A Note on Inconsistencies in the Conception of the Soviet System as a “Post Capitalist Capital System”

A Note on Inconsistencies in the Conception of the Soviet System as a “Post Capitalist Capital System”


We start with the following question (from the above link):

Question: What is the validity of criticism regarding Marx’s theory of the “conversion of value to price” and the Marxian model in response to that?

Istvan Meszaros : Well, I think it may be too technical to go into the details. You know the way in which modern economic theory was questioning these points. But I don’t think that we can make much of it, in that the market system under which we operate makes it necessary to provide this conversion. This takes us back to the question of the “Labour Theory of Value”. The foundation of the Marxian conceptual framework is the Labour Theory of Value, concerning the way in which “Surplus Value” is generated and appropriated under the rule of capital. Since under our present conditions of socio-economic reproduction in most countries we have a market framework in which the “plurality of capitals” which I mentioned earlier must adjust itself. You mentioned the “Profit Rate” which is also in the process of constant adjustment. But this adjustment cannot take place without the intermediary of conversion.
If (and where) capital had a straightforward political way of controlling the system’s expanded reproduction, there would be (and there was) no need for the intermediary of genuine conversion; the process could be more or less arbitrarily settled on the basis of political decisions, as it actually happened under the Soviet type capital system. In other words, we are again concerned with a subsidiary element of the overall theory. It is a matter of secondary importance whether “Surplus Labour” is appropriated politically or economically. What is of primary importance is that under all conceivable varieties of the capital system it must be appropriated by a separate body superimposed on, and structurally dominating, labour. Here, as you can see, the fundamental category is “Surplus Labour”, and not “Surplus Value”, as people often erroneously assume. “Surplus Value” and the specific forms of its appropriation and realisation are absolutely essential under capitalism. But the capital system embraces much more than its capitalist variety. There have been – and indeed even today there still are in existence – forms of the capital system which cannot be simply described as capitalist.
You know that many people have tried to characterise the now defunct Soviet system as “State Capitalist”. I do not think that such characterisation makes any sense at all. The Soviet system was not “State capitalist”; it was “Post-capitalist”. Nevertheless, this system also operated on the basis of the appropriation of Surplus Labour by a separate body, structurally dominating labour and operating the political extraction of Surplus Labour. In other words, the Soviet labour force was not in control of the regulation and allocation of its own Surplus Labour, which in that system did not have to be converted into Surplus Value. The Soviet type system was a historically specific form of the capital system in which the appropriation of surplus labour had to be politically controlled.

