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Ted Grant
1913-2006

“Against the Theory of State Capitalism”, 1949

In his essay Against the Theory of State Capitalism—Reply to Comrade Cliff (1949), Grant asserts:

  1. If the USSR is "state capitalist", then the revolution of 1917 has created a capitalist social system, as Cliff does not have enough arguments to show that the social relations in the USSR have qualitatively changed since that time. However, to see the revolution of 1917 as "capitalist" is preposterous, it goes against all facts (although some are ready to do that!).
  2. In a transitional society, there are some elements of capitalism and socialism. There is the law of value, which is inherited from capitalism, and there is the law of production of socially necessary things, which is from socialism. The production of socially necessary things, and services, is expressed in the law of planned production, which was the dominant tendency in the USSR.

P.S. We should note that Grant (1913-2006) has become a reformist in his later years. In the work "The Collapse of Stalinism and the Class Nature of the Russian State", dated February 1996, Grant suggests that transitional states can be changed into capitalist ones in "a cold way", i.e. without a civil war. For example, he writes: "“Is it possible to establish capitalism in a “cold” way? Trotsky did not think so. Yet, in Eastern Europe, this appears to be happening. Marxists must never be afraid to say what is. Lenin pointed out that “history knows transformations of all sorts.” And that is certainly the case. The first European who saw a giraffe is supposed to have exclaimed “I don’t believe it!” But, as materialists, we are compelled to believe the evidence of our senses, even where this contradicts preconceived ideas.” And he continues: “The process of privatization in the Czech Republic, and its integration with the German economy has gone very far. It is possible, but by no means certain, that the point of no return has been reached”. And here is another example: "East Germany is a special case, because here the restoration of capitalism is a product of absorption into the most powerful capitalist state in Europe. It can be taken for granted that the process has already passed the point of no return, although even here it is not free from contradictions. As shown by the high level of unemployment and the undercurrent of discontent, mirrored, as in other Eastern European countries, in increased support for the ex-Stalinist party, the PDS, which recently scored a big success in East Berlin". East Germany is the most curious case to be examined, from the point of view of developing a Marxist theory of the state. That’s what must be done: examine the transitional states, starting with the former USSR. 

The Collapse of Stalinism and the Class Nature of the Russian State

Feb. 1996

http://www.tedgrant.org/archive/grant/1996/02/collapse.htm

What does this mean?

“Under certain conditions, the ruling clique can manoeuvre between the classes and eliminate the existing property relations. This was the case with the army caste in Syria, Burma, Ethiopia, Afghanistan, as only our tendency was able to explain. Now in Russia and Eastern Europe we have a peculiar variant of the same process, but in reverse.” nonsense

“In the 19th century, the transition from feudalism to capitalism in Japan was accomplished through the mechanism of the bureaucracy, which, under a peculiar set of circumstances, shifted from one class basis to another without a revolution or civil war. Of course, the transition to capitalism was not a “pure” one—there were many elements of feudalism in it, which were only eliminated (in another peculiar variant) by the US occupying forces after 1945, under the pressure of the Chinese revolution.” – The case of Japanese capitalist revolution - ?Trotsky:

“The element which fascism has in common with the old Bonapartism is that it used the antagonisms of classes in order to give to the state power the greatest independence. But we have always underlined that the old Bonapartism was in a time of an ascending bourgeois society, while fascism is a state power of the declining bourgeois society.”

(However, there is no fresh analysis of the USSR, only repetition of the well-known methodology, which thus becomes a dogma. He has not gone “further”. It appears that Marxism has stopped developing with the death of Trotsky. Who, after him, has brought in something new and original and radical? Maybe only the real revolutionaries, such as Mao and Che. Получается что все «марксистские» авторы перемалывают все те же фразы из Маркса, Ленина, Троцкого, или, по тенденции, Сталина или Мао. Болото, без выхода. Trotsky: «At every new stage, therefore, a concrete analysis is necessary of actual relations and tendencies in their connection and continual interaction.” (The Revolution Betrayed, p. 49.))

