maximum red

Lukacs on Heidegger

2010-06-23T01:46:00.000-07:00

[Selections from Chapter Four 'Vitalism (Lebensphilosophie) in imperialist Germany' and other parts of The Destruction of Reason, Georg Lukacs , Merlin 1980. Chapter 3 on Nietzsche is on the Marx Internet Archives, and Chapter 6 'German sociology of the imperialist period' is on this blog.]
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6. The Ash Wednesday of Parasitical Subjectivism (Heidegger, Jaspers)

Scheler's tempered feelings of uneasiness about the contemporary situation burst into the open in the philosophy of his younger fellow-pupil, Martin Heidegger. With the latter, phenomenology came to occupy the centre of the German intellectuals' philosophical interest for the time being. But it now turned into the ideology of the agony of individualism in the imperialist period. Already the 'consolidation' of Scheler's philosophy echoed only faintly that self-awareness which imperialistic subjectivism had voiced in the philosophy of Dilthey and above all Simmel. It was just extreme relativism which seemed to account for the sovereign assurance of this self-awareness: everything solid resolved into a matter of subjective viewpoint, and all objectivity into a purely relative function or relation conditioned by the subject. This meant that, for all the relativistic resignation, the subject appeared to itself as creator of the spiritual universe, or at any rate as the power creating - in line with its own model, own assessmen and own inner needs - an ordered cosmos out of an otherwise senseless chaos, bestowed on it a meaning to its own greater glory, and appropriating it as the realm of its experiences. Vitalism, even Simmel's, expressed this general feeling more cautiously than did imaginative literature in the imperialist period (we are thinking chiefly of the lyric poetry of Stefan George and Rilke).
     The grim years of the First World War, which were full of abrupt changes of fortune, and the ensuing period brought a marked change of mood. The subjectivistic tendency remained, but its basic tenor, its atmosphere was completely altered. No longer was the world a great, multi-purpose stage upon which the I, in ever-changing costumes and continually transforming the scenery at will, couuld play out its own inner tragedies and comedies. It had now become a devastated area. Before the war, it had been possible to criticize that which was mechanical and rigid about capitalist culture from a lofty vitalistic angle. This was an innocuous and safe intellectual exercise, for the being of society appeared to stand undisturbed and to guarantee the safe existence of parasitical subjectivism. Since the downfall of the Wilhelmine regime the social world had started to constitute something alien to this subjectivism; the collapse of that world which subjectivism was continually criticizing, but which formed the indispensable basis of its existence, was lurking at every door. There was no longer any firm means of support. And in its abandoned condition, the solitary Ego stood in fear and anxiety.
     As a rule, relatively similar social situations produce relatively similar tendencies in thought and feeling. Before the outbreak of the 1848 revolution, which was an international, European event, Romantic individualism went to pieces for good. The most important thinker during its crisis and fall, the Dane Soren Kierkegaard, formulated in the most original way the philosophy of the then current Romantic-individualistic agony. No wonder that now, when this depressed mood was already starting to make itself felt - years ahead of the actual crisis - as a foreboding of future gloomy events, a renascence of Kierkegaard's philosophy was proclaimed by the new phase's leading minds, Husserl's pupil Heidegger and the former psychiatrist Karl Jaspers. Of course they did so with up-to-date modifications. Orthodox Protestant relgiosity and Kierkegaard's strictly Lutheran faith in the Bible were of no use to present needs. But in Kierkegaard's critique of Hegelian philosophy, as a critique of all striving for objectivity and universal validity by reasoned thought, and of all concepts of historical progress, acquired a very strong contemporary influence. So did Kierkegaard's argumentation of an 'existential philosophy' from the deepest despair of an extreme, self-mortifying subjectivism which sought to justify itself in the very pathos of this despair, in its professed exposure of all ideals of socio-historical life as mere vapid and vain ideas, in contrast to the subject which alone existed.
    The altered historical situation did, of course, dictate far-reaching changes. Again, these lay chiefly in the fact that Kierkegaard's philosophy was aimed against the bourgeois idea of progress, against Hegel's idealist dialectics, whereas the renovators of existential philosophy were already principally at odds with Marxism, although this seldom found overt and direct expression in their writings; at times they attempted to exploit the reactionary aspects of Hegelian philosophy on behalf of this new campaign. That in Kiergegaard existential philosophy was already no more than the ideology of the saddest philistinism, of fear and trembling, or anxiety, did not stop it conquering wide intellectual circles in Germany on the eve of Hitler's seizure of power and the nihilistic period of so-called heroic realism. On the contrary: this pretentiously tragic philistinism was precisely the socio-psychological reason for the influence of Heidegger and Jaspers.
     It was this mood of despair, and not deep-seated programmatic differences, which distinguished existential philosophy from the rest of vitalism. Admittedly, it was more than a matter of chance or merely terminology that the emphatically used catchword of 'life' was succeeded by an emphasis on 'existence'. Although the difference was one of mood far more than philosophical method, it nevertheless expressed something new in content and not trivial: the intensity of the loneliness, disappointment and despair created a new content. The emphatic stress on 'life' signified that conquest of the world through subjectivity; hence the fascist activists of vitalism, who were about to succeed Heidegger and Jaspers, revived this catchword, although they gave it a new content once more. 'Existence' as a philosophical leitmotif implied the rejection of a great deal that vitalism had elsewhere approved as 'alive', and this was now presented as inessential, non-existential.
     Certainly this mood was not unknown in pre-war vitalism. It is obvious in Nietzsche, although in his case the selection from 'life', the rebuttal of a portion of 'life' suggests rather the militant vitalism of fascism and pre-fascism. But Dilthey and Simmel were no strangers to such moods either. Let us remember Simmel's 'tragedy of culture' and his cynically resigned attempts at solving it. And even Dilthey stated once: 'And the contemporary analysis of huyman existence fills us all with a feeling of fragility, of the might of the dark impulses, of being afflicted with obscure visions and illusions, of the finiteness in everything that constitutes life, even where these things give rise to the highest constructions of communal life." [Collected Works, Chap VII, p.150]
     But it would be wrong to see only a quantitative difference here, a difference of accent. Granted, in order to recognize that the social and psychical motives which existentialism engendered were operative from the start, it is important that we heed the communal foundation, the being of society in the imperialist period. It is equally important, on the other hand, not to overlook what was specifically new about it. We might say that the same motives now appeared iin different proportions, thus bringing us closer to that which was new. For the basic philosophical mood of existentialism is expressed in just this qualitative change of proportion. Whereas the earlier vitalism had been mainly concerned with rejecting the 'moribund formations' of social being and confronting them with the vivacity of total subjectivity as organ of the conquest of 'life' the cleft now appeared within the subject. Whereas before, - in the context of the aristocratic epistemology this necessarily entailed - human beings were divided to some extent into two classes, the one living oiut life and the other torn from it, now the life of each human being, life in general was considered at risk. And the peril was expressed in the very feeling of becoming inessential, of succumbing to the un-living. The emphatic stress on existence instead of life, even in contrast to life, expressed precisely this fear of life's becoming inessential in general; and it indicated a search for that core of genuineness in subjectivity which, it was hoped, man could still endeavour to rescue from the imminent general destruction. So the pathos of the new orientation expressed the yearning to rescue naked existence from a universal collapse, and therein lay this basic mood's affinity with Kierkegaard's.
   Heidegger united Diltheyan tendencies and phenomenology more resolutely and consciously than Scheler. He even brought description and hermeneutics closer together than Dilthey himself had done, and this naturally meant a reinforcement of ovety subjectivism. He stated: 'The methodical meaning of phenomenological description is interpretation.' [This and following quotes unless otherwise stated are from Being and Time] With him even contemplation and thought appear as 'distant derivatives of understanding. The phenomenological "intuition of the essence" too is based on existential understanding.'
   Despite this heightening of subjectivistic tendencies, Heidegger represented perhaps even more strongly than his predecessors the philosophical 'third way': the claim to be above the antithesis of idealism and materialism (which he terms realism). 'That which-is-in-being (Seiendes) is independent of experience, discovered, defined. But being (Sein) "is" only in the understanding of that which-is-in-being, to whose Being belongs something like an understanding of Being.' This epistemological hocus-pocus, so typical of the whole imperialist period, was carred out by Heidegger such that he always says 'existence' (Dasein), thus giving the impression of an objectivity independent of human consciousness, although by 'existence' he meant nothing more than human existence, indeed only, in the final analysis, its manifestation in consciousness.
   Heidegger solved this crucial question of the philosophical 'third way' on the basis of apodictic statement and 'essential intuition'. He himself was obliged to see that through his position, he was approaching that vicious circle which Dilthey had perceived with alarm in the earlier vitalism. 'But if interpretation must operate within the bounds of the understood and be sustained by it, how then is it to yield scientific results without travelling in a circle, especially if, moreover, the presupposed understanding moves within the general ken of mankind and the world?' But whereas Dilthey paused to regard the circle with scientifically honest alarm, Heidegger resolutely cut the knot with the aid of 'essential intuition' (with which, because of its irrationalistic arbitrariness, anything at all can be sought out, especially by means of an ontological transition to Being). For understanding 'proves' (?) to be 'the expression of the existential pre-construction of existence itself...Because understanding, in its existential sense, is the potential Being in existence, the ontological hypotheses of historical perception surmount, in principle, the rigour of the exact sciences. Mathematics are not stricter than history, but only narrower with regard to teh radius of the existential foundations pertaining to mathematics.'
     The special significance of the historical in Heidegger we shall discuss later. Here it is only important to establish that Heidegger 'ontologically' smuggled 'understanding', i.e., a procedure governed purely by consciousness, into objective Being and thus tried to create, in his own way, just as ambigious a contrast between subjectivity and objectivity as Mach, in his own period, had done with regard to the sphere of apprehension. Both, in reality, were carrying out the same transference - though in a different form, as befitted their different intentions - of purely subjective-idealistic positions into objective (i.e., pseudo-objective) ones. It is just that the Machists were far more open and straightforward in translating direct observations into the only (pseudo-objective) reality accessible to us, whereas Heidegger was presenting the project of a - professed - special science of pure objectivity, of ontology. To be sure he was no more successful than the earlier phenemenologists in showing how to find a way from objective reality 'set in parenthesis' to genuine objectivity, independent of consciousness. On the contrary: he posited a close and organic connection between phnomenology and ontology, allowing the latter to grow out of the former without further ado. 'Phenomenology is the mode of access to and the deciding mode of determining that which is to become the theme of ontology. Ontology is only possible as phenomenology.'
That this had to do with the intuitivistic (and hence irrationalistic) arbitrariness of 'essential intuition' is indicated by the definition of the object which directly precedes it as: 'Patently that which generally is not immediately manifest, which is concealed in relation to that which generally is immediately manifest, but which at the same time intrinsically belongs to that which generally is immediately manifest, and so as to constitute its meaning and ground.' This is the very 'Being (Sein) of which-is-in-being (Seienden)' : the object of ontology.
     The advance in Heidegger's proposition as against Machism lies in the fact that he zealously made the difference between essence and phenomenon his central concern, whereas Machism could only draw overtly subjectivistic ('thought-sparing') distinctions in the phenoomenal world. But the advance, which contributed much to Heidegger's influence in a period hankering after objectivity, promptly defeated its own ends in the manner of his answers. For in this method, 'intuition of the essence' alone can decide what is to be comprehended as 'concealed essence' in immediate present reality perceived directly by the subject. Thus with Heidegger too, the objectivity of the ontological materiality remained purely declaritive, and the proclamation of ontological objectivity could lead only to a heightening of the psuedo-objectivism and - owning to the intuitivistic selection principle and criterion - irrationality of this sphere of objectiveness.
     But the terminological camouflaging of subjective idealism was exposed each time that Heidegger came to speak of concrete questions. Let us quote just one example: ' " There is" truth only insofar and as long as there is existence ...Newton's laws, the thesis of contradiction, every truth in general, these are only true as long as existence is. Before there was any existence and after there is existence no longer, there was and will not be any truth because, as a thing inferred, a discovery and thing discovered, it cannot then be.' That is not less subjective-idealistic than theh view of any follower of Kant or Mach-Avenarius. This jugglingh with quasi-objective categories on an extremely subjectivistic basis pervades Heidegger's entire philosophy. He claimed to be arguing an objective doctrine of Being, an ontology, but he then defined the ontological essence of the category most central to his world on a purely subjectivistic basis, with pseudo-objectivistic expressions. He said of existence: 'Ontologically, existence is fundamentally different from all that is present and real. Its "permanency" is grounded not in the substantiality of a substance, but in the "autonomy" of the existing self whose Being was grasped as care.'
     And in another place: 'That which-is-in-being' ... is always we ourselves. The Being (Sein) of this which-is-in-being (das Seiende) is always mine.' The arbitrariness examined above in the transition to (professed) objectivity is voiced quite plainly in some foregoing methodological remarks: 'Higher than reality stands possibility. Phenomenological understanding lies solely in seizing it as possibility.' For clearly, in any serious attempt to conquer subjectivist-irrationalistic arbitrariness scientifically (and also philosophically, only objective reality can produce a standard for genuine or merely imagined possibility. Kierkegaard's conscious subjectivism first reversed the philosophical-hierarchical positions and placed possibility higher than reality in order to create room - a vacuum - for the free dedision of the individual concerned with absolutely nothing beyond saving his soul. Heidegger followed Kierkegaard in this, albeit with a difference which very much impaired the logic and honesty of his philosophizing. For in contrast to his master on this point, he still avowed the objectivity of the categories thus arising (the so-called existentials).
     The claim to objectivity is even more marked with Heidegger thann with Scheler, and yet he made the subjectivistic character of phenomonology far more salient. And the Husserlian tendency towards a strictly scientific approach had now already faded completely. In striving to argue an objective doctrine of Being, an ontology, Heidegger needed to dsraw a sharp dividing line between it and anthropology. But it turns out that when he came to his central problems and was not engaged in pure, detached methodology, his ontology is in actual facts merely a vitalistic anthropology with an objectivistic mask. (So here again Heidegger was faced with an insuluble dilemma of the kind we have noted with Dilthey. And here again the same contrast between the two holds good: Dilthey shrank from the dilemma and tried to evade it, whereas Heidegger cut the knot in a loftily declarative, overtly irrationalisitic manner.) Characteristic, for example, are his efforts to prove the underlying anthropological bias in Kant's 'transcendal logic', efforts intended to make Kant just as much a forefunner of existential philosphy as Simmel had made him out to be a forerunner of vitalism.
     Over and above his reading of Kant, however, Heidegger expressed this tendency at every point. Anthropology today, in his view, is not a special discipline, 'but thee word signifies a basic tendency of man's present attitude to himself and to the whole of that which-is-in-being (das Seiende). In accordance with this basic attitude, something is only perceived and understood if it has found an anthropological explanation. Anthropology not only seeks the truth about man, but now lays claim to decide what truth can signify in general. [Kant and the Problem of Metaphysics] And he clarified his attitude, which implied a factual indentity between his ontology and anthropology, by saying that while no age had known as much about man as the present one, it was also true that 'no age knew less what man is than the present age. To no age has man become so questionable as to ours.'
     This plainly expressed the negativity of Heidegger's philosophical tendencies. For him philosophy was no longer the detached 'strict' science of Husserl, but also no longer the path to a concrete world-outlook, as vitalism from Dilthey to Spengler and Scheler had been. Its task was rather: 'to keep the investigation open by means of questions'. [Kant...] With a pathos reminiscent of Kierkegaard, Heidegger expounded his position as follows: 'Does it make sense and are we entitled to comprehend man as "creative" and hence as "infinite" on the basis of his intrinsic finiteness - the fact that he needs "ontology", i.e., understanding of Being -, when it is just the idea of infinite essence that rebuffs nothing so radically as an ontology? ... Or have we already become all too much the dupes of organization, industry and speed for it to be possible for us to be familiar with the essential, simple and permanent ...? [Kant...]
     Thus what Heidegger termed phenomenology and ontology was in reality no more than an absractly mythicizing, anthropological description of human existence; in his concrete phenomonological descriptions,however, it unexpectedly turned into an - often grippingly interesting - description of intellectual philistinism during the crisis of the imperialist period. Heidegger himself admitted this to a certain degree. His programme was to show that which-is-in-being 'as it immediately and mostly is, in its average everyday state'. Now what is really interesting about Heidegger's philosophizing is the extremely detailed account of how 'the human being', the supporting subject of existence, 'immediately and for the most part' dissipates and loses himself in this everyday state.
     Here reasons of space, apart from anything else, prevent us from retailing this account. Let us stress just one element, namely that the unauthenticity of the Heideggerian everyday existence, that which he calls the 'fallen state' (Verfallensein), is caused by social being. According to Heidegger, man's social character is an 'existential' of existence, which he regards as a term in the sphere of existence equivalent to categories of thinking. Now, social existence signifies the anonymous dominance of 'the one' (das Man). We need to quote at some length from this account in order that the reader can receive a concrete picture picture of Heidegger's ontology of the everyday state:

The Who is not this person or that person, not oneself and not several and not the sum of all. The 'Who' is the neutral, the one (das Man) ... It is by being inconspicuous and incapable of being pinned down that 'the one' evolves his actual dictatorship. We enjoy and amuse ourselves in the way one enjoys himself; we read, view and judge literature and art in the way one looks and judges; but we also withdraw from the 'great mass' of people in the way one withdraws; we find 'outrageous' whatever one finds outrageous. The one, which is no specific person and all persons, although not as the sum of them, dictates the type of being of the everyday state ... Each is the other and nobody is he hinself. The one, the answer to the question as to the Who of everyday existence, is the nobody to which all existence in teh being-among-one-another (im Untereinandersein) has already delivered itself up. In the ontological characteristics of everyday being-anong-one-another on display: staleness, mediocrity, levelling, public life, shedding of being and acquiescence lies the nearest 'permanence' of existence ... One is in the mode of non-independence and unauthenticity. This mode of being does not signify any reduction in the facticity of existence, any more than 'the one' as nobody is a cipher. On the contrary, existence is, in this ontological type, an ens realissimum, provided that 'reality' is understood as being governed by existence. To be sure, 'the one' is as little present as is existence in general. The more obviously 'the one' behaves, the more incomprehensible and latent it is, but it is also all the less of a nought. To unprejudiced ontic-ontological 'vision' it will reveal itsself as the 'most real subject' of the everyday state.

     Such descriptions constitute the strongest and most suggestive part of Being and Time, and in all likelihood they formed the basis of the book's broad and profound effect. Here, with the tools of phenomenology, Heidegger was giving a series of interesting images taken from the inner life, from the world-view of the dissolute bourgeois mind of the post-war years. These images are suggestive because they provide - on a description level - a genuine and true-to-life picture of those conscious reflexes which the reality of post-war imperialist capitalism triggered off in those unable or unwilling to surpass what they experienced in their individual existence and to go further towards objectivity, i.e., towards exploring the socio-historical causes of their experiences. With these tendencies, Heidegger was nhot alone in his time; similar tendencies were expressed not only in Jasper's philosophy, but also in a large part of the imaginative literature of the period (it will suffice, perhaps, to mention Celine's novel, Journey to the End of the Night, and Joyce, Gide, Malrsaux, etc.) However, even if we acknowledge the partial accuracy of these accounts of spirtual states, we must ask how far they square with objective reality, how far their descriptions go beyond the immediacy of the reacting subjects. Of course this question is chiefly of philosphical moment; imaginative literature operates within far more elastic limits, although its stature is still determined by the comprehensive concreteness and depth of the representation of reality. But to treat the problems arising from this is not within the scope of these studies.
   Heidegger's descriptions are related to the spiritual conditions prompted by the crisis of power-war imperialistic capitalism. There is evidence for this not only in the influence exercised by Being and Time, far beyond the sphere of the really philosophically-minded - it was repeatedly singled out for praise and censure by philosophical critics. What Heidegger was describing was the subjective-bourgeois, intellectual reverse side of the economic categories of capitalism - in the form, of course, of a radically idealistic subjectifying and hence a distortion. In this respect Heidegger was carrying on Simmel's tendency 'to construct a basement underneath historical materialism', professedly in order to render visible the philosophical, indeed, metaphysical hypotheses of this doctrine. The difference, however, tells us more than the affinity. It is a difference expressed in both the nethodology and the mood of Heidegger's work. Methodologically, in the fact that, in constrast to Simmel, who was expressly criticizing historical materialism and trying tso 'deepen' it through personal reinterpretation, Heidegger did not give the least indication of doing anything similar. Not only is the name of Marx absent from Being and Time, even from allusions where it is patently relevant. The content also dispenses with all objective categories of economic reality.
     Heidegger's method was more radically subjectivistic: without exception his descriptions pertain to spiritual reflexes to socio-economic reality. Here we have manifested in practice the inner identity of phenomenology and ontology, the purely subjective character of even the latter in spite of all declared objectivity. Indeed it is even manifest that this shift to ontology - an allegedly objective ontology - rendered teh philosophical view of the world still more subjectivistic than it was at the time of the overtly radical subjectivism of a thinker like Simmel. For the latter, there are at least glimmers of objective social reality with its contours distorted, whereas iin Heidegger this reality is reduced to purely a series of spirtual states described phenomenologically. This shift of method is intimately connected with the change in the basic mood. Simmel was philosophizing in the very hopeful early days of vitalism. Despite establishing a 'tragedy of culture', and for all his critique of capitalist civilisation, he still considered money, as we may recall, the 'guardian of inwardness'. In Heidegger, these illusions had crumbled long ago. The individual's inner life had slong since renounced all world-conquering plans; no longer was its social environment regarded as something prolbematical in itself, but in whose domain pure inwardness could nonetheless lead a free life. The surrounding world was now an uncanny, mysterious permanent threat to everything that would constitute the essence of subjectivity. This again, to be sure, was not a new experience for bourgeois man under capitalism; Ibsen, for example, had portrayed it many decades earlier in the famous scene where his Peer Gynt - symbolising the problem of the essentiality, or lack of it, in his own life - peels an onion and finds no core, only peel.
     In Heidegger, this expression of the ageing and despairing Peer Gynt became the determining maxim of his descriptions. This is the meaning of the dominance of 'the one' (translated back into the language of social life: of bourgeois-democratic public life in the imperialist period, and thus, say, the Weimar Republic): 'But the understanding of existence in "the one" perpetually overlooks itself, in its projects, in respect of the genuine ontological possibilities.'
     For Heidegger, this was something akin to an ontological proof for anti-democratism. And he amplified this idea in a graphic concept: 'Existence hurtles out of the him-self into the it-self, into the bottomlessness and nothingness of the unauthentic everyday state.' It is just this that is concealed through public life and is manifested as 'concrete life'. But this is a deceptive whirlpool. 'This continual breaking losse from authenticity while always simulating it, at one with the perocess of tearing into "the one" ... Accordingly the average everyday state of existence may be disclosed as the falsifying-disclosed, dejected-projecting (geworfen-entwerfend) state of being-in-the-world, concerned with its intrinsic ontological potential in its being with the "world" and in it co-being with others.'
     This makes it clear that with Heidegger, the transition from phenomenology to ontology was, at root, as much directed against the socialist perspective on social development as teh irrationalistic method of all leading bourgeosi thinkers since Nietzsche. Germany's post-war crisis and the class struggles exacerbated as a result of it - with, in the background, the existence and growing strength of the socialist Soviet Union and, among both the working class and intelligentsia, the spread of a Marxism taken a stage higher than Lenin - impelled all men into making a personal choice far more strongly than was the case in quieter times. Heidegger, as we have noted, did not explicitly contest the economic doctrines of Marxism-Leninism of the political consequences they entailed - neither he nor the caste he represented was capable of it. He attempted rather to avoid the necessity of drawing social conclusions by 'ontologically' branding all man's public activity as 'inauthentic'.
     Bourgeois man's sense of becoming inessential, indeed a nonentity, was a universal experience among the intelligentsia of this period. Hence Heidegger's complicated trains of thought, his labourious phenomenological introspections struck upon the material of experiences widespread among this class and found an answering chord. Heidegger was here preaching a retreat from all social dealings just as much as Schopenhauer, in his time, had proclaimed a withdrawal from the bourgeois idea of progress, from the democratic revolution. Heidegger's retreat, however, implies a reactionary stand far stronger than that to be found in Schopenhauer's quietism. At the height of the revolution, to be sure, even this quietism could, within the thinker advocating it, all too easily tilt over into counter-revolutionary activity, and Nietzsche demonsztrated how easily a counter-revolutionary activism could be evolved from Schopenhauer's hypotheses on the philosophical level as well. One may say without undue exaggeration that in the period of the imperialistic bourgeoisie's struggle against socialism, Heidegger was related to Hitler and Rosenberg as Schopenhauer, in his own day, was related to Nietzsche.
     All the same, events never repeat themselves mechanically - not even in the history of philosophy. The human emotional emphasis in the withdrawing process was totally different, indeed opposed, in Schopenhauer and Heidegger. With the latter, the felling of despair no longer left he individual free scope for a 'beatific' aeshetic and religious contemplation as in Schopenhauer. His sense of peril already encompassed the whole realm of individual existence. And although the solopsism of the phenomenological method may have distorted the depiction of it, it was still a social fact: the inner state of the bourgeois individual (especially the intellectual) within a crumbling monopoly capitalism, facing the prospect of his downfall. Thus Heidegger's despair had two facets: on the one hand, the remorseless baring of the individual's inner nothingness in the imperialist crisis; on the other - and because the social grounds of for this nothingness were being fetishistically transformed into something timeless and anti-social - the feeling to which it gave rise could very easily turn into a desperate revolutionary activity. It is certainly no accident that Hitler's propaganda continually appealed to despair. Among the working masses, admittedly, the despair was occasioned by their socio-economic situation. Among the intelligentsia, however, that mood of nihilism and despair from whose subjective truth Heidegger proceeded, which he conceptualised, clarified philosphically and canonized as 'authentic', created a basis favourable to the efficacy of Hitlerian agitation.
     This everyday state of being, dominated by 'the one', was therefore actually non-being. And in fact Heidegger defined Being not as immediately given, but as extremely remote: 'The state of being (das Seiende) in which each of us rests is ontologically the remotest state.' This most intrinsic part of man, he mjaintained, was forgotten and buried in everyday life; and it was precisely the task of ontology to rescue it from oblivion.
     This programmatic attitude towards life (the social life of his period) determined Heidegger's whole method. We have already indicated, more than once, the unsurmountable subjectivism of the phenomenology, the pseudo-objectivity of the ontology. But only now that Heidegger's world picture stands before us in a certain concreteness with regard to both content and structure is it plain that this method, for all its objective fragility, was the only possible one for his purposes. For in Heidegger's conception, man's life in society was a matter not of a relation between subjectivity and objectivity, not of a reciprocal relationship between subject and object, but of 'authenticity' and 'unauthenticity' within the same subject. Only in appearance, in the methodological expressions, did the ontological surpassing of objective reality 'set in parentheses' tend towards objectivity; in actual fact it was turning to another, purportedly deeper, layer of subjectivity. Indeed it may be said that with Heidegger, a category (an existential) expressed Being all the more genuinely and came all the closer to Being the less it was uncumbered by the conditions of objective reality. For that reason his defining termsw (mood, care, fear, summons, etc.) were without exception of a decidedly subjective character.
     But for that very reason, Heidegger's ontology was bound to grow more irrationalistic the more it developed its true nature. Admittedly, Heidegger was constantly trying to shut himself off from irrationalism. Here too it was his aim to elevate himself above the antithesis of rationalism and irrationalism, to find a philosophical 'third road', just asin the question of idealism and materialism. But for him it was impossible. He repeatedly criticized the limits of rationalism, but would then add to his critique: 'No slighter matter, therefore, is that falsification of phenomena which banishes them to the refuge of the irrational. Irrationalism - as the counterpart of rationalism - speaks only squintingly of that to which the latter is blind.' But since, in Heidegger's eyes, this blindness lies in the fract that rationalism takes into account the observable facts and laws of objective reality, a loss of all real possibility results from his exclusion of irrationalism. For if one removes from a concrete state every condition relevant to observable reality, if this concrete state arises solely in the inner life, it is inevitable that the consequent findings will take on an irrationalistic character.
   This was already so with Kierkegaaard. The latter, however, although able to work with theological categories and hence to attain a quasi-rationality or quasi-dialectic, did not shrink from the most extreme conclusions and spoke, with regard to precisely the decisive questions of 'existence', of the paradox, i.e., irrationality. Heidegger lacked, on the one hand, the possibility of resorting to overtly theological categories, and, on the other, the courage openly to declare his allegiance to irrationalism. Yet every one of his ontological statements shows that the de-reification of all conditions of objectivity in reality - however we may phrase this - leads to irrationalism. Let us give a single example. Heidegger writes of 'mood' (Stimmung). This is realised in principle in its Why, Whence and Whither. 'This ontological character of existence which is shrouded in its Whence and Whither, but which is all the more openly revealed to existence itself, this "That it is" we call the throwness (Gewortfenheit) of this state of being in its There, and this means that it constitutes the There qua being-in-the-world.' But the resulting 'facticity is not the matter-of-factness of the factum brutum of something which is present, but an ontological character of existence which, although at first forced away, had been taken up into existence.' As long as Being - in Heidegger's 'project' - intervenes or intends to intervene, the findings (and the road to obtaining them) can only be irrationalistic. The road to Being means casting aside of all objective conditions or reality. At all times, Heidegger's ontology imperiously demanded this in order that man (subject, existence) might escape the power of 'the one' that rendered him unauthentic and took away his essence.
     We thus see that, inadvertently, Heidegger's ontology was turning into a moral doctrine, indeed almost a religious sermon; this ethico-religious epistemological shift also shows the determining influence of Kierkegaard on Heidegger's propositions and method. The gist of the sermon is that man should become 'essential' and make ready to hear and understand 'the call of conscience' in order to mature to 'resolution'. Heidegger gave a very detailed account of this process too; again, we can give only a brief outline of it here. The disclosure of the nothingness concealed in the 'fallen state' (Verfallensein) is achieved through ontology: 'The essence of the originally nullifying nothing lies herein: it begins by putting being-there (Da-sein) before the state of being (das Seiende) as such ... Being-there means: bound immancency (Hineingehaltenheit) in nothingness.' [Was ist Metaphysik?]
That is the essence of Heidegger's 'existence', and men were deemed to differ merely in respect of whether or not they were conscious of it. The attainment of awareness took place through the conscience: 'Conscience is the call of anxiety from teh uncanniness of being-in-the-world, summoning existence to it most intimate potential state of guiltiness ... Understanding of the summons initiates personal existenc into the uncannincess of isolation.'
     The understanding of this summons brought man to a state of resolution. Heidegger stressed the significance o this 'existential' witih great pathos. After what has gone before, it comes as no surprise when he strongly denies that 'resolution' (Entschlossenheit) in respect of man's surroundings might bring about even the slightest change; not even the dominance of 'the one' is disturbed. 'The "world" close at hand does not become another "in substance", and the circle of the "other ones" remains unchanged ... The irresolution of "the one" still holds sway, only it is incapable of combating resolute existence.' Here, the methodology and content of Heidegger's philosophy are expressing in an extremely complicated (but above all, mannered) terminology the intellectual phistine's feelings in a time of severe crisis: the threat to personal 'existence' is so deflected as to prevent its giving rise to any obligation to alter one's living conditions or indeed to collaborate in transforming objective social reality. Difficult though Heidegger may be to grasp, this much was correctly read out of his philosophy.
     So the only result arrived at here was the insight that existence as such is to blame. And the authentic life of theh resolution man now constitued a preparation for death; 'a foreshadowing of the possibility', in Heidegger's terminology. Here again there are traces of Kierkegaard, though without the pronounced Protestant theology.
     Like every vitalistic philosophy, this Heideggerian theology without positive religion or a personal God was, of course, bound to contain a new doctrine of time of its own. This too was a methodological necessity. For the rigid opposition of space and time was one of the weakest points of undialectical rationalism. But whereas a true way of surmounting that opposition must lie in the dialectical interaction of space and time founded in objective reality, irrational vitalism had alwayas directed its sharpest attacks against the rationalistic time-concept, taking time and space - like culture and civilization in the realm of social philosophy- as diametrically opposed, indeed warring principles. To conquer time was very important to vitalism in a positive respect - this is the reverse side of the aforesaid polemical intention - because the indentification of experience and life (existence) crucial to its pseudo-objectivism was only possible if there was a subjectified, irrationalistic conception of time to meet this demand.
     Heidegger laid much weight on this. He sharply divorced himself from Bergson whom he condemned - along with Aristotle and Hegel - as representing the 'vulgar' view of time. This 'vulgar' time was the accepted one that knows past, present and future; the time of the 'fallen' world of the 'one', the time of measurement, clock-time etc. Genuine time, on the contrary, knew no such sequentiality: 'The future is not later than that which has come to pass, and the latter not earlier than the present. Temporaneity proceeeds as futurity which has come to pass and is bringing to pass (gewesende-gegenwartigende Zukunft).'
     Epistemologically, the contrast to Bergson (but not to Aristotle and Hegel) was merely a difference of nuance. For each of them -Berson and Heidegger - posited a subjectively experienced time as authentic time in opposition to real objective time. Only, in the case of Bergson, who in the essence of his epistemology was a pre-war figure whose thought shows many affinities with Simmel and with pragmatism, experienced time was an organon of the subjective-individualistic conquest of the world. In Heidgger's diseased philosophy, however, 'real' time is de-secularized and becomes devoid of content, theological, concenrated purely on the element of personal decision. Hence Bergson aimed his sallies chiefly against 'spatial' time, against concepts formed in the exact sciences, and his 'real' time was oriented to aesthetic experience, whereas with Heidegger, vulgar time corresponds to an existence that has fallen foul of 'the one', and real time points towards death. (Here again it can be easily spotted that the difference between Heidegger's and Bergon's view of time was of a social character and determined by their respective adversaries. In essence Bergson was polemicizing against the scientific-materialistic world-view obtaining during the rise of the bourgeoisie. Heidegger, even with regard to the theory of time and the reading of historicity closely associated with it, was chiefly attacking the new adversary, historical materialism whose influence was felt in all areas of life.) In both cases, however, this antithesis within the concept of time was a means to setting up an irrationalistic philosophy. Granted, Heidegger did 'discover' that time played a hitherto unobserved role in Kant's Critique of Pure Reason, above all in the chapter on schemata or essential forms. The central position of time, Heidegger stated, 'thus disrupts the dominion of reason and understanding. "Logic" has lost its long-standing primacy in metaphysics. Its idea is becoming questionable.' [Kant...] Thus Kant becomes, for Heidegger, one of the fathers of modern irrationalism.
    In view of this interpretation of time Heidegger's second chief programmatic point, proof of the elementary historicality of 'existence' as a basis for comprehending history, turns out to be pure shadow-boxing. Heidegger was right in making a stand against the neo-Kantians who were trying to argue historicality from a 'subjective' setting, and in indicating that Being must be historical in order for there to be any historical science. As on many points, vitalism was here preempting the collapse of undialectical idealism. Butg Heidegger still lagged far behind the neo-Kantians in the concrete definition of his 'existential' historicity. As a consequence the primary phenonmena of history was, for him, existence, i.e., the life of the individual, the 'universal coherence of life between birth and death'. And this too - quite in accordance with the Diltheyan vitalistic method - was defind from experience: 'It (this coherence, G.L.) consists of a sequence of experiences "within time"'. The result was a double distortion. Firstly, Heidegger did not take the historical data in Nature as the 'originals' (Kant-Laplace theory, Darwinism, etc.), but presented the coherence of human experiences far removed from the 'original state' as the starting-point, the 'primal phenomenon'. Secondly, he failed to observe that his 'primal phenomenon' was derivative: a consequence of that social Being and praxis of men in which alone such a 'coherence' of experiences could come about at all. As far as he did notice a link, he rejected it as belonging to the domain of the 'one'. In so doing, he not only isolated a distorted derivate of human social praxis - as an historical 'primal phenonmenon', as 'original' - from real history, but also set them up as antinomies. The tendency to falsify in this way the structure of reality graphically exporesses the pre-fascist character of Heidegger's thinking. Now since the primary historicality was 'ontologically founded' on this basis, the automatic product of it was Heidegger's crucial distinction between 'authentic' and 'unauthentic' history. 'In keeping with the rooting of historicality in anxiety, existence exists as authentically historical or unauthentically historical, all depending.'
     But according to Heidegger's reading of history, it was precisely real history that was unauthentic, just as real time is the 'vulgar' kind. In giving history an apparently ontologically reasoned basis, Heidegger actually took away any kind of historicality, whilst acknowledging as historical only a philistine's moral 'resolution'. In his analysis of everyday existence, Heidegger had already rejected all human orientation towards objective facts or treands in socio-economic life. There he stated:

One would completely mistake phenomenally what mood (Stimmung) reveals and how it does so, were one aiming at collating witih the revealed material that which existence, in the given 'mood', knows about and believes 'simultaneously'. Even if existence is 'secure' in the belief of its 'Whither', or thinks it is rationally enlightend about the Whence, none of this affects the established phenomenal fact that teh 'mood' confronts existence with the That of its There, a remorselessly sphinx-like sight. Existentially-ontologically, one has not the least right to suppress the 'evidence' of the existing state thorugh judging by the apodictic certainty of a theoretical perception of that which is purely present.