Shaun May : I think the answer to this question raises a host of questions regarding what is meant by a “capital system”. In the Soviet system, capital was not the dominant social relationship of production and distribution as we see it under the capitalist system. But this then elicits the question of what Meszaros actually means by the term “capital system” in relation to the Soviet system i.e. if capital did not operate in the same mode as it does in the capitalist system. Capital in the capitalist system means the production of surplus value, its realisation through the market and the augmentation of the value of capital in accumulation. What Meszaros is effectively doing is re-defining what is meant by “capital” according to altered historical conditions. Since in the Soviet system, there was neither the production of surplus value nor a market through which it was socially realised as profit. But what is this “capital” in the “post-capitalist capital system” of the Soviet Union? It is not the same “capital” as we see under capitalism.
Capital originates in circulation, not in production. The first forms of capital – which were operative in both ancient and feudal societies – were commodity and money capital in the form of merchants’ and usurers’ capital. These forms of capital were the chief historical agents in and for the dissolution of feudal relations. Only after feudalism had disappeared did capital become the dominant social relationship in production itself, first entering and dominating agricultural production and later manufacture. Capitalism itself only announces its historical arrival with capitalist commodity production. Capitalist production as a whole now means the evolution of the total complex of productive, commodity and money capital., i.e. capitalist production as a whole has arrived.
This is why Marx writes that capital-in-circulation only attains its “classical form” after capital becomes the dominant relation of production and not before this historically. But these societies – ancient and feudal – were not “capital systems” despite the historical existence of forms of capital within them. And, also, despite the political extraction of surplus labour from the producers. Marx writes of the the trading peoples of antiquity living in the “pores of society” which implies that they were not of the dominant mode of production.
This notion that “it is a matter of secondary importance whether surplus labour is appropriated politically or economically” could therefore be important in regard to the question of the Soviet system as a “capital system”. And, of course, the idea that “what is of primary importance is that under all conceivable varieties of the capital system it (surplus labour – SM) must be appropriated by a separate body superimposed on, and structurally dominating, labour” could also apply to all conceivable class societies producing a surplus – including those river valley civilisations dominated by a priesthood caste – and not simply those “varieties of the capital system”.
Where society has reached the point in the evolution of production where a surplus can be produced this always, sooner or later, gives rise to the appropriation of this surplus labour by an alien class, caste or state which becomes separated out as the ruling one and thenceforth we have the “superimposition” and “domination” of this class in the articulated form of its state power. Whether this surplus labour is appropriated as surplus value or not, as the case may be, is actually very important as an indicator which helps us to characterise the form of society within which this appropriation actually takes place. It helps us to understand whether or not the capital relation is operating under the given historical conditions.
Where this surplus labour is appropriated in the form of surplus value, there we have the operation of the capital relation. The capital relation – as a social relationship of production and distribution – cannot exist on the basis of the appropriation of surplus labour per se but only on the ground of its appropriation in the specific historical form of surplus value. Implicitly, if surplus labour is not appropriated in this form, the capital relation cannot be operative. Otherwise, we have to re-conceive what we understand by capital and modulate that conception according to the prevailing socio-historical conditions.
Productive capital finds its notion (Begriff) in its continuous expansion i.e. it is characterised as capital as such only in so far as it continually augments its value, returns to itself in the form of expanded value from which point it thence proceeds again into the next phase of expansion. This expansion of capital is the accumulation of surplus labour but only in the form of surplus value. The distinction of form is critical because it means that humanity has reached its capitalist stage of production. All societies producing a surplus have accumulated “surplus labour” in one form or another but this did not make them “capital systems”. For them to be a “capital system” (i.e. as the dominant, preponderant social relationship of production), this accumulation must take the form of the accumulation of surplus labour in the form of surplus value. To assert that such an accumulation only has to take the form of the accumulation of “surplus labour” (“Here, as you can see, the fundamental category is “Surplus Labour”, and not “Surplus Value”, as people often erroneously assume” IM) is itself the assertion of an abstract ahistorical proposition.

