The Meaning of the Russian and Chinese Revolutions and State Capitalism
Written by Kennich Suzuki (1998)
Translated by R.West
1. The Thing to Ask Now
2. The Character of the Russian Revolution
3. From Military Communism to N.E.P.
4. The Road to State Capitalism
5. The Historical Significance of State Capitalism and its Point of Arrival
1. The Thing to Ask Now
If the Twentieth Century can be summed up as the age of the rule of imperialism
and capitalism, then the Russian and Chinese revolutions should be remembered
for a long time as the two peaks in the workers and peoples class struggle
against this rule; the two greatest historical events of this century.
The October revolution in Russia overthrew the savage rule of Czarism and
the bourgeoisie. Socialism, the unfulfilled dream of the workers throughout
the world, was felt to be close at hand. Needless to say, this made a deep
impression on the workers of the world, and encouraged their struggles.
Further, the victory of the Chinese revolution in 1949 swept away the rule
of Japanese imperialism and the power of the bourgeois landlords, and heralded
the period of "national liberation", having a particularly strong
impact on the people living in the colonial and semi-colonial regions of
Asia and Africa.
However, now eighty years have passed since the Russian revolution and
the "socialist homeland"=USSR has already has ceased to exist,
and out of the rubble of the collapsed Soviet Union a Russia has appeared
which is unmistakably a bourgeois state. In Russia, which has taken the
path of the "market economy", a new capitalist layer has been
formed through economic liberalization and the "democratic management"
of former state owned industries, and the struggle for leadership among
the financial clique centered on the former state owned industries has
intensified. This is reflected in Yeltsin's power struggle, as well as
the scramble for power shaping up for the post-Yeltsin period.
Even China, which had formerly struggled with the Soviet Union for leadership
of the "camp of world socialism", never ceasing to "export
revolution" and supporting the national liberation struggles in surrounding
countries, has nakedly rushed onto the capitalist road in the name of a
"socialist market economy". Coexisting along with the state owned
industries are an enormous number of private, individual, and foreign capital-based
industries, as well as security markets, stock companies, a large number
of urban poor, unemployed and a huge discrepancy in wealth, bureaucratic
corruption, rampant crime, and so on. It would not be saying too much to
say that there is nothing that exists in the capitalist states now that
does not also exist in China. The Chinese Communist Party still professes
to Marxism-Leninism-Maoism, and displays the sign board of "socialism",
but hardly anyone mistakes the bourgeois nature of this country.
What does the reality of the USSR (Russia) and China teach us exactly-this
is precisely the question. Does this signify that socialism in the present
day is not possible and the "final victory of capitalism" as
the bourgeoisie of the world triumphantly proclaimed when the Soviet Union
collapsed in autumn 1991?
Certainly, if the Soviet Union and China had been socialist in the true
sense, it would be difficult to refute this argument. Indeed the world's
"left-wing" political parties, especially the Japanese Communist
and Socialist Parties, which for a long time had depended on the borrowed
authority of the Soviet and Chinese Communist Parties to justify themselves,
were completely at a loss, and used deceitful excuses while they daily
became more purely part of the political establishment.
In this sense, the question of how to evaluate the USSR and China and why
these systems "evolved" towards becoming open bourgeois systems
is not merely a question of historical or academic judgement, but rather
is above all a practical question relating to the possibility of socialism
in the present day.
Needless to say, the question of how to judge the nature of the Russian
and Chinese revolutions and the post-revolutionary systems has been a significant
point of debate since the time of the revolutions-to be more precise, the
debate on the character of the revolution dates before the revolutions.
Putting aside the claims of Stalinists in defense of the system such as
"the final victory of socialism" or "developed socialism",
Trotsky's theories of "The Revolution Betrayed" and the "degenerated
workers state" are famous, but in the post-war period Tony Cliff and
Raya Dunayevskaya's theories of "bureaucratic state capitalism"
appeared from within the Trotskyist school, and had a significant influence
in Japan (from the fifties to the sixties Tadayuki Tsushima's theory of
state capitalism was also influential).
In the midst of the movement which used the 1960 Security Treaty (Anpo)
struggle as an opportunity to create a new workers, we thoroughly criticized
the Stalinists theories, while at the same time, beginning with Trotsky,
we clarified the limits of Cliff's theory of "bureaucratic state capitalism".
Thus, from an independent standpoint we defined the USSR and China as bourgeois
systems, a special form of capitalism, bearing no relation to socialism,
in other words, state capitalism. We firmly believe that our standpoint
is the only one which can rationally explain the subsequent bourgeois process
of development in the USSR and China, and we think that the collapse of
the Soviet Union and the transition in China to a "market economy"
system backs up our theory.
But before discussing the post-revolutionary systems in the Soviet Union
and China, we must first discuss the character of these revolutions. Then
the necessity of state capitalism and the bourgeois "evolution"
will be clear.
