What Is Bureaucrat Capitalism?

#PUBLICATION NOTE

This edition of What Is Bureaucrat Capitalism? has been translated, prepared, and revised for digital publication by the Institute of Marxism-Leninism-Maoism under the Central Committee of the Communist Party in Switzerland on the basis of the edition published on vnd-peru.blogspot.de.

#INTRODUCTION NOTE

This is a document drafted by Comrade Gonzalo for the Revolutionary Student Front of Peru in Lima, Peru in 1973. It was first published as a pamphlet.

#Workers and oppressed people of the world, unite!

#WHAT IS BUREAUCRAT CAPITALISM?

#Gonzalo

#1973

#★

#1. INTRODUCTION

Today, in the fifth year of the fascist military dictatorship, the necessity of a correct analysis of our domestic situation is becoming increasingly evident. Economic analysis in particular allows us to see through the current process of the corporatist counter-revolution in our homeland. Because the economic and political plans have been delayed, the reactionaries must now strive to the fullest to «industrialize» the country by military means. This is an expression of the fact that the appearance of the phenomenon of fascism is the logical consequence of the development of bureaucrat capitalism.

This is why the urgency of a precise understanding of bureaucrat capitalism has become so apparent. Many people get bogged down in useless discussions about questions such as whether this or that governmental measure is bad or good, whether it has «positive aspects», whether the government «represents hidden national interests», and so on. We can quickly poke holes in the much-propagated chatter about «nationalization» by understanding the meaning of this form of capitalism that imperialism promotes in backward countries such as ours.

In this pamphlet are included various items. The first is a series of excerpts from a Chinese book studying the phenomenon of bureaucrat capitalism in China, which is of cardinal importance, because the Chinese experience is one of the most valuable ones in the world. The second item we offer the students is a study guide on bureaucrat capitalism, because we want to contribute to making this theory an important weapon in the struggle for a scientific understanding of our reality. Now that the centre of the revolutionary struggle in the world is shifting closer and closer to our America, we must arm ourselves with the science of Marxism-Leninism-Mao Zedong's Thought in order to understand the process of development of bureaucrat capitalism, which is being promoted by the big bureaucrat bourgeoisie by way of its political power as represented by the reactionary armed forces.

There are many different standpoints on the class character of the present regime. One of these standpoints is that of «Revolutionary Vanguard», which holds that the national bourgeoisie is the class in power. This is a veiled assertion that what is going on is a revolutionary process, because it assumes that the national bourgeoisie has displaced imperialism, the big bourgeoisie, and the feudal lords, which, according to Leninism, would be a revolution. However, this amounts to a lack of understanding of the fact that the national bourgeoisie only ever takes an anti-imperialist attitude in the face of armed imperialist aggression, a thesis upheld by Mariategui in his Anti-Imperialist Standpoint and by Mao Zedong in his famous essay On Contradiction several years later. Moreover, it is not the first time that this deviation has been promoted in our homeland.

On the other hand, «Red Homeland» claims that a so-called «industrial-financial bourgeoisie» is the class in power. First of all, according to Lenin's work, Imperialism, the Highest Stage of Capitalism, finance capital is the fusion of banking capital and industrial capital; secondly, our «industrialists» do nothing but engage in manufacture, and our «financiers» are nothing but usurers. The big bourgeoisie cares more about money than about production, as Mariategui stated in his unsurpassed Seven Interpretive Essays on Peruvian Reality.

It is of cardinal importance to discuss these questions, because the conclusions reached by the different «Left-wing» organizations will determine what role they are to play in our society and, particularly for us, in the sphere of the university. Thus, we can definitely say that «Revolutionary Vanguard» is located in the bureaucrat camp, that is, it is an agent of fascism, and «Red Homeland» is taking the same, dangerous road.

In brief, we are armed with Comrade Mao Zedong's invaluable analysis of the form of capitalism that imperialism promotes in the backward countries. This is a most important further development of Marxist sociology and a brilliant contribution to historical materialism. This thesis on bureaucrat capitalism developed by Mao Zedong has once and for all become an integral part of Marxist economics.

#2. EXCERPTS FROM THE BOOK THE SOCIALIST TRANSFORMATION OF THE NATIONAL ECONOMY IN CHINA

#Xue Muqiao, Su Xing, and Lin Zeli

#1960

#INTRODUCTION

On the 1st of October, 1949, the People's Republic of China, embracing 1/4 of the world's total population, was established in the East. After Russia's Great November Socialist Revolution, this event constituted another important turning point in the history of the world. It immensely strengthened the forces of the socialist camp and weakened those of imperialism.

The founding of the People's Republic marked the virtual end of the bourgeois-democratic revolution and the beginning of the proletarian-socialist revolution in China. The era of semi-colonialism and semi-feudalism was ended forever. The Chinese working people have now entered the great new era of socialist revolution and construction.

For the past 100 years, China had been in semi-colonial and semi-feudal bondage. For a long period of time, the imperialists had controlled the main arteries of China's economic life, transforming it into a market where they scrambled for raw materials, dumped their commodities, and to which they exported their capital.

