Today marks the thirtieth anniversary of the fall of the Berlin Wall (which did not quite make its own thirtieth anniversary). It will be accompanied by the usual capitalist paeans to the wonders of democracy and the capitalist way of doing things. The following article from Communist Review 8 (later Internationalist Communist) appeared in January 1990 but has never been reproduced digitally before. It was our deeper reflection not only on the collapse of the USSR’s empire in the East but the burgeoning crisis of world capitalism as a whole. For us this was not “the end of history”, as Francis Fukuyama put it at the time but only one stage in the ever-deepening crisis of capitalism. This “secular stagnation” has now lasted forty years. It has been prolonged by the printing of money by the state and by a resort to speculation by a capitalism that can no longer find profitable sources of investment. As we concluded back then

"We are not facing a real economic revival. There is no basis for a long-term revival of the accumulation cycle. In the present phase of management of the crisis based on indebtedness and financial speculation, the certain future is that of a new recession."

We had to wait until 2008 for this to come true but the fundamentals were correct. Today we are living in that recession with no sign of any new magic bullet from the capitalist class to revive it. The march of history goes on … until the world working class decides that capitalism’s time is up and turns the page for a real new beginning.

Internationalist Communist Tendency

9 November 2019

== Crisis of Communism or Crisis of Capitalism?

We are witnessing a deep and devastating crisis. The "socialist" world has been engulfed by a gigantic wave welling from the depths of its economic substructure, sweeping away atavistic bureaucratic forms, and the old ideology. It is on a tumultuous and unstoppable course towards disintegration, triggered by an economic crisis whose explosive and unpredictable effects are being felt by the whole society. The result is an entirely new theory of society whose divergence from the previously established model only equals the intensity of the crisis which gave rise to it.

In Russia economic crisis can be seen in the most serious shortage of basic goods since the 2nd World War: rising inflation, increasingly widespread unemployment, and hunger and misery for the vast majority of the population. The standard of living of the proletariat who live and produce on the periphery of the Soviet Empire has been reduced to mere survival. This situation has triggered intense episodes of class struggle, such as the miners‘ strikes; autonomist tendencies in almost every region from the Baltic to the Caucasus, Estonia to Armenia; religious wars between Christians and Muslims of such intensity that they have led to the most disgusting forms of xenophobia.

In China recent events in Tiananmen Square are the tragic demonstration of how the economic troubles which have been dogging the Deng regime for years could lead only to revolt and repression. It is possible to concentrate solely on the democratist petty-bourgeois demands of the Beijing students. However, it was the 40 million unemployed and the generally miserable living conditions which provided the soil for the ferociously repressed protests to grow in. In other words, when the emotive old stereotypes and false ideologies are discarded, it is clear that the two major SELF-PROCLAIMED "communist" countries are in the grip of the most serious social and economic crisis recorded in history.

Certainly, there is plenty of nourishment for bourgeois ideology. But there is also enough ‘food for thought' for an accurate Marxist interpretation, which takes into account the different histories of the two countries, their differing social problems and their different levels of development.

In Russia the earthquake of perestroika was released from above and is seeking a consensus at the base. In China centrifugal forces moved from the streets towards the seat of power. Perestroika is moving against the old world of Stalinist bureaucratic privilege in order to create the conditions for an opening onto the free market. The Chinese events exploded after ten years of "liberal" experiment. While the orphans of Stalin are grappling with the ethnic and national problems which have flared up, the descendants of Mao are confronted with an inflammatory situation even though it hasn't yet assumed any particular regional form. Whatever is happening in terms of social revolts, political and economic experiments, and mass actions reactions from above or vice versa, they are no more than the results of serious economic contradictions.

The Western bourgeois vulture is greedily feeding on this decomposing social material. It presents an opportunity for the West to reinforce the two-fold attempt to hide its own incurable contradictions and to contain the political and economic demands of its own proletariat. The opportunity is so favourable that the bourgeois attack on the supposed communism of the "socialist" countries is not directed, as in the past, against cardinal points of Marxist theory and method, such as the dialectic, the theory of value or economic determinism. Instead they arrogantly and empirically seize on the broken pieces swept up by the economic crisis in the Eastern bloc countries.

