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The Theory of State Capitalism
Without Substance as Capitalism

Marxist Critique of Tony Cliff's Theory
of "Bureaucratic State Capitalism"

Written by Kennichi Suzuki (1992)


1. Cliff's Logic -- How He Proceeds
2. Concept of State Capitalism as a Theoretical Abstraction
3. "State as the Repository of Means of Production" ?
4. Fallacy of "Capitalism Without Private Ownership".
5. Break with NEP and Methodological Defect.
6. State Capitalism and the Law of Value
7. Cliff's Metaphysical Understanding of the Historical Significance of State Capitalism


Tony Cliff's "State Capitalism in Russia" 1 is one of the pioneering works which exposed the non-socialist nature of the USSR under the Stalin regime. As is well known, in this work he defines the Stalin regime as state capitalist (or more correctly, "bureaucratic state capitalist", according to him). As far as this is concerned, he is in accord with us. Based on the analysis of the relations of production in the USSR, we also have defined the regime as state capitalist.

However, an accordance in terminology doesn't necessarily mean an accordance in concept or content. If you examine his theory carefully, you would understand that it is totally different from ours both in methodology and in content. In this short work, we roughly introduce Cliff's theory first and examine its pioneering significance and its limit.

1. Cliff's Logic -- How He Proceeds

In order to grasp the content and methodology of Cliff's theory of state capitalism, first of all we look at how Cliff unfolds his "State Capitalism in Russia"("SCIR", below onwards).

In his SCIR, Cliff examines "Socio-economic relations in Stalinist Russia" in Chapter 1, and "State and party in Stalinist Russia" in Chapter 2.

In Chapter 1, he "described some of the salient features of the economic and social relations prevailing in the USSR", by which he exposed the reality of the Stalin regime that was so far from real socialism. He revealed that: production in the USSR was totally controlled by the bureaucracy, that the workers didn't have any rights ; that the workers were atomized and forced to compete between them by means of piece-work systems ; that the women were also mobilized for labor on a massive scale, that a huge number of prisoners were forced labor in camps, [ which is said to have amounted up to 10 million in the 30's] ; that consumption was subordinated to accumulation, and that the workers were subordinated to the means of production. He also exposed on the one hand the accumulation of capital and poverty on the other ; industry subordinated to war -- war industries extremely enlarged ; the productivity of labor increased, the expropriation of the peasantry ; the turnover tax ; the subordination of man to property ; changes in the relations of distribution ; the expansion of inequality in income ; bureaucratic mismanagement, etc. Surely his exposure of these above facts had a great significance in the 1950's and the 60's -- until then they had been hidden by the Stalinists.

In the last part but one of this chapter, he wrote, Russia, instead of a real plan, strict methods of government dictation are evolved for filling the gaps made in the economy by the decisions and activities of this very government, therefore, instead of speaking about a Soviet planned economy, it would be much more exact to speak of a bureaucratically directed economy. 2

Then, according to him,

One should, however, avoid the mistake of assuming that this mismanagement corroding Russia's national economy precludes very substantial, nay, stupendous, achievements. Actually, between the bureaucratic mismanagement and the great upward sweep of Russia's industry, there is a tight, dialectical unity. Only the backwardness of the productive forces of the country, the great drive towards their rapid expansion (together with a whole series of factors connected with this) and, above all, the subordination of consumption to capital accumulation, can explain the rise of bureaucratic state capitalism. 3

Here, for the fist time, we come across the definition "bureaucratic state capitalism". But he neither explains its concept nor makes clear the relation between the definition and the description he has already put.

In Chapter 2, he exposes the bureaucratic control of the state and the Communist Party and finishes the chapter with this conclusion,

The strengthening of the Russian state, its increasing totalitarianism, can only be the result of profound class antagonisms and not of the victory of socialism. 4

But he doesn't explain the content of the "class antagonisms".

In Chapter 3, he examines "the economy of a workers' state". He, however, doesn't analyze at all the relations of production in the USSR, but only quotes from Marx, Engels, and Lenin.

In the ending part of Chapter 4 "The material heritage of pre-October society", we are at last given some description of how Soviet state capitalism was formed historically.

Here Cliff says that the "world economy" had already realized a high enough productive to shift to socialism but Russia was so backward that it needed to achieve bourgeois tasks first. He says,

Post-October Russia stood before the fulfillment of the historical mission of the bourgeoisie. 5

(Incidentally, what he means here by "the historical mission of the bourgeoisie" is, in his understanding, "increase in the productive forces of social labor and the socialization of labor".)

And he continues like this.

......the fulfillment of the bourgeois tasks was the central problem in post-October Russia with its low level of national income. In the United States the addition of new means of production necessary for the socialization of labor can be accompanied by a rise in the standard of living of the masses, by a strengthening of the element of conviction in production discipline, by the fortification of workers' control, by the progressive dwindling of the differences in income between manual and mental workers, etc. But can this be achieved in a backward country under conditions of siege ? Can labor discipline based mainly on conviction prevail when the level of production is very low ? Can a quick tempo of accumulation, necessitated by the backwardness of the country and the pressure of world capitalism, be accomplished without the separation of society into the managers of the general business of society and the managed, the direction of labor and the directed ? Could such a separation be ended before those who directed production also directed distribution in their own interests ? Can a workers' revolution in a backward country isolated by triumphant international capitalism be anything but "a point in the process" of the development of capitalism, even if the capitalist class is abolished ? 6

This way Cliff raises the question ; and according to him, the Five-Year Plan was a moment when the bureaucracy was transformed into a ruling class.

