Chapter 4: On the Concept of State-Monopoly Capitalism

In the first instance the term monopoly capitalism is no more than a correct description of existing society. Capitalism is pleaded by monopolies and in large part determined by them. The state, whose function is to protect the social structure, is thus the state of monopoly capital. This is by no means a new phenomenon in capitalist society: it has always been a feature of capitalism, if not as pronounced in the past. According to Marx, who has given us the best analysis of capitalism, capitalist competition presumes monopoly, i.e., capitalist monopoly over the forces of production. The antagonistic class relations that result from this require control of the state, which at the same time represents the national interests of capital at the level of international competition.

A capitalism of pure competition exists only in the imagination and in the models of bourgeois economics. But even bourgeois economists speak of natural monopolies and monopolistic prices. Although, granted, monopolies are not subject to the laws of the market, they are still held to be unable to shake these laws to any notable extent. Only in recent times, with whole branches of industry monopolized, has bourgeois economics been forced to deal with imperfect or monopolistic competition in its theories and to go into the changes monopoly has wrought in the market. What for bourgeois economics marked a theoretical turn had in Marx's analysis of capital always been seen as an inherent tendency in capitalist accumulation. Capitalist competition leads to capital concentration and centralization. Monopoly was born of competition, and out of it grew monopolistic competition. Marxist theory has also always ascribed a more important role to the state than the bourgeois world was willing to acknowledge, not only as an instrument of repression but also as the organized powered mainstay of capitalist expansion.

Thus there can be nothing objectionable in the use of the term state-monopoly capitalism, although it implies no more than the simple term capitalism. Various stages can be distinguished in the process of monopolization and state economic intervention, however. Thus the development of capitalism can be represented as its progressive evolution into monopoly capitalism, and we may accordingly ask what this means in present times, and further, what it implies for the future. It is in this context then, that emphasizing the special state-monopoly character of present-day atavism becomes meaningful.

Capitalist accumulation tends not only toward a progressively deeper class division between labor and capital but also toward increasing concentration and centralization of the power to dispose over capital as it expands. 'One capital kills many other', and what concentration is unable to achieve through competition, deliberate centralization can do through the formation of trusts, cartels, and monopolies. Capitalism thus tends itself in a state of constant change, although the underlying exploitative relations remain unaltered.

For Marx the decline of capitalism was already contained in its rise. The same social relations that allowed it to expand would also bring about its fall. Capital accumulation was a process ridden by crises; under the conditions of advanced capitalists in which the working class is the pre-eminent class, every major crisis contained the possibility of social revolution. However, if we put aside revolution as a potential solution to capitalist contradictions, the trend of capitalism, despite all the setbacks during crisis periods, is toward increasing monopolization of the national economy and sharpening international monopolistic competition.

This trend is often seen as objectively preparing the way for socialism. With the transition from competition to monopoly and to the large capital units created by accumulation, concentration, and centralization, individualistic capitalist private ownership of the means of production has been transformed into the collective ownership of corporations and large concerns, in which management and ownership no longer reside in the same persons. For Marx:

"capital is here directly endowed with the form of social capital (a capital of directly associated individuals), as distinguished from private capital, and its enterprises assume the form of social enterprises as distinguished from individual enterprises. It is the abolition of capital as private property within the boundaries of capitalist production itself."

