By Greg Godels 

July 20, 2018

Contrary to a popular caricature, the Marxist conception of the state is not a static notion, but one that changes with the transformations imposed by the growth of capitalist productive forces, with significant shifts in the balance of class forces, with changing ruling class policies brought on by those transformations, and with the consequent deepening of theory. For example, the state described in Marx’s The Class Struggles in France (1850) is different from the state described by Marx in The Civil War in France (1871).

The changes in Marx’s evolving thinking about the state were brought on by changes in the French economy, its class structure and class dominance, the lessons of class struggle, and those lessons applied to theory. We learn from the Paris Commune and Marx’s observations about the Paris Commune that mature capitalism imposes a kind of dictatorship, a bourgeois dictatorship over the state.

Moreover, we learn definitively from the experience of the Commune that the state that successful revolutionaries acquire from the bourgeoisie cannot simply become a useful instrument in the hands of the working class. Because its most important features are crafted to serve capital and only capital, the capitalist state must be smashed and replaced by a new state, a state that serves the working class, a dictatorship of the proletariat. Marx left this historically demonstrated theoretical elaboration of the state as the legacy of nineteenth-century Marxism.

The late nineteenth-century emergence of a new stage of capitalism– the era identified by Lenin and others as the era of imperialism– coincided with new features of capitalism and new forms and mechanisms of accumulation. The emergence of mega-corporations, cartels, and monopolies and their dominance over capitalist economies demanded a larger, more decisive role for finance capital and an expansion of markets as well as sources of raw materials. Access to markets and resources further demanded foreign expansion, colonial dominance, intense competition and rivalry, and a growing potential for war.

Accompanying this new stage was a new relationship between the commanding heights of the economies– the cartels, monopolies, and finance capital– and the capitalist state.

The new stage of capitalism began to necessitate further engagement of the monopolies in the state and further involvement of the state in the affairs of the monopolies. First as a coordinator, then as a capitalist referee, as a regulator of, and as a partner in monopoly accumulation, the state took on an active role as guarantor and promoter of monopoly interests. In the US, for example, post-World War I federal spending was four or more times the amount spent before the war, demonstrating a growing role for the state despite political credos touting small government. That growth in spending has continued to this day, and despite “austerity” governments.

At the same time, monopoly capital encroached on the state, supplying a growing cadre of administrators, experts, and professionals to occupy the seats of federal power and support the interests of big business.

The Great Depression brought the process of the melding of the state and monopoly capital to its full maturation. The state was charged with the program of saving capitalism from devouring itself while, at the same time, maintaining the dominance of monopoly power. Some governments– as the collective arm of monopoly– even forced public employment and universal welfare on reluctant individual corporations, acting for the greater good– of monopolies! Ultimately, world war solved the problem of a collapsing global economy to the benefit of the monopolies and the detriment of the masses.

It was in the context of the emergence of a new stage in the development of capitalism and the accompanying growth of a state intimately influenced by and influencing the course of monopoly capitalism that many Marxists coined the term “State-Monopoly Capitalism” (SMC) in order to capture the process of monopolization, the guiding role of the state in this process, and the increasing dominance of the state by monopoly.

For the greater part of the 20th century, most Communist and Workers Parties shared this theory of the relationship of the capitalist state to this specific mature stage of capitalist economic development.

Unfortunately, some Soviet theoreticians were inclined to attach a proviso to the theory, suggesting strongly that SMC was a harbinger of the “general crisis of capitalism.” In a mechanical, historically contingent manner, the same theoreticians fatalistically associated SMC with discrete stages occurring in twentieth-century history which were thought to lead invariable to capitalism’s demise. But fatalism is alien to Marxist science.

Perhaps this association accounts, in part, for the decline in support for the theory of SMC after the fall of the Soviet Union and European socialism. Perhaps, the general disarray of the World Communist Movement after the fall explains it as well. In any case, there was little interest in the theory of SMC after 1991.

