Ira Gerstein

Capitalist Restoration or Transition to Socialism?

A Review of Goldfield and Rothenberg, The Myth of Capitalism Reborn

First Published: Theoretical Review No. 25, November-December 1981

Transcription, Editing and Markup: Paul Saba

Copyright: 1981 by Ira Gerstein

Editors’ Note: Ira Gerstein is a Marxist activist living in Boston. His articles have previously appeared in Economy and Society and the Insurgent Sociologist. While the editorial board is not in agreement with all of Ira Gerstein’s conclusions regarding capitalist restoration in the USSR we feel that this review is an important contribution to the debate on this question.

Introduction

Controversy over the nature of the Soviet Union and the role it plays in the world is not new. Among socialists and progressives, at times violent differences date back to the founding of the new Soviet state in October 1917. The controversy entered a new stage with new political stakes in the 1960s and 1970s, however. At that time the Communist Party of China and the Party of Labor of Albania enunciated, elaborated, and acted on two closely connected theses: (1) The Soviet Union is no longer a socialist country–in fact, capitalism has been restored there; (2) The Soviet Union is an imperialist superpower, one of the two main enemies of the world’s people. The Chinese later stated that the Soviet Union has embarked on an offensive against the world’s people designed to wrest global hegemony from US imperialism.

In the late 1960s and early 1970s a new Marxist-Leninist movement arose in many countries in the wake of the split in the international communist movement. This trend identified with the positions of the Chinese and Albanian Parties, accepted the correctness of the two theses, and embraced them as an important element of its ideological identity. Politically, this anti-revisionist trend elaborated positions on international events which incorporated the two theses, particularly the second.

As it turned out, some anti-revisionists had doubts as to the correctness of the theses. Many of those who endorsed them did not investigate their basis very carefully at the time.

Later, when world events (particularly developments in China following the defeat of the “gang of four” and the open break between China and Albania) seemed to undermine their understanding, they found themselves unable to defend the two theses. Open controversy actually began somewhat earlier, in late 1975 when Cuban troops intervened in Angola, and China denounced that intervention in the name of support for national independence and opposition to social-imperialist expansion. At first this debate focused on particular aspects of China’s analysis of the world situation and particular foreign policy decisions apparently based on that analysis. It soon became clear, however, that different interpretations of Soviet actions lay behind these specific disagreements. While some people saw Soviet invasions and occupations (and Soviet-sponsored invasions and occupations) of Third World countries as social-imperialism in action, others began to interpret them as having a more ambiguous content, as mistakes and errors in an otherwise benign policy, and even as acts of proletarian internationalism.

Fundamental issues of peace and war are at stake here. The Soviet Union’s increasingly activist foreign policy since the mid-1970s is one of the main factors in world events to which every class force must respond. Certainly all those who support the cause of national independence and liberation must arrive at some assessment of the Soviet Union’s role in relation to these goals. Furthermore, debate over the nature of the Soviet Union is inevitably debate over the prospects for socialism. Capitalism increasingly demonstrates itself incapable of providing a decent life for the vast majority of the world’s people. But what is the alternative? Does the Soviet Union hold the key to the future, or is Soviet style “socialism” in reality an exploitative class society which should be fought and defeated by a new socialist revolution of its own people? The answer to these questions will provide the main context in which progress will be evaluated in the 1980s and beyond.

