Readings on 'State Capitalism'

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DD MARxist 20p EDUCATION ISSUED BY THE INTERNATIONAL MARXIST GROUP EDUCATION COMMISSION, 182 Pentonville Rd. London N.1.

Readings on “STATE CAPITALISM’

The Social Character of the Soviet Economy & (from‘Marxist Economic Theory’)-Ernest Mandel @ Maginot Marxism: Mandels ‘Economics’- Michael Kidron @ The Inconsistencies of State Capitalism - Ernest Mandel @ The Inconsistencies of Ernest Mandel - Chris Harman @ The Mystifications of State Capitalism- Ernest Mandel FEBRUARY 1973

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INTRODUCTION The purpose of this pamphlet is to make available a series of articles which were published during 1969-70 but are now for the most part out of print. They form the basis of a debate between the International Marxist Group (British Section of the Fourth International) and the International Socialism group, which was sparked off by a review by Michael Kidron, a leading |.S. theoretician, of Marxist Economic Theory by Ernest Mandel on the occasion of its publication in English. What at first appears to be an academic debate about the nature of the Soviet Union (whether it is ‘state capitalist’ as 1.5. sees it, or a ‘transitional economy’ as the Fourth International sees it) concerns in fact the very basis of Marxist revolutionary theory and practice, covering all aspects of the policy of both groups, This includes the natur of post-capitalist societies, the-understanding of the colonial revolution, the reasons for the long boom in the advanced capitalist countries, indeed the very nature of the epoch of imperialism and the tasks of revolutionaries ir building parties based on the working class. This debate will only finally be settled in the arena of the actual class struggle, but essential in that struggle is a continuous effort to overcome incorrect theories and elements of bourgeois ideology within the revolutionary vanguard.

CONTENTS PAGE 1: THE SOCIAL CHARACTER OF THE SOVIET ECONOMY -Ernest Mandel

PAGE 3: MAGINOT MARXISM - MANDEL’S ECONOMICS -Michael Kidron

PAGE 7: THE INCONSISTENCIES OF STATE CAPITALISM -Ernest Mandel

PAGE 27: THE INCONSISTENCIES OF ERNEST MANDEL -Chris Harman

PAGE 33: THE MYSTIFICATIONS OF STATE CAPITALISM -Ernest Mandel

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1. The Social Character of the Soviet Economy Ernest Mandel, Reprinted from Marxist Economic Theory, Merlin Press, 1968, pp560-365, }

these laws and particular features. Despite t..c immense territory open On the basis of these facts it is possible to make an appreciation of to it in Asia, beyond its frontiers, it “exports” thither very little the character of the Soviel economy and its laws of development. Contrary to what is alleged by a number of sociologists who try to make “capital”, though the “rate of profit’ is cerlainly higher in those countries, owing to the lower “organic composition of capital” and use of the Marxist method of dnalysis,t the Soviet economy does the lower cost of labour (countries like China, North Korea, Outer not display any of the fundamental aspects of capitalist economy. It Mongolia, North Vietnam, etc.), Despite the huge accumulation of ig only forms and superficial phenomena that can lead the observer astray in secking to define the social character of this economy, “capital” in heavy industry, investments continue to go primarily into this sector, instead of spilling over more and more into the marginal It is true that rapid industrialisation takes the form of a ‘primitive sectors, as happens in capitalist economy in its declining phase. Artiaccumulation” achieved by a forcible levy on consumption by the ‘ficial limitation of production, agricultural Malthusianism, suppression workers and peasants, just as capitalist primitive accumulation was based on an increase in the poverty of the people.* But, unless there-is of technical inventions, mot to mention periodical crises of “overa large-scale contribution from outside, no accelerated accumulation production”, partial stoppage of production, or even destruction of part of production—all these phenomena which are characteristic of can be carried out otherwise than by an increase in the social surplus capitalist economy as a whole, including the economies of capitalist product not consumed by the producers, whatever the form of society countries less developed industrially than the U.S.S.R. (Japan, Italy, in which this happens. There is nothing specifically capitalist in that.

Argentina, Brazil, etc.) are not to be found in Soviet economy, and this Capitalist accumulation is an accumulation of capital, that is, a has been so since 1927, that is, for a third of a century. capitalisation of surplus value with as its aim the production of more World capitalist economy forms a whole. Even countries which surplus Value by this capital. Profit remains the purpose and driving are most autarkic in policy—Japan on the eve of the Second World force of capitalist production. Soviet accumulation is an accumulation of means of production as use-values. Profit is neither the purpose War, Nazi Germany, Italy in the period of the League of Nations “sanctions, etc.—are unable to exempt themselves from the general nor the chief driving force of production. It is merely an accessory instrument in the hands of the state in order to facilitate fulfilment of conjuncture of the world capitalist market. The outbreak of the crisis of 1929, and then that of 1938, left a deep mark on the economies the plan and checking on how it is being carried owt by each enterof all the capitalist countries, not excluding the “autarkic™ ones.

Because capitalist production is production for profit {t is essentially The Soviet economy, however, while retaining definite links with world capitalist economy, is exempt from the fluctuations in the conproduction based on competition for conquest of markets. Even if juncture of world economy, Indeed, periods of most remarkable concentration of capital has reached its highest point and the advance by Soviet economy have coincided with periods of crisis, monopolies wield supreme power, competition continues in both old forms and new. It is this competition that determines the anarchy of depression or stagnation in world capitalist economy. capitalist production. Private decisions, taken independently of each This being so, it is talking at cross. purposes to declare that the capitalist nature of Soviet economy is shown by its competition with other, decide the amount and rate of growth of production and the other great powers (U.S.A., Germany, Japan, etc.), “competition” accumulation. All “organisation” of capitalist economy is thereby which primarily takes a military form. Ii is clear that any non-capitalist doomed to remain fragmentary and insufficient, economy established nowadays over a large part of the globe would Soviet planning, in contrast to this, is real planning, insofar as the totality of industrial means of production is in the hands of the state, find itself in latent hostility with the surrounding capitalist world.

Geographical, military, economic and commercial necessities follow which can thus centrally decide the level and rate of growth of proautomatically from such a situation. But this is not capitalist competiduction and accumulation. Elements of anarchy continue, it is true, within the framework of this planning, but their role is precisely comtion, which is competition for markets and profit; rather is it a “competition” which results precisely from the different social characters parable to that of the elements of “planning™ in the capitalist of the U.S.S.R. and the capitalist world, which confront each other. economy: they modify but do not abolish the fundamental social Similarly, it is erroneous to regard the Soviet economy merely as Capitalist economy, subject to the tyranny of profit, develops in the “culmination” of developmental tendencies which can be seen in present-day capitalist economy: tendencies towards total monopolisaaccordance with quite precise laws—tendency of the rate of profit to tion of industry; abolition of “‘classical” private property; merging fall; flow of capital into sectors with rates of profit higher than average: of the economy with the state, growing “state interference” in the concentration and centralisation of capital leading to the seeking of economy, and so on. Actually, Soviet economy is the dialectical negamonopoly super-profit, etc.—from which result the particular features tion of these tendencies." : of its present-day phase. Soviet economy escapes completely from t See Ygael Gluckstein [Tony Cliff], The Nature of Stalinist Russia; D. Daltin, * Cf. Karl Marx speaks in Volume II of Capital about joint-stock companies The Real Soviet Russia; Amedeo Bordiga, Dialogue with Stalin, etc. which, in practice, involve the expropriation of amall and medium capitalists, and adds: “However, this expropriation appears within the capitalist system in "In @ speech to the Central Committee of the C.P5.U., Stalin declared in a contradictory form, as appropriation of social property by a few". And again: 1928 that industrialisation would impose a heavy tribute on the peasantry. This “The capitalist stock companies, as much as the co-operative factories, should Speech was not published until 1949, in Volume XI of his Morks.” We deal be considered as transitional forms from the capitalist mode of production to with the theoretical problems raised by this historical fact, and the limited the associated one, with the only distinction that the antagonism is resolved effectivencss of thia technique of industrialisation in Chapier 16, section on negatively in the one and positively in the other.” “Sources of socialist accumulation” and “Maximum and optimum rates of accumulation”.

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In present-day capitalist economy the “managed economy”, the capitalist country. It remains nevertheless mistaken to draw the conincreasing fusion of state and economy, the occasional violation of clusion that the U.S.5.R. is already a socialist country, although classes sacrosanct private property, all exist for the benefit of monopoly (the working class and the peasantry) continue to exist, with interests capital, for the defence, protection and guaranteeing of its profits. The which are antagonistic historically and sometimes even immediately, merging of the state with the economy is at bottom nothing but the although social inequality has much increased, and although the level total domination of the economy by the private monopolies, which of development of the productive forces still remains below the level make use of the state machine. In the U.S.5.R., however, the state reached by the most advanced capitalist country. management of the economy, the abolition of the right to private The advocates of the “‘state capitalism” theory show correctly the ownership of the means of production, the fusion of economy and bourgeois character of the phenomena of inequality, of the norms of state, have all taken place by way of the expropriation and destruction payment for work that exist in the U.S.5.R. But they generalise false of the bourgeoisie ax a class. Present-day capitalism is capitalism which when they describe the Soviet mode of production as being likewise has carried to the furthest limit its own developmental tendencies. capitalist, The advocates of the theory of “bureaucratic collectivism” Soviet society is the destruction, the negation, of the chief characterisshow clearly the non-capitalist nature of the Soviel mode of productics of capitalist society. tion, But they generalise falsely when they deny the basically bourgeois Structural revolutions are always the best indices of the ‘social nature of the norms of distribution. In fact, Soviet economy is marked character of an economic system. The incorporation of the territory of by the contradictory combination of a non-capitalist made of producfion and a still basically bourpeals mode of disxtribution® Such a conone capitalist country into another capitalist country is not accompanied by any revolution in social structure: the German occupation tradictory combination points to an economic system which has of France and the occupation of Germany by the Americans, British already gone beyond capitalism but which has not yet reached and French showed this quite clearly. socialism, a system which is passing through a period of transition be- In contrast, the German occupation of the Western provinces of tween capitalism and socialism, during which, as Lenin already the U.S.S.R., and later the incorporation of the so-called “people's showed. the economy inevitably combines features of the past with democracies” into the zone of Soviet influence, involved qualitative features of the future." structural changes. It is unnecessary to speak of the destruction of * The noisiest of these allegations was that put forward by Bruno Rizzi and capitalism in Eastern Europe; the facts are known to all. Less known taken up by James Burnham in The Manggerial Revolution: the Soviet-German are the measures taken by the Nazi occupiers in the U.S.S.R. to reinalliance was said to be a stable alliance between two social systems of the same troduce private ownership of the means of production. The aluminium kind, The Nazi attack on the (.5.5.R and the extremely clear-cut and savage works at Zaporozhe was seized by the Vereinigte Aluminiumwerke aspect of a struggle between two different social systems which was assumed by trust. Within the framework of the Berg und Hiittenwerke Ost the war between the USSR. and Germany, showed the complete inanity of this theory. G.m.b.H., financed by the three biggest German banks, the Flick KontA conference of American scholars, interpreting very critically the Soviet zem took over, jointly with the Reichswerke Hermann Goering, the statistical data, came to the conclusion that the rate of progress of industrial steel works of the Donets Basin, under the title of Dnjepr Stahl production in the U.S.S.R, has kept up since the first thrusts of rapid indua- G.m.b.H. The Siegener Maschinenbau A.G. took over the Voroshiloy trinlisation, and considerably eveeeds the rate of industrialisation of all the other countries, including the U.S.A. in the period after the Civil War.” works at Dniepropetrovsk, the Krupp trust grabbed two factories at ** Cf. Engels in Anti-Dohring; “Each new modé of production ot form of Marupol, two at Kramatorskaya and one at Dniepropetrovsk. It was exchange is at first retarded not only by the old forms and the political associa» accorded the right to manage these enterprises and draw profit from tions which correspond to these, but also by the old mode of distribution; it them, with complete ownership promised for after the end of the war.** can only secure the distribution which is essential to it in the course of a long Tn 1943 Krupp dismantled the entire electric steel works at Mariupol struggle”. (Ct. also Marx, in Crifigue of the Gotha Programme: “What we and transported it to Breslau. The LG. Farben trust organised the have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitnlist Chemie Gesellschaft Ost G.m.b.H. and the Stickstoff Ost A.G. in socicly . .. Hence, equal rigit here is still in principle—fourgeols right, . °? Russia, In the daily newspaper Frankfurter Zeitung we find, within 1CfMarx: “Within the co-operative society hased on common ownership of a space of three days in May 1943, reports of the establishment of the means of production, the producers do not exchange their products; just as seven large-scale German private undertakings in the occupied areas little docs the labour employed on the products appear here ar the volwe of these products... since now, in contrast to capitalist society, individual labour no of Russia." longer exists in an indirect fashion but directly o8 a component of the total The theories according to which the Soviet economy represents an labour."* And Engels: “The seizure of the means, of production by society economy of a new type, neither capitalist nor socialist, a “managerial” puts an end to commodity production... From the moment when society society (Burnham), a bureaucratic society (L. Laurat), bureaucratic enters into boars of the means of production and uses them in direct collectivism (Bruno Rizzi, Shachtman, ete.), or a society run by a “new association for production, the labour of each individual, however varied its specifically useful character may be, is immediately and directly social labour."™ class" (Milovan Dijilas) cannot be accepted either. The supporters of these theories rightly deny that the Soviet mode of production is 46. Stalin: 9th July, 1928, “Industrialisation and the Grain Problem", (Works, capitalist in character. But they do not grasp that what is non-socialist English edition, Wol, XI, p. 167). in the U.S5.5.R.—extensive social inequality, bureaucratic privilege, 47. Marx; Dos Kapital, Vol. 101, FLPH edition, pp. 430, 431. lack of self-determination for the producers, etc.—represents a product 48. Nuremberg Trials, Vol. VI, pp. 19, 699, of the country’s capitalist past and capitalist environment. 49. Frankfurter Zeitung, 8th and 11th May, 1943. They see these survivals as the rudiments of a future society. They 50. Bergson: Soviet Economic Growth, pp. 11, 46-48, 77. are unable, however, to offer an exact characterisation of this society, prinyimeoringe By, ne , ogy 167; Mare: Critique of Si. Engels: -Dishring, 1934 H i : = 7 to define a particular dynamic for it, beyond uttering platitudes or absurd allegations which are continually being contradicted by events.* a2, A. Yugov: Russia's Eronomie Front jor War and Peace, p. 261. They cannot say what mode of production qualitatively different from 53. Marx: Critique of the Gotha Programme, FLPH edition, p. 20. that of the U.S.S.R. would correspond to the era of transition from $4. Engels: Ansi-Dahring, 1934, English edition, pp. 311, 339. capitalism to socialism. In reality, Soviet economy embodies comfradictory features, which neither its apologists nor its vulgar critics have been able to bring together into a comprehensive conception. The apologists point to the absence of private ownership of the means of production, the constant and rapid progress of the productive forcest and of the general level of technical skill and culture of the population; all this does indeed prove that the U.S.S.R. is not a

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2. Maginot Marxism: Mandel’s Economics Michael Kidron (Reprinted from International Socialism, April/May 1969, pp33-36,)

Mandel’s Economics’ is a Marxist failure. It is unsure of the punishment at the other. What is important is that the criteria central capitalist dynamic. It evades the essentials of the system measure consistently the contribution of an individual, or as it operates today. It is more concerned with defending Marx's group’s, decisions to the growth of any single capital; and that the categories of analysis than with applying them. In consequence, it incentives elicit as consistently the decisions that promote such does little damage to the system intellectually or, by derivation, This distinction between the behaviour of capital and the social in practice. and psychological mechanisms which ensure that behaviour, 1. The central dynamic between the rules and the players of the game as it were, is If capitalism is peculiar among class societies, it is not because a obscured. It is nonetheless real, and of prime importance surplus product is systematically pumped from the mass of analytically. For the behaviour of capital — its blind unconcerted producers — this happens in any class society — nor because a compulsion to grow — derives directly from the central small section of society, the ruling class — organizes that pumping peculiarity of the system — its fragmentation into more or less and benefits from it — that too happens in any class society — but autonomous competing units — while the mechanisms whereby because there is no central, public arrangement to ensure that the the ruling class organizes itself to promote that behaviour do not. process will go on in an orderly, continuous and predictable way.

These are common to all class societies. Key choices about the deployment of resources are left to The distinction does not exist for Mandel, On one page he individual capitals, big and small, public and private. concedes ‘the sccumulation of capital’ as ‘the great driving force Within nation states the doctrine of ultra vires holds, permitting of capitalist society’*. On, ‘another it is ‘the capitalists’ thirst for individual capitals to do anything not expressly forbidden by laws profit’?; and on yet another money is ‘the initial and final form of capital, towards which the whole of economic activity is whose scope and content they themselves determine to a large extent. Beyond, in the world shared between national capitals or directed”. the states with which they are more or less identified, positive constraints scarcely exist. Not even the largest state is coextensive with the system, so there are no overriding institutions that can The primacy of growth is essential to Marx’s model of the system make binding decisions for it. Yet a sort of order emerges from at work. Each capital is driven to jack up productivity by coupling its workers with more, and more costly, machinery, the chaos. That it does so is because the behaviour of individual capitals is while simultaneously trying to hold down wages. As this narrowly determined by the competition between them. Simply rationalization spreads, labour power becomes a smaller in order to exist over any length of time each capital must grow component of total capital (the ‘organic composition of capital’ as fast as it possibly can, by reinvesting the major part of its share rises) and smaller even in absolute terms (the ‘reserve army of of surplus-value (accumulation) or by absorbing and taking over labour’ grows); the value added in production and surplus value other, less successful capitals (concentration), or by doing both. become smaller in relation to total investment; and so the average If an individual capital did not grow, it would ultimately be rate of profit falls. Booms become progressively less profitable and shorter; slumps more lasting and severe. Stagnation threatens unable to afford the rationalization and innovation with which to meet those that did, or unable to ride as successfully the sudden and the system becomes increasingly restrictive. changes in market conditions which are part of the system. For The model is a closed system, in which all output flows back as an individual capital growth is the ultimate compulsion. inputs in the form of investment goods or of wage goods. There Growth does not come about automatically. Since capital is not a are no leaks. being but a systematic relationship between beings, somebody has Yet in principle a leak could insulate the compulsion to grow to decide to make growth happen, to devote the freely-disposable from its most important consequences. If ‘labour-intensive’ goods resources ag they become available to investment rather than were systematically drawn off, the overall organic composition of consumption. That somebody, whether an individual or a group, capital would rise faster than in a closed system. However, if must be able to measure its performance against very clear ‘capital-intensive’ goods were drawn off, the rise would be slower criteria. It must also be very strongly motivated to make the right and — depending on the volume and composition of the leak — could even stop or be reversed. In such a case there would be no decisions, for primordial Adam has still not been gorged, not even decline in the average rate of profit, no reason to expect by affluent late capitalism. increasingly severe slumps, and so on. The precise forms these criteria and incentives take are Capitalism has never formed a closed system in practice. Wars and unimportant. Historically the former have been as different as the slumps have destroyed immense quantities of output. Capital amount of money profits and the volume of gross physical exports have diverted and frozen other quantities for long output; and the latter as different as material privilege or superior stretches of time. status at one end of the spectrum, and material loss or physical Page 3

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We are told, quite nghtly, that ‘increasing organic composition of A lot has, since World War II, filtered out in the production of capital... is the basic tendency of the capitalist mode of arms. Each of these leaks has acted to slow the rise in the overall production”. But then tendency is assumed to be fact and the organic compccition and the fall in the rate of profit. But since next tendency in Marx’s logical sequence — that of the average their size and composition have been spontaneously arrived at rate of profit to fall — is quickly tagged on as fact too: one table and not tailored to attaining these results their impact at any shows it to have dropped by two-fifths between 1889 and 1919°, given time has been unpredictable except in broadest outline. another that net accumulation of capital fell catastrophically 3. The historical perspective between the 1860s and the 1930s’; and two others that, Arms production has clearly provided the largest and most depreciation has claimed more and more of gross output between effective normal drain since the second world war. Being a the 1880s and the 1920s and between the 1880s and the 1940s capital-intensive’ drain it will have had a restraining effect on the (to 1948).° Since nothing beyond the forties could sustain tendency of the organic composition to rise. Without separating Mandel’s thesis, the facts are suspended then. out the organic composition of the arms-producing industries and On to ‘the inevitable slump’. Since the key fact here — the firms from that of the non-arms-producing ones and then carrying mildness of post-war récessions — is too public and obtrusive to the exercise through all the backward linkages to their suppliers, be suppressed, it is conceded and even explained?. But, their suppliers’ suppliers and so on — an exercise which has yet to incredibly, it is not allowed to affect the larger analysis: the be undertaken — there is no way of measuring the effect directly, elusive inevitability is still announced at regular intervals'®; but it must have been considerable. For the expected immediate slumps still punctuate a trend towards stagnation’!. The consequence of a rising organic composition, namely a fall in the uncomfortable fact is, attached, not incororated. average rate of profit, has not occurred. If United States figures The same is true of the drive to restrictiveness, immobility and are any guide, the rate of profit has kept more or less level for the decay. One by one they come: the ‘absence of fresh fields for entire post-war period, as the accompanying table shows. investment’! * (as if interest rates were not constantly pressing upwards to attract scarce money capital, or were not now at a US: Corporate Profits Before Tax and Net Working Capital, historically high level); the decline in trade relative to 1948-1967 $ billion production’? (as if trade in manufactures has not gone up at twice the rate of output since 1948)'*; the-growth in the rentier Net working Year Pre-tax profits capital Profit rate class! * (as if it has not been nearly euthanased since World War II by the combination of high profit retentions and high personal 1948 32.7 68.6 477 taxation); the march of cartellization in Britain'® (as if 1949 26.2 724 36,2 competition for and from world markets were not increasing, or 1950 40.0 81.6 49.0 Resale Price Maintenance were still with us). There is even the 1951 41.2 86.5 47.6 quaint assertion, based on a crude misunderstanding of what 1952 35.9 90.1 39.8 insurance is about, that ‘the chief preoccupation (of the capitalist 1953 37.0 91.8 40.3 regime) has become security, that is, conservation, and is no 1954 33.2 95.0 34,9 longer expansion” '. 1955 44.9 102.9 43.6 But since this sort of statement and others about ‘monopoly 1956 44,7 107.4 41.6 capitalism’ limiting and fettering ‘the development of the pro- 1937 43.2 111.6 38.7 ductive forces’ look hairless even to Mandel, we are given a sop: it 1958 37.4 118.7 415 ‘does not mean that world production, or even that of the leading 1959 477 124.2 38.4 countries, sinks into stagnation; but it falls even further short of 1960 44.3 128.6 34.4 the possibilities offered by modem techniques”. 1961 50,3 148.8 33.8 But once again, the admission is not allowed to affect the argu- 1962 55.4 155.6 35.6 ment. The magpie goes gathering on, and we are left wondering 1963 59.4 163.5 36.3 what to make of non-stagnating stagnation, slumpless slumps and 1964 66.8 170.0 39,3 similar Mandelania. 1965 778 180.1 43.2 1966 85.6 189.4 45.2 4. State Capitalism 1967 81.6 200.1 40.8 Nothing in Stalinist (including post-Stalin) Russia defies analysis in terms of Marx’s model. The process of pumping our surpluses From Federal Reserve Bulletin, relevant years. from the mass of producers is as vulnerable in Russia to wild and There having been no long-term slide in profit rates, there has also random encroachments from other capitals as it is anywhere else. not been a series of ever-deepening slumps or signs of growing The people, that organize and benefit from it, are under as oprestrictiveness. In fact output has seldom fallen from one year to pressive a compulsion to fast economic growth as is any similarly the next since the war and then never by more than 2 per cent, placed class elsewhere. They need to be as clearly motivated to and the tendency throughout the system has been generally away ensure growth as their counterparts abroad; and if their criterion from inconvertibility, tariff barriers, resale price maintenance and of success has been the volume of gross physical output rather so on. Nor has there been a steady increase in unemployment. than money profits, the distinction is one of detail not essence — Despite the evidence that has accumulated this last year or so of output has served the bureaucracy perfectly well as a success growing instability, the system has been kept open. indicator, at least until very recently. Mandel will have none of this. He does not so much as hint at the Some of these signals do get through. Mandel does concede that stringency of.Marx's assumptions or at the extreme abstraction the deployment of resources in Russia is determined by its comand simplicity of Capitals theoretical construct. Marx said, petitive relations with the outside world. As he puts it: therefore it must be. Models turn into the real thing; and the real International competition with capitalist economy also thing becomes as simple as the model. necessitated an increased shift of emphasis to the quality Pape 4

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of products, the productivity of labour and the rationcould do so because the dynamic of capitalism — accumulation alization of investment, the volume of which moreover does not and never did require centralized control over the whole necessitated the maintenance of a high rate of growth even of society in order to function. It is a dynamic that operates on the purely quantitative plane.’ ° within autonomous units, small or large, and for that reason it ‘He even recognizes that with an ‘excessive rate of accumulation’ could coexist with the localism, the traditionalism and “the bureaucracy becomes the regulator and chief (sic) director of subsistence-orientation of feudalism. ; ‘accumulation’*", that the ‘central political, economic and But socialism is a total system. It cannot grow piecemeal within military administration’ has exclusive ‘controlling power over the the interstices of a capitalist society, How does workers’ control social surplus product’*', and that the ‘Soviet leaders’ ‘delibof production coexist with control by a ruling class when the _ erately chose to base themselves on the interests of privileged means of production in dispute are one and the same? How does minorities rather than those of the mass of the workers, in order self-determination and consumer sovercignty (‘production for to give the necessary impetus to industrialization’ 27 use") coexist with the external compulsion arid blind accumulation that results from capitalist dispersal? There may be Typically, none of this means anything in terms of the analysis as room for transitional forms in distribution, but at the level of a whole, Within fourteen pages of reading that ‘international production and control over production the only possible competition’ determines the ‘emphasis . .. on transition is a sudden, revolutionary one. quality... productivity ...rationalization...high rate of 5. The politics of confusion growth’, determines in other words the content of the Plans, we It is useless to look for independent or critical thinking in are told that on the contrary, ‘Soviet planning...is real Mandel. Nowhere in the two volumes is there a sense of fresh planning, insofar as the totality of industrial means of production exploration or the feel that capitalism is posing old problems in is in the hands of the state, which can thus centrally decide the new ways, and that the explanations need to be worked afresh level and rate of growth of production and accumulation,?? In out of the loose body of analysis written in the Marxist tradition. even less space we make the transition from a bureaucracy On the contrary, doctrine is first, its use secondary: ‘we seek to organized as ‘regulator and... director of accumulation’, which show’, he announces in his Introduction, ‘that it is possible, on is nothing if not a productive role, to a bureaucracy whose key the basis of the scientific data of contemporary science, to characteristic is ‘bourgeois norms of distribution’. reconstitute the whole economic system of Karl Marx'??, And in Part of this sloppiness derives from Mandel’s original confusion his final chapter we find him still waving the truncheons of about capitalism. Part from his determination to cast Russia asa uncritical orthodoxy; Marxism rejects...it readily ‘transitional’ society, neither capitalist nor yet socialist, a ‘contraadmits... Marxism explains’?°. dictory combination of a non-capitalist mode of production and a Here at least Mandel is consistent. In the defense of othodoxy the still basically bourgeois mode of distribution’?* medium becomes the message. Since facts are to be paraded as so Russia is not capitalist, he writes, because the bureaucrat is not many defense witnesses rather than used to explain what is ‘subject to the tyranny of profit's,25 (true, the tyranny is of plan actually happening, only the most docile, old and used ones are fulfilment); because there is no tendency for the rate of profit to selected. Since precision might entail a critical inspection of the fall (untrue, the tendency is there but checked as in the West); doctrine, it is drowned in irrelevant ‘detail. And since there are because there is no internal competition nor unimpeded operaother Marxists who do better as critics of the system, because tion of the law of value (true, nor is there — by definition — they think rather than intone, they are swept under the text into ‘within any single capital); no flow of capital from low-producta footnote and their ideas passed over?! | ivity to high-productivity sectors (untrue, how else do the Vagueness and sloppiness swamp everything: parallel to that planners ensure growth’ ); little exporting of capital to backward bureaucracy which is only the chief (sic) director of countries (true, but there is little of that from the West too); no accumulation’ there is a working class whose ‘conquest of power’ overproduction (untrue, Mandel himself draws attention to the and whose ‘socialization of the major means of production and billions of rubles of unsold retail stocks of unwanted, socially exchange ... fail of their purpose to some extent (sic) if they are unnecessary consumer goods*"): no bourgeoisie (true, but a not accompanied by radical changes in the atmosphere (sic) in the burcaucracy with remember — ‘controlling power over the enterprise’?*, Crude philosophical idealism suffuses every sacial surplus product“); no free contractural relations between enterprises “controlling power over the social surplus product’); thought, whether it is about the individual unconscious still no free contractural relations between enterprises (less true as harbouring ‘echoes from the primitive communist past’ of 7,000 economic reform embraces a growing part of industry); no crisis years ago, or about the amazing triumph of disembodied Marxist theory ‘capable of inspiring, and not unsuccessfully, the (irae. hut not highly significant given the situation in the West). economic policy of states both large and small’? ?, And so on, Hut Russia is not socialist either: there is ‘extensive social- Behind it all lies a confusion between social power and its inequality, hureiucratic privilege, lack of self-determination for packaging, between control and its forms. It is a congenial the producers, cte."?” For, you see, ‘the Bolshevik Party did confusion for Mandel because it allows him to practise his unique fugitive accent — the easy shift from urban workers, to ‘third not understand in good time the seriousness of this problem {of bureaucratic management), despite the many warnings world’ peasants, to students as the revolutionary focus; the rapid sounded by Lenin and by the Left Opposition’! transitions from reforms to ‘structural reforms’ to direct action as the current tactic; the indiscriminate loving-up to the only Su Russia is transitional, But what is a transitional society in fixtures in his political world — the dissident and not so dissident Mandel’s context other than a verbal convenience? Is such a form bureaucracies of both Social-Democracy and Stalinism. possible beiween cupitulism and socialism? True, there have been In the realm of theory it places him plumb in the centre of ‘the transitions! societies in ithe past. For centuries. after the school of “vulgar” economics —-a school characterized by the — Renaissance individual capitals were growing within feudal abandonment of all attempts to systematize and synethesize’?* society. gullicring economic pewer, weakening the host, becoming more able and willing to seize political power. They Page 3

