The Limits of the Mixed Economy. Paul Mattick 1969


Marx did not envision an intermediary stage between private-enterprise capitalism and socialism. His rather clean-cut differentiation between feudalism, capitalism, and socialism made for a certain “orderliness” and “simplicity” in his revolutionary expectations. He recognized, however, that his history of the rise of capitalism pertained solely to Western Europe, and he opposed any attempt to turn it into “a general historical-philosophical theory of development valid for all nations, no matter what their historical conditions might be.”[1] Marx, as well as Engels, allowed for courses of development different from those in Western Europe, and for a shortening of the road to socialism for pre-capitalist nations, in the wake of successful proletarian revolutions in the West. They recognized the state-capitalist tendencies in developed capitalist nations as indications of the coming socialist revolution without foreseeing their role in transforming pre-capitalist into state-capitalist systems of production.

We know now that social revolutions in capitalistically-under developed countries do not, and cannot, repeat the pattern of development of Western capitalism, but tend to introduce state-capitalist structures. They are not socialist revolutions in the Marxian sense even if they do avail themselves of Marxian ideology. The idea that state-capitalist revolution means the victory of socialism even in industrially-advanced nations gains some credibility because such revolutions appear to bring to its logical conclusion the increasing government-determination of production and of social life in general, and because they follow the pattern set by the established state-capitalist systems, which are quite generally perceived as socialist. In these systems, however, the institution of state-capitalism had the function not of abolishing the capitalist class but of aiding in its quick formation and thereby in the formation of capital. In industrially-advanced countries, state-capitalism would be as irrational a system as that which preceded it, for the difficulties of capital production can here be resolved not through an increase of exploitation but only through its abolition.

However, industrially-advanced countries could maintain a system of class differences under such regimes just as capital's poor nations do. They would not have the “excuse” of the under-developed states, but they could create a political apparatus of repression which would eliminate the need for one. There would thus have been a revolution, but not a socialist revolution. For a socialist revolution must mean precisely the creation of a social structure in which the producers themselves control their product and its distribution. It is conceivable only as one made by the working-class which ends social class relations. “What Marx – and before him, in 1843, Flora Tristan – formulated in one single proposition, namely, that ‘the emancipation of the working class must be conquered by the working class itself’, remains the implicit postulate of all genuine socialist thought.”[2]

It was Marx’s conviction that the contradiction between the growing social forces of production and the narrow capitalist relations of production would be overcome through a revolution which, by ending the class structure of society – its basic antagonism – would open the way towards a socialist world. Such a social revolution has not taken place; neither has the contradiction of social-as capital-production been resolved. Production is still everywhere the production of capital, and the capitalist world remains a world of crises.

Within this context, Keynesianism merely reflects the transition of capitalism from its free-market to a state-aided phase and provides an ideology for those who momentarily profit by this transition. It does not touch upon the problems Marx was concerned with. As long as the capitalist mode of production prevails, Marxism will retain its relevance, since it concerns itself neither with one or another technique of capital production, nor with social changes within the frame of capital production, but only with its final abolition.

It may well be that socialism is an illusion and that society is condemned to remain class-society. But this conclusion cannot be derived merely from the fact that recent revolutions have not destroyed exploitative class relations. The revolutions of the twentieth century have been directed against a capitalism unable to extend the conditions of its own existence, powerless to enlarge the industrial proletariat and, therewith, its own domain. Yet capitalism disturbed and destroyed earlier forms of social organization and modes of production by subordinating world production to a world market determined by the special interests of the great centers of capital production. The old ruling classes of the ravaged nations lacked both the interest and the power to withstand the inroads of foreign capital. It was left to the impoverished themselves to rebel against the double yoke of foreign and native exploitation, as well as the still greater misery of unemployment resulting from the lack of such exploitation. Because their wretchedness was due to both class and national subjugation, the character of their revolution was, and still is, both revolutionary and nationalist.