Reviving State Monopoly Capitalism

In September of 2007, I posted an essay on Marxism-Leninism Today arguing for a fresh look at SMC and arguing for its relevance: “Given imperialism’s new-found currency, perhaps it is also time to rehabilitate the widely scorned theory of State Monopoly Capitalism.”

In my discussion of the theory, I drew heavily upon Soviet economist Eugen Varga’s writing in Politico-Economic Problems of Capitalism (1968), the influential Marxist economist’s final word on the concept that he did much to popularize. He stated that “The coalescence of two forces– the monopolies and the state– forms the basis of state monopoly capitalism… The essence [of SMC] 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.”

To my mind, twenty-first century capitalism constitutes an even better “fit” to the theory of SMC than the theory did for any previous era. Monopoly corporations effectively own the state in all the major capitalist countries. For example, the corporate bailouts in the wake of the 2007 collapse were accomplished globally with little political resistance, an achievement only possible with the close collaboration of monopoly and state power. For the US, I cited in the essay the drop of corporate taxes as a portion of total taxes from 26.5% (1950) to 7.4% in the early 1990s as an example of monopoly functioning as a “ward of the state.”

Further, I argued that the ‘coalescence’ of monopoly with the state generated a totalizing effect upon capitalist society, narrowing “legitimate” political, cultural, and social choices to those benefiting monopoly capital. In the US, for example, both political parties are dominated by monopoly capitalists and monopoly capitalist money. In most major capitalist countries, the congruence of the ‘mainstream’ parties towards a common embrace of market fundamentalism, the sanctity of corporations, and the subordination of all social interests to profit underscores the intimacy of monopolies and the state.

Ten years after my essay, an even better case can be made for the theory of State-Monopoly Capitalism as an explanatory framework for understanding modern-day capitalism. Regrettably, however, I believe that some of the political conclusions that I drew in my essay were mistaken, a matter to which I will return.

New Book: An Important Step in the Elaboration of State Monopoly Capitalism

For the first time in English, a single-volume edition of the German publication Staatsmonopolistische Kapitalismus (2015), State Monopoly Capitalism, (2017) is available. [Editors’ note: go to  ISBN 978-1-907464-27-0 £4.95 €5.50 (plus £1.50 p&p (€3 p&p) ]

Co-authored by Gretchen Binus, Beate Landefeld, and Andreas Wehr and published by Manifesto Press, this slender book is an essential tool for the construction of a unitary, Marxist-Leninist theory, a theory that supplements the theory of Imperialism and captures the role of the state in the advanced capitalist countries under conditions of monopoly corporate dominance.

First serialized in Communist Review (translated by Martin Levy), State Monopoly Capitalism tracks the origins of SMC from the late nineteenth-century concentration of industrial production as well as the history of SMC as a Marxist theory covering those developments.

The authors present a nuanced view of SMC, stressing national ‘variants,’ the tolerance of different forms of state intervention, different mechanisms of consensus-building, and the existence of a measure of state independence from the monopolies.

Their chapter on The history of SMC theory usefully brings forward a number of European authors and works likely unfamiliar to many in an English-speaking audience– accounts from the GDR, the FRG, France, and the Soviet Union.

Here, as well, they address the question of why SMC dropped from the theoretical scene so precipitously. The authors fault proponents with interpreting SMC as leading directly to socialism “from the influence of socialism as an alternative system,” as “…a historical level of development in the ‘end time’ of capitalism.”

In addition, advocates for SMC suffered from “an underestimation of capitalism’s potential for development.”

And the authors also profess a flaw in the SMC understanding of the “absolute supremacy” of nationalization in the “Marxist policy of socialization.” One might ask for more clarity and development on this point, however.

Of course, the “shock” of the demise of European socialism played a role in the disappearance of SMC Theory, as Binus, Landefeld, and Wehr acknowledge.

