Cliff’s ‘State Capitalism’ and competing theories

A talk I gave to the Canterbury branch of the SWP on 15/8

A while ago I wrote a response to an anti-Trotskyist leaflet1. It claimed that, by rejecting the possibility of ‘socialism in one country’, we try to put down “those who have the temerity to go on and build socialism”. It was a Stalinist group that put out this leaflet, but an orthodox Trotskyist could easily have written it.  One of the groups I spoke to at the Marxism festival was the International Bolshevik Tendency2, who are supporters of the theory that the Soviet Union (along with many other countries) was a “deformed” or “degenerated workers’ state”. Their spokesperson wagged a finger at me and told me about how awful it is that the SWP looks at the Hungarian uprising of ‘56 positively, rather than as an act of counterrevolution, and how we think a socialist revolution still needs to take place in North Korea.

So although as part of this talk I won’t be going over the arguments of the most uncritical Stalinists, I will be going part of the way to addressing that position, since the so-called Orthodox Trotskyists are themselves so often counterrevolutionary and apologists for Stalinism. It sounds like nonsense to say that a Trotskyist could be guilty of this, but Cliff explained well how it happens, and how it comes from following Trotsky dogmatically but losing his essence, and abandoning classical Marxism3.

Tony Cliff outlines six main points of Trotsky’s theory of permanent revolution – six points that proved correct in the 1917 Russian revolution4.

  1. A bourgeoisie which arrives late on the scene is fundamentally different from its ancestors of a century or two earlier. It is incapable of providing a consistent, democratic, revolutionary solution to the problem posed by feudalism and imperialist oppression. … It is an absolutely conservative force.
  2. The decisive revolutionary role falls to the proletariat.
  3. The peasantry will follow the town and… must follow the leadership of the industrial proletariat.
  4. “The democratic revolution grows over immediately into the socialist, and thereby becomes a permanent revolution.”
  5. The completion of the socialist revolution ‘within national limits is unthinkable… It attains completion only in the final victory of the society on our entire planet’.
  6. Revolution in backward countries would lead to convulsions in the advanced countries. (Austria, Hungary)

Experience has proved the validity of these six points, but Cliff also identified four incorrect predictions made by Trotsky for the end of the Second World War. For this topic we’re only in the first and third.

  1. Trotsky predicted that the Stalinist regime would not survive the war. “The USSR will be able to emerge from a war without defeat only under one condition, and that is if it is assisted by the revolution in the West or in the East. But the international revolution… will be the death blow for the Soviet bureaucracy”. The regime did not collapse but expanded its rule to Eastern Europe.
  2. (Third.) Trotsky argued that in economically backward, underdeveloped countries the accomplishment of bourgeois democratic tasks could only be advanced by working class power. Mao led a party as divorced from the working class as is possible to imagine to unify the country and institute land reforms.

These incorrect predictions came from Trotsky’s understanding of the Soviet Union as a degenerated workers’ state. He had two distinct, conflicting definitions of a workers’ state5:

  1. (1931) The first was whether or not the proletariat has direct or indirect control over the state machine, and whether only reform, not revolution, is needed to get rid of the bureaucracy.
  2. The second definition ignored the independence of the state machine from the masses and said that as long as the means of production are nationalised, the state remains a workers’ state.

The second definition is entirely contrary to everything we know about Marxism. It negates something fundamental, that ‘the emancipation of the working class must be an act of the class itself’6. It also means that the Paris Commune and the Bolshevik dictatorships can’t be described as workers’ states at all, since the former did not have state owned means of production, and the Bolsheviks did not for some years.

There ought to be no problem in seeing that this was a mistake by Trotsky that does not detract from the correctness of the theory of permanent revolution: class relations in Russia were not distinctly different from any capitalist countries and that it was not any kind of workers’ state. But so-called “orthodox Trotskyists” like the Spartacist League or the International Bolshevik Tendency insist that the Soviet Union, along with many other countries since, are degenerated workers’ states. As such they believed only reform was necessary to remove the bureaucracy, and so revolutions in Russia or North Korea or Laos or Cuba were not desired. (Venezuela is not a workers’ state, apparently.)

Sticking to Trotsky’s word so closely is not good Marxist practice, but is actually an example of scholasticism, similar to finding answers in Aristotle or Nostradamus rather than using the scientific method. This manifested itself most embarrassingly in a statement by James P Cannon. Trotsky predicted that the USSR would not survive the Second World War, so when everyone else had acknowledged the end of the war, and the USSR was still standing, he said that the war must not be over after all7.

