Alex Callinicos on State and Capital

— Kim Moody

By Alex Callinicos
University of Minnesota Press, 1990, 103 pages, $11.95 paper.

IN THIS PROVOCATIVE and stimulating short book, Alex Callinicos summarizes the basis of Tony Cliff's theory of state capitalism. The author is an important Marxist philosopher and a leading intellectual in the British Socialist Workers Party. This review will focus on the theory in the present stage of world capitalism, leaving aside Callinicos' interpretation of the history of the Trotskyist movement, which is obviously of interest in its own right.(1)

Callinicos argues that Cliff, like Trotsky before him, takes as his starting point, the “global context,” which gives Cliff's theory of the nature of the Soviet Union and the bureaucratic societies an advantage over those of C.L.R. James, Bruno Rizzi, C. Castoriadis, and Max Shachtman, all of whom looked primarily at the internal relations of Stalinist society.

This, Callinicos argues, also locates Cliff's theory solidly in the camp of classical Marxism. Today, when “global context” is universally acknowledged to be of prime importance by almost everyone attempting to analyze capitalist dynamics, this seems a highly attractive argument.

But Callinicos, following Cliff, is very specific about what the particular global context upon which the theory of state capitalism is based: it is “the international state system.” Critics and fans familiar with Cliff's theory will remember that the state capitalism of the (now-deceased) USSR, and the explanation of its accumulation dynamics, were said to rest on the competitive pressures of the arms race that characterized this “international state system” until recently and certainly still affect it or its transition to more traditional capitalism.

As Callinicos summarizes it, “Military competition forced the Russian bureaucracy to give priority to heavy industry and the arms sector.” In fact, as an empirical observation, Callinicos' restatement of the basis of Soviet industrial priorities is probably unobjectionable from almost any anti-Stalinist theoretical standpoint.

There is, however, something quite objectionable in the “global context” Callinicos and Cliff present as the basis of their theory. Its importance goes far beyond the theory of state capitalism and effects one's understanding of the sharp turn taken by capital in the last twenty years and, therefore, the unfolding of the present stage of capitalist crisis. Indeed, it would undermine one's understanding of capitalist crisis in the first place, if one applied it consistently.

I am referring to Cliff's substitution of the “international state system” for the actual mechanisms and dynamics of capitalist competition -- which involves the competition of capitals, not of states.

Accumulation, Profit Rate & the State

The central theory of crisis spelled out by Marx in Vol. III of Capital, endorsed by Callinicos and the British IS/SWP tradition in general, is based on the falling rate of profit. Indeed, in Trotskyism, Callinicos correctly criticizes Ernest Mandel who, in his work Late Capitalism, replaces the centrality of the falling rate with a multivariable approach “that provides no general account of the relative importance of the variables.”

If all “variables” are, in fact, more or less equal then the direction of the accumulation process is essentially indeterminate. To put it another way, if the conditions of the market are largely independent of the accumulation process itself, as Mandel now and then implies, then capitalist crisis can be indefinitely postponed by the skillful manipulation of the variables. What we see, however, is the opposite: The state's ability to offset an actual fall in the average rate of profit has declined despite continued attempts to manipulate those variables open to state influence.

There is a problem here, however, for Callinicos as well. Marx's theory of the tendency of the rate of profit to fall rests on the competition of independent capitals. To put it one way, both domestically and internationally what creates the continued pressure to accumulate, opening the door to the falling rate, is the competition between GM and Toyota and other capitals of different national origins -- not that between the United States and Japan.

The interventions of these states, more or less skilled or clumsy, have some influence on the process to be sure, but they are not the basis or the major variables in the process. To substitute the state, much less the vaguer “international state system,” for the competition of capitals is to do fundamental damage to the entire theory. To narrow it even more to the arms race between “capitalist” states presents an even greater problem for both Marxism and Callinicos -- as we shall see, it runs up against the historic, and valid, IS/SWP analysis of the mitigating influence of the arms race on the falling rate of profit.

Cliff's attempt to resolve the difficulties of analyzing “classical” Stalinism does damage to the marxist theory of the state as well and, therefore, to our understanding of the current direction of capitalist crisis and organization, to which I will return. First, the capitalist state.

