Notes on the Real Domination of Capital and State Capitalism

The problem: to understand how the transition from the formal to the real domination of capital leads to: totalitarian state capitalism, which swallows/absorbs the whole of bourgeois 'civil society', reduces democracy to facade, a form of ideological control over society, prevents the possibility of 'permanent' class struggle by the proletariat through 'permanent' struggle organizations -- such as trade unions and mass political parties -- unifies the previously separate spheres of production, circulation, and consumption into a single process of the production and accumulation of the national capital, and involves the penetration of the law of value throughout this entire process, and indeed throughout society?

First of all, it must be understood that the real domination of capital -- ie. generalized extraction of relative surplus-value by capital from labour -- involves the ever-growing and generalized domination of present, living labour by past, dead or objectified labour in the form of increasingly large-scale and increasingly powerful productive technology in the means of production. Secondly, it must be understood that concurrent with this increasing domination of productive technology over living labour is the increasing concentration of capital into ever fewer and ever larger units of capital. These concentrating capital units tend to become too large for a single owner, so they tend to become joint-stock companies with shares publicly traded on stock exchanges; in this way ownership and control of a relatively few enormous corporate conglomerates can be spread out amongst a much larger number of capitalists and companies. The significance of the tendency to generalized extraction of relative surplus-value in a developing capitalism lies in the fact that it greatly accelerates the tendency to the growing organiccomposition of capital (ie. increasing proportion or ratio of constant capital to variable capital) and to the increasing concentration of capital into fewer but larger units. These tendencies are permanent and irreversible.

This acceleration of the development of capital also leads, naturally enough, to the increasing significance of the contradictions of capital, of those factors which plunge capital into periodic crises (of the sort Marx analyzed in Capital). And as the number of capitals decrease while their size and scale increase, these crises become more and more devastating to the continued reproduction and expansion of capital as a totality. ";From the moment ... when fixed capital [ie. the means of production] has developed to a certain extent -- and this extent, as we indicated, is the measure of the development of large industry generally -- ... from this moment on, every interruption of the production process acts as a direct reduction of capital itself, of its initial value .... Hence, the greater the scale on which fixed capital develops ... the more does the continuity of the production process or the constant flow of reproduction become an externally compelling condition for the mode of production founded on capital" (Marx, Grundrisse, p.703; as quoted by Mac Intosh in "State Capitalism", IP #7, p.22). This is because: "The value of fixed capital is reproduced only insofar as it is used up in the production process. Through disuse it loses its use value without its [exchange-] value passing on to the product" (ibid.). Lost production time is lost value for fixed capital because that time can never be 'made up'; new technological developments will demand the replacement of that fixed value (or part of it) at a fixed point in time: when the forces of competition demand it. This demands increasing efforts by the capitalist class as a whole to combat and suppress the growing threat of the crisis factors in the further reproduction and accumulation of capital. Along with the increasing concentration of capital, this greatly accelerates a tendency to the increasing concentration and unification of the capitalist CLASS.

Next, it must be understood that the nation-state is the legal-political framework of the development of capital. The capitalist class is a national class in every case and the nation state represents the unification and shared interests of the entire bourgeoisie of the nation. It is the only means by which the class as a whole can impose rules of operation and discipline on itself as a totality, as well as upon the whole society (all the classes and strata) under its domination. By conquering state power, through their bourgeois revolutions over the pre-existing feudal-aristocratic regimes, the newly arisen national bourgeois classes were able to preserve, defend and extend their property in its particular bourgeois form, with laws regulating orderly and "fair" exchange of commodities, enforcing contracts, etc. within the nation, and to defend the national interest of the whole national capitalist class against the "foreign"; interests of other states and pillaging gangs.

As capital develops on an essentially national axis or basis, the growth of the scale of production and of the concentration of capital tends to meet its limits at the level of the nation.(Although the formation and continued existence of multi-national or transnational corporations, particularly since WWII, proves that these limits are not insuperable, we are dealing here with capital in its historical development, especially the period from the bourgeois revolutions to roughly the middle of the 20th century.) This growth and concentration of capital leads, in every case, to the formation of a more or less unified national capital in every country, with the state being the primary means to defend and develop this total capital. And as capital's crisis-factors become increasingly problematic for entire national capitals, the state becomes increasingly the only means by which to combat and suppress these contradictions. (Remember that these crises are those of an expanding, ascendant capitalism, not of decadent capital mired in permanent crisis.) The state comes to take in hand all the tasks which national capitals are forced to undertake in order to 'manage' these contradictions, to prevent the interruption of the overall valorization and reproduction processes of the national capital as a totality.

