of industry, and would instead choose to leave the industry in capitalist hands while regulating it “in the popular interest.”

In practice, those “progressive” regulations would serve mainly to stabilize the economy in the long-term interests of big business, and use a minimalist welfare state and labor regulations to clean up the worst (and most politically destabilizing) forms of destitution left by the capitalists. As Belloc put it, if only the Fabians’ lust to manage and regiment the underclass were satisfied, they would be quite accommodating about capitalist ownership. So the de facto role of the “democratic socialist” state would be to oversee the economy on behalf of big business.

The historic continuity of the ruling class is another theme that has appeared in many guises. Immanuel Wallerstein and Christopher Hill, both Marxists, argued that a significant minority of the landed ruling class under the late Medieval political economy managed to reinvent itself as agrarian capitalists and negotiate the transition to capitalism, where they survived in such forms as the Whig landed oligarchy in Great Britain. The persistence of bastard feudal forms of concentrated land ownership, through such expedients as large-scale enclosure of the Open Fields, common pasture and waste, and the mercantile system of state finance and chartered monopoly, ensured a great deal of structural continuity between the medieval and early capitalist systems.

A similar continuity bridged agrarian and industrial capitalism, as silent partners in the landed classes provided much of the capital for industrialization and the most successful capitalists bought titles or married into noble families. That continuity between the European landed nobilities and industrial capitalists in the modern era was the thesis of Arno Mayer’s book The Persistence of the Old Regime.

Wallerstein, like Brett, feared either that the giant finance-capitalists would manage to install themselves as the new ruling class in control of the postcapitalist state, or that the bureaucratic apparatus would use its control over the economy to live in privilege. The same has been true of left-libertarian critics like Emma Goldman and the post-Trotskyist Frankfurt School, who used terms like “bureaucratic state capitalism” and “bureaucratic collectivism” to dismiss the USSR as a new form of class society.

If there’s anything to such analyses — and I believe there is — we should take a long, hard look at whether state socialism (i.e., a system in which genuine working class political and economic power is exercised through the state) is even possible.

Murray Bookchin, in his multivolume work The Third Revolution, presented a historical typology of revolution in which, in the course of a revolution, popular struggle by working people themselves gave birth to all sorts of decentralist, self-managed, liberatory institutions like soviets and workers committees. But in every case, once a revolutionary party had firmly established itself in the capital and purged the state of its rivals, it proceeded either to suppress working class organs of self-management or to coopt them as top-down transmission belts for state policy.

That’s what happened when Lenin liquidated the other parties of the Left in his governing coalition, suppressed the Workers’ Opposition, and put down the Kronstadt mutiny. It’s what happened in Spain, when the Communist-dominated government in Madrid set up its own Soviet-trained OGPU unit and showed its willingness to lose to Franco in preference to tolerating anarchists in Catalonia.

In essence, it’s the cyclical phenomenon described by Orwell’s fictional “Emanuel Goldstein”: The high and middle eternally jockeying for power over the low, with the middle in each revolution enlisting the help of the low long enough to oust the old ruling class and set themselves up as the new one.

Since the rise of the state as an instrument of economic exploitation on behalf of a ruling class, there have been endless attempts to achieve justice through revolutionary seizure of the state — each one ending in failure and disillusionment. Ending injustice and exploitation through machinery which is purpose-built for injustice and exploitation is doomed. To repeat Brett’s observation: “So long as government exists, a governing class is inevitable.”

So maybe we need to do it different this time.