The Nature of Russian State Capitalism (1985)

From the November 1985 issue of the Socialist Standard

A few months before the outbreak of the Second World War was published in Paris, in an edition of 500, a book entitled La bureaucratisation du monde. Its author was Bruno Rizzi (who identified himself simply as “Bruno R.”), an Italian travelling salesman who had come to Paris from Milan in 1938. Rizzi had at one time been a member of the Italian Communist Party and was a Trotskyist sympathiser without ever being a member of any Trotskyist organisation.

This book, despite being frequently referred to in all Marxist discussions on the nature of Russian society, has only just become available in English with the publication of a translation of its first part under the title The Bureaucratisation of the World. The USSR: Bureaucratic Collectivism, with a useful and informative introduction by Adam Westoby (Tavistock Publications, £9.95).

The book’s main theme was that capitalism was being replaced throughout the world by a new social system called “bureaucratic collectivism”. This was, like capitalism, a class-divided society based on the exploitation of the producers but one in which the capitalists had been replaced as the exploiting class by a bureaucracy which collectively owned the means of production through the State. Thus Rizzi argued:

  Class ownership, which in Russia is a fact, is quite certainly not registered with notaries, nor in the most detailed of surveys. The new exploiting Soviet class had no need of such things. It holds state power and that is worth much more than the old records of the bourgeoisie. It guards its property with machine guns, with which its all-powerful oppressive apparatus is well supplied, and not with legal scribblings (p.64). 

  In the USSR, in our view, it is the bureaucrats who are the owners, for it is they who hold power in their hands. It is they who manage the economy, just as was normal with the bourgeoisie. It is they who take the profits, just as do all exploiting classes, who fix wages and prices. I repeat – it is the bureaucrats. The workers count for nothing in the governing of society. And what is still worse, they have nothing to do with the defence of this peculiar nationalised property. Russian workers are still exploited, and it is the bureaucrats who exploit them (p.69). 

  In Soviet society the exploiters do not appropriate surplus value directly, as the capitalist pockets the dividends from his enterprise, they do it indirectly, through the state, which appropriates the whole national surplus value and then distributes it amongst its own functionaries. A good part of the bureaucracy, that is to say technicians, directors, specialists, stakhanovites, profiteers, etc is authorised, in one way or another, to exact its high salaries directly within the enterprises they control. Over and above this they also enjoy, as do all bureaucrats, state services, provided out of surplus value, and in the USSR these services are both numerous and important, as befits the pattern of ‘socialist’ life (p.75).

The transition to Bureaucratic Collectivism, said Rizzi, had been completed in Russia, was well on the way to completion in Nazi Germany and Fascist Italy and had also begun in the old capitalist democracies with measures such as the New Deal in America.

A copy of the book was sent to Trotsky in Mexico. What interested him was not so much the characterisation of Russia as a new class society – which he did not accept since he always considered Russia to be a “Workers’ State”, a degenerate one, but a “Workers’ State” nevertheless – as Rizzi’s analysis of what might happen if, with capitalism in decay, the working class should fail to establish socialism. Trotsky regarded such a failure as a remote theoretical possibility only, but conceded that, in that event, the Trotskyist movement would have to revise its political perspectives because it would be faced with the prospect of defunct capitalism being replaced by the new bureaucratic class society described by Rizzi. As the working class did fail to establish socialism after the Second World War Trotsky was committed to revising his analysis of, among other things, Russia and it can be plausibly argued that, had he not been murdered by Stalin’s agents in 1940, he would have come to regard Russia as “bureaucratic collectivism”.

The idea that Russia under Stalin was pro-working class was so patently absurd that, towards the end of the Thirties, it began to be challenged even within the Trotskyist movement. In France Yvan Craipeau suggested that Russia might be some new class society with the bureaucracy as the collective owning and exploiting class. In America James Burnham argued that, although Russia was not capitalist, it could not be described as a “Workers’ State” either. Rizzi followed, and took part in the French Trotskyists’ discussion of this issue and clearly derived many of his ideas and arguments from it.

The discussion was particularly acrimonious in the American Trotskyist Party where it came to a head over the related issue of “unconditional defence of the USSR” (which is of course a logical consequence of attributing some working class character to the Russian State). Burnham, Max Shachtman and the others who rejected this slogan were, with Trotsky’s approval, expelled from the Trotskyist movement in 1940.

Burnham, disillusioned with Trotskyism, went on to write his best-seller The Managerial Revolution, which first appeared in 1941, where he argued that the capitalists were everywhere being replaced as the ruling class by the managers. Shachtman and his supporters, on the other hand, continued to regard themselves as Trotskyists and founded a new organisation, the Workers’ Party, which, despite a minority led by Raya Dunayevskaya and C.L.R. James which came to regard Russia as state capitalist, adopted as its official policy the view that what existed in Russia was neither capitalism nor socialism, but bureaucratic collectivism. The Workers’ Party, which later changed its name to the Independent Socialist League, continued to exist as an independent organisation committed to the bureaucratic analysis of Russia until 1958.

Many have claimed that Burnham plagiarised Rizzi, a view endorsed by Rizzi himself. Certainly Burnham, like Rizzi, saw the world, led by Stalinist Russia, Nazi Germany and Fascist Italy, evolving towards a new class society based on State ownership where the workers exploited by a class which owned and controlled the production. On the other hand, there is no evidence that Burnham ever read La bureaucratisation du monde; he may have done in the unlikely event of Trotsky having lent him his copy, but it is much more probable that he learned of Rizzi’s theory through the references to it in Trotsky’s articles and letters.

