State-Monopoly Capitalism

a new, more developed form of monopoly capitalism, characterized by the joining of the forces of capitalist monopolies with the power of the state to preserve and strengthen the capitalist system, enrich the monopolies, suppress the workers’ and national liberation movements, and unleash aggressive wars.

State-monopoly capitalism is imperialist capitalism in the era of its general crisis, an era marked by the existence and struggle of the capitalist and socialist systems, the growing influence of the force of world socialism on the course of history, and the increasing disharmony between the level of productive forces and capitalist relations of production. This form of monopoly capitalism is characterized by the incompatibility between the high degree of socialization of production and labor on the one hand and private capitalist appropriation on the other; by the accelerated creation of the material preconditions of socialism; and by the upsurge of the workers’ and liberation movements. The extended reproduction of monopoly capital and the accumulation of monopolistic superprofits in this period require the coalescing and merging of monopolies (finance capital) with the state. With the scientific-technological revolution, the aggravation of interimperialist contradictions, and the increase in class contradictions, the character of contemporary capitalist reproduction presupposes the need for state intervention in the economy.

The economic basis of state-monopoly capitalism in the developed capitalist countries consists of highly concentrated industry and highly centralized capital (both private-monopolistic and state capital).

The founders of Marxism foresaw a time when communications and the means of production could not be administered by corporations, when nationalization by bourgeois authorities would become economically inevitable. In the Preface to his work The Critique of Political Economy, K. Marx pointed out the obvious interrelationship of such phenomena as “the state, foreign trade, and the world market.” An analysis of the activity of the joint-stock company brought Marx to the conclusion that “in certain spheres, it leads to the establishment of a monopoly and therefore requires state intervention” (K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 1, pp. 481–82). Engels wrote, in Anti-Diihring, that “the state, as the official representative of capitalist society, is compelled to assume the leadership of these means of production and communication” (ibid., vol. 20, p. 289).

V. I. Lenin provided a profound analysis of state-monopoly capitalism at the very beginning of its existence. The very term “state-monopoly capitalism” was coined by him. In his work Imperialism as the Highest Stage of Capitalism (1916), Lenin, examining imperialism of the period before World War I (1914–18), affirmed the existence of state monopolies and defined their role. In subsequent works, Lenin pointed out that monopoly capitalism grows over into state-monopoly capitalism. In his work War and Revolution (1917), Lenin exposed “the beginnings of state-controlled capitalist production, combining the colossal power of capitalism with the colossal power of the state into a single mechanism and bringing tens of millions of people within the single organization of state capitalism” (Poln. sobr. soch., 5th ed.. vol. 32, p. 83). Lenin emphasized that the characteristic trait of state-monopoly capitalism is the coalescence of monopolies with the state.

The teachings of Lenin on state-monopoly capitalism were developed further in documents and decisions of the CPSU and the international Communist movement.

The growing over of monopoly capitalism into state-monopoly capitalism results from the action of the internal laws of capitalism. The elements of state-monopoly capitalism appeared at the turn of the 20th century as a result of the transformation of monopolies into the predominant force. World War I hastened the development of state-monopoly capitalism. The need to create a centralized war economy led to increased direct state intervention in the economic life of the warring countries. The state restricted the production of goods of peacetime consumption; the market system for the allocation of scarce raw materials, partly processed materials, and equipment was replaced by a centralized one; the state strove to regulate production, introduced direct control over foreign trade, and established compulsory settlement of labor conflicts in the interests of the capitalists. State control of private enterprise was abolished after the war. State financial and credit activity then developed, and was directed, above all, at saving capitalism in those countries where it found itself on the brink of catastrophe; the Dawes Plan and the Young Plan were leading examples of such activity.

The World Economic Crisis of 1929–33 led to the further development of state-monopoly capitalism. It was necessary to put the credit, financial, and economic resources of the state into operation in order to prevent the bankruptcy of private banks, industrial concerns, railroads, and other establishments. In the USA, the so-called New Deal of President Roosevelt appeared, which was an attempt to lead the country out of the economic crisis by means of state influence on banks, business concerns, and the credit system. The fascist government of Italy created a system of state participation in the basic sectors of industry and in the big banks—the so-called Institute for the Reconstruction of Industry. In Hitlerite Germany, the preparation for war brought on increased state intervention for the militarization of the economy; the growth of military-monopoly capitalism accelerated, including control over the economy, compulsory cartelization, and the granting of the prerogatives of state power to the so-called fuhrers of enterprises.

