eastern Europe and Cuba are all variants of the same system that exists in the capitalist world appears to defy elementary common sense. But, as Chris Harman would be the first to point out, Marxism is not about "common sense" but discovering the underlying "laws of motion" which make social systems tick. So how does Harman explain the mechanisms of 'state capitalism"?
According to Harman, following Tony Page 26
FEATURES 'State capitalism'; no way forward for east European workers Cliff (2), these states are capitalist not because of their internal organisation, but because of "competition" - mainly military competition -with the other capitalist countries.
Cliff and Harman are, of course wise not to claim that the countries of the easter bloc are capitalist on the basis of their internal orThe 'state capitalism' as portrayed by comrades Tony Chiff and Chris Harman is indeed a curious variety of capitalism, functioning outside any normal capitalist rules.
Somehow even after this system has allegedly been in place for over six decades in the USSR and 40 years in Eastern Europe, the "state bourgeoisic" apparently failed to notice that vital components of capitalism were missing:
• A lack of capital: the sight of East Europe's decrepit, antiquated factories, the spectacle of Lech Walesa touring the wester capitals desperately pleading for foreign investment, and the feeble progress towards privatisation - for lack of available domestic investors - are all testimony to the lack of sufficient free or fixed capital to function and survive in the world market.
• A lack of capitalists. With much of the "state bourgeoisie' unceremoniously dumped from office and thus instantly relegated from bourgeoisie to proletariat) by the events of 1989, it has become obvious to all but the SWP that all the East European bourgeoisie and big landlords were expropriated over 40 years ago. Would-be marketisers are now scouring the world's lounge bars searching for emigre capitalists,
ganisation. For Marx insisted, most explicitly in the Grundrisse, that capital can only exist as "many capitals" - firms competing with one another for profits, the central dynamic of the capitalist order.
But no such system exists where the means of production are collectivised. Despite the while various small-time bureaucratic spivs jockey for the chance to becomic small businessmen. Yet along with the expropriation of the old capitalists went the structure of property and company law needed to run a capitalist economy - creating still more headaches for today's wester bankers! The privatisation and consolidation of a new capitalist ruling class in these countries will be no quick change.
• A lack of commodities. Page one of Marx's Capital tells us that "The wealth of those societies in which the capitalist mode of production prevails, presents itself as an immense accumulation of commodities"". Yet it is precisely the lack of such basic commodities as food, soap, toilet paper, cigarettes and vodka that has confirmed the failure and crisis of bureaucratic rule.
• The lack of a market While the "market' system sacrifices the fulfilment of social need in order to focus on what is profitable, the bureaucratic plan", freed from this constraint, substitutes the numbing straitjacket of the command economy, the quota and the nom - crushing any concept of workers" control or initiative, This is certainly not socialism - bur it's light years from capitalism, too!
• The lack of profits Westem bankers weighing up their prospects in Easter SOCIALIST OUTLOOK no 27, October 1990
Lack of basic commodities confirms the crisis of bureaucratic rule existence in some eastem European countries of small firms and private peasant production, generalised commodity production, in which goods are produced by independent, private labour for the market, does not exist. Harman tries to escape from the conundrum this way:-
if old style "free market" competition that lacks something Europe are appalled to find the majority of state industries are bankrupt, and that:
*For now the lack of investment in the East [of Germany] may simply reflect the fact that there is nothing worth buying". (The Independent 21,8.90)
The losses are not recent or temporary, bat chronic and endemic to the shambles of bureaucratic mismanagement, covered over by subsidies and a tissue of lies. No capitalist economy could function at such a loss in this way year after year without outside support.
