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"State Capitalism": a most convenient term for everyone

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Cortes Posted: Tue, Oct 23 2012 6:20 PM

What a word. It seems to be quite a convenient term for varying purposes, depending on who is using it, and defined in different ways.

I find this term a stark example of the inherent war of language and how all definitions are essentially arbitrary.

There is the definition used by many varieties of socialists and anti-capitalist anarchists. There probably is a better one out there but this will do:

 

"Capitalism is an economic system that is based on private ownership of the means of production and the creation of goods or services for profit."

USSR and all states that have done complete nationalizations fit perfectly, with the private owner of everything being the state, therefore- state capitalism.

 

Then there is the libertarian definition, one that is essentially equivalent to what many libertarians call 'corporatism' (which I think is a mistake, as corporatism is more specific and it does not follow that all state capitalist economies were corporatist, only that some of them can be) or 'crony capitalism'. From Rothbard:

If we are to keep the term "capitalism" at all, then, we must distinguish between "free-market capitalism" on the one hand, and "state capitalism" on the other. The two are as different as day and night in their nature and consequences. Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at. State capitalism consists of one or more groups making use of the coercive apparatus of the government — the State — to accumulate capital for themselves by expropriating the production of others by force and violence.

 

I am intrigued by a post from (presumably) an anti-capitalist anarchist in another thread here ("Libertarian Socialism"):

Markets can exist in a non-capitalist economy, like mutualism (a type of socialism), and capitalism can exist without markets (state capitalism). Laissez faire capitalism is not the only type of capitalism, state capitalism and mixed economy capitalism are the other two kinds. Laissez faire capitalism is just the only type of capitalism that never existed.

 

For the most part, I agree with this, except for the assertion that capitalism can exist without markets.

However, I do not see how it follows that the USSR can be defined as 'state capitalism'. I am having trouble accepting this argument, not that I don't believe in the term, but that I have no idea what is meant when it is used to describe the Soviet Union as not 'true socialism'. To me the anti-capitalist anarchist definition seems like sophistry to me, if not an oxymoron. The definition of state capitalism used in this argument seems to be so broad and vague that it is meaningless, not to mention absurd in equivocating the State with a private person.

If all it means is that the State owns capital, then essentially every government has been at some point state capitalist, in the libertarian definition. Yet it does not follow from the anti-capitalists that the Soviet Union was not socialist.  'State socialist' perhaps.

My question is then, is the term really viable or coherent at all? Is it just moving the goalposts?

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Some people see it fit to change the definitions of terms to fit in with their ideology.

capitalism is defined as: An economic and political system in which a country's trade and industry are controlled by private owners for profit.

If a state owns all the property then that is public ownership and therefore not private and not capitalism.

If a state owns all the property and utilises the property to make a profit then that is fascism (Italian)

Socialism is defined as, an economic system based on state ownership of capital or The view that the government should own and control major industries.

Communism is defined as, A system of government in which a single, totalitarian, party holds power. It is characterized by state control of the economy, and restriction on personal freedoms

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Autolykos replied on Wed, Oct 24 2012 8:07 AM

Friedrich Engels defined "state capitalism" as a form of capitalism where the state is the sole capitalist (so to speak).

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stsoc replied on Wed, Oct 24 2012 10:46 AM

Then there is the libertarian definition


The definition you mentioned is the libertarian one. The propertarian definition is a redefinition for propaganda purposes of confusing the plebs, just like your hijacking of the word libertarian for yourself, which was first used, and was used so all over Europe, and is still used here for anarcho-communists.

However, I do not see how it follows that the USSR can be defined as 'state capitalism'.


By being that capitalism is defined by it's notion of property, which implies that a title of ownership is possible over areas of land, and implies that rent is legitimate use of property, which then implies legitimacy of the employer-employee relation (which is based on rent of means of production).

USSR fits all that, with state being the capitalist.

Socialism wishes to abolish the notion of property that capitalism accepts, and to institute the notion of property under which one cannot have a title of ownership over areas of land (but can only "occupy-and-use" it), and under which rent would be illegitimate, which would invalidate all unearned incomes, and which would have a result of a classless society of labobers that have full self-management, which is how socialism is most precisely defined- as worker self-management, non-hierarchical economy where no one manages workers but themselves.

