The State as Capital

Colin Barker
From International Socialism, 2:1, July 1978, pp. 1642.
Copied with thanks from the REDS Die Roten Website.
Marked up by Einde OCallaghan for the Encyclopaedia of Trotskyism OnLine (ETOL).

I. Introduction
In recent years, there has been a welcome revival in the Marxist critique of political economy. A
good deal of this revival has been concerned with the rediscovery of Marxs concepts, and much
less with their use for comprehending the contemporary capitalist world, If there has been a field
where development has been most slight, however, it has been the critique of the capitalist state and
its place within the reproduction of capitalism as a whole. Partly, this has reflected the very form
that the revival of Marxist economics has taken: what Marx did write has been subjected to close
(and often useful) scrutiny, wit what he left unfinished has been little developed. (In one area this is
an unfair assessment. The debate over the place of domestic labour in capitalist society: cf. our
bibliography.) Marx intended to continue bin major work with an account of the state and of the
world market, though to my knowledge nothing has been preserved even by way of this projected
continuation. [1*]
The problem I want to try and discuss here is that of the place of the capitalist state in the
capitalist system. Such a project is clearly too large for me to cover this adequately, and all I can
hope to do is to indicate some of the problems which seem to require development.

II. The general tradition

The starting point for any adequate theory of the state must be the general discussions of the state in
the writings of Marx and Engels. At the risk of considerable over-simplification, what they said is
reducible to a small number of general propositions:
1.

The state is a product of class society, of a condition in which society has become
entangled in irreconcilable contradictions. If any kind of orderly life is to continue in a
society rent with internal divisions, the members of that society must lose their power to
control the communal affairs of their society to specialised agencies and persons The
state is thus not an everlasting and inevitable product of human social relations; rather, it
is a product of particular forms of society, whose manner of formation divides their
members
against
each
other.

2.

The very existence of the state, in this general sense, is therefore an indication of
alienated social relations. Certain forms of human social relations, organised around
antagonistic divisions, make impossible for all members of society to run their own
society
communally.

3.

The existence of the state involves a particular form of the division of labour, through
which some members of society specialise in directing the rest of Society. The state is
thus separated from the rest of society.

4.

The means of coercion are no longer the direct property of the whole of society, but are
specialised into the hands of the members of the state. Thus the state is a
... public power which no longer directly coincides with the
population organising itself as an armed force. This special public
power is necessary because a self-acting armed organisation of the
population has become impossible since the split into classes ...
This public power exists in every state; it consists not merely of
armed men, but also of material adjuncts prisons, and institutions
of coercion of all kinds, of which gentile society knew nothing.

5.

The state apparatus, the product of Class divisions in society, anything but neutral
between
classes.
It
is
a
crucial
element
in
class
rule.

6.

The fullest development of the state, whether in terms of the relative growth in its
personnel, the relative separation of its organisation and principles from those of class
society, or by any other measure occurs with the development of capitalism the most
completely
alienated
form
of
class
society.

7.

The destruction of capitalism and the construction of communism requires the smashing
up of the existing state apparatus, its replacement by the armed power of the working
class, and the beginning of the process of the withering away of the state altogether. A
fully developed communist society, its production organised according to the famous
principle From each according to his ability, to each according to his need! will have
no need of a state organisation. It will be a self-governing community, for whose
members public and private interests will coincide.

The state is an apparatus of violence, first and foremost, which enforces onto society a communal
interest or national interest which is not the direct product of that societys members and which
maintains the basis of the class divisions. At this high level of generality, these core propositions
about the state and thus about the need to overthrow the state and destroy it as a condition of the
realisation of human emancipation through communism form part of the ABC of Marxism both as
a theory of human history and as a theory of human emancipation.

III. Some difficulties and unsatisfactory answers

Where problems begin to arise is when we move from this high level of generality to much more
specific discussion of the precise relation between state and society within capitalism. It is this area,

above all, which Marx himself left very undeveloped, and which subsequent Marxist discussion has,
until quite recently, not developed very much further. What we have inherited from Marx are, above
all, some brilliant historical accounts of particular crises in the development of the capitalist state,
notably in 19th century France, and a superb chapter in Capital, Vol. I on the introduction of
legislation in Britain to control the length of the working day. Otherwise, there are. only scattered
remarks, like those of Engels in Anti-Duhring on the general theoretical possibility of state
capitalism, and very general observations by the young Marx on the alienated character of politics
in capitalism. All of these are full of profoundly interesting insights, but hardly constitute a
developed theoretical framework.
Indeed, Marxs. most famous summary statement on the question of the capitalist state is also
one of the most misleading:
Each step in the development of the bourgeoisie was accompanied
by a corresponding political advance of that class ... the
bourgeoisie has at last, since the establishment of modem industry
and of the world market, conquered for itself, in the modern
representative state, exclusive political sway. The executive of the
modem state is but a committee for managing the common affairs
of the whole bourgeoisie. [2*]

