Populism and Producerism

With the recent debate on the Wheat Board there has been a focus in Federal politics on Western Farmers. The farmers movement in Western Canada influenced politics in Canada both left and right for the past ninty years and still is.

It is the politics of producerism. It's populism is deeply political, and its producerism is the source of its critique of the capitlaist monopoly marketplace.

When it is used by the right wing such as the Reform party, it is used as an attack on state monopolies. When used by Social Credit it was the monopoly of the banks. When used by the left such as the CCF it was an attack on monopoly captialism and its state.

The Prairie Roots of Canada's Political 'Third Parties'

Farmers' organizations were also thinking seriously about new political departures. When the "Union Government" from 1917-1920 failed to make significant changes to the tariff structure, many farmers decided to give up on the old parties.

Some political activists on the prairies believed that political parties were inherently undemocratic, and that they should be replaced by non-partisan political organizations. Even if not solidly "anti-party," many western political activists were determined to break the mold of previous party practice.

As grain farmers made up the largest single occupational group on the prairies, provincial grain grower associations and co-operatives made up the major interest groups who dealt with provincial and federal governments. So when organized farmers in Alberta, Manitoba and Saskatchewan followed the United Farmers of Ontario by "going political" between 1920 and 1922, potent political forces ready to replace old party government were suddenly on the scene.

Farmers' parties were able to mobilize citizen opinion concerning public ownership of banks and resources, re-design of political institutions, and other reform measures. Under pressure from the "Non-Partisan League," the United Farmers of Alberta organization (UFA) developed the most radical and distinctive critique of old-party politics, and a new theory for political representation. Farmers' organizations of other western provinces were less innovative but nonetheless succeeded in laying the foundations for third party politics.

Prairie farmers regularly attacked the National Policy, especially the protective tariff. In 1921, the Canadian Council of Agriculture's "Farmers' Platform" observed that the tariff was "a chief corrupting influence in our national life because the protected interests, in order to maintain their unjust privileges, have contributed lavishly to political and campaign funds, thus encouraging both parties to look to them for support, thereby lowering the standard of public morality."

The originators of this Western Populism and Producerism were William Irvine who would co found the CCF and Henry Wise Wood the ideolouge behind the United Farmers of Alberta movement.

Farmers not only reinforced, but they also criticized the rural socio-economic order, as they often expounded a radical, "populist" discourse that exposed the material inequalities inherent in monopoly capitalism. Drawing on populist traditions of castigating corporate, political, and social privilege, this particular strain of radical agrarianism at once embraced and critiqued the concept of producerism, or the labour theory of value. This vision of society held that the producing class, made up of farmers and skilled workers, needed to band together to defeat monopoly and corporate power to retain the fruits of their labour for themselves. Even though this socio-economic outlook encountered many adherents in both the Grange and Patrons of Husbandry, it tended to exhibit a more negative view of other classes in the larger community. Dividing society into either useful producers or slothful and parasitical non-producers, some members of the Dominion Grange and the Patrons of Industry fostered adversarial sentiments within the less prosperous members of the agricultural population, focusing on issues of their material, political, and even social exclusion. However, what is noteworthy regarding this antagonistic class rhetoric of agrarian protest is that farmers advocating the continuance of market agriculture and those supporting the co-operative system could both maintain hostile relations with those individuals deemed non-producers. "Severing the Connections in a Complex Community": The Grange, the Patrons of Industry and the Construction/Contestation of a Late 19th-Century Agrarian Identity in Ontario

While monopoly especially by banks and railroads were the main focus of producerist outrage its populism could easily become the hatred of the 'other' as much as critique of the capitalist banker, landlord, railbaron. That other was the loafer. And thus the rural revolt in Western Canada, the source of our 'alienation' as a colony of Ontario and the Railroads, was as much against the metropole as it was against colonialism by "lazy-faire capitialists".

"The Business Clerk as Social Revolutionary; or,
a Labor History of the Nonproducing
Classes"

In fact, the age abounded in loafers. There were literary loafers, Yankee loafers,
French loafers, genteel loafers, common loafers, and country loafers, among others, the
latter observed by Nathaniel Hawthorne at the Brighton Cattle Fair “wait[ing] for some
friend to invite them to drink.” Nevertheless, loaferism was most essentially a metropolitan
phenomenon, haunting the city’s sidewalks, wharves, museums, and parks, and serving as a
ready epithet for anyone needing to hurl an insult. The young New York conservative
George Templeton Strong thus ascribed the worst tendencies of democracy, “so called,” to
the loafer, while the Southern Literary Messenger accused him of no less than advocating
“the sublime doctrine of social equality.” Loafers were known for cursing without shame
and for smoking cigars. They cared little for the law and exhibited a marked disregard for
public life in general. They were eccentric, if not impudent, in their personal habits. They
had a weakness for billiards and bar-rooms and were maddeningly self-satisfied, if not
philosophically reclusive. And they wore stand up collars that were, more often than not,
covered in stains.

The producerist/populist ideology of Prairie farmers, is a contiental North America phenomena.

A COMPARATIVE VIEW OF POPULISM ACROSS TIME AND SPACE:

Fertile fields, indeed, for social movements of the type that Tilly described: modern, organized, and sustained efforts on behalf of people who consider themselves powerless to shape their own future, movements that are political in intent but not confined to political parties. What we have seen emerging since the 1970s are cross-class movements, for the most part, tending to be centered in the lower middle class, but still comprised of people who consider themselves to be “producers” (though now their self-identity may include equal parts of “consumer”), and possessing as a birthright sufficient cultural resources to organize themselves for action. For a variety of reasons most have come to view government as the principal threat to their liberty and economic well-being and to express that feeling with as much intensity as “my” populists ever did against the monopolists.
I believe that Tilly points us toward the kind of framework needed to analyze “populist” movements of the past quarter century as a class of collective behavior, not merely a language or generalized sense of resentment. Modern day movements of this type are organized and sustained activities that bring forward programs of “reform” on behalf of “the people.” They make use of cultural resources at hand, even while harboring deep suspicion of dominant cultural institutions. They connect, in some way, to constitutional and democratic processes. While they often have strong leaders they cannot be understood solely in terms of the leader’s ability to sway the impressionable masses.
In this way of looking at the phenomenon in America, groups that are “off the grid”

When producerists support a market place alternative to cooperatives like the Wheat Pools and the Wheat Board, though the later is state sanctioned, it is not the current capitalist marketplace they long for. It is the idealized 'free market'.

"Raising Less Corn, More Hell"

In the course of three decades as a newspaper writer, Pyle went from feeling that the "farm beat" was like covering the progress of a glacier to understanding that the real story of agriculture in America is quite dramatic. In Pyle's view, our farming culture is based on one big bad idea and one big fat lie.