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Ernest Mandel, Marxist Economic Theory, translated from. the French by Brian Pearce, London: Merlin Press, 1968, two volumes 4 gms. ibid, p 706 (emphasis in the original), ‘the totality of production...is urged onward only by the capitalists’ thirst for profit, The private form of appropriation makes profit the only aim and driving force of production” ip 171); ‘Profit remains the purpose and driving force of capitalist proluction’ (p S561); and so on, ibid, pp 568-9 ibid, p 166 ibid, ibid, ibid, p 167 ibid, pp 529-34 See pages 168, 171, 346, 437, 529 for a fair sample, ibid, p 531 ibid, pp S11, 520-1 ibid, pp 488, 489 Alfred Maizels, Industrial Growth and World Trade, Cambridge University Press, 1963, p 80 Mandel, op cit, pp 436-7 ibid, p 4y2 thid, p 516 ibid, pp 437, 437n ibid, p 575 ibid, p 584 ibid, p 631 ibid, p 592 ibid, p 561 ibid, p 565, ibid, p 561 ibid, pp §71-2 ibid, p 34 ibid, pp 372-3 ibid, p 17 ibid,p726 | Three out of a ‘number of sociologists (sic!) who try to make use of the Marxist method of analysis’ are mentio by name in a footnote to ‘The Social Character of the Soviet Economy’, a key -section (p 560). The one whose ideas on the subject are most developed and who has succedded in implanting them in an active, revolutionary organisation — Tony CUM — is not mentioned in the extensive Bibliography nor referred to in the Index. The one whose ideas are of an carlier vintage and less following in Italy — Amedeo Bordiga — makes the Index but not the Bibliography. And the third — D. Dallin — with few, and reactionary, ideas and no following — makes both. ibid. p 643 32. ibid, p 13 ibid, p 707

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3. The Inconsistencies of State Capitalism Ernest Mandel {Reprinted from The Inconsistencies of State Capitalism, /MG Publications, 1969, )

Michael Kidron’s “Maginot Marxism”! cannot be considered a serious criticism of “Marxist Economic Theory”. It takes up only three chapters out of eighteen and even these in an unsystematic and haphazard manner. It does not try to understand, let alone refute, the internal logic of the book, or any of the contributions it makes to the development of marxist theory. Nevertheless it denies that any such contributions are contained in the book at all. But if it does not represent a serious critique of contemporary marxist economic theory, it strikingly reveals most of the contradictions into which adherents of the theory of “state capitalism” enmesh themselves, when they have to tackle problems of economic analysis on a larger historic scale. A discussion of Kidron’s article is therefore useful, less as an “anticritique” than as a starting platform for a critique of the “state capitalist” theory. “The Central Capitalist Dynamic”

Kidron starts out with an amazing accusation: Marxist Economic Theory is “unsure of the céntral capitalist dynamic”. This would be indeed an unforgivable sin for a marxist, because “the central capitalist dynamic” is precisely what marxist economic theory is about.

So in order to teach us a lesson, Kidron starts explaining what this “central capitalist dynamic” is in his opinion. First he says that what is peculiar to capitalism, among class societies, is the fact that “there is no central, public arrangement to ensure that the process (of es a se oa product systematically from the mass of producers) will go on in an orderly, continuous and predictable way. Key choices about the deployment of resources are left to individual capitals, big and small, public and private”. Then he continues to say that under capitalism “growth is the ulumate compulsion,” “the primacy of growth is essential to Marx’ 5 model of the system at work”.

Unfortunately for Kidron, both “definitions” of the “central capitalist dynamic” get him immediately into trouble if considered in the light of economic history. In most class societies, there is no “central sce arrangement” to ensure that the process of accumulation goes on “in an orderly, continuous and predictable way”. On each medieval demesne, it is true, a sert was forced to deliver say half of his output to the noble lord. But what was sowed and reaped on each demesne, what (if any) surplus was left over after the lord's consumption needs were covered, how much local, regional, national or international trade was made possible as a result of this surplus, how much (if any) development of productive technique took place, was not only not “ensured” in an “orderly, continuous and predictable way” but was cven much more disorderly, discontinuous and unpredictable than under capitalism, To think that Alexander the Great (slave society), the Emperor of China (Asian mode of production) or Charlemagne (feudalism) were in possession of some mysterious “central, public arrangement” to ensure that the process of surplus product extraction went on in an “orderly, continuous and predictable way” in the societies they dominated, is a complete mis of history. In fact, under precapitalist class society, interruptions in this process were much more numerous and much more disastrous for all involved than under capitalism (one has to think only of the regular recurrence of famines).

With his second definition, Kidron has no more luck than with his first one. The * oy Of ig not only true for capitalism; it is true for severat other historic formations. The trans trom on to large scale irrigated agriculture, sometime between the 35th and the 30th panne BC. triggered off a tremendous process of growth which led us in the course of no more than 400 years from small isolated villages to large cilies, extended international trade and the building of empires. The victory of the socialist world revolution tomorrow will also trigger off tremendous economic growth (and, perish the thought, even large-scale “accumulation”), unless of course we conceive of abe socialism with two-thirds of mankind condemned to the miserable standard of living they are “enjoying” to-day.

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So the very charge raised by Kidron against us boomerangs against him with a loud bang, right at the Guliet of his article. It is Kidron who quite plainly shows himself unable to define the specific characteristic of the capitalist mode of production. It is Kidron who is unable to define any “central dynamic” of capitalism which sets it apart from all other social formations in the history of marikind. And this is all the mere amazing, because “Capital,” and all Marx's economic writings, are built upon precisely that differentia specifica which, in all modesty, we claim to have fully understood and made the cornerstone of Marxist Economic Theory as well.

It is sufficient to open “Cupitul” and to read chapter | of the first vok to understand what constitutes this “central dynamic” of the capitalist mode of production. Capitalism is the only form of class seciety in which conitidiry production becomes generalized, in which all clements of production (land, labour power, labour instruments, etc.) become commodities". Generalization of commodity production creates a constantly growing but also constantly uncertain and changmg anonymous market, and this implics in Lun universal competition. It is this universal competition between separate capitals (owned by scpurate capitalists) which is the main driving force for the accumulation of capital, the only means to systematically reduce production costs, because any individual capitalist who stays behind in this race will be pushed out of the market through being forced to sell at a loss (or at too small a profit) Capitalism is therefore a mode of production in which the generalization of commodity productioi unleashes a historic process of accumulation of ‘capital, Which is in turn a constant (be it discontinuous) growth-of conmradiry production, of ‘production of exchange valiies and reinvestment Of surplus-vValue, “Starting from this detinition we can easily distinguish capitalism from previous class societies “with no central arrangement to ensure that the process will go in an ‘orderly, continuous and predictable way,” as well as from other societies where there is a ~ primacy of growth”. Capitalism ts the only society in which cconomic growth takes the form of a general growth of commodity production, whereas economic growth in the period in which irrigation agriculture became generalizea, was essentially growth in the output of use-values (as it will be under socialism). Disorders, discontinuity in accumulation, and unpredictable developments in pre-capitalist class societies arose essentially from sudden decline in production, i.¢,_underproduciion of wse-valwes (famine, epidemics, population decline, decreasing ferulity of the soil, wars, etc.); whereas disorders, discontinuity in accumulation and unpredictable developments under capitalism arise from overproduction of exchange-values,i-e. from the contradictions of commodity production (which most of the time are caused not by a decline but by an increase in the production ot use-values). Competition, economic compulsion and “psychological mechanisms”

It is true that Kidron uses, in passing, the concept of “competition” which would normally imply the notion of commodity production. He writes: “ihe behaviour of individual capitals 1s narrowly determined by the competition between them... Lf an individual capital did not grow, it would ultimately bé unable to atford the rationalization and imnovation with which to meet those that did, or unable to ride as successtully the sudden changes in market conditions which are part of the system. For an individual capital growth js the ultimate compulsion” (p. 33). We fully agree witn this description. But 2 moment's thought will show that this is true only 11 one assumes a generalization of commodity production and competition between indivdual owners and sellers of commodities’. “Competition” between different tcudal landowners for the occupation of “land without a master” or the submission of free peasants; “competition” between Rome and Carthage; “competulion” even between merchant cities (e.g. between Venice and Byzantium, or between tne Dutch and the Hansa towns) does not lead to the results which Kidron just described. Under such conditions, he failure to “accumulate capital” docs not make a feudal aemesme “unable to ride as successfully the sudden changes in market conditions which are part of the systein”, precisely because sudden changes in market conditions are not “part of the system”, as long as the means ot production have not become commodities and are not submitted therefore to constant and unpredictable technological changes. Lack of growth of merchant capital is no barrier to success, when supply as well as demand are more or less nagrowly limited, a..a result of limited markets, traditional tecnniques, and relatively stagnant output. Under such conditions, “competition” does not lead to productive reinvestment ot capital, and especially not to its reinvestment in industry. Accumulation of capital takes the form of hoarding, of usufy capital, of buying up of land. : 9 So the rationale of capitalism can be understood only under conditions of constantly expanding commodity production, of a constantly expanding and insecure market, and of firms, or producing units, facing that anonymous market independently from each other and competing for larger and more profitable shares of the market. If one abandons that specific form of competition—capitalist \ competition, that is—then any rational explanation of the drive to accumulate becomes impossible, and we are left with mystifying tautological formulas like “capital must accumulate because it is its function to accumulate”, or “the bureaucracy is the peal or 5 of capital in its purest form”. But if we assume generalized and constantly expanding commodity production, we assume also the absolute need to realize the exchange-values of these commoditi¢s, in order to accumulate capital. It is the specific nature of commodity production that a ship full Ss : : im uc of shoes cannot be transformed into additional machinery, additional quantities of leather, and wages for additional 1 - at it is not sold, i.c., transformed into money. Innumerable capitalists have suffered a fate worse than death because they a to forget that simple little vue ack Kidron, curiously enough, seems to consider a special id cracy of Mandel's. Because capital is tied to commodity production, and Page & ;

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to commodity production only, because no capitalist production is possible on the basis of producing use-values. Money is indeed the initial and final form of capital, towards which the whole of economic activity is directed. And for that same reason, capital accumulation, the final money form of capital, and the capitalists’ thirst for profit, far from being distinctive from each other—the one “behavjour of capital”, and the other “social and psychological mechanisms which ensure that behaviour”— are just different synonymous expressions of the same basic economic compulsion, determined by the structure of capitalist society.

There cannot be the slightest doubt that Marx understood the working of capital exactly in this way, and in this way only*. For Marx, “capital” could only exist in the form of different capitals; otherwise, there was no more compulsion to accumulate. Consequently, capital could only exist in the form of “different capitalists”, i.c., a social class constituted so that each part of it was, by compelling economic interest, tied to the survival of “its” own unit of production or circulation. Consequently, the “thirst for profit” of each part of that class, and the “drive to capital accumulation”, are identical, the second one being only realizable through the first (the attempt at profit maximisation of each unit or firm).

For Marx capital implies commodity production, i.e., the need to sell commoditics before one can reconstitute and expand capital. “Returning to the money form of capital”, “thirst of profit” (i.c., drive to profit maximisation) and compulsion to accumulate capital are therefore exactly identical expressions, which uncover the basic tissue of capitalist society and capitalist mode of production: a dialectical unity between a class structure (based upon the interests of the ruling class), a specific mode of production (generalized commodity production, which, be it repeated again, implies that labour power has become a commodity, which implies therefore the existence of a proletarian class, forced to sell its labour power), and a specific set of laws of motion resulting from them (capital ' accumulation and its contradictions, among them, of course, the class struggle).

Kidron’s attempt to unravel this tissue is based on semantic misunderstandings, which ultimately reflect lack of clarity of what capitalism really means. To say that the capitalists’ “thirst for profit" (or the firm's tendency to profit maximisation) is a “social and psychological mechanism" through which the behaviour of a mythical abstraction called “capital”, divorced from social classes, is assured, and that these “mechanisms” are common to all class societies, is committing a gross confusion between individual psychological motivations—on which much discussion is possible—and economic compulsions, to which social classes are ruthlessly submitted in a given social framework (under the impact of a given mode of production). The capitalists’ “thirst for profit” is not a matter of individual psychological motivation at all; it is an economic compulsion, as Kidron should infer from his own description of capitalist competition. And it is just not true that this “thirst for profit™ is “common to all class societies". On the contrary, all class secieties in which the secial surplus preduct took essentially the form of use-values produced ruling classes which had no “thirst for profit" whatsoever, but only “thirst” for luxury consumption, and which went so far as to systematically destroy the very sources of “profit” (i.e. of capital accumulation) in their thirst for consumption.

According to Kidron, Mandel confuses “social control” and its “form’’. This argument is especially unfortunate, because Marx himself made explicitly the point that it is precisely the specific form of the social surplus product which implies the dynamic ot the system*®. Kidron seems to be under the impression that if precapitalist class societies did not know the kind of growth which capitalism witnesses, it was because the ruling classes had “everything under control”. We were ‘then presumably living under “economic law and order”, The truth is of course quite different.

Precapitalist ruling classes had no economic compulsion to capital accumulation because the form of the social surplus product was essentially that of use-values, and unlimited accumulation of usevalues is economicaly irrational and meaningless: the limit to economic growth was more or less given by the limit of luxury consumption of the ruling class and its retainers (including of course —_— conspicuous consumption, vide: the pyramids).

Acceleration of economic growth could start on a tremendous scale only when the social surplus product took the form of money, which could be used not only to acquire consumer goods, but also to buy land, means of production and labour power, and when the generalization of commodity production, the creation of an expanding market, and the appearance on this market of independent producers and sellers of commodities, made it not only protitable but indispensable to reinvest money in expanding production. It is this economic compulsion for a social class to productive accumulation of the social surplus product—which was only possible because this surplus gene had taken the form of money, had become surplus value—which created capitalism. And Or marxists, the tremendous revolutions involved in these transformations are inconceivable without a social class whose interests must be scrved—and indeed were served—through them; because for marxists, unlike for vulgar “cconomic determinists", no economic transformations are possible without social forces imposing them, and no social forces impose such transformations if these are ‘against their basic economic interests.

That's what Marx taught about capital, capitalism, the capitalist class (and incidentally, more generally about historical materialism. That's what we tried to illustrate, with new empirical data, and at least in the historical parts of Marxist Economic Theory, in a more extended way than Marx had found time to do. We don’t say of course: this is true, because Marx said so. We only say: Marx po Fras ong Kidron can either claim to approve Marx's analysis of capital—and then he has to w his clumsy criticism of our dealing with the “central dynamic” of the system. Or he has the Tight to Marx—but then he must come up with an analysis which covers the ole history of capital, from its inception till to-day, and which Suiagatshce this system from Page 9

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all other modes of production, either previous or ulterior, and that he hasn't done so far. Perhaps he is, after all, afraid that he will look a bit silly pretending to know better than Marx what is the real essence of “Capital” .. .

The Laws of Motion of Capitalism and the “Pure Model”

This is all the more important as Marx himself has clearly defined what method he used in his analysis of capitalism. In his preface to the second edition of “Capital”, he quotes approvingly an article in a Russian magazine which states that the scientific value of his analysis lies “in the unveiling of the particular laws which regulate the origins, existence. development and death of a given social organism, and its replacement by another and higher one”. Marx adds to this quotation that the author of that magazine article has most correctly (“treffend™) defined his method, which is the dialectical one.

This means that no understanding of capitalism is possible without the understanding of general laws of motion which explain both its origins, its development through its successive stages, and its final and inevitable decline and fall. To say, as all “fashionable” professors of economics do to-day. that Marx discovered laws of motion which were correct “only for 19th century capitalism”, but that they don’t apply any more to-day, means to say that Marx was completely wrong. His ambition was not at all to analyse and given limited period of the history of capital; his ambition was to explain its whole history. trom its beginning to its death.

Kidron, under the obvious influence of “fashionable” (ic. bourgeois) economics, moves around this hot stew, quite unsure of himself, and does not dare either to eat or to refuse it. The “solution” with which he comes up is that in Marx's “pure” system, the laws of motion apply, bui that real life is quite different from this “pure” system, and in real life Marx's laws of motion do not apply “completely” (or even not at all, which is at least implied in some of Kidron’s remarkable statements about contemporary capitalism), Let us first state that Kidron’s way of summarizing the laws of motion of capitalism contains several “classical” oversimplifications, fashionable in academic circles and in the Kautsky-school of vulgarized maraism; this is no accident, as we shall presently note. Kidron will have a hard time finding any evidence in Marx’s “Capital” that there is a tendency for labour power to decline in abselute terms under capitalism; thal “booms become progressively less profitable and shorter; slumps more lasting and severe.’ But be this as it may, let us now follow Kidron’s argumentation of how the absence of a “closed system” of capital upsets the workings of the laws of motion of capitalism discovered by Marx:-— “The model is a closed system, in which all oulput flows back as inputs in the form of investment goods or of wage goods. There are no leaks, “Yet in principle a leak could insulate the compulsion to grow from its most important consequences ... If ‘capital-intensive’ goods were drawn off, the rise would be slower and— depending on the volume and composition of the leak—could even stop or be reversed. In such a case there would be no decline in the average rate of profit, no reason to expect increasingly severe slumps, and so on. = “Capitalism has never formed a closed system in practice. Wars and stumps have destroyed immense quantities of owput. Capital exports have diverted and frozen other quantities for long stretches of time. “A lot, since World War II, filtered out in the production of arms. Each of these leaks has acted (o slow the rise in the overall organic composition and the fall in the rate of profit.” (p.33).

A truly remarkable constant confusion between use-values and eachange-values, between physical goods produced (or destroyed) and their counterpart in form of value of commodities, appears throughout these lines. It is worthy of inclusion in a textbook simply to show what misunderstanding a lack of clarity on the dual nature of the commodity necessarily leads to.

What seems to lie at the basis of this whole conception is some vulgar theory of over-production, according to which it is a glut of physical goods which ts at the basis of all capitalism's evil.

Stumps result from too many consumer goods; increased organic composition of capital and declining rate of profit result from too many investment goods (too many machines). When there are “leaks”, and other goods are produced instead of these, or, even better, when these goods are destroyed, then there is rejoicing in the sky of Capital, and laws of motion are magically put out of action.

Kidron forgets that what capitalism is about is the accumulation of capital (i.e. stored value) and not the disposal of the use-values of commodities. A certain proportion of these must, of course, fill physical needs and give production its needed physical material. But these physical conditions of reproduction are only material preconditions for the successful realization of capital accumulation.

They don’t guarantee in themselves either the realization of that process, nor its realization under conditions where the laws of motion of the system apply, apply only partially or, presumably for Kidron, don't apply at all. These conditions depend exclusively on the composition, exchange, valorization and reproduction of capital as value.

The example of slumps clarifies this casily. A slump is not primarily a destruction of “immense quantities of output” (of physical goods). Sometimes, this destruction does not en at all; and even when it docs happen, it is only a secondary side-effect of what is the real ug of slumps (and, incidentally, also their objective function in the dynamics of capitalism): the destruction of capital as value, through massive depreciation of stocks of goods, or fixed capital (parts of which even lose all their value: machines are turned into scrap iron, etc.) and of ‘fictitious capital’. this essential process is accompanied by physical destruction of goods is immaterial. Page 10

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Because slumps are destroyers ol capital and not of “output”, they tend to lower the organic composition of capital*, and allow a rise in the rate of profit which sets off a new cycle of increased ¢apital investment, boom, rising organic composition of capital, decline in the rate of profit, which eventually leads to a mew decline in production, etc. There is therefore no need at all to discover any “leak” in the “closed system” to “explain” why slumps temporarily reverse the trend towards increased organic composition of capital and declining rate of profit. On the contrary, this “safetyvalve” is built-in in the “closed system”, as Marx himself clearly stated and as we explicitly repeated in Marxist Economic Theory”.

The same thing is truc for capilal exports. This process can only be constructed as a “leak” from the “closed system”, if this “closcd system” is viewed as being established in a single country, surrounded by a world outside of the realm of capitalism—a construction which is completely alien to Marx's “model”. Once the “closed system” of capital is viewed as an international system (the capitalist world market), then capital exports are neither a “diversion” nor a “freezing” of output (?) for “long stretches of time’, but simply the manifestation of the basic law of motion of capitalism, the tendency of capital to flow from branches, regions, arcas, countries with lower, to those with higher rates of profits. It is no accident that Kidron does not even mention this law of motion in his description of the model. And such a flow (be it “export” or not) of course counteracts the trend towards a declining rate of profit, inasmuch as it leads to capital investments with a lower organic composition of capital or (and) a higher rate of surplus-value. Again, the counteracting tendency does nol represent any “leak”, but is built-in-in the “midel” as such, and clearly stated by Marx himself.

Kidron’s third “leak” is represented by wars. The same confusion between use-values and éxchange-values, between pliysical goods and capital, occurs here. All wars destroy physical goods; but whether they destroy capital is wot so obvious nor so automatic. :

In order to destroy capital, they must nut only destroy consumer goods, including durable ones like houses, but also destroy industrial equipment to a larger degree than is newly built. Wars, it should not be forgotten, not only can destrey capital but also can lead to a tremendous increase of capital accumulation (as happened, jor example, in the USA both during the first und second world war). Often the two processes occur side by side (//ke in Britain during the second world war), and only if the first process is larger than the second one is there real capital destruction (f.¢., does overall capital accumulation become negative). We have described the mechanics of this process of contracted reproduction under war cconomy in Marxist Economy Theory; incidentally one of the examples of “fresh exploration” which Kidron somehow managed to miss in the book. Kidron seems to labour under the impression that wars and war production are “unproductive” and “destroy capital” because weapons are “destructive goods”. He forgets that a manufacturer of tanks, munitions and fighter planes makes a huge prolil, uscs a large part of it to accumulate capital (7c. fo buy new machinery and to fire new men) and that this represents a process of capital accumulation identical to the similar steps embarked upon by a manufacturer of tinned milk or by a firm producing turbines.

We have now arrived at Kidron’s fourth “leak”: arms primluction, According to him, it represents a “drain”, and “being a capital-intensive drain, it will have a restraining effect-on the tendency of the organic composition to rise” (pp. 33-34). Why arms production is a “drain”, and why it has a restraining effect on the tendency of the organic composition of capital to rise, remains an absolute mystery.

The whole construction is completely artificial and misses the muin “law of motion” of capital accumulation altogether. For arms production is not conducted on some mysterious planet Mars, but on this wicked planet of ours: it is not conducted under conditions of some mystcriously unknown mode of production, but under “normal” and “classical” capitalism, with a constant flow of capital between all sectors of profitable investment, including arms production. So the calculation of an “organic composition of capital” in the arms industry, separate and apart from that of the “civilian sector”, is completely meaningless to establish the trend of the average rate of profit, which results precisely from the social average between all sectors, including the arms sector. What Kidron woukl have to prove, to show that the effect of capitalist arms production is to weaken or to stop the tendency to a declining rate of prolit, is that the average social organic composition of capital (including of course the arms scctor ilself) has become lower than it would have been if that arms production sector would not have existed. And that conclusion just does not make any sense, if one assumes that the organic composition of capital in the arms production sector is actually higher and not lower than the average organic composition of capital in the “civilian” production sector, because it is nearly entirely situated in the “capital intensive” sector of heavy industry".

Kidron’s assumption could only imply an element of truth if the average organic composition of capital would be actually lower in the armament sector than it is in the other sectors. In that case, of course, strong expansion of u sector with lower organic composition of capital would lower the social average organic composition of capital and thereby successfully counteract the tendency of the rate of profit to fall. But this hypothesis—which Kidron would be the first one to reject!—does not correspond to reality. And even if it would, it would not represent a “drain” but only a particular manifestation of the same basic law of motion of capitalist accumulation of the “pure” model, which we described above.

Kidron would have spared himself much confusion, if instead of talking about “leaks” and “drains”, he would have started from the key-difficulty which monopoly capitalism has encountered for three-quarters of a century. This is nev the difficulty of disposing of surplus goods (thereby welcoming any tum in development which would lead to a sudden decline in the “surplus” of consumer Page 11

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ipa and investment goods}, but the difficulty of disposing of surpluy capital, which derives from the very nature of monopoly capital’, Thence both the drive to increasing capital exports, and the drive towards arms production. The economic function of arms production is to provide additional fields of investment for capital surplus, not to reduce the increase in the organic composition of capital and/or the declining rate of profit. Its overall effect—if it is large —will be to ensure a higher rate of overall growth (obviously, because the alternative would be not to use at all the capital invested in arms production) and to reduce the volume of investment and output fluctuations (because arms production, unlike “civilian” production, generally does not decline in phases of recession). But whether all this leads toa rise or to a decline in the average rate of profit depends on other circumstances (e.g., on the effects of arms production on the rate of surplus-valuc), not on the nature of arms production as a “drain”.

Contemporary Capitalism and Vulgar Economics So Kidron’s whole construction of “leaks” and “drains” collapses as an explanation of why the laws of motion of capitalism don't apply to-day. He is faced with the same dilemma as all those who call themselves marxists: either he has somchow to accept that there are “tendencies” which do not manifest themselves (which is vf course something different from sayng that there are tendencies which don't manifest theniselves permanently or without counteracting tendencies), or he has to have a fresh look at reality, try to shake off impressionism, and to find behind superficial phenomena and doctored “statistics” more fundamental economic processes which do, after all, correspond to Marx's laws of motion, That's what we teed, in Murviat Lounomic Theory and subsequent writings, and we think we can prove our case. As we have shown, between 1869 and 1919, the output of producers’ goods increased more than twenty times in the USA, whereas the output of consumer goods only i twelve times. Between 1919 and 1964, the output of machinery and instruments in the USA. “rose from 14.1‘, to 20.5% of total manufacturing production. Again, the output of machinery increased threefold between 1947 and 1968, whereas total industrial production rose by 250%, in the same period.

So one might infer that for one century the output of department I has indeed grown more rapidly than the output of department LH, which implies that there is a definite tendency for the composition of capilal to rise!?, and that, from a long term point of view, this tendency is neither stopped nor-reversed during the last decades (although it obviously slows down percentwise, when the absolute volume of department I reaches a higher and higher level. The same rate of of the organic composition of capital would require, starting from a certain absolute volume of constant capital and given, the average rate of capital accumulation, an absolute decline in variable capital— or in output of department Tl—which has obviously not been the case, and could not be the case given the cxisting reltionship of forces between Capital and labour in the U.S.A.).