It is a statement with all the brilliant flair of Marxs best aphorisms. Its very fame, however, has led
to its being taken uncritically as the last word on the subject, a last word to which uncritical
Marxists have then attempted to find unattainable proofs. Two problems are posed immediately by
it.
First, taken literally, the statement is plain wrong. The executive of the modern state is but a
committee for managing the common affairs of the whole bourgeoisie. The whole bourgeoisie? If
we quite ignore any subtleties about divisions within the bourgeoisie of this or that county, the
simple tact is that the bourgeoisie is a world class, an international class of exploiters and parasites
that runs a world system of production. Capitalism, from its beginning; presupposed a world
market. But the state form within the capitalist mode of production is decidedly not a world state,
but a system of national states whose relations with each other are antagonistic.
The whole bourgeoisie does not have a state, cannot have a state. No single, universal centre of
coercion has emerged out of the contradictions of the world society that capital has forged over the
past few centuries. When we talk of the capitalist state, we always mean the nation state, or rather
the nation-state system. [1] And no nation state, clearly, can be seen as any kind of committee for
managing the common affairs of the whole bourgeoisie.
Second, Marxs statement has to be taken-by both would-be Marxists and anti-Marxists alike-to
mean that the state is the direct property of the capitalists. A good deal of ink has been wasted in the
attempt to defend this proposition. [2] We ourselves have been anything but immune to this idea
that the capitalist class directly controls the state and runs it in its own interest. Certainly a mass of
radical sociology has been devoted to teasing out the supposed ways in which major capitalist
interests are inter-linked with the leading personnel of the state through common social origins,

common club memberships, common educational backgrounds, common general prejudices,

directorships, lobbies, advisory committees, etc., etc. The crucial theoretical problem with all this
(admittedly often fascinating) material is that it forgets what sort of a class the capitalist class is,
and imputes common interests too easily and uncritically to the bourgeoisie. [3]
The capitalist class is, foremost, the class which drives the competitive accumulation process of
capital. It is a class which, as against the working class, is united by its demand for surplus-value.
But it is also, at the same time, a class which is internallydivided by competition. Exploitation and
competition are, indissolubly, the two defining features of the social relations that define the
bourgeoisie. In Marxs phrase, the bourgeoisie are hostile brothers. They share a mutual interest
in the extraction of the maximum total quantity of surplus-value out of productive labour; but they
are equally engaged in permanent internecine strife with each other over the distribution if that
surplus-value.
The very structural antagonisms that define the internal relations within the capitalist class make
it exceptionally difficult to conceive how, with all the common club-memberships, old school tie
connections, inter-marriages and multiple directorships in the world, the capitalists of a particular
country are capable of forming a common political will sufficient to enable them to dictate the
policies of the state. For the state to be a direct instrument of a class, that class must be capable of
forming a cohesive view of its interests and a common will sufficiently strongly to wield such an
instrument. If any class in history must, precisely because of the mode of production it supervises,
find that requirement difficult, it is the capitalist class.
Three consequences follow: first, that in practice the state must have a degree of autonomy
from the capitalist class; second, that while we must by no means deduce from this that the state is
neutral in the class struggle, its class character, its specifically capitalist character, must be
demonstrated on other grounds than those commonly used by radical sociologists and political
scientists; third, that the very autonomy of the state from the immediate control of the capitalist
class is a source of reformist illusions in the possibility of the working class using the capitalist
state machinery to achieve the destruction of capitalism.
So we cannot understand the place of the nation-state in the movement of capital, if we rely on
the kind of analysis by writers like Ralph Miliband [4], or, indeed, his opponent Nicos Poulantzas
who forget the specific character of the capitalist system in order to demonstrate or argue the
capitalist character of the state. In Milibands case, the problem is that quite simply he treats the
capitalist class as a class capable of acting as a purposive subject in history, pursuing common
goals, when it is precisely that which cannot be demonstrated. Poulantzas, in practice, despite his
many differences with Miliband, regards the problem of formulating a theory of the capitalist state
as a problem for political theory, as if there were a separate theory of the capitalist economy
which is relatively irrelevant to the political sphere, as Picciotto and Holloway point out. [5*] He
does not treat as problematic the very distinction between politics and economics, except in the
most abstract sense imaginable. And, in his concrete studies, Poulantzas, despite much surface
sophistication, does fall back on notions about the interests of monopoly capital as if these were
capable of being read off from history like elephant tracks.

At the most general level, we might say that the problem with what has in practice been the
dominant tradition of Marxist discussion of the state and capitalism has been that it has not begun
with capitalism, but with class society in general. The alternative, then, is to begin with capitalism
as
a
mode
of
production.

IV. Capitalism and the state: alternative starting points

An adequate Marxist analysis of the state and its relation to capital needs to begin with a
consideration of the form that class relations take in the capitalist mode of production, and not
merely in class society in general. This implies that the starting point for theoretical development
should be, not Marxs occasional political writings, but rather his full theoretical treatment of the
alienated forms of social relations characteristic of capitalism That is, it is not from writings
like The
18th
Brumaire
of
Louis
Bonaparte that
we
should
begin,
but
from Capital and Grundrisse.
In this perspective the character of the state and its relation to the processes of capital
accumulation becomes a matter of great significance for the critique of political economy. We have
to tease out the forms in which the state itself is the expression of the same fundamental alienated
social relations that are expressed in the notions of value and surplus-value, accumulation and
competition, and examine the limits of the possibility of state intervention in overcoming the
contradictions of capitalist social relations.
It is characteristic of reformist thought that it looks to the state to do just that, to overcome the
contradictions of capital. For reformism, in its various guises, the state stands Over and outside
capitalism as a source of power which is capable under favourable circumstances of being captured
by socialist principles and employed to destroy capitalism. Nothing, of course, could be further
from Marxs whole analytical conception than this, but nonetheless he never concretely worked out
the links between the fundamental forms of social relations he analysed in the three volumes
of Capital, and the forms in which the capitalist state appears. This was to have been achieved in a
projected volume continuing the analysis in Capital, which was never even drafted in outline.
It is this task, theoretically, which has been taken up by a number of recent Marxist theorists,
especially in Germany, [6*] I cannot cover all the ground or all the ideas they develop, or offer an
adequate critical assessment of their work here. What I will do is to take some ideas from their
work, and show how they make I think universally a mistake whose significance increases with
the aging of the capitalist system.
The starting point for the German theorists, analytically, is a question posed in the 1920s by the
great Bolshevik legal theorist, Pashukanis. [5] Engels, Pashukanis suggests, had theorised the state
as a necessary product of class society and class conflict. But in so doing he had failed to ask why
the state takes on the specific form it does, and why it performs the specific functions it does, within
capitalist society.

