Along with Imperialism, the Marxist concept of State Monopoly Capitalism was part of the intellectual bathwater discarded with the demise of European Socialism in the last decade of the twentieth century. So called Western Marxists a small group of academically bound thinkers in the developed capitalist countries, with no party, no mass following, and no working class roots were quick to dispose of any thinking associated with what they viewed as the orthodoxy of Soviet and Eastern European Marxism.

In place of the ideology formerly embraced by most of the international Communist movement, Western Marxists were free to spin speculative and fanciful theories to explain post Soviet developments. From pretentious, obtuse accounts of new age Empires to dry, data laden postulations of new supra national capitalism, academics seized every moment, every quantitative socio economic change as evidence for a new, qualitatively distinct era. From anti globalization rallies to Robin Hood – like movements in Chiapas, the theoreticians of the Western Left saw a portent of a new, decidedly non ‑ Communist, if not anti – Communist, social movement. Socialism and anti imperialism were passé.

Today, most of this nonsense is forgotten. The orgy of naked US imperialist adventure since the fall of the Soviet Union makes a mockery of these once fashionable theories. Even establishment figures, foreign policy think tanks, and media talking heads concede that the US operates internationally in the fashion of an arrogant imperial power. At the same time, inter – imperialist rivalries are escalating between the US, the EU, Russia, Brazil, India, and other Asian countries.

In addition, socialism is once again on the people’s agenda, with deeply rooted and powerful social movements in Central and South America holding or contending for state power. Some Communist Parties are revitalized and playing an ever enlarging role in the political life of their respective countries, though notably, and unfortunately, not in the most developed capitalist countries.

Given imperialism’s new-found currency, perhaps it’s also time to rehabilitate the widely scorned theory of State Monopoly Capitalism. Like many well grounded Marxist theories, State Monopoly Capitalism (SMC) grew out of a careful examination of a long term, system wide trend. After the Great Depression and the Second World War, capitalism organized around several economic principles that brought relative stability to the system. Government intervention, which was anathema to the Laissez Faire pre Depression era, became a tool for restoring the health of the system. This intervention took many forms: regulation, public works, fiscal manipulation, the socializing and re distribution of more of the national income, the development of supra national regulatory organizations and even a bit of state planning.

Of course others saw these trends as well, but they failed to understand the underlying logic of these developments. As Eugen Varga the far sighted Soviet economist put it forty years ago: “The coalescence of two forces the monopolies and the state forms the basis of state monopoly capitalism…. The essence of state monopoly capitalism is a union of the power of the monopolies with that of the bourgeois state for the achievement of two purposes: 1) that of strengthening the capitalist system … and 2) of redistributing the national income through the state to the benefit of monopoly capital.” On this view, dominant capital will, when necessary, cede much of its freedom of action to government bodies in the interest of an organized, coordinated effort to stabilize and promote capitalist development. At the same time, the state faithfully serves the cause and profitability of monopoly capital. As a scientific theory, we must hold SMC to high standards of validity: most importantly its power to predict the direction of the capitalist economy. Writing in 1981, a consensus of Soviet political economists wrote the following about SMC for a dictionary entry: “Some of the key elements of the merger of monopolies and the state are as follows: “personal union between finance capital and government institutions; bribing of government officials; activities of bourgeois parties, which are in fact funded by the monopolies…National income is redistributed chiefly in the interests of the monopoly bourgeoisie through the state sector of the economy. The state grants certain privileges to the monopolies, exempts them from paying taxes on a considerable part of their profits, and sanctions the premature depreciation write off of fixed capital. As a result it is the working people who have to bear the main burden of taxes…. The money extorted from the people as taxes, social security contributions and loans…. is passed along to private capital through preferential credits, investment grants, state subsidies etc. Especially large and constantly increasing budget allocations are annually spent on military purchases and contracts … [S]upra national regulation has increased… The higher form of supranational state monopoly regulation is capitalist economic integration… [E]conomic life is becoming increasingly internationalized….”

Twenty five years later, this elaboration of SMC captures only too well the logic of capitalism in the twenty first century. The “coalescence” of monopoly capital and the state has continued unabated with corruption rampant and corporate ownership of the two parties, the judicial system, and the media at unimaginable levels. Military, Homeland security, intelligence, police, and penal spending accounts for a staggering portion of the state budgets while infrastructure, public transportation, education, and other of the people’s needs starve. The “internationalization” of economic life—what some call globalization—has accelerated. And corporate concentration and integration has reached unprecedented heights.

What is new and unanticipated is nonetheless consistent with the theory of SMC. Clearly, the demise of Soviet and Eastern European socialism was not expected by Communist theorists. Yet the lack of an international bulwark against imperialism and capitalism has only accelerated the processes attributed to SMC. Despite the lack of a powerful socialist block perceived as a military threat, military spending grows persistently, now driven by a ludicrous “War on Terror”. Internationalization (globalization) of economic activity exploded without the alternative of a socialist economic community. And free of the ideological competition of real, existing socialism, the state dramatically shifted the weight of state budgets onto the people while heaping the benefits onto corporations: all moves consistent with and counterfactually predictable from the theory of SMC (If the Soviet Union were to fall, then SMC would become even more dominant…).