"The bad idea," he writes, "is the increasing concentration -- economic, political, and genetic -- of the ways in which our food is produced." The lie behind it is that "the world is either short of food or risks being short of food in the near future." With the help of an editorial writers' fellowship, and later as the director of the Prairie Writers Circle at the Land Institute in Salina, Kansas, Pyle took time away from his daily deadlines to research a book on the American farm economy.

"Raising Less Corn, More Hell" is dedicated to the memory of his father, who was raised on a Kansas farm, but Pyle is no sentimentalist when it comes to the fate of family farms. What the agricultural economy needs, he argues, is a truly free market -- not one kept afloat by federal subsidies and unaccounted environmental damage. The root cause of hunger, he claims, is usually a lack of money. Yet the fear of not having enough food has driven the rise of chemical fertilizers, massive machinery, genetically modified seed, and whatever else will help squeeze greater yields out of every acre.

Meanwhile, the true costs of the industrial system -- eroded soil and depleted aquifers, polluted water and air, desperate and indebted farmers, rundown main streets, unhealthy diets, and a food supply at risk - are not factored into the price of food.

Even as we push to grow more, the government subsidizes farmers for growing less. The subsidies continually fail to keep up with gains in production, leading to a surplus of food that costs less than it should. This gets shipped abroad and cripples the efforts of third-world countries to develop their own agricultural base. And so the system fails even on its promise to feed the world.

It was perhaps inevitable that a producerist ideology would find itself supplanted by the distributionist ideology advocated by Social Credit. The later is more urban the former rural. Within a decade the producerist populism of the UFA would divide itself into two political streams the prairie socialism of the CCF and the distributionist poltical economy of Social Credit.

The latter is a post WWI modernist movement that attempted to create a catholic socialism. It is the theories of Hilaire Belloc transformed by the English journal New Age publishers of Major Douglas the founder of Social Credit. Distributionism places the producer and consumer as equals while railing against monopoly, banking monopolies in particular .The unfortunate downfall of all such economic monotheisms that they fall into consipracy theories around the origins of Banking and the Jews.

If producerism is the populist economics of agrarian revolt, Distributionism is its equivalent for those living in towns and cities outside the major port metropoles of Toronto, Montreal, Vancouver and Halifax. The common enemy of producerism and distributionism is the banks, which are an icon for the Eastern Power Establishment in both Canadian and American political geography.

Thus years later the Reform Party of Canada was able to launch itself on the basis of a prairie populism which had once been a movement of radical reform that had become established as a prairie identity, despite the changes and evolution of Alberta, Saskatchewan, Manitoba and B.C. into modern urban cultures. The conservative ideology has always been to look backward, and in this case in looking backwards they embraced agrarian protest politics and purged it of any of its socialist roots.

The Eastern establishment, a much more sophisticated political class saw this as bumpkinism. They laughed off the Reform party, and its funny looking leader as irrelevant in this day and age. They forgot two important things, the deep seated roots of prairie populism regardless of party political alignment and that economic and thus political power was moving west.

If the Reform/Alliance/Conservative party gained credence and support from its shameless exploitation of genuine prairie populism, the newly minted Green Party may be able do the same with its embracing of a fiscal conservative economics merged with Distributionism which is the ideology of new Leader Elizabeth May .

See:

A History of Canadian Wealth, 1914.

Happy Canada Day/Jour heureux du Canada

Historical Memory on the Eve of the Election

Calgary Herald Remembers RB Bennet

Canada's First Internment Camps

Social Credit And Western Canadian Radicalism

Rebel Yell

Social Credit

Western Canadian Populism


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THE BRITISH DISTRIBUTIONISTS

Those who are regular readers will know that I have a passing interest in Distributionism and its impact on Canadian reformist populist politics of the Right and Left.

From the Canadian Anarchist Journal; Any Time Now. ATN #26 - Spring 2007
it includes a critique of Elizabeth May's mentor; Commander Coady.*

THE BRITISH DISTRIBUTIONISTS
review by
Kevin A. Carson
Race Matthews. Jobs of Our Own: Building a
StakeholderSociety--Alternatives to the Market & the State
(Australia and UK, 1999).

Matthews starts with the nineteenth century origins of
distributism: in the Catholic social teaching of Leo XIII's De
Rerum Novarum (heavily influenced by the proto-distributist
cardinal, Henry Manning, who in turn translated it into
English and added his own commentary), and the wider
tradition of Christian socialism; and in what Matthews calls
the "communitarian and associative" strand of the greater
socialist movement.

The distributist vision of a social order based on
widespread, small-scale ownership of property, and of
an economy where the means of production were
mainly owned by workers, dovetailed closely with the
principle of "subsidiarity" in Catholic social teaching:
that social functions should be carried out at the
smallest scale and the most local level of control
possible.

Distributism clearly also had strong roots in the socialist
revival of the 1880s, but was alienated from an increasingly
statist and collectivist socialist movement. In the terminology
of Chesterton and Belloc, distributists saw themselves in
opposition to both capitalism and socialism. But I get the
sense, from reading Matthews, that their position was less a
repudiation of socialism as such than a recognition that the
state socialists had permanently stolen the term for
themselves in the public mind.

Rather than a breach with socialism, it would perhaps be
more accurate to say they abandoned the term to their
enemies and adopted the name "distributism" for what
"socialism" used to mean. One contributor to the Distributist
Weekly, W.R. Titterton, commented that distributism would
have fit nicely with the kind of socialism that prevailed in
England back when William Morris was alive (and, I suspect,
would have fit in better yet with the earlier socialism of
Proudhon and the Owenites). "It was a fine time that, and
the vision which possessed us might at last have captured
England, too. If we had not met Sidney Webb!"
The Fabians, like other collectivists who have tried to
marginalize cooperativism within the socialist movement,
dismissed distributism as a "petty bourgeois" or "preindustrial"
movement relevant only to "artisan labor," and
inapplicable to large-scale industrial organization. Cecil
Chesterton, whose premature death dealt distributism a
serious blow, treated such arguments with the contempt
they deserved. "If Mr Shaw means... that it cannot distribute
the ownership of the works, it might be as well to inquire first
whether the ownership is distributed already.... I must
confess that I shall be surprised to learn that Armstrong's
works are today the property of a single man named
Armstrong.... I do not see why it should be harder to
distribute it among Armstrong's men than among a motley
crowd of country clergymen, retired Generals, Cabinet
ministers and maiden ladies such as provide the bulk of the
share-list in most industrial concerns."

Of the major intellectual figures of British distributism, Cecil was the most
aware of the central importance of producer organization.
The distributist movement of G.K. Chesterton and Hilaire
Belloc, unfortunately, was long on theory and short on
action. It made little or no attempt at common cause, for
example, with the Rochedale cooperative movement.
Although distributist intellectuals were strongly in favor of
cooperatives in principle, they seemed to have little
awareness that the wheel had already been invented!
Despite impulses toward practical organization in the
provincial chapters of the Distributist League, and Fr.
Vincent McNabb's support of agrarian colonies on vacant
land, such efforts were inhibited by the leadership vacuum
in London (whose main concern, apparently, was apparently
intellectual debate, soapbox oratory, drinking songs, and
public house bonhomie).