   The illumination of existence can come only from within, for every (to Heidegger's mind: purported) objectively directed perception brings about a casting down (das Verfallen), a state of surrender to the 'one' and unauthenticity. Thus it was only logical for Heidegger, in positing the historicality of existence, to refute equally firmly everything objectively historical; Heidegger's historicality, then, has nothing to do with the point 'that existence occurs in a "world-history"'. Here he was polemicizing - quite rightly to some extent - against the old idealistic argumentation of the theory of history. The 'location of the historical problem', he said, 'must not be sought in history as a science of history ... How history may become a possible object of history (in the absract) can only be inferred from the ontological character of the historical,, from historicality and its rootedness in temporaneity.' Here again Heidegger was pre-empting the collapse of idealism, not unskillfully, by giving the impression that he planned to make the historical nature of existence itself the starting-point of history. But on one breath he was giving his existence itself, as we have observed, a thoroughly subjectivistic definition, while in the next he radically 'purged' the original historicality of existence of all relation to real, objective history. For: 'In accordance with the rooting of history in anxiety, existence existes as either authentically or unauthentically historical.' From this we may logically conclude that 'the authentic being-unto-death, i.e., the finiteness of temporaneity is the latent ground for the historicality of existence'.

--------------------------

From Epilogue [Heidegger's post-war service to US imperialism]

...But the problem of conconformity goes deeper. In his Empirio-Criticism Lenin had already shown that the academics' various individual epistemological nuances, furiously attacked and defended as they were, are no longer distinguishable when considered from the angle of the really crucial epistemological question: idealism or materialism? This applies on a heightened scale to ideological problems today. Anyone giving his attention to teh really decisivie philosophical problems will discern an alarmingly conformist montony in the - at first sight - incommensurable chaos of individual nuances. We have indicated, for example, the close proximity of Wittgenstein and Heidegger (beween whom there is no mutual influencing) when regarded from this viewpoint. The situation is exactly the same in ethics, in interpretation of history, in the stance taken towards society, and in aesthetics. And also, of course, in literature and art themselves.
     Precisely the most individualistic, most radically non-conformist tendencies involve a radical levelling down of this kind. For objectively (and hence artistically as well) 'the real richness of the individual' depends 'wholly on the richness of his real relations' (Marx), and the more defiantly modern art focuses on the purely sefl-sufficient personality detached from society and from social relationships, the greater the similarity will be between figures outwardly so extraordinarily diverse, until there is no perceptible difference. For objectively (and hence artistically as well) the world of culturally evolved human relations is incomparably more varied than the bare world of the instincts. And this is why an art concentrating on the latter with almost dogmatic insistence is careering inevitably towards monotony and levelling down. How alike Aeneas and Dido are to Romeo and Juliet in their copulation, whereas the differences in erotic feelings determined by their society and culture have created genuine and enduring individuals. The solipsistic, abstract approach of the majority of modern nonconformists has brought about an inhuman levelling in the standards of creative work. Thus an (involuntary) inner regimentation we have indicated above on the part of monopoly capitalism. Ernst Fischer, the distinguised Austrian thinker, rightly said at the Peace Congress in Wroclaw that modern nonconformists are as alike as peas in a pod.
     The loader and rowdier the proclamation of nonconformity, the shallower, more uniform and standardized the personality will be. The structure, as reflected in artistic creation and its audience, is an objective fraud which inevitably springs up from the soil of monopoly capitalism; subjectively it is very often a case of self-deception, a delusion. This is the general character of the 'free world' today. It was already thus under Hitler. But in Hitler's day, the fraud was concealed from some people by a gaudy veil of myths, while others thought that Hitler's demagogy and tryanny (and not the character of of advanced monopoly capitalism, of which Hitler was a mere tool) constituted the only obstacle, and that with its elimination, nonconformist individualism would come into its own. Now the veils have beenh removed, and the delirium is over. Today, everyone must see that the precondition of a tolerated nonconformity is an obligatory apologetic of the capitalist system, and this in its present aggressive and bellicose form. Room for manoeuvre in this world is becoming increasingly narrow, and the presecribed content to be promulgated increasingly meagre and fraudulent. It is hard to believe, but true. Cold War ideology has entailed a drop in standards even in comparison with the Hitler era. One has only compare Hans Grimm with Koestler, or Rosenberg with Burnham.
     The causes we have already revealed. They stem from the collapse of indirect apologetics, which at least offered ideologists the illusory semblance of a link with the people. However much effort modern 'brains trusts' devote to the task, they are incapable of devising a form for their central content - the struggle against communism - that could really win the people's enthusiasm. The fraud is becoming bigger and bigger, its mode of appearance less and less attractive and appealing. Hitler was still able to sum up everything reactionary accruing from the irrationalist developments of a century and a half and, as we have noted, to take irrationalism out of polite society on to the streets. Today, the socially determined necessity of direct apologetics renders this too impossible.

5

It goes without saying that all these tendencies, which we have outlined so far chiefly as they occur in the prevailing American ideology, are also to be found in Western Germany. Here, admittedly, they occur wtih specific variations, and in view of the immediate importance of Western Germany's role, it is certainly worth at least taking a look at these. The main point to observe is that Western Germany is the seat of former Hitlerian fascists. Naturally the occupying powers have done nothing to uproot Nazism in the organizational and ideological sense. On the contrary, they did all they could to salvage and preserve for the furture those elements in the Nazi movement and its mental ambit that could be used in the campaign against the Soviet Union. Nevertheless a certain mental adjustment - in both external and internal respects - we needed in order for a henchman of Hitler to become an ideologist of Truman or Eisenhower. It will suffice to recall those differences in ideological structure we have indicated in their basic outlines, for all the affinities as regards the principal questions. This issue is of particular development which has been undertaken in the American period by ideologists who played a leading part in preparing and establishing Hitler's dominion.
   The situation is simplest when it comes to those who - either of their own accord or because of chance personal circumstances - did not themselves participate in Hitler's regime directly although, considered from an objectively ideological angle, as extreme developers of irrationalism they blazed an intellectual trail for Hitler and led a quiet, secure life under his rule. Jaspers is the chief representative of this type. Today the well-tried principle of his philosophizing still holds good: to go along with fashionably reactionary trends all the way, while at the same time accommodating them to the tepid juste milieu of a petty-bourgeois salon of intellectuals. Since Jaspers was an existentialist, irrationalist, Kierkegaardian and Nietzschean, nobody in Hitler's time could raise a concrete objection to him. Now, after Hitler's downfall, Jaspers discovers ... reason. This is natural: today 'reason' is dedicated to refuting Marxism as irrationalism was previously. It begins in an 'original' wasy by alleging that Marxism is actually a pseudo-scientific kind of magic: 'The destructive element is the creative element. When nothingness is introduced, Being appears automatically. But in the process of comprehension and action this is, in fact, a rehearsal of magical dealing in the guise of a pseudo-science. Corresponding to this magic is the Marxist claim to command a higher knowledge.' Jaspers's pretended originality consists in the use of a vogue word like 'magical', whicih was meant to give Marxism a devastatingly compromising ring in the age of semantic logic. This apart, the same argument has been already advanced seventy-five years previously by Duhring, and its rebuttal may be easily located in Engel's Anti-Duhring. Here ignoring the ABC of Marxism, Jaspers triumphantly repudiates inventions of his own creating.
     As a good remedy for the 'superstition of knowledge' that Marxism supposedly presents, Jaspers recommends his own, fashionably up-to-date irrationalism: we must revert to the 'original deed' of fashionable so-called ontology. 'Then the language of all things becomes discernible, and myth meaningful; poetry and art become the "organon of philosophy" (Schelling). But the language of myth is distinct from a cognitive content. What is perceived in contemplation and is then animating in practice may neither be extinguished nor acquire the character of cognition when reason compels the test of truth. This verification is not a test by experience but a test against one's own intrinsic nature, by whether it causes an upsurge or decline in selfhood (Selbstsein), by the extent of our love.'
     And in association with this Jaspers now defines as follows the connection between his old and new philosophy: 'Decades ago I spoke of existential philosophy, and I added that we were dealing not with a new or a particular philosophy but with the one perennial philosophy, which may, for an instant or abandonment to the merely objective realm, be accentuated with Kierkegaard's basic idea. Today I would prefer to call philosophy rational philosophy because it seems incumbent on us to emphasize its ancient essence. If reason is lost, philosphy itself will be lost.' To stress the predominance of reason is the sole possible guarantee of the origin of genuine myth: 'Thus myth is the inescapable language of transcendent truth. The creation of genuine myth is true illumination. This myth conceals reason inside it and is controlled by reason. Through myth, image and symbol we acquire our profoundest insight at the ultimate point.' Where this safeguard is lacking, veneration will inevitably arise. The danger here, accoring to Jaspers, is that there then comes about not an 'impotent nothingness' but a 'potent enchantment.' Jaspers thus employs the ancient distinction between white and black magic to introduce into philosophy the oline pursued by the leaders of the Cold War. That is to say, the 'experience' of the criminal Munich policy is supposed to be a reason for rejecting as appeasement any serious negotiations with the Soviet Union. So what Jaspers had neglected to contribute to the ideological rebuttal of Nazism, he now makes up for as an anti-Marxist campaigner. The parallels are all the more valid in that Chamberlain's political proximity to Hitler was no less than the philosophical proximity of Jaspers's irrationalism to its Nazi slant.
     The emphasis on myth does not affect Jaspers's contact with semantics. We can already say this because his constant invocation of Kant is just as agnosticist and irrational as the basic philosophical position of semantics; let us remember the irrationalism of Wittgenstein. Both give expression, under a flimsy mask of rationality, to a despair over reason, to the impotence and dissolution of reason. For Jaspers 'reason' is, for example, a priori unhistorical (because Marx recognizes the rationality of history, Jaspers calls him a relativist), and it forms an antithesis to causal perception - 'causally I recognize only the non-rational,' he writes. Thus it is bound to be completely powerless in the face of reality. What Jaspers thus understands as a philosophy of reason is the old irrationalism in a garb matching modern American needs. It is the same philosophy of no exit as before, again tailored to the spiritual and moral comfort of a self-sufficient petty-bourgeois intelligentsia.
     For Heidegger, it was far harder to engineer a transition of this kind. He had not only helped ideologically to bring Nazism about but had also made a direct and active stand on Hitler's behalf. To obtain an amnesty in such circumstances as well as a a leading role once more, in order to assist the renewed barbarization of philosophy, and to do so by associating with the professed combatants of Hitler, but without conceding the 'achievements' gained in paving the way for Hitler intellectually - in other words, to present a public image changed and unchanged at the same time - is a more difficult task. How does Heidegger solve it? The Kierkegaardian arsenal offers an outstanding weapon for these purposes: an incognito. This is central to Heidegger's thinking today. With Kierkegaard himself, to be sure, the situation was relatively simple. Objectively, because in his case the incognito followed logically from the anti-rationality, the anti-humanity of the relationship to God; personally, because he had nothing compromising to hide.
     Heidegger - unworldly, world-despising thinkers are often very practical in the conduct of their private lives - knows very well that atheism is not a going commodity whilst there exists an alliance between the Vatican and Wall Street. He draws from this the appropriate consequences. Not, of course, in the form of an overt break with the atheism and nihilism of Bring and Time, but simply be stating apodictically that his chef d'oeuvre was neither atheistic nor nihilistic. But in spite of this concession to present day religious trends, he cannot render Kierkegaard' s theology of immediate use to his personal aims. He attempts, on the contrary, to deduce a dogmatic incognito as the essence of all historicity from an extension of the familiar theory of history and time. (In its intrinsic content, it must be admitted, this is still only an up-to-date variant of Kierkegaard's thesis that there is a world-history only in the sight of God.) For Heidegger, history is now a realm of errancy (Irre), of the dogmatic, ontological incognito:

Being withdraws by enclosing itself in that which-is-in-being (das Seiende). In this way Being confuses what-is-in-being, while clarifying it, with errancy. What-is-in-being has been realized in errancy, in which Being misleads it and thus creates ... error. Error is the essential arena of history. In it, the essential matter of history passes its likeness by ... From the epoch of Being comes the epochal nature of its destiny, in which authentic world-History consists. Every time that Being holds fast in its destiny, world is an abrupt, unexpected event. Every epoch in world-history is an epoch of errancy.

Here Heidegger found the ontological arguments and justification for his behaviour in the Hitler period. In his book on, or rather against humanism this idea receives a more concrete form still. He stresses - through his falsification of Holderlin - that the latter's relation to Greek antiquity is 'essentially different from humanism'. 'Hence the young Germans who knew of Holderlin thought and lived differently in the face of death from what was publicly proclaimed to be German opinion.' Here Heidegger discreetly refrains from saying - evidently this also belongs to the ontologically historical incognito - that those young men were not only in a 'situation confronting death' under Hitler, but took a highly active part in murder and torture, pillage and rape. Evidently he considers it superfluous to mention this, for after all the incognito covers everything up: who can tell what a pupil of Heidegger intoxicated by Holderlin 'thought and lived' when he was pushing women and children into the gas chambers at Auschwitz? Nobody can tell, either, what Heidegger himself 'thought and lived' when he led the Freiburg students to vote for Hitler. There is nothing unequivocally knowable in history as he presents it: it is a general 'errancy'.
Here Heidegger has a threefold aim in view. Firstly, a total denial of responsibility for what he did to give Hitler active support. Secondly, he wants to preserve his old existential standpoint. Thirdly, he wants to make it seem as if all the changes he has effected today to accommodate himself to American policies had always represented his views. Such acrobatic feats can only be accomplished by resorting to scientific dishonesty. His former pupil, Karl Lowith, has exposed the fraud of this kind of Neue Rundschau.

But a contradiction cannot be resolved either by a shift in perspective or one's view or by a dialectical correspondence. In the postface to the fourth edition of Was ist Metaphysik? we read with regard to the truth of Being that Being 'may well' exist without that which-is-in-being, 'but' that what-is-in-being can never exist without Being. In the fifth edition published six years later, the 'but', i.e., the stressing of an antithesis, is left out and the 'well' replaced by 'never', i.e., the whole meaning of the sentence is turned into the opposite, without any indication of this change. What would one say to a theologian who claimed on one occasion that God may well exist without a Creation and on another that he could never exist without it? How do we account for the fact that a linguistic thinker who weights his words as carefully as Heidegger makes such a radical change to so crucial a passage? For obviously only one of the two formulations can be the true and proper one.

Now wither is this philosophy bound? It retains from pre-fascism its extremely anti-rational character. When Heidegger now says, 'Thinking only begins when we have learnt that the reason we have glorified for centuries is thought's most stubborn antagonist,' he is only drawing the most extreme inferences from what was implicit in Husserl's 'intuitive vision' (Wesensschau) from the outset. And since, as we have shown, phenomenology in its origins was closely related to Machism, it is not too tricky for Heidegger - in essence - to come very near to semantics. His terminological peculiarites are well known, as is his verbal hair-splitting. Now, as the crowing of Machism, phenomenology and semantics, he succeeds i making a philosophical method of language. 'Thinking collects language into the simple telling. Thus language is the language of Being as the clouds are the clouds in the sky. With its telling, thinking makes modest furrows in language. They are more modest even than the furrows which a countryman ploughs in a field.' Here we have 'poetic' semantics as a particular German nuance. But in both cases the irrationalist abyss is the same, no matter whether the immediate form of expression is deliberately 'poetic' or soberly prosaic.
The methodological approximation points to an objective proximity. Heidegger's Being (in contrast to what-is-in-being) is not all that far removed from what, according to Wittgenstein, could only be shown and not stated. And a similar method will give rise to similar consequences. In Hitler, Heidegger greeted the dawning of a new age and thereby, to put it mildly, brought enternal disgrace upon himself. Today he is more cautious, at leas in expression, but he seeks to ingratiate himself with today's or tomorrow's rulers as much as with Hitler. He expresses himself with caution, with a deliberate obscurity, but he lets the idea of a new age glimmer through this twilight again.

Are we standing indeed on the eve of the vastest transformation of the earth and of the historical space on which it hinges? Are we on the eve of a night that will precede a different dawn? Are we about to march off into the historical land of this global evening? Will the land of eveningtide emerge first? Is this evening land to become the scene of the coming and more incipiently transmitted history, over and above Occident and Orient and passing beyond the European stage? Are we contemporaries already occidental in a sense that is only coming to light with our passage into the global dark? How are any philosophies of history that are purely historically measured to account for history if they only dazzle with what is surveyable in material historically inculcated, without ever conceiving the foundations of its explanatory causes from the essence of history, and the latter from Being itself? Are we the latecomers we are? But are we at the same time also attendants on the dawn of a quite different world epoch which will have left our present historical ideas of history behind?

   The form of inquiry and pessimistic impressions suggest Germany's situation today. They are indispensible, for without the pessimistic tone one cannot influence the elite, so-called, of the intellectuals - especially German intellectuals - not even today. But we can see or at least glimpse behind this - in an intended twilight - the outlines of the 'American century', of the global State under American command. (Certainly, if a German imperialism shhould achieve independence at some future date and again aspire to global power, these words from Heidegger's disgrace over Hitler is not enough for him; he needs a second disgrace at all costs. This would be the suitable fulfillment of his philosophy - as a doctrine of 'errancy'.
     Naturally the perspective we have drawn is - in immediate terms - the most important feature of these statements by Heidegger. But beside the perspective, the method must no be overlooked completely. We have noted that Heidegger posits an 'authentic' historicity in order to challenge real historicity as 'vulgar' more effectively. This tendency becomes acuter in the post-war period. Whereas his Being and Time was in character a single great polemic against Marxism, but without revealing this character through as much as a distinct reference, Heidegger now feels already obliged to speak of Marx openly. 'What Marx, deriving from Hegel in a substantial and significant sense, recogniezed as the alienation of man reaches back at root into the homelessness of man in the modern epoch ... Because Marx, in experiencing alienation, delves into an essential dimension of history, the Marxist view of history is taken to be superior to all other versions.' Granted, he promptly reduces Marxism to technics, like all bourgeois vulgarizers of historical perception. But this statement, of course, already amounts to saying openly that Heidegger regards Marxism as the chief antagonist. On the one hand all this expresses bourgeois philosphy's universal rearguard action against Marxism: just as Nietzsche, after Schopenhauer's repudiation of all history, was forced to argue a mythical pseudo-historicism, so imperialist phenomenology proceeds from Husserl's a-historicism via Scheler to Heidegger's 'authentic' historicity. And on the other hand, the comments quoted above clearly show that he intends thereby to discredit all real and concrete historical knowledge. For he states: 'How are any philosophies of history that are purely historically measured to account for history if they only dazzle with what is surveyable in material historically inculcated, without ever conceiving the foundations of its explanatory causes from the essence of history, and the latter from Being itself?'

[to be continued]

THE MARXIST THEORY OF THE STATE AND THE COLLAPSE OF STALINISM

2008-12-30T00:59:00.000-08:00

“In Russia the reactionary idea of national socialism in one country is winning out. In the last analysis this could lead to the restoration of capitalist relations in the country”
Leon Trotsky at the funeral of Adolf Joffe, 1927 [1]

“... either the bureaucracy, becoming ever more the organ of the world bourgeoisie in the workers’ state, will overthrow the new forms of property and plunge the country back into capitalism; or the working class will crush the bureaucracy and open the way to socialism.”
Leon Trotsky, 1938 [2]

1. The “defence of the Soviet Union” and its historical significance

The collapse of Stalinism throughout Eastern Europe and the ex-Soviet Union between 1989-1991 is the most important development in world politics in the past half-century. It has resulted in a major shift in the international balance of power, and unleashed in its wake wars, economic crisis and upheaval throughout the region. Its tremors have been felt throughout the world in nationalist and workers’ organisations, which for the previous 75 years had defined themselves in one way or another by their attitude to “communism” and the Soviet Union.

In particular, its effects have gripped all those who identify with Marxism. But the results of much of the wave of reassessment and self-examination provoked by the collapse have in the main proved woefully inadequate. It is our contention that only by theoretically rearming the vanguard of the working class in relation to this watershed experience can there be a revolutionary future for Marxism.

The “Russian question” has been at the heart of many of the sharpest struggles between those who have identified themselves as Trotskyists. By origin, it turned on whether the Soviet Union remained a workers’ state which should be defended against imperialism, particularly in the event of war. By extension, the “Russian question” came to embrace the deformed workers’ states of Eastern Europe, Asia and Cuba. Each time the question was presented anew, particularly in the “buffer zone” debate of 1946-51 and the controversy surrounding the Cuban Revolution from 1961-63, it caused new crises among the descendants of Trotsky’s Fourth International.

From the outset, revolutionaries identified this “defence” of the Soviet Union primarily with the gains of the October Revolution, rather than the “territorial integrity” of the Soviet state. Even in the final stages of the death agony of the degenerated/deformed workers’ states of the Soviet Union and Eastern Europe, the question of military defence of the workers’ states remained relevant in so far as imperialism continued to exert military pressure on them. But the decisive blows of social counter-revolution were to be political rather than military. With the coming to power of restorationist, pro-imperialist governments, the military aspect of the “Russian question” has been relegated to the status of a historical dispute. But the controversy surrounding the class nature of these states remains.

From the early 1920s, with the beginning of the New Economic Policy (NEP), Trotsky and the Left Opposition fought both ultra-left and right-centrist forces which abandoned the defence of the Soviet Union on the grounds that a new form of class rule had arisen. The first proponents of a state capitalist theory were the Mensheviks, and similar positions were put forward by Karl Kautsky and some anarchists.

By 1926, the Democratic Centralism group, led by the old Bolsheviks V. M. Smirnov, T. Sapronov and N. Osinsky, had arrived at the position that the workers’ state had been liquidated. Osinsky and Sapronov developed versions of state capitalism.[3] All three died in the purges; however, their political trajectories were different. Osinsky subsequently became a supporter of Bukharin. It seems that surviving Democratic Centralists in the camps maintained a defencist position in the event of war, despite their position on the nature of the state.[4]

Hugo Urbahns, the chief theoretician of the Leninbund in Germany, (which collaborated with the Left Opposition until 1930) also developed state capitalist views. Such positions persisted among some German Trotskyists in the mid-1930s,[5] and were also put forward by Yvan Craipeau in the French Trotskyist movement.[6] In 1937, James Burnham and Joseph Carter of the SWP (US) advanced the thesis that the Soviet Union was neither a workers’ nor a bourgeois state.[7] Within two years, they had been joined by SWP leaders Max Shachtman and Martin Abern, and formed a heterogeneous grouping opposed to the designation of the Soviet Union as a degenerated workers’ state.[8]

Both Burnham and Shachtman were influenced by the erratic Italian writer Bruno Rizzi,[9] although they came to different conclusions. Shachtman, who developed the theory of bureaucratic collectivism, initially hedged his bets on the defence of the Soviet Union, and held that it represented a higher stage than capitalism. However, in the course of his evolution into a Cold War social democrat, he came to see bureaucratic collectivism as lower rung on the ladder of social progress than bourgeois democracy, and wound up supporting US imperialism against the degenerated/deformed workers’ states. Burnham, whose managerial revolution thesis[10] foreshadowed much of Cold War sociology (convergence theory), moved far more rapidly to right-wing positions, urging imperialist intervention against the Soviet Union.

The expansion of Stalinism after the Second World War gave a fresh impetus to such theories. Ex-Trotskyist Tony Cliff’s State Capitalism in Russia[11] and Yugoslav dissident Milovan Djilas’s The New Class[12] were products of this period. The common thread uniting the various new class, state capitalist, bureaucratic collectivist and managerial revolution theses was that the crimes of Stalinism had resulted in the overthrow of the workers’ state, and on this basis the military defence of the USSR was excluded. The defence of the Soviet Union, or the post-war “Stalinist states”, they claimed, implied political support for Stalinism. Trotsky, in contrast, had insisted that it did not mean giving uncritical support to any of the variants of Stalinist policy.

Although such currents were small and uninfluential in the workers’ movement in the 1950s, and represented an adaptation to the Cold War, they were also the result in part of the theoretical impasse among the Trotskyists. In the 1940s, the vast majority of the FI refused to recognise the emerging workers’ states in Eastern Europe. The mechanical repetition of Trotskyist “orthodoxy” proved wholly inadequate to meet the challenges of the post-war world. Worse still, “orthodox Trotskyism” failed even to develop those pointers within Trotsky’s writings which could have served as the starting point for an analysis of the social overturns in Eastern Europe and China.

While the decision to reverse this position and extend the FI’s defence of the Soviet Union to the deformed workers’ states was a step in the right direction, the discussion during the “buffer zone” debate demonstrated a high degree of methodological confusion, which sowed the seeds of future crises. The debate surrounding the Cuban revolution demonstrated that none of the theoretical issues had been resolved. The United Secretariat (USFI) was formed in 1963 around broad agreement that Fidel Castro had created a “healthy workers’ state”. Meanwhile, the rump of the International Committee around Healy’s SLL and Lambert’s PCI refused to recognise that anything had qualitatively changed, and clung to the untenable position that Cuba remained a bourgeois state.

Without any unified theory to explain the emergence of deformed workers’ states – and frequently without even an adequate empirical knowledge of developments within the economies and societies under Stalinist rule – it was almost inevitable that the various strands of “Trotskyism” would be plunged into crisis by the events of 1989-91. Having failed to comprehend the process in one direction, it was unlikely to do so in the other. The suddenness of the collapse of Stalinism only served to deepen the confusion. Chronic theoretical crisis became acute political disorientation.

“Optimists” uncritically tail-ended the anti-Stalinist opposition movements which emerged, in the belief that the long-awaited political revolution was unfolding. The logic of their position – that whatever replaced Stalinist rule was a step forward – led them to cheer the fall of the Berlin Wall and support the “democratic” counter-revolution.

“Pessimists”, in the face of widespread illusions in bourgeois democracy and capitalist restoration, abandoned class politics from the opposite direction, and became strategists of “united fronts” with the decomposing bureaucracies, which they continued to regard as having an intrinsic interest in the defence of the workers’ states.

The programmatic divisions which existed between the various “revolutionary” currents in 1989-91 have naturally carried over into the theoretical plane, with the result that no consensus exists on the class nature of the ex-Soviet Union and the states of Eastern Europe. Most of the optimists continue to cling to the view that workers’ states still exist, and that the counter-revolution has yet to win a decisive victory. To think otherwise would be out of keeping with their upbeat perspectives. Behind the optimism lurks a gloomy assumption – that the fall of the workers’ states will set back working class struggle for decades.

For the pessimists, the failure of a “Reiss faction” to emerge within the bureaucracy has led them further into a sectarian wilderness inhabited by fascism and world historic defeats. The absolute distinction they drew between Stalinism and social democracy has been disproved by reality – in so far as Stalinism has made a political comeback in some countries, it has done so by reinventing itself as a pro-market social democracy.

The largest of the “Fourth Internationals”, the United Secretariat (USFI), is gripped by paralysis and has no clear, agreed position. In keeping with its federal structure, its last world congress in 1990 encompassed both those who saw the reunification of Germany as a liberating event which should be toasted with champagne and others who saw it as the greatest defeat for the working class since 1933!

Socialist Action, USFI sympathising section in the United States, puts forward the following thesis: “The situation in these countries [Eastern Europe and the ex-Soviet Union] can be summed up roughly as degenerating workers’ states in transition to capitalism under the political rule of a government based on an alliance between bureaucrats and gestating comprador capitalists.”[13] But, as far as a definition of the state goes, this is clearly a fudged position. On the other hand, some supporters of the USFI majority appear to be moving towards the position that bourgeois states have been restored.

For LO, and presumably for its international tendency, the UCI, as well, “the attempted social counter-revolution aimed at transforming Soviet society into a capitalist society ... has started in a legal sense but is in reality far from being completed”, although a small minority within LO holds that “the state has become the instrument of the bourgeois restoration, in other words simply a bourgeois state”.[14]

The debate on the class nature of the ex-Soviet Union and Eastern Europe is not a dry, academic issue. There is no “Chinese Wall” separating “theory” from perspectives and programme. What is at stake is a fundamental theoretical challenge from which definite political conclusions are drawn. For those who set out to overthrow capitalism, the ability to understand the processes of revolution and counter-revolution is not an optional extra; it is fundamental in order to be able to intervene in them. Five years after the collapse of Stalinism in Eastern Europe, and three years after the end of the Soviet Union, it is high time that Marxists stopped whistling to keep up their spirits and took up this challenge.

2. Mechanical Materialism and the Theory of the State

Those who still regard the countries of Eastern Europe and the ex-Soviet Union as deformed/degenerated workers’ states rest their case – with varying degrees of sophistication – on the continued existence of predominantly nationalised economies. Despite the existence of bourgeois restorationist governments, the state remains, they argue, the superstructural reflection of the base. Taken in isolation, some of Trotsky’s writings can appear to support such a position. Those who care to look will find numerous examples of “political shorthand”, where Trotsky appears to equate the existence of the workers’ state with the survival of nationalised property; for instance: “So long as the forms of property that have been created by the October Revolution are not overthrown, the proletariat remains the ruling class”.[15]

The task of Marxists, however, is not to mindlessly repeat sacred texts, but to grasp the underlying method of Marxism. To begin to provide a definition of the class nature of the ex-Soviet Union, it is necessary to return to the most basic question – what is a workers state?

According to Trotsky’s succinct definition, “The class character of the state is determined by its relation to the forms of property in the means of production” and “by the character of the forms of property and productive relations which the given state guards and defends”.[16] This implies a dialectical rather than a mechanical relationship between base and superstructure: it is not merely a question of the existing forms of property but of those which the state defends and strives to develop.

Underlining this approach, Lenin argued in early 1918 that: “No one, I think, in studying the question of the economic system of Russia, has denied its transitional character. Nor, I think, has any Communist denied that the term Socialist Soviet Republic implies the determination of Soviet power to achieve the transition to socialism, and not that the new economic system is recognised as a socialist order.” [17]

Thus, despite the fact that between 1917 and 1918, the Bolsheviks ruled over a bourgeois economy, only economistic pedants would deny that the infant soviet regime was a workers’ state. Not only did workers hold state power directly through soviets, but the Soviet regime was committed to expropriating the bourgeoisie.

Elsewhere, we have attempted the following definition: “At root, a workers’ state is one in which the bourgeoisie is politically suppressed, leading to its economic expropriation as a class. This is what such apparently disparate events as the October Revolution of 1917 and the bureaucratic overturns in Eastern Europe, Asia and Cuba after 1945 have in common… We reject both purely “economic” and purely “political definitions of a workers’ state.”[18]

History abounds with examples of contradiction between the state and economic forms, which demonstrate that the class character of the state cannot be defined in purely mechanical terms. For instance, feudal states continued to exist during the formative period of merchant capital in Europe. In this century, Marxists have recognised as bourgeois states both countries which contain many survivals from pre-capitalist economic formations and countries in which substantial sections of the means of production have been nationalised (e.g. Algeria, Angola, Burma, Ethiopia, Libya, Mozambique, Syria, etc). Among what we previously recognised as deformed workers’ states were countries with numerous pre-capitalist survivals and/or significant private sectors within their economies. Moreover, most of the countries of Eastern Europe had large state sectors prior to 1947-48 – the period most Trotskyists identify as marking the emergence of deformed workers’ states.

The cutting edge of distinction between bourgeois states and workers’ states is not some decisive degree of nationalisation (Militant/CWI), nor the existence of “central planning” (Workers Power/LRCI), nor the alleged “commitment” of the state apparatus to defend the socialised forces of production (ICL and IBT), but which class interests the economy and the state apparatus ultimately serve.

Neither elements of private ownership on the one hand, nor extensive nationalisation on the other, in and of themselves, determine the class character of the state, because the state is at least partly autonomous from the economy. This is why the character of the state and the economy can change at different speeds. For example, the New Economic Policy (NEP) in the 1920s was a concession to private capital forced on the Bolsheviks in the difficult circumstances of the period, which was – at least initially – within the overall framework of defending working class interests. In contrast, the Chinese Stalinists’ policy today of encouraging private enterprise in the special economic zones is preparing the restoration of capitalism.