Besides the crisis-factors which increasingly pose difficulties for capital in its period of development and expansion (up to 1914), there are other contradictions which increasingly come to threaten the continued smooth functioning of national capitals, further necessitating the increasing power of the state over all of bourgeois society. As capital tends to unify itself on the national level into one national capital, the bourgeoisie, previously divided into factions and having real differences between each other, tends to come together into a more or less unified class in opposition to the growing threat posed by the associated working class -- a specific product of capital as it develops its real domination over labour -- becoming increasingly organized, militant, and conscious of its shared interests and of the irremediable opposition of their interests to those of capital and its ruling class. This truth applies particularly to the period of the First and Second Internationals (1864-1914). Increasingly the differences between the different factions of the bourgeoisie of a nation are minimized, while coming to the fore in their political preoccupations we find: (1) how to combat the growing problem of crises and the underlying factors which inevitably give rise to them in a developing capitalist economy; (2) how to best defend the national interest on the international plane, economically, politically, and ultimately militarily; and (3) how to best execute the class war as a really united class, to continue its domination, control, and containment of all other classes and strata of its society, first and foremost, the proletariat.

As has been noted, the generalization of the extraction of relative surplus-value involves productive technology coming increasingly to dominate first the production process and the producers within it directly, and then, indirectly, more or less the whole of capitalist society. The role of science in this development steadily comes to the fore. Science increasingly becomes a means for capital to expand itself, to valorize itself to the greatest extent practicable. Science and technological research and development become increasingly impregnated by capital, by its interests and concerns. As productive forces -- or, alternatively, as central factors in the development of modern productive forces -- capital takes hold of science and technological research and transforms them into its own image, indelibly stamping them with its own logic and imperatives. (Foremost among these imperatives, as Marx pointed out in Results of the Immediate Process of Production, are the continued and expanded production of surplus-value and the the continued reproduction of capitalistrelations of production, in particular, that of wage-labour.) Certainly, seperate capital units come to employ more and more scientists and technicians involved in research specifically concerned with the problems and tasks confronting those capitals in their quest to remain competitive with other capitals, first on the national market, then on the world markets. However, it is the state which directs the overall process of the development of science generally within capitalist society, through its universities, academies, 'national science councils', and research institutions, etc.(thereby determining the direction and aims of the research carried out under the auspices of these institutions). The 'impartiality' of the state (from the standpoint of the bourgeoisie) is what permits the various capital units and bourgeois factions with differing research and development concerns to entrust to the state this role of overall director. In this way the state comes increasingly to identify itself with the interests of the technical advancement and development of its national capital as a whole.

As productive technology comes increasingly to dominate production and its producers, and as capital increasingly concentrates into larger units, the greater is the need felt -- by the bourgeoisie in general -- for the increasing participation or intervention of the state in the construction of the infrastructure required by new technological developments for the functioning of a 'modern industrial capital'. Thus the development of the steam engine train led to the need for the state to develop a unified national rail system in the then most developed economies. The development of electrical power led to the construction by the state (in a number of the then most economically developed countries) of a series of dams and hydro-electric power plants. Similarly, with the development of the automobile, the state undertook the task of building a national system of roadways and bridges. The state didn't undertake these massive projects and enterprises for the 'good of the people', but rather because their national capitals demanded it -- that is, the competition for dominance on the international markets demanded it of them. Clearly, then, the transition to the real domination of capital led directly to the increasing role of the state in the overall development of its national capital, of the national economy.

One reason for the necessary recourse to state 'intervention' in the economy -- in business concerns which the bourgeoisie would like everyone to believe are strictly private concerns -- is that the sheer size and scale of technological modifications demanded by international competition represent in value terms an increasingly unsustainable burden on the particular capitals undertaking these modifications (and the tendency for the average rate of profit to fall plays a role here); as a result, the assistance and support of the state in assuring the completion of these modifications is required. The investments demanded by the need to continue the reproduction and accumulation process and remain competitive on world markets (in other words, with reference to capitals from other nations) become too large for the separate capitals themselves to make on their own. Without the state's backing, these investments would not be realizable, and the productive forces would not develop, but, instead, stagnate; and the result would be massive crises, with the largest capitals going bankrupt, and full-scale depression sure to follow. Marx provides us with the explanation for this increasing scale of investment required in the development of new, more powerful means of production under the capitalist mode of production: "Productivity of labour in general = the maximum of profit with the minimum of work.... This becomes a law, independent of the will of the individual capitalist. And this law only becomes reality because instead of the scale of production being controlled by existing needs, the quantity of products made is determined by the constantly increasing scale of production dictated by the mode of production itself. Its aim is that the individual product should contain as much unpaid labour as possible, and this is achieved only by producing for the sake of production." (Results of the Immediate Process of Production, p.1037-38) As a result: "...a definite and constantly growing minimumamountof capital is both the necessary precondition and the constant result of the specifically capitalist mode of production [which, for Marx = the real domination of capital]....The minimum amount of capital in an industry increases in proportion to its penetration by capitalist methods and the growth in the social productivity of labour within it." (ibid., p.1035)

