The SWP and eastern Europe

Socialist Outlook no. 27, October 1990, pp. 28-30

Transcribed or corrected by hand from the printed page.

A theory that can't cope with facts

The truth of Marxist theory can only be confirmed by practice. So, the dramatic developments in Eastern Europe in the last year have been an important test of the competing theories of the character of the Stalinist states.

Every Marxist and semi-Marxist tendency claims to have found confirmation of its theories in the dramatic crisis in the Eastern bloc. None more so than the Socialist Workers Party, which like a laborious Heineken advert insists 'only state capitalism can explain this'. Chris Harman devoted 82 pages to this task in International Socialism No. 46, and another 19 pages to a review of Ernest Mandel's book Beyond Perestoika in IS 47 (1).

In fact, the attempt to fit the Eastern bloc crisis into the 'state capitalist' framework leads not only to chronic theoretical incoherence but also to a very dangerous political conclusion: that, if capitalism is restored in Eastern Europe, this will only be the replacement of one form of capitalism with another, and hence simply a 'move sideways'. This is most surely not the way to attempt to attempt to arm the most class conscious workers in these countries for the massive struggles ahead. In this article we look first at the theoretical basis of the SWP's claims, and then at their political conclusions.

At first sight, the idea that the Soviet Union, China, eastern Europe and Cuba are all variants of the same system that exists in the capitalist world appears to defy elementary common sense. But, as Chris Harman would be the first to point out, Marxism is not about 'common sense' but discovering the underlying 'laws of motion' which make social systems tick. So how does Harman explain the mechanisms of 'state capitalism'?

According to Harman, following Tony Cliff (2), these states are capitalist not because of their internal organisation, but because of 'competition' – mainly military competition – with the other capitalist countries.

Cliff and Harman are, of course wise not to claim that the countries of the eastern bloc are capitalist on the basis of their internal organisation. For Marx insisted, most explicitly in the Grundrisse, that capital can only exist as 'many capitals' – firms competing with one another for profits, the central dynamic of the capitalist order.

But no such system exists where the means of production are collectivised. Despite the existence in some eastern European countries of small firms and private peasant production, generalised commodity production, in which goods are produced by independent, private labour for the market, does not exist. Harman tries to escape from the conundrum this way:-

'...if old style "free market" competition plays a very little role, a new form of competition dominates it completely. This is military competition between rival state capitalist ruling classes of different countries. This competition has similar effects on the organisation of production in each country to those economic competition has on the organisation of production inside each firm... The threat of military defeat compels the giant state capitalist class to impose the law of value on its enterprises just as the smallest individual entrepreneur is forced by the threat of bankruptcy'.

In other words, it has been not profits but arms competition which forced the USSR to 'compete' with the imperialist powers, thus relating the value of each concrete act of labour inside the USSR to the value of labour in the capitalist west. Cliff and Harman even claim that it was arms competition that was the driving force of Soviet industrialisation.

Now, there is no doubt that massive arms production has distorted the development of the Soviet economy, and contributed to the present crisis. But the claim that arms competition 'makes the USSR capitalist' is completely unproven. To prove that arms competition has made the USSR capitalist, it would be necessary to show that it has imposed a system which has the characteristics of capitalism – production for profit, investment flowing to those enterprises which are most 'profitable', production ending with the accumulation of vast amounts of capital in the form of money, the optimisation of profit being the driving force of the economy. None of these things exist – yet – in the Soviet Union. Indeed it is precisely one of the main complaints of the pro-marketisers in the Gorbachev camp and beyond that they don't!

