At the risk of repetition, let us summarize the argument. On the evidence presented, it is reasonable to conclude that the Chinese Communist party does not embody the class interests of either the workers or the peasants of China. By no criterion can the People’s Republic be seen as a “Workers State”, although at various times the régime has claimed to embody the “dictatorship of the proletariat”. In 1978, as in 1949, the most important role of the workers of China was not the leadership of the country but as the primary source of the surplus which sustains the State and national accumulation. The mass of the peasants have been permitted to retain a larger share of their very much smaller product; but again, by no stretch of the imagination can they be seen as collectively directing the Chinese State. The reality is concealed by the party’s consistent confusion of popular consultation with majority control, of mass support with mass initiative, of popular participation with democracy, of the emancipation of the State and “the productive forces” with the self-emancipation of the majority.
On the other hand, when the Communists came to power, they did not embody the aims of the other two classes identified by the party – the capitalists and landlords. The new State demonstrated this when, having secured power, it eliminated both of them. The concessions to private business in the early years were not forced out of the State, but awarded to achieve increased production. The State was not a Buonapartist clique, balancing between classes. It had its own independent power, far greater than that of landlord and capitalist. It eliminated them in part to tighten its control of the other two classes for its own independent purpose – national accumulation.
In sum, then, it seems Marxism is wrong, invalid in the light of Chinese experience. Parties do not embody the interests of particular social classes, themselves the products of the social division of labour rooted in the material foundations of society. The State does not necessarily embody a particular class (or survive only temporarily by playing one class off against another). The Chinese Communist party has consistently claimed to represent the national interest, over and above all “sectional claims”, whether of workers, peasants, capitalists or landlords. The party’s definition of “national interest” included benefits for the exploited (and, indeed, for the exploiters), but they did not include the abolition of exploitation, the “wage system”, nor the right of the exploited to fashion directly the new State. The rhetoric of the régime suggested the reverse but, in essence, the claims of the Chinese State are not dissimilar to the claims of Western capitalist regimes to “represent the people”. Clearly, Marx’s slogan, “the emancipation of the working classes must be achieved by the act of the working classes themselves”, was false in China.  It was equally false during the Cultural Revolution, launched and terminated by the party leadership, and in no way changing the structure of power (although it changed, even if temporarily, the position of some of the cadres). In 1949 the party did the emancipating’ on behalf of the Chinese “nation”. In the Cultural Revolution, if there was “emancipation”, it was largely the result of actions by Mao and his Cultural Revolution group.
If the party represents the “national interest”, how is it distinguished from ordinary bourgeois parties that make the same claim? Marxists have hitherto understood that the parties of the bourgeoisie always present the interests of the ruling class as the “national interest”. But if the Chinese Communist party’s claims are correct, there is a “national interest” different from the interests of the constituent classes of a country. Then the critique of bourgeois parties becomes uncertain. In bourgeois democracy, the right of a party to claim to represent the “national interest” in theory turns on its willingness to submit to elections to parliament, in competition with other parties; a majority vote supposedly vindicates what the winning party says the “national interest” is. Not even that exists in China to validate the claims of the Communist party.
Clearly, Marxism is incapable of a coherent account of the Chinese revolution and of the People’s Republic. The theoretical assumptions contradict the known reality. A “non-class” force, representing the national interest, came to power in an isolated backward country (that is, before capitalism had created the material prerequisites for socialism). On the basis of its own independent consciousness, the Communist party then began to construct socialism. The material basis of China was apparently not a decisive obstacle to the socialist transformation. Charles Bettelheim, a distinguished defender of the Chinese order, puts it in this way: “What has happened in China demonstrates in effect that ‘the low stage of development of the productive forces’, is not an obstacle to the socialist transformation of social relations and does not have the necessary result, arising from the process of primitive accumulation, of aggravating social inequality, etc.”  Provided only that there exists a “proletarian party armed with revolutionary theory and playing a direct role”, socialism can be built. In sum, the party can both conceive and implement a strategy to achieve socialism, independent of the society of which it is a product. The problem can only be resolved if we reconsider the context in which Chinese development has occurred.
(i) Modern Capitalism and the State
Competition between capitalists concentrates capital in a few hands and production in a few large-scale plants and in a few geographical areas. By Lenin’s time, sectors of national production were already dominated by a few large companies, “monopoly capital”. The maintenance of monopoly required the State to exclude or restrict competition from foreign rivals. The State became a major factor, working in alliance with the corporate giants, and negotiating with other States over the conditions of competition in the world market.
Competition was intensified in the world market as a result of the “colonization” of each domestic market by the State. Thus, the centralization of capital was even further accelerated. Slump and war compelled each national bourgeoisie to subordinate its private activities to State direction as the condition of its own survival. Indeed, in time of war, the State converted itself into the board of directors of one gigantic national conglomerate, all the efforts of which were directed against the external enemy.