Behind all these controversies one fundamental problem lies

concealed: why does the dominance of a class not Continue to be
that which it is-that is to say, the subordination in fact of one part
of the population to another part? Why does it take on the form of
official state domination? Or, which is the same thing, why is not
the mechanism of state constraint created as the private
mechanism of the dominant class? Why is it dissociated from the
dominant class-taking the form of an impersonal mechanism of
public authority isolated from society? [7*]

To this question, several kinds of answers have been given, which we can quickly outline, not in
opposition to each other, but rather as if they were all additions to a rounded account. First, the fact
that capital can exist only as many capitals in competition with each other means that the
reproduction of the whole society is a problem. In a society constituted as a market, in which
production is carried out in isolated units related to each other antagonistically through exchange,
some institution outside the production units must enforce order on them, guarantee the rights
which each must recognise if social production as a whole is to continue. The maintenance of
contractual relations requires the development of law, and of an institution of coercion to enforce
contracts and rights. Put another way, since the interests of each isolated individual in commodity
production include no conception of a general interest of society, the state is required to enforce a
common interest on all participants. (The state, in this perspective, is required as Thomas
Hobbes Leviathan was required, to save humanity from the consequences of its own nature red in
tooth and claw!)
The fierce competition between capitals means that capitalist society cannot ensure its own
continuance, its own necessities, without some other institution outside capital to enforce a common
interest on capitalist society. In his analysis of the development of the Factory Acts, Marx showed
that the intervention of the state became necessary to prevent 19th century British capitalists from
so extending the working day that they risked destroying the very foundation of their capital
accumulation, the living labour-power of the working class. [8*]
The paradoxical result of the workers struggle to limit the working day was that, through the
state, they enforced on capital its own interest in further development. The point is taken further in
the current German discussion, in an argument (derived from a section of the Grundrisse) that
capital accumulation involves the necessity of certain general conditions of production which
capital itself being constituted of many mutually antagonistic capitals is incapable of providing.
The state thus provides certaindeficiencies of capital which it cannot itself provide. These include:
the provision of certain parts of the economic infrastructure e.g. roads, postal communications,
nationalised industries, etc.; the provision of a legal system through which rights and contractual
responsibilities are enforced; the regulation of the conflict between workers and capitalists, and
where necessary the political coercion of the workers; safeguarding the expansion of national
capitals on the world market (the imperialist function). Here the state is seen as providing certain
necessary general conditions of production which private capitals themselves cannot directly
provide. The existence of the state as a coercive institution separate from capitals, a product of the

capital relation but not itself capital, is posited as a necessary aspect of the capitalist mode of
production.
Capitalism, of course, is not merely, or even principally, competitive production of commodities;
it is a mode of production based on the production and accumulation of surplus-value. It is not
merely an anarchic system of production and distribution, it is aclass system. The bean of capitalist
social relations is constituted not simply by relations of antagonistic separation of producers, but by
relations of domination. But the system of domination is hidden. On the surface of society, in the
market relations between capitals and between capital and labour, it appears that everything is fair
and equal; everyone gets, more or less, the value of his commodity, including the worker who sells
his labour-power. In Capital I, Marx suggests that force is not a permanent necessity for capitalist
exploitation to continue. Workers contintue to produce surplus-value for their employers, not
because there is permanently a gun at their backs, but because if they dont they will starve:
The advance of capitalist production develops a working class
which by education, training and habit looks upon the requirement
of that mode of production as self-evident natural laws. The
organisation of the capitalist process of production, once it is fully
developed, breaks down all resistance. The constant generation of
a relative surplus population keeps the law of supply and demand
of labour, and therefore wages, within narrow limits which
correspond to capitals valorisation requirements. The silent
compulsion of economic relations sets the seal on the domination
of the capitalist over the worker. Direct extra-economic force is
still of course used, but only in exceptional cases. In the ordinary
run of things, the worker can be left to the natural laws of
production, i.e. it is possible to rely on his dependence on capital,
which springs from the conditions of production themselves and is
guaranteed
in
perpetuity
by
them.[9*]

V. And further difficulties

There is a good deal more to the contribution made by the German Marxist theorists to the
understanding of the relation of capital to the state than appears above, and their work with its
many controversies and insights deserves serious study. At the same time, in a few respects all the
German theorists appear to agree on a particular approach to the question of the state which I wish
to question.
They all tend to see the state in two unsatisfactory ways: firstly, they all treat the state as a
necessarily unproductive sphere of activity, as being outside the concept of capital itself, as notcapital though necessary for capital; and secondly, they all tend to treat the state in the singular.
The two problems, I suggest, are related. The implication of their theorising of the state are such as
to rule state capital out of court as a theoretical impossibility, a non-thing a position which
must tend, I suggest, to make it more and more difficult for them to apply the concepts they have

developed to the analysis of contemporary capitalism, in both the East and the West (not to mention
the South).
As to the first point, Muller and Neususs treat the state as a particular social institution which
confronts productive society [10*]; Altvater writes:
... capital cannot itself produce through the actions of many
individual capitals the inherent social nature of its existence; it
requires at its base a special institution which is not subject to its
limitations as capital, one whose transactions are not determined
by the necessity of producing surplus value, one which is in this
sense a special institution alongside and outside bourgeois
society. [11*] [6]