In essence, the point which SM is making here is that the extraction of surplus labour from the producers by an alien body does not necessarily make that system a capital system. We all know this. It is the ‘bread and butter’ of Marx and thousands of years of human history testifies to this.
In ‘Beyond Capital’, the author (pp. 911-914, 6. Breaking the rule of capital, Political Power and Dissent) gives a summary of his rationale as to why the Soviet system was a “post-capitalist capital order”. The six bullet points he gives are not simply conditions for the existence of “the capitalist formation” but also for the actual existence of a “capital system”. Not necessarily for capital itself in its historical genesis (as we know from Antiquity and the Middle Ages) but certainly for a “capital system” or “order”. Meszaros appears to make a radical rupture with Marx by characterising a system as a “capital system” simply on the principal ground that “the extraction of surplus labour is regulated politically and not economically”. But does this make such a system a “capital system”? Other societies have operated on the same basis – the soviet system was not unique in this regard – but this did not make them “capital systems”. Meszaros seems to effectively redefine what is meant by the term “capital” by stripping it of its essential economic character as accumulated surplus value and postulating its existence in a political form independently of this economic character.
The means of production and distribution in the Soviet system were not forms of capital as it exists in its specific mode as the preponderant social relationship of production which also embraces its function as a “mode of control of the social metabolism”. The extraction of surplus labour from the producers by the state power does not render these means of production “capital” per se. This is to misconceive the very nature of Marx’s conception of capital. Otherwise, almost every society in the history of man could be characterised as a “capital system”.
In the final sentence of the above answer, he makes a leap from “political extraction of surplus labour” to “capital system”. Surplus labour can be extracted without the system being a capital system. The process of politically appropriating surplus labour can take place even if the means of production and distribution are not forms of capital. But we all know this.
If we admit that capital was the dominant social relationship of production in the Soviet system, then this tends to lead towards the conception that the Soviet system was indeed “state capitalist” which Meszaros himself denies. What needs to be clarified and concretised is what Meszaros actually means by the term “capital system” in relation to the Soviet system when capital did not operate within this system as the dominant social relationship of production as it does under capitalism.
When Meszaros refers to the Soviet system as a “post-capitalist capital order” he refers to capital as the “mode of control of the social metabolism”. He cannot be referring to capital as the dominant socio-economic relationship of production and distribution because that would undoubtedly mean that the Soviet system was a capitalist system and not post-capitalist. This raises the question of the distinction between capital as a “social relationship of production” and capital as “a mode of control of the social metabolism” and their interrelationship. Obviously, for Meszaros, in the actual operation of the Soviet system, capital as a “mode of control of the social metabolism” could continue in the absence of its historic function as a preponderant social relationship of production as Marx develops it. How was capital as a mode of control of social metabolism actually articulated through the real structures and within the real relations of the Soviet system? Clearly this is a development by Meszaros of Marx’s conception of capital but we need to concretely grasp what is the content of this development within the context of understanding the nature of the Soviet system.

It was the control of production and distribution – and not any form of ownership – which enabled this privileged stratum in the Soviet system to appropriate, assign and manage the distribution of the surplus produced by the labour of the people. Control of production afforded this privileged parasitic layer the right to appropriate a disproportionate share of the socially produced surplus. This control afforded certain privileges but not comprehensively as in the case of ownership. It is worth mentioning that even under capitalism, ownership does not necessarily give complete control since state regulations can limit what owners can do with their property, taxation, building and land-use statutes, etc.

The ruling Soviet stratum did not have the right to alienate the resources which they controlled as with property-owning classes. That is, they could not sell these resources with a view to the full compensation of their total value. However, their control of these resources gave them a self-serving privileged position in regard to the management and direction of them. Such ruling strata – as with the ancient priesthoods – owe their position and privileges to control and not to ownership. Once established, they develop and cultivate a consciousness of their own interests (separate from, and antagonistic to, those over which they rule) and which is embodied (in confronting alienated form) in the structures of power and state.

The Soviet bureaucracy controlled social property but did not own it. As a stratum, it owned nothing but controlled everything. All the resources in the old Soviet system, the land, factories, infrastructure, etc, were owned by the state as social property and could not be bought or sold by bureaucrats. The Soviet system was, according to Meszaros, neither “capitalist” nor “state capitalist”. It was “post-capitalist”. Trotsky himself (1936, Revolution Betrayed, Chapter 9, Social Relations in the Soviet Union) insisted that the Soviet system was not a form of “state capitalism”. In this respect, Meszaros and Trotsky coincide. Later some “Trotskyists” described it as “state capitalist” not that long after Trotsky wrote Revolution Betrayed.

Trotsky remarks that the characterisation of the Soviet Union as “state capitalist” was an attempt to “seek salvation from unfamiliar phenomena in familiar terms” (ibid., Revolution Betrayed, subsection 1, State Capitalism). In other words, an attempt to squeeze the living reality of the historically novel and unfamiliar into the formal categories of the familiar in order for metaphysical thinking to comfortably apprehend and ‘box’ the nature of the Soviet Union. In this way, the living reality of the Soviet system eluded the conceptual grasp of the purveyors of the ‘State Capitalist Theory’. Perhaps we need to consider Trotsky’s remark here in regard to the conception of the “post-capitalist capital order”?

