If anyone may have the impression that state capitalism means state-sponsored capitalism, or capitalism as state policy, this will be a perfectly reasonable, but wrong impression. Wading into the muddied waters of state capitalism as a term we are embarking on a captivating journey into one of the least familiar territories of the Commonwealth of Capitalist nomenclature. Is state capitalism prima facie just a different species of capitalism as-we-know-it, or a grotesque aberration, by virtue of its inherent and irreconcilable conflict with the most fundamental principle of capitalism an-Sich: that of private rather than state ownership, and private rather than state enterprise?
Whether purposely, or by reasons of unthinking nonchalance, known as detached objectivity, our Webster’s Dictionary (see my entry Webster’s Dictionary As An Authority Of Sorts, to be posted very soon) sees this as a simple, clear-cut case: “State Capitalism (is) a form of capitalism (sic!), in which much of the capital, industry, etc. is state-owned.”
Now, how much is “much” in this case? Is it the controlling stock, turning the minority private stockholder into a junior partner of the big brother state, putting up almost half of the money, but having next to no say in the decision of how to run the state-controlled business? Or are we to assume that the state can ever agree to put up substantial public funds merely for the purpose of investment, without assuming control over the business in which it is investing? (I know that such cases indeed exist, but I see them as a corruption, rather than normal business practice.)
But, anyway, Webster’s is pretty explicit in emphasizing “state ownership” of “much of the capital, industry, etc.,” so, as we see, “state capitalism” is not a state policy of supporting private ownership, but an intrusion of the state into the area which, according to the basic concept of capitalism, is a private domain.
Thus, characteristically, we have found in our very respectable Webster’s Dictionary a very inadequate and even contradictory definition of “capitalism,” for, we can rightfully assume that “qualified” capitalism (and “state capitalism” is qualified capitalism!) is supposed to be capitalism still.
No wonder I am so fond of my Webster’s! It keeps things simple, and through such simplicity it exposes the inconsistencies of basic terminology, whereas the more respectable, in-depth sources are mainly misleading, as they can much more successfully than a dictionary cover up their own confusion by the respectability of a scientific gobbledygook which most of us find so above our pay grade that we are forced to accept whatever we are told merely on the strength of its intimidating authority.
Now, from a simple definition which exposes the inadequacy of the term, let us move to a more descriptive approach to the said term “state capitalism.”
As Wikipedia puts it, “during the postwar (post World War II, that is) boom, a broad array of new analytical tools in the social sciences were developed, to explain the social and economic trends of the period, such as the concepts of post-industrial society and welfare statism. The phase of capitalism from the beginning of the postwar period through the 1970s has sometimes been described as “State Capitalism,” especially by Marxian thinkers. (Ernest Mandel and Immanuel Wallerstein have been particularly prominent advocates of the analysis of post-WWII conditions as state capitalism. See, for example, Ernest Mandel. The Theory of “State Capitalism” (1951).”
Here is already a revealing suggestion that at least during the quarter-century since the end of World War II, capitalism of yore had mutated into a somewhat different form, “described as ‘state capitalism,’ especially (but not exclusively!) by Marxian thinkers.” I must add that having read some other authorities on orthodox capitalism, such as, for instance, earlier quoted Milton Friedman and Alan Greenspan (see The Mouse That Roared, etc.), I would rather take the more honest Marxians over the bloviating ideological apologists of a system which seems to have lost the capacity to defend its own integrity, except by smoky obfuscation, and other cheap tricks.
(((…Note: There is an understandable desire, on the part of the historians of capitalism, to draw a very sharp distinction between post-WWII capitalism and the subsequent era of Reaganomics [1981-2008], followed by the current stage of post-Reaganomics, brought about by the world financial crisis. I have written about this series of historical developments elsewhere, however, this distinction has little bearing on the context of the present entry…)))
In this regard, it will be instructive to repeat my earlier quote from Noam Chomsky, who, perhaps, falls into the more honorable category of “Marxian thinkers” with this following comment:
“There's nothing remotely like capitalism in existence. To the extent there ever was, it had disappeared by the 1920’s or ’30s. Every industrial society is one form or another of state capitalism.” (From his Interview with David Finkel of The Detroit Metro Times, given in 1991.)
