Chapter 20 : 
State-Capitalism and The Mixed Economy
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Author : Paul Mattick

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While Marx’s theory of accumulation covers the mixed economy, it seems
to lose its validity for the completely-controlled capitalist economy, i.e.,
state-capitalism or state-socialism as represented by the so-called communist
societies of the Eastern power bloc, where government decisions and economic
planning determine production, distribution and development. These societies
are not the product of a slow transformation from a “mixed” to a
state-directed economy but are the direct outcome of war and revolution. In
practice, they have continued and extended the state-directed war time economy;
theoretically, they regard their activity as the realization of Marxian
socialism. This is somewhat plausible because they adhere to an
“orthodox” interpretation of Marxism which sees in private property
relations the main, or only, condition of exploitation. Actually, the
conditions which Marx expected to result in the “expropriation of
capital” did not even exist in the industrially underdeveloped nations
engaged in social revolution. Their leaders were convinced, however, that total
state control over all of the economy would bring about a more rapid capital
development than would be possible under competitive market relations, and that
this more rapid development under the auspices of socialist governments would
enable a slow transition to socialism.

The development of capital production in the name of “socialism”
or “communism” is a paradox too farfetched to have entered
Marx’s mind. Yet from the vantage point of the present it is not strange
at all. Although constructed with an eye on England which, at that time,
represented capitalism in its most advanced and purest form, Marx’s model
of capital production represented neither the national nor the world economy
but was an imaginary system of basic capital-labor relationships. The actual
development of capitalism brought with it a variety of more-or-less developed
capitalist nations, colonization, and imperialism. Yet the world economy was
inextricably interconnected with, and dependent upon, capital expansion in the
dominating capitalist nations. In under developed countries revolutionary
theory had to relate itself not only to still-existing pre-capitalist
conditions but also to the over riding capital-labor relations that dominated
world economy. As there was no way to develop new independent national
economies except in opposition to the monopolistic powers and their fetishistic
capital expansion, the ruling capitalist ideology could not serve
national-revolutionary needs in backward countries, the less so as their own
pre-capitalist ruling classes secured their existence in close collaboration
with the imperialist powers. Even though it could serve no more than national
capital development, the revolutionary ideology had to be an anti-capitalist
ideology. And as the carriers of this ideology operated in the twentieth and
not in the eighteenth century, their concept of progress by way of capital
production was no longer associated with private enterprise and general
competition but with the highly concentrated mixed or state-controlled economy
of modern capitalism. Able only to reach those social conditions that Marxian
socialism intended to eliminate, they could see themselves as
“Marxists” by assuming an engagement in two revolutions at once
– the “bourgeois” revolution which created the capital-labor
relations of modern industry, and the “socialist” revolution, which
prevented the determination and utilization of this development by private
capital.

Though carried out in the name of Marx, the state-capitalist, or
state-socialist, revolutions would be better described as “Keynesian
revolutions.” What is usually designated as the “Keynesian
revolution” is Keynes’ recognition and acceptance of the fact of
intensive state interventions in the economy. It is only because of
Keynes’ preoccupation with “mature” capitalism that the
application of his theory has a reformatory rather than a revolutionary
connotation. But as a measure of reform, stopping at the “mixed
economy,” it is self-defeating, for it slows up but does not prevent the
destruction of the private enterprise system. Arising at the same time as the
mixed economy, the state-capitalist system may be regarded as Keynesianism in
its most consistent and most developed form. It is not a mixed economy in the
limited Keynesian sense of safeguarding private capital by way of government
controls. But it is a mixed economy in the projected wider sense of a
“comprehensive socialization of investments,” geared to the promise
of alleviating the prevailing “inequitable distribution of wealth and
income” by leaving it to the “common will, embodied in the policy
of the state,” to determine “how far it is safe to stimulate the
average propensity to consume” in a full-employment, crisis-free economy.
Moreover, state-capitalism remains a “mixed economy” by being part
of a world economy still largely determined by private profit production, and
by virtue of the fact that it is marked by all the antagonisms that
characterize private capital production except that of private profit
appropriation.