2. The Character of the Russian Revolution
-The Meaning and Limitations of the October "Socialist Revolution"
Putting aside the Chinese revolution, for a long time the judgement of
the Russian revolution as a "socialist revolution" was firmly
fixed. Not only the Soviet Communist Party, but from the bourgeoisie to
the "left wing" this was an a priori thesis which no one called
It is a matter of common knowledge that the "experience" of the
"leap" from the February bourgeois revolution to the October
socialist revolution, was turned into the dogma of the theory of the "extension"
of the democratic revolution into a socialist revolution or "two stage
theory" by Stalin and his epigones, and foisted on the communist parties
of the world. The Stalinists trumpeted this theory as the strategy of Lenin,
and the dialectical development of revolution, but in reality this was
nothing but a "metaphysical revolution" which caused tremendous
confusion and unrest in the class struggles of the workers throughout the
world, and led to defeats (remember the miscarriage of the postwar Japanese
Even today this theory of the "October socialist revolution"
is deeply rooted. For example, in the Japanese Communist Party's (JCP)
"The Problem of Power in Socialsim", Hiro Kikunami argues that,
"…in order to break free from war and extreme poverty, and end nationalistic
suppression, Russia could not stop at a bourgeois revolution. Countries
of belated capitalist development must progress to a socialist revolution.
This was the case for the October Revolution." Kezai ('Economy'-JCP
monthly journal) February 1997).
However, by easily declaring the October Revolution to be a 'socialist
revolution', Kikunami falls into a pitfall. Why would NEP (New Economic
Policy)-in other words the introduction of capitalism-be necessary after
a 'socialist revolution' Why did Stalin's despotic power triumph? Further,
if this Stalinist system can in some way or another be defined as socialist,
how can we explain the subsequent "liberalization" of the economy,
in other words the commencement of open bourgeois development. These are
the fundamental questions which Kikunami must answer. Naturally, of course,
Kikunami can only flounder about without success. At any rate, until just
recently (until the collapse of the Soviet Union) he had advanced the theory
of "the period of the generation of socialism", and dispersed
the de facto apologetic theory which argued that the Soviet Union (despite
its negative side) was socialist as a system. Now he is beginning to say
that the Soviet Union was not socialist, but he is at a loss when faced
with the question why this could happen after a "socialist revolution",
and seeks refuge in the theory of "mistaken policies" in which
the Soviet Union was led astray from the socialist road through Stalin's
Of course, however, the point here is not to criticize Kikunami's position.
Simply put, his position is merely one example of the blind alley fallen
into by people who proclaim the October Revolution to be equivalent to
a socialist revolution. The nature of the Russian Revolution cannot be
defined simply as a socialist revolution.
When we say this there are certainly some people who feel that we are denying
the historical significance along with the socialistic nature of the Russian
Of course this is not the case. We acknowledge that the Russian Revolution
was a proletariat revolution in a sense-or more precisely that it had this
side-and for precisely this reason we judge it highly. The Russian working
class, refusing the compromise and cooperation with the bourgeoisie preached
by the Mensheviks, rallied behind the consistently proletariat political
party of the Bolsheviks and fought the class struggle against the bourgeois
and landlord class out to the end. They overthrew the power of the landlords
and capitalists, and brought the Bolsheviks to power. Starting with the
land, the main means of production were nationalized, and the principles
of socialism and thorough democracy were proclaimed. The driving force
of the revolution was the working class, and the Bolshevik government which
represented them struggled hard to realize the proletarian, socialistic
principles. This is precisely why the Russian Revolution captivated the
workers of the world, and continues to do so.
However, while acknowledging the proletarian and socialistic nature of
the Russian Revolution in terms of (political) power, we must frankly point
out the fact that in socio-economic terms the revolution was unable to
overcome the limits of a bourgeois revolution. As Lenin said, a proletarian
socialist revolution is only an abstraction. During the debates on labor
unions after the revolution, Lenin admonished Trotsky in the following
way, "Comrade Trotsky speaks of a "workers' state". May
I say that this is an abstraction…The whole point is that it is not quite
a workers' state…ours is not actually a workers' state but a workers'
and peasants' state." Later Lenin added that the state is also "a
workers' state with bureaucratic distortions".
What is the significance that this was a workers and peasants state? This
means that power was partially possessed by the workers and peasants, and
so naturally the state had to consider the interests of the peasants, not
only the workers. The workers and peasants both shared the trait of being
direct producers. On the other hand, however, the peasants differed from
the working class, or "property-less class" (in Japanese the
word proletariat can be translated as musan kaikyu which translated directly
means "property-less class" or "un-propertied class"),
which didn't possess any of the means of production. The peasants had their
own (small) means of production, a point they had in common with the bourgeoisie.
This duality is the characteristic trait of the petty bourgeois peasants.
They fought together with the working class to expropriate the land from
the landlords, but once the landlord class had been expropriated, they
wanted to keep the land taken from the landlords as their own private property,
accumulate profit, and rise into the ranks of the bourgeoisie. How could
this state with its "bourgeois advance army" and jointly possessed
power, possibly a pure workers state or socialist state? For this reason,
Lenin warned that if Soviet power was simply defined as a workers state,
a large number of errors would arise (the debate with Trotsky directly
concerned the trade union policy, but Trotsky's abstract, idealistic standpoint
of "jumping over the peasants" became a turning point in his
defeat to Stalin in the power struggle after Lenin's death).
Did Russia possess the objective conditions to create socialism in the
first place?-this is the question. Needless to say, Marx viewed socialism
as only being possible with the highest development of productive power,
in other words, the highest development of capitalism. Recall the famous
formula of the materialist viewpoint of history from the first chapter
of The Preface to a Critique of Political Economy: "No social formation
is ever destroyed before all the productive forces for which it is sufficient
have been developed, and new superior relations of production never replace
old ones before the material conditions for their existence have matured
within the framework of the old society."