Consistently with this assertion, he understands the economic system of the United States as, primarily, “a state-capitalist system, in which public funds are used to research and develop pioneering technology (the computer, the internet, etc.) largely in the form of defense spending, and, once developed and mature, these technologies are turned over to the corporate sector, where civilian uses are developed--- for private control and profit.” (Z Magazine, February 1993, The Pentagon System).
But with all my admiration for Chomsky, I am not too eager to accept his clever notion of state capitalism as the current state of capitalism in “every industrial society.” My word for what he calls state capitalism is, instead, a mixed basket, whenever it is used in a general sense, or, when he uses it in the technical sense, as described in the paragraph above (with regard to the practice existing in the United States, of turning over pioneering technologies developed with public funds, to the private sector) I would rather have a different term employed instead. The reason why I am reluctant to join Chomsky’s characterization is that I reserve, perhaps, idiosyncratically, the term state capitalism for a distinctly different socio-economic phenomenon. Unless, of course, by state capitalism we understand any kind of level of political and economic intrusion, on the part of the state, into the private sector, resulting in the partial nationalization of national economy, which can range from state control of the strategic industries and some regulation of others, to a complete takeover of the nation’s banking system, foreign trade, and overall functioning of national life, without any clear delineation between the degrees of intrusion, which may be all right as a general principle, but it does not address the practical boundary line, beyond which any further increase in “quantity” inevitably creates a new political “quality.”
Needless to say, this is not the kind of state capitalism I am talking about, although the disparity of power between the private sector and the state always tilts the balance toward the latter. Nor am I very interested in what Karl Marx himself has to say on this matter. Yet, I am deeply interested in the Russian brand of State Capitalism, starting with the Lenin prototype, down to the latest Putin model.
I believe that the Putin model of state capitalism in particular brings us into fascinating new territory, where the term capitalism becomes so eroded and devoid of meaning that, in essence, it becomes indistinguishable from socialism, with all that it entails… But I am not going to travel that far yet, and I would rather prefer to make a step back to Chomsky’s quote.
To sum it up, my interest in state capitalism is quite specific, focusing on the Russian model, whereas in my approach to the European model and the American model I would rather use different terminology. But, in so far as Chomsky’s characterization is concerned, it is fresh, insightful and legitimate in its own right. After all, as Chairman Mao used to say, let a hundred flowers bloom, and let a hundred worthy definitions make their point… (seriously!)
Whether purposely, or by reasons of unthinking nonchalance, known as detached objectivity, our Webster’s Dictionary (see my entry Webster’s Dictionary As An Authority Of Sorts, to be posted very soon) sees this as a simple, clear-cut case: “State Capitalism (is) a form of capitalism (sic!), in which much of the capital, industry, etc. is state-owned.”
Now, how much is “much” in this case? Is it the controlling stock, turning the minority private stockholder into a junior partner of the big brother state, putting up almost half of the money, but having next to no say in the decision of how to run the state-controlled business? Or are we to assume that the state can ever agree to put up substantial public funds merely for the purpose of investment, without assuming control over the business in which it is investing? (I know that such cases indeed exist, but I see them as a corruption, rather than normal business practice.)
But, anyway, Webster’s is pretty explicit in emphasizing “state ownership” of “much of the capital, industry, etc.,” so, as we see, “state capitalism” is not a state policy of supporting private ownership, but an intrusion of the state into the area which, according to the basic concept of capitalism, is a private domain.
Thus, characteristically, we have found in our very respectable Webster’s Dictionary a very inadequate and even contradictory definition of “capitalism,” for, we can rightfully assume that “qualified” capitalism (and “state capitalism” is qualified capitalism!) is supposed to be capitalism still.
No wonder I am so fond of my Webster’s! It keeps things simple, and through such simplicity it exposes the inconsistencies of basic terminology, whereas the more respectable, in-depth sources are mainly misleading, as they can much more successfully than a dictionary cover up their own confusion by the respectability of a scientific gobbledygook which most of us find so above our pay grade that we are forced to accept whatever we are told merely on the strength of its intimidating authority.
Now, from a simple definition which exposes the inadequacy of the term, let us move to a more descriptive approach to the said term “state capitalism.”
