The Many Types of Capitalist Economic Anarchy

[This is a brief essay against the notion that there is only one kind of capitalist economic anarchy. I submitted it to the RCP in 1983 under the title "On State Capitalist Economic Anarchy". I received no response from them.]

The current discussion on the nature of the Soviet Union is an important one. But as an RCP member has pointed out to me, it is not simply a matter of arguing for one existing line against all other lines—it also includes the necessity of further developing our understanding of the question. Though I respect the contribution made by the old Revolutionary Union publication, Red Papers 7, as well as the more recent writings of the RCP on the subject, the present situation demands a still deeper analysis.

In this essay I would like to raise just one particular issue from among the many that need to be discussed—that of the existence and types of economic anarchy under capitalism, and under state capitalism in particular.

One of the main themes of Engels' work Anti-Dühring[1] is that under capitalism "anarchy of social production prevails" [p. 350] and that under socialism "the anarchy within social production is replaced by consciously planned organization" [p. 366]. He also says that

In proportion as the anarchy of social production vanishes, the political authority of the state dies away. Men, at last masters of their own mode of social organization, consequently become at the same time masters of nature, masters of themselves—free. [p. 369]

I agree with Engels on these points—even the last one which could be taken by some to imply support for the infamous "theory of the productive forces" (though I do not read it that way). But if these points are even generally correct, it follows that you should be able to decide whether a society is capitalist or socialist by deciding if it can still be characterized by anarchy in its social production, and by whether such anarchy as does exist is decreasing or not.

(This is an economic test of socialism as opposed to a political test; and actually socialism is both a political and economic system. However I believe that these things are so interrelated that sufficient tests of either kind can be constructed and that they will not lead to opposite conclusions. In the present case, for example, it seems to me that the only way there could possibly be an absence of economic anarchy, or even a progressive diminution of economic anarchy in a society, is if the proletariat controlled that society... but this is jumping ahead in the argument.)

In pursuing this line of inquiry, then, the key question becomes: "In what does the socio-economic anarchy of capitalist production consist?" The answer to this question is that the anarchy of capitalist production is manifested in many ways, some of which are more important than others. All of these derive, however, from one basic contradiction in capitalist production, a contradiction so important in fact that it is often called the fundamental contradiction of capitalism: This is, as Engels expressed it, "the contradiction between social production and capitalist appropriation" [p. 349]. Let us then proceed to discuss some of the ways in which this contradiction leads to capitalist economic anarchy.

First, and most important, the fundamental contradiction leads to economic crises of overproduction. As is well known, this "overproduction" is not in relation to the material needs of the people, but rather in relation to what can be sold. If anything is economic anarchy it is the quintessential capitalist phenomenon of starvation and want in the midst of a mountain of "excess" goods which cannot be disposed of profitably. Of course the explication of these crises of overproduction can get quite complicated, as many subsidiary contradictions are involved. The whole of Marx's Capital is in effect the detailed story of how this all works. (This is why those who point to any single argument in Capital as being Marx's "theory of economic crises" are hopelessly off the mark.)

[Note added on 8/12/98: I've partially changed my mind on this point. It is not an appropriate response to someone seeking a short explanation of capitalist economic crises to say "go read Capital". The essential features of any process can be summarized briefly, or relatively briefly. But it is true that the essential features of capitalist economic crises are still somewhat complex. This is why Marx's dialectical explication of them is the best way to proceed.]

A second form of capitalist economic anarchy is the anarchy among the various capitalist enterprises. Each enterprise may attempt to organize its production rationally, but—traditionally at least—that same rational planning did not exist overall. There is no denying that this is an important type of economic anarchy, and it is also true that it can play a role in the development of overproduction crises. However, with the advent of monopoly capitalism this particular form of economic anarchy has become relatively less important than it used to be. For one thing, there is the widespread development of vertical integration of production within corporations, and the equally important closer integration of production between companies and their outside suppliers which has often gone so far as to allow "just-in-time" arrival of parts from other companies (in order to avoid large parts inventories). From the standpoint of rational planning of production it often no longer makes any real difference if the parts come from a different company, or from another factory or division of the same company.

For another thing, there are now generally only a small number of producers of particular commodities, and it is easier for them to divide up the market and hence impose at least a degree of rational planning among the various enterprises. Often this has even gone to the point of formal production cartels, though in the U.S. it is typically done through secret (illegal) agreements and implicit "understandings". And more important by far, there now exists the phenomenon of state capitalism of the Soviet variety, under which formal production plans are developed for the whole economy (even if they are to some extent a farce!). This does not completely eliminate the anarchy among Soviet production enterprises, but it certainly greatly reduces this type of anarchy.