In addition, Marxist theorists did not anticipate the rise of neo liberalism the market zealotry, privatization drive, and deregulatory orgy emerging with Thatcher and Reagan or the successes of the ultra right, though Eugen Varga came tantalizingly close, writing in 1968: “In the United States, where the bourgeoisie considers its rule relatively secure, it constantly fights against state ‘interference’. The demands of the extreme Right wing of the Republican Party… are typical in that respect. Below are some of the demands advanced by this movement:

   ●The repudiation of all social and economic legislation promulgated after 1932

   ●Curtailment of trade union rights

   ● Promulgation of laws on the right to work

   ●Abolition of state housing construction

   ●Abolition of income tax

   ●The refusal to enter into disarmament agreements with or without guarantees

This fascist gang openly demands what the American monopoly bourgeoisie only dares dream about, namely, that all taxes be paid by the mass of consumers, that all legislative or trade union restrictions on the exploitation of labor be abolished and that nothing be allowed to hamper the arms race… No matter how much some monopolies may be against state ‘interference’, against state monopoly capitalism, no matter how much they may deride state functionaries among themselves, they never reject government orders, which are an important cog in the mechanism of state monopoly capitalism”. (“Problems of State Monopoly Capitalism” in Politico Economic Problems of Capitalism)

Varga anticipates a vulgar criticism of SMC that points to the on going loud and determined rhetoric against “big government” on the part of the ruling class and its minions. If SMC predicts a rise in government engagement on behalf of the monopoly capitalist, why do political leaders rail against government size and spending? As Varga points out, their words are different from their deeds. Ross Perot could rant against big government while building his fortune on government contracts. No better example of this hypocrisy exists than Vice President Cheney, an icon of small government conservatism, who received his vast wealth from the Haliburton Corporation which only survives thanks to its parasitic relationship with the government.

But one must also be careful to distinguish government, in the narrow sense, from the state. While Clinton was hailed for shrinking government employment, the criminal justice – judicial penal complex was exploding in size at the same time (federal spending on “justice” grew by 27.3% between 1992 and 2000 while social security declined by 9%, income security fell by 17.6%, education dropped by 23.9%, veterans administration fell 11.1%, and science was reduced by 24%). Virtually all the noise associated with “small government” is directed at services rendered to the working class and the poor, not corporations, the military, or the organs of state coercion. These developments only underscore the predictive power of SMC.

Thus, the neo liberal agenda was consistent with, if not anticipated, by SMC as envisioned by Marxist theoreticians. As a theoretical framework for understanding capitalism’s evolution, the theory of SMC seems to acquit itself quite well. One searches far and wide for a competing theory with the explanatory power of SMC.


If anything, the historical trajectory of capitalism since the development of the theory of State-Monopoly Capitalism (SMC) after the Second World War confirms the theory’s relevance. In other words, the contemporary landscape largely validates the theory. We can say with some confidence that while Soviet and Communists theorist failed to anticipate some contingent details, their view of SMC largely anticipated the path of monopoly capital into the twenty-first century.

Many critics naively fail to see this stage of capitalism as a process and not a discrete level attained in all its manifestations. The measure of the scientific worth of a social theory lies in its increasing conformity over time to the features predicted from its tenets. Thus, we would expect a theory of the motion of capitalist development to expose more and more of the fusion or coherence of monopoly capital and the state as capitalism advances. Additionally, we would expect this “marriage” to be more and more naked.

Such is the case.

Today’s monopoly capitalism is more concentrated than ever, with both horizontal and vertical integration. The process of monopoly integration has virtually destroyed independent businesses in most sectors of the economy and consolidated most large rivals into true oligopoly with only three or four mega-corporations remaining to compete. World-wide merger deals reached a value of $3.4 trillion in 1999, expanding to $3.79 trillion in 2006.  And that process continues vigorously. Vertical integration is a relatively new wrinkle, bringing all production together as part of the same conglomerate or linked by common financial or other dependent relations. Even so-called “niche” businesses – operating on the fringes of mass production – have been devoured by mega-corporations. These dependent, subservient relations leap across borders, creating a web of international and integrated corporately organized giants.

The Thomas Friedman’s and Chamber of Commerce types invoke the growth of small businesses and entrepreneurships as an example of a countertendency to monopolization. What they fail or refuse to point out is that nearly all of these new businesses are parasitic upon the monopoly, mega – corporation. Consulting firms, off-shore services, soft ware firms, transportation companies, technical support, etc. exist as servile, low cost purveyors to monopoly needs.

Of course corporate spin-offs occur as countertendencies, but they are usually inspired by actuarial maneuvers or union busting; generally, the same dependency is retained or a new master acquired.