.......the inauguration of the Five-Year Plan marked the turning point in the development of the relations of distribution, in the relations between accumulation and consumption, between the productivity of labor and the standard of living of the workers, in the control over production, in the legal rights of the workers, in the institution of forced labor, in the relation of agriculturists to the means of production, in the tremendous swelling of the turnover tax, and finally, in the structure and organization of the state machine. 7

As he also writes in the final part of this chapter,

It was now, for the first time, that the bureaucracy sought to create a proletariat and to accumulate capital rapidly. In other words, it was now that the bureaucracy sought to realize the historical mission of the bourgeoisie as quickly as possible. A quick accumulation of capital on the basis of a low level of production, of a small national income per capita, must put a burdensome pressure on the consumption of the masses, on their standard of living. Under such conditions, the bureaucracy, transformed into a personification of capital, for whom the accumulation of capital is the be-all and end-all here, must get rid of all remnants of workers' control, must substitute conviction in the labor process by coercion, must atomize the working class, must force all social-political life into a totalitarian mold. It is obvious that the bureaucracy, which became necessary in the process of capital accumulation, and which became the oppressor of the workers, would not be tardy in making use of its social supremacy in the relations of production in order to gain advantages for itself in the relation of distribution. Thus industrialization and technical revolution in agriculture ("collectivization") in a backward country under conditions of siege transforms the bureaucracy from a layer which is under the direct and indirect pressure and control of the proletariat, into a ruling class, into a manager of "the general business of society : the direction of labor, affairs of state, justice, science, art and so forth".

Dialectical historical development, full of contradictions and surprises, brought it about that the first step the bureaucracy took with the subjective intention of hastening the building of "socialism in one country" became the foundation of the building of state capitalism. 8

Through the Five-Year Plan the bureaucracy rapidly accumulated capital, created a proletariat, transformed itself into a personification of capital. Thus the bureaucracy was transformed into a personification of capital by realizing the historical mission of the bourgeoisie as described above. This explanation is not wrong and we can agree with it. However, the key question is how we should understand such a state capitalism. Unfortunately, so far Cliff hasn't satisfied us, for we have only been given the definition "bureaucratic state capitalism" without an adequate explanation (and not just a collection of concrete facts) of its content. But anyway we can find some kind of explanation about it from Chapter 5 "The common and different features of state capitalism and a workers' state.

2. Concept of State Capitalism as a Theoretical Abstraction

In the opening of Chapter 5 Cliff says,

None of the Marxist theoreticians doubted that if the concentration of capital could reach such a stage that one capitalist, a collective of capitalists or the state, concentrated the total national capital in its hand while competition on the world market continued, such an economy would still be a capitalist economy. At the same time, all the Marxist theoreticians emphasized that long before the concentration of capital could reach such a level, either the antagonism between the proletariat and the bourgeoisie would bring about a victorious socialist revolution, or the antagonisms between the capitalist states would drive them into such a destructive imperialist war, that society would totally decline. 9

The book makes frustrating reading up to this point, since we have been given only the definition "state capitalism" or "bureaucratic state capitalism". But here at last we realize that he defines as "state capitalist" a capitalism which has reached "the stage that one capitalist, a collective of capitalist of the state, concentrated the total national capital in its hands while competition on the world market continued", or that this is his image of state capitalism.

Soon after this, Cliff tells us that,

While state capitalism is possible theoretically it is indubitable that individual capitalism through evolutionary development will in practice never arrive at the concentration of the entire social capital in one hand. 10

He explains its reason quoting from Trotsky.

The last two factors -- the "contradictions among the proprietors themselves" and the fact that if it were the "universal repository of capitalist property, the state would be too tempting an object for social revolution", explain why it is most improbable that traditional individual capitalism will develop gradually till it reaches 100 per cent state capitalism. But do these two facts exclude the possibility that after a ruling working class is overthrown, not traditional capitalism , but state capitalism, is restored ? The revolutionary proletariat has already concentrated the means of production in the hands of one body, and so eliminated the first factor. As regards the second factor, in any case any oppression and exploitation of the workers by the state makes the state a "tempting . . . object for social revolution" ; the political expropriation of the working class is thus identical with its economic expropriation. 11

Here it is clear that Cliff's understanding is that in Russia "after the ruling working class was overthrown", "state capitalism was restored".

