On State Monopoly Capitalism

This is the second part of a lecture I am preparing on why foreigners are still unable to understand a socialist market economy. This part examines state monopoly capitalism, which was a significant part of Soviet and European Marxist debates up to the end of the 1980. The text is as follows:

State monopoly capitalism is first and foremost a Marxist category, arising in Soviet thought (abbreviated as stamocap) and gaining widespread usage after the Second World War. Notably, in this tradition ‘state monopoly capitalism’ is used almost exclusively to speak of capitalist countries in light of the evolving stages of capitalism. With one exception: I have been able to find one example – an implicit one – where a certain type of state monopoly capitalism has been used more recently in relation to socialist countries (among others). I will deal with this exception towards the end.

State monopoly capitalism may be defined as a ‘distinct stage of capitalism characterised by the fusion of monopoly forces with the bourgeois state to form a single mechanism of economic exploitation and political domination’ (Jessop 1982, 32).[1] I have taken this definition from Bob Jessop, who provides what is arguably the most comprehensive critical overview of the theory. The date of publication is also telling, for in 1982 the theory was still relatively widespread. There were two main components: a new stage of capitalism in light of its internal crises, which entailed a closer alignment of monopoly capital and the bourgeois state; a development of communist strategy to exploit the contradictions through popular front activities.

The theory initially arose in the Soviet Union (Varga 1964, 1964 [1968], 1934) and became dominant from the 1950s to the 1980s, so much so that The Great Soviet Encyclopaedia has a major 1979 entry (Cheprakov 1979). The origins may be traced back to Marx and Engels, concerning the contradiction between competition and monopoly, and Lenin’s relatively undeveloped observation that imperialism entails the growth of state monopolies (Lenin 1916 [1964], 1917 [1964]-b),[2] so much so that – and here he quotes a resolution – ‘monopoly capitalism is developing into state monopoly capitalism’ (Lenin 1917 [1964]-a, 305; 1917 [1969]-b, 443).[3]

During its heyday, the theory of state monopoly capitalism developed in a number of directions, depending on the emphasis and context. Jessop identifies four, with copious references:

1) General crisis approach, in which the capitalist world faced yet another stage of crisis, generated by the increasing number of socialist countries, the collapse of European colonialism in light of anti-colonial liberation struggles. The response of a decaying capitalism was to find new domination through the merging of the state and monopoly capitalism.

2) Monopoly-theoretical tradition (strong in the Soviet Union and Germany), in which the contradiction of competition and monopoly leads to a permanent domination of the latter. This was seen as a new stage of capitalism, beyond imperialism – as Lenin had initially argued (Lenin 1916 [1964], 1916 [1969]). Here too we find the challenge of socialism, but now seen primarily in class terms: the international challenge of socialism leads to the fusion of monopolies and state, with resultant militarism and a focus on technological development.

3) The capital-theoretical tradition (England, but also in Germany and the Soviet Union), which focuses on the basic laws of capitalist motion. This approach emphasises that state monopoly capitalism is a crisis-driven response to the contradiction between the increasing socialisation of the forces of production and private nature of the relations of production. The state’s active role at multiple levels effectively further socialises the relations of production through the state. On the British side (Fine and Harris 1979, 120-45), this entails not a new stage of imperialism (see above), but a third stage in the capitalist mode of production, after laissez-faire and monopoly capitalism. The state’s active role – through nationalisation, taxation, and state credit – not only negates working class access to real state power through direct control, but also internationalises productive capital by working with multi-national companies and establishing international organisations such as the World Bank and the International Monetary Fund.

4) The French ‘overaccumulation’ approach, which was framed in terms of the contradiction between private monopoly capital’s overaccumulation and its revalorisation through the state. Basing its approach on the cyclical crises of capitalism, which at times reach a crescendo so that structural changes are needed, the French approach identified the increasing role of the state in ensuring that the falling rate of profit (which leads to overaccumulation) is arrested for a time by comprehensive structural changes. Thus, state monopoly capitalism becomes a necessary development to ensure, through the state’s central role, that private monopoly capital is able to produce surplus-value. And it does so through reorganising the relations of production, with the resultant increase in exploitation and polarisation of classes.

To sum up, most approaches agreed on a few basics: state monopoly capitalism was a new stage, either beyond imperialism or a third stage in capitalism (after laissez-faire and simple monopoly); this new stage was yet another systemic effort to deal with unsolvable contradictions, whether in terms of the relations of production and globalised class conflict or in terms of the means of production; it entailed new types of exploitation for workers and efforts to suppress of socialism. But they also differed in many ways, with a core difference determined by whether the focus was primarily political or economic. Thus, those who saw the development in political terms (monopoly-theoretical) were keen to find new approaches to political agitation, but they ran the risk of determining the economic analysis through such an agenda. By contrast, those who preferred to focus on the internal laws of capitalism (capital-theoretical and overaccumulation approaches) at times seemed to come close to Marxist ‘book worship’ and thus a type of economism.