There is not a single, convincing analysis and discourse of the late Soviet system which gives us an adequate characterisation of it being a form of “state capitalism”. Moreover, there is no comprehensive and convincing historical study of how it was, ab initio, or actually became, “state capitalist” either before or after Trotsky’s study in his 1936 Revolution Betrayed.

The implication in Meszaros’s work is that capital existed in the Soviet system in a different mode to the way it exists in capitalist society. In the Soviet system, it existed as an overarching ‘mode of control of the whole social metabolism; which is distinct from its existence under capitalism itself as a more intrinsic, organic and more widely and deeply embracing and economically entrenched controlling ‘social relationship of production and distribution’ which also incorporates within itself this latter function of ‘metabolic control’. In this case, the conception of capital is modulated according to the conditions of a ‘post-capitalist society’. Of course, this is problematic in terms of the differentiation of the determination because it implies that there are two forms of capital. The ‘complete’ and all embracing, ‘totalising’ form under capitalism and the modulated form in the Soviet system in which capital does not exist ontologically as a ‘social relationship of production’. This leaves the theoretical path open for the assertion that once ‘capital’ no longer exists as a ‘social relation of production’ then it has passed over into something other than ‘capital’; that to characterise the Soviet system as a “capital system” is falling into Trotsky’s trap of seeking “salvation from unfamiliar phenomena in familiar terms”. If the extraction of surplus labour was carried through politically and not also economically, then to describe such a state of affairs as a “capital system” actually raises significant difficulties because it denies the organic and intrinsic social embeddedness of capital as a social relation. It renders capital as ‘social epiphenomenon’ which is simply imposed as a consequence of political structures. It leaves no room for the possibility of a system which is not a ‘capital system’ economically and yet displays the characteristics of one in terms of its political hierarchical and administrative functions. But such a hybrid system could not be characterised as a “capital system” but must be determined differentially from such a system. It becomes neither a capital nor a post-capital system but a transient species in which both aspects are manifested simultaneously in its internal social relations.

[See Istvan Meszaros, Beyond Capital, Political Power and Dissent in Post-Revolutionary Societies, p.898. Merlin Press, 1985. And specifically, section 6. Breaking the Rule of Capital, pp. 911-914 where he characterises the Soviet system as a ‘capital system’.]

The emergence and consolidation of the rule of the Soviet bureaucracy expressed the resistance of international capital to the Russian Revolution. This stratum was essentially parasitic and did not own the means of production and therefore was not a property-owning ruling class as such. In the same way, the trade union bureaucracy is not a property-owning ruling class but a controlling bureaucratic caste.

In the Soviet system there was no private ownership of the land, production, infrastructure, etc. But the Soviet state bureaucracy controlled and directed production and lived a privileged existence off the surplus created and extracted from the producers. The producers had no control over their product which was controlled and directed by an alien body hovering over society. The fundamental question (and determining criterion in social relations) in the Soviet system was one of control and not of ownership. And this corresponds to the conception that the controlling collective in that system was not constituted as a property-owning class but rather as a controlling caste.

The bureaucratic system of control was in dissonance with the post-capitalist forms of ownership. It resembled capitalist forms of social control. Either restoration of capitalism, on the one hand, or taking the whole system beyond the constricted form of bureaucratic control which corresponded to, or resembled, capitalist forms of control, on the other hand, was the contradictory pivot on which the whole Soviet system precariously balanced. 1989 and after gave the impetus to the process of restoration. If the forms of ownership and control do not correspond to, and compliment, each other, the whole social structure becomes animated with a structural contradiction which has to be resolved one way or the other i.e. either control has to bow to the developmental tendencies of ownership or ownership must be reversed in favour of the character of the forms of control.