State as Capitalist Mediator

The state arises and is reproduced in capitalism on the basis of both the class struggle and the competition of capitals both domestically and internationally. Of the two, the class struggle (historically, against the ancien regime as well as against the working class) is certainly the more fundamental, but it is in many ways the latter that underlies the unique character of the modern bourgeois state.

As Hal Draper has pointed out in his extensive study of Marx's view of the state, Karl Marx's Theory of Revolution, Vol I (The State and Bureaucracy), the bourgeoisie is composed of business people narrowly obsessed with their own affairs, competing with one another, and forming all manner of conflicting interest groups. The state, therefore, mediates all these interminable conflicts in the overall interests of capital through, among other means, intervention in economic life both domestically and internationally.

In a very real sense, the state gives the capitalist class its life as a class. As Draper argues, it is precisely the “tendency toward state autonomy” that makes this possible.(2) Thus, in both the first and final analysis, the capitalist state is not the same thing as the capitals (or capitalist class) whose interests it both reflects and mediates. If it were, the capitalist state would be both very different and a great deal less complex and opaque than it actually is in any of its forms.

One of the aspects that gives the capitalist state its apparently flexible and autonomous nature is the legal and institutional complexity required to protect capitalist private property, not only from some historically predatory proletariat but from its individual units or capitals and from the very state that administers all of this. The state must have a certain measure of autonomy from capital in order to mediate the competition between capitals and resolve the myriad conflicts of interest among the factions of the ruling class.

Usually, the “rule of law,” which always in theory and often in practice stands above any individual capitalist (and the collectivity of workers) is sufficient for governance. At times, however, this measure of autonomy can expand to Bonapartist, fascist, or other types of authoritarian regimes where capital is disciplined “for its own good” -- autonomy and complexity are about property, not human rights.

What is important here is that capitalist authoritarianism or even totalitarianism are about the tendency toward state autonomy from capital, not about the conflation or identity of the two.

If capital and the state were one and the same thing, there would be on the one hand no “theory of the capitalist state” to worry about, and no competition of capitals except on the world market to produce a falling rate of profit, on the other. Moreover, a world capitalist market composed only of trading states without real internal markets would hardly resemble what Marxists usually mean by that term. The proper form of state competition in the “international state system” is political or economic pressure, war, and conquest, not the fight for market shares or the accumulation of capital for profit.

Furthermore, if accumulation is reduced to the arms race -- which is, as Callinicos (following the Permanent Arms Economy theory of Michael Kidron) argues, waste production -- the logical result of such a world system would be not a falling rate of profit, but a falling rate of accumulation leading to disaccumulation. Cliff's analysis avoided this absurdity only because “actual existing capitalism” prevailed in two-thirds of the world. The state capitalist bloc could exist as the “shirt-tail cousin” of the real thing, affected by the family rules even as it broke them daily.

Nevertheless, from a theoretical point of view, to the degree that the world moved toward the identity of state and capital implied in the theory of state capitalism, capitalist accumulation as Marx saw it would have been negated.

This is not to say that it is wrong to view the bureaucratic state economies as a reaction to the world market or as affected by it. They did not and could not exist in some splendid isolation from the world economy as a whole, but their relationship to it was fundamentally different from that of a capitalist nation.

For most of their existence and with only peripheral exceptions, the bureaucratic economies grew by virtue of their withdrawal from the world market and their suppression of internal capital markets or competition. The state and economy were fused. Both the ruthlessness of their exploitation of labor and their provision of social needs through the state are explained by this fact. Their complexity arose from the contradictions of the planning system, not from the legal or institutional arrangements required to mediate competition between capitals, and not from the workings of the world market from which they were largely insulated until recently.

The bureaucratic states shared with capitalism only the need to suppress the working class as a basis of state formation. But even this necessity, for the bureaucratic system rested not on some measure of state autonomy from accumulation, but from its direct command of that process.

Historically Limited Theories

Cliff's theory, like those of Trotsky, Schachtman, etc., arose at a time when virtually all schools of Marxism and many trends in bourgeois thought foresaw the continual growth of the capitalist state and its increased intervention in and regulation of economic affairs.

