The state as Engels described it, is “the ideal personification of the total national capital.” (Socialism: Utopian and Scientific) and he recognised “The more productive forces it (the state) takes ever into its possession, the more it becomes a real aggregate capitalist, the more citizens it exploits. The workers remain wage-workers, proletarians. The capitalist relationship is not abolished, rather it is pushed to the limit. (Engels, Socialism: Utopian and Scientific)
The nature of capitalism is distorted by those who draw their model of capitalism from its early competitive stage and describe its essence as the competition among individual capitals within a nation-state. Marx himself did not confine his analysis to a description of the stage of competitive capitalism, but grasped the basic laws of development leading to greater concentration and centralization of capital. Even in speaking of stock companies, he refers to this form of ownership as being “social capital” which represents “the abolition of capital as private property within the framework of capitalist production itself.” (Capital, Vol. 3) In the Soviet Union today the state had become the chief framework within which capitalist production is organized even though capital in the form of individual private property has been abolished. The ruling class in the Soviet Union can be described as state capitalists, since they command the highly centralized Soviet economy and oppresses and exploits the working class directly through its stranglehold on the state apparatus. This class does not individually own the means of production, but this fact makes it no less a capitalist class. The central question to pose in determining whether the Soviet Union is capitalist or socialist is thus not whether the principal means of production have been nationalised, but which class holds real political and economic power. This power is held in state bureaucracy by the nomenklatura and apparatchiks , which controls and disposes of state property and gears the whole economy towards the maximization of surplus-value extraction, towards “accumulation for accumulation’s sake, production for production’s sake.” (Capital, Vol. l)
To understand more clearly the difference between socialism and state capitalism we need to start by understanding the difference between use value and value in commodity production. Use value refers to the useful aspects of products which satisfy human wants and needs, while value is the abstract worth given to products for the purposes of exchange and based on the socially necessary labor time that went into creating them. Surplus value is the difference between the value the worker creates with his labour and the value he or she receives in payment, this difference being pocketed by the capitalist.
Marx pointed out that in the case of slavery the slaves were oppressed and exploited in order to produce use values for the slaveowners. This is distinct and different from the exploitation of the working class by the capitalist class, whose goal, as Marx puts it, is “the production of surplus value as the absolute law.” Under socialism, although the value of products, based on socially necessary labor time, must be taken into account, still commodity production is made subordinate to the goal of producing use values for the working people, such as food, clothing, housing, health care, transportation.
The basic functioning of the Soviet economy revealed that the extraction of surplus value is indeed the guiding principle. The Soviet bureaucrats has been able to maximize capital accumulation through the national economic plan. The real power of the state bosses is wielded through its control over the national economic plan, in which it is able to fix the rate of output and the rate of capital accumulation for the Soviet economy as a whole, and determine the utilization of the labor force and the total wages that will go to the working class.
Despite its high level of organization, it would be misleading to characterize the state ruling class as one monolithic class, since it is composed of a number of different, competing, and conflicting wings, just like any other capitalist county. Capital is always “private” in the sense that a capitalist class controls it and makes decisions about it in its own narrow class interests. But capital is not, in essence, an individual private affair. Moreover, the existence of capital as state capital by no means gets rid of the anarchy of production. There is competition among the different wings or special interests of the Soviet elite.
Marx notes, that capitalism produces not only surplus value, but also the class relations between exploiters and exploited. It is not in the class interests of the Soviet working class to work hard to produce surplus value for the state bourgeoisie, and working-class resistance is taking a number of different forms. These include demands for higher wages, a constant search for better jobs, or just simply doing as little work as possible on the job. The lack of labor discipline has become a common theme in Soviet economic literature. Losses of working time are substantial. One of the results has been a continual drive by the Soviet bourgeoisie to intensify labour in order to raise productivity. Institutions like the trade unions, which are supposed to defend the workers interests, remained bound hand and foot to the ruling class.
Some argued that the Soviet Union cannot be capitalist because the Soviet elite does not really enjoy great material privileges. The whole line of argument on material privileges, of course, is a red herring since it misses the essence of capitalism, which involves the accumulation of surplus value, not its consumption in the form of luxurious use values by the ruling class. As Marx states about the capitalist, “as far as he is personified in capital, it is not values in use and the enjoyment of them but exchange value and its augmentation, that spur him into action.” (Capital, Vol. l) But evidence was sufficient to demonstrate that there was a qualitative gap between the wealth of the Soviet ruling class and the income of the working people which cannot be justified on any rational basis according to the principle of bourgeois right. Moreover, if these privileges were justified as a material incentive to create greater loyalty and labour, why was the access to these privileges kept from public view?
Those Stalinists and certain Trotskyists who believed that the working class held state power in the Soviet Union were led into vulgar apologetics for glaring injustice, exploitation, and oppression in Soviet society, that led them to approve Soviet imperialist adventures abroad, whether slaughtering peasants in Afghanistan or napalming them in Eritrea. Such a stand betrays the interests of not only the Soviet working class which has accomplished so much in the past, but also the various peoples of the world who are oppressed and exploited by their Soviet “saviors.”