Militant’s theory of “proletarian Bonapartism”[19] is the crassest example of vulgar materialism in awe of nationalised property. The states which Militant characterises as workers states, Angola, Burma etc, were capitalist states from their inception. The high degree of nationalisation carried out by the nationalist petty-bourgeoisie or army officers were the basis for the emergence of a bourgeois class, whose interests were defended by the state apparatus and the legal system.

3. Workers Power: Economism and the State

On the face of things, the most sophisticated “economist” attempt to theorise the origin of the deformed/degenerate workers’ states and defend the view that, along with the ex-Soviet Union, the countries of Eastern Europe remain workers’ states, has come from Workers Power and the LRCI.

According to Workers Power, the degenerate workers’ state is characterised by three main features: “statification of the decisive parts of the means of production; their co-ordination and functioning according to the objectives set by the ruling bureaucratic caste, which necessarily involves the negation of the law of value within the state; the protection of this system from disruption by the external law of value through a state monopoly of foreign trade.”[20]

Faithful to this “economist” method, Workers Power has tried to isolate a defining moment to “date” the emergence of deformed/degenerate workers’ states. Thus, “by the spring of 1947, with the inauguration of the first five year plan, the process of the creation of a bureaucratically degenerate workers’ state in Yugoslavia was complete”[21] Similarly China: “The introduction of planning in 1953 on the clear basis of subordinating the operation of the law of value, marks the establishment of a degenerate workers’ state in China.”[22] And although “by the summer of 1960, Castro had broken decisively with the Cuban and US bourgeoisie”, Workers Power places the formation of the Cuban workers’ state as 1962, “from the implementation of the first five year plan”[23] – the intervening two years being occupied by a “bureaucratic anti-capitalist workers’ government”, which finally resolved “dual power”. (Quite how dual power could exist with the bourgeoisie already suppressed and expropriated, and the working class demobilised remains a mystery!)

In its quest to discover elaborate new, watertight schema, Workers Power has only succeeded in piling up further problems. If everything necessary for the functioning of the “post capitalist” economy must be in place before the workers’ state is created, it raises the question of why the workers’ state is necessary, and what its function is.

History shows that the state is the pioneer of future economic relations represented by the class which controls it. Or as Engels puts it, “The proletariat seizes state power and to begin with transforms the means of production into state property.”[24] The English bourgeois revolution of the 1640s did not just spring from an already developed capitalism; it swept aside its prime achievement was to sweep aside the obstacles (or, at least many of them) which stood in its way.

For Workers Power, the opposite is the case: “the state is always the expression of pre-existing productive and property relations.”[25] This leads to the ludicrous notion of “dating” the formation of the deformed/degenerate workers’ states from the day the Stalinists proclaimed five year plans. But in most Eastern European countries these were not inaugurated until 2-3 years after 1947/8 – the point at which what remained of the bourgeoisie was suppressed, its property largely expropriated and its political parties outlawed.

Workers Power’s claim to be able to analyse at every stage the class nature of the state and the programmatic and tactical implications which flow from it[26] doesn’t hold water. Armed with its theory, it is far from clear what special insight revolutionary parties in Eastern Europe between 1948 and 1950 would have had. How exactly would they have tested that the law of value had been suppressed? Presumably they would have had to wait on the Stalinist planning organs to announce their intentions before amending their programme accordingly.

Indeed, the idea of planning being the key determinant of the class character of the state places a question mark over the nature of the Soviet Union down to 1928. No doubt Workers Power would reply that the working class held power directly through its soviets after 1917. But the soviets, as organs of direct workers’ democracy, had largely decayed by 1921 – fully seven years before the Stalinist turn to industrialisation, collectivisation and full-scale “planning” – with the majority of workers either mobilised in the Red Army, drawn into the administration, atomised by exhaustion, disease and famine, or dispersed into the countryside.

No Trotskyist would deny that a gulf exists between the revolutionary workers’ state of 1917 and the Stalinist regimes of “already existing socialism”. Nevertheless, by using two entirely different sets of criteria, Workers Power is left with the conundrum that, according to its theory, the concepts of a “healthy workers’ state” and a “degenerate workers’ state” have nothing at all in common.

Workers Power’s model of the deformed/degenerate workers’ states is no more than a superficial description – and, what is more, only at a certain stage of their development. It has broken down in the face of real events. It is in any case highly questionable whether their economies functioned “according to the objectives set by the ruling bureaucratic caste”. Aside from the overtones this carries of a “bureaucratic mode of production”, it contrasts with the picture conveyed in much Soviet literature, not of an economy proceeding to plan, but one constantly frustrating its would-be planners by shortages and break-downs – themselves the consequence in large part of bureaucratic misplanning. Even at the level of formal description it is inaccurate. Yugoslavia, for example, was a deformed workers’ state, which for many years lacked both central plan as a determining factor of the economy as a whole, and a monopoly of foreign trade.

As for the suppression of the law of value, it too is defective as a determinant of the workers’ state. The very nature of transitional society down to 1989-91 ensured that the law of value never entirely disappeared, and lurked behind the apparently monolithic statified economies – which, in any case, from the standpoint of distribution, had always retained bourgeois norms.

Even under capitalism, the proposition that the value of commodities is determined by the amount of socially necessary labour time required to produce them does not operate according to a set of ideal norms (free competition), but within living contradictions. What is “normal”, in fact, is that capitalism “violates” the law of value at the particular level so as to realise it at the general level. It is very common for entire branches of industry in capitalist states to be subsidised in the interests of the bourgeoisie as a whole.

In countries in which the bourgeoisie is weak, it frequently resorts to state capitalist methods. The law of value can hardly be said to have operated “normally” in Angola, with much of its economy militarised. And what about countries, such as Ethiopia, which have experienced such acute famines that very few people are producing anything? In neither case, we suspect, would any Marxists seriously propose that the bourgeois state had ceased to exist.

How has Workers Power’s theory of the degenerate workers’ state held up since 1989? Initially, in the case of the GDR, events seemed to provide a near “economic” cut-off point, with the monetary union with the Federal Republic on July 1, 1990.

But in all other cases, the attempt to theorise a “purely economic” point of no return for the workers’ state has been doomed to failure. In 1991 Workers Power could still write that “it is the destruction of planning as the determinant of the whole of the economy which marks the destruction of the proletarian character of the property relations and, therefore, of the state which defends them.”[27]

But the election of bourgeois restorationist governments throughout Eastern Europe and the ex-Soviet Union has been accompanied by the destruction of Stalinist planning organs and the monopoly of foreign trade. Private capitalist accumulation is actively promoted, and the legal obstacles to it removed. What remains is a substantial legacy of state property, which, despite its origin, now performs approximately the same function that it does in weak semi-colonial capitalist states.

It would seem logical, given the stress it lays on “planning”, for Workers Power to acknowledge that social counter-revolution – at least at the level of the state – has already taken place. But at this point, one strand of Workers Power’s theory collides with another. Since its conditions for retrospectively baptising a degenerate workers’ state include not merely the existence of planning, but “the complete elimination of the bourgeoisie”[28] – and since neither a numerous bourgeoisie nor a “normal” functioning of the law of value exists – Workers Power has decided, for the time being, that bourgeois states have not been restored.

Its addiction to formal-logical categories did not allow for the contradictions of the real world – a situation in which the Stalinist economic mechanisms would break down, but there would be no developed bourgeoisie to fill the void. Workers Power has continued to fit reality around its schema, unconvincingly arguing that printing bank notes to subsidise state enterprises constitutes a residual form of planning [29] – although it must be obvious that it is impossible to “plan” the economy of a country such as Russia which is experiencing hyper-inflation.

In order to prepare the evacuation from such untenable positions and to accommodate evident internal opposition, the LRCI’s 3rd international congress, held in August 1994, developed a new category – “moribund workers’ states” (MWS). These are defined as “degenerate workers’ states that have restorationist governments in power which are actively demolishing the foundations of planned economy. The objective of all governments inside the MWS is clear: the complete destruction of the system of command planning and the transformation of the economy into a functioning capitalist market economy.”[30]

But in line with Trotsky’s definition of the state in terms of the property it “guards and defends” this is clearly a description of a bourgeois state! As a category the MWS is every bit as much of a fudge as the “transitional state” position of the FI in 1948 – it is a “bourgeois state form” whose social content remains undecided.

The attempt to define the state in purely economic terms leads Workers Power to the following conclusion: “A change of leading personnel within the already bourgeois-type state machine – from objective to subjective restorationists – is not the qualitative moment of transition from a workers’ to a bourgeois state. Only a tendency that had in all essentials abandoned Trotsky’s analysis could identify the collapse of the bureaucratic dictatorship with the collapse of the workers’ state itself.” [31]

In which case, among those who have “in all essentials abandoned Trotsky’s analysis”, we must include ...Trotsky! : “The inevitable collapse of Stalinist Bonapartism would immediately call into question the character of the USSR as a workers’ state. Socialist economy cannot be constructed without a socialist power. The fate of the USSR as a socialist state depends upon that political regime which will arise to replace Stalinist Bonapartism:”[32]

In the meantime, it is sobering to consider that, had Nazi Germany succeeded in conquering the Soviet Union, it might well have retained a substantial state sector. According to Workers Power’s theory, the workers’ state would have survived – albeit with a fascist government.

4. Stalinism and the Post-War Social Overturns: Problems of the Transition

The social counter-revolution in Eastern Europe and the Soviet Union is (despite obvious dissimilarities) a striking mirror-image of the process which saw the formation of deformed workers’ states in the 1940s. Both have been the subject of considerable, if frequently un-illuminating, dispute among Trotskyists. How we understand the development “forwards” should to a large degree inform our analysis of the regression in the opposite direction.

The capitalist states of Eastern Europe were all industrially backward and predominantly agrarian before the Second World War, with the exception of Czechoslovakia. During the 1930s, they were effectively semi-colonies of German and French imperialism. In Poland, Czechoslovakia and Yugoslavia, state intervention played an important role in industry.

The Nazi occupation of Poland and Czechoslovakia converted them into direct colonies of German imperialism. Much of the property of the bourgeoisie was looted, and either taken over directly by the German state, or handed over to German companies. The influence of German capitalism also grew in the economies of its allies, Hungary, Romania and Bulgaria.

The defeat of German imperialism by the Soviet army left the latter in control of all of Eastern Europe. The bourgeoisie, greatly weakened by the destruction caused by the war, and with many of its representatives having fled abroad, was in crisis. For the Vern-Ryan tendency in the Socialist Workers Party (US), Stalinist control of the repressive apparatus meant that: “From the time of the occupation onward the designation of these states as worker’s states is an inescapable Marxist characterisation.”[33]

Although many of Vern-Ryan’s criticisms of the SWP and Fourth International leaderships in the early 1950s were acute, there are a number of objections to their theory. In general, it replaces history with hindsight; it reads the outcome of a process into its origins.

Vern-Ryan’s emphasis on the repressive apparatus is one-sided. The state does not merely consist of “armed bodies of men”. They are one element of the state, albeit a highly important one. Normally they are subject to political masters who direct what property they defend. Armed with such a theory, some on the left believed that the Soviet army was tied to the defence of nationalised property to the extent that it would be obliged to intervene against counter-revolution in 1989-91. Not for the first time history has proved that armies can transfer their class allegiance without significant disturbance.

Their theory also fails to explain why Stalinists exercising governmental power and/or control of the repressive apparatus failed to result in worker’s states in Republican Spain, Finland, Northern Iran and the Russian occupation zone in Austria after the Second World War or Afghanistan during the 1980s.

Vern-Ryan tended to see a predisposition within Stalinism to overturn capitalism, which is clearly linked to their peculiar understanding that “our movement has always characterised Stalinism as a centrist current”[34].

Certainly, the Soviet bureaucracy could have finished off the Eastern European bourgeoisie without great difficulty at the end of the war. What Vern-Ryan have very little to say about is what it actually did. A serious examination of this demonstrates that what existed in Eastern Europe between 1944/5 and 1947/8 were weak bourgeois states, which the Stalinists set about rebuilding[35].

True, the most openly pro-fascist, “unpatriotic” elements of the bourgeoisie were purged, and the reins of the repressive apparatus were held by the Soviet bureaucracy and its hirelings. “Unreliable” (i.e. anti-Soviet) bourgeois forces were replaced by elements which were ready to collaborate with the Stalinists to the hilt. But other open reactionaries – collaborators, monarchists, clericalists and even former fascists – were tolerated, and in some cases recruited to the Communist parties.

On the other hand, workers who attempted to seize factories and estates with the arrival of the “Red” Army were evicted. Bourgeois parties and parliaments were re-established, in line with the Yalta Agreement. Indeed, the term “people’s democracies” was not coined merely out of cynicism. What Stalin intended was to preserve weak bourgeois states with popular front governments under Soviet tutelage, similar to Finland.

The high degree of nationalisation was a consequence of the war. In many cases the bourgeoisie welcomed state ownership, and recognised it was necessary, since it was in no position to fill the breach. In Czechoslovakia, for example, the state inherited 60 per cent of industry and almost the entire banking system from the German occupation, without having to expropriate the local bourgeoisie. Poland, where the devastation and loss of life were far greater, had nationalised nearly 90 per cent of industry within the first year of liberation.

This didn’t, however, mean an attack upon bourgeois property as such, as the Stalinists were at pains to stress. In Hungary, factories and mines were restored to private ownership. Strikes were everywhere condemned as sabotaging reconstruction.

The political forces with which the Stalinists shared power in these years were far from negligible. In Romania, the monarchy was retained and a CP/Liberal Party coalition established headed by the anti-semitic reactionary, Radescu, and including supporters of the fascist Iron Guard.

Bulgaria also kept its monarchy under the Stalinist-initiated Fatherland Front coalition, led between 1944 and 1946 by the arch-reactionary, General Georgiev; the CP held only three ministerial portfolios in its first coalition, and other forces, including the Agrarian Party, held significant positions. Elections in Hungary in 1945 gave the Smallholders Party 57 per cent, with the Stalinists receiving only 17 per cent.

Poland saw a coalition between the Stalinists and various supporters of the London-based pro-imperialist émigrés, and the CP faced significant competition from the Polish Socialist Party and the Polish Peasant Party. The Czechoslovakian coalition established in March 1945 included the Communist Party, Social Democrats, National Socialists, the Catholic Popular Party and the Slovak Democrats. Although the Stalinists had significant support – they gained 38 per cent of the vote in the elections of May, 1946 – bourgeois parties operated in relative freedom for another two years.

It must be remembered that the various Smallholders and Peasant parties were in reality bourgeois parties, which, although they had some radical elements, also served as a refuge for representatives of the pre-war ruling circles, who had close links with the West.

Only in Yugoslavia and Albania, as a result of the Partisan War, were there no significant bourgeois political forces. The short-lived coalition between the Yugoslav Communist Party and the monarchist-reactionary Subasich only lasted from 1944 to 1945.

There is no evidence to show that this was all merely a Machiavellian plot on the part of Stalin to create “socialist” states. The protection of bourgeois interests – albeit those prepared to play ball with the Soviet occupiers – was a crucial part of Stalin’s strategy of peaceful co-existence with the West. Its counterpart was the faithful class collaboration practised by the Western Stalinist parties in the same period.

Only with the onset of the Cold War in late 1946, and particularly with the announcement of the Marshall Aid Plan in March 1947, which posed the reorganisation of the Eastern European bourgeoisie under imperialist leadership, did Stalin’s alliance with imperialism break down, and the necessity to consolidate the “buffer zone” countries as deformed workers’ states arise.

Without reference to this crucial turn in the international situation – the gravity of which was clearly understood by both sides at the time – it is impossible to explain the decisive nature of the changes which took place in 1947-48. Vern-Ryan’s theory does not ascribe any particular significance to this shift in international relations.

Historical evidence suggests otherwise. In the course of 1946 and 1947, the reviving eastern economies were forging growing links with the West. Trade with the Soviet Union went into steep decline, while that with the United States grew rapidly.[36] The Marshall Plan, and the willingness of the Czechoslovak and Polish governments to embrace it, threatened to make this trend permanent. Far from acting as a defensive “buffer”, the People’s Democracies threatened to become hostile outposts of imperialism in the Soviet Union’s back yard. Taken together with the eviction of the CP’s from the post-war coalitions in France, Italy and Belgium, it marked an unmistakable breakdown in the “spheres of influence” agreement.

The final break with the bourgeoisie – conducted bureaucratically, “from above” – was accomplished throughout Eastern Europe, with slight variations in tempo in different countries, between late 1947 and early 1948. It completed the policy of purging bourgeois parties by outlawing them, of eliminating working class opposition by forcible fusion of the social democrat and communist parties, and of concentrating all political power in the hands of the Stalinists. A further nationalisation drive expropriated most remaining capitalist property. All this took place, with the partial exception of Czechoslovakia,[37] without the working class being mobilised.

How is this apparently “peaceful” process to be understood in terms of the Marxist theory of the state? What of Marx’s famous judgement on the Paris Commune that “the working class cannot simply lay hold of the ready-made state machinery and wield it for its own purposes”[38] Didn’t Lenin devote much of The State and Revolution to establishing that the capitalist state could not be overturned by an aggregate of reforms, and that it had to be “smashed”? And what of Trotsky’s waning that: “He who asserts that the Soviet government has been gradually changed from proletarian to bourgeois is only, so to speak, running backwards the film of reformism.”?[39]

Firstly, let us observe that, although nothing resembling a civil war took place in 1947-48, the phenomena of politicians mysteriously preferring windows to lifts; of mass arrests and purges; of party fusion at gun point – none of these were either particularly “peaceful” or typically “reformist”. They all constituted elements of force. As a general rule, force is normally applied in rough proportion to the strength of the opposition and the degree of resistance put up. In a situation in which the Stalinists already controlled the repressive apparatus, this amount of force was relatively less than in, say, an imperialist state with a large standing army.

Secondly, it is necessary to remember that these were far from “normal” bourgeois states. They existed in a unique situation, which is unlikely to be repeated. The bourgeoisie sought to preserve its slender hold on life by acquiescing to Soviet occupation, thereby surrendering much of its own sovereignty. The Soviet bureaucracy, for its part, opted to preserve this bourgeoisie out of wider international policy considerations. Such a relationship was inherently anomalous, unstable and could only be temporary. The circumstance of a bourgeois state having much of its policy decided for it by a workers’ state, however, is not unique – as is demonstrated by much of modern Finnish history.

The economies of these states were backward and already highly statified before 1947. The concentration of capitalist property in the hands of the state – state capitalism – is a typical reflex of the bourgeoisie in terminal crisis. Such a situation was anticipated by both Engels and Lenin.[40] In this sense, the bourgeois state prepares the rule of the workers’ state as a “bourgeois state without the bourgeoisie”.

Does this mean that we are arguing that a bourgeois state can be used as a platform to create a workers’ state, and are thereby fundamentally revising Marxism? The apparently gradual transformation of state structures was, on the face of things, closer to the “gradual” model of the transition from feudal to capitalist states which took place in most central and Eastern European countries. The semi-feudal aristocracy was forced to industrialise in much of central Europe during the 19th century under the threat of economic and political downfall. In these cases state apparatuses were adapted to the needs of new relations of production, whilst partially maintaining the old institutional framework. These old forms finally changed their social character.

Tim Wohlforth, whose Theory of Structural Assimilation[41] remains one of the few serious efforts to reopen the “buffer zone” debate since the 1940s, attempted to get round the problem of “dating” the transformation by arguing that it was managed during an extended period, by a state which assumes a hybrid, dual character: “It is possible to ascertain around when the process begins and after the process is all over it is clear that a qualitative change has taken place. However, during the process things are nowhere as clear. In fact in the middle of the process things are extremely contradictory for both qualities – what existed before and what is to be – exist in a complex inter-relationship. For this reason there exists no one moment when the qualitative change takes place. That the qualitative change has taken place becomes clear only some time after the change has been consummated.”[42]

This position is echoed by Westoby,[43] and is the Achilles heel of the structural assimilation theory. If Marxism cannot analyse the class nature of the state power, then a question mark must arise not only over its analysis of class society as a whole, but its ability to advance a programme capable of outlining the tasks of the hour.

Of course, the overturn of capitalism in Eastern Europe was a process, rather than an isolated event which took place at a definite time on a definite day. However, Wohlforth and Westoby only succeed in mystifying the nature of the process, and rendering it incomprehensible. For all their criticisms of the FI leadership, they manage to provide it with an alibi.

As we have earlier argued, the break with the bourgeoisie – in spite of its bureaucratic method – was nonetheless real enough, and fairly abrupt. Its timing was conditioned by a fundamental shift in world politics. Having crushed the remaining centres of bourgeois political and economic power in the space of a few months, the foundations of the new states were laid.

The ability of the Stalinist bureaucracy to effect such a fundamental change did not rest only upon a particular political conjuncture. It was also a by-product of the bureaucracy’s Bonapartist nature. But whereas for Deutscher and Pablo, this implied a residual progressive mission to destroy capitalism, the real “secret” of Stalinist Bonapartism lay in its manoeuvring between classes, both domestically and internationally, and its lack of an “organic” class base. Having politically expropriated the working class in the world’s first workers’ state, while still being dependent upon the foundations of that state as a source of material privilege, the Stalinist bureaucracy balanced uneasily between imperialism and its own masses.

Between 1944 and 1947, the Stalinists found themselves in possession of the repressive apparatus and many of the elements of government in the Eastern European states. But while these states remained bourgeois, they also were states in a peculiar situation of dependency upon a foreign – and, in the class sense, alien – power. By eliminating the active oppositional elements in both main classes from the equation, the bureaucracy enjoyed a high degree of political independence. It was able to fashion the building blocks of new states from the petrified remains of the old ones, without facing the direct challenge of either bourgeois counter-revolution or proletarian, anti-bureaucratic revolution.

There were therefore also significant differences with the “hybrid” state formations of early capitalism. Far from taking over these states of Eastern Europe “ready-made”, the Stalinists deconstructed them, filling nominally bourgeois institutions with their own creatures, performing qualitatively different functions. Far from lending theoretical support to reformism – as Wohlforth’s description of an amorphous cumulative process tends to – this understanding fundamentally demarcates the transition of 1947-48 from social democratic reformism.

The bourgeois states were therefore “smashed”, although not in the manner anticipated by classical Marxism: not at a given hour on a definite day, admittedly, but smashed nonetheless. The survival of some institutions of the bourgeois state – cited by state capitalist theorists and some contributors to the “buffer zone” debate as evidence that no qualitative change had taken place – is of little significance, except that it underlines the particularly degenerate nature of the transformation.

The fact that the same judges, who had presided at trials of communists in the 1930s, were sometimes to be found passing sentence upon those purged by the Stalinists in the 1940s; that all kinds of bourgeois administrative arrangements carried over; that various quasi-democratic bodies (including nominally independent “bloc parties” and pseudo-parliaments) were permitted by the Stalinists – these things were not decisive in determining the class nature of the state. Certainly, those Trotskyists who argued that they were, had been obliged by reality to quietly drop their objections by the early 1950s.

The real question for Marxists is not the class origins of the functionaries but in whose interests they function. The history of bourgeois revolutions showed that it was possible for opportunist elements to navigate the choppy waters of both revolution and counter-revolution – General Monck and the Vicar of Bray in England, Fouché and Talleyrand in France. Even the Bolsheviks were obliged to retain a good part of the old civil service for a period, and subsequently re-employ the “military specialists”.

As we would expect, the bureaucratic overturns in Eastern Europe were far more degenerate in their methods, and considerably less choosy when it came to making use of the dregs of the old society. As a result of the new socio-economic course after 1947, the remnants of the old order were either reconciled to the new regime or systematically purged. State institutions and the legal system, while continuing to harbour numerous reactionaries, were similarly transformed in line with their new function. The Stalinists ensured the loyalty of the state apparatus by establishing and developing links between it and the nationalised sectors of the economy.

Even with the emergence of deformed workers’ states, matters were far from settled. Trotskyists have tended to overestimate the extent to which the adoption by the People’s Democracies of planning and other typical features of bureaucratic rule necessarily guaranteed their future existence. In fact, they continued to be subject to wider considerations of Soviet foreign policy, as was shown by the preparedness of the Soviet leadership in 1953 to barter away the GDR: “Malenkov and Beria viewed Germany’s division and the presence of the armed forces of East and West on German soil as the chief obstacles to a rationalisation of Soviet foreign policy and the chief source of international tension. They contemplated nothing less than a withdrawal from Germany and the virtual abandonment of the East German communist regime, hoping that they would be able to persuade the Western Powers to agree to a withdrawal of their forces too.”[44] They proposed to Eisenhower that “a peace treaty with Germany giving the German people the possibility of a reunion in one State...should be concluded as early as possible; and following closely upon this the occupation troops should be withdrawn.”[45]

Although there were significant differences between what took place in Eastern Europe in 1939-40 and 1947-48, Trotsky’s last writings in the course of the struggle against the Burnham-Shachtman opposition should have provided the post-war Fourth International with some of the necessary analytical tools.

“It is more likely, however,” he wrote in 1939, “that in the territories scheduled to become a part of the USSR, the Moscow government will carry through the expropriation of the large landowners and statification of the means of production. This variant is most probable not because the bureaucracy remains true to the socialist programme but because it is neither desirous nor capable of sharing the power, and the privileges the latter entails, with the old ruling classes in the occupied territories.”[46]

As to whether this placed a question mark over the counter-revolutionary nature of Stalinism, he had this to say: “The primary political criterion for us is not the transformation of property relations in this or another area, however important these may be in themselves, but rather the change in the consciousness and organisation of the world proletariat, the raising of their capacity for defending former conquests and accomplishing new ones. From this one, and only decisive standpoint, the politics of Moscow, taken as a whole, completely retains its reactionary character and remains the chief obstacle on the road to the world revolution.”[47]

Nor was Trotsky in favour of entrusting any historic mission to the Red Army or according it any independent significance: “We have never promised to support all the actions of the Red Army which is an instrument in the hands of the Bonapartist bureaucracy. We have promised to defend only the USSR as a workers’ state and solely those things within it which belong to a workers’ state.”[48]

He also envisaged a situation in which capitalism could be overturned, not by a workers’ revolution, but by “a civil war of a special type. ... introduced on bayonets from without ...controlled by the Moscow bureaucracy”.[49] At the same time he warned that these “missionaries with bayonets” would alienate the masses.[50]

The Fourth International responded to the post-war developments inadequately. Not only was the FI’s timing belated; its method was defective, and prepared the political collapse which followed. It remained the prisoner of the prognosis that capitalism could only be destroyed in Eastern Europe as a result of “structural assimilation” into the Soviet Union, as had been the case with the eastern zone of Poland and the Baltic States in 1939-40. Once it abandoned this perspective, it readily accepted that Stalinism could after all “project a revolutionary orientation”.

It is ironic therefore to find both “anti-Pabloite” David North and “Pabloite” Pierre Frank defending the line of the FI in the late 1940s. North argues that the Second World Congress “correctly maintained that capitalism had not been destroyed in the “buffer zone”,[51] while Frank claims that: “Despite a few measures aimed at those members of the propertied classes who had collaborated with the Germans, the (Soviet) army had left the bourgeois social structures of these countries intact.” [52]

David Rousset appears to have been one of the first members of the FI to argue that, on the basis of widespread nationalisation, the buffer zone countries had become workers’ states.[53] His contribution to the International Executive Committee Plenum in June, 1946 was opposed by Ernest Mandel, who insisted: “The bureaucracy can definitively bring new territories into its control only by assimilating them structurally on the economic base which issued from the October Revolution.” [54]

The Fl’s Second World Congress met in April-May, 1948, after the decisive overturns had taken place. Its main document was “The USSR and Stalinism”, presented by Mandel. “To deny the capitalist nature of these countries”, it claimed, “amounts to an acceptance, in no matter what form, of this Stalinist revisionist theory, it means seriously to consider the historic possibility of a destruction of capitalism by “terror from above” without the revolutionary intervention of the masses.”[55]

Amendments proposed by the RCP (Britain, led by Jock Haston and Ted Grant), arguing that the overturn of capitalism in the buffer zone, and the control of the bourgeoisie over the government and state apparatus was either complete or approaching completion, were heavily defeated.[56]

In June, 1948, immediately after the congress, the Soviet-Yugoslav split took place. Junking the congress’s analysis of Yugoslavia as a capitalist state in which revolutionary defeatism should be strictly applied in time of war, the Fl leadership immediately began treating it as a de facto workers’ state, headed by a party which had broken with Stalinism.[57] Three fawning open letters were sent to the YCP by the International Secretariat, one of them finishing with the ringing words: “Yugoslav communists, let us unite our efforts for a new Leninist International.”[58]

Although a majority of the FI was in favour of characterising the buffer zone countries as capitalist, sustaining this analysis was becoming increasingly difficult. The resolution of the 7th plenum of the IEC in April, 1949 described the buffer zone as “a unique type of hybrid transitional society in the process of transformation, with features that are as yet so fluid and lacking precision that it is extremely difficult to summarise its fundamental nature.”[59]
This unique “transitional state” category was in fact a basic revision of Marxism. It meant either that the state could at one and the same time be the instrument of two classes – or that it was neutral between them.

The IEC’s tortuous reasoning forced it first one way, and then another. The Eastern European bourgeoisie was suffering from “enfeeblement” or “virtual disappearance”,[60] however, “the buffer zone, except for Finland and the Russian-occupied zones in Austria and Germany, are on the road toward structural assimilation with the USSR, but...this assimilation has not yet been accomplished.”[61]

In order to justify this conclusion, the IEC had to come up with a range of secondary criteria which the buffer zone countries would have to fulfil before becoming workers’ states. National borders would have to be abolished and “real planning” implemented, either by incorporation into the Soviet Union, or by the establishment of a Balkan-Danube Federation.

Needless to say, none of these conditions were ever met. But the qualitative similarities between Eastern Europe and the Soviet Union were already obvious. The FI began to divide into two camps. Those who were moving to recognise the buffer zone as workers’ states argued that the economic criteria had been fulfilled; those who held the line that they were capitalist states maintained that the political criteria had not.

Bert Cochran (E. R. Frank) put forward a workers’ state position in March, 1949, comparing the degree of statification with the Soviet Union. Morris Stein, addressing the SWP Political Committee in July, 1949, put the case for ostrich Marxism: “Rather than jumping to conclusions as to the social character of the states in Eastern Europe, it is far better to await further developments.”[62] When discussion resumed in August, the positions of the RCP were dismissed out of hand, and with little regard for the facts: “I haven’t read their latest documents, but this is of little importance, since their position dates back some sixteen months...When they first took their position that the buffer countries were workers’ states, [i.e. April, 1948] these countries had not yet undergone any extensive nationalisation.”[63]

By September, Michel Pablo was proposing that the FI adopt Yugoslavia as a workers’ state – a position it had implicitly held for over a year. Mandel counter-attacked in October, exposing the weaknesses of those who were prepared to equate nationalisation with the overthrow of capitalism, but woodenly sticking to his contention that it could only be overturned by a genuine proletarian revolution. Revealingly, Mandel admitted that his method owed more to political considerations than to the study of objective reality: “Our criterion of Stalinism from the standpoint of its ineffectiveness against capitalism would lose all its meaning.” [64]

Joe Hansen, writing in December, 1949, noted two major contradictions in the majority position. The Second World Congress resolution, while insisting that revolutionary action was necessary in the buffer zone, acknowledged that capitalism had been overturned in 1939-40 in the Baltic countries, eastern Poland, Bessarabia and Karelia without the mobilisation of the masses. The 7th plenum resolution had emphasised the capitalist nature of the buffer zones states, but had paradoxically argued that this “does not at all imply that the bourgeoisie is in power as the dominant class in these countries”.[65]

Although this method was similar to Hansen’s – that a sufficient degree of nationalisation resulted in a workers’ state – Pablo was not yet ready in February, 1950, to go beyond admitting Yugoslavia to the fold. It was a “special case”: the result of a proletarian revolution in progress since 1941, (although the FI had not noticed it until 1948). The break with the Kremlin was the summit of this process. The rest of the buffer zone, Pablo saw as only “approaching assimilation to the USSR”, although he was prepared to accept that “it could take place without either the abolition of borders, or formal incorporation into the Soviet Union.”[66]

Cochran was altogether more blunt: “We maintain that if the state structures and the economies of these countries are similar to that of the USSR, then they are of the same class type. Any other conclusion calls into question our characterisation of the USSR.”[67] He saw the buffer zone countries after 1945 as “regimes of dual power” and the Stalinist constitutions of 1948-49 as “the juridical expression of the fact that the dual power regimes had come to an end”.[68]

It was Pablo who first coined the term “deformed workers’ state”. By origin, applied to Yugoslavia, it meant a state quantitatively, rather than qualitatively deformed by bureaucracy.[69] At its 8th plenum in April, 1950, the IEC formally accepted Pablo’s position on Yugoslavia, although there were still those like John G. Wright – praised by North as a far-sighted and perceptive dissident![70] – who held out.

If a semblance of political unity was to be maintained, there was little to do except wrap the discussion up in the Fl as diplomatically as possible. Mandel meanwhile quietly dropped his objections. Matters were not finally settled until the Third World Congress in August, 1951, which extended the category of deformed workers’ state to the remainder of the buffer zone countries. Even then, it did so with a face-saving formula: “We still believe that up to 1949 these states still retained a fundamentally capitalist structure”.[71] This meant that the 7th plenum resolution had been correct, and that – somehow – the qualitative changes in Eastern Europe had taken place since 1949.

The Trotskyist movement paid a heavy price for this display of unity – the congress’s resolutions were adopted overwhelmingly. The theoretical issues at stake were left unresolved and brushed under the carpet. And the political consequence was a somersault from Stalinophobia to Stalinophilia. Having clung for so long to the position that only genuine proletarian revolutions could overturn capitalism, the revelation that Stalinism had already “done the job” in half a continent produced a deep-going adaptation in the FI, which now saw its role as pressuring the communist parties from the left.

This political collapse cannot simply be put down to “bad men” or “bad politics in the formal sense. At the root of the FI’s disorientation was its failure to develop the Marxist theory of the state, and in particular, to grasp how a counter-revolutionary bureaucracy, which had acted as the gravedigger of the world’s first workers’ revolution, could nonetheless expropriate the bourgeoisie.
The fear Mandel had betrayed of ceding Stalinism a historic mission was turned inside out. The FI’s adaptation to Tito was repeated in relation to Mao, Castro and Ho Chi Minh; each was portrayed as a revolutionary leader who had broken from Stalinism under the impact of “mass pressure”.