Everything from the New Deal to fascism and, in some versions, Stalinism were seen as evidence of this universal trend. This thought was consistent with earlier “stratification” theories of Hilferding and Bukharin and was reenforced by the empirical reality of the interwar years.

In fact, Bukharin is cited by both Cliff (in his basic work Russia: A Marxist Analysis) and Callinicos (in another important recent book The Revenge of History) for his World War I speculation in Imperialism and World Economy that traditional capitalism at the national level was giving way to the state organization of economies into “state-capitalist trusts.”(3)

Most of these theories had in common some version of the notion of the increased fusion of the state with capital, rather than the classical Marxist analysis of its autonomy as the basis of its regulatory functions. (Those writing in the “bureaucratic collectivist” tradition, however, also postulated the fusion of the bureaucratic state and economy, but rejected the notion that this was in any way capitalism.)

Rather than seeing the growth of the capitalist state (reflected in growing budgets, bureaucracy, military forces, and more direct forms of economic and social intervention) as a sign of its relative and increased autonomy -- including, therefore, its ability to discipline capital or sections of it -- these theories saw capital and the state as becoming increasingly one and the same.

Implications for Today's Crisis

In addition to the damage the theoretical amalgamation of capital and state does to the Marxist theory of the capitalist state, as noted above, it also does fatal damage to Marx's theory of capitalist accumulation and crisis. This, in turn, greatly undermines our ability to understand today's world -- and the very different direction that capital has taken in the last twenty or so years as the crisis of profitability proves intractable.

Specifically, today's world, including the enormous recent expansion of the world market to new areas, is incomprehensible if we try to understand it as one of competing states. This is, in fact, the conventional bourgeois ideological fashion in which to cast the economic problems of the time, for example as competition between the United States and Japan, but it is not sufficient as a way to understand the reorganization of the world economy or its consequences for world labor.

International competition, no less than domestic competition, is a competition between capitals (within as well as between national markets). The highly integrated world market, the internationalized systems of production, and the increasingly seamless global financial markets are a consequence of this competition as it has broken out of its national boundaries and transcended the narrower and more traditional channels of trade.

Indeed, even the content of trade has changed dramatically in the last couple of decades. Reflecting the growth of internationalized production, the bulk of world trade is now in Department I goods, i.e commodities used to produce other commodities rather than to be consumed, and perhaps half of this occurs within the channels of the multinational corporations (MNCs) as “intra-firm” trade.

Increasingly, these MNCs compete at the level of the world market beyond the regulation of the state. And increasingly it is they who set the regulatory norms, not the state.

Who's Regulating Whom?

Symbolic of this process are the changes in the GATT in the last twenty years and the content of new trade agreements like the European Single Market and NAFTA.

What is significant about these agreements is not the reduction of tariffs or liberalization of trade, but the political-legal changes they bring. These agreements do not regulate trade, investment, or MNCs, they attempt to regulate national states!

Their endless rules are directed at limiting the regulatory powers of the national state not only as they affect transactions between nations, but within nations as well. They proscribe not only traditional non-tariff barriers to trade or investment, but expand the meaning of these to include all manner of national regulations and social programs. To put it bluntly, they tend to institutionalize the ability of capital to reclaim authority over the state through the process of internationalization.

From the vantage point of the fusion-of-state-and-capital approach and, hence, of Cliff's attempt to explain Stalinism as a variant of capitalism, all of these developments are ironic to say the least. It is no longer the state which increasingly rules capital, but the obverse. Furthermore, it is not fusion that explains this reversal, but the tendency toward state autonomy.

The state's relative autonomy, after all, is nothing but the other side of capital's relative autonomy (its status as ruling class by virtue of its economic dominance and power, not its political power as in feudalism) in the actually existing system of competitive capitalism. Thus, through its autonomous internationalization -- through the “global context” -- capital has now reversed the “stratification” tendency.

Like “statification,” this reversal is only a tendency, itself reversible in the long run, but a real one nonetheless and one of crucial importance to the working class movement.

Some Conclusions

All this is impossible to theorize or analyze if we cannot understand the distinction between the bourgeois state and capital itself. If the direction of world history is toward the fusion of state and capital as a variant of capitalism, then the rise of MNCs and the regulating role of the falling rate of profit on a world scale are incomprehensible -- as is the reversal of the trend toward state dominance over capital.