Antigonish

The first large-scale attempt to put distributism into practice
was the Antigonish movement of Frs. Jimmy Tompkins and
Moses Coady, among the Acadian French population of
Nova Scotia. Tompkins and Coady acted through adult
study circles, strongly geared toward spurring practical
action. One of the first outgrowths of their educational work
was a decision by lobstermen to build their own cooperative
canning factory. This quickly led to cooperative marketing
ventures, buying clubs for fishing supplies, and cooperative
outlets for household woven goods. The movement
continued to spread like wildfire throughout the Maritimes,
with over two thousand study clubs by the late '30s with
almost 20,000 members, and 342 credit unions and 162
other cooperatives. By keeping for themselves what formerly
went to middlemen, the working people of the Antagonish
movement achieved significant increases in their standard of
living.

Through it all, Coady and Tompkins were motivated by
the "Big Picture" of a cooperative counter-economy on a
comprehensive scale: cooperative retailers, buying from
cooperative wholesalers, supplied by cooperative factories
owned by the movement, and financed by cooperative
credit.

In practice, though, the main emphasis was on
consumption and credit rather than production. The
fundamental weakness of Antigonish, Matthew argues, was
that it relied mainly on consumer cooperation, on the
Rochedale model. Consumer cooperation, by itself, is
vulnerable to what Matthews calls the "Rochedale cul-desac,"
in which cooperatives have "gravitated from the hands
of their members to those of bureaucracies," and adopted a
business culture almost indistinguishable from that of
capitalist firms. Worse yet, cooperatives are sometimes
subject to hostile takeovers and demutualization.

The problem with the cooperative movement, idealized by Distributionists, Social Credit and even the CCF was it was limited as a producer's movement in opposition to existing capitalism. It was unable to produce a strong enough alternative economy and political force, whether from the right or left as the legacy of the UFA, Socreds and CCF show, to defeat existing capitalist relations.

When these producer based movements became political parties within a parliamentary system they literally sold their souls to the company store.
In building a broad based alliance between farmers, workers, and urban professionals, these movements pushed for real parliamentary reform calling for direct democracy; referendum, recall.

In becoming a political party especially one in power, whether in Alberta or Saskatchewan, or indeed in some American states, the ability to reform the parliamentary system was limited, and in fact a straight jacket around the realpolitik of the movements.

Ultimately such movements during the last century in Europe and in North America ended up as consumer cooperatives, rather than independent artisan or producer alternatives to the banks and ultimately the capitalist system of production and distribution.

As such they became cogs in the existing capitalist system, as they are today. One really cannot tell the difference between the CO-OP stores and Safeways, or the Credit Unions and the big Banks.

Since once you transform producers to wage slaves they ultimately become 'consumers' in capitalist culture. As such they are subjects of history, rather than class conscious objects; makers of history.

The advent of transforming producers into wage slaves and ultimately declasse consumers, was the ultimate key to the survival of post Depression, post WWII capitalism.

The secret to becoming a revolutionary class for and of itself, the object of history, is the proletariats realization of the need to once again become producers,and land owners, thus self-valorizing individuals.



* a cheeky reference to a ground breaking rockabilly group from the sixties; Commander Cody and the Lost Planet Airmen.


SEE:

Corporatism

Shameless

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NAFTA Poisioning

With the liberalization of trade regulations, and the neo-con agenda of de-regulation, reducing public services, the privatization and contracting out of inspection services leads to consumer poisoning.

And it ain't just China that's to blame.

NAFTA2 aka the SPP is also to blame.

The Canadian Food Inspection Agency is warning the public not to consume Los Angeles Salad Company Genuine Sweet Baby Carrots because the product may be contaminated with Shigella.

The item is labelled as product of Mexico and is sold in 672 gram plastic bags and sell by dates up to and including August 13th, this year.

The agency says the product was sold in Costco stores in British Columbia, Alberta, Ontario, Quebec and Newfoundland.

This is not the news story the three amigos and their corporate buddies wanted to hear this morning.

The Canadian Press reported Sunday night that the leaders will issue a statement regarding procedures aimed at keeping borders open should another 9/11-type emergency occur, yet political activists say there's apparent secrecy on other issues up for discussion.

They say business leaders have been invited to meetings with the "Three Amigos" in Montebello, while protesters have been shut out. Their signs and shouts will only be available to leaders via video link.

"We want Canadians, Americans and Mexicans to know that this is a big-business driven process, for them and by them, to deregulate all sorts of regulations across the board -- environment, health, safety worker standards," said Maude Barlow, chair of the Council of Canadians, the main group behind a protest in Ottawa on Sunday.

Last time it was organic American spinach, then organic carrots. And under the SPP agreement being discussed today America wants Canada to reduce its food safety regulations.

Regulatory harmonization, or regulatory co-operation as it is euphemistically called, is another top priority for business. Leaders have asked their officials to complete a "regulatory framework agreement" in time for the Montebello meeting. This will set the guidelines for many SPP initiatives. It is unlikely that we will see the full framework agreement, and even less so that we will see how it is applied in specific circumstances. Critics believe the government is preparing to weaken Canadian health, safety and environmental regulations and standards in the name of trade.

Let’s take the example of food safety. The SPP’s business council (the NACC) called for the harmonization of Canadian and U.S. lists of toxic substances, which are preventing some U.S. products from being sold in Canada. We also know that an SPP committee is working to resolve differences in pesticide maximum-residue limits. But will we ever know the outcome of these negotiations?

In this case, we do know now, thanks to an astute Ottawa Citizen reporter, who discovered that the Canadian government is in fact planning under the SPP to relax its requirements on pesticide residues on fruits and vegetables entering from the U.S. Some 40 per cent of the pesticides Canada regulates have stricter limits than U.S. regulations. The U.S. sees them as trade barriers and wants the list of priority pesticides to be relaxed. With the Bush administration aggressively dismantling its own regulatory systems, this harmonization concession amounts to Canada importing U.S. deregulation. Will this be the norm or the exception?

SEE:


The Truth About the Farm Crisis

Alberta State Capitalism

Fish Contamination

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Mother Prevails

Mother Nature does what the protesters could not at the Trilateralist SPP/North American Union Summit in Montebello, Quebec.

Hurricane concerns to cut summit short

Oh he was hoping for more protesters to improve his profile?

Harper dismisses 'sad' summit protest as police fire tear gas

As riot police fired tear gas and pepper spray to hold back demonstrators outside the Montebello summit Monday, Stephen Harper shook hands with George W. Bush and dismissed the protest as a “sad” spectacle.