As Wikipedia puts it, “during the postwar (post World War II, that is) boom, a broad array of new analytical tools in the social sciences were developed, to explain the social and economic trends of the period, such as the concepts of post-industrial society and welfare statism. The phase of capitalism from the beginning of the postwar period through the 1970s has sometimes been described as “State Capitalism,” especially by Marxian thinkers. (Ernest Mandel and Immanuel Wallerstein have been particularly prominent advocates of the analysis of post-WWII conditions as state capitalism. See, for example, Ernest Mandel. The Theory of “State Capitalism” (1951).”
Here is already a revealing suggestion that at least during the quarter-century since the end of World War II, capitalism of yore had mutated into a somewhat different form, “described as ‘state capitalism,’ especially (but not exclusively!) by Marxian thinkers.” I must add that having read some other authorities on orthodox capitalism, such as, for instance, earlier quoted Milton Friedman and Alan Greenspan (see The Mouse That Roared, etc.), I would rather take the more honest Marxians over the bloviating ideological apologists of a system which seems to have lost the capacity to defend its own integrity, except by smoky obfuscation, and other cheap tricks.
(((…Note: There is an understandable desire, on the part of the historians of capitalism, to draw a very sharp distinction between post-WWII capitalism and the subsequent era of Reaganomics [1981-2008], followed by the current stage of post-Reaganomics, brought about by the world financial crisis. I have written about this series of historical developments elsewhere, however, this distinction has little bearing on the context of the present entry…)))
In this regard, it will be instructive to repeat my earlier quote from Noam Chomsky, who, perhaps, falls into the more honorable category of “Marxian thinkers” with this following comment:
“There's nothing remotely like capitalism in existence. To the extent there ever was, it had disappeared by the 1920’s or ’30s. Every industrial society is one form or another of state capitalism.” (From his Interview with David Finkel of The Detroit Metro Times, given in 1991.)
Consistently with this assertion, he understands the economic system of the United States as, primarily, “a state-capitalist system, in which public funds are used to research and develop pioneering technology (the computer, the internet, etc.) largely in the form of defense spending, and, once developed and mature, these technologies are turned over to the corporate sector, where civilian uses are developed--- for private control and profit.” (Z Magazine, February 1993, The Pentagon System).
But with all my admiration for Chomsky, I am not too eager to accept his clever notion of state capitalism as the current state of capitalism in “every industrial society.” My word for what he calls state capitalism is, instead, a mixed basket, whenever it is used in a general sense, or, when he uses it in the technical sense, as described in the paragraph above (with regard to the practice existing in the United States, of turning over pioneering technologies developed with public funds, to the private sector) I would rather have a different term employed instead. The reason why I am reluctant to join Chomsky’s characterization is that I reserve, perhaps, idiosyncratically, the term state capitalism for a distinctly different socio-economic phenomenon. Unless, of course, by state capitalism we understand any kind of level of political and economic intrusion, on the part of the state, into the private sector, resulting in the partial nationalization of national economy, which can range from state control of the strategic industries and some regulation of others, to a complete takeover of the nation’s banking system, foreign trade, and overall functioning of national life, without any clear delineation between the degrees of intrusion, which may be all right as a general principle, but it does not address the practical boundary line, beyond which any further increase in “quantity” inevitably creates a new political “quality.”
Needless to say, this is not the kind of state capitalism I am talking about, although the disparity of power between the private sector and the state always tilts the balance toward the latter. Nor am I very interested in what Karl Marx himself has to say on this matter. Yet, I am deeply interested in the Russian brand of State Capitalism, starting with the Lenin prototype, down to the latest Putin model.
I believe that the Putin model of state capitalism in particular brings us into fascinating new territory, where the term capitalism becomes so eroded and devoid of meaning that, in essence, it becomes indistinguishable from socialism, with all that it entails… But I am not going to travel that far yet, and I would rather prefer to make a step back to Chomsky’s quote.
To sum it up, my interest in state capitalism is quite specific, focusing on the Russian model, whereas in my approach to the European model and the American model I would rather use different terminology. But, in so far as Chomsky’s characterization is concerned, it is fresh, insightful and legitimate in its own right. After all, as Chairman Mao used to say, let a hundred flowers bloom, and let a hundred worthy definitions make their point… (seriously!)
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