The Change sapped the system’s juridical foundations in private property. The mass of shareholders became passive pensioners of the system, not its directors. The State replaced them in many respects.  Ownership became decisive for wielding power only when it was massive; the professional managers in private companies depended upon the favour of the largest institutional owners of stock, not their own holdings. In the public sector, even these considerations did not apply. Indeed, the boundaries between public and private became so blurred as scarcely to exist – the State financed “private” activities; taxes on business profits Contributed to financing the State; businessmen directed segments of the public sector, and civil servants moved into private business. The growth of capitalism produced the steady attrition of the majority of those people previously identified as “capitalists”.
The institutional transformation in no way changed the central drive, accumulation as a condition of survival. But the survival at stake was not now simply that of the individual private capitalist, but of the collective capital of a national ruling class, competing with other ruling classes. The extension of the State to encompass all domestic activities in no way changed matters, as Engels long ago pointed out: “The modern State, whatever its form, is an essentially capitalist machine; it is the State of the capitalists, the ideal collective body for all capitalists. The more productive forces it takes over, the more it becomes the real collective body of all the capitalists, the more citizens it exploits. The workers remain wage earners, proletariafls. The capitalist relationship is not abolished; it is rather pushed to an extreme.” 
This “statification” of the national parts of the world system was accelerated by the conditions of slump in the interwar years and the Second World War. It was an empirical response; few people endeavoured to lay out a plan for the reorganization of the advanced capitalist countries, to defend a particular country against its rivals.  The processes were only indirectly acknowledged in the bourgeois theories of society. Supposedly, the slow transformation was merely a marginal amendment to the idealization of nineteenth-century capitalism presented in the founding theories. Nonetheless, the process was general, whether, as in Britain and France, without major political upheaval; in the United States through the instrument of Roosevelt’s New Deal programme; or in Germany through Nazism or Japan through its new order.  Almost every country stumbled in the same direction.
The State reorganized society to a greater or lesser degree on the model of its own instrument of power, the army. The militarization of Germany, the imposition of what was supposedly strict hierarchy, the direction of labour, the elimination of dissent as treason, the destruction of trade unions and political parties, all were designed to make every citizen a soldier. The largest private businessmen were guaranteed their profits provided they accepted the State’s direction that all national efforts should be organized to compete abroad and not at home. 
Sections of the ruling class fought the trend fiercely. Those that would fail to inherit in the new order had to oppose it as the condition of their survival. Keynes might threaten the rentier with “euthanasia”, but something much slower was required to achieve orderly change; in practice, too many people, like Keynes himself, made a little something on the stock exchange, for the rentier to be completely wiped out. He survived the war, and even managed to make a modest, albeit carefully controlled, revival in the conditions of post-war boom. It required a radical break with old capitalism, a “dialectical leap”, to achieve the right State structure. While private capitalism might evolve towards State capitalism, it could not reach it without a new social foundation; the old social relations of production impeded even the limited rationalization involved in State capitalism.
The demands of the Second World War accelerated the trend, which continued after the war although at a slower pace. By contrast with the interwar years, a long-term boom – quite unexpected for the ruling classes of the advanced countries – pushed the world economy into unprecedented growth from 1948. The elaborate State controls were dissolved under the acid of a revival in private capitalism; autarchy faded before a new “liberalization”. But the State did not entirely relinquish its position in the civil economy. In the military sphere, in the face of greater rivalries than ever before, expansion reached new records in the effort to maintain a permanent preparation for war.
For those of the advanced countries in relative decline – in the 1960s, Britain and Italy-the role of the State in the civil economy continued to increase despite the boom. In Britain, “centralization” proceeded with particular speed. In 1909, fifteen per cent of manufacturing net output was produced by the 100 largest firms; by 1930, twenty-five per cent; and by 1970, forty-five per cent. In the 1950s, under a supposedly pro-private-business government, the State employed nearly a quarter of the total labour force (a share which had risen to 29.1 per cent by 1975), invested forty per cent of gross national investment and took forty per cent of the gross national product (a share which had risen on one method of calculation to fifty-nine per cent by 1976; on another, fifty-two per cent). Between 1890 and 1955, the State’s share of the gross national product had risen from four to thirty-seven per cent, a forty-seven-fold increase in money terms (and ten-fold in real terms).
The State had an even more important role in promoting future growth. In Britain, roughly three-quarters of research expenditure in the key technological industries (atomic energy, aircraft, electronics) has been advanced by the State in the past twenty years. In the United States, of the projected national expenditure on research and development for 1976-7 of US $38 billion, $21 billion was provided by the federal government (half of it for defence projects); while some two-thirds of academic research was financed by the State.