I would like to close with two final questions. First, are there any abiding insights from this material? At a deeper level, it was very useful in identifying the inescapable role of the bourgeois state within a capitalist economy. Debates may continue as to the changing ways this happens, but it is a useful corrective to the neo-classical (and indeed neoliberal) approach which sees the market as a separate entity, within which the state intervenes from time to time.[4] One way of seeing the tensions within capitalist economics is in light of these two theoretical approaches: while the state is deeply and structurally involved, there are at the same time constant moves to delink the state, to privatise state assets and seek a ‘small state’. Periodically – such as during wartime or extensive economic crises – one approach dominates, but then we find a reactive move in the other direction.

This point brings me to the second question: why did state monopoly capitalism as a theory virtually disappear among foreign Marxists after 1989 and the counter-revolution in the Soviet Union and eastern Europe? One reason is that it was due to the tensions within capitalism outlined above: the drive to state monopoly capitalism produced a reaction in the 1980s, with the revival of laissez-faire economics under the label of ‘neoliberalism’. Another reason is that many of the theorists saw a major contradiction at a global level between capitalism and socialism. The latter was growing at the time, with successful revolutions in Asia, anti-colonial struggles and national liberation in Africa, Asia and elsewhere, while the capitalist world was shrinking. The counter-revolution in Eastern Europe seemed to suggest that this analysis was wrong. Instead, socialism seemed to be in retreat and capitalism was gaining momentum.

Or that is how it seemed to Western eyes in the 1990s and early 2000s. Since then, of course, much has changed. Socialist countries, especially China, are now more powerful and influential than they have been for a very long time. Many formerly colonised countries have found that the economic models borrowed from the West have not worked and they are looking for alternative models adapted to their own conditions. And these countries have also been active in international bodies, from the United Nations to the World Trade Organisation, transforming them from within to suit the conditions of a rapidly changing world.

Indeed, I suspect that ‘state monopoly capitalism’ may make a comeback as a category of analysis, albeit in a different way. Thus far, state monopoly capitalism has not been applied to socialist countries,[5] but there is a beginning of efforts to do so, albeit without any awareness of the Marxist origins and development of the term. Let me give one example, although it is implicit rather than explicit. It appears in the recent work by the neo-classical economist, Kurlantzick, who works within the framework of state capitalism but seeks to delimit its application. Realising that ‘state capitalism’ potentially applies to all states, he offers this definition: ‘countries whose government has an ownership stake in or significant influence over more than one-third of the five hundred largest companies, by revenue, in that country, a situation that gives these governments far greater control over the corporate sector than a government in a more free-market oriented nation like the United States or the United Kingdom’ (Kurlantzick 2016, 9). This definition is extremely intriguing, for Kurlantzick must work very hard to exclude a number of countries – such as France, Japan and the United States – from his list. In order to so, he adds:

  1. The ownership and control of key enterprises must be direct and not indirect (since the United States provides massive indirect subsidies to its military and automobile industries)
  2. This ownership and control must be long-term and not during economic crises, as we found after 2008 in some countries.
  3. Direct government spending on items such as welfare is also excluded.
  4. Sovereign wealth funds are excluded.

Only in this way can he focus on what are implicitly seen as state-monopoly capitalist countries. A major reason for the restrictions is that Kurlantzick is desperate to save mostly Western countries from being versions of state (monopoly) capitalism, for he sees their ‘free market’ approach and its attendant liberalism as under severe threat and failing. But even with these restrictions, the number of state monopoly capitalist countries is quite large, as the following table indicates (Kurlantzick 2016, 28):

More monopolised                    Hybrid           Less monopolised

Two socialist countries make the list, China and Vietnam, although they are by no means the most ‘monopolised’ according to Kurlantzick’s criteria. The question arises as to why this implicit state monopoly capitalism should be recurring now, albeit without awareness of the Marxist tradition. Has the effort to revive laissez-faire economics under the label of ‘neoliberalism’ run its course? I will say more on this question in the section on state capitalism.


Bollana, Primo. 1981. ‘Some Characteristics of State Monopoly Capitalism in the Soviet Union’. In Soviet Revisionism and the Struggle of the PLA to Unmask It, edited by Institute of Marxist-Leninist Studies at the CC of the PLA. Tirana: “8 Nëntori” Publishing House.

Cheprakov, V.A. 1979. ‘Gosudarstvenno-monopolisticheskiĭ kapitalizm’. In Bolʹshaia sovetskaia ėntsiklopediia. Moscow: Izdatel’stvo Sovetskaia Entsiklopediia.