Before the War of Resistance Against Japan (1937-45), the imperialists monopolized 70% of China's coal production, over 95% of its iron, 73% of its shipping tonnage (83,8% of this being ocean-going), and by far the greater part of its public utilities. They also exercised control over its banking, insurance, and foreign trade. Taking advantage of their various special privileges, they extorted enormous profits from China. Before the Second World War, China was a battleground where the imperialist nations — Britain, Japan, the United States, Germany, and France — haggled over spheres of influence and waged sharp struggles against each other. During the war, Japan carried out unbridled aggression against China, crowded out Britain, the United States, and the others, and seized by force most of China's markets and resources. With the victory over Japan, the US imperialists stepped into the shoes of the Japanese, thus becoming the major aggressive force in China.

After the invasion of foreign capital and the development of Chinese capitalism, the feudal economic basis was impaired to some degree. But, just as Mao Zedong wrote in 1939: «[...] the exploitation of the peasantry by the feudal class, which is the basis of the system of feudal exploitation, not only remains intact, but, linked as it is with exploitation by comprador and usurer capital, clearly dominates China's socio-economic life.»¹ In the countryside, the feudal lords and rich peasants, who numbered less than 10% of the population, owned over 70% of all arable land, but the middle peasants, poor peasants, and farm workers, who numbered 90% of the population, owned less than 30% of the total amount of such land. The peasants had to give about 50% of what they produced to the feudal lords for the land they rented. For all their toil through the year, they had insufficient food and clothing for themselves.

The capitalist economy of Old China consisted of two different sectors. One was national capitalism — consisting mainly of middle and small enterprises. These were connected in a thousand and one ways with imperialism and feudalism, but, as they were oppressed and preyed upon by imperialism and at the same time fettered by feudalism, constant contradictions existed between them and both imperialism and feudalism. The national bourgeoisie, who controlled this sector of the national economy, was comparatively weak, both politically and economically. The other sector was feudal, comprador, State-monopoly capitalism, that is, bureaucrat capitalism. It was represented by the «Four Big Families» — the families of Jiang Jieshi, Song Ziwen, Kong Xiangxi, and the Chen Guofu and Chen Lifu brothers. It was built up mainly during the 20-odd years' rule of the Nationalist reactionaries, who used their counter-revolutionary political power to ruthlessly exploit and plunder the people of the whole country. It was entirely dependent on foreign imperialism and linked with feudalism within the country. After the victory over Japan, when the reactionary Nationalist government had taken over the properties in China of the imperialist countries — Japan, Germany, and Italy — bureaucrat capitalism reached the height of its development, controlling the main arteries of the country's economy. This State-monopoly capitalism not only oppressed and exploited the workers and peasants, but also strangled the growth of national industry and encroached upon the interests of the national bourgeoisie. Like imperialism and feudalism, it was a great obstacle to the development of the social productive forces. Mao Zedong pointed out:

Besides doing away with the special privileges of imperialism in China, the task of the new-democratic revolution at home is to abolish exploitation and oppression by the feudal class and by the bureaucrat-capitalist class (the big bourgeoisie), change the comprador, feudal relations of production, and unfetter the productive forces.²

[...]

#THE DEVELOPMENT OF THE SOCIALIST STATE SECTOR OF THE NATIONAL ECONOMY

#THE BIRTH OF THE SOCIALIST STATE SECTOR

[...]

#THE CONFISCATION OF BUREAUCRAT CAPITAL AND EXPANSION OF THE SOCIALIST STATE SECTOR

The large-scale construction and development of China's State sector of the economy began with the confiscation of all bureaucrat-capitalist enterprises around the time of the founding of the People's Republic.

Bureaucrat-capitalist enterprises were chiefly State-monopoly-capitalist enterprises of a comprador and feudal character, which were controlled by the bureaucrat-bourgeois clique headed by Jiang Jieshi. In this connection, Mao Zedong said:

During their 20-year rule, the «Four Big Families» — Jiang, Song, Kong, and Chen — have piled up enormous fortunes valued at USD 10'000'000'000 to 20'000'000'000 and monopolized the economic lifelines of the whole country. This monopoly capital, combined with State power, has become State-monopoly capitalism. This monopoly capitalism, closely tied up with foreign imperialism, the domestic feudal class, and the old-type rich peasants, has become comprador, feudal, State-monopoly capitalism.²

This type of capitalism did not grow mainly through increased production, but through open plunder with the aid of the State machine, through exploiting the working people and crowding out and swallowing up the middle and small capitalist enterprises by means of speculation, currency inflation, and various measures of economic control. Like imperialism and feudalism, it seriously impeded the growth of the productive forces.

Bureaucrat capitalism came into existence prior to the War of Resistance Against Japan. It reached the peak of its development after victory in the war, when the reactionary Nationalist government took over the Japanese, German, and Italian imperialists' enterprises in China. In 1948, bureaucrat capital accounted for about 2/3 of the total industrial capital in the Nationalist-controlled areas. On the eve of Liberation, the National Resources Commission of the Nationalist government controlled 90% of the country's iron and steel output, 33% of its coal, 67% of its electric power, 45% of its cement, and all its petroleum and non-ferrous metals. Bureaucrat capital also controlled the nation's light industry. In 1947, the China Textile Industries, Incorporated alone possessed 37,6% of the nation's total number of spindles and 60% of its mechanized looms. In addition, bureaucrat capital had under its control the big banks, all the railways, highways, and air lines, 44% of shipping tonnage, and a dozen or so monopoly trading companies.

