If we examine the definitions of a social class given by different Marxist theoreticians, we shall find that according to all of them we will have to call the Stalinist bureaucracy a class. Thus, for instance, Lenin writes:
Classes are large groups of people which differ from each otehr by the place they occupy in a historically definite system of production, by their relations (in most cases fixed and formulated in laws) to the means of production, by their role in the social organisation of labour, and, consequently, by the dimensions and method of acquiring the share of social wealth they obtain. Classes are groups of people one of which may appropriate the labour of another owing to the different places they occupy in a definite system of social economy. 
Bukharin gives a very similar definition:
A social class ... is the aggregate of persons playing the same part in production, standing in the same relation toward other persons in the production process, these relations being also in things (instruments of labour). 
If there is any doubt left about whether the Stalinist bureaucracy is a class or not, we need but peruse Engels’ analysis of the merchant class which did not even take a direct part in the process of production. He writes:
A third division of labour was added by civilisation: it created a class that did not take part in production, but occupied itself merely with the exchange of products – the merchants. All former attempts at class formation were exclusively concerned with production. They divided the producers into directors and directed, or into producers on a more or less extensive scale. But here a class appears for the first time that captures the control of production in general and subjugates the producers to its rule, without taking the least part in production. A class that makes itself the indispensable mediator between two producers and exploits them both under the pretext of saving them the trouble and risk of exchange, of extending the markets of their products to distant regions, and of thus becoming the most useful class in society: a class of parasites, genuine social ichneumons, that skim the cream of production at home and abroad as a reward for very insignificant services; that rapidly amass enormous wealth and gain social significance accordingly; that for this reason reap ever new honours and ever greater control of production during the period of civilisation, until they at last being to light a product of their own – periodical crises in industry. 
In the light of this definition it is clear why Marx could designate the priests, lawyers, etc., as “ideological classes”, as the classes, which have, according to Bukharin’s apt expression, a class monopoly over the “means of mental production”.
We think it would be wrong to call the Stalinist bureaucracy a caste for the following reasons: while a class is a group of people who have a definite place in the process of production, a caste is a judicial-political group. The members of a caste can be members of different classes, or in one class there can be members of different castes. A caste is the outcome of the relative immobility of the economy, of the division of labour and the productive forces. The Stalinist bureaucracy was transformed into a ruling class on the crest of the dynamism of the economy.
Except as personified capital, the capitalist has no historical value, and no right to that historical existence ... But, so far as he is personified in capital, it is not values in use and the enjoyment of them but exchange value and its augmentation, that spur him into action. Fanatically bent on making value expand itself, he ruthlessly forces the human race to produce for production’s sake; ... So far, therefore, as his actions are a mere function of capital – endowed as capital is, in his person, with consciousness and a will – his own private consumption is a robbery, perpetrated on accumulation ... Therefore, save, save, save, i.e., reconvert the greatest possible portion of surplus value, or surplus-product into capital! Accumulation for accumulation’s sake, production for production’s sake. 
The two functions of the extraction of surplus value and its transformation into capital, which are fundamental to capitalism, become separated with the separation of control and management. While the function of management is to extract the surplus value from the workers, control directs its transformation into capital. For the capitalist economy actually these two functions alone are necessary; the bondholders appear more and more only as consumers of a certain part of the surplus value. The function of the consumption of a part of the surplus product by the exploiters is not specific to capitalism, but existed under all class systems. What is specific to capitalism is accumulation for accumulation’s sake, with the object of standing up to competition.
In capitalist corporations most of the accumulation is institutional, the corporation financing itself internally, while the great majority of the dividends disbursed among the shareholders is used for consumption. Under a state capitalism which evolves gradually from monopoly capitalism, the bondholders would appear mainly as consumers, while the state would appear as the accumulator.
The more the relative part of the surplus value devoted to accumulation increases as against the part consumed, the more purely does capitalism reveal itself. The more the relative weight of the factor of control increases as against that of bondholding, in other words, the more dividends are subordinated to the internal accumulation either of the corporation or of the state which owns teh means of production, the more purely does capitalism reveal itself. If as a result of financial manipulations Morgan were to reduce the dividends disbursed among the hundreds of thousands of shareholders in the corporations until they are completely eliminated as a factor, or if the state succeeded in doing so by cutting the rate of interest down to nothing (which in fact would mean the expropriation of the whole capitalist class) then capitalism would reveal itself in its purest form.
(Everyone knows that those who have the control of capital in their hands, who are the extreme personification of capital, do not deny themselves the pleasures of this world, but the significance of their spending is much smaller than that of accumulation, and of much less historical importance.)
We can therefore say that the Russian bureaucracy, “owning” as it does the state and controlling the process of accumulation, is the personification of capital in its purest form.
At the same, Russia is different from the norm, the concept, of state capitalism.
Every concept is the result of abstraction. And the manifold factors which are in reality active – the criss-crossing of different chains of causes, their clashing, etc. – inevitably make it impossible for concept and reality to be congruent. 