Whereas the mixed economy in the narrow Keynesian sense is limited by the
nature of private profit production, in its wider sense – as a complete
state-capitalist system – it is limited by inter national capital
competition. In theory, state-capitalism should allow for a nationally-planned
determination of both the volume and the direction of production. The kind of
“planning” actually undertaken is, however, determined by the needs
of capital production within a setting of international capital and power
competition. The possible advantages of complete government control can be only
partly enjoyed and the fate of the state-capitalist economy remains bound to
the fate of capitalism in general. Its economic expansion is not of the type
which characterized the rise of capitalism but of the type characteristic of
its decline. “Overproduction” in the form of waste-production in a
relentless power competition now accompanies the early stages of capital
formation and even that of “primitive accumulation.” As in the
capitalism of old, the accumulation of capital, not the real needs of the
producers, determines the direction of production.

As capital formation is a concern of government in the mixed as well as in
the state-capitalist system, what, in the Keynesian view, divides
“capitalism” from “socialism” is merely the degree of
government control. But as capitalism, according to Keynes, has the
“tendency to socialize itself,” socialism is now defined as a fully
“socialized capitalism.” In this sense state-capitalism represents
“socialism” and is generally recognized as such by spokesmen of the
“Marxist” and “anti-Marxist” camps. The dissolution of
the private property system through capital concentration in corporations, some
of which “are units which can be thought of only in some what the way we
have heretofore thought of nations,”[1] changed the capitalist economy into “something
which differs from the Russian or socialist system mainly in its philosophical
content.”[2]
Contrariwise, it can also be argued that if the word capitalism is still used
for the economies of the Western world, it “ought not be used to describe
only the private ownership of capital; it ought to describe any community which
believes in steadily increasing its wealth-creating capacity by a constant
investment of resources in productive capital. So defined, there is nothing
controversial about capitalism, since the leading examples in today’s
world of progress-by-capital are the United States and the Soviet
Union.”[3]

Already during the Great Depression, President Roosevelt realized
“that what we are doing in the United States are some of the things that
are being done in Russia and even some of the things that are being done under
Hitler in Germany. But we are doing them in an orderly way.”[4] Because of the affinity
of the mixed to the state-capitalist economy, their actual enmity is now
largely related to “philosophical” differences that are supposed to
determine their political institutions but not their socio-economic structure.
To be sure, “orthodox Marxism” maintains that the mixed economy is
still the capitalism of old, just as “orthodox” bourgeois theory
insists that the mixed economy is a camouflaged form of socialism. Generally,
however, both the state-capitalist and mixed economies are recognized as
economic systems adhering to the principle of progress by way of capital
accumulation.

During the Great Depression, Keynes deviated from this principle and
envisioned an early change of emphasis from investment to consumption in a
society of capital abundance which would render superfluous the socialism
conceived by its founders and adherents. It was precisely this deviation which
distinguished his theory from the “orthodoxy” of his
contemporaries. After the war, however, bourgeois theory insisted again on an
accelerated rate of capital formation. “The extraordinary progress in
Russia, with its distinct capitalistic tendency, has contributed to this
general change of attitude and has greatly impressed the rest of the world.
Never before has a people imposed upon themselves such severe restrictions in
order to accumulate savings to be converted into real capital. It is now
clearly realized that this immense display of [Russian] power is based on an
abundant supply of capital created by an abnormal reduction in current
consumption. Everywhere, people are demanding an economic policy which will
lead to a progress similar to that in Russia.”[5] While in the capitalistically
less-developed nations this masochistic “demand” comes to the fore
in various attempts to emulate the Russian example, in the highly-developed
capitalist nations it takes the form of frantic attempts to reach
Russia’s higher rate of capital formation.