These questions were posed by world events and they naturally produced a response from Marxists, some of whom developed a consistent critique of China’s foreign policy. A section of the anti-revisionists–the anti-dogmatists–first argued that one could reject the two theses and preserve an anti-revisionist identity. Later, and particularly following China’s invasion of Vietnam in 1979 they started to argue that the theses were wrong and had to be rejected. Some anti-dogmatists formed a national Soviet Union Study Project to provide the theoretical underpinnings for these new positions. The Myth of Capitalism Reborn is the first (and apparently the only) publication of that project, although it is the independent work of its two authors, Michael Goldfield and Melvin Rothenberg.[1]

The Myth of Capitalism Reborn fails in its claim to lay the capitalist restoration thesis to rest once and for all, as I shall demonstrate in this review.[2] It must be acknowledged, however, that Goldfield and Rothenberg do identify serious weaknesses in much of the restoration literature, not the least of which is the lamentable absence of a single definitive work which marshals all the arguments for the thesis and sets them down in a coherent and comprehensive theoretical demonstration. Its inability to develop such a definitive explanation of the two theses points to grave political and theoretical weaknesses of the anti-revisionist movement of the 1960s and 1970s.[3] This is not in itself proof that the theses themselves were wrong, however, although it does mean that supporters of them have a lot more work to do than perhaps they once thought.

In fact, supporters of the theses did attempt to fill the gaps in the Chinese and Albanian material with more systematic studies of their own, the most well-known in the US being books by Martin Nicolaus and the Revolutionary Union, and Charles Bettelheim’s much more substantial ongoing work.[4] It is these studies that Goldfield and Rothenberg mainly address, in particular Nicolaus and Bettelheim.[5] In particular, they subject Nicolaus’ book to a withering critique, much of which is on target. After Goldfield and Rothenberg, this book has little or no credibility as a coherent demonstration of the correctness of the two theses.

One valid criticism of the restoration literature focuses on the empirical data used by the Chinese and Albanians (repeated by Nicolaus and the Revolutionary Union) to support the theses. Goldfield and Rothenberg’s negative assessment of this data is justified:

Anecdotes, rumors, the most superficial impressions are all thrown in the same pot with hard data, statistics, etc. Any tidbit which seems to support their thesis is trotted out, including many pearls of dubious authenticity .... The main difficulty with relying on anecdotes, impressions or even journalistic accounts, as the Chinese and to a certain extent the Albanians often do, is that there is no way of assessing whether the phenomena described is characteristic or representative. Each anecdote depicting how awful life is in the Soviet Union that is put forth by the restorationists, can be matched by a contrary anecdote put forth by the defenders of the Soviet Union, showing how great life there is. This counterposing of anecdotes does not lead anywhere. Exposures of criminal and corrupt behavior by the Soviet press can be interpreted as meaning such behavior is endemic and characteristic of the Soviet scene or as evidence that the authorities are ruthlessly stamping it out. (p. 109)

I have cited this passage at length for two reasons. In the first place, it accurately describes much of the restoration literature. Those who have simply accepted the pages of Peking Review or Albania Today as the last word in scientific analysis must raise their standard or doom themselves to permanent irrelevance. At the same time, Goldfield and Rothenberg’s criticism is extreme. The documentary evidence compiled by the Chinese and Albanians cannot stand by itself as proof of the restoration thesis, nor is it the main route toward such a proof; on the other hand, it should not be concluded that this evidence is completely useless and without value. Goldfield and Rothenberg’s own handling of “hard data, statistics, etc.” is far from problem free. It is no more correct to totally neglect the Chinese and Albanian material than to rely on it exclusively.

In the second place, this passage points out the difficulty involved in determining the nature of a social formation like the Soviet Union. Such a determination is not simply, or even mainly an empirical question in the sense of comparing a mass of data with a model of capitalism or socialism. The nature of the Soviet Union raises new theoretical problems, whether it be socialist, capitalist, or a third as yet not fully explored exploitative mode of production.[6] No amount of amassing data, even the “hardest” and most statistically valid, will take us very far in the absence of some resolution of these theoretical questions.

Yet Goldfield and Rothenberg’s treatment of Bettelheim’s work, which attempts to deal with these questions is extremely superficial; herein lies a major weakness of The Myth of Capitalism Reborn. They exhibit little understanding of the thrust of Bettelheim’s thinking, presenting a vulgar caricature of it and criticizing that. This in itself undermines any claim that The Myth of Capitalism Reborn has disposed of all defenses of the two theses, let alone that it has disproved the theses themselves.