The prime minister welcomed Bush to the North American Leaders’ Summit as the U.S. president stepped off his helicopter on to the lush grounds of the posh — and heavily guarded — Chateau Montebello. “I’ve heard it’s nothing,” the prime minister said when asked whether he’d seen the protesters. “A couple hundred? It’s sad.”

And actually it was more than a couple of hundred protesters.

The protesters were among about 2,000 people who demonstrated for several hours outside the site of the meeting of U.S. President George W. Bush, Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon.

And it is a secret meeting after all, and has not been as well publicized as the "secret" meetings of the Bilderberg's, or Davos World Social Forum of the ruling classes. Which also did not get a lot of protests until after Seattle.

Hallmarks of the People’s Global Action (PGA)

As agreed to by social movements at the PGA Conference in Cochabamba, Bolivia, August 2001:

1. A very clear rejection of capitalism, imperialism and feudalism; all trade agreements, institutions and governments that promote destructive globalisation;

2. We reject all forms and systems of domination and discrimination including, but not limited to, patriarchy, racism and religious fundamentalism of all creeds. We embrace the full dignity of all human beings;

3. A confrontational attitude, since we do not think that lobbying can have a major impact in such biased and undemocratic organisations, in which transnational capital is the only real policy-maker;

4. A call to direct action and civil disobedience, support for social movements’ struggles, advocating forms of resistance which maximize respect for life and oppressed peoples’ rights, as well as the construction of local alternatives to global capitalism;

5. An organisational philosophy based on decentralisation and autonomy.

Ironically for Canada's Gnu Government, which which hates all things Liberal, and supports the SPP the idea for a North American Union was laid out back in the eighties by those nasty Liberals with their MacDonald Commission






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FDR and the origins of State Capitalism

As I have written before state capitalism is a historic epoch. It saved capitalism from self destruction and from workers revolution. A revolution which was aborted and beccae a model for historic shift in the thirties to State Capitalism. It resulted from the shift from post WWI production to finance capital. The roaring twenties was a period of both Fordist expansion and expansion of finance capital. And that led to the crash of 1929.

It follows, therefore, that during a crisis the decline in commodity prices is always accompanied by a contraction in the volume of credit money. Since credit money consists of obligations assumed during a period of higher prices, this contraction is tantamount to a depreciation of credit money. As prices fall sales become increasingly difficult, and the obligations fall due at a time when the commodities remain unsold. Their payment becomes doubtful. The decline in prices and the stagnation of the market mean a reduction in the value of the credit money drawn against these commodities. This depreciation of credit instruments is always the essential element of the credit crisis which accompanies every business crisis.
Rudolf Hilferding, Finance Capital. A Study of the Latest Phase of Capitalist Development


In response to the crash of '29 Keyenes suggested that since the State creates capital in the form of money that it should intervene as the producer of credit and save the market. Just as it is now saving International Financial Capitalism from itself;

“The government intervention is not a government takeover,” Mr. Bush said. “Its purpose is not to weaken the free market. It is to preserve the free market.”

Which is exactly what FDR did after three years of Depression in the U.S. And which Republicans have spent the last sixty years denouncing, mistakenly, as Socialism. George W. Bush has ended his romance with Ronald Reagan to embrace the real politicks of FDR.

As Rosa Luxemburg pointed out;This new type of capitalism--properly called state-capitalism--persists to the present day in the ideological dress of 'socialism."


In fact it was a historic moment in Capitalism, when the financial exuberance of the market collapsed internationally, and the capitalist State came to the rescue, changing the nature of capitalism forever.

To sum up: the development of the productive forces of world capitalism has made gigantic strides in the last decades. The upper hand in the competitive struggle has everywhere been gained by large-scale production; it has consolidated the "magnates of capital" into an ironclad organisation, which has taken possession of the entire economic life. State power has become the domain of a financial oligarchy; the latter manages production which is tied up by the banks into one knot. This process of the organisation of production has proceeded from below; it has fortified itself within the framework of modern states, which have become an exact expression of the interests of finance capital. Every one of the capitalistically advanced "national economies" has turned into some kind of a "national" trust.N.I. Bukharin: Imperialism and World Economy Chapter VIII


State Capitalism in the thirties took on various forms, including Fascism, which itself is a form of nationalized corpratist state. Which once again right wing American politicos deliberatly confuse with Socialism. Whether it was FDR, or the populist movements of Prairie Socialism or Social Credit, state capitalism originated as a form of Distributionism, and is not socialism.At best it is about 'sharing the wealth', but not changing the fundametal nature of capitalism.

With the end of WWII the modern form of State Capitalism was born. It was internationalist and imperialist, reliant upon the Cold War to continue the prosperity of War Production. Both East and West were mutating into new forms of State Monopoly Capitalism; Stalinism in the East and the Military Industrial Complex in the West.

Contrary to pundits on the right, it is the historic mission of the capitalist state to save capitalism from itself, from its excesses. A lesson learned in the thirties. Socialism is not merely the state nationalizing or owning private assets, it is workers owning the means of production, not as taxpayers or consumers, but as producers. Anything less is merely another face of capitalism.

And capitalism is not a 'free' market, but the historic movement towards global expansion and the increasing development of large monopolies, whether they are private corportations or state controled ones. Thus China's development as evolving from State Capitalism into a form of Monopoly Capitalism can be explained in light of both Schumpter and Hilferding .

Lenin and Bukharin influenced by Hilferding saw Capitalism of their day evolving as a new form of Imperialism, which today we call Globalization. They also saw the beginings of a new form of Capitalism; Fordist rproduction financed by Banks which we call Monopoly Capitalism. However their view that socialism was public ownership of Monopoly Capitialism was coloured by their view of the State.

As Social Democrats they viewed control of the State as the essence of Socialism. When in reality, as the Russian Revolution, and later Revolutionary periods of workers uprisings; Spaing 1936-39, post WWII revolts in Poland/East Germany and Hungary, France in 1968 and Italy in 1973 would show, workers recolution was about direct workers control of production, workers self management, not state ownership or state management.

Which is why stripped of the rhetoric, the so called Socialism of China is simply another face of Monopoly capitalism. And the current financial crisis is a crisis of competing capitals, which may result in rebalancing the Imperialist powers globally. America is in debt to the Asian Tigers and the current economic crisis harkens us back to the crisis and reshaping of the world after 1914.

And like that period the elephant in the room is actually not the fiscal crisis at all but the solution to this crisis which is either Inter-Imperialist War or workers revolution. Already the sabre rattling and small wars and war like crisises are part of the background noise we read and hear everyday, despite the rollercoaster that is Wall Street.

Around the world food production is down, costs are up and last year there were thirty major revolts world wide around food. In China and around the developing capitalist economies the proletariat are revolting, each new product failure, collapsing mine, or major capitalist disaster is met with increasing distrust of the 'system', the 'estalishment'. The falling rate of profit that so called Marxist myth, has once again reared its ugly head.