The task of determining which property relations the state defends and/or strives to develop has, in the final analysis, to be answered politically. In the case of classical social revolutions, such as the French bourgeois revolution of 1789 or the socialist revolution of October 1917, where state power clearly passed from one class to another, the task is straightforward.
However, deciding the class nature of the state becomes especially difficult when a petty-bourgeois leadership has come into conflict with both the main classes of modern capitalist society, the bourgeoisie and the proletariat – typically where both are weak and leaderless. This was the case in both the Cuban and Nicaraguan revolutions at a certain point of their development.

In such a situation, the practice of this leadership and the development of the relationship between the state, the property relations and the two main classes have to be carefully analysed. A qualitative change in the state would be marked by the fact that limited collectivist interventions into the economy proved inadequate to stabilise the situation, and placed more drastic measures – the suppression of the bourgeoisie – immediately on the agenda. The alternative is growing paralysis, which prepares political counter-revolution.

The Nicaraguan FSLN came to power in 1979 as a result of an armed struggle, which overthrew the Somoza dictatorship. It was in essence a radical popular front, with a petty-bourgeois leadership, supported by workers’ parties, and minority anti-Somoza sections of the Nicaraguan bourgeoisie – a line-up of forces similar to that led by Fidel Castro in 1959. Moreover, it undertook significant measures of nationalisation and state intervention.

But despite the subjectively “socialist” intentions of the FSLN, there was to be no “Cuban Road” in Nicaragua. The fate of such revolutions is closely linked to the nature of the political leadership at the head of the state. A revolutionary-internationalist leadership would have combated US/Contra insurgency not only by military means, but by destroying the basis of the bourgeoisie at home, and by spreading socialist revolution abroad. In the absence of such a leadership, the international balance of forces, and within that, the refusal of the Soviet and Cuban bureaucracies to countenance a rerun of the Cuban revolution, determined the eventual outcome – the negotiated settlement with Chamorro and the Contras in 1989.

5. Trotsky and the Possible Paths of Counter-Revolution

In its most dogmatic versions, “orthodox Trotskyism” has sought to fit reality around Trotsky’s prognoses, rather than to analyse reality, while using Trotsky’s ideas as a methodological tool. The projection in some of Trotsky’s writings that civil war would be a necessary precondition for capitalist restoration became transformed in the hands of the epigones into a supra-historical dogma. It is small wonder that, armed with such a theory, the events of 1989-91 took the majority of would-be Trotskyists by surprise. Instead of dispensing with the reactionary notion that Marxism is a kind of crystal ball for gazing into the future, some despaired of their “god that failed”, and looked for a purer pre-Bolshevik Marxism. Others pretended that the counter-revolution had yet to happen; the civil war still lay in front.

Without underestimating the potential for civil wars of various kinds in Eastern Europe and the ex-Soviet Union, the civil war of the kind the epigones envisaged has not been required to restore bourgeois states, not least because other key elements of Trotsky’s equation – for instance, the contention that “the social revolution, betrayed by the ruling party, still exists ... in the consciousness of the toiling masses”[72] – had been so substantially eroded in the intervening 55 years.

By reducing Trotsky’s thinking on the possibility of counter-revolution to a single sentence, the epigones have done it a grave disservice, and overlooked its historical and dialectical evolution. Indeed, without falling into the trap of attempting to show that Trotsky did indeed predict the course of events, a rounded study of his writings shows that he considered a number of possible paths of counter-revolution, and that, viewed in their proper perspective, a number of his insights can shed light on the present.

Although it is possible to cite a number of agitational manifestos and speeches in which Bolsheviks presented world revolution as “inevitable”, in their mature output, Lenin and Trotsky viewed both revolution and counter-revolution as living struggles of social forces. Their prognoses were therefore historically conditional, and they rarely strayed too far from the present and its short-term potential.

In the immediate aftermath of the revolution, the most likely potential for counter-revolution came from an alliance of domestic forces – landlords, monarchists, capitalists and richer peasants – with external imperialist intervention. But the Soviet victory in the civil war brought an uneasy peace with the imperialists. With this breathing space, the immediate likelihood of a successful White Guardist uprising receded. Moreover, the peasantry, whatever it thought of the Bolsheviks, had a stake in the revolution in the shape of the agrarian revolution. This explains why the machinations of imperialist agents such as Sidney Reilly were crushed so easily. The more perceptive counter-revolutionaries, among them leading Cadets like Ustryalov, saw greater potential in the evolution of the regime itself, and thought that the NEP would naturally evolve back towards capitalism.

In the course of his “last struggle” of 1922-3, Lenin became acutely aware of the growth of conservative, bureaucratic forces within the party and the state bureaucracy, which through their chauvinism and readiness to retreat, over such central issues as the monopoly of foreign trade, were preparing the collapse of the proletarian dictatorship – a dictatorship, which in Moshe Lewins’s phrase, was increasingly being exercised “in a void”.[73]

The dangers inherent in reviving private ownership were never far from the thinking of leading Bolsheviks. In his report on production to the 12th congress in April 1923, Trotsky remarked: “Petty commodity production and private trade form a hostile bloc of forces against us.”[74] He went on to give the following summary of the conditions necessary for the survival of the workers’ state: “If we had to explain upon what our hopes for a socialist future for Russia rested, we would reply: I) Upon the political power of the party, supported by the Red Army; 2) Upon the nationalisation of production; 3) Upon the monopoly of foreign trade. It would be sufficient to throw down one of these pillars for the building to fall.”[75]

The threat represented by the alliance of the bureaucrat, the NEPman and the kulak is a theme running throughout Trotsky’s writings during the struggle of the Left Opposition from 1923-27. His veiled attack in Towards Socialism or Capitalism?[76] in 1925 on the economic programme of Stalin and Bukharin centred on his demand for accurate and comparative coefficients of world economy – which, in contrast to the official legend of socialist self-sufficiency, would have revealed the backward nature of Russian development and its far lower level of labour productivity.

By 1927, during the last period of the Opposition’s public struggle, this threat had become a growing reality. The “Platform of the Joint Opposition”[77] drew explicit attention to the link between the stabilisation of world capitalism, the counter-revolutionary and chauvinist elements which had flooded the bureaucracy and the discontent of the peasantry in the face of the “scissors crisis”.

Little attention has been paid to Trotsky’s article Thermidor[78], written during this struggle – perhaps because his views on Thermidor underwent a well-known revision in 1935. Here Trotsky discusses two variants, which show that he was far from categorical in relation to the “civil war thesis”: “But bourgeois restoration, speaking in general, is only conceivable either in the form of a decisive and sharp overturn (with or without intervention) or in the form of several successive shifts. This is what Ustryalov calls “going downhill with the brakes on.”...Thus, as long as the European revolution has not conquered, the possibilities of bourgeois restoration in our country cannot be denied. Which of the two possible paths is the more likely under our circumstances: the path of an abrupt counter-revolutionary overturn or the path of successive shiftings, with a bit of a shake-up at every stage and a Thermidorian shift as the most immediate stage? This question can be answered, I think, only in an extremely conditional way. To the extent that the possibility of a bourgeois restoration in general cannot be denied, we must keep our eyes out for either of these variants – with the brakes on or without the brakes – to weigh the odds, to note the elements contributing toward either.”[79]

The acute crisis which developed in 1927 led Stalin to somersault from the policy of attempting to conciliate the kulak to one of ruthless collectivisation. Despite its disastrous results, and the fact that it certainly did not eliminate inequality in the countryside, it did effectively remove the rural petty-bourgeoisie as a serious contender for power, at least in the short term. The NEP bourgeoisie was similarly eliminated, in the drive towards industrialisation. Trotsky’s thinking underwent a corresponding evolution, and increasingly saw the bureaucracy itself as the principal source of internal danger. Indeed, his view that the Bukharinite right was “the main danger” and “the Thermidorian wing of the party” led the Left Opposition to refuse to countenance any bloc on internal democracy.

The characterisation of the Right Opposition as “the masked form of counter-revolution”, as the proxy for the kulaks and NEPmen, runs through many of Trotsky’s writings in Alma Ata. Whatever the merits of this position, the ease with which Stalin crushed the Right made this too an increasingly less likely scenario.

By the time Trotsky wrote The Class Nature of the Soviet State in 1933 a perspective had emerged which in some respects in its picture of internal disintegration is strikingly contemporary: “The workers, having lost control over the state and economy, may resort to mass strikes, as weapons of self-defence. The discipline of the dictatorship would be broken. Under the onslaught of the workers and because of the pressure of economic difficulties the trusts would be forced to disrupt the planned beginnings and enter into competition with one another. The dissolution of the regime would naturally find its violent and chaotic echo in the village, and would inevitably be thrown over into the army. The socialist state would collapse giving place to the capitalist regime, or more correctly, to capitalist chaos.”[80]

These themes recur in The Revolution Betrayed in even sharper relief, where Trotsky discusses the interaction of crisis within the regime and the economy: “A collapse of the Soviet regime would lead inevitably to the collapse of the planned economy, and thus to the abolition of state property. The bond of compulsion between the trusts and the factories within them would fall away. The more successful enterprises would succeed in coming out on the road of independence. They might convert themselves into stock companies, or they might find some other transitional form of property – one, for example, in which the workers should participate in the profits. The collective farms would disintegrate at the same time, and far more easily. The fall of the present bureaucratic dictatorship, if it were not replaced by a new socialist power, would thus mean a return to capitalist relations with a catastrophic decline of industry and culture.

... In the sphere of industry, denationalisation would begin with the light industries and those producing food. The planning principle would be converted into a series of compromises between the state power and individual “corporations” – potential proprietors, that is, among the Soviet captains of industry, the émigré former proprietors and foreign capitalists. Notwithstanding that the Soviet bureaucracy has gone far toward preparing a bourgeois restoration, the new regime would have to introduce in the matter of forms of property and methods of industry not a reform, but a social [counter] revolution.”[81]

And he noted that the bureaucracy itself would provide much of the cadre of this counter-revolution: “If...a bourgeois party were to overthrow the ruling Soviet caste, it would find no small number of ready servants among the present bureaucrats, administrators, technicians, directors, party secretaries and privileged upper circles in general. A purgation of the state apparatus would, of course, be necessary in this case too. But a bourgeois restoration would probably have to clean out fewer people than a revolutionary party.”[82]

Against those who insist one-sidedly that Trotsky only considered the variant of a violent overthrow of the workers’ state must be set the theses on The Fourth International and the Soviet Union, drafted for the “Geneva” conference for the FI and written at the same time as The Revolution Betrayed. The Stalin Constitution of 1936, he noted, “opens up for the bureaucracy “legal” roads for the economic counter-revolution, that is, the restoration of capitalism by means of a “cold stroke”.”[83]

As these references indicate, up to this point Trotsky considered it likely that political and economic counter-revolution would march hand in hand. However, replying to Burnham and Carter in 1937, he revises this view, arguing that: “Should a bourgeois counter-revolution succeed in the USSR, the new government for a lengthy period would have to base itself upon the nationalised economy.”[84] Incidentally, it is scarcely credible to argue that Trotsky, in the aftermath of a successful bourgeois counter-revolution, would have continued to claim that a workers’ state existed!

With the onset of the Second World War, Trotsky’s last writings accurately forecast many of its decisive turning points. Since 1933 he had insistently warned of the threat to the Soviet Union from German imperialism. Having already anticipated the Stalin-Hitler pact, he also foresaw its break up: “In the event of victory Hitler...will make Germany the contractor of the most important state enterprises in the USSR in the interests of the German military machine. Right now Hitler is the ally and friend of Stalin; but should Hitler, with the aid of Stalin, come out victorious on the Western Front, he would on the morrow turn his guns against the USSR.”[85]

The urgency with which Trotsky took up the slogan of an Independent Soviet Ukraine in 1939 was related to the restorationist threat posed by Stalinist repression driving the Ukrainian masses into the arms of reactionary nationalists and German imperialism. This warning was fully borne out. When German forces entered Kiev in 1941, they were greeted as liberators.[86]

Trotsky, naturally enough, did not write a manual on capitalist restoration in the 1990s. Some of his perspectives were strictly limited in their historical scope; others retained an enduring relevance. What he did leave us were sufficient pointers to prepare for the unfolding of the death agony of Stalinism. In practice, however, most of his would-be successors were unable to read the writing on the wall, still less analyse the process.

Various currents of Greek Trotskyism continue to maintain that it is historically impossible to restore capitalism in the former workers’ states. This is based upon a complete misunderstanding of Trotsky’s analogy of Thermidor in the French Revolution, combined with a metaphysical belief in the powers of nationalised property. Although it is true that after 1935, Trotsky used Thermidor to describe the counter-revolutionary stabilisation of Stalinism on the basis of nationalised property, it is crystal clear that he always considered that a further retrogression to capitalism was entirely possible.

In what sense can we continue to say today – as Trotsky wrote in 1935 – that “the Soviet state still remains the historical instrument of the working class insofar as it assures the development of economy and culture”[87]? The economy stands in ruins, the masses have been pauperised and culture has been thrown back decades. In the face of such sharp breaks in continuity, the repetition of old formulae becomes a senseless exercise in ostrich Marxism.

6. The Road to Restoration

With Trotsky, we believe that the Stalinist bureaucracy only defended the workers’ state insofar as they could derive a reliable source of privilege from it. While politically expropriating the working class, the bureaucracy was obliged to guarantee it tangible gains – job security, low cost housing and other essentials. It was fear of working class resistance to attacks upon these gains which for a long period acted as a constraint upon the pro-market sections of the bureaucracy.

Nonetheless, in the degenerated Soviet Union and the deformed workers’ states Stalinism acted as a transmission belt between the nationalised forces of production and world capitalism. The growing appetites of the bureaucrats to convert their privileges into private property were fuelled by a deepening loss of confidence in the bureaucratically planned economy.

In the 1930s Trotsky could write that “the nationalised and planned economy of the USSR is the greatest school for all humanity aspiring to a better future” and that it had “assured a development of productive forces never equalled in the history of the world”[88]. But the take-off of the post-war imperialist boom left the economies of the Soviet Union and Eastern Europe ever further behind. Once the initial successes of “primitive socialist accumulation” (themselves inflated by the bureaucracy’s statistics) had been achieved, the transition to socialism was blocked. In the long view, the decades since the 1950s represent a long, slow transition in the opposite direction.

Stalinist “command economy” methods increasingly acted as a fetter on the development of the socialised forces of production. The rate of growth in industrial production fell in each five-year period from 1951-1980. This was partly masked in the 1950s and 1960s by the use of labour-intensive methods which, despite the command structure and the lack of advanced technology, produced significant economic growth. In the 1970s, the beginnings of collapse were staved off only by the leap in world oil prices.[89] But by the late-1970s, with the escalation of the arms race following the Vietnam war, the Stalinist relations of production had suffocated the development of the forces of production. This sharpening contradiction set the stage for the economic crisis of the 1980s, which in turn led to the political collapse of 1989-91.

The sharper the contradictions became between the socialised forces of production and the command structure (“central planning”!), the further the Stalinists attempted to offset the stagnation of the economy with market experiments. By the late 1980s, Stalinism had already attempted – and failed – to introduce reform programmes in most countries.[90] These failures only served to undermine what confidence workers had in a transition to socialism via these states, and strengthened illusions in capitalism.

The chief beneficiaries of the various Stalinist attempts at “reform” were the urban middle strata – the “specialists”, the managers and the intellectuals.[91] Their growth not only reflected deep demographic changes – by 1980 over 60 per cent of the population of the Soviet Union lived in cities and towns, and there were 28 million graduates of universities and technical colleges. It also reflected a conscious attempt by the bureaucracy to widen its own social base.
If anything, the social weight of these layers exceeded their numerical strength. It was from such strata that the dissident movement emerged, impatient with the pace of reform and oriented towards bourgeois democracy. And it was to such forces that Gorbachev’s policies of glasnost and perestroika were directed, as were “premature” reform initiatives in Eastern Europe, like the Prague Spring.

These middle layers of society increasingly came to identify “democracy” with the market. The effect of the bureaucratic “reform from above” was to temporarily unite the “liberal” market-oriented sections of the bureaucracy with this middle class, as well as most former dissidents. Separated from the working class by a social gulf, and lacking any faith in a socialist perspective, the intelligentsia quickly grew impatient with the manifest failures of the reform process, and looked to a more “radical” settlement with the old regime, with the promise of salvation in the future market economy. Gorbachev’s determination to manage the reform process through the old party machine increasingly alienated those it had set out to attract.

In contrast, the working class, although its numbers had grown enormously was atomised, cut off from revolutionary traditions and its own organisations for decades. Politically alienated, economically dissatisfied and industrially demotivated, it became increasingly impervious to exhortations and threats. “They pretended to pay us, and we pretend to work” was a well-known samizdat joke. Workers remained suspicious of the entire glasnost and perestroika project. Their consciousness did not rise above a trade union level, so that the miners, whose militant strikes shook the Soviet Union in 1989 and 1991, remained politically loyal at crucial turning points to the restorationist Yeltsin.

The rural population, except in some non-Russian republics where it mobilised behind nationalists, scarcely played any significant role. Despite the appalling inefficiency of Soviet agriculture, Gorbachev’s frequent promises to make farmers the “real masters” of their own soil, had little appeal. The sheer scale of investment necessary to make individual farmers competitive on the world market was sufficient disincentive.

These factors go a long way to explaining the form which the counterrevolution look in 1989-91 – why it took an urban petty-bourgeois-democratic form, and not the rural rebellion which many assumed it would in the 1920s. A number of threads of Trotsky’s analysis were nonetheless confirmed. The period of Gorbachev’s leadership did mark a series of “successive shifts downhill” in the direction of restoration; his warnings of the consequence of enterprises competing with each other, and of the destruction of the monopoly of foreign trade have been fully borne out; those who argue on the basis of institutional continuity would do well to ponder his remarks on the potential for large sections of the bureaucracy to go over to the counter-revolution; the industrial managers have indeed become a fertile breeding ground for future proprietors; the concentration of political power in the hands of the bureaucracy did prepare a succession of “cold strokes”; the mighty Soviet miners’ strikes of 1989 and 1991 did serve, in the absence of revolutionary leadership, to further undermine the old regime, which has given way to a regime of “capitalist – or rather state capitalist – chaos”; and finally, the national question did play a central role in the final debacle of the Soviet Union.

The long duration of Stalinist role did not tie the bureaucracies organically to the non-capitalist foundations of the workers’ states. They always remained parasitic castes within the workers’ states. This has now been confirmed by the central role played by Stalinists and ex-Stalinists in the restoration process.

It is in this context that the dual role/function/nature which Trotsky ascribed to the bureaucracy has to be considered.[92] The foundation of this “duality” lay in the dual character of the workers’ state itself as a “bourgeois state without the bourgeoisie” – while preparing the future society the state was obliged to follow bourgeois norms of distribution.

The victory of a counter-revolutionary bureaucracy in an isolated and backward workers’ state greatly exacerbated this contradiction: “The function of Stalin ...has a dual character. Stalin serves the bureaucracy and thus the world bourgeoisie – but he cannot serve the bureaucracy without defending the social foundation which the bureaucracy exploits in its own interests. To that extent does Stalin defend nationalised property from imperialist attacks and from the too avaricious layers of the bureaucracy itself. However, he carries through his defence with methods that prepare the general destruction of Soviet society.”[93]

The two main Trotskyist traditions after 1953 both falsified this analysis. The International Secretariat/USFI tradition saw the “dual character” of Stalinism as a matter of subjective intention – good and bad, progressive and reactionary. The IC, following Joe Hansen, baldly declared Stalinism to be counter-revolutionary through and through – only to flop down on all fours in front of Tito, Mao and Ho Chi Minh.

No less erroneous was the line of the Stalinophiles who saw the bureaucracy as intrinsically linked to the workers’ state in such a way that it would always be obliged to defend it. If there were any illusions in the correctness of this thesis before, they have been rudely brushed aside.
Clinging to static – and thoroughly false – models of this duality, none of these schools was able to explain its erosion in the materialist terms foreseen by Trotsky: “...if the bureaucracy becomes ever more powerful, authoritative, privileged and conservative, this means that in the workers’ state the bourgeois tendencies grow at the expense of the socialist – in other words, that inner contradiction which to a certain degree is lodged in the workers’ state from the first day of its rise does not diminish, as the “norm” demands, but increases.”[94]

The more the economies of the workers’ states headed into crisis, the less secure a source of privilege they became. Hence, the bureaucrats were less and less willing to defend this base, and began to look to opportunities to jump ship, to the point where this duality was almost entirely expunged.

The dilemma facing a bureaucracy which had lost faith in its own system produced corresponding factions, each with their own social base. The “hardliners” feared that the bureaucracy would be swept away by restoration and clung, with increasing hopelessness, to the old apparatus. The Stalinist mainstream hoped to manage the transition at a pace which would enable large sections of the bureaucracy to find a niche in the new order. Its ideology became “market socialism”. The fast-track “radicals” saw the only salvation in crashing the command economy, and out of the resulting chaos, kick-starting capitalism. Nowhere – and for good reason – did a revolutionary or “Reiss” tendency emerge out of the bureaucracy.

The crisis-ridden bureaucracies, which here and there were able to form alliances with former oppositionists, were able to begin the transformation of the workers’ states info capitalist states, without facing significant resistance on the part of workers.

The collapse which began in Poland in the spring of 1989, and accelerated in the GDR, rapidly became an avalanche. In the course of that period there took place in each country events which in the consciousness of the masses came to symbolise the point of rupture with the political system of Stalinism. In Poland there were the first partially “free” elections in June 1989; in the GDR the fall of the Berlin Wall on November 9, 1989; in Romania the fall of Ceaucescu on December 25, 1989; in the Soviet Union the collapse of the coup on August 21, 1991.

In each of these turning points the restoration of capitalism was far from accomplished; indeed each of them contained the possibility for struggles to defend nationalised property to develop. But in the absence of revolutionary leadership each of these events paved the way for the creation of bourgeois states committed to building and protecting capitalism. To attempt to focus on some single economic measure in order to be able so as to establish exactly the date when the transition from a workers’ state to a bourgeois one took place is a pedantic academic exercise, divorced from the real settlement of accounts which took place on the plane of the class struggle.

At the Conference for Security and Mutual Co-operation in Europe in 1990 all the ruling bureaucracies of Eastern Europe undertook to restore capitalism in their respective countries. From the point at which the leading elements of the Stalinist bureaucracies opted to restore capitalism, the workers’ states were paralysed as defenders of nationalised property relations. Without significant working class resistance, or any resistance worthy of the name from within the bureaucracies, the destruction and transformation of the state apparatuses governing the economic system began. In most cases, those old bureaucrats who were too closely identified with the old regime were soon swept aside by new bourgeois forces which are now carrying out the process of restoration.

This unanimous policy on the part of the bureaucracies became possible not only because the working class in these countries lacked even an embryonic revolutionary leadership; its confidence in a collectivist solution to its problems (shown in Berlin, 1953, Poland and Hungary, 1956, Czechoslovakia, 1968, Poland, 1971, 1976 and 1980-1) had steadily ebbed.
This in turn had material roots in the deep crisis gripping the “command economies”. The impasse of “already existing socialism” and the absence of an alternative programme for political revolution had revived “all the old crap”, in the form of bourgeois democratic, social democratic, “self-management”, nationalist and even fascist ideas. Walled off from acting as a class for itself, the working class has tended to respond to the effects, rather than the principle of capitalist restoration.

Therefore, to argue, as many Trotskyists have, that “all that was missing was the subjective factor” in the Eastern European “revolutions” of 1989-90 is to miss the point completely. It is in fact a “subjective” interpretation of the “subjective factor”, divorced from the objective conditions upon which the consciousness of workers had developed.

Revolutionary parties do not simply fall from the sky. They depend for success on a level of consciousness among the masses themselves. This is not to argue, of course, that it was a waste of time for revolutionaries to intervene in the collapse of Stalinism. What it does mean is that voluntarist notions of “revolutionary leadership” based on wildly inaccurate estimates of the situation will inevitably fail.

7. Self-Determination, Secession and the National Question

Before the August Coup – and even sometimes after it – Stalinophile groups (the International Bolshevik Tendency, the Spartacists and some other groups) considered the fight against national movements and secessionist tendencies to be identical with the defence of the workers’ state. The IBT in its statement of September 15, 1991, declared its solidarity with the Stalinist hardliners because they had “sent ‘black beret’ units to crack down on the pro-capitalist secessionist governments of the Baltic republics.” [95] For the IBT, therefore, the August coup was justified, because Gorbachev “refused to carry the Baltic intervention to its logical conclusion and depose the governments there. He once more began pushing marketization.”[96] The German section of the ICL trumpeted in January 1992: “Dissolution of the Soviet Union means disaster.”[97]

The question which divided the bureaucracy most sharply on the eve of the coup was how to preserve the great power status of the Soviet Union and how to maintain the existence of large parts of the bureaucracy. This latter concern found its expression in the hardliners’ use of overt Great Russian chauvinism – which in turn strengthened the influence of reactionary nationalists in the non-Russian republics.

The IBT recognised that the hardliners were “only too willing to stoop to Great Russian chauvinism and even anti-Semitism to protect their political monopoly.”[98] But this was not going to put them off, since the hardliners’ alleged defence of nationalised property stood higher than their chauvinism.

But lending support to such chauvinism – even indirectly – meant not only dragging the name of Trotskyism through the dirt; objectively it assisted petty-bourgeois nationalism and accelerated the growth of anti-communism.

Those who adapted to the pro-capitalist Great Russian elements of the Stalinist bureaucracy not only revised the Leninist-Trotskyist position on the national question in general; they also specifically revised the Bolshevik position on the fight of national self-determination within workers’ states, developed prior to the Stalinist degeneration of the Soviet Union. Basing themselves on a false analysis of Stalinism, these capitulators toyed with any and every means to preserve the role of the bureaucracy: terrorism against the working class, Great Russian chauvinism towards minority nations and the militarisation of politics.

It is well known that revolutionary Russia recognised the right of Finland and the Baltic republics to secede. In these cases self-determination meant, among other things, accepting the right to form a capitalist state. But the Bolsheviks under Lenin and Trotsky did not only accept this separation because it was forced upon them.

Lenin fought successfully for the inclusion of the fight of self-determination in the programme of the Russian Communist Party: “On the national question, the policy of the proletariat, which has captured political power – unlike that of the bourgeois-democratic formal proclamation of equality of nations, which is impossible under imperialism – is persistently to bring about the real rapprochement and amalgamation of the workers and peasants of all nations in their revolutionary struggle for the overthrow of the bourgeoisie. To achieve this object, the colonial and other nations which are oppressed, or whose fights are restricted, must be completely liberated and granted the fight to secede as a guarantee that the sentiment inherited from capitalism, the distrust of the working people of the various nations and the wrath which the workers of the oppressed nations feel towards the workers of the oppressor nations, will be fully dispelled and replaced by a conscious and voluntary alliance.”[99]

It is true that the Bolsheviks under Lenin and Trotsky did not claim that the fight of national self-determination was absolute, and wrote on several occasions that it was subordinate to the necessities of the class struggle. Nonetheless, they understood that it had to be defended as a precondition for achieving the revolutionary unity of the proletariat.

Bukharin and Preobrazhensky drafted the ABC of Communism as a basic textbook and popularisation of the post-revolutionary programme adopted by the Bolsheviks at the 8th congress, held in March, 1919, at the height of the civil war. In it, they explicitly recognised the fight of national minorities to secede from the Soviet state, even under a bourgeois leadership: “Finally, take the case of a nation with a bourgeois government which wishes to separate from a nation with a proletarian regime, and let us suppose that, in the nation which desires to separate, the majority of workers or a notable proportion of them are in favour of separation...Even in this case it would be better to allow the proletariat of the separating land to come to terms in its own way with its own bourgeoisie, for otherwise the latter would retain the power of saying: ‘It is not I who oppress you, but the people of such and such a country’.”[100]

But whereas the revolutionary Soviet state, besieged on all sides at the height of the Civil War, was prepared to recognise this right, certain “Trotskyists” were prepared to volunteer their services as frontier guards for the collapsing Soviet Union in 1991. For sectarians such as the Spartacists and Voce Operaia, the example of Georgia, whose fights to self-determination were overridden by strategic considerations at the end of the civil war in 1921, served as a pretext to turn the exception into the historical rule.

Trotsky justified the invasion of Georgia, arguing that the revolution faced a direct military threat. However, in his uncompleted biography of Stalin, Trotsky noted that: “In Georgia, premature sovietization strengthened the Mensheviks for a certain period and led to the broad mass insurrection in 1924, when, according to Stalin’s own admission, Georgia had to be “reploughed anew”.”[101]

Today’s sectarians uphold a new programmatic norm: that the defence of a workers’ state always takes the priority over the fight of national self-determination. This position proceeds from the pessimistic assumption that the majority of the working class does not, and will not, defend the workers’ state, and that the action of the working class must be replaced by military means. Under Lenin and Trotsky, the revolutionary prestige of the Soviet state was such that the departure from the programmatic norm in Georgia could be justified.

But under Stalinism, military action to stifle demands for independence could only serve to cement relations between the workers of oppressed nations and the petty-bourgeois and nationalist leaderships, thereby derailing the potential for political revolution. “Trotskyists” who advocated such a course of action were actively doing the restorationists’ business for them.

Faced with mass support for independence, Trotskyists should have counterposed to the nationalist leaderships’ support for separate capitalist states, the slogan of independent Soviet republics, while defending the democratic right of oppressed nations and peoples to secede. Only with such a policy would it have been possible to take the wind out of the sails of the nationalists, and at the same time fight for the unity of workers of all nationalities in the struggle for political revolution. This was the course which Trotsky proposed with growing urgency in the late 1930s for the Ukraine against both fellow travellers of Stalinism and sectarians such as Oehler, when it became apparent, even from the fragmentary information he could obtain, that Stalinism had taken up Tsarism’s role as the jailer of a prisonhouse of nations.

Indeed, he was in favour of extending this position to other non-Russian nations: “We are for the independence of Soviet Ukraine, and if the Byelo Russians themselves wish – of Soviet Byelo Russia.”[102]

The crisis of post-war Trotskyism has produced two equally bankrupt revisions of this revolutionary heritage – one trend tailing the Stalinist bureaucracies, and the other adapting to the petty-bourgeois nationalists. To no small extent this assisted in obstructing the re-emergence of revolutionary parties in the Soviet Union and the countries of Eastern Europe. It is the task of revolutionaries today to reassert all that is best in the heritage of Marxism on the national question.

8. The August Coup and the End of the Soviet Union

The coup of August 19, 1991, was a decisive political test for all those describing themselves as Trotskyists.[103] The IBT believed that in Yanayev’s “Emergency Committee” it had discovered the Thermidorian wing of the bureaucracy, which would defend the workers’ state in its hour of need. The IBT rendered the coup plotters’ Great Russian chauvinism more profound: their conflict with some of the nationalist leaderships in the non-Russian republics the IBT saw as the showdown between the workers’ state and social counter-revolution. The IBT also believed (and this view was tacitly shared by many other groups) that a successful coup could have slowed down the speed of capitalist restoration. But it was the coup which provided the pretext for the Yeltsinite wing of the bureaucracy to accelerate the destruction of the Soviet Union and the process of capitalist restoration.

In fact, the skeletal programme put forward by the coup-plotters was not significantly different to that of the other forces of capitalist restoration, and the position that only the Yeltsinite wing of the bureaucracy (as opposed to either Gorbachev or the coup-plotters) was the conscious instrument of the world bourgeoisie is unsustainable. From 1990 onwards, Gorbachev was aiming not just at market “reforms” but at capitalist restoration. The winter of 1990-91 saw Gorbachev pull back from fast-track restoration, and tack in the direction of the “conservatives”. This reflected an attempt to offset the narrowing “democratic” base of the regime. But the intractable problems of the economy forced him by the spring of 1991 back into the arms of the “radicals”.

The pace of restoration, in any case, could not be determined by any of the decomposing wings of the bureaucracy, and depended on the degree to which foreign capital could be attracted and an indigenous capitalist class developed. In this sense, even Shatalin’s 500-day plan for privatising the economy, which Gorbachev abandoned in October 1990, could not have been decisive in the short term.

The months leading up to the coup saw the imperialists’ patience wearing thin, as the economic and political situation within the Soviet Union steadily deteriorated. But in the eyes of most of the imperialists, Gorbachev remained a more serious and reliable ally than the erratic and unreliable Yeltsin. Shortly before the coup Yeltsin was received in a very reserved way by the European parliament. Gorbachev, in contrast, was warmly received after the G7 summit in July, 1991 by British Prime Minister Major. In the course of their discussions, Major referred to Yeltsin disparagingly as a “populist”.[104]

Gorbachev’s biggest problem was that this political sympathy did not extend to hard cash. He was sent away from the G7 summit empty handed, and there were even sympathetic reports in the Western press about a possible “Chilean solution” to carry out capitalist restoration.

Although the pace of capitalist restoration was one element in the split in the bureaucracy, it was certainly not the decisive one. The immediate motivation for Yanayev and his supporters was Gorbachev’s Union Treaty, which they saw as a betrayal of the Soviet Union’s “great power” status.

What is more, the restorationist goal was never in dispute. In their declaration to the United Nations and to the world’s governments on August 19, 1991, the coup-plotters stated that the emergency measures taken “will in no way...lead to the abandonment of the course of fundamental reforms in all areas of life of state and society.”[105] Underlining their preparedness to continue Gorbachev’s pro-market “reforms”, they promised: “Favourable conditions shall be created for increasing the real contribution made by all types of entrepreneurial activity”.[106]

The response of the most important imperialist politicians to the coup was to announce their readiness to continue co-operation with the new leadership of the Soviet Union. Some bourgeois commentators saw it as a chance to slow down the course of restoration and avoid provoking major class struggles.

These considerations did not prevent both the Spartacists and Franco Grisolia of the Faction for a Trotskyist International (now part of the International Trotskyist Opposition in the USFI) from declaring Yeltsin to have been the main enemy during the August events, or from speculating about a possible alliance with the coup plotters, whom they reproached for their lack of professionalism in the business of carrying out putsches (the Spartacists) or for their lack of proletarian support (Grisolia).