Now, as productive technology comes to increasingly dominate the production process -- at the expense of the living labourer -- the nature of productive labour itself is transformed. Increasingly technified production demands an increasingly technified labour force to operate , maintain and develop such production processes. According to Marx: under the real domination of capital, "...labour-powersocially combined and the various competing labour-powers which together form the entire production machine participate in very different ways in...creating the product....If we consider the aggregate worker, i.e. if we take all the members comprising the workshop together, then we see that their combined activity results materially in an aggregate product....And here it is quite immaterial whether the job of a particular worker is at a greater or smaller distance from the actual manual labour."; (ibid., p.1040) In the era of real domination, when the 'workshop' comes to extend itself out to the scale of the whole nation (and eventually beyond), the state is indisputably the only organ capable of taking on the tasks of forming and maintaining this aggregate workforce, of supplying its education and training -- including its technical education and training -- its healthcare and 'social security', in a word, its continued reproduction as the workforce specifically demanded by the needs of its national capital. As real domination continues to develop, and as capital extends the division of labour in the production process, productive labour increasingly becomes a matter of specialisation and 'skill', i.e. a form of labour which demands increasing levels of education and training for its adequate performance -- as determined by the needs of capital, of course. Consequently, the importance of the role played by the state in assuring such a work force for its national capital tends to increase together with the level of development reached by that capital itself.

Of course, part and parcel of of the 'education' of this aggregate workforce of the nation is capital's ideological domination and control of it. As the state identifies its interests increasingly with those of the aggregate capital of its nation, and as we noted above, foremost among these interests is the continued reproduction of capitalist social relations, especially that of wage-labour; and, at the same time, as the working class increases its consciousness of its collective antagonism to capitalist social relations, above all to wage-labour, the state increasingly intensifies its efforts at, while at the same time perfecting its means to, effect this ideological control. And with the development of increasingly powerful technologies -- which is the hallmark of the real domination of capital --the state, with the full co-operation of (more or less) the whole national capital, develops increasingly powerful technologies specifically geared to the ideological control of the aggregate work force and, indeed, of the entire poulation. The state takes hold of these technologies (whether they were first developed in the 'private sector' or the 'state sector'), and transforms them incessantly into means of ever more powerful ideological and political domination. We may call what the state develops in this way the forces of social conditioning and control. Through the confluence of the state's assuming overall leadership of the national capital, the development of ever more powerful forces of social conditioning and control (including those concerned with 'thought control' or 'mind control' or 'brainwashing'), and the need to keep the modern, 'highly educated', workforce, as well as other segments of the population, under its total control, the modern bureaucratic state becomes increasingly TOTALITARIAN in its domination of the whole modern society, mirroring the real doination of capital over labour. This control is absolutely essential to the maintenance and continued reproduction of the specifically capitalist relations of production, and to the most efficient possible expansion of exchange-value for the whole integrated national capital.

The generalization of the extraction of relative surplus-value directly implies the increasing relative diminution of variable capital, that is, of the value of labour- power compared to total capital. This relative diminution applies to the aggregate labour-power of the aggregate work force in relation to the aggregate (national) capital to which it (the work force) is subordinated. In Marx's terms, v increasingly diminishes relative to c + s . But this diminution depends on the actual price of labour-power remaining at or close to its real value in the overall process of capitalist valorization. (One factor that comes into play in this equation is inflation, which in the 20th century is a product of, more than anything else, the state's taxation of wages and consumer commodities and its creation of massive quantities of fictitious capital.) However, conditions on the labour markets -- e.g. a shortage of skilled labour or a general militance of workers in negotiating the terms of the sale of their labour-power -- may lead to a significant rise in the price of labour-power above its real value; thus causing a fall in the rate and mass of surplus-value which capital is able to extract from its work force. Once again, the state is the means of last and best resort to rectify this situation. Taking control of the increasingly massive and highly bureaucratized trade unions -- which were originally actually under the control of their members -- is the primary means by which the state accomplishes this task. From the late 19th century onwards, the most developed states began a process of gradual absorption of the largest, most powerful trade unions and labour federations. The state came increasingly to control and manipulate these organizations, by way of its various means of coercion and intimidation, leading to an interlinking approaching a fusion of the two organizations' bureaucracies. Union bureaucrats and the roles they play in their organizations become increasingly indistinguishable from bureaucrats in the 'state' and the 'private' sector. Instead of engaging in an open permanent struggle to the death with the state, these unions and federations -- having from the beginning no purpose other than the sale of socialized labour-power to capital -- succumbed to the domination of the state to become organs of management and containment over the working class.