Now given the evulence of a long-term trend of rise in the organic composition of capital, given the complete lack of cvidence of any long-term rise in the rate of saxplti-value gevenetioael to it, onc can only conclude either that there-has to be long-term decline in the average rate of profit, or that Marx's labour theory of value does not hold any more (that constant capital is somehow wiveteriously “producing surplus-value”), and in that case, the whole of Marx's economic theory collapses. Let us repeat again that we are not talking of a couple of years here and a couple of years there, but of long-term trends. Kidron makes a caricature of our analysis when he says that for us “the real thing becomes as simple as the model”. But surely, a model which has no relation whutsocver to the “real thing” is a wrong model, 1 would presume ... And the denial of any longterm decline in the rate of profit leads Kidron smack into vulgar economics accepting the labour theory of value with one hand and denying it with another.

In studying capitalist statistics on “rates of profit’, one has to take a whole series of precautions, in order to translate them into marxist terms.

In the first place, the average rate of profit marxist economic theory is concerned with is the rate of profit on the flow of current production ( pl . in which is the fraction of the total capital c+v stock actually used up in annual output and not the rate of profit of the stock of total capital investment Cex , in which K is the value of all fixed capital invested and M the value of total circulation +M a ty available in capitalist industry). Most statistics—and balance sheets of capitalist firms— profit rates on the stock and not on the flow—and the difference can be quite striking.

In the second place, Ma:x's laws of motions are concerned with value production, not with price calculations. It takes a lot of analytical labour to deduct from national income and national expenditure statistics the sum-total of surplus-value produced by industrial labour. Part of that surplusvalue is appropriated by other sectors of capital (banking capital, commercial capital, capital invested in the service industries, etc.) through the market (i.e., through the purchase of ‘services’ by fhe manufacturing firms, which appears in the balance-sheets as “production costs’’, or through the sale of commodities below their prices of production), is thus deducted from the income of industrial capital, and is not included in the category “profit of industry before taxes”. If this part of surplusvalue, while increasing in absolute figures, is declining in relation to “industrial profits", then the rate of growth of surplus-value as compared with the rate of growth of current capital expenditure might be in fact lower than appears from the statistical “series before taxes", and the average rate of Page 12

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profit might in fact be declining although the series “profit before taxes” does not show so.

In the third place, ever since corporation taxes became “burdensome”, a whole new “service industry” for doctoring balance-sheets has arisen. Most marxist commentators have insisted especially upon the profit-concealing function of this doctoring (e.g, camouflaging important part of surplusvalue as constant capital consumption, through the method of accelerated depreciation)". They seem to have forgotten that this also implies a systematic under-valuation of capital itself, in the first place an under-valuation of the total capitat stock—which is all the more formidable because it becomes cumulative—but also an under-valuation of current capital expenditure (part of which is marked down in the bocks as “current costs of repair”, another part of which does net appear at all, because the value has already been “written off” before). Now if the real value of capital is much higher than appears in the balance sheets, then of course statistical series which appear to show uncertain fluctuations of the rate of profit, or even an increase of that rate, can actually hide a long-term tendency of a declining rate of profit'’.

All this being said, do the statistical series really warrant any conclusion that the trend towards a declining average rate of profit has somehow been reversed by contemporary capitalism? Kidron’s own’ series, whatever may be its serious shortcomings indicated above, actually prove the opposite. In order to interpret them, we have to understand that the rate of profit-oscillation works on two wavelengths, so to speak. They work within the span of each cycle, going up in the boom and going down under conditions of recessions; and they work in longer-range periods, tending to reach peaks, during booms, which have a tendency to become lower (which does not mean naturally that each boom must have automatically a lower maximum rate of profit than the previous one had. Increases in the rate of surplus-value can momentarily offset the effects of increases in the organic composition of capital). One can dispute the first type cyclical decline only if one disputes the inevitability of cyclical variations of capitalist production at all; and one cannot dispute this inevitability neither in fact (recessons have occurred in the USA economy in 1949, 1953, 1957, 1960, and one is starting right now) nor in theory (it flows precisely from the fragnientation of productive resources between different awners, ie., from the existence of ‘different capitals”, viz.. from capitalist competition without which as we have seen above, captalism cannot be conceived), But what about the long-term trends of the rate of profit? Kidron’s statistics show that on “net working capital” the rate of profit declined from 49% in the boom year 1950 to 43.6% in the next peak boom year 1955, 38.495 in the next peak boom year 1959 and an average of 43.1% for the three boom years 1965, 1966 and 1967. There is no “linear” decline, but the tendency towards decline is quite clear.

The same applies to the two main European capitalist countries, West Germany and Great Britain. In West Germany, net profits as a percentage of net capital worth declined for all industry from 20.9% in 1951 to 14.59% in 1955, 18.49) in 1960 and 14.9% in 1965 (each peak years of the cycle; the rates for the intermediary years are each time lower than the peaks). And for Britain, the Financial Times’ “Annual Trend of Industrial Profit” series indicate a similar trend: for all industrial companies, the rate of profit as against net assets declines from an average of 9.3% for the 1952-1960 period to an average of 7.89 for the 1961-1965, and an average of 6.9%, for the 1965-1968 period."

So Kidron is wrong when he assumes that “nothing beyond the forties could sustain Mandel’s thesis...”

It is true, that Marxist Economic Theory does not treat in a systematic way the problem of the sharp rise in the rate of growth of the capitalist economy after world war II, a rate of growth ich is now declining—as we foresaw correctly since the early sixties, and as the very same issue of : “International Socialism” which prints Kidron’s critique also confirms (p. 31). The reason for this does not lie in our “maginot marxism” (it is not difficult to explain that rise with Marx's mena tools). It lies simply in the fact that most of Marxist Economic Theory was written in the late fifti i.e. more than ten years ago, when many of the postwar trends were not yet clear.

The further development of what we believe to be the explanation of the peculiarities a capitalism” can be found in a few of our later writings.’ Briefly, we think that what fH second one which [e i ul i ef eee Fre i: | q which 5 § of pushing the rate of investment and of growth upward during a ie inevitably preparing thereby the grounds for a later “long cycle” with a mach HEE th. We believe, in other words, that the cyclical movement of the rate of profit is three-fold: 10 years cycle (first up, then down); between the peaks of several cycles constituting Z Ss long-term period of 20-25 years (generally down); and between several long-term periods downward in the “secular” sense: obviously, the average rate of profit is today

ca a higher scale, just as monopoly capitalism reproduced competition on a higher scale. i framework. Whereas “free competition” capitalism was largely limi 2 2 : part of the world, imperialism embraced the whole earth. “Neocapitalism” (or late is again limited to only part of the world. But whereas early expanding “liberal”

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capitalism of tne 19th century had only to face decaying older social orders, “late” capitalism is confronted with the formidable challenge of anti-capitalist forces and a post-capitalist social order which enjoys both a higher rate of growth and a much larger popular appeal to at least two-thirds of mankind One can also add that during the “long period” of stagnation of capitalist world economy (1913-1940) a great “reserve” of scientific and technological inventions had been built up, whose large-scale productive application was delayed as a result of the unfavourable economic conditions prevailing during that period. The dynamic of these inventions, accelerated by the results of the war economy boom itself, laid the basis for a real explosion of technological innovations, which could be widely applied under conditions of reconstruction, stepped up capital accumulation’ and continued expansion of arms production, itself strongly determined by the conditions of “competition with a non-capitalist economy in the Soviet Union. ; eed In any case, the key aspect of this development is to understand the oversimplification of the assumption (of which even Lenin and Trotsky were at moments victim of) that the structural crisis of the world capitalist system, which undoubtedly began with the first world war and the Russian revolution, somehow is identical with an absolute decline in the development of productive forces.

There is no trace in Marx's “Capital” and his mature economic thought of such an idea.

The structural crisis of the capitalist world system means that the system begins to break up, that there is an uninterrupted chain of social revolution erupting, some victorious and some defeated, that the restriction of world capitalism to only parts of the world (and the challenge which the other part represents to it) put formidable supplementary constraints on to it, that the Tundamental contradiction between the level of development which the productive forces have reached and the capitalist production relations, leads periodically to big social explosions, and that thereby the objective pre-conditions for victorious socialist revolutions exist, historically for the whole epoch, and conjuncturally at successive phases in various countries. This structural crisis of the capitalist mode of production is intertwined with the periodic crisis of overproduction, but by no means identical or synonymous with it. And each time when a period of revolutionary upsurge of the working class in the industrialized imperialist countries ends in defeat, this creates a situation in Which an economte recovery is not only possible but inevitable for the imperialist bourgeoisie.

In other words: the basic notion here is that there are no “economic situations without a way out” for the imperialist bourgeoisie, as Lenin rightly stated. Capitalism cannot collapse simply out of its own inner economic contradictions. This Kautskyist conception—which, through the intermediary of English mechanistic “marxists” of the Strachey type, has exercised a deep influence on marxist thought in Great Britain—is the underlying assumption of much of Kidron’s misplaced critique against Marxist Economic Theory. We don't share this conception, and Marx had nothing to do with it. The only thing he showed was that the inner contradictions of capitalism lead towards iodic economic crisis and social explosions. The fact that even in a period of accelerated investment and growth a tremendous inverted pyramid of monetary inflation and personal indebtedness had to be erected to keep the system going—a pyramid which cannot be expanded in an unlimited way—clearly shows that al! these contradictions are still very much with us, like in Marx's time. But whether capitalism collapses or not depends on the successful revolutionary action of the working class. And what happens when it does not collapse depends on a varicty of factors, some of which we have just sketched.

We shall not take up Kidron’s laborious attempts at irony, accusing us of pandering to the notions of “non-stagnating stagnation” and of “slumpless slumps”.'? It is very significant that in none of the passages of Marxist Economic Theory, which Kidron cites as proof that we did not “incorporate the uncomfortable fact of the mildness of post-war recessions” into our general analysis, but continue to speak of the “inevitabic slumps” (presumably on pages 168, 171, 346, 347, 529, etc.) in none of these passages does the word “slump” even so much as appear! The only “inevitability” we mention in ati these passages is the inevitability of periodical downward fluctuations, of periodic declines in output, of periodic increases in unemployment, of periodic overproduction of commodities and excess capacity of equipment. That's what capitalist crisis means for marxist economic theory.

And these continued to occur regularly, after world war II as well as before.

Kidron does not understand at all the point we made about “recessions” and “slumps”; that the difference is purely quantitative and not qualitative (and very often quantitative only after a certain stretch of time; the first manifestations of q recession are very often as violent as the first manifestations of the 1929 slump, as we statistically proved). Recurrent recessions prove precisely that capifalism is mot capable of regular, harmonious growth, is mot capable of avoiding unemployment and is mot capable of avoiding fluctuations of income; all this for the simple reason that it is generalized commodity production conducted under conditions of private property (of “many capitals") which inevitably implics irregular, spasmodic ups and downs of investment. A mild recession is a recession, i.c., a crisis, after all; and a million unemployed in a country like West Germany or Italy are, after all, a million unemployed, and not full em ent. That they don't have ris gravity of the 1929 and the 193% slumps, we concede willingly. But what does that prove? How comparing them to the pre-1929 or the pre-1913 crises of overproduction (these were, after -those which Marx wrote about)? What about determining their tendency? Will they tend to “milder” and “milder” till they fade away? Or will they become stronger and stronger? matters are all connected with the very heart of marxist economic theory. Is it possible roid - ions while generalized commodity protanstios exists? Is it possible to avoid crises i overproduction (pardon me: “recessions”) when “key choices about the deployment of resources’ Mage 14

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are left to individual capitalists? If Kidron thinks it isn’t, he, too, believes in the inevitability of crises of overproduction under capitalism, and then, following his own absurd vocabulary, he too is a believer in “slumpless slumps”. And if he docsn't believe in the inevitability of crises under “contemporary” capitalism, then he can in no way hide his complete and total break with marxist economic theory, method, analytical categories and doctrine as a whole. His impressionist refusal to answer these questions is, in fact, a typical “refusal to generalize”, characteristic of vulgar

Capitalism and “State Capitalism”—the Nature of the Soviet Economy How does it happen that a trained and not talentless economist like Kidron, who has also read some Marx, can make such elementary blunders, constantly confusing use values and values, physical 1 and capital, absence of slumps of the 1929 type and absence of capitalist crisis of overproduction? The reasons obviously do not lie in his lack of analytical ability. lie in his despératé ‘attempt to cling to the myth of “state capitalism" existing in Russia, and to the need which flows from that attempt to show somehow that there is no “basic” difference between the functioning of “contemporary capitalism” and the functioning of the Soviet economy. That's why he has to slur over or even deny fundamental aspects of capitalism and fundamental laws of motion of the capitalist mode of production.

Ever since social-democraltic opponents of the Russian October revolution hatched the theory of “capitalism” continuing to exist in the Soviet Union, supporters of that theory have been faced with a difficult choice. Either they consider that Russian “capitalism” has all the basic features of classic capitalism as analysed by Marx, to start with generalized commodity production, and that it also shows all the basic contradictions of capitalism, included capitalist crisis of overproduction— and then they have a hard time discovering evidence for this. Or they admit the obvious fact that most of these features are absent from the Soviet economy, and they then have to contend that these features are not “basic” to capitalism anyhow, which in the last analysis only means exploitation of wage-labour by “accumulators”. This then implies unavoidably that there are qualitative differences between the functioning of capitalism as it exists in the West and the functioning of the Soviet economy, and that “state capitalism” is a mode of production different (i.c., corresponding to different laws of motion) from classical private capitalism. Bordiga is the outstanding representative of the first current, Tony Cliff of the second current. The peculiarity of Kidron is to try to have it both ways: he intends to eat his “state capitalist” cake and have it too!

He starts by conceding that Soviet economy is not subjected to the tyranny of profit nor te internal Competition nor to crisis (p. 35). The explanation is that in Russia we are living under the regime of “a single capital”. But if there is no Competition, if there is only a single capital, then, obviously; there is a “central, public arrangement to ensure that the process will go on in an orderly, continuous and predictable way” (Kidron’s definition of what does not exist under capitalism) and this “arrangement” is called central planning. Obviously, too, if there is no competition, “key choices about the deployment of resources” are not left to “individual capitals” (which do not exist), but are centrally determined in a coherent way, and we have continuous growth. And then, equally obviously, there is no capitalism, because all these “arrangements” are unattainable under capitalism.

But at the same time as he concedes all this, Kidron makes a series of statements which completely contradict this conception of the laws of motion of capitalism not applying inside Russia. We read that “nothing (') in Stalinist (including post-Stalin) Russia defics analysis in terms of Marx's model. The process of pumping out surpluses from the mass of producers is as vulnerable in Russia to wild and random encroachments (!) from other capitals as it is anywhere else. The people, that organize and benefit from it, are under as oppressive a compulsion to fast economic growth as any similarly placed class elsewhere” (p. 34). We wait for any substantiation of these breathtaking statements. There is none to come. And none can come because they are based on a crude conceptual sleight-of-hand. Here all the initial confusion between use-values and excHange values, between accumulation of machines and accumulation of capital, between conflicts of different social systems and capitalist competition, come finally into their own.

Let us take for a minute the concept of a “single capital” seriously and see where it leads us. Inside General Motors there is of course no capitalist competition going on. The department producing car bodjes does not “compete” with the department producing gear-boxes. Capital does not “flow” from one department to the other, when gear-box production is “more profitable” than car body uction. General Motors normally can do nothing with gear-boxes in excess of cars produced (we leave aside the marginal case where a large corporation would actually sell parts to a rer this does not change anything in the logic of our reasoning). Normally, the production of all parts is “planned” so that a maximum number of cars can be sold profitably.

Now if there is no “market economy” inside General Motors corporations; if the flow of goods between the departments of that “single capital” is not a flow of commodities but a flow of use-values, why then in General Motors a capitalist trust, why is the final product indeed a commodity, why are the owners of the corporation under the economic compulsion to exploit their workers and to accumulate more and more capital? Obviously because they have to sell their cars on a market, in competition with other car manufacturing corporations. If the wages in their firm go up quicker than productivity of labour, cost prices go up and the General Motors cars would be priced out of the market. If the rate of exploitation goes down, capital accumulation goes down, technology Page 15

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becomes obsolete compared to that of competitors with higher capital accumulation, and again the firm not only would quickly lose its share of the market, but would even be in danger of finding no market whatsoever for its goods. It is through the fact that the final products of General Motors are commodities, have to be sold on a market, and are therefore subject to capitalist competition, that the inner organisation of the plant which appears at first sight as “planned economy” is subject to “wild and random encroachments from other capitals”, and that anarchy of production, increased exploitation, capita] accumulation, periodic crisis, firmg of workers, inflow and outflow of capital from the auto branch to other branches, in brief, all the laws of motion of capital discovered by Marx, assert themse]ves.

Now let us presume that through some “miracle” called the October Revolution the jworkers of General Motors expropriate their owners and reorganize production in such a way that they do not have to sell any commodities on the outside market (later, after some soul-searching, they decide to divert 1° of their annual output for such a sale, but this does not change anything decisively in the set-up; even if this 154 were to be suddenly suppressed, no basic change in the organization of their would occur)” Diversification cf production tends to cover at least the elementary needs of all the manpower of the firm. Would this still be “capitalist” production? Of course not, no more than that of the “communistic” colonies of 19th century America. Do the laws of motion of the capitalist mode of production apply to that outfit? Evidently not. There would be no capital accumulation, only an accumulation of industrial equipment, produced according to plan, in the form of use-values. There would be no flow of capital from less to more profitable arcas.*! There would be no cyclical movement of investment, income and output, no periodic crisis, no periodic unemployment, but steady growth (provided the planning functions more or less adequately).

Would there be threat of encroachment by capitalism? Of course there would be such a threat; capitalism, by its very nature, is adverse to any part of the earth and any potential market being taken out of its grip. This threat would take the form of a threatening poice action (or a military action) to restore private property and “free enterprise” in the domain of the collectivised outfit. It would take the form of trying to lure away the G.M. workers, by showing them at least that elsewhere they could enjoy a higher standard of living. These threats would, obviously, influence the behaviour of whoever administers collectivized General Motors. Part of output would have to be diverted for arms production, for purposes of self-defence, and there would be a powerful incentive for technically more and more advanced arms production, Plans would also have to be drafted (and 1) in order not to fall too much behind capitalist production technique for consumer and investment goods too (or even for overtaking them). The division of total output inside the collectivized domain would be influenced by these challenges and the desired response to them.

This would be true, incidentally, independently from the fact whether collectivised domain were administered under a perfect scheme of workers control and workers self-management, or whether it were administered by a hideous gang of foremen and engineers, who grabbed power inside the domain in order to reserve for themselves the cream of hte output, achieving thereby a much higher standard of living than the modest average made possible by the given capacity of output. ftandard of living than the modest average made possible by the given capacity of output. And the possibility of political power and seli-udministration being taken away from the workers of the plant would in its turn depend on the degree by which general consumers needs would be satisfied (if they were, there would be no “incentive” for anyone grabbing power in order to satisfy consumer needs!), on the degree of political activity, awareness and socialist consciousness of the workers (in its turn depending at least p ee ye Dnemr aon cc saineee tne of cultiey), oes hl ag in part a function of the existence and leading influence of a revolutionary But by no stretch of imagination, and especially, by no clever word-play (first using “wild and random encroachments” instead of pressure or threat of pepe then using encroachment” instead of “competition for shares of a market"; and finally substituting accumulation of capital for accumulation of use-values, could these conditions be pressed back into the categories of Marx's model of the inner logic, the laws of motion and the contradictions of generalized commodity production, i.e., of the capitalist mode of production.

So the conclusion is inescapable. There is no “single capital” in Russia (capitalist production under “single capital” was ruled out by Marx anyway). It is absurd to assume that itali roduction was somehow reintroduced because of “competition on the capitalist world market” ie,, that the tail of 1% of output imported from and exported to advanced capitalist countries is it is even methodologically wrong to assume a mechanical and automatic identity between the fact of a country being submitted to “encroachments” of foreign capital and the fact of that country becoming capitalist. Only if and when these encroachments change the internal mode of production do apt Arges to introduction (or reintroduction) of capitalism.

Marx made the point that India and China, although gradually drawn into the capitalist world market, did not for several centuries become capitalist countries (i.c., acquire a capitalist mode of production), because of the strong resistance which the basic mode of uction of these countries continued to oppose to the “encroachments” of international capital. And if such was the capacity of resistance of a decadent and decaying Asiatic mode of production, surely the « ity of resistance against encroachments by the world market of a superior mode of pedactica. basa sed on collective property of 1 . y of the means ot production and planned economy, could be understood to be a thousand times stronger. History proves that it has indeed been so. Page 16 oe

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The Meaning of the Economic Reforms in the U.S.S.R.

All these questions become even clearer if one tries to fit the current economic reforms in Russia and Eastern Europe into this analytical framework. If we assume, as Kidron does, that Russia is a capitalist economy “accumulating capital” under pressure of and in competition with the capitalist world market, then these reforms become meaningless (indeed, any analysis of the Russian economy made by “‘state-capitalists", cf. Tony Cliff's “The Nature of Stalinist Russia” written in the fifties, completely failed to foresee ae Me of the kind). There is the need to “accumulate capital”. The bureaucracy is the * ‘agency for accumulation”. Accumulation leads to “class struggle” like in the West. But because there is “fascist-type dictatorship”, this can only erupt violently (and not for reforms). That's all they had to say.

Lf one starts however from the assumption that Russia's economy is not capitalist; that it is a specific non-capitalist mode of production, then one has to analyse the specific contradictions of that mode of productton, and then one can foresee the specific economic and social problems, conflicts and crisis, which will arise from these contradictions (completely different from those of bourgeois society). That's what we tried to do in Marxist Economic fheory and events have shown us to be right. Indeed, the very contradictions which we laid bare were admitted by the leading economists there and used as starting points for the economic reforms being introduced in Easter Europe and the USSR since the early sixties (these reforms, be it said in passing, will only temporarily provide solace and can in no way solve the said contradictions, which can only be overcome by a political revolution introducing democratically-centralized, ic., planned, workers management).

We cannot here reproduce the whole argument, but let us concentrate on the main points. As we have said above, it 1s simply not true that all ruling layers (classes and castes) in history have had an urge to pump more and more surplus product out of the producers. And it is even less true that they all have an urge to “accumulate capital”. This “urge” is typical only for the capitalist class, under the concrete conditions of the capitalist mode of production (universal commodity production and private property of the means of production, i¢., the existence of “several capitals”, ie., competition). Now the Soviet bureaucracy is not a capitalist class. It does mot manage factories under conditions of universal commodity production. it is mot in the process of competition for markets with other capitalists. So it is under no economic compulsion to maximize output and under even less economic compulsion ta optimize resource utilization. dn fact, it accepts the * “tyranny of the plan” (as Kidron states, without seeming to understand that this is a qualitatively different “tyranny” from that of profit) only because it wants to keep its managerial position, as a means of achieving the optimum standard of consumption available under the given conditions. In other words, the consumption desires of the bureaucracy (like the consumption desires of precapitalist classes) and not the need fo maximize accumulation and output, are the motive force behind bureacratic management. And this unavoidably clashes with the inner logic of a planned econdmy which calls for maximising output*? and optimizing deployment of resources.

How did Stalin solve this contradiction? Essentially through two means. Un the one hand, “material consumer incentives” to the bureaucrats were greatly increased, and were made much more meaningful in the light of the miserable standard of living of the mass of the producers. Cu the other hand, the bureaucrat was trapped in a mass of orders which he had to fulfill, lest he lose not only his consumer privileges but also his liberty and very possibly his life. It was tacitly understood that among all these contradictory indicators, that of attaining or surpassing gross output figures had the absolute priority, and that he was allowed to disregard some other indicators to attain these. But from time to time he was harshly reminded, through violent sanctions, that he had to respect plan discipline as a whole, and not only parts of it.

Why did this combination of carrot and stick increasingly fail to deliver results starting with the fifties? From the point of view of the overall interests of the planned economy, because it had been geared essentially to the needs of an extensive industrialization (with large reserves of land, natura] resources and manpower); in which cost calculations in relation to alternative investment projects were of less importance; this period was over and the Soviet economy needed urgently to grow from extensive into imfensive industrialization, with much more closely calculated use of resources than before. From the point of view of the bureaucracy as a social layer, because both the carrot and the stick were rapidly losing their effects. The incentive effect of the bureaucracy's consumer privileges was dwindling, when the general standard of life in the country rose and in fact imequality in income declined somewhat: e.g. the salary of a director of the biggest machine-building plant, first category, was only five times the minimum wage of a cleaning woman, after the latest rise of minimum wages on January Ist, 1968, instead of eight times in 1966 or ten to twelve times under Stain, The fear of violent repression was also receding as a result of the “liberalization” of the Krushchev era and the general decrease in the use of arbitrary trials, deportation (not to say killings etc.), against individual bureaucrats.

Looking for a way to overcome the growing contradictions between the general needs of the planned economy and the material interests of the individual bureaucrats — are pure consumer interests, be it repeated!) as the driving force of economic growth, the leaders and \avcaaaes of the bureaucracy gradually evolved a system of economic reforms which would tie the sultiincs dspunding oni cic ha ontnicsiel potion and carrpingeel tenaiens tie Instead of these meas and a out the plan, they would henceforth Eoestaety as on ae scirmen of the factory the bureaucrat manages. And profit was Page 17

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partially “rehabilitated” as a faithful indicator of such overall economic performance. In this way, the bureaucracy’s ideologues thought the managers would be forced to a higher degree of optimization in resource utilization than before. The machine-building plant's director we referred oo would receive his “incentive” through bonuses tied to profit, instead cf through a very high salary.

Contrary to what superficial Maoist and semi-Maoist critiques in the West assumed—these strange new “state capitalist” bediellows of Kidron”!—the reforms do not mean that capitalism is being reintroduced in he Soviet Union. They do not mean that profit becomes the motive force of economic growth, iLe., starts to direct investment “spontaneously from branches where it is lower towards branches where it is higher, No real competition in the capitalist sense of the word (ie., competition for selling on an anarchic market) occurs. Means of production have not become commodities, Rather, what has occurred is the use of a pseudo-market to optimize resouree utilisation quite along the lines which the late Oscar Lange postulated already in the thirties*?. i But do these reforms mean a smooth and rational use of the planned economy's resources, in order to achieve the maximum growth of output? By no means. They only substitute one set of contradictions for another. Income of the bureaucracy is now increasingly tied to the factory’s “success” on the “market”. But this “success” does not depend only, or even essentially, upon a rational utilization of given resources available to the factory. It also, and above all, depends upon the technology of the factory (ic. new investment taking place) and upon a given relationship between the “prices” the factory has to pay for what it “buys”, the amount of manpower it has to use and is wages bill on the one hand, and the “prices” the same factory receives for what it “sells” on the other hand. As long as these prices, the mass and form of investment, the amount of manpower and wages, arc determined by the plan, the bureaucrat will quickly feel cheated by the new arrangements. He will say: “You want us to perform “optimally”, but you fix things so from the start, that such a performance is, in fact, impossible’.

So the economic reforms niust unleash a constant tug-of-war of a new type between the plan and the bureaucrats administering the units of output. The old tug-of-war was essentially about allocations (the bureaucrats systematically overestimated the factories’ needs of workers and material, while they underevaluated the productive capacity of the same factories), The new tug-of-war will be about power of decision. The factory managers will demand the right to hire and fire workers as they like. They will demand the right to “negotiate” wages (regionally, locally, or even by branch or unit) according to “market conditions”. They will demand the right to retain the major part of the “profit” of “their” factory to be invested there. They will ask for a rising (and specific) share in total investment to be realized autonomously. by themselves, inside “their” factory. They will above all demand that they should fix the prices of the products they “sell” as they seem fit to do (Le., as the “market” dictates). And the “planners” will of course stridently resent all these demands which run counter to the elementary principles and needs of central planning.

Let us assume for a moment that the factory managers were to be successful in their demands, and gradually conquer these supplementary rights (this is the actual formula used to-day in Soviet discussion; “increasing rights for the factory managers"). What would be the outcome of that process?

Surely, we would have to drop the inverted commas around the words “market”, “buy” and “sell”.

Surely, each factory making its own investment, trying to establish its own prices, negotiating its own wages, would have become an independent firm, and the market would then “arbiter” between these firms and give birth to prices which would no more be determined by plan, but would result from the inter-play of market forces. Surely, in that case, capital would flow from less to more profitable branches. It would no more be the plan, but this flow of capital which would determine the general lines of growth of the economy. Surely, more and more firms would then find it profitable to export part of their goods instead of selling them in the inner market, and would establish direct connections with foreign firms which would increasingly also sell on the Russian market, as well as export capital to that country. Surely, the growth of individual investment would inevitably lead to overinvestment which in a market economy could only be corrected through periodic crises of overproduction and unemployment (never mind whether “mild” as recessions, or “grave” as slumps).

