Lenin's “Own Words”(Part Four: On Economic Theory)

14. What is "Peculiar State Capitalism"?

For What Purpose did the Soviets Grab Power?

“The Soviets must take power not for the purpose of building an ordinary bourgeois republic, nor for the purpose of making a direct transition to socialism. This cannot be. What, then, is the purpose? The Soviets must take power in order to make the first concrete steps towards this transition, steps that can and should be made. In this respect fear is the worst enemy.” (“The Seventh (April) All-Russia Conference of the R.S.D.L.P.(B.),” Collected Works Vol. 24 p. 241)

Lenin’s strategy has often been described in the following way: Up to February 1917 he advocated a two-stage theory of revolution, but then he became a one-stage (proletarian socialist) revolutionary theorist, thus moving closer to Trotsky’s position. In this way, cooperation with Trotsky, who was moving closer to Lenin’s “organizational theory,” became possible. The reality, however, is quite different from this Trotskyists view. Throughout 1917, Lenin did not speak of a socialist revolution. Even looking at the “April Theses,” presented when Lenin returned from exile to , the eighth thesis states: “It is not our immediate task to ‘introduce’ socialism, but only to bring social production and the distribution of products at once under the control of the Soviets of Workers’ Deputies.” (Collected Works Vol. 24 p. 24) Even concerning the form of power, Lenin did not refer to a proletarian dictatorship, but the old revolutionary democratic dictatorship of the workers and peasants (in terms of the peasantry as a constituent element of the revolutionary government, Lenin referred to the soldiers who rallied to the workers-soldiers soviets) Lenin, addressing Trotsky’s view in particular, offered the criticism that, “If we had said, ‘No tsar, but a dictatorship of the proletariat,’ well, this would have meant skipping over the petty bourgeoisie.” (Ibid. p. 246)

Of course, this government and the policies it would implement -- nationalization of land, banks, and large businesses -- is not the “introduction” of socialism, but it is clear that it is one step towards socialism. The question came down to whether the proletariat should resolutely carry out these revolutionary policies that the objective situation called for, or instead abandon the struggle and take the side of the bourgeoisie (in the manner of the Mensheviks) because the conditions for socialism did not exist. Lenin thought that there was no way forward except to advance the class struggle one step by the proletariat carrying out the policies that it could and must carry out.

Later Trotsky would criticize Lenin’s theory of the dictatorship of workers and peasants, saying that, while this was in fact the same as his own theory of proletariat dictatorship, in Lenin’s theory the question of who would exercise hegemony and whether a dictatorship of two classes is possible was not made clear. But Trotsky forgot the important point of who the dictatorship was directed against. A dictatorship against the feudalistic government is not necessarily limited to a dictatorship of a single class. Secondly, although the Soviet state established in Russia might be referred to abstractly as a proletarian dictatorship, in fact it was compelled to consider the interests of the peasantry. This was because the revolutionary government in Russia was not a proletarian state in the sense of being able to maintain the interests of the proletarian above all others and head directly towards the construction of socialism. Therefore, Lenin’s theory of the Soviet state as a democratic dictatorship of the workers and peasants was an extremely particular and concrete concept, which was a much more profound reflection of reality, with a much deeper content, than Trotsky’s general concept of a proletarian state.

On NEP = "Peculiar State Capitalism"

“The real nature of the New Economic Policy is this -- firstly, the proletarian state has given small producers freedom to trade; and secondly, in respect of the means of production in large-scale industry, the proletarian state is applying a number of the principles of what in capitalist economics is called ‘state capitalism.’” (“Interview with Arthur Ransome Manchester Guardian Correspondent,” Collected Works Vol. 33 p. 407)

At first NEP was the recognition of the freedom of commodity exchange for peasants, and a tax in kind to replace the earlier requisitions. This emerged from the realization that “wartime communism” (1918-1921) was in fact not communism in the true sense, but rather a temporary, extraordinary method of dealing with the economic collapse. Ultimately, however, NEP spread to industry, and the independent accounting for nationally owned businesses, i.e., the introduction of business principles. In this way, the overall economic system in Russia had to become a kind of capitalistic one in the end.

However, this state capitalism in Russia was not “capitalism in the usual sense,” but “capitalism in a peculiar sense.” This “peculiar” content did not mean that it wasn’t capitalism, but that it was capitalismunder a proletarian state. Lenin thought that in economically backward peasant-based states like Russia, there was not a struggle between capitalism and socialism, but rather socialism and state capitalism were struggling against the dispersed, naturally-generated and dangerous capitalism (i.e. small peasant economy), and in this sense state capitalism in Russia at the time was completely progressive. NEP was a policy that inevitably emerged from the entire thought and practice of Lenin.