Russia at that time, however, was far from the point at which "all
the productive forces had developed to the point where there was no longer
room to develop." Even though capitalism was slowly developing, feudalistic
relations still remained, more than eighty per cent of the population was
made up of the peasantry still groaning under the landlord system united
with Czarism, and although the workers concentrated in Petrograd and other
large cities showed great power, they still made up no more than ten per
cent of the population. Although a proletarian revolution was possible
under such conditions, this was not a socialist revolution in the full
sense of the word. In Russia, where the material conditions for socialism
were lacking, a proletariat revolution was victorious, but it could only
clear the path to socialism-here lies the contraction of the Russian Revolution.
Isaac Deutscher describes the "multiple" character of the Russia
revolution rather adroitly: In his The Unfinished Revolution, he says that,
"It is in this sense that we can characterize the October revolution
as a combination of bourgeois and proletarian revolutions." (The Unfinished
Revolution, Oxford University Press; p. 22)
"The bourgeois revolution over which they presided created conditions
which favoured the growth of bourgeois forms of property. The proletarian
revolution they accomplished aimed at the abolition of property. The main
act of the former was the sharing out of the aristocracy's land. This created
a wide potential base for the growth of a new rural bourgeoisie. The peasants
who had been freed from rents and debts and had enlarged their farms were
interested in a social system that would offer security to their holdings."
(Ibid p. 23) "The peasants, afraid of counter-revolution that might
bring back the landlords, thus acquired a stake in the Bolshevik regime.
But from the outset the socialist aspects of the revolution aroused their
misgivings, fears, or hostility." (Ibid p. 24)
Let's look at his explanation of the contradictions of the two revolutions
a little bit further.
"The socialist revolution was supported wholeheartedly by the urban
working class. But this was a small minority of the nation. Altogether
one-sixth of the population, twenty-odd million people, lived in the towns:
and of these only half or so could be described as proletarian. The hard
core of the working class consisted at the most of about three million
men and women employed in modern industry. Marxists had expected the industrial
workers to be the most dynamic force in capitalist society, the main agents
of socialist revolution. The Russian workers more than justified this expectation.
No class in Russian society, and no working class anywhere in the world,
has ever acted with the energy, the political intelligence, the ability
for organization, and the heroism with which the Russian workers acted
in 1917 (and thereafter in the civil war). The circumstance that Russia's
modern industry consisted of a small number of huge factories, concentrated
mainly in Petrograd and Moscow, gave the massed workers of the two capitals
an extraordinary striking power at the very nerve centers of the ancien
regime. Two decades of intensive Marxist propaganda, fresh memories of
the struggles of 1905, 1912, and 1914, the tradition of a century of revolutionary
endeavor, and Bolshevik singleness of purpose had prepared the workers
for their role. They took the socialist aim of the revolution for granted.
They were not content with anything less than the abolition of capitalist
exploitation, socialization of industry and banking, worker's control over
production, and government by Soviets. They turned their backs on the Mensheviks,
whom they had followed at first, because the Mensheviks were telling them
that Russia was not 'ripe for a socialist revolution.' Their action, like
that of the peasants, had its own spontaneous force: they established their
control over production at the factory level well before the October insurrection.
The Bolsheviks supported them and turned the factory rebellions into socialist
Yet Petrograd and Moscow, and a few other scattered industrial centers,
constituted an extremely narrow base for this undertaking. Not only did
people over the whole immensity of rural Russia scramble to acquire property
while the workers of the two capitals strove to abolish it; not only was
the socialist revolution in implicit conflict with the bourgeois one; in
addition, it was fraught with its own inner contradictions. Russia was
and was not ripe for socialist revolution. She was better able to cope
with its negative than with its positive tasks. Guided by the Bolsheviks,
the workers expropriated the capitalists and transferred power to the Soviets;
but they could not establish a socialist economy and a socialist way of
life; and they were unable to maintain their dominant political position
for any length of time." (Ibid pp. 24-25)
We can't agree with Deutscher's opinion that "proletariat revolution"
and "bourgeois revolution" progress separately and "together"-this
is because the question is the overall nature of the revolution, and it
is necessary to recognize that while having the mark (being stamped) of
a proletariat revolution it could not overcome bourgeois limitations-however
he is justified in pointing out the "internal contradiction"
of the Russian Revolution which combined proletariat and bourgeois elements.
It is precisely this contraction that is thought to have led to state capitalism.
3. From Military Communism to N.E.P.
The historical process after the October revolution did not progress as
Lenin had imagined (it would probably be better to say as he had desired),
that is the victorious workers and peasants state was not able to advance
towards socialism through the assistance of the international proletariat.