To me the anti-capitalist anarchist definition seems like sophistry to me, if not an oxymoron.

Which just shows that you have no idea what "anarchism" means. Read the A.1.1 and A.1.2. from here:

What is Anarchism?
http://anarchism.pageabode.com/afaq/secAcon.html

Some people see it fit to change the definitions of terms to fit in with their ideology.

You have described propertarian tampering with words perfectly here.

Socialism is defined as, an economic system based on state ownership of capital

Not even close. Read this:

Why is Caplan's definition of socialism wrong?
http://anarchism.pageabode.com/afaq/append11.html#app2

Appendix: Defining Anarchism
http://anarchism.pageabode.com/afaq/append11.html#app6

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gotlucky replied on Wed, Oct 24 2012 12:04 PM

lol, not this again.

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Neodoxy replied on Wed, Oct 24 2012 12:10 PM

What are you talking about gotlucky? Surely 3 threads getting nowhere over the same thing is better than 2.

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Lol, if only the USSR privately owned their country for profit...

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Socialism wishes to abolish the notion of property that capitalism accepts, and to institute the notion of property under which one cannot have a title of ownership over areas of land (but can only "occupy-and-use" it), and under which rent would be illegitimate, which would invalidate all unearned incomes, and which would have a result of a classless society of labobers that have full self-management, which is how socialism is most precisely defined- as worker self-management, non-hierarchical economy where no one manages workers but themselves.

But to envision an economic system without management even decentralised management is not pragmatic. Imagine trying to run an amazon.com or apple without hierarchy or what about a heavily state run system like the NHS, which would more closely resemble your socialism, how could that logistically and efficiently run without hierarchy?

There are many businesses and corporations that start with one person who invents something or similar and goes on to make a massive organization that employs millions of people in some cases. What incentive would these individuals have if they had to share all their inventions with every person who he works with in order to make a profit?

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gotlucky replied on Wed, Oct 24 2012 4:52 PM

Neodoxy:

What are you talking about gotlucky? Surely 3 threads getting nowhere over the same thing is better than 2.

You're right - I don't know how I missed that. With more threads comes more competition. The forum market (redundant phrase is redundant) will attract useful posts and weed out those lol posts about "true" libertarianism.

Of course, what if we're wrong!? What if we aren't using the word "libertarian" properly? Then the forum market will attract more posts. That would be a market failure. I guess we will have to renounce anarcho-capitalism.

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Cortes replied on Wed, Oct 24 2012 8:39 PM

 

What are you talking about gotlucky? Surely 3 threads getting nowhere over the same thing is better than 2.

 

But this isn't 'the same thing' as the other threads. This is specifically about the term 'state capitalism' and what exactly that is supposed to be and mean. 

I'm sorry that isn't to your liking for whatever reason.

 

Of course, what if we're wrong!? What if we aren't using the word "libertarian" properly? Then the forum market will attract moreposts. That would be a market failure. I guess we will have to renounce anarcho-capitalism.

 

what

 

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gotlucky replied on Wed, Oct 24 2012 9:22 PM

Cortes,

I was making fun of stsoc.

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Neodoxy replied on Thu, Oct 25 2012 12:31 AM

"But this isn't 'the same thing' as the other threads. This is specifically about the term 'state capitalism' and what exactly that is supposed to be and mean. 

I'm sorry that isn't to your liking for whatever reason."

 

I wasn't commenting upon the topic of the thread itself, rather the possibility of another libertarian vs. libertarian socialist debate breaking out on these forums right now.

I've actually been thinking about how insightful this thread is. I don't think this is how you meant it, but the thread name brings up something very important, that for libertarians the term "state socialism" is dirty because it perverts capitalism with the state. For socialists it dirties the state with capitalism. Socialist anarchists get it the best though, because for them it's just a combination of two bads.

@gotlucky

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stsoc replied on Thu, Oct 25 2012 6:19 AM

But to envision an economic system without management even decentralised management is not pragmatic.

There will be management. Self-management.