Engels remarked that "The contradiction between social production and capitalist appropriation reproduces itself as the antagonism between the organization of production in the individual factory and the anarchy of production in society as a whole" [p. 352, emphasis in original]. While this is literally true, it is possible to read Engels here as saying that this is the only way that anarchy is manifested from the fundamental contradiction. I don't think Engels is saying this, but if he is, as much as I admire him, I have to say that he is wrong on this point. In any case, those who believe that the anarchy in capitalist production consists mainly (or entirely) of anarchy among capitalist enterprises are very much mistaken, as are those who believe that the fundamental contradiction must of necessity lead to the development of crises of overproduction through the exclusive medium of inter-enterprise anarchy.

It is easy to see why certain people today might be attracted to these views, however. For if the anarchy of capitalism derives solely (or even primarily) from the anarchy among competing enterprises, all that is necessary to eliminate this anarchy is to institute an overall state economic plan. State capitalism then becomes free (or largely free) of economic anarchy, they suppose. The Soviet revisionists repeatedly state that economic crises do not and cannot occur in the Soviet Union because of the existence of their overall economic plans. The fact that they continue to trumpet these comments at the same time as their economy sinks deeper into stagnation and crisis vastly amuses us, of course.

A third kind of capitalist economic anarchy is the anarchy which exists within capitalist enterprises. Marx and Engels often refer to the "social production" within each enterprise, and of course they even contrast this with the anarchy of production among the various capitalist enterprises. But anybody who has ever worked for a large corporation has, I am sure, seen enormous waste, disorganization, bad planning (or the partial absence of planning), and the like. In fact the "socialized production" of the capitalist workplace is really only semi-socialized and could be greatly improved upon in a more completely socialized enterprise controlled by the workers. Social production under capitalism is far from perfect because (for one important reason among many) society is split into classes and it is not in the interests of the workers to work harmoniously according to the production plans of the capitalists. Many workers know this quite well, at one level of consciousness or another.

Paradoxically, one of the factors leading to economic anarchy within corporations is a bureaucratic over-centralization! Any complex entity (be it a living organism or an economy) needs a dialectical balance between centralism and decentralism. Too much central control of production leads to a situation where some small dislocation somewhere cannot be quickly and readily compensated for, resulting in disruptive chain reactions. Of course this sort of thing is particularly characteristic of the Soviet economy, which comes close to being "one big bureaucratic corporation".

A fourth kind of capitalist economic anarchy is the anarchy which exists among capitalist countries, including that among the various state capitalist countries. This is, in a sense, the international reproduction of the older type of economic anarchy among individual enterprises within a single country. The importance of this form of anarchy has of course grown immensely with the advent of imperialism.

As long as capitalism exists all of the many types of capitalist economic anarchy will continue to exist, to one extent or another. And they all will continue to play a part in the development of overproduction crises. But the primary cause of crises of overproduction derives directly from the fundamental contradiction of capitalism (between social production and private appropriation), and these crises do not require the existence of any other type of economic anarchy for their development. Even if we imagine that the whole earth comes under control of a single capitalist world government, operating under a "perfect" world economic plan, and that every single economic enterprise on earth operates completely rationally within that plan, there would still be economic crises of overproduction! The reason is simple: surplus value would still be ripped off from the workers; the workers would therefore be unable to buy all that they produce; the capitalists would use up a certain part of the resulting spoils in the form of untold luxuries and extravagances, and would re-invest the rest in the expansion of the means of production; but there would come a time when the further expansion of the means of production would become obviously pointless; for awhile things might be kept going by advancing credit to the workers, but after awhile it would become apparent that the workers could never repay their loans and the credit bubble would collapse... and sooner or later stagnation and/or depression would develop. These things are inherent in capitalist commodity production, and there is no escaping them. It is not possible to have an economic plan under any form of capitalism, which will not eventually break down.

Socialism or communism without an overall economic plan is inconceivable. There is a great deal of work still necessary to understand exactly how socialist or communist economic plans should be developed and implemented. But one thing transcends all this: the realization that the law of value is fundamentally incompatible with communist planning, and that any economic plan that is based upon the continued existence of commodity production is either capitalist, or at best transitional (to the extent that the law of value is being progressively restricted). The importance of getting clear on the nature and varieties of economic anarchy which can exist under various forms of capitalism, including state capitalism, is that this helps us understand why the much-glorified economic planning in the revisionist Soviet Union is nothing more than capitalist economic planning carried as far as it can go.

Of course there is much more which could be, and should be, said about all this. I hope these introductory comments can be of some value to the discussion of the nature of the Soviet Union which is now underway.

—Scott H.
   2/23/83 (edited slightly on 8/12/98)


[1] Frederick Engels, Anti-Dühring (Peking: Foreign Languages Press, 1976).

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