From Manifesto of the Communist International, 1919:
"The catastrophe of the imperialist war has completely swept away all the conquests of trade union and parliamentary struggles. For this war itself was just as much a product of the internal tendencies of capitalism as were those economic agreements and parliamentary compromises which the war buried in blood and muck.
"During the decades preceding the war, free competition, as the regulator of production and distribution, had already been thrust aside in the main fields of economic life by the system of trusts and monopolies; during the course of the war the regulating-directing role was torn from the hands of these economic groups and transferred directly into the hands of militarystate power. ...all these fundamental questions of the world's economic life are not being regulated by free competition, nor by associations of national and international trusts and consortiums, but by the direct application of military force, for the sake of its continued preservation. If the complete subjection of the state power to the power of finance capital had led mankind into the imperialist slaughter, then through this slaughter finance capital has succeeded in completely militarizing not only the state but also itself; and it is no longer capable of fulfilling its basic economic functions otherwise than by means of blood and iron.
"The state-ization of economic life, against which capitalist liberalism used to protest so much, has become an accomplished fact. There is no turning back from this fact - it is impossible to return not only to free competition but even to the domination of trusts, syndicates and other economic octopuses."
Why is state capitalism an important concept
Understanding the tendency toward state capitalism is fundamental to understanding key questions in the class struggle, especially the neutralization of reformist parties and unions, national liberation struggles, nationalization demands, etc. The ICC says that the unions and the left parties have become integrated into and are now a part of the bourgeois state. What does this mean? How did it come about? What is the nature of state capitalism? How did it come about? Through what mechanisms, and why?
Understanding this process will allow revolutionaries clarity to explain fundamental questions like why these organs can't be reconquered any more than the Democratic Party can taken over for the working class-in short, any more than the bourgeoisie can be persuaded to fight for socialism. Also crucial is understanding the development of state capitalism to avoid being driven off class terrain in struggles by falling into leftism which demands union recognition, arbitration, nationalization, etc.
These phenomena must be understood from a materialist standpoint-understanding what it is about the unions and 2nd International that led to their integration into the state. It is only thus that one can understand why a mass party for reforms within capitalism is, as soon as capitalism enters its historical period of decadence, when the capitalist expansion upon which those reforms were based becomes impossible, doomed to be integrated into the state's management of the national economy and doomed to lead workers' struggles into the hands of the state. Similarly, only with a materialist understanding can one grasp what it is about the structure of the unions in state capitalism that leads them to be enforcers of capitalist austerity, and police against real mass struggles.
What is state capitalism.
"The debate on Russia or any specific economy has often clouded the issue of state capitalism as a general tendency in all capitalist countries and it is by no means clear what is meant by "state capitalism" as used by anyone from International Socialism [Cliffite] to Bordiga to Mattick." (A Contribution on the Question of State Capitalism)
Rather, "In the decadence of capitalism the general tendency towards state capitalism is one of the dominant characteristics of social life. In this period, each national capital, because it cannot expand in an unfettered way and is confronted with acute imperialist rivalries, is forced to organise itself as effectively as possible, so that externally it can compete economically and militarily with its rivals, and internally deal with the increasing aggravation of social contradictions. The only power in society which is capable of fulfilling these tasks is the state. Only the state can:
take charge of the national economy in an overall centralised manner and mitigate the internal competition which weakens the economy, in order to strengthen its capacity to maintain a united face against the competition on the world market.
develop the military force necessary for the defense of its interests in the face of growing international conflict.
finally, owing to an increasingly heavy repressive and bureaucratic apparatus, reinforce the internal cohesion of a society threatened with collapse through the increasing decomposition of its economic foundations; only the state can impose through an all-pervasive violence the preservation of a social structure which is less and less capable of spontaneously regulating human relations and which is more and more questioned the more it becomes an absurdity for the survival of society itself.
On the economic level this tendency towards state capitalism, though never fully realized, is expressed by the state taking over the key points of the productive apparatus. This does not mean the disappearance of the law of value, or competition, or the anarchy of production, which are the fundamental characteristics of the capitalist economy. These characteristics continue to apply on a world scale where the laws of the market still reign and still determine the conditions of production within each national economy however statified it may be. If the laws of value and of competition seem to be ‘violated', it is only so that they may have a more powerful effect on a global scale. If the anarchy of production seems to subside in the face of state planning, it reappears more brutally on a world scale, particularly during the acute crises of the system which state capitalism is incapable of preventing. Far from representing a ‘rationalization' of capitalism, state capitalism is nothing but an expression of its decay.