• The lack of any drive to exploitation. Western industrialists are appalled at the huge manning levels that still prevail in East Buropean industry: western retailers boggle at the forbidding shops with their redundant teams of clerks issuing and collecting chits. The Stalinist model — as a non- capitalist system insulated from world competitive pres sures - has deliberately avoided changes that eradicated jobs and retreated from measures that would cut workers" living standards. Now, as we have already seen in Poland, the moves towards the free market seem likely to slash the value of wages and to throw 40 mil lion Soviet workers out of their jobs, along with a third of the East German workforce and millions elsewhere in East Europe
• The absence of any drive to imperialist expansion. Far from exploiting the workers SOCIALIST OUTLOOK no 27, October 1990
FEATURES plays a very little role, a new form of competition dominates it completely. This is military competition between rival state capitalist ruling classes of different countries. This competition has similar effects on the organisation of production in each country to those economic competition has on the organisation of East Europe, Soviet economic links have been characterised by huge open and hidden subsidies to prop up flagging economies. The same is true of Victnam, Cuba and countless other recipients of Soviet economic aid, which pay a certain political price, but are not exploited cconomically. While povertystricken recipients of wester aid in third world' countries are fleeced through huge interest payments, the USSR has exported wealth, training and expertise to its protege regimes.
• The absence of free foreign trade. The state monopoly on foreign trade and non-convertibility of currencies which has applied throughout Eastern Europe are recognised by all but the SWP as a major obstacle to the functioning or rebirth of capitalism. They are symptoms of the complete ousting from power of the capitalist classes in the events of 1944-50.
Of course in exceptional circumstances and unusual conditions in the balance of class forces at home or internationally, one or more of these anomalies might be visible in a capitalist economy: but for a 'capitalist system to function for decades without capital, capitalists, commodities, market, profits or exploitation stretches the definition well beyond breaking point.
Cof production inside each firm... The threat of military defeat compels the giant state capitalist class to impose the law of value on its enterprises just as the smallest individual entrepreneur is forced by the threat of bankruptcy. In other words, it has been not profits but ams competition which forced the USSR to 'compete' with the imperialist powers, thus relating the value of each concrete act of labour inside the USSR to the value of labour in the capitalist west. Cliff and Harman even claim that it was arms competition that was the driving force of Soviet industrialisation. Now, there is no doubt that massive arms production has distorted the development of the Soviet economy, and contributed to the present crisis. But the claim that anns competition makes the USSR capitalist is completely unproven. To prove that arms competition has made the USSR capitalist, it would be neces sary to show that it has imposed a system which has the characteristics of capitalism -production for profit, investment flowing to those enterprises which are most "profitable", production ending with the accumulation of vast amounts of capital in the form of money. the optimisation of profit being the driving force of the economy. None of these things exist - yet - in the Soviet Union. Indeed it is precisely one of the main complaints of the pro-marketisers in the Gorbachev camp and beyond that they don't!
In sticking to what used to be summarised as the permanent arms economy' theory of why the USSR is capitalist, Harman follows the well-trodden founding theories of the SWP, which he debated with Emest Mandel 20 years ago (3). But in defending state capitalist theory in an unfavorable situation, Harman makes'more explicit some of the underlying propositions of his theory. The first is the idea that all industrialised countries are a for of 'state capitalism'; the system in the Eastern bloc is just one variant of the 20th century trend towards all capitalism being "state capitalism'. Harman argues:-
the tendency towards state control of the whole economy was not something unique to Stalinism. It was something which hap pened to various degrees throughout the capitalist world, particularly in its weaker national elements, in the period which stretched from the First World War and the crisis of 1929-33 through to the 1970s... The two world wars and the crisis of the 1930s led to a massive degree of fusion between the state and the giant enterprises in the advanced capitalisms: this was the major point made as carly as 1916 by Bukharin and Lenin in their studies of imperialism. But in the late 1930s the scale of state control of industrial activity in Nazi Germany was such as to persuade the famous Austro-Marxist economist Hilferding