Imagine trying to run an amazon.com or apple without hierarchy

Mondragon Coproration and John Lewis Partnership both have more then 80.000 workers and do just fine.

state run system like the NHS, which would more closely resemble your socialism

State run and socialism go toghether only in capitalist propaganda, in reality, they don't have anything to do with each other.

What incentive would these individuals

Many corporations would start by one guy buying some slaves, and ending up with having thousands of slaves and exporting cotton or tobacco, what incentive do this kind of guy have now? None. What a waste.

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Anenome replied on Thu, Oct 25 2012 3:58 PM

Mondragon, this is you "business without hierarchy"?:

"At Mondragon, there are agreed-upon wage ratios between the worker-owners who do executive work and those who work in the field or factory and earn a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns 5 times as much as the theoretical minimum wage paid in his/her cooperative."

So even your favorite example can't do without managers, and the workers are voluntarily paying the managers much more than the workers receive? This doesn't give you pause?

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Anenome replied on Thu, Oct 25 2012 4:00 PM

John Lewis Partnership:

Every employee is a partner in the John Lewis Partnership, and has a possibility to influence the business through branch forums, which discuss local issues at every store, and the divisional John Lewis and Waitrose Councils.[9] Above all these is the Partnership Council, to which the partners elect at least 80% of the 82 representatives, while the chairman appoints the remaining. The councils have the power to discuss ‘any matter whatsoever’, and are responsible for the non-commercial aspects of the business – the development of the social activities within the partnership and its charitable actions.

The Partnership Council also elects five of the directors on the partnership board (which is responsible for the commercial activities), while the chairman appoints another five. The two remaining board members are the chairman and the deputy chairman. These routes ensure that every non-management partner has an open channel for expressing his/her views to management and the chairman.

Is it your assertion that democratic participation negates hierarchy? That's the only charitable way I can read your holding up these two companeis as models when they both feature consierable hierarchy.

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I can understand the confusion over the term. Part of the problem is that socialists don't always use the term consistently. Sometimes they use it to refer to states like the Soviet Union that own all the property, and sometimes they use it to refer to more of a social democratic "interventionist" state. Lenin himself even used the term to describe the Soviet Union. However, he meant something quite different than his socialist critics. He used it merely to indicate that the state was tolerating some private ownership at the time.

There is probably also a difference between how anarchists and libertarian Marxists define it. It would probably be easiest to understand the term from the Marxist side because their economic theory is more cohesive.

One of the problems is what is meant by "private" and "public" property. We often think of property with a legal title held by individuals or businesses as private and property with a legal title held by the state as public. It is often assumed then that a society where all of the property is public in this sense is socialist. In that case, libertarian socialists do not support public property. However, there is also a different way to divide property, by the way that it is open to use. We might use the terms "communal" property and "hierarchical " property to designate this difference (of course there would still be room for property which is neither communal or hierarchical but "individual"). The problem is that this second division often seems to coincide with the first division. For example, a city-owned park is communal because anyone is free to use it and is public because the government has legal title to it. But then there is also privately owned property that could be considered communal. Zucotti Park that housed the OWS protesters is a private park but is open to the public in the same way that a state owned one is. One might also consider a church library or a user operated site like Wikipedia to be communal despite being privately owned. On the other hand, battleships, public schools, and post offices are all public property but are hierarchical. It is therefore this communal property (in opposition to hierarchical property) that characterizes libertarian socialist society and not public property. (See Ivan Illich's "Institutional Spectrum" for more on this distinction).

Let's look at what some Marxists have said about "state capitalism."

The best argument I've found so far that the USSR was capitalist is this article by Raya Dunayevskaya. She makes the point that private property is not what characterizes capitalism:

It is neither titles to property nor motives of individuals that distinguishes different exploitative economic orders, but their method of production, or manner of extracting surplus labor. If it was the legal title to property that were basic, the Stalinists would be right in assuming, “Since there is no private property in Russia, there is no exploitation of man by man.”

Behind the imposing façade of the “socialist economy”, however, stands the “classless intelligentsia”. The specific weight of the upper crust, as we saw in Part I, comprises a mere 2.05 per cent of the total population!