In Chapter 6 "A further consideration of Stalinist society, economics and politics", he argues that "the Stalinist bureaucracy qualifies as a class" and, . . . the Russian bureaucracy, "owning" as it does the state and controlling the process of accumulation, is the personification of capital in its purest form. 12

Just after this part, he argues about "its difference to a state capitalism evolving gradually from monopoly capitalism". He writes,

However, Russia is different from the norm -- the concept of state capitalism evolving gradually from monopoly capitalism. This divergence from the state capitalism which evolves gradually, organically, from monopoly capitalism, doesn't render the question of the concept of state capitalism unimportant. Far from it, it is of the greatest significance to find that the Russian economy approaches this concept much more closely than ever could a state capitalism which evolved gradually on a capitalism foundation. The fact that the bureaucracy fulfills the tasks of the capitalist class, and by doing so transforms itself into a class, makes it the purest personification of this class. Although different from the capitalist class, it is one and the same time the nearest to its historical essence. The Russian bureaucracy as a partial negation of the traditional capitalist class is at the same time the truest personification of the historical mission of this class.

To say that a bureaucratic class rules in Russia and stop at that, is to circumvent the cardinal issue -- the capitalist relations of production prevailing in Russia. To say that Russia is state capitalist is perfectly correct, but not sufficient ; it is also necessary to point out the differences in the juridical relations between the ruling class in Russia and that in a state capitalism which evolved gradually from monopoly capitalism. The most precise name for the Russian society is therefore Bureaucratic State Capitalism. 13

Thus at last we reached Cliff's "bureaucratic state capitalism". Though I have followed Cliff's unfolding of his logic as much as possible, I find, his explanation so far isn't at all persuasive. For he only defines the USSR as state capitalist or bureaucratic state capitalist ; he does not make clear at all how it is operating as capitalism.

But this is all he can do. Because his concept of state capitalism is one of capitalism where "one capitalist, a collective of capitalists or the state, concentrated the total national capital in its hand while competition on the world market continued". Certainly, if the concentration of capital takes place in its most extreme form, the ultimate result would be a "stage" that "one capitalist, a collective of capitalists or the state concentrated all capital". But Cliff himself admits that a socialist revolution or a destructive imperialist war would break out before a capitalism reaches such a "stage". Therefore, such a "stage" is just an abstraction which in reality cannot come into being.

Despite this, Cliff claims that such a state capitalism which wouldn't actually exist under capitalism can come into being (by the state capitalist bureaucracy transforming itself into a ruling class) after a workers' state is overthrown. What's more, according to him, the regime in Russia is the very real existence of such a state capitalism.

In this definition of state capitalism, you may well say that the state (or the bureaucracy as a ruling class) which has centralized capital (the means of production) as a whole under its own volition exploits the working class as a whole. However, it doesn't become clear at all why this system should be regarded as capitalist and how it operates as capitalism. In other words, Cliff's state capitalism is not one which is actually operating through a concrete mechanism but one as a theoretical abstraction of the ultimate form of the concentration of capital.

3. "State as the Repository of Means of Production" ?

His understanding, as we have seen, is unseparably related to the fact that he, following Trotsky, defines the state as the "universal repository of capitalist property". We often come across similar expressions through his work. To take a few examples, ". . . if the state becomes the repository of all capital", also ". . . even if the state is, as yet, not the repository of the means of production". So these show us that this concept is something essential for him. Here's another quotation.

The state bureaucracy, as Marx said in his Critique of Hegel's Philosophy of Law, possesses the state as private property. In a state which is the repository of the means of production the state bureaucracy -- the ruling class -- has forms of passing on its privileges which are different from those of the feudal lords, the bourgeoisie or the free professionals. 14

However, the definition "state as the repository of means of production" is one-sided and wrong. Certainly, it isn't impossible to say that a state is the "repository of means of production" as long as they are nationalized and owned in law by the state. But if the means of production are in a "repository", they are just stocks which actually don't operate as capital. A machine left in a warehouse doesn't automatically produce cars. The means of production operate as capital only when they employ workers, exploit them, create surplus value, and gain profits under a general relation of capitalism, whether they are in the state sector or in the private sector. The means of production which are just laid in a repository are not capital (though they can potentially be capital).

When we define the regimes in the USSR, China and others as state capitalist, we don't do so as an abstraction. In our definition the means of production there don't stay in repositories but are actually operating as capital. In other words, the state capital exists in the form of state enterprises, state farms and so on, and is actually operating.

Certainly, the means of production were under state ownership and the state bureaucracy did decide on the kinds and amounts of goods to be produced and their prices. So the functions of the means of production as capital were extremely limited. However, the state enterprises had been regarded as independent units of production since the Stalin regime (so-called "Hozraschot" or the principles of economic calculation) and obliged to raise profits.

Previously I have pointed out the following facts by quoting from Alec Nove's "The History of Soviet Economy" and "The Soviet Economic System" ; The December 1929 Central Committee of the CPSU decided that "each enterprise should be a basic unit of industrial management, that Hozraschot (the economic calculation system or the commercial calculation system) should be put into practice in each enterprise, and that each enterprise should have a suitable autonomy and legal personality over its finance". Therefore, according to Nove, Soviet enterprises "were operating as independent financial units with the profit and loss account", were required to keep a certain level of profitability by economizing resources as much as possible and by spending from their own money income".