On the eve of the Russian November Revolution, Lenin said: «[...] State-monopoly capitalism is a complete material preparation for socialism, the threshold of socialism [...].»³ This was also true of State-monopoly capitalism in Old China. Bureaucrat capital was not only highly concentrated, but directly connected with the reactionary State machine. Under such circumstances, the bureaucrat-capitalist enterprises could be changed over in a short time from State-monopoly capitalism of a comprador and feudal character to the socialist State sector as soon as the dictatorship of the big feudal class and the big bourgeoisie was destroyed and replaced by the dictatorship of the proletariat.

The confiscation of these bureaucrat-capitalist enterprises was carried out on a nationwide scale following the victory of the people's revolution. In a short space of time, all the factories, mines, railways, shipping, postal services, banks, trading establishments, and other enterprises formerly owned by the Nationalist reactionary government and the bureaucrat bourgeoisie passed into the hands of the State led by the working class, which then controlled the vital economic arteries of the nation.

Statistics show that by 1949 the State had confiscated 2'858 bureaucrat-capitalist industrial enterprises which employed more than 750'000 industrial workers. This confiscation led to the unprecedented growth of the socialist State sector. In 1949, socialist State industrial enterprises accounted for 41,3% of the gross output value of China's large industries. The State sector also held 58% of the country's electric power, 68% of its coal output, 92% of its pig iron, 97% of its steel, 68% of its cement, and 53% of its cotton yarn. Besides, it controlled all the railways in the country, most of the modern communications and transport, the far greater part of banking business, and domestic and foreign trade.

Confiscation of bureaucrat-capitalist enterprises meant not only legally transforming their assets into those of the people's democratic State, but, at the same time, putting them under the direct management of the State, so that they could produce in accordance with the needs of society. These bureaucrat-capitalist enterprises had their own managerial staff and management systems, which were of a dual nature. These systems had originated from bureaucrat-capitalist relations of production and served as an instrument for enslaving and oppressing the workers. Therefore, these aspects had to be eliminated. They also had certain other aspects, which had to do with large-scale socialized production, such as the knowledge of processes of production, technical management, and accounting. These could be partly carried over, preserved, and adapted to the needs of the developing socialist sector. Some other parts, however, were unreasonable and had an adverse effect on the workers' enthusiasm for production and on the development of the enterprises. They needed to be reformed. But the reform of these systems was different from changing the ownership of the means of production. First of all, they had to be studied and thoroughly understood. Then, in accordance with the actual conditions and existing possibilities, the unreasonable systems were replaced with reasonable ones and the lower technical organizations were changed to more advanced ones. To carry out the reforms blindly in a disorderly way and without any plan would have dislocated production, circulation, and the whole economy. That is why, in taking over the bureaucrat-capitalist enterprises, the measures adopted were essentially different from those in taking over the Nationalist State bodies. This was for the purpose of protecting production. These enterprises were preserved instead of destroyed. In other words, these old enterprises, with their technical organization and systems of production, were taken over intact, placed under supervision, and then reformed step by step.

[...]

The second [point in the programme of these democratic reforms] was leading and mobilizing the workers to completely abolish the surviving portions of the systems of management inherited from bureaucrat capitalism that had been used to oppress and enslave them. Some of these were feudal survivals in the textile industry, whereby the workers were searched when leaving the mills, that of the gang boss in the collieries, and that of the contractor boss in the transport enterprises. In addition, steps were taken to rid the enterprises of the hidden counter-revolutionaries and remnants of the feudal forces.

[...]

#THE SOCIALIST TRANSFORMATION OF THE SECTOR OF INDIVIDUAL OWNERSHIP OF THE PEASANTS AND HANDICRAFTSPEOPLE

#THE ECONOMIC CONDITIONS IN THE COUNTRYSIDE AFTER LAND REFORM AND THE POLICY OF THE COMMUNIST PARTY OF CHINA CONCERNING AGRICULTURAL COOPERATION

#THE TWO ROADS FOR ECONOMIC DEVELOPMENT IN THE COUNTRYSIDE AFTER LAND REFORM

Land reform began in various Liberated Areas in China during the period of the democratic revolution. After the founding of the People's Republic, the Land Reform Movement was launched on a nationwide scale. The aim was to confiscate the land belonging to the feudal class and distribute it to the landless and land-poor peasants, thus changing feudal landownership into ownership of land by the peasants. This dynamic change in the history of China was fundamentally completed in 1952.

Land reform gave 700'000'000 mou (or more than 46'000'000 hectares) of free land to some 300'000'000 peasants together with some other means of production, thus fundamentally changing the economic relations in the countryside. The system of feudal economy, which had prevailed in China for several thousands of years, was abolished. The rich peasants were weakened economically as part of their surplus land was requisitioned; and the peasants working on their own became the owners of land and some other means of production. The peasants no longer had to pay the feudal lords the exorbitant annual land rent totaling some 70'000'000'000 catties (35'000'000 tons) of grain and began to use this part of the fruits of their labour for the expansion of production and the improvement of their living conditions. This gave rise to great enthusiasm for production such as had never been witnessed before. At that time, this enthusiasm for individual production was good for the recovery and development of agriculture and the entire national economy.

[...]