Of course, today, no one would claim that state-capital fusion is the direction of events. In his The Revenge of History, a generally excellent refutation of the “end of history” thesis published only a year after Trotskyism, Callinicos pays homage to all of these new trends. But the collapse of the Stalinist regimes is seen as a sort of lateral move by sections of the bureaucracy from “the old autarkic mode of development for integration into international capital... a `moving sideways' -- a shift from bureaucratic state capitalism to multinational capitalism.”

This is a slick segue, to be sure, but hardly a theoretical explanation of “de-fusion.” In fact, the fusion theory as an explanation of the direction of capitalism was always wrong. Crisis theory, as much as a current analysis of the internationalization of production, require the classical marxist understanding of the analytical distinction between capital and the state that capitalism requires, nurtures, and depends upon for its accumulation.

The demonstration of this lies precisely in the need for international capital to increasingly bend the will of all states to its needs through the elevation of transnational institutions like the GATT, World Bank, IMF, NAFTA, ESM, G-7, etc.

One observation must be made here to avoid misunderstanding. The tendency toward the subordination of the national state to internationalized capital does not involve the negation of the state. Any such theory is simply a mirror image of the fusion theory.

The current development and direction of capitalism and its major accumulation strategies, often characterized as globalization, rests on the uneven structure of world capitalism. Far from transforming this set of relations between First and Third Worlds, the new internationalization driven by world competition seeks to conquer through economic means what it could not subdue through occupation or military means.

This is based on an international, but largely continental, system of production imitative of the “lean production” methods of the regulating capitals of Japan. Its relative “statelessness,” as Business Week has characterized it, stems less from the neo-liberal preference for laissez faire policies than the competitive demands for lower-cost production.(4)

The state remains necessary to capitalism for all the reasons posited by classical Marxist theory -- and for these same reasons, the state also maintains its “tendency toward autonomy.” These functions include maintaining capitalist hegemony over the working class, repression when that doesn't work, mediation between competing capitals, provision of basic infrastructure -- as well as extra-national defense of local capital, in other words, imperialism.


  1. Because I read this book while doing work on a future article for ATC on globalization and uneven and combined development, I was struck in a new way by some of Callinicos' arguments. Rather than incorporate my ideas on this in the ATC article, which is already outgrowing its original intention, l decided to put them in this brief review -- whose purpose, I promise, is not to rehash the "nature of the Soviet Union" debate despite its starting point in the British/IS/SWP theory of state capitalism.
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  2. Draper’s notion of the "tendency toward state atonomy;” derived from Marx's analysis of the development of the bourgeois state and the experience of Bonapartism, has nothing, to do with the structuralist notion of the relative autonomy and/or the relative autonomy and/or determination" of the structures of “base” and "superstructure;” including the state, as developed by Althusser, Draper, following Marx, is dealing with the relation of a living social class and historical subject to political institutions it has created and molded in the process of class struggle, first against the ancien regrme and later against the proletariat, yet which it cannot itself administer on its own. As Norman Geras wrote some time ago, "The Althusserrian universe is governed by structures and the only subjects that populate it are those subject to this government, their places and functions marked out for them by its ubiquitous hegemony." (in Western Marxism: A Critical Reader, Verso, 1978). Callinicos, to his credit, presents a similar view in Althusser's Marxism, Pluto Press, 1976.
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  3. Interestingly, Bukharin's basis for the rise of the "state-capitalist trust," the fusion of state and economy, lies in the growing concentration and centralization of capital. Yet, we can see today it is precisely the global centralization of huge (nationally situated) concentrations of capital in the multinational corporation that lay the basis for both capital's decentralized" production strategies and its growing “independence” from the national state. While the real nature of the capitalist state allows for the latter, it precludes the sort of development Bukharin speculated on.
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  4. For analysis of this trend see forthcoming articles by the author in Against The Current and Latin American Perspectives, as well as the Labor Notes book Unions and Free Trade: Solidarity or Competition, co-authored with Mary McGinn.
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ATC 52, September-October 1994

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