The divergence from the concept of state capitalism which evolves gradually, organically, from monopoly capitalism, does not relegate the question of the concept of state capitalism to unimportance. Far from this, it is of great importance to find that the Russian economy approaches this concept much more closely than ever could the state capitalism evolved gradually on a capitalist foundation. The fact that the bureaucracy fulfils the tasks of the capitalist class, and by doing so transforms itself into a class, makes it the purest personification of this class. Although different from the capitalist class, it is at the same time the nearest to its historical essence. The Russian bureaucracy as a partial negation of the traditional capitalist class is at the same time the truest personification of the historical mission of this class.
To say that a bureaucratic class of bureaucratic collectivism or managerial society rules in Russia is to circumvent the cardinal issue – the capitalist relations of production prevailing in Russia. To say that Russia is state capitalist is perfectly correct, but not sufficient; it is also necessary to point out the differences in the juridical relations between the ruling class in Russia and that in a state capitalism which evolved gradually from monopoly capitalism. Therefore the most precise name for the Russian society is bureaucratic state capitalism.
In Russia the state appears as an employer, the bureaucrats as managers only. There is an absolute separation between the function on ownership and that of management. This, however, is only formally so. In essence ownership is in the hands of the bureaucrats as a collective – it is vested in the state of the bureaucracy. But the fact that the individual manager appears to lack all ownership of means of production, and that the appropriation of his part in the national income is in the form of a salary, may deceive one into believing that he receives only the reward for his labour power in the same way as the worker receives the reward for his labour power. The difference between the function of teh worker and that of teh manager is befogged because both are included under the heading of the social process of production; the labour of management is necessary for every process of social production, and as such has nothing to do with relations of exploitation. Antagonistic class relations thus appear to be harmonious. The labour of the exploited and the labour of organising exploitation both appear as labour. The state appears to stand above the people, as personified ownership, while the bureaucrats, who direct the process of production and are therefore historically in essence the personification of capital, appear as labourers, and as such, producers of values by their labour itself.
But what appears superficially to be the case is not the objective truth.
The best way to make the difference clear between the ‘labour’ of the manager and that of the worker, to see the connection between the position of the former and the separation of the latter from the means of production, will be by comparing it with the relations between the workers in a capitalist enterprise, the manager of the same, and the owner of capital.
Let us assume that the owner of capital is not an active capitalist, but is only a lender of his capital, while the active capitalist does not own the capital. (For the sake of the question being dealt with here, it is not important that this separation should be complete.) Marx explains that in such a case the profit is divided into two parts: firstly, the interest; secondly, the “profit of enterprise”. The interest seems to be a payment for the mere ownership of capital, and the profit of enterprise a payment for the functions which the active capitalist fulfils. Seeing that capitalist ownership is already represented by one man (the lender) and is expressed in one form of payment (interest), it seems that profit of enterprise has nothing to do with ownership and capitalist exploitation, as if it is simply the active capitalist’s reward for his participation in the social process of production. Marx said:
The industrial capitalist as differentiated from the owner of capital does not appear as a functionary of capital, but as a functionary separated from capital, as a simple agent of the labour process, as a labourer, and specifically as a wage-labourer. 
In this way the labour of exploitation and the exploited labour both appear as labour, as identical. The labour of exploitation is labour just as well as the labour which is exploited. It is the interest which represents the social form of capital, but it does so in a neutral and indifferent way. It is the profit of enterprise which represents the economic function of capital, but it does so in a way which takes no cognisance of the definite capitalist character of this function. 
Compared to the money-capitalist the industrial capitalist is a labourer, but a labouring capitalist, an exploiter of the labour of others. The wages which he claims and pockets for this labour amount exactly to the appropriated quantity of another’s labour and depend directly upon the rate of exploitation of this labour, so far as he takes the trouble to assume the necessary burdens of exploitation. 
If in traditional capitalism the concentration of ownership in one person and the function of capitalist in another person befogs the real character of the latter, then in Russia the fact that the state is the official owner of the means of production while the bureaucrats ‘only’ manage production even more befogs the function of the bureaucrats as ‘active producers’.
However, the difference between what the function of the bureaucracy and its remuneration seem to be on the one hand, and their real character on the other, is much deeper than the difference between what the profit of enterprise seems to be and is in reality.
Although interest seems to be qualitatively different from profit of enterprise, they are at the same time very similar to each other. In Russia the state which owns the means of production does not receive its part of the surplus value in the form of interest, and the bureaucracy does not receive its part in the form of profit of enterprise. There is therefore even more confusion between the character of the function of the bureaucracy as the extractor of surplus value from the workers, and its function simply as part of the social process of production (and as such as value producer). Seeing that the workers as well as the bureaucracy receive wages, one could easily believe on the one hand that the bureaucracy receives the reward for its value producing alone, and on the other hand – as a corollary to this – that the whole surplus value goes into the hands of the state.
It is clear, however, that the income of the bureaucracy has a direct ratio not to its work, but to the work of the workers. The quantity itself reveals the qualitative difference between the it and the wages of the workers. Otherwise, to take a corresponding example in Britain, we should have to say that Lord McGowan, who receives the highest director’s salary in Britain, does no more than sell his labour power. Besides this the state, which is the employer and appears to rise above all the people, is in reality the organisation of the bureaucracy as a collective.
