State-based class structures

The different momenta of primitive accumulation distribute themselves now, more or less in chronological order, particularly over Spain, Portugal, Holland, France, and England. In England at the end of the 17th century, they arrive at a systematical combination, embracing the colonies, the national debt, the modern mode of taxation, and the protectionist system. These methods depend in part on brute force, e.g., the colonial system. But, they all employ the power of the State, the concentrated and organised force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society pregnant with a new one. It is itself an economic power [emphasis added].

Marx, Capital, Chapter 31

I don’t like the term “state capitalism” anymore.  For one thing, it has two distinct uses: one use is to describe when a fundamentally capitalist economy relies on state-based management for capitalist purposes.  The other is a theory for describing the “Eastern Bloc” societies, “actually existing socialism,” as a way of saying they were state-based economies but not really socialism.

The reason I don’t like the phrase “state capitalism” is because it seems to be playing “no true Scotsman.”  Yes I know that marxists may have a rather different definition of “capitalism” than most people, but when most people say “capitalism” they mean a roughly free-market economy, with goods and firms being exchanged using currency.  Though I will argue that state-based class societies used a different type of “currency,” the fact is that most state-based class societies don’t resemble what most people think of as “capitalism.”  So for us to go around calling it “state capitalism” just sounds like we’re in denial, and we’re trying to blame everything on free-market capitalism when really it was we socialists who screwed up.  So if it’s not “capitalism,” but it’s not socialism either, what is it?  It’s a state-based class structure, or a state-based class society.

Do we really need one more term?  Well, if it helps achieve clarity, yeah.  I’m not drawing hard lines over it.  I’ll work with people who don’t embrace it.  It’s just my opinion.

What is class?

We should scale back and re-examine our definitions of the most basic terms in this debate.  What is class?  What is ownership?

While this definition smacks of anarchism, class is an economic hierarchy.  As opposed to the anarchist belief that all oppressive social relations can be expressed as a hierarchy between seemingly self-evident demographics, marxists do explain class as the one type of social relations which can be accurately described as a hierarchy.  (Many anarchists would say owner versus worker, man versus woman, and white versus people of color.  Rather than deny the existence of oppression, marxists reimagine who its beneficiaries are: we would say owner versus worker, owner versus woman, and owner versus people of color.)

How does this hierarchy work?  In some ways it conforms to the rather obvious idea of a chain of command.  In fact that might actually be sufficient, except we should mention the means of production.  In free-market capitalism (which doesn’t truly exist), the situation is not like feudalism where there is a traditional order of rank with a widespread culture of obedience to superiors.  But even feudalism revolved around land.  Instead of sharecropping our crops to our lords, we sharecrop our work-time to our shareholders.  They get our full labor, we get paid a wage or salary – as opposed to being paid a corporate dividend for equal ownership in the company, which would generally be much higher.  We tolerate this because they have us between a rock and a hard place.  Just as the peasants had to work their lords’ land because they had no land of their own and the land was protected at swordpoint, so must we work for our shareholders because we own no commercial property and all the commercial property is protected by the cops at gunpoint.

There are exceptions – while CEOs are technically employees, they have tremendous power over the way the means of production is ran and to whom the profits are distributed (often a healthy dose to themselves, which they typically get away with).  So though the CEO often does not legally own the company, in many ways they effectively own it, at least partially.  This is analogous to the effective-but-not-legal ownership of the state by bureaucrats.

If class is centered on a person’s relationship to the means of production, then class is abolished by instituting equal, collective ownership of the means of production and workers’ democratic management.

Ownership, management, and who owns the state

This brings up the question of ownership.  What does it mean to own something?  Usually it means having the right to do whatever you want with something, but for the means of production (workplaces), it takes on an extra dimension.  Not only do you have the right to do what you like with it, but you also have the right to whatever goods or services are produced within, granting you the right to sell them on the market and keep whatever profits are accrued.  This is an important distinction, because it means that the employees do not own the goods and services created or their market value.

So in short, part of owning a business means being entitled to the goods produced within.

Another part of ownership is the right to decision-making within the business, or management.  Now obviously owners may hire someone else to manage a business for them, and in most large businesses it could not conceivably be done any other way.

Marxists typically contend that, while the official propaganda claims that the government is the property of all the people in a country, really the government is the property of society’s ruling class.  Their economic power extends into political power.  The banks get bailed out, everyone else is left with paying the national debt.  Sometimes the state provides things like welfare, but rather than being a measure of humanity, it is a concession for the sake of either stabilization or even the smooth running of business.  Some capitalist states have concluded that free healthcare or free education make for a stronger capitalist economy!  This is not actually socialist, and is the reason why Europe is not really socialist.

