It is very easy to quote from In Defense of Marxism how the Mensheviks stuck to the concrete while Lenin began with dialectical materialism.1 To carry out Leninism in practice, however, is another matter. Strictly speaking, we should begin with philosophy, but we postpone that to the end of this document where it sums up the whole. We shall begin instead with political economy.
It is not because of the policy of the Fourth International that the world revolution has suffered such defeats. Stalinism is the enemy. We have to pose the question in opposition to Stalinism.
For many years now the whole gigantic theoretical machinery of Stalinism has had one main theoretical enemy. This enemy, it will surprise most members of the Fourth International to learn, is the theory of state-capitalism, whether applied to Russia or countries abroad. We have to add that the Fourth International either does not know or does not care about what the Stalinists are doing in this field. As we shall see, that is not at all accidental but it makes our task particularly difficult. Before we discuss, we have to state the facts and conditions of discussion.
Marx removed political economy from intellectual theorizing and made it a weapon of the class struggle. He placed it in the very heart of the capitalist system, in the process of production itself. For him the fundamental antagonism of society was the contradiction between the development of the productive forces and the social relations of production. Inasmuch as this conception is what the Stalinists are using all the power of the Russian state to destroy, we must spend some time here.
In the United States since 1935 the working class in the CIO is mobilized to fight any increase in the productivity of labor.2 Speed-up does not mean necessarily work beyond physical or mental endurance. The proletariat as a class is opposed to increase of productivity of labor in any form, whether it is speed-up of the line or the machine, or the further division of labor. It is convinced in the very marrow of its being that any such increase is obtained only at the expense of its own most vital material and spiritual interests. But the capitalist class is equally convinced that the desire of the workers to have the decisive word on production standards is opposed to the vital interests of the capitalist system which they represent. Both sides are absolutely correct upon the basis of capitalist production. The clash is final and absolute.
Marx established that as long as the proletariat did not rule production, production knew and could know no other method of progress but the increase of constant capital, machinery, mechanization, at the expense of variable, living labor. The only revolution which could save society was the proletarian revolution in the process of production.
Further he showed that this system not only created the violent clash in social relations. Inevitably the rate of profit would fall and (theoretically) at a certain stage the economy would not be able to expand any further because it would lack sufficient surplus value.
In his strictly logical theory Marx expressly excluded any idea that the system would collapse because goods could not be sold. In his analysis of collapse he made it absolutely clear that the capitalist could sell all the goods he produced. This would not alter the conditions of the workers in the factory. It is possible to keep silent about this, but to deny it - that is impossible. The Stalinists do not go so far. All Marx's theories of crisis, overproduction, commercial' crisis, etc., to which he paid careful attention, all are based on this foundation of relations in production.
All his opponents, however differentiated among themselves, are united in this, that they see the solution of the crisis of capitalism in every conceivable place except the reorganization of the productive process by labor itself. From Section 1, Chapter 1, Vol. 1 of Capital, this is precisely what Marx opposed.3 The very categories he used, and the content he gave to them as categories of exploitation, were derived from his analysis of the mode of labor, and without it he could not have succeeded in defeating all his opponents.
It is obvious, therefore, that the Marxian theory from its very elements is an invincible weapon against the capitalist class or a usurping bureaucracy, whether the property is private property or state-property. It is equally obvious that a bureaucracy, caught in the throes of economic crisis and in the name of Marxism exploiting millions of workers, has a deadly enemy in this theory. If the Marxian categories apply to Russia, then it is a simple matter to say that Russia is a form of state-capitalism. The Marxist categories therefore become for the Stalinist bureaucracy the concrete theoretical enemy.
In 1943 Leontiev published his celebrated Political economy in the Soviet Union.4 There was a crisis in political economy in the Soviet Union. He tells us that for years the teaching of political economy had stopped entirely. The reason will astonish most of the readers of this document. The Soviet youth studying Capital found them selves unable to see how the categories, money, wages, etc., as described in Capital differed from the categories as they appeared in the Russian reality. (No such doubts trouble orthodox Trotskyists.)
Leontiev described the measures adopted. Economists were henceforth to teach:
a. that these categories existed before capitalism, hence are not integral to capitalism;
b. that they meant something different in each period and hence mean something different in Russia.
Thus Marx's analysis of the categories of capitalism, the foundation of Marxism, received the first blow. But the Stalinist theoreticians had something positive to substitute.
Above all, they said, these categories have always been part and parcel of private property capitalism and exploitation of man by man. There is no private property in Russia, hence no exploitation of man by man, hence these categories are not the same.
But this ridiculous sophistry could not shake Capital.