The main distinction that needs to be made between state and market capitalism is that, despite nationalisation, Stalinist Russia could not be described as having a planned economy. The rate of exploitation and the ratio between living labour and dead labour was not dictated by workers’ councils or by Stalin’s own hand but by the world economy and world competition. As for timing, Cliff explained in his book State Capitalism in Russia and again in Trotskyism After Trotsky that Russia became state capitalist during the first Five Year Plan8. This was when a proletariat had to be created to accumulate capital rapidly. With this came forced collectivisation and the banning of independent trade unions9– essentially eliminating anything that could be described as workers’ control or democracy. The conviction to work was replaced with coercion.

When I was talking to someone from the Spartacist League at the Marxism Festival, she used as evidence the turmoil that resulted from the end of the Soviet Union, usually known as the “fall of communism”. This included the increased rate of suicide in Russia after 1991 and those famous pictures of poor families searching in the rubble of their destroyed homes. This was really a non-sequitir and an appeal to emotion. Cliff and Chris Harman saw the “fall of communism” as a sideways step: state capitalism to market capitalism, because the same party structures existed. The KGB continued to exist and the ruling class, for the most part, was made up of the same families. The victims of the old system were the victims of the new system because it was fundamentally the same. One example of hundreds is that the last Chairman of Soviet Estonia was also the third president of independent Estonia10, a country where free-market, classical liberal economics dominates discussion, and he has not changed his political stances dramatically.

Counter-revolution abroad11

This is not all the “workers’ statists” have to be apologists for. The Soviet regime stood by a domestic policy known as ‘socialism in one country’, and a foreign policy of counterrevolution in every country. Italy and Germany give us the best examples, though Cliff also gives a good account of what went wrong in France.


Revolutionary potential in Italy became clear in 1943 with a strike at a massive Fiat plant, followed a day later by a general strike that brought down Mussolini’s regime. In March 1944, 300,000 workers protested in Milan including tram workers for the first five days of the month. The strike extended beyond industry to textile factories in Bologna and Florence. Especially with the agitation by women and the lowest paid workers, and with industrialists fleeing to Switzerland for fear of social revolution, it was hard to imagine a counterrevolution to set back these achievements. The Comintern-controlled Italian Communist Party found a way, though.

Instead of pushing for more strikes and occupations, they proposed a compromise between communists and Italian fascists and notables. They demanded a government ministry in return for order returning to the streets. The communist leader Togliatti went backwards further and urged all anti-fascists to join the royal government, led by Badoglio, a former chief under Mussolini, and swear allegiance to the king.


In 1939 in Germany, the Gestapo sized almost 16,000 anti-Nazi leaflets. In 1940, only 1,277 were taken. The reasons for German communists, becoming so confused were clear. The leadership of the reformist SPD and the Stalinist controlled KPD could have, as Trotsky recommended, formed a united front against fascism. But Hitler came to power almost without challenge from either of them. The signing of the 1939 Hitler-Stalin pact was also discouraging, along with the anti-German propaganda (anti-German, not anti-Nazi) coming from the Russian press: “The only good German is a dead German” was one slogan.

Encouragingly, at the end of the Second World War, over 500 anti-fascist committees were set up around Germany, with a mostly working class membership. They started a process of de-Nazification. This proved that only workers doing the job themselves could banish Nazism for good, while they freed themselves from the SPD and KPD. This activity was only discouraged by occupation forces (including the Russian Army) and by Stalinists within the workers’ movement. Naturally, the SPD did not advocate for revolution either.

Bureaucratic Collectivism12

There is another theory about the nature of Soviet society that leads to similar political conclusions to the degenerated workers’ state theory. Its most notable two proponents were Max Schachtman and Bruno R, though it is quite popularly expressed by various kinds of socialist. You might have often heard this idea that the Soviet Union was neither socialist nor capitalist, or as Schachtman described it in 1948, “both anti-bourgeois and anti-proletariat”. This theory was given the name of ‘bureaucratic collectivism’ in 1939, but Cliff criticised this as being an empty phrase.