It also brought the question of “growth” to the forefront in a
rather shamefaced return to political economy, which characterizes current
bourgeois economic theory and practice in its new concern with the
“macroscopic” aspects of the economy and its dynamics. However,
contrary to Marxian theory, bourgeois theory holds that capitalism has proved
to be reformable and is now securely on its way to solving all remaining social
problems. There is, then, no need to see in the class struggle the motive force
of social development, or even to approach still-existing social evils from a
class position. These evils may be dealt with as general human, not
specifically social, problems. (This point of view may, by the way, help
explain the recent vogue of the socialist humanism of the young Marx, who
considered the alienation of labor in capitalism a result of the
“alienation of man from his true nature.” This un-Marxian Marx well
fits the welfare-state and can even be used in the ideological war against the
ideological Marxism of the state-capitalist adversary.)

At present, moreover, there exists a tendency to view the developments of
both the Soviet and Western systems as converging pointing to the eventual
establishment of a socio-economic structure as much removed from free
enterprise principles as from those of the regimented economy. “The
Soviet system does not remain the same,” it is said, “and neither
does the Western system. Both are moving and the movements are, generally,
converging ones.”[6] It is no longer true, the argument goes on, that
“the systems are diametrically opposite,” they have “already
many features in common; elements from each can be combined, leading to new
mixed systems.”[7] But while both systems undoubtedly agree on the
importance of capital formation, they disagree on the far more important
question as to what particular social layers are to be its beneficiaries.

As regards this question, nationalized capital is the opposite of private
capital, even though – as regards the producers – both forms of
capital production thrive on exploitation. This common point encourages the
empty hope for their eventual convergence; but they remain divided on all other
issues. The nationalized economy is no longer a market economy, even though it
may retain, or reintroduce, some quasi-market relations subordinated to
over-all government control. Good or bad, it can actually plan its production
and distribution, although the nature of the planning itself is co-determined
by internal necessities, the world market, and the changing requirements of
imperialist competition.

The strictness of the opposition between private and government ownership of
means of production, between market-determined and consciously-regulated
capitalist economy, seems to be contradicted by the existence of the
“mixed economy” and its projection onto the international scene as
a possible harmonious co-existence of different social systems. Yet an
indefinite peaceful co-existence of state-capitalist and market-oriented
economies is no less illusory than the indefinite existence of the “mixed
economy” as a market-economy. In fact, it is precisely the advancing
state-control in the private-enterprise economies which accentuates the
conflict between the two different capitalistic systems. The wars between
identical capitalist systems have made it clear that capital competition turns
into imperialistic competition and that wars would occur even if there were not
a single state-capitalist nation. The Second World War demonstrated the
feasibility of temporary alliances between state-capitalist and
“liberalistic” systems of capital production; but it demonstrated
at the same time their fundamental irreconcilability, based not merely on
newly-arising imperialistic interests but also on the difference between their
social structures. Far from bringing “traditional” capitalism
closer to state-controlled economies, the advent of the mixed economy
intensifies the enmity between the two, if only to curtail the expansion of
state-control in the market economies.

Capitalism will not turn itself into state-capitalism; and it would be just
as difficult to make a state-capitalist revolution as it is to make a socialist
revolution. Since a conscious organization of social production presupposes the
expropriation of private capital, the transformation of the mixed economy into
state-capitalism can only be a revolutionary, not an evolutionary, process. In
thought, of course, it could be otherwise. In a “democracy,” it is
not entirely inconceivable that a government may come to power committed to the
slow or rapid nationalization of industry. But such a government would be a
revolutionary, anti-capitalist government, insofar as capitalism is identified
with private ownership of the means of production. In order to realize its
program, it would be forced to displace the market system by a planned system.
As far as the capitalists are concerned, this would be their death-warrant, and
it is not easily conceivable that they would accept it without protest. Most
likely, the complete nationalization of industry would lead to civil war. It is
fear of the social consequences of extensive nationalization which prevents
those ideologically committed to it from actually attempting its
realization.