In sticking to what used to be summarised as the 'permanent arms economy' theory of why the USSR is capitalist, Harman follows the well-trodden founding theories of the SWP, which he debated with Ernest Mandel 20 years ago (3). But in defending state capitalist theory in an unfavorable situation, Harman makes more explicit some of the underlying propositions of his theory. The first is the idea that all industrialised countries are a form of 'state capitalism'; the system in the Eastern bloc is just one variant of the 20th century trend towards all capitalism being 'state capitalism'. Harman argues:-

'... the tendency towards state control of the whole economy was not something unique to Stalinism. It was something which happened to various degrees throughout the capitalist world, particularly in its weaker national elements, in the period which stretched from the First World War and the crisis of 1929-33 through to the 1970s... The two world wars and the crisis of the 1930s led to a massive degree of fusion between the state and the giant enterprises in the advanced capitalisms: this was the major point made as early as 1916 by Bukharin and Lenin in their studies of imperialism. But in the late 1930s the scale of state control of industrial activity in Nazi Germany was such as to persuade the famous Austro-Marxist economist Hilferding that a new mode of production had been established.' (IS 46:p37)

And again:- 'There is, so to speak, a "merging together" of industry and the state. This merging finds its fullest development in all-out imperialist wars, in which the state and capital work to plan the economy internally, while destroying rival capitalisms physically.' (IS 47: p151)

This analysis is compounded by Harman's references to the West offering a 'more open and free' state capitalism (alternatively 'multinational state capitalism') – as opposed to the 'autarchic' state capitalism of this East.

Now this is a classic restatement of what used to be known as 'convergence theory' – that the role of the state east and west was bringing both camps to a similar sort of system. The objections to it are numerous, but here we list the most obvious.

First, the increased and obvious role of the state in western capitalism, does not result in a full merging of the state and capital, even under Nazism, even in wartime. In the era of the 'multinationals' this is absolutely obvious – often their operations are totally outside the control of any national state ('multinational state capitalism' is an absurdity).

During World War Two, the big trusts made huge private profits from the war effort. But despite this, the war economy did not become a permanent feature, far less a culminating point: it remained an emergency measure for the capitalist class. The national planning of this type of economy was dismantled after the war, despite attempts at Keynsian 'indicative planning'. So the modern era where many fields of production are dominated by a few monopolies does not result in 'planned capitalism', or the removal of capitalist competition and the anarchy of the market. The almost obsessive deregulation policies pursued by Thatcher, Reagan and other neo-liberals confirms the new trend to unravel state control.

Second, Harman's theory amounts to saying the east is just a more complete or autarchic version of state capitalism. It fails to explain (and this runs through his whole theory) the enormous hostility between these two types of 'state capitalism'. Inter-imperialist competition of course exists between all imperialist powers. But why the division of the world into two competing blocs? Why the cold war? Why this huge conflict which has dominated the post-war world? Surely it was because of the incompatibility of these two systems?

There was always an ambiguity in state capitalist theory as to whether state capitalism was a different mode of production, or just a variant of the same mode of production. Harman is explicit in arguing that it is basically the same mode of production. And in saying so Harman renders the whole history of the 20th century completely inexplicable.

Until recently, Tony Cliff and Harman always referred to the Soviet ruling caste ('class') as 'the bureaucracy'. Now Harman has come clean, and following Bettleheim and other pro-Chinese theorists who claimed in the 1960s and 70s that the Soviet Union was just 'capitalist', refers to the bureaucracy as the 'state bourgeoisie'.

A further complication of the 'state capitalist' approach is that there have existed states in the third world – modern Iraq is a good case – in which the state does completely dominate capitalist economies. There is a good case for calling these 'state capitalist'. But such states have no necessary hostility to western capitalism, and are generally subordinate to imperialism. After all, didn't the SWP (wrongly) argue that Iraq was simply a tool of US imperialism during the Iran-Iraq war?

Since – according to the SWP – the Soviet Union is just one variant of modern capitalism, it follows that Gorbachevism and the eastern bloc crisis are variants of capitalist crisis – a crisis of overproduction (IS 46 pp44-52), of the rising organic composition of capital. But since capital in the Marxist sense doesn't exist in the USSR (how can it, when even according to Cliff the internal organisation is not capitalist?) this theory has some difficulties.

According to Harman (4) it is the 'urge to accumulate' which drives the Soviet bureaucracy. It invests too much, and devotes too little to consumption. Now, the theory of permanent arms economy can explain over-investment in the arms sector, but it cannot explain this mysterious 'urge to accumulate' more factories, tractors, machinery etc. from which the Soviet bureaucracy is supposed to suffer.