Two years later the Stalinists had to drop the pretense that only the "teaching" of political economy was being changed. Nothing short of a break with the dialectic structure of Capital would do. They decided to reorganize Capital thoroughly, beginning with page 1 of Chapter 1 of Volume 1. Marx had begun the analysis of capitalism with the analysis of the commodity. The Stalinists repudiated his method, stating that to "preserve unchanged the same sequence" would be "ludicrous and harmful pedantry". The new theory was explained for English readers in Marx's Capital: An Aid to the Study of Political economy by Leontiev, 1946.5
The Stalinists have drowned Marx's specific categories of capitalist exploitation. They have to, because they cannot differentiate them from the economic system in Russia. They know who the enemy is. In his article Leontiev thundered against the "Trotskyite-Bukharinist wreckers":
"It is known that enemies of socialism of various brands - bourgeois economist wreckers, restorers of capitalism from the camp of the Trotskyite-Bukharinist agency of fascism - have tried to extend to socialist economy the laws of capitalist economy. To suit their wrecking counter-revolutionary purposes they have slanderously perverted the character of the socialist relations that have been introduced among us, falsifying them, repainting them in the colors of capitalist relations".
We hope no one believes that the Stalinists go through all this merely for "Trotskyite-Bukharinist-fascists". To any-one who knows them and reads Leontiev's article, it is perfectly obvious that there is inside Russia itself a tendency to call Russia state-capitalism and the Stalinists can only fight it by mutilating Capital. They must attempt in theory as well as in practice to destroy every manifestation of the developing revolution in Russia. The theory of state-capitalism is the theoretical foundation for this revolution.
Orthodox Trotskyism lives peaceably while all this goes on. It repeats: State-property, therefore no laws of capitalism. The whole meaning of the present discussion is that those days are over.
But what about overproduction, asks orthodox Trotskyism? There can be no overproduction in Russia, hence the system is superior, etc., etc. The Stalinists are taking care of that too. The method is to destroy the theory of the falling rate of profit and substitute the theory of the market, under-consumptionism. If state-property, and not the total reorganization of labor, is the solution to the contradiction of capitalism, then the proletariat has only to work hard (and very hard) until in the fullness of time, there is enough for all.
In 1943 Leontiev wrote in his essay a moderate paragraph which looked innocent but was part of the assault on Capital and the Russian proletariat.
"... the law of value under capitalism operates through the law of the average rate of profit, whereas in the socialist system of national economy the law of the average rate of profit has lost its significance".6
Thus in place of the law in the decline in the rate of profit, i.e., the insoluble contradiction of capitalism due to value production, the Stalinists have substituted the average rate of profit or the distribution of the total profits among the capitalists. The average rate of profit is singled out as the crucial feature of Volume III of Capital.*
Prior to World War I, the debates in the Marxist movement revolved around Volume II of Capital. The theory of accumulation was urgent only insofar as it concerned whether imperialist expansion could solve the contradictions of capitalism. By World War II this was no longer the question. Not only had the contradictions of capitalism not been solved by imperialist expansion; there was a crisis in productivity on a world scale. The debate of necessity has shifted from Volume II (expanded reproduction) to Volume III (decline in the rate of profit).
The debate over Volume III of Capital is the debate over the developing revolution on a world scale and especially in Russia. If the problem is selling goods, then there is absolutely no economic reason for the collapse of the bureaucracy. If, however, the problem is the rate of surplus value in production, needed for expansion, then the bureaucracy is faced with a revolution in the process of production itself.
It will be possible to fill twenty volumes of books with quotations about overproduction from Marx and Marxists. In this dispute they will have the same validity as the numerous witnesses the chicken-stealer was prepared to bring' who hadn't seen him steal the chickens. They will not alter the fact that Marx's theory of capitalist collapse is based (though not exclusively) upon the falling rate of profit.
It assumes that all the goods are sold, there is no overproduction, and yet capitalism will collapse. The importance of this for the analysis of Stalinist Russia is obvious. It destroys the Stalinist contention that because Russia, unlike capitalism, has no problem of sale of goods, the Russian economy is superior.