And Hirsch writes that

The function of the bourgeois state can never be more than the
creation of the external conditions for the social reproduction
process which regulates itself on the basis of the law of value. The
social process of production and reproduction cannot be the direct
object of state activity ... [13*]

And before them all, the Bolshevik theorist of law Pashukanis had declared,
The principal of competition which is dominant in the
bourgeois-capitalist world as we have already noted supra
provides no possibility of associating political authority with an
individual enterprise after the analogy of the association of such
authority with great holding of land under feudalism. [14*]

Thus a rigid conceptual distinction is maintained between state and capital. The external
concerns of states tend to be tagged on as an afterthought [7], not taken into the general analysis of
the form and functions of the capitalist state. [8]
Contrary to the position implicitly or explicitly assumed in much of the contemporary discussion,
I suggest that the state can itself be a capitalist, in the sense that the state institutions can directly
become the conscious bearer of the capital-relation, that the state can have as its direct object of
activity the social process of capital production and reproduction within a national sphere, that
political authority can be associated with an individual enterprise even while the total activity
of the state cannot be thus defined as directly capitalist. In particular, it seems to me to fly in the
face of current actual developments in the world economy to deny that the state can be
a productive capitalist, that is, a capitalist under whose direct dominion surplus-value is produced.
In other words, the state can be funded not only through its taxation of revenue from productive
capitals falling within its political sphere but can itself also directly exploit productive labour.

In part this position assumes that what Marx termed the general conditions of production, and
which Marx discussed very briefly in the Grundrisse, are not produced by this or that nation-state
for capital in general, as much of the discussion tends to assume. Rather, they are produced by
this or that nation-state for its capital, or capitals, not to facilitate capitalist production in general,
but to facilitate national capitalist production conducted in competition with capitalist production
under the aegis of rival nation-states. This also therefore assumes that the production by states of
the general conditions of production includes state activities which are both productive and
unproductive, in capitalist terms. [9] (I also assume, though this point is not much further
developed here, that the production of the general conditions of production is not an activity
necessarily restricted to states, but is also performed by other capitals and by such forms as the
family, under conditions which require to be analysed in their own right. [10])

VI. The state and unproductive labour

There appear, in the light of what has already been said, to be two principal forms of unproductive
wage labour within modern capitalism, one of the two forms having important inter-relations with
the dominant form of unwaged unproductive labour, housework. [11]
The first of these forms is unproductive labour employed in the sphere of the circulation of value,
where labour is employed to realise value for a particular capital or state or to protect it for one
capital or state against the depradations of alternative consumers. Here we include workers in
finance, insurance, credit, sales [12], taxes, army, police, security-guards, judges, lawyers, prison
officers etc.
The-second kind of unproductive labour is labour employed to reproduce labour-power, a
commodity whose actual reproduction does not involve the production of surplus value. Here must
be included the activity of productive workers when they are not actually at work for capital (for
their own consumption activities are, as Marx noted, also a production process through which they
reproduce themselves), the work of housewives, doctors, nurses, hospital porters, teachers, social
workers, etc. The labour of these workers does not occur in the sphere of the circulation of surplusvalue, but rather in the distinct sphere of the circuit of simple commodity production, the sphere of
the reproduction of labour-power.
In Capital Vol. III, Marx showed that the relation between the individual productive worker and
his individual employer is in reality a relation between the worker and the entire capitalist class.
The worker who produces surplus-value under the direction of his immediate employer turns out in
reality to be producing surplus- value which enters into the collective property of the whole class of
capitalists,, and which is shared out amongst the capitalists by a process of internal competitive
struggle through which (a) values are transformed into prices. (b) a general rate of profit is formed,
(c) the claims of finance and landed capitals are met, and (d) a matter not much discussed by
Marx the tax claims of the nation-state are met. What appears to be the relation between the
individual worker and his individual boss turns out to be a relation between the working class and
capital as a whole.

Similarly, to the extent that the state enforces taxation and uses the money thus collected to
provide all manner of social services, the whole working class is forced to contribute to the costs of
its own total reproduction, to the costs of maintaining and reproducing the reserve army of labour,
the children, the old, the sick, etc., and to the cost of reproduction of the unproductive labour power
which contributes to the maintenance and reproduction of labour-power future, present (actual and
potential) and past. On examination, the seeming individualised relation between the individual
worker and the individual employer, between the individual worker citizen and the state, turns out
to be part of a collective, class relation.
There; are limits set to the possibilities of the complete statification of the reproduction of labourpower. The welfare state, whose development has on the one hand undoubtedly been the product
of workers struggles over a number of generations, cannot be viewed simply as a set of
concessions wrung out of capital and its state by the labour movement, cannot be seen simply as a
positive gain. Not only because, as the cuts in welfare in the present crisis reveal, the ruling class
are not willing to maintain the same level of concessions, but also because the forms of the
welfare state are impregnated with the principles of the capitalist state, are shaped by the very
process of class struggle through which they have been expanded.
Workers, not surprisingly, do not view the welfare state as theirs. Rather, the relation of
workers with the agencies of the welfare state is one dominated by the bureaucratic relation of the
state to its subjects, by the removal of control of welfare state institutions from popular control, by
the scrupulous suspiciousness that pervades the dealings of welfare agencies with their clients
(whether in schools, hospitals, claims for benefits, etc.). The welfare state is a highly alien sphere,
whose very architecture declares its drab, alienated character, its miserable and limited pursuit of
the common interest. Marxist historians are just beginning to write accounts of the welfare states
various branches which take proper account of the tendencies to bureaucratic centralisation which
have marked their development and extension. Certainly, from well before the New Poor Law,
workers feared dependence on the state for the reproduction of their labour-power, and for all too
comprehensible reasons. A part of workers struggle under capitalism has thus always been
a defence of the family form of reproduction as Marxist feminists have just begun to
demonstrate. [13]
All forms of expansion of unproductive labour represent deductions from potential total surplusvalue available for recapitalisation in the productive sector. On the other hand, the very existence
of modern capitalisms unproductive sector also depends. on the production of sufficient surplusvalue to maintain it, and its growth if growth there has been has depended on the expansion of
the
mass
of
the
total
surplus
value
produced.