Both claimed to base themselves upon Trotsky’s hypothesis of a “united front” with the Thermidorian wing of the bureaucracy against capitalist counter-revolution in the Transitional Programme of 1938. Trotsky believed that such a bloc was only possible under the most extreme and exceptional circumstances. (Significantly he uses the term united front in inverted commas in the Transitional Programme.) The Spartacists and the IBT turned this unlikely possibility into the strategic axis of their policy – outside of time and space, and independent of concrete analysis.

In fact these capitulators to Stalinism and to Great Russian chauvinism (both of them restorationist tendencies incidentally!) were unable to show that even a minority Stalinist current existed within the bureaucracy genuinely committed to the defence of the workers’ state against capitalist counter-revolution, still less a revolutionary one. Idle speculation about whether it would have been permissible to support the coup-plotters if they had had more proletarian support or a better programme simply misses the point.

The failure to seriously analyse the socio-economic course of the various wings of the bureaucracy, was compounded by an equal failure to examine which relationship of forces offered the best possibilities for the working class to organise, to gain confidence in its own strength and to develop its class consciousness.

The idea that working class political independence could be bartered for the “right” to passively support a military coup was totally alien to Trotsky’s thinking. The programme of political revolution rested on the premise that the working class could only defend the workers’ state with its own, proletarian, methods. Its interests lay solely in defending its gains, which were linked to the existence of the workers’ state, rather than defending the bureaucratic apparatus which sat on top of it.

Confronted by the coup – the collapse of which only became apparent after three days – revolutionaries had to propose a course of action which would enable the working class to develop from an atomised and disoriented mass into a class for itself, gaining self-confidence and class consciousness, and understanding the tasks it faced. There could not have been any “purely economic” defence of workers’ interests without also defending the democratic rights – the right to strike, to organise, to hold meetings, to build political parties etc – which had been won.

The attitude of the coup-plotters towards the working class was clear. The Emergency Committee’s Resolution No. 1 stated: “The activities of political parties, social organisations and mass movements hampering a normalisation of the situation shall be halted...The Procurator’s Office, the Interior Ministry, the KGB and the Ministry of Defence of the USSR shall organise effective interaction between the law-enforcing agencies and Armed Forces...The holding of meetings, street manifestations, demonstrations, and also strikes shall be prohibited. When necessary, a curfew, patrolling of the territory and inspections shall be introduced, and measures taken to strengthen the border and customs regimes…A resolute end shall be put to...disobedience towards officials engaged in ensuring compliance with the regime of the state of emergency.”[107]

This clearly shows that the pseudo-Trotskyist strategists of “alliances with the Thermidorian wing of the bureaucracy” had overlooked one “small matter”: that every attempt to mobilise the working class independently in defence of its own class interests would immediately have brought it into direct conflict with its “allies”, the putschists. In other words, this “united front” could only operate if the working class stayed at home! Faced with the stark choice of resistance or political capitulation to the coup, they chose the latter, using the argument that Yeltsin – at this moment – was the “main enemy”.

The fact that any independent working class action would have inevitably led to a sharp confrontation with the putschists did not however mean that revolutionaries should have given political support to Yeltsin. Nevertheless – as at August 19, 1991 – the most important task was to defend the democratic rights of the working class and the minority nations against the immediate threat of the coup, by mobilising for a general strike, and, if conditions had ripened, by organising an armed uprising. Yeltsin had not ceased to be an enemy, but in this situation he had to be fought with different methods from those which were necessary against the putschists.

Without proposing a united front to Yeltsin, (as Workers Power/LRCI did), common action with Yeltsin’s supporters in the trade unions would have been unavoidable and necessary in the context of a general strike or a generalised armed confrontation. This would have enabled revolutionaries to have criticised Yeltsin and his supporters for failing to take decisive measures against the putschists, and instead of energetically mobilising workers, pinning their hopes on sections of the Stalinist apparatus. The success of such a policy presupposed a willingness to fight in a military bloc alongside Yeltsin and his supporters. Similar tactics were applicable towards the nationalists in the non-Russian republics, most of whom sat out the coup in cowardly neutrality.

Most of those who speculated on the possibility of an alliance with the Thermidorian wing of the bureaucracy (FTI, ICL, Liaison Committee of Communists) came down in favour of the apparently “revolutionary” line of taking no side in the conflict, and mobilising the working class independently. But such a position was entirely abstract. In so far as the working class mobilised, it took action against the coup. Had Yeltsin’s call for a general strike taken hold, then it would have been farcical to attempt to call another general strike alongside the one already in progress. It would, on the contrary, have been obligatory to agitate among workers taking action, warning of the danger represented by Yeltsin, and counterposing a transitional programme to defend workers’ rights to the programme of the “democratic” restorationists.

Within three days, however, the situation had changed completely. Yeltsin exploited the situation, in the face of a pantomime coup and widespread working class apathy, to drive forward the development towards capitalist restoration. The basis for a tactical bloc with the Yeltsinites (similar to that of the Bolsheviks with Kerensky during the Kornilov coup) no longer existed. But the fact that Yeltsin was now the main enemy did not give any retrospective justification either to the policy of the putschists, or to the policy of “critical support” for the coup.

Neither the coup plotters nor any other significant current within the bureaucracy put forward a serious programme for the defence of the workers’ state. But the coup plotters also lacked a viable programme for capitalist restoration. Once this became clear, it had the effect of rallying the fragmenting apparatus around Yeltsin, which in turn meant that he could avoid mobilising workers against the coup. Had he been forced to do so, it would in all likelihood have radicalised the masses, in spite of Yeltsin’s intentions, and potentially have endangered the restorationist course.

The aftermath of August Coup demonstrated that an overwhelming proportion of the Stalinist bureaucracy supported capitalist restoration in one form or another. Instead of slowing down the pace of restoration, the coup had the opposite result. Yeltsin was now able to purge those elements of the bureaucracy which had hesitated over the restorationist course. The banning of the CPSU – the political headquarters of the bureaucracy – symbolised the collapse, not only of the old regime, but of the workers’ state. The dissolution of the Soviet Union in December 1991 merely underlined the victory of the counter-revolution.

On more than one occasion Trotsky compared the degenerated workers’ state to a trade union with a reactionary bureaucracy which had conquered power.[108] However, he also spelt out the limitations of the analogy: “Should these gentlemen [the bureaucracy] in addition defend the income of the bourgeoisie from attacks on the part of workers; should they conduct a struggle against strikes, against the raising of wages, against help to the unemployed; then we would have an organisation of scabs, and not a trade union.”[109] Who today can seriously doubt that the Yeltsin government is “an organisation of scabs” which, in alliance with imperialism, has broken the back of the workers’ state?

Reality finds it hardest to penetrate the skulls of doctrinaires and sectarians. Stalinophiles like the Spartacists, who had expected that the bureaucracy would, even to a limited extent, resist restoration, were thrown into confusion by Yeltsin’s counter-coup, For more than a year, the ICL clung to the definition of the (ex-) Soviet Union as a degenerated workers’ state.

The Spartakist Arbeiterpartei (German section of the ICL) foolishly wrote in January 1992: “In reality the dismembering of the USSR did not leave an accomplished capitalist counter-revolution, but a gigantic mess, since what we are confronted with in the dissolution of the Soviet Union today, is a number of governments, which are counter-revolutionary through and through and which have the intention of smashing the degenerated Soviet workers’ state”.[110]

In the same issue of its journal it cited approvingly an article from Workers Vanguard[111], which referred to Yeltsin merely as the “would-be grave-digger” of the USSR, and this insight was topped off with a quote from the Financial Times: “The news of the death of the Soviet Union seems to have been a little bit overhasty.”[112] The big hope of the Spartacists followed: “In the whole country there is talk of a new coup d’état – this time it is said, that the military will play an important role – and/or a people’s uprising, triggered off by the economic disaster and the growing hunger.”[113] The order of priorities given to these hopes was hardly surprising!

In November 1992, the ICL abruptly changed its position, arguing – in terms that which were methodologically very vague – that the failure of workers to resist counter-revolution was central to the redesignation of the state as bourgeois.[114]

9. The Crisis of Restoration

Those who consider that workers’ states still exist in Eastern Europe and the ex-Soviet Union in fact press reality into abstract and pre-determined schema, based upon secondary criteria given in some Marxist classics – criteria which moreover have been proven wrong by history. This only gets them deeper into theoretical quagmire. They talk about workers’ states even though for nearly four years Russia and the CIS have been led by pro-capitalist governments actively driving forward capitalist restoration. If this theory were correct, its proponents would have to concede that it is possible for counter-revolutionaries to take possession of a workers’ state and make it serve counter-revolutionary purposes – without fundamentally changing its social character!

Not all the currents of the “Trotskyist movement” which deny that bourgeois states have been restored are waiting for a classical civil war to unfold. But in common with the doctrinaires, they emphasise the undoubted problems facing the development of capitalism. In particular they refer to the difficulties facing privatisation because of the lack of foreign investment; the weakness of domestic capital formation; the painful and difficult transformation of nationalised property into capital; the creation of a corrupt bourgeoisie, drawn from the former nomenklatura and from criminal and comprador elements; the problem of integration into the world market while attempting to preserve the cores of the existing national economies. Such conditions have inevitably led to enormous instability – the sharpening of the class struggle; the development of xenophobic and fascist movements and repressive regimes; sudden turns in the political situation, including civil wars.

But these factors, real as they are, do not demonstrate the continued existence of workers’ states; they are the birth pangs of a weak capitalism, operating in a far from “normal” fashion. The central theoretical error at work is the failure to distinguish between the state and the socio-economic system, and to grasp the essential differences between bourgeois and workers’ states.

In any case, distinctions need to be made between the conditions in different countries. Empirical evidence suggests that the restoration process is proceeding with widely varying results. The more economically advanced countries of Eastern Europe -the Czech Republic, Hungary, Poland, Slovenia and the Baltic states – having suffered acute crisis between 1989 and 1992 have begun to recover. With productivity at 40 percent but wages at only one eighth of German rates, they have begun to attract inward capitalist investment, and may gain associate status with the EU. For the states laying further to the east Bulgaria, Romania and especially the ex-Soviet Union – the situation is altogether bleaker, with no end in sight to the crisis.

The turning point in the wake of the abortive coup therefore by no means signified that restoration had been accomplished from an economic standpoint. To break up the degenerated workers’ state is one thing. Building a thriving capitalism in its place is another. Even though after 1991 it was clear to everyone that the old Soviet Union could not be resurrected, Yeltsin has encountered similar intractable problems to Gorbachev. Presidential decrees are only implemented hesitantly and partially. The restoration of capitalism without prior capital accumulation or extensive foreign investment cannot be realised overnight and its successful outcome is far from assured.

The immediate effects of Yeltsin’s counter-coup were political rather than economic. They imprinted themselves upon the consciousness of the masses, and served to further weaken the small number of Stalinists who attempted to resist.

The main tasks facing the restorationists in country after country, which are at various stages of completion, can be broadly summarised as follows:

i. the building of a functioning capitalist state
ii. a purge of the old state apparatus from top to bottom
iii. the dissolution of the machinery of central planning
iv. the abolition of restrictions on commerce and capital transactions, and the development of a capitalist banking system
v. the withdrawal of the state from the economy, transforming nationalised property and the work-force into capital
vi. the establishment of a new tax and fiscal administration.

The tasks relating to the state and the economy are inter-related, but not identical. The transition from the workers’ state to capitalism is marked by a period of “state capitalism” – mirroring the opposite development in Eastern Europe in the 1940s. Far from representing a continuation of “planned economy”, it is the only viable means of preparing large parts of the economy for privatisation. A central component of this strategy is the conversion of money into capital. The exposure of currencies to international comparison, and the freeing” of prices via “big bangs” restore money as a real (i.e. capitalist) measure of value, and facilitate capital formation through the pauperisation of the masses, on the one hand, and the creation of commodity production for profit on the other. This process is the consequence, rather than the cause, of the creation of bourgeois states.

The primitive accumulation of capital relies to a considerable extent upon comprador and directly criminal methods together with the exploitation of the old Stalinist apparatus of political and economic management. The development of the new bourgeoisie is therefore characterised by corruption and the pillage of state property “by any means necessary”. But while such methods are necessary in the creation of a capitalist class, they simultaneously obstruct the “normal” functioning of a bourgeois state, which is obliged to create a stable legal framework for capitalist activities.

In its birth pangs, therefore, the new bourgeois state lacks even the legitimacy of modern imperialist states, which are obliged to appear “impartial” in their dealings with capitalist citizens. It cannot meet the needs of a developed capitalism. But neither capitalist nor bourgeois state apparatuses have to be “ideal” or “ready” in order to be pressed into service. We have already pointed to the fact that capitalism can coexist for a period with other forms of production inherited from the past.

In transitional periods it is the character and the real policy of the leadership of a state which is decisive in determining its class character. Only guided with this criterion can we give clear answers to the problems posed, in conformity with the rhythm of history.

The class struggle never entirely disappeared in the degenerated and deformed workers’ states; nor has it in the restored bourgeois states, even if it takes new forms. A period of prolonged political instability is inevitable, in which rival groupings of aspiring capitalists will struggle to win control over the levers of political power. New relations are being established between the classes and the state, and between the different strata of classes. These constant changes in class relations and state institutions do not contradict our characterisation of these states as bourgeois. Rather, their weak character means that this instability is likely to continue so long as authoritative political parties and other means of regulating relations between the new bourgeoisie and the state institutions do not exist.

Developments since 1991 confirm that the bloc which supported Yeltsin at the time of the coup was far from stable. Conflicts have repeatedly arisen, which reflect the relationship of different sections of the bureaucracy to the restoration process. Some favour protection from the world market on the basis of extensive nationalisation as a means to create a strong Russian bourgeoisie, while others are prepared to accept a capitalist economy dominated by imperialism. Both currents supported, or at least tolerated, Yeltsin for a period and were represented in both the “conservative” parliament and Yeltsin’s government. In the provinces the restorationists were able to base themselves on the regional apparatuses, free from direct political control from the centre.

Yeltsin’s showdown with the Russian parliament in October 1993 did not solve the conflicts which had arisen.[115] Although he won militarily, it was clear that Yeltsin’s hold over the apparatus and the army was shaky. And although his second “counter coup” strengthened his hand, his allies among the more energetic “modernisers” had lost much of their popular support by the time of the elections in December 1993. In the pre-election period a wave of strikes took place.

The Yeltsinite electoral bloc, despite the massive financial support it received from the new Russian banks, was wiped out in the provinces and polled less than 20 per cent. Even if these results signalled a defeat for those restorationists most closely identified with international finance capital, they should not be mistaken for a defeat for capitalist restoration as such. The banks had also invested heavily in the campaign of the maverick Russian nationalist Zhirinovsky as a means of derailing popular discontent. Until the elections, Zhirinovsky had pursued a moderate line towards Yeltsin, and had supported him on the constitution. Yeltsin had responded by allowing Zhirinovsky a monopoly of nationalist representation in the elections. Zhirinovsky’s success, together with the results achieved by the opposition obliged Yeltsin to adopt a course which paid more attention to the new “national” capitalists and Great Russian demagogues.

This marks a qualitative departure from former times. In a bourgeois state, political changes do not eliminate the social role played by capitalists and their representatives – hence the need for the new state to attempt to accommodate and balance between competing factions. In contrast, the old Stalinist cliques lost their material privileges and social role when they were purged from the nomenklatura.

Yeltsin and his successors will not be able to establish a stable framework for capitalist development so long as the fundamental conflicts within the restoration process remain unresolved. At present the working class is disoriented and without any significant revolutionary leadership. But if workers reoriented themselves towards defending their class interests, the restorationists would in all likelihood attempt to close ranks behind a military dictatorship, or even fascism. Yeltsin’s efforts to impose strong presidential rule are only a weak anticipation of this possibility.

10. Towards a Programme of Action

The central task of Trotskyists is to assist the working class in all the territories of the ex-Soviet Union to build revolutionary parties – sections of a rebuilt Fourth International. Such parties will have to orient to every struggle of workers and other oppressed sections of society against the effects of capitalist restoration. In the scope of this document it is only possible to sketch the main lines of a programme of action.

Such a programme of action must begin with the defence of the democratic rights of the working class and the oppressed.

For a constituent assembly! In this period where real soviets are not on the immediate agenda and revolutionaries can only propagandise for such workers’ councils, it is necessary to mobilise the multinational working class in the cities and in the kolkhozes against Yeltsin’s Duma.

The main axis of the programme must be the struggle to defend the living standards of workers, the young and pensioners.

For a sliding scale of wages and pensions!
Defend nationalised property and social services!
Stop all lay-offs!
Stop privatisation and corruption!
Expropriate the new rich, the new banks and the criminal gangs!

The ex-Stalinist bureaucrats and the new bourgeoisie can be stopped through the fight for workers’ control of factories and kolkhozes and for a new economic plan drawn up democratically by producers and consumers.

Worker’s’ committees to make their own inventory of state and collectivised property to prevent its pillage by the restorationists!
For a worker’s plan for economic reconstruction – No to the World Bank, the IMF and their Russian agents!

To carry out this struggle, workers must organise themselves both politically and economically, independent of the restorationists and the national chauvinists. Trotskyists must participate in both the trade unions and any mass workers’ party presenting their programme in democratic competition with other tendencies to convince activists of the need for revolutionary leadership.

For a class struggle policy and workers’ democracy in the trade unions!
For a worker’s party based on the trade unions!

In every important struggle, workers will be confronted by fascist thugs and other reactionaries, as well the police and the army. A workers’ party must defend all workers’ organisations and the right to strike, as well as defending the democratic rights of rank and file soldiers.

Build defence groups towards the creation of a workers’ militia!
Organise soldiers’ committees!

Equal rights for women! Working class women must be free to participate fully in the workforce and in the political and social revolution. Such fights must include:

Equal pay for equal work!
Free 24-hour childcare centres!
Free contraception and free abortion on demand!
Free quality socialised dining rooms in the factories and neighbourhoods and free laundries!
Equal rights for gays and lesbians!

Workers will only successfully defend their rights if they create the maximum unity. Trotskyists will fight for a united front of all organisations which base themselves upon the urban and rural working class. While they advocate a united multinational struggle against social and political reaction, they will defend the right of all oppressed nationalities to self-determination, up to and including secession. Trotskyists will oppose every manifestation of racism and chauvinism, especially the Great Russian variety.

A fighting united front of the working class poses the building of factory committees and genuine soviets throughout the ex-Soviet Union. In the course of their struggle against the bureaucrats turned restorationists, workers may well throw up different organisational forms to these tried and tested ones. But for them to be successful the goal must remain workers’ governments which base themselves upon the mass organisations of the working class and the principles of workers’ democracy. In such governments there will be no place for those who seek to bring back Stalinism.

Long live internationalism!

Rebuild the Fourth International!

April 1995

________________________________________
[1] Samizdat, p.207
[2] Samizdat, p.207
[3] See L. Trotsky, ‘The Workers’ State, Thermidor and Bonapartism’ in: Writings of Leon Trotsky (1934-35), Pathfinder, 1971, pp. 166-184, and R. V. Daniels: The Conscience of the Revolution, Simon and Schuster, 1969
[4] Samizdat, p.207
[5] M. Dewar, The Quiet Revolutionary, Bookmarks, 1989, p.16
[6] L. Trotsky, Writings of Leon Trotsky (1937-38), pp.34-44
[7] G. Breitman (ed), The Founding of the Socialist Workers Party, Monad, 1982, pp.141-5; L. Trotsky, Writings of Leon Trotsky (1937-38), pp.60-71
[8] See L. Trotsky, In Defence of Marxism, New Park, 1975, and J.P. Cannon, The Struggle for a Proletarian Party, Pathfinder, 1972.
[9] B. Rizzi, The Bureaucratization of the World, Tavistock, 1985
[10] J. Burnham, The Managerial Revolution, Penguin, 1962
[11] T. Cliff, State Capitalism in Russia, Pluto, 1974
[12] M. Djilas, The New Class, Unwin, 1966
[13] Socialist Action (US), World Political Resolution submitted to the USFI 14th World Congress, August 1994
[14] Class Struggle, No. 51, December 1992
[15] L. Trotsky, Writings of Leon Trotsky (1933-34), Pathfinder, 1972, p.104
[16] L. Trotsky, Writings of Leon Trotsky (1937-38), p.65, p.61
[17] W. l. Lenin, Collected Works, Vol. 27, Moscow, 1965, p.335
[18] CWG/LTT Fusion Declaration, Workers News, No. 44, Mar-Apr 1993
[19] T. Grant, The Unbroken Thread, Fortress, 1989, pp.342-70
[20] K. Harvey, ‘Poland’s Transition to Capitalism’, Permanent Revolution 9,
Summer/Autumn 1991
[21] Workers Power/lrish Workers Group, The Degenerated Revolution: The Origins and Nature of the Stalinist States, WP/lWG, 1982, p.53
[22] Ibid., p.59
[23] Ibid., p.72
[24] F. Engels, Anti-Dühring, cited in A. Richardson (ed), In Defence of the Russian Revolution: A Selection of Bolshevik Writings 1917-1923, Porcupine, 1995, viii
[25] Trotskyist International, No. 11, May-Aug, 1993, p.45
[26] The Degenerated Revolution, p.97
[27] Permanent Revolution No. 9
[28] The Degenerated Revolution, p.46
[29] Trotskyist International, No. 11, p.47
[30] Trotskyist International, No. 16, Jan-Apr 1995, p.24
[31] Trotskyist International, No. 11, p.45
[32] L. Trotsky, Writings of Leon Trotsky (1934-35), p.182
[33] Documents of the Vern-Ryan Tendency, Communard Publishers, n.d., p.33
[34] Ibid., p3
[35] Much of the empirical information, although not the argument, of the following paragraphs is drawn from T. Wohlforth and A. Westoby, “Communists’ Against Revolution”, Folrose, 1978; C. Harman, Class Struggles in Eastern Europe 1945-48, Bookmarks, 1988 and A. Westoby, Communism Since World War II, Harvester, 1981

[36] F. Claudin, The Communist Movement: From Comintern to Cominform, Peregrine, 1975, p.464
[37] See J. Bloomfield, Passive Revolution: Politics and the Czechoslovak Working Class 1945-48, Allison and Busby, 1979
[38] K. Marx, The Civil War in France, Marx-Engels Collected Works, Vol. 22, Moscow, 1986, p.328
[39] L. Trotsky, Writings of Leon Trotsky (1933-34), p.103
[40] A. Richardson, Introduction to In Defence of the Russian Revolution, vii-ix
[41] In Wohlforth and Westoby, ‘Communists’ Against Revolution
[42] Ibid., pp.87-8
[43] Communism Since World War II, p.387
[44] I. Deutscher, Russia, China and the West 1953-1966, Penguin, 1970, p.47. For a detailed account of twists and turns of Soviet policy on Germany see D. Dallin, Soviet Foreign Policy After Stalin, Lippincott, 1961
[45] Russia, China and the West, p.48
[46] L. Trotsky, In Defence of Marxism, p.22
[47] Ibid., p.23
[48] Ibid., p.36.
[49] Ibid., p.113
[50] Ibid., p.34
[51] D. North, The Heritage We Defend, Labor Publications, 1988, p.145
[52] P. Frank: The Fourth International, Ink Links, 1979, pp.72-3
[53] S. Bornstein and A. Richardson, War and the International, Socialist Platform, 1986, p.217
[54] E. Germain, ‘The Soviet Union after the War’, SWP International Information Bulletin, Vol. 1, No. 2, September, 1946
[55] Quoted in S. Bornstein and A. Richardson, The War and the International, p.217
[56] Ibid., p.217
[57] See B. Pitt, ‘The Fourth International and Yugoslavia (1948-50)’, Workers News supplement, July 1991
[58] Ibid
[59] Class, Party, and State and the Eastern European Revolution, SWP Education for Socialists, 1969, p.13
[60] Ibid., p.11
[61] Ibid., p.14
[62] Ibid., p.19
[63] Quote in D. North, The Heritage We Defend, pp.162-3
[64] Quoted in ibid., p.175
[65] Class, Party, and State and the Eastern European Revolution, p.22
[66] M. Pablo, ‘Yugoslavia and the rest of the Buffer Zone’, SWP International Information Bulletin, May 1950
[67] Class, Party, and Stare and the Eastern European Revolution, p.40
[68] Ibid., p.41-2
[69] Pablo considered that the transition from capitalism to socialism might span “an entire historic period”, occupied by a “whole gamut of transitional regimes” which would suffer from some degree of “deformation”. This unremarkable prognosis, not greatly dissimilar from Lenin’s conception of the transition period, became transformed by those who formed the International Committee, into the legend of “centuries of deformed workers’ states”.
[70] D. North, The Heritage We Defend, p.181
[71] Pierre Frank’s report to the congress, Class, Party, and Stare and the Eastern European Revolution, p.50

[72] L. Trotsky, The Revolution Betrayed, New Park, 1982, p.255
[73] See W. I. Lenin and L. Trotsky, Lenin s Fight Against Stalinism, Pathfinder, 1975, and M. Lewin, Lenin’s Last Struggle, Pluto, 1975
[74] L. Trotsky, ‘Socialism and the Market’, Workers News No. 31, May 1991
[75] Ibid
[76] L. Trotsky, Towards Socialism or Capitalism?, New Park, 1976
[77] The Platform of the Joint Opposition (1927), New Park, 1973
[78] L.Trotsky, The Challenge of the Left Opposition (1926-27), Pathfinder, 1980, pp.258-64
[79] Ibid., pp. 260-1
[80] L. Trotsky, Writings of Leon Trotsky (1933-34), p.117
[81] L. Trotsky, The Revolution Betrayed, pp.250-53
[82] Ibid., p.253
[83] L. Trotsky, Writings of Leon Trotsky (1935-36), Pathfinder, 1977, p.63
[84] L. Trotsky, Writings of Leon Trotsky (1937-38), p.63
[85] Trotsky, In Defence of Marxism, pp.19-20
[86] For an autobiographical account of life under the occupation see A. Kuznetsov, Babi Yar, Penguin, 1982
[87] L. Trotsky, Writings of Leon Trotsky (1934-35), p.170
[88] L. Trotsky, Writings of Leon Trotsky (1937-38), p.35
[89] Although at what cost is debatable. The short term benefit to the balance of payments must be offset against the negative effects of diverting huge resources away from other branches of the economy
[90] The dissident Andrei Amalrik perceptively noted in 1969: ‘The so-called “economic reform”, of which I have already spoken, is in essence a half-measure and is in practice being sabotaged by the party machine, because if such a reform were carried to its logical end, it would threaten the power of the machine.’ A. Amalrik, Will the Soviet Union Survive Until 1984?, Penguin, 1980, p.34.)
[91] See D. Singer, The Road to Gdansk, Monthly Review, 1982, chap. 3
[92] On this point, see D. Bruce, ‘Trotsky and the Materialist Analysis of Stalinism. A Reply to Cliff Slaughter.’, WRP internal document, and A. Richardson, Introduction to In Defence of the Russian Revolution
[93] L. Trotsky, Writings of Leon Trotsky (1937-38), p.65
[94] Ibid., p.67
[95] 1917, No. 11,Third Quarter, 1992
[96] Ibid.
[97] Spartakist, No. 92, January 1992
[98] 1917, op cit.

[99] W. I. Lenin Collected Works, Vol. 29, Moscow, 1965, p.127
[100] N. Bukharin and E. Preobrazhensky, The ABC of Communism, Penguin, 1970, p.248
[101] L. Trotsky, Stalin, Vol. 2, Panther, 1969, p.47
[102] L. Trotsky, In Defence of Marxism, p. 24
[103] For an analysis of the tactical issues, and the positions of various Trotskyist currents, see M. Sullivan, ‘The August Coup Revisited’, Workers News No. 46, August 1993
[104] Guardian, June 21, 1993
[105] Frankfurter Allgemeine Zeitung, August 20, 1991
[106] Putsch -The Diary, p.19
[107] Putsch -The Diary, p.19

[108] L. Trotsky, In Defence of Marxism, p.31, p.36; Writings of Leon Trotsky (1937-38), p.64-5
[109] L. Trotsky, Writings of Leon Trotsky (1937-38), p.65
[110] Spartakist, January 1992
[111] Workers Vanguard, December 27,1991
[112] Financial Times, December 1, 1991
[113] Spartakist, January 1992
[114] How the Soviet Workers State was Strangled, Spartacist pamphlet, 1991

[115] How the Soviet Workers State was Strangled, Spartacist pamphlet, 1991

The Development of Capitalism in NZ - Part 4

2006-04-11T19:29:00.000-07:00

4.0 THE ANALYSIS OF CRISIS AND THE N.Z. SOCIAL FORMATION.

Our previous analysis has stressed two basic points of relevance to an analysis of crisis. First, is the need to consider the N.Z. formation as an articulation of various sub-modes under a dominant mode of production. Second, is that the operation of its economic base may best be thought of as complicated system of interlocking circuits operating to reproduce capital in its various forms. Crisis may be defined as a period of dislocation, or discrete reversal in the speed and pattern of the circulation of capital throughout this base. Since the various moments of the circuit are moments at which capital, in some form, is active, e.g. industrial capital at time of advance, productive capital during the process of production, bank and merchant capital at time of sale etc. then no one moment or particular fraction or social class represented by that moment, has a fortune fundamentally different from any other. All are affected by the dislocation of the flow of exchange value through the various interlocked circuits. Less profit in one area leads to less in another and hence to cumulative processes of contraction, or expansion, as conditioned by various structural and other phenomena involved. These may be, for example, the time periods of production, the nature of operation of monetary institutions, the patterns of income distribution and so on.

Since a crisis ultimately affects all moments of the circuit, production, circulation, distribution, reinvestment, it is unreasonable to classify crises as uniquely crises of overproduction, or of foreign exchange or whatever. Categorising along these lines reflects an attempt to identify the apparent source or most obvious manifestation of the dislocation which has lead to the crisis. For instance, a crisis of overproduction as evidenced by unsold stocks of commodity capital has its immediate source in inadequate demand for these commodities which in turn implies a disruption in the flow of purchasing power to those doing the demanding. But, the actual cause of the disruption is not explained. Many crises in New Zealand are, in these terms, crises of production; i.e. they dislocate the production process initially - labour disputes for instance - and thereafter affect distribution and exchange. But these crises are of a relatively superficial nature. They don't greatly affect the reproduction process and can be dealt with outside the production process itself.

At some stage however (the mid 1970's) there occurred a "structural crisis of reproduction" reflected in a discrete fall in the rate of profit in a significant number of the main branches of production. The decline in the rate of profit reflects the inadequacy of available measures to counter the tendency of the rate of profit to fall. A structural crisis of reproduction therefore brings on the need of the ruling class to review the structure of the total social capital and to adopt a range of specific measures for regenerating the accumulation process. It involves, in principle via the mediation of the state at all levels and instances, alteration of the pattern of accumulation, liquidation of inefficient businesses and reorientation in directions that will restore and surpass previous levels of profitability. The crisis acts to "purge" the impurities as it were, and thereby to ensure that expanded reproduction and circulation will be renewed. Such is the nature of the crisis now affecting world capitalism and New Zealand in particular.

The main features of the current crisis are by now very familiar –slow growth in production, heavy unemployment, low rates of profit, high indebtedness of many manufacturing businesses, declining real wages etc. At the base of this crisis is the inadequacy of the mass of surplus-value being produced to satisfy the demands for consumption, accumulation and other reproductive functions placed upon it. The role of the crisis is to effect a redistribution of the surplus value away from areas of lesser efficiency, out of the hard won gains of working class struggles, and out of generally unproductive hands, into areas of higher accumulation potential. The methods used require an attack by the ruling class and the state at the economic, political and ideological instances, in order to bring about the required restructuring. The general direction of the desired restructuring is that of manufacturing production for export, assisted by a widened range of specific state subsidies and tax concessions. Incomes and income taxes have been shifted in favour of the higher income groups and the managerial fraction in particular (see 3.6), with only minor' concessions' allowed for lower wage earners, domestic workers, welfare beneficiaries etc.

Given the generalisation of monetary circulation throughout the entire economic base, the impact of the crisis cannot be escaped by any class or class fraction as part of the dominant CMP or any of the sub-modes with whicl1 it articulates. Rather, the impact is passed through the various circuits to the weakest points, at which 'moments' the impact is offloaded. These points are those at which the sub-modes articulate with the dominant mode and show up as increased exploitation of weaker classes. On this basis the PFM, domestic labour, youth, racial minorities etc. are the groups to bear the major impact of the crisis, a conclusion that can be easily verified by empirical investigation e.g. on properly defined PFM terms of trade , relative wage of Maori labour, whatever.

In order to legitimate its economic restructuring policies, the state engages in an ideological and political offensive. On the one hand it must gather support for its policies by appealing to an overriding patriotic sentiment and present the restructuring as in the' national interest'. At the same time as exhorting all New Zealanders to 'pull together' (Task Force Report) the ideological apparatus of the state operates to divide the basis of solidarity within the working-class by setting striker against non-striker, skilled against unskilled, white against non-white, married against unmarried and so on. Any attempt to 'rock the boat' or 'stir' is immediately interpreted as greedy, short-sighted, communist-inspired etc., and against the nation's' interests'. The bourgeois notion of harmony only resides, in the mind, at the level of joint participation ("working together") in the nation's development, at which level conflict dematerialises.

It should be emphasised however, that each 'solution' to a crisis of reproduction in the' national interest', while it may restore the rate of profit for a time, can only do so by accelerating the maturation of the CMP and the pre-conditions for socialist revolution (Marx, German Ideology ,54). That is, the basic contradiction between the forces of production and capitalist social relations becomes condensed in a more acute form on a higher plane. The forces of production are concentrated in the monopoly sector to a greater degree by restructuring (supplanting the PFM in agriculture, and small manufacturers etc) while the proletarianisation of the people generates the material basis for overcoming the ideological divisions within the working-class along the lines of skill, income, race and sex. And as we have seen earlier, the ability of the state to contain class struggle arising from the growing contradiction is limited by its own contradictory role as capitalist state masquerading as 'peoples' state'. It becomes increasingly difficult for the state to attack the working-class and pretend to be doing otherwise (e.g. when capital can no longer operate within the' rule of law'). The immediate consequence of restructuring therefore is to intensify class struggles within the political and ideological instances, to foster the growth of the 'new' society within the 'old', and ultimately to hasten the transition to socialism.

These general observations regarding the nature of the current crisis in NZ are expressed here to underline an important point of analysis. This is that the forces underlying crisis cannot be understood simply at the level of distribution; i.e. class struggle over the shares of the surplus going to wages and profits. The crisis is one of fundamental restructuring involving discrete shifts in the pattern of accumulation, the welfare of various social groups and the nature of state intervention. These crises do not occur as a result of certain uncontrollable forces such as workers' drives for higher wages al though these may be an easily observable phenomenon associated with the crisis. Rather, their basic function, which is their real significance, is first to bring about a redistribution of surplus value so as to enable a new pattern of capital accumulation to be established and the reproduction of capitalist social relations to be maintained.