The individuals who act as agents of the state and its industry are, of course, theoretically free to refuse to participate in the process of accumulation, just as a capitalist in the United States is free to sign away to the workers in his factory his legal title to the means of production. In the United States he would retire to Catalina Island or, at worst, be sent to an insane asylum. In Russia he would be “liquidated”. But he does not refuse. He acts exactly as the agent of capital that he is, as agent of the dead labor alienated from the worker and oppressing him. The class difference between the two, which the Russians euphemistically call “functional”, is expressed outwardly, too, in no different manner than under traditional capitalism, where the one lives in luxury and the other in misery. It is true that in Russia the agent of capital does not “own” the factory. But personal property is recognized in the unlimited right to purchase interest-bearing bonds, sumptuous homes, datchas, and personal effects. State bonds, no matter how large the amount, are not subject to inheritance or gift tax. All forms of personal property can be left to direct descendants. Institutions of higher learning, the tuition fees of which make them inaccessible to the proletariat, welcome the children of these property-less factory directors, and this assures their offspring of good positions as befits the sons and daughters of the ruling class. This, however, is entirely incidental to the relationship in the factory.

It is not the caprice of the bureaucracy nor the “will” of the individual capitalist in competitive capitalism that sets the wages of the workers. It is the law of value which dominates both.

The law of value, i.e., the law of motion, of the Russian economy has led to the polarization of wealth, to the high organic composition of capital, to the accumulation of misery at one pole and the accumulation of capital at the other. This is a given single capitalist society, an economy governed by the laws of world capitalism, originating in the separation of the laborer from control over the means of production.

[...]

Capital, said Marx, is not a thing, but a social relation of production established through the instrumentality of things. The instrumentality which establishes this exploitive relationship is, as is well known, the means of production alienated from the direct producers, i.e., the proletariat, and oppressing them. The capitalist’s mastery over the worker is only the “mastery of dead over living labor”. The material manifestation of this greater preponderance of constant over variable capital is the preponderance in the production of means of production over means of consumption. In capitalist society it cannot be otherwise for the use values produced are not for consumption by workers or capitalists, but by capital, i.e., for productive consumption or expanded production. The greater part of the surplus value extracted from the workers goes back into this expanded production.

The Russian exploiters are so well aware of the fact that surplus value, in the aggregate, is uniquely determined by the difference between the value of the product and the value of labor power, that the Plan for 1941 stipulated openly that the workers are to get a mere 6.5 per cent rise in wages for every 12 per cent rise in labor productivity.

“This proportion between labor productivity and average wage”, brazenly proclaimed Voznessensky, “furnishes a basis for lowering production cost and increasing socialist (!) accumulation and constitutes the most important condition for the realization of a high rate of extended production.”

C.L.R. James:

Today this antithesis between production for use and production for surplus labor can be seen nowhere so clearly as in Stalinist Russia. And that stamps this society as being of the same inner essence as capitalism. Up to 1928, the use-value of the commodity predominated to the limited extent that this was possible in a backward society in the environment of the world market. The industrial proletariat in that year lived, at the very least, up to the standard of 1913. The first Five Year Plan predicted doubling of the subsistence of the working class by 1932.

But from 1929 a decisive change began. The lowering of agricultural prices in the world market threw the Russian plan into chaos. The competition on the world market, in its modern form of imperialist war, compelled the bureaucracy to reorganize the plan to meet the threat of Japan, at heavy cost; and with the coming to power of Hitler and his announcement that the main enemy was Russia, the change in Stalinist production and in Stalinist society became more uncontrollable. The bureaucracy was compelled to continue the process of industrialization at feverish speed. Under such circumstances, in a backward country, with an immature working class, the main aim of production inevitably must become the production of surplus labor, for the sake of more production, for the sake of still more production.

[...]

In all previous societies, land was the main factor in production. In capitalist society the main factor is accumulated labor, within the environment of the world market. If the laborer controls the accumulated labor we have socialism. Wherever it controls him we have capitalism. “It is only the dominion of past, accumulated, materialized labor over immediate living labor that stamps the accumulated labor with the character of Capital.” Marx repeatedly wrote these definitions.