#THE SOCIALIST TRANSFORMATION OF INDIVIDUAL HANDICRAFTS AND SMALL TRADES

#THE CHARACTERISTICS OF HANDICRAFTS RUN ON AN INDIVIDUAL BASIS

In the early transitional period, there were great numbers of handicraftspeople. According to the 1954 statistics, about 20'000'000 people were engaged in handicrafts on an individual basis, and the value of their output was about RMB 9'300'000'000. Of the total number, about 8'000'000 were independent handicraftspeople, whose production was valued at about RMB 6'800'000'000, and 12'000'000 were peasants, who took up the production of handicrafts commercially on a part-time basis. The value of the peasants' output was about RMB 2'500'000'000. Also, there were two other groups engaged in handicrafts. The first worked in capitalist manufactories, and the second consisted of those peasants who produced handicrafts as side-occupations for their own use. Neither of them fell into the category of handicrafts on an individual basis.

The individual handicraft economy, like individual farming, was based on the labourers' private ownership of the means of production. However, in comparison with the latter, it had certain characteristics of its own.

Firstly, individual farming, though fundamentally small-scale commodity production, possessed some survivals of natural economy, while handicrafts were a pure commodity economy, the production of which was entirely for the market. Furthermore, the handicraftspeople had to purchase all their means of production and consumer goods. In comparison with the peasants working on their own, they maintained closer connections with the market and with the commercial and credit establishments. In Old China, a great number of handicraftspeople were under the control of commercial capital, which supplied them with raw materials and marketed their products. Even in the early days of the transitional period, handicraftspeople still suffered from exploitation by private commerce and factory owners. With the development of the socialist State sector and the gradual realization of the socialist transformation of capitalist enterprises, the handicraftspeople gradually freed themselves from their subordination to commercial capital. They established a close connection with the socialist sector; the socialist commercial enterprises supplied them with raw materials and marketed their products.

#★ ★ ★

When the Social-Democratic students break with the revolutionaries and politically minded people of all other trends, this by no means implies the breakup of the general student and educational organizations. On the contrary, only on the basis of a perfectly definite programme can and should one work among the widest student groups to broaden their academic outlook and to propagate scientific Socialism, that is, Marxism.⁴

Revolutionary culture is a powerful revolutionary weapon for the broad masses of the people. It prepares the ground ideologically before the revolution comes and is an important, indeed essential, fighting front in the general revolutionary front during the revolution.⁵

#3. EXCERPTS FROM THE BOOK MORE ON THE DIFFERENCES BETWEEN TOGLIATTI AND US

#Chen Boda and Others

#Before the 4th of March, 1963

#THE STATE AND REVOLUTION

[...]

#CAN STATE-MONOPOLY CAPITAL BECOME «A MORE EFFECTIVE INSTRUMENT FOR OPPOSING MONOPOLIST DEVELOPMENT»?

Replying to the editorial in our paper, Renmin Ribao [People's Daily], Comrade Luigi Longo, one of the chief leaders of the Communist Party of Italy, wrote in an article on the 4th of January, 1963:

Our Tenth Congress has also forcefully reaffirmed that a firm point in what we call the Italian road to socialism is the recognition that, already today, in the existing international and domestic situation, even when the capitalist regime continues to exist, it is possible and necessary to arrive at the liquidation of the monopolies and of their economic and political power.

These comrades maintain that, by adopting the measures they have worked out, it is possible to change the capitalist relations of production now existing in Italy and to change the «big property regime» of the Italian monopoly capitalists.

The economic measures of «structural reform», which have been worked out by Togliatti and other comrades, are, in their own words, the realization of «the demand for a definite degree of nationalization, the demand for programming, the demand for State intervention to guarantee democratic economic development, and so on»;⁶ and «the movement which tends to increase direct State intervention in economic life, through programming, the nationalization of whole sectors of production, and so on».⁷

Probably Togliatti and the other comrades will go on to devise still more measures of this sort.

Of course, they have the right to think and say what they like, and no one has the right to interfere, nor do we want to. However, since they want others to think and speak as they do, we cannot but continue the discussion of the questions they have raised.

Let us take first the question of State intervention in economic life.

Has not the State intervened in economic life ever since it came into being, no matter whether it was a State of slave-owners, of feudal lords, or of the bourgeoisie? When these classes are in the ascendant, State intervention in economic life may take one form, and, when they are on the decline, it may take another form. State intervention in economic life may also take different forms in different countries where the State power is the same in its class nature. Leaving aside the question of how the State of slave-owners or feudal lords intervenes in economic life, we shall discuss only the intervention of the bourgeois State in economic life.

Whether a bourgeois State pursues a policy of grabbing colonies or of contending for world supremacy, a policy of free trade or of protective tariffs, every such policy constitutes State intervention in economic life, which bourgeois States have long practised in order to protect the interests of their bourgeoisie. Such intervention has played an important role in the development of capitalism. State intervention in economic life is, therefore, not something new that has recently made its appearance in Italy.

But perhaps what Togliatti and the other comrades refer to by «State intervention in economic life» is not these policies long practised by the bourgeoisie, but mainly the nationalization they are talking about.

Well, then, let us talk about nationalization.

In reality, the slave society onward, different kinds of States have had different kinds of «nationalized sectors of the economy». The State of slave-owners had its nationalized sector of the economy, and so had the State of feudal lords. The bourgeois State has had its nationalized sector of the economy ever since it came into being. Therefore, the question to be clarified is the nature of the nationalization in each case, and what class carries it out.