The growth and concentration of monopoly corporate power is reflected in an even greater fusion with the state. We doubt that any Soviet economist would have anticipated both the domination and complete subservience of the state to monopoly power today, especially in the US, the UK and Japan, with the EU moving smartly in the same direction.

At the same time, Soviet economists might have been surprised at the decline and near disappearance of welfare-state Keynesianism and the rise of neo-liberalism in SMC. They shouldn’t have been. There was never any good reason to assume that the dynamic of capitalism required or desired any measure of social responsibility to the masses, as consumers or employees, for its continued development. To the contrary, the idea of promoting effective demand through employment or public assistance was only a desperate, last-ditch effort to save capitalism and not intrinsic to the function of SMC. Both mass pressure and the socialist example of an economy geared to human needs sustained the welfare state and not the logic of capital. As a colleague pointed out, the demise of the Eastern European socialist community removed “the third person at the bargaining table” in class conflict in the West. Of course Keynesianism could be reborn as an instrument of capitalist salvation or as result of the threat of a robust socialist option.

It would be hard to imagine a state that functions more completely at the behest of a socio-economic class than that of the owners and managers of monopoly capital. Certainly since the era of feudalism, no economic stratum has enjoyed such a total domination of the state. Yet monopoly capital is so unimaginably more powerful than and more determinate of all aspects of social life as to obliterate any analogy. But like feudalism, the state functions to coerce, cajole, or seduce the masses to comply with the interests of the dominant class. Monopoly capital and the modern state together shape virtually every aspect of human endeavor.

Some would point to the fascist state, an extreme variant of capitalism, as a more total – totalitarian – expression of social control. Yet, minus the brutal coercion, modern monopoly capital and its state accomplish the same control, though through more benign, manipulated consent.

The showpiece of the modern capitalist state is bourgeois democracy. Throughout the advanced capitalist countries – France, Germany, the UK, Italy – the two-Party system found in the US is replacing the multi-party parliamentary system. More and more, the imperatives of SMC – corruption, corporate funding of the leading bourgeois parties, and the near total corporate domination of the media – has marginalized traditionally independent parties leaving only two viable parties or blocs to compete in a narrow political space. It is simply impossible, with the enormous concentration of wealth, for parties independent – parties outside of the tentacles of monopoly capital – to challenge the monopoly parties on their own terms. 

Of course, the most advanced example of this process and the maturation of SMC is the United States. In the US, the game of politics is media-driven which allows only players with the privately generated funds to access the media. It follows, of course, that those with the most resources, the corporations and their wealthy minions, exercise the greatest influence upon electoral results. Running for office is the privilege of the well-off. Winning is the prerogative of monopoly capital.

It is worth noting that the logic of a two-party system generates a closer and closer ideological identification of the two electoral contestants in time. This is, of course, the experience of the post-war period, accelerating smartly with the growing influence of polling. Parties compete for the center. Thus, the Democrats move to the right when the Republicans successfully pursue a rightward course and the Republicans will tilt slightly leftward when their fortunes shift as they have after the recent interim elections. At all times, however, the ideological differences narrow in order to patronize the center.

Before the prevalence of SMC, parties organized around regional, ethnic, and class interests, albeit within a narrow frame of pragmatic politics. These interests generated party principles, admittedly narrow, corrupted, and dilute, but sufficient to count as principles. At the very least, school children could recite the basic “principles” of the two parties. Today, no one can explain where the Democrats stand and the cynicism and opportunism of Republican “conservative values” are apparent to all. Monopoly capital has turned the formerly tepid battle of ideas into a marketing campaign – personality, perceived character, camera friendliness rules. The dominance of SMC reduces the two-party system to two-wings of the same party.

When Soviet scholars wrote of the personal union of monopoly and the state, they surely did not imagine the prospect of two families – the Bushes and Clintons – very possibly ruling the US for twenty-eight consecutive years.

A great nineteenth century innovation of bourgeois thought was the fiction that a corporation was an individual with the same legal rights and duties of any flesh and blood individual. Certainly this gave the capitalist enterprise a great advantage over its fellow citizens since it had infinitely more resources and power than they did. Thus disputes or contests between corporations and individuals were heavily weighed in favor of corporations. Nonetheless, the corporation paid taxes and other obligations like any other citizen.

But with the advent of SMC, the modern corporation is less an ordinary citizen and more a privileged ward of the state. Where corporate taxes accounted for a substantial portion of collections after World War II, it is now common for corporations to pay no taxes at all. Indeed, the trend has shifted from corporations as substantial tax payers to negative tax payers. In 1951, federal corporate taxes amounted to 6.4% of US GDP while by 2003, corporate taxes counted as only 1.3% of US GDP. During roughly the same period (1950-2003), the corporate share of all taxes collected dropped from 26.5% to merely 7.4%. In the early 1990’s, over 1500 corporations averaging well over $1 billion each in assets paid no federal taxes at all!