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that a new mode of production had been es- tablished. (IS 46:p37) *There is, so to speak, a And again:- "merging together" of industry and the state. This merging finds its fullest development in imperialist all-out in which the wars, state and capital work to plan the economy while intemally, destroying rival capitalisms physical- ly. (IS 47: p151) This analysis is compounded by Har- man's references to the West offering a more open and free state capitalism (alternative- ly 'multinational state capitalism') - as op posed to the "autar- chic" state capitalism of this East. Now this is a clas sic restatement of what used to be known as "convergence theory' - that the role of the state east and west was bringing both camps to a similar sort of sys tem. The objections to it are numerous, but here we list the most obvious. First, the increased and obvious role of the state in western capitalism, does not result in a full merging of the state and capital, even under Nazism, even in wartime. In the era of the "multinationals" this is absolutely ob vious - often their operations are totally out- side the control of any national state ('multi- national state capitalism' is an absurdity). During World War Two, the big trusts made huge private profits from the war ef- fort. But despite this, the war economy did not become a permanent feature, far less a culminating point: it remained an emergency measure for the capitalist class. The national planning of this type of economy was dis- mantled after the war, despite attempts at "indicative planning. So the Keynsian moder era where many fields of production are dominated by a few monopolies does not result in "planned capitalism", or the removal of capitalist competition and the anarchy of the market. The almost obsessive deregula- tion policies pursued by Thatcher, Reagan and other neo-liberals confirms the new trend to unravel state control. Second, Harman's theory amounts to saying the east is just a more complete or autarchic version of state capitalism. It fails Page 28
FEATURES to explain (and this runs through his whole theory) the enormous hostility between these two types of "state capitalism'. Inter-im- perialist competition of course exists be- tween all imperialist powers. But why the Gorbachev: a bureaucrat but not a capitalist patibility of these two systems? capitalist inexplicable. just "capitalist. was bureaucracy as the 'state bourgeoisie". further complication of the A
division of the world into two competing factories, blocs? Why the cold war? Why this huge conflict which has dominated the post-war suffer. world? Surely it was because of the incom-
There was always an ambiguity in state
theory as to whether state capitalism was a different mode of production, or just a variant of the same mode of production. Harman is explicit in arguing that it is basically the same mode of production. And in saying so Harman renders the whole history of the 20th century completely
Until recently, Tony Cliff and Harman always referred to the Soviet ruling caste ('class") as "the bureaucracy'. Now Harman has come clean, and following Bettleheim and other pro-Chinese theorists who claimed in the 1960s and 70s that the Soviet Union
Prefers to the "state capitalist' approach is that there have existed states in the third world - moder Iraq is a and good case - in which the state does completely dominate capitalist economies. There is a good case for calling these *state
capitalist. But such states have no necessary hostility to wester capitalism, and are generally subordinate to imperialism. After all, didn't the SWP (wrongly) argue that Irag was simply a tool of US imperialism during the Iran-Irag war? Since - according to the SWP - the Soviet Union is just one variant of modern capitalism, it follows that Gor- bachevism and the caster bloc crisis are variants of capitalist crisis - a crisis of overproduction (IS 46 pp44-52), of the rising or- ganic composition of capi- tal. But since capital in the Marxist doesn't SCnSe exist in the USSR (how can it, when even accord- ing to Cliff the internal or- ganisation is not capitalist?) this theory has some difficulties, According to Harman (4) it is the urge to accumulate' which drives the Soviet burcaucracy. It invests too much, and devotes too little to con- sumption. Now, the theory of permanent armis explain economy can over-investment in the arms sector, but it cannot explain this mysterious "urge to accumulate" more tractors, machinery etc. from which the Soviet bureaucracy is supposed to In fact, the Soviet bureaucracy is driven not by some mysterious urge to accumulate, but by the defence of its social position and privileges, including its privileged level of consumption. The crisis in the USSR is a crisis of bureaucratic planning, including often a failure to invest. If some sectors are characterised by over-investment, it is be- cause of the inefficient and wasteful use of resources, endemic in the bureaucratised economies. The crisis is not a 'crisis of overproduction' of capital, but a crisis driven by the inability of the system to use resour- ces rationally, to innovate, to meet the con- sumption needs of the masses. In part, but only in part, this is a result of over-investment in the arms industry. But this is not the essence of the matter. Since Harman is referring not to the over-ac- cumulation of capital in the Marxist sense, but to too much investment in fixed plant goods, couldn't the producer bureaucracy solve the crisis by investing a little less? But less investment would not SOCIALIST OUTLOOK no 27, October 1990
Nationalised property must be defended against privatisation solve the basic problem of the inefficient and wasteful use of resources, which is a product of bureaucratic rule itself. Less investment could, while bureaucratic rule survives, chronically worsen the crisis. The political conclusions of the SWP's theories are disastrous. Harman is explicit:
*.. before socialists in the Eastern states can take advantage of the factors in the situation which favour them, they have to be clear about certain important points. First, they have to grasp that the transition from state capitalism to multinational capitalism is neither a step backwards nor a step forwards but a step sideways... Unfortunately there are still socialists in the Easter states who have not fully grasped this' (1).