A veteran Communist like Comrade Togliatti is certainly not ignorant of what Engels said in his Socialism: Utopian and Scientific:

In any case, with trusts or without, the official representative of capitalist society — the State — will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for interaction and communication — the postal office, the telegraphs, the railways.⁸

To this statement, Engels added the following very important rider:

I say «have to». For only when the means of production and distribution have actually outgrown the form of management by joint-stock companies, and when, therefore, the taking them over by the State has become economically inevitable, only then — even if it is the State of today that effects this — is there an economic advance, the attainment of another step preliminary to the taking over of all productive forces by society itself. But of late, since Bismarck went in for State ownership of industrial establishments, a kind of spurious Socialism has arisen, debased, now and again, into something of flunkeyism, that without more ado declares all State ownership, even of the Bismarckian sort, to be socialist. Certainly, if the taking over by the State of the tobacco industry is socialist, then Napoleon and Metternich must be numbered among the founders of Socialism. If the Belgian State, for quite ordinary political and financial reasons, itself constructed its chief railway lines; if Bismarck, not under any economic compulsion, took over for the State the chief Prussian lines, simply to be the better able to have them in hand in case of war, to bring up the railway employees as a voting herd for the government, and especially to create for himself a new source of income independent of parliamentary votes — this was, in no sense, a socialist measure, directly or indirectly, consciously or unconsciously. Otherwise, the Royal Maritime Company, the Royal porcelain manufacture, and even the regimental tailors of the army would also be socialist institutions, or even, as was seriously proposed by a sly dog during the reign of Friedrich Wilhelm the Third, the taking over by the State of the brothels.⁸

Engels then went on to emphasize the nature of so-called State ownership in capitalist countries. He said:

But the transformation, either into joint-stock companies and trusts, or into State ownership, does not do away with the capitalist nature of the productive forces. In the joint-stock companies and trusts, this is obvious. And the modern State, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments, as well of the workers as of individual capitalists. The modern State, no matter what its form, is essentially a capitalist machine, the State of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage workers — proletarians. The capitalist relation is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.⁸

Engels wrote all this in the period when monopoly capital was first emerging and capitalism had begun to move from free competition to monopoly. Have his arguments lost their validity now that monopoly capital has assumed a completely dominating position? Can it be said that nationalization in the capitalist countries has now changed and even done away with «the capitalist nature of the productive forces»? Can it be said that State-monopoly capitalism, formed through capitalist nationalization or in other ways, is no longer capitalism? Or perhaps this can be said of Italy, though not of other countries?

Here, then, we have to go into the question of State-monopoly capitalism, and in Italy in particular.

Concentration of capital results in monopoly. From the First World War onward, world capitalism has not only taken a step further toward monopoly in general, but also taken a step further away from monopoly in general to State monopoly. After the First World War, and particularly after the economic crisis broke out in the capitalist world in 1929, State-monopoly capitalism further developed in all the imperialist countries. During the Second World War, the monopoly capitalists in the imperialist countries on both sides utilized State-monopoly capital to the fullest possible extent in order to make high profits out of the war. And since the war, State-monopoly capital has actually become the more or less dominant force in economic life in some imperialist countries.

Compared with the other main imperialist countries, the foundations of capitalism in Italy are relatively weak. From an early date, therefore, Italy embarked upon State capitalism for the purpose of concentrating the forces of capital, so as to grab the highest profits, compete with international monopoly capital, expand its markets, and redivide the colonies. In 1914, the Consortium for Subsidizing Key Industries was established by the Italian government to provide the big banks and industrial firms with loans and subsidies. There was a further integration of the State bodies with monopoly-capitalist organizations during Mussolini's fascist regime. In particular, during the great crisis of 1929-33, the Italian government bought up, at pre-crisis prices, large blocks of shares of many failing banks and other enterprises, brought many banks and enterprises under State control, and organized the Institute of Industrial Reconstruction, thus forming a gigantic State-monopoly-capitalist organization. After the Second World War, Italian monopoly capital, including State-monopoly capital, which had been the foundation of the fascist regime, was left intact and developed at still greater speed. At present, the enterprises run by State-monopoly capital or jointly by State and private monopoly capital constitute about 30% of Italy's economy.

What conclusions should Marxist-Leninists draw from the development of State-monopoly capital? In Italy, can nationalized enterprise, that is, State-monopoly capital, stand «in opposition to the monopolies»,⁹ can it be «the expression of the masses of the people»,⁹ and can it become «a more effective instrument for opposing monopolistic development»,¹⁰ as stated by Togliatti and certain other comrades of the Communist Party of Italy?

No Marxist-Leninist can possibly draw such conclusions.

State-monopoly capitalism is monopoly capitalism in which monopoly capital has merged with the political power of the State. Taking full advantage of State power, it accelerates the concentration and accumulation of capital, intensifies the exploitation of the working people, the devouring of small and middle enterprises, and the annexation of some monopoly-capitalist groups by others, and strengthens monopoly capital for international competition and expansion. Under the cover of «State intervention in economic life» and «opposition to monopoly», and using the name of the State to deceive, it cleverly transfers huge profits into the pockets of the monopoly groups by underhand methods.