State Capitalism is Compatible with Marxist Theory

Goldfield and Rothenberg identify two different version; of the restoration thesis–the thesis of private capitalism and the thesis of state capitalism.[7] Nicolaus, for example, is a proponent of the private capitalism thesis, while the Revolutionary Union and Bettelheim argue for the state capitalism thesis. Much of the Chinese and Albanian material does not really distinguish between the two. This fact, coupled with the inability of the anti-revisionist movement to grasp the theoretical difference between, say Nicolaus and the Revolutionary Union, is a testament to the meager theoretical ability of that movement overall, and the muddle that results from such weakness.

Unfortunately, Goldfield and Rothenberg’s contribution to clearing up this confusion is undercut by a muddle of their own as great as any found in the restoration literature and of greater fundamental significance. The Myth of Capitalism Reborn is structured by the presumed existence of two “theories” of capitalist restoration–called very undescriptively, “Theory Number One” and “Theory Number Two.” In his series in The Organizer, Goldfield adopts the more descriptive terms, “the Economic Variant” and “the Political Variant” to refer to the same theoretical constructions, and I shall use this identification. Whatever the name used, Goldfield and Rothenberg identify the thesis of private capitalism and the thesis of state capitalism with the Economic Variant and the Political Variant respectively and slide from statements and claims about one to statements and claims about the other on the basis of this identification. The problem is that neither of the Variants is a theory of capitalist restoration at all, unlike the two theses which are. The Variants are propositions about historical materialism, concerning questions such as how to conceptualize modes of production, how to grasp the connections between the elements of social formations, in particular the connection between politics and economics, and how to investigate social formations by carrying out a concrete analysis of a concrete situation.

It is bad enough to slip from general propositions about historical materialism to specific theories of capitalist restoration without distinguishing between these two different theoretical levels, but this error is compounded by the fact that neither of the Variants is actually consistent with historical materialism. The Economic Variant is an economist distortion of the principles of historical materialism, while the Political Variant is an idealist/voluntarist distortion. Worse yet, Goldfield and Rothenberg think that the Economic Variant is correct and complete the confusion by identifying it with the private capitalism thesis. Not surprisingly, this error pervades the entire book. Since the point of The Myth of Capitalism Reborn is to analyze the nature of the Soviet Union I shall relegate further discussion of Goldfield and Rothenberg’s incorrect conception of historical materialism to a short Appendix, where I point out that at bottom they are locked into a sterile choice between an economist distortion and an idealist/voluntarist distortion because they fail to accord the class struggle its proper place in the center of analysis. This failure also appears in their discussion of the alternative theses of capitalist restoration to which I now turn.

The difference between the private capitalism thesis and the state capitalism thesis is presented correctly toward the middle of Chapter IV where, in a short section entitled “In Search of the Soviet Bourgeoisie” we find the following:

All these theories have chosen either one or two candidates for who the Soviet ruling class is. By far the most popular candidate has been the higher level party and state functionaries. This view, which identifies the actual political and economic decision makers with a new kind of capitalist class leads directly to the theory of state capitalism. We will examine this theory in detail later in the paper. Let it suffice for now to note that this theory requires a fundamental revision of Marx’s analysis of capitalism. Nicolaus, although he does mention that the economic structure is of a “state monopoly capitalist type” (p.5), a term which has been used with a great deal of ambiguity, seems to be aware of the ’state capitalist’ theory. He thus attempts to place his chips on the other candidate for the new Soviet bourgeoisie, the enterprise directors, (p. 56)

To be precise, it is not quite correct to assert that one or the other “[choice] leads to” one or the other theory. The starting place for Marxist analysis of social formations is, as I suggested above, neither the economy nor politics but the class struggle. Classes are not simply the product of the economy or of politics, but are the complex effect of the social formation as a whole, including its history, so putting the class struggle at the center of the analysis avoids the economist/voluntarist choice which plagues Goldfield and Rothenberg. While specifying the place occupied by the bourgeoisie (it should be emphasized that the issue here is the question of structural place, and not the mechanism by which specific personnel are recruited to fill those places) is not all that is involved in specifying the content of the two theories of restored capitalism, it is the correct way to begin and sets us off in the right direction. For Goldfield and Rothenberg this specification is a relatively minor point; they mention it in passing, almost as an afterthought.