Russia—a Sinking Ship, dated 30th of January 1995: “The real lesson of Chechnya is that, despite the adoption of a new constitution and the incorporation of many ‘technocrats’ in Russia’s government, the old bureaucracy of the former Soviet Union continue to rule the state in the same secretive way as before, and with the same instincts. Whenever confronted by a seemingly intractable problem, Yeltsin opts for force, rather than compromise.”

(Private property is not an established and well-defended institute in post-Soviet republics. Example: nationalization programs.) Similar situation in Eastern Europe: “Slovakia is going backwards on privatisation: it has halted the use of vouchers and is selling off state companies mostly to those who run them: ex-apparatchiks chummy with Mr. Meciar.” (The Economist, 18/11/95.)”

Victor Serge on the role of “blatt” and the black market: “We now come to the unique domain of blatt, a Russian slang term which signifies ‘combination.’ From the bottom of economic life to its summit the combination reigns. Heads of trusts, directors of banks or of plants, administrators of State commerce, administrators of kolkhozes or of artels, store managers, employees—all resort to it everyday. All the wheels of the colossal machine are oiled and fouled by it. Its role is as great as that of planning, because without it the plan would never be realised. The combination of a multitude of departments makes up for the insufficiency of wages, for the defects in statistics, for administrative negligence, for bureaucratic unintelligence; it piles miracle upon miracle. A shoe-factory director receives, in accordance with the plan, a permit for a ton of leather to be taken from the neighbouring tannery in February. The tannery, even though it conforms with the directives, answers that it finds it impossible to deliver these raw materials before March. The production plan of the shoe factory is going up in smoke; but our director is not upset by it. He expected that. ‘Look here, old man,’ he will say to his colleague from the tannery, ‘you wouldn’t pull a trick like that on me, would you?’ ‘Certainly not, we only need to get together on it. Service for service, eh? The tanners are lacking shoes, dear comrade; couldn’t you have five hundred pairs for me within the fortnight?’ In the end, the tanners will be shod—not so well, to be sure, as their factory director and his family, whose boots the whole town will admire; and the shoe plant will execute its plan, which will bring its directors premiums, a banquet, etcetera. It will be clearly perceived, when the problem of transporting the raw materials from one plant to the other arises, that there are neither cars nor trucks available, for entirely peremptory reasons; but here again the beneficent combination will intervene. Railway men and lorry-drivers will find that it pays.” (Victor Serge, Destiny of a Revolution, pp.43-4.) Thus, blatt supplements the planned economy.

Post-Soviet capitalism as not productive: “Russian capitalism has revealed itself from the outset as corrupt and degenerate. It is Mafia capitalism, and continues to operate as such. Its main concern is not the development of the productive forces, but robbery, swindling and cheating. Its methods include kidnapping, murder and extortion. The Russian Mafia-bourgeoisie imposes a 20% “tribute” on everyone—from foreign investors to poor old women selling a few pathetic possessions outside the metro. Its conception of free competition includes the systematic murder of business rivals. Along this road lies not progress, but only barbarism.” – this is not completely true. There are some exceptions, when private big stores are well-managed and represent an improvement on what is offered by the state.

Mafia capitalism is an expression of the fact that the Russian bourgeoisie has arrived too late to play a progressive role, and that, on a world scale, the capitalist system has exhausted itself.

(Stalinism has not collapsed, Grant does not see that)

Marxism explains that the key to historical development in general is ultimately determined by the development of the productive forces: of the growth of industry, agriculture, science and technique, of the productivity of labour. – and this is where capitalism competes against non-capitalism, today

If we take the real GDP of Russia in 1989 as 100, the figure for 1994 was 49%. That means a drop of more than half in five years. If we remember that the fall in the USA in the period 1929-31 was 30%, it is possible to get an approximate idea of the unprecedented nature of the collapse. Nor is Russia the worst case. In the same period, the economy of Kazakhstan had a negative growth of 56%; Ukraine, 57%; Moldova, 58%; Tajikistan, 60%; Armenia, 63%; Azerbaijan, 65%; and Georgia, an astonishing 83%. – that is why “market” will not do in post-USSR