VII. State as capital: productive labour in the state sector

It would be a mistake to treat all forms of state production as unproductive labour, merely because
of the fact of state ownership of the relevant means of production. The state can be a capitalist, and
a productive capitalist. The obvious case is the nationalised industry Sector in western capitalism,
within which wage-labour is combined with state-owned means of production to produce use-values

embodying both necessary and surplus labour, embodying surplus-value. At the same time, the state
is a capitalist of a particular sort, whose character as capitalist is disguised by the state form.
It is sometimes objected, that the state cannot be a capitalist, and in particular that the
nationalised industries cannot be capitalist enterprises, because of the low or even negative rates of
profit which they earn. This objection. however, confuses the surface appearance with the
underlying real relations. In order to comprehend the place of the nationalised industries in the total
process of reproduction of national capital, it is necessary to remind ourselves of the outline of
Marxs argument concerning value and prices, and concerning the formation of an average rate of
profit.
In Marxs account, the individual values of commodities cannot coincide with their average
prices. Surplus value is created only by living labour power, and thus capital would never flow into
the less profitable and more capital-intensive branches of industry, and capitalism would be
marked by permanent technical stagnation. Such a theoretical conclusion does not, obviously, match
the actual history of the capitalist mode of production, whose chief historical merit in Marxs eyes
was precisely its massive development of the productive forces.
A systematic deviation between values and prices is thus a necessity for capitalist production as a
whole. Marxs argument, crudely, is that all the surplus-value produced in all the various branches
of production enters a common fund which is the collective property of the whole capitalist class.
This fact of common property in surplus-value is what gives the capitalist class as a whole a
collective interest in the rate of exploitation of the working class in the whole productive sector of
capitalism. The distribution of that collective fund of value amongst the various capitalists is
determined by competition between the capitalists. And, broadly speaking, the outcome of that
competitive struggle amongst the capitalists is that each capital gets back a proportion of total
surplus-value in the form of profit, its proportionate share being determined not by its contribution
to the collective fund, but by the total size of its capital outlay. Thus the more labour-intensive
industry produces surplus-value a part of which is transferred through the competitive process
within the sphere of circulation to the more capital-intensive branch of industry; thus the worker
in an industry with a low average organic composition of capital actually labours to produce profits
for capitalists in industries with high organic compositions of capital. Through this competitive
process, an average rate of profit is formed across the whole of the capitalist production process.
Nor is this the end of the story, for total surplus-value is distributed not only among the
capitalists whose production processes contribute surplus-value to the collective fund, but also
among other capitalists whose claim to a share rests on the possession of capital in other forms:
finance capital, landed capital. Thus surplus-value is divided, not simply into various shares of
profit, but also into interest and rent, which represent the claims of non-productive capitals.
Though Marx has much less to say about this, it is also clear that it is at this point, when the
collective fund is being distributed, that the state also steps in with its particular claims which its
takes out in the form of taxes. Just as the landlord can press his claim to a share of total surplusvalue on the grounds of his monopolisation of land, so the states monopoly of force permits its
claims to be met as well. The various costs of the state are thus met out of this collective fund of
surplus-value.

However, to the extent that the state owns productive capital, as with nationalised industries, it
contributes to the collective value- fund as well as deducting from it. At the same time, its
monopolistic position founded finally in its ability to use force, to collect taxes permits the state
to organise the pricing of its products in such a way that it appears that they are simply
unproductive, simply loss-makers. The states ability to tax gives it the power to obtain constant
and variable capital by other means than through the price-mechanism.
The implication of the price-mechanism is, of course, that those who actually use (consume) a
particular commodity provide the capital producing that commodity with the money that can be
reconverted into further constant and variable capital in production. Non-users make no
contribution.
The state, on the other hand, is able to enforce payments for its outputs on non-users, or merely
a variation on the same theme to enforce payments for its output which are disproportionate to
their use. And commonly we find nation-states, relying ultimately on their monopoly of force,
altering the domestic price-structure, and altering the flows of surplus-value. Thus, state railways
commonly make losses, in that their monetary revenues from passenger and freight services do
not match their monetary outlays, but this does not imply that they therefore cease to operate.
(Though, in the hands of private capital, which generally lacks the ability to tax, they would cease
to operate, as they would fail to attract further capital). What happens, of course, is that the capital
required for the maintenance of the railways, and for their modernisation, is provided by the state,
through its peculiar powers. The implication is that those who directly use the railways are not the
only providers of their money-capital requirements.
In Britain, certainly, it is notable that with the possible exception of the Inland Waterways
Board the nationalised industries have invested massively in the development of the productive
forces under their command, and despite their low profitability. Clearly, the financial resources to
enable all the modernisation investment that has been undertaken in the electricity supply industry,
in gas, in the railways, the coal-mines, etc., has not been secured by the price-mechanism alone. In
addition to the revenues raised by these industries through direct sales of their products, they have
also depended on the states ability to provide them with investment capital in other ways: through
the writing off of losses, through loan-capital, through tax-raised money, through various kinds of
financial subsidy, etc., All this money raised by the state, by whatever means, and used for these
investment purposes must surely be viewed as a portion of total surplus value extracted from
capitals collective fund and redistributed through the states coercive ability to define, and enforce,
a common interest for national capital.
On the whole, within western capitalist countries, the nationalised industry form is used by
nation-states in situations where, for whatever reasons, (a) the rate of return obtainable by a
particular branch of production or capital is insufficient to guarantee the continued investment of
private capital (whose only means of making a profit is via the price-mechanism) and (b) where,
for whatever reasons, the state judges that the continued provision of the use-values produced in
that branch of production or capital is in the national interest. The state, with its particular
powers, takes over the financing of capital in that sector, and to a greater or lesser extent shifts the