In that case, of course, the Soviet economy would have become a capitalist economy, for everybody to see and acknowledge the fact, even the dogmatic and myopic Mandel. But would it be a “state capitalist” economy’ The whole process started because the income of the factory manager being tied to the factory's “profit”, the manager had received a strong economic incentive to determine this “profit” by his own decision (i.c., to establish control over most of the decisions on which that profit depends). But once he actually succeeds in doing this, he has an even stronger incentive to remain tied to “his” factory for the rest of his life, and to transmit these “ties” to his children and family. Imagine how cheated he would feel if, after having succeeded in making a factory a “profitable” concern, he would then be transferred to another factory which makes a loss (with the loss of income which this would entail for him!). So the process could only end by the reintroduction of private property. And when, even before this ultimate outcome, the ties with foreign firms become stronger, villas bought on foreign coasts and mountains, bank-accounts established in foreign banks and used for some “profitable investment” (e.g. the purchase of foreign ~stocks and bonds) would become additional stepping stones in this process.

One could say that all this is purely imaginary and only invented for argument’s sake. But is it indeed? Hasn't that process actually begun in the Soviet Union? Have not the managers received the right to fire some “excessive workers’? Has not pressure to grant them the right to “fix their own prices” (i.e. to have them fixed by supply and demand on the market) already started, and Page 18

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isn’t it referred to in the Soviet press? Have not certain ideologues of the “managerial layer” (whose existence is now openly admitted and whose formation and education is surrounded with the greatest care by the leaders of the bureaucracy) claimed the right to decide upon the closure of “unprofitable factories"? Has not even Liberman raised his voice in favour of the enterprise becoming more and more “self-financing”? Isn't there already an experiment with a whole industrial branch financing “its own” investment?25 Haven't the trends towards a disintegration of planned economy begun to assert themselves in Yugoslavia, since the “economic reforms” of 1965? Hasn't even an open conflict arisen between “workers self-management” (in its distorted Yugoslav version) and “socialist market economy”, the most “aggressive” wing of the Yugoslav factory managers openly defending the idea that management should be freed from day-to-day “encroachments” by the workers’ councils, whose functions should presumably be reduced to one of “deciding income distribution”, e.g. to similar functions of a capitalist firm's general stockholders meeting? And isn’t the possibility of this process going further and further in that direction conceivable to-day, with all the social forces and contradictions involved in it before our eyes, in broad daylight so to speak, in the Yugoslav case?

What we deny of course, is that this process could lead to “gradual” and “imperceptible” restoration of capitalism. We do not believe that this restoration of capitalism can be achieved “behind the backs of society”, so to speak, in the first place behind the backs of the working class, which is already by far the numerically strongest class in the Soviet Union and in many other Eastern European countries. We are convinced that the workers will put up the strongest possible resistance to such a disintegration of the planned economy, especially when it entails a loss of jou security, reappearance of large-scale unemployment, wage decreases and the strong increase in inequality of income*®. We are therefore convinced that capitalism could be- restored in tle Soviet Union or in any Eastern European country only after breaking the fierce resistance of the working class. And we are likewise convinced that the state apparatus is tied in its majority to the preservance of social ownership of the means of production and of planned economy, and that its resistance would have to be broken too on the road of capitalist restoration (that is the reason why we stil call it a workers’ state, incidentally be it a very degenerate one), nay that it will have to be broken and shattered to pieces, and replaced by a state apparatus of another type, geared to the defence of eee pony and “free enterprise”. Given the present constellation of social forces, both nationally and internationally, we think it very unlikely that this resistance could actually be broken under these conditions, and that capitalism cowld be restored either in the Soviet Union, or in Yugoslavia, dr in any other bureaucratically degenerated or deformed workers’ state.

But the beginning of the process is here, for everybody to see. And it reveals the inconsistencies and contradictions of the theory of “state capitalism” in a striking way. For Kidron will have to answer two sets of questions:

First, are all these contradictions, conflicts, trends and processes anywhere similar or identical to the laws of motion of capitalism, observed by Marx? Have they anything to do with what has been going on in the West during the last 20 years? Aren't they ebviously contradictions, conflicts and laws of motion of a mode of production qualitatively different from capitalism? Aren't they isely those conflicts between “the-+ogic of the market” and the “logic of planning”, which the ate Preobrashensky analyzed as characteristic fur the period of transition between capitalism become socialism, which ts ushered in by the overthrow of capitalism? How could capitalism become restored under capitalism? Would Kidron deny that the above-sketched process, if it would unfold 1ill its ultimate logic, would actually lead to the replacement of one social system by another? Would he then concede that "state capitalism” is different from “private capitalism”, exhibiting different and specific laws of motion? But what's the use of calling it then ‘capitalism’? And what becomes of he preposterous statement that “nothing in stalinist Russia defics analysis in terms of Marx’s model"? Would it indeed not be more correct lo postulate the opposite: the whole development of stalinist Russia follows other laws than those elucidated in Marx's mode of capitalismid, if one presumes that the process of disintegration of planned economy proceeds tll the bitter end, and that “classical” capitalism, based upon the private ownership of the means of production, is restored in the Soviet Union, what would Kidron call that process, and what would be his political attitude towards it? Would it be just the change of one form of “capitalism” into another? Would Kidron’s attitude be one of indifference, or even of glee, “liberal capitalism" replacing a “totalitarian” one? Would the change in the mode of production and in the nature of the state be a historical progression or a historical regression? If it would be a regression (and the more. intelligent “state capitalists” tend to admit that), wouldn't Kidron then be in the unfortunate position of having to call it a social counter-revolution, and to give a positive connotation to what he calls the “ruling class” in the Soviet Union, rehabilitating it and “defending” it against its “reactionary enemies”? And if he were “indifferent”, how could he reconcile this with the obvious economic and social regression encompassed in this process? If he were even to deny this regression, how could he reconcile this with his own admission that there reigns to-day in Russia “the tyranny of the plan” and not the “tyranny of the market"? The society in transition between capitalism and socialism _. rhe most irresponsible of Kidron’s statcments is the one that denies the existence and the very possibility of a society in transition between capitalism and socialism. (In all fairness, one must state that Tony Cliff does not agree with him on this point.) Calling such a society a mere “verbal convenience” is not only in opposition to the whole body of theory of Marx, Lenin and Trotsky and Page 19

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to more than a century of experience of the revolutionary labour movement (it is not Mandel who invented that category, after all), but also puts a question mark over the possibility of socialist revolution anywhere in the world to-day, to begin with in Britain and WestermEurope.

Kidron’s argument is again a typical example of his mechanistic and uahistoric thought.

True, he says, there can be a transition between feudal society and capitalist society’’, because capitalism can grow piecemeal within the interstices of feudal society. Then he goes on: “But socialism is a total system. It cannot grow piecemeal within the interstices of a eapitalist society.

How does workers’ control of production coexist with control by a ruling class the means of production in dispute are one and the same? How does self-determination and consumer sovereignty (‘production for use’) coexist with the external compulsion and blind accumulation that results from capitalist dispersal? There may be (!) room for transitional forms in distribution, but at the level of production and control over production the only possible transition is a sudden, revolutionary one” (p. 35). ae The first striking feature of this argument is Kidron’s definition of socialism. We can hardly believe our eyes: Kidron appears here as a pupil of . . . Stalin! For it was Stalin who first dared to introduce into marxist thought the utterly revisionist and primitive notion that socialism =wresting control over the means of production from capitalists, big and small. It is true that for Stalin, socialism equals nationalisation of these means of production, whereas Kidron, loudly protesting. calls this a farce and claims that socialism=workers control over production. But when the smoke has cleared from the verbal battle-ficld, and all the epithets and insults are pushed out of the way, the notion is cxactly the same in both cases, and it is exactly as wrong!

For classical marxism, to which we continue to adhere notwithstanding all of Kidron’s sneers, socialism means a classless socicty. It therefore presupposes not only the suppression of private property of the means of production, henceforth managed in a planned way by the associate producers themselves, but it also calls for a level of development of the productive forces which makes possible the withering away of commodity production, of money, and of the state. It is therefore a new social system having its own mode of production, its own mode of distribution, and its own economic automatism, which constantly reproduces basically socialist relations between men. :

Now the working class is perfectly capable of overthrowing capitalism in a single country (it did so in Russia, Yugoslavia, China, Cuba, North Vietnam, and is busy doing so in South Victnam right now). But it is not capable of building a socialist society in a single country, not even in the U.S.A. (not to speak of Britain or Western Europe), When it has taken power and has organiscd a planned economy it is not able to suppress commodity production completely because output is not yct high cnough to cover all social needs. If it tries to do this artificially, commodity production (with some “private” monetary standard) will re-emerge spontaneously from universal rationing, independently of the will of the “associated producers’“*. Commodity production will therefore still prevail in the realm of consumer goods. Economic automatism will not reproduce “socialist” relationships in society; stale coercion will be necessary to correct that. And we will therefore have a society in transition between capitalism and socialism, characterised (like the Soviet Union) by the basic contradiction and combination of a non-capitalist mode of production and essentially bourgeois norms of distributivn*’. It is no more capitalism, because there is no universal commodity production, no capitalist competition, no capital accumulation, no laws of motion of capital. It is not yet socialism, because there is still partial commodity production, not yet universal production for use, there is still moncy, there are still social conflicts, and there is still a state.

Kidron could object: “I admitted that there might be transitional form in distribution, didn't I? But what about control over production?” Unfortunately, it is not possible to separate production and distribution in such a mechanistic and total way. If bourgeois distribution norms still reign, there is still some incquality of income. If there is still inequality of income, some social tensions subsist (the more so the more backward the country is from the outset, or the greater this inequality), and the state is still necessary and cannot wither away. True, if the state is administered by the workers themselves, this role of arbiter will function in the general direction of greater equality; if it is administered by a privileged bureaucracy, it will arbitrate in the sense of maintaining and consolidating these igs aps of income. But the mevitability of social tension and the survival of the state correspond to survival of precisely these bourgeois norms of distribution, which in turn reflect precisely the degree of development of the productive forces: insufficient for an immediate and general introduction of free distribution of goods and services. And the concrete way in Which the economy will be managed will again depend at least partially upon the effects which the cxisting moncy economy and inequality of income will have on the activity and consciousness of the producers, on their class cohesion and political involvement, etc., etc. if this is so, such a society still has the need for accumulation (not of capital, of course, but use-Values in the form of equipment, etc.). The division of the social product between consumption anid accumulation remains a problem, creating new social tensions. Whether there is workers control or bureaucratic it will make a lot of difference in the way this problem is solved: but it cannot make the m disappear through magic. And all these problems and tensions are neither those of a socialist society, nor those of a capitalist society, but precisely those .of a society in transition from one to another (in the larger historical sense of the word, like Marx and Lehin characterised it: “the epoch of the dictatorship of the proletariat”, which is most certainly not the epoch of socialism).

Of course accumulation will not be “blind” (it is not in Russia either). But external compulsion will still very much be with us (except if one assumes simultaneous revolution in the whole world), Page 20

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and will lead to new distributions and allocations of the social product (not only between consumer goods and investment goods, but also between them and weaponry). And this will again create many problems, and increase social tensions all around.

So a socicty in transition from capitalism to socialism, far from being a mere “verbal convenience” of Mandel’s, is a basic historic category which maintains its fundamental significance for the whole epoch of world revolution. That's what was built in Russia by Lenin and Trotsky. That's what still will subsist in the Soviet Union when the working class will have overthrown the parasitic rule of the bureaucracy, through a political revolution, and when it will have restored full Soviet democracy. That's what we shall have to build, when the workers take power and establish “genuine workers control”, in any country of the world tomorrow. That and not fully fledged socialism and “production for use” without commodities, money, at state and—alas—weapons. Anybody whe promises otherwise is only creating meaningless illusions among workers, which will cause havoc and deception when reality exposes them. “A society in transition between capitalism and socialism (i.c.; the historical epoch of the dictatorship of the proletariat, under whatever form this may appear) doesn’t exist”, thunders Kidron. “A society of transition between capitalism and socialism, i.¢., nationalisation of all means of production under workers control, democratically planned economy, but still with commodity production of consumer goods, with the survival of money, with foreign trade and with a workers army as long as the threat of strong bourgeois states subsists: that’s the only thing we can build immediately, when we overthrow capitalism tomorrow”, revolutionary socialist workers in Britain will answer.

If Kidron wanted to be consistent—but can one ask an adherent of the theory of “state capitalism” to be consistent?—he would have to reply to them: “Back with you, sons of Satan! You want to entice me to build not a socicty in transition between capitalism and socialism— because such a society doesn't exist—but state capitalism. This I will steadfastly refuse. 1 will tell you-that you are unable to overthrow capitalism anywhere, anytime, as long as it is not overthrown in all countries simultaneously, as long as there is compulsion to accumulate and to manufacture weapons. For socialism can only be born by one stroke, or it won't be born at all". Will Kidron dare draw this ultimate conclusion from his irresponsible denial of the existence of a society in transition between capitalism and socialism, and dare tcll the British workers they should wait before overthrowing capitalism even if and when conditions for this overthrow would be most favourable in their country, tll they can do it simultaneously with the American and . . . the Soviet workers, lest they get themselves entangled unwittingly in the building of “state capitalism”? We bet that he would not retain followérs with such a defeatist statement. The politics of “state capitalism”

Kidron might shrink back before this ultimate conclusion of his thinking but it is its logical conclusion. It shows the uselessness and danger of the theory of “state capitalism” for the working out of a revolutionary strategy in the present world. ; If one starts from the assumption that capitalism to-day reigns supreme not only in Russia, but also in Yugoslavia, Eastern Europe, China, North Vietnam, Cuba—an assumption, incidentally, which you won't find a single capitalist in the world sharing—then it follows that world capitalism is to-day stronger than it ever was before in history. Then capitalism has ushered in a new and sensational phase of universal development of the productive forces, above all in backward countries like Russia and China, much more impressive even than anything Marx described for 19th century capitalism. Then Trotsky was deadly wrong with his theory of permanent revolution, and his demial of any possibility for capitalism to solve the historic tasks of the bourgeois revolution in underdeveloped countries. Then any suggestion that there is a “world crisis of the capitalist system” can only be so much empty talk. _ Inthe best of cases. we would just be faced with intensified international competition between two imperialist blocs, which eventually could lead to war, but with which revolutionists could have nothing to do. And it then follows that there do not exist to-day any objective conditions ripe for socialist revolution, anywhere in the world, us long as capitalism continues its triumphant march forward. Only after some major breakdown of the system (perhaps after a war!) could such a possibility arisc. Strangely cnough, a consistcnt “state capitalist” would thus arrive at a very similar conclusion as a pro-Moscow CPer (the pro-Pcking CPers will in good time arrive at the same conclusion too): socialist revolution is not on the agenda anywhere just now. : -The strategic conclusions which follow are concrete and very deadly. Kidron himself has spelled them out at least for two of the three sectors of world revolution.

In Western Europe, basing himsclf on his assumption of capitalism triumphant, Kidron, as late as 1967, while recognizing that some slowdown of growth would probably occur, saw as the only possible strategy for the working class movement the perspective of . . . “mass reformism” from below™, We, on the other hand, understanding, we believe, much more correctly the structural crisis of the world capitalist system, could make the prediction that notwithstanding the temporary increase in the rate of growth of the Westcrn cconomy in the fifties and the carly sixties, this remained a deeply crisis-ridden system, in which periodic social explosions, which would op the revolutionary conquest of power on the agenda, were unavoidable!. The French May 1968 events have shown who has been right and who has been wrong in that respect, and what Kidron’s analysis objectively leads to: to furnish a theoretical apology for all those reformist and nco-reformist tendencies in the Western labour movement—to start with the French CP!—who all claim that no more than a defence of workers’ real wages and the like is possible to-day.

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For the colonial and semi-colonial countries, Kidron's medicine is an even more bitter one. As the colonial revolution can only lead to capitalism in one form or another—a current exercise of the Hritish adherents of the “state capitalist” theory is to explain even the cultural revolution in China by reference to the need “to step up capital accumulation”; presumably, if tomorrow, after Mao's death, most of the decisions of the “cultural revolution” were reversed, the same explanation would then be given for the reversal. We had better stop chattering about “permanent revolution”. Anybody who comes to power there, including through a popular uprising, can only submit himself to the laws of competition of the world market. As these laws evidently play against the poor countries (and poor classes), workers and poor peasants in these countries can only expect higher burdens, nothing else.

It o unbelievable, but that’s exactly what Kidron has to say about the perspectives of the Ceylon “trots yists’ ae “Ceylon i is poor. She is terribly dependent on the export of plantation products, primarily tea, whose prices are steadily falling. Unless she can break into new export markets for manufactured goods, she will simply become poorer. “Exporting new goods is not easy, particularly in competition with speculators like Hon (Kong, Taiwan and Singapore and it is made less easy by Ceylon’s relatively high level of socia welfa re expenditure .. “ITE the transition is to be made at all—andit is undeniably necessary—productivity will have fo be jacked up and wages held down, There is no alternative, All the LSSP can hope for is that the workers will make the sacrifice willingly. “This then is their dilemma: they are a working-class party m theory yet much of their policy is directed at making palatable the sacrifices they intend demanding from the workers, they are ostensbily a socialist party, yet much of their programme is concemmed with making Ceylon competitive in a capitalist world. “It is a cruel dilemma, and one that can become only crueller as, and if, the left-coalition implements its economic programmfe. For as they do so they must become increasingly isolated— foreign capital will put on the squeeze, the coalition’s small business allies will take fright and the anti-coalition Ieft will nibble successfully at their working class support” (Socialist Worker, July 3, 1969—our emphasis).

If all this were truc, one should have to draw two conclusions. One that it is useless to try today to make a socialist revolution in Ceylon, things could only become worse, and a socialist should limit himself to fight for modest democratic and economic reforms, postponing “revolution” ill some better age. Second, that it would be utterly irresponsible to condemn, not only the reformist LSSP of entering a bourgeois coalition government, but also and above all the various reformist CPs of supporting national bourgeois governments (as the Brazilian, Iraqi, Persian, Indonesian CPé have done and the Indian CPs are doing now, one knows, with what magnéficent results!) Because they had no more choice than the reformist LSSP, and wasn’t it preferable, after all, to have the capitalists do the dirty job of squeezing the workers’ standard of living themselves, rather than do it for them under the false signboard of “‘socialist revolution”?

So Kidron's politics lead to utter despair for a revolutionist. No revolution possible in the West; no revolution possible in the South; as for the East, insofar as the “objective conditions” are fiinilar cither to the West (in Russia, Czechoslovakia, East Germany) or to the South (China, Vietnam, etc.) why hope for revolution there? The only place to withdraw, for a revolutionist, in n’s universe, is to the study, where intelligent tary can be made about the failures of past revolutions and perspectives of new ones, in the 21st century. The members of “International Socialism” sould ask themselves whether that’s what they joined their group for.

No wonder that Kidron scolds us for ‘ ‘shifting easily” from urban workers to “third world” peasants, to “students as the revolutionary focus” (p. 35). If world revolution is some vague for adistant future, then of course the only thing to do today would be—outside of studying— to involve oneself with the day-to-day economic struggles of the workers, meanwhile preaching socialism, as good social-democrats did around 1890.

But if world revolution is seen as the main reality of our epoch, drawing larger and larger parts of mankind in its orbit, ds a result of the world crisis of the capitalist system, then the objective — of the process—whose main epicentre did pass in fact during twenty years (1948-1968) oe Western Europe to China, Vietnam, the Arab world, Cuba, Bolivia, etc.—must be followed and evaluated with the greatest care, and the fact that the students did trigger off a general strike and Tevolutionary struggles in two industrialized countries, France and Argentina, within the same year, should be given all the importance it merits. This does not destract from the concept that the industrial proletariat remains, on a world scale, the decisive social force to overthrow capitalism and build a socialist world. But it leads back to the Leninist concept of “What is to be done?”, that a truly revolutionary organization can only challenge Capital's power—here on a world scale, and not in the framework of Russia—if it succeeds in integrating and orienting towards sccialism all objectively revolutionary demands and movements of other social layers, be it “third world peasants” (near]y two-thirds of mankind by the way)—students in revolt.

The inconsistencies of “state capitalism” do not stop there. The adherents fo “state capitalist" ibeories were at least couse wien | y refused to back North Korea and China against American es ge ir oor gg hs camp” against the other? Now, all of a they back North Vietnam and the South-Vietnamese Liberation Front (the nucleus, presumably, of the ‘bureaucratic class’ which is going to extract tomorrow the last drop of surplus-value from the South Vietnamese labourers under the “state capitalist" system they are busy establishing): Page 22

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What has happened? Isn't Russia “state capitalist” or “imperialist” any more? Has China ceased to be “state capitalist”? Is the conflict no more a conflict between two “imperialist camps”? Have the South Vietnamese communists suddenly more “choice” than the “tropical trotskyists” in Ceylon? Could they—God forbid!—actually lead a socialist revolution and build a society “in transition form capitalism to socialism”, instead of state capitalism? One can't make head nor tail of this “logic”. Here all the inconsistencies of the theory of “state capitalism” are revealed quite nakedly “.

Let us add that Kidron’s dilemma for the Ceylon trotskyists (and revolutionists in the backward semi-colonial countrics in general, at that) does not make much sense from an economic point of view either. Kidron assumes that the “terrible dependence” of Ceylon on the capitalist world market is somehow the result of that country’s poverty and backwardness; but couldn't it be conceived as the origin rather than the consequence of that poverty? What does Ceylon (or rather ihe Ceylonesc capitalists aml foreign plantation companies) receive in exchange for tea, rubber and coconut exports, and what do they do with these results of unequal exchange? Do they use it for industrializing the country? Only to a small extent. Don't they rather import a lot cf consumer goods, to begin with foud? Couldn't most of these consum#ér goods, to start with food, be produced in Ceylon itself? Isn't there a tremendous reserve available for this, half a million unemployed plus all the underemployed able-bodied adult men (not to speak about the unemployed adult women)? Shouldn’t this underemployment of the nation’s resources be viewed as one of the main roots of underdevelopment too? Shouldn't the enthusiasm of the population be mobilized for these productive purposes, rather than for having them “accept sacrifices in their standard of living”? Couldn't this “labour investment” under conditions of socialist democracy (i.e., majority consensus and workers control) lead to an increase in output, where increase in the standard of living could go side by side with increase in investment (in fact, isn't that the economically optimum solution, i.<c., the one which guarantees fastest economic growth)? Wouldn't the main condition for such a “take-off” be the expropriation of foreign and native capital and the establishment of a state monopoly of foreign trade and isn’t the trouble with the reformist LSSP that it can achieve this neither in alliance with the bourgeois SLFP nor by clectoral means? Couldn't Ceylon answer an economic blockade by Britain (if it came about) like Cuba did, by exchanging rubber, tea and other goods for Russian, Czechoslovak and East German industrial equipment? Couldn't the administration of the tea estates by the Tamil workers, and the subsequent rise of their standard of living, create tremendous sympathy and enthusiasm for a Ceylon workers and peasants republic among the starving, downtrodden but politically already alert or even radicalized population of South India and Bengal? Couldn't a victorious Ceylonese revolution become a powerful factor for triggering off a revolution in India, which would be one of the most important and far-reaching upheavals in the history of the human race? That is the answer to Kidron’s dilemma, which any revolutionary marxist could have mapped out to him. If he himself hasn't found it, it is not because of lack of intelligence, but because the theory of “state capitalism’ makes him colourblind to the real problems of world revolution today and their answers.

Under these circumstances, one cannot be surprised that, faced with the accusation of “crude philosophical idealism” hurled at us by Kidron we are not at all upset. Yes, in our view marxism does imply that Ceylonese revolutionists have a choice today, and that “capitalist exploitation and accumulation” does not fatally flow there from a certain set of economic circumstances. Yes, in our view, the tragic lack of understanding by the leadership of the Bolshevik party, in the twenties, of the problem of bureaucratic deformation of the workers state, and of the means to fight it till a new upeurge of world revolution came about, was the main cause of Stalin's conquest of power, and not any economic fatality against which there was no avail. Yes, we are not “economic determinists” in Kidron’s way, which is really Kautsky’s and Otto Baeur's tradition, excluding revolutionary party as a determining factor of history, anywhere, any time. To be accused of “philosophical idealism” by such a fatalist cannot but confirm us that we are right.?* After all, some people, before Kidron, thought that socialists in a backward country had no choice but to act as a benign opposition to capitalists, because they thought that whatever one did, capitalism was on the agenda in that country (as long as it would not have been overthrown in all or most of the industrially advanced countries of the world). That's why these people were furiously to the October revolution, which they called a “voluntarist adventure”, inspired by “crude ical idealism”. That’s why thcy proclaimed triumphantly, as early as 1920, that facts had them right, and that “capitalism” (some actually said: state capitalism) existed in that country. name of that country was Russia, and the people were called mensheviks. They are Kidron’s models and inspiration, whether he likes it or not.

August 10, 1969 Ernest Mandel.

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NOTES

Michael Kidron, “Magginot Marxism: Mandel’s Economics”, in “International Socialism”, April-May, 1969.

Capitalism is the transformation of labour power into a commodity and of means of production into capital, Which means that = have to become commodities too. “Objects for use only become commodities because they are products of private labours, conducted independently from each other. The complex of these private labours constitutes global labour. ~ As the producers establish social contact only starting with the exchange of the products of their labour, the specific social character of their labours appears only threugh this exchange” (Wolume I, chapter I, p. 39}— “In order that these objects may enter into relations with each other as commodities, their guardians must place themselves in relation to one another as persons whose will resides in these objects... . =, must, therefore, mutually recognize cach other as privat: proprietors” (Volume I, chapter II, pp. 30-51}—“In the existence of the product as commodity, determined historical conditions are mnbesded. In order to become a commodity, the product couldn't be produced a3 means of immediate subsistence for the producer himself. If we would have purstied our investigation and asked: ‘Under what conditions do all or even the majority of products take the form of commodities?’, we would have discovered that this ha only on the basis of a very specific mode of production, the capitalist one” (Volume I, chapter IV, p. 132)}—"The transformation of a sum of money in means of production and labour power is the first Movement which a quantity of value passes through, if it has to function as capital. This takes place on the market, in the circulation sphere. The second phase of the movement, the production process, 1s finished as soon as the means of production are transformed into commodities, whiae value is greater than the value of their component parts, and thus contains the advanced capital plus surplus-value, These commodities must then be thrown back into the circulation sphere" (Volume I, 7th part, preface to chapter XXL, p. 527), All references are to the German edition of “Das Kapital” of Karl Marx, edited by Engels (9th printing, Hamburg, Otto Meissners Verlag 1921), and have been translated by us. “This absolute drive (Trieb) of enriching himself, this passionate chasing after value, is common to both the capitalist and the hoarder, but while the hoarder is but a mad capitalist, the capitalist is a rational hoarder. The indefatigable increase of valuc, which the hoarder tries to attain through salvaging money out of circulation, the more intelligent capitalist realizes it by throwing money again and again into circulation” (Wolume |, chapter 4, p. 116}—“Commodity production presupposes commodity circulation, and commodity circulation presupposes the representation of commodities as money, monetary circulation; the duplication of commodilics in commodities and money is a law of the appearance of products as. commodities, In the same way capitalist commodity production presupposes—from a social as well as from an individual point of view—capital in monetary form or monetary capita] as primus motor for each new beginning business, and as a continuous motor. ... The whole advanced value of capital, ic., all com t parts of capital, which are composed of commodities, labour power, labour means and productive material, must constantly be eae by money and bought again. What is true here for individual capital, is also true for social capital, which can function only in the form of many individual capitals” (Volume II, chapter 18, p. 328}—“Money is the form in which each individual capital (abstraction made of credit) must appear, in order to transform itself into productive capital, this follows from the nature of capitalist production itself, in general from commodity production” (ibidem, P 332, for source, see nole 3), . “Capital exists and can only exist as many capitals, and its self- ] cfermination appears therefore as interaction of these many capitals on each other,” (p. 317}/—“The concept of capital implies that the objective conditions of labour—and these are its own products—become embodied in confrontation with labour (literally: take up a personality in confrontation with labour, E.M.), or, which is the same, that they are osed as properly of a personality alien to the worker. The concept of capital implies that of the capitalist” p. 412}—Karl Marx: “Grundrisse der Krik der politischen Ockonomie, (Rohentwurf) 1857-1858", Dietz- Verlag, Berlin 1953. our own translation. . “The specific economic form, in which unpaid surplus labour is pumped from the direct producers, determines the conditions of domination and submission (Koechtochaft) as they emerge directly from production itself, and react in its turn in a determining way upon production” (Wolume II], chapter 47, p. 324 of “Das Kapital", source a5 in mote 3) . Marx made the point, in several parts of “Capital”, and in “Theories of surplus-value”, that real seme are higher in the capitalist countries with higher productivity of labour than in the less developed ca pi countries. As for Marx the reserve army of labour is the regulator of wages, this implies that there is no absolute decline of labour forescen by Marx, when capitalist industrialization unfolds. The movements ef accumulation of capital can produce several results: absolute increase of labour accompanied by relative increase (in comparison to the mass of production and the mass of capital), absolute increase accompanied by relative declinc; and absolute decline accompanied by relative decline. The first case (which implies a decline in social productivity of labour) is exceptional under conditions of industrial capitalism, and so is the third one, characteristic for periods of primitive accumulation of capital; the second case is the more common one. . Karl Marx, Theorien ober den Mehrwert, 2er Band, pp. 267-8 (2nd edition by Kautsky, Stuttgart, Dietz Verlag 1910). . Karl Marx, Das Kapital, Volume III, chapter 15, pp. 236-7 in the edition indicated in note 3, There is of course one peculiarity of arms production which we stressed in “Marxist Economic Theory": the fact that its products do mot enter the enlarged repreducrion process, as they are niether means of production nor means of consumption, and reconstitute neither constant capital nor labour power. But capital invested in the arms sector i; part of total social capital; its profits enter the accumulation process, exactly like any other capilal, and its own organic composition of capital enters in the determination of organic composition of global social capital, hence in the determination of the average rate of profity exactly like any other capital.