We have in many places taken up this question in full. Here we can only state the case: As late as 1935, Maurice Dobb,7 British Stalinist, says:
"... consumption was an incident - an important incident - in the total setting ... At the same time it remained only a facet; and it seems clear that Marx considered the contradiction within the sphere of production - the contradiction between growing productive power, consequent on accumulation, and falling profitability of capital, between the productive forces and the productive relations of capitalist society - as the essence of the matter". (Political Economy and Capitalism, p. 121).8
No kind of underconsumptionism could pass as Marxism chiefly because Lenin (who wrote constantly of anarchy of production, individual appropriation, etc.) had nevertheless written the finest analysis of Capital in existence, a devastating and comprehensive polemic against all who tried to say that capitalism would collapse because it could not "realize" profit, i.e., sell its goods.**
Eugene Varga in Russia, however (with some sneaking apologetics, for Varga knows better), for years' propagated the view that capitalism would collapse from underconsumption while the nationalized production could not.9 Then in 1942 appeared The Theory of Capitalist Development by Paul Sweezy.10 Sweezy posed two fundamental types of crises:
"In the one case we have to do with movements in the rate of surplus value and the composition of capital, with the value system remaining intact".
This is the Marxist view, the political economy of the Proletariat. Paul Sweezy has another view. He goes on to say:
"In the other case we have to do with as yet unspecified forces tending to create a general shortage in effective demand for commodities. . . ". (p. 146.)11
This is the political economy of underconsumption. Previously it could be used to some degree by the petty-bourgeoisie. Today it is the absolutely inescapable political economy of the bureaucracy.
Marx's analysis showed that inevitably, though the mass of profit would grow, total profit in relation to total capital would grow less and less, and theoretically, would bring the system to a standstill.^* It is only after having proved this that Marx takes up overproduction, etc.
Sweezy says that Marx's analysis of the falling rate of profit seems to be some rough notes he just jotted down.~* He scoured the three volumes of Capital in an attempt to prove his underconsumptionist interpretation. He could find nothing but some odd scraps which were already notorious as completely inadequate. He had to admit as much (Ibid., p. 178).
But Sweezy would not give up. Instead he proposes:
"Another view is possible, however, namely, that in these scattered passages Marx was giving advance notice of a line of reasoning which, if he had lived to complete his theoretical work, would have been of primary importance in the overall picture of the capitalist economy".12
So that in thirty years and nearly 3,000 pages Marx was merely giving advance notice.
Sweezy's book was written in 1942. Since then, in the latest issue of Science and Society (Spring, 1950), this fellow traveller has become the authentic voice of the Stalinist maneuver to defend Russia against the theory of state-capitalism.13 As usual, the maneuver takes the form of historical analysis. As always, it seeks desperately to remove the class struggle from the process of production. In this article, Sweezy has reached the advanced stage of replacing the Marxist concept of the internal contradiction in production with a wholly external contradiction, between production for use and production for the market.
We hope, therefore, that this ghost of overproduction which has stalked about in our movement so long and disrupted economic analysis of Russia will go to its grave and stay there; or if it reappears will be injected by its sponsors, however temporarily, with some real blood and life.
* Insignificant minority as were "Johnson-Forest, "we did what we could to defend Marxist theory against the Stalinist revision. Through the agency of Raya Dunayevskaya, we forced publication of the document by translating it, attacked Leontiev and routed the chief Stalinist fellow-travellers in the United States who came to his defense. (American Economic Review, September, 1944 to September, 1945 inclusive.14)
** See especially the first chapter of his Capitalism in Russia, "Theoretic Mistakes of the Nafodnik-Economists," translated into English by F. Forest, New International, October, November, December, 1943.15
^* The falling rate of profit is no longer theory. Like so much of Marx's abstract analysis the proof now is before our eyes. Who in his senses today thinks that the world is suffering from an excess of capital? Where? In Britain, in France, in Italy, in Japan, in India, in Brazil, in China? Where, pray, where? From everywhere the cry rises for capital. The total mass of surplus value produced in relation to the total social capital is hopelessly inadequate. It may be useful (though we doubt this) to point out the fabulous profits of this or that company in the United States. This is no more than a variety of American exceptionalism. These profits will never be able to rebuild world economy. Europe, China, India under capitalism will perish for lack of capital to continue ever-greater expansion. This capitalist system is finished, finished for good and all. Only the released proletariat can produce sufficient to rebuild society. No one has to read Marxism any longer to understand this. All that is necessary is to look.
~* Comrades should not spend all their indignation on this. They will need some a few pages later and not for Sweezy.
1 Leon Trotsky, In Defence of Marxism, (1942).
In Defence of Marxism contains a collection of articles and letters by Trotsky. The letters were to members of the Socialist Workers' Party (SWP) (USA), then the largest Trotskyist party in the world. The focus of the articles and the letters was the nature of the USSR. The discussion was sparked by the USSR entering into a pact (the Molotov-Ribbentrop Pact) with Nazi Germany in August 1939 (For background on the Pact see: Angelo Tasca, The Russo-German Alliance: August 1939 - June 1941, 1950).