The way forward for the producers in and beyond the Soviet system was to rid themselves of bureaucratic control so that it was they who not only produced but also controlled and directed production and distribution rather than an alien state bureaucracy hovering menacingly above society. A system of bureaucratic state management which, in its mode of operation, still connected Soviet society to capitalist relations meant that the system had not irreversibly rid itself of the threat of capitalist restoration. And, of course, after 1989 this is what has actually proceeded. The Russian Revolution – as a result of the impact of world capital and its state powers on it – never resolved the posited conflict between ownership and control. Under such circumstances, the possibility of capitalist restoration was always a mediating factor animating the whole social structure.

In the Soviet system, the form of social ownership of the means of production and distribution pointed beyond the age of capital. However, because these means of production and distribution were controlled and managed according to norms and parameters which resembled those of a capitalist system, their operation, but not there ownership, corresponded to the rule of capital. This is not to assert that the means of production and distribution in the Soviet system were capital. Only in their state management and control could they possibly be described as exhibiting the characteristics of capital. Only in their external bureaucratic mode of state management from the “outside” so to speak. The extraction of a surplus and its distribution were carried out under the concerted direction and control of the bureaucratised state structures but not, as in capitalist countries, under the private ownership and control of a distinct ruling capitalist class and its state power. The ruling echelons of the state bureaucracy were not a new ruling property-owning class but rather a ruling controlling stratum. If we employ control as the major criterion to determine class, then we could describe this stratum as a ruling class. Under capitalism, a fundamental pre-condition for the operation of the productive forces is the continual expansion and augmentation in their value, i.e. valorisation and accumulation are an actual precondition for their actual existence. This was not the case in the Soviet system. The means of production and distribution did not exhibit this social characteristic of the capital relation which is intrinsic to the capitalist system.

Of course, the capital relation (commodity capital and money capital) actually operated in pre-capitalist societies just as commodity production and exchange did. It was not, of course, capitalist commodity production in these societies. The capital relation did not (and could not) reach its ‘classical’ form until capital became the dominant relationship within production. In antiquity and in the feudal period, merchant and money capital emerged and developed in the form of trade and usury. For example, Carthage in the Mediterranean but trading and usury were common amongst the other developed peoples such as the Greeks, Romans, etc, and in the ‘interstices’ of feudal society, especially amongst the Jews. (see Abram Leon’s work on ‘The Jewish Question’).

However, what distinguishes capital in antiquity and the feudal period from its existence in contemporary society is that it was not the dominant/preponderant relationship of production and distribution. It was merely a subsidiary, peripheral aspect of these societies which were essentially subsistence societies with the ruling classes living on the extraction of a surplus from the labour of serfs/villeins, slaves, coloni or conquered peoples or from the plunder, tribute and taxes in kind or coin arising out of such conquests. The parasitism of the ruling classes was founded upon their ownership and/or control of the land or the military domination of the subjugated populations. The general form of labour was not wage labour but rather slave or bond labour. And this simple truth necessarily meant that the means of production, even those utilised to produce saleable items, were not forms of capital as such. In antiquity, for example, products of labour which found their way into exchange relations were generally produced by the slave, the colonus or the workshop-owning petty artisan.

Extraction and distribution of the surplus in the Soviet system was controlled and managed politically. But that, in itself, does not render the means of production ‘capital’. In other words, in the Soviet system, the appropriation of the surplus by the state was not based on, did not arise out of, the operation of capital as the controlling social relation of production and distribution in the same mode as it does under capitalism. Rather this appropriation of a surplus arose on the basis of the direct political domination of the state bureaucracy – backed up by military force – over the producers. The means of production and distribution were controlled and managed according to capitalist norms [“the mode of metabolic control”] but this, in itself, did not make them forms of capital. The fundamental contradiction was between the social form of ownership and the form of control. In a similar fashion (not identical, of course), the ancient (non-property owning) priesthood of the ancient river valley civilisations extracted its surplus from its human hinterland. It did not need to actually own the land in order to carry this out. The existence of social property formed the basis for its parasitism which arose out of its control and management of production based on social ownership of the land and infrastructure.