In his book “Western Capitalism since the War" (Weidenfeld & Nicokon, London 1968, pp. 46-7), basing himself on writings of von Bortkiewicz and Sraffa, Kidron tries to explain the “drain” nature of arms production by equating them to “luxury is". He forgets that by the Marxist definition of Juxury | these are bought by the non-accumulated part of surplus-value. So what we have here is a aig t principis. If the non-accumulated part of surplus-value grows, accumulations slows down (and, with it) the effects of all laws flowing from increased accumulation: that's what be wanted to prove from the start, But is arms production indeed paid for by the “non-accumulated” part of surplus-value? What interest has the caprtalist class in suddenly slowing down accumulation for a quarter of a century? Has arms production actually resulted in a slowdown, or has it rather led to a speed-up of accumulation? Aod if it has resulted in a 5) Pp, how can one then Large arms as “luxury products"? These questions show that Kidron’s analysis of arms production does not hold water. his Kidron does not want to admit, because he labours under the impression that there exists not a 11. This pletion but a scarcity of capital. The “proof” he produces is the e rate of interest, i.c., high demand or money capital. If conjunciural factors—as those which exist in the USA in 1968-9—are abstracted

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from the general rise of interest rates during the last decade is a result of inflation and net of scarcity of tupital, When secular inflation—which Kidron could have linked to the weight of arms production, among other things—becomes a permanent feature of the economy, the interest rate is composed of two factors: the “price” of loaning money capital plus an insurance premium to offset annual losses of purchasin power of the currency. When this premium is evaluated at 3%,, then the # gost for loaning money capi is much lower than it appears to be. Evidence for the plethora of capital can be found (1) in the movement of capital export from the main imperialist powers, which is today stronger than ever before; (2) in the high rite of self-financing; one of the striking changes of today’s monopoly capital as compared to monopoly capital in Hilferding’s and Lenin’s description (a change which we noted and explained in “Marxist Economic Theory"). Incidentally: inflation can increase the demand for money capital side by side with the existing plethora of productive capital. As capitalists big and small don't want to hold cash, rar buy up all kinds of “real values”, and have an interest to do this on credit as far as possible.

Thus inflation creates credit expansion, which in turn feeds inflation. Whether this leads to a scarcity of productive ca ital can be studied in the annual reports of the big corporations. Do they have difficulties in selling stocks and bonds? Can't they finance important expansion projects due 4o lack of capital, ete, ttc.? Posing the oe is answering it, The excess productive capacity in key sectors of industry ts the teal basis of thie plethora of capital.

The 1869-1919 from “Historical statistics of the USA, from colonial times till 1957", the = iz. 1919-1 from “Long Term economic growth 1860-1965 (US Department of Commerce, Wa 1 In “Marxist Economic Theory” we have clearly indicated the counter-acting tendencies, which down. 13. and, momentarily, even reverse the tendency for the average rate of profit to decline.

Cf. Baran-Sweezy: Monopoly Capital, pp. 372-378, Monthly Review Press, 1966, New York. ! 14, We have already indicated elsewhere a very telling example: when the Mobutu regime of Congo nation- 15. alized the Union Minitre du Haut-Katanga and rape Sagal compensation on the basis of the net book value of a the gentlemen concerned cried out like w animals: “But our assets are worth three times as much... .”

West German figures “Zeitschrift flr alleemeine und textile Marktwirtschaft", Heft 2, 1968—The British 146. figures are not completely comparable, because till 1965 they express the relation between net profits ion profits less depreciation and taxes) and net assets, whereas the post 1965 figures deduct financial charges too from gross profits. The difference is however less than 1%, and therefore cannot change the neral trend.

See eee “The Economics of Neo-Capitalism”, published in the “Socialist Register", 1964, London, 17. erlin Press.

Supe up capital accumulation can be explained i1 Germany, Italy and Japan, the three. countries with the highest rate of growth for the period 1950-1965 among the major imperialist powers, essentially as a result of a sudden upward push in the rate of surplus-value. Reconstruction of the ruined economy increased profit and productivity of labour rapidly, whereas wages lagged behind, as a result of the large —— of —_ (from Japanese and Italian agriculture on the one hand, the strong influx of East German ugees on the other hand). ; ; : :

Kidron denies that there has been a decline of world trade in relation to total industrial production, and 19. states that “trade in manufactures has . . . gone up twice the rate of output since 1948” (p. 34). He forgets that there was a tremendous drop in the relation: trade in manufacturers/output of manufacturers for the capitalist countries after the 1929 slump; that the -1929 relation was reached again only in 1965; that the pre-1929 relation was in itself lower than the 1913 relation; and that the 1965 figures are strongly inflated as a result of the expansion of trade inside the European Common Market (which, at least partially, resembles the trade inside the United States more than niernational trade). A which verifies itself for more than half a century is surely a historical tendency, even if it is reversed for four years, . Imports from capitalist countries fell from 0.7% of the Soviet Union's national income in 1940 to 0.5% in 1950, after that slowly to rise to 1.2% of the national income in 1959 and 1.5% in 1964. These figures don't tell the whole story though, for a large part of these imports come from semi-colonjal coyptrjes which have an average productivity of labour much lower than that of the Soviet Union and can ; neither “encroach” nor “wound” anything inside the Soviet economy. Imports from advanced capitalist countries have till now remained consistently lower than 1% of the Soviet Union's national income.

Kidron alleges that the planners ensure growth by a flow from low-productivity to high-productivity sectors, 21. and equates this with the flow of capital from sectors with low profits to sectors with profits. He seems to forget that in a capitalist economy, it is not physical productivity of labour, but profitability of capital (through the prism of the market) which directs the flow of resources from one sector to another—and that both parameters by mo means automatically coincide. Unwittingly he has thereby stressed another qualitative difference between the Soviet economy and a capitalist economy, instead of “discovering” a simile. Just in passing: doesn't Kidron believe that in a socialized, or even a socialist economy, resources will also have to Row fam low-productivity to high-productivity sectors, inasmuch as economic growth is still needed? Doesn't this indicate the basic similarity between the Soviet economy and any economy in the epoch of the dictatorship of the proletariat, after the overthrow of capitalism, in whatever rt of the world this occurs? ; ; . jot, of course, maximizing accumulation. We showed in “Marxist Economic Theory” that the Maximum rate of accumulation never leads to the fastest rate of growth, also some “fresh” thinking which escapes Kicron's attention. ie Cf. Oscar Lange and Fred M. Taylor: “On the Economic Theory of Socialism”. =o The economic rationale of central planning as against “individual profitability” of the factory lies in the fact that the optimum combination of national (or international) resources gives a higher economic result (whether counted in net revenue or in economy of labour-time) than the sum total of the optima achie.ed on a factory level.

A few recent Soviet articles referring to these debates can here be mentioned: V. Komin: “Economic Reforms and Tasks in Further Improving Price Formation", in "Planoveid Khoziaistvo", 1968 nr. 4; V, Lisitsyn and G. Popov: “On administrative cadres", in “Planovoié Khoziaistvo”, 1968, nr. 5, E.G, Liberman and #. Zhitnitsky: “Economic and Administrative Methods of Managing the Economy”, in “Planovajé Khoziaistvo", 1968, nr. 1, etc.

Cf. The outcry and near-open revolt of the Yugoslav workers since 1968 against the results of the “economic reforms”, especially in the form of increased unemployment, increased inequality of income and i encroachments by managing bodies on the worker’ rights. :

In fact, there have been “transitional societies" between all major stages of man's histary. Cf. George 27.

Novack's excellent article in the November-December 1968 issue of “International Socialist Review".

In “Marxist Economic Theory” we analyzed for the first time (except for the contribution by Preobrashensky, essentially geared however to the problems of an underdeveloped agrarian country) the concrete process of withering away of commodity production, in the course of building a socialist economy. One would have scpeued, some comments of Kidron’s on this example -of “fresh exploration”.

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29, Kidron eagerly picks up our remarks about unsold stocks in the Soviet Union to show that overproduction, after all, exigts in that country. He doesn’t understand that from a partial survival of commodity os partial overproduction would emerge inevitably, as we correctly predicted already im the fifties, t that the whole difference between capitalism on the one hand, and petty commodity production or society in transition between capitalism and socialism on the other hand, lies precisely herein, that in the first case, generalized commodily production leads “by natural law” to generalized overproduction, iLe., to periodic decreases in investment, in income, in output and in employment in the economy as a whole, whereas under partial commodity production this is not the case, no more in medieval Ttaly than in today's Russis, Here notwithstanding unsaleable stocks in various sectors of consumer goods, global investment, income, outpul and employment don't interrupt their continuous growth. Kidron has again, unwittingly, clarified a major qualitative difference of Soviet economy and of capitalism, instead of the simile he thought to have discovered. . Michacl Kidron: “Western Capitalism since the War", pp. 147-8. Kidron’s prescription was based upon the assumption of permanent full employment. Once this is eroded, the resistance of workers of individual factories or firms against the increasingly centralized determination of real wages has no chance of success.

See our article: “Une strategic socialisie pour l"Europe capitalisie’, in “Revue, internationale du Socialisme”™, 31.

No. 9, mai-juin 1955, :

Kidron should have been at least objective enough to tell his readers that after entering a coalition govern- 32. ment with the bourgeoisie, the reformist. LSSP was expelled by the Fourth International, while a minority, the LSSP (Rh-which has the secretary of the strongest Ceylon trade union in its ranks—maintains the continuity of revolutionary marxism, ic, trotskyism, in the island.

Incidentally, this conception equals a rehabilitation of Stalin too. The poor fellow had obviously no 43, choice—no more than the reformist LSSP—bu; to industrialize Russia at the expense of the workers’ standards of living. And the alternative programme of Trotsky’s Left Opposition? So much “philosophical idealism”, undoubtedly... .

We could continue the tale. The same tssued of “International Socialism” which publishes Kidron’s “article 34. contains an excellent report by Ibrahim Ali, which end: with the following sentence: “Only a revolutionary and internationalist solution is capable, net only of solving the Palestine problem, but all other problems of social and pational emancipation in the region”. We fully agree, But let Kidron explain why “developed Arabs” can solve all (!) their social problems through a socialist revolution, while “underdeveloped Ceylonese” cannot.

Let the editors of “International Socialism” explain why what is true for the Arab revelution, Eastern sector, was not applicable to the Arab revolution, Western sector (1¢., the Algerian revolution) Wouldn't it then have en necessary to give the Algerian armed struggle against French imperialism the same kind of critical support “International Socialism” is giving today the Palestinian guerillas? And wouldn't it have been necessary to try and push the Algerian fevolution forward to a socialist revolution, exactly like [brahim Ali proposes today to the Palestinians?

Even on this very minor question Kidron cannot keep his categories clear. “Philosophical idealism” i a 35. doctrine which affirms the primacy of spirit (mind) over matter, the first cteating the second. When we say that the individual unconscious stil] harbours echoes from the “communist part” of 700 years ago, we don't imply thereby that instincts or ideas “create” material conditions; we simply assume that they can linger on after the material conditions which gave birth to them have disappeared. This statement has therefore nothing to do with cither philosophical or historical idealism, but is an elemealgry truth of historical materialism, conceived in a dialectical way. Doesn't Kidron know that the peculiar ideas of the Catholic Church, born out of material conditions_of feudalism, still have a powerful impact a thousand years after their formulation? Doesn't he know thal superstitions born from material conditions, which have disappeared for many more centuries also lipger on? Why is it then so difficult to conceive that some of the elementary customs of social solidarity and cooperation, born under tribal communism, and maintained in the village community, could still strongly affirm themselves today? Perhaps because Kidron's way of thinking is narrowly mechanistic based upon vulgar determinism, where everything flows automatically from, cconomic fatality?

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4.The Inconsistencies of Ernest Mandel Chris Harman (Reprinted from International Socialism, Dec/Jan 1969/70, pp3641.)

with this question is there a single mention tion of capitalists with each other and Anv attempt to ‘examine the economic of the working class or a single reference basis of the theories of International with ,those who produce ihe means of to the wage labour/capital relationship. Socialism’ and to ‘demonstrate . . . in fact production so as to continually reproduce Now this is curious, For 1 was noi Michael the Menshevik theories of International on an enlarged scale, the competition, Kidron but Karl Marx who wrote “The Socialism lead to a very bad political prac- Mandel's argument is that this cannot be relation between wage labour and capital tice’ would merit attention in this journal. a definition of capitalism because: determines the entire character of the mode, When the author of such an attempt has 1—The primacy of growth ‘is not only of production’. And this is not an accibeen considered for many years the leadtrue for capitalism’. He instances the-‘iredental aside, Marx's original starting point ing theoreticign of the ‘Fourth Internamendous process of growth’ of the fourth was alienated labour, the situation in which tional’ and has also acquired a reputation millenium BC and ‘the tremendous econthe products of man’s labour appear as in certain circles as a ‘Marxist economist’, omic growth’ that would occur under independent’ forces, constraints. on his a serious assessment of his arguments can socialism. Yet, in fact, neither of these activity. In its developed form this implies net only enable us to clarify our arguactually refers to a situation in which there the separation of the worker from control ments, but also to see to what extent his was a ‘primacy of growth’ in Kidron’s af the means of production, expropriation terms, thal is, a system in which growth is reputation is deserved. Es of the actual producers, the creation of a There are, however, two practical difficulcompulsive. Rather each refers, even acproletariat. ties in an overall assessment of Mandel’s cording to Mandel, to growth that occurs pamphlet! The first is that the range of The significance of this omission will beas a result of historically contingent faccome apparent later. For the moment, tors. In fact even Mandel is unimpressed points covered is so greal as to prevent us attempting to deal with other than the however, let us look at the conclusion by his own argument here. For 12 pages Mande! thinks can be drawn from his major ones, The second is that his critique later he writes: ‘this urge (to accumulate definition. He sees it as meaning that is not_of ‘the theories of the International capital) is typical only for the capitalist commoditie; produced have to be trans- Socialism group as a whole’, It is a critique class under the concrete conditions of the formed into money, and that therefore that of one short presentation of these theories capitalist mode of production’. ‘capital accumulation’, ‘the final money in a review by Mike Kidron; the books 2— More importantly, he argues that comform of capital’ and ‘the capitalists thirst and articles by Cliff, Kidron and others petition alone cannot be the definition of for profits’ are ‘exactly identical expreswhere our arguments are put fully are capitalism, because in the past there have sions’, But this is plain unadulterated nononly mentioned a couple of times in passbeen societies competing with each other sense. Thirst for profits is nol ‘synonymous’ feg Rome and Carthage, Venice and ing in Mandel’s pamphlet. : j with ‘the basic economic compulsion de- However, by looking at the major points Byzantium) that have not been capitalist. termined by the siructure of capitalist on which Mandel takes dispute with us, the erefore, what counts is only competition society’, Thirst for profits existed, for inbasic untenability of his position can be on the basis of ‘generalised commodity Stance, among usurers in the ‘slave society shown, together with the extent to which production’. : of Roman antiquity or in Chinese oriental he is forced into inconsistencies, distortions The trouble with this definition is that it despotism. So did the ‘final money form of and simple misunderstandings in order to leaves the concept of ‘commodity’ as uncapital’. In neither case did they produce defend it, and the overall shallowness of problematic. This might not matter if one systematic ‘capital accumulation’. What his «critique. were ‘dealing with small-scale capitalist Mandel is trying to say is that in capitalproduction with many competing firms ex- The nature of capitalism , At, ism as Marx describes it they are different The first central point in Mandel’s critichanging all their produce on the market. elements in an integrated ongoing system. cism concerns the nature of capitalism. He With modem capitalism of the Western But if that is the case, it is difficult to see argues thal ‘Capitalism is a mode of prosort, let alone with that which dominates the particular sin in describing them as duction in which generalised commodity in countries like Egypt or Syria, this raises social and psychological mechanisms that production unleashes a historic process. of immediate problems. For instance, what make the system function, Yet it is for this accumulation of capital, which is in turn happens when the capitalist produces for that Kidron is subjected to attack. What a constant (if discontinuous) growth of the state? According to Lenin: really matters, of course, is whether they commodity production, of production of ‘When capitalists work for defence, ic are the only such mechanisms that proexchange values and of reinvestment o for the government treasury, it is duce the peculiar features of that system surplus value’. “The rationale of capitalobviously no*more “pure” ‘capitalism, as opposed to other historically existing ism can be understood only under condibut a special form of national econmodes of production. tions of constantly expanding commodity omy. Pure capitalism means comproduction, of a constantly expanding and modity production, Commodity pro- This ieads us to the central argument: insecure market, and of firms, of producing duction. means working for an unwhether the capitalist mode of production units, facing that anonymous market inknown and free market. But the is to be defined by a system involving the dependently from each other and comcapitalist “working” for defence does ‘thirst for profit’ and ‘commodity producpeting for larger and more profitable shares not “work” for the market at all." 5 tion’ for a ‘constantly expanding and inof the market.... But if we assume Or again, in a monopoly when the capitalsecure market’, or by something else of generalised and constantly expanding comist has a degree of contro] over his own which these are but manifestations. Kidmodity production we assume also the prices? As Hilferding has put it: ‘The ron ar, that this something else is the absolute need to realise the surplus value Tealisation of the Marxian theory of concompetition between rival owners of means centration — the monopoly merger — seems of these commodities, in order to accumuto lead to the invalidation of the Marxian of production that forces each to try and late capital," resist the inroads of the other by conlaw of value’.# tinually expanding the means of produc- The argument is developed at some length The Commodity tion. This establishes a relationship beand the central idea js repeated, in difter- Unfortunately Mandel does not even begin tween the different accumulations of alienent forms, several times. far as it goes to discuss these points. He continually reated labour making up the competing it is a fair summary of a part of Marx's fers: to ‘generalised raipatiee Al production’ tion of the nature of capitalism.* means of production that defines each as as essential to capitalism, but does not But there is an odd omission. Nowhere in capital, and their owners as capitalists. It begin to analyse what it means. He is so the whole section of thé pamphlet dealing also determines the dynamic of interac-

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concerned to try to show Kidron as deviatcosts to that of production taking place understand how it falis one has to begin ing from the picture of capitalism that elsewhere, There is ‘regulation of mutual from the law of gravity. Marx painis that he does not see any production by the costs of production :

In an advanced capitalist society most pro- Problems arising as capitalism itself begins the product is related to itself as a realisaduction is not pure commodity production; to deviate from Marx's picture. But prebut one can —— to understand its tion of a determined quantity of general cisely in order to understand how the syslabour, of social labour time’! For the dynamic through the law of value. There tem we live under is the same as that anaparticular commodity producer this means 13 a partial negation of the law of value, lysed by Marx, one had to go beyond mere that his methods of production —his parbut on the basis of the law of value itself, surface definitions, so as to see how the ticular relationship with nature and other men in the pocesen process — has conform of commodity production may under- The Stalinist States go profound changes, become hardly rec- The argument about the nature of capitaltinually to changed as there are unism in general is a Mecessary preparation ognisable, but the content remains the planned and anarchic changes in the for the discussion about Russia and the same. In other words, what is needed is a methods of production of all other proclear analysis of what commodity producother Stalinist states, Por Mandel it is ducers. This. commodity production besettled in advance that these cannot be lion is, the analysis that Mandel does not comes capitalist production when labour even refer to in his critique of Kidron. ~iptalist states of any sort because a propower, the capacity for performing labour, ducing unit is, as argued previously, only as well as the products of labour, becomes Despite Mandel's claim that he is only recapitalist when its products ‘have to be a commodity, the price of which (ie wages) ting what Marx wrote — ‘We only say: sold on the market’, ‘It 1 absurd to assume is determined by the unplanned social inarx truly said this'?—he does not in that capitalist production was somehow reteraction between its exploiters that confact take up a paid central to Marx's introduced because of “competition on the tinually forces them to pay for it no more whole analysis of commodity production: world market” (ic, that the tail of J per than an historically and culturally deterwhich is precisely that the commodity cancent of output imparted from and exported mined minimum. not be taken at face value, that ‘its analysis to the vanced capitalist countries is shows that it is in reality a very queer We can sum up what we have been saying wagging the dog of the Russian spar thing, abounding in metaphysical subtleties up to this point: yes, capitalism is, as Mandel does not, however, stop at this Mandel arguts, competition on the basis of and theological niceties’.* One of the most point. He feels the need to go on and argue commodity production. But to fully underimportant sections of Capital is after all his case in more depth. Kather than take called “the fetishism of commodities’. The stand it one has to go further and see time to point to some of the limitations of that what makes man-produced objects — commodity is not just a good whose charhis argument here—for instance, the and above all labour power — into a comacter is clearly visible from the fact that crude empiricism implied in a mere quanmodity is precisely competition between it exchanges with another pood. It is a titative estimation of the role of foreign producing units that has advanced to the reflection of a more deep-rooted charactertrade, without any examination of whether point where each is compelled to conistic of social production. As society deat certain points the qualitative signifilinually rationalise and rearrange its invelops, what is manifested on the surface cance of commoditiés obtained *by foreign is the exchange of commoedities;: But ternal productive processes so as to relate trade might have been much preater than through this one recognises whal is bethem to the productive process of the 1 per cent! (after all, Magdoff has argued yond: the economic relations of producothers. persuasively that the very low proportion Now if one examines why, say, the comtion." Marx's conclusion is quite clear. of US trade with the third world is of petition between Rome and Carthage was ‘The reason why the products of labour central importance to the US economy) become commodities, social things whose not capitalist, the reason is not just the merits some of the absurd conclusions that qualities are at the same time perceptible tautological one that it was not based upon must follow (which if Mandel does not and imperceptible by the senses’ is ‘because ‘commadity production’, but rather that the accept, other ‘Trotskyists’ do), that Cuba, the relation of the producers to the sum labour processes which the citizens (and say, with the major portion of its productotal of their labour is presented to them slaves) of Rome were engaged in were not live resources devoted in the next fivebeing continually transformed and rationalas a social relation, existing not between year period, as in the last one, to attemptised 50 as to keep pace with such changes themselves, but between the products of Ing to produce 10 million tons of sugar a their jabour’ ‘As a general rule, articles in Carthage and vice-versa, The ‘social year to sell on the world market in comrelation" between the Roman and the of utility become commodities, only bepetition with other sugar producers, is Carthaginian citizen established by the cause they are products of the labour of engaged in commodity production and is private individuals or groups of individuals competition did not. continually intrude therefore capitalist, while Russia is not— who carry on their work independently of upon the actual act of production in this we will analyse his arguments further, each other. The sum total of the labour Way.

Not only is it not true, argues: Mandel, On the other hand, one is now able to see of these individuals forms the aggregate that there is commodity production in why, and in what sense, production where labour of society. Since the producers do Russia, neither is there an urge to accommodities as defined by common-sense not come into social contact with each cumulate capital. "As we have said above, {and Mandel) do not exist can be ‘comother until they exchange their products, it is soma not true that all ruling layers modity production’. In monopolies both the specific social character of each proin history have had an urge to pump more ducer's labour does not show itself except the goods produced at each stage in the and more surplus product out of their production process and the labour power in the act of exchange. In other words, the producers, And il is even less true that labour of the individual asserts itself as a employed are ‘commodities’ because in the they all have an urge to “accumulate part of the labour of society, only by the long run the internal organisation of the the capitalist class under the deta rely capital”, This “urge” is typical only for labour process —ie, the number of goods relations which the act of exchange establishes directly between the products, and produced, the exchange relations between ditions of the capitalist mode of producindirectly through them, between the prodifferent goods, the percentage of the total tion (universal commodity production and ducers."?° Marx argues that this process social labour time employed in producing private property of the means of producthem, the price paid for labour power — forces the labour of the individual labourer tion, ie, the existence of several capitals, to have a two-fold character: on the one is determined by its relationship to proie, competition), Now the Soviet bureauchand it is concrete, useful labour of a duction taking place in society outside the racy is not a capitalist class. It does not particular sort; on the other hand it repmonopoly. Similarly, with arms production manage factories under conditions of unifor the government; because there exist Tesents 2 portion of the total labour of versal commodity production. It is not in the whole of society. “The different kinds complex and unplanned relationshi between the process of arms srotaction the process of competition with other capiof private labour, which are being carried lalists. So it is under no economic comon independently of each other... are (albeit not ones arising from competition pulsion to maximise outpat and under even between commedities on the free market} continually being reduced to the quantitales economic compulsion to optimise reand the production processes for other tive proportions in which society requires source allocation’ (Mandel’s emphasis). them. ... .” goods in society, commodity production One can only thank Mandel for putting can be considered to take place. In both What is central. for Marx's analysis of the logic of his argument so clearly. There cases, the ‘law of value'—the complete commodity production then is that through are two premises and an irrefutable condetermination of production by its unit the labour of individuals is related in a clusion: only under capitalism is there an Planned market relation to production takquantitative fashion to the labour of all ‘urge’.to accumulate capital, Russia is not ing place elsewhere, is negated in a certain other individuals with whom they enter by Mandel’s definition capitalist, and theresense. But at the same time, it alone prointa social felations, not consciously, but fore the Soviet bureaucracy is under ‘no vides a necessary basis for understanding rather through the relations that come to economic compulsion ta maximise output how the production process is in fact exist between the products of their labour. _». and {to optimise resource allocation’, regulated. An object falling freely through This. in turn means that the production Clearly if we can disprove this conclusion, the atmosphere certainly does not fall at process itself is determined by factors outwe can seriously question (to say the least) 32 feet per second per second; but to side of it, that is, by the relation of its Mandel's whole position, It would seem Page 28