What determines the division of surplus value between the state and the bureaucrats as individuals?
While the quantitative division of the total value produced between wages and surplus value is dependent on two elements qualitatively different – labour power and capital – the division of the surplus value between the bureaucracy as a collective (the state) and individual bureaucrats cannot be based upon any qualitative difference between them. One cannot therefore speak of exact, general laws of the division of the surplus value between the state and the bureaucracy or of the division of the latter part between the different bureaucrats. (Similarly one cannot speak about exact general laws regulating the distribution of profit between profit of enterprise and interest, or between the owners of different sorts of shares in capitalist countries. ) It would be wrong, however, to assume that absolute arbitrariness governs this decision. The tendencies can be generalised. They are dependent on the pressure of world capitalism which demands an acceleration of accumulation, the material level which production has already reached, the tendency of decline of the rate of profit which relatively decreases the sources of accumulation, etc. Taking these circumstances into account, we can see why a constantly increasing part of the surplus value is accumulated. At the same time the bureaucracy which administers the process of accumulation does not overlook the gratification of its own personal desires, and the quantity of surplus value consumed by it rises absolutely. These two processes are possible only if there is a continuous increase in the rate of exploitation of the masses, and if new sources of capital are constantly found. Hence the process of primitive accumulation in which the Russian peasantry is pillaged, and the plunder of the countries of Eastern Europe.
The overwhelming majority of the means of production in Russia is in the hands of the state. Bonds or other forms of legal claim cover so small a part of the means of production as to be of only minor significance.
Why is this so? Is there no tendency to introduce such a form of private claim on a large scale? Why is there a difference between the law of property prevailing in Russia and that in the rest of the capitalist world? In order to answer these questions we must first analyse the relationship between the relations of production and the law of property. We have already seen how Trotsky explains the fact that the bureaucracy did not restore capitalist private property. He says, “It [the bureaucracy] continues to preserve state property only to the extent that it fears the proletariat.” But as we have said, the Russian proletariat has no contact with the form of property as such except as regards their relation to the state which is the repository of the means of production. It is therefore impossible for the proletariat, after losing control over the state and instead being oppressed by it, to keep control over the form of property.
Trotsky’s explanation of the non-emergence of shares and bonds being unsatisfactory – and the war experience during which the bureaucracy was tremendously strengthened confirms this – we are still left with the same question: why does the bureaucracy not assure the permanent right to surplus value and the right of testament by issuing shares and bonds on a large scale? In order to give the answer to this question let us analyse the relationship, between the relations of production and the law of property.
Law is based on the economy. Property relations are the juridical expressions of the relations of production. But there is no exact and absolute parallelism between relations of production and the development of law, in the same way as there is no exact and absolute parallelism between the economic basis and the other elements of the superstructure. The reason for this is that law does not express the relations of production directly, but indirectly. If it reflected the relations of production directly, every gradual change in the relations of production being accompanied by an immediate and parallel change in law, it would have ceased to be law. The function of law is, so to say, to bring harmony between the antagonistic interests of the classes, to fill up the gaps which tend to break in the economic social system. In order to achieve this, it must rise above the economy, while basing itself upon it.
From the standpoint of its content, law is the indirect reflection of the material basis on which it is erected, but from the standpoint of its form, it is but the assimilation and completion of the law inherited from the past. There is always a lapse of time between the change in the relations of production and the change in law. The deeper and quicker the change in the relations of production, the more difficult it is for law to keep pace and still formally preserve continuity from its past development. Thus there are numerous historical examples of the rise of a new class which has been reluctant to publicise its coming to power and has accordingly tried to adapt its existence and rights to the framework presented by the past, even though this framework has stood in absolute contradiction to it. Thus, for instance, for a very long time the rising bourgeoisie endeavoured to prove that profit and interest are but some sort of rent – at that time the rent of the landlord was justified in the eyes of the ruling classes. The English capitalist class tried to base its political rights on the Magna Carta, the charter of rights of the feudal class, which from the standpoint of both content and form is fundamentally in contradiction to bourgeois right. The attempt of a ruling class to hide its privilege under the cloak of the law handed down from the past is most strongly made in the case of a counter-revolution which dare not declare its existence.
the revolutionary proletariat does not hide its aims, and the law it dictates on taking power is therefore revolutionary both in content and form. Had the armies of intervention been victorious after the October revolution, their bloody rule would have been accompanied by the restoration of most of the old laws scrapped by the October Revolution. But, as the bureaucracy in Russia transformed itself gradually into a ruling class, the changes in the relations of production were not expressed immediately in the complete change of the law. For various reasons, the main one being the need Stalinist foreign policy has of pseudo-revolutionary propaganda among the workers all over the world, the Russian bureaucracy did not openly declare that a counter-revolution had taken place.