Whereas for Marx this situation was a sign of capitalistic decay, Friedrich Engels detected in it also a positive element, namely, a kind of capitulation of capitalistic anarchy to the planned production of the socialist future. In his view, we witness here "the reaction of the mighty, growing, productive forces against their character as capital, the increasing compulsion to recognize their social nature, which more and more forces the capitalist class itself, insofar as this is at all possible within the relations of capital, to treat them as social forces of production." Engels saw, of course, that 'neither the transformation into joint-stock companies (or trusts), nor that into state-property, eliminates the capitalistic character of the productive forces. In the case of joint-stock companies (and trusts), this is obvious. And the modern state, again, is only the organization whirls bourgeois society provides for itself in order to support the general external conditions of the capitalist method of production against encroachments as well of the workers as of individual capitalists. The modern state, regardless of its form, is essentially a capitalistic machine, the ideal collective capitalist. The more productive forces it takes over into its possession. so much the more does it become the actual collective capitalist, and so many more citizens does it exploit. The workers remain wage-workers, proletarians. The capitalist relation is not eliminated. It is rather brought to a head. But, brought to a head it topples over. State ownership of the productive forces is not the solution of the conflict, but it conceals within it the formal means for the solution of the problem." While for Engels state property and monopolization do not eliminate capitalism's susceptibility to crises and depressions, for Hilferding, on the other hand, their progressive development indicates the possibility of ending the capitalist crises and reducing soclalism to a mere poltical problem, Although the pressures on all noncapitalist classes increase with increasing monopolization, nonetheless, it will finally lead to a consciously regulated social reduction, leaving the remaining social antagonisms to the sphere of distribution. What remained to be done would be; 'the planned regulation of the economy, not by the magnates of capital and in their specific interest, but with regard to the needs of the whole society and through society. The socialized functions of financial capital - the combination of industrial andbanking capital makes the overthrow of capital so much easier. As soon as financial capital is in control of the most important branches of production, it suffices that society, by means of the proletarian state, appropriates financial capital and thereby gains control over the dominant branches of production.

For Hilferding finance capital had already completed the necessary expropriation of private capital, and nationalization would merely put the finishes touches on the socialization of productive forces initiated by capital itself. Later this idea was taken up by Lenin. In his writings on imperialism he described state capitalism at the turn of the century as 'parasitic, stagnating, and dying' and marked by the 'substitution of capitalist monopolies for capitalist free competition'. But monopoly is the transition from capitalism to a more highly developed order. Without going into Lenin's theory of imperialism, we may say that for him imperialism. coincided with finance capital, and the latter was organizationally the precursor of socialism. The centralized administrative control over social capital exercised by monopoly finance had only to be taken over by the proletarian state and put to the service of society at large.

Thus we see that this concept - which goes back to Engels and was shared in common by Hilferding and Lenin despite their other differences - that monopoly capitalism paved the way for , Socialist society, is rooted in the false assumption that the forms of social organization accompanying capital concentration were identical with the socialization of production. Because the individual enterprise was presumed to be organized rationally and according to plan, as opposed to the irrational, unplanned functioning of the economy as a whole, Lenin imagined accordingly a socialist economy as one huge factory steered by the state. In actuality the individual firm is just as irrational as the economy as a whole, unless of course one regards the capitalist profit motive as an economically rational principle of production. Individual firms are just as dependent on the law of capital expansion as is the society as a whole and must function within the framework of general or monopolistic competition, which determines the form of their organization.

In their pursuit of profit monopolies organize themselves and no more. If they were all brought under the central control of the state, the state could do no more than reproduce this new capital relation between itself and the producers, unless of course the produced abolish the state. There is hardly any need to belabor the point further: the long existence of the "socialist states" is practical proof enough that the term socialism is no more than a cover for today's state capitalism. Complete monopoly over the means of production does not do away with the capital-labor relations; it merely frees capital from market competition without abolishing competition itself. Quite apart from the fact that competition continues to exist at the international level, even within state capitalism it merely changes its outward appearance by moving from the economic sphere into politics.

Yet so far state capitalism has been the preserve of capitalist underdeveloped countries or has been imposed imperialistically on developed countries, as in Eastern Europe; and the countries that fit Lenin's description of monopoly capitalism have remained at this stage, although the role of the state in them has grown. The conditions of a monopolistically controlled world market precluded any possibility of capitalist development by way of competition for the underdeveloped countries. In a situation more or less similar to the pro-revolutionary status in Russia, that is, with a weak bourgeoisie, a proletarian minority, and a predominantly agrarian population, these nations could only counter the head start of the monopolistic nations by establishing even more rigid monopolistic control over economic life. Monopoly capitalism evokes state capitalism not within monopolistic economies but in the struggle against them.

Indeed, Russia's example has shown that a state-controlled economy is able to speed up industrialization, at least in large nations, even if only at the expense of the working population and to the benefit of state capitalisms newly spawned ruling class.