Quite correctly, the authors argue vigorously for further research on and development of the theory of SMC, especially in the wake of the crises wracking twenty-first century capitalism and the theoretical poverty of most alternative left theories.

In the third chapter, Topicality of the SMC analysis, State Monopoly Capitalism impressively updates the theory for the twenty-first century, sketching the new global balance of forces that intensifies international competition. They graphically depict how radically the “homes” for the most powerful corporations have shifted from the US to other countries.

Where the US enjoyed overwhelming dominance in 1960, the largest corporations were much more widely dispersed beyond the US by 2012. (1)

Implicit in this trend is the necessity of greater state intervention to protect and promote these national “assets” in a very competitive environment.

Binus, Landefeld, and Wehr affirm that competitive pressures on corporate profits have led to a “search for yield” that has shifted investment to the speculative financial sector, generating the explosive growth of that sector in recent decades: “The long term accumulation of huge financial wealth– the piling up of financial resources– forms the economic foundation for the financial market’s strengthened role in the most recent period. The more rapid growth, over the last 30 years, of this wealth than of the whole world social product is connected not only with the worsened conditions of capitalist exploitation in the real economy but also with the neoliberal policies and the liberalization of capital markets adopted at the same time.”

State Monopoly Capitalism falls decidedly on Lenin’s side in the Kautsky/Lenin debate over “ultra-imperialism”– the notion that imperialist states can and will, over time, unify cooperatively in a common enterprise of exploitation. Lenin, in his typical acerbic style, derided the idea as “absurd,” “ultra-nonsense.” Applying Lenin’s critique to the European Union, the authors see the EU not as a distinctive state, a super state, or imperial colossus, but as an alliance of convenience juggling the contradictory tendencies of cooperation and competition: “the dialectics of competition and cooperation.”

Beyond State Monopoly Capitalism

Probably the most understandably controversial chapter– the final chapter of State Monopoly Capitalism— is entitled Strategy discussion against the background of SMC theory. In this chapter, the authors tackle the challenge of applying SMC theory to the strategic goal of achieving socialism.

Throughout the post-World War II period, when many Communist and Workers Parties in primarily advanced capitalist countries of Western Europe achieved mass support, debates on the way forward arose over the limits of parliamentarism and potential class or party alliances. Some thought that the validity of State Monopoly Capitalism implied that revolutionaries could not win socialism without first engaging monopoly capital, that a broad anti-monopoly alliance, front, or party must be organized to tackle monopoly as a preliminary to the fight to replace capitalism. They argued that the working class and working class parties were in need of the support of broader masses– those adversely affected by the monopoly form of capitalism– in order to secure a greater, a sufficient mass base to tackle capitalism itself.

The strategy of an anti-monopoly front, alliance, or party sprung from this thinking and came to prominence, if not dominance among Communist and Workers Parties in the advanced capitalist, bourgeois democracies.

Thus, given their able defense of SMC theory, the question before Binus, Landefeld, and Wehr becomes whether SMC does, in fact, imply an anti-monopoly strategy for Marxist-Leninists working for socialism in the twenty-first century. Are they committed to accepting either an anti-monopoly stage or an anti-monopoly form of struggle on the road to socialism?

State Monopoly Capitalism reflects critically on the twentieth-century experience of anti-monopoly strategies, from the united fronts against fascism to the Allende government, the Portuguese revolution, and the Socialist/Communist common program in France. They consider, with some enthusiasm, the prospects of the self-described socialist projects in Latin America, though the book’s UK editor concedes that “…there have been some reactionary developments in Latin America, promoted by US imperialism.”

In some detail, the authors recount the strategic discussions within the German Communist Party (DKP) occurring over several decades. They bluntly, but convincingly, criticize a right, reformist tendency that arose within the Party, locating its source in the Gorbachev right-turn at the end of the Soviet era and the wave of pessimism that swept the movement after the fall of the Soviet Union.