locus of realisation of value away from immediate purchasers of the use-values produced onto the
whole national capital or some other parts of it.
Nationalisation of this or that capital cannot be said to be in the interests nor against the
interests of capital either of capital- in-general or of whatever is defined as national capital.
Some individual capitals benefit from nationalisations, others lose out. Some receive new moneycapital in the form of compensation (if this is paid), some do not; some benefit, in that the state
effectively forces other capitals to meet part of the costs of their material inputs, some subsidise
more than they are subsidised; some benefit from the maintenance in the nationalised industry of a
market for their own output, others do not; some meet the maintained nationalised sector as a
competitor, some meet is as an alternative vendor seeking their custom.
It should also be cleat that formal, legal nationalisation is by no means the only process to
which this kind of analysis is appropriate. To the degree that a nation-state subsidises any capital. it
also interferes in the price-formation process, and thus interferes in the movement whereby value is
distributed between alternative competing realisation possibilities. What seems to have been a
marked tendency towards greater state intervention in investment, pricing, etc., means that the
various nation-states have become increasingly prominent actors in the determination of the flows
of value within national capitalist markets.
In the case of a national economy like the Russian one, the internal market plays only a very
small part in the determination of prices. In such a case, the formation of prices is removed a good
distance from the processes discussed by Marx in his account of the transformation of values into
prices, and the need for a developed account of the tax-form becomes especially apparent. If Russia,
where effectively all means of production are in the hands of the state [14], represents the extreme
point of development within a national economy, there are clearly significant shifts in this direction
also manifest within western capitalist countries.
In western capitalism, the nationalised industries, together with the semi-nationalised sector of
state-subsidised industries, are to be regarded as a sector of productive labour. In this they are to be
distinguished from the rest of the state sector, which is a sphere of unproductive labour. That is, the
nationalised industries not only consume value produced elsewhere, but also add to the collective
fund of capital their own contribution of surplus-value. But they represent, generally, a sector of
capitalist production which for a variety of historical reasons has proved incapable of realising
sufficient surplus-value to engage in the investment/modernisation deemed necessary by the state in
the national interest.
The prospective rate of profit earnable on their assets has not been sufficient to induce their
private (or municipal) capitalist owners to invest in their future to the degree deemed necessary by
national government. It is not possible to treat these industries as infrastructural or simply a part
of the general conditions of production, for they are too diverse to be thus neatly categorised.
Even if we can slot industries like gas, coal, electricity, rail, the Post Office, steel into this kind of
neat categorisation, examples like Rolls Royce aero-engines, or British Leyland (or indeed
Volkswagen or Renault) just do not fit easily into such an over-tidy framework.

Two important general observations of course, need to be made. They are inter-related. The first
is that however much state intervention may affect the pattern of domestic national prices, and
however much it may affect the distribution of value between competing realisation possibilities the
law of value still operates overall. A change in the distribution of value from one possible
destination to another does not, in itself, add one iota of additional value to total capital. The general
level of the rate of profit is not altered by its redistribution. Any inherent tendencies within capital
in general, such as the tendency for the rate of profit to fall, are in no way overcome. [15] The fact
that this or that nation-state becomes directly or indirectly involved in the actual process of surplusvalue production, or alters the distribution of value within its sphere, does not in the least alter the
general laws of motion of capital, which continue to operate behind the backs of the producers,
including state producers.
State interventions in the distribution of surplus-value, of the kind involved in nationalisation and
subsidisation, does represent a form of capitalist socialisation of production. As socialisation, of
course, it is inherently limited by its capitalist form, and by its national character. Such
socialisation is carried out, not in the interests of production in general, nor even in the interests
of capital in general, but rather with a view to benefiting those parts of total capital which operate
within the national orbit of the state. The costs of running these industries, insofar as they are not
covered by receipts from direct sales, are borne by the rest of the national capitalist class, and
appear as deductions from their (potential) revenue.
Secondly, we need to remind ourselves of the merely national character of the state. There is an
apparent tendency in Marxist theorising about the state, and about phenomena like capitalist
imperialism, to treat the external relations of states as factors to be added on to analysis as a mere
after-thought. Put another way, there is a tendency to treat the world market as a sum of a set of
national economies, rather than treating the world market as the analytical starting point for a
discussion of the nation-state. [16] The world market, intended to be the subject of Marxs last
planned volume of Capital, is not something as it were extrinsic to capital, but is rather implied in
the very concept of capital itself.
... just as capital has the tendency on the one side to create ever
more surplus labour, so it has the complementary tendency to
create more points of exchange, i.e., here, seen from the
standpoint of absolute surplus value or surplus labour, to summon
up more surplus labour as complement to itself; i.e. at bottom, to
propogate productioii based on capital, or the mode of production
corresponding to it. The tendency to create the world market is
directly given in the concept of capital itself. Every limit appears
as a barrier to be overcome. [16*]