Although there is no precedent, it is not inconceivable that a
state-capitalist system could be instituted with capitalist consent; the mixed
economy would then have been a step in this direction. Keynesian reforms and
political movements associated with them may bring about a “social
climate” in which the nationalization of essential industries may appear
inescapable, or even a good thing to a majority of capitalists. Arrangements
may be made to safe guard property rights in terms of income while delegating
control of production to national agencies. Various “socialization”
schemes, based on capital-compensation, are aimed toward this end – to be
achieved within the legal structure of political democracy. Nationalization of
industry, however, no matter how capital owners may be compensated, amounts to
their abdication as a ruling class; unless, of course, they regain this
position as members of government. Compensations are based on the value of the
capital turned over to the State. But accumulation now becomes the accumulation
of national capital and decisions over the employment of surplus value become
the decisions of government. Compensation comes out of surplus-value but cannot
be productively accumulated to private account. The income it represents is
secured by nothing but the good will of government and the latter may at any
time repudiate this claim to unearned income and complete the expropriation of
private capital. Whether by consent or by revolution, the nationalization of
capital ends the class rule of private capital.

The disciples of state-capitalism can if they wish have an easy time
recognizing the inconsistencies and aimlessness of the neo-liberalism of the
“mixed economies.” They can point to the fact that capitalism is
continuously changing in the direction of state-capitalism. For a long time,
however, they were not willing to conceive of peaceful abdication by power
groups in the interest of the general developmental trend. The Bolsheviks, for
instance, never had the illusion of a frictionless side-by-side development of
capitalism and “socialism,” nourished by the war alliances between
democratic and totalitarian nations and by the growing “similarity”
between the Keynesian welfare-state and the state-capitalist system. They were
convinced that the transformation of a partly-controlled social system of
capital production into authoritarian state-capitalism involved social
struggles, and if they envisioned a future world-unity, they saw it in the
image of their own social system and thus de fended the latter as much for the
sake of “world-revolution” as for its own sake. Convinced of their
progressive calling, theirs is an optimistic attitude and their policy is
“dynamic” in contrast to the neo-liberal attempt to arrest the
development at whatever particular point it happens to find itself.

Of course, like any social group, the Bolsheviks too can blow hot or cold.
“Co-existence” allows for a variety of interpretations and so does
the content and strategy of “Marxism.” The latter has often been
played down. This was the policy during the Second World War, for instance, to
allow the Grand Alliance to discover a previously non-existent harmony between
Russia and the anti-Nazi Western world – and this policy also suited
Russia’s internal needs, as she required at that time a return to
traditional ideologies to support the war of “national liberation.”
On the other hand, with the end of the war and the extension of Russia’s
power the oppositional character of Bolshevik ideology and practice was
stressed once more and Russian “communism” was revived with the
help of Western “anti-communism.” But at the time of Stalin’s
demise Russia took the initiative in attempting to moderate the world
situation. In view of the precarious international situation and the still more
precarious conditions in Russia, Stalin’s death was an event capable of
leading to great disturbances internally and abroad. His successors sought a
reduction of tensions in both areas – in the first, by scrapping the
internal course planned by Stalin;[8] in the second, by an apparent willingness to open
the “socialist” market to capitalist trade.[9]