World War II (1939–45) developed and increased the forms of state-monopoly capitalism. State capital investment in industry increased. The state built military plants, some of which it ran itself and some of which it turned over to private monopolies; it granted subsidy loans and tax concessions to monopolists; and it established various forms of economic control in order to guarantee the output of military production. A still greater intermingling of the state apparatus with monopolistic groups of the bourgeoisie took place. A comprehensive system of state regulation of the economy took shape.

After World War II, the subsequent uneven development of state-monopoly capitalism was caused by the intensification of the contradictions of capitalism, social changes in the world, and the further militarization of the economy of the main capitalist countries. The striving of the monopolistic bourgeoisie toward state-monopolistic forms of the economy and economic policy was furthered by the growing successes of the world socialist system and the growth of its influence, as well as by the increasing general instability of capitalism and an accompanying fear of crises and social and economic shocks. State-monopoly capitalism after World War II took different forms in different countries, but its general direction was state regulation in the interests of the monopolies, along with policies aimed at preventing crises. The French ruling class, under great pressure from the masses, was compelled to nationalize individual sectors of industry. However, nationalization was carried out in the interests of the monopolistic bourgeoisie: the state had to rebuild the fixed capital of backward sectors of industry (coal, power industries), so that these branches could provide energy and raw materials for monopolistic enterprises under advantageous conditions. In Great Britain, nationalization of individual sectors of industry was carried out mainly in order to revive unprofitable industries (the coal industry) or to place key sectors of the economic structure, such as the Bank of England and the railroads, under state control. In the USA the predominance of state-monopoly capitalism was strengthened by two trends: militarization, stemming from the attempts of American monopolistic capital to achieve world supremacy, and expansionism, the attempt of the monopolies, having broadened their internal market, to find new capital investments and to accumulate new superprofits.

The need to concentrate the economic resources of the bourgeois state—the aggregate capital of the capitalist class —in order to guarantee the process of extended capitalist reproduction in the interests of the monopolies, is dictated by the level attained by the productive forces, the growth in the scale of enterprises, the need in large-scale production to introduce and use new technology, and the requirements of profitability and effectiveness of production under the conditions of intensified competitive struggle. The accumulation of economic resources in the hands of the state is achieved, in addition to growing tax receipts, by means of the nationalization of part of industrial production and transport, creation of new productive capacities at the expense of the state budget, and the appropriation by the bourgeois state of the surplus value of enterprises belonging to it. Under the pressure of monopolistic capital, the state is compelled to give material support to those sectors of the capitalist economic structure that are necessary for the functioning of the economic system but that do not provide the monopolies with suitable profits. An infrastructure (including means of communication, hydraulic and power installations, institutions of professional education, and other systems needed to support primary production) is created and expanded with state funds, including the funds of municipalities, in order to maintain the activity of capitalist monopolies.

In many cases the purpose of nationalization was the rescue of a corporation threatened with bankruptcy. This nationalization would be accomplished by means of redemption, most frequently at overstated prices and under extremely favorable conditions for the owners of the capitalist property.

The development of state-monopoly capitalism does not proceed in a direct unwavering fashion. The contradictions of the process of capitalist reproduction itself and the mercenary interests of individual monopolistic groups result in such phenomena as the denationalization of individual enterprises and the rejection of various forms of state control. However, the basic trend of development is toward increasing state intervention in economic life. It must also be taken into account that there is not and cannot be any such thing as “pure” state-monopoly capitalism, inasmuch as some medium- and small-scale nonmonopolistic enterprises inevitably survive in industry, agriculture, and the service sector.

Forms. Different forms and combinations of forms of state-monopoly capitalism develop in each capitalist country, depending on historical conditions and actual circumstances.