Goldfield and Rothenberg reject the state capitalism thesis because, they say, it contradicts Marx’s understanding of capitalism:

The pivotal point in understanding this incompatibility is comprehending why (1) Capital can only exist as many capitals, and (2) Competition is the ’inner nature of capital’, (p. 95)

The concept of state capitalism, they argue, implies that in it capital exists only as a single, undivided unity (state capital) controlled by the state bourgeoisie. As a result, competition cannot exist in this mode of production. But competition, they say, citing Marx, is the “inner nature of capital.” Ergo the concept of state capitalism is impossible within a Marxist framework. This argument is the essence of Goldfield and Rothenberg’s claim to have disproved the state capitalism thesis. It is thus worth examining in some detail.[8]

Is it true that competition cannot exist within the concept of state capitalism? As Goldfield and Rothenberg recognize, the most advanced work, both theoretical and empirical, on the concept of state capitalism and its use in analyzing the Soviet Union is being carried out by Charles Bettelheim and his coworkers. Their argument against Bettelheim’s work has two prongs: on the theoretical level they reject his work on state capitalism, particularly as developed in his book Economic Calculation and Forms of Property, while on the ideological level, they criticize his “pessimistic syndicalism.” This indictment requires careful analysis, particularly in light of Bettelheim’s critique of the present leadership of the Communist Party of China.[9] In this regard, it must be pointed out that communists have, unfortunately, done some pretty terrible things to the working class in the name of combating syndicalism. For example, Line of March, of which Rothenberg is a contributing editor and which publishes and distributes The Myth of Capitalism Reborn is prepared to support and even encourage a Soviet invasion of Poland in order to combat the syndicalist deviation represented by Solidarity and the upsurge of the Polish working class.[10] It is difficult to take criticisms of syndicalism seriously when they come from a position such as this. Furthermore, even if Bettelheim does exhibit a tendency towards syndicalism, the observation alone hardly disqualifies his work. What is needed is a careful study of all of his work (Goldfield and Rothenberg omit some of his most significant contributions) to make a determination of the exact effect of this syndicalism on his major theses. Lacking this examination, Goldfield and Rothenberg’s charge of syndicalism has little scientific use.

In fact, Bettelheim does not argue that there is no competition under state capitalism; he argues the opposite. One of the principal aims of Economic Calculation and Forms of Property is to determine whether capitalist categories, including competition, can exist and even come to dominate a “planned” economy. He further attempts to determine what forms these categories will take phenomenally, on the surface of society. He argues that the contradiction in these societies should not be thought of as being between plan (understood as no competition) and market (competition), but rather that competition exists between different plans and types of plan, and within the plan itself.

Goldfield and Rothenberg characterize Bettelheim’s view as follows: “. .. he sees the market as a surface phenomenon which hides the functioning of the capitalist system, and, is in no way essential to it.” (p. 97) This misreads Bettelheim and, more importantly, it misunderstands capitalism. Consider private monopoly capitalism as it has developed in the West. Goldfield and Rothenberg argue that competition exists here only between different legally independent blocks of capital: in other words, competition between the large monopolies: “Competition between monopoly groups is ever present in the imperialist world.” (p. 97) They view the monopolies themselves, though, as being without internal contradiction, or at least, without internal contradictions that have any connection to Marx’s conception of capitalist competition. But this is a superficial view, which is situated solely on the terrain of the market and sees market competition as the only possible form competition can take under capitalism. In standard economics textbooks this view goes under the name of “imperfect competition,” in which theories of degrees of oligopoly are spun out at length. The terrain of these theories is the left-Keynesian economics, not Marxism.[11]