This alone, however, is insufficient to explain why the bureaucracy does not restore private property in the form of bonds or shares covering the whole economy in such a way that every member of the bureaucracy should be able to bequeath a safe economic position to his son. Other factors must be taken into account in explaining this. The desires of a class, a caste or a social layer are moulded by its material conditions of life. Not only has each class its own special place in the process of production, but each owning class has a different stronghold in the social wealth. If the simple desire for the maximum material and cultural benefits in the abstract had been the driving force of humanity, then not only would the working class have desired socialism, but also the petty and middle bourgeoisie, and even the big bourgeoisie; the more so as this generation lives under the shadow of atomic warfare. But this is not the case. When people make history, they make it according to the external, objective reality in which they find themselves, which moulds their desires. The feudal lord thus strives to increase the area of his and his son’s domains; the merchant endeavours to give his sons security by bequeathing them a large quantity of money; the physician, the lawyer and the other professions attempt to pass their privileges on to their sons by giving them “mental means of production”; as there is no Chinese wall between the different classes and layers, the latter will, of course, try to bequeath more than “mental means of production” but material means of production also.
The state bureaucracy, as Marx said in his Critique of Hegel’s Philosophy of Law, possesses the state as private property. In a state which is the repository of the means of production the state bureaucracy which is therefore the ruling class has forms of passing on its privileges which are different from those of the feudal lords, the bourgeoisie or the free professionals. If co-optation is the prevailing mode of selecting the directors of enterprises, heads of departments, etc., every bureaucrat will try to pass on to his son not so much a million roubles (even though this has its importance) but his “connections”. Obviously he will at the same time try to limit the number of competitors for the position in the bureaucracy by restricting the possibilities the masses have of getting a higher education, etc.
The last few years have witnessed a big increase in Russia’s national debt, a big increase in the amount of state bonds owned by the higher layers of Russian society. Does this herald the beginning of a general transformation of the form of property?
In traditional capitalist economy, the process of accumulation of capital has two aspects – the material aspect expressed in the production of means of production, and the monetary aspect which reflects this process in additional fictitious capital. For example, a corporation which wants to buy additional machinery can get the necessary money from one of two sources – either from the surplus value of the corporation, or by issuing new shares, bonds, etc. to the public. In the second case, it is clear that the increase in the total real capital in the hands of the corporation is accompanied by a corresponding (although far from exactly corresponding) increase in the total fictitious capital. When the corporation does not issue new securities the increase in real capital still reflects itself (other conditions being the same) in an increase in fictitious capital as the price of its shares on the market rises.
In Stalinist Russia the increase in the real capital need not necessarily be accompanied by an increase in the fictitious capital, for the following reasons: Firstly, the state is the industrial capitalist and the banker at one and the same time, so that accumulation is not financed in the main by individuals. Secondly – this factor being the converse of the first – almost only that part of the surplus value used for consumption reaches private hands, while the part used for accumulation remains from the beginning in the hands of the state, so that individuals have not sufficiently abundant monetary means to finance the state economy. If the state has decided to finance the economy wholly internally, the accumulation of capital would not have been accompanied by bonds at all despite the great improvement in the position of the bureaucracy.
Only in the measure that the economy diverges from pure state capitalism, from the absolute separation of accumulation and consumption, does the appearance of bonds seem explicable. And indeed, the existence of elements of individual capitalism, cracks in the planning of the state capitalist economy – the importance of which very much increased during the war, when the accumulation of real capital in the hands of the state was in general very restricted and even negative (the destruction of whole regions, the wear and tear of machinery, etc.) – very much spurred on the appearance of bonds. It is also not accidental that among the Soviet millionaires a prominent part is played by the rural rich who accumulated big sums of money from the sale of their products on the free market.
Nevertheless, whatever the future may show, the appearance of Soviet millionaires, owning bonds worth millions of roubles, the decreeing of the new inheritance law, etc. – all these have very great importance in themselves. They are important, if not as harbingers of the anchoring of the bureaucracy’s privileges in the traditional forms of private property, then as a proof that the function fulfilled by the bureaucracy is a capitalist function. The fact that without any change in the relations of production there appears a form of property which no one will deny is typical of capitalist economy (bonds, money-capital, interest) serves as additional proof of the capitalist character of the relations of production. These relations accord the class which controls the means of production the privilege of controlling the surplus value produced by others. One of the forms of appropriating surplus value is the taking of interest on money-capital.
But, whether there were bonds and shares covering the whole economy or not, the fundamental laws of the economy – the plan arid its limits, the antagonistic way of distribution of the products of production, the tempo of accumulation and consumption, etc. – would not be changed, nor would the relation of the masses to the means of production. The position of the bureaucracy as regards the process of production would still be the same; so would the degree of stability or instability of the bureaucracy as a collective (although it is true that as individuals it would have changed very much). There is therefore no fundamental reason why the form of property in Russia should have changed.
If shares and bonds covered the whole economy, no Marxist would deny that there was state capitahsm. But if their existence changes nothing in the laws of motion of Russian economy as long as the relations of production remain as they are, what ground is there for denying that there is state capitalism there?