The formation of capital from the beginning, as the basis of the capitalist mode of production,
implied and was contained in a developing world market, within which nation states were formed
and differentiated. The formation of a world market (whose geographical reach need not as
Wallerstein recently pointed out [17*] initially be genuinely global in scope) implies that the
processes discussed above, through which values are transformed into prices through the
competitive interaction of capitals, occurs not merely on a national but on a world market level. Not

only that, but it is through the world market that socially necessary labour time is determined for
any particular commodity: i.e., it is through the world market, and the competition of capitals
therein, that the production process of this or that capital is declared or not declared necessary. It
is simply astonishing how easily this elementary and important idea is forgotten or not grasped,
both by bourgeois and Marxist theorists [17]
Through the movement of value within the whole world economy, limits are set to the
possibilities of nation-state interventions in capitalist production and realisation. This elementary
notion is forgotten by those, including most in the Keynesian tradition, for whom full
employment or any other desirable condition of the national economy can be simply provided if
the state pursues the correct policies. In practice, no nation-state can have the degree of leverage
required to produce the desired result in its own segment. Properly, analysis of the world
economy should be the starting point for the analysis of the nation-state. [18]

VIII. National capital

State interventions in national production, whether in the form of the direct nationalisation of the
means of production, or various indirect semi-nationalisations such as state-subsidisation, tariff
protection for certain commodities, legally instituted limits on rights to transfer capital, etc., imply
the formation of national capital. How far can we take this notion of national capital?
Consider the meaning of a nation-states decision to nationalise or otherwise aid a segment of
industry. What we may say happens in such a situation is that a nation-state places itself in the
position of the directors of a national capital, and tries to decide what policies will best serve
the interests of that national capital. I place national capital in quotation marks, since part of
the process of decision making actually involves deciding what the practical limits of national
capital actually are. A nation-state is defined, in part, by its possession of a monopoly of force over
a particular segment of geographical territory, for it is as tied to land as was any feudal serf or lord.
The various means of production which exist within and outside the territorial limits of the nationstate can, under various circumstances, and depending on government perceptions, be counted as
part of national capital or counted out of such a conception. Thus, for example, the plant and
other facilities which legally belong to companies with their headquarters in other countries may,
for certain purposes, be counted as national capital and for other purposes they may be counted as
foreign, alien. [19] Similarly, the overseas holdings of the states own legal subjects may or
may not be counted as part of national capital.
In whatever way the nation-state perceives the shape of its national capital for the immediate
purpose, it must form its conception of national capital in opposition to or in separation from the
rest of capital, as against other national capitals. In a sense, what the nation-state asks is, does
British industry require a massive injection of new money-capital into its steel/coal/railway/nylon
stockings production? [20] Will those who currently direct that production themselves provide or
raise the necessary investment capital? What are the consequences for British industry of a major
injection of new investment by the state into that sector or, on the other hand, of allowing that
sector of national production to run down? Should tariffs be erected to protect this or that branch

of national production from overseas competition, and with what results for the rest of national
capital?
It is clear; from the history of the relations between the state and capital both in Britain and
elsewhere since at least the First World War that, with important forward and reverse movements,
states have become increasingly interventionist vis-a-vis their national capitals. National
capitals have become less and less notional, in the sense that large agglomerations of capital are
being and have been formed around the nation-states of western capitalism, these state capitals
consisting above all of the formally nationalised industries whose continued existence depends on a
sizeable degree of state subsidisation. The states have carried out forms of vertical integration of a
variety of sectors of production, collecting them together into statified conglomerates with more
or less integrated internal structures.
But faced with a crisis in profitability in this or that sector of national production,
nationalisation or state-subsidisation is only one possible response. For coherence of policy
formation is not by any means to be expected in these circumstances; rather, ad hoc adjustments and
decisions, reflecting capitals essential anarchic planlessness, are all too apparent. [21] Mike Kidron
put the point well:
It is difficult not to conclude that the states growth in size and
economic effect has not been a direct result of pressure from either
business or labour. While organised labour has, on balance,
favoured state involvement and capital opposed it, nothing
suggests that either attitude has had much effect on the actual
course of events since the war. On the contrary, the states growth
has been in a series of disjointed steps that bear every sign
of not representing a coherent attitude working itself out in
institutional form, but rather a series of ad hoc responses to shortterm problems which could not be dealt with in any other way.
Since the problems were shared by more or less all western
capitalist countries and their institutional arrangements were
similar at the outset, it is not surprising that they adopted similar
approaches and went through a similar course. [18*]

Though even this is capable of being read too economistically in two senses: first, in that it
underplays the degree of uneven development as between nation-states witness the lower level
of formal nationalisation etc. in the US economy, especially in the 1950s and 1960s; second, in that
it leaves unexamined the Ways in which ad hoc responses to short-term problems could be dealt
with in other ways i.e., it leaves out the class struggle.
How should national capital be organised? There is a permanent debate and struggle among
capitals ideologists as to the appropriateness of market forces and planning, over the desirable
level of statification for national capital, etc. [19*] That debate is paralleled within management
theory in a general controversy over the desirability of centralised control and decision-making as
against local managerial initiative and departmentalism within the individual capitalist enterprise. It
is also mirrored in the post-Stalin debates in Eastern Europe over the degree to which market