In conclusion I wrote,

It goes without saying that this "economic calculation system" is nothing but a capitalist principle. Enterprises, as "independent financial units with the profit and loss account", "keep a certain level of profitability by economizing resources as much as possible and by spending from their own money income" -- it is more than clear that such enterprises are capitalist enterprises which exist and operate as capital. Certainly, the enterprises didn't operate as capital to the full. This was because various obligatory indications (especially "the total sum of production"), which accorded with state purposes, took priority over anything else and the operation of capital was severely limited by the systems of the state allocation of means of production, fixed prices, and so on. But despite these facts Soviet enterprises were nothing but capital.

Workers were severally employed by each enterprise (in other words, sold labor powers) and received wages. They were exactly wage laborers. In addition, they were severely exploited by the piecework wage rate (furthermore, the cumulative piecework wage rate !), that is, by the system which Marx described as "a richest source of wage deduction and capitalist exploitation" or "a wage form which is most suitable to the capitalist relation of production". 15

In Soviet state capitalism thus capitalism existed as the real dominant relation of production and state capital also actually existed and operated as capital (taking the forms of state enterprises, state farms and so on). Though they couldn't function to the full under state control, the fact was never denied that they existed and operated as capital.

What's more, because state capital was under state control and limit, in other words, because it still had been operating as capital under such a condition, Soviet state capitalism created from within an impulse for "economic liberalization" or a necessity for more free operation by getting rid of the weakness as state capital when it reached a certain stage of development.

But in Cliff's "bureaucratic state capitalist" theory state capital is just an abstraction (or just an existence in concept) and the means of production are simply left in the "repositories" under the state. Naturally enough, he can never explain the actual operation and function of capital, the contradictions which an economy that operates under state control intrinsically creates, and thereby, the inevitability of the impulse and internal requirement for "liberalization" to break through such contradictions. Luckily (unluckily ?) enough for Cliff, his original work was first published under the title "Russia, A Marxist Analysis" in 1955. So he was able to avoid a "duty" to explain the inevitability of the "liberalization" and its historical meaning.

4. Fallacy of "Capitalism Without Private Ownership"

Cliff only "applies" his image of state capitalism to Russia as a theoretical abstraction, without explaining its content. Our criticism can also be backed up by the fact that he denies the existence of private property in Russia. He says,

Russia presents us with the synthesis of a form of property born out of a proletarian revolution and relations of production resulting from a combination of backward forces of production and the pressure of world capitalism. 16

His peculiarity is that he is fond of playing with abstract arguments like this. And this is what he inherited from his "master", Trotsky (Cliff calls himself "a disciple of Trotsky". I will discuss this later). After the passage above he writes,

History often leaps forward or backward. When it leaps backward, it doesn't return directly to same position, but goes down a spiral, combining the elements of the two systems from which and to which the society passed. For example, because in the same state capitalism which is an organic, gradual continuation of the development of capitalism, a form of private property would prevail in the ownership of shares and bonds, we must not conclude that the same will apply to state capitalism which rose gradually on the ruins of a workers' revolution. Historical continuity in the case of state capitalism which evolves from monopoly capitalism, is shown in the existence of private property (bonds). Historical continuity in the case of state capitalism which evolves from a workers' state that degenerated and died, is shown in the non-existence of private property. 17

But is it really correct to say that private property doesn't exist under Soviet state capitalism ? For instance, how about the collective farms ("kolkhoz") ? Unlike the state farms ("sofkhoz"), they collectively own the means of production. Stalin would be the best person to explain this fact to us. As he wrote,

Today, there are two basic forms of socialist production in our country ; the national form -- the ownership by all the people -- and the kolkhoz form which cannot be described as "by all the people". In the state enterprises the means of production and the products there are owned by all the people of the country. However, in the kolkhoz enterprises while the means of production (the land and machines) belong to the state, the products there are owned by each kolkhoz. Because one's labor in the kolkhoz belongs, as well as seeds, to himself or herself, and the kolkhoz deal with their land given for permanent use, virtually as their own property -- though they are not allowed to sell, buy, let, or to mortgage. 18

As we know, with this fact Stalin admitted the existence of commodity production and the law of value -- though he also emphasized that it was a "special kind of commodity production" which would never develop into capitalism. Thus the kolkhoz "deal with the means of production as their own property, use them permanently, and own their products to sell to the state". Obviously, the kolkhoz were independent private producers and collective owners of private property.

Here I present another obvious example, the so-called "curtilage" (attached residential land). Stalin made some concession to the peasants in order to mitigate their discontent. After the 1935 Act. on the kolkhoz, the peasants in the kolkhoz were allowed to possess land within 0.25 or 0.50 ha. and cows (up to two), pigs (up to two), sheep (up to ten) per capita (also rabbits and chickens, without limit). Even before then, in May 1932 the government had permitted markets and commerce in the kolkhoz. The new Article in 1935 allowed the peasants to possess some kinds of the means of production and to sell their agricultural products from their land. What's more, you cannot miss the fact that the products from their private land, such as milk, eggs, meat, potatoes and so forth, later came to share a significant part of the total consumption in the USSR. Thus private means of production played an important role under the Stalin regime.

These means of production owned by the peasants such as curtilage, agricultural tools and so forth were nothing but "private property". Therefore, the peasants were allowed to freely sell their products on the market, and they actually circulated as commodities.