Trotsky, we have noted, had dealt with the theoretical possibility of what might happen if, with capitalism in decay, the working class failed to establish and had conceded that Rizzi would be right: the world would be heading towards Bureaucratic Collectivism. Burnham, who in his disillusionment had come to the working class as incapable of establishing socialism, merely drew a logical conclusion from Trotsky’s admission: the world was heading towards a new class society based on State ownership of the means of production.

Burnham, however, called this new society “managerial society” and not “bureaucratic collectivism”. This is significant and a reason for concluding that Burnham did not simply plagiarise Rizzi. For Burnham rejected the term “bureaucratic collectivism” precisely because he held that the new ruling class would not be the political bureaucrats but rather the industrial managers, who were directly involved in production. In the final chapter of his book he distinguished his theory from what he called “the similar theory of the bureaucratic revolution”, a reference to theories such as Rizzi’s. Further, Burnham had suggested that Russia might be some sort of “non-bourgeois, non-proletarian State” before Rizzi wrote his book. For he is the B of the “Comrades B and C” referred to by Rizzi at the beginning of Chapter II.

There is another important difference between the theories of Burnham and Rizzi, At the end of Chapter VII, Rizzi suggests that the orthodox Trotskyists should drink the cup of bitterness to the last dregs and recognise that Stalinist Russia was not a “Workers’ State”. But he did not himself drink the cup to the last dreg since he continued to regard the Russian revolution as a proletarian one. Burnham, on the other hand, had no hesitation in declaring: “The Russian revolution was not a socialist revolution . . . but a managerial revolution” (The Managerial Revolution, 1945, p,185).

This is a much more logical position for those who hold Russia to be a class society (whether managerial, bureaucratic collectivist or state capitalist) to adopt – and much more in accord with the Marxist method of judging historical events by their practical outcome instead of by what their participants said they were doing – since it makes the revolution which overthrew the old ruling class part of the process of the rise of the new ruling class.

Rizzi could have made a better case for having been plagiarised by Shachtman who adopted his view of Russia, including the name “bureaucratic collectivism”, unchanged. But then Shachtman did not agree that Nazi Germany and Fascist Italy were bureaucratic collectivist or that the whole world was evolving in such a direction.

The fact is that Rizzi, Burnham, Shachtman, Dunayevskaya, James and the others drew their ideas from a common pool provided by the discussion in the Trotskyist movement on “the nature of the Soviet State”. In this discussion all sorts of ideas were put forward even if only to be rejected by those who brought them up: that the bureaucracy was a class; that Russia was state capitalist; that a class could own without legal property titles; that Stalinist Russia and Nazi Germany had the same social system . . . In these circumstances it is quite out of place for one of the participants to claim that he was plagiarised by another. Rizzi can however be allowed to regard himself as the originator of the term “bureaucratic collectivism”.

In any event, “the theory of the bureaucratic revolution” was proved wrong. It is now more than a generation since both Rizzi’s and Burnham’s books were written, but the capitalist class in the West are as firmly established as ever and show no signs of being ousted by industrial managers or a political bureaucracy. Certainly the Russian system has spread to Eastern Europe and China and to a number of countries in Africa, Asia and Latin America, but the question here is whether the system in Russia can really be regarded as a new, non-capitalist exploiting society.

It is true that in Russia the exploiting class collectively own the means of production and do not have legal property titles to it, and in this respect they do differ from the capitalist class of the West. But, to use a phrase of Marx’s which comes up in Rizzi’s book, this does not necessarily mean that “the specific economic form in which unpaid surplus labour is pumped out of the direct producers” is different. In fact it is basically the same: the producers are separated from the means of production and, in order to live, are forced to sell their labour-power for a wage or salary. In the course of their work they create, over and above the value of their labour power, a surplus value which is realised when the commodities in which it is embodied are sold. Thus in Russia, as in the West, the working class are exploited through the wages system. All the other features and categories of capitalism also exist in Russia: commodity production, value, profits, capital accumulation, and so on. The difference – in the form of ownership but not of exploitation – between Russia and capitalism in the West is best indicated by referring to Russia as State capitalism.

That there is, and has been, a continuous trend towards state capitalism all over the world is undeniable. This has taken place not only in the underdeveloped countries where various groups controlling State power (army officers, party leaders, nationalist intellectuals) have substituted themselves for weak or non-existent private capitalists in the process of primitive capital accumulation (as, indeed, the Bolsheviks had been forced to do in Russia). It has also taken place in the developed capitalist countries where the State has more and more intervened to organise national capital for the struggle for a share of the world market. In this sense Rizzi and Burnham did correctly identify a trend, but they analysed it wrongly. What they saw as a struggle between the old capitalist class and a “new class” was in fact the continuation of the tendency seen by Marx towards the centralisation of production under capitalism, a tendency which makes the private capitalist more and more obviously superfluous.

Supporters and opponents alike often mistakenly analyse this tendency towards state capitalism as socialist. Indeed, as a result of years of misuse the word “socialism” has now virtually come to mean “state capitalism” for most people. But socialism must be clearly distinguished from State capitalism otherwise the working class will be intervening on the political scene only to support State capital against private capital, just as in the last century they intervened to support the industrial capitalists against the landed aristocracy. Socialism means a system of society based on the common ownership and democratic control of the means of production by and in the interests of society as a whole. While State capitalism retains all the features and categories of the capitalist economy – the wages system, commodity production, profits, money, banks socialism abolishes them. Socialism is opposed to both private and State capitalism and alone is in the interests of the working class.

Adam Buick