Because in the state capitalism which is an organic, gradual continuation of the development of capitalism, a form of private property would prevail in the ownership of shares and bonds, we must not conclude that the same will apply to state capitalism which rose gradually on the ruins of a workers’ revolution. History often leaps forward or backward. When it leaps backward, it does not return directly to the same position, but goes down a spiral, combining the elements of the two systems from which and to which society passed. Historical continuity in the case of state capitalism which evolves from monopoly capitalism is shown in the existence of private property (bonds). Historical continuity in the case of state capitalism which evolves from a workers’ state that degenerated and died is shown in the non-existence of private property.
Russia presents us with the synthesis of a form of property born of a proletarian revolution and relations of production resulting from a combination of backward forces of production and the pressure of world capitalism. The content of the synthesis shows historical continuity with the pre-revolutionary period; the form shows historical continuity with the revolutionary period. In the retreat from the revolution the form does not move right back to its point of departure. Despite its subordination to content, it yet has considerable importance.
The spiral development of the combination of content and form brings about the synthesis of two extremes of capitalist development in Russia, a synthesis of the highest stage which capitalism can ever reach, and which probably no other country will reach; and of such a low stage of development as has yet to demand the preparation of the material prerequisites for socialism. The defeat of the October Revolution served as a springboard for Russian capitalism which at the same time lags well behind world capitalism.
This synthesis reveals itself in an extremely high concentration of capital, in an extremely high organic composition of capital; and on the other side, taking the level of technique into account, in a low productivity of labour, in a low cultural level.
The synthesis explains the speed of the development of the productive forces in Russia, a speed far outstripping what youthful capitalism experienced, and the very opposite of what capitalism in decay and stagnation experiences.
Youthful capitalism practiced inhuman brutality on the toilers, which is shown by the struggle against “vagabonds”, the poor laws, the forcing of women and children to work 15 to 18 hours a day, etc.; aged capitalism again commits many of the brutalities of its childhood, with the difference that it is able, as fascism has shown, to carry them out much more effectively. Both periods are characterised by the use of measures of compulsion in addition to the activity of the automatism of the economic laws. The synthesis of state capitalism and the tasks of capitalism in its youth gives the Russian bureaucracy an unlimited appetite for surplus value and capacity for inhuman brutality, while at the same time it provides it with the ability to practise the highest efficiency in carrying out its oppression.
When Engels said that “humanity, descended from animals, has needed to use barbarous, almost animal, methods in order to escape from barbarism”, he certainly was not describing the socialist revolution, when history becomes “conscious of itself”. But he well described the prehistory of humanity. Peter the Great will go down in history as one of the fighters against barbarism using barbaric methods. Herzen wrote that he “civilised with a knout in his hand and knout in hand persecuted the light”. 
Stalin will go down in history as the oppressor of the working class, the power which could have advanced the productive forces and culture of humanity without the knout, as the world was mature enough for it, but which nevertheless advanced the productive forces “knout in hand”, and at the same time endangering all humanity with the threat of decline through imperialist wars.
The proletarian revolution swept all the impediments to the development of the productive forces out of its path and abolished a lot of the old barbarities. But being isolated, and taking place in a backward country, it was vanquished, leaving the field free for the fight against barbarism by barbaric methods.
The state is “special bodies of armed men, prisons, etc.”, a weapon in the hands of one class to oppress another class or other classes. In Russia the state is a weapon in the hands of the bureaucracy for the oppression of the mass of toilers. But this alone does not describe all the functions of the Stalinist state. It represents also the direct needs of the social division of labour, of the organisation of social production. A similar task was fulfilled, mutatis mutandis, by the states of ancient China, Egypt and Babylonia. There, because of the vital necewssity of big irrigation works, the organisation of which could be carried out at all only if done on a large scale the state came into being not only as a result of the appearance of class divisions, and so indirectly as a result of the social division of labour, but also directly, as part of the process of production. There are thus such mutual relations of dependence and influence between the class divisions and the emergence and strengthening of the state as make any separation of economics and politics impossible. In Russia, similarly, the Stalinist state did not rise only as a result of the widening abyss between the masses and the bureaucracy and the need for “special bodies of armed men”, but also as a direct result of the needs of the productive forces themselves, as a necessary element of the mode of production.
One of the Chaldean kings said:
I have mastered the secrets of the rivers for the benefit of man ... I have led the waters of the rivers into the wilderness; I have filled the parched ditches with them ... I have watered the desert plains; I have brought them fertility and abundance, I have formed them into habitations of joy.
Plekhanov, who cites this, remarks: “For all its boastfulness, this is a fairly accurate description of the role of the oriental state in organising the social process of production.” 
Stalin could similarly claim that he built the industries, drove the productive forces of Russia forward, etc. (although, of course, the tyranny of the Chaldean king was historically necessary and progressive in its time, while that of Stalin is historically superfluous and reactionary). As in ancient societies, so in Russia today, because of the double function of the state, as a guardian of the ruling class and as organiser of social production, there is a total fusion of economics and politics. This is out of accord with vulgar materialism,but to a dialectical materialism entrely valid.