The failure is so complete that the bourgeois crow only has to gloat over the defenceless 'victim' and the nervous steps towards "neo-capitalism" which are apparently emerging as the only solution to the "socialist" countries' agony. There isn't a single political commentator who doesn't support the accepted idea that, given their devastating economic crisis, the only road open for the Eastern bloc countries is "a return to capitalism": both in economic terms and in the shape of traditional bourgeois democracy with its political pluralism.

The essence of the question is that we are neither seeing the crisis of Marxism nor the failure of its supposed realisation (in Russia, China or the East European countries), but more simply the consequences of the Stalinist counter-revolution.

What is collapsing in Moscow and Beijing is the great historical fraud which resulted from the construction of state capitalism disguised as socialism. The analytical key to everything still remains having a correct interpretation of that unique and great revolutionary experience of Bolshevik October. A full and exhaustive analysis of this cannot be made here. However, the fundamental stages need to be repeated, if only as a very quick overview.

Although the Russian proletarian revolution — the one and only example of victorious class struggle — created all the political conditions for the construction of a socialist society, there was no possibility of it moving on to a higher economic and social plane. The revolution was strangled by economic backwardness and its isolation from other revolutionary experiences in the advanced capitalist areas. Lenin's great worry, and that of all the major Bolshevik Party leaders, was dramatically articulated many times: this was that either the international revolution would manage to come to the aid of the Russian proletariat or the first experience in the world revolution would be defeated.

All Lenin's efforts, including the New Economic Policy were directed, not at the construction of "socialism in one country" (impossible in any country but particularly in one that was economically devastated), but at political resistance to the revolution's decline whilst waiting for other sectors of the international proletariat to make their absolutely crucial contribution. NEP itself, supported and vigorously defended by Lenin, was not conceived as a necessary precondition for socialism, still less a socialist gain. Rather, it was seen as the only possible policy and a step backwards towards capitalism, even if it was supervised by the state. It was a sort of temporary defensive shield whose power of protection was in inverse proportion to the length of isolation. Only the falsified history of Stalinism, with its talk of "socialism in one country" could distort the uncertainty of this delicate period of waiting and programmatic retreat into a triumphalist take-off point towards the building of socialism. The mystification was all the more delusive and ill-fated, given that the vast majority of the international proletariat were swept along by emotional memories of October. Stalinism did NOT produce socialism of any sort. On the contrary it was the police-state form of the counter-revolution which liquidated the Bolshevik Old Guard in Russia and all the communist oppositions abroad. The theory about "socialism in one country" was just a disguise for the transformation of the economic structure into state capitalism.

Today the international bourgeoisie is tenaciously pursuing its aim of destroying the vision of communism by annihilating Stalinism. In the process it plays on the lies which the counter-revolution itself has created. Under these circumstances it is imperative to reply to the bourgeoisie's expedients by putting Stalinism back into its proper historical context. The political crimes which were committed against first the Russian proletariat and then the international proletariat have to be denounced.

The whole history of Russia from the end of the Twenties to the outbreak of the Second World War clearly demonstrates the total strangulation of the political aims and strategy of October. Not a single postulate held by the Bolshevik Party and the Third International at the outset of the revolution remained in place. Thus, a revolutionary programme with the potential for attacking the international bourgeoisie slowly changed into a programme for the defence of the Russian state. Proletarian internationalism gradually made way for the national path to "socialism".

The Second World War, with its Cold War aftermath, provided the imperialist framework by which the Russian example came to be held up as the obligatory reference point for a succession of social and political movements which either didn't have the strength to free themselves from Russian influence or which, more often, opportunistically acted as its clients in national liberation wars or antifascist fronts. This happened in the immediate post-war period in Eastern Europe following the liberation from Nazism, in Mao's China of 1949 following the civil war against the Kuomintang, in 1950 in Korea and subsequently" in Vietnam. According to this framework even the totally imperialist struggle between the USA and the USSR was depicted as the struggle between world communism and the major imperialist state, or sometimes, if one preferred, as the unavoidable confrontation between the advance of communism and the arrogant defence of capitalism.