In addition to the war with Germany dragging on, the country was almost
completely exhausted through civil war and the intervention of the imperialist
armies. E.H. Carr describes the situation at the time in the following
"These desperate conditions were reflected in the total disarray of
the economy. During the war, production had been crippled and distorted
by military needs, and by the absence of agricultural and industrial workers
at the front. The revolution itself, and the ravages of civil war, completed
the picture of economic, social and financial disintegration; hunger and
economic, social and financial disintegration; hunger and cold overtook
large sectors of the population. Initial Bolshevik remedies for economic
ills did not go beyond the proclamation of such general principles as equal
distribution, nationalization of industry and of the land, and workers'
control. In the first months of the revolution many industrial enterprises
were taken over, sometimes by state organs responsible to the Supreme Council
of National Economy (Vensenkha), sometimes by the workers themselves. For
agriculture the Bolsheviks who still had little power in the countryside,
had adopted the programme of the SRs, and proclaimed the 'socialization'
of the land and its equal distribution among those who tilled it. What
happened in fact was that the peasants seized and distributed among themselves,
the estates, large and small, of the land-owning nobility, and the holdings
of the well-to-do peasants, commonly dubbed kulaks, who had been enabled
to accumulate land by the Stolypin reforms. None of these measures arrested
the decline of production. In finance, the banks were nationalized and
foreign debt repudiated. But it was impossible to collect regular taxes
or to frame a state budget; current needs were met by resort to the printing-press"
(The Russian Revolution: From Lenin to Stalin, Macmillan Press p. 21)
Russia had to push ahead with a system of "Military Communism"
because of this situation. The most important task was to secure provisions
to supply the soldiers fighting in the civil war and the industrial workers
in the cities, and to accomplish this strict control was enforced.
The main policies taken during the period of Military Communism from May
1918 were: 1) the nationalization of all industry; 2) state monopoly on
grain transactions, and a system for the requisition of an allotment of
surplus food (that is, the prevention of private grain transactions); 3)a
comprehensive system of compulsory labor, etc. This policy of extreme control
in order to provide for war expenditure through the additional issue of
paper money, and as the value of the currency dropped wages were paid in
kind which and fantasy that the money economy had been abolished spread,
and along with the birth of the notion that Russia could "leap"
to socialism in one stretch. However, this fantasy was exposed by the March
1921 Kronstadt Uprising (the riot of peasant sailors in uniform against
the Bolshevik government).
"In the critical year of the civil war, when the survival of the regime
seemed to hang by a thread, and the territory even nominally controlled
by it was being constantly contracted by inroads of White armies, the method
by which the essential needs of the Red Army, of the factories engaged
in war production, and of the urban population were met was the crude method
of requisitioning, dictated and justified by military necessity. To keep
the Red Army supplied was the over-riding task of economic policy, and
little attention could be spared for civilian needs or civilian susceptibilities.
It was above all the widespread requisitioning of surpluses of grain which
led the peasants, once the danger from the Whites was over, to rebel against
the harshnesses of war communism." (Ibid p. 25)
"By the autumn of 1920, when the fighting was over, the whole economy
was grinding to a halt. Nothing in the theory or practice of war communism
offered any clue how to re-start processes of production and exchange which
had come to a standstill. The nodal point, as always in the Russian economy,
was grain. The policy of requisitions, which had worked after a fashion
during the civil war, was bankrupt. The peasant retreated into a subsistence
economy, and had no incentive to produce surpluses which would be seized
by the authorities. Widespread peasant disorders occurred in central Russia
during the winter of 1920-1921. Gangs of demobilized soldiers roamed the
countryside in search of food, and lived by banditry. It was imperative,
if the rest of the country was not to starve, to provide the peasant with
incentives which were denied to him under a system of requisition."
(Ibid p. 31)
Thus, the shift to N.E.P. was inescapable. To put it more concretely this
included some of the following policies: The compulsory requisition of
food was halted, replaced by a food tax. Peasants were free to dispose
of their surplus agricultural products; in other words, free grain transactions
were permitted. Minor enterprises released from state ownership were allowed
as part of a fixed range of private capitalism. However, this was not only
a "policy", but manifested the reality that one kind of capitalism
(state capitalism) was inevitable in Russia. Everyone in the left wing
of the Communist Party denounced this as the resurrection of capitalism,
but if the shift to N.E.P. had not been made the Bolshevik government would
probably have collapsed amidst the resistance and rebellion of the peasants.
Further, N.E.P. was a return to the roundabout policy that had been interrupted
during Military Communism. Lenin proposed N.E.P. at the time of the debate
with the left wing of the Communist Party over the Brest Litovosk peace
treaty. He argued for the necessity and inevitability of N.E.P. by pointing
out that in Russia, where a broad sector of small peasants exists and a
dispersed, anarchic petty bourgeois economy is dominant, state capitalism
is progressive and the first step toward socialism. In an essay from May
of the same year entitled "Left-wing Childishness and the Petty Bourgeois
Mentality" Lenin said that "the continuation of the anarchy of
small ownership is the greatest, the most serious danger, and it will certainly
be our ruin" and that "state capitalism would be a gigantic step
forward". We should also recall what he said next:
"…the payment of a heavier tribute to state capitalism not ruin us,
it will lead us to socialism by the surest road. When the working class
has learned how to defend the state system against the anarchy of small
ownership, when it has learned to organize large-scale production on a
national scale, along state capitalist lines, it will hold, if I may use
the expression, all the trump cards, and the consolidation of socialism
will be assured."
Lenin frankly recognized that NEP was the revival of capitalism.