The Bolshevik government, by “introducing” state capitalism through NEP, was able to avoid the fate of the French revolutionary government, which met its downfall when the people turned their backs on “socialization” and regulations. This Bolshevik government discovered a means of fighting against the large number of petty bourgeois peasants, organizing them, and incorporating them within the proletarian state power -- and this was NEP. This role was played by NEP, which prevented the collapse of the proletarian state. It was foolish for anarchists and the leftwing of the Communist Party to refuse to see the historical progressiveness of NEP in a country like Russia with low productive power, undeveloped heavy industry, and a population mainly composed of the petty bourgeois (=peasants) on the basis of the idea that it was a “revival” of capitalism. If “wartime communism” (i.e. forced requisitioning from peasants) had been continued it would have inevitably led to a revolt of the peasants (this was already seen in the Kronstadt rebellion), the collapse of the Bolshevik government, and the return of the old order and relations, and under such a system capitalist development would have been unavoidable ? and this would have been the development of capitalism at a more lethargic pace, forcing the proletariat to shoulder greater sacrifices and burdens.

Contradictions of NEP

“The proletarian state may, without changing its own nature, permit freedom to trade and the development of capitalism only within certain bounds, and only on the condition that the state regulates (supervises, controls, determines the forms and methods of, etc.) private trade and private capitalism. The success of such regulation will depend not only on the state authorities but also, and to a larger extent, on the degree of maturity of the proletariat and of the masses of the working people generally, on their cultural level, etc. But even if this regulation is completely successful, the antagonism of class interests between labor and capital will certainly remain.” (“The Role and Functions of the Trade Unions Under the New Economic Policy,” Collected Works Vol. 33, p. 185)

The combination of a proletarian state and capitalism had contradictions, and even serious contradictions. This state was called a “proletarian state,” but it was unable to realize the ultimate interests of the proletariat -- that is the complete superceding of capitalism. Rather, this state was compelled to adopt policies that even harmed the interests of the proletariat, such as the “introduction” of capitalism. The fact that NEP was in the interests of the workers, relatively speaking, certainly does not mean that it was a proletarian policy. NEP was essentially represented a compromise with the peasants, and a was policy in the interests of the peasantry.

Abstractly speaking the Soviet Union was a proletarian state, but concretely speaking, this state did not always implement proletarian policies, and so this state publicly recognized labor unions and “the existence and inevitability of the economic struggles” of labor unions, and even recognized that in some cases a strike by labor unions would bring them into conflict with the “proletarian” state.

Lenin did not deny the possibility of the “revival” of capitalism in Russia, but he thought that regardless of whether socialism or capitalism were victorious, the NEP system was ultimately something that was transitional. NEP was seen as a “detour,”  if this policy got off track while taking this detour, it was likely that NEP would become fixed as some form of capitalism. And this was in fact what happened in the case of Russia.

Lenin saw the objective to be pursued by state capitalism as the fight against other forms of capitalism through the utilization of one form of capitalism. In stead of the private capitalism that would emerge from the naturally generated freedom of commerce and small production, this would be the victory of state capitalism ? and this is what was achieved in Russia. It is clear, however, that this was not the sublation of capitalism in general or its ultimate sublation. Lenin repeatedly emphasized that in terms of socialism there was nothing to be feared in capitalism as long as the proletariat held state power. In fact, however, there was plenty to fear in state capitalism, and this system had more than sufficient power to completely transform the proletarian state, and history has demonstrated this. The new historical task that has emerged for the proletariat [in these countries] is to struggle against the state capitalism that took the place of “naturally generated” capitalism or became grafted onto it.

Economic Source of Russian Bureaucracy

“What are [the bureaucracy’s] economic roots? They are mostly of a dual character: on the one hand, a developed bourgeoisie needs a bureaucratic apparatus, primarily a military apparatus, and then a judiciary, etc., to use against the revolutionary movement of the workers (and partly of the peasants). That is something we have not got. Ours are class courts directed against the bourgeoisie. Ours is a class army directed against the bourgeoisie. The evils of bureaucracy are not in the army, but in the institutions serving it. In our country bureaucratic practices have different economic roots, namely, the atomised and scattered state of the small producer with his poverty, illiteracy, lack of culture, the absence of roads and exchange between agriculture and industry, the absence of connection and interaction between them.” (“The Tax in Kind” Collected Works Vol. 32 p. 351)

Lenin said that there were two sources of bureaucratism: One was the state apparatus and the other was the backwardness of and economic collapse. This second reason for bureaucratism appeared in connection to “wartime communism” and was therefore eliminated in part by NEP. On the other hand, it became clear that the bureaucratism connected to the state apparatus (and party apparatus), as represented by Stalin, was abnormally deep-rooted and unyielding, and this ultimately transformed the proletarian state.