Friedrich Engels:

But, the transformation — either into joint-stock companies and trusts, or into State-ownership — does not do away with the capitalistic nature of the productive forces. In the joint-stock companies and trusts, this is obvious. And the modern State, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists. The modern state, no matter what its form, is essentially a capitalist machine — the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers — proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution

Guy Debord:

The concentrated spectacle belongs essentially to bureaucratic capitalism, even though it may be imported as a technique of state power in mixed backward economies or, at certain moments of crisis, in advanced capitalism. In fact, bureaucratic property itself is concentrated in such a way that the individual bureaucrat relates to the ownership of the global economy only through an intermediary, the bureaucratic community, and only as a member of this community. Moreover, the production of commodities, less developed in bureaucratic capitalism, also takes on a concentrated form: the commodity the bureaucracy holds on to is the totality of social labor, and what it sells back to society is wholesale survival. The dictatorship of the bureaucratic economy cannot leave the exploited masses any significant margin of choice, since the bureaucracy itself has to choose everything and since any other external choice, whether it concern food or music, is already a choice to destroy the bureaucracy completely. This dictatorship must be accompanied by permanent violence. The imposed image of the good envelops in its spectacle the totality of what officially exists, and is usually concentrated in one man, who is the guarantee of totalitarian cohesion. Everyone must magically identify with this absolute celebrity or disappear. This celebrity is master of non-consumption, and the heroic image which gives an acceptable meaning to the absolute exploitation that primitive accumulation accelerated by terror really is. If every Chinese must learn Mao, and thus be Mao, it is because he can be nothing else. Wherever the concentrated spectacle rules, so does the police.

[...]

After Kronstadt, the bureaucracy–sole proprietor of a State Capitalism–consolidated its power internally by means of a temporary alliance with the peasantry (with the “new economic policy”) and externally by using workers regimented into the bureaucratic parties of the Third International as supports for Russian diplomacy, thus sabotaging the entire revolutionary movement and supporting bourgeois governments whose aid it needed in international politics (the power of the Kuonmintang in China in 1925-27, the Popular Front in Spain and in France, etc.). The bureaucratic society continued the consolidation by terrorizing the peasantry in order to implement the mast brutal primitive capitalist accumulation in history. The industrialization of the Stalin epoch revealed the reality behind the bureaucracy: the continuation of the power of the economy and the preservation of the essence of the market society commodity labor. The independent economy, which dominates society to the extent of reinstituting the class domination it needs for its own ends, is thus confirmed. Which is to say that the bourgeoisie created an autonomous power which, so long as its autonomy lasts, can even do without a bourgeoisie. The totalitarian bureaucracy is not “the last owning class in history” in the sense of Bruna Rizzi; it is only a substitute ruling class for the commodity economy. Capitalist private property in decline is replaced by a simplified, less diversified surrogate which is condensed as collective property of the bureaucratic class. This underdeveloped ruling class is the expression of economic underdevelopment, and has no perspective other than to overcome the retardation of this development in certain regions of the world. It was the workers’ party organized according to the bourgeois model of separation which furnished the hierarchical-statist cadre for this supplementary edition of a ruling class. While in one of Stalin’s prisons, Anton Ciliga observed that “technical questions of organization turned out to be social questions”(Lenin and the Revolution).

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Mondragon, this is you "business without hierarchy"?:

Mondragon clearly has a hierarchy, and a number of anarchists have criticized it.

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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I'm still wondering what you'd call China's system, or Vietnam's system after Doi Moi.

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Anenome replied on Fri, Oct 26 2012 1:13 AM

SkepticalMetal:

I'm still wondering what you'd call China's system

What system is characterized by limited private ownership with ultimate central control? Fascism.

So, China today has, essentially, a fascistic system. So does the USA just in differing degree. Every time we hear politicians talking about 'creating jobs' the principle is furthered in the public mind. Politicians should have nothing to do with the economy. We need a separation of economy and state.

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Agreed. Personally, I'd like to see a free economy and no state :)

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stsoc replied on Fri, Oct 26 2012 10:37 AM

@Anenome

I don't know the details of those two coop, I just saw that they are called worker coops and have many workers. If it is the case that they are not organized by direct democracy, but have a hierarchy (delegation of power, and from top to down organization) then they are not worker coops.