"The New Economic Policy means that food requisitions allotments are
replaced by a food tax and to a fair degree signifies a shift to a revival
of capitalism. To what degree-of this we are not certain. Vested rights
contracts for foreign capital and the leasing of businesses to private
capital-these mean the direct revival of capitalism and are directly connected
to the base of the New Economic Policy. This is because the end of the
allotted requisitions means that the peasant will be able to freely sell
the surplus agricultural products that are not collected as tax. Only a
small part of the agricultural products are collected as tax. Because the
peasant represent the largest part of the overall population and economy,
there is no way to avoid the growth of capitalism with this free commerce
as the foundation." (translated from Japanese)
Moreover, Lenin recalls the question "who will prevail, the capitalists,
or the Soviet state power, and argues that the question is "whether
it is possible for proletariat state power with the peasants as a basis
to create a system where the capitalists are put under appropriate control
and capitalism is brought into the orbit of the state so that capitalism
can be subordinate to the state and serve it." (translated from Japanese)
If we look at the actual process of N.E.P., it did not stop, as was first
thought, with permitting freedom for the peasants to carry out transactions
of surplus products, but had no choice but to advance from the acceptance
of business calculations in industry to the acceptance of businesses. In
October 1921 at the Seventh Moscow Prefectural Party Meeting, Lenin summarized
the process of N.E.P. up to that point: "Throughout the whole state,
industrial and agricultural products are exchanged by socialistic means;
and through this exchange of commodities a revival of heavy industry, which
is the sole foundation for socialistic organization, is expected."
But "if the exchange of commodities breaks down and commodity exchange
takes the form of trade this breaks down." He describes this in the
"We must recognize that the retreat was insufficient, and further
that a retreat is necessary, and that a shift from state capitalism to
state regulation of trade and currency circulation is also necessary. The
exchange of commodities was not useful. The private market was stronger
than us. In place of the birth of commodity exchange, ordinary trade and
businesses were born." "We are now in a situation where we must
retreat not just to the return of state capitalism, but to the state regulation
of business and currency circulation. This has taken longer than we expected.
If we don't take this path, we won't be able to revive economic activity.
In other words, we won't be able to stand under our own power through the
revival of a correct economic system, the small peasant economy and large
industry. If we don't do this we probably won't be able to break out of
the crisis. This is the only way out." (translated from Japanese)
In this way, N.E.P. shows that capitalism was inevitable in Russia and
progressive when contrasted with the petty bourgeois economy; socialism
was still something far in the future. This shows again that economically
speaking the Russian revolution was unable to overcome the bourgeois limits.
4. The Road to State Capitalism
However, even under N.E.P. Russia was unable to solve its economic difficulties.
A certain revival of agricultural productive power was seen under N.E.P.,
but industry was unable to supply peasants with enough industrial products,
and the peasants became reluctant to deliver grain to the state. The disequilibrium
between agriculture and industry led to the actualization of the "scissors
condition of price differences" (a phenomenon in which the price of
industrial products rises while the price of agricultural products falls,
and the price curve thus opens up like a pair of scissors.) The contradictions
widened, with class differentiation progressing in the villages, rich peasants
and 'Nepmen' ruling the markets, rampant speculation, etc. At the end of
the Twenties the production equipment inherited from the prewar and wartime
had become superannuated, and there was a pressing need for replacement,
but the agricultural tempo was slow, it became clear that small agricultural
production could not supply industry with its investment capital. Moreover,
the rich peasants were strengthening their stance of refusing to sell grain
at the official prices. For these reasons, Stalin began forced agricultural
collectivization and rapid industrialization (since this process is described
in detail in part two of this book we will not touch on it here).
These policies of Stalin were an attempt to forcibly break through the
socio-economic contradictions in Russia that had developed to an explosive
point under N.E.P. Through collectivization, Stalin attempted to achieve
industrialization and a rapid development of the national economy through
compulsory labor-and through a despotic political system which is naturally
accompanied by the concentration camp-as well as the exploitation of the
peasants, completely integrated into and subordinated to the system of
state capitalism. To merely put forward the criticism that the policies
were mistaken or went too far-in the manner of Kikunami-results in an arbitrary
interpretation of history and moralistic blame. In Russia under the objective
conditions of the time-imperialist encirclement on top of its own late
economic development, almost no economic assistance, as well as the rise
of Hitler-the unavoidable development of capitalistic development required
that this path of state capitalistic accumulation be taken. People like
Kikunami cannot imagine that if the system of state capitalism had not
been established in Russia and an ordinary "liberal" state had
appeared (bear in mind the case of the India where backwardness has dragged
on for a long time under such a state) following the collapse of the "Workers
and Peasants State", the Russian workers would have been tied to the
yoke of backward capitalism, and further would most likely have suffered
under the rule of Hitler.
It is not particularly difficult to understand why for such a long time
the Stalinist system (the system of state capitalism) which was established
at the beginning of the Thirties was believed to be socialism. This was
said to be because the primary means of production had been nationalized
(the peasants were 'collectivized') and a 'planned economy' system had
been established. The results of the first and second Five Year Plans were
triumphantly and widely broadcast, and Russia, with its path of rapid development
contrasting the world-wide crisis into which capitalism had fallen, certainly
appeared to prove the "superiority" of socialism.
However, the economic "liberalization" begun in the mid-Sixties
forcibly exposed the hidden bourgeois nature of this system. The "profit
debate" unfolded among Soviet scholars and economic bureaucrats, and
it was declared that hereafter the primary task for state run industries
would be to secure and increase the rate of profit. Various limits which
restricted the economic activity of business were removed (or eased), the
"independence" of business was strengthened and competition was
said to be introduced. However, first of all businesses which pursue high
accumulation through free business activity and competition are precisely
capitalistic enterprises. Any person is aware that in the capitalist system,
companies as capital pursue profit (surplus value), place the highest priority
on gain, and try to overcome intense competition. Nevertheless, Stalin's
successors proclaim that companies under the present-day "socialist"
system in the Soviet Union place the highest priority on profit and gain.