A NOTE ON THE REAL DOMINATION OF CAPITAL AND THE MODERN BUREAUCRATIC STATE

In his essay "Reification and the Consciousness of the Proletariat", Georg Lucaks provides us with a number of insights pertinent to a comprehensive understanding of how the transition to the real domination of a capital (a concept Lucaks never explicitly refers to, and which he was apparently unaware of in the works of Marx) leads to the modern totalitarian capitalist state. On the phenomenon of modern capitalist bureaucracy, Lucaks begins from an insightful quotation from the bourgeois sociologist Max Weber: "The modern capitalist concern is based above all on calculation. It requires for its survival a system of justice and an administration whose workings can be rationally calculated, atleast in principle, according to fixed general laws, just as the probable performance of a machine can be calculated....What is specific to modern capitalism...is...the strictly rational organisation of work on the basis of rational technology.... For these modern businesses with their fixed capital and their exact calculations are much too sensitive to legal and administrative irrationalities. They could only come into being in the modern bureaucratic state with its rational laws...." (p.96, History and Class Consciousness). Of course, Weber, being a positivist bourgeois sociologist, was incapable of appreciating the dialectical relationship between capital and the state; of how, equally, with the latter thesis asserted in the above quote, the modern bureaucratic state could only come into being within a social order increasingly rationalized, mechanized, and (bureaucratically) planned -- "calculated" in Weber's words -- as a result of the increasing incorporation of science and scientific methods within the production and accumulation processes of capital -- in a word, as a result of the transition to the real domination of capital.

Permit me to quote Lucaks' reflections on these relationships at length: First: "There arises a rational systematisation of all statutes regulating life, which represents, or atleast tends towards a closed system applicable to all possible and imaginable cases....the legal [and administrative] system is formally capable of being generalised so as to relate to every possible situation in life and it is susceptible to prediction and calculation." (ibid.)

Then: "Bureaucracy implies the adjustment of one's way of life, mode of work and hence of consciousness, to the general socio-economic premises of the capitalist economy, similar to that which we observed in the case of the worker in particular business concerns. The formal standardisation of justice, the state, the civil service, etc., signifies objectively and factually a comparable reduction of all social functions to their elements, a comparable search for the rational formal laws of these carefully segregated partial systems....This results in an inhuman, standardised division of labour analogous to that which we have found in industry on the technological and mechanical plane."

"It is not only a question of the completely mechanical, 'mindless' work of the lower echelons of the bureaucracy which bears such an extraordinarily close resemblance to operating a machine and which often surpasses it in sterility and uniformity. It is also a question, on the one hand, of the way in which objectively all issues are subjected to an increasingly formal and standardised treatment and in which there is an ever-increasing remoteness from the the qualitative and material essence of the 'things' to which bureaucratic activity pertains. On the other hand, there is an even more monstrous intensification of the one-sided specialisation which represents such a violation of man's humanity. Marx's comment on factory work that 'the individual, himself divided, is transformed into the automatic mechanism of a partial labour' and is thus 'crippled to the point of abnormality' is relevant here too. And it becomes all the more clear, the more elevated, advanced, and 'intellectual' is the attainment exacted by the division of labour." (ibid., pp.98-99)

As science and scientific methods become increasingly incorporated into the functioning of capital, so too do they become increasingly incorporated into the functioning of the capitalist state. And these methods, along with the increasingly powerful technological means at their disposal, tend to permit the modern capitalist state to wield increasing power over the functioning of the whole of its society. In a word, they tend to give rise to the conditions which permit the development of the specifically capitalist modern totalitarian state.

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Note: This text was written by one of two people who were discussing the basic programmatic text of the group Internationalist Perspective, "Reference Points: The World As We See It" published in 1994.