Contrived business losses, subsidies, tax incentives, so-called public-private partnerships, and grants have justified the charge of corporate welfare. Estimates made in the mid-1990’s indicate that state, local, and federal subsidies equal roughly half of all corporate after-tax profits. Greg Leroy of Good Jobs First estimates that corporate extortion of tax subsidies and grants cost the tax payer nationally about $50 billion per year. Certainly this demonstrates a more intimate relationship between the state and monopoly capital than a mere helping hand.

The corporate model invades every aspect of economic activity. Besides the insidious Three P’s (public-private partnerships) – the pillage of public funds to subsidize and eliminate risk to private ventures – the corporate model has spawned the emergence and explosive growth of “non-profit” corporations. These operations – essentially tax dodges – function not with the goal of increasing profits, but to expand “excess revenue”, a verbal slight-of-hand that unfortunately fools far too many people. More and more corporate culture creeps into public institutions created to serve people’s needs without homage to profits. Politicians of both Parties strive to run federal, state, and local governments and agencies “like a business” with corporate-like titles, incentives, worker speed-up, reduced salaries and benefits, and costly self-congratulatory and predatory marketing. 

The Cold War development of what came to be called the “Military-Industrial Complex” could take the charge even further and posit a version of corporate socialism! An enormous portion of government spending is devoted to the military and its complex network of support and supply. The level of military spending is severed from any real threat, continuing at an ordered pace regardless of events or needs. In constant dollars, the amount of Defense Department spending has remained remarkably constant since the Korean War with little or no decline in peacetime. Where no threat exists, one is created to continue to feed the insatiable appetite of the colossus.

But the Defense Department budget only tells part of the story: when factoring in the human costs of prior military adventures and the financial costs of servicing the debt incurred from prior budgets, the Friends Committee on National Legislation  estimates that 41% of the 2006 federal budget went to the military. From 1998 to 2007 the Defense Department budget nearly doubled in constant dollars.  With the Afghan and Iraqi occupations, military related spending exceeds that of the US at the end of World War II.

The driving force for military spending is, predictably, profits. The mechanism is corrupted, non-competitive, and vastly wasteful contractual arrangements. Nothing points to the fusion of the state and monopoly capitalism more than this institutionalized, regular plunder of social wealth by private monopoly capital. Indeed, the spirit of Keynes is alive with this sector of the economy. The issuance of military orders is SMC’s preferred method of spurring effective demand, a point made by Communist leader William Z. Foster in the 1950’s (“The Two Major Variants of Keynesism” in Keynesian Economics: A Symposium, Delhi,  1956). Foster argued: “The reactionary variant of American Keynesism has the backing of the decisive big capitalists…they seek to accomplish the investment of the dangerous surplus of capital by redoubling their imperialist drive to conquer the world’s markets, and by pressing the government into making huge investments for a war economy programme.” Foster’s forecast fifty years ago has proven accurate.

Government intervention in economic life under SMC is largely at the behest and in the interest of monopoly capital. Heralded bailouts like Chrysler Corporation and the airlines industry serve to restore assets to corporate debtors, maintain stock prices, and continue top executive pay. At the same time, massive cuts in jobs, pay, and benefits serve to establish business competitiveness. And this is always done behind the mask of saving jobs.

The logic of SMC invariably moves towards greater freedom of action for monopoly capital. Thus, deregulation and privatization become possible thanks to the coherence of monopoly capital with the state. While corporations always resist regulation and oversight, it has been forced on them in the past. Both the enormity of corporate influence and a quasi-religious business friendly ideology have established the presumption that regulation is bad. At the same time, what the Soviet economists called “Supra-regulation” – international structures designed to oil the tracks of global trade – have increased. Trade organizations and pacts, like the WTO, NAFTA, GATT, etc are playing a greater and greater role.

This same presumption of corporate efficiency and performance fuels the drive for privatization. Unlike the past, where corporations shrugged off any responsibility for education of the work force, construction, administration, and maintenance of infrastructure, security, and adjudication unto the public sector and individual taxpayers, the monopoly corporation under SMC has the audacity to seize these functions for private, profit making. Federal, State, and local operations are plucked like ripe plums. Of course the individual tax payer still foots the bill. Privatized charter schools, state roads, city services, even military service were barely imaginable before the ascent of SMC. The old industrial barons were quite content to be left alone to amass profits, their SMC prodigy see profit potential in every activity.

While State Monopoly Capital calls the tunes, it needs an orchestra to provide the soothing harmonies. That service is ably provided by a monopolized, powerful, profit-driven and compliant “entertainment” juggernaut. Today the lines between American Idol and the ABC Evening news are barely perceptible.

 Both the deregulation and wide-ranging concentration of the media has produced a behemoth that occupies more and more of the leisure time of the citizenry. Where even mature capitalism allowed for a substantial spontaneous social and participatory life outside of the workplace, the masses live vicariously – isolated and self-centered – before a TV or computer screen or in false and contrived mass rituals of shallow group identity. Where echoes of a rich working class culture remained in group activities after World War II, social life today is best symbolized by the IPOD. Nostalgia for the lost world of rich social relations – neighborhoods, communities, amateur team sports, group activities, etc – perversely feeds the attraction of hypocritical “family values” touted by opportunistic, hypocritical politicians.