@Fool on the hill

Kautsky's Terrorism and Communism and Pannekoek's State Capitalism and Dictatorship are orthodox marxist perspectives that clearly see nationalization as a process that produces state capitalism, not socialism.

I mentioned Bakunin, but also Proudhon and Kropotkin dismissed nationalization as having anything to do with socialism.

Leninism, when it came in power, destroyed socialism, first moves of Lenin, Trotsky and the rest of the Bolshevik leadership was to abolish the worker councils, which were organization of socialism (being that the core of socialism is workers' self-menagement), and to call that destruction of socialim "socialism" is simply a travesty, either an act of malevolent propaganda, or a manifestation of vast ignorance of the topic at hand.

What system is characterized by limited private ownership with ultimate central control? Fascism.

Mix of laissez faire capitalism and state capitalism (mixed economy capitalism) can be in different degrees and with different non-economic policies. USA has one type of mixed economy capitalism, social-democracy has another, a little closer to state capitalism. Titioism would be even closer to state capitalism, whereas Stalinism is full state capitalism. Fascism is just a nationalistic or rasist and imperialist version of social-democracy. USA has a mixed economy capitalism that is closest to laissez faire capitalism- even though it really is not close to it, it is the closest from all systems of first world countries, and has similarities with fascist states, imperialism being one.

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I came across an article that looks to be a deeper analysis of the capitalist nature of the USSR than the ones I posted above: What was the USSR?

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Malachi replied on Fri, Oct 26 2012 10:11 PM
While both Lenin and Trotsky argued that it was necessary to overthrow the Provisional Government and establish a workers' government through a socialist-proletarian revolution, neither Lenin nor Trotsky saw socialism as an immediate prospect in a backward country such as Russia. The proletarian revolution that established the worker-peasant dictatorship was seen as only the first step in the long transition to a fully developed socialist society. As Trotsky was later to argue,10 even in an advanced capitalist country like the USA a proletarian revolution would not be able to bring about a socialist society all at once. A period of transition would be required that would allow the further development of the forces of production necessary to provide the material basis for a self-sustaining socialist society. In an advanced capitalist country like the USA such a period of transition could take several years; in a country as backward as Russia it would take decades, and ultimately it would only be possible with the material support of a socialist Europe.
interesting to note that it is taken as a given, even among communists, that communists will never get anything done and other people, even perhaps other, inferior communists, will have to undertake to provide the capital for such an existence. Admit it, its an elaborate farcical attempt to trick other people into doing your work for you.
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h.k. replied on Sat, Oct 27 2012 12:02 AM

Malachi:
While both Lenin and Trotsky argued that it was necessary to overthrow the Provisional Government and establish a workers' government through a socialist-proletarian revolution, neither Lenin nor Trotsky saw socialism as an immediate prospect in a backward country such as Russia. The proletarian revolution that established the worker-peasant dictatorship was seen as only the first step in the long transition to a fully developed socialist society. As Trotsky was later to argue,10 even in an advanced capitalist country like the USA a proletarian revolution would not be able to bring about a socialist society all at once. A period of transition would be required that would allow the further development of the forces of production necessary to provide the material basis for a self-sustaining socialist society. In an advanced capitalist country like the USA such a period of transition could take several years; in a country as backward as Russia it would take decades, and ultimately it would only be possible with the material support of a socialist Europe.
interesting to note that it is taken as a given, even among communists, that communists will never get anything done and other people, even perhaps other, inferior communists, will have to undertake to provide the capital for such an existence. Admit it, its an elaborate farcical attempt to trick other people into doing your work for you.

 

 

Communism is really just a roundabout way of saying that those nerds in highschool who study really hard, aren't actually smarter than those dipshit jocks who get average grades. Conceptually it isn't very different at all.

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Cortes replied on Mon, Dec 3 2012 6:12 AM

Would it be correct to consider "State Capitalism" a tautology?

Trying to repackage the same thing, depending on the context the word is used, as something allegedly completely different, using different words? In socialists and anti-capitalists' case, it's used to describe a planned economy. For libertarians, who don't seem to use the word as much, it's analogous to 'crony capitalism' or 'corportatism, or any government/business partnership. 

 

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