Debating the significance of the state sector in the transition to socialism


by Joseph Green
(from Communist Voice #22,. October 9, 1999)

. The bourgeois economists say that all state ownership is socialist, and that even various market economies in Western Europe are partially "socialist" according to how much state industry and welfare measures they have. The Stalinist and other state-capitalist regimes called themselves "socialist" and said that their nationalized industry overcame the ills of capitalism. Trotskyist groups criticize this or that aspect of the regimes in China, Cuba, Yugoslavia or, yesterday, the Soviet Union. But most of them advocate that the nationalized industry shows that the economic base of these regimes is essentially socialist, so that they are "deformed workers' states".Communist Voice, on the contrary, holds that Marxist communism has nothing to do with the promotion of illusions in the state-capitalism which has been so rampant in the 20th century.The extensive nationalization in the state-capitalist regimes and the large state sector of various Western capitalist countries do not make these countries partially socialist. Both the working class and the bourgeoisie make use of nationalization in their own ways. so that only some types of nationalization help move a country towards socialism.

. Thus the question arises: what distinguishes the nationalization that takes place as the working class, after taking power in a revolution, strives to move towards socialism (in what could be called a "transitional economy"), and the large state sectors so evident in advanced capitalist countries today (even during the era of privatization)? What is the nature of the state sector in a revolutionary regime which has overthrown the old capitalist class but still hasn't achieved a classless society? Is the only difference between a transitional economy and state-capitalism who heads the government? Or does the state sector in a transitional economy amount to state capitalism, but not the type in Cuba, China, etc.? Or is it something economically distinct from state capitalism?

. A debate over such issues broke out among the people around the Communist Voice Organization, the organization that publishes Communist Voice. It began after publication of an article denouncing the influential economic theories of Yevgeny Preobrazhensky, a Soviet economist of the 1920s and early 30s. CVO circles contain not just CVO members, but also other people interested in the issues being discussed. One of them, Sal in Seattle, had earlier objected to the anti-revisionist agitation of the CVO about Cuba, claiming that the CVO hadn't shown the difference between the state-capitalist Cuban economy and what a real transitional or socialist economy would look like, and that the economic difference between capitalism and socialism was basically just private ownership or state ownership. Later Communist Voice carried a series of articles by Mark on the Cuban economy showing that it still had anarchy of production, even in its state sector. Articles on the Soviet Union by me and on China by Pete Brown showed a similar anarchy of production there. Then last year, my two-part critique of Preobrazhensky's theorizing on the state sector appeared in Communist Voice. (1) Preobrazhensky, the main Trotskyist economist theorist in the 20s, advocated that the Soviet state sector was inherently socialist in and of itself. The old bourgeoisie had been overthrown, and, according to Preobrazhensky, it was impossible for a new bourgeoisie to arise on the basis of the state sector.This theoretical position has been refuted in practice by the rise of a revisionist bourgeoisie in Stalinist Russia, in Cuba, in China, etc., but my article sought to refute it theoretically.

. The critique of Preobrazhensky resulted in a slowly-developing but wide-ranging discussion.My article showed that Preobrazhensky was wrong to advocate that, despite the rampant buying and selling, commodity production had been abolished in the Soviet state sector.Preobrazhensky's theorizing, if correct, would apply to all economies where the old bourgeoisie had been expropriated. He held that the buying, selling, and profit-making in such a state sector were only surface appearances, chimeras, and not the real, underlying reality. That was why a new bourgeoisie based on control of the state sector supposedly could not arise. Thus there was no danger of a capitalist restoration so long as the state sector was intact. Sal dropped one of Preobrazhensky's theoretical claims -- that the state sector had dispensed with commodity production simply because the old bourgeoisie was gone; indeed, Sal advocated that the state sector and the economy as a whole would be state capitalist for a whole period. But he advocated that this state capitalism and such a state sector were already socialist, thus agreeing with Preobrazhensky's main theory about the state sector. He reiterated his views about the economic difference between capitalism and socialism being basically just private ownership or state ownership. He also agreed with the basic thrust of Preobrazhensky's argument that it was impossible that a bourgeoisie could arise based on exploiting the state sector. He thus closed his eyes to the actual experience of the 20th century. Various CVO members opposed Sal's prettification of revisionist state-capitalism, but there are still varying views among CVO members about the precise economic analysis of the state sector, about how the transitional economy should be characterized, and about the relationship of this transitional economy to commodity production.