In fact, what would have been - if victorious — the mainspring for the revolutionary movement of the world proletariat became instead the most infectious source of contamination by counter-revolutionary ideology. Its devastating consequences still weigh heavily on the world working class. Seventy years of Stalinism, seventy years of counter-revolution, have succeeded in cancelling out the historical memory of the Bolshevik October. Traditional methods of class struggle now appear obsolete in the light of what is happening in the so-called "socialist countries and the world's bourgeoisie has been presented a with a golden opportunity to rage against Marxism – or rather, against what is universally regarded as such. For the economic, social and human tragedies which come with the disintegration of the Russian Empire or the crumbling of the socio-economic order in China, are not the "tangible proof" of the failure of communism's historic programme. They are not evidence of the "obvious impossibility" of constructing anything other than capitalism. They are, however, in contrast to the whole hypocritical stance of the bourgeoisie, the sign of the end of a great deception which for too long has nourished the counter-revolution and the traditional bourgeois order.

AN HISTORICAL LIE

Today there are more repentant Marxists than there are algae in the Adriatic. The collapse of the myth of Russia and China has brought with it a crisis for the host of false interpretations and superficial approaches to the proletarian cause. This is certainly a good thing. The international revolutionary movement is so reduced and has to face such enormous problems that the "loss" of this load of rubbish can only be an advantage to it — if only in the sense that it is becoming clear at last that certain "fellow travellers" have never been fellow travellers of the proletariat and that, though they may have a long way to go, there path is different from ours. Moreover, it's painful to see how dramatic events of late, instead of sparking off self-criticism amongst the left, have given rise to the idea that "everything" was a mistake and that they might as well beat an ordered retreat. For certain political animals it is easier to take this apparently obligatory step and declare their own experience as "Marxist" militants over, with the supposed death of Marxism, than make the effort of checking whether it's really Marxism which is dying or that version of "Marxism" which has been continually refined politically by Stalinism itself, by Maoism, or by "Sixty-eightism", etc. Neither able nor willing to definitively sever the umbilical cord which binds them to their political origins, such elements have been easily drawn in the opposite direction by the events which have hit the "communist world" and by the noise the bourgeoisie is making about it.

Nevertheless, a small band of inveterate Stalinists or Stalino-Maoists are still in action and are refusing to liquidate themselves politically. Even here, rather paradoxically, their ultimate polemical venom is reserved, not so much for attacking the key democratist critique of the bourgeoisie (they are themselves beguiled by this), but for criticisms stemming from the left — i.e. from those who condemn Stalinism for the collapse of the Russian Revolution. Their argument can be summarised thus: "Agreed, Stalinism happened, but it hasn't been a complete success only because mistakes and deviations occurred. However, it doesn't follow that these countries haven't been building socialism, that they are capitalist or state capitalist societies. You can say what you like..." continue our "non-deviationists" "... but the Russian and Chinese experiences are based on the socialisation of the means of production, they have eliminated private property and money remains only as the universal medium of exchange, not as capital; is this not socialism!" — A fine speech if it wasn't so outworn and wasn't delving back to a debate of fifty years ago.

Certainly one of the first measures taken by the revolutionary government in Russia was the socialisation of the means of production. All capital was expropriated from the national bourgeoisie who in turn were deprived of military organisation and a say in the decisions of the new-born soviet republic. This, however, is the fundamental content of the dictatorship of the proletariat: the expropriation of the class enemy and resistance against its reactionary return. Both practically and in juridical terns the revolutionary state took into its hands the management of finance capital, the exploitation of mineral resources, the production of important products, foreign trade and a good part of internal trade. That is, it created the political and legal preconditions and organised the factors of production for a future, lengthy process of transformation from capitalist society, subdued as it was, into socialism. But — and here lies the keystone to all analyses of the Russian experience – these achievements of the Bolshevik October represented only the NECESSARY preconditions for the subsequent development of socialism, they were in NO WAY SUFFICIENT. For the full potential of these preconditions to be realised in practice the international revolution would have had to occur and come to the aid of 'poor', backward Russia, otherwise it was goodbye to socialism, and goodbye also to the preconditions so laboriously achieved by the first victorious episode of class struggle.