This fusion is characteristic of capitalism in its highest stage, as well as of a workers’ state. But while under a workers’ state this fusion means that the workers, being politically dominant, advance even closer to a situation in which the “government of persons is replaced by the administration of things and the direction of the process of production” , under capitalism in its highest stage it means that political coercion is added to the automatism of the economy in oppressing the toilers.
The special feature of the capitalist order is that all the elements of the future society appear in it in a form in which they do not draw nearer to socialism but draw further away from it.
Thus, for instance:
as regards the army, development brings general obligatory military service ... that is, an approach to the people’s militia. But it is realised in the form of modern militarism, which brings the domination of the military state over the people and pushes the class character of the state to the extreme. 
This proves that our period is so ripe for socialism that capitalism is compelled to absorb more and more elements of socialism into itself. As Engels said, this is the invasion of socialist society into capitalism. This absorption, however, does not lighten the burden of exploitation and oppression; on the contrary, it makes it bear down much the more heavily.
Wherever there is a fusion of economics and politics it is theoretically wrong to distinguish between political and economic revolution, or between political and economic counter-revolution. The bourgeoisie can exist as the bourgeoisie, owning private property, under different forms of government: under a feudal monarchy, a constitutional monarchy, a bourgeois republic, the Bonapartism of Napoleon I and III, a fascist dictatorship and for a certain time even under a workers’ state (the kulaks and Nep Men existed till 1928). In all these cases there is a direct relationship of ownership between the bourgeoisie and the means of production. Even, therefore, if the state is independent of the control of the bourgeoisie, the bourgeoisie does not cease to be a ruling class. As agsainst this, where the state is the repository of the means of production, there is an absolute fusion between economics and politics – political expropriation also means economic expropriation. If the above-mentioned Chaldean king were politically expropriated, he would necessarily also have been economically expropriated. The same applies to the Stalinist bureaucracy, and mutatis mutandis, also to a workers’ state. Seeing that the workers as individuals are not owners of means of production even in a workers’ state, and their ownership as a collective is expressed through their ownership of the state which is the repository of the means of production, therefore if they are politically expropriated they are also economically expropriated.
The proletariat cannot take over the bourgeois state machine but must smash it. Does it not follow that the gradual transition from the workers’ state of Lenin and Trotsky (1917-23) to the capitalist state of Stalin contradicts the basis of the Marxist theory of the state? This is one of the pivots of the defence for the theory that Russia today is still a workers’ state. Those who hold to this theory quote Trotsky in 1933 (but omit to quote his opposite statement of a later date). He wrote in The Soviet Union and the Fourth International, the thesis adopted by teh International conference of teh Fourth International in Geneva in July 1936:
The Marxian thesis relating to the catastrophic character of the transfer of power from the hands of one class into the hands of another applies not only to revolutionary periods, when history madly sweeps ahead, but also to the period of counter-revolution when society rolls backwards. He who asserts that the Soviet Government has been changed gradually from proletarian to bourgeois is only, so to speak, running backwards the film of reformism.
The question at issue is the validity or otherwise of the last sentence.
Capitalist restoration can come about in many ways. Political restoration may precede economic restoration: this would have been the case if the White Guards and armies of intervention had succeeded in overthrowing the Bolsheviks. Or economic restoration, even if not complete, may precede political restoration: this would have been the case if the kulaks and Nep Men who entrenched their economic privileges until 1928 had succeeded in overthrowing the regime. In both cases the transition from a workers’ state to a capitalist state would not have been gradual. Indeed, to say that it might have been gradual could justifiably be branded as “only, so to speak, running backwards the film of reformism”. But where the bureaucracy of a workers’ state is transformed into a ruling class economic and political restoration are indissolubly interwoven. The state becomes gradually further divorced from the workers, the relations between it and the workers become more and more like the relations between a capitalist employer and his workers. In such a case the bureaucratic clique that first appears as a distortion gradually transforms itself into a class which fulfils the tasks of the bourgeoisie in capitalist relations of production. The gradual evolutionary divorcement of the bureaucracy from the control of the masses, which continued until 1928, reached the stage of a revolutionary qualitative change with the First Five-Year Plan.
The question, however, still stands: does this not contradict the Marxist theory of the state?
From the standpoint of formal logic it seems irrefutable that if the proletariat cannot gradually transform the bourgeois state into a workers’ state, but must smash the state machine, the bureaucracy on becoming the ruling class also cannot gradually transform the workers’ state into a bourgeois state but must smash the state machine. From the standpoint of dialectics, however, we must pose the problem differently. What are the reasons why the proletariat cannot gradually transform the bourgeois state machine, and do these continue as an immovable impediment to the gradual change of the class character of a workers’ state?
Marx and Engels said that the smashing of the state machine as the first step in the proletarian revolution did not apply to England, but only to the continent of Europe. They said that in England the “social revolution might by effected entirely by peaceful and legal means”. On this Lenin says: “This was natural in 1871, then England was still the model of a purely capitalist country, but without militarism and, to a considerable degree, without a bureaucracy.” 