Needless to say, the tune called by SMC is one hostile to independent thinking and resistance. Corporate media impresses upon the masses a way of life dominated by individual success, greed, facile relationships, and fealty to power. John Howard Lawson, a towering Communist intellectual and blacklisted Hollywood writer, once remarked that art could find no place for a heroic bourgeois. Sadly, a despicable “bourgeois” like Donald Trump fascinates a huge television audience in our times.

News and commentary – more essential to authentic democracy than the formal trappings of campaigns and elections – have been reduced to entertainment. Shallow and sensational ranting dominates media political discourse, while news reflects a conventional and slavish deference to power and authority. Orwellian expressions like “embedded reporter”, “collateral damage”, or “terrorist” have become commonplace in news reporting.

For the multi-national US, monopoly capital offered a market-driven re-segregation of the nation’s neighborhoods, schools, and workplaces. Despite the absence of nominal barriers to minority advancement, urban areas have become US versions of the South African racist Bantustans, offering segregated enclaves of neglect, unemployment, poverty and insecurity. While minority faces are ever present in public life, the cruel reality for most African-Americans and Hispanics is an apartheid-like existence.

After the Second World War, liberal theorists faced a crisis: bourgeois democracy was not supposed to produce a Hitler. The notion that such a repugnant figure could be elected in 1933, win masses to his program, and maintain power challenged the very core of bourgeois democratic theory. In many respects, liberals viewed the pre-Nazi Weimar Republic as a model of democracy with a diverse culture, a “free” press, multiple parties and responsible, bourgeois elites. So how could these conditions fail?

To avoid the unwanted and unhappy conclusion that monopoly power dominates and trumps the institutions of bourgeois democracy, political liberals spawned the concept of totalitarianism. Totalitarian parties – like the Nazis and Fascists – reject the rules of bourgeois democracy and overcome the safeguards through demagogy, intimidation, and ruthlessness. Moreover, they impose a total – a totalitarian – rule over their subjects, leaving them with no private space of their own. While avoiding the deep causes of these movements’ success – capitalist desperation against a powerful left – the theory of totalitarianism reassured liberals that bourgeois democratic theory was viable if only it suppressed the forces of totalitarianism. This move proved especially useful in the Cold War when the Communist movement was stigmatized with this charge despite the absence of the obscurantism, thuggery, and xenophobia of fascism.

Understandably, the left, especially the Marxist left, has rejected this concept. Nonetheless, it may be helpful to understand SMC by giving “totalitarianism” a new, more rigorous meaning. Where liberalism links totalitarianism to a political posture, the term better describes an economic system that totally dominates the lives of its subjects. Monopoly capital with boundless power exercises this power through a thoroughly fused state. Thanks to the continued advance of the material means of production – the new technologies – this total domination is achieved without the coercion common among earlier totalitarian regimes. But like the European fascist order, the new totalitarianism of State Monopoly Capitalism touches and commercially shapes every aspect of life, from the costs of birth to the fees of death.


Since its formulation, the Theory of State-Monopoly Capitalism has endured many critiques from outside the Communist movement, most of which are simply dismissive.Paul Sweezy and Paul Baran – two self-styled independent Marxists – wrote in their influential Monopoly Capital: “…terms like…’state capitalism’ and  ‘state-monopoly capitalism’ almost inevitably carry the connotation that the state is somehow an independent social force, coordinate with private business… This seems to us a seriously misleading view – in reality, what appears to be conflicts between business and government are reflections of conflict within the ruling class…” (p.67)

This simplistic argument, like most others, seriously distorts the Marxist approach to socio-economic development. They share these errors with most other left critics:

1.     The Sweezy/Baran view is ahistoric, crudely and mechanically fixing the status of the state in relation to capitalism. It is fundamental to Marxism that the state is established to serve the interests of the class dominant at any given time – the ruling class. But how that class rules is subject to the relative balance of forces arrayed against it and the strength and unity of the dominant class. SMC explains how capitalism rules the state in our time.

2.     Sweezy and Baran fail to acknowledge a dialectical relationship between capital and the state. They falsely view the state as either totally dependent or totally independent of capital, when, in fact, the state evolves both influencing monopoly capital and shaped by monopoly capital. SMC explains both the relationship and the path of this relationship.

3.     Written from the perch of public intellectuals, the Sweezy/Baran approach denies the influence of subordinate classes upon the state. While undeniably dominated by capitalism and serving the ruling class, the state is not immune to the resistance and militancy of the working class. This resistance or lack thereof and the relative dominance of capitalism shape the character of the state. SMC reflects this relationship today.