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that we should devote considerable effort ‘There is only one thing this something Encroachment and ‘Transformation to doing so. We do not, however, intend else, in contradiction to the desires of in- OF course, it is ‘methodologically wrang to to. For Mandel himself saves ‘us the dividual bureaucrats, cam be: the pressures assume a mechanical and automatic ideneffort. Only one sentence Ister he writes of rival ruling classes outside Russia. It tity between the fact of a country being that ‘the inner logic of a planned economy is these that continually determine the submitted to “encroachments” of foreign calls for maximising oulput and optimisin pace and direction of economic processes capital and the fact of the country becomdeployment of resources’ and a Paragrapl inside Russia. If Mandel js not clear about ing capitalist. Only when these encroachlater that the ‘Soviet economy needed this, he only reveals that he is more myopic ments change the internal mode of produc- Urgently to grow from extensive to ineven than Stalin was, tion do they lead to the introduction (or Teintroduction) of capitalism’, In this at tensive industrialisation, with much more ‘The environment in which we are calculated use of resources than before’. least we wholeheartedly agree with Mandel. placed ...at home and abroad... But Mandel himself has just argued that That is why Russia in the 10 years after compels us to adopt a rapid rate of there can be no such ‘inner logic’, no such 1917, although continually threatened by growth of our industry’ (Stalin, need ‘urgently to grow from extensive into foreign capitalism, was not itself capitalist, 19.11.29),19 Until the inauguration of the first five-year intensive industrialisation’, or as he put it Or again: earlier no ‘urge to accumulate’ in a nonplan it was certainly not the needs of com- “fo slacken the pace of industrialisa- Peling against foreign capital that detercapitalist society. In a non-capitalist society tion would mean to lag behind; those the consumption needs of the ruling class mined the inner structure of the production who lag behind are beaten... . We determine the dynamic of production. A process in Russia. [t is clear (both from old are fifty years behind the advanced ‘plan’ is merely the organisation of prosources like Clifl’s Russia and newer ones countries, We must make good this like the most recent volume of E H Carr) juction to fulfil these needs. A ‘plan’ has no lag in 10 years, Either we do it or that the differing levels. of real es, the ‘inner logic’ to accumulate. The ruling class they crush us.” 1" (or bureaucracy) may want to accumulate consumption level of the peasants, the relaand plan accordingly —or it may not and It was this continual pressure from world live sizes of heavy and light industry, were plan otherwise. until 1928 the result of differing ures capitalism that was responsible for the of different social groups on the state. development of the Russian economy from There was growth, but no ‘urge to accumu- 1929 onwards. It was this, not the ‘needs Reifying the Plan of the plan’ or the ‘desires of the bureauclate’, Until 1924 not economic and military racy" hat produced an accumulation of In talking of the ‘need’ of the plan to competition with the West, but spreading accumulate, Mandel is making precisely the of the revolution was seen as the basis for means of production devoted to further mistake that Marx castigates again and accumulating means of production, Only establishing socialism in Russia, Even after again of ascribing human properties to on such a basis was it possible for the the proclamation of ‘socialism in one things. of accepting reified appearances, of country’ in 1925 the bureaucracy did not bureaucracy (once ils interests had made it worshipping the commodity fetish, The abandon a perspective of revolution accept the programme of competing with only “need” plans in general have is that of the West. Rather, it tried to ignore the abroad) to develop the material base to ensuring a proportionate division of input power of world capitalism in a quite defend its control over Russian society to produce the desired outputs — people from the intrusions of foreign ruling utopian fashion (as Mandel, incidentally, —whether consciously of unconsciously still does). ? classes. And, it is worth adding, this 1s through their unplanned interaction — not But it is also the case that in [28 reality still what determines both the structure of ‘plans’ determine whether this output should did overtake the bureaucracy and force it the plan and the degree of fulfillment of be large or small, and for that matter to industrialise. In doing so it did bring its different sectors, Again, the Russian about changes that are on such a scale whether it be the result of an ‘optimal bureaucrats are more aware of this than utilisation of resources’ of otherwise, Rosa Wantitatively and qualitatively as to bear the ‘Marxist’ Mandel: bet al cription as a ‘change in the mode of Luxemburg, at least, was very clear that ‘Owing to the international situation it has not been possible to allocate as production’, Firstly, pressures of world one sort of ‘plan’ would be subject ta no capitalism led to a rapid change in the such reified pressures: “The aim of social- Many resources as intended to agriism is not accumulation but the satisfacmode of production in agriculture on an cultural investment and whilst the 1969 unprecedented scale. Tens of millions of tion of humanity's wants by developing the figure exceeds that for 1968 jt is below individual peasant farms were collectivised, roductive resources of the entire globe 19 that envisaged in Directives for [966- But why does Mandel, who has certainly The Stalinist bureaucracy brought more of 70 ‘ar the economy into state ownership than the read Marx's strictures against reification It is worth adding that Mandel is quite and fetishism, so readily fal} into this trap prepared to concede the importance of great October revolution had. This was himself? The reason is not difficult to find. ‘continued expansion of arms production’ necessitated not by the arbitrary ‘desires’ of the bureaucracy, still less by the ‘logic Clearly something other than the ‘consumpdue to competition with the non-capitalist tion needs of the bureaucracy’ !* is behind of the plan” but by the pressures to build economy in the Soviet Union’ in determinup heavy industry on a scale that could the forced development of the economy. It ing economic development in the West, not be sustained without a forcible pump- Bul apparently. this ‘competition’ docs not was obviously not the privileges of the ing of surplus agricultural produce out of bureaucracy that determined the need for play the same role in relation to Russia. the countryside.1? hundreds of millions of tons of iron and If, on the other hand, this competition Secondly, in industry there was also a does determine the whole development of stee! in the thirties and forties, Nor was it change in the mode of production, In a the Russian economy, then the anarchic these that produced the collectivisation of matter of months chan were carried agriculture and the near stagnation of conand unplanned relations between the prothrough that were to endure for decades: ducts of their labour with that of producers sumer good production after 1929. Nor, wages were cut, the rate of production for that matter, could it have been the outside Russia (comparisons of levels of speeded up, piecework introduced, the arms production and of the development consumption needs of other sections of the of heavy industry generally) will determine elementary rights of workers to defend Population, The bureaucracy itself implethemselves done away with, the indepenthe conditions under which Russian workmented the plans (there were no long term dence of the trade unions abolished, the ers will produce and live. Because the plans before 1928-9) yet according to labour camps expanded on a massive scale, price of labour power in the West is conandel it was only motivated in its tinually being forced down to a historically € measures were all symptomatic of a ‘economic management’, by its ‘consumpchange in the whole mode of operation of determined minimum in the long run, so tion desires’. Therefore, something else has the economy. Building up of heavy inwill the price they receive fie, their real to be responsible for all the rest. Given dustry in competition with the West was wages). Every change in production pro- Mandel's premises it must have been the on the basis of such measures. It was that cesses in the West will force changes in plan, (What an argument for ‘planning’, Production processes in Russia, and vicewhich brought them about. In other words, that its ‘logic’ entails subordination of production and the conditions of producversa. Accumulation in the West will force consumption to accumulation!) accumulation in Russia (and again, vicetion were no longer determined the In real life something other than the ‘conversa). In other words, a total system of sumption desires of the bureaucracy’ did reified relations is set up in which the use values, but by the ‘needs’ of competidetermine the dynamic of economic deanarchic and unplanned interaction of the tion, the production of exchange values ea age in Russia, something that makes products of labour determines the labour In other words, through the jation of possible the ‘reification’ of the plan. There process, in which dead labour dominates can be a ‘tug of war’ between the plan living labour, in which every concrete act cen consumption and accumulation, and the desires of individual bureaucrats of labour is related to abstract labour -on between living and dead Iabour, was deprecisely because the plan is determined by termined by (and in turn determined) the a world scale—in which although there something outside itself other than these may be many partial negations of the law allocation operating outside of the Russian desires not by some metaphysical of value these are on the basis of the law economy, in the capitalist world. A leap ‘logic of the planned economy’). of value.

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individual, Indeed, if he does not seize in the overall organic composition of from ‘freedom to necessity’ had been imthem by utilising a greater portion of coneats and the fall in the rate of stant De goeves then his competitors will, his profit.” There is no way of rationally understarfdcosts production will be relatively too According to Mande! what is involved in ing the dynamic of development of Russia high, and he will be forced out of business. this account is “a vulgar theory of overeither in the thirties or today if one denies.

Enlarged constant capital means an overthat a change in the mode of production production, according to which it is a glut all (throughout the system) fall in the rate of physical goods which is at the basis of was forced through by the bureaucracy of profit, But if there are leaks whereby when it decided to defend itself against all capitalism’s evil’, which depends for its value is taken out of the total system, the tapitalism by imitating capitalism. Onlv lausibility on ‘a truly remarkable conopportunities for each individual capitalist this can make sense of Mandel’s own talk usion between use-values and exchangeobtaining value to transform into constant of a ‘logic’ to the plan that is different values... worthy of inclusion in a textcapital will be less, and therefore the confrom the desires of individual bureaucrats. book simply to show what a lack of understraints on each capitalist to expand his But this does not mean that acceptance standing of the dual nature of the commeans of production will lessen. The imof this logic of competition with the West modity necessarily leads to’. mediate pressures to expand constant capiwas either ‘mechanical’ or automatic — it What is amazing is that Mandel feels captal (and therefore of production) will dimwas in fact resisted in 1928-9 both by a able of writing this criticism down without inish, the overall rate of profit will fail peachy, 2 what is central to Kidron’s substantial section of the bureaucracy less, and therefore there will exist the basis around Bukharin, and by a section of the stress on leaks: their affect on the organic for a longer term steady expansion ba: left opposition who, despite ambiguities, composition of capital and the rate of upon a lower average organic composition wanted to defend Russia against capitalprofit. Kidron never once refers to an of capital, This will be true whatever the ism by revolutionary means, not by an ‘overproduction’ of cither use values or form the value that leaks from the sysiem internal imitation of capitalist exploitaexchange values in the passage referred to, _ providing its creation employs relation, But it is a matter of fact, unfortuunlike Mandel who earlier writes thai ‘unively more dead labour than living predictable developments under capitalism nately or otherwise, that these lost out in labour. arise from an overproduction of exchangethe struggle and that the Stalinist transvalues... (which most of the time are formation of the economy took place. It is worth adding here that with the decaused by .. . an increase in the produc- Mandel's analysis of modern capitalism Mandel’s own analysis of the nature of the velopment of the newer Stalinist-type tion of use-valwes)'"" Fhe ‘rise’ Kidron is concerned with is a rise in the organic ‘key omy facing monopoly capital" is regimes, it is no longer merely competithat this difficulty is not that of ‘disposing tion with private capitalist states that imcomposition of capital (Mandel judiciously of surplus goods’ ‘but the difficulty of disposes ifs laws upon them, It is also the omits one sentence from Kidron making posing of surplus capital’, Here Mandel this clear in his long quotations, so the needs of competition with other state makes the mistake he.accuses Kidron of, capitalist ones (eg with orientation of the reader might well not be aware of this). of distinguishing capital and goods as Russian economy to defence against China Further, his ‘closed model’ is precisely a different use-values, without seeing that model of the circulation of exchange and vice-versa), Nor is it only or necesas values they are equivalent (ie, if you sarily military competition. e general values: given that all value produced is can dispose of surplus goods profita ly. crisis confronting the Czechoslovak regime transformed cither into consumer goods then you can dispose of surplus capital). or capital goods, and that the value of from the mid-1960"s on arose from an in- Mandel goes on to distinguish between labour power does not rise, then there will ability to sell the produce of its economy the effect of ‘the economic function of on the world market (including to other be an overproduction of values than can arms production’ —‘to provide additional Stalinist regimes) — that is, from a classionly be disposed of either by an overfields for investment for surplus capital" — production of consumer goods, leading to cal inability for the state capitalist bureaucand any reduction ‘in the tendency of the a crisis, OF an increase in ratio of constant tacy to realise its surplus value. increase in the organic composition of capital to variable capital in new investcapital and/or the decline in the rate of ment (leading to a fall in the rate of profit, profit’, But on the classical Marxist model to less investment and therefore to crisia); The analysis of modern capitalism precisely such a distinction is impossible, Mandel's criticism of Kidron’s analysis of the only alternative is for there to be a modern capitalism can be more quickly because only if the rate of profit is preleak whereby values can be drawn from vented from falling too drastically is any the system. At no point in this argument dealt with than the analysis of the Stalinist long term, steady growth of investment can there be, given its very form, the con- Slates, because the issues involved are less possible. To put it another way; there are profound. Mandel begins by apparently fusion of ‘use-values' and ‘exchange-values* quoting Kidron’s view of Marx's model of always opportunities for capital investinvented by Mandel. capitalism and of why it should mean that ment, arms expenditure or no arms cx- It is only because he ignores the actual penditure, but these are only seized if the there is a ‘tendency for labour power to model presented by Kidron, that Mandel rate of profit is high enough. decline in absolute terms under capitalism; is then able to pretend that ‘leaks’ from Even more fascinating, however, is that “booms become progressively less the system which occur through war, for- Mandel’s excuse for not trealing ‘in a profitable, and shorter; slumps more lasteign investment, slumps, etc, involve the stematic way the problem of the sharp ing and severe”’. Incidentally, Mandel physical destruction of goods. For instance, rise in the rate of growth of the capitalist claims that Kidron ‘will have a hard time Kidron's whole point is that wars cause economy after World War Two’, in his finding any evidence in Marx's Capital’ for possibilities of growth for the system by book Marxist Economic Theory. This is these assumptions. One can only suggest destroying value that would otherwise have apparently because most of il ‘was written that Mandel refers to pe 630-635 of Capital to be transformed into constant capital. in the late fifties, ie, more than 10 years (vol 1). Thus Mandel quotes Kidron:

This certainly does not mean that wars ago, when most post-war trends were not ‘The model is a closed system, in which have to destroy physical means of producyet clear’, This statement is nothing short all output flows back as inputs in the lion in order to counteract the contradicof preposterous. One does not have to go form of investment goods or of wage tions of the system: indeed, in arguing back to the early post-war period, when oods, There are no leaks, in this way it is actually Mandel, not Kidalready in 1946 and 1947 there was an et in principle a leak could insulate ron, who confuses lee as accumulated argument by Marxists such as Tony Cliff ®* the compulsion to grow from its most walue (the Marxian definition) with a given against Mandel’s views then that ‘there is important consequences... - If “capiaccumulation of particular use values, (‘to no reason to believe that we are facing a tal intensive” goods were drawn off, destroy capital ... they must destroy innew epoch of capitalist stabilisation and rise would be slower and — dedustrial equipment to a larger degree than development’“! Mistakes at that time were pending on the volume and composiis newly built’).*" Similarly, Kidron’s whole quite natural, given the short duration of tion of the leak — could even stop or point is not that slum estroy goods, but peacetime conditions. But by 1950 the be reversed. In such a case there would that they result in a devaluation of goods, post-war expansion was already pronounced be no decline in the average rate of ie, Value is destroyed or ‘leaks’ from the enough, despite many Marxist predictions, profit, no reason to expect increasingly closed system, so as to permit new capital for writers such as Vance (in the New severe slumps, and so on. investment at a lower organic composition International) to be attempting theoretical Capitalism has never formed a closed — would wages yrs be the case. explanations of it. Fully five years before system in. practice. Wars and slumps ¢ can put Kidron’s argument another Mandel began writing his book, Cliff and have destroyed vast quantities of outway. It deals with the circulation of value Kidron had substantially developed (in ed Capital exports have diverted and in the system as a whole. For the indiv- Socialist Review) explanations of ‘post-war frozen other quantities for long idual entrepreneur if there are no leaks in trends" that five years later, according to stretches of time. this total system, therc 1s an ever-growing Mandel ‘were not yet clear’.

A lot since World War I, filtered out abundance of capital available. This means Yet ewen stranger is Mandel's analysis, in the production of arms. Each of that the possibilities of expanding and developed since, of the reasons for this these leaks has acted to slow the rise cheapening production always exist for the Page 30

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class” that is going to extract tomorrow deadly wrong with his theory of permanent post-war growth. Apparently. it is because the Jast drop of surplus-value from the revolution’. Such according to Mandel is capitalism is undergoing a third ‘industrial South Vietnamese labourers’. One wonders what Kidron does, and such is ‘Mensherevolution’, This has’ been possible because al the inconsistencies both we and Mandel’s vism'.28 ‘during the “long period” of stagnation of organisation have fallen into in the past Perhaps Mandel reads different editions of the capitalist world economy (1913-1940) without him noticing — supporting say, the Trotsky to the rest of us. The theory of a greal “reserve” of scientific and techno- Kenyan struggle against colonialism, alpermanent revolution according to Trotsky logical inventions had been built up, whose though its leaders ‘were the nucleus’ of an 1 know asserts quite unequivocally that the large-scale productive application was detasks of the bourgeois revolution in the African capitalist class, or the Cypriot struggle led by the cleric Makarios and layed as a result of unfavourable econunderdeveloped countries can only be omic circumstances prevailing during that solved by the working class, led by a classthe fascist Grivas, In fact we found no period”, The i however, is simply contradiction whatsoever in giving wholeconscious revolutionary party. It is not contradictory, One moment these innova- ‘Menshevism’ to assert that as a matter of hearted support to these struggles against tions are responsible for the economic cxfact not only has no such party yet led imperialism, without believing their leadpansion; the next they were allowed to ers to be socialists; we have no such probthe working class to the taking of power accumulate for 30 years because there was lems in the case of Vietnam either, “All in Vietnam, or China or Cuba, but those no economic expansion, In that case, someithe inconsistencies of the theory’ we adhere that did take power executed (in Vietnam thing other than the innovations must be and China) or imprisoned (in Cuba) those to must lie in the fact that, unlike Mandel, responsible for their present employment we hold that the fundamental problems trying to build such parties. Neither Mao's —olherwise why did they not cause exparty nor Ho Chi Minh’s party were facing the populations of these countries pansion in the thirties? Mandel seems as cannot and will not be solved until these workers’ parties in anything other than incapable now as when he wrote his book struggles are led by a real, not a mythical, name. Their membership and leadership 10 years ago of identifying what this other were not workers, nor was their theory that working class with a revolutionary Marxist cause might be. of proletarian revolution (it was that of party committed to an explicit, programme of socialist revolution on an international classical, unrepentent Stalinism).** Nor for that matter have the regimes in Permanent Revolution ; es scale. At this point we have dealt with Mandel’s China, Wietnam or Cuba carried through In his pamphlet Mandel has set out to arguments of substance. But there are a all the tasks of the national bourgeois revo- ‘reveal most of the contradictions into few others werth referring to. There is lution, It is mere apologetics to pretend which adherents of the theory of “state the claim that the ‘working class has overthat they have solved the problem of incapitalism’’ enmesh themselves’, Unfortuthrown capitalism .... in Yugoslavia, dustrial development. The ‘cultural revonately, all that he has done is ta show China, Cuba. North Vietnam and 1s doing jution’ in China occurred precisely behimself as ignorant, both about these 4o now in South Vietnam’. One wonders cause the Maoist regime cannot. (Here theories and about quite fundamental queswhen the ‘working class’ actually did again Mandel shows his ignorance by asktions in Marxism (such as the analysis of ‘overthrow capitalism’ jn, say, Yugoslavia. ing what would our attitude be if ‘tomorthe commodity, the relalicaship between In 1944-457 If so one wonders not just row most of the decisions of the cultural capitalist production and commodity prohow (through what institutions of mass revolution were reversed’ — in reality most duction, and the relationship between use self-activity and struggle) and led by what of these ‘decisions’ were reversed two years and exchange value); as self-contradictory revolutionary party, but also why Marxists ago with the setling up of the ‘three-in- (over the questions of the dynamic of the at the time did not notice this monumental one’ revolutionary committees.) In .Cuba, Russian economy and of the unprecedented fact. For three years afterwards Mandel despite desperate attempts to overcome the expansion of capitalism in the post-war certainly did not regard Tito’s regime as dependence on the world market by diversiperiod); and as dishonest (in making omisany sort of workers’ state, It was, he and fying agriculture, the road to development sions when quoting Kidron so as to distort his colleagues argued, an ‘extreme form of is now seen as lying through the produchis argument), I say ‘unfortunately’ be- Bonapartist dictatorship’. In particular retion of more and more sugar to sell in cause it is only through s¢rious and scienlation to Yugoslavia and Albania he himcompetition with other sellers on the world tific debate that Marxist analysis can deself wrote that the Stalinists ‘had conmarket. Finally, in Wietnam, the Stalinist velop. Mandel has made no contribution Structed ‘a new bourgeois state apparatus’.** leadership has twice already shown itself to this in his pamphlet. And when someone argued otherwise, they incapable or unwilling to solve the most elementary of bourgeois national tasks — were not merely wrong, but carrying through ‘a complete petty bourgeois revithat of national unity —when opportunision of the Marxist-Leninist concept both ties to do so were al hand fin 1945 and in of the state and of the proletarian revolu- 1954). tion’? Again, ome wonders when the over- It is Mandel who is actually the modern throw took place in North Vietnam. With E Mandel, The Inconsistencies of State Menshevik, tailing behind a petty bourg- = the establishment of the first Vietminh Capitalism, IMG, 4s. eoisie trying to transform itself into a state government in 19457 But those who took Ibid p 2. capitalist class with varying degrees of Wo a | Which is not to say that the details are power then were described without equivesuccess in Yugoslavia, in Algeria, in Vietcation by Mandel’s organisation as ‘the beyond criticism. nam and in China. He does so, moreover, Stalinists who themselves long ago aban- Ibid p 13. al a time when in the largest of these, the Lenin, ‘Works’ (Russian) vol XXV p doned the Communist banner of Lenin and Shanghai general strike of January 1967 §1, quoted in T Cliff, Russia: A Marxist Trowky. .. 7! Far from what was taking and the emergence of groups like the Sheng place in Hanoi being described as a social- Analysis, London, nd, p 153.

Wu Lien, has revealed new forces challeng- R Hilferding, Das Finanzkapital, ist revolution, Ho Chi Minh, like Soecking completely the pretentions of the Vienna 1910, p 286. harno, was said to have been ‘logically bureaucracy. brought to betray and sabotage the national Mandel, op cit p 4.

The theory of permanent revolution can- Capital, vol 1 p 71. ‘ emancipation’.** not be applied in our epoch without certain K Marx, Fondements de la Critique de Now, of course, Mandel can change his important modifications.** But its most leconomie politique (French translation mind. But one would like to hear his reaimportant conclusions — that the problems of the Grundrisse), Paris 1967, p 169, sons for doing so. to see what evidence of the backward countries can only be there is of workers’ power in Yugoslavia Capital, 1, p 78. == -— solved by proletarian revolutions and even K Marx, Fondements de la Critique, op or Vietnam now thal was not available then not without the revolution spreading previously. It would also be interesting to cit p 147. ; —become more and more apposite as the 12 In fact foreign trade has played a see Mandel justify his own claimed comsuccesses of the petty bourgeoisie in a few crucial role at certain points in the mitment to the theory of permanent revocountries prove increasingly limited and transitory. But it is ws whe draw these history of Stalinist Russia—particularly lution in the light of the avowed policy of in the early thirties when Stalin exthe Chinese before taking power and of conclusions, not Mandel, pected to be able to buy foreign machthe NLF teday being the “bloc of the four Finally, it is worth noting that in order to inery for industrialisation, In order to classes’. try and justify himself Mandel pretends pay for this he had to be able to sell Instead of doing any of this, Mandel merely complete ignorance of the Marxist posiagricultural produce. But ‘the violent asseris that these countries have seen tion on the national question. “All the fall in the terms of trade associated with workers’ revolutions. and that to deny inconsistencies of the theory of “state the world depression greatly increased this is to assert that ‘capitalism today is capitalism” are revealed quite nakedly’ bethe cost of imported machinery in terms stronger than it ever was’ and ‘has ushered cause we are able to support ‘North Vietof Soviel primary exports’, (M Kaser, in new and sensational phase of developnam and the National Liberation Front’, Comecon, London 1967, p 19) In order. ment of the productive forces. above all in even though we believe their present leadto pay for the machinery, more primary backward countries’ so that “Trotsky was ers are ‘the nucleus of a “bureaucratic Page 31

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25 Editorial in fVeme Internationale, Deproduce had to be obtained from the cember 1946, This same journal also peasantry. hence increasing the prespublished an interesting description of sures for collectivisation, : events in Saigon during 1945-6 in_ its 13 Ross Luxemburg. The Accumulation of issue of September/Octaber 1947. Fin- Capital, London 1963, p 467. ally Mandel’s organisation also pub- 14 E Mandel, op cit p 14 lished a mong by Ahn-Van and 18 Quoted in EH Carr and RW Davies, Foundations of the Planned Economy Roussel, where they write that: "The direction of the Vietminh profited 1926-29, London 1969, p 327. by its influence to block the revolution 16 — quoted in Deutscher, Stalin, p and... to fulfil its counter-revolutionary role, That is why it decreed in 17 Finansy SSR 238/69.

November 1945 the dissolution of the 18 For the ‘iirect relationship between CP... That is why it forbade the threats to @ussia from the West and confiscation and division of the land, the decision to build up heavy Parnes satisfying itself with decreeing the taksee, for insiznce, E H Carr and R ing of “collaborators’” lands; that is Davies, op cit p 295. why it maintained and legalised the 19 E Mandel, op cit p 2. usury system, merely pleading for a 20 Ibid p 5. lowering of interest rates. . .. The 20 See, for example, Tony Cliff, All that Stanlist direction sought a compromise glitters is not gold, London 1947, Inwith French imperialism and struck at cidentally, at another point, Mandel the avant-guard: the Trotskyist leaders finds it possible to blame Cliff for ‘not Ta Thu Thau, Tran Wan Trac and foreseeing’ the need for reforms in numerous others were assassinated in Russia in his writings of the ‘fifties February 1946 so as to prepare the such as ‘The Nature of Stalinist way for ihe accords of March 6."

Russia’, But that work was not written 26 It is not only Kidron who, according in the 1950's at all, but in the carly io ~Mandei’s argument must thus be months of 1948. And it certainly does “Menshevik", but also such lifelong point out the major contradiction that revolutionaries as the late Natalia the bureaucracy has attempted to solve Sedova Trotsky (see for instance her (unsuccessfully) since: "The historic letter breaking off relations with the task of the bureaucracy is lo raise the Fourth International in Socialist Reproductivity of labour, In doing this view 1950) and the late Alfred Rosmer, the bureaucracy enters into deep con- Zimmerwaldist, founder member of the tradictions. In order to raise the pro- French CP and founder member of the ductivity of labour above a certain Fourth International. point, the standard of living of the 27 For example, the programme of the masses must rise, as workers who are Vietminh addr itself to “Rich undernourished, badly housed and unpeople, soldiers, workers, intellectuals, educated, are not capable of good proemployers, traders, youth, women, .. .” duction... . But workers, besides hav- Today, the worker content of the Vieting hands, have heads. The raising of namese Communist Party ‘is only 18.5 the standard of living of the masses per cent and the higher the party echemeans to raise their self-confidence, inlon the lower the worker stock’ (Le crease their appetite, their impatience Duc Tho, guoted in Sunday Times, at the lack of democratic rights and 7.9.69). personal security and their impatience 28 For attempts at this, see T Cliff, 'Dewith the bureaucracy that preserves flected Permanent Revolution’ in IS 12 these burdens. On the other hand, not and N Harris, ‘Perspectives for the to raise the standard of living of the third world’ in IS Internal Bulletin, masses means to endanger the produc- December 1969. tivity of labour which is fatal for the bureaucracy in its present international telations, and sooner or later drive the masses to revolts of despair.”

For a full description of the reasons the reforms in Russia have not worked one has only to add this, not Mandel's ‘tug of war’ ‘between the plan and the bureaucrats administering the units of production’ between ‘factory managers’ and the ‘plarners’, but (1) the existence of certain groups in the bureaucracy with a vested interest in resisting changes that would be beneficial to the bureaucracy as a whole—not just ‘planners’ a3 a group or ‘factory managers’, but rather those associated with the police apparatus and with certain sorts of planning mechanisms together with ‘ r rs’ in heavy industry; (2) the continuing short-term pressure of world capitalism thaf prevents Paid and high [oho acagpies to agricu and light i needed labour productivity is res raised to a level competitive in the long term. 21 Quoted in Hal “Buildi Cae x a wilding the 22 Soret Union After the War, September 23 Ibid. 24 Resolution of Fourth International, in

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5.The Mystifications of State Capitalism Ernest Mandel (Reprinted from The Mystifications of State Capitalism, /MG Publications, 1970.)

they are products of private labour, carried on independently fram each In his attempt to answer our criticisms of the theory of “state capitalism‘!1) Chris Harman carefully avoids all the main problems. He does other.” But this, you see, leaves the concept “unproblematic”. Harman not tell us whether "state capitalism" is a mode of production equal to will teach us some deeper, “below the surface”, truths about commodior different from the capitalism analysed by Marx. He does not prove ties, But what we get is exactly the same quotation which we quoted that, if it is equal to “capitalism”, its 40-year history in the USSR can fram part IV of Chapter | of Das Kapital, into which Harman simply be explained by the “laws of motion” as revealed in Das Kapital. He proceeds to inject a mystification. We can catch the mystifier red-handed, does not even give us an inkling of the mysterious “laws of motion” 50 to speak, in the following passage: which guide Russian “state capitalism” as different from those of Yes, capitalism is, as Mandel argues, competition on the basis of capitalism—if it is a differant mode of production. He does not explain commodity production. But to fully understand it one has to go to us whether the (rejintroduction of ‘state capitalism” in a relatively further (7) and see that what makes man-produced objects—and backward country having successfully achieved the overthrow of above all labour power—into a commodity, is precisely competition capitalism is inevitable, in the absence of victorious world revolution, between producing units that has advanced to the point where each asa result of “pressure from the world market", or whether it can be is compelled to continually rationalise and rearrange its internal avoided (and if so, how). He does not answer the question whether productive processes so as to relate them to the productive process there is an inevitable period of transition between capitalism and of the others,""!4) socialism, wherever the socialist revolution takes place. He does not Now, that is. mor what Marx says in part |'V of Chapter | of Das Kapital relate the emergence of “state capitalism” on one-third of the globe (the famous passage on ‘commodity fetishism"). He says clearly that to the question whether capitalism has still a globally progressive role “the fetish character of the commodity” results from the “specific social to play or not, i.e. whether we are justified in speaking of an epoch of “general crisis of capitalism”, whether world revolution is on the character of labour which produces commodities.” He precises that use agenda or is for the time being only a utopian pipedream. And he does * values become commodities only because they are products of private not relate the theory of “state capitalism” to the realities of the class labour carried out independently from each other. And he goes on to Struggle on a world scale in the last twenty years, except by the childish make his point crystal clear. In a society divided by division of labour, device of talking about “national liberation movements led by the but in which mutual dependence of individuals—i.e. the social character petty-bourgeoisie’'—presumably unrelated to the capitalist mode of of labour—continues to assert itseif (where every family does not live production, capitalist private property and the imperialist world system. completely autarchically and independently from other units), there are We do not know whether for Harman, more than for Michael Kidrén, two ways in which this interrelation can be established. In a society in the “tropical trotsk yists” have a choice or no choice, whether capitalism which there is common (collective or cooperative—Marx uses the word can be overthrown in a country like Ceylon or not, and we are left with “gemeinschaftliche’’) property of the means of production, labour is immediately social, i.e. it is the community (or its leaders, e.g. the elders the preposterous proposition that it has somehow not been overthrown in China, Cuba, North Korea, North Vietnam, and is not in the process in certain tribal communities) which consciously allots resources to of being overthrown in South Vietnam, different branches of production. On the contrary, in a society in which there is private property, social labour is not directly recognised as such.