It is, then, the bureaucracy and the standing army that constitute the impediment to the workers’ peaceful accession to power, for the workers’ state has no bureaucracy or standing army. Thus, where these institutions do not exist, a peaceful transition can be accomplished .
Let us now see whether what excludes a gradual social revolution excludes a gradual counter-revolution.
If the soldiers in a hierarchically built army strive for decisive control over the army, they immediately meet with the opposition of the officer caste. There is no way of removing such a caste except by revolutionary violence. As against this, if the officers of a people’s militia become less and less dependent on the will of the soldiers, which they may do as they meet with no institutional bureaucracy, their transformation into an officers’ caste independent of the soldiers can be accomplished gradually. The transition from a standing army to a militia cannot but be accompanied by a tremendous outbreak of revolutionary violence; on the other hand, the transition from a militia to a standing army, to the extent that it is the result of tendencies inside the militia itself, can and must be gradual. The opposition of the soldiers to the rising bureaucracy may lead the latter to use violence against the soldiers. But this is not essential. What applies to the army applies equally to the state. A state without a bureaucracy, or with a weak bureaucracy dependent on the pressure of the masses may gradually be transformed into a state in which the bureaucracy is free of workers’ control.
The Moscow trials were the civil war of the bureaucracy against the masses, a war in which only one side was armed and organised. They witnessed the consummation of the bureaucracy’s total liberation from popular control. Trotsky, who thought that the Moscow trials and the “constitution” were steps towards the restoration of individual capitalism by legal means, then withdrew the argument that a gradual change from a proletarian to a bourgeois state is “running backwards the film of reformism”. He wrote: “In reality, the new constitution ... opens up for the bureaucracy ‘legal’ roads for the economic counter-revolution, i.e., the restoration of capitalism by means of a ‘cold strike’.” 
The word “barbarism” denotes different things. On teh one hand we say the barbaric exploitation of the workers, the barbaric oppression of the colonial peoples, the barbaric murder of the Jews by the Nazis, etc. “Barbaric” here does not denote a stage in the history of humanity, a certain content of social relations, but a certain aspect of the actions of a class, which may even be a rising, progressive class: for instance, we say the barbaric eviction of the peasantry in Britain at the time of rising capitalism, or the barbaric looting of the population of South America, etc. On the otehr haqnd, “barbarism” may denote something which, even though it has some connection with the former meaning, is yet entirely different. It may denote the total destruction of civilisation by the decline of society into an ahistorical era. This makes it a whole stage in the history of humanity. A particular event may indeed be barbaric in both senses. For instance, a third world war would be barbaric as it describes the activity of the ruling classes (the first meaning), and as it is the cause of the total decline of society (the second meaning). Essentially, however, the meanings are different and must be distinguished between. Barbarism used used with teh first meaning as regards our epoch signifies the price humanity is paying for the belatedness of the socialist revolution. Used with the second meaning it signifies the loss of all hope in a society which has decayed and declined. According to this it would be wrong to define Nazism as barbarism with the second meaning, as “renewed feudalism”, as the “state of the termites”, as an ahistorical period, etc., as the Nazi system was based on the labour of proletarians, who are historically its gravediggers and the saviours of humanity. It would be even less justified to designate the Stalinist regime as barbarism in the second sense, as this regime, in the face of Russia’s backwardness and fear of annihilation in international competition, is rapidly increasing the numbers of the working class.
This question is not a matter of philological hairsplitting, but a matter of prime importance. To use the word barbarism with its second meaning would be as wrong as to use the word slave to designate the Russian workers, if slave is used as something different and opposite to proletarian. Slavery, like barbarism with its first meaning, used to denote one aspect of the condition of the Russian worker under Stalin as well as of the German worker under Hitler – his lack of legal freedom, his partial negation of himself as a worker – would be a correct term. But used as a basic definition of a regime it would be wrong. We must therefore strongly oppose the use of the word barbarism with its second meaning to denote the Stalinist regime. As a matter of fact we must oppose its use in general to denote the stage society has reached today, and can only condone its use with the first meaning, that is, used to describe certain aspects of declining capitalism as a whole, whether American, Russian, British or Japanese.
If acertain social order is necessary to develop the productive forces and prepare the material conditions for a higher order of society, then it is progressive. We must emphasise the material conditions, as if we include all the conditions (class consciousness, the existence of mass revolutionary parties, etc., etc.), then any social order will be progressive, as its very existence proves that all the conditions for its overthrow are not there, i.e. it is progressive.
It does not follow from this definition that when a social order becomes reactionary, becomes an impediment to the development of the productive forces, the productive forces cease to advance, or that the rate of advance falls absolutely. There is no doubt that feudalism in Europe became reactionary in the 13th to 18th centuries, but this does not mean the productive forces developed more slowly in this period than before. the very opposite is the case. Similarly, while Lenin said that the period of imperialism (beginning with the last decades of the 19th century) signified the decline and decay of capitalism he at the same time said:
It would be a mistake to believe that this tendency to decay precludes the possibility of the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a more or less degree, one or another of these tendencies. On the whole, capitalism is growing far more rapidly than before. But this growth is not only becoming more and more uneven in general; its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (such as England). 