In fact, the large monopolies themselves (which, by the way, are not simply giant factories) are riven with internal contradiction. The inability to see this and take it into account has been one element in the dismal record of Marxists in the US. As Nicos Poulantzas pointed out in a path-breaking discussion of this phenomenon:[12]

... the contradictions of monopoly capital do not express themselves simply as ’inter-monopoly’ contradictions, i.e., as contradictions between monopolies as integral entities, but also cut through every single monopoly.

Certain examples of this spring immediately to mind. For instance, the competition between Buick and Chevrolet is real, despite the fact that they are both divisions of General Motors. It is true that this puts certain limits on that competition, but the competition between General Motors and Chrysler has its obvious limits too. The failure of the Penn Central Railroad is connected with the competition between blocks of capital which were nominally united in ownership. It is not hard to find examples of this phenomenon in private monopoly capitalism.

If this kind of inner-monopoly competition is present in private monopoly capitalism, why should it not be a feature of state capitalism too? Just because the state bourgeoisie holds power collectively, at least in a juridical sense, does not mean it is not divided into rival blocks structured internally by the contradictions between them. The apparently seamless web of legal ownership conceals ferocious differences. Chavance, for example, describes things this way:[13]

The state bourgeoisie is a class composed of various strata that are sometimes torn by sharp contradictions. Its most powerful groupings are represented by high party functionaries (such as Brezhnev), economic specialists, economic administrators (such as Kosygin), and by the military hierarchy: all these groups are largely composed of Russians. The party leadership both reflects and arbitrates conflicts of interest between the central bureaucratic group and the local bureaucratic groups, as well as those between the central and local bureaucratic groups and those strata of the monopolist bourgeoisie which administer the industrial enterprises.

The point is not whether Chavance’s analysis is correct detail, whether he has accurately expressed the main form of capitalist struggle in the Soviet Union. The point here that he presents an analysis of the Soviet Union based on the categories appropriate to state capitalism which include significant differences within the state bourgeoisie.

This question could be discussed at length, particular the way in which these differences take the form of struggle over the plan and within the plan. This is a program research which advocates of the state capitalism thesis must carry out; it would take us too far afield here. I will instead return to Goldfield and Rothenberg’s understanding of capitalism, since I suspect they would reject the idea that the kind of struggles depicted by Chavance have anything to do with the kind of capitalist competition they hold to be a central feature of the capitalist mode of production. They locate this kind of competition in the sphere of circulation:

It is in the spheres of circulation that competition takes place, where the dynamics of the system and the character of the production process are shaped, (p. 96)

It is the competition of many capitals in the spheres of circulation, the absolute need of each capitalist to sell his commodities on the market, to realize the maximum amount of profit that gives the capitalist system its character, (p. 96)

Most of the basic laws of capitalism flow directly from the competition of many capitals with each other–the inevitability of overproduction crises, the reserve army of the unemployed, the formation of an average rate of profit, the tendency of the rate of profit to fall. These laws result from the attempt by the capitalists to sell their products in the market at the highest price available. This drive to maximize profit is inexplicable without the existence of the competition of many capitals, (p. 97)

It is worth thinking through these assertions in some detail; they lie at the heart of Goldfield and Rothenberg’s (mis)understanding of capitalism, and, it might be added, of socialism.