In fact, the Soviet bureaucracy is driven not by some mysterious urge to accumulate, but by the defence of its social position and privileges, including its privileged level of consumption. The crisis in the USSR is a crisis of bureaucratic planning, including often a failure to invest. If some sectors are characterised by over-investment, it is because of the inefficient and wasteful use of resources, endemic in the bureaucratised economies. The crisis is not a 'crisis of overproduction' of capital, but a crisis driven by the inability of the system to use resources rationally, to innovate, to meet the consumption needs of the masses.

In part, but only in part, this is a result of over-investment in the arms industry. But this is not the essence of the matter. Since Harman is referring not to the over-accumulation of capital in the Marxist sense, but to too much investment in fixed plant and producer goods, couldn't the bureaucracy solve the crisis by investing a little less? But less investment would not solve the basic problem of the inefficient and wasteful use of resources, which is a product of bureaucratic rule itself. Less investment could, while bureaucratic rule survives, chronically worsen the crisis. The political conclusions of the SWP's theories are disastrous. Harman is explicit:

'... before socialists in the Eastern states can take advantage of the factors in the situation which favour them, they have to be clear about certain important points. First, they have to grasp that the transition from state capitalism to multinational capitalism is neither a step backwards nor a step forwards but a step sideways... Unfortunately there are still socialists in the Eastern states who have not fully grasped this' (!).

Apparently the conclusion from this bizarre approach is that we should support workers struggles in Eastern Europe, but not defend nationalised property against privatisation!

Of course, the restoration of capitalism in the eastern states is not yet a certainty. If it happens, it will be the result of defeats imposed on the working class. The SWP, by insisting that it is already in place, logically, fails to grasp that capitalism can only be restored through a massive attack on the working class, including removing its social gains, which are based on nationalised property.

A concrete example. The IMF has told Hungary that it will make loans – provided these go to private enterprises and housing rents are charged at 'market prices'. Rents haven't changed in Hungary for forty years. This implies a huge attack on the Hungarian working class. But where exactly did these cheap rents, a basic factor in working class living standards, come from? Wasn't it something to do with the absence of capitalism?

The workers in the GDR, where capitalism is being established, will soon discover what the capitalist order has in store for them – mass unemployment with perhaps a third of the workforce unemployed, the destruction of social services like free childcare, subsidised rents, cheap transport and so on. Part and parcel of the working class resistance to austerity must be the defence of its social gains, which are based on collectivised property. No wonder some socialists in eastern Europe can't see what the SWP is getting at.

The international implications of the crisis in the east are not referred to by Harman. But the deepening of the peaceful coexistence course implied by perestroika has had deeply reactionary effects internationally, strengthening the hand of imperialism. The US invasion of Panama was given the green light by Gorbachev. Only Soviet complicity allowed the US intervention in the Gulf. Since such developments don't fit in with state capitalist theory they are simply ignored.

More generally, Chris Harman attempts to insinuate that those failing to hold the theory of state capitalism, were in some way or other soft on Stalinism. Thus we learn that in 1956 'part of Pablo's supporters supported the suppression of the Hungarian revolution by Soviet tanks'. Michel Pablo of course in 1956 was a central leader of the Fourth International; but no part of the Fourth International whatever did anything but support the workers revolution. We learn the intriguing information that Tariq Ali, who is soft on Gorbachev, was most influenced by 'Isaac Deutscher, Leon Trotsky and Ernest Mandel' (in that order). Logic: Deutscher, Mandel, Tariq Ali (and Trotsky!) are all basically the same in being soft on Stalinism. The left can do without this kind of silliness.

For decades many on the left have regarded the debate about the character of the Soviet Union and the other Stalinised states as a kind of esoteric theological exercise played by bizarre revolutionary groups. But the present crisis in the east, and the attempts of imperialism and internal forces to bring about the restoration of capitalism show it is anything but. The restoration of capitalism in the Soviet Union, eastern Europe, China and Cuba would have immense reactionary implications, and set back the struggle for socialism. A theory which would describe it as 'moving sideways' is a failure.

Notes

(1) The Storm Breaks: IS 46

(2) State Capitalism in Russia Tony Cliff, Bookmarks

(3) See E. Mandel: The mystifications of State Capitalism. International No. 2 1970

(4) IS 46: pp