4.     Writen in the 1960’s, the Sweezy/Baran position fails to consider how the development of the productive forces and the further monopolization of capital would alter the state. The simplistic view that the state is dependent upon capitalism tout court provides no insight into the beast of twenty-first century capitalism. SMC, on the other hand, demonstrates how new technologies and oligarchic concentration will generate a new version of “totalitarianism”.

Others have faulted SMC for many sins, most of which belie any real study or understanding of the Communist literature. One common error is to link it with a specific theory of crisis or revolutionary strategy. Thus, the absence of crisis and the failure of revolution have cast a long shadow over the theory. But understanding SMC is only a vital, but not sufficient condition for projecting crisis and crafting a revolutionary strategy.

Another common misconception arises from identifying SMC with the welfare-state. Thus, the rise of the Reagan, Thatcher brand of neo-liberalism is thought to be a glaring counter-example to the theory. As we stated in Part 1, no such identification was either made or necessary. That the welfare-state was intimately and irreversibly linked with a modern, shackled capitalism was the great folly of social-democracy. And the equally great tragedy of the last thirty years was to believe (or hope) that monopoly capitalism would recognize that it needed the welfare-state for its survival. Far too much effort goes into seeking to convince monopoly capital and its anointed political operatives that a humane welfare-state is in their best interests, especially at the expense of conducting a concerted fight to resist its power and fight for a genuine people-centered economy.  

In recent years, a subtle rebuke to SMC has been mounted through an exaggerated awe of the phenomenon of “globalization”. The rapid expansion of global trade after the collapse of the socialist economic bloc and the continuing encroachment and growth of transnational corporations has led some to believe that the era of the nation-state was being eclipsed by a new institutional structure: the supra-national corporation. On this view, states were diminished if not irrelevant to modern social and economic life. Indeed, this view challenges the Leninist notion of imperialism since a central idea of Lenin’s view turned on rivalries between nation-states.

Events have thoroughly refuted this position. The so-called “War on Terror” has proven to be a transparent return to the most naked nation-state imperial aggression since World War II. The tensions over markets, currencies, and trade conditions between the imperial centers – the US, EU, Russia, Asian states, etc. – demonstrate for all a classic confrontation between imperial nation-states and blocs. And the anti-imperialist movements, notably in Central and South America, clearly identify the enemy as such while playing them against each other.

Sadly, some in the Communist movement have been seduced by the “globalization” thesis. Underlying this seduction is a weak, reformist view that the nation-state is historically a kind of referee between various class interests. Yes, the referee sides with transnational capital. But that is precisely the forecast of the theory of State-Monopoly Capitalism.

To take liberties with Marx’s oft-quoted dictum, the capitalist class makes its own history, but it doesn’t make it as it pleases. Yes, the class rules through the state, but how it rules is determined by many factors and of vital importance to those who wish to eliminate that rule. 

It is a common misconception among many on the left that SMC arose as a heart transplant for a critically ill patient: the world economy. This view springs from linking its emergence with the economic depression of the 1930’s, the political crises that spawned fascism, and the rise of government intervention along the lines justified by the theories of John Maynard Keynes. While these events spurred many developments that helped to shape the post-war world, the driving forces in this period were popular movements. The growth of massive government spending in the form of job programs, welfare and public enterprises came not at the behest of a desperate capitalist class, but from the demands of the unemployed, the powerful industrial proletariat, the poor and the organized left, principally the Communists. Just as fascism rose as a response against a militant, radical working class movement, the Roosevelt administration sought to ameliorate the frustrations of the masses out of fear of more radical programs. World War II, with a man-power mobilizing draft and a massive military build-up broke the back of the depression in the US, driving a world-wide post-war recovery.

SMC is not a defensive measure on the part of capitalism under siege or in crisis, but a massive offensive driven by the enormous growth of the wealth and power of monopoly capital. Like the quantitative accumulation of capital developing into monopoly capitalism, the quantitative growth and further concentration of monopoly capital created the conditions for its fusion with the state. The power of monopoly capital and the development of new technologies overwhelmed any remaining relative independence of government, the media, education, and culture – in short, the state and all of its supportive structures. 


Unlike the Soviet economists of an earlier time, we do not see SMC today as primarily a development in response to the contradictions unfolding in the capitalist system. In the twentieth century, this view was credible because the growth of the socialist community restrained the freedom of action of capital internationally and forced a profit restraining “human face” upon the social and cultural life of the masses domestically. With the departure of this profound material influence in the world, the development of SMC only accelerated. This understanding only amplifies our optimism with the development of twenty-first century socialism in Cuba and South America as well as the firm resistance to imperialism in the Middle East. They are crucial battlegrounds in the struggle against SMC.