General monopolistic state property takes the form of direct participation by the state in the process of production itself, with the state acting as an employer. State property originates through the construction of state enterprises (military industry, new and capital-intensive industries), the nationalization of individual enterprises and of whole sectors of industry and transport (because these sectors are important for the state or because they are unprofitable), or state acquisition of some of the shares of a monopolistic enterprise. In Great Britain the state owns more than 20 percent of all stock capital; in Italy, more than 28 percent; in France, 33 percent; and in the Federal Republic of Germany, 18 percent. The immediate aim of nationalization is to strengthen the economic and political position of the monopolistic bourgeoisie, but at the same time nationalization undermines the very principle of “the sacredness of private property.” The capitalist state that owns means of production acts as an aggregate monopolistic capitalist, directly exploiting workers. Private and state monopolies become more and more intermingled by the state’s use of financial means for the control of private firms, by the creation of mixed associations, and by the penetration of private capital into the state sector.

The state directly participates in commodity circulation, both as a buyer and a seller. State-monopoly capitalism is reflected in the growth of state consumption. The government purchases industrial goods from monopolies because it itself is an entrepreneur (some state enterprises are financed from the state budget; some operate with the rights of joint-stock companies). In a number of countries, the government buys up surplus agricultural products. The state is also an important seller of goods and services. State enterprises provide coal and electrical energy, run railway transport, and so forth and sell accumulated stocks of foodstuffs and agricultural and mineral raw materials.

The growth of the state market is due to the broad development of militarism, with its huge government orders for armaments and expenditures to maintain the armed forces and to create strategic reserves. The state provides a new area of capital investment for monopolies; finances monopolistic companies; supplies fixed capital, labor force, and scarce raw materials for monopolies; and supports high prices for the goods of monopolistic enterprises.

In regard to capital investment, the state accumulates huge monetary sums in its hands. If in the beginning of the 20th century, 5–10 percent of the national income in the major capitalist countries was redistributed through the state budget, then in the 1960’s the corresponding figure was more than one-third. Space research and the development of atomic industry are mostly supported by state funds. The government earmarks huge sums to support private scientific research of a military nature. The state actively participates in credit relationships: it receives credit through the issuance of state loans, and it issues banknotes through banks of issue belonging to it or under its control. The big monopolies make extensive use of the state budget, tax policy, and various credit institutions in order to promote a significant withdrawal of the national income and its subsequent redistribution in the interests of monopolistic capital. State subsidies, credits, and big tax concessions all play an enormous role in increasing the financial resources of the monopolies for new capital investments. The state reduces the costs of production of the private monopolies and in this way increases their profits.

The state has become involved with regulation and programming. The essence of regulation and of its higher stage, programming, consists of attempts to coordinate the interests of private monopolies with the general policy of the monopolistic state. Under conditions of overproduction, the state restricts the production and sale of a commodity to preserve high monopolistic profits. State regulation is promoted by so-called economic stabilizers, including government guarantees to bank depositors, credit policy and loans, and the establishment of rates of exchange and of tax rates. In wartime conditions, when there is a shortage of goods, regulation is carried out by a policy of priorities, assuring preferential supply of scarce raw materials and manpower to sectors of industry working for military needs; this redirection is accomplished through preferential financing. With peacetime, most European capitalist countries have developed long-term programs of economic growth, in order to influence the process of. economic reproduction. The US monopolies, which possess great resources, are limited by government financial and currency policy. State-monopolistic regulation and programming are implemented mainly through influencing the profit motive. Tools of state regulation include a government policy of capital investment and purchases, credit and monetary policy, influence on interest rates, control of the activity of central banks, regulation of prices, and the “freezing” of wages.

Programming has an advisory, rather than a directive, character; but, since it is accompanied by practical measures to stimulate this or that sector of industry, it exerts a definite influence on the economic structure, leading to changes in the structure of the national economy and hastening the process of the monopolistic socialization of production. State regulation and programming in capitalist conditions are limited by the character of the capitalist method of production. Such state measures are not able to save capitalism from economic shocks, such as the cyclical crises of overproduction, industrial slumps, financial and budgetary instability, and inflation and deflation. State-monopolistic regulation and programming are accompanied by a strengthening of antidemocratic tendencies, that is, by an offensive against the working class and the laboring masses.