Apparently the conclusion from this bizarre approach is that we should support workers struggles in Eastem Europe, but not defend nationalised property against privatisation!
Of course, the restoration of capitalism in the castern states is not yet a certainty. If it happens, it will be the result of defeats imposed on the working class. The SWP, by insisting that it is already in place, logically. fails to grasp that capitalism can only be restored through a massive attack on the working class, including removing its social gains, which are based on nationalised property.
A concrete example. The IMF has told Hungary that it will make loans - provided these go to private enterprises and housing rents are charged at 'market prices'. Rents haven't changed in Hungary for forty years. This implies a huge attack on the Hungarian working class. But where exactly did these cheap rents, a basic factor in working class living standards, come from? Wasn't it something to do with the absence of capitalism?
The workers in the GDR, where capitalism is being established, will soon discover what the capitalist order has in store for them -mass unemployment with perhaps a third of the workforce unemployed, the destruction of social services like free childcare, subsidised SOCIALIST OUTLOOK no 27, October 1990
FEATURES/ REVIEW
rents, cheap transport and so on. Part and parcel of the working class resistance to austerity must be the defence of its social gains, which are based on collectivised property. No wonder some socialists in eastern Europe can't see what the SWP is getting al. The intemational implications of the crisis in the east are not referred to by Harman. But the deepening of the peaceful coexistence course implied by perestroika has had deeply reactionary effects intemationally, strengthening the hand of imperialism. The US invasion of Panama was given the green light by Gorbachev. Only Soviet complicity allowed the US intervention in the Gulf. Since such developments don't fit in with state capitalist theory they are simply ignored.
More generally, Chris Harman attempts to insinuate that those failing to hold the theory of state capitalism, were in some way or other soft on Stalinism. Thus we leam that in 1956 "part of Pablo's supporters supported the sup pression of the Hungarian revolution by Soviet tanks*. Michel Pablo of course in 1956 was a central leader of the Fourth International; but no part of the Fourth International whatever did anything but support the workers revolution. We lear the intriguing information that Tariq Ali, who is soft on Gorbachev, was most influenced by 'Isaac Deutscher, Leon Trotsky and Emest Mandel" (in that order). Logic: Deutscher, Mandel. Tarig Ali (and Trotsky!) are all basically the same in being soft on Stalinism. The left can do without this kind of silliness.
For decades many on the left have regarded the debate about the character of the Soviet Union and the other Stalinised states as a kind of esoteric theological exercise played by bizarre revolutionary groups. But the present crisis in the east, and the attempts of imperialism and intemal forces to bring about the restoration of capitalism show it is anything but. The restoration of capitalism in the Soviet Union, eastem Europe, China and Cuba would have immense reactionary implications, and set back the struggle for socialism. A theory which would describe it as 'moving sideways' is a failure.
(1) The Storm Breaks: /S 46
(2) State Capitalism in Russia Tony Cliff, Bookmarks
(3) Sce E. Mandel: The mystifications of State Capitalism. International No. 2 1970
(4) /S 46: pp
Nice Idea; shame about the picture Safe, smug and