So the goal is to create a society where both the economy and the government are truly owned by everyone.  There have been many attempts at this, and many failures, whether due to physical repression, or due to people falling for incomplete visions of socialism.

Who owned the state in “socialism?”

Many orthodox Trotskyists, who I’ll say from the start I disagree with, argue that the USSR was socialism and not a class society because it had formally “collective” or “national” property.  It is true that nationalizing the economy is an effective way to unify it so that it may be placed under democracy.  (Hard to vote on something that is fragmented into private pieces.)  However, workers in the “communist” countries typically labored without a say in their working lives, what they worked on, or without any control over the distribution of goods and services, nor any considerable say in state policy.

Firstly, there was no workers’ control over who would get the products of the collective labor.  This is evidenced by the fact that distribution in the USSR was heinously unequal.  Instead of disproportionate wealth embodied in currency, apparatchiks simply received enormous favoritism in consumer goods on the basis of “favor for a favor.”  The “reliable men” did the system the favor of acting as mouthpieces, managers, and muscle.  In return they received their share of the goods.

In Revolution Betrayed Trotsky wrote,

“If a ship is declared collective property, but the passengers continue to be divided into first, second and third class, it is clear that, for the third class passengers, differences in the conditions of life will have infinitely more importance than the juridical change in proprietorship. The first-class passengers, on the other hand, will propound, together with their coffee and cigars, the thought that collective ownership is everything and a comfortable cabin nothing at all.”

I confess I cannot find similar data on China.  It seems China did a better job tackling income inequality – before now.  Obviously now the “iron rice bowl” is shattered as it embarks on the gross contradiction of become one of the world’s main capitalist powerhouses while maintaining a “Communist Party” in power.  The fact that China once had relative if not absolute income equality, and is now losing it, suggests a lack of sufficient workers’ control over state policy.

Not only was there no workers’ control over distribution, there was no workers’ management.  Instead there was state management.  Just as corporate managers are pressured into competition not by direct personal profit but by being compared with each other, so were state managers similarly pressured to compare favorably to each other in cracking the whip to meet production quotas.  In this way competition between firms is replaced by competition between departments, though this happens in capitalism too.

What kind of person would receive a promotion in “actually existing socialism?”  Someone who stood unswervingly for the principle of workers’ self-management?  No: someone who stood for “Communism,” as long as it conformed with the definition of top-down control.  These types of people are often referred to as “reliable men,” in capitalism as “company men,” or more directly, “the Establishment.”  The kinds of people who would get promoted were bureaucrats who could successfully squeeze maximum production out of their subordinates, officials who could keep their area of jurisdiction in “order” (quiescence), hardliners who had the nerve to give the order for repression, and smooth-talkers who could make it sound like it was done in the name of communism.  These were cynically referred to as “trusted cadres.”  (Disciplined Minds, p17)


trusted cadre, from Time magazine January 1989

This is virtually identical to free-market capitalism: the people who get promotions and who move up through the party ranks are the media figures who persuade for budget cuts, the bureaucrats who impose them, the officials who order the police to attack protesters, the smooth-talking Obama types who can lull the rowdy crowds into line, the managers who get results out of their workers, and the executives capable of heartlessly laying off thousands of people at a time.

So if there is no money to measure rank, to classify people into proletarian, middle class, or ruling class, then how is class rank measured?  It’s actually rather simple – just as rank is measured quantitatively in free-market capitalism, with the wealthiest being closest to the top, so is it measured quantitatively in state-based class structure: the state executive and his immediate subordinates own politics and the economy the most, high-ranking and mid-ranking bureaucrats operate as a sort of middle class which has limited power over politics and the economy, and low-level bureaucrats and state employees have virtually no power at all, not even power over their own working lives, except through self-initiated collective disruption.  Your place in the hierarchy is…your place in the hierarchy – just not for the reasons the officialdom claims.

However, this analysis so far leaves bare a major blind spot.  Countries like Russia and China actually have had mechanisms of workers’ control.  The Russian Revolution was not special simply because it nationalized property, but because workers took over their workplaces and established democratic management.  In places where this model could not precisely apply, neighborhood assemblies took over.  China imitated many of these models.  So how is it that instruments of workers’ self-management could exist, without there being genuine workers’ control?