Concord between Russia and the Western world is, of course, the hope of
people horrified by the prospect of a new and more devastating war, and of
those who envision a future reconciliation between East and West on economic
grounds. They recognize that any rapport demands decisive changes in both the
East and the West and they try to help them along by developing the appropriate
ideology. They tend to believe that the industrialization of totalitarian
nations and their increasing ability to trade will trans form them into more
democratic systems more akin to modern welfare capitalism. A partial
abandonment of “Marxism” is urged upon the Russians in the interest
of their own survival and final success. “Marxism for our time,” it
is said, exhausts itself in a full employment program, though not necessarily
in the Keynesian fashion. But as private capital relations are declining
anyway, there is no need to stress the inevitable. The general trend in the
direction of a regulated economy will on its own accord serve Bolshevism better
than a senseless harping on by-gone issues of expropriation and capitalist
collapse. And if the Russians are not able to change their ideology, they
should at least grant others what they deny themselves. Marxist propaganda in
the old capitalist countries, it is pointed out, “would not necessarily
lose in impressive strength were it clearly stated to non-Russians,
non-Chinese, etc., that the further evolution of their national ways of life
cannot simply be derived from the experiences made by civilizations with a
completely different background.”[10] In this view, Bolshevik propaganda would be more
successful “if the claims for maximum realization of the original Marxist
pattern were dropped,” because with the receding of the egalitarian
approach in the Marxist camp, the desire “for wholesale nationalization,
as distinct from that of the commanding heights of economics, has lost its
raison d’etre.”[11]

By looking at the hands of Bolshevism rather than its mouth, Western capital
may then find little reason to oppose the totalitarians, because their social
system seems not too different from the future of its own. This is not a
one-sided matter, of course, for while the Western world tends to adopt many of
the innovations of state-capitalism, the Bolshevik East seems to adapt itself
to the ways of the West. “Thus some ideas which sprang from early
Communist preferences but proved difficult to apply have been given up. It is
no longer held that workers can manage productive units by themselves, that all
incomes should be more or less equal, or that money is superfluous. Incomes are
geared to productivity and money concepts are increasingly used in planning.
Interest, though not recognized as a possible source of private income, has
gradually been accepted as representing a real cost element.

The value of an international exchange of products has been increasingly
understood and some autarkic preferences weakened. Some decentralization in
economic decision-making has been introduced and consumption has been given
more attention in the new party program. Mathematical methods in economic
planning, at first considered ‘bourgeois’, are now increasingly
applied.”[12]

However, just as it is highly improbable that in the absence of social
revolution, the market economy will slowly transform itself into a planned
economy, so it is equally improbable that a once-nationalized economy will
return to capitalist market relations. The restoration of the market would mean
the restoration, de facto if not de jure, of private capital. In the
Western capitalist nations there exists the false concept of a
“people’s capitalism,” by which is meant a system wherein a
wide dispersal of stock-ownership results in a division between the ownership
and the control of capital. The alleged divorce between ownership and control
supposedly turns the non-owning managers of industry into acting capitalists.
If the functions of the capitalists can be exercised by management without
ownership, the rewards of ownership may also become the rewards of management.
Although hardly likely, it is not inconceivable that the managers of Russian
industry, in collaboration with the government and with the consent of large
layers of the population, might proceed to restore a competitive market economy
based on profit production, in the sense that each enterprise would operate as
any private enterprise does in the West. As before, government would siphon off
the equivalent of its own requirements from both paid and unpaid labor by way
of taxes. But this would constitute a private-capitalist counter-revolution
under the guise of a “managerial revolution,” and would at once
reintroduce into the Russian economy all the contradictions which are immanent
in competitive private capital production.[13]

What a private-enterprise economy can engage in, short of social revolution,
is a form of pseudo-planning, and what the nationalized economy can restore,
short of social counter-revolution, is some sort of pseudo-market. Either case,
that of spurious planning or that of spurious market competition, indicates the
existence of difficulties within the market system or within the planned
economy. In combating these difficulties, however, the use of instrumentalities
which – despite their possible temporary usefulness – are foreign
to the respective systems and their special needs will have to be arrested in
time if the system’s basic characteristics are to be secured. There is no
congruency between the planned and the market systems, even though some
economic-technical arrangements, in distinction to socio-economic relations,
may be common to both.