The name isn’t the only element that suffered from vagueness and theoretical poverty. Karl Marx, in works like Wages, Prices and Profit lays out the laws of motion that govern capitalism. Other revolutionaries have tried to describe in as much detail how a socialist economy should work and what the transition to it might look like.  But the authors suggesting bureaucratic collectivism as a method of analysis never published a developed account of the theory and its laws of motion. Cliff believed that the idea of “neither socialist nor capitalist” is only negative and is therefore abstract. As the theory is so ill defined, it allows its supporters to hold seemingly contradictory views. Schachtman believed that bureaucratic collectivism was more progressive than capitalism, and a few years later, without a fundamental change of heart, described it as more reactionary than capitalism. Bruno R believed the Soviet Union was a kind of slave society, but that it would wither away as it was the threshold of a peaceful transition to communism. This takes some extraordinary mental gymnastics and gives the oppressed class a passive role.

Both authors find themselves in more contradictions very easily and I recommend Cliff’s article The theory of bureaucratic collectivism: a critique, if you want a fuller explanation. His main conclusions are that, like the degenerated workers’ state theory, it has no use in combatting Stalinism and fundamentally misunderstands class, focussing more on the mode of appropriation by the ruling class than on the position the oppressed class has in the process of production.

China13, 14

Some orthodox Trotskyists still claim that China is a ‘degenerated workers’ state’. Most do not. It is clear to almost anyone that nobody does capitalism better than their Communist Party, and that the real communists, most of them Maoists, are now the dissidents, not the political leaders. However, Mao’s China was described as a  workers’ state. This raises the same question as the fall of the Soviet Union: if it was ever a workers’ state, why did the proletariat not defend it against capitalism? The truth is the Chinese working class had virtually no part in helping Mao to power, replacing the nationalists in 1949. From the end of 1926 to the end of 1928, workers dropped from making up 66% of the communist party to 10%. This did not seem to bother the party though, as one general admitted, “The regions under the direction of the Communists are the most backward economically in the whole country”. The Comintern also acknowledged this. In December 1937 the Kuomintang nationalists issued the death penalty for any worker going on strike or advocating for strikes. A communist spokesperson’s response was that they were ‘fully satisfied’ with the government’s conduct.

If there is one statistic that demonstrates China’s capitalism under Mao, it has to be the rate of exploitation. The figures for three years were proudly published by the People’s Daily newspaper. In 1953, ’54 and ’55, labour productivity increased by 13%, 15%, and 10%, while wages in those years increased by 5%, 2.6%, and 0.6% respectively. We see in this the subordination of everything else to heavy industry and capital accumulation, and a textbook example of exploitation, as explained by Marx in the early chapters of Capital and more simply in Wage Labour and Capital. Just because there is an increase in wages does not mean the gap between the two main classes in capitalism is shrinking, as workers are not paid the full value of their labour. The peasantry was also exploited in quite an obvious way in the years 1954 to ’55. By grain tax, the state acquired 30% of the total grain output of the country.

Yet, one of Trotsky’s predictions was proved wrong by China: that only workers could win liberation from imperialism. The problem was that the theory of permanent revolution presupposes a radicalised proletariat, which China did not have. Without this, the six points that I mentioned at the start that define permanent revolution fall apart. The class that was supposed to bring the Communists to power could not have, but Cliff explains that five factors helped instead.

  1. The rebelliousness of the peasantry
  2. The weakening of world imperialism (the two main superpower blocs did not want to intervene in the Third World for fear of it starting war between them)
  3. The growing importance of state power in the absence of the working class
  4. The impacts of Stalinism and reformism (outlined in detail in Cliff’s 1957 article, Mao Tse-Tung and Stalin)
  5. The growing importance of the intelligentsia. Cliff explains that “the leading role of the intelligentsia is in direct proportion to the general economic backwardness of the masses from whose midst it arises”

The outcome in China had some features of permanent revolution but, without a revolutionary working class leadership, deviated from it radically. This is known as “deflected permanent revolution”.


The example of the Cuban revolution was a still more extreme deviation, as not even the peasantry were essential in bringing Castro to power. Castro admitted that “the wage workers in the city were not conscious in any revolutionary way” and that their unions did nothing more than the unions in the US and Canada, only asking for better pay and conditions. This was perfectly summed up by Castro’s totally ignored call for a general strike in April 1958, 16 months after the fall of Batista. The working class was not striving for revolutionary socialism as it had done in Russia in 1917, and so state capitalism was the result once more. One of the ideas behind Cuban socialism is the idea of selling things cheaper: “essentials” have to be cheaper, and luxury items more expensive. Maybe it’s a good idea, but at best it is an attempt at reforming capitalism, not overthrowing it.