Prompted by the major role played by the state in the war economies of World War I, Lenin was led to regard monopoly capitalism with its imperialist imperative, as state monopoly capitalism in which the state serves the monopolies. The next step in the erection of socialism in capitalist countries would then accordingly be to sever the state's ties to monopoly interests and reorganize it to serve the interests of the population as a whole.

First, however, it was necessary to smash the state of the monopolists to make way for a new state, which could then get down seriously to the task of abolishing capitalist exploitation. State-monopoly capitalism was to give way to the socialist state, without losing thereby its centralized administrative control over the economy at large. Leninists still adhere to this program, although it amounts to nothing more than the attempt to drive out the devil with Beelzebub.

With state capitalism identified with socialism, regarded as a transition to a stateless communism set sometime in the far-distant future, the struggle for socialism becomes a struggle against present-day state-monopoly capitalism. This struggle can only be a revolutionary struggle, since state-monopoly capitalism will hardly hand in its resignation voluntarily. Although state capitalism still continues worker exploitation, it nevertheless does destroy the class domination of the bourgeoisie. But the communist parties in the Western nations, which now appear to have taken up the banner against state-monopoly capitalism, had ceased as long ago as 1920 to be a revolutionary movement. They are no longer prepared to put through their own program by revolutionary means, and they are waging a mock battle against state-monopoly capitalism in order to gain for themselves places of influence within the existing systems.

This is not to say that the Western communist parties have abandoned their own goals. Whenever and wherever the opportunity presents itself, one can be sure they will attempt to divert every successful anticapitalist movement in the direction of state capitalism. Since such movements are not yet on the agenda, these parties pour all their efforts into a struggle for positions of power within the existing society, and their 'struggle' against state-monopoly capitalism becomes an empty propagandistic slogan to mobilize the masses behind them, masses as yet turned only against the 'bad sides of capitalism,' not against capitalism itself. Indeed, the communist parties are neither against capitalism nor against the state; they are only against a state that is wholly in the services of the monopolies and for a state and a capitalism that serve the common interest.

But a common interest can only exist under classless socialism. Under capitalism there exist only irreconcilable class interests. Therefore capitalistically inclined social strata that are the victims of monopolization cannot be won over to socialism because their special social positions would be destroyed even more rapidly and thoroughly under it than under monopoly capitalism. At most they can be won over to a capitalist program that caters to their special interests, in a word, an antisocialist policy. Thus behind the slogan of a struggle against state-monopoly capitalism lurks the proclamation of a counterrevolutionary policy directed against socialism.

It is, however, quite conceivable that as monopolistic pressure intensifies, driving segments of the petite bourgeoisie into the proletariat, some of these petit bourgeois layers will be persuaded that their last chance lies with state capitalism, which they hope will throw open the gated to the career monopoly capitalism had barred to them one glimpse into the "socialist countries" is sufficient to confirm their optimistic expectations. However, for the workers the same glimpse gives a somewhat different picture. They have no burning desire for this kind of socialism. Therefore for them communist policy, in countries where it carries some weight, e.g., in France or Italy, does not represent the embodiment of the desire for the revolutionary transformation of state-monopoly capitalism into state capitalism, but their only immediate interests within the existing social system. The functions of the communist parties are recordist, not revolutionary, and ultimately, therefore, they sere to sustain the continued existence of state-monopoly capitalism.

In the light of this situation, the sham struggle against state-monopoly capitalism is only a slogan of embarrassment. The communist parties have for a long time now been unwilling to mount an offensive against capitalism itself on either a national or an international scale - 'peaceful competition' and the business ties between the different social systems are proof enough of this. At the national level they take pains to assure that they are against only the self-seeking uncurbed power of the monopolies, not against the state or capitalism itself, and that state involvement is required to bring the monopolies under state control. At the international level the alleged struggle against state-monopoly capitalism serves the ends of an opportunistic imperialist policy. They are not against imperialism as such, only against the imperialist policies of other nations, which serve the interests of their national monopolies to the disadvantage of their own country's imperialist or national interests. The distinction between capitalism and state-monopoly capitalism can be used to justify either alliances or elasticities between the 'socialist' and the capitalist countries, as well as differences among the 'socialist' countries themselves. In other words, the communist parties utilize the slogan of struggling against state-monopoly capitalism only to conceal their own capitalist, hence imperialist, policy and to win the support of the workers.