What can we infer about the nature of the system from these trends? First, that the most advanced productive forces had broken out of the shell of private ownership. Whatever the institutional forms – whether the State or some combination of the State and large private corporations – ownership per se was not a decisive question. The mass of private owners had become simple parasites, living off the proceeds of production as pensioners, but without any role or power to influence the process. Of course, the rentiers’ loss was the gain of the largest owners; their power now drew together vast concentrations of capital.
Under the impact of world economic growth, the productive forces had broken out of the old mould in a different way. The largest private companies had in part escaped from the State itself. In Europe, the national ruling classes were obliged to try to recapture them by creating a “common market”, by setting up the political framework for a vastly increased scale of concentration, the standards of which were determined by the United States, a much larger unit than any single European State. That still did not snare the multinational corporations in conditions of boom; their activities encompassed the globe, using States as stepping stones in a world contest.
However, in neither case – whether the EEC or the multinationals – were such institutions able to mobilize the physical force required to defend their position in conditions of slump. Physical force remained the monopoly of the national State. The return of slump or long-term stagnation could thus produce both the disintegration of the Common Market, paralysed by the competing interests of its constituent national ruling classes (that is, assuming the most powerful of these, the West German, did not use physical force to subordinate its erstwhile partners), and the retreat of the multinationals behind the boundaries of national State protection. The tendency to the internationalization of the world’s means of production conflicts directly with the political form of the social relations of production: the national State.
Much of the orthodox Left remained unable to draw the political conclusions. They remained preoccupied with the private nature of ownership. Indeed, for some, the decline of private ownership was seen as a step towards socialism. Yet it was capitalism itself which impelled State direction, ownership, financing and planning, the conditions of survival in the new phase of competition. European Social Democracy became one of the forces pressing for statification, for the strengthening of the national State against the declining segments of private capital.
Nationalization without workers’ control, without a change in the balance of class power, represented no more than a rationalization of capitalism, a fortification of the position of the existing ruling class. Indeed, in so far as the future of the “productive forces” was embodied in an international economy, this strengthening of the national State was essentially “reactionary”. The key question – what happened to the wages system? – remained unasked. State planning had no automatic working-class character; it distinguished modern capitalism and the corporate managers from nineteenth-century capitalism and its mass of small capitalists, but in itself it did not advance the interests of workers. Indeed, nationalization and planning, without a change in class power, were the bourgeoisie’s methods of increasing exploitation to compete more effectively with its foreign rivals. Only in the sense that, with increased centralization of power, the system became more vulnerable to attack, could such changes be seen as an advance for workers, and then the advance depended upon there being a revolutionary workers’ movement to make the attack.
(ii) The Bourgeois Revolution
If the capitalist class was in decay, how could the capitalists seize power in relatively backward countries and perform its “historical tasks”: the accumulation of capital and the socialization of the labour force? In Tsarist Russia, the native employers were not a popular class of small local businessmen, rooted in the cities, towns and villages. Industrial development had been undertaken not by Russian capitalists but by the Tsarist State as the condition of its military survival. The Tsars undertook the development of the Donetz coal basin (later under private operation), the steel and engineering industries, built the trans-Siberian railway, expanded ports and telecommunications, all to defend the imperial frontiers. Private business was heavily concentrated in foreign hands. Thus, the class of indigenous private employers was tiny when the Russian working class was already large. The employers, even had they wished, could not have led all the classes of Russia against the Tsar.
By the 1890s, most European Marxists recognized that the bourgeoisie could no longer lead the majority. Furthermore, Russian employers would not dare to make the attempt lest they unleash the proletariat which would overwhelm both the Russian State and the employers together. The first Social Democratic manifesto of 1898 put it this way: “The further east one goes [in Europe], the weaker, meaner and more cowardly in the political sense becomes the bourgeoisie.”
Yet Tsarist Russia was among the most advanced of the backward countries and, though dominated by foreign capital, at least had sufficient political independence to rank as imperialist. What of the other backward countries? There, the entrenched position of the great concentrations of world capital, backed often by direct political control through colonialism, meant that the bourgeois revolution was impossible unless it also established the political independence of the country concerned. Quite often, as in Russia, the native capitalists were anxious to secure a monopoly position, to exclude the competition of the advanced concentrations of foreign capital. They were thus drawn to oppose foreign domination. Yet simultaneously, their weakness made them materially dependent upon foreign capital – they were economic extensions of the great world concentrations rather than indigenous growths. For the same reason, even in conditions of political independence (such as existed in Latin America), private business was incapable of repeating what the European capitalists had done in the nineteenth century, building independent capitalist economies; in special cases, a dependent development was possible, but in most cases not even that.