The state also takes part in the economic expansion of monopolies in foreign countries. Monopolies make wide use of the bourgeois state to finance and support their foreign economic expansion. State measures in this area include tariff policy and the granting of tax concessions to monopolies. In the export of goods abroad, the state can grant export incentives, exempt exported goods from direct taxes, and guarantee exports. The state promotes the export of private monopolistic capital. Private monopolies receive state guarantees for their investments in newly liberated countries; these guarantees shift the entire risk connected with these investments to the state treasury. After World War II, state export of capital increased, with the aim of forcing commodity export by monopolies and of creating a favorable “climate” for private monopolistic investments in the developed capitalist countries. In 1955, American private capital investments in Western Europe totaled $5.4 million. By the beginning of 1970 they had increased to $30.3 billion. The export of state capital in the form of so-called assistance is directed toward the political and economic enslavement of those countries to which it is sent.

The imperialist activities of state-monopoly capitalism are becoming increasingly integrated. Today the monopolies function in the international arena largely through the state apparatus. Since World War II, many intergovernmental monopolistic organizations and cartel agreements have been created by official arrangements between the governments of capitalist countries. They embrace individual sectors of industry (for example, the European Coal and Steel Community) or are of a more general character (the European Economic Community, the European Free Trade Association). International state-monopolistic organizations, which originated under the slogan of “unity” and with the aim of easing conflicts over markets, are, as experience has shown, being transformed into hotbeds of acute friction both within and between the organizations.

Monopolies and the state. The supremacy of the monopolies in the economic structure leads to the supremacy of the monopolies in the political structure. The contemporary capitalist state is the agency of the class domination of the monopolistic bourgeoisie. Relations between the monopolies and the government are based on the use by monopolistic capital of the state’s apparatus, finances, and economic resources and the economic policy of direct state intervention in the process of the reproduction of capital. Monopolistic capital uses these in the processes of production, circulation, and distribution and consequently also in the process of the appropriation of surplus value. State-monopoly capitalism is characterized by a further strengthening of the personal union of the leaders of the state apparatus and the leaders of the monopolies. The monopolies’ influence on the bourgeois state and its policy is also exerted through numerous alliances of monopolists, which unite representatives of monopolies of a sector of the economy and of the nation as a whole. These alliances have at their disposal enormous machinery supported by funds from the monopolies. The most important representatives of monopolistic capital are at the head of these alliances and are simultaneously leaders of various governmental committees and members of the government. All governmental decisions of any importance are adopted, as a rule, only after they have been examined and approved in these organizations of monopolists. At the same time, the state, like every other social organism, retains relative independence and has its own interests; therefore, it cannot be considered as a “department in the office of the trusts.”

Influence on class structure of society. The development of state-monopoly capital led to the sharp intensification of the social polarization of capitalist society. The “melting away” of the middle strata of the city and the countryside, the growth in the size of the working class and of all those working for hire, and the decrease in the proportion of capitalist property owners have reached an extremely high degree. At the end of the I960’s in the USA. hired workers constituted 92 percent of the entire gainfully employed population; in Great Britain, 93.5 percent; in the Federal Republic of Germany, 83 percent; in France. 77 percent; and in Japan, 63 percent. State-monopoly capitalism is the general monopolistic form of the exploitation of the working class. The broad mass of the proletariat finds itself set off against not only the individual employer but increasingly against the entire class of capitalists and the state power of this class. The monopolistic bourgeoisie resorts, on the one hand, to the forcible suppression of the communist and workers’ movement and, on the other, to highly refined forms of social demagogy, with the aim of dividing the workers and undermining their class struggle. The forced concessions of the bourgeoisie to the working class, whether of an economic or a political character, do not change the bases of bourgeois society and the essence of the class struggle.