The chief methods by which State-monopoly capital serves the monopoly capitalists are as follows:

• Firstly, it uses the funds of the State treasury, and the taxes paid by the people, to protect the capitalists against risk to their investments, thus guaranteeing large profits to the monopoly groups. For example, on all the bonds issued to raise funds for the Institute of Industrial Reconstruction, the biggest State-monopoly organization of Italy, the State both pays interest and guarantees the principal. The bondholders generally receive a high rate of interest, as high as 4,5 to 8% a year. In addition, they draw dividends when the enterprises make a profit.
• Secondly, through legislation and the State budget, a substantial proportion of the national income is redistributed in ways favourable to the monopoly-capitalist organizations, ensuring that the various monopoly groups get huge profits. For example, in 1955, about 1/3 of the total State budget was allocated by the Italian government for purchasing and ordering commodities from private-monopoly groups.
• Thirdly, through the alternate forms of purchase and sale, the State, on certain occasions, takes over those enterprises which are losing money or going bankrupt or whose nationalization will benefit particular monopoly groups, and, on other occasions, sells to the private-monopoly groups those enterprises which are profitable. For example, according to statistics compiled by the Italian economist Gino Longo, between 1920 and '55, successive Italian governments paid a total of ITL 1'647'000'000'000 (in terms of 1953 prices) to purchase the shares of failing banks and enterprises, a sum equal to more than 50% of the total nominal capital in 1955 of all the Italian joint-stock companies with a capital of ITL 50'000'000 or more. On the other hand, from its establishment to 1958, the Institute of Industrial Reconstruction alone sold back to private-monopoly organizations shares in profitable enterprises amounting to a total value of ITL 491'000'000'000 (in terms of 1953 prices), according to incomplete statistics.
• Fourthly, by making use of State authority, State-monopoly capital intensifies the concentration and accumulation of capital, and accelerates the annexation of small and middle enterprises by monopoly capital. For example, from 1948 to '58, the total nominal capital of the ten biggest monopoly groups, which control the lifelines of the Italian economy, multiplied 15 times. The Fiat Company multiplied its nominal capital 25 times and the Italcemento 40 times. Although the ten biggest companies in Italy constituted only 0,04% of the total number of joint-stock companies, they directly held or controlled 64% of the total private shareholding capital in Italy. During the same period, the number of small and middle enterprises which went bankrupt constantly increased.
• Fifthly, internationally, State-monopoly capital battles fiercely for markets, utilizing the name of the State and its diplomatic measures, and thus serves Italian monopoly capital as a useful tool for extending its neo-colonial penetration. For example, in the period of 1956-61 alone, the National Hydrocarbons Board [ENI] obtained the right to explore and exploit oil resources, to sell oil, or to build pipelines and refineries in the United Arab Republic, Iran, Libya, Morocco, Tunisia, Ethiopia, Sudan, Jordan, India, Yugoslavia, Austria, Switzerland, and so on. In this way, it has secured for the Italian monopoly capitalists a place in the world oil market.

The facts given above make it clear that State monopoly and private monopoly are in fact two mutually supporting forms used by the monopoly capitalists for the extraction of huge profits. The development of State-monopoly capital aggravates the inherent contradictions of the imperialist system and can never, as Togliatti and the other comrades assert, «limit and break up the power of the leading big monopoly groups»⁷ or change the contradictions inherent in imperialism.

In Italy, there is a view current among certain people that modern Italian capitalism is different from the capitalism of 50 years ago and has entered a «new stage». They call modern Italian capitalism «neo-capitalism». They insist that, under «neo-capitalism», or in the «new stage» of capitalism, such fundamental Marxist-Leninist principles as those concerning the class struggle, socialist revolution, conquest of State power by the proletariat, and the dictatorship of the proletariat are no longer of any use. In their view, this «neo-capitalism» can apparently perform the function of resolving the fundamental contradictions of capitalism within the capitalist system itself, by such means as «programming», «technical progress», «full employment», and the «welfare State», and through «international alliance». It was the Catholic movement and the social-reformists who first advocated and spread these theories in Italy. Actually, it was in these so-called theories that Togliatti and the other comrades found a new basis for their «theory of structural reform».

Togliatti and the other comrades maintain that «the concepts of planning and programming the economy, considered at one time a Socialist prerogative, are more and more extensively discussed and accepted today».¹¹

It is Comrade Togliatti's opinion: firstly, that there can be planned development of the national economy, not only in socialist countries, but also under capitalism; and, secondly, that the economic planning and programming characteristic of socialism can be accepted in capitalist Italy.

Marxist-Leninists have always held that the capitalist State finds it both possible and necessary to adopt policies which, in some way, regulate the national economy in the interests of the bourgeoisie as a whole. This idea is contained in the passages quoted above from Engels. In the era of monopoly capital, this regulatory function of the capitalist State mainly serves the interests of the monopoly capitalists. Although such regulation may sometimes sacrifice the interests of certain monopoly groups, it never harms, but, on the contrary, represents, the overall interests of the monopoly capitalists.

Here is Lenin's excellent exposition of this point. He said:

[...] the erroneous bourgeois-reformist assertion that monopoly capitalism or State-monopoly capitalism is no longer capitalism, but can now be called «State socialism», and so on, is very common. The trusts, of course, never provided, do not now provide, and cannot provide complete planning. But, however much they do plan, however much the capitalist magnates calculate in advance the volume of production on a national and even on an international scale, and however much they systematically regulate it, we still remain under capitalism — at its new stage, it is true, but still capitalism, without a doubt.¹²

However, some comrades of the Communist Party of Italy maintain that, by carrying out «planning» in Italy under the rule of the monopoly capitalists, it is possible to solve the major problems posed by Italian history, including «the problems of the liberty and emancipation of the working class».⁷ How is this miracle possible?