This is a riddle that those who believe the Soviet Union is "socialism"
are unable to solve. They either revise their "theories" according
to the situation and use sophistry to argue for "socialistic commodities"
and the "development of the law of value under socialism"; or
they abandon their faith because of their disappointment in socialism.
Since we believe that the Stalinist system has an intrinsic bourgeois nature,
there was nothing perplexing about this economic liberalization (bourgeois
Certainly in the Soviet Union the main means of production were nationalized
and formally were commonly owned, but in fact their nature as capital could
not be overcome. The fact that generally nationalization does not immediately
signify common social ownership (overcoming their character as capital)
is made instantly clear when we look at the experience of Europe and the
United States. In a number of bourgeois states, referred to as "welfare
states", industries such as coal, steel and communications were often
nationalized, but this didn't alter one bit the bourgeois essence of these
states. Under commodity production, the general foundation of capitalism,
nationalism itself does not eliminate the essence of the state owned companies
as capital, and does not signify socialism.
Even under the Stalinist system, the nationalization of the means of production
did not signify the elimination of their character as capital, but rather
the formal transformation from private capital to state capital. This should
be made clear by the fact that an economic system of independent calculation
of profit ("Hozraschot") for nationalized companies under the
Stalinist system was implemented whereby increases in profit were expected,
the products of state companies given prices as commodities, and workers
were exploited as wage laborers (often under the piecework wage, the most
savage form of wages).
Of course, with the creation of capital as state capital, there were limits
on the free activity of state companies as capital-the state companies
were pressured by state assignments, and had to adapt to the "state
objectives" of preferential development of heavy industry. As a result,
the losses of companies were covered by the state budget, and bourgeois
character of this system was concealed. However, once state capitalism
was established and the task became efficient management, the particular
limitations and contradictions of state capitalism were revealed, and capital's
true character, which had been suppressed, was released, leading to rationalization
and increased efficiency. In this way, this system's bourgeois character
was actualized. This is precisely the real significance of 'economic liberalization'.
This was nothing but the bourgeois evolution resulting from the contradictions
of state capitalism.
The "liberalization" of state capitalism and the shift to a "market
economy" is the inevitable consequence of the fact that this system
originally had an intrinsic bourgeois character. It most certainly does
not mean that socialism turned back into capitalism, or the collapse of
5. The Historical Significance of State Capitalism and its Point of Arrival
a. The Character of the Chinese Revolution
Before proceeding, I must touch on the Chinese Revolution, but this won't
take up too much space. Its peasant character should be clear at a glance.
The New China stepped forward as a radical peasant state.
The struggles of the peasantry, the subject of the Chinese Revolution,
were focused on the power of the landlords who ruled the countryside, and
inevitably developed into a struggle to dissolve the landlord system of
land ownership, and transform it into their own property.
The Chinese Revolution developed, above all, as a struggle of radical peasants.
Using tactics peculiar to peasant struggles such as the "long march",
"raiding", surrounding cities, the peasant masses who possessed
either no land or very little, overthrew the rule of the landlords and
imperialists. This was the revolutions historical meaning.
The character of the revolution as a peasant revolution also determined
the nature of the development of the Chinese system after the revolution.
The establishment of peasant land ownership was the starting point for
the development of commodity production and capitalism. In fact, this later
follows the process of development of China's particular capitalism (state
capitalism). Mao bourgeois himself at first acknowledged the bourgeois
character of the Chinese Revolution with his expression "new democratic
revolution", and added that the development of state capitalism was
necessary. However, just as the powerful state system created through Stalin's
centralization of agriculture began to be called a socialist system, in
China also was called socialist following the "introduction"
of the "Great Leap Forward" and the Stalinist system of centralization.
This was the only way to conceal the essence of China as a state capitalist
However, the strength of the elements of the New China as a peasant state,
as witnessed in phenomenon such as the long duration of the system based
on the "peoples communes", and the explosions of the "Great
Leap Forward" and the Cultural Revolution, added original characteristics
to China's state capitalist system.
b. The Historical Role of State Capitalism and the Meaning of "Liberalization"
and the "Market Economy"
Finally, we must give a summary of the historical significance of the state
capitalist systems established after the revolutions in Russia and China.
As I said at the beginning, in both Russia and China the workers and peasants
developed their class struggle and swept aside the old system, but because
of the historical limitations of underdeveloped capitalism, the jump to
socialism could not be made. After the revolutions, these countries had
to take the road of state capitalism. Although these were systems which
exploited and oppressed the workers and created many difficulties for the
people, their historical significance of developing the productive power
and forming a broad working class cannot be denied.