The statification of capital takes place either in a gradual manner through the fusion of ‘private' and state capital as is generally the case in the most developed countries, or through sudden leaps in the form of massive and total nationalizations, in general in places where private capital is at its weakest.
In practice, although the tendency towards state capitalism manifests itself in all countries in the world, it is more rapid and more obvious when and where the effects of decadence make themselves felt in the most brutal manner; historically during periods of open crisis or of war, geographically in the weakest economies. But state capitalism is not a specific phenomenon of backward countries. On the contrary, although the degree of formal state control is often higher in the backward capitals, the state's real control over economic life is generally much more effective in the more developed countries owing to the high level of capital concentration in these nations.
On the political and social level, whether in its most extreme totalitarian forms such as fascism or Stalinism or in forms which hide behind the mask of democracy, the tendency towards state capitalism expresses itself in the increasingly powerful, omnipresent, and systematic control over the whole of social life exerted by the state apparatus, and in particular the executive. On a much greater scale than in the decadence of Rome or feudalism, the state under decadent capitalism has become a monstrous, cold, impersonal machine which has devoured the very substance of civil society." (ICC Platform)
A couple of points about State Capitalism to be deepened
How did the transition to State Capitalism come about and through what mechanisms?
...The ICC's position is that "there is no section of the bourgeoisie which is the exclusive carrier of state capitalist tendencies: the military (as representatives of national unity and the "forces of order"), the technical bureaucracy, the educated elite, the disenfranchised tribal groups, or the powerful members of the private capitalist class in crisis can be instruments of the state capitalist tendency depending on the specific needs of the situation." (Contribution...) Still, it is important to understand why the system of monopoly capitalism developed into State capitalism, and why it could not have been otherwise.
Indeed, before the onset of state capitalism, the world market was divided into trusts, cartels, and syndicates based on industrial monopolies, sometimes international and transnational in character. Thus, "The tendency towards state capitalism did not appear as a gradual, intrinsic "rationalization" of the system. Unlike monopoly capital, which gradually grew out of laissez-faire competition without any particular planning or over-all design, state capitalist measures grew abruptly out of the situation during World War I as a conscious, economic policy of the national governments. State capitalism was not a direct outgrowth of the freely developed previous economic trends but was a breaking down of the tendency towards international cartels and trusts, a movement towards national concentration and unity." (Contribution...)
State Capitalism & Workers' Struggle
"State capitalism enchains the proletariat more firmly than ever, and it does it with its own traditions of struggle. This is because the capitalists, as a class, have drawn the lessons of experience and have understood that the essential weapon for preserving their class rule is not so much the police as direct ideological repression. The political party of the workers has become a capitalist party. What has happened with the trade unions, emptied of their former content and absorbed into the state, has also happened to what used to be the workers' party. ...the old objectives of struggle, linked to a bygone period, have disappeared, while the forms of struggle survive, without their former content." ("Evolution of Capitalism and the New Perspective," Internationalisme 1952)
From this we have the question, what is the state? What does the ICC mean by saying that the unions & workers' reform parties are "part of the state"? Surely this doesn't mean that left parties are always in power or that in all periods the ruling class utilize the unions in the same way or collaborate openly. Is it because they don't challenge the state's framework? Because they participate in state initiatives (wars, arbitration boards, national economy plans)? Does every bourgeois ruler know what an ally they have in these organs and consciously use them? Or is it rather that the structure, material basis, and mode of existence and operation of these organs necessarily compels them to ACT as instruments of the state, even if they are unconscious of this? How much does Machiavellianism play into this?
The idea of state capitalism and what it implies is deeply tied to the notion of decadence-the idea that capitalism has long since reached the objective limits of its real expansion and thus campaigning for reforms from the state, and concessions from individual employers has become useless because these reforms and concessions cannot be granted in a lasting way. ...As Trotsky indicated, the reforms which had been possible in a certain period of capitalism had as their precondition the expansion of capitalism across the world and the expansion of the market and the accumulation of capital.
This notion of decadence is something that needs to be debated by revolutionaries, in order to ensure that the revolutionary strategies and forms of struggle are rooted in the objective historical reality of the development of capitalism. Just as the reforms of the 19th Century parliamentary and trade union struggle were only possible based on the expansion and accumulation of capitalism, revolutionaries need to know whether such expansion is possible and base their intervention on that knowledge. For communist revolution is only a possibility when it has become an objective historic necessity. State capitalism itself only exists on this same objective economic and historic basis.