In the course of the development of state-monopoly capitalism, the intelligentsia became a massive social stratum in the category of wage laborers. The leading elements of the intelligentsia, in life-style and economic position, are members of the bourgeoisie; but the bulk of the intelligentsia, exploited by monopolistic capital, surrounded by political oppression, and opposed to the aggressive foreign policy of the ruling circles, connects its fate more and more closely with that of the working class. A prominent position in the general structure of capitalist society is occupied by white-collar workers; this prominence is related to the growth in the administrative apparatus, the state apparatus, and especially the service sector. In Great Britain, of 25 million hired workers, there are 5.8 million white-collar workers (almost 24 percent); in the USA, more than 30 percent are white-collar workers. These workers in capitalist countries are oppressed by monopolistic capital and the state. Urban small producers are driven out of business and fill the ranks of wage laborers; their movement into a higher class is a rare phenomenon. Each step forward in science and technology inevitably and inexorably undermines the basis of small-scale production in capitalist society. As this process unfolds, small and medium enterprises are transformed into appendages of large enterprises; much of the petite bourgeoisie becomes dependent upon big capital.

State-monopoly capitalism hastens the process of the differentiation of the countryside. The state helps the monopolies to drive the peasants off the land, and it strengthens the position of the big farmers in agriculture. The concentration of agricultural production is inevitably accompanied by the massive ruin of small and middle peasants and farmers. In the USA the number of farms decreased from 6.4 million in 1940 to 3 million in 1970. In Italy in 1936,49 percent of the total population of the country was engaged in agriculture; at the end of the 1960’s the figure was only 24 percent. Finance capital places agriculture under its control. The concentration and centralization of production and capital in agriculture takes place through the creation of big capitalist farms and of various kinds of cooperatives for the purchase, processing, and sale of agricultural products; under capitalist conditions these cooperatives inevitably fall under the control of monopolies. The government system of guaranteed prices to producers of agricultural products does not protect the working masses of landholders from ruin.

The process of the centralization and concentration of capital and production, along with the socialization of capital and production on a private monopolistic and general monopolistic basis, has resulted in a decrease in the proportion of the bourgeoisie proper to the total gainfully employed population, both in comparison with the period of premonopolistic capitalism and with the period up to World War I. The proportion of representatives of production capital has especially decreased. The transfer of major productive enterprises and means of communication into the hands of the monopolies and the state has demonstrated the uselessness of the bourgeoisie for the administration of contemporary productive forces. All the productive functions of the capitalist are now fulfilled by high-level office employees. The development of state-monopoly capitalism has promoted the formation of a special leading elite within the capitalist class. This elite consists of several strata that are intertwined in the closest manner despite contradictory interests. It includes monopolists, who own significant corporate and stock property; the directing staff of joint-stock companies (managers); higher officials of the governmental apparatus (administrative and economic); and the leadership of the military caste.

Creation of the material preconditions of socialism. “State-monopoly capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no intermediate rungs” (V. I. Lenin, Poln. sobr. soch., 5th ed., vol. 34, p. 193). The socialization of labor and production has attained the highest stage possible on a capitalist base. This testifies to the fact that the prerequisites of socialism have already matured within capitalist society, that the urgent historical need to replace capitalist production relations with socialist ones has become imminent. State-monopoly capitalism signifies that in a given country the mechanism of social management is technologically perfect and already prepared, and the “only” remaining task is to liberate it from those who dominate the toiling masses.

State-monopoly capitalism pushes to the limit all the contradictions of imperialism: the class contradictions within each capitalist country, especially between labor and capital: contradictions between imperialist states; and contradictions between imperialist states and newly liberated countries. The striving of the ruling classes to strengthen the capitalist system simultaneously hastens the downfall of this system. The economic processes go in the direction of the further displacement and subordination of small and medium enterprises, the merging and absorption of big joint-stock companies, the further concentration of the means of production, and the centralization of capital in the hands of the monopolies. State-monopoly capitalism tries to resolve the contradiction between the social character of production and the monopolistic form of property by social methods alien to capitalism, including methods and forms of management such as nationalization and programming.

State-monopoly capitalism, with its isolation of production from consumption and with its expansion of militarist consumption, increases the decay and parasitism of capitalism. An intensification of class antagonisms takes place. The competition and contradictions within the capitalist class are sharpened. A fierce struggle is conducted for the redistribution of surplus value. The monopolies, with the support of the state apparatus, destory the small property owners. A struggle takes place among individual gigantic associations of monopolists for influence on the state apparatus in order to secure passage of measures advantageous to them.