Comrade Togliatti says: «State-monopoly capitalism, which is the modern aspect of the capitalist regime in almost all the big countries, is that stage — as Lenin has affirmed — beyond which, in order to go forward, there is no other way but socialism. But, from this objective necessity, it is necessary to make a conscious movement arise.»¹¹

There is the well-known statement by Lenin that «[...] capitalist development [...] has moved forward from capitalism to imperialism, from monopoly to State control. All this has brought the socialist revolution nearer and has created the objective conditions for it».¹³ He also made similar statements elsewhere. Clearly, Lenin meant that the development of State-monopoly capitalism serves only to prove «the proximity [...] of the socialist revolution, and not at all as an argument for tolerating the repudiation of such a revolution and the efforts to make capitalism look more attractive, something which all reformists are trying to do».¹² In talking about «structural reform» and «conscious movement», Comrade Togliatti is using ambiguous language exactly as the reformists do to evade the question of socialist revolution posed by Marxism-Leninism, and he is doing his best to make Italian capitalism look more attractive.

#★ ★ ★

It is particularly necessary to emphasize the following: The war has caused such untold calamities to the belligerent countries and has, at the same time, accelerated the development of capitalism to such a tremendous degree, converting monopoly capitalism into State-monopoly capitalism, that neither the proletariat nor the revolutionary small-bourgeois democrats can keep within the limits of capitalism.¹⁴

#4. EXCERPTS FROM THE BOOK LENIN ON IMPERIALISM, THE EVE OF THE PROLETARIAN SOCIAL REVOLUTION

#People's Publishing House of Beijing

#22nd of April, 1960

#STATE-MONOPOLY CAPITALISM HAS NOT CHANGED THE NATURE OF CAPITALISM, BUT INTENSIFIED ITS CONTRADICTIONS

#MONOPOLY IN GENERAL HAS EVOLVED INTO STATE MONOPOLY

World capitalism, which, in the 1860s and '70s, was an advanced and progressive force of free competition, and which, at the beginning of the 20th century, grew into monopoly capitalism, that is, imperialism, took a big step forward during the war, not only toward greater concentration of finance capital, but also toward transformation into State capitalism.¹⁵

On the other hand, opposed to this, mainly Anglo-French group, we have another group of capitalists, an even more rapacious, even more predatory one, a group who came to the capitalist banqueting table when all the seats were occupied, but who introduced into the struggle new methods for developing capitalist production, improved techniques, and superior organization, which turned the old capitalism, the capitalism of the free-competition age, into the capitalism of giant trusts, syndicates, and cartels. This group introduced the beginnings of State-controlled capitalist production, combining the colossal power of capitalism with the colossal power of the State into a single mechanism and bringing tens of millions of people within the single organization of State capitalism.¹⁶

Capitalism has made gigantic strides, particularly in the 20th century, and the war has done more than was done for 25 years. State control of industry has made progress in Britain as well as in Germany. Monopoly, in general, has evolved into State monopoly. The objective state of affairs has shown that the war has stepped up capitalist development, which has moved forward from capitalism to imperialism, from monopoly to State control. All this has brought the socialist revolution nearer and has created the objective conditions for it. Thus, the socialist revolution has been brought closer as a result of the war.¹⁷

#STATE-MONOPOLY CAPITALISM MEANS MILITARY SERVITUDE FOR THE WORKERS AND PARADISE FOR THE CAPITALISTS

The objective conditions for a socialist revolution, which undoubtedly existed even before the war in the more developed and advanced countries, have been ripening with tremendous rapidity as a result of the war. Small and middle enterprises are being squeezed out and ruined at a faster rate than ever. The concentration and internationalization of capital are making gigantic strides; monopoly capitalism is developing into State-monopoly capitalism. In a number of countries, regulation of production and distribution by society is being introduced by force of circumstances. Some countries are introducing universal labour conscription.

Under private ownership of the means of production, all these steps toward greater monopolization and control of production by the State are inevitably accompanied by intensified exploitation of the working people, by an increase in oppression; it becomes more difficult to resist the exploiters, and reaction and military despotism grow. At the same time, these steps inevitably lead to a tremendous growth in the profits of the big capitalists at the expense of all other sections of the population. The working people, for decades to come, are forced to pay tribute to the capitalists in the form of interest payments on war loans running into billions.¹⁸

Imperialism — the era of bank capital, the era of gigantic capitalist monopolies, of the development of monopoly capitalism into State-monopoly capitalism — has clearly shown an extraordinary strengthening of the «State machine» and an unprecedented growth in its bureaucratic and military apparatus in connection with the intensification of repressive measures against the proletariat, both in the monarchical and in the freest, republican countries.¹²

In Germany, things have reached a point where the economic life of 66'000'000 people is directed from one centre. The national economy of a country of 66'000'000 is run from this one centre. Tremendous sacrifices are imposed on the vast majority of the people in order that the «upper 30'000» can pocket billions in war profits, and that millions die in the shambles for the enrichment of these «finest and noblest» representatives of the nation.¹⁹

The imperialist war has immensely accelerated and intensified the process of transformation of monopoly capitalism into State-monopoly capitalism. The monstrous oppression of the working people by the State, which is merging more and more with the all-powerful capitalist associations, is becoming increasingly monstrous. The advanced countries — we mean their hinterland — are becoming military convict prisons for the workers.²⁰

Both the United States and Germany «regulate economic life» in such a way as to create conditions of wartime penal servitude for the workers (and partly for the peasants) and a paradise for the bankers and capitalists. Their regulation consists in «squeezing» the workers to the point of starvation, while the capitalists are guaranteed (surreptitiously, in a reactionary-bureaucratic fashion) profits higher than before the war.³