The first thing to be said is that despite their confident assertion that this is what Marx meant by capitalism, this kind of understanding of the essence of capitalism really has very little to do with Marxism. For Marx, it is simply not true that the basic laws of capitalism (and note that Goldfield and Rothenberg consider only so-called “economic laws”) “flow directly from the competition of many capitals with each other,” nor do they flow indirectly from this competition. They do not flow from the sphere of circulation at all. For Marx, the laws of capitalism flow from the sphere of production, not from circulation e competition. The sphere of production is the sphere of the production and appropriation of surplus value. Production is the place where labor is exploited by capital, the basis of the class struggle. Goldfield and Rothenberg focus on capitalist competition in the sphere of circulation and have almost nothing to say about the exploitation of labor at the point of production. The result is little short of astonishing. Two Marxist theoreticians produce a conception of capitalism which has nothing to say about the exploitation of labor by capital, while it focuses instead on relations internal to the capitalist class! Here we begin to see the root of the singular absence of the working class and the class struggle from the pages of The Myth of Capitalism Reborn.

The correct conception of capitalism is a unity of production and circulation (which itself does not exhaust the notion of capitalist competition and struggle), with production the dominant element. One most significant feature of this unity (directly related to the spontaneous appearance of economist ideology in capitalist social formations) is that circulation structures the appearance of phenomena on the surface of the social formation. The laws of capitalism “flow directly” from this complex unity. They have their origin in the sphere of production, but are “realized” in the unity of production and circulation.[14] Much of Marx’s Capital elaborates just this point. He argues that the classical political economists (and it is true of all bourgeois political economy, no matter how left) took the sphere of circulation as the essence of capitalism because they were unable to penetrate the surface forms to the underlying reality. The ideological source of this blindness is simple to figure out. Taking circulation as the essence of capitalism has the effect of obscuring the determining effect of the class struggle between capital and labor, a class struggle which focuses irreducibly on the fact of exploitation. Instead, in circulation we see equal competition, among capitalists, between capital and labor over the size (but not the fact) of wages, and even among workers for jobs, status and other relative advantages. Bourgeois economics is typically preoccupied with competition and the market; it identifies this realm as the source of the laws of capitalism while production is treated as a technical, “natural” endeavor. This view reverses Marx’s understanding, and he fought against it. Goldfield and Rothenberg adopt this position, and so occupy bourgeois terrain in their understanding of capitalism (and of course socialism).

The only support Goldfield and Rothenberg find for this is a quotation from the Grundrisse which talks about competition as being “conceptually . . . the inner nature of capital, its essential characteristic,” and then goes on to state that “capital exists and can only exist as many capitals.” (The citation is found on p. 95.) This apparently is in flat contradiction to the view of the relation between production and circulation I put forward above. It is important to note, however, that this quote comes from the Grundrisse and not from Capital. The significance of this observation follows from consideration of the Grundrisse’s status among Marx’s work. The Grundrisse is a series of notebooks containing material that would eventually become Capital. These notebooks are not, however, Marx’s preparatory notebooks for Capital since a separate set of these exist. That is, the relationship between the Grundrisse and Capital is not properly described as being the relationship between a first draft and the finished work. Certain formulations that are essential to Capital do not appear at all in the Grundrisse (for example, the crucial distinction between labor and labor-power appears only in Capital, also the distinction between fixed and circulating capital, on the one hand, and constant and variable capital, on the other); while certain preoccupations of the Grundrisse are not found in Capital (for example, the concept of alienation). All told, one has to be extremely cautious in using the Grundrisse. It can be used to elaborate concepts found in Capital, or to clarify Marx’s thinking as he developed his concepts. But it cannot be used as the primary interpretation of Marx if the Grundrisse selection under consideration is unique in the sense that Marx later dropped all reference to a particular thought. In this case the task is to explain why Marx changed his mind.[15]

Goldfield and Rothenberg rely on the Grundrisse precisely because nothing like the quote they cite can be found in Marx’s (later) published material. Thus, they present as the essence of his view of capitalism a concept which he quickly abandoned! Even in the Grundrisse itself one can find quotes which contradict the one presented by Goldfield and Rothenberg. The place to turn, however, is Capital where the following discussion of the relation between the sