State capitalism and state capitalists
One of the most significant developments of the 20th century was the emergence of big state-owned economic sectors. The state came to plan the whole of internal production in Germany in the latter part of the First World War, in the US and Britain as well as Germany throughout most of the Second World Warand, of course, in the USSR from Stalin to Gorbachev and in China under Mao.
Just as many analysts accept the "common sense" view that the state is something outside of capitalism, so they also refuse to accept that state-run industries and economies can be capitalist.85 The classical Marxists, however, saw things rather differently. Marx in Volume Two of Capital was already "including" among "the sum of individual capitals", " . . . the state capital, so far as governments employ productive wage labour in mines, railways etc, perform the function of industrial capitalists". 86 Engels spelt this out much more fully in reacting to Bismarck's nationalisation of the German railway system:
The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more it actually becomes the national capitalist, the more citizens it exploits. The workers remain wage workers-proletarians. The capitalist relation is not done away with. It is rather brought to a head. 87
Kautsky could argue in the 1890s that the original economic liberalism (from which present day neoliberalism gets its name) of the "Manchester school" "no longer influences the capitalist class" because "economic and political development urged the necessity of the extension of the functions of the state", forcing it "to take into its own hands more and more functions or industries" .88
Beyond Marx: Monopoly, War and the State
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