There is as yet no way to transcend the limited nationalist character of these revolutions, because of the total absence of an inter national revolutionary working-class movement capable of providing these national struggles with a wider frame of operations and with goals more extensive than mere capitalization by revolutionary means. Whatever else these revolutions may accomplish, they can not lead to socialism as an alternative to modern capitalism. They are but one of many expressions of the disintegration of the capitalist market economy as a world system, and it is only as such that they support the general need for a more rational social system of production. The problems of the backward nations cannot be solved apart from those that beset the developed ones. The solution for both still lies in a revolutionary change in the latter, while it would prepare the way for a socialist integration of world economy. For just as the underdeveloped countries cannot develop socialistically in a world dominated by capital production, so they could not develop capitalistically in a world dominated by socialist systems of production. The key to a socialist development of the underdeveloped nations is the socialist transformation of the advanced capitalist part of the world.

Yet this key does not seem to fit the real situation. It is quite obvious that the industrially-advanced parts of the world have the means to industrialize the underdeveloped regions in a rather short time and to eliminate hunter and poverty almost immediately merely by diverting the expenses of waste-production into productive channels. But there are as yet no social forces in sight willing to realize this opportunity and thus bring peace and tranquility to the world. Instead, the destructive aspects of capital production take on an increasingly more violent character – internally, by more and more waste production; and externally, by laying waste to territories occupied by people unwilling to submit to the profit requirements of foreign powers, which could only spell their own doom.

It cannot be expected that those who profit by the status quo and whose existence and future depends on its perpetuation will alter their ways by abdicating their dominating class positions. It is by means of the “mixed economy” that they have thus far succeeded in preventing the rise of social conditions which could lead to anti-capitalist social movements. In this sense, Keynesianism has been the “savior” of capitalism, even though by its own nature, and by the nature of capitalism, it can be only of temporary avail. With or without full employment, the mixed economy is a social fact in all capitalist nations, and in some of them has proved itself capable not only of avoiding large-scale depressions but of bringing about conditions of “prosperity” such as have never been experienced before, thus making it possible for the well-off to describe capitalism as a society of affluence.

Practically and ideologically, World War II and its aftermath led to an almost total eclipse of working-class socialism. But a continuing absence of any effective opposition to capitalism presupposes the system’s ability to maintain the given living conditions of the laboring population. If this should turn out to be impossible, the present social cohesion of the capitalist system may well be lost again – as it has been in previous crises of long duration. It is only on the assumption that all arising social problems can be resolved within existing institutions that it is possible to deny the working class – the vast majority of the population in the industrially-advanced countries – their role in history, which must of necessity, be an oppositional role and thus find expression in a revived or newly-emerging revolutionary consciousness.

The temporary success of Keynesian policies has given rise to the conviction that a way has finally been found to deal effectively with capitalism’s difficulties and thus dissolve the system’s revolutionary potentialities. But this conviction is an illusion based on the money veil that covers all capitalistic activities. If the veil is lifted, it becomes apparent that the continuous application of Keynesianism implies the self-destruction of capital production. The optimism of the “new economics” merely mistakes the postponement of a problem for its disappearance.

If revolutionary consciousness depends on misery, there can be little doubt that the suffering awaiting the world’s population will go beyond anything thus far experienced, and that it will eventually engulf even the privileged minority of workers in the industrially-advanced countries who still think of themselves as immune to the consequences of their own activities. As the general level of oppression increases, the special situation of “affluence” will dissolve, for the blessings of increased productivity will be dissipated in slaughterous competition for the diminishing profits of world production. Even previously, war and its aftermath brought with them an extent of social misery unknown during the darkest clays of the Industrial Revolution and exceeding anything Marx himself was able to relate about the miserable condition of the laboring population. Only by excluding the human costs of war and depression has it been possible to assert that capitalist development did not imply the growth of “the mass of misery, oppression, slavery, degradation, and exploitation;” and only by restricting the argument to the narrow field of wage statistics in a few countries could it be said that Marx was wrong in predicting increasing misery during the course of capital accumulation. But surely, this prediction is derived from his General Law of Capitalist Accumulation and its Historical Tendency and not merely from the commodity-character of labor-power and its changing fortunes on the labor market. It encompasses all aspects of capitalist development by way of competition, crises, and wars. It is not reasonable to maintain that the conditions of prosperity in a few countries in the wake of World War II, and the consequent further improvement of the living standards of their populations, is sufficient compensation for the rather permanent crisis conditions in the larger part of the world and for the almost incomprehensible suffering, exploitation, and degradation of hundreds of millions of people during and after the war.