Thus, the claim that private property didn't exist under Soviet state capitalism was completely unfactual (besides, houses, villas and so forth would be among the examples of "private property"). Before everything else, generally speaking, there cannot be a capitalism which isn't based on private property, thereby, on commodity production and circulation whether in state capitalism or in private capitalism.

Certainly, capitalism is not directly identical with commodity production both in concept and in history. Needless to say, this discrimination shouldn't be ignored. But Stalin's claim that there could be a "special kind of commodity production" which wouldn't develop into capitalism is totally nonsense and theoretically wrong. Capitalism is a society of "the highest form of commodity production". It is always established on the development of commodity production. In other words, the foundation of capitalism is always the relations of commodity production and circulation. This should be clear as common sense for every reasonable Marxist.

But unfortunately, it is not so for Tony Cliff. For his theory of state capitalism, his alleged capitalism, lacks private property and, therefore, commodity production and the operation of capital. His "capitalism" is just a theoretical abstraction which lacks substance.

5. Break with NEP and Methodological Defect.

Another big difference between Cliff and us is that while we regard Russia under the NEP as state capitalism and the Stalin regime as its developed or "completed" form, he understands that Soviet state capitalism is one which "evolved from a workers' state that had degenerated and died" (To be sure, he is a disciple of Trotsky !) As we have already made clear, his "bureaucratic state capitalism" is not a special kind of capitalism that was born and developed on the foundation of commodity production, but one that suddenly popped out from the ruins of a workers' state, where neither private property nor commodity production nor capitalism had existed (gutted by the Stalinist bureaucracy ?). It is a theory of state capitalism without substance as capitalism.

But as Lenin also admitted and indeed stressed, Russia under the NEP was state capitalist based on a wide spread petty commodity production. Moreover, the Russian Revolution itself was not simply a socialist revolution but one of the workers and peasants and its socio-economic content was bourgeois, as we have always been stressing. But strangely enough, Cliff forgets this point when he speaks of Soviet state capitalism ; though he also admits it in a sense. Lenin was absolutely correct when he criticized Trotsky, who abstracted the Bolshevik's power as a "workers state" (note that he did so in 1921 !). Russia was nothing but a state of the "workers and peasants".

But though Cliff sometimes admits such a bourgeois character of the Russian Revolution, he doesn't try to develop his analysis based on the facts in a historical materialist way, but escapes into the abstraction "workers' state" and speak of state capitalism only from such a position. Therefore, it is not a coincidence at all that he cannot draw state capitalist analysis from the actual relations of production and their development in Russian society but only applies to Russia an abstraction of state capitalism as the ultimately developed form of capitalism.

If you read through his SCIR carefully, you will notice that in its first half various facts are put, but without theoretical interpretation and in its second half only a collection of abstract theories without the analysis of facts. But this is not a coincidence, but tightly connected to his methodological defect ; which lacks a materialistic dialectical approach in developing a state capitalist concept by scientifically analyzing actual relations of production as well as examining the concept in comparison with the reality. Consequently, he cannot organically synthesize theory and facts but detaches them from each other and mechanically stand them side by side.

6. State Capitalism and the Law of Value

Thus Cliff's "bureaucratic state capitalism" is, so to speak, an "empty pie" lacking the substance of various relations of capitalist production such as commodity production. This naturally affects his argument about the law of value in Soviet economy. Now let us look at how he understands the law of value in Russia.

He examines in Chapter 8 of SCIR the "Russian economy and the Marxian law of value and theory of capitalist crisis". After he introduces some well-known arguments among Soviet economists about "whether the law of value operates under socialism", he moves on to the questions of state monopoly capitalism, state capitalism and the law of value.

Before we discuss this question, let us go back for a minute to the question of Cliff's definition "the state as the repository of means of production". In this chapter, he again says,

The term "state capitalism" can denote both a capitalist war economy and the state in which the capitalist becomes the repository of all the means of production. 19

Therefore, "it will be preferable to distinguish between the two in order to avoid confusion". Then he goes on to say,

The term "state capitalism" will be used only to denote the stage in which the capitalist state becomes the repository of the means of production, while a capitalist war economy will be termed "state monopoly capitalist". 20 We have already criticized this claim, so we won't repeat it. Here we only point out that this is also typical of Cliff's one-sided understanding of state capitalism.

Now let's return to the question of the law of value. He writes,

State monopoly capitalism is, in the last analysis, at the mercy of blind economic forces, and is not governed by the conscious will and decisions of any man or men. 21

According to him, even in the Nazi economy the pressure of competition was the decisive factor. So he writes, Notwithstanding, therefore, the distortions of competition and of the law of value under state monopoly capitalism, this law is, in the last analysis, all-decisive. 22

We have no objection to this conclusion itself. Insofar as state monopoly capitalism is also within the framework of capitalism, undoubtedly the law of value exists and operates -- even though it is so deflected as not to operate to the full. But Cliff puts forward a very strange explanation when it comes to the law of value in Soviet economy. He separates his examination into two parts ; "viewed in isolation from world capitalism" and "viewed in its relations with world capitalism". And he puts a negative view about the law of value in the former case. He writes,

At first sight the relationship between the different enterprises in Russia appears to be the same as that between different enterprises in the traditional capitalist countries. But this only formally so. In a society of private producers the essential difference between the division of labor within a workshop and the division of labor within society as a whole, is that in the former the ownership of the means of production is concentrated in the hands of one man or one body of men, while in capitalist society as whole there is no center of decisions, but only the "blindly working average", which determines how many workers shall be employed in different enterprises, what commodities shall be produced, and so on. No such distinction exists in Russia. Both individual enterprises and the economy as a whole are subordinated to the planned regulation of production. The difference between the division of labor within, say, a tractor factory and the division of labor between it and the steel plant which supplies it, is a difference in degree only. The division of labor within Russian society is in essence a species of the division of labor within a single workshop.