Fine, Ben, and Laurence Harris. 1979. Rereading Capital. London: Macmillan.

Herzog, Phillippe. 1972. Politique économique et planification en regime capitaliste. Paris: Editions sociales.

Hoxha, Enver. 1978 [1985]. ‘Imperialism and the Revolution’. In Selected Works, 358-707. Tirana: “8 Nëntori” Publishing House.

Jessop, Bob. 1982. The Capitalist State: Marxist Theories and Methods. Oxford: Martin Robertson.

Kurlantzick, Joshua. 2016. State Capitalism: How the Return of Statism is Transforming the World. New York: Oxford University Press.

Lenin, V.I. 1916 [1964]. ‘Imperialism, the Highest Stage of Capitalism: A Popular Outline’. In Collected Works, Vol. 22, 185-304. Moscow: Progress Publishers.

———. 1916 [1969]. ‘Imperializm, kak vysshaia stadiia kapitalizma (Populiarnyĭ ocherk)’. In Polnoe sobranie sochinenii, Vol. 27, 299-426. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1964]-a. ‘Speech in Favour of the Resolution on the Current Situation, April 29 (May 12), 1917’. In Collected Works, Vol. 24, 305-8. Moscow: Progress Publishers.

———. 1917 [1964]-b. ‘War and Revolution: A Lecture Delivered May 14 (27), 1917’. In Collected Works, Vol. 24, 398-421. Moscow: Progress Publishers.

———. 1917 [1965]. ‘The Impending Catastrophe and How to Combat It’. In Collected Works, Vol. 25, 323-69. Moscow: Progress Publishers.

———. 1917 [1969]-a. ‘Groziashchaia katastrofa i kak s nei borot’sia’. In Polnoe sobranie sochinenii, Vol. 34, 151-99. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-b. ‘Rech’ v zashchitu rezoliutsiia o tekushchem momente, 29 aprelia (12 maia)’. In Polnoe sobranie sochinenii, Vol. 31, 443-46. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-c. ‘Voina i revolutsiia: Lektsiia 14 (27) maia, 1917g’. In Polnoe sobranie sochinenii, Vol. 32, 77-102. Moscow: Izdatel’stvo politicheskoi literatury.

Varga, Evgenii. 1934. The Great Crisis and its Political Consequences: Economics and Politics, 1928-1934. London: Modem Books.

———. 1964. Ocherki po problemam politékonomii kapitalizma. Moscow: Gospolitizdat.

———. 1964 [1968]. Politico-Economic Problems of Capitalism. Moscow: Progress Publishers.

[1] Compare the definition in The Great Soviet Encyclopaedia: ‘new, more developed form of monopoly capitalism, characterized by the joining of the forces of capitalist monopolies with the power of the state to preserve and strengthen the capitalist system, enrich the monopolies, suppress the workers’ and national liberation movements, and unleash aggressive wars’ (Cheprakov 1979).

[2] Lenin speaks of ‘the beginnings of state-controlled capitalist production, combining the colossal power of capitalism with the colossal power of the state into a single mechanism and bringing tens of millions of people within the single organisation of state capitalism’ (Lenin 1917 [1964]-b, 403; 1917 [1969]-c, 83). For a comprehensive assessment of Lenin’s contribution, see Jessop (1982, 32-36).

[3] Lenin is, however, not entirely consistent in his usage and the theory remains somewhat undeveloped. Before the October revolution, he saw state monopoly capitalism as a development, especially in the context of war, to a new level of capitalism itself, although even here it was already seen as a step towards socialism (Lenin 1917 [1965], 361-63; 1917 [1969]-a, 191-93). Later, he quotes from this 1917 text – ‘The Impending Catastrophe and How to Combat It’ – in ‘The Tax in Kind’ from 1921, where he argues for the need for a muted verison of state capitalism during the New Economic Policy. In other words, he subsumed state monopoly capitalism under state capitalism (see below), which he saw as a (major) step towards socialism. This inconsistency is most likely due to different circumstances: the initial proposal was made before the October Revolution during the last phase of Russia’s engagement in the First World War, while his later development of the idea took place after the revolution and Civil War, particularly in light of the need to develop the New Economic Policy.

[4] Indeed, one of the debates over state monopoly capitalism concerned the relation between state and economy: were they fused under state monopoly capitalism, distinct, or did they function in terms of ‘contradictory separation in unity’ (Herzog 1972, 125)

[5] One does find very occasional accusations internal to the former Eastern Bloc that the Soviet Union and Yugoslavia had descended, from the time of Khrushchev, to a type of state monopoly capitalism (Bollana 1981; Hoxha 1978 [1985], 414-15).