We have already mentioned the NEP measures of 1921 (Lenin always spoke of them as a step backwards). The reopening of the market, the drive to develop the productive forces all involved a return towards capitalism. Except that, and Lenin emphasised this, it would have to be a "particular" kind of capitalism — state capitalism, directed and administrated by the proletarian dictatorship itself. This was all in the context of the dual perspective of holding on to power whilst waiting for revolutionary upheavals on the international scene. As the second perspective became less and less likely, both in the short and long term, the Russian revolution did not move towards socialism and found itself developing under the aegis of a capitalist economic structure, even if this was state capitalism. In other words, NEP, which had been imposed as a temporary economic necessity, became the definitive economic support for post-revolutionary Russia.

By the beginning of the Twenties then, the revolutionary state was almost completely devoid of the political content it had had in 1917. The state had now taken on the form of a bureaucratic administration that was now subsumed to a centralised, planned, capitalism where every single productive energy had to be channelled towards the accumulation of capital which, even though it was no longer private, was still capital.

Thus depicted, the historical course of the retreat of the Russian revolution can be more easily understood. The necessary preconditions for socialism had disappeared altogether or else they were transformed into their opposite and came to be regarded as the socialisation of the means of production. But socialisation is not just about expropriation, it is also about collective property and therefore non-property. It simply means the communal management of goods and resources without any individual property rights, not even on the part of the state.

But if socialisation is to become more than a mere precondition and have a working 'juridical' structure, the latter has to be connected to a real social content, that is to a socialist development of the forces of production and distribution. In this case, and only in this case, "juridical form" and social content come together and influence each other to give life to a new social dimension. In this collective management from below leads to economic development while the productive apparatus in turn satisfies the needs of the collectivity. In every other case the only thing that can emerge is an insurmountable division between the first and the second (i.e. juridical and productive relations) which removes any meaningful content from either.

Yet, how could a society such as Russia, where capitalist economic forms were being strengthened, not distort the content of socialisation? On the other hand, how could a 'juridical' form such as the socialisation of the means of production — created as part of the development towards socialism — facilitate the growth of capitalism? Either the juridical relations must impede the development of capitalism or, in the long-term, capitalist productive relations would gain superiority over the original thrust towards socialisation.

Given the absence of the first solution, the outcome of the Russian experience is clear. The gradual appearance of capitalism transformed the state from an overseer of the gains of the revolution into the manager of the process of capital accumulation. Consequently socialisation itself was emasculated and redefined as simply the transfer of private property to the state, as the best way to accommodate to reality. The collective management of the means of production gave way to state ownership of them. Added to the fact that the state at this point was no longer a revolutionary state but capitalist with all the bureaucratic/ administrative trappings of such, the fate of the revolution was sealed. It is pure folly to suppose that after thirty or fifty years of solidification of this economic process socialisation can survive, like a laboratory experiment, in complete isolation from the historical context which surrounds it.

The Russian capitalist state emerged out of defeat or, more accurately, as a result of the impossibility of an isolated revolution continuing on its course. The state turned to managing the relations of production as a "collective" capitalist and accommodated itself to the capital-labour relationship. The old revolutionary concept of socialisation began to play an important role in supporting the historical fraud of state capitalism recycled as "socialism". Even though the theoretical justification for this is crude, sometimes very crude, the counter-revolution has exploited the October victory to the full in order to disguise how it has been obliged to survive.