Formally, products are distributed among the different branches of the economy through the medium of exchange. But as the ownership of all enterprises is vested in one body, the state, there is no real exchange of commodities. . . . .

In a society of private producers, connected with one another only through exchange, the medium regulating the division of labor in society as a whole is the monetary expression of exchange value -- price. In Russia there is a direct connection between the enterprises through the medium of the state which controls production in nearly all of them and so price ceases to have this unique significance of being the expression of the social character of labor, or regulator of production. 23

Thus he concludes that neither the social division of labor nor the "real exchange of commodities" exist and that, therefore, there is no space for the law of value to exist in the USSR.

Hence if one examines the relations within the Russian economy, abstracting them from their relations with the world economy, one is bound to conclude that the sauce of the la of value, as the motor and regulator of production, is not to be found in it. In essence, the laws prevailing in the relations between the enterprises and between the laborers and the employer-state would be no different if Russia were one big factory managed directly from one center, and if all the laborers received the goods they consumed directly, in kind.

On the other hand, according to him, "if one examines it in its relations with world capitalism", the conclusion would be different. It goes like this.

The Stalinist state is in the same position vis-a-vis the total labor time of Russian society as a factory owner vis-'-vis the labor of his employees. In other words, the division of labor is planned. But what is it that determines the actual division of the total labor time of Russian society ? If Russia had not to compete with other countries, this division would be absolutely arbitrary. But as it is, Stalinist decisions are based on factors outside of control, namely the world economy, world competition. From this point of view the Russian state is in a similar position to the owner of a single capitalist enterprise competing with other enterprises. 25

And his conclusion is,

The law of value is thus seen to be the arbiter of the Russian economic structure as soon as it is seen in the concrete historical situation of today -- the anarchic world market. 26

Now our readers must have intuitively felt that there is a fundamental defect in this sort of argument. Actually here Cliff is putting forward a very strange argument.

Certainly the law of value wouldn't exist if in Russia the social division of labor based on private ownership actually didn't exist, if "the division of labor within Russian society is in essence a species of the division of labor within a single workshop" and "there is no real exchange of commodities", and if "in essence Russia were one big factory managed directly from one center, and if all the laborers received the goods they consumed directly, in kind". For under such a condition products don't transform into commodities, therefore, there is no space for the law of value to exist.

However, such a society, if any, would be one already different to state capitalism (and any kind of capitalism). In other words, it should be identical with a socialist society. Cliff is totally confused here. What sort of socialist society could we have if a society was not socialist, in which private ownership is abolished, the means of production are transferred to common ownership of the society -- though in the first place it has to go through state ownership -- , and the whole of which has already become "one big factory managed directly from one center" ? We can even say that these include all the basic concepts necessary for socialism.

Therefore, though he is speaking of Russian "state capitalism", at the same time Cliff is virtually saying that Russia is not capitalist but socialist. So, as far as this is concerned, he may well say that the law of value doesn't exist in Russia.

Now here appears a question. Where has his "state capitalism" gone ? What is the reason for him why Russia is state capitalist ? His theory of "state capitalism", which we call "the theory of state capitalism without substance as capitalism", is now stuck in a dilemma from which it cannot escape.

"Wait ! You shouldn't jump to such a conclusion ! No problem even if there is no space for the law of value to exist within Russia. Don't forget that I am not for socialism in one country but for world revolution !" -- though I don't know if he actually would have said this when he wrote. Anyway, Cliff is prepared for our criticism -- with the section "The Marxian law of value and the Russian economy viewed in its relations with world capitalism".

According to him, though the Russian state is the single owner or "repository" of the means of production, it is "in a similar position the owner of a single capitalist enterprise competing with other enterprises if it is viewed in its relations with world economy.

In this capitalist world economy Russia is thrown into the competition with other countries, therefore, it cannot escape from being applied to various laws in the world of commodities and the law of value. He says,

The rate of exploitation, that is, the ratio between surplus value and wages (s/v) doesn't depend on the arbitrary will of the Stalinist government, but is dictated by world capitalism. 27

Surely as he says, if a socialist country exchange commodities with bourgeois countries or capitalist enterprises on the world market, it necessarily has to act as an owner of commodities. And the relation between them is one between commodity owners, in other words, the relation of commodity exchange, which is regulated by the law of value. In this sense, socialist countries cannot be completely free from the law of value unless they reach a world socialism or, at least, a lot of major countries in the world become socialist (if it is not a huge country which has rich resources and many workers -- enough to build "socialism in one country")

Having said that, if a country is socialist in the essential sense as explained earlier, the relations of commodity exchange cannot permeate the fundamental relations of production in the country, which will be able to remain as socialist without being applied to the law of value.