State-monopoly capitalism created a new situation, one in which the class struggle of the toiling masses for their immediate interests acquires an increasingly open and political character. This struggle is concentrated on problems of national policy and is directed against the entire system of state-monopoly capitalism.

The International Conference of Communist and Worker’s Parties (1969). basing itself on the real conditions of the contemporary period, ascertained that “favorable preconditions are being created for unifying all democratic tendencies into a political union capable of restricting, in a decisive manner, the role of the monopolies in the economy of the country; for ending the power of big capital; and also for realizing fundamental political and economic changes that would secure more favorable conditions for the continued struggle for socialism” (International Conference of Communist and Worker’s Parlies: Documents and Materials, 1969, p. 310).

The proletariat is the main moving force and predominant power in the antimonopolistic. general democratic struggle. In the struggle against the monopolies, it unites around itself all hired workers, much of the peasantry and the urban petite bourgeoisie, and all social groups that are victims of the policies of the monopolies and want changes. The working class and its communist vanguard strive to unite all democratic movements, which are opposing the yoke of the financial oligarchy, into one mighty antimonopolistic flood.

A struggle is waged for the coming to power of progressive, antimonopolistic forces, so that profound transformations in the social, political, and economic life of the capitalist countries can be realized. Such changes include the limitation and liquidation of the political and economic power of the monopolies; the satisfaction of the social demands of the toiling masses; the realization of the aims of the scientific-technological revolution in the interests of the people; the defense of the interests of the peasants and farmers: and the defense and expansion of democratic freedoms, including the participation of the workers in the administration of enterprises, the expansion of the rights of parliament (finding support in the mass movement), the establishment of democratic control of the activity of state enterprises, and the strengthening of the local bodies of self-government.

The unfolding in the main capitalist countries of the anti-monopolistic struggle and the accession of a government of democratic unity is historically inevitable; the coming to power of such a government is the point of departure for the further progressive movement on the path to the complete emancipation of the proletariat and of all working people from capitalist bondage.

Critique of the bourgeois theory of state intervention in the economy. Bourgeois economists, reformists, and revisionists distort the essence of state-monopoly capitalism. One of the first theoreticians of state-monopoly capitalism was J. M. Keynes, who strove to demonstrate the possibility of eliminating crises and guaranteeing “full employment” by methods of state capitalist regulation. The followers of Keynes including A. Hansen and S. Harris of the USA, W. Röpke of Germany, and J. Monnet of France, recognize the fact of state intervention in the economy (the theories of statism, étatisme, and dirigisme), but they deny that the aim of this intervention is the defense of the interests of the monopolies.

The ideologues of contemporary capitalism attempt to prove that capitalism, as a result of state influence, has supposedly undergone such radical changes that it has ceased to be capitalism, that it is already “capitalism without capitalists” and “reformed capitalism,” that “capitalism of the diehard type has already died.” The intervention of the bourgeois state in the economy is portrayed as a “revolution” marking the beginning of the “welfare state” (A. Berle, E. Johnston, and G. Stigler in the USA). Other current theories assert that the contemporary economic system of the capitalist West is a mixed economy, that is, a combination of oligopoly, free competition, and active state intervention (S. Slichter. USA) or that it is a coordinated economy (the French economist F. Bloch-1-ainé). The convergence theory has been widely disseminated; it maintains that, as a result of a supposedly growing adaptation to identical conditions of existence, socialism and capitalism are approaching each other, so that they will meet at some point. The reformists also take bourgeois stands, with their assertions of “radical changes” in the structure of capitalism. They maintain that state-monopoly capitalism is “almost socialism”; with the nationalization of individual sectors of industry and the state regulation of others, capitalism is achieving socialist aims and is growing into socialism. Lenin had long ago criticized such assertions as groundless, mistaken, and distorting the essence of state-monopoly capitalism. These theories reflect the new phenomena that arise as a result of state intervention in the economy. However, they ignore the fact that in the general system of the capitalist mode of production no basic changes have occurred.