North Korea

North Korea is a country born of something positive – standing up against Japanese imperialism – but I see no evidence of any workplace democracy or class relations different to the rest of the world. South Korean socialists have said in the Socialist Worker that we can oppose US rhetoric and sanctions against North Korea and want US military out of the South, and at the same time say that the DPRK’s economy has nothing to do with socialism16. All industry might be nationalised, but workers did not win this. It was enforced by Kim Il-Sung and other unelected politicians. Maybe this explains why no new political party has been set up there since 1955, and why there is such a wealth gap between the cities and rural areas.

Cult of the individual

One characteristic that these three countries (China17, Cuba, North Korea) share, and that ties them to Stalinism, is the cult of the individual, or ‘personality cult’. Portraits of Mao still hang in taxis and above toilets and on sides of buildings. These portraits are often bowed to, in the same way that a landlord or king might be. The same can be seen in the DPRK with pictures and statues of Kim Il-Sung, where the majority of original music is about him or Kim Jong-Il or along some other patriotic theme. Cliff has a partial explanation for the personality cults of Cuba, which applied not just to the Castros but also extended to trade union leaders, who are almost always led by non-workers. He said that the importance of the intelligentsia, or a ‘professional revolutionary elite’, is in direct proportion to the general economic backwardness of the masses from whose midst it arises. This elite is not primarily made up of the class who has socialist revolution in its interest and as we know, ‘the prevailing ideas of society are the ideas of the ruling class’. The result of state capitalism is therefore unsurprising.


Only with a state capitalist analysis, and by explaining the repeated failure of ‘socialism in one country’, can we win over people in the so-called ex-communist countries. Whether the USSR is in their living memory or not, they have understandably seen capitalism as their saviour from totalitarianism. Try persuading the majority of Russians, Ukrainians, Estonians and Georgians about their fallen workers’ states, degenerated or not. To people in China and even more so in the DPRK, the words “socialism” and “workers’ paradise” will equate to the belt-tightening that is so often talked about by austerians in the UK. Socialism to them means a sacrifice – it means failed promises of things getting worse before they get better – rather than a different mode of production. This is another misconception that can be challenged by seeing these countries as state capitalist.

A decent understanding of the Soviet Union is essential for anyone wanting to build socialism today. I think I’ve explained how a state capitalist analysis, though it deviates from some of Trotsky’s predictions and theoretical work, leads us back to his greatest contribution: the theory of permanent revolution. Socialism cannot be won except by the self-emancipation of the working class, the only class capable of breaking down imaginary state boundaries until the it is in control the world over. “Short of this target”, said Tony Cliff, “it cannot achieve freedom”.


  3. “Our criticism of orthodox Trotskyism was conceived as a return to classical Marxism.” – “1: Recognising the problem” in, Trotskyism After Trotsky, Tony Cliff, 1999
  4. “Permanent Revolution”, Tony Cliff, International Socialism Journal issue 12, Spring 1963
  5. 2: State capitalism” in Trotskyism After Trotsky, Cliff, T., 1999
  6. “RULES” in Rules and Administrative Regulations of the International Workingmen’s Association, Marx, K., 1867. “…the emancipation of the working classes must be conquered by the working classes themselves”
  7. J.P. Cannon, The Struggle for Socialism in the “American Century” (New York, 1977), p.200. “Trotsky predicted that the fate of the Soviet Union would be decided in the war. That remains our firm conviction. Only we disagree with some people who carelessly think that the war is over. The war has only passed through one stage and is now in the process of regroupment and reorganisation for the second.”
  8. 2. State capitalism” in Trotskyism After Trotsky
  9. Russia’s definition of a workers’ state and the Marxist theory of the state” in The Nature of Stalinist Russia, Cliff, T., 1948
  11. 5: The heritage” in Trotskyism After Trotsky
  12. The theory of bureaucratic collectivism: A critique, Cliff, T., International Socialism Journal, issue 32, Spring 1968. (duplicated content 1948)
  13. Mao Tse-Tung and Stalinism, Cliff, T., Socialist Review, April 1957
  14. Mao’s rise to power” in Trotskyism After Trotsky
  15. Castro’s revolution” in Trotskyism After Trotsky
  16. US rhetoric and sanctions ramp up dangerous tension with North Korea” in Socialist Worker (UK) issue no. 2347,  5 April 2013
  17. Cult of the individual” in Mao Tse-Tung and Stalinism, Cliff, T., April 1957

Further reading

  1. Jeremy said:

    u smell like fart

  2. Jeremy said:

    good fart tho

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