Nonetheless, we agree that State-Monopoly Capitalism contains many ripening contradictions. Principally, we see the acceleration of inter-imperialist rivalries since the demise of the “old” European socialist community. Tensions between and within the imperial countries grow dramatically, principally over energy resources, but also over spheres of influence. The actions of NATO in middle Europe disguise sharp divisions as do the occupations of Afghanistan and Iraq. Africa is emerging as an area of confrontation though masked by the common shield of fighting “terrorism” or opposing “corruption” as in the case of Zimbabwe. Likewise, the imperial powers meddle in Eastern European affairs under the guise of promoting “democracy” in the form of the insidious imperial sponsored color revolutions.

Since the wide acceptance of the theory of SMC after World War II, Communists have projected the anti-monopoly party or front as a central strategic pillar. Given monopoly capital’s ever enlarging impact on civil society, Marxists devised a strategy that would reveal how the interests of most of society are in sharp contrast to those of the monopoly corporations. At the same time, they sought to unify all of those classes and strata that stood to gain from reigning in monopoly. Where oppositional parties exercised a measure of independence from monopoly, a united front would seek to influence such parties to take broad and popular positions to combat monopoly capital. Where no such independent parties exist, Marxists proposed creating new, anti-monopoly parties.

Unfortunately, following this strategy proved to be very difficult and contentious for many reasons. While Marxist and Social Democratic Parties experienced growth in influence and parliamentary strength along with a commendable unity in the post-war period (excepting North America), this progress was eroded by a massive Cold War organized by the US and NATO. Enormous, unprecedented resources were devoted to overtly and covertly influencing political life in Europe and North America. Anti-Communism, nationalism, religious loyalty, and racism were effective instruments in stunting the development of an effective anti-monopoly front.

In addition there were subjective factors, including the lure and intoxication of parliamentarianism. Elected left leaders begin to place personality, re-election, and the seduction of power ahead of advancing the anti-monopoly agenda. In many cases, the movement of the masses was neglected in favor of parliamentary maneuvers.

Disunity in the Communist movement and Social Democratic opportunism also retarded the advancement of the anti-monopoly front. The rise of uniquely national roads to socialism, though understandable in light of errors in establishing a collective internationalism, proved to be a harmful diversion, especially in the face of an increasingly internationalist capital. Euro-Communism was one obvious example of misspent opportunities to unite in an international front against monopoly capital.

The post-war period found Social Democracy moving inexorably rightward to achieve respectability and electoral success. Well before the ascent of neo-liberalism, every major Social Democratic party had renounced socialism in its constitution or platform. 

The left response to the neo-liberal offensive of the late twentieth century proved to be a disaster. Disillusioned by the dismantling of the welfare-state and the collapse of European socialist community, much of the left assumed a defensive posture, sounding the alarm bells of creeping fascism. While this period did see the increasing impact of the “fascist gang” that Varga identified in 1968 (see Part 1), a lack of confidence in the masses resulted in a shameless wholesale retreat to the ever rightward shifting political center and an absorption in the maneuvers of bourgeois politics. The daunting task of building a movement in labor, among minorities, for international solidarity was put aside in the interest of joining an ideologically diffuse, indecisive center. As a result, the political terrain was reduced to a struggle between a committed, determined right and a vacillating center with its own privileged seat at the table of monopoly capital. Yet every gauge of popular opinion shows mass dissatisfaction with this state-of-affairs. In the US, the wide-spread  sense that no institution cares about jobs, health care, housing or education induces no response from a left comfortably embracing a “unity against the ultra-right”, but afraid to be for anything.

Sadly, the US serves as a pre-cursor of the marginalization of a much more mature and mass-based left in many European countries equally determined to coalesce with a respectable center. Recent electoral contests – in France and Italy most clearly – have shown the same dynamic: circling the wagons around a decadent, vacillating center ill-equipped and unresolved to mount a serious battle with the forces of state monopoly capital.

Without a left option – an anti-monopoly option – the likelihood of the masses turning to even more demagogic solutions grows immensely. Ironically, the taming of the left out of fear of fascism only increases the likelihood that a frustrated, desperate citizenry will succumb to obscurantism, xenophobia and scapegoating.

But there are many signs that most people in the US would welcome an independent third party. Aside from opinion polls that show significant assent when directly asked if they favor the emergence of third parties, there is strong evidence that most citizens’ attitudes are, and have been, moving more and more in an anti-monopoly direction. A Pew research poll released in late March (Trends in Political Attitudes and Core Values: 1987 – 2007) examined changes in “political attitudes and core values” over a twenty year period ending in 2007.  Apart from growing independence, the electorate is becoming more skeptical of politicians, corporations, and profits and more accepting of government operating in the interests of the majority. This profile of the citizenry is decidedly more progressive and more anti-monopoly than the two major Parties, their platforms, and their policies. This gap between popular attitudes and the positions of elected officials and their media minions demonstrates a deep flaw in US democracy – an urgent topic for another occasion. After the euphoria of the 2006 elections, many saw the potential for a revitalized Democratic Party. Today, the Democratic controlled Congress has earned a poll approval rating lower than that of President Bush.