On the 50th anniversary of the Russian Revolution, E.H. Carr said the following,
which also applies perfectly to the China, and is how the historical significance
of both revolutions and state capitalism should be remembered:
"The success of this campaign, which in thirty years, starting from
a semi-literate population of primitive peasants, raised the USSR to the
position of the second industrial country in the world and the leader in
some of the most advanced technological developments, is perhaps the most
significant of all the achievements of the Russian revolution. Nor can
the achievement be measured purely in material terms. In the time span
of half a century, a population almost 60 per cent urban has replaced a
population more than 80 per cent peasant; a high standard of general education
has replaced near illiteracy; social services have been built up; even
in agriculture, which remains the stepchild-or the problem child-of the
economy, the tractor has replaced the wooden plough as the characteristic
instrument of cultivation. It would be wrong to minimize or condone the
sufferings and the horrors inflicted on large sections of the Russian people
in the process of transformation. This was a historical tragedy, which
has not yet been outlived, or lived down. But it would be idle to deny
that the sum of human well-being and human opportunity in Russia today
is immeasurably greater than it was fifty years ago. It is this achievement
which has most impressed the rest of the world, and has inspired in industrially
undeveloped countries the ambition to imitate it." (1917: Before and
After, Macmillan Press pp. 7-8)
Isaac Deutscher argued that "the most remarkable change" post-revolutionary
Russia was the achievement of a rapid urbanization. According to Deutscher,
the urban population was only 26 million residents in 1926, had increased
to 125 million by 1966. "Within the lifetime of a generation the percentage
of the town dwellers in the total population has risen from 15 to 55 per
cent." (The Unfinished Revolution, p. 43) Deutscher says that if we
recall that in the United States it took 160 years for the urban population
to increase to 100 million and one century for the percentage of urban
residents to rise from 16% to 60% we see that "Soviet urbanization,
in tempo and scale, is without parallel in history." (Ibid p. 43)
Needless to say, the development of cities means the appearance of industrial
development, the formation of a working class, and urban concentration.
In other words, the process of usurping the peasantry and establishing
the foundation for capitalism through original accumulation, which took
several centuries for capitalism in Western Europe, was accomplished in
the Soviet Union in just half a century.
"Only a small proportion of the expansion was due to natural growth
or to the migration of the townspeople. The mass of the new town dwellers
were peasants, shifted from the villages, year after year, and directed
to industrial labour. Like the old advanced nations of the West, the Soviet
Union found the main reserve of industrial manpower in the peasantry. In
the early stages the growth of capitalist enterprise in the West was often
accompanied by forcible expropriation of farmers-in Britain by the 'enclosures'-and
by draconic labour legislation. Later the West relied in the main on the
spontaneous work of the labour market, with its laws of supply and demand,
to bring the required manpower to industry. This euphemism means that in
the course of many decades, if not of centuries, rural overpopulation,
and sometimes famine, threw great masses of redundant hands onto the labour
market. In the Soviet Union the state secured the supply of labour by means
of planning and direction. Its dominant economic position was the decisive
factor; without it, it would hardly have been possible to carry out so
gigantic a transformation within so short a time." (Ibid pp. 43-44)
Deutscher also hits the mark in pointing out the historical significance
of agricultural collectivization.
"The transfer of the rural population began in earnest in the early
1930's, and it was closely connected with the collectivization of farming,
which enabled the government's agencies to lay hands on the surplus of
manpower on the farms and to move it to industry. The beginnings of the
process were extremely difficult and involved the use of much force and
violence. The habits of settled industrial life, regulated by the factory
siren, which had in other countries been inculcated into the workers, from
generation to generation, by economic necessity and legislation, were lacking
in Russia. The peasants had been accustomed to work in their fields according
to the rhythm of Russia's severe nature, to toil from sunrise to sunset
in the summer and to drowse on the tops of their stoves most of the winter.
They had now to be forced and conditioned into an entirely new routine
of work. They resisted, worked sluggishly, broke or damaged tools, and
shifted restlessly from factory to factory and from mine to mine. The government
imposed discipline by means of harsh labour codes, threats of deportation,
and actual deportation to forced labour camps. Lack of housing and acute
shortages of consumer goods, due in large measure to deliberate acts of
an anti-consumptionist policy-the government was bent on obtaining the
maximum output of producer goods and munitions-aggravated the hardships
and turbulence. It was common in the cities, even quite recently, for several
families to share a single room and a kitchen; and in the industrial settlements,
masses of workers were herded in barracks for many years. Crime was rampant.
At the same time, however, many millions of men and women received primary
or even secondary education, were trained in industrial skills, and settled
down to the new way of life." (Ibid pp. 44-45)
Agricultural collectivization didn't stop with the securing of raw materials
for industry and food supplies for urban workers. In addition to being
a means of extracting raw materials for industrialization through the thoroughgoing
plunder of the peasants, collectivization was also a measure to transform
surplus peasants into workers, that is raw material for exploitation. It
could be said that because of the international and domestic conditions-international
isolation, the threat of fascism, socio-economic backwardness (consider
the different course that agricultural collectivization took in China)-this
took the form of violent concentration camps and forced collectivization,
and that these conditions required a violent and despotic character like
It is easy to denounce the cruelty and barbarity of Stalin's forced collectivization,
but this not a problem that can be taken care of with moralistic criticism.
What made this necessary? What was the objective meaning of this? To elucidate
these questions, a person must examine history. In this sense, Deutscher's
examination is also suggestive.
"As one who witnessed the collectivization of the early 1930s and
severely criticized its forcible methods, I would like to reflect here
on the tragic fate of the Russian peasantry. Under the ancien regime the
Russian countryside was periodically swept by famine, as China's countryside
was and as India's still is. In the intervals between the famines, uncounted
(statistically unnoticed) millions of peasants and peasant children died
of malnutrition and disease as they still do in so many underdeveloped
countries. The old system was hardly less cruel towards the peasantry than
Stalin's government, only its cruelty appeared to be part of the natural
order of things, which even the moralist's sensitive conscience is inclined
to take for granted. This cannot excuse or mitigate the crimes of Stalinist
policy; but it may put the problem into proper perspective. Those who argue
that all would have been well if only the muzhiks had been left along,
the idealizers of the old rural way of life and of the peasantry's individualism,
are purveying an idyll which is a figment of their imagination. The old
primitive smallholding was, in any case, too archaic to survive the epoch
of industrialization. It has not survivied either in the country or in
the United States; and even in France, its classical homeland, we have
witnessed a dramatic shrinkage of the peasantry in recent years. In Russia
the smallholding was a formidable obstacle to the nation's progress: it
was unable to provide food for the children of the overpopulated countryside."