The confidence of the private employers also varied with their fortunes in the market. When the world system boomed, there were far greater chances of undertaking the political tasks (but less need to do so). In the interwar years of slump, the opportunities evaporated from fear that any political change would lead to disaster. The private employers in most backward countries could not create a bourgeois republic. Even in industrialized Germany, at an earlier stage, the private employers could not overthrow the Kaiser, let alone establish a stable republic. It took German workers to destroy the old imperial order, but then the highest achievement of the German bourgeoisie was the Weimar Republic, founded upon counter-revolution, tottering from one crisis to another, speared at every stage by the intransigent vengeance of its victorious neighbours, and finally tumbling helplessly into Nazism. In Japan in the 1920s, a similar exercise in weak bourgeois rule effectively became fascism under the impact of world slump. Now the barbarities of war became the only method of safeguarding the old order. In backward Italy, Poland, Romania, Hungary, Portugal and finally Spain, fascism became the sole means available to ensure, if not progress, at least the survival of the ruling class. In China, it was ij comparable order under Chiang Kai-shek’s Kuomintang. Yet even then, the territory of China could not be unified under the national government, nor could Nanking provide serious opposition to the depredations of Japan.
Such régimes emerged from defensive reactions to world crisis. But they went halfway to meet the needs of national survival, to securing national independence and the bourgeois revolution. They could go only halfway because of the decay of the world capitalist class, its dominant economic position and yet its social shallowness in the backward countries. The material basis for an effective national class of private employers had disappeared. The bourgeois revolution had become an archaic concept.
The growth of the great concentrations of capital in the hands of the industrialized powers and the resulting decay of capitalists in both advanced and backward countries made the tasks of the bourgeois revolution contradictory; the accumulation of capital, national independence and the socialization of the labour force became mutually inconsistent. Some of the backward countries opted for the first, some for the second; almost none were able to achieve the third. For those who opted for national independence, it became not, as in the case of the United States, a means of popular emancipation but the simple precondition of national survival.
In the twentieth century, the programme of popular freedom has all but disappeared in the face of the changed preconditions of some measure of national independence. The masses are offered improved welfare as a substitute for freedom. Sun Yat-sen, founder of the Kuomintang in China, or Nehru in India, the lineal descendants of Garibaldi, to a greater or lesser extent accommodated to the changed conditions in their demand for “socialism” – a system in which the State assumed the dominant directing position in the economy. Most of the backward countries entering independence in our own times – Nasser’s Egypt, l~ekn Bella’s Algeria, Sukarno’s Indonesia, Nkrumah’s Ghana – have adopted strikingly similar formulae. But in terms of actual State power – as opposed to popular welfare – even the declared right-wing regimes, like Brazil, are drawn in the same direction.
The bourgeois revolution was founded upon the demand for the freedom of the majority. That demand fused the perceptions of different classes in a common social transformation, culminating in the conquest of the old State. But in the twentieth century, the material requirements of State power, of surviving against the now much stronger dominant powers, rule out the possibility of popular freedom. The revolutionaries of national independence have substituted “social reform”, a clumsy accommodation to the contradictory interests of different classes. Even so, many of the leaders were still frightened of the possibility of unleashing a popular revolution. They went only halfway to meet the need of the time, to the “mixed economy” or “democratic socialism” (which means an increase in State power while protecting private capitalism).
However, without a popular revolution, a “peasant war”, how were the revolutionaries to come to power? Only through the army or a comparably disciplined instrument, a mass party. If such instruments could be rendered independent of the interests of existing classes, there was no need to demand liberty. At the moment when history required it, a model was created.
1. Address and Provisional Rules of the Workingmen’s International Association (the First International), 1864, in SW II, London, n.d., p.442.
2. Charles Bettelheim, Les luttes de classe en URSS, 1ere periode, 1917-1922, Paris, 1974, p.40.
3. In the case of Britain, tax as a proportion of net company income increased between 1938 and 1956 from 14 to 39%; dividends and interest payments as a proportion of net company income fell between 1912 and 1949-50 from 67 to 23% – cited by Michael Kidron, Imperialism: Highest Stage But One, in International Socialism 9, Summer 1962, and reprinted, Capitalism and Theory, London, 1974, p.129.
4. Socialism: Utopian and Scientific, op. cit., p.180.
5. The nearest equivalent to such a conscious plan in Britain was Harold Macmillan’s The Middle Way: A Study of the Problem of Economic and Social Progress in a Free and Democratic Society, London, 1938.
6. For what is still the best outline of some of these tendencies, see Robert A. Brady, Business as a system of power, New York, 1943.
7. In the case of British Conservatives, this is examined in Chapters 3 and 4 of my Competition and the Corporate Society: British Conservatives, the State and Industry 1945-1964, London, 1972, pp.48-74. On the situation in the United States, see E.W. Hawley, The New Deal and the Problem of Monopoly, Princeton, 1966.