Having left out all the key questions, the only thing Harman can do Private individuals establish connections between each only as “comis to make numerous debating points, mostly without any interest.!2! modity owners”, appearing on the market. The social nature of their He skulks around, throwing a few pebbles into the pond. This is then labour is only recognised post festurn, to the extent to which they called “serious and scientific debate” which we are supposed to be succeed in selling thejr commodities. Commodity fetishism consists in incapable of. But even these pebbles contain their pinch of worth, this, that relations between things, commodities, hide and obscure a because they underline once again how, when you start from the specific relation between men, resulting from the fragmentation of incorrect theoretical presumption, you are forced not only to make social labour into private labours carried on independently fram each incorrect political conclusions, but also to “develop” theory further and other, (Le. resulting from private property. further in a mystifying way: instead of explaining reality, hide it all in a cloak of formulas which sound very “deep” but tend to obscure Now we can re-read this whole sub-chapter of Marx’s on commodity fetishism from A to Z, not once will we find a mention of the mystifyreal social relations and real social struggles. ing formula of Harman's: “What makes man-produced objects..,into a First Mystification: Commodity Fetishism commodity, is precisely competition between producing units that has advanced to the point where each is compelled to continually rationalise Harman concedes that capitalism as a system of generalised commodity and rearrange its internal productive processes so as to relate them to production is a “fair summary” of part (7) of Marx's conception of that the productive process of the other", And the reason why Marx could system's nature. That concession already deals a death blow to Kidron’s not follow Harman's “deeper” analysis of the commodity is of course contention about our having missed the “central capitalist dynamic”: the fact that he knew quite well that commodity production had been the very term “commodity production” was lacking from Kidron's going on for thousands of years before capitalism blossomed as a definition of capitalism. But Harman, being an adept of the school of separate mode of production—and that only under that separate mode “state capitalism” which hinges on the assumption that there can be of production does commodity production lead to “competition “ capitalism "in a country like the USSR where obviously there is not between producing units...compelied to continually rationalise and generalised commodity production, has to try and take back his concesrearrange its internal productive processes”. Mediaeval handicraftsmen on as soon as he made it. He therefore finds a way out by accusing were commodity producers, but their "productive processes" were not us of “ leaving the concept of ‘commodity’ as unproblematic ", of not “continually rationalised and rearranged’’; they remained very stable taking up “ a point central to Marx's whole analysis of commodity for long periods, sometimes several centuries. production.......that the commodity cannot be taken at face value."“(2)

In our naivety we thought thet the mysteries of commodity Harman's mystification begins by defining the commodity by its end production had all been revealed in Das Kapita/. In particular we quoted result, capitalist competition, instead of defining capitalist competition Marx a3 explaining that (at the beginning of The /nconsistencies of asa result of generalised commodity production, It puts the historical sequence and the theoretical analysis on its head. It then goes on by Page 33

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the “production of their material life” ata given level of development mystifying competition itself. Once one “forgets” that for Marx, comof productivity of himan labour, This means that they encompass not modity production is essentially social labour fragmented into “private only the relations inside factories, but also those between factories, labours carried on independently fram gach other’, one can then Production could not go on for one week in Russia without raw materseparate “compulsion to continually rationalise and rearrange producials being sent from one factory to another, machines going to where tive processes 50 a5 to re/ate (sic) them to the productive process of the they are needed [inclusive to raw material producing units), material others’ from its social basis and economic purpose, deny that competi: resources being constantly shifted fram one place to another. tion born fram commodity production is always in the last instance competition tor selling commodities owned by different proprietors Under capitalism, the “law of value” governs these shifts. All proona market, and discover that the “compulsion” which exists for any ducer goods are commodities, All producing units react to increases or workers state, even managed by the most perfect system of workers decreases of sales of their commodities on the market, to increases or control, to defend itself against imperialist armaments, or to relate, in decreases of profits. The “law of value’’—i.e. commodity production— some way or to some extent, its output to that of the outside world, allocates and re-allocates resources behind the backs of the producers in is “proof” of the existence of....capitalism. A very nice way of “deepena society in which social labour is fragmented into private labours as a ing” Marx's analysis indeed result of the private property of the means of production, Second Mystification: ‘‘Reification of the Plan™ Once these means of production are collectively owned, however, they are no more commodities, They are not sold and bought on the No wonder that Harman, not having understood the relation of commmomarket. The “law of value” ceases to govern their allocation and reallodity production to private labour, cannot understand what planning cation between different producing units. “Competition” between really means in relation to social labour, and accuses us of “reifying the “commodities” or “capitals” has ceased to be the basic force to regulate plan”. For, according to him, in Russia inwestment. And then the only other means to assert the social nature of “a total system of reified relations is set up in which the anarchic and human labour is planning. unplanned (sic) interaction of the products of labour determines the In other words: conscious economic “planning”. far fram being “rer labour process, in which dead labour dominates living labour, in fied appearances” or “a thing”, is a specific set of relations of producwhich every concrete act of labour is related to abstract labour on a tion resulting from the suppression of the private property of the means world scale—in which, although there may be many partial (!} negaof production and the beginning of the withering away of commodity tions of the law of value, these are on the basis of the law of value."!6! production, through which labour performed in-collectively owned factories fs recognised as immediately social jabour.'8) And this essential Again we are faced with a breathtaking revelation, completely unproved and completely mystifying. Why does arms production competition with part of the conquest of the socialist October revolution not only should the West “determine the whole development of the Russian economy”? not be eliminated from the Soviet economy by the coming political Through what economic mechanism? By what economic results? One revolution against the bureaucracy, but it should be consolidated, could make a point of saying that arms competition with the West strengthened and generalised: for there is no other alternative to the would be a factor slowing down the increase in the standard of living of rule of the “law of value”. Even those who call the coming revolution the workers, or the rate of economic growth, that it would prevent the in the USSR a “social” one should recognise this, building of a fully developed socialist society [obviously the impossibi- Now, when we wrote that “the inner logic of a planned economy lity of “socialism in one country” is related to the class struggle going calls-for maximising output and optimising deployment of resources”, on ona world scale, and the attempt of the world bourgeoisie to rein- Har;man shouts triumphantly: “A ‘plan’ has no inner logic to accumutroduce capitalism into the USSR), But by this, one has not yet proved late” (p. 38). We beg his pardon: the word “accumulate (especially: that, a5 there is not yet socialism, there has to be capitalism “in which accumulate capital) has been surreptitiously introduced by himself. We every concrete act of (Soviet) labour is related to abstract labour on a didn’t speak about an “inner logic to accumulate’, We spoke about “the world scale’’. inner logic af a planned economy for maximising output and optimising Harman takes for granted what he assumes, but in the absence of any deployment of resources” What does that mean, in the light of what we concrete proof, this can only be called a mystification. Otherwise he just stated about the nature of planning as a specific set of production should prove that Soviet prices are “in the last analysis” (or in the long relations arising out of the suppression of private property of the means run) determined by prices on the capitalist world market; that Soviet of production by a socialist revolution? Obviously, that when means wages are determined by “competition” with, say, USA or British [or of production have stopped being commodities, but when there is-still.a should one say: Indian?) wages; that investment flows from one branch scarcity of consumer goods, and therefore a need to ensure rapid econo: to another according to “relative profitability” (the search for surplus mic growth, the interest of the producers (i.e. their inclination to “muinprofit); that the inferiority of Russian productivity of labour, as commise’ inputs of labour and “maximise” their standard of living) calls for pared to American, has prevented the industrialisation of the country, such an optimal deployment of resources. The farther this willbe from like it did prevent the industrialisation of all under-developed countries realisation, the greater will be the workload for the producers, and the encompassed in the worldwide imperialist system, governed by “the smaller their consumption. This rule, which would even be true ona law of value”. If he cannot prove anything of the sort, then the whole world scale latter the victory of the world revolution) —as long as we talk about “every concrete act of Soviet labour” being related ta are in a period of transition, as problems of industrialisation and increas- “abstract labour on a world scale” and “anarchic and unplanned intering per capita output are still very urgently with us; 35 saturation of action of the products of labour” determining Soviet labour processes demand of basic consumer goods has not yet been achieved for all men fall because Soviet Russia had to defend itself against Hitler's armies is of course much truer ina relatively backward country and under and the American A- and H-bomb, like any workers state would have capitalist encirclement, which imposes the supplementary constraint of to!) is just a Jot of hot air. military self-defence against imperialist threats [the main constraint “The only ‘need’ plans in general have is that of ensuring a proporremains that of avercoming backwardness, i.e, the low standard of tionate division of inputs to produce desired outputs; people. ..not living and of culture of the mass of the producers). ‘plans’ determine whether this output should be large or small, and We stress again that we are talking ot “maximising output” and of for that matter whether it be the result of an ‘optimal utilisation of “optimising deployment of resources”. We are not talking of “accumu: resources’ or otherwise" '6! lation of capital’, or even of “maximising investment’. We tried to prove that excessive investment (like that practised under the two first says Harman. He does not seem to notice that exactly one sentence after having castigated us for “ascribing human properties to things, Five-Year Plans} does nor lead to maximum output and optimum of accepting reified appearances’’, he repeats exactly the same deployment of resources!) That is one of the aspects where the bureau- “mistake’': for what is this “need” of “plans” in general ‘to ensure cratic management of the economy comes into conflict with the “inner proportionate division of inputs to produce desired outputs”, indepenlogic of planning” (i.e. the production relations born from the October dently of social relations between human beings? revolution)—and by no means the only one. We think that “in the long run, the conflict is-irreconcilable. Either the workers will consolidate The solution of the riddle lies in the understanding of what a planned and harmonise planning by eliminating bureaucratic mismanagement, economy resulting from an overthrow of capitalist property relations ot the “consumer interest” of the bureaucratic managers of the econareally meang, “State capitalists’ —and not only they—generally tend to mic will destroy planning and reintroduce private property. These, like reduce production relations to relations between producers and “overseveral other basic contradictions of the Soviet economy, are incompreseers of labour" at factory level. But that is of course a gross over: hensible in the light of the theory that some form of “‘capitalism” exists simplification, and a distortion of Marxism. For Marx, production relain the USSR. They can only be understood in the light of the theary tions are a/! relations between producers which are indispensable for

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defined, demonstrated or even proved ta exist with so much asa single which sees the Soviet economy and society as a society of transition word. It will be hard for Harman to prove that the machine-tools of the between capitalism and socialism. And in the light of the same theory it factories of Magnitagorsk, that the equipment of the Dnjepostroy, or is evident that Harman's identification of “maximisation of output” the lathes of the automobile works of Moscow suddenly became com: with “capital accumulation”—of use values with exchange values—is modities, only because the workers who produced them received lower exactly the same “theoretical” mystifying sleight-of-hand which Kidron wages, or because their “conditions of labour’ were no more determined was guilty of, and which we revealed in The /ncansistencies of State by their needs, And as long as you don't have commodities, you have no Capitalism. exchange values But aren't the Soviet workers exploited by the bureaucrats, Harman But the mystification goes much deeper, Harman presents things as if thunders on? Doesn't Mandel “forget™ the wage labour/capital relationindustrialisation sprang up because of “pressures of rival classes” (pre: ship (which he is. accused of “forgetting” even in his detinition of capisumably the international bourgeoisie) outside Russia, He should admit talism)'1017 We don’t “forget” anything; we just tried to explain the that a point could be made about this pressure coming above all from specific nature of the reiationship between labour and capital, as against inside Russian society (kulaks and Nepmen). In fact, hadn't Trotsky anc all other torms of “exploitation”. the Left Opposition foreseen years before 1927 that as a result of the NEP lie. of the reintroduction of wide-scale petty commodity produc:

Producers have been exploited in all societies since the beginning of tion) there would be a process of primitive accumulation of private disintegration of primitive communism [even in the “society of transicapital which would cut across the needs for developing state industry, tion” between tribal communism and the first form of class society, and that this would lead to a sharpening of the class struggle which there was exploitation of labour-see the misuse of communal labour in would express itself in an attempt of rich peasants to starve the workers favour of tribal chiefs) by making a delivery strike of grain surplus? Wasn't this exactly what What is soecific under capitalism is not simply that part of the happened in the winter 1927-8? product of labour is appropriated by other classes or layers of society, That this “internal pressure” (more correctly: sharpening of the class as part of the secial surplus produced by the Soviet workers is, for sure, struggle and polarisation of class forces) in Russia was linked to “exterappropriated by the bureaucracy. What is specific of capitalism is that nal pressure’, neither Trotsky nor any Trotskyist would deny. Let us exploitation takes the form of labour power becoming a commodity, leave aside the question which of them was basic, and which was—at that which is being bought by the owners of the means of production, and moment—subordinate. Isn't it clear, however, that accelerated industria whose price is determined by the laws of supply and demand on the fisation and siphoning off of part of the agrarian surplus product to “Tabour market’, and the fluctuations of the reserve army of labour. further industrialisation were also (a) in the interests of the working Having sold their labour power.to the owners of the means of producclass: (b) in the “logic of the plan” [1e. of the new production relations tion, the producers have to abandon the property of the products of created by the October revolution): (c) indispensable to theart the their labour to that very same class which monopolises the means of tendency towards restoration of capitalism which would come about as production. This class thus appropriates the surplus value contained in aresult of strengthened primitive private capital accumulation in Soviet the products of labour, realises that surplus value by selling the com society trying to link up with the capitalist world market? Wasn't it modities, and transforms it into additional property, additional capital precisely Trotsky and the Left Opposition who were clamouring for None of these processes are at the basis of the “exploitation of more rapid growth, more planning, more industrialisation, before 19287 Soviet labour, (f anything, wages have gone down not when unemploy- Were they perhaps the spokesmen of “state capitalism”, or expressing ment went up, but when it disappeared. And since the Second World ‘the “pressures of rival ruling classes abroad” by doing so? War, they have gone up in the most rapid way, when frictional unem- By differentiating “growth" before 19278 and “urge to accumulate” ployment reappeared, in the “50s, and after Krushchew’s fall, in the after 1928, Harman commits a double mystification. Before 1928 middle "GOs: they are, in other words, unrelated to any “fluctuations on growth was too slow for fulfilling the needs of the people (i.e. the the labour market’. workers and poor peasants). After 1928, there was no “urge to accumu- The largest part of the social surplus product in the USSA does not late” [Harman hasn't proved the transformation of means of production consist of surplus-value (which must be realised through the sale of into commodities, exchange values, capital, after 1928) but # soeed-up commodities), but in additional machinery and raw material, given a5 of growth jindustrialisation! under specific forms. But without a speeduse-values, It is precisely because “accumulation”, in the USSR, is up of industrialisation, not only could the needs of the people not have “accumulation” of use-values and not of capital, that the bureaworacy 1s been satisfied, but the transformation of the means of production into in no Way @ necessary agent for economic grawth—which could perfectly commodities, capital, i.e. the restoration of capital, would have been have been realised, since 1927 will this very day, by the “associayed unavoidable. So the “state capitalists’ sleight-of-hand appears here producers’, within the framework of a planned economy, And for the again in a striking way. What was in reality an empirical, panicky, very same reason itis preferable not to speak about “exploitation” of uncalculated and barbarous attempt to prevent the reintroduction of the Soviet workers in the scientific sense of the term, but to state that capitalism into Russia, to prevent the absorption of Russia by the the bureaucracy appropriates in a.parasitic and pilfering way an imparcapitalist world market and the “law of value’’, is presented a3 a suctant part of the consumer goods product produced by the Soviet cumbing to pressure of capitalism! working class. Social parasitism is not the same as exploitation, and the Of course industrialisation and collectivisation of agriculture were mediaeval robber barons were not @ class ‘exploiting’ the merchants introduced wader such a form and under such leadership that the imme which they regularly plundered, as long as they had the political power diate and long-term interests of the Soviet proletariat were deeply to do so,!111 harmed. They were introduced under the leadership and to protect the Third Mystification: The Industrialisation Process in the USSR interests of a specific social layer of Soviet society, the Soviet bureaucracy, which during this period crystallised into a hardened caste. Harman argues that, if we were night in saying that the consumer needs (Incidentally, when Harman dismisses the “desires of the bureaucracy” of the bureaucracy do not provide any socio-economic mechanism for 4a motive force for the way the change occurred, he mystifies and assuring maximum economic growth, this growth could only be exreifies social relations: how can the “pressure of world capitalism” lead plained by the “pressures of rival ruling classes outside Russia’. to changes inside Soviet society unrelated to the interests and “desires” “Pressures of world capitalism led to a rapid change in the mode of of specific layers of that society?) The soecific form of Soviet industrialisation resulted fram a political and social defeat of the working class production in agriculture on an unprecedented scale... This was from the hands of the Soviet bureaucracy, But that industrialisation necessitated not by the arbitrary ‘desires’ of the bureaucracy, still itself meant also a political and social defeat of capitalism (as well tess by the ‘logic of the plan’, but by pressures to build up heavy Russian capital, or semi-capitalist primitive capital accumulation, as industry on a scale that could not be sustained without forcible international capitalism) from the hands of the bureaucratically pumping of surplus agricultural produce out of the countryside... deformed workers state. It is because they are unable to understand this Secondly, in industry there was also a change in the mode of producspecific and unforeseen combination of social and economic conflicts in tion... Building up of heavy industry in competition with the West Russia and on a world scale, that the adherents to the theory of “state was on the basis of such measures. It was that which brought them capitalism” cannot make head or tail of the world they have been living about, In other words, production and the conditions of production in over the last thirty years. were no longer determined by the needs of the people, i.e. by the production of use values, but by the ‘needs’ of competition, the Let us formulate the question in other words. Was it in the interests production of exchange values."!12) of Russian producers to greatly and rapidly increase the mass of modern means of production in Soviet society in the late ‘20s? Only an The petitio principis is worthy of a textbook: the “exchange values” ignoramus can answer this question with “no". Was it therefore in their suddenly pop up at the end of the reasoning, without having been Page 35

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interest to “accumulate means of production” (as use values, of course)? within the framework of the capitanst world market. This is a basic Again the answer must be emphatically “yes, Does it therefore make aspect of the “general crisis of capitalism’’, on a world scale, since World $ense to present such a rapid increase in industrialisation asa result of War |, the basic reason for nearly uninterrupted revalutionary convulthe “pressure of world capitalism”, this meaning an adaptation to capisions in the “Third World” for more than forty years. talism {of course, workers also make strikes as a result of the “pressure Asa result of the socialist October revolution, Soviet Hussia broke Of capitalism’; but strikes are not exactly an adaptation to capitalism; away from the capitalist world market, from the possibility-of imperiathey happen to be means to fight against it}? There is no sense whatsolist capital and imperialist commodities preventing a tremendous ever in such a mystifying statement—except the old-time Menshevik and industrialisation process. This was realised on the basis of a planned social-democratic “sense” that a socialist revolution in a backward economy, i.e. by freeing the country from the tyranny of the “law of country is impossible and that, whatever you do, capitalism, and only value". For sure, this emancipation is only partial, not complete. This Capitalism, can flower there. industrialisation cannot reach, inside one country, a higher productivity But, clamours Harman, industrialisation was realised through lowering of labour than was realised by imperialism through international division the standard of living of the workers. Quite true. Wasn't that therefore of labour; it cannot, thereby, achieve the building of a socialist society. an “adaptation to capitalism"? Wasn't that “accumulation of capital’?

But the Russian pro/etariat can starf such a construction. It can develop ‘Accumulating’ his sophisms, Harman has forgotten his starting point. the productive forces and resist “world market pressures’, without The “pressure” was supposed to have taken the form of the need ta having to resort to barbaric means. The bureaucracy’s crimes were build a strong armament industry, “heavy industry", “in competition neither unavoidable to industrialise the Soviet Union, nor historically with the West") it was decidedly not the pressure of “competition” for Necessary, Nor progressive in any senz selling goods on an international market. But it is only sucha “competition” which would have made it imperative to lower wages. When Fourth Mystification: Contemporary Capitalism Harman says that only through lowering the standard of living of the Harman tries to defend Kidron’s preposterous notion that “arms eco- Russian workers could there have been rapid build-up of heavy industry nomy” represents a leak which enables capitalist to avoid crises. But in and armament industry in’ Russia, he in reality swallows the classical order to extricate himself from Kidron's constant confusion between apology for Stalinism hook, line and sinker. He implies that, without destruction of use values and destruction of exchange values! '3!, he has lowering wages, there could have been no heavy industry, no armaments to push the inconsistency of that theory to its extreme. For he now industry in Russia. But as, without such an armament industry, the USSR would have ceased to exist long since, given Hitler's onslaught, it” detines a lesk as a slowdown of economic growth. Do we misrepresent him or exaggerate? Here is what he says himself: then follows that Stalinism —“lowering wages’ and all the miserable rest— wis really unavoidable. Stalin saved the USSR. “You couldn't make an “But if there are leaks whereby wolue is taken out of the total omelette without breaking eggs”, ete., etc., ad mausegn. system, the opportunities for each individual capitalist obtaining value to transform into constant capital will be fess, and therefore In reality, this classical Stalinist apology is rotten and false through the constraints on each capitalist to expand his means of production and through. The excessive rate of investment did not increase but decreased the “rate of accumulation of means of production” in the will Jessen. The immediate pressures to expand constant capital land Soviet Union. Forced collectivisation did not help, but disorganised, therefore production) will diminish, the overall rate of profit will fall “heavy industry” and “armaments industry’, “Anns competition with less, and therefore there will exist the basis for a longer term steady expansion upon a lower average organic composition of capital.""!4? the West” was not helped but hindered by Stalin's peculiar set of economic policies. A lower rate of investment, with a much higher {Our stress}. productivity of labour as the result of higher wages, would have enabled If any sense can be read into this extraordinary nonsense, then it would fo.get much better results than those of Stalin's. Trotsky's alternative run as follows: if capitalists accumulate less, the organic rate of capitaeconomic proposals would have led to much more efficient competilism will grow less rapidly, the rate of profit will decline slower, and tion with Western armament and heavy industry” than Stalin's. accumulation can go on longer. This is an obvious truism—provided one If that is so, Stalin's policies can no more be explained by “objective does not forget at the end of the sentence what one said at the beginneeds of “competing » th the West’ They can only be explained by ning, to vit: that accumulation can go on longer because it is carried on the specific social interests of the privileged Soviet bureaucracy. The atalow: ate. But does this bear any resemblance to the economic difference between Trotsky’s policy and Stalin's was not that Trotsky history ol , 33t-war capitalism, as compared to that of the twenties or was in favour of “slower economic growth", but that he was in tavour the thirties? Has economic growth been slower or quicker? Has capital of a ruthless elimination of social inequalities and a putting of the accumulation been lower or higher? Has the organic composition grown working class in command of the industrialisation process, The bureauquicker or slower? Has technical innovation been retarded or accelera- | Gracy, NOt wanting to lose its power and privileges, crushed the working ted? To present the developments between 1950 and 1965 as being Class political proponents and introduced industrialisation, in a delayed characterised by the fact that “the constraints on each capitalist to and spasmodic fashion, in such a form as to tremendously increase the expand his means of production have lessened” is such a fantastic slap bureaucracy's privileges, By doing so, it also tremendously increased the in the face of reality, that mystification here really hits the jackpot! waste of economic resources {in the first place the waste of labour power, of productive enthusiasm of the workers, and of productivity of What Harman is as unable as Kidron to prove is that “arms produclabour) and Jed to a much weaker “competitive” position compared to tion” is in any forma “leak”. Arms, we repeat, are commodities the West than Trotsk y's would have led to. This is the real, and not the produced for profit, exactly like television sets or machine tools. Even _ mystified, history of the Soviet socio-economic developments in the if one osxsumed that they are entirely paid for by surplus value, they would not constitute a “leak” but a redistribution of surplus value jate “20s and “30s, And it leaves no stone of Harman’s laboriously builtinside the capitalist class, the non-armament sector having part of its _ up mystifying construction: “industrialisation-through-state-capitalismin-order-to-withstand-the-pressure-of-Western-heavy-industry.”" profits siphoned off—not qutside the system, but to finance capita! accumulation in the armament sector. And as this armament sector has Let us try to put the question into historical perspective, Capitalist a higher organic composition of capital than, say, textile production or industry was born “dripping blood and tears out of all its pores", asa even television production, one cannot understand how such a diversion result of a violent and barbaric process of primitive accumulation (of would lead to a slowdown of the increase in the average organic compoexchange values). Marx denounced the momentous crimes—but he never sition of capital, or to a reversal of the decline of the average rate of for one instant forgot to mention that they were historically unavoidprofit. able. No other class of late feudal society could have realised industria- In reality, of course, it is completely false to assume that armament lisation but the bourgeoisie, and by no other means. And without production is paid for exclusively by surplus value, Rosa Luxembourg industrialisation, no tremendous increase in humam productivity of exposed that liberal-pacifist argument long ago!!. Armament producfabour, na historical possibility of freeing man from curse of idiptic tion is being “‘paid”’ for at least in part by a redistribution of the net and repetitive labour, no possibility for expanding human needs towards product between wages and surplus-value (it is largely financed by direct realisation of all human possibilities, no possibility for the withering taxes weighing on wages and indirect taxes weighing on consumer _ away of alienating social division of labour. goods}. It leads, in an indirect way, to an increase in the rate of surplus- In the epoch of imperialism, as a result of the common “drain” by value, and therefore to an increase in the rate gf profit. It sets off temimperialism and native ruling classes on the potential investment fund porarily the fall of the rate of profit neither through a decrease in the for industrialisation (the social surplus product) and the tremendous constraint of competition from imperialist mass production, no uriderdeveloped country can really repeat this process of industrialisation Page -36 hi

