The Spectre of State Capitalism by Ilias Alami and Adam D. Dixon published by Oxford University Press
Don Flynn on political economic theory
The idea of state capitalism provokes conflicting emotions for many people on the left. In the Labour tradition, interpreted by its deeper thinkers of the stature of Anthony Crosland, it figures as a broadly progressive development in which the more disruptive anarchic forms of free market capitalism are suppressed and the system rendered more plannable and responsive to the welfare needs of most of the population. For others, it is the point where the class struggle runs out of steam, and the revolution is betrayed by a corrupt bureaucracy.
This is not the state capitalism discussed in this book. For the authors, state capitalism is manifested in the sovereign welfare funds (SWFs), state-owned enterprises (SOEs) and the policy and development banks, which are features of contemporary globalist architecture. It is also not reducible to a putative fundamental division between a liberal capitalist West and an authoritarian East, since the hybrid private-public firms that are increasingly important across the world economy have a strong stake in both social and political systems.
State capitalism is best understood in the term suggested in the book’s title: as a spectral force that haunts many aspects of the modern world and is playing a key role in the relations between states and the circuits of capital accumulation.
The key question is why the last twenty-five years have produced such a strong shift in the logic of the system, away from entrenched opposition to state meddling in economic affairs to a heavy reliance on its powers to bring about the current restructuring of productive activity?
Alami and Dixon offer a deep dive into political economic theory to provide us with their answer. They set out a perspective based on what they call the “churn” of uneven development, which is the product of the previous period of neoliberal globalism. Under this, private firms were up to the task of exploiting the labour markets that became available when world trade was prised open in the 70s and 80s and global supply chains were seamlessly managed by the new digital technologies. But these same firms have not been so proficient in managing the consequences of their erstwhile success.
What emerged from the neoliberal decades is the present long period of economic stagnation and industrial overcapacity, which the constant appeal to the interests of the entrepreneur and private investor has not been able to get us out of. A dramatic expansion of state intervention became necessary to manage the resulting turbulence, enhancing its role as promoter, direct owner of capital and investor-shareholder. As the authors argue, state capitalism functions in part as a stabilising force acting to counter turbulence generated in the global economy.
The forms of this intervention – the SWFs, SOEs and policy and development banks mentioned above – were very different from the nationalisation of industries and expansion of public services seen in the mid-20th century. Its key feature is that it safeguards forms of private capital, like the centrality of shareholder value, which ensure surplus value is returned to investors and the interests of workers remain subordinate. Because of this, state capitalism cannot be considered simply as a progressive development in and of itself on the grounds that it represents a step in the direction of the socialisation of capital.
Its logic is consistent with tendencies inherent in processes of capitalist accumulation, which include the centralisation of individual capital into fewer hands. The fact that this is now being supervised by state-capital hybrids rather than private monopolies does not automatically swing the balance in favour of social progress.
Is state capitalism just a temporary phrase, and will it eventually lead to a vast privatisation once the system has been stabilised? This seems unlikely since it is proving so dynamic and effective in overseeing the wider interests of capital. Nevertheless, it also contains tensions which point to the possibility of challenge. It has emerged as an ad hoc response to the failings of neoliberalism but is itself marked by the messy, crisis-ridden conditions of its birth.
The book’s final pages consider the circumstances in which progressive, democratic, green challenges might be leveraged by crises of state capitalism, which are yet to come. These will seem all too brief and sketchy for activists who are looking for a clear indication of the way out of the capitalist predicament in whatever form it takes. But the authors’ viewpoint on the central characteristics of state capitalism is a weighty contribution to understanding where we are today, and what might need to be done to get to a different place.