. The part of the discussion reproduced in this issue of CV is relevant to such issues as the following:

. (a) Will there be need for special measures such as affirmative action in education in the transitional period between capitalism and communism?

. (b) After the overthrow and expropriation of the old bourgeoisie, can a new bourgeoisie arise based mainly on its control of the state sector? For example, do the ruling elites in Cuba, China, North Korea, etc. constitute ruling classes, or just some cliques of errant bureaucrats?

. (c) Does it make a difference to the nature of the state sector and of the economy whether the working class actually runs it? Or is the matter of whether the workers are really in control simply a political question independent of the class relations in a country and of the fundamental structure of its economy? Moreover, does it suffice, to change the class structure of the state sector, to have a workers' party fill some government ministries and take over some managerial positions, or must the working class develop its mass initiative and increasingly eliminate the existence of a separate managerial stratum?

. (d) Does the buying, selling, and profit-making that must continue during the transitional economy pose a constant threat to pull the economy back towards capitalism, or can the existence of a properly-run state sector sanitize profit-making and make it into simply another tool by which to achieve socially-useful goals? Are there thus "two levels" of profit-making, a bad bourgeois profit-making and a good, proletarian one?

. (e) Does the term "state capitalism under workers' rule" properly describe the economy that exists during a good part of the transitional period?

. In this issue of CV, we carry a part of the debate that begins with Sal's report on a study group meeting of last December, where he objects to how his views were characterized by others. We then proceed to statements by Mark and Pete Brown in reply to Sal. Then Sal gives a comprehensive view of his idea of transition between capitalism and communism. And then I give a lengthy reply which analyzes both the issues of economic content and the terminological issues in the debate.

. Future issues of CV will carry more material relevant to the issues dealt with in this discussion.These issues will not go away in the new millennium. World capitalism goes through swings from privatization to developing state-capitalist institutions. Even today, it is not just privatizing on a world scale, but it is also developing major state institutions to regulate economics, even on a global level. Moreover, as it faces environmental disasters, downswings of the economic cycle, and other issues in the 21st century, it will eventually swing back from neo-liberal orthodoxy to more use of state regulation. What attitude should progressive activists take toward such developments? Should those capitalists and capitalist parties who rely on or propose increasing the state sector be regarded as our friends, or should the working masses be prepared for major battles over the content of the state regulation of the future? And there is still the perennial question with regard to the revisionist or Stalinist regimes: Should we look towards this or that faction in the ruling bourgeoisie in China, Cuba, Vietnam, etc. to finally do something good, something deserving of our support, or should we encourage the workers of these countries to develop their own independent class organizations, opposed to the ruling bourgeoisie as a whole? This question too will continue into the next millennium. So the debates of today may help prepare the movement theoretically for such challenges of the future. <>

The October 1999 issue of CV contained the following statements from this discussion:

* On affirmative action and on the economics of socialism (an extract from Sal's report of Jan. 15, 1999 on the discussion of the Seattle Marxist-Leninist Study Group of Dec. 6).
* Two issues: affirmative action and the transition between capitalism and communism (A reply to Sal's report by Mark, Detroit, Jan. 17, 1999)
* The transitional society and profit by Pete Brown (Jan. 19, 1999)
* State capitalism in the preliminary phase of socialism, by Sal, Seattle, March 1999
* State ownership is not sufficient to define the transitional economy (Reply to Sal) by Joseph Green, July 11, 1999


(1) See "Preobrazhensky, Ideologist of State Capitalism". Part 1 appeared in the Communist Voice of 15 April 1998 and part 2, concentrating on the law of value, appeared in CV for August 1, 1998. (Return to text)

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