From the February 1994 issue of the Socialist Standard
The demise of national state capitalism as a credible political programme doesn’t affect the case for genuine socialism.
When the Berlin Wall came down in 1989 the American political thinker Francis Fukuyama proclaimed "the end of history". History, he argued, had now come to an end with the establishment over most of the world of a society based on a free market and liberal democracy. Apparently, this was the goal towards which we humans had been travelling ever since we first came down from the trees.
That a money-grubbing rat race run by businessmen and career politicians was the rational society to which some 19th century philosophers had thought History (with a capital H) was heading was never really a serious proposition. How could a society where some are privileged while others are deprived, and geared to making profits rather than meeting needs, even be considered as a possible rational society?
Unfortunately for Fukuyama, at about the same time that the Berlin Wall came down the world capitalist economy entered its third, and deepest, slump in the relatively short twenty-year period since the long post-war boom came to an end in the early 1970s. Factories were closed, machinery was scrapped, food was dumped, millions more workers joined the ranks of the unemployed. Not because people’s needs for what these workers could produce had been met. but because the rate of profit had fallen. The supposedly rational market economy had once again created the irrational situation of poverty amidst potential plenty, of idle factories and workers alongside unmet needs even for basics like housing, food and health care.
In Russia the achievement of Fukuyama’s "end of history" has brought about the emergence as a serious contender for political power of a Hitler-type demagogue. As in Germany in the 1920s and 1930s the aggravated failure of the market economy to deliver what it promised has led to people blaming not capitalism but the liberal democracy that Fukuyama sees as its ideal political framework.
Fukuyama’s "end of history" claim was an expression of the triumphalism of capitalism's intellectual apologists over what they saw as the defeat of socialism, their main ideological enemy. But it wasn’t. What had been defeated was not real socialism but a version of capitalism in which the state was all-powerful. Totalitarian state capitalism not socialism. Unfortunately, two generations of propaganda, by opponents and supporters alike, has misled many into identifying socialism with the old regime in Russia. As a result there is a widespread popular misconception that the collapse of totalitarian state capitalism in Russia represented the collapse of socialism.
The mistaken idea that socialism had collapsed was reinforced by parties in the West such as the Labour Party abandoning their paper commitment to achieving a state-run economy by democratic and constitutional means rather than the dictatorial ones used in Russia. They gave up proposing this even in theory as an alternative to the market economy and in fact accept the Fukuyama thesis that there is no rational alternative to the market. With the collapse of totalitarian "socialism" in Russia and of democratic ’’socialism" in the West no wonder the ideologists of capitalism felt so self satisfied and triumphalist.
There has indeed been a shift of opinion but the shift has been against the project of a state-run national economy as a solution to the problems created by capitalism. Which, if it had not been perceived as the rejection of socialism, we could wholeheartedly welcome. Since, for us, a state-run economy has never been the goal, has never been what we meant by socialism nor what we have seen as the alternative to capitalism. In fact, far from being an alternative to capitalism it was in our view merely a different, and not particularly desirable, way of running capitalism.
We have always held that socialism could not be established just within the framework of a single state, but only on a world basis. This was not because "socialism in one country" was necessarily a bad aim in itself, but because the development of a world economy under capitalism had made it a practical impossibility. Once capitalism had become an economic system dominating the whole world — as it did in the age of imperialism that culminated in the significantly named first world war — then the only kind of socialism that was possible was a world socialism.
Even within the context of world socialism we did not see a role for states, certainly not as coercive political institutions but not in the economic sphere either. There would indeed be a need for administrative and decision-making bodies at what today is called the national level, but these would not be "states” in the sense of a body exerting coercive political authority over a territory and its inhabitants. They would not be institutions ruling over people with the coercive force to impose their own will, but would be part of the institutional structure that would allow people to participate on an equal basis in the democratic running of their common affairs including the production and distribution of wealth. In short, genuine democratic control would replace rule by states.
The association of a state-run national economy with the idea of socialism has been one of the greatest illusions of the 20th century. Despite the protests of genuine Socialists like ourselves the word socialism came to be used to describe what was a real enough development in the capitalist economy: the increasing role of states in its operation at national level. The correct term for this would have been "state capitalism".
Now further developments within the world capitalist economy (the emergence since the last world war of a global manufacturing system dependent on the world market both for its inputs and its sales) are to a certain extent reversing this trend by limiting the scope for the state direction of the economy, and people are talking about the "end” or the “decline” or the "irrelevance” of socialism.
But this demise of national state capitalism as a credible political programme doesn’t affect the case for genuine socialism. It does not mean that all we are left with, as the way of organizing the production and distribution of goods and services, is private enterprise, free market capitalism. Socialism — real socialism — is still on the agenda and, as a classless community of free and equal men and women cooperating to produce what they need on the basis of the common ownership and democratic control of the world’s productive resources, has a much better claim to being the rational society the 19th century philosophers hoped would be the goal which human history was moving towards.