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organic composition of capital nor through a slowdown of economic “Not only the agrarian, but also the national question assigns to the expansion—but, on the contrary, thraugh stepped-up capital accumulapeasantry—the overwhelming majority of the population in backward tion and increased economic growth, accompanied by an increase in the countries—an exceptional place in the democratic revolution. Without rate of surplus value. In that way, and in that way only, does “armaan alliance of the proletariat with the peasantry, the tasks of the ments production” enable “profitable investment” of surplus-value, as democratic revolution cannot be solved, nor even feriously posed. we pointed out in The Inconsistencies of State Capitalism. But inasmuch But the alliance of these two classes can be realised in no other way as it steps up “capital accumulation”, it increases the Organic compesithan through an irreconcilable struggle against the influence of the tion of capital, and thereby loses after a certain time on the right side national-liberal bourgeoisie. what it gained on the left. Even under fascism, the rate of surplus-value “No matter what the first episodic stages of the revolution may be cannot be constantly stepped up to compensate that process, as Hitler in the individual countries, the realisation of the revolutionary (and the German capitalists) found out to their cast. That's why armaalliance between the proletariat and the peasantry is conceivable ments production as a cure for the ills af capitalism is only a short term only under the political leadership of the proletarian vanquard, solution, it has the tendency to lead ot war—or to lose its curing virtues. organised in the Communist Party. This in turn means that the Now, the past twenty years have been characterised by a much victory of the democratic revolution is conceivable only through the quicker rate of capital accumulation, of economic growth, of develop: dictatorship of the proletariat which bases itself upon the alliance ment of the productive forces in the imperialist countries, than the with the peasantry and solves first of all the tasks of the democratic period 1919-1939. If arms production is not the main explanation for revolution. this, there must be another one. Harman cannot follow our argument “..#\ democratic dictatorship of the proletariat and peasantry, asa that each of the long-term periods of rapid economic growth under regime that is distinguished from the dictatorship of the proletariat capitalism (1849-1876; 1900-1918; 1940-45-1965) have been charac: by its class content, might be realised only in a case where an indeterised by a new industrial revolution (a quick transformation of base pendent revolutionary party could be constituted, expressing the industrial technology), followed by long-term periods in which existing interests of the peasants and in general of petty-bourgeois democracy technology became generalised throughout the system. He confuses —a party capable of conquering power with this or that degree of aid technical inventions with innovation, and presence of surplus capital from the proletariat, and of determining its revolutionary programme. potentially capable of innovation, with circumstances inducing actual As all modern history attests—especially the Russian experience of investment of that surplus capital for these innovation purposes. A the last twenty-five years—an insurmountable obstacle on the road friendly bit of advice: please compare the rate of surolus-value (or the to the creation of a peasants’ party is the petty-bourgeoisie's lack of increases of productivity of labour), say, in 1928 in the USA, Germany, economic and political independence and its deep internal diffaran- France, Japan, Italy, with those of, say, 1953 in these last countries tiation. By reason of this the upper sections of the petty bourgeoisie {and 1950 or 1960 in the USA): perhaps this will explain ta you part of lof the peasantry) go along with the big bourgeoisie in all decisive the mystery. cases, especially in war and revolution: the intermediate section Evidently, the long cycles linked with industrial revolutions have to being thus compelled to choose between the two extreme poles. be explained by the inner motive forces of capitalism, Le. must be seen Between Kerenskyism and the Bolshevik power, between the in terms of long cycles of “over-accumulation” and “under-accurnula- Kuomintang and the dictatorship of the profetariat, there ts not and tion”. We shall have occasion to come back to this in detail elsewhers, camot be any intermediate stage, that is,no democratic dictatorship of the workers and peasants." (Our stress). Fifth Mystification: Permanent Revolution Let us first stress the fact that Trotsky starts from social and historical When dealing (briefly) with the political implications of the theory of problems, and not from political norms. The words “class conscious state capitalism for the under-developed countries, Harman again is revolutionary party” do not appear once: and when he uses the formula forced to mystify realities and theories, which are quite transparent: “Communist Party” or “Bolshevik power, he means it evidently ina “The theory of the permanent revolution according to Trotsky | socio-historical sense, i.e. a party capable of crushing capitalist-feudal power, like the Bolsheviks did in Russia in October. What the exact know asserts quite unequivocally that the tasks of the bourgeois relations of that party are with revolutionary Marxism and self-organisarevolution in the under-developed countries can only be solved by tion of the working class is not automatically implied in that historical the working class, led by a class-conscious revolutionary party. It role—and not an absolute precondition to this role. We have had a Paris isnot “menshevism” to assert that as a matter of fact not only has Commune which was not led by a “class conscious revolutionary party”, no such party yet led the working class to the taking of power in even before the theory of state capitalism was born. And we know that Vietnam, or China or Cuba, but those that did take power executed in its history, the working class has been led again and again. in its (in Vietnam and China) or imprisoned (in Cuba) those trying to great majority, by parties which were opportunist dr centrist, in all build such parties... Nor for that matter have the regimes in China, shades possible and imaginable, not only in periods of relative quies- Vietnam or Cuba carried through all the tasks of the national bourcence, but even in periods of great revolutionar? upheavals.) geois revolution. It is mere apologetics to pretend that they have solved the problem of industrial development."!'6)

Trotsky defines the two key historic tasks of the bourgeoisdemocratic revolution in the backward country as the conquest of national The mystification begins by replacing a set of social relations by an ideal independence and the agrarian revolution (the uprooting of all samipolitical norm, and then goes on to dissolve concrete historical tasks into feudal remnants and imperialist 2ncroachments which brake the vague generalisations (“solved the problem of industrial development’’). development of the productive forces in the countryside). He never By doing so, Harman has to entangle himself in passing into a new Says, and we never said, that this leads automatically to a thorough contradiction. He seems to have forgotten that the historical function industrialisation of a backward country, after the victory of a socialist of “state capitalism” was to “‘defend itself against capitalism by imitatrevolution. He only says, and so did we, that this opens the road for ing capitalism”, in building up heavy industry. Now we are told that for industrialisation which a combination of imperialist and internal Chinese “state capitalism” is unable to “imitate” capitalist industrialisareactionary class structure otherwise block quite eff iciently, tion, The industrialisation of China {a backward country of 700 million inhabitants!) has not yet been “solved”, according to Harman's yard- Now let us make the test for the four countries involved in the stick, But has it made a decisive step forward compared to the prewar controversy. Is China today a semi-colonial country? Does imperialism situation? Did China, under Chiang Kai-Chek, have a huge industry for maintain indirect rule as it does in Brazilia, Lagos or New Delhi, not to producing industrial consumer goods and industrial machinery, including mention smaller countries? fs Cuba still under the thumb of American some of the most modern ones? Could it have built up such an industry imperialism, as it was during the Batista regime? Is American (or French in competition with the capitalist world market? Harman doesn't even or perhaps British?) imperialism still the real ruler in Hanoi, just as it understand the question, let alone answer it. obviously is Saigon? Were the spies of the “Pueblo” just captured by “agents of American imperialism" in Pyong Yang through an unfortu- But all this is beside the point. For Trotsky has a clear and precise nate oversight? summary of the theory of permanent revolution, which sweeps away all Anybody who does not have a completely mystified view of the the cobwebs of Harman's mystifications: present world will hardly doubt as to how to answer these questions. “With regard to countries with a belated bourgeois development, It is obvious that these countries conquered complete and thorough especially in colonial and semi-colonial countries, the theory of the independence from imperialism not only formal-political, but also permanent revolution signifies that the complete and genuine solueconomic independence—and this through violent revolutions; generally tion of their tasks of achieving democracy and national emancipation ending in bloody anti-imperialist wars, is conceivable only through the dictatorship of the proletariat as leader of the subjugated nation, above all of its peasant masses.

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Taiwan or Honolulu: he'll tell you, He knows. He cannot afford to be Nor can there be the slightest doubt thata thorough-going agrarian revolution (asa matter of fact, a more thorough-going one than that of mystified by “state capitalist rhetoric. So here we have an even more Russia atter 1917!) took place in these niries, weeping away any mysterious situation for the poor adherents to the theory of “state capitalism”, “Petty bourgeois leaders” (peasant parties) are seemingly remnant of landlord-usurer-comprador-kulak bourgeois rule in the countryside (i.e. with the exception of more urbanised Cuba, for not only ablé to eliminate imperialist rule and liberate the peasants between 80 and 90% of the population of these countries}. from age-old landlard-moneylender-comprador exploitation; they can even destroy the “native” capitalist ruling class as well, together with 4g these are self-evident facts, Harman has to involve himself in its bourgeois army and its bourgeois state. And Harman has the cheek another inconsistency when defining these countries as “state capitato pretend that this preposterous proposition is not in complete contralist’. For the inescapable conclusion this would lead him to would be diction with the theory of permanent revolution! to declare these ‘state capitalist’ regimes as highly progressive! Evidently, if tomorrow a non-working class party were to be capable of “The Vietnamese merit support, because they are cond ucting a sweeping away all ties with imperialist exploitation and all remnants of national liberation struggle”: this is Harman's lame answer to our pointing out the inconsistency of supporting the NLF and seeing in it exploitation of poor peasants by landlords, usurers, merchants, kulaks, at the same time “the nucleus of a future state capitalist exploiting as well a3 eliminate all rural unemployment, in countries like India or class”. Let us leave aside the ridiculous comparison between the Viet- Brazil, this would be a gigantic historical step forward, which all Marnham war and the Kenyan or Cypriot struggle; we are eager to have ists should hail as at least as progressive as the great French revolution Harman point out to us the five hundred thousand British soldiers sent (the theory of permanent revolution states that ih the epoch of imperiato Kenya or Cyprus’), But here again Harman in reality is forced to lism, this cannot any more be achieved but by a proletarian party; but accept one typical Stalinist mystification, peddled by the C.P. “peace Trotsky might, after all, have been wrong, think Cliff-Kidron-Harman movements” all around the world: the mystification that “essentially” & Co., at least partially wrong). the South Vietnamese are fighting for the “independence” of their Now who led the revolutions which actually achieved these mighty country against a "foreign aggression’, and not at all against capitalism. social upheavals (even a “‘state capitalist” will have to admit that they were revolutions, and not friendly negotiations at tea parties)? Commu- The reality is of course otherwise. In South Vietnam, a civil war started right after the Geneva agreement!21!_ People rose because the nist parties, and, in the case of Cuba, a revolutionary organisation called the “July 276 Movement’ which was of non-communist origin. “These fascist Diem regime clapped them into concentration camps by the tens parties were workers’ parties in nothing but their name,” thunders of thousands, and eliminated the agrarian reforms realised in the terri- Harman. Really? What about their social composition? Would Harman tories liberated in the South by the Viet-Minh, before the Geneva truce. deny that an important part of the (relatively small) Indo-Chinese, and This civil war unfolded for years before there was. any North Vietnamese the (more important) North Korean and Chinese proletariat (not to intervention. Large-scale imperialist intervention only took place when speak about the Cuban plantation and sugar industry proletariat) gave this civil war was on the point of being successful. Its purpese was not political support, wide allegiance, and even participated to the best of to introduce “national oppression” into South Vietnam, but to prevent its abilities in these parties? And what about their programme? Was that the overthrow of capitalism there. U.S. imperialism was afraid that such characterised only by “the bloc of four classes" (we shall come back to an overthrow would threaten capitalism in the whole of South-East this in a minute)? Wasn't that blac, or the “new democracy”, only con- Asia, and stimulate permanent revolution on an even wider scale, This, ceived a5 a transitional stage towards the dictatorship of the proletariat, and only this, can explain the stupendous investment of arms, men and which was spelt out in black and white as the historical goal of these capital to stop the Vietnamese revolution—and not U.S. imperialism’s parties [by Castro after the beginning of the revolution, it is true, but “hatred” of national liberation struggles, which it could quite go alang much earlier than the Cuban C.P. itself understood this)? Does Harman with [see Indonesia, Algeria, ete.) as long as capitalist wasn't know any “pedsant party” which has a programme in favour of the threatened. dictatorship of the proletariat, which claims to fight for collective The question which Harman has to answer is the one relative to the property of all means of production and even to set out to build a class class nature of the forces involved in that civil war. On the one side less communist society? “Words, words, just words,’ Harman obstinatethere were the landlords, the usurers, the fascist Diem bureaucrats. the ly insists. “In essence, these are peasant parties, petty-bourgeois peasant compradors, the kulaks, the imperialists. Who was on the other side? parties.”

Only the poorer peasantry? Isit then capable of leading a centralised But this is precisely where you make your break with the theory of revolutionary strugg!eall by itself, not only against a tottering collection the permanent revolution, dear “state capitalist blunderers, we answer. of semi-feudal overlords, but even against the mightiest imperialist For the mainstay of that theory is the inability of the peasantry to power on earth? Was Trotsky then so wrong in “underestimating the build a revolutionary party of its own. If the peasantry is able to solve peasantry” 's capacity for independent political struggle? Or was there, the problem of agrarian revolution and national indeperidence by itself, after all, also the working class, and a working class party—a bureaucrathe very possibility of the dictatorship of the proletariat in a backward tised one of Stalinist origins, undoubtedly; but after all a working class one—leading those masses? country disappears. Where the working class is a small minority of society, this possibility on/y exists in function of the incapacity of the Harman feels it necessary to throw the pebble of the “bloc of the peasantry to successfully centralise and lead its own struggles for solving four classes” into the pond, too: basic bourgeois-democratic tasks. Trotsky is crystal-clear on this in the above-quoted conclusion from Permanent Revolution, The peasantry _ “It would be interesting to see Mandel justify his own claimed commitment to the theory of permanent revolution in the light of split into two parts: one, the richer, going with the bourgeoisie, the the avowed (') policy of the Chinese before taking power and of the other, the poorer, going with the proletariat. This happened in China NLF today being the ‘bloc of the four classes’"'22) after 1945, in Vietnam after 1945, in North Korea after 1945, in Cuba after 1959, exactly like in Russia after March 1917 of in China after Marx taught us to judge people not on what they say about themselves 1925. So either you defend the preposterous proposition that national but by what they do (by their objective role in society). Harman the independence and agrarian revolution were not realised im these mystifier now turns this lesson upside-down, Never mind whether the countries—or you have to admit what seems to us self-evident: that Chinese CP. has expropriated all private property of the means of Mao, Ho Chi Minh, Kim il Sung, Castro, were leaders of proletarian production from the capitalist class; whether it has destroyed their state parties, certainly bureaueratised ones, of Stalinist origins (in the first and their economy, left not one regiment from their army. Thatis three cases, certainly opportunist ones, certainly parties a far cry from unsubstantial. As that party has the “avowed polid¢y” of the “bloc of revolutionary Marxism —but nevertheless working-class parties (in the four classes", any upright state capitalist has to presume that Chiang same sense a5 the French and the Italian C.P. are bureaucratised oppor- Kai-Chek and his henchmen are still today in power in Peking. How tunist working-class parties).

Stupid can one get?

The question does not stop there. The Chinese, Vietnamese, North A “policy” is nota set of words on paper, but a line one follows in Korean, Cuban, revolutions didn’t limit themselves to establishing action. The “bloc of the four classes’ meant the subordination of the complete independence from direct or indirect imperialist rule, and €.P. to the Kuomintang, the subordination of the workers to the radical agrarian revolution. They also abolished all native capitalist bourgeois army (which hastened to disarm and kill the workers), the property as well, eliminated the native bourgeoisie, and destroyed the refusal to touch the property of the landlords, urban capitalists and bourgeois state (the Yugoslav revolution did of course the same!) | rich peasants in the countryside, for fear of “upsetting™ the (bourgeois) Nobody in his right mind really beliqves that the Chinese bourgeoisie army. is ruling today in Peking. Ask any Chinese capitalist in Hong Kang, Page 39

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There were certain formal similarities between Mao's line between “Stalinism” has been capable of overthrowing capitalism in the most popu: 1937 and 1946, and the disastrous line pursued by the Chinese CP. lated country on earth is decidedly giving too much honour to Stalin! between 1925 and 1927, although even before 1946 there was a basic Because the Yugoslav, Chinese, Korean, Vietnamese, Cuban, revoludifference: instead of disarming his own forces, Mao maintained them tions were distorted socialist revolutions (the Cuban the least bureauindependent from the bourgeois ermy, which tried again and again to cratised and distorted of them all, for it was led by revolutionary forces crush them militarily, and failed. In the towns, the similarity was proba: not originating from Stalinist ideology or organisations), they are part bly more than formal, although the Japanese imperialist occupation and parcel of the world revolutionary process-started in October 1917— introduced a complicating (and obscuring) factor. be it under unforeseen and specific forms. Their victory has meant But after 1946 a definite change set in, essentially under the pressure heavy defeats for world capitalism and imperialism. It has strengthened of a huge uprising of poor peasants and rural semi-proletariat in North and not weakened the international revolutionary vanguard, included China. In face of that uprising—and of a renewed military offensive that part of it consciously fighting for world revolution and for workers against him by the Chiang Kai-Chek forces, Mao now made a decisive states under workers’ management through freely elected workers” turn towards coordinating and centralising a peasant revolution throughcouncils (the same can certainly not be said about Stalin's victory in the USSR). it has weakened and not strengthened Stalinism in the Soviet out the country, towards destroying the bourgeois army, and conquering power in the towns, destroying capitalist property in the wake of Union, and its stranglehold on the international working class moveconquering the towns (with a certain delay, for sure, but, after all, even mént. It has deepened both the crisis of capitalism and the crisis of the the Bolsheviks didn’t nationalise industry immediately after taking Soviet bureaucracy, and created more favourable conditions for an power, and had intended to do it still later than it actually occurred. To extension of the world revolutionary process to the industrialised countries in Western Europe. This logic—and therefore everything which put a sign of identity (“avowed policy of the bloc of the four classes") is happening with workd revolution in the last decade—is incomprehenbetween a complete subordination of the CP. to the Kuomintang, and sible if one falls under the sway of the mystifications of ‘state the destruction of Kuomintang power by a huge popular revolution ted capitalism”. It is only made comprehensible by Trotsky’s theory of by a bureaucratised working class party (a bureaucratically deformed socialist revolution, if you wish) isa feat of “theoretical” acrobatics Stalinism and of the Soviet bureaucracy. Harman can be really proud of.

August 10, 1970 We pointed out that Kidron’s conclusions about developments in he colonial and semi-colonial countries were straight Menshevism—flowing from the Menshevik theory that in Russia—“under the pressure of the Footnotes world market"—only capitalism was possible, Harman, having swallowed () Chris Harman: The /nconsistencies of Ernest Mandel, in [ntermathe Menshevik starting point of “state capitalism”, is now forced to say tional Socialism, December 1969-January 1970—an answer to Ernest 8, after having said 4. Vor an/y has he acfopred Menshevism, but he is Mandel: The /nconsistencies of State Capitalism, \MG pamphlet, 1969, adapting also more and more of its Stalinist by-products. We have itself an answer to Michael Kidron: Maginot Marxism: Mandel’s Econoalready seen how his interpretation of the Soviet industrialisation mics, in International Socialism, April-May 1969. process is nothing but a repetition of the classical apologetic theories of (2) One example will be sufficient for this type of debating point. Stalinism: “Without Stalin, no efficient armaments industry in the Harman takes us to task because we are alleged to have identified “thirst USSR," Now Harman adopts another Stalinist “theory: the theory of for profit” with “capital accumulation” and “the final money form of “petty - bourgeois” states, neither workers states nor bourgeois states, capital”. This is plain unadulterated nonsense, he proclaims (op. cit. neither the dictatorship of the proletariat nor the dictatorship of the p. 36). A moment's more careful reading would have shown him that bourgeoisie, neither fish nor fowl. This remarkable revision of Marxism we didn’t identify any abstract “thirst for profit” with “capital accumuhas been elevated to the level of dogma by...the official programme of lation” (and certainly not a Chinese usurer’s one), but “the capitalists" the CPSU under Krushchev, And how else but by this Stalinist formula thirst for profits”. And that “thirst” is indeed determined by the econoof “national democracy” can one summarise Harman's definition of mic compulsion to accumulate capital under conditions of private China, Vietnam, Cuba, Yugoslavia, North Korea, as being states of “a property (competition). Far from being “nonsense”, unadulterated or petty bourgeoisie trying to transform itself into a capitalist class"!24!? not, this identification is one of the basic discoveries of Marx's Because for us the Yugoslav, Chinese, Vietnamese, Korean revolutions are distorted socialist revolutions (i.e. led by bureaucratically (3) Chris Harman, op. cit. p. 36, 37. distorted working-class parties), we prefer not to call the parties which (4) Chris Harman, op. cit. p. 37. led these revolutions “Stalinist” parties, For us, Stalinism is essentially © Das Kapital, Engels Edition, 9th printing, Hamburg, Meissners a conservative ideology of the ruling bureaucratic layer in the Soviet Union, historically committed to the status quo (the extension of its Verlag, 1921, vol. |, pp. 39-40, 45-46. (@ = Chris Harman, op. cit. p. 38 power and privileges into the Eastern European countries, at the end of World War Il, on a world scale historically strengthened and not 7 Ibidem. weakened the status quo, for it was being “paid for’ by the attempt to {8} = Inasmuch as only generalised commodity production is suppressed stop the overthrow of capitalism in Western Europe and many other after the overthrow of capitalism, and that partia/ commodity producplaces, inclusive China). Stalinist parties are parties which are subordination still survives, the economy is dominated by a struggle between the ting the interests of the working class in their own countries to the “aw of value” ("spontaneous allocation of resources’) and “the logic interests of the Soviet bureaucracy's diplomacy. They therefore have of planning” (i.e. conscious allocation of economic resources in the acted, historically, as props of the capitalist system in their countries,!24! interests of those who administrate the economy). This struggle can only end by either a return to capitalism (in that case, “the lawof Of course, the Chinese, Vietnamese, Korean, Yugoslav, C.P.s are value" takes over again), or by a definitive consolidation of planning (in parties of Stalinist origin; many traits of their ideology, internal struc: that case commodity production starts to wither away in the field of ture, attitude towards the masses, were inherited fram Stalinism. But these traits, important as they are, and important as are their negative consumer goods too). On the road to this second end-result, the consequences for world revolution and for starting the process of bureaucracy's administration of the economy and the str 2e must be building a socialist society in their countries—and against which traits overthrown. It is very unlikely that this second process could be we conduct an inreconcilable struggle—are not the decisive factor for achieved without an international extension of the revolution (although determining their social nature. Decisive, on the contrary, is the fact what is involved here is something more “primitive” than the final end that, when the overthrow of capitalism was put on the agenda, they /ed result: the complete disappearance of commodity production, of classes and of the state, i.e, the completed construction of a socialist society, this overthrow, be it in a distorted and perverted form, instead of preventing it. In order to do so, they had to break with the rule of unattainable in a single country). subordinating themselves to the Kremlin bureaucracy, they had to (9) Ernest Mandel: Marxist Economic Theory, Merlin Press, 1969, disobey Stalin's orders and instructions, and to throw overboard, at vol. Il, pp. 621-626, least in practice, some of the basic tenets of Stalinist “theory’’. 10) An amazing accusation! On page 2? of our pamphlet, we wrote that capitalism is the only form of class society in which all elements of To say that the Chinese C_P. is the same kind of party as the production (land, labour power, labour instruments, etc.) become com- Indonesian C.P., the Yugoslav as the Greek C.P., the Vietnamese as the modities. The transformation ot labour power into a commodity—isn't French C.P,—to say, in other words, that there is no “basic” difference that “a reference” to the wage labour/capital relationship? This is between destroying capitalism and upholding it! —is to throw overboard all repeated again on page 3, where it says that capitalism is characterised objective criteria of judgment in favour of partial analogies!@5! . To say that Page 39

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independence in the whole country, and tried to unify it, but was by a class structure and a mode of production which imply that labour driven away from the cities by superior foreign military strength tand power has become a commodity, i.e. by “the existence of a proletarian class, forced to sell its labour power". Two lines further on we mention only thereby). Perhaps Harman missed out telling Giap how he could have taken the “opportunity” to beat the French army, navy and airthe class struggle between Capital and Labour as resulting inevitably fram the laws of motion of capitalism, On p, 12 we explain at length force in 1945, supported additionally by British and Chiang Kal-Chek what forces a capitalist corporation to exploit workers in order to accuforces, Presumably, Dien-Bien-Phu was as easy a battle to organise, for mulate capital, Yet Harman coolly writes: “Nowhere in the whale experts of the Harman vintage, as it would have been in 1954 to start open warfare against American imperialism, without granting a breathing section of the pamphlet dealing with the question [presumably the Question of the nature of capitalism and of commodity production) is Space to people who had been fighting for fourteen years. With the same irresponsibility, one could say that the Brest-Litovsk peace showed there a single (!} mention of the working class or a single [!) reference the Bolsheviks’ “inability or unwillingness to solve the most elementary to the wage Jabour/capital relationship” (p. 36)... of bourgeois national tasks" in Russia. Harman should be ashamed of MM) Trotsky makes this distinction between the bureaucracy’s “approsuch kind of “arguments” used against revolutionists who have struggled priation of the products of the labour of others” (The Aewolution longer against imperialism and capitalism, arms in hand, than any other Setrayed, New Park Publications, p. 740, 1967), and “exploitation” in group in the world since the international working class movement was the scientific sense of the term (/n Defence of Marxisn, Pioneer Pubfounded. lishers, New York, 1947) (22) Harman, op. cit. p. 40. 2h Chris Harman, op. cit. p. 38-9. (23) One class “trying to transform itself” (sic) into another class is 13 Harman accuses us of “falsifying” Kidron's position. But he fails certainly a daring “innovatign in the framework of historical materiato explain why a war would represent a “leak of capital”, Slumps lism. devaluste capital, we all agree (and | indicated that, on that point, (24) “The chief accusation which the Fourth International advances Kidron was only repeating Marx). But what about wars? “Wars and against the traditional organisations of the proletariat is the fact that slumps have destroyed immense quantities of output,” wrote Kidran, they do not wish to tear themselves away from the political semi-corpse Ien°t that inferring that destruction of exchange values (by a slump) of the bourgeoisie,” writes Trotsky in the Transitional Programme, equals destruction of use values (¥ ¢ a war)? How is war supposed to (3) The Shachtmanite adherents to the theory of a “new bureaucratic “DGEStroy IMMENSE QUANTITIES Of GUIPUT ‘except tnrougn prysical destruction? class" tried at least to be more consistent; they saw in each Communist Party an “instinctive drive” to establish itself into a new “‘fascist-type 4) Chris Harman, op. cit. p. 39. like" ruling class. The cold war having given its verdict—and Shachtman- S) Rosa Luxemburg: Die Akkumulation des Kapitals, pp. 370 et fal., ism having disappeared under its waves in a sea of ridicule and renegade Vereinigung Internationaler Verlagsanstalten, Berlin 1923, behaviour—one sees how wrong that prediction was, But why are some "6 Chris Harman, op. cit. p. 40, C-P.s just “neo-reformists” (i.e, subservient to private capitalism) as the 7) Leon Trotsky: Permanent Revolution, New Park Publications, British C.P. presumably is the eyes of /nternational Socialism (like the 1962, pp.152-154.

French, Italian, Greek, Spanish, Indonesian, Brazilian, C.P.s, and the "3! “To avoid misunderstandings, and to prevent the inevitable shouts list could be extended ad fibiturmn), while just a few others are “trying of ‘revisionism’ by our dear friends of the Healyite persuasion, let us to transform themselves into a new ruling class"? And If this distinction exists, what's the use of defining both categories of parties by the same repeat for the nth time that Trots':y foresaw and predicted that “under exceptional circumstances (war, defeat, financial crash, mass revolulabel? tionary pressure)", opportunist and bureaucratised parties like the C.P.s could break with capitalism and initiate a revolutionary process leading to the dictatorship of the proletariat. (See the chapter of the Transitional Programme entitled "Workers and Farmers Government"). Isn't that precisely the description of what happened in Yugoslavia, China, Vietfam, ete.? The essential question is whether this is “highly exceptional” (as Trotsky predicted and we emphatically uphold) or whether this Could somehow become a wider-“rule", as opportunist split-offs from the Fourth International (to start with, Posadas, Pablo and the Ceylonete LSSP) are persuaded? 3! Harman cannot resist making another dubious debating point: “Why didn't you recognise the Yugoslav socialist revolution when it happened, but only three years later?" We could start quoting to him some passages indicating that we had at least_an inkling that something particular was going on in that country before 1948 (notwithstanding an evident lack of information). But look who's complaining: a member of a group which “discovered” the establishment of “'state capitalism” in the USSR not three but more than twenty years after it had

(20) in Algeria, French imperialism engaged on a large-scale colonial war, it is true, But this can be explained not only by the exceptional importance of French investment in the Algerian oil industry—uncom: pared to any U.S, imperialist investment in Vietnam—but also and especially by the special implications, for French internal politics, af the presence of a large French settlers’ minority in that country, which made millions of petty-bourgeais rabidly attached to “'l'Algerie frantaise’’. Nothing of the kind exists in Vietnam with regard to American society. 21) Harman‘s remark, that “in Vietnam, the Stalinist leadership has twice already shown itself incapable or unwilling to solve the most elementary of bourgeois national tasks—that of national unity—when Ipportunities (!) to do were at hand (in 1945 and in 1954),"* This isan adious travesty of historical truth, for it completely mystifies the precise Opponents of “national unity’. It is not asa result of the Vietnamese CP. “submitting” itself to some “bourgeois” leadership (presumably Bao-Dai? or Diem?) or the Chiang Kai-Chek type that national unity wasn't realised in 1945 of 1954, but due to direct foreign intervention of a ten-times-stronger military power (later backed by U.S. imperialism which was one hundred times stronger). Ho Chi Minh in fact proclaimed Page 40