The conception that the Soviet system was ‘state capitalist’ implies that the means of production in the Soviet system were owned and operated on the same basis as the former nationalised industries in Britain before their privatisation by the Thatcher governments. However, the relations of ownership of the nationalised industries in pre-Thatcher Britain were fundamentally different in their characterisation to the forms of ownership of the means of production in the Soviet system. In Britain, before ‘privatisation’, these means of production and distribution were actually forms of state capital in their very nature whereas in the Soviet system the means of production were only managed according to capitalist norms but were not subject to the relations of capitalist ownership either by state or capitalist class. The driving raison ‘d’etre of state capital is production for profit and the augmentation of value. Accordingly, the failure to do this (and continual state subsidy) was a motivating ground for their later ‘privatisation’ as capital’s structural crisis began to develop in the 1980s.

Meszaros cites four basic pre-conditions by means of which “capital maintains its – by no means unrestricted – rule in post-revolutionary societies…” [p.913, Beyond Capital]. In none of them can we find any indication that what existed in the Soviet system was a new form of capitalist or state capitalist ownership but rather, according to Meszaros, that capital exerted its control by means of a system of bureaucratic management and the prioritisation of ‘material imperatives’; through the continuation of the division of labour inherited from capitalism; through the ‘structure of the available production apparatus’ and the ‘restricted form of scientific knowledge’ and through the Soviet system’s ‘links….with the global system of capitalism’. It exerted its rule as a ‘mode of control of the social metabolism’ but not as a fundamentally animating and governing social relationship of production and distribution – economically extracting surplus value – as in capitalist society. But how does capital exert such control without it being the animating social relationship of production? The Soviet system was ‘post-capitalist’ but not ‘post-capital’. But being not ‘post-capital’ does not necessarily make it a ‘capital system’. That is a doctrine of formal logic : if not A then must be B. A system which is neither ‘post-capital’ nor ‘capital’ could conceivably be a distinctly unique type of social system which transiently exhibits qualities of both but as a system as a whole is neither.

The age-old division of labour will still be with us in a sublated, more fluid, form even after the capital relation and commodity production have been eliminated from society. Only the further evolution of society into the ‘True Realm of Freedom’ will see it progressively diminish and disappear. The ‘available production apparatus’ and ‘form of scientific knowledge’ will always be ‘restricted’ in the sense that both are historically conditioned and ‘limited in their actuality but unlimited in their disposition’ (Engels). To focus on these in order to provide evidential criteria for the “maintenance of capital’s rule” in the Soviet system is not fetishistic but it is somewhat departing from a characterisation of the nature of social relations in the Soviet system in order to explain capital’s continued “influence”.

Only points [1] and [4] [p.913., Beyond Capital] are really fundamental and are actually related and interconnected. If anything the ‘material imperatives which circumscribed the possibilities of the totality of life-processes’ were inextricably connected to the historical ‘links and interconnections’ which the Soviet system had ‘with the global system of capitalism’. The real “influence” of capital and the forms of state bureaucratic control and management corresponding to this “influence” arose from the daunting pressures of the world capitalist order on the Soviet system. From the very start, and before, this was the fundamental condition and reason why a technically isolated and capitalistically encircled ‘post-revolutionary’ society was degraded and degenerate in nascendi. It reinforces the overall conception that the commencement of the destruction of the global capital order and its state powers must be posited as nothing less than a continuously unfolding global process. And only temporarily halting when this is absolutely unavoidable according to conditions and expedience.

Shaun May

Revised November 2015




This entry was posted in Capital, Marx, soviet system, 'post-capital capitalist system', Istvan Meszaros. Bookmark the permalink.

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