The high standards of living attained by large layers of the working-class in industrially-advanced countries may themselves become detrimental to capital expansion. For the maintenance of such standards under conditions of decreasing profitability requires a continuous extension of non-profitable production. This in turn implies an increasingly greater need to raise the productivity of labor, which, under present conditions, means the steady growth of unemployment. Provision for the unemployed itself becomes an increasing expense which, together with all the other expenses of “affluence,” will sooner or later tax to the utmost even the greatest economic and technical capacities. This is not to say that “affluence” breeds revolution, but only that no absolute impoverishment is required to produce oppositional sentiments. People need not be reduced to starvation levels before they begin to rebel; they may do so with the first deep inroads into their customary living standards, or even when access to what they consider their living standards should be is denied them. The better off people are, the harder it is to bear any deprivation, and the more tenaciously they cling to their accustomed style of life. It is in this sense that the partial loss of the prevailing “affluence” may be enough to destroy the existing consensus.

Marx once said that “the proletariat is revolutionary or it is nothing.” At present it is nothing and it may well be that it will continue to be nothing. But this is not certain. Obviously, subversive ideas flourish under conditions of dissatisfaction such as do not as yet exist in the prosperity – false though it is – of present-day society. Though the poverty-stricken in the mixed economies are a large minority they are still a minority, and their opposition remains inarticulate. They cannot become a social force strong enough to oppose the material interests represented by the ruling ideology. The sporadic rebellions of despair are easily handled by the authorities representing the smug majority, which still includes the mass of the proletariat. The substratum of the impoverished can be decimated by the very conditions of existence provided for them. But as their number grows – and it is growing – the frequency of their rebellious acts will also increase, as will the awareness on the part of many of the smug that perhaps they, too, will soon find themselves on the refuse heap of capitalism. To judge by the past, the growth of social misery gives power to this misery and power leads to conscious actions aimed at ending the misery. Of course, the patterns of the past may not hold for the future; the age of revolutions may well be over. But if we cannot judge by past experiences we cannot judge at all. In that case, everything is possible – even a working-class revolution.

This possible revolution presupposes the continued existence of the proletariat, which, however, is allegedly already coming to an end with respect not only to its non-existing class consciousness but to its social functions as well. A distinction is often made between the “classical working class,” i.e., the industrial, proletariat in the Marxian sense, and the modern working population, of which only the smaller part is occupied in production. But this distinction is artificial, for what differentiates the proletariat from the bourgeoisie is not a particular set of occupations, but the former’s lack of control over their existence resulting from the lack of control over the means of production. Even if more workers are now engaged in non-productive so-called service industries, their social position vis-à-vis the capitalists remains unaltered. Because of the concentration of capital and the elimination of the proprietary middle class there are more proletarians now than ever before. It is of course true that a good portion of these people receive income which provide them with bourgeois or petty-bourgeois living standards. But the vast majority, as far as living standards are concerned, fall into the category of wage-workers, no matter how unproductive their work may be.