4.1 Conclusion

What are the most important points to emerge from our analysis? Into which areas do we suggest the greatest attention should be directed?

First, we would suggest that our analysis has re-affirmed the importance of the science of history. No attempt at explanation of the path of development of any social formation can merit serious consideration if it fails to pay sufficient attention to the historical process. The contribution of Marx was that he discovered the continent, or, the science of history (Althusser, Lenin, 42). His method is scientific because it represents a full reconstruction in the mind of the entire process of the operation of a given reality, in our example the development of capitalism in the New Zealand social formation. It is not a partial view, stressing isolated instances and fragmentary appearances; it is a total conceptualisation based on a materialist analysis.

Secondly, applying the science of history, our approach has stressed the dynamic of reproduction, as distinct from production. No social order can persist unless it succeeds in reproducing itself together with the contradictions contained within it. This means that the reproduction of the forces and relations have to be analysed using an appropriate method. The interlocking circuit model of reproduction has provided us with the required conceptual apparatus.

Finally, implicit in both the Marxist science of history and its application to a particular social formation is the clear opposition to bourgeois ideology. We wish to underline our position in the theoretical class struggle in which we are engaged. What we have attempted to show is that the bourgeois approach is unscientific since it never takes into account more than the level of appearances and more than a narrow or partial view of history. On the contrary, the Marxist position is that nothing must be left unexplained and no instance can remain un-attached if one is aiming for a full explanation of the evolution of any social formation. Our treatment of the case of New Zealand serves, we believe, as an illustration of the validity of a Marxist approach.

REFERENCES

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YB and NZYB (NZ Official Year Book, Department of Statistics, Wellington, NZ)

Development of Capitalism in NZ - Part 3

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3.0
THE EVOLUTION OF THE N.Z. SOCIAL FORMATION

We proceed from the level of the material base, using the model of interlocking circuits outlined above, to show how that approach can explain the evolution of the N.Z. social formation. The most important interlock came historically from N.Z.'s (or specifically the PFM's) role as a supplier of cheap foodstuffs to the U.K. in return for the investment of U.K. money capital as well as providing a limited market for British manufactures (see (7) above). This connection between N.Z. capitalism, based mainly on the PFM, and U.K. industrial capitalism, was to completely determine the historical development of the N.Z. social formation. At the same time it operated as a counter-tendency to the falling rate of profit in the U.K. by cheapening wage-goods and returning interest on the national debt.

Since this interlock is so important in setting the limits to historical development in N.Z. we must give an explanation of its origins. This involves tracing the causal interplay between the economic base, represented by the interlocking turnover circuits, and the agents who perform class functions within these circuits, and the superstructure of politics (the imperial connection) and ideology (nationalism). Our explanation of the timing of N.Z. settlement and of the subsequent development of the CMP must therefore begin with the question of the causes of colonisation, and in particular with an examination of the ‘land barrier’ in mid-nineteenth century Britain.

3.1 The Land Barrier

Our analysis of the historical circumstances which caused white-settler colonisation is based on the barrier of landed property to further capital accumulation. Marx establishes the connection between agriculture and industry as follows:

In the period of the stormy growth of capitalist production, productivity in industry develops rapidly as compared with agriculture, although its development presupposes that a significant change as between constant and variable capital has already taken place in agriculture, that is, a large number of people have been driven off the land. Later, productivity advances in both, although at an uneven pace. But when industry reaches a certain level the disproportion must diminish, in other words, productivity in agriculture must increase relatively more rapidly than in industry (TSV, II, 110).

From about 1800, increased productivity in agriculture was retarded by the remaining feudal barrier to accumulation on the land - landed property in Britain and the protected colonies. A landlord class extracted an absolute rent from tenant fanners and consumed rather than invested this surplus-value as capital (Marx, Capital Vol. Ill, 748-813). This barrier to agricultural investment prevented a cheapening of the elements of constant capital (raw materials) and wage goods (food etc) in industry acting as a brake on the expansion of industrial capital.

The consequence was a prolonged period of relative economic stagnation, of small booms punctuated by commercial crises, and accompanied by agricultural labourer’s riots, Chartist demonstrations, overpopulation, pauperism and crime (Hobsbawm, Industry, 56-108).

Thus the encumbrance of landed property to the further development of industrial productivity (relative surplus-value) was expressed politically and ideologically as a class struggle between the landlords and the industrial bourgeoisie. Parliament was still the preserve of landed property, propped-up by the mercantilist system, the extraction of absolute rent in Britain and the colonies (Marx, Capital Vol. Ill, 791; Mandel, MET, 282-292). The breaking of the land-barrier came only after a lengthy struggle in which the industrial bourgeoisie asserted its parliamentary supremacy, abolished the feudal rump of mercantilism and put ‘free trade’ in its place. There followed between 1850 and 1870 an unprecedented boom based on new sources of cheap food and raw materials which established Britain as the 'workshop of the world'.

Equally important for our purposes was the land barrier as the prime cause of white-settler emigration. While the process of the expropriation of agricultural labourers was continuing apace, together with the depopulation of Ireland, a stagnant industry could not provide employment for this surplus population. In order to escape wage-labour and pauperism large numbers emigrated to the colonies. Between 1815 and 1859 a total of 4,917,598 persons emigrated from the U.K. to all parts of the world. Over the same period approx. 684, 000 emigrated to Australia and New Zealand (Merivale, Colonisation, 166). The outflow of white-settlers to the ‘new lands’ added an important dimension to the development of the CMP in Britain. It established not only new sources of surplus-value, but new ‘little Englands’ i.e. social formations where ‘fragments’ of the British social formation comprising economic, political and ideological levels, were grafted onto pre-capitalist formations, producing a hybrid type of colony.

3.2 The Penetration of the Capitalist Mode

It follows that the penetration of the CMP into the Maori social formation occurred at all three levels -economic, political and ideological. The task is to determine the relative impact of each level upon the colonisation process. It is clear at the outset, that the bourgeois approach to colonisation, in examining in minute detail the motives of those concerned (missionaries, the Colonial Office, settlers), begs the question of economic determination in the last instance (Sinclair, A History, 65; Ward, Justice, 24-40). This is the method of the ‘isolated instance’ as opposed to that of ‘structural causality’. In terms of our explanation, these actors were all agents of the CMP, but they operated at different levels. The settlers most directly represented the class struggle arising from the land barrier in Britain. Consisting of those who were escaping high rents in the hope of getting the benefit of ‘founders’ rent’, or of the unemployed hoping merely to produce their means of subsistence in the land, they were either aspiring capitalist farmers or independent producers (Marx, Grundrisse, 279; TSV, 11, 239).

Of the settlers, it was the systematic colonisers who were the most influential in causing the imperial state to annex N.Z. They persuaded the British state agents that colonisation would provide a solution to the social and political problems of the time by serving as an outlet for surplus labour and capital. Merivale, for example, went to great lengths (in his capacity as Oxford don) to demonstrate that controlled emigration would not deplete the reserve army of labour below the numbers necessary to hold down wages at home (ibid, 164-165). The clinching argument was that the expenses incurred would be paid for by a tax on the wages of the emigrating workers in the new colonies (ibid, 158).

The imperial state's annexation of N.Z. can therefore be seen as a necessary expense incurred in the maintenance of law and order as a condition of the reproduction of the CMP in Britain (see 2.4). Whether these expenses were involved in putting down rebellion at home, transporting convicts, or pacifying unruly 'natives' - Afghan, Chinese, or Maori - the purpose was the same. The apparent contradiction, in bourgeois terms, between the expense of annexation and the absence of any direct economic benefit (raw materials, labour, market) in a period of free trade, which can only be ‘explained away’ by introducing the myth of ‘moral suasion’ (Wards, Shadow), is in the final analysis, no contradiction. Native protection was simply a slogan providing-ideological cover to the geographic extension of the imperial state's political-legal function in reproducing the CMP (see 2.6).

Once we have established that the class interests of the settlers were not in contradiction with the imperialist state, the highly over-rated role of the missionaries and humanitarians becomes clear.

They are revealed as bourgeois agents in the reproduction of ideas at the ideological level. Though these ideas (anti-slavery, native protection, civilising mission etc) are determined in the last instance by the interests of the industrial bourgeoisie, the ideological agents do have great ‘relative autonomy’ in practice. Since the function of bourgeois ideology is to represent the values of capital as ‘natural’ and ‘universal’, we must expect well-intentioned missionaries to perform this task literally in the geographical sense, often penetrating pre-capitalist social formations in advance of the market. According to Merivale, religion is the basic means by which ‘civilisation’ is introduced to ‘savage tribes’; “For in what mode are we to excite the mind of the savage to desire civilisation?” (ibid, 524).

The immediate impact of the ideological ‘civilising mission’ in N.Z. was to challenge the dominance of the Maori chiefs (elders) in the reproduction of the MLM. In this they failed for the introduction of commodity trade allowed a rapid adaptation of the MLM to commodity production (flax, wheat etc) but still under the dominance of the elders (cf. Firth, Economics, 482). Thus the combined efforts of the ‘advance guard’ of the CMP, the missionaries and traders, were insufficient to subordinate the MLM, convert its means of production and labour-power into commodities, or to set-up the settlers’ PFM. The explanation is to be found in the key role of the elders in the MLM (see Section 2.7). Since the elders were not a ruling class;
they could not be used in alienating the land without destroying their ideological dominance in the MLM. By 1860 the growing pressure from the settlers for land put this role to the test. A number of chiefs responded by reasserting their ideological command over the MLM in the from of the King Movement to prevent the loss of their remaining land. This resistance was interpreted by the imperialist state as a political rebellion (implying a Maori King and a Maori state) justifying the use of state force to break the elders’ control of the MLM, and in to seize the land in compensation. With the elders' control broken, the imperial state, as midwife of history, introduced the CMP into N.Z., establishing the PFM and articulating the remnants of the MLM, both under the dominance of capital.

Following the intervention of the imperial state to establish by force the conditions for the CMP, the way was clear for the settlers to assume responsibility for self-government. The striking difference between the ‘new lands’ and the ‘old world’ was the absence of landed property. Marx, in his discussion of the ‘new system of colonisation’ (Capital Vol. I, Chap. 33) shows how free land is a hindrance to capital accumulation of a different sort to landed property, since it prevents the formation of a wage-labour class without its means of subsistence. That this was the case in N.Z. together with the refusal of the British Crown to allow many of the N.Z. Company's dubious claims, accounts for the failure of the Wakefield system to dominate agriculture. Had the Company been able to establish ownership of the vast tracts of land it claimed, then it would have been able to reproduce in the colony a system of landed property, whereby a few landlords could have extracted absolute rent from agricultural labourers and tenant farmers. While it is true that in the period up to 1890, a landed squattocracy controlling large landholdings did exist, this was in the nature of extensive capitalist farming of wool and wheat, and did not constitute a barrier to capital investment in increasing agricultural productivity. What was established in New Zealand in this period was therefore neither landed property, nor large-scale capitalist farming, but rather the grafting of the old stock of the PFM onto the new roots of ‘free land’ through the agency of the settlers’ state.

It is important to stress the key role of the state as it figures prominently in bourgeois explanations of N.Z.’s ‘national development’. The settlers used the local state “to hasten, as in a hothouse, the process of transformation.. . to the CMP” (Marx, Capital Vol. I, 915). With the destruction of the MLM, the state legislated ‘peaceful’ means of appropriating any remaining Maori land of value (Ward, Justice. 185). It encouraged the immigration of the land-hungry and assisted smallholder settlement with crown leaseholds, loans and other forms of subsidies. Most importantly, it borrowed large amounts of British finance capital to lay down a productive infrastructure, social overhead facilities and the necessary links to international trading networks. It was a very good example of the use of the national debt described by Marx as one of the “most powerful levers of primitive accumulation” (Capital Vol. I, 706-707). While the benefits of the developments made possible by such borrowing went mainly to direct producers, “financiers and middlemen”, much of the burden of interest on the national debt fell on the working-class.

Bourgeois conceptions of the role of the state in the articulation process are of two sorts. The neo-classical view reduces the state and ideology to epiphenomena of the international market (Blyth, Industrialisation). N.Z.’s comparative advantage is in its agricultural specialisation - fertile land, plus capital equals ‘take-off’. Following the classical political economy, this view does not recognise exploitative class relations or the capitalist nature of the state. Its perspective is thus entirely limited to the appearances of the market. The more common view of the role of the state is that which draws on the radical tradition of the ‘progressives’ (Reeves, Experiments, 59-102; Sutch, Poverty, Colony, etc). It gives causal primacy to radical ideas which are then translated into progressive legislation to control the ‘excesses’ of the market, and to regulate capital and labour in the ‘common interest’. It acknowledges but does not understand the key role of the state. Following Reeves and Stout, the state is seen as ‘neutral’ and above classes, not merely ‘relatively autonomous’ , but capable of abolishing classes and capitalism itself (Bedggood, State Capitalism).

It is clear that the bourgeois historiography in the ‘long Pink Cloud’ tradition (Sinclair, N.Z.), in making radical ideas the prime cause in N.Z.’s history, has not looked beneath the level of the superstructure to discover the final cause of bourgeois radicalism. A classic example is the role of radical ideas and policies in land settlement (Marx, TSV, II, 44). Once the objective of the ‘nationalisers’ or ‘single-taxers’ had been realised, namely land-ownership, radicalism was transformed into a conservatism of private property. Therefore, to take the isolated instance of radical ideas as the independent and ultimate cause of national development, is to replace an economic determinism with a cultural determinism in the ‘last instance’ i.e. idealism. While the semi-colonial state was an important instrument in the development of capitalism in the N.Z. social formation, it was not sufficient. It was the new land combined with immigrant labour, producing a high rent plus a secure return on the national debt, which in the last instance, determined the politics and ideology of ‘national development’.

3.3 The Reproduction of Capitalist Social Relations

In summary then, the articulation of modes which evolved in the N.Z. social formation, reflected in the last instance, the ability of the peasant smallholder to achieve state subsidised settlement and to benefit from ‘founders’ rent’ on relatively fertile land (Murray, Value, II). This s provided the material circumstances for the establishment of the CMP in N.Z. and the capitalist domination of a new source or surplus-value that entered into the imperial circuit, furthering accumulation both in Britain and the semi-colony. But the whole basis of the extension of capitalist accumulation in N.Z. rested upon the reproduction of capitalist social relations. The crucial role in this process was played by the comprador bourgeoisie, who as linking agents, managed the transmission of capitalist social relations into the ‘backwoods’ of the PFM in the new colony. Though now possessing land, the settler lacked capital, a crucial fetter to his expansion beyond producing his means of subsistence; and the comprador provided it if the state did not also. The merchant provided commodities for use, and credit for their sale and purchase. The finance capitalist provided capital for the land, and the banker backed them both and directed customers to them. The role played by the comprador class has been nowhere adequately stressed in the bourgeois literature, and not even by so-called radicals, who in their concern with ‘foreign control’ ignore the bourgeois class that has acted as the local agents of most forms of ‘foreign control’ (e.g. Sutch, Takeover).

The class relation which became the basis of the pattern of interlocking circuit dependence that had emerged by the 1930's was one in which the peasant smallholder had become a form of wage-slave, contributing surplus-value to the comprador class. This form of exploitation follows from the key role of the comprador in extracting surplus-value, in controlling the marketing of the primary products, and requiring the farmer to meet his fixed charges out of normal profits and even wages (see next section). This extraction was expressed in a disguised form in accounts as interest on mortgage, rent paid, commission to stock and station agents, freight charges, insurance on chattels,(re-possession on default of mortgage repayments)etc. in total accounting to about 45% of all farm income in normal times, and 100% during the Great Depression (Weston, Farm). The comprador had in effect, replaced the landlord as an agent in extracting surplus-value. Though Condliffe, one of the more perceptive of bourgeois economic historians, recognised that the N.Z. ‘freeholder’ had by the early 20th century, “exchanged the landlord for the mortgagee”, he refused to admit to any more than the possibility of his ‘exploitation’ by the comprador class (NZ, 277).

On the basis of this analysis we conclude that the grip of the finance bourgeoisie, both British rentier and local comprador, on the labour process of the peasant producer, did not cease to tighten and consolidate the now traditional pattern of semi-colonial specialisation in the international division-of-labour. Though they replaced the landlord class in extracting surplus-value from agriculture, their role was not to hold back the investment of capital in agriculture. They accumulated rather than consumed the surplus-value off the land, facilitating the circuit of capital into agricultural production in the form of productive capital, providing money capital for investment in the nascent branches of industrial capital in N.Z., and of course re-circulating money capital into British and other international circuits.

While Marx and others have written on the articulation of CMP and Peasant Modes, there is no fully developed theory of what we have call called the PFM in the white-settler states. It seems to us that the potential of this form of articulation has been underestimated in circumstances where it is introduced into a semi-colonial setting characterised by (a) an absence of feudal landed property, (b) the dominance of a capitalist comprador class, and (c) in association with a highly interventionist, modernising local state. It is clear that when these conditions prevailed, as in N.Z., the PFM has, in the form which we have described above (2.7), undergone remarkable transformation.

3.4 Unequal Exchange

Our analysis of the production and extraction of surplus value in the N.Z. social formation so far leads us to the position of accepting that same form of ‘unequal exchange’ of value operates to maintain

N.Z.’s subordination to international capital. This subordination shows up in many forms but is most obviously related to the international flow of export commodities and the value relationships underlying these flows. Consequently we reject any analysis of ‘unequal exchange’ in the tradition of Emmanuel’s work, which begins from the level of wages, prices or terms of trade, and tries to deduce explanations of ‘exploitation' and under-development. Very briefly, Emmanuel argues that inequality of wages as such, all other things being equal, is alone the cause of inequality of exchange (Unequal, 613). But of course all other things can never be equal and it has become clear that arguments which begin at this level cannot further our understanding of the problem. For example, in Clark’s discussion of Australia, he records that Australian wages have been generally higher than British wages. He can only avoid the absurd conclusion that Australian workers have exploited British workers by calling for more pseudo-statistics! (Clark, Unequal).

Yet for all the polemic against Emmanuel, little empirical or theoretical work has been done to counter the appeal of his thesis. Bettleheim and Palloix have pointed to the logic of reproduction as the starting point, and Barratt-Brown has marshalled some data to demonstrate that the level of wages is a mirror image, not a determining factor of unequal exchange (Economics, 235). By contrast, we have argued that the position of various classes in relation to the overall reproduction of capital is what is fundamental, and that this must not merely be asserted but actually demonstrated. This we propose to do, beginning first with an attempt to explain the phenomenon of ‘unequal exchange’ as a particular case of absolute rent in the N.Z. historical context. We start therefore by explaining the basic idea of absolute rent and then adapting it to the problem of unequal exchange. Then we show how responses to this original form of unequal exchange help explain the current pattern of relationships prevailing in N.Z.’s international trade in agricultural commodities.

a. Marx's Theory of Absolute Rent

Marx defines absolute rent as that component of surplus-value which does not enter into the process of equalisation of the rate of profit across departments (Capital Vol.III,760-761). It reflects the monopoly of ownership of a particular resource employed in the production of commodities under the CMP. In Marx's example, the resource referred to was land and it was the landlord class which acted as an obstacle to the free flow of capital and the equalisation of the rate of profit in agriculture with that in other departments. In demonstrating the case of absolute rent, Marx defines three levels of analysis

(1) the Value of commodity i, understood here as an agricultural commodity, and comprising the elements W1= Ci + Vi + Si

(2) Prices of Production (Yi) comprising costs (Ci + Vi if we ignore the transformation problem) plus average profits and

(3) a monopoly-price or modified price (Xi) which equals costs plus profits, at an average rate if the farmer is a '’true’ capitalist, plus absolute rent or excess profits.

These 3 levels are defined in the diagram below.
(NB: In what follows we ignore the so-called transformation problem which is a red herring for the purposes of the present discussion anyway).

In this example, Xi >Yi, i.e. the modified price exceeds the price of production by the full amount of the absolute rent, since we assume all items of costs and profits to stay the same in both cases. Absolute rent is added as a monopoly profit to give a modified price which is consequently higher than the price of production (Yi). Now whether absolute rent is added on to the price of production (Yi) or is deducted wholly or in part from Yi depends on market conditions (supply and demand) (Capital Vol.III p762) . It also depends on the relations of production in agriculture. Normally under capitalist production relations in agriculture absolute rent is by definition marked up on top of average profit from farming since no capitalist farmer would invest his capital at below average profit and no landlord will let him use the land without paying rent.

Now at first glance, there would seem to be little relevance in all this to the N.Z. case. Not only was there no landlord class, but no effective obstacles to settlement on the land existed. How then do we establish a case for unequal exchange along these lines?

b. Adapting the Basic Theory

We recall the point made by Marx and Lenin that colonial super profits were the most important counter-tendency to the falling rate of profit. Such super-profits in turn imply the existence of monopoly control of finance capital at the centre which could act to eliminate competition and prevent the general process of equalisation of the rate of profit everywhere. But this still does not indicate what the source of unequal exchange was in the periphery. To explain this we refer back to our discussion of the causes of settlement in N.Z. (3.3). Our general thesis was that whilst monopoly over landed property (‘modern landed property’) was never established in N.Z., this was replaced by another form of monopoly, that of finance capital, owned by the comprador class. While the process of settlement was such that some acquired large holdings, the majority were peasant smallholders, buying and selling on the local market. After establishment of the main trading links with the U.K., these smallholders became increasingly indebted to merchant bankers for the credit needed to purchase and develop their holdings, consolidating the relationship with the comprador class which extracted the surplus-value from the direct producer in the form of an absolute or monopoly rent, this time understood as a monopoly of large money capital.

Now the question arises as to where this rent came from. Was it paid out of a modified price Xi in excess of Yi by the full amount of the rent, as in the original analysis outlined in Section (a) above? Or was it absorbed into Yi and taken out of some combination of wages (i.e. the value of labour-power of the snallholder, Vi) and a rate of profit that was average or less than average? The latter could only occur if the occupying smallholder was not a true capitalist, i.e. did not demand an average rate of profit on his capital.

Moreover, its impact on different smallholders’ individual rates of profit would depend on the differential rent from their new land in the colony, i.e. the disparity between their individual costs of production and the average price as determined for them by the market. We are referring here to DR1 which Marx defines as the varying yields from land of equal area with equal applications of constant capital, arising out of differences in fertility and location with respect to the market (Capital Vol. III 647-673). The effect of greater yields would be to reduce the unit cost of production for the favoured smallholder, and raise his rate of profit above the average. However, we cannot assume that in N.Z. all the land settled was better than older lands under cultivation in the countries of older civilisation (Capital Vol. III p.769). So, in what follows we assume at first land of average fertility and then in Section (c) consider the impact of differential rent on our initial conclusions about the distribution of surplus value produced.

In trying to determine the distribution of surplus value we have to consider only 2 alternatives - do we assume the average smallholder realised an average rate of profit or a less than average one, in the conditions of settlement of N.Z.? We suggest that probably the latter was what occurred at least in the early period. The two main reasons for this were (1) that under pioneer conditions, settlers were more concerned with producing their means of subsistence and reproducing their capital at a minimum rather than an average rate. That is, they valued actual possession of the land highly. (2) Market conditions also operated in the same direction. The comprador class had an interest in increasing its share of the surplus value produced at the expense of the direct producer, so keeping the modified price Xi low and the price of the new colony's commodities down. This was after all the basic function of the new colony - to cheapen costs at the centre. The comprador would therefore attempt to take his excess out of average profit of enterprise, rather than mark-up the price of production and lower the colony's international competitiveness. In all cases, however, the share of the comprador in the form of a monopoly rent constitutes unequal exchange.

As a simplified abstraction of the likely pattern of unequal exchange we offer the following example. We stress that we are dealing at this stage only with land of average fertility.

Here Ci is constant capital in branch i; Vi is variable capital, Si is surplus value, R is the average rate of profit calculated in the usual way - i.e. assuming the identity between aggregate surplus-value and total money profits. R' is the rate of merchant profit on merchant comprador capital advanced (Mi), and R’ is the analogous rate on enterprise capital advanced (Ki). We divide the N.Z. social formation into the agricultural sector (or circuit) (A) the industrial sector (or circuit) (M). The table below shows the general relations of exchange which finally prevail after the modifying influence of the comprador class is taken into account.

In the table, R = 20% before modification by merchant finance capital, i.e. before deduction of monopoly rent. After modification, the merchant rate of profit in (A) exceeds that in (M) and merchant capital in the latter receives a rate of return approximating the overall modified rate or enterprise profit in (M). The rates of profit finally received are:

(The figures in brackets are actual modified profits received in money terms) .

Under this solution ∑Wi = ∑Yi = ∑Xi, but individually values and prices (either Yi or Xi) diverge. The family smallholder ends up with a less than average rate of enterprise profit and turns a monopoly rent over to the merchant comprador in the same way as the English tenants turned over rent to their landlord as the condition of their being permitted to invest capital in his land (Capital Vol. III, 626).

In our example, the comprador class, therefore, inserts itself in an intermediary position between the dominant capitalist mode and the dependent PFM forcing prices received by the PFM down low enough so that, even after modification by monopoly margins, the market price was still low enough to be competitive.

Unequal exchange, as it operates here, is a form of monopoly rent extracted by a comprador class from the surplus value produced in agriculture as a consequence of that class's control over the movement of capital into that branch of production. But it clearly cannot rest there. This monopoly will be subjected immediately to countering forces. For instance, how long will it be before manufacturing capitalists attempt to become merchant compradors? We must now turn to a discussion of the counteracting forces.

c. Countering Obstacles to Extended Reproduction

It follows from our example as it stands, that the direct producers of the PFM would have had difficulty reproducing their conditions of existence, or even making improvements to compensate for declining natural fertility of the land. As such our illustration underestimates the potential for expanded reproduction within the PFM, a potential which history shows to have been clearly realised. In the first place, we have ignored Differential Rent 1, i.e. differences in fertility and location which would imply that, although on average, the rate of enterprise profit in (A) was kept low, there were wide variations around this average. Farms with above average DR1 could therefore earn rates of profit equal, or even in excess of the average for the formation as a whole (20% in the example). For these producers, then, there would be fewer obstacles to accumulating capital and extended reproduction. Such disparities in DR1 therefore, (e.g. above average fertility or exceptional location) underlie our explanation of the differentiation of the peasantry, as outlined in Section (2.7) above, into 3 classes or fractions after about 1890. The bourgeois fraction was favoured in its ability to invest their own capital in the general modernisation of their holdings, and so reduced their dependence on the comprador class.

However natural fertility of the soil has to be replaced, and the pace of mechanisation, or raising of the organic composition had to be maintained and in this process the State played a crucial role. The State's activities may be summarised as intervention in the PFM to sustain extended reproduction by limiting the monopoly control of the comprador class over the movement of capital. This was achieved by methods which influenced both DR1 and DR2 although a clear distinction between the two is difficult to maintain. The most important measures were State subsidies in the development of improved methods of cultivation, higher yielding stock, improved methods of fertilisation, improved public works etc. Secondly, the State limited the monopoly of the comprador over the supply of credit by offering cheap State loans for both settlement and development. Finally, particularly after the onset of the depression of the 1930's, the State itself became a monopoly in the acquisition of smallholder dairy production in an attempt to bolster squeezed profitability and to undertake more ‘rational’ marketing of dairy products. (Such, Security, 183-6)

As a consequence of these measures and others too numerous to mention, the State ‘nationalises’ the major costs of agricultural production and re-circulates excess profits at least partially back to the direct producer, holding down the share of the comprador class of the surplus value produced. The direct producer's rate of realised profit would converge upwards to the overall average and thereby allow for extended reproduction to go ahead more rapidly.

But while State intervention breaks the monopoly control of the comprador class over the PFM in subsidising the costs of agricultural production, this only modifies the basic pattern of unequal exchange, it does not reverse it. The fact that such commodities still sell at modified market prices below their values represents unequal exchange out of the PFM in the conventional sense, i.e. a divergence of value from price. The State operates to redirect some of this transfer of surplus value back into the PFM by means of subsidies paid out of general tax revenues.

In addition to this conventional form of unequal exchange, we have added another relating to the monopoly ownership of capital by the comprador class. We have pointed out the limits placed on this monopoly by the State. In terms of the interlocking circuit model, the semi-colonial State, therefore, encourages the reproduction of international capital by transferring value in the form of State subsidies into agriculture, hence countering the tendency for agricultural production to stagnate.

To conclude our analysis of unequal exchange in agriculture it follows that the transfer of value out of agriculture, made possible by the combination of 1) a modern progressive form of land tenure in the semi-colony, 2) high differential rent and, 3) State intervention, provided a source of capital which could be used to ‘develop’ domestic manufacturing.

3.5 Contemporary Patterns of Circuit Interdependence

The previous sections have been concerned with the application of the interlocking circuit model to the analysis of the development of capitalist dominated agriculture in the N.Z. social formation. To some extent we have presupposed the existence of the Industrial Capital Circuit in our discussion of the flow of surplus-value via the state into the agricultural branch. In this section then, we extend the analysis to include the development of the industrial circuit into N.Z. and to demonstrate its impact on contemporary ‘economic’ relationships affecting the social formation, and on the pattern of social relations, or ‘class structure’. Though we cannot give more than an outline of the growth of the circuit in this paper, we emphasise its importance in the full development of the CMP in N.Z. It represents the further development of the CMP in N.Z. from the initial limited interlock of British capital with the PFM, through the establishment of branches of domestic manufacturing, to the present complete penetration of industrial capital into all branches of production accounting for 3 to 4 times as much as agriculture in the statistics on national production (Year Book, 1977).

What is quite distinctive about this development is that while it followed a sequence of ‘stages’ from the introduction of the PFM, to simple manufacturing, to later advanced production by international capital, it did so at a much more rapid rate than the original capitalist transition because it occurred in the context of the already established CMP and as the result of a highly interventionist local state. This meant that the pre-conditions for capitalist manufacture, namely 1)- capitalist dominated agriculture, 2)- wage-labour, 3)- industrial capital and 4)- a market, were rapidly realised by means of their displacement from the British social formation and their re-location in the semi-colony by the agency of the local state. We have emphasised in our previous discussion the influence of the state in establishing capitalist social relations in agriculture by means of the National Debt, using U.K. finance capital to develop the infrastructure of ports, communications , etc. for the full development of capitalist farming. This provided the first condition for manufacture, i.e. wage-goods for a working-class.

The state created the second condition, the working-class itself, by means of the assisted immigration of would-be settlers who finding themselves landless had no choice but to work for wages. The creation of wage-labour in the colony was not therefore the result of the original Wakefield scheme, but that of state schemes that applied the same principles of using the revenue from land sales to pay for a supply of immigrant wage-labour.

The third condition, industrial capital, arose out of the process we have discussed above. We saw that the accumulation of capital from the PFM, whether by the comprador class or the peasant bourgeoisie, was sufficient to increase agricultural production. It also provided the necessary money capital for investment as productive capital in the industrial circuit as soon as the combination of conditions required for domestic manufacturing occurred. This conjunction came about during the Long Depression when the pool of unemployed drove down the value of labour-power to the point where the local cost of production (at low organic composition and high absolute rates of exploitation of men, women and children) together with tariff protection (in 1888) made domestic import substitution of some commodities profitable for the local capitalist class (Sutch, Poverty, 106).

Apart from the development of primary processing industries, either cooperatively owned, or owned by capitalists (see (11) above), and their more recent extension into areas such as paper pulp etc., the three main branches of domestic manufacturing established after 1880 were:

(1) - Production of Wage-Goods: articles of consumption for the working-class, beginning with clothing, shoes etc., and incorporating a widening range of commodities entering into the value of labour-power E.g. TV’s, domestic appliances, motor cars (see (9) above).

(2) - Production of Capital Goods for Agriculture: the local production of previously imported machinery, farm implements, topdressing aircraft etc.

(3) - Production of Capital Goods for the Wage-Goods branch: a more recent tendency since as we pointed out in 2.5, the production of capital goods is usually the speciality of the Industrial Circuit in the core capitalist states, e.g. steel for construction, plastics for consumer durables etc.

Though these domestic branches of production were established and sustained by means of state protection (tariffs and import controls etc) they nonetheless represented a new source of surplus-value production open to international capital. As a result, from the 1880’s to the present day, we find that all branches have been penetrated by ‘foreign’ capital which has moved to take advantage of the development of the CMP in the N.Z. social formation, drawing the formation further into the international circuits of capital and reinforcing the semi-colony's extraverted dependence.

We can describe the contemporary N.Z. social formation therefore as an immensely complicated system of interlocking circuits of capital spreading throughout its articulated economic base, and now augmented by an increasingly important branch of manufacturing production. The basic logic of the whole unity is one of circuitous interdependence, each circuit feeding or linking at some crucial stage with a foreign counterpart. The most crucial interlocks, in the context of our current discussion, are as follows:

(a) The Level of Production

(i) imported materials of labour feed into agricultural production for re-export or for industrial manufactures (oil, chemicals, raw fertilisers etc). We may call this an ‘import-output’ linkage.

(ii) Imported machinery is required for use in producing commodities feeding into non-agricultural production processes (wood, metal lathes etc). We can call this the ‘import-input’ linkage.

(iii) Agricultural raw material production feeds into locally-sited production processes, undertaking further processing before exporting takes place (e. g. timber, meat and wool processing). We call this an ‘output-export’ linkage.

(b) The Level of Exchange: the foreign exchange earned from a( iii) is required to finance linkages a(i) and (ii). The foreign exchange earned from exported manufactures is needed to reproduce production of itself, as seen by linkage a(i).

(c) The level of Finance Capital: seasonal shifts in the demand for credit by the farming sector results in credit being withdrawn at certain periods from this sector and fed into urban manufacturing. The seasonal pattern of production and realisation of export revenues, implies a requirement for foreign exchange credits for purchasing continuously needed materials for manufacturing. The credit system operates to effect these linkages and enables reproduction to proceed efficiently.

In sum, the basic model is one of the “production of commodities by means of commodities” (Sraffa), but with the crucial extension of all circuits into a foreign counterpart. The high degree of dependence on foreign trade is only partially revealed by aggregate figures relating exports to GNP, where, as can be seen from the table below, N.Z.’s percentage is not particularly high, and corresponds to that of many advanced capitalist social formations.

However, these figures conceal the dependence on particular primary commodities which is a general characteristic of colonies and semi-colonies. Moreover, as the previous discussion demonstrates, a lower aggregate ratio of exports to GDP may merely reflect the extent of indirect linkages in an increasingly diversified economic base. But these local circuits all at some stage spill out into an external one, so such aggregate data as presented in the table can say little if anything about the real degree of dependence or ‘extraversion’ which prevails in the N.Z. semi-colony. For, as is well known, the vital significance of the foreign exchange linkage, in permitting the reproduction of the entire economic base, and obvious from our above illustrations, explains why there has developed such heavy state control of foreign exchange transactions in N.Z.

Although less so than in the past, the evolution of N.Z. capitalism is still strongly dependent on the speed of development of the agricultural branch. Hence minimising the turnover, i.e. the time of production, plus the time of circulation of agricultural capital is critical to the ongoing pattern of accumulation. However, unlike manufacturing, there are natural limits to the capacity of new technology to speed up turnover of capital in agriculture and related branches of production, e.g. forestry. Agricultural produce simply needs a certain time to grow. Limits to the speed of circulation e.g. on account of the physical distance from its markets, are also important and very costly to overcome. This leads to a key point. Any reduction of these limits becomes increasingly costly in its capital requirements, even with heavy state subsidy. The result must be a tendency for the relative profitability of agriculture to lag behind that in other branches and for capital to be redirected accordingly.

These structural limitations (to which others such as the parcellisation of land could be added) to the development of the productive forces in the branches of primary production will act as real constraints on N.Z.'s overall capacity for accumulation. They also occur in conjunction with a world of heavily protected production of similar commodities in overseas formations whose states place strong limits on the market access for N.Z.'s traditional dairy products, leading to chronic overproduction in those markets that do remain open to N.Z. produce. It follows that the costs of maintaining minimum prices and returns to the smallholder in N.Z. by means of various state subsidies, represent deductions from the total social capital. The fact that these revenues might have been used in more productive branches (in line with the current ideology) reflects the price to be paid for preserving the foreign exchange earnings of the semi-colony. In international ‘comparative’ terms then, N.Z. carries a structural weakness much more significant than in social formations such as W. Germany, Japan etc. , which are not dependent on exports of primary produce, and which are currently said to be forging ahead of N.Z. in the international league tables.

Whilst these figures are clearly subject to severe limitations, taken at face value they can be used to support our structural argument.

The contradictions inherent in the semi-colony' s new, or rather evolved, pattern of circuit interdependence are fairly obvious, but are clarified by means of our analysis of linkages made earlier in this section. For instance, more exports as called for by the orthodox ‘task force’ ideologists (N.Z. at the Turning Point)requires more export production (output-export), in turn requiring more inputs, and more imports (import-output) and so more exports to pay for them etc. Discrete changes in the cost of any one component (e.g. oil costs) are transmitted and probably magnified in their impact (through mark-up pricing practices) on all other components. So, from the above analysis, it follows that increasing export costs lead to reduced export competitiveness (and so on, in a downward spiral).

In addition, the usefulness of across-the-board measures, e.g. devaluation to cheapen exports, have their effects dissipated by the contradictory impact which devaluation has on import costs. This criss-crossing of effects at the level of market forces - prices, terms of trade, incomes etc. - is in truth the realm of the economist number-juggler, whose weighty pronouncements about such complicated interrelationships reflects their function as mystifiers of the underlying relations of production. The consequence of their ideological pronouncements is ultimately to assist in the offensive to drive down the value of labour power in the interests of the “export drive” (Steven, Terms).

3.6 Contemporary Class Structure

In this section we derive the contemporary pattern of social relations (i.e. the class structure) from our analysis of the development of the CMP and the subordinate modes in N.Z. Our approach is simply to locate classes in terms of their qualitative relations as wage labour or capital. We define this relation as one of ‘real ownership’ or ‘real non-ownership’ of capital which determines the form of control of the means of production, the labour process, and the distribution of the surplus-value produced. In our view, ‘legal’ ownership of the means of production is not capital unless accompanied by ‘real’ ownership. Contrary to some views it is meaningless to distinguish between owning either MP, or LP, since the CMP presupposes C (LP+MP) = P. We do not, therefore propose to attempt to quantify the extent to which an individual may be exposed to ‘contradictory’ positions with respect to capital or wage-labour (Wright, Class, Steven, Class). Nor are we concerned at this stage with the reproduction of social relations, or with any imputation of class ‘interests’. We wish to establish first the links between the interlocking circuit model of accumulation, and the formation of a class structure.

From our analysis it follows that two classes produce surplus-value (s) in N. Z. They are:

(1) The working' peasant smallholder (together with-other residual petty capitalist elements of little importance) which we shall discuss below.

(2) The Productive Working-Class (PWC) , in all branches of production and both private and public sectors. Productive labour is defined by Marx as the production of surplus-value (s) in commodity form, “The worker who performs productive work is productive and the work he (sic) performs is productive if it directly creates surplus-value” (Capital, Vol. I, 1039). This is an important point because it is the exploitation of this PWC that sets the limits to the production and distribution of surplus-value (cf. Wright, Class). All other classes, and fractions of classes, do not by definition produce s , but they are nonetheless engaged in its realisation, its circulation, its accumulation and its consumption. Arising out of the total circuit of capital therefore, it is possible to determine the form in which the social relation, wage-labour and capital, expresses itself in the contemporary N.Z. class structure. (See diagram below).

1. The Working Class

(a) Productive workers: Beginning at the point of production of s in commodity form in all branches of production we have the PWC. Though Marx speaks of ‘direct’ creation of surplus-value it is clear from the context that he includes both mental and manual labour, the “manager, engineer, technologist, the overseer, the manual labourer and the drudge etc” (Capital Vol. I, 1040). The PWC in N.Z. therefore includes not only all those defined as production workers in all industry divisions, but scientists, technicians, graphic artists etc who design and build commodities for the production of other commodities or the consumption of the working-class. See graphic (22) below for an estimate of the total numbers and size of the PWC. Since it is the PWC alone which produces s in the form of commodity capital, C', it is the rate of exploitation of this class of ‘living labour’ which absolutely determines the limits to total s production (excluding the PFM). But while the PWC produces C' it is only one part of the total proletariat (defined as being dispossessed of capital) which functions to circulate capital through its various moments of the circuit, all of whom can be defined as reproductive workers. They include (following the movement of surplus-value through the circuit):

(b) Realisation Workers: all those wage and salary earners engaged in sales (wholesale and retail), advertising, promotion etc, who function to convert C' into M'. This function is performed by employees of capital, public servants on behalf of private capital (e.g. Department of 'Trade and Industry), and public employees on behalf of state enterprises that produce commodities (Gas, Coal etc). They comprise all sales workers (with the exception of those selling financial, business and community etc services) (See Graphic 22. )

(c) Circulation Workers: all those wage and salary earners who are concerned with the circulation of M' as money capital and its conversion into productive capital (exchange for MP and LP) in new productive circuits. They include all forms of commercial workers, banking, finance and administration, both in the private and public sectors. Private sector circulation workers are usually engaged in some aspect of the credit system, advancing M' to finance production or consumption. State circulation workers are those involved in all forms of administration of the public revenue, that is the transfer of s (taxes) from gross wages and salaries, and profits, into all types of productive consumption as capital: first, in the state's own productive enterprises, and second, all kinds of subsidies to the private sector's productive branches. The estimated composition of the circulation working-class consists of the total employed in the major Industry Division, ‘Finance/Business' (less production, sales and service workers) together with clerical and related workers, and professional, technical, managerial etc workers involved in circulation in all of the ‘production’ and ‘realisation’ (sales) industry divisions. ( See Graphic 22)

(d) Service Workers: Those wage and salary earners who exchange services for wages and salaries of the working-class, or who as state employees staff and operate the social services (health, education etc) thereby contributing to the value of labour-power. This group includes all the major division ‘Community-Services’ etc, together with service workers in the production and realisation divisions.( See Graphic 22)

(e) Domestic Workers: This Category of worker is usually ignored by bourgeois economists and placed outside the work1ng-class by Marxists on the grounds that the labour performed is not exchanged for variable capital and is therefore not productive, nor is it exchanged for wages or revenue. It is regarded as a form of “privatised, unpaid, toil” (Adamson, et. al. Women’s).Yet while domestic work is no more productive of s than is realisation, circulation or service work, it nevertheless contributes to the value of labour-power by performing unpaid surplus-labour and reproducing labour-power below its real value. In many cases domestic labour is done by single men and women, and married women, who also perform wage-labour (in N.Z. 50% of women working for wages are married). It follows that there is no strictly separate category of ‘domestic workers’, though it is usually identified as consisting of married women not otherwise working. In our view domestic labour is clearly a case of reproductive labour since it performs the very important function of reproducing the productive and reproductive working-class without which capitalist production would be impossible. The residual category of ‘domestic workers’ should therefore be added to the other categories of reproductive workers in determining the size and composition of the total working-class. ( See Graphic 22.)

(f) The Industrial Reserve Army: Since there are always some individuals(dispossessed of capital) who are unemployed, and the function of the reserve army is to facilitate the production of s through the increased rate of exploitation of all other wage-workers, the unemployed are also reproductive workers (albeit not currently employed). The reserve army, together with the actively employed categories of wage-labour and domestic labour comprise the total working-class.

In the following table we present some estimates of the total working-class relative to capital, and of the relative size of the various sections of productive and reproductive workers comprising the working-class. Because of the limitations of the data, they are no more than rough approximations of the numbers involved in 1971.

Our method of making these estimates was to cross-classify workers according to the major occupational group i.e. type of work - production, service, sales etc. and the major industry division. We classified the industry divisions into production (Agriculture etc; Mining etc; Manufacturing etc; Electricity etc; Construction and Transport etc) and into reproduction (Wholesale etc; Finance etc; and Community etc).

The logic of capital accumulation with increasing concentration and productivity, is to expel ‘living labour’ from production into either the reproductive working-class or unemployment. For example the relative decline in productive workers to reproductive workers is evident in the following:

Similarly, the petty bourgeoisie (those who possess some means of production but do not employ wage-labour) are being progressively squeezed out of existence into the proletariat, even in agriculture where the PFM still accounts for some 65,000 working farmers. For example, in the dairy industry:

It would appear therefore that the familiar polarisation of the two main classes in the CMP is taking place in the N.Z. social formation with the working-class now comprising about 90% of the active working population, and the capitalist class about 10%.
(Note: It should be emphasised that the identification of the working-class at the level of production relations deliberately excludes the fashionable concept of the ‘function of capital’ which is adopted by Wright and others to introduce a conflict of interest between certain categories of wage-labour who whilst performing wage-labour are ‘possessing’ or ‘controlling’ labour on behalf of capital. Whilst it is true that these categories of labour are often higher paid and may not perform surplus-labour this in our view introduces a conflict at the level of distribution of incomes and not production. This, of course, is not to deny the importance of these distributional conflicts along with other ideological and political differences that separate the immediate interests of various categories of wage-labour. The basic point however, is that the difference between these categories is not one given in the relations of production, those who have some function in supervising labour, are not owners of capital in the sense of controlling both means of production and labour process, so whatever differences exist between the immediate interests of the various categories of wage-labour - productive/unproductive, private sector/state, supervisory/non-supervisory etc. – are not conflicts between wage-labour and capital, but conflicts within wage-labour introduced by capital.)

2. The Ruling Class

From what has been said before, the ruling class, which defines the contemporary pattern of control of N.Z. capitalism, will be found to comprise certain definite elements. First, due to the absence of either any established industrial bourgeoisie, or an important landed aristocracy, their place taken be elements reflecting the actual historical process of accumulation in N.Z. Given the ‘facts’ as outlined above, it is not surprising therefore to find the following four major groups represented in the N.Z. ruling class.

a.The old merchant families.

b. The modern finance capitalist (the modem successor to the early comprador).

c. The ‘new professionals’ - lawyers, accountants etc, together with 4.

d. The splattering of ‘ self-made men’ of various descriptions. In terms of numbers of individuals, the group is small (about 100) but they can be defined as the ruling class because they control (actually own) the MP and LP that is brought together in capitalist production in the N.Z. social formation. (N.Z. Herald, Top 100) '!he function of these groups is to integrate, co-ordinate and control, through the various directorships they hold, all the most important industrial and finance companies in N.Z. (NZH, Top 100, Jesson, Family). The technocrats (group 3) are increasingly important in mediating in relations between capital and the state (taxation, inflation accounting, ‘planning’ etc). The ‘pure’ directors on the other hand represent the interests of both foreign and local capital (foreign shareholding amounted to approx. 20% of the total in N.Z. in the '60s but the true degree of foreign control cannot be properly assessed in these terms (see Deane, Economic).

In terms of ‘legal’ ownership of course the ruling class is [still] a minority. This is a consequence of the extensive amount of ‘socialised’ legal ownership of capital in N.Z. both in the form of state shareholding and the ‘pygmy-property’ of thousands of private individuals. But shareholding is as a legal concept, not part of the relations of production. It is the latter which the ruling class controls through their control of management which determines all key decisions affecting the allocation of capital. The separation of the work of management from the ownership of capital as different functions, which is illustrated in the following example, was fully analysed by Marx 100 years before its ‘discovery’ by Galbraith under the now renowned phrase ‘the separation of ownership from control’ (Capital Vol. Ill, 388). (cf. Burnham, The Managerial Revolution)

The way in which the ruling class operates at the level of the economic base and in particular how they dominate the relations of production by determining the distribution of the realised surplus-value, may be illustrated by a concrete example. In the period following the 1975 downturn in market conditions, more and more apparent has been the allocation to management of surplus-value in the form of higher salaries, Mercedes-Benz cars, petrol, housing and other allowances. These deductions are made, not at the expense of the workers, as workers, but at the expense of the pygmy-shareholders (who may of course be workers) whose rates of dividend on their shares consequently fell in 1976 and 1977. Many dividends were declared at low levels, in accordance with a policy of dividend control to discourage the ‘excessive wage claims’ of workers. But in fact, what was occurring as the result of falling profits, was a redistribution of the surplus-value in favour of the managerial group within the ruling class, who received an average or above average rate of profit on their capital, since their dividends were augmented by payments disguised in other forms. The absurdity of taking a legalistic view of production relations is fully illustrated by this example. Legal relations are part of the superstructure. Relations of production determine the allocation of the surplus-value to those legally entitled.

In sum, therefore, the function of the ruling class is two-fold. First, they determine the distribution of surplus-value between the various capitalist and other class fractions within the limits imposed on the reproduction of capitalist social relations due to the contradictions within the CMP (see next section). Second, a point not stressed above, they manage the articulation of N.Z. peripheral capitalism into the international capitalist system. This function brings with it various conflicts which cannot be properly treated here, but which require serious study. Finally, the social composition of the ruling class reflects the historical process of accumulation in N. Z.

3.7 The ‘Welfare State’ and Reproduction

In the preceding sections we have shown how the state played a decisive role in establishing the CMP in the N.Z. social formation by means of its political-legal and economic functions. As a result, capitalist social relations were established in agriculture, and in domestic manufacturing, developing into class struggles between peasants and compradors (see 3.4) and between wage-labour and industrial capitalist classes. In this section we show how the semi-colonial state has functioned to reproduce these social relations at the level of political and ideological relations allowing the full development of the CMP within the N.Z. social formation.

Up until the establishment of the industrial circuit in N.Z. the semi-colonial state functioned largely as a sub-imperial outpost of the imperial state. It drew heavily on the imperial state's political-legal and ideological apparatuses (the imperial army, the Westminster system, statute law etc) which it adapted to the transplanted social institutions in education, trades unions, religion and family relations. However, as we have noted, the local state assumed a much more dominant role in establishing the CMP in N. Z. than had the capitalist states in the historical transition to the CMP in Europe, and it also responded to the growing threat of class struggle arising out of the Long Depression by rapidly transforming its apparatuses, that is introducing ‘state experiments’ to regulate work hours and conditions and provide basic social security measures. The local state therefore assumed a central dominant role in reproducing the CMP in the semi-colonial setting, fusing its accumulation, political-legal and ideological functions in the form of the ‘welfare state’ (Poulantzas, Classes, Intro) .

It is clear that the serious challenge to the reproduction of capitalist social relations posed by the rise of union militancy, forced the ruling class to rely much more heavily on the state's reproductive functions in maintaining social unity and cohesion. But while the state's role was to moderate class struggle and to shift the basis of accumulation from absolute surplus-value to relative surplus-value (i.e. actively reproducing skilled labour-power by means of the state provision of health, education and welfare) it was presented at the level of popular ideology as ‘state socialism’ . The state was conceived to be a ‘neutral’ institution standing above class interests and capable of reconciling these interests in the general interest expressed in terms of the dominant ideology of nationalism. By using the state to reconcile class interests at the level of ideology the ruling class was able to reproduce the conditions for extended accumulation. In so doing, it was in turn able to finance the rising living standards and social services of the working-class and continue state subsidies to capitalist production by means of the rising productivity of labour-power. And rapid accumulation, in its turn, worked to legitimate the state’s appearance as the ‘peoples’ state’. Thus, if the working-class benefitted from higher wages, better conditions, social security etc. it was not because it had won a victory against the capitalist class, but because it had provided these ‘benefits’ out of its own surplus-labour (Bedggood, Class).

The post World War II development of the welfare state has extended its functions in reproducing the CMP and maintaining the unity of the social formation. The use of Keynesian economic policies such as full employment, income maintenance and social security, together with the reproduction of skilled labour-power, sustained the post-war accumulation boom. This had the effect at the level of ideology of legitimating the state’s capitalist role under the slogans of economic growth and per. capita. prosperity. But clearly the state can only manage to appear as the benign ‘people’ state’ so long as its functions do not require any drastic reduction in the living standards of the working-class. So long as it can perform its accumulation functions of reproducing skilled labour-power through the provision of equal opportunity in education, health, housing etc. without raising taxes or cutting wages, these functions will appear to be in the ‘interests’ of the working-class. Indeed, they will serve to reproduce capitalist social relations at the level of individual achievement motivation.

(Note: Most writers (e.g. Yaffe) assume that state intervention in the economy is a drain on the surplus-value going to the capitalist class thereby lowering the average rate of profit. The position taken in this paper is that this conclusion follows from a static analysis which does not take into account (a) the surplus-generating functions of the state which must offset to some extent the so-called ‘drain’ by creating new surplus-value, and (b) the fact that the state extracts surplus-value from the working class (which would not otherwise have gone to the capitalist) in the form of taxation. Thus over the post-war period increased productivity has created more value, but the state has actively intervened in the class struggle for shares of the newly created value by extracting a portion that would have entered into the historical component of the value of labour-power, and cunningly redistributed it to capital. Thus the ideology of the welfare state is the reverse of the reality. (Bedggood, State, cf. Wright, Class, Crisis and the State)

More recently, however, the costs of maintaining the levels of social welfare spending to sustain the illusion of equal opportunity in education, health and so on, has put a strain on the state's fiscal resources, leading to the general situation of cuts in state spending, increased taxation, and the redistribution of state revenue from less productive to more productive branches such as export manufacturing. The basic contradiction between the relations and forces of production which has been suppressed during much of the semi-colony's history by the intervention of the state now threatens to dissolve the unity of the state's reproductive functions. Now that the rate of accumulation has slowed down, the state's efforts in sustaining accumulation require it to redistribute surplus-value from the working-class to the capitalist class. As it takes the offensive against the working-class it sheds its appearance as the ‘welfare’ state and for the first time faces a serious challenge to its ability to suppress class struggle and maintain social cohesion in the N.Z. social formation.

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Development of Capitalism in NZ : Part 2

2006-03-29T16:33:00.000-08:00

2.0 The Materialist Framework

2.1 The Circuit of Industrial Capital.

We begin by outlining the basic mechanisms of the circulation process. The economic base, or real foundation, comprises the twin elements of relations and forces of production. The former represents the social circumstances which relate individuals to each other with regard to the production and appropriation of surplus-value ; the latter represents the rode of economic or material life and organisation, the level of technology, nature, human qualities, etc., with which the relations of production must operate. Any advanced capitalist society is one whose economic base, by definition, has experienced considerable accumulation and division-of-labour.

To analyse such accumulation, we use the circuit model which brings out the important distinctions between forces and relations, between production and distribution/exchange, and between the production process and circulation process. This is one of Marx's most brilliant simplifications - the basic idea of the circuit is one of reproduction, not production. It is used to analyse a situation where start becomes finish to start again on an expanded scale (Le. as it is across the entire Monetary base of the (Mp). Hence, the capitalist advances fixed and circulating ("working") capital to purchase means of" production and the labour-power of the working class to start the circuit. He receives at the end an expanded mass of money capital, now including his net profit which he (or his bank) could temporarily hoard or immediately reintroduce into the next turnover cycle. Capital in changing its form over the cycle cannot be given any unambiguous (algebraic) definition; capital in Marx's sense must always be related to the reproduction of the underlying capitalist relations of production, wage-labour and capital, as they relate to the turnover circuit. "Capital is not a simple relation, but a process, in whose various moments it is always capital" (Grundrisse, 258, also 221-370 for Marx's definition of capital).

Within the CMP, the circuit of reproduction assumes the form: M - C - M'. Fully expanded this becomes :

where M is money capital, C is commodity, i.e. marketed production, Lp is labour-power (also a commodity), Mp is means of production, and P is productive capital. The primed values represent in general greater magnitudes than the unprimed ones and also later historical stages of a circuit or part of a later circuit. M’ – M = m’ or gross profit (see Macrae, The Neglect).

As expressed, this circuit represents the essentials of the underlying relations of production: labour-power as a commodity exchanged for M and organised with means of production by an industrial capitalist. It may also be used to assess the level of development of the productive forces since these will be reflected in the speed (time) of the turnover of capital i.e. the time elapsing between M and M'. We see, also the roles played in this process by a) the speeding up of the production process - continuous shift work, electronic technology with instant calculations, better product flow and b) the speeding-up of the circulation process - use of marketing, advertising, hire purchase agreements etc. to telescope the time of circulation. All these agents contribute therefore to the more efficient reproduction of capital (see discussion of productive and unproductive labour in 3.6 below).

2.2 Extensions and Generalisations

The above circuit (1) may be extended to assist in understanding certain key parameters of the system, for example the rate of profit – “The motive power of capitalist production” (Marx, Capital, Vol. III, 259). We shall also generalise it to account for interlocking circuits, both within social formations, and between them (internationalisation, Sect. 2.5) something of fundamental importance for our subsequent analysis of the N.Z. social formation.

According to Marx, it is during the production process (or during the production phase of the circuit indicated by the series of dots in (1) above) the surplus-value is created, although it does not take on a monetary form until it has been realised as part of gross sales revenue or M'. It is in the form of monetary profit that surplus-value therefore makes its appearance in the CMP. Accepting the formal identity between the mass of surplus-value and the mass of profit as Marx defines it, the annual rate of profit is defined as r (A).

(Note: this important distinction must be made more strongly in this current era of costing of “profits” for reasons of tax evasion, thus reducing the significance of ‘declared profits’ as a measure of r (A))

The rate is a relation between a flow magnitude and a stock magnitude. It represents the gross return over total capital advanced by the capitalist, over a particular period of time, that period thereby giving the rate its time dimension. From (2) it follows that r (A) is directly related to the mass of the surplus-value created, and this in turn, is a function of several variables, the most important being:

(a) The rate of surplus-value - itself a function of the level of development of the productive forces

(b) The number and quality of productive workers employed

(c) The number of effective 'turnovers' of production that can be completed in a year which in its turn is dependent on a range of factors e.g. levels of demand, sales, administrative efficiency, state intervention, together with the development of the credit system, all of which speed-up the circulation process; and factors such as mechanisation, rationalisation etc. which speed-up the production process itself.

Our analysis has pointed to the functions of sales agents, credit terns, managerial education and so on in speeding-up turnover. These items may be added to Marx's general list of counter-tendencies operating to overcome the falling rate of profit (Capital, Vol. Ill, 232-240). They all act ultimately on the rate of turnover and hence, the rate of profit, either by helping to economize the amount of capital to be advanced, or by spreading fixed expenses over more production runs. Distinguishing fixed from circulating capital is also important for questions of pricing, employment and distribution (Macrae, The Neglect).

(Note: It is important to know how our analysis of reproduction is distinct from most existing Marxist analyses which stress a static approach to the economic base. Such approaches are dominated by questions such as “who gets more or less surplus-value”, or “what groups represent ‘drains’ on surplus-value” often leading to a discussion at the level of distribution rather than one based on a dynamic value analysis.)

Using the circuit model is it possible to get from an expression of an annual rate of profit (2), to a general rate of profit for any given social formation? Such a vexed question involves a consideration of the total social capital as composed of individual capitals with individual rates of profit, each circuit interlocking with others to reproduce the total social capital. Now a circuit of capital can interlock with another in a number of different ways, depending on the particular form which it takes on. One of the most important interlocks is that between the circuit of finance capital, put at the disposal of industrialists; this is the classical context of the discussion of imperialism (See 2.6 below).

According to Marx's analysis in Capital Vol. III, the general rate of profit is formed by re-allocating total surplus-value across departments so as to equalise the rate of profit (as defined in (2) above) in each. But, if we view surplus-value as a flow deriving from the continuous movement of production, as in the circuit model, we cannot undertake any transformation as per Vol. III unless we assure a particular historical structure and phasing of interlocking circuits. If surplus-value is an irregular flow, it is not a stock that can be parcelled out into its ‘aliquot’ parts. Consequently it is doubtful whether any meaningful general rate of profit can be measured for a given social formation.

2.3 Money and Credit

Use of the interlocking circuit model clearly presupposes an advanced use of money in various forms. Money is the universal medium of exchange by which the circuits can be renewed. In this context money plays the role of a means of commodity circulation, although the Marxist theory of money encompasses other vital functions as well - in particular a measure of value and as an object of specific demand itself, even when it takes the form of inconvertible paper (De Brunhoff, p. xv). Indeed, the acceptance of money as a medium of circulation presupposes its establishment as the measure of value. It would seem, however, that with the development of the credit system, the function of money as a means of circulation declines relative to that as a unit of account, or measure of value, or obligation of debtor to creditor; here lies a major reason for recurring monetary crises, namely the 'liquidity crises' that occur when debts falling due cannot be met. While in normal times, the credit mechanism works to cover such gaps and enables the entire interlocking system to continue, at times of crisis this breaks down, loans are recalled, disruptions of production occur, and so on.

We can see then that there are fundamental interconnections between the credit system and the various interlocking production circuits. In some cases, the only interlock between branches of production may be, not by the exchange of commodities, but through the credit system itself, recycling ‘fallow’ capital from one otherwise independent branch to another. In this respect we see that the main functions of bank credit may be summarised as follows:

(a) Economising the absolute amount of capital to be advanced by the industrial capitalist, at the expense of course of interest payments drawn from the mass of surplus-value the industrial capitalist receives - i.e. a deduction from his gross profit.

(b) Speeding-up turnover by substituting for an inability to pay (commercial bills etc) and boosting low levels of purchasing power (hire purchase etc).

(c) Transferring balances of firms and individuals of one branch to make than work in other branches of production affecting (a) and (b) above, and raising the share of interest in surplus-value. These transfers of M raise the velocity of the circulation of money and thereby the possibility of an increase in the rate of accumulation. This is because the increased velocity of the circulation of money facilitated by the credit system is of itself insufficient to increase the rate of accumulation. It presupposes conditions such as the willingness of capitalists to invest, stocks of commodities, balance of payments etc. It may stimulate rapid inflation and contradict the basic aim of increasing capital accumulation, a point we take up below.

The importance of these credit functions in relation to the rate of profit has been shown by recent research. In their study of the declining profitability of advanced industrial capitalism, 1955-1975, Loiseau et. al. are struck by the very rapid growth in indebtedness of industrial firms to the banks over this period. The authors regard this important trend as both a countertendency to falling rates of profit, as well as a warning of the impossibility of repeated recourse to borrowing of this nature (from the credit system) to overcome the long- term tendency of continued decline in profitability .

Money itself has no price, rather a rate of exchange which ties money to socially necessary labour time, thereby expressing the function of money as a measure of value (De Brunhoff, 27). Inflation results in the depreciation of this rate of exchange between money and value. This is immediately reflected at the level of distribution as the depreciation of the holdings of money creditors, who are now repaid the equivalent of less value than they had originally advanced (depending of course on the exact terms of interest and repayment) and favours debtors who must pay a lesser equivalent in terms of value. Whilst much capital that exists today is fictitious capital (i.e. capital which does not enter directly into the productive circuit and therefore plays no direct part in the augmenting of capital, but which nonetheless exists in the form of a monetary claim on total surplus-value, e. g. interest on the national debt (Marx, Capital, Vol. Ill, 465), this mass of fictitious capital is clearly increasing with inflation and its growing claim on total surplus-value is not fictitious. There comes a stage therefore, when monetary phenomena (inflation, balance of payments, interest and exchange rates etc.) will hinder the reproduction process. Whenever monetary phenomena, in the guise of the credit system, interpenetrate the reproduction circuit, as they do to such an overwhelming extent in contemporary capitalism, the potential for crisis is so much more greatly increased. And as the state is drawn into the management of reproduction, any measures affecting money, such as credit policy, expenditures or other policies adopted by governments, because they affect the "universal medium", must therefore percolate throughout the entire system.

2.4 The State and Reproduction

The capitalist state functions to reproduce the CMP at three levels - the political/legal, the ideological and the economic.

(a) Political/Legal. By this we mean the establishment by force of capitalist social relations - the separation of the direct producers from the means of subsistence and production, both in Europe, and the lands subsequently penetrated by the CMP. This function therefore is historically prior to the establishment of the CMP and its internationalisation (See Marx on "Primitive Accumulation" Capital, V. I 667-724), but remains a necessary condition of reproduction of total social capital on a world scale today as imperialism (2.6 below). The legal aspect of the states function is to legitimate the possession of private property, i.e. the conversion of means of production into alienable commodities including that of labour-power (e. g. the laws governing maximum wages and restricting strike action etc). This function of the state corresponds most directly to the bourgeois view of the state as an institution which has a monopoly of the use of force. Althusser refers to this area of state activity which contains the “Government, the Administration, the Army, the Police, the Courts, the Prisons etc” as the Repressive State Apparatus (Lenin, 136).

(b) Ideological. This function of the state is concerned with the reproduction of capitalist ideology. It extends the commodity fetishism of the marketplace into the realm of politics and culture by means of the Ideological State Apparatuses -educational, family, legal, political (including parties), trade-unions, communications, the arts etc. (Lenin, 137). The reproduction of ideology is basic to the reproduction of capitalist social relations since it constitutes bourgeois' subjects'- i.e. character structure of bourgeois individuals. Political, Legal and Ideological functions combine to give us the ‘form’ or ‘appearance’ of the capitalist state including Social Democracy and fascism. The particular combination of any given form reflects the ‘relative autonomy’ of the state in performing its basic economic function (Bedggood, The Limits, cf. Poulantzas, Classes, 17-35).

(c) Economic. This function presupposes some combination of (a) and (b), i. e. some balance of force and ideology, in establishing the conditions of production. At this level the state intervenes in the circuit of capital to operate countertendencies to the falling rate of profit and to reproduce both national and international capital (see 2.5) These interventions can be understood in terms of the points at which they affect the circuit of industrial capital as expressed in (1) above.

M - Mp - The state advances capital in the form of an infrastructure (public works, railways, ports etc), or in the form of loo interest loans or outright grants. Thus the absolute amount of capital advanced by capitalists is reduced and the organic composition of capital held down, both counteracting the falling rate of profit.

M – Lp - This is a state subsidy which cheapens the reproduction costs of labour-power to the capitalist. It takes the form of a subsidy on wage-goods (food, mortgages, state rentals, public transport etc) or wage-transfers (the provision of health, education and social services). The ‘cheapening’ of these elements in the value of labour-power is paid for by means of tax revenue drawn ultimately from surplus-value but immediately from wage and salary earners, transferring this cost from the capitalist via the state to the working-class.

P . . . C' - As well as subsidies to productive capital, the state intervenes in the production process itself. Intervention in the private circuit consists largely in the applications of research and development to increasing productivity and in speeding up the production process itself. Since competition generates a drive to improve productivity, state involvement in subsidising the advancement of technology becomes increasingly important. Direct intervention in production takes the form of the nationalisation of particular branches which require exceptionally large capital outlays (energy, transport etc) or which are too risky or unprofitable. In this way the state subsidises the losses involved in high-risk or low profit areas, allowing the goods and services produced to enter into the circuit of capital at less than 'economic' prices. In so doing it makes possible the concentration and centralisation of capital at rising levels of organic composition, developing the forces of production and intensifying the contradiction between private ownership of the means of production and the increasing socialisation of the forces of production.

An important area of state intervention in the circuit is between M' at the end of one turnover and the re-investment of M' as C' at the beginning of another. This concerns the state's policies in facilitating the mass of productive capital and the speed with which it circulates, since productive capital alone (combined with Lp and Mp) makes the production of surplus-value possible. Of course the purpose of all forms of state intervention is to counteract the falling rate of profit and by doing so, to make the re-investment of M' more attractive to the capitalist than consumption, hoarding or speculation. Nonetheless, to the extent it can influence the decisions of capitalists or their agents concerning the use of M', the state plays an important role in the reproduction of capital. The main instruments it uses to control the direction and speed of ‘capital formation’ are those which help to reduce the cost of credit. However, since the operations of the government itself affect this cost by influencing the amount of credit available and the amount demanded, then the analysis of state intervention at this point in the circuit is tied up with the circumstances of overall fiscal policy as reflected in the state budget.

By means of various institutional arrangements, the state establishes a mechanism of continual credit creation and credit rotation which can be altered to suit the particular needs of capital. Since the state bank has the power to create credit, it can theoretically create unlimited credit to cheapen its cost and encourage the efficient re-investment of M'. In practice however, it cannot do so beyond certain limits without causing hyperinflation and with it that consequence it seeks to avert, namely an investors' strike. It has therefore to rely upon a policy of combining some credit creation together with the rotation and control of credit within the private sector, referred to commonly as the ‘stop-go’ counter-cyclical policy.

The credit policy of the state's bank has therefore two major goals:
i) to manage the state's own credit needs, and ii), to provide for the credit needs of the business sector in general. For instance, directives to the trading banks to hold more government stock would be made if the state's budget was in heavy deficit, whilst the private sector has a surplus of M'. Selling government securities would have the same impact in principle, raising the cost of credit (the rate of interest) by reducing the supply available to the business sector. The reverse would be the case following a policy of deliberate expansion of the supply of credit. In general, the state's credit policies work to flatten the business cycle by means of its counter-cyclical ‘stop-go’ controls. It will also attempt to prevent the non-productive use of M' in hoarding or speculation as prices and interest rates rise by means of selective incentives. The logical development of such policy is of course for the state to assert increasingly tight control over capital formation to ensure its recirculation as productive capital. In doing so however, it cannot escape the limits of the credit system as a means of overcoming the rise of inflation, the depreciation of commodity prices, and finally, crisis (Bullock and Yaffe, Inflation, 26).

In concluding this section it should be stressed that while the state’s economic interventions are designed to arrest the falling rate of profit in the short term, this merely transfers the tendency from the market onto the state itself in the form of ‘fiscal crisis’. That is to say, the increased costs of subsidising capital become steadily less productive of total surplus-value. The state runs up mounting expenditures wyich tend to outrun its ability to increase its sources of revenue. And as this deficit cannot be met simply by ‘printing money’ beyond a certain point without fuelling inflation, or by increasing taxation of surplus-value going to the capitalist in the form of profit, rent or interest, it must be raised by increasing the rate of taxation of both the productive and unproductive working class. This puts the state in the position of having to expose its functions on behalf of the capitalist class as it becomes difficult to reconcile its attack on workers living standards with a ‘neutral’ non-class ideological status (Bedggood, State Capitalism). The result is that class struggle within the state apparatuses becomes generalised across economic, political and ideological levels, placing limits upon the states ability to resolve the basic contradictions short of the social expropriation of the means of production.

2.5 Internationalisation

So far we have considered the process of reproduction in abstract terms without reference to particular social formations. In this section we propose to relate reproduction specifically to the internationalisation of capital. As we have pointed out, the development of capitalism in New Zealand is, by definition, related to the development of the CMP on a world scale and can only be properly conceived at that level. What we shall do here is to apply the interlocking circuit approach to the problem of internationalisation as it affects the development of capitalism in New Zealand. In the light of this discussion we shall then examine the applicability of the traditional theories of imperialism to this problem.

We start with the circuit of an industrial capital (M1) which can be schematised (after (1) above) as follows:

In this example, industrial capital in branch 1 takes on at least three different forms at various phases (Marx, Capital, Vol 11 (chaps 1-3l Palloix, Self Expansion, 19) namely

1. a commodity capital circuit C1- M'1 – C'1

2. a productive capital circuit P1 – M'1 - P'1

3. a money capital circuit M' – C'1 - M'1

Each of these has to be reproduced in order for self-expansion to occur. In addition various other framents of capital are required at particular stages. These are:

· merchant capital to realise linkages marked -

· bank capital to achieve adequate levels of M

· realisation capital to facilitate the entire circuit by promotional advertising etc of commodities for sale.

Note that we have surrounded the whole process by a bracket to indicate that the entire interlocking process bakes place within a given social formation designated by [A]. Now we proceed to extend this to an international context by distinguishing different ‘brackets’ i.e. distinguishing the different (geographical) locations or sites of various components of the whole self-expansion process.

As Palloix puts it:

The process of internationalisation in relation to the self-expansion of capital does not refer simply to the extension of the process of self-expansion beyond national boundaries . . .The internationalisation process is not a reality external to capital, a reflection, a result, (a spatial overflowing, an intersecting of foreign capitals) . . .(it) is a result of the world-wide universality of the CMP . . .internationalisation manifests itself both as an expression of: the national division (into social formations); the universality of the CMP (the generalisation of wage-labour); and the law of uneven development. It takes this form in order to assure the continual increase of the rate of surplus-value on the basis of the fusion of M-Lp and M- Mp within the process of production. The internationalisation of capital and the working of the national economy are not antagonistic, not two alternative realities, but are two phenomena which constantly mirror each other, amplifying each other in their historic development because they are both shaped and moulded by capital (ibid: 23)

We define internationalisation here as the process of ‘unification’ of different social formations by means of capital in its various forms and fragments for the purpose of its own self-expansion. Given the various forms and fragments of capital mentioned above, the patterns of internationalisation as it affects different social formations will be extremely variable. The best know cases would be:

In addition to industrial capital, merchant and bank capital will be involved in the process. The ‘hegemonic’ industrial capital circuit M-C-M will absorb these fractions in its movement. Thus local capital will normally be used to provide commodities auxiliary to the main production process, financial services, or wage-goods to workers employed by foreign capital. Rarely does the dominated social formation provide large amounts of capital in the form of instrument of labour embodying advanced technology (machinery, electronics etc), this being reserved for sale by other branches of capital at the centre. A typical interlock with the local social formation is the absorption of national money capital for advance to the industrial circuit, and it is in this that local finance capital plays a key role. These are some of the mechanisms by which' hegemonic' capital self-expands through the uneven development of the social formations drawn into the internationalisation process.

Having stated the problem in its most abstract and generalised way, we now proceed to its application to the New Zealand formation. In the first place, since the CMP came up against a pre-capitalist and nonmonetised mode the form of Maori society, the existing formation had to 'adapt' to the needs of capital. This had to involve the introduction of money forms by means of the attraction of native labour into construction work, and the dispossession of the land - in short the undermining of the system of production for use-value in Maori society with production for exchange with the CMP. The most significant form of commodity exchange implanted in N.Z. was that of the white-settler production of commodities indirectly related to the circuit of industrial capitalism. By this we mean the production of wage-goods for reproducing labour-power in Britain, which in its turn was then directly involved in the production of surplus-value in Britain. There would not be, for some time, a locally established branch of production into which British industrial capital could interlock. The other side of the semi-colonial commodity production was therefore the requirement for money, for capital, mainly freed-up rentier capital from the U.K. which could be used to establish the conditions enabling the new colony to play a role in the international division-of-labour. Schematically we may describe these interlocks as follows. In this diagram [A] is the U.K. and [B] is New Zealand.

We have distinguished here between capital advanced by the enterprise (M11 or M21) in each social formation, and that advanced by agents, namely the rentier in the U.K. (M12) and indirectly, via the state, In New Zealand (M22). We ignore the private rentier capital invested in New Zealand and the export of industrial commodities from the U.K. to N.Z. which in our view were relatively minor interlocks in the initial period (see 3.5). Key interlocks are expressed by the arrows. The rentier interest on M12 in the U.K. is m12 = M'12 – M12. The interest on M22 (the N.Z. public debt) is m'22 = -M'22 – M22. The basic function of the new colony therefore was to expand U.K. industrial capitalism by cheapening the reproduction costs of labour-power, and providing a secure outlet for the investment of rentier capital. Both operated as counters to the falling rate of profit.

Once these interlocks had been established their impact on the two social formations was quite dramatic. During the first third of the 19th century England imported only 2.5% of its foodstuffs. In 1912 it imported mainly from Australia and New Zealand about 50% of its meat, 70% of its butter and 50% of its cheese (Harms, 1912: 176). The consequences for New Zealand's economy are summarised below:

Once established this pattern of internationalisation of the circuit of commodity capital has never ceased to be of prime importance to the New Zealand social formation. However, the modern period (Post W. W. II) exhibits a far more diversified and evolved pattern of inter-locking than that illustrated above. The contemporary pattern of circuit interdependence is outlined in greater detail below (see Section 3.). We shall limit ourselves to an analysis of the main forms of dependence in abstract terms. The major new development in the modern period has been the establishment of a range of production processes in New Zealand organised along industrial capitalist lines, under the domination of foreign capital. Foreign capital dominates directly - by direct or partial ownership in conjunction with a fragment of national capital of these branches. Or else it dominates, indirectly, by provision of the range of modern instruments, materials, patents, licenses, agencies, managerial expertise etc. essential to the reproduction of capital in New Zealand. - all of which are supplied by 'hegemonic' capital. In other words, MA (foreign capital), in various forms, constantly traverses the reproduction of local capital (MB) which in turn functions to reproduce the former (Palloix, Appendix, 21). The following are a few examples of this new pattern of dependence. In all cases, A refers to "abroad", B to the local N.Z. social formation. We also break down Mp into instruments and materials of labour (e.g. machinery and oil), symbolised by IL and ML respectively.

Case A - a joint venture producing previously imported articles of consumption or instrument of labour

In the extreme case of A (colour TV’s for instance) no MA is advanced in [B], but m'A is drawn off in the form of royalties etc. arising out of the assembly and sale of TV’s in NZ from 'kitset' packs supplied by the licensing company. Local capitalists are happy at the monopoly profits provided (m'B) under the protection of rigorous state enforced import controls on foreign competitors.

Case B - The provision of materials of labour for a MNC (eg Comalco)

In this case, Cornalco gets cheap auxiliary materials of labour (electricity C’B ) to smelt imported bauxite ore, which is subsequently re-exported (C’A). Although the production process is located in New Zealand (PB), this signifies few linkages apart from some local employment, (LpB) and, because of transfer pricing, little chance to claw back any declared profit (m’A'). In effect the huge state investment involved in MB (supplying the electricity) and the low price of its sale means that the New Zealand working-class subsidises the profits of the huge MNC, Cornalco.

Case C - Foreign control of processing of smallholder production (eg meat)

Here the foreign company sells the processed meat (C') to its overseas subsidiaries at inflated overseas (EEC) prices. Smallholders provide the livestock (ML) at low costs and are vulnerable to developments all down the line of processing, transporting, marketing etc.

Case D - Provision of an advanced transport facility (eg Air New Zealand)

I
n this case, heavy overseas costs for importing IL and ML from [A] (fuel, aircraft) are met by state guaranteed overseas borrowing (MA). Revenues to return these advances, together with interest, are earned by charging New Zealand and foreign users high monopoly tariffs for travel (the commodity sold) on protected South Pacific routes [C'A/B].'

These cases illustrate the degree of penetration of foreign capital in its commodity, money and productive forms into the contemporary social formation. The examples underestimate the degree of dependence on foreign capital since they ignore for instance, the indirect links to foreign capital through locally provided materials of labour e.g. imported oil to provide electricity (MLB) in the case of Comalco and other firms. Nor does the degree to which the local state makes concessions such as export incentives, state regulation of wages etc. to foreign investment to make the conditions for production as attractive as possible, show up in these examples. Moreover, the links with overseas banks, finance, merchant and insurance companies, all of which can be related to the above circuits, have not been isolated.

All these links act to manage the flows of commodity production and thereby also to transfer as much of the surplus-value as possible from the direct producers to the various fractions of the capitalist class both in New Zealand and overseas.

2.6 A Note on Imperialism

So far we have limited our discussion of the main interlocks affecting the N.Z. social formation to the analysis of the internationalisation process. We have made no reference to the political and ideological context in which this interlocking of circuits occurs. We now want to trace the connection between the internationalisation of capital and the rise of imperialism in order to determine the role of the semi-colonial state in this process.

According to Palloix, imperialism differs from internationalisation, being the manifestation at the political level of the role of the core capitalist states in linking-up the CMP in various social formations on a world scale. If we conceive of internationalisation as the ‘unification’ of social formations by the CMP, then imperialism is the political form taken by this unification. The core states’ dominance over peripheral and semi-peripheral states ranges from direct rule to formal independence, demonstrating the imperial states' ‘relative autonomy’ within the limits set by the particular historic circumstances of internationalisation. Usually the initial interlocks with pre-capitalist social formations will he established by force, but the development of these interlocks may be managed by ‘self-governing’ or ‘independent’ client states. Imperialism, so defined therefore, spans the whole epoch of internationalisation from the 16th century to the present day. While we should be careful to distinguish between successive phases of imperialism, an adequate theory of imperialism must be able to account for the co-existence of internationalisation and imperialism over the whole epoch (Murray, Value, part 2).

According to our definition imperialism refers to the role of the core state in serving the needs of capital accumulation by territorial expansion. While Marx noted the importance of the state as “a powerful lever of capital accumulation” in the mercantilist phase (Capital, V. I, 706) he appeared to limit its role to one analogous to ‘primitive accumulation’ in the period of free trade (i.e. the bombardment of new markets into submission in India and China, and in opening-up the lands of white-settlement). In the chapter on the ‘Modern Theory of Colonisation’ (Capital, V. I Chap. 33), Marx quotes approvingly the Wakefield analysis of systematic colonisation. A working-class could be created according to this plan even when land was abundant, as in the colonies proper such as Australia (he does not mention N.Z.) by means of a ‘sufficient price’ policy operated by the state. The resulting fund would be used to manage immigration and keep the labour market full for the capitalist. But later on in this chapter Marx reflects on the limited usefulness of this particular analysis in the light of events in North America where other factors such as the civil war, the rise of the national debt, in brief “the most rapid centralisation of capital” (Capital, Vol 1 724) were more important in creating the conditions for capitalist development than any Wakefield type of scheme.

Despite these observations, and the brilliance of Marx's vision of the future development of the Pacific Basin (On Revolutions, 392), he and Engels avoided any serious consideration of the long-term consequences of the introduction of the CMP into the Australasian colonies. They preferred to believe that the abundance of 'free' land would remain a permanent barrier to capitalist production on any large scale, and that as markets for British goods they would be rapidly ‘glutted’ and incapable of preventing the coming crisis in Britain (Mayer, Marx, 97). In other words the element of wishful thinking prevented Marx and Engels from developing their theory of ‘foreign trade’ to allow for the new financial interlocks between the self-governing colonies and the Imperial state. They failed to appreciate therefore the important role of the semi-colonial state as a ‘powerful lever of capital accumulation’ not only in the colonies but in Britain.

Of course it can always be argued in their defense that the great increase in British capital exports to the self-governing territories did not take place until after 1880, too late for Marx and Engels to be aware of their significance (Barratt-Brown, Economics, 189). Today, with the benefit of hindsight, we can see that the interlocks established between Britain and the colonies proper in the first half of the nineteenth century were characterised by a form of imperialism in which the initial use of imperial state force to implant the CMP was followed by a rapid transition to self-government by the settlers. This form of imperial core/periphery connection was entirely consistent with the nature of the interlocks established (see (7) above).

If Marx and Engels had some excuse for underestimating the rise of capitalism in the semi-colonies, Lenin and Bukharin did not. Though they showed that the uneven development of the colonies and semi-colonies was the consequence of the centralisation of capital as finance capital in the core states, there is little discussion of the white settler colonies in their work. Bukharin stressed the fetter of landed property on the pace of development of agriculture in the established capitalist formations, but did not link this dis-proportionality to the plight of the suffering classes, or the development of capitalism in white-settler colonies such as New Zealand. For though he mentions directly N.Z.'s role in supplying foodstuffs to the British market, he ignores the significance of cheap wage goods supplied by the semi-colonies in overcoming the land barrier and in countering the falling rate of profit of industrial capital (Imperialism, 19-21).

The most influential theorist of imperialism, Lenin, conceived of imperialism as a distinct (the "highest") stage of capitalism characterised by the concentration of capital in monopolies and cartels in the European states, the export of surplus-capital in search of super-profits, and the increasing rivalry between European states for colonial territories (Imperialism, 700). He also drew a direct connection between imperialism and the reformism of the European working-class which was 'bribed' by colonial super-profits and drafted in defence of national capitals (712). Lenin fully understood the degree to which the contradictions of the CMP were expressed in imperialism; on the one hand, the export of capital “greatly accelerates the development of capitalism in those countries to which it is exported. . . .expanding and deepening the further development of capitalism throughout the world” (691) while on the other hand, the concentration of capital in monopolies established monopoly prices as a barrier to competition, to increasing the rate of relative surplus-value and hence the further development of the productive forces at the centre. The stagnation at the centre therefore intensified the scramble for colonial super-profits based on the extraction of absolute surplus-value at low organic composition (and low wages) (Mandel, MET, 455-458), leading to growing national rivalry and eventually war.

Like Marx and Engels, the weakness in Lenin's theory of imperialism is the element of wishful thinking. Because he believed (rightly as it happened) that the fate of the Russian Revolution would hinge on the revolution in Europe, he exaggerated the ripeness of capitalism's decay and the revolutionary potential of the working-class. Just as important for our discussion, however, was his failure to appreciate the extent and depth of capitalist development in the white-settler colonies. As Barratt-Brown points out Lenin did not distinguish between ‘colonies’ in general and the ‘self-governing colonies of the British Empire’ in his analysis of capital export (Economics, 186). Had he done so he would have seen that the vast export of British capital to the self-governing colonies and Latin America after 1870 was not in search of super-profits but a secure return from the national debts of a number of white-settler colonies established in the period before 1870.

The bulk of British investment was not associated with capitalism's ‘highest stage’ as conceived by Lenin, but with en earlier one, when various class fractions thrown out by the process of accumulation at the centre were relocated in the periphery under changed conditions. There they did lead, it is true, to the consolidation of the (Mp and its development to a higher stage, but only after certain pre-conditions had been satisfied. In sum, the establishment of the CMP in the white-settler states before 1850 and their subsequent development by British finance capital, contributed not only to the success of British free trade policy, but also to her continued supremacy after 1870 in the age of imperial rivalry.

If we allow for the elements of wishful thinking, Marx, Engels and Lenin have left us a theory of imperialism that can be used, together with the interlocking circuit model of the internationalisation process, to analyse the development of capitalism in New Zealand. The changing patterns of world imperialism over this whole period have produced several shifts in the New Zealand state’ s relations with imperial powers, in particular from that of self-governing colony within the British Empire to that of ‘junior partner’ in U.S. imperialism today. But whatever the nature and form of this changing relationship, it has been determined historically by the particular interlocks established with N.Z. by the internationalisation of capital. It is to the actual problem of explaining the historical evolution of the N.Z. social formation (in the light of these combined processes) that we turn in the next section (3). Before doing so however, for the sake of clarity in this analysis we must set-out the basic characteristics of the pre-capitalist modes of production which articulate with the CMP in the N.Z. social formation.

2.7 General Characteristics of the Subordinate modes

We stated in the Introduction (1.1.) that the contemporary N.Z. social formation could only be understood in terms of an articulation of various modes of production. These are the CMP in New Zealand (the development of which is the object of this analysis), together with the residual elements of the pre-capitalist Maori Lineage Mode of Production, and a highly evolved and differentiated Peasant Family Mode of Production. Since the development of capitalism in N.Z. is viewed as the process of articulation of the CMP with these two subordinate modes, we need to define the main characteristics of each of these modes before proceeding further.

(a) The Peasant Family Mode (PFM). The mode we refer to here, is a particular form of pre-capitalist simple commodity production established by the “mass of fanning colonists” in the colonies proper (Marx TSV, V2, 301). Traditionally, the characteristics of this mode are: a patriarchal household and plot of land; production of means of subsistence for use, but with some exchange); and its non-capitalist calculation of ‘profit’ – “. . .so long as the price of the product covers (his) wages, (the peasant) will cultivate his land, and often at wages down to the physical minimum" (Capital, V Ill, 805-806). Whilst these features did, to a degree characterise early N.Z. settlement, the contemporary PFM is quite different in almost every respect, retaining only the family form of labour as a traditional social relation. Unencumbered by any feudal rode and benefitting from cheap and abundant land alienated from the MLM, the PFM in New Zealand has undergone remarkable evolution (see 3.4). (Note: the PFM does not apply to sheep farming).

The evolution and subsequent differentiation of the PFM followed its rapid subordination to the CMP. Thus in N.Z. it came under the firm dominance of the agents of the CMP (e.g. the stock and station agents) who ultimately controlled the family farmer as a sort of wage-slave, despite the position of the farmer appearing to be one of ‘independence’. His independence becomes a ‘formal’ independence; against the fact that he possesses and legally ‘owns’ his land he does not control it (Banaji, Modes, 33-36). The ‘price’ the farmer gets for his product is in fact a ‘concealed wage’ and the interest and commissions paid to the merchant-banker is ‘rent and profit’ (34).

Having determined the underlying nature of the relations of production dominating the PFM as capitalist, we must also point to the manner in which its articulation with the CMP has evolved. In particular, we describe in Section 3.4 how the peasant farmer class used the state as an ally against the merchant-banker class to boost their price and rate of profit. We point to the crucial role of agricultural exports in the 1970's in the efficient reproduction of the CMP in N.Z. (Section 3.5). This historical process has resulted in a considerable differentiation of the PFM, particularly when viewed from the level of distribution (income, profits etc). First, there is the section of quasi-subsistence farmers (e.g. on marginal land); second, there is the middle-peasantry, who in good years might realise an average rate of profit, but because of high levels of debt and fluctuations in their terms of trade, seldom in fact do so; third, there is the peasant bourgeoisie (capitalist farmers), who for some reason or other, could accumulate on the basis of earning an average or above average rate of profit, employing wage-labour, managers, accountants etc. We find, therefore, despite Marx's reference to this form of production as “capitalist. . . without its advantages” (TSV, Ill, 487), (that is, unable to expand reproduction on the basis of the production of relative surplus-value) in N.Z., the interaction of the state, the merchant-bankers, and the natural environment, combined to permit the PFM to evolve out of colonial simple commodity production to provide the basis for expanded capitalist production in the semi-colony (See Lenin, Russia, 175-190).

(b) The Maori Lineage Mode (MLM). The mode of production which corresponds to the ‘structure’ of the Maori social formation is that of ‘primitive communism’, or the ‘lineage mode’ (Terray, MPS; Hindess and Hirst, PCMP). Notwithstanding the debates surrounding this concept, for the moment we adopt the view that the basic characteristics of the Lineage Mode apply to Maori society - they are; a low level of development of the forces of production, community ownership and possession of the means of production, cooperative labour and collective distribution of the product at the economic base; the absence of a state and the dominance of ideology in the form of kinship relations at the level of the superstructure - hence the term ‘lineage’ signifying the key role of ideology in reproducing the conditions of existence of this mode.

The MLM can therefore be characterised in these terms as having an economic base comprising collective ownership and control of the means of production, and where the distribution of the product is not determined by class relations at the base, but is dominated by the ideological agents (elders, chiefs) who (a) do not form a ruling class, (b) do not therefore require a state, but (c) are responsible to the collectivity for the reproduction of the mode. In short, the MLM is a good example of Marx’s concept of primitive communism (Grundrisse, 471-474).

The historical process by means of which the MLM became subordinated to the CMP has been described by us elsewhere (Bedggood and De Decker, Destruction; Macrae, The Maori). It follows approximately the same stages suggested by Dupre and Rey (Reflections) beginning with:

(a) Trade: The period from European contact to about 1860 during which the main links with the MLM were via traders and missionaries. The MLM quickly adapted to the commodity market and withstood early attempts at domination by agents of the CMP to a high degree.

(b) The Colonising Period: from 1860-1880 approx. during which state force was used to break the resistance of the MLM to the penetration of the CMP resulting in widespread alienation of the land, the pre-condition for the transformation of collective labour into capitalist wage-labour, and the establishment of the PFM.

(c) The Period of CMP dominance: From approx. 1880-1945. The MLM was reduced to a semi-subsistence peripheral mode providing labour at low wages in seasonal or casual work in the CMP, now consolidating its hold over the PFM and laying the basis for domestic manufacturing on the post-war 11 scale.

(d) Industrial Proletariat Stage: From 1945 to the present, during which the bulk of the rural population of the MLM migrated to the cities to join the industrial proletariat. Today, approx. 1.3 million hectares of Maori land remain in areas of strategic importance for forestry, iron sands, urban development etc. This fact, together with the rising level of proletarian consciousness among Maori workers, shows that while the MUM has been almost totally subordinated to the CMP, the residual elements of its base (the land and cooperative social relations) and of the superstructure (ideology and ‘culture’') play a significant role in the current conjuncture (see 3.7).

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The Development of Capitalism in New Zealand: Towards a Marxist Analysis

2006-03-28T18:21:00.000-08:00

John Macrae and David Bedggood

First published in Red Papers, 3, Summer 1978/79

1.0 Introduction

In this paper we present the outline of a Marxist analysis of the development of capitalism in New Zealand. Given the circumstances under which we are working, it is obvious that much that will be covered requires further research and further thought. Nevertheless, it reflects a point in the evolution of our thinking. It also represents therefore as much a project of research as a definite statement of progress.

We shall show that N.Z.'s "national development" has been determined by its role as a semi-colony (white-settler colony or "colony proper" as distinct from colony) within the world-wide division of labour under capitalism. In taking this approach, we are engaged in theoretical class struggle against bourgeois conceptions of the causes of "development" which focus on there appearances and 'isolated instances' which are taken to represent the total social reality.

The method employed is that of Marx and Lenin, together with some reformulations and extensions of their work, which seeks to understand the working of the Capitalist Mode of Production (CMP) in terms of certain "laws of Motion" which operate not in any vulgar deterministic sense, but as a complex "structural causality" determined under specific historical conditions of class struggle. Adopting this method, we intend to demonstrate its power in explaining the development of capitalism in N. Z. as a complex inter-relation of economic, political and ideological causes which are determined in the "last instance" by the historic expansion of the CMP into the lands of white-settlement in the nineteenth century.

1.1 Modes of Production and the Social Formation

In this section we set out the basic concepts used in our analysis, essential for the understanding of both the structure and evolution of N.Z. capitalism. The core element of structure which we adopt is Marx's concept of a Mode of production. A Mode of Production consists of an economic base or infrastructure, made up of two elements, forces of production - signifying the level of development of the technology of production, the extent of the division-of-labour in the production process, and the embodiment of scientific knowledge – and the relations of production - referring to the social circumstances of individuals who cane together in the process of producing and appropriating use-values. Relations refer to relations of production in three senses: legal ownership (e.g. shareholding), real ownership (executive control etc), and possession (e.g. physical operation of the process of production). Of the two elements comprising the economic base, it is the relations of production which are dominant in the form

of "class struggle" as the ''motor of history". Overlying the economic base in any mode of production is a superstructure comprising political, legal and ideological relations. Both base and superstructure make up the total structure of a mode of production (Marx, Preface, Marx and Engels, German Ideology, 41-62; Althusser, Essays, 201-8).

A mode of production is an abstraction. It is not directly observed; it is not an appearance. Rather it is the product of the Marxist abstraction of the' relevant' structure underlying the main features of the world is seeks to explain. The real world of human relations is not immediately given nor understood by simply observing everyday behaviour in the marketplace or the boardroom - were any 'social scientists' interested. It can only be reconstructed as knowledge of the laws which govern these relations. A Mode of Production therefore does not describe any actual society existing in recorded history. As a concept its purpose is to abstract those basic characteristics common to all actual societies, and to show how any given society can only be understood by means of such a concept.

In applying the concept of a Mode of Production to actual societies, Marx put forward another concept, that of a social formation In contrast to the superficial and unscientific bourgeois concepts of 'nations', countries' or 'societies', a social formation is defined as a site of the concrete existence of one or more modes of production, under the dominance of the most' advanced' mode. In almost all cases, social formations will be made up of a complex articulation of modes representing a complex pattern of inter-relations expressed at the level of appearances as a 'unique' pattern.

Thus the contemporary N. Z. social formation as we define it can only be understood in terms of the articulation of various modes of production: the CMP in N.Z., together with the residual elements of the pre-capitalist Maori social formation (an example of a lineage mode of production), and the evolved form of the peasant-family sub-mode, but under the dominant influence of the world CMP mediated through its agents in N.Z., the national bourgeoisie. We insist that the concept of the N.Z. social formation has to be constructed as the end-product of the application of the Marxist method, and is not drawn out of the air as are the bourgeois figments of 'nation', 'N.Z. Society' or N.Z. population. We reject, in short, the method of political economy which starts from the outward form (e.g. the size of the population) and is forced to fumble into more and more meaningless generalities (the population's skills, its social composition, the concept of a family etc.). On the contrary, we begin from the abstract and use this to explain the meaning of the concrete level of appearances (Marx, Grundrisse, 100) .

[Note : The concept 'mode of production' is a highly contentious one. We use it as an abstraction capable of differentiating distinct 'social forms' of production according to "different forms of the appropriation of resources, or means of production, and of the product itself". Thus the concept is neither a schema emptied of historical content, nor an actual historical social formation. It is an analytic tool enabling us to look beneath the surface forms in any society and determine the 'organising principle' - that of the reproduction of the material means of existence (production) - of that society.]

Against the apologetic vision of the (political) economists, namely the harmony of interests, materialist analysis is dialectic; it insists on the primacy of contradiction built into the concept of structure. Now, the very existence of a structure presupposes the reproduction of that structure within a social formation. A mode of production (or any articulation in a given social formation) is not a stable equilibrium, but a system in which contradictory forces are constantly in opposition. The principal contradiction in any mode of production is between the forces and relations of production crudely between the forces of material progress and the 'class' appropriation of the materials produced - which generates 'class struggle'. The reproduction of a mode of production therefore is the reproduction of its conditions of existence, namely conditions which contain the class struggle, but which also constantly reproduce class struggle. It is in this sense that Marx describes the CMP as a "unity with contradictions" (Grundrisse, Introduction). It also signifies that class struggle necessarily takes place within the superstructure as well as at the level of productive relations.

In contrast to the fragmented and superficial approaches of the bourgeois writers, the concept of the underlying "laws of motion" we advance is that of a complex structural causation which signifies that the reproduction of any social formation will involve the complex interplay of historical and contemporary circumstances, and also the interplay between the base and political and ideological levels of the superstructure. Despite the complexity of these relations as they operate in the case of the N. Z. social formation, we propose to trace this process of complex structural causation in order to demonstrate the primacy of the economic base in determining in the "last instance" the relations at the level of the superstructure. It is important to recognise that the dominance of social relations as expressed in the concept of determination in the' last instance' is in the final analysis, that of class struggle. In this, we follow the position of Althusser:

The capitalist social formation, indeed, cannot be reduced to the capitalist productive relations alone, therefore to its infrastructure (economic base). Class exploitation cannot continue, that is, reproduce the conditions of existence, without the aid of the superstructure, without legal-political and ideological relations, which in the last instance are determined by productive relations.. .and since the production relation is a relation of class struggle, it is the class struggle which in the last instance determines the super-structural relations, their contradiction, and the over-determination with which they mark the infrastructure (Essays, 203-4).

In other words, while the superstructure has a 'relative autonomy' from the base, this is determined within the limits set by the need to reproduce the conditions of existence of the dominant mode of production. Once these conditions begin to weaken or breakdown, we enter the whole new question of the transition from one mode of production to another (Bettleheim, Class Struggles).

What we shall be attempting to illustrate is new this pattern of structural causality, including the relative autonomy of the superstructure within limits determined in the 'last instance' by the base, operated in the case of the N. Z. social formation. This means first, determining the specific economic form in which exploitation occurs, and how this relates to the corresponding form taken by the state etc. Marx has stated the logic of this approach very clearly (cf. Althusser, Essays. 175-187).

The specific economic form in which unpaid surplus-labour is pumped out of direct producers, determines the relationship of rulers and ruled, as it grows directly out of production itself, and in turn, reacts upon it as a determining element. Upon this however, is founded the entire formation of the economic community which grows up out of the production relations themselves, thereby simultaneously its specific political form. It is always the direct relationship of the owners of the conditions of production to the direct producers - a relation always naturally corresponding to a definite stage in the development of the methods of labour and thereby its social productivity - which reveals the innermost secret, the hidden basis of the entire social formation, and with it the political form of the relation of sovereignty and dependence, in short, the corresponding specific form of the state. This does not prevent the same economic basis - the same from the standpoint of its main conditions - due to innumerable different empirical circumstances, natural environment, racial relations, external historical influences, etc., from showing infinite variations and gradations in appearance, which can be ascertained only by analysis of the empirically given circumstances (Vol. III, 791-792).

By taking the "facts of development of capitalism in (one) country" (Lenin, Russia, 67), we shall show how in the case of N.Z., any analysis of the "innermost secret" of the "hidden base of the entire social structure" has to take into account what has been said above i.e. natural environment - climate and fertility of new lands in the colony; racial relations - the destruction of Maori society; external historical influences - British Imperialism. Consequently, underneath what is usually taken to be a "unique" pattern of appearances, "the special case" (Blyth, 1973), there is the determination in the last instance of N.Z.'s semi-colonial role within the CMP.

1.2 Our Method of Procedure

Since the understanding of the history of the N. Z. social formation requires first an understanding of the CMP, we must begin with Capital. In Section 2 we assume that the reader is familiar with Vol. I on the production of surplus value, and the outline of the circulation process in Vol. Il. We use as our basic operational abstraction, the analysis introduced in Vol. Il, which we refer to as the 'circuit model'. This describes the reproduction of capital by means of an increasingly complex system of interlocking circuits of capital in its various forms, constituting the total social capital (Vol. II, 357). We then add to this analysis of the economic base, the analysis of the ‘superstructure’ of the state and its 'ideological apparatuses' to demonstrate their role in the reproduction of the conditions of existence of the social formation. We conclude this section by showing how the circuit model can be used to analyse the process of expanded reproduction of the total social capital on an international scale. Here we extend the analysis of the "internationalisation of capital" pioneered by the French school of Marxists including Michalet and Palloix. We then show how the internationalisation of the circuits of central capital, into the peripheral or semi-peripheral social formations, such as N.Z., provides a significant extension of the basic model for our purposes. In the Note on Imperialism we argue that the use of the circuit model helps in explaining the particular historic roles of core capitalist states in furthering the internationalisation process by the use of force in establishing the CMP in 'new' lands and in setting up dependent client states in peripheral and semi-peripheral social formations.

The circuit model is not the orthodox theoretical model used in Marxist economics and its adoption implies that we approach many of the standard issues of Marxist debate (e. g. the transformation problem, productive vs. unproductive labour etc) from a different perspective (see the earlier formulation of this model in Macrae, The Neglect, Evolution). It is a 'dynamic value analysis' as opposed to a static one found in most standard approaches (Mandel, Desai, Balinky etc). We refer briefly to the implications of this approach for some of these debates in Section 2.

In Section 3 the abstract circuit model which provides the basis for our analysis of the internationalisation of capital and of imperialism, is used as a materialist framework for a brief history of the New Zealand social formation. Here we attempt to follow the complex causality at all levels -- economic, political and ideological, tracing the patterns of change from the British social formation, through annexation, the destruction of Maori society, the implantation of the CMP, and the subsequent semi-colonial form of extraction of surplus-value, all determined in the 'last instance' by the economic base, i.e. the interlocking circuits of capital established in N.Z. In doing so, we subject bourgeois "histories" which put causal primacy on super-structural aspects of the social formation, to the critique of a Marxist science of history.

In the concluding Section 4, we attempt to put forward some general observations and guidelines for the analysis of the current crisis, drawing together the main lessons of the foregoing analysis, and setting out areas requiring further detailed analysis.