The collapse of the manufacturing base in this period is revealed in the statistics for the share of industry in the GDP. Industry’s share in the economy fell by 26.4% in Albania, 22.5% in Armenia, 23.5% in Bulgaria, 21.3% in Georgia, 19.4% in Poland and 11,1% in Russia. There was an increase in the parasitic “service” sector in most of these countries (but even that fell by 10% in the Ukraine, 12.7% in Georgia and 25.4% in Armenia). The big increase in the share of agriculture in Armenia, and to some extent the Ukraine, can only be explained by a partial return of sections of the population to subsistence farming in conditions of general economic collapse

Total foreign direct investment (FDI) in Russia between 1989 and 1994 was a derisory $1.6 billion. In the same period, China received $82.5 billion.

the position of women—always a faithful barometer of the level of real social progress – also: the minorities, other ethnic groups.

the movement towards capitalism has not yet reached the point of no return – that’s the view of Grant, but too weakly stated. He believes that capitalism can be established “in a cold way” – hence, a reformist: “Is it possible to establish capitalism in a “cold” way? Trotsky did not think so. Yet, in Eastern Europe, this appears to be happening. Marxists must never be afraid to say what is. Lenin pointed out that “history knows transformations of all sorts.” And that is certainly the case. The first European who saw a giraffe is supposed to have exclaimed “I don’t believe it!” But, as materialists, we are compelled to believe the evidence of our senses, even where this contradicts preconceived ideas.” “The process of privatisation in the Czech Republic, and its integration with the German economy has gone very far. It is possible, but by no means certain, that the point of no return has been reached.”

The slogan of the nascent bourgeois is: “Get rich and get out!”

East Germany is a special case, because here the restoration of capitalism is a product of absorption into the most powerful capitalist state in Europe. It can be taken for granted that the process has already passed the point of no return, although even here it is not free from contradictions. As shown by the high level of unemployment and the undercurrent of discontent, mirrored, as in other Eastern European countries, in increased support for the ex-Stalinist party, the PDS, which recently scored a big success in East Berlin. – East Germany is the most curious case to be examined, from the point of view of developing a Marxist theory of the state. That’s what must be done: examine the transitional states, starting with the former USSR, and then former East Germany.

“because there is virtually no accumulated capital in private hands, the state ends up paying for most privatisations. Since it is all new, the rules are often imprecise or simply lacking altogether…By and large, the energy and telecoms sectors remain state domains with, at most, only minority stakes being sold off. Older heavy industry is still in state ownership in most places, even if foreign buyers are attracted by it (which on the whole they are not). ‘Private owners cannot be invented,’ says Joze Mencinger, a former economics minister in Slovenia. ‘New capital must come from profits it will take the private economy years to build up.’” (The Economist, 18/11/95.)

According to some estimates, up to 80% of the economy of the Czech Republic is now in private hands. If this is the case then it would suggest that the process here has also reached the point where quantity becomes transformed into quality. – clearly, the guy has no understanding of what is “quantity” and “quality”. On Czech republic: ““The government’s boast that 80% of the economy is in private hands is, however, an exaggeration. The National Property Fund still holds big stakes in many partly privatised companies and sits in corporate board rooms alongside private shareholders, who wield most influence.” (Financial Times, 2/6/95.)”

‘You can’t buy what you want in this country,’ German businessmen can be heard lamenting. Volkswagen runs Skoda, the Czech carmaker; but a famous distillery at Karlovy Vary (Karlsbad to Germans) lost its lure for German buyers when the government in Prague, reluctant to let go of a ‘national treasure,’ decided to limit the sale to a minority holding. In one way or another, the government still controls much of basic industry. The remarkably low unemployment rate, below 5%, suggests that so far it has failed to undertake much of the essential industrial restructuring the country needs.” (The Economist, 18/11/95.)