Cliff should understand this point. If a given country becomes capitalist because it is put inside the competition of world capitalism, it only means the country is not socialist but capitalist from the beginning. Unless the country has a capitalist foundation inside, the law of value of world market cannot permeate the domestic economy of the country and become a ruling economic law. So, you can't prove a country capitalist by arguing its "relations with world capitalism" as Cliff does.

What's more, Cliff dares to put himself in a further strange contradiction. He writes,

Up to now, Russia's economy has been too backward to be able to flood foreign markets with her goods. Her own markets are protected against the possibility of being flooded with foreign goods by virtue of the state's monopoly of foreign trade which can only be destroyed by military power. 28

That is to say, he says that Russian economy was shielded from the world market-- suitably for its banner of "socialism in one country". This is exactly true. Because of the virtual economic blockade of major capitalist countries and also of the exhaustion of Russian economy itself, which made the country unable to export her goods and import foreign goods, the trade with the "free world" didn't have a significant importance for Russia for many years.

Cliff positively admits this fact. Then, how on earth can he claim that Russia was capitalist because it was forced to be applied to the law of value on world market ? -- he has just admitted that Russia was isolated from the world economy !

He seems to know his own such claim is contradictory. So he says that Russia's competition with other countries was limited to the trade of military products. But this doesn't solve his contradiction and only throw him into a more and more strange position. To take an example,

Because international competition takes mainly a military form, the law of value expresses itself in its opposite, viz. a striving after use values. 29

Is there any rational content here at all ? He has completely been stuck in an impasse. The harder he tries to escape from it, the more hopeless a confusion he falls into.

In this chapter, he puts forward still more such strange arguments as follows. "Under state capitalism no crisis of overproduction takes place (because the law of value itself doesn't exist)". "Tugan-Baranovsky's 'solution' that under state capitalism production can endlessly be continued if an equilibrium is kept between the sectors of producer goods production and consumer goods production, is at least 'temporarily possible'". Also, "there is another means whereby state capitalism can eliminate the crisis of overproduction, viz. a war economy. " But we don't have time for the company of these strange arguments. Let's go on to the next.

7. Cliff's Metaphysical Understanding of the Historical Significance of State Capitalism

Cliff's idealistic, metaphysical understanding of state capitalism inevitably leads him to the position which denies any progressive aspect of Soviet state capitalism. He writes,

Although, of course, the tyranny of the Chaldean king was historically necessary and progressive in its time, while that of Stalin is historically superfluous and reactionary. 30

As opposed to this, on the other hand, he also writes,

A social order which is necessary to develop the productive forces and prepare the material conditions for a higher order of society, is progressive. 31

Then, shouldn't he objectively evaluate the aspect that the Stalin regime, though it severely oppressed and exploited the workers and peasants on the very same process, raised the backward peasant Russia up to an industrial superpower ? But he doesn't dialectically observe things in such a historical materialist fashion. Instead, he prefers more simplified sorts of argument such as that Russia was reactionary because it "retreated" to state capitalism though the world was mature for socialism. Here is nothing but that same old idealistic clich' of Trotskyists. Anyway, let's listen.

Were the backward countries isolated from the rest of the world, we could certainly say that capitalism would be progressive in them. For instance, if the countries of the West declined and disappeared, Indian capitalism would have no less long and glorious a future than British capitalism had in the nineteenth century. The same is true of Russian state capitalism. Revolutionary Marxists, however, take the world as our point of departure, and therefore conclude that capitalism, wherever it exists is reactionary. (Listen to this hopelessly metaphysical claim ! -- Suzuki) For the problem humanity must solve today, under pain of annihilation, is not how to develop the production forces, but to what end and under what social relations to utilize them.

This conclusion as regards the reactionary character of Russian state capitalism, notwithstanding the rapid development of its productive forces, can be refuted only if one could prove that world capitalism has not prepared the material conditions necessary for the establishment of socialism, or that the Stalinist regime is preparing further conditions necessary for the establishment of socialism than those prepared by the world at large. The former contention leads one to the conclusion that we are no yet in the period of the socialist revolution. The most one can say to the latter is that Stalinist Russia will bequeath to socialism a higher concentration of capital and of the working class than any other country. 32

I extract another quotation.

The very fact of the existence of the Stalinist regime declares its reactionary nature, as without the defeated October revolution the Stalinist would not have existed, and without the maturity of the world for socialism the October revolution would not have broken out. 33

Now our readers must have been assured, with their own eyes, of the abstract, metaphysical character of Cliff's theory. "The world is mature for the socialist revolution, so capitalism is reactionary wherever it is". What is this ? At least, it is absolutely sure that it is anything but a claim by a Marxist.