All the state-capitalist systems resemble the capitalist market economy in
their maintenance of capital-labor relations and their use of capitalistic
business methods. Instead of being owned by capitalists, the means of
production are now controlled by governments. The latter set a certain value
(in money terms) on productive resources and expect a greater value (in money
terms) following the intermediary of production. Money wages are paid to the
workers, whose function it is to create a value greater than that represented
by their wages. This surplus is allocated in accordance with the decisions of
governments. It feeds the non-working population, secures national defense,
takes care of public requirements, and is re-invested in additional capital.
All economic transactions either are exchange-transactions or appear as such.
Labor-power is sold to management of some enterprises and wages buy commodities
from management of other enterprises. There is quasi-trade between the
management of some enterprises and the management of other enterprises, like
that which is carried on between the various divisions of large corporations in
all capitalist nations and which reaches its complete form in the fully
centralized State economy. Formally, there is not much difference between
private-enterprise and state-controlled economies, except for the
latter’s centralized control over the surplus-product.

All actually-existing state-controlled systems were, or are, to be found in
capital-poor nations. The first requirement of such nations is the formation of
capital, a presupposition for their national independence and a precondition
for the intended socialization of production and distribution. Bound more or
less (depending on the country and its particular situation) to the capitalist
“international division of labor,” they must relate their economies
to world market conditions and partake in international commercial competition.
This limits or excludes any desire they may have not to make the money-economy
and its expansion the motive force of their activities.

The “socialization” of the means of production is here still
only the nationalization of capital as capital. Though private ownership no
longer exists, the means of production still have the character of capital
because they are controlled by government instead of being at the disposal of
the whole of society. Although private capital accumulation is now excluded,
the exploitation of men by men continues by way of an unequal system of
distribution in both the conditions of production and the conditions of
consumption. This inequality perpetuates competition as a struggle for the more
lucrative positions and better-paid jobs, and carries the social antagonisms of
capitalism into the state-capitalist system.

State-capitalism is still a “surplus-value” producing system,
but it is no longer a system which finds its “regulation” through
market competition and crisis. The surplus-product no longer requires market
competition in order to be realized as profit; it derives its specific material
character, and its distribution, from conscious decisions on the part of the
state’s planning agencies. That these decisions are co-determined by
international economic and political competition and by the requirements of
accumulation does not alter the fact that the lack of an internal capital
market demands a centrally-determined direct system of decision-making with
regard to the allocation of the total social labor and the distribution of the
total social product.

Under these conditions, the use of quasi-market relations is a convenience,
so to speak, not a necessity, even though it may have been forced upon the
state-capitalist systems by circumstances they were unwilling to resist. In the
U.S.S.R., for example, the quasi market relations provide enterprises with a
quasi-autonomy consumers with a quasi-freedom of choice of consumption, and
workers with a quasi-choice of occupation. But all these quasi-market relations
are subordinated to over-all direction by government.

Within definite limits, this restricted “free play” of market
forces can be extended or contracted without seriously affecting the planning
system as such. It is presently being extended, in the belief that this will
make for greater “efficiency” without diminishing the effectiveness
of the planning system. This involves some decentralization of the
decision-making process and more self-determination for individual enterprises
– in support of the overall direction of the economy as a whole. The goal
is not to change the character of the economy but merely to provide it with
greater profitability through a more extensive use of capitalistic techniques
of incentives.

Individual enterprises are given more leeway in determining their production
processes, so as to fulfill and excell their planned production quotas; a
greater regard for consumers’ preferences is expected to aid production
plans and to eliminate waste; interest charges on borrowed capital are supposed
to lead to greater rationality in investment decisions; wage differences within
the plant are left to some extent to the discretion of management; portions of
the profits made through higher productivity and improved organization may be
retained by management and reflected in wage in creases. These and other
“innovations” are intended to accentuate what has always existed,
namely, the use of capitalistic incentives in state-capitalist economy. They do
not affect the control of investments by government, nor its control of total
social production and its division in accordance with a general plan. Wherever
the outcome of these “innovations” does not suit the general plan,
a government veto can change the situation either by decree or through a change
in pricing policies. The limited “free market” can at any time be
suspended by the real power relations which stand behind the pseudo-market
relations.

It should be obvious in any case that at a time when not even the private
enterprise systems are able to exist except through extensive government
intervention, no state-capitalist system will find itself on the road of return
to private-enterprise. In fact, the only advantage of the latter over the
former type of system consists in its complete control over economic affairs,
which compensates for its economic ineffectiveness vis-à-vis the
highly-developed private-capitalist systems. The state-capitalist system does
not suffer that particular contradiction between profitable and non-profitable
production which plagues private-property capitalism, and which offers it as an
alternative to stagnation only its slow destruction. With this destruction
already behind itself, the state-capitalist system may produce profitably and
non-profitably, without facing stagnation.

 

1. A. A. Berle, Jr., Economic Power and the Free Society, New York, 1957, p. 15.

2. Ibid., p. 13.

3. The Economist, London, October 16, 1954.

4. The Secret Diary of Harold L. Ickes. The First 1000 Days, 1933-36, New York, 1953, p. 104.

5. G. Cassel, “The Role of Capital in the National Economy,” Skannaviska Banken, Quarterly Review, January, 1945.

6. J. Tinbergen, Shaping the World Economy, New York, 1962, p. 34.

7. Ibid., p. 39.

8. According to his last writings on the Economic Problems of Socialism in the U.S.S.R. (New York, 1952), Stalin thought that intra-capitalist rivalries would grant Russia time and opportunity to speed up her productive capacity by way of a further strengthening of state control. In his eyes, Russian socialism was still weak because the government controlled collective-farm property only incompletely. “In order to raise collective-farm property to the level of public property,” he wrote, “the surplus collective farm output must be excluded from the system of commodity-circulation and included in the system of products-exchange between the state-industry and the collective farms.” (p. 70) This was an expression of dissatisfaction with the existing rate of farm labor exploitation. And, as it is clear that in a still largely agricultural nation an increased rate of industrial expansion depends on increased profitability of agricultural production, Stalin’s statement formulated a policy detrimental to the interests of farm labor. A preoccupation with the agricultural problem also characterizes post-Stalinist regimes. But the latter do not seem to dare to base their policies on the assumption of a prolonged period of peace. If war is imminent it would be unwise, in their views, to alienate the farm population; if war is not imminent, more palatable, if slower, methods may be used to increase agricultural production. Most of all, it is necessary to assure a prolonged peace.

9. In Stalin’s view, the breakdown of the world market led to the rise of “two world-markets, confronting one another,” as socialism and capitalism do. He predicted that the nations of the “socialist camp” would soon “not only be in no need to import from capitalist countries, but will themselves feel the necessity of finding outside markets for their surplus products,” which would increase the capitalists’ difficulties and lead to new wars between the capitalist nations. (Economic Problems of Socialism in the U.S.S.R., p. 26). What is implied here is a program of “autarchy” for the Eastern power bloc, and beyond that, a perpetration of the “cold war” in the sphere of international trade. Against this policy, Stalin’s successors proclaimed a great interest in the strengthening of international economic relations in order to ease international tensions.

10. R. Schlesinger, Marx: His Time and Ours, New York, 1950, p. 293.

11. Ibid., p. 369.

12. J. Tinbergen, Shaping the World Economy, p. 34.

13. The Yugoslav “market socialism,” for instance, in which a combination of Workers’ Councils and professional management runs industrial and commercial enterprises in accordance with the profitability principle and in competition with other enterprises, and where agriculture is mainly carried on by private peasants, suffers all the contradictions characteristic of capitalistic market relations, such as disproportional development, business failures, unemployment, and the ups and downs of the business cycle.


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