Ask Lemmygrad

@[email protected] and @[email protected] already provided good answers to this question, so I will just add my 2 cents.

I dislike the term state capitalism, because capitalism per se is a state system. The nation-state is the way the bourgeoisie thought it would be best to organize a country ever since the end of the monarchies in Europe in the 19th century. Nation states have laws (which secure private property, and how agents that hold private property should engage each other), have clearly defined borders, an official language (in feudalism many villages within a territory would speak many different dialects), concentrate all the power of violence and bureaucracy under the nation-state (a move that started to happen since the advent of absolutist monarchies), will issue a currency and will define the laws on how foreign actors will engage in the domestic economy.

So the capitalist market is a superstructure created by the nation-state to uphold the interests of the capitalists. The state creates the conditions for the market to exist. It creates the entire legal framework that is used by the market, and even runs state services (transportation, energy generation, police, roads, railways, airports, military, diplomacy, urban zoning etc) that will support capitalist enterprises. There is a dialectical relationship between the market and the state, both a positive relationship, as the market depends on the state to exist and a contradiction in the sense as the market battles the state bureaucracy to have more power over it (as in neoliberalism) and/or the state fights the market in order to establish the dominance of state-based economic development (as it happened in the Keynesian phase of post WW2).

Note that socialism and capitalism are not different from each other because of economic planning. Both Japanese and South Korean economies heavily depended on central planning, with South Korea having a dictatorship and central planning that was even more centralized than we ever had in the post communist revolution China. The SK state was draconic with capitalists regarding their returns and how they should invest their capital and they would be disposed if they didn't achieve state development goals.

This reasoning about planning was what motivated Deng Xiaoping's market reforms in China:

Why do some people always insist that the market is capitalist and only planning is socialist? Actually they are both means of developing the productive forces. So long as they serve that purpose, we should make use of them. If they serve socialism they are socialist; if they serve capitalism they are capitalist. It is not correct to say that planning is only socialist, because there is a planning department in Japan and there is also planning in the United States. At one time we copied the Soviet model of economic development and had a planned economy. Later we said that in a socialist economy planning was primary. We should not say that any longer.

So the idea that state-capitalism is an initial form of socialism is wrong. The real question is, who holds power over who? The communist party, controlled by fractions of the proletariat is the controller of the state in the case of socialist economies. In capitalist economies, even in case of countries with good welfare programs, the state is still controlled by the bourgeoisie. Let's never forget the politics in political economy. This is essential to understand how both capitalism and socialism work. Let's not fall in the same trap the traditional neoclassical economists do in order to label economic systems.

State capitalism is what libs call socialism whenever it's objectively doing too much better economically than their own shit.

Soothes the butthurt to also puff some copium.

When Lenin says capitalism, he doesn't necessarily mean dictatorship of the bourgeoisie. That's what people get hung up about because nowadays the word is inseparable from liberalism. But when he says state capitalism, he's just talking about using the state to direct a capitalist economy. You can do that communistly like how China directs its economy towards renewables, research, infrastructure, poverty alleviation, etc. Or you can do that liberally like how the US gears its economy towards war, racketeering, and debt.

In practice, IME, a confused term generally put forward by people who for some reason don't want to call AES states socialist projects (possibly in part because of how vilified the words socialism and communism are in the west). The most important question is, who / what interest group is in power. In China, the working class is in power through the dictatorship of the proletariat. In the US, the capitalist class is in power through a dictatorship of capital. Beyond this, it can get nuanced on what the conditions are of a given state and how they go about designing and carrying out policies and so on.

But it's more literally accurate to say the US is "state capitalism", though in this regard it's kind of redundant; the state ensures that capitalism is the only mode that can be in power. Corporate lobbyists and representatives are a revolving door. In other words, in the US, the operations of capital and the operations of the state often work hand in hand; they just do it more indirectly than you'd see in something centrally planned. If the capitalists were to abolish the state (such as in the anarcho-capitalist fantasy), they would also abolish a vital mechanism through which they enforce the capitalist reality and so they would lose/dilute much of their power in the process. This is important because some people get confused and think of socialism as "state doing stuff" and capitalism as "private enterprise doing stuff", but it's not that simple. Capitalism is a specific mode of private enterprise having supreme power through its ownership of the means of production and distribution; land, factories, etc. China is not capitalist because the capitalists are not in charge. Capitalists are subservient to the state rather than using the state to define and enforce their power.

The reality of global capitalism being such a pervasive part of the world economy no doubt gives China some capitalist characteristics in spite of its best efforts if for no other reason than because in order to not be isolated, it has to trade and deal with the capitalist global economy. But the nature of its society as a whole is still going to be significantly different than the US, for example, because of where power derives from and whose interests it is for.

What I think “state capitalism” is is a terrible term, so I don’t use it.

What it usually means is state-owned production, which is publicly owned means of production. https://en.wikipedia.org/wiki/State_capitalism

State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital accumulation, centralized management and wage labor).

I think it’s a terrible term because they aren’t bound to the M-C-M’ capitalist mode of production. They’re not capitalist. Why would they be when the state can simply print money? It makes no sense to “accumulate capital” when you’re the sovereign and can create money by fiat.

Central planning with private ownership of capital. The economy is dominated by private enterprise that employs workers for a wage and collect profits from the surplus value created by workers, but politics are in command instead of the anarchy of markets.

Ultimately it's a strategic step towards achieving socialism; a developmental stage that allows the centrally planned economy to attract foreign investment and implement rapid development until it's not needed. China, for example, is replacing more and more of its private sector with fully/majority publicly owned companies. I believe a majority of China's economy is now public, not private. If the trend continues, most private ownership will whither away.

Was it necessary? I don't think so - this is just how history happened to unfold.