(Demography of a country is a real indicator of its development. Thus, in Poland: “many families have adapted to lower real in comes by having fewer children. Despite a recent virtual church ban on abortion. Last year saw the smallest population increase in Poland since the war”

The conflict between different wings of the bureaucracy was expressed, not in the language of parliamentary debate, but in that of tanks and machine guns. This fact alone is sufficient to show that the contradictions within the bureaucracy are not at all secondary ones. – if conflict between factions of bureaucracy has been the cause of bloodshed, what about a conflict between bureaucracy and capital?

The removal of General Lebed was a desperate attempt to prevent the crystallisation of an opposition within the armed forces. – the murder of Rokhlin

The Relevance of Marxism Today

1994

Again: it is incorrect to assert that “the fall the Stalinism”. And what is the nature of the state today in the former USSR?

Demography is the best indicator of the economy, the development of the productive forces

the Financial Times (16/12/93) pointed out that:

“Over the whole period between 1950 and 1991, the volume of total world exports grew twelve times, while world output grew six times. More startlingly still, the volume of world exports of manufactures rose twenty three times, partly because this is where trade liberalisation was concentrated, while output grew eight times.”

Whereas in the period of upswing from 1948-74 we had long periods of boom interrupted by shallow and short recessions, a very different picture is now emerging: of relatively weak periods of boom, characterised by low rates of investment, low growth and permanently high unemployment, which are only the prelude to increasingly deep and prolonged periods of slump. – so it is true that world capitalism is in impasse. But so is Stalinism.

In the Grundrisse, Marx refers to the tendency of the rate of profit to fall as “the most important law in modern political economy.” – applicable to capitalism. Imperialism and transitional states stand over capitalism and this law.

In his book The Current Crisis written in 1987, Mark Glick publishes the following figures for the long-term rate of profit in the United States:

1899—22% 1939—7%
1914-18—18% 1945—23%
1921—12% 1948—17%
1929—17% 1965—18%
1932—2% 1983—10%

Profit Margins in Manufacturing Industry as a Percentage of the Value of Production:

 

 

1951

1960

1979

1973

1975

1977

 

Italy

 

25.2

16.5

19.9

3.6

3.3

 

West Germany

34.4

29.3

20.6

13.6

11.0

11.8

 

Japan

36.3

43.7

39.3

29.2

15.5

16.6

 

USA

25.9

19.6

16.2

17.7

17.5

18.6

 

Britain

30.8

27.4

16.1

17.7

4.7

9.6

a ferocious struggle to push down real wages, while simultaneously forcing up the productivity of labour – constantly waged by capitalists

Concentration of capial:

If we take the percentage of total assets held by companies in the United States, for example, we get the following result:

 

 

100 biggest

200 biggest

 

1925

34.5

----

 

1939

41.4

58.7

 

1954

41.9

50.4

 

1968

48.4

60.4

At the present moment in time, no less than nine-tenths of the US economy is in the hands of the top 500 companies, and 80% of that is in the hands of the 100 biggest. A US Senate report of 1980 further revealed that the controlling interests of the stocks of these companies was in the hands of just two dozen big financial institutions.

a match factory where children, mostly girls, work a 6 day-60 hour-week, with toxic chemicals, for three dollars. A letter to the Economist of the 15th September 1993 pointed out that: “Parents do realise the value of education for the future of their children but often their poverty is so desperate that they cannot do without the wages of their labouring children.”

In Britain, the application of monetarist policies under Thatcher led to a collapse of industry, from which it has still not recovered. From 28.4% of GDP in 1971, manufacturing industry fell to 23.1% in 1989. Those employed in manufacturing fell from 8.4 million in 1969 to 5.1 million in 1990. On the other hand, the parasitic banking sector increased from 9.3% in 1971 to 18.7% in 1989.

The bourgeois economists contradict themselves continually. On the one hand they argue that there is “not sufficient demand” in the economy, while simultaneously arguing in favour of a cut in demand in the form of wage cuts and slashing public expenditure.

(Main problem of “Marxism”: little or no concrete analysis.)

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