It is true that national capitalism's are combined with each other through world market and transformed into a tightly linked world capitalism. And this is a progressive aspect of capitalism. However, it is a hopelessly absurd simplification to say that capitalism has become reactionary anywhere because the world has prepared the material conditions for socialism. For instance, how about China ? There, capitalism has just entered the period of its full-scale development. How about a great number of countries in Africa ? Everyone knows that these countries have just reached the departure of capitalist development, where the poverty of the people isn't necessarily brought by capitalism but rather by the underdevelopment of capitalism. Can anyone say that capitalism is already reactionary in such countries ? Or is there any practical point in saying so ? One cannot dodge these questions by saying "world historically speaking" or "if you see it on a world scale", etc. Because what basically determines the character of the social revolution in a given country is the stage of economic development there and that of the world as a whole is, in the first place, a secondary factor. 34

Of course, to say this doesn't exclude the possibility that in the case that (a couple of) highly developed big countries transform into socialism, small countries around them can reach socialism in a shorter term by "jumping over" the capitalist stage or shortening the transitional period with less difficulties. But this possibility never justifies Cliff's "methodology" which directly "draws" the socialist revolution from the stage of development of world capitalism.

In examining the characters and socio-economic contents of any revolution, namely, the Russian Revolution and the Chinese Revolution, we have always drawn conclusions by analyzing the various socio-economic conditions and the historical stage of development in those countries. This method is absolutely correct for the historical materialists and an unconditional duty for the Marxists. But Tony Cliff departs from the abstraction "world capitalism" which he alleges has already prepared the material prerequisites for socialism, and applies the conclusion which he has deduced from the abstraction to concrete conditions in Russia. 35 His way of "interpretation" is totally upside-down. This is a historical idealistic, metaphysical view of history which has nothing to do with Marxism.

However, at the same time, our evaluation that Soviet state capitalism was historically progressive is, of course, not unconditional. It goes without saying that it was so, viewed only in the historical context and the concrete conditions in then Russia and, what's more, our evaluation never contradicts at all our accusation of the bourgeois essence of the Stalinist regime and our support to the struggles against it.

As our Platform says,

State capitalism was thousands of times as progressive as the former semi-feudal and semi-colonial societies in Russia and China, and made possible a national economic development in these huge countries. But it is a peculiar form of capitalism accompanying as its inevitable moments the harsh oppression and exploitation of dozens of millions of working people, the lack of political rights, and row, primitive autocracy. The so-called "Stalinism" is nothing but the "superstructure" of such a state capitalism. 36

Only those who cannot take the dialectical approach toward history lose their temper and shout that it justifies Stalinism to hear the evaluation that the Stalin regime had a certain historical progressive aspect.

As a conclusion, Tony Cliff accused of the Stalin regime and gave it the definition "state capitalism (or bureaucratic state capitalism)" trying to grasp the essence of the regime. But he didn't try to draw the conclusion by a scientific analysis of real, concrete, historical conditions in Russia, but, on the contrary, he started from the abstractions such as "workers' state" and "world capitalism" and applied them to the reality there. Speaking in a word, he couldn't overcome his idealistic position, falls into a lot of confusions and contradictions, and exposes his theoretical bankruptcy. After all, he departed as a "disciple of Trotsky"as he himself admits, and tried to get over his master, only to fail both in "content" and in "methodology". In other words, he remains within the limit of Trotskyism.

First published in the SWP(JPN) theoretical journal "Prometheus" 1992 Spring issue.
Translated by Shin Takeo


1 Tony Cliff's "Stalinist Russia, A Marxist Analysis" (1955) was first translated into Japanese in 1961 by Tsushima Chuko, who had a great influence among the Japanese far left movement in its early years.

2 T. Cliff, "State Capitalism in Russia", p. 103.

3 Ibid., p. 103.

4 Ibid., p. 135.

5 Ibid., p. 163.

6 Ibid., p. 164.

7 Ibid., p. 164, 165.

8 Ibid., p. 165, 166.

9 Ibid., p. 167.

10 Ibid., p. 167.

11 Ibid., p. 168.

12 Ibid., p. 181.

13 Ibid., p. 181, 182.

14 Ibid., p. 187.

15 Labor and Liberation, 1990 November issue, p. 31.

16 T. Cliff, State Capitalism in Russia, p. 187.

17 Ibid., 188.

18 J. V. Stalin, Economic Problems of Socialism in the Soviet Union, Japanese Edition, p. 23.

19 T. Cliff, State Capitalism in Russia, p. 213.

20 Ibid., p. 213.

21 Ibid., p. 214.

22 Ibid., p. 214, 215.

23 Ibid., p. 220, 221.

24 Ibid., p. 220, 221.

25 Ibid., p. 221.

26 Ibid., p. 224.

27 Ibid., p. 221.

28 Ibid., p. 222.

29 Ibid., p. 222.

30 Ibid., p. 191.

31 Ibid., p. 197, 198.

32 Ibid., p. 199, 200.

33 Ibid., p. 200.

34 The Trotskyists should answer why every single revolution in backward countries such as Russia, China, Cuba, Nicaragua, and dozens more, didn't automatically trigger a "world revolution" but has only been "betrayed" and "degenerated" by petty bourgeois nationalists or Stalinists.

35 Platform of the SWP(JPN), English Edition, p. 5.

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