(Ibid pp. 51-52)
No matter how many peasants were directly victimized by the state capitalist
systems in China and the Soviet Union, one must still recognize the following
historical significance: the problem of famine was temporarily solved,
the dispersed and anarchic peasantry was consolidated into a system, the
dissolution of the country was prevented, agricultural nations became industrial
nations, and the material conditions for a higher form of society were
prepared. We must remind those who talk of the great number of victims
in this process that in the original accumulation process of "free"
capitalism as well there was a long history of hundreds of thousands of
peasants had their land plundered and were driven off the land, shut up
in dirty and dangerous factories, and were thoroughly exploited under horrendous
conditions. What took these countries one or two hundred years to do, the
Soviet Union was able to accomplish half a century, and to this extent
the sacrifices were also condensed.
Perhaps the greatest historical significance of the state capitalist system
was that through these tremendous sacrifices peasants were turned into
workers, that is, it created the mass of the working class, the gravediggers
of this system, and the creators of the future system. Without the formation
of a large scale working class (in other words, the formation of a large
scale industrial base), the formation of a more advanced society is out
of the question.
"The industrial workers, the small minority of 1917, now form the
largest social class. The State employs about 78 million people in workshops
and offices-it employed 27 million after the end of the Second World War.
Well over 50 million people work in primary and manufacturing industries,
in building, transport, communications, and on State-owned farms. The rest
early their livelihood in various services-13 million of them in health,
education, and scientific research. It is not easy to distinguish with
any precision the numbers of manual workers and technicians from those
of office workers, because Soviet statistics lump them together-the sociological
significance of this will be discussed later. The number of workers may
be put at between 50 and 55 million." (Ibid pp. 45-46)
Of course, when compared to advanced capitalist countries of Europe and
North America, it becomes clear that technology in present day Russia industry
is backward on the whole (especially in areas of advanced technologies
like electronics and information communications), and the welfare and the
bourgeois welfare state has yet to emerge. Nevertheless, it is certain
that state capitalism rapidly developed the productive power of Russia
and China (when compared to the backward pre-Revolutionary conditions),
and created a broad working class.
Its later historical development shows that through the contradictions
peculiar to state capitalism the advance to "liberalization"
could not be stopped and the shift to "free" capitalism had to
be made. Only based on the theory of state capitalism can we rationally
explain that the "liberalization" of state capitalism couldn't
stop at partial "liberalization", and that the inevitable extension
and outcome of this "liberalization" was for state capitalism
to be replaced by "free" capitalism.
As we mentioned before, state capitalism is very much full of contradictions.
It was formed on a foundation of commodity production, and the means of
production existed as capital in this system. However, this capital was
organized as state run enterprises, in other words it existed as state
capital. For this reason, the character of capital's insatiable search
for profit was often repressed and subordinated to the objectives of the
state. These contradictions, hidden during the course of the establishment
of state capitalism, inevitably become a barrier and must be broken through
once state capitalism is established and the time has come when a higher
stage of productive power must be reached through the efficient use of
the limited human and material resources. However, within the framework
of state capitalism "liberalization" is must always be incomplete
and a zigzagged process (a typical example can be seen in the period from
Kruschev to Brezchev.). As the overall contradictions of this system deepen
a phase is reached where it is impossible to continue without the negation
of the existence of capital as state capital. This is the significance
of the shift from state capitalism to a "market economy". This
is due to the fact that state capitalism is transitional existence full
The Soviet and Chinese shift to "free" capitalism does not signify
the collapse of socialism or a self-criticism, but is just an expression
of a particular process of the evolution of capitalism. Furthermore, the
fact that the USSR (Russia) and China are now openly recognized as capitalist
systems finally buries the once dominant fantasy that these systems were
socialist-this point has enormous historical significance. The collapse
of Soviet "socialism" and China's bourgeois evolution also marks
the definitive end to the idea that the contemporary age is a confrontation
between world capitalism and world socialism and that the latter occupies
a superior place, as well as the class cooperation fantasy that the shift
to socialism can be made "peacefully" without sharp class struggle.
Moreover, with Russia and China becoming more firmly a part of the world
capitalist system, capitalism is truly and literally becoming global capitalism,
and this makes the possibility of world socialism realistic. It could be
said that now, for the first time, the ideal of the true liberation of
mankind, through the sublation of capitalism worldwide and the victory
of world socialism, is a real task. This is where we have arrived before
the 21st century. Humanity has not progressed through history for nothing.
Finally, the state of the Soviet Union (Russia) and China, far from sounding
the collapse of Marxism, in fact prove the Marxist theory that socialism
is only possible on the basis of the highest development of capitalism.
Marxism far from collapsing will become increasingly brilliant. We should
realize that what has collapsed are the fantasies of pseudo-socialism and
the theories of Stalinism which were lies from the outset.