Rejecting the rightist “Reform Alternative,” the DKP affirmed a road to socialism through “an anti-monopoly democracy.” According to the authors, the DKP programs of 1978 and 2006, “see ‘the anti-monopoly and socialist revolutions as connected stages of development in the unitary process of the transition from capitalism to socialism.”

They go on: “In that context it is a matter of stages of struggle, not of an ‘intermediate’ stage between capitalism and socialism… It involves a period of revolutionary struggle, in which elements of capitalism are still present, but also embryonic forms of socialism are also already there,’ i.e., it involves ‘relations of transition’…”

While they grant the Greek Communist Party (KKE) a dissent from the “anti-monopoly democracy” strategy, the authors demur: “The distinction between stages of struggle, which mark the political power relations, and the level of the social structure is absent here” [with the KKE position].

Binus, Landefeld, and Wehr close by singling out nationalization of the banks as a possible centerpiece of anti-monopoly organizing: “Today, the demand for nationalization of the banks is already being raised by broad sections of the public… and this brings them into opposition to the bourgeoisie of finance capital. Consequently, the anti-capitalist forces have the task of further developing the still-diffuse criticism of the ‘greed of the bankers’ into a fundamental criticism. If this is successful, then in the centres of capitalism new possibilities for developing anti-monopoly alliances, as well as for leading anti-monopoly struggles, will result.”

When discussing strategic programs, it is always wise to heed Lenin’s injunction in “Left-Wing” Communism, an Infantile Disorder: “The main point now is that Communists of every country should quite consciously take into account the main fundamental tasks… and the specific features which this struggle assumes and inevitably must assume in each country in conformity with the peculiar features of its economics, politics, culture, national composition…, its colonies, religious division, etc.” In other words, there are many strategic shades of difference based upon the specific features of the countries that Communists inhabit; in devising a program for socialism, it is a mistake to assume that one size fits all.

Yet Lenin does offer some general admonitions on the revolutionary road to socialism. In the same pamphlet aimed at critiquing “left” doctrinairism, Lenin offers two essential tasks of revolutionary preparation: 1) the consolidation of the vanguard organization “winning over the class-conscious vanguard” — a task that is largely “propaganda,” i.e., educational, and 2) preparing to “lead the masses to the new position that will ensure the victory of the vanguard in the revolution.”

In regard to the second task, Lenin emphasizes that revolutionaries must make a frank accounting of the objective status of the various classes: the “hostile” classes must be at “loggerheads,” unable to mount an effective response; the “vacillating, wavering, unstable immediate elements” must be rendered illegitimate in the “eyes of the people;” and the proletariat must be steeled “in favour of supporting the most determined, supremely bold, revolutionary action…”

To be clear, these are not tasks to secure a parliamentary majority or to lead a trade union movement, though they in no way preclude those tasks, but are tasks to defeat capitalism and establish socialism.

That Lenin foresaw no place for a stage, step, transitory goal, or rung, is clear from his comments in October, 1917 on the eve of the Bolshevik Revolution (The Impending Catastrophe and How to Combat It). In the section Can We Go Forward If We Fear To Advance Towards Socialism?, Lenin writes:

For socialism is merely the next step forward from state-capitalist monopoly. Or, in other words, socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people and has to that extent ceased to be capitalist monopoly.

There is no middle course here. The objective process of development is such that it is impossible to advance from monopolies (and the war has magnified their number, role and importance tenfold) without advancing towards socialism…

There is no middle course.

And therein lies the fundamental contradiction of our revolution…

The dialectics of history is such that the war, by extraordinarily expediting the transformation of monopoly capitalism into state-monopoly capitalism, has thereby extraordinarily advanced mankind towards socialism.

