Property and Capital (14)

14. State capitalism

A fundamental distinction in the description of the modern capitalist economy is that between: property - finance - enterprise. These three factors that meet in every productive firm can have different or unique relevance and ownership.

Property concerns the real estate in which the factory is located: land, structures, buildings, with real estate characteristics. It produces a rent which, after deducting the "dominical" expenses, gives the revenue. We can also extend this factor to fixed machinery, to installations or other permanent works without altering the economic distinction, and likewise to mobile machinery, or different tools, with the only observation being that the latter are quickly worn out and require a more frequent renewal with a significant periodic expense (amortisation) as well as costly maintenance. But qualitatively it is the same for houses and buildings and also for agricultural land, with Marxists rejecting the thesis that there would be a basic revenue of its own from the land, which would furnish it outside human labour. Therefore the first element: property that produces net income.

The second element is the liquid working capital: with it the raw materials are purchased at each cycle, and the wages of the workers are paid, as well as salaries, general expenses of all kinds and taxes. This money can be laid out by a special financier, private or bank in the general case, who is concerned with nothing more than withdrawing an annual interest at a given rate. For brevity, we call this element finance, and its remuneration interest.

The third characteristic element is the enterprise. The entrepreneur is the real organisational factor of production, who makes the plans, selects the purchases and remains the arbiter of the products seeking to place them on the market under the best conditions, and collects all the proceeds of sales. The product belongs to the entrepreneur. With its proceeds one pays all the various advances of the previous elements: rent, interest on capital, costs of raw materials, manpower, etc. Nonetheless, in general, there remains a margin which is called the profit of an enterprise. Therefore, the third element: enterprise, that produces profit.

Property has its value, which is called patrimony, finance has its own value, which is denominated (financial) capital, and finally the enterprise itself has a distinct and alienable value which derives, as it is said, not from trade secrets and technical patents but from "clientele", "goodwill", "circle of customers" and which is considered to be linked to the "firm" or "company name".

It should also be noted that for Marx real estate corresponds to the class of land owners, working capital and enterprise capital corresponds to the class of capitalist entrepreneurs. These are then divided into bankers or financiers and true and proper entrepreneurs: Marx and Lenin emphasised the importance of the former with the concentration of capital and enterprises, and the possibility of conflicts of interest between the two groups.

In order to understand what is meant by the expressions capitalist state and state capitalism, and with the concepts of statisation, nationalisation and socialisation, reference must be made to the organs of the state taking on of each of the three previously distinct essential functions.

It is not controversial, even among traditional economists, that all landed property could become state property without leaving the limits of capitalism and without relations between the bourgeoisie and the proletariat changing. The class of the owners of real estate would disappear, and these, as indemnified in cash by the expropriating state, would invest the money by becoming bankers or entrepreneurs.

Nationalisation of land or urban areas are therefore not anti-capitalist reforms: for example, already implemented in Italy is the statisation of the subsoil. The management of companies would be carried out under lease or concession, as is the case for state-owned properties, mining properties, etc. (e.g. ports and docks).

But the state can assume not only the property of fixed installations and different tools, but also that of financial capital, framing and absorbing private banks. This process is completely developed in the capitalist era, first with the reservation of the printing of the paper currency that the state guarantees to a single bank, then with the obligatory cartels of banks and their central discipline. The state can therefore more or less directly represent in a company not only the property but also the liquid capital.

We have therefore gradually: private property, private finance, private enterprise - state property, private finance and enterprise - state property and finance, private enterprise.

In the next and complete form, the state is also the owner of the enterprise: either it expropriates and indemnifies the private owner, or in the case of joint-stock companies it buys all the shares. We then have the state company in which money from it is used for all the operations of acquisition of materials and payments for labour, and all the proceeds from the sale of products go to the state itself. In Italy, for example, there is the tobacco monopoly, or the Ferrovie dello Stato.

These forms have been known for a long time and Marxism has repeatedly warned that there is no socialist character in them. It is no less clear that the hypothetical complete statisation of all sectors of the productive economy does not constitute the implementation of the socialist demand, as the vulgar opinion so often repeats.

A system in which all enterprises based on collective labour are nationalised and managed by the state is called state capitalism, and this is quite different from socialism, being one of the historical forms of capitalist past, present and future. Does it differ from the so-called "state socialism"? With the term state capitalism we want to allude to the economic aspect of the process and to the hypothesis that incomes, profits and earnings all go through the state purse. With the term state socialism (always fought by the Marxists and considered in many cases as reactionary even with respect to the liberal bourgeois demands against feudalism) we return to the historical aspect: the substitution of private property with collective property would happen without the need for class struggle nor the revolutionary transfer of power, but with legislative measures issued by the government: in that is the theoretical and political negation of Marxism. There can be no state socialism, both because the state today does not represent the social generality but the dominant class, that is, the capitalist, and because the state tomorrow will represent the proletariat, but as soon as the productive organisation becomes socialist there will no longer be either the proletariat nor the state, but society without classes and without the state.

On the economic side, the capitalist state is perhaps the first form from which modern industrialism set out. The first concentration of workers, subsistence, raw materials and tools was not possible for any private individual, but was only within the reach of public power: Commune, Lordship, Republic and Monarchy. An evident example is the armament of ships and merchant fleets, the basis of the formation of the universal market, which for the Mediterranean starts from the Crusades, for the oceans from the great geographical discoveries of the late fifteenth century. This initial form can reappear as the final form of capitalism and this is traced in the Marxist laws of accumulation and concentration. Gathered in powerful masses by the state centre, property, finance and domination of the market are energies kept at the disposal of the corporate initiative and of the dominant capitalist businessism, especially with the clear aims of its struggle against the assault of the proletariat.

To establish, therefore, the unbridgeable distance between state capitalism and socialism, these two currents of distinction are not enough:
a) that the statisation of companies is not total but limited to some of them, sometimes in order to exalt the market price for the benefit of the state organism, sometimes in order to avoid excessive price increases and political-social crisis;
b) that the managing state of the few or many nationalised companies is nevertheless the historic state of the capitalist class, not yet overthrown by the proletariat, every policy of which follows the counter-revolutionary interests of the ruling class.

To these two important criteria we must add the others below, no less important to conclude that we are in full bourgeois capitalism:
c) the products of the statised companies, have however the character of commodities, that is, they are put on the market and purchasable with money, by the consumer;
d) the workers are, however, remunerated with money; they remain therefore salaried workers;
e) the managing state considers the various enterprises as separate companies and businesses, each with its own balance sheet of entry and exit computed in money in its relations with other state companies and in every other, and requires that these balance sheets lead to an active profit.


[1] Here the Italian uses three terms with very similar meanings: accorsamento, avviamento, cerchia di clientela.

Prometeo, No. 4, July-September 1952.
Translation by Libri Incogniti

(Italian Version)


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