Lenin said that the proletarian state might be able to reach socialism via state capitalism and that the best approach would be that of attaining state capitalism first and reaching socialism after that, expressing the “firm belief” that the Russia of NEP could give birth to the socialist Russia.

However, this prediction of Lenin was not borne out by reality. The other possibilities were more powerful, as is clear from the experience of history. With state capitalism, a new class emerged that had its own special interests, and this class transformed the proletarian state from within (by crushing the proletarian elements by means of factional struggles and state power), which they then usurped. This class was not composed of the “Nepmen” or the spontaneously generated capitalism that Lenin had feared. This late-appearing embryo of the bourgeoisie was unable to raise itself to the level of the ruling class of the state. The usurpers of the proletarian state were not the Nepment, but rather the state capitalist state bureaucrats, organizers of the state-run industries, and the party bureaucrats. The proletariat was not strong enough to subordinate them to their own system. This transformation was manifested in the phenomena of the altering of the proletarian party and the bureaucratization of the party, as well as the bureaucrats usurpation of the proletarian state. Trotsky and his followers, however, only focused solely upon these phenomena, while neglecting the analysis of the underlying relations of production. It was not merely a question of the rule of the bureaucrats, as Trotskyists say. Ultimately the question comes down to either the rule of the bourgeoisie or the proletariat. The ruling class (bureaucrats) of the Soviet Union were a special existence-form of the bourgeoisie, and not simply bureaucrats as a degenerated layer of the proletariat.

Referring to Stalinists as state capitalist bureaucrats does not include any sort of moralistic criticism. In fact, their function as the organizers and rulers of the state capitalist state and its enterprises had, to a certain extent, historical justification and progressiveness.

Socialism and Class

“Socialism means the abolition of classes. The dictatorship of the proletariat has done all it could to abolish classes. But classes cannot be abolished at one stroke.

“And classes still remain and will remain in the era of the dictatorship of the proletariat. The dictatorship will become unnecessary when classes disappear. Without the dictatorship of the proletariat they will not disappear.

“Classes have remained, but in the era of the dictatorship of the proletariat every class has undergone a change, and the relations between the classes have also changed. The class struggle does not disappear under the dictatorship of the proletariat; it merely assumes different forms.” (“Economics and Politics in the Era of the Dictatorship of the Proletariat,” Collected Works Vol. 30, pp. 114-5)

As long as classes exists, socialism has not been constructed -- this premise should be natural for anyone who is a Marxist. In fact, it is the overcoming of the opposition, difference and contradiction between classes that is the most essential content of socialism. However, the Stalinists have argued that even under socialism there are classes such as the “intelligentsia” (this is what they called the state capitalist bureaucrats), workers, and peasants, thereby challenging one of the most fundamental aspects of Marxist theory. The Stalinist theory labeled the existing reality in Russia at the time “socialism” (which was said to be an ideal situation that should be found satisfactory) in order to conceal all of the class differences and contradictions. It was in the interests of the ruling class of the Soviet state to defend the bourgeois theory (under the name of Marxism) of “distribution in accordance to the quantity and quality of labor” that concealed contradictions such as the exceedingly shoddy and barbaric system of piece-rate wages, terrible wage gaps, and the Stakhanov movement. It is not without reason that they attacked the idea of distribution in accordance with labor as “egalitarianism.” Trotskyists have said that Stalinism is “objectivism,” “socialism in one country,” or “peaceful co-existence on the basis of socialism in one country,” but this has only served to mystify Stalinism (and it is here that we can see their idealism and negative aspects). However, the fundamental theories of Stalinism ? such as the idea that even under socialism classes exist and the role of the state actually expands or the idea that the law of value is not only not sublated but actually is “utilized” and develops ? served to hide the contradictions of Soviet state capitalism from view by means of using the term “socialism” to refer to various phenomena of Soviet reality. In this sense, Stalinism is above all the ideology of the Soviet state capitalist system, and the thought that prettifies the state capitalist bureaucratic system. This is exactly the same as how the bourgeoisie seeks to conceal or justify the contradictions of capitalism. In Russia there are contradictions between classes, the role of the state has expanding -- including its role for oppressing the masses -- and money relations remain. But it is said that since this was occurring within “socialism” and “communism” (read: the equivalent of what the bourgeoisie calls the welfare state!) could only be reached through an increase in productive power through the development of this “socialism,” the masses would just have to be patient. Lenin recognized the existence of the law of value (i.e. the fact that the freedom of commerce was also the freedom of capital) and he emphasized that socialism was the overcoming of the law of value. Stalin, on the other hand, labeled capitalist elements “socialism”! In this way, it is clear that Stalinism is not merely the ideology of the state capitalist system, but also an ideology that glorifies capitalism in general, treating it as something eternal.

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