For decades the false dichotomy between capitalism and socialism has held sway (with Russia and the rest of the "socialist" countries held up as examples), thus separating the area of so-called private capitalism from that of statism and reinforcing the lie that state capitalism = socialism. This dichotomy is all the more fraudulent when the development of capitalism itself is considered. As always, but in an accelerated way since the Second World War. capitalism's economic course has given rise to areas of state and areas of mixed capitalism (i.e. where industry is owned by a mixture of private and state capital). Together these represent today 40-50% of GNP in the vast majority of industrialised countries. It is obvious that the tendency towards state capitalism has developed in a different, manner in the West and under different historical circumstances to the Russian counter-revolution. Nevertheless, it is equally obvious that state capitalism is not a historical accident, a new economic form representing a half-way house between capitalism and socialism, but a way of organising production which is entirely in keeping with capitalism.

The most obvious historical difference between the East and the Western world is that in the former state capitalism — given the backwardness of the productive forces, the partial isolation from the international market and the weakness, if not the absence, of private capital — emerged as the necessary condition for the development of capitalist productive relations. In the latter, on the other hand, the state's progressive assumption of responsibility for the productive forces is synonymous with an anti-cyclical economic policy aimed at managing the economic contradictions of the system of production.

Yet this does not mean that in Germany, Sweden or Italy, where state intervention in the economy is most consistent, one can speak of socialised areas or of sectors which have been withdrawn from the logic of profit-making simply because they are managed by the state. In both experiences, whether stemming from a failed revolution or from the normal course of development of private capitalism, capitalism managed by the state does not change its character as exploiter of labour power and it absolutely has nothing to do with any kind of socialisation of the means of production.

To return to Russia and the socialisation-state relationship there is an important point which must be considered. If we accept that what was developing in the Soviet Republic was a revolutionary process and that therefore the state was not degenerating — the only condition which could have saved the social content and political function of socialisation - then there should have been some movement towards the development of socialism. And if this had happened we would have seen, first of all, the disappearance of all capitalist categories such as capital, wage labour, the market, commodity production and eventually the disappearance of the state itself.

But in Russia exactly the opposite happened. Every capitalist economic category was reinforced. The fundamental relationship between capital and labour power became more and more rigid to the point that the Stalinist Five Year Plans could start from calculations of the rate of exploitation of labour and the corresponding remuneration for capital: the amount of investment which would be possible, wage increases and the selling price of goods and services. Equally, the state not only was not extinct but had enormously broadened its functions so that it engulfed all aspects of social life imposing itself as an economic state, a social state, a bureaucratic state, a police state — all in the service of capital accumulation.

Another connected argument is that in the socialist countries the survival of money is only a technicality which simply reflects the necessity to exchange goods, not the existence of money as capital. This distinction, as old as capital itself, and extensively discussed by Marx, is intended to demonstrate that money in its role as the universal medium of exchange must not be confused with money as capital, whose unique goal is represented by the accumulation process. It is a bit like saying: "If I use money to buy the goods and commodities I need, that's one thing; if I use that same money for productive investment, it's another." In the first case, "I use it technically, as a simple means of exchange, typical of every modern society and without contravening the economic prerequisites of socialism." In the second case, "I would be using it capitalistically, but in the "socialist" countries it is prohibited for private citizens (save for a few exceptions) to employ money in the form of capital."

Well said. If only to show that they understand the basic Marxist lesson that money is defined, not by its nominal form, but by the economic role it is called upon to carry out: as the universal medium of exchange, as a reservoir of value and as capital. Only Marx went further in his analysis and distinguished between a lower, or commercial, capitalist society — where the prevalent function of money was the technical one of commodity exchange — and a higher, or industrial capitalism where the fundamental role of money is as capital. This is because Marx foresaw communist society as one without money, either in its first or second function. Once capital is destroyed and with it its role as exploiter of labour power there is no longer any need to fall back on money as the measure of individuals’ needs. It is individual needs themselves which will preside over the distribution of goods and social services. Since in capitalist society the distribution of social wealth is organised on the basis of income, which in turn represents the different relationship the world of labour has with capital, it follows that labour power's income (wages) depends on the need for capital accumulation and not on its own needs. In this case, when the proletariat uses money to buy goods or to benefit from social services it is using it as a means of exchange. But this is always in the context of capital and its law of value. In a communist society the opposite is the case. Given that social needs determine the rhythm of social development and the distribution of wealth, or rather the consumption of goods and services, these are the pivot of the accumulation process (which is obviously a social and not a capitalist process). In this sense money as the representative of income has no reason to exist. The point is that in every capitalist society — both private and in the statified version — money as the universal medium of exchange doesn't exist autonomously but is indissolubly linked to money capital.

If wages exist then capital exists. The one is the condition for and the measure of the other. The more wages are suppressed, the more the working class is prevented from satisfying its needs, the more, that is, the role of money as the means of exchange is suppressed while all the other economic components of capital remain firmly in place, the higher the return for capital.

Whether one likes it or not, fixing the two functions of money into technically diverse and non-communicating roles is a gross blunder, only surpassed by those who can conceive of money functioning purely as a means of exchange inside a commodity-producing society without the existence of money capital. Moreover, in Russia things cannot even be posed in these terms. If it is true that the subjects of the empire are only allowed to make use of money as a means of exchange, it is otherwise for the state enterprise whose task it is to manage money capital: which, far from not existing, settles every kind of payment and distinguishes, like a joint-stock company, between payments for the bureaucrats and those of the workers.

Gosbank is not a wicked invention by critics of "socialism". The existence and operation of capital is evident in every sector of the economy. The only difference is that it isn't in the hands of individual entrepreneurs but is concentrated in the hands of the state, which in turn acts like a private entrepreneur as far as accumulation is concerned.

All enterprises (until the Gorbachev reforms) are in the hands of the state and are financed by it in the form of loans (capital). With these they buy raw materials and production goods, again from the state, pay wages and salaries, produce commodities at a price imposed by the state and return the capital to the state with so much interest. Thus the state takes part in the accumulation of capital without it ever leaving its sphere of jurisdiction. To it, therefore, goes the honour of administering money capital, to the workers the honour of utilising money as the means of exchange.

Only by going back to the same old lie that state capitalism is socialism can it be maintained that in the "socialist" countries money capital does not exist and that the only way the nasty stuff survives is in the very banal role of as the technical means for commodity exchange. This deception equally fraudulently denies the existence of the other elements of capitalism. Even though it is under the omnipresent control of the state, production is not geared towards the satisfaction of social needs, but has as its first priority the satisfaction of the voracious needs of capital. It is not simply goods which are produced but goods in the form of commodities. These are sold at a price which depends on the portion of capital invested, not the consumption needs of the workers. Since both capital proper and its aspect in the form of wages act dialectically inside the whole social organisation, all the typical economic characteristics of capitalism exist, even though they are coordinated by a single superior body, the state entrepreneur acting as the "collective capitalist". But at the end of the day it is history, that chronicle of ugly events, which destroys the flimsy basis of false ideologies. The devastating economic crisis which has burst out in post-Stalinist Russia and which threatens to split up the empire is just the manifestation of the economic crisis from which state capitalism, like that in the West, can no longer escape.

Hundreds of political commentators are spouting from all sides on the political significance of perestroika. Either it is presented as a process of socialist reform, cautiously opening up the market but still firmly anchored in the defence of October, or it is portrayed as the clear defeat of an idealistic political venture which is being forced to fall into line with reality and is now discarding the trappings of an impossible egalitarian society in favour of bourgeois pragmatism.

But we can dismiss these stupidities. The real question which must be answered and which sweeps away the analytical errors of both sides, is, "How has an economic crisis of such vast proportions come about?" and "What are the mechanisms which created it?" And there can be only one reply. That is - the crisis of capitalism; the crisis of state capitalism. This has appeared even without the traditional methods of capital accumulation.

The Russian economy, like every capitalist economy, is suffering the combined effects of low productivity and a high organic composi