The discussion led to a split within the SWP. The large minority who dissented from the official Trotskyist position of critical support for the USSR left to form the Workers' Party (USA). The majority of the WP held to the theory of 'bureaucratic collectivism', which was developed by party theoretician Joseph Carter. The majority in the WP who supported this theory were often referred to as the Shachtmanites, after Max Shachtman, the leader of the WP.
James and Dunayevskaya were dissidents within the WP. They developed their own theory of state-capitalism and formed a minority tendency in the WP. This tendency was referred to as the State-Capitalist Tendency or the Johnson-Forest Tendency (named after their party names, J. R. Johnson (CLR James) and Freddie Forest (Raya Dunayevskaya). The Tendency left the WP in 1947 and rejoined the SWP.
2 The Congress of Industrial Organizations (CIO) was created in 1938 as a break away from the American Federation of Labor (AFL). The CIO rejected the trade union orientation of the AFL, with its focus on defending the position of skilled workers in specific types of employment. The CIO sought to organise with skilled and unskilled workers within specific industries. The CIO also opposed Jim Crow laws as divisive of workers and sought to work with African-American workers. On the CIO see e.g.: C. Thomas 'Negro Workers and the CIO', New International, Vol. 11, No. 3, May-June 1950; Ben Rose 'The Communist Party and the CIO', Theoretical Review, No. 22, May-June 1981.
3 'The Two Factors of a Commodity: Use-value and value', Chapter 1, Section 1 of Karl Marx, Capital: Volume 1, 1867.
4 Translated into English as: L. A. Leontiev, 'Political Economy in the Soviet Union', Science & Society, Vol. 8, No. 2, Spring, 1944.
5 A. Leontiev, Marx's Capital: An Aid to the Study of Political Economy, New York: International Publishers, 1946.
6 L. A. Leontiev, 'Political Economy in the Soviet Union', Science & Society, Vol. 8, No. 2, Spring, 1944, p. 124. In the English translation is reads as: "The law of value under capitalism acts through the law of average profit, which has lost its meaning under socialism".
7 Maurice Dobb (1900-1976), a Cambridge University (England) academic, was internationally recognised as one of the leading "Marxist" economists of the mid-twentieth century. He was a member of the Communist Party of Great Britain from 1919 until his death in 1976.
8 Maurice Dobb, Political Economy and Capitalism: Some essays in economic tradition, London: Routledge 1937 (second edition, 1940).
9 Eugen Varga (1879-1964) was people's commissar for finance in Hungarian soviet government 1919. He emigrated to Soviet Russia after its fall and he was a prominent Soviet economist until criticised by Stalin in 1947.
10 Paul Sweezy The Theory of Capitalist Development, Oxford University Press, 1942. The book was considered by many on the left to be the best introduction to Marxist economic theory. Paul Sweezy (1910-2004) was a founding editor of Monthly Review (established in 1949).
11 Ibid.
12 Ibid., p. 178.
13 Paul M. Sweezy and Maurice Dobb, 'The Transition from Feudalism to Capitalism', Science & Society, Vol. 14, No. 2, Spring, 1950, pp. 134-167.
14 Raya Dunayevskaya (trans) 'Teaching of Economics in the Soviet Union', American Economic Review, Vol. 34, No. 3, September 1944.
The article was originally published anonymously in the journal Pod Znamenem Marxizma (In the Name of Marxism). Dunayevskaya's translation was accompanied by an article with her commentary 'A New Revision of Marxian Economics', published in the same issue. Dunayevskaya's commentary elicited responses from: Paul A. Baran, 'New Trends in Russian Economic Thinking?', American Economic Review, Vol. 34, No. 4 (Dec., 1944), pp. 862-871 (Baran went on to collaborate in writing with Paul M. Sweezy in their classic underconsumptionist work Monopoly Capital: An essay on the American economic and social order, Monthly Review Press, New York, 1966); Oscar Lange, 'Marxian Economics in the Soviet Union', American Economic Review, Vol. 35, No. 1 (Mar., 1945), pp. 127-133; Brooks Otis, 'The Communists and the Labor Theory of Value', American Economic Review, Vol. 35, No. 1 (Mar., 1945), pp. 134-137, and; Leo Rogin, 'Marx and Engels on Distribution in a Socialist Society', American Economic Review, Vol. 35, No. 1 (Mar., 1945), pp. 137-143. Dunayevskay's response to Baran, Lange and Rogin was published as 'Revision or Reaffirmation of Marxism?', American Economic Review, Vol. 35, No. 4 (Sep., 1945), pp. 660-664.
15 Raya Dunayevskaya translated the first chapter of Lenin's The Development of Capitalism in Russia (1899) for the Workers' Party monthly publication, The New International. This three-part translation appeared in the October, November and December issues of 1943.
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