The banking magnates seem to be afraid that State monopoly will steal upon them from an unexpected quarter. It goes without saying, however, that this fear is no more than an expression of the rivalry, so to speak, between two department managers in the same office; for, on the one hand, the millions entrusted to the savings banks are, in the final analysis, actually controlled by these very same bank capital magnates, while, on the other hand, State monopoly in capitalist society is merely a means of increasing and guaranteeing the income of millionaires in some branch of industry who are on the verge of bankruptcy.²¹

#STATE-MONOPOLY CAPITALISM IS A COMPLETE MATERIAL PREPARATION FOR SOCIALISM

The dialectics of history is such that the war, by extraordinarily expediting the transformation of monopoly capitalism into State-monopoly capitalism, has thereby extraordinarily advanced humanity toward socialism.

Imperialist war is the eve of socialist revolution. And this not only because the horrors of the war give rise to proletarian revolt — no revolt can bring about socialism unless the economic conditions for socialism are ripe — but because State-monopoly capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history, between which and the rung called socialism there are no intermediate rungs.³

To make things even clearer, let us, first of all, take the most concrete example of State capitalism. Everybody knows what this example is. It is Germany. Here, we have «the last word» in modern large-scale capitalist engineering and planned organization, subordinated to Junker-bourgeois imperialism. Cross out the words in italics, and, in place of the militarist, Junker, bourgeois, imperialist State, put also a State, but of a different social type, of a different class content — a council State, that is, a proletarian State — and you will have the sum total of the conditions necessary for socialism.²²

#STATE-MONOPOLY CAPITALISM IS STILL UNDOUBTEDLY CAPITALISM, BUT THE REFORMISTS CALL IT SOCIALISM FOR THE PURPOSE OF REPUDIATING THE SOCIALIST REVOLUTION

Here, we have what is most essential in the theoretical appraisal of the latest phase of capitalism, that is, imperialism, namely, that capitalism becomes monopoly capitalism. The latter must be emphasized, because the erroneous bourgeois-reformist assertion that monopoly capitalism or State-monopoly capitalism is no longer capitalism, but can now be called «State socialism», and so on, is very common. The trusts, of course, never provided, do not now provide, and cannot provide complete planning. But, however much they do plan, however much the capitalist magnates calculate in advance the volume of production on a national and even on an international scale, and however much they systematically regulate it, we still remain under capitalism — at its new stage, it is true, but still capitalism, without a doubt. The «proximity» of such capitalism to socialism should serve genuine representatives of the proletariat as an argument proving the proximity, facility, feasibility, and urgency of the socialist revolution, and not at all as an argument for tolerating the repudiation of such a revolution and the efforts to make capitalism more attractive, something which all reformists are trying to do.¹²

#★ ★ ★

No political party can possibly lead a great revolutionary movement to victory unless it possesses revolutionary theory and a knowledge of history and has a profound grasp of the practical movement.²³

The economic relations of imperialism constitute the core of the entire international situation as it now exists. Throughout the 20th century, this new, highest, and final stage of capitalism has fully taken shape.²⁴

The correctness or incorrectness of the ideological and political line decides everything.²⁵

#5. STUDY GUIDE ON BUREAUCRAT CAPITALISM

[...] the US imperialists and their lackeys — the bureaucrat capitalists, the feudal lords, and the Nationalist reactionaries who represented these two classes — were the enemies of the people [...].²⁶

• Posing the Question
  • Capital and Capitalism
  • Monopoly Capitalism and Imperialism
  • State-Monopoly Capitalism
  • Comprador and Feudal State-Monopoly Capitalism: Bureaucrat Capitalism
• In the Thought of Jose Carlos Mariategui
  • Semi-Colonialism, Economic Status of Our Society, and Our Economic Basis
  • Outline of Economic Development
• The Current Situation
  • How the Bureaucrat Line Is Being Pushed Forward Everywhere in the Country Under the Current Fascist Regime
  • Lines for the Development of Bureaucrat Capitalism
    • The Feudal Line in Agriculture
    • The Bureaucrat Line in Industry, Commerce, and Finance
    • The Bureaucrat Line in Ideology

#6. BIBLIOGRAPHY

Lenin:

• Karl Marx (July-November 1914), Section 3
• Imperialism, the Highest Stage of Capitalism (January-June 1916)
• The Development of Capitalism in Russia (1896-99)

Mao Zedong:

• The Chinese Revolution and the Communist Party of China (15th of December, 1939)
• The Present Situation and Our Tasks (25th of December, 1947)

Chen Boda and Others: More on the Differences Between Comrade Togliatti and Us (Before the 4th of March, 1963)

Kang Sheng and Others: Is Yugoslavia a Socialist Country? (Before the 26th of September, 1963)

Jose Carlos Mariategui:

• In Defence of Marxism (1934)
• Seven Interpretive Essays on Peruvian Reality (1928), Section 1
• Programme of the Communist Party of Peru (October 1928)
• Anti-Imperialist Standpoint (21st of May, 1929)

Viktor Ceprakov: State-Monopoly Capitalism and Bourgeois Political Economy (1962)

National Institute of Planning:

• Documents, Guillermo Marco del Pont
• Global Development Plan, 1971-75

William Arthur Lewis: The Principles of Economic Planning (1949)

Virgilio Roel Pineda: Outline of Economic Development (1971)