forces should be permitted freedom of movement and development, given the effects of
bureaucratically centralised planning on waste, stagnation, etc. [22] The issue in the debates is,
which form of internal organisation of capital will prove most effective in terms of capitals external
necessity of responding to competitive anarchy in the world system. Certainly the debate is not
about capitalism v. socialism, but about forms of capitalist organisation and strategy, in which the
various schools of thought emphasise particular aspects of the contradictory character of capital,
without perceiving the totality. The actual effect of the ideologists on state policy-making is
obscure; probably, they appeareffective to the degree that their propositions represent actual class
forces at particular conjunctures.
The problems of analysis arising from the growth of the state sector in 20th century capitalism
are considerable. If, on the one hand, we reject that argument which suggests that the whole of the
state sector is a sphere of unproductive labour in the sense that it is a sphere of activity financed
purely from revenue and which contributes nothing to surplus-value directly, we also have to
beware of the opposite trap of treating modem capitalism as a more or less fully formed system of
state capitals. In such a view, as presented in an essay by Kidron [20*] for example, the world
economy is seen as fundamentally a system made up of an aggregation of Russias, with only the
added complication that the boundaries of the integrated state capitals do not coincide with the
territorial boundaries of states. For Kidron, if such a system is not yet fully formed, this is the
tendency of development.
Such an approach, I suggest, involves treating the capitalist nation-state as a rather less
contradictory phenomenon than in fact it is. In a senses Kidron makes the same mistake that von
Braunmuhl (cited above, section VII) identifies as the mistake underlying a variety of accounts of
imperialism: they treat the world market as a sum of national markets, a sum of nation-states, rather
than beginning with the totality and treating each national segment and each nation-state within it as
a particular field within the whole seen in this light, each national economy appears as a particular
combination, a complex unity of capitals with different structures, different markets, different
sources for its material inputs, etc. And within world capitalism, at least two general tendencies are
identifiable: not merely the one suggested by Kidron.
These are exactly the tendencies that Bukharin identified in general terms in his much neglected
work, Imperialism and World Economy (1915): on the one hand tendencies to the nationalisation
of production and exchange, on the other hand tendencies to their internationalisation. Both
tendencies are very apparent within contemporary capitalism, and in important ways they contradict
and reinforce each other. One field in which the contradictory character of these tendencies
manifests itself very sharply is within each nation-state: hence precisely the importance, in using
terms like national capital and national interest, of maintaining permanent quotation marks.
National capital comprises a very contradictory bundle of capitals. It includes domestically
based capitals which are chiefly concerned with the domestic markets for both capital and
consumer goods. They may be private or nationalised. It also includes capitals based and run
from overseas, which are oriented towards the domestic market and towards overseas markets. It
also includes domestically based capitals which are oriented towards export markets: again, both
private and state capitals are involved British Steel, British Shipbuilders, Rolls Royce, British

Leyland. Among these, some capitals are concerned chiefly with the export of commodities, others
with the export of capital, both productive capital and various kinds of rentier and finance
capital. Nor are the sources of capital borrowing limited to the domestic market, but include
massive foreign borrowings, including borrowings from the growing euromoney markets. In the
nature of the situation, the process of nation-state policy formation and strategy must be a response
to a whole variety of demands and pressures from capitals, many of them necessarily in
contradiction with each other. [23]
The states relation to the contradictory demands and movements of capital in the world market,
and in its domestic economy as it relates to the world market as a part, is mediated most directly
through the more or less accidental aggregate manner in which the inter-relations between capital
within and outside its territorial boundaries are experienced: through the national balance of
payments, and through the varying relations between the state-guaranteed national currency and
world money, i.e. between the exchange-value of its national money and other national currencies
and gold.
So the capitalist nation-state is even without our taking account of the struggle of capital with
the working class over the accumulation and exploitation process anything but a permanently
structured bloc of interests. Rather, the state is a field of intracapitalist conflict, through which at
best only temporary and shifting determinations and enforcements of the national interest are
achieved. Understanding the role of the state as capital is therefore only the starting point
although an essential starting point for understanding its relationship with the rest of capitalist
society.

References
1*. Roman Rosdolsky, The Making of Marxs Capital, 1977, chap.2.
2*. Karl Marx, The revolutions of 1848, 1973. p. 69, (my emphasis CB).
3*. Cf. Claus Offe, Structural problems of the capitalist state, German Political Studies, 1974.
4*. Isaac Balbus, Modern capitalism and the state, Monthly Review, May 1971.
5*. Cf. John Hollway and Sol Picciotto (eds.), State and capital: a marxist debate, 1978, Introduction.
6*. Cf. ibid.
7*. E.B. Pashukanis, The general theory of law and marxism, in J. Hazard (ed.), Soviet Legal Philosophy, 1951, p. 185.
8*. Cf. W. Muller and C. Neususs, The illusion of state socialism, Telos 25, 1975.
9*. Karl Marx, Capital, Vol. I, Penguin 1976 p. 899.
10*. Hollway and Picciotto (eds.), op. cit., p. 38.

11*. Ibid., p. 41 (my emphasis, CB).

12*. Elmar Altvater, Notes on state interventionism, Kapitalistate, 1, p. ??)
13*. Hollway and Picciotto (eds.), op. cit., p. 64 (my emphasis, CB).
14*. Pashukanis, op.cit., p.186)
15*. Eugene and Laice Kamenka, The life and after-life of a Bolshevik jurist, Problems of Communism, 1970, p. 532.
16*. Karl Marx, The Grundrisse, 1973, pp. 4078.
17*. Cf. Immanuel Wallerstein, The modern world system, 1974.
18*. Michael Kidron, Western capitalism since the war, 1970.
19*. Nigel Harris, Competition and the corporate society, 1973.
20*. Cf. Michael Kidron, Two insights dont make a theory, IS 100, July 1977.>

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