Imperialist war is the eve of socialist revolution. And this not only because the horrors of the war give rise to proletarian revolt—no revolt can bring about socialism unless the economic conditions for socialism are ripe—but because state-monopoly capitalism is a complete material preparation for socialism, the threshold of socialism, a rung on the ladder of history between which and the rung called socialism there are no intermediate rungs.

Of course this polemic was written over 100 years ago, in the throes of an unprecedented brutal war and within a country collapsing from the weight of that war.

Yet the US and its NATO allies have been at war through most of the last decades of the twentieth century and without relent in the twenty-first century. For the last decade, the global economy has been tottering on the brink, stagnant, or growing in fits and starts. In the US, the real average hourly wage is virtually the same as it was nearly 50 years ago. And in Europe and the US, the social safety net is either frayed, privatized, or burdened with extra costs.

When I wrote the essay on SMC in 2007, I was convinced that conditions were ripening for an anti-monopoly approach. I wrote: “A revived anti-monopoly strategy is essential in the US today… potential for anti-monopoly struggle is great… programs that identify monopoly profit as a subversive, alien element to social progress must be advanced.”

Like many others, I took for granted that the era of state-monopoly capitalism demanded an anti-monopoly approach.

Today, I believe that was a hasty, unwarranted conclusion.

History has produced no successful example of a left-inspired anti-monopoly struggle leading to a successful transition to socialism. Nor has history produced a notable spontaneous, self-consciously anti-monopoly movement based on non-working class strata or the petty-bourgeoisie since the nineteenth-century populists. Spontaneous risings like Occupy or Indignados drew mass support not from offering a sophisticated notion of monopoly, but from attacking capitalism itself, though admittedly as a vague, ill-defined, and flawed concept and with little understanding of how to defeat it.

In reality, monopoly is not a political category that can be usefully separated from the idea of monopoly capitalism.

State Monopoly Capitalism is a mandatory read for all who want to better understand the features of twenty-first century capitalism and the theory that remains at the core of the Marxist understanding. The authors advocate for a strategic anti-monopoly “stage of struggle,” thoughtfully and with circumspection.

Of course the validity of that strategy, whether specifically or in general, will be decided by practice. As the Communist and Workers Parties struggling under capitalism regroup and grow in size and influence from the setbacks inflicted by the demise of European socialism, as they undoubtedly will, the questions raised in the book will clarify and resolve.

Coming through a period of disappointment and decline not unlike our time, Lenin offered the following words to comrades in Western Europe and the US:

In Western Europe and in America, the Communists must learn to create a new, uncustomary, non-opportunist, and non-careerist parliamentarianism; the Communist parties must issue their slogans; true proletarians, with the help of the unorganised and downtrodden poor, should distribute leaflets, canvass workers’ houses and cottages of the rural proletarians and peasants in the remote villages…; they should go into the public houses, penetrate into unions, societies and chance gatherings of the common people, and speak to the people, not in learned (or very parliamentary) language, they should not at all strive to “get seats” in parliament, but should everywhere try to get people to think, and draw the masses into the struggle, to take the bourgeoisie at its word and utilise the machinery it has set up, the elections it has appointed, and the appeals it has made to the people; they should try to explain to the people what Bolshevism is… It is very difficult to do this in Western Europe and extremely difficult in America, but it can and must be done, for the objectives of communism cannot be achieved without effort. We must work to accomplish practical tasks, ever more varied and ever more closely connected with all branches of social life, winning branch after branch, and sphere after sphere from the bourgeoisie. “Left Wing” Communism, an Infantile Disorder


(1) The earlier, post-war concentration of powerful corporations in the US led many to promote a distorted picture of the logic of monopoly capital. Generalizing from a mid-1960s snapshot of US monopolies and their allergy to competition, their relative stability, their seeming overcoming of the law of value, a misleading theory of monopoly capital emerged. I develop this further in a paper in Communist Review: Sweezy and Baran’s Monopoly Capital after 50 Years: A Critical Appraisal. (NUMBER 82, WINTER 2016/2017)