At teh same times as Lenin spoke of the decay of capitalism, he said that the democratic revolution in Russia, by sweeping away the remnants of feudalism, would give tremendous possibilities of development to Russian capitalism, which would stride forward at an American tempo. And this view he held at the time that he believed that the “democratic dictatorship of the proletariat and peasantry” would perform the tasks of the bourgeois revolution in Russia.
If we look at the figures for world industrial production since 1891 we can see that in the period of imperialism the productive forces of the world are far from absolute stagnation :
World industrial production
As regards the capacity of production, we need but take into account the control of atomic energy to see what strides have been made.
If we abstracted the backward countries from the world, we could certainly say that capitalism would be progressive in them. For instance, if the countries of the West declined and disappeared, Indian capitalism would have no less long and glorious a future than British capitalism had in the 19th century. The same is true of Russian state capitalism. But as revolutionary Marxists we take the world as our point of departure, and therefore conclude that capitalism, wherever it exists, is reactionary. For the problem humanity must solve under pain of annihilation is not how to develop the productive forces, but to what and under what social relations to utilise them.
This conclusion as regards the reactionary character of Russia state capitalism, notwithstanding the rapid development of the productive forces, might have been refuted if one could prove that world capitalism did not prepare the material conditions necessary for the establishment of socialism, or that the Stalinist regime is preparing further conditions necessary for the establishment of socialism than the world at large prepared. The former alternative leads one to the conclusion that we are not yet in the period of the socialist revolution. Of the latter, the most one may say is that the heritage Stalinist Russia will be a higher concentration of capital and of the working class than any other country. But this is only a quantitative difference: if we compare the economies of the USA and England we find that the concentration of capital and socialisation of labour is much higher in the former than in the latter, but this does not make the present-day capitalism in the USA historically progressive.
One may claim that planning inside Russia is an element which transforms the Russian economy into a progressive one in comparison with the capitalism of other countries. This is a totally unsound claim. So long as the working class has no control over production, the workers are not the subject of planning but its object. This applies just as well to the planning within the gigantic enterprise of Ford as to the whole economy of Russia. As so long as the workers are the object, planning is important to them only as an element of the material conditions necessary for socialism – as an aspect of the concentration of capital and workers. In a factory employing 100,000 workers planning is more elaborated and developed than in a factory employing 100 workers, and still more in state capitalism which employs 10 million workers. This does not make the relations of production in the big enterprise progressive relative to those in the smaller one. The plan in each is dictated by the blind external force of competition between independent producers.
The very fact of the existence of the Stalinist regime declares its reactionary nature, as without the defeated October Revolution the Stalinist regime would not have existed, and without the maturity of the world for socialism the October Revolution would not have broken out.
1. V.I. Lenin, Selected Works, Vol.IX, p.432-433.
2. N. Bukharin, Historical Materialism, London 1926, p.276.
3. F. Engels, The Origin of the Family, Private Property and the State, London 1943, p.201.
4. K. Marx, Capital, op. cit., Vol.I, pp.648-652.
5. In a letter to Schmidt, Engels dealt broadly with the question of the relation between concept and reality. He cites this example of the divergence between them: “Did feudalism ever correspond to its concept? Founded in the kingdom of the West Franks, further developed in Normandy by the Norwegian conquerors, its formation continued by the French Norsemen in England and Southern Italy, it came nearest to its concept - in Jerusalem, in the kingdom of a day, which in the Assizes de Jerusalem [the statute book of Godefroi de Bouillon for the kingdom of Jerusalem in the 11th century] left behind it the most classic expression of the feudal order. Was this order therefore a fiction because it only achieved a shortlived existence in full classical form in Palestine, and even then mostly – on paper?” (1 March 1895, K. Marx and F. Engels, Selected Correspondence, op. cit., p.530).
6. K Marx, Capital, op. cit., vol.III, p.449.
7. Ibid., p.450.
8. Ibid., p.455. Another factor strengthening the illusion that profit of enterprise is a reward for labour performed is that part of what the capitalist earns and thinks to be a profit is in reality wages for the work of management, which is socially necessary in the same way as any other bind of labour in the process of production, and must be remunerated accordingly even under socialism.
9. See K Marx, Capital, op. cit., vol.III, p.428.
10. Quoted by B Souvarine, Stalin, London 1939.
11. G.V. Plekhanov, The Materialist Conception of History, London 1940, p.32.
12. F. Engels, Anti-Dühring, op. cit., p.309.
13. R. Luxemburg, Sozialreform oder Revolution?, Leipzig 1908, p.41.
14. V.I. Lenin, State and Revolution, London 1942.
15. Fourth International and the Soviet Union. Thesis adopted by the First International Conference of the Fourth International, July 1936.
16. V.I. Lenin, Imperialism, the Highest Stage of Capitalism, op. cit., p.109. My emphasis.
17. J. Kuczynski, Weltproduktion und Welthandel in den letzten 100 Jahren, Libau 1935, pp.20-21.
Last updated on 20.1.2004