When Marx declared that the “historical mission” of the working class was to end the capitalist system, he was speaking, as he gathered from his theory of accumulation, of the expropriation of the few by the many. He rightly saw that the expansion of capital is also the polarization of society into a small minority of capitalists and a vast majority of property less workers forced to sell their labor power in order to exist. The industrial proletariat of a hundred years ago has today swollen into an amorphous mass of wage-receiving occupations and professionals, all of whom are dependent on the vicissitudes of market events and the changing for tunes of the accumulation process. However they think of themselves, they belong not to the ruling class but to the ruled.

Capitalism is basically a two-class society, notwithstanding the various status differentiations within each separate class. The ruling class is the decision-making class; the other class, regardless of its inner differentiations is at the mercy of these decisions, which are made with a view to the special needs of capital and determine the general conditions of society. The ruling class cannot act otherwise than it does: stupidly or intelligently, it will do everything to perpetuate itself as a ruling class. Those outside the decision-making process may disagree with the decisions made, since they may not correspond with their own interests, or because of convictions that things should be done differently. But to change these decisions they must have power of their own.

Whatever the decision-makers decide upon has to be actualized in the sphere of production because the manner of distribution depends on that of production. Without control over the production process, no decisions can be made, no class can rule. Control of production is exercised by control of the means of production, by ideology and by force. But property, ideology, and force alone can produce nothing. It is upon productive labor that the whole social edifice rests. The productive laborers thus have more latent power at then than any other social group, or all other social groups combined. To turn this latent into actual power demands no more than the producers’ recognition of social realities and the application of this knowledge to their own ends.

To deny this fact is the main job of bourgeois ideology, as is evidenced by its economic theories and by the general disparagement of productive labor. However, despite the prevailing notion of the decreasing importance of the industrial proletariat, more attention is devoted to it than ever before, because its potential power to control society has actually never been so great as it is flow. The technical-organizational “socialization” of production, i.e., the interdependence of the whole of the population in an uninterrupted flow of production, provides the working class with almost absolute power over the life and death of society simply by ceasing to work. While this could not be their intention, as they are members of the same society, they could nevertheless shake society to its foundations if they were determined to alter its structure. It is for this reason that labor unions have been adapted to the capitalist establishment – in order to control industrial disputes – that governments, including labor governments, pass anti-strike legislation, and that those most aware of the latent power of industrial action, the totalitarian regimes, outlaw strikes altogether.

Because the industrial proletariat has the power to change society if so inclined, it is now, as before, the class on whose action the actual transformation of society depends. If this power did not exist, if its application were not a real possibility, there would be no hope of overcoming the existing material forces of repression. To be sure, all social struggles are also ideological struggles; yet success in the fight for a new society requires a material lever with which the defenses of the status quo may be overturned. It is not entirely inconceivable that the growing irrationality of capitalism will lead to a wide-spread revulsion among the population at large, regardless of class affiliations, and to a growing conviction that there is no longer any need for, nor any sense in, exploitative class relations, since society could be reorganized so as to benefit all people. Still, such a society will have to be fought for with all available weapons both in the ideological sphere and in the field of real power relations.

With the record of working-class behavior before us, the workers’ indispensability for the actualization of socialism makes socialism seem farther off than ever. But it is more than doubtful that the working class will indefinitely endure all that the capitalist system has in store for it. One has only to think of what in all probability is bound to happen without a socialist revolution in order to accept the possibility of a different kind of behavior on the part of the laboring population. What is bound to happen is in some measure already happening, and the quantitative projection of the present into the future points to the utopianism of solving capitalism’s social problems by capitalistic means. The present American war in Southeast Asia, for instance, may well engulf the Far East and finally the whole world. In view of this perspective, not to speak of unavoidable new economic crises of world capitalism, the phrase “socialism or barbarism” states the only real alternatives.


1. K. Marx, “Letter to the Editors of Otetschestwennyj Sapiski,” Marx-Engels Werke, Vol. 19, Berlin, 1962, p. 111.

2. M. Rubel, “Reflections on Utopia and Revolution,” in Socialist Humanism, ed. by E. Fromm, New York, 1966, p. 216