And if the pending crash and recession are serious and deep enough even American Idol besotted American Consumers may suddenly realize they are actually proletarians, facing the imminant collapse of not only their Empire, but of their very livlihoods, and revolution will be on the agenda once again.

It was exactly this threat of world revolution that spurned FDR and the American capitalist establisment to try and stablize capitalism last time around. And for sixty years it succeeded, until the predictable happened again; capitalism melted down.

--------------------The Origins of State Capitalism-------------------------

"H.G. Wells was one of the few socialists who claimed to see big business, and multinational corporations, in particular, as the forerunners of a World Socialist State"

John Maynard Keynes wanted a global system of fair trade and fair development free of debt bondage and unemployment. His greatest ideas came up against a USA determined to rule the world, to hold off trade competitors at any cost, and to wring from the Third and Fourth worlds every ounce of wealth it could squeeze at whatever cost in human suffering.

Keynes was an enlightened capitalist. His life’s work is adequate proof of that. He was also an anti-Communist, quite openly. Nonetheless, his total defeat on international trade and monetary policy by the US demonstrates the fate of the enlightened, even of enlightened capitalists – even ones of outstanding genius up against corporate capitalist imperialism.

He was a member of the justly famous Bloomsbury group: Virginia and Leonard Woolf, Lytton Strachey, Clive and Vanessa Bell, Duncan Grant, and a host of other luminous, talented, gifted people. Keynes connected as well with W.H. Auden, Rupert Brooke, Serge Diagilev, Nijinsky, Ottoline Morrell, G.B. Shaw, Ludwig Wittgenstein, Sidney and Beatrice Webb, as well as every major economist and many of the most powerful politicians of his time.

Franklin Roosevelt Studied in Post-Soviet Russia

Primakov, now functioning as a senior figure in Russian policy circles, and an informal advisor to Putin, made a high-profile television appearance on an NTV Sunday evening program, Jan. 28. He said that Russia is being criticized today more sharply than at any time since the end of the Cold War, because of "subjective factors on the other side": expectations that Russia would be a towel boy for Western institutions, beginning in the early 1990s.

Primakov recalled how, when he was Prime Minister, "a representative of the International Monetary Fund came over and tried to impose certain models of development on us. They were trying to impose on us a system whereby the state was not to be involved in anything, everything was to be left at the mercy of the market, and the market was supposed to take care of everything."

As against the fallacies of the IMF, Primakov cited Franklin Roosevelt, saying: "No country has ever managed to extricate itself from an economic crisis situation without decisive interference of the state. This is what Roosevelt said, and this is what [Ludwig] Erhard in West Germany after the Second World War said, and he acted accordingly.... We have seen a turning point; at long last we have rejected the views of the people I would describe as dogmatic liberals who thought that the market would provide all the answers.... At present the state is increasingly involved in the economy. It does not mean that the state will revert to [the Soviet central planning agency] Gosplan, to issuing directives. But indicative planning and even industrial policy as such were also denied. Now, thank God, we have abandoned this, and this is not liked."

The current Russian deliberations about Roosevelt go far beyond any opportunistic considerations that might be involved, having to do with Putin's team seeking a third term for him. They bring to the front of the agenda, where they should be, three things.

First, a reminder of what a difference for the world, the quality of leadership in the United States of America makes.

Second, an understanding of how the collaboration of the United States and Russia, as two of the world's great nations, has shifted the course of history for the better, in the past, and could do so again. MGIMO, the venue for the Feb. 8 "New Deal" conference, recently issued an in-depth study of what a multipolar world could look like, and it by no means excluded the U.S.A. (See "Moscow Discussion: Can U.S.-Russian Relations Improve?" in EIR, Dec. 8, 2006.) And when his NTV interviewer asked if Russia should form a bloc with countries that have been ostracized, e.g., for seeking nuclear weapons, Yevgeni Primakov strongly condemned any notion of turning anti-American: "To form a bloc against America? I am against it.... There should be no anti-Americanism in our policy. We should look for ways to uphold our national interests without confrontation. This is Putin's course and I support him on that to the hilt."

Lastly, the American System economics of the Roosevelt period in the U.S.A., with all it implies for basing relations among nations on their mutual interest in the improvement of life for their populations, is exactly what needs to be brought into action in Russia, in the United States itself, and throughout the world.

'A new deal'

In his Presidential acceptance speech in 1932, Roosevelt promised "a new deal for the American people." The term was taken from a 1932 book by the same name, "A New Deal," written by Stuart Chase. That book rapidly disappeared from the shelves after Roosevelt's election. Its contents were the currency of White House economic policy discussion by Tugwell and other central planners around the new President.

Chase, along with Tugwell and Robert Williams Dunn, had jointly written a report, "Soviet Russia in the Second Decade," following their 1927 travel to Stalin's Russia.

In his 1932 book, "A New Deal," Chase argued that the earlier transition out of feudalism into what he called laissez-faire capitalism, was essentially over. The era of Trusts, monopolies, capital concentration by large banks, must now give way to central or collective planning. Chase wrote, "modern industrialism, because of its delicate specialization and interdependence, increasingly demands the collectivism of social control to keep its several parts from jamming. We find a government meeting that demand by continually widening the collective sector through direct ownership, operation and regulation of economic functions." He adds, "Competition is perhaps a good thing—in its proper place. Where is its proper place? Collectivism is beyond peradventure on the march."

Much of Chase's book was filled with fulsome praise for Stalin’s Russian model of central planning and its achievements, reflecting the fascination of numerous younger American intellectuals in the early 1930's.

In his "A New Deal," intended as a kind of blueprint for the Roosevelt campaign, Chase advocated what he called, "The Third Road, a road which runs neither to red dictatorship nor to black (business)." Chase proclaimed that under the Third Road, "private profit will not furnish the happy hunting ground it used to. State trusts, investment control, the curbing of speculation, will choke the muzzle of the more devastating forms." He also proposed drastic economic controls, an eerie harbinger of what would come to pass under the Federal Reserve of Alan Greenspan: "The Federal Reserve will take over the control of currency, the stock exchanges, banks and domestic investment... A new Foreign Trade Corporation will supervise exports, imports and foreign loans. Public works will undoubtedly be centralized in one department..."

Leaving no doubt that his sentiments were not market-oriented in any way, Chase concluded his tract by stating, "We can go on, however...without violent revolution...if we are willing to halt expansion, and organize industry on the basis of using to the full the equipment we now possess. This is the program of the third road. It is not an attempt to bolster up capitalism, it is frankly aimed at the destruction of capitalism, specifically in its most evil sense of ruthless expansion. The redistribution of national income, the sequestration of excess profits, and the control of new investment are all designed to that end." Little wonder that Chase was given a very discreet background policy role in FDR's inner circle. This was explosive stuff for the American public, even in an economic depression.

After leaving Harvard in 1910, Chase had joined the Boston Fabian Club and went to Chicago to work in Jane Addams' Hull House. As a young bureaucrat with the Federal Trade Commission in 1917, Chase investigated charges against Armour & Co. meatpackers. This all shaped his social outlook, and the Soviet model gave it justification in terms of national planning. Chase first met Roosevelt in 1932, but his role was more as a writer than as a policy administrator in the New Deal. He held several official consulting posts in the New Deal, but was mainly influential through his good friend, Rexford Tugwell, and through his writings.

Rexford Guy Tugwell, the Columbia University economics professor who traveled with Chase in 1927 to the Soviet Union, was the central person of this collectivist group around FDR. Indeed, when it emerged that Tugwell was one of the inner circle of the new President, business leaders and newspapers began to research Tugwell's economic writings, and came away shocked, leading some to nickname him, "Rexford the Red."

As newspaper journalists began digging into Tugwell's published writings for clues as to what policies the new President Roosevelt was being given by his top advisers, they became alarmed.

In a paper in the American Economic Review March 1932, Tugwell wrote, that the quest for profit no longer motivated business, but that instead it produced "insecurity" because profits were, "used for creating over-capacity in every profitable line; they are injected into money market operations in such ways as to contribute to inflation; they are used, most absurdly of all, as investments in the securities of other industries." Tugwell proceeded further in his frontal assault on the core of the market private enterprise system which had created such extraordinary wealth and improvement of general living standards over the previous decade: "Industry is thought of as rather a field for adventure...The truth is profits persuade us to speculate." When such comments were widely reported in the Nation's media, they did little to bolster businessmen's confidence in the new Administration.

In discussing a proposal to introduce national economic planning, Tugwell wrote in 1932, "it seems altogether likely that we shall set up, and soon, such a consultative body...The day on which it comes into existence will be a dangerous one for business...There may be a long and lingering death (of the private profit enterprise—w.e.), but it must be regarded as inevitable." Private business, Tugwell added, "would logically be required to disappear. This is not an overstatement for the sake of emphasis; it is literally meant."

In October 1932, that is, one month before FDR's election, Rexford Guy Tugwell went on to formulate a six-point program for dealing with the depression crisis. Tugwell opposed wage cuts, then a common method of corporate cost cutting. He insisted, however, on reducing retail prices, and called for "drastic income and inheritance taxes," as well as "avoidance of budgetary deficits and monetary inflation." Obviously businesses could not possibly simultaneously maintain wage levels, reduce prices, and pay increased taxes, without risking bankruptcy in such crisis times. To this, Tugwell advocated, "the taking over by the government of any necessary enterprises which refuse to function when their profits are absorbed by taxation."

In brief, Tugwell's program, and this was planed, would first make it impossible for business to function, then bring those failed businesses under nationalization or state ownership. Tugwell concluded his 1932 program, "So long as prices, profits and individual production programs are at the disposal of independent business executives, our system will continue to show much the same faults as it displays at present." Tugwell endorsed Norman Thomas' League for Industrial Democracy program which called for a, "new social order based on production for use, not for profit."

Tugwell was strategically placed in 1933 as Deputy Secretary of Agriculture, just under his recommended choice of Secretary of Agriculture, Iowa farm editor, Henry A. Wallace. Tugwell continued in the early months to have regular access to his old friend, FDR as well.

Rudolf Hilferding and the total state.

Before World War I, Hilferding followed the traditional Marxist view that identified the executive branch of the modern state as a "committee for managing the common affairs of the whole bourgeoisie." He regarded the state as the "conscious organ of [a] commodity producing society" which reached the height of its power in the era of finance capital. For Hilferding the most important features of "modern capitalism" were "those processes of concentration which, on the one hand eliminate free competition' through the formation of cartels and trust, and on the other bring bank and industrial capital into an ever more intimate relationship." Through this relationship, he argued, capital assumed the form of finance capital which, "in its maturity, is the highest stage of concentration of economic and political power in the hands of the capitalist oligarchy."(3) Hilferding also thought that the development of finance capital created the economic preconditions for socialism, which could be achieved only through the seizure of political power. Workers, organized in trade unions and in the SPD, could use the state to wrest large-scale industry from the control of finance capital and transform it into public property. He thought that it was possible for the working class to win state power through electoral means, but that capitalist suppression of workers' rights or a major war between rival capitalist powers could lead to violent revolution. Nevertheless, he did not argue that the SPD itself should "make" the workers' revolution.(4) World War I and its aftermath forced Hilferding to revise his views on the relationship between Social Democracy and the state. In 1918 he joined the anti-war Independent Social Democratic Party (USPD), in which he supported the socialization of key industrial sectors, the dismantling of the army and bureaucracy, and the democratization of German politics. By 1921, however, he was convinced that the socialist revolution had failed. The splintering of the workers' parties, the SPDs counterrevolutionary actions, and the political "immaturity" of the working class combined to halt Germany's social and economic tranformation. For Hilferding defending whatever democratic gains the revolution had made against the growing strength of Germany's reactionary right wing became the socialist movement's main task and he strongly supported the USPD's reunification with the SPD in 1922.(5) Hilferding steadfastly advocated the parliamentary road to socialism after 1922, and he justified this strategy with an analysis of contemporary changes in the economic and political situation both at home and abroad. He asserted that the war had accelerated the economic processes he had identified prior to 1914. The expansion and further concentration of capital, the formation of cartels and trusts, the increasing influence of finance capital, and the state's intervention in the economy were bringing the era of capital competition to a close. A new system, characterized by economic regulation and planned production, was developing. If left undisturbed, this process would result in a hierarchical social order in which the economy was organized, but the ownership of the means of production remained in private hands. Hilferding called this system "organized capitalism." He saw in its stability and its enhanced use of planning the potential for a socialist planned economy.(6) Social Democracy's task, Hilferding believed, was to educate workers and to fight for the democratization of production. In his view, the republic gave the working class real access to political power because its institutions were subject to the will of the voters.

Permanent Revolution 08 Revolutionary theory and imperialism

In his 1910 book, Finance Capital,4 Hilferding examined the latest developments in the capitalist mode of production. He explained how the process of concentration and centralisation of capital, which Marx outlined, had grown apace in the last quarter of the nineteenth century. This had given rise to the domination of the economy by huge cartels or trusts rather than small scale enterprises so typical of the era of “free competition capitalism”. This he called monopoly capitalism, a new stage in the development of capitalism.The reason that the banks had come to dominate in this way was due in the first instance to changes within capitalist production itself. The rise in the organic composition of capital had lengthened turnover time (i.e. the length of time it takes for machinery and plant to wear out and transfer its value completely through several cycles of production) and so reduced the adaptability of firms to short-run cyclical ups and downs. To get over the effects of short term fluctuations in demand the firms turned more and more to the banks and the provision of credit; they also needed credit to finance the ever larger sums necessary for new investment in machinery. As a result of this development the banks themselves began to commit huge sums to industry for ever longer periods of time. As a consequence they could not move capital about freely to take advantage of every short term fluctuation in the rate of profit between sectors. This meant, in turn, that the banks had an interest in the formation of cartels and trusts so as to prevent as far as possible fluctuations in output and demand putting their huge credits at risk. Hilferding summarised the process thus:“The most characteristic features of ‘modern’ capitalism are those processes of concentration which, on the one hand, ‘eliminate free competition’ through the formation of cartels and trusts, and on the other, bring bank and industrial capital into an ever more intimate relationship. Through this relationship . . . capital assumes the form of finance capital, its supreme and most abstract expression.” 5Thus a central feature of this new stage was the growth of banking monopolies which in the course of their development had come to dominate, and even fuse with, the key sectors of industrial capitalism to form “finance capitalism”.A natural consequence of the concentration of capital in this way was that huge amounts of machinery and plant (constant capital) more and more outweighed the growth of variable capital (i.e. the amount advanced to buy wages). This growth in the “organic composition of capital” led inexorably to the tendency of the rate of profit to fall (TRPF), as Marx had explained in Capital.On the basis of this law he explained how finance capital uses its power to offset this law. The huge monopolies can cut output within certain limits in order to maintain prices and profits; they can influence the national governments to erect tariffs preventing foreign monopoly capital entering their markets to compete with and undercut them; they can even keep prices in the internal market high and practise “dumping” at lower prices in colonial or semi-colonial markets.But for Hilferding the key factor which explained the relatively crisis-free expansion of monopoly capital which marked the last years of the nineteenth century and the early years of the twentieth was the export of capital to foreign countries. This, for Hilferding, was the root of the explanation of the long boom of 1895-1913. Following Marx in Capital he illustrated the way in which the export of capital to countries with a lower organic composition of capital and higher rate of profit overcomes the effect of crises due to the operation of the law of the TRPF:“The precondition for the export of capital is the variation in the rate of profit, and the export of capital is the means of equalising regional rates of profit. The level of profit depends upon the organic composition of capital, that is to say upon the degree of capitalist development.” 6Hilferding explained that the policy of finance capital which it pursues to secure external markets for sales, capital investment, access to raw materials and so on is the policy of imperialism. Moreover, on the basis of the recent developments in the growth of monopoly capital and faced with the internal contradictions of this growth, “capital can pursue no other policy than that of imperialism”

.7Rudolf Hilferding and 'the stability of capitalism' --

The real danger comes from WITHIN scientific socialism--Rudolf Hilferding the orthodox [Marxist], not Eduard Bernstein(4), the revisionist. Hilferding sees the new stage of capitalism in its financial razzle-dazzle appearance and becomes enamored of its capacity to “unify” commercial, industrial, and financial interests [instead of being] concretely aware of the greater contradictions and antagonisms of the new monopoly stage of capitalism.
I wish to stress the seeming orthodoxy of Hilferding. No one, absolutely no one--not the firebrand Rosa Luxemburg, nor the strict realist V.I. Lenin, and I dare say not Hilferding himself--knew that what he was doing with his theory of finance capitalism was bringing in the first theory of retrogressionism [into Marxism]....Even with over four decades of hindsight, and much, hard thinking on the subject, I have first now realized that what Hilferding was SEEING and analyzing (and it took Nikolai Bukharin’s theory of the transition period to bring it home to me)(5) was the STABILITY OF CAPITALISM.
Watch the orthodoxy though: Hilferding is proposing no revisionism. The automatic fall of capitalism is still expected and the inevitability of socialism in a mechanistic sort of way is also held to tightly. BUT rather than seeing monopoly as a transition into opposite of a previous stage, monopoly is treated more like simple large-scale production. THAT IS THE KEY. For if it is not a transition into opposite of a fundamental attribute of capitalism, then CAPITALISM’S ORGANIZATION and centralization, monopolization’s appearance as the “emergence of SOCIAL control”...is in fact superseded socialism. Or more precisely, [Hilferding] retrogresses back to home base: the equilibrium of capitalist production.
By viewing the whole development of trusts and cartels not from within the factory, but from “society,” that is, the market, Marx’s general law of capitalist accumulation--the DEGRADATION of the proletariat along with capitalist accumulation--has no meaning for Hilferding. Neither does Marx’s postulate “private production without the control of private property” make any imprint on Hilferding.(6) And of course labor remains a unity; there is not any inkling of an aristocracy of labor arising out of the monopolization and degradation and imperialism.
You must remember that even with the outbreak of World War I, but before Lenin did his own analysis [of imperialism in 1915], he introduced Bukharin’s WORLD ECONOMY AND IMPERIALISM which said pretty much the same thing as Hilferding. All this I want to repeat again and again in order to emphasize the orthodoxy, in order to show that [even when] all the formulae are adhered to the loss of revolutionary perspective not yet in a positive way but in the negative of awe before the EXISTENT, continued capitalism can be very, very deceiving. If it was [deceiving] to Lenin we better watch it all the time.
What in truth emerges from a close study of Hilferding...is that the new generation of Marxists following Engels’ death [in 1895], placed within growing, centralized production, SAW MONOPOLY NOT AS A FETER BUT RATHER AS AN ORGANIZING FORCE OF PRODUCTION. So that the Second International, which had openly rejected Bernsteinism and gradualness, accepted Hilferdingism. That meant tacit acceptance of the capacity of capital to gain a certain “stability,” to modify its anarchism as a “constant” feature. They saw in [this] new stage not a TRANSITION to a higher form, but something in itself already higher, although “bad.”
Now the person who made this all clear to me was Bukharin, that logical extension of Hilferding, blown into the THEORY of counter-revolution right within the first workers’ state. It is to him that we must turn. Here too for our generation it is correct to view him with hindsight, precisely because his is “only” theory that will become full-blown actual counter-revolution with Stalin supplying it an objective base.
Keep in mind therefore the three actual stages of capitalist production for the three decades since the publication of Bukharin’s ECONOMICS OF THE TRANSITIONAL PERIOD:
l) 1920-30: Taylorism plus Fordism, that is, the discovery of the [assembly] belt line and with it the necessity for a fascistic order in the factory. It may be “vulgar” to call gangsters part of the intelligentsia, but that is the genuine face of “social control” when the masses themselves do not control [production]. Marx’s view of the planned despotism plus the industrial ARMY of managers, foreman, etc. has moved from theory to such EVERYDAY practice that every worker knows it in his bones; he needs no ghost come from the grave to tell him THAT....
2) 1930-40: General crisis; New Dealism where “everybody” allegedly administers, and fascism where openly only the elite do, both in mortal combat with the CIO and the general sit-down strikes (which made a true joke of private property) for “social control.” Plan, plan, plans: National Five-Year Plans in Russia, Germany, Japan; John Maynard Keynes, the New Deal, technocracy, the Tennessee Valley Authority, public works.
3) 1940-50: Monopolization has been transformed into its opposite, statification. (What greater scope for a modern Moliere, to take those weighty volumes of the Temporary National Economic Committee (TNEC)(7) proving monopolization and how strangling it is, and then on the eve of World War II they are finally published in full, prefaced by a call for full mobilization which shows that monopolization plus Hitlerism is child’s play as compared to American statification.)
End of World War II, “end” of fascism and state-private-monopoly rule. Complete state-capitalism reaching its tentacles from Russia into Eastern Europe, engulfing Britain, seeping into Western Europe and peering out of the U.S. TOTAL, GLOBAL PLANS: Marshall, Molotov, Monnet, Schumann, Truman’s Point 4.(8) Keynes is dead; long live the state plan. The intelligentsia in Russia, the Social Democratic labor bureaucracy elsewhere, all in mortal combat with the Resistance, with the Warsaw [uprising](9), with general strikes and colonial revolutions. One strangles the revolution “for” the masses’ own good, and the other for “democracy’s” shadow.

Did Hilferding Influence Schumpeter?

The thesis regarding the limited ability of free competition to promote
technological progress is supposed, for both theoreticians, to be a conclusion drawn
from past historical experience. More precisely, Schumpeter argued that the
capitalist era could be divided into two distinct periods (Screpanti and Zamagni
1993, pp. 243ff.): (a) The era of ‘competitive capitalism’ when small enterprises
dominated, an era which declines in the 1880s and (b), the era of monopolistic or
‘big-business capitalism’, during which large enterprises, trusts and cartels
dominated, starting roughly from the 1880s and having consolidated its fully
fledged form by the time Schumpeter’s book was written.
For Hilferding, too, the elimination of free competition and monopolies
came, historically, in a similar way: ‘Finance capital signifies the unification of
capital. The previously separate spheres of industrial, commercial and bank capital
are brought under the common direction of high finance, in which the masters of
industry and of the banks are united in a close personal association’, and
consequently: ‘The basis of this association is the elimination of free competition
among individual capitalists by the large monopolistic combines’ (Hilferding 1910,
p. 301, emphasis added). Thus, ‘it is also clear that monopolistic combines will
control the market’ (ibid., p. 193).
We have seen, so far, that for both theoreticians the real incentive for
innovation was the ability of monopolistic formations – deriving from their noncompetitive
nature – to create extra profits. Also, the elimination of free
competition was regarded, by both economists, as the main characteristic of an era
during which large enterprises, trusts and cartels dominated, and which attained its
typical characteristics around 1900.

As far as the other aspect of the Schumpeterian hypothesis is concerned,
namely that perfect competition is an unstable market structure where only large
enterprises can push technological progress forward, the views of both theoreticians
are strikingly similar. For Schumpeter, once big corporations are formed, the
imperfectly competitive market structure becomes stable, as large firms become
increasingly conducive to technological progress and change:9 ‘There are superior
methods available to the monopolist which either are not available at all to a crowd
of competitors or are not available to them so readily’ (Schumpeter 1942, p. 101).
‘The perfectly bureaucratized giant industrial unit .… ousts the small or mediumsized
firm’ (ibid., p. 134). On the same line of argument, the large firm is
considered to possess the ability to attract superior ‘brains’, to secure a high
financial standing (ibid., p. 110), and to deploy an array of practices to protect its
risk-bearing investments.
In his Finance Capital, Hilferding had developed a similar approach:
The expansion of the capitalist enterprise which has been converted into
a corporation .… can now conform simply with the demands of
technology. The introduction of new machinery, the assimilation of
related branches of production, the exploitation of patents, now takes
place …. from the standpoint of their technical and economic suitability
.… Business opportunities can be exploited more effectively, more
thoroughly, and more quickly .… A corporation .… is able, therefore,
to organize its plant according to purely technical considerations,
whereas the individual entrepreneur is always restricted .… The
corporation can thus be equipped in a technically superior fashion, and
what is just as important, can maintain this technical superiority. This
also means that the corporation can install new technology and labour
saving processes before they come into general use, and hence produce
on a large scale, and with improved, modern techniques, thus gaining
an extra profit, as compared with the individually owned enterprise.
(ibid., pp.123-4)
Consequently, ‘The introduction of improved techniques .… [benefits] the
tightly organized cartels and trusts. [T]he largest concerns introduce the
improvements and expand their production’ (ibid., p. 233).
Hilferding repeatedly affirmed the position that the big corporation is able
to create the conditions which may assure its market supremacy as well as its extra
profits for a long period: ‘An industrial enterprise which enjoys technical and
economic superiority can count upon dominating the market after a successful
competitive struggle, can increase its sales, and after eliminating its competitors,
rake in extra profits over a long period’ (ibid., p. 191).
Thus Hilferding expressed what we could codify as ‘Hilferding’s
hypothesis’, namely the thesis that ‘the size and technical equipment of the
monopolistic combination ensure its superiority’ (ibid., p. 201), which is, in general
terms, very similar to ‘Schumpeter’s hypothesis’, written thirty-two years after
Hilferding: ‘large firms with considerable market power, rather than perfectly
competitive firms were the “most powerful engine of technological progress”’
(Schumpeter 1942, p. 106). The obvious similarity of ideas of both theoreticians on
this specific issue needs no further comment.
Further to the above, Hilferding introduced, in his Finance Capital, the
notion of a ‘latest phase’ of capitalism, which is characterised by the following
main features: the formation of monopolistic enterprises, which put aside capitalist

competition; the fusion of bank and industrial capital, leading to the formation of
finance capital, which is considered to be the ultimate form of capital; the
subordination of the state to monopolies and to finance capital; and, finally, the
formation of an expansionist policy of colonial annexations and war.10
Hilferding regarded capital exports as an inherent characteristic of
capitalism in its ‘latest’, monopolistic, stage, rooted in the ‘cartelisation and
trustification’ of the economy and the need ‘to annex neutral foreign markets ....
above all overseas colonial territories’ (Hilferding 1910, pp. 326, 328).
Finance capital, as Hilferding defined it, is advanced to industrial
capitalists who use it. This ‘new’ concept is also seen as the linking between
capitalism’s ‘latest’ stage and imperialism (Winslow 1931, p. 727). The colonies
were regarded as the outlets for the export of finance capital. In this sense, finance
capital was considered to be helpless without political and military support: ‘capital
export works for an imperialistic policy’ (Hilferding 1910, p. 406) since it ‘does not
want freedom, but domination’ (ibid., p. 426). Imperialism is, thus, a tendency to
expansion of a developed capitalist power, a tendency created, in the last instance,
by economic processes, but also supported by political processes. It is argued,
therefore, that imperialism, which is capitalist rivalry at its highest level, leads to
war and mutual destruction of the capitalist powers.

SEE:

No Austrians In Foxholes

State Capitalism in the USSR

China: The Truimph of State Capitalism

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