The 'theory' of state-monopoly capitalism selves, then, on the one hand, as an apology for the totally recordist activity of tile communist parties in the capitalist countries and, on the other hand, the changing demands of imperialist power politics', it gives notice, therefore, that despite all their points of difference, both capitalist and 'socialist' countries have taken upon themselves the joint task of defending capitalist production relations against any socialist transformation. This is nowhere more obvious than in the current convergence theory, ostensibly rooted in industrialzation, which seeks to obliterate the differences between these two different social systems. Since the industrialization process is the same under both state capitalism and monopoly capitalism, the social formations, according to this theory, differ only in the degree of centralization of administrative control over social production and distribution. But since under state-monopoly capitalism this administrative control has already brought about a separation between ownership and management, only a small step remains to complete the transformation of private capitalism to state capitalism, one that can be accomplished politically. With this step achieved, socialism will have been born out of capitalism, marking the end of social class struggles.

Furthermore, since nothing else need be changed in the existing system of production aside from abolishing the monopolies, there is nothing in the system that should not be adequate to the needs of socialism as well. This explains the relative indifference shown today toward the recurrent crises of present-day capitalism. The blame for the difficulties and injustices with which it continues to be beset is laid on the state, which has assumed the interests of the monopolies as its own interests. Therefore merely another state or another government, not a different economic system, is what is required. Present-day capitalism and state capitalism experience a meeting of the minds on this point as well. State-monopoly capitalism also imagines that it, too, has put an end to crises through state interventionist policies. As this illusion steadily loses credibility in the face of the hard facts, opposition to state-monopoly capitalism adopts the goal of a broader, and in the end a total, state control of the economy to avoid further convulsions.

As among the bourgeoisie itself, a capitalist solution is sought to capitalist contradictions, The "left" is prepared to sacrifice monopolies to save capitalism. The bourgeoisie as long ago given up belief in automatic regulation of the economy through the market. As competition peter out, prices and profits are no longer determined by the market but set at will by the monopolies. Since, however, nothing can be changed in the monopolistic structure of the economy, the state must intervene not only to ensure full employment through money and fiscal policies, but also to regulate wages and prices in the interests of economic stability. It is the task of the state to achieve by political means what the capitalist market is unable any longer to achieve by itself. Indeed, state intervention has grown steadily, and state economic policies were given credit for periods of economic prosperity, prompting the notion that capitalism actually was susceptible to rational control.

Socialist theories had anticipated this view. Hilferding wrote, for instance:

"The monopolistic elimination of competition also eliminates the objectively given price relations. Prices cease being objective magnitudes and become a mere instrument of account for those who consciously determine what the prices should be. The realization of the Marxian doctrine of capital concentration in monopoly capitalism eliminates also the Marxian labor theory of value."

What Hilferding did not see was that in Marx's theory of Value, the law of value determined only the general price level and its fluctuations, not prices themselves. Competition tends toward an average rate of profit, which is the resultant of deviations between price and value. Surplus profits or monopoly prices have been a constant feature throughout all of capitalist development and one of the reasons for accelerated accumulation. As monopolization progresses, monopoly prices reduce the average rate of profit of competing capitals. Profits here are transferred from the sphere of competition to the sphere of monopolies. As competition declines. the possibility of transferring profits from the competitive sector to the monopoly sector of the economy also diminishes; through the law of value the monopolistic rate of profit tends to become the average rate of profit.

A monopolistic economy does not abolish the law of value; on the contrary, it reaffirms it, since the rate of profit and hence the rate of accumulation continue to fall under monopoly capital as well, necessitating state intervention in the economy. But such interventions are limited by capitalist production relations themselves and can only be seen as short-term measures. Once their possibilities are exhausted, the capitalist crisis cycle resumes, and once again the revolutionary transformation of the capitalist system becomes a real possibility, Under state-monopoly capitalism, as under capitalism in any other form, the task of the proletariat remains one and the same, namely, the abolition of capitalist relations through the elimination of wage labor in a classless society.