Workers councils and rule by terror

How is it that something can legally belong to someone, without actually belonging to them?  It is such a state of disgrace, and such a denial of stated rights, that people would naturally rebel against it.  To be told you live in a socialist society where workers control things, while living in a bureaucratic nightmare where you have to do what you’re told, would be psychologically excruciating.  Why would people tolerate it?  The answer: because they’re at gunpoint, if not literally, then by secret police.

Why is it that free-market capitalism often rules through formal “democracy” while state-based class societies typically rule through coercion?

This phenomenon is because of the massive ideological contradiction of a nationalized economy having a ruling class.  More directly, state-based ruling classes are forced to rule by gunpoint because their “socialism” is an obvious lie.  Economies are only supposed to be nationalized in order to serve the people; otherwise they are the blatant unjustified dictatorship of the few over the many.  State-based ruling classes must therefore rule by repression and crude propaganda.  The “socialist” class structure was so contradictory that elites often communicated by “signaling,” where superiors would not actually state their orders, but suggest or imply them, leaving subordinates to interpret their superiors’ unpleasant true intentions, sometimes to comedic results.  (This is the reason behind Soviet humor which mocks the twisted, Orwellian nature of official propaganda.)

In state-based class structures, the ruling class does not rule passively and allow free speech as in Western capitalism, where the power of money influences all the key players to fall in line without the rich ever needing to directly hold any kind of state office.  Free-market capital rules the state and cultural institutions essentially through bribery or by owning critical parts of the power structures like media outlets or productive enterprises.  State-based ruling classes in economies where all institutions are nationalized cannot do that with only money, so they rule directly, by holding office.

Any free discussion of politics whatsoever would result in the contradiction being laid bare.  Any workers’/democratic mechanisms of control over the state must also be terrorized into submission, emptied of any real power, and cult-ed into conformity, or else they will spontaneously exert their supposed legal right to manage society, and inevitably end up overturning the apparatus.

Therefore to rule, the apparatus must rely on sheer physical repression, total curtailing of free speech, and peer-pressure cult tactics.  They must also not simply disallow alternative views, but enthusiastically spread blatant, even obvious lies (the regime’s ability to declare obvious falsehoods with impunity serves as a means of terror — if they can get away with that, they can do anything to you).

This transforms the “national” or “collective” property (in name) to being apparatus property (in fact).  This is comparable to a mafia front business, which is   legally owned by some poor bullied fall guy, but is effectively the property of the criminal cartel, with this effective ownership enforced through physical coercion.

This is what allows a society to go so far as to contain workers’ councils and community councils, without being socialism.  If you can’t speak up in these bodies without fear of being dragged off by the secret police and placed in some kind of prison or work-camp, then these bodies are neutralized as instruments of workers’ control over the economy or the state, and it’s not socialism, but rule by bureaucrats in a different type of class society.


The transference of so much of the old “Communist” bureaucracy to the new class of Russian oligarchs belies the problematic similarity.  The new Russian ruling class also continues the tradition of heavy state involvement in a market economy.

But was the fall of “communism” a positive event?  Many Russians are increasingly saying no!  What “liberalization” really meant in Russia was the “liberalization” of the economy without a democratization of politics.  As opposed to the positive socialist vision of combining the best of civil rights and collectivism, Russia has received authoritarian capitalism.  If Russians are still denied democracy anyway, nostalgia for a state-based (not market-based) class society, which at least did things like provide universal healthcare, is very understandable.

The main economic event of “communism” falling was not privatization, since so much of Russia’s “public” property was really the shared private property of the apparatchiks anyway.  The true damage was inflicted by the fall of trade barriers (a policy not unique to state-based economies).  Entire industries were wiped out in the Eastern Bloc by being opened to foreign purchase.  This essentially meant that, rather than American business carpet-bombing its industrial competitors as in World War II, they simply bought them up and shut them down, using methods more reminiscent of Detroit than Germany.  (At least Germany got a Marshall Plan.)  Employment rates were destroyed.

So I think most of the “socialist” countries were actually state-based class structures.  Then is it all hopeless?  Again, no.  For example, I may consider Cuba to be a state-based class society.  However, the subjective support for socialism present among the Cuban population and even a great deal of the Cuban ruling class leads to some very positive policies.  Even though Cuba’s party bosses own the upper echelons of state policy and the economy, they still do more for their people with their limited resources than most countries on the planet.  Just look at their medical system.

This is all just for the sake of clarity for myself and anyone who cares to read my stuff.  If you don’t like it, that’s okay.  We can still be friends, and we probably agree on a great deal of what to do in the here-and-now.

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