To a great extent, the speculative Bloomberg candidacy is a response to the contradictions in the electoral arena. Like Bayrou in France, the New York mayor recognizes that with little difference between the two parties, a third option untainted by public disgust, yet anchored by centrist politics could attract the independent mood of the electorate. Bloomberg, a former Democrat, now former Republican, might exploit some of the disenchantment and disappointment to be generated by the forthcoming presidential campaign. If he runs, Bloomberg will likely offer the voters a kind of fusion of the two parties – a fresh caked baked from the same ingredients. Surely, his potential candidacy reflects recognition on the part of a sector of the ruling class that there is a developing electoral independence that must be fed.

The recent denunciation of the Democratic Party by Cindy Sheehan – the leading and pivotal figure of the anti-war movement – offers a similar opportunity for the left. Her public impatience and disappointment with the Democratic leadership on the ending the Iraqi occupation places her in step with most of the US. As a symbol of courage and stubborn resistance, she could serve as the driving force for an independent third party with an anti-monopoly orientation (This was written prior to her July 8 announcement that she was strongly considering running against Speaker Nancy Pelosi as an independent, a move that all the left should encourage and welcome).

 A revived anti-monopoly strategy is essential in the US today. With confidence in both the Democrats and Republicans sinking, frustration with the war at new levels, living standards sinking, and minorities experiencing increasing hardships, the potential for anti-monopoly struggle is great. Anger and disgust invite programs that offer a real challenge to the further advance of state monopoly capitalism. Unity built around subservient loyalties to complacent, patronizing millionaires will not capture the attention of a citizenry further and further removed from political life. Instead, programs that identify monopoly profit as a subversive, alien element to social progress must be advanced.

Despite the awesome power of monopoly capital, there are contradictions within capital that can be incorporated into an effective anti-monopoly strategy. For example, the Wall Street Journal as a mouthpiece for finance capital has been carrying on a vocal campaign against obscene executive compensation. While the motive is selfish – the interests of corporate shareholders – the argument would resonate with millions of people appalled by growing inequality.

The rapacious extortion of tax deferments, grants and loans from cities, counties, and states to retain or attract development is now meeting with resistance and supported by small, local businesses who resent this privilege of monopoly capital. The “advantages” of free trade agreements have been decidedly beneficial to the monopoly sector of capitalism and disastrous for small and medium size businesses.

The health care crisis pits small businesses and individuals against giant health care “nonprofits” that are, in many places, ruthlessly attacking each other for market dominance. Enormous waste, excess profits and pitiful health care have put a national, people-before-profit health care system on everyone’s agenda except the Washington politicians.

The so-called immigration question divides the ultra-right and industrial capital from the many businesses that exploit immigrant labor for its forced mobility and low wages.  Those businesses that cannot out-source the labor process rely upon immigrant labor to maintain profits commensurate with that of other sectors. These differences within capital, if exploited, could help to defuse the xenophobic component of the anti-immigrant movement.

Of course, the war in Iraq presents the greatest opportunity for anti-monopoly forces. Much of monopoly capital turned against the war before the 2006 elections in a break with the military and energy monopolists. This split affords the anti-monopoly left an opening to shift the discussion from failed foreign policy to building a solid anti-imperialist front.

There are clear and constant indications that important sectors of monopoly capital have lost patience with the ultra-right program. The failings of the Bush administration and the isolation of US imperialism casts a long shadow over this movement’s ability to stabilize and govern in the interests of monopoly capital. Thus, the Democrats will be given a chance to further these interests. It would be a tragic mistake to think that this moment requires blind support for the other monopoly Party. It does, however, mark a chance to advance an anti-monopoly party.

Certainly it is far easier to identify this opportunity than it is to execute it. In the first place, the difficult, frustrating task of building an anti-monopoly party must be tackled. Those devoted to this task must be prepared for the barrage of criticism launched by Democratic Party operatives and many honest activists who lack the understanding or confidence that this is advisable or feasible. Rank and file labor and the African American community are essential foundations for avoiding the fate of earlier third-party movements. While existing labor organizations will not likely support such a move, there are many signs that rank-and-file workers are both frustrated with the Democrats and desperate for a political voice. Despite the most consistent loyalty to the Democratic Party, African-Americans and other urban minorities have been shamefully ignored by the two Parties. Like the Palestinians, their urban communities are administered by a hostile force committed only to containment. They have nothing to gain from supporting the two Parties, nothing to lose from supporting an anti-monopoly movement.

But it would be a mistake to fail to build the anti-monopoly movement outside of the electoral arena. The time is ripe for organizing around advanced issues that challenge monopoly capital and imperialism. While there are many good organizations and committed activists engaged in myriad progressive initiatives, they lack both a common, unifying organizational form and a common, unifying theme. Surely few see that potential in the Democratic Party or its platform. Again, this challenge points to the necessity of an anti-monopoly party as a force for shaping and focusing the everyday struggles against the power of corporate monopoly.   

 To fight to win, we must first identify the enemy. The enemy is State-Monopoly Capital.