Letter to the Editors from the October 1965 issue of the Socialist Standard
From reading the national press it appears that the term “State Capitalist” will become an accepted phrase when applied, for example, to the contemporary Russian and Chinese economic systems. Am I justified in assuming that the SPGB were the first to apply the theory of State Capitalism to Soviet Russia in me 1920’s? Can you tell me something about the origin of the term; e.g. where the credit lies for first developing this theory.
The Socialist Party would not wish to claim what is not our due. As a matter of fact the Bolshevik’s themselves were the first to apply the term “state capitalism" to Soviet Russia.
Lenin first used the term in 1918 to describe the only policy that a “proletarian state" could pursue in the circumstances. He took as his model the war-time system of controls which had been built up in Germany whereby the State assumed large powers to control capitalist industry in the interests of the war effort. Lenin held that in Russia capitalist industry could be similarly controlled but in the interests of the mass of workers and peasants. He knew that Socialism was impossible in Russia because the economic basis for it, large-scale social production, hardly existed. A policy of State Capitalism, or the development of the large-scale social production of capitalism under the control of the “proletarian state”, was all that could be done. Lenin admitted this openly when introducing plans for the New Economic Policy in 1920. This policy of State Capitalism upset the more Utopian and simple elements among the Bolsheviks who both in 1918 and in 1920 denounced the “betrayal” and “retreat” which they claimed this policy represented.
Although this is open to debate, Lenin seems to have regarded the socialist aspect of Soviet Russia to lie not in the economic field but in the political, in the control of State power by the Bolshevik party, the “vanguard” of the working class. It is true however that on occasions he did refer to the “socialist industries” of Russia.
In the disputes in the Bolshevik party which followed Lenin’s death in 1924 this ambiguous position was used by both sides. At the XIVth Party Congress in December 1925 and in a book, Leninism, Zinoviev went so far as to claim that the nationalised industries in Russia were not socialist but were state capitalist; in other words that the workers who were employed in the State trusts were still exploited. Stalin opposed this insisting that these industries were socialist. Trotsky too rejected Zinoviev’s views.
It can thus be seen that the term “state capitalism” was in frequent use, and not necessarily as a term of criticism, in the early discussions of the victorious Bolshevik party. After the final triumph of the group led by Stalin and the suppression of free discussion in the party altogether the term became unacceptable. In 1928 began the “era of socialist construction” ending in 1936 with the proclamation of “socialism” in Russia.
Dissident Bolsheviks of all kinds insisted on the “state capitalist" label against the claims of the Stalinist majority though the largest group of them, the Trotskyists, never did accept this argument. Trotsky held that the trouble was mainly political; the loss of political power by the working class to the bureaucracy represented by Stalin. This however did not alter the fact that the "socialist" basis of the economy still existed in the nationalised industries.
The Socialist Party operating in Britain faced a different situation. Many of the admirers of Soviet Russia in Britain were not equipped with the Marxian knowledge of men like Lenin, Trotsky and Zinoviev; they talked about “socialism" as if it already existed in Russia; all sorts of extravagant claims as to what the Bolsheviks had done or could do were made. In this situation the Socialist Party used its Marxian knowledge to bring home a few basic facts: Socialism was not possible in Russia; whatever the Bolsheviks could do to help the working class in Russia (and they did do something at least at the beginning) they could not introduce Socialism; neither the material (social production) nor the intellectual (a socialist working class) prerequisites of Socialism existed in Russia. Only Capitalism was possible.
The first reference to state capitalism in our journal, the Socialist Standard, was in July 1920 in a discussion of Lenin's pamphlet, The Chief Task of Our Times. Lenin’s admission in this pamphlet that Socialism was a long way off in Russia and that the capitalist stage of economic development would have to come first in the form of State Capitalism was seen as a complete vindication of the position the Socialist Party had maintained from the beginning.
We also denied the claim of the Bolsheviks that they had established a “proletarian state" or a “socialist republic”. Their rule was not, as they claimed, equivalent to that of the working class. The Bolshevik party was supported by only a minority of the working class, let alone of the population as a whole, and maintained itself in power by undemocratic means such as the suppression of other parties and their journals and the jailing of opponents; a fact which was to have a significant effect on the subsequent evolution of the regime in Russia.
From its foundation in 1904 the Socialist Party maintained that nationalised institutions like the Post Office were examples not of socialism but rather of state capitalism.
Thus we had no difficulty—or hesitation—in pointing out the state capitalist nature also of the nationalised industries in Russia. When in the 1930's this sector was greatly extended and the whole system labelled “socialism", our reply was to deny this and describe the whole system as “state capitalism".
Even if the Socialist Party was not the first to use the term we do feel that we deserve credit for developing a coherent theory of what was possible in Russia and for consistently standing by it—to be proved correct by events. In the 20's. 30's and 40's, despite the unpopularity of our position, we were the only organization in Britain to point out the real nature of what was called socialism in Russia. As such we became the scourge of the so-called Communist Party and its fellow travellers.
In recent years, it is true, the state capitalist designation has become more widely accepted but without any recognition of the pioneer work we have done in developing this theory or, unfortunately, any understanding of the lessons of what happened in Russia.