Why the USSR was not state capitalist

One of the major disagreements between the socialist party CWI and the Socialist workers party the SWP still till this day is how they saw the USSR and what kind of state form this took

For the SWP it is very clear Russia was state capitalist and when the USSR fell it changed to a different type of state capitalism . We in the socialist party take a different approach.

The collapse of Stalinism has been a process which is not yet complete in all parts of the world. The Castro regime remains in power in Cuba. We characterise this as a deformed workers state. According to the SWP it is and always has been capitalist. Were the regime to fall and were the capitalist calls in waiting in Miami to return Cuba to its former status as an offshore haven for US capital, we should have very different attitudes.
Despite our criticisms of the Castro regime we would see this as a setback, a counter revolution in terms of property relations. But, if you were consistent and applied the same approach as you did to what happened in Russia and Eastern Europe, you would see this not as a reverse but as an “opportunity.” According to the SWP “We saw the collapse of these regimes not as a setback for socialists, but as an opportunity to begin the fight for real socialism in these countries.”


The difference is still a live issue even in relation to Russia and Eastern Europe where the restoration of capitalism hasbeen carried through. The CWI is carrying out work in a number of these countries. An essential theoretical foundation for this work is an understanding of what happened after 1989. We begin from the position that there was a change in property relations and capitalism was restored. If we held your view that this counter revolution was not a “defeat,” not a victory for world capitalism, but a sideways move from one form of capitalism to another, we would have no adequate explanation for the demoralising and disorienting effect on the working class, the throwback of consciousness with the re-emergence of reactionary ideas which had not had an organised expression since Tsarism, nor for the economic and social collapse which has followed.
Our analysis of the collapse of Stalinism is fundamental for our work within the former Stalinist states. It is also important in the rest of the world since an explanation of what went wrong in Russia is essential if we are to convince workers and youth that socialism can work. For these reasons our differences with the SWP over the class nature of these states remains a live issue.



Stalin came to power because the defeats of the revolutionary movement in Europe left the 1917 revolution isolated to Russia. Socialism could not and cannot be built in one country, least of all in an underdeveloped country as Russia was at that time. The isolation of the revolution and the exhaustion of the working class allowed space for a privileged layer to emerge. Stalin was the personification of the interests of this bureaucratic caste.
Trotsky in 1935 posed the questions “What does Stalin’s ‘personal regime’ mean and what is its origin?” He answered himself thus:
“In the last analysis it is the product of a sharp class struggle between the proletariat and the bourgeoisie. With the help of the bureaucratic and police apparatuses the power of the ‘saviour’ of the people and the arbiter of the bureaucracy as the ruling caste rose above the Soviet democracy, reducing it to a shadow of itself.” (Again on the question of Bonapartism, Writings, 1934-35, p. 208).
Under Stalin political power was wrested from the working class and placed in the hands of a privileged bureaucratic caste. But not all the gains of the 1917 revolution were lost. The economy remained in state hands; there was planning, albeit carried out in a crude and bureaucratic manner; and the state held a monopoly over foreign trade. The economic foundations of a workers’ state remained in place.
The bureaucracy did not become a class. It did not own the industries which it managed. While the bureaucracy, by dint of privilege, was self-perpetuating it did not enjoy the right of inheritance. Its relationship to the economy was more akin to that of the heads of nationalised industries in the west to the industries they manage. These people are privileged, they are as removed from their workforces as the capitalists, but they are not capitalists.
The capitalist class is defined by what it owns, not by what it consumes. The Soviet bureaucracy consumed a large slice of the surplus wealth produced by the working class. But this is not unique. Every bureaucracy rewards itself for its commanding position by creaming off a larger share of wealth for itself. Unlike the capitalists, the Stalinist rulers did not have ownership of the surplus, and could not have unless they undid the other gains of 1917 and privatised the economy. Trotsky was absolutely clear and categorical on this: “Still the biggest apartments, the juiciest steaks and even Rolls-Royces are not enough to transform the bureaucracy into an independent ruling class.” (The class nature of the Soviet State, Writings, 1933-34, p. 113).


Under a state capitalist natured society thee would still be capitalist crisis this was not the case in russia under Stalinism they avoided the over production and crisis in capitalism that the western capitalist nations always endured due to their planned nature of their economy

We in the socialist party make it very clear we did and do not ever support the Stalinist regime but we do however recognise the benefits of a planned economy that was still practised in the USSR up until 1989.

This does not mean that there was no crisis or that there were no contradictions. But the contradictions of the Soviet economy, and the reasons for the economic impasse which eventually brought Stalinism to its knees, were different. The most fundamental contradiction was between the fact of a planned economy and the bureaucratic administration of the plan. Not for nothing did Trotsky argue that the planned economy needs democracy just as the human body needs oxygen. For a period the advantages of state ownership and a form of plan, however bureaucratically drawn up and autocratically implemented, did lead to significant economic improvement. The USSR went from being a backward country, an India, to the second world superpower, something which would not have been possible on the basis of capitalism.

Once the economy reached a certain degree of sophistication the disadvantages of bureaucratic methods, of the absence of democratic decision making, began to outweigh the advantages of public ownership and of planning. By the Brezhnev era, certainly by the end of this time, the economy had ground to a halt and the bureaucracy, by their crude methods, were incapable of taking it forward. Stalinism came up against its economic limitations, not the limitations or contradictions of capitalism, but the restraints imposed by the stifling fact of bureaucratic misrule. The choice, ultimately, was not of ongoing rule by the bureaucracy but either its removal and the establishment of workers’ democracy or else a return to capitalism.

The SWP disagree with the idea that these regimes were “transitional.” Trotsky, however, repeatedly refers to their “transitional” character. The triumph of Stalin was a step back from October 1917, but not a complete step away from the gains of that revolution. Trotsky’s view was that if the bureaucracy remained in control, at some point the pressures of world capitalism would tell. Counter-revolution, perhaps initially in the form of the invasion of cheaper goods from the more developed capitalist economies, would triumph. It would be the triumph of higher productivity, of “less labour,” in the advanced capitalist states, over the less productive, more labour intensive, industries in the isolated Russian economy. The bureaucracy, or a section of it, would seek to transform itself into a capitalist class. Only a movement of the working class to overthrow the bureaucracy could offer an alternative way out.
In the Transitional Programme he writes:
“The USSR embodies terrific contradictions. But it still remains a degenerated workers’ state. Such is the social character. The political prognosis has an alternative character: either thebureaucracy, becoming ever more the organ of the world bourgeoisie in the workers’ state, will overthrow the new forms of property and plunge the country back into capitalism; or the working class will crush the bureaucracy and open the way to socialism.”
Trotsky’s either/or prognosis, developed particularly in his classic book, The Revolution Betrayed, was correct, but it took a whole historic period to work itself out. What Trotsky could not have foreseen was that Stalinism would emerge from the Second World War enormously strengthened. The defeat of Germany and the exhaustion of the British and US troops, who were not prepared to follow those generals who wanted to continue the war against Russia, allowed the powerful Red Army to conquer Eastern Europe unopposed.
Having taken control of the state, the new rulers proceeded to take over the economy and set up regimes modelled on the Stalinist regimes in Russia. The peculiar circumstances allowed that capitalism was abolished, from above, with the support of a large section of the working class, but not as the conscious and independent action of that class. Again, it was the particular circumstances of the time which allowed the guerrilla armies which later seized power in China and Cuba to follow the Russian example and eradicate landlordism and capitalism.
These did not become socialist societies, but were precisely “transitional” regimes in which the choice was either political revolution to overthrow the bureaucracy or else ultimately counter-revolution and their reintegration into the capitalist world market.

Since they had not been at any point healthy workers’ states the term “degenerated workers’ states” used by Trotsky to describe Russia was not quite accurate. We used the term “deformed workers’ state” as a more precise definition.


The emergence of the USSR as a world superpower allowed the regime a relative stability for a period. Trotsky’s 1930 perspective was postponed. However, what happened in 1989 and after brilliantly bore out his analysis. The fall of the Berlin Wall and the opening of the eyes of East Germans to the goods and lifestyles which seemed to be available in the West ushered in the counter-revolution which ended with the restoration of capitalism. In Russia and Eastern Europe, most of the bureaucracy went along with the restoration – bearing out what Trotsky had also said – that faced with the choice of a workers’ movement for political freedom or the restoration of capitalism they would look to the latter as the only way to maintain their privileges.
Counter-revolution, as with revolution, means decisive change. It is clear that the events of 1989-91 marked such a change in Russia and Eastern Europe. The old Stalinist states collapsed, the state apparatus in part “moved over” and in part was replaced. The new states which emerged were intent on re-establishing capitalism. The overthrow of the old state apparatus ushered the beginning of a change in property relations. It was a repeat of 1917, only this time in reverse.
If the SWP believes that the USSR was capitalist you need to show at what point the counter-revolution in property relations was carried through. The victory of Stalin in the late twenties and the thirties, and the purges which followed, represented a political victory for this caste. The property relations – state ownership and the plan – which were established in the years after 1917 were maintained. If this was state capitalism then what was set up by the Bolsheviks was state capitalism also. Or else we would have to draw the entirely un-Marxist conclusion that a change in political rule is tantamount to a change in the social system. In other words, we would have to start out from what is in fact the underlying theoretical premise of reformism.

For Marx, the decisive question was which class owned industry, not whether that class exercised democratic control in management of that industry. There have been occasions when the capitalist class have lost direct control over the state, but so long as property relations remain unchanged, they remain the ruling class. The SWP have mixed up changes to the superstructure – the method of political rule – with the more fundamental question of the economic base. We determine the class nature of society by examining its economic foundations.
Must the working class have a direct hold on the levers of political power before we can use the term “workers state”? Let Trotsky answer us on this:
”The dictatorship of a class does not mean by a long shot that its entire mass always participates in the management of the state... The anatomy of society is determined by its economic relations. So long as the forms of property that have been created by the October revolution are not overthrown, the proletariat remains the ruling class.” (The class nature of the Soviet State, Writings, 1933-34, p. 104).
And again:
”But this usurpation (by the bureaucracy) was made possible and can maintain itself only because the social content of the dictatorship of the bureaucracy is determined by those productive relations that were created by the proletarian revolution. In this sense we say with complete justification that the dictatorship of the proletariat found its distorted but indubitable expression in the dictatorship of the bureaucracy.” (The Workers State Thermidor and Bonapartism, Writings, 1934-35, p. 173).
In basing their characterisation on the fact that the working class were deprived of democratic rights, were oppressed and in a sense “exploitedthe SWP, are in the camp of liberalism, not Marxism. I have already quoted Trotsky on his attitude to the “moralists” who looked at the horrors of Stalinist rule and indignantly professed that this could not be a “workers state.” From there the SWP’s argument gets worse. The regimes in Eastern Europe, they say, cannot be “workers states” because they were installed from above. Marx, you remind us, had argued that “the emancipation of the working class must be accomplished by the working class.”


This indeed is the standpoint of Marxism. But the same Marx who argued in a general historical sense that the bourgeois, or capitalist, revolutions which overthrew feudalism were the historic tasks of the rising capitalist class, also pointed out that in some cases the capitalists relied on other forces to carry this out.
Even the ‘classic’ bourgeois revolution – in France 1789-1815 – unfolded with a rich complexity which confounds the one dimensional historical view of the SWP. The backbone of the revolution at its high point in 1792-94 was the urban poor, the sans culottes, who acted in alliance with the Jacobin left wing of the bourgeoisie. But the power of the plebeian masses who overthrew absolutism began to encroach on the bourgeoisie. The period of Thermidor leading to the triumph of Bonaparte saw many of the gains of the revolution, such as the declaration of universal male suffrage, removed. Bonapartism meant rule by the sword. The state rose above society and, by military means and by decree, ‘arbitrated’ between the rival class interests. This was a step back in terms of political rights but the new capitalist class relations which were established by the overthrow of feudalism and absolutism remained fundamentally in place.
In 1815, Bonaparte was defeated by the forces of reaction in Europe. The Bourbons were restored. In appearance it was back to pre-1789. But the substance was different. Capitalist property relations remained in place. If the class nature of the state was just a matter of the political superstructure then France after 1815 would have been a feudal state. This was clearly not the case. The rising bourgeoisie had to surrender political power, but in the main the property rights created by the revolution stayed in place.
The revolutions of 1830 and 1848 did away with the Bourbons and with the dynasty of Louis Philippe of Orleans. The working class was by now more powerful than in 1789, but was not yet capable of taking power. The bourgeois, trembling in the face of the growing strength of the working class, were divided and unable to rule. As the struggle between these two modern classes could not be fought to a decisive conclusion, the state stepped into the equilibrium and once again assumed the role of arbiter. The Second Republic achieved mainly by the armed working class in 1848 became the Second Empire under the dictatorship of Napoleon’s nephew, Louis Napoleon Bonaparte.
The state arbitrated but ultimately came down on one side, the side of the bourgeois. Even in the “classic” example of France the rule of the bourgeois was finally consolidated by a Bonapartist regime which took direct political power from the capitalists, and which creamed off a good proportion of the wealth for itself. Engels, in his introduction to Marx’s The Civil War in France, written just over a hundred years ago, uncovers these complex and seemingly contradictory processes in a living manner which contrasts sharply with the crude one-dimensional approach to history which the SWP applies to the less complex processes of revolution and counter-revolution in Russia.
“Louis Bonaparte took the political power from the capitalists under the pretext of protecting them, the bourgeois, from the workers, and on the other hand, the workers from them; but in return his rule encouraged speculation and industrial activity – in a word the dominance and enrichment of the whole bourgeoisie to an extent hitherto unknown. To an even greater extent it is true, corruption and mass thievery developed, clustering around the imperial court, and drawing their heavy percentages from this enrichment.” (The Civil War in France, Progress Publishers, 1968 edition, p 8)
In other cases the bourgeois played even less of a role in “their” revolution. In the case of Germany the unification of the country was carried through from above by the reactionary Prussian nobility through the “blood and iron” methods of their representative, Bismark. The German bourgeoisie were too cowed by the power of the working class which had been demonstrated in the revolutionary uprisings of 1848, to play any role. “Their” rule came into being under the militaristic banner of the reactionary rulers of the Prussian House of Hohenzollern.
Stalinism was a modern form of Bonapartism. The political gains of the revolution were wiped away. Tsarist autocracy was replaced by Stalinist autocracy. But as in France the social gains of the revolution were not abolished. Even though the working class did not have political power, Russia did not return to the orbit of capitalism. It was not in any sense a capitalist state.
This is not to say that there can be an exact parallel between the bourgeois revolutions of the 18th and 19th centuries and the scientific revolutions. 1789 in France may have been carried through by the majority, the great mass of the oppressed in France, but it inevitably had to end as rule in the interests of a minority, the capitalists. In the words of Engels it may have proclaimed “the Kingdom of Reason,” but in reality it established “the Kingdom of the bourgeoisie.” The socialist revolution, on the other hand, is not carried out by the majority, it allows that majority, for the first time in a real sense, to rule. It is therefore correct to say that the socialist revolution cannot be completed by any class or section of society other than by the working class. But this is not to say that the course of the socialist revolution, like the bourgeois revolutions, cannot be tortuous, that it cannot move along dead ends, or that all sorts of transitional formations cannot be thrown up along the road to its completion.
Marx and Engels were absolutely right when they stated that the working class would be the “gravedigger” of capitalism and that no other class could play this role. But truth is always concrete. A general statement made by Marx over one hundred years earlier does not alter what actually happened in Eastern Europe, and under slightly different conditions in China, Cuba, Vietnam and a number of other countries. The inability of imperialism to hold back the colonial revolution and prevent the coming to power of guerrilla armies, or of other forces hostile to the West, combined with the “model” of the already existing Stalinist states, meant that in these cases one part of the task of the socialist revolution was carried through without the working class playing the leading role.


With extracts taken from the theory of state capitalism by the late Peter Haddon of the Irish socialist party