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Capitalism and the State

A Fabian myth shared by Mr. Strachey is that increasing state activity, especially on its economic side, is an important factor in changing capitalism into something which is not really capitalism. Like Communists, although for other reasons many Labourites have proclaimed that the system is on its last legs. Unfortunately for such a view, capitalism seems to be a centipede.

State Economic Activity and Capitalism

It may be pointed out that state economic intervention has been a feature of modern capitalism right from the start in the form of state funds for capital projects, subsidies, technical research, tariffs, etc. So far from state intervention being a symptom of the system's old age, it has, on the contrary, been a means whereby the various capitalist nationals have attained a more vigorous economic life.

That there has been a great increase in state activity in the history of modern capitalism is undeniable. This is due to the fact that the state is bound up with and inseparable from the general activities of capitalism. With the vast expansion of capitalism there has gone a corresponding increase in the activities and functions of the state. Just as the development of capitalism, nationally and internationally, has led to an increase in the antagonisms and tensions not only within the national economies, but between them, this in turn has greatly added to the growth of the weight and complexity of their problems. The state thus comes increasingly to the fore as the one social institution able to cope with these problems at any adequate level.

Origin of the State

Marxists do not regard the state as part of some eternal dispensation. It can be shown that the state is an historical product and, like all other social institutions, it has an origin and growth. Marxists point out that there have been societies without states, hence society is both logically and historically prior to the state institution. The state as an organised coercive agency does not in fact emerge until the break up of early tribalism, with its primitive egalitarianism, which was brought about by the development of private property relations and its concomitant privileged and unprivileged social classes.

With the division of the community into owners and non-owners of the sources of wealth production, the state as a social power becomes the means of ensuring the continuance of this division against disruption from within, as the result of social conflicts engendered by antagonistic class relations of production and enemies from without. The state thus serves to guarantee the legal titles of those who own the means of production and gives them the right to appropriate the labour of others, be they slaves, serfs or wage workers. In the ultimate instance these legal relations can receive a physical sanction by the control of the state over the armed forces. Thus any class which is the dominant class in a given set of private property relations of production must have direct or indirect access to the state apparatus.

The Struggle for State Power

If since the passing of primitive society history has been the history of class struggles, then these struggles have centred around the attempt to preserve or win state power. Thus an established ruling class will seek to maintain its control over the state machinery in order to perpetuate a social arrangement favourable to themselves. On the other hand, a rising class which aspires to become a new ruling class, will seek to obtain control of the state in order to mould it along the lines of their own interests. This was the position in which the bourgeoisie found itself in its struggle against the old feudal order, although economic development, by placing them in the key positions of the productive process, had given them an advantage over the old class, they found the old social organisation based on an older mode of production, inadequate for a new expanding form of production of which they would be the prime beneficiaries. The need for the control of state power became essential to bring about a social arrangement more accommodating for the extension and widening of the divergent economic powers.

It can be seen then that a particular form of state organisation is the product of a social class or classes which benefit from a particular set of property relations which it is the state's obligation to enforce.

The Meaning of Private Property Relations

When Marxists say that the state is the protector of private property, they mean that it guarantees the class interests of a given set of property relations. But the significance of these property relations do not consist in the mere ownership of things like the possession of a pair of trousers or the tools of an independent craftsman. Capitalist private property relations means a social relation between men, a relation between owners of the means of production and non-owners.

The social relations of production of capitalism are linked then with a definite class interest which confers upon those who own the wealth resources the right over the disposal of the labour of others. And it is to maintain and enforce these social relations of production that constitutes the primary function of the state.

Reformist View of the State

Marxists point out that class social systems, with their corresponding state structure, are the outcome of social development. They have come and gone, and there are good historical reasons for stating that capitalism, which is the latest of such systems, will also be the last and in turn will give way to a classless and hence stateless social organisation.

While Labour and Fabian theorists accept the fact of the class structure of capitalist society, they do so on different grounds to Marxists. For them social classes and state organisation have always existed and always will. That is why Labour propaganda, although it at times makes veiled references to the injustices of a class society, never advocate the abolition of classes. For them capitalism is part of an eternal dispensation. Their theory is then unhistorical and uncritical.

If, according to such a view, there must always be a class differentiation in the social structure, what purpose does the state serve? Their answer is that the function of the state is to minimise the conflict between the classes to the greatest possible extent, in order to maximise social harmony. On such an assumption the state is not a class organ but a classless agency which exists to reconcile divergent economic interests for the greatest common good. Translated into actual political practice, it is the class collaboration theory of the old political parties, whereby the state serves as a means of seeking to blunt class antagonisms.

Such a view of the state provided an opportunistic springboard for the initial high dive of the Labour Party into politics. Its case against the Tories and Liberals was that it had subverted the true function of the state to act in the interests of the whole of society by taking sides, in the use of state power: the side of the rich against the poor; thus using the state for a class purpose. It did not say the rich should not be rich, but that they should not be too rich. It did not say that the poor should not be poor, but that they should not be too poor. Social reforms and taxation were to be the instruments for redressing the abuses of Tory and Liberal rule and so bring about a greater equalisation of what they considered as part of the natural order of things to be a socially unequal situation. Nevertheless, their claim that by redressing social abuses they would restore the proper social balance between the classes, compelled them to pose as champions of the under-dog, and even gave the illusion if not the reality of their being a class party, which in spite of their most strenuous denials to the contrary, they have only recently lived down.

Accepting as they did the contest between Capital and Labour as a social norm, they claimed that they would see it was fought under the Marquis of Queensbury rules. As a genuine third man in the ring, they would see the bigger opponent did not use his weight unfairly or maul in the clinches. They would on occasions even compel him to pull his punches. Nevertheless, they were only too anxious to point out that should the workers attempt to take advantage of the situation, unduly, by pressing their claims too far, it would be necessary in the general interest of society for the state to seek to restrain them. That various Labour Governments have used this pretext to employ the repressive machinery of the state to curb the demands of various sections of the working class is too well known to need recording here. In the real world of capitalism the state remains the guarantor of capitalist property relations.

The old apologists for capitalism used to explain away its class division as a division between brain and hand. Labourites refer to it as the division between intellectual and manual work. Like the old apologists, they also accept as a corollary of this that great differences in income are part of the natural order of things. Mr. Strachey in his book, Contemporary Capitalism, in spite of his pseudo Marxist language, endorses the Labour Party's views on all these matters.

One cannot help being struck by the identity of Labour and Tories social outlook. The Tories also accept class society as part of the eternal dispensation and the state as being the true representative of society as a whole. Thus Burke, Hegel, Comte, John Stuart Mill, and Uncle Tom Cobley and all, find their synthesis in modern political theory.

Labour Party and Social Planning

When the Labour Party speak of social planning they do not imply the controlling and harmonising of the economic resources in the interest of the whole of society. What they mean is the adoption of certain state policies for the better regulation of the forces of capitalism. Indeed, in a system where profit is the ruling motive and anarchy of production an inevitable consequence, social planning in any real sense is impossible.

In the distant past Labourites saw the hope of a socially planned capitalism in the growth of monopolies. So far, however, from monopolies eliminating the anarchy of capitalist production, as was fondly imagined, they on the contrary tend to intensify it, because monopolies seek the pursuit of certain ends, regardless of the requirements of the economy as a whole.


Labour's Changed Views on State Capitalism

Early Fabian and Labour theorists, often ex-civil servants, dreamt bureaucratic dreams of a state directed capitalism. Present day Labourites now see it as a nightmare. They have long learned that private appropriation, the interplay of the market and individual economic calculation are the indispensable norms of world capitalism and hence British capitalism. It knows that a Whitehall capitalism so far from solving present day problems, would only complicate and intensify them. In fact, the present anarchy of production would be the essence of economic rationalism compared with the organised chaos of a vast state controlled capitalism.

Now the Labour Party and, of course, Mr. Strachey along with them, have no "plans" for taking over capital accumulation. With proper safeguards Mr. Strachey blandly assures us capital investment and the profit motive must still be the unmutated mainspring of his "mutated economy." As Mr. Morrison once observed, the Labour criticism of capitalism was not that the capitalist makes profit, but his inefficiency in failing to make continual profit sufficient enough to justify his existence. This also, it seems, is Mr. Strachey's views.

State Investment

For many years it was fashionable for Labour "experts" to laud state capital investment as an alternative to private investment, and that a planned economy could be achieved by a major intervention in the economic affairs of capitalism via state investment. Such an assumption was utterly unrealistic. Not only would state investment have to compete with private investment, but capital accumulation and profit making would still constitute the mainspring of the system, and the problems of capitalism would remain essentially unaltered. In point of fact, any analysis of modern capitalist countries will show that the state has never assumed any obligation to direct and control capital accumulation, and Labour Governments have been no exception to the rule. What governments have done is to devise policies which seek to aid and maintain capital accumulation. Even social reform legislation, in so far as it succeeds in blunting class antagonisms, has for this reason a bearing on facilitating the smoother path for accumulation.

If capital accumulation, as it can be incontestably shown, is the norm of capitalist society, then it follows that state economic legislation must follow the pattern of that norm. Unless we assume that state policies are designed to undermine and finally destroy this most fundamental feature of capitalist behaviour—the self-expansion of capital. There is not the remotest evidence that the reformist parties contemplate such a project. The state exists then to act on behalf of the aims and objectives of capitalist society. While state policies may modify capitalism, the state can never transform capitalist society, whose creature it is. And it is only transformation that can be equated with significant change.

Whatever changes the Labour Party envisages in capitalism, it always unchangingly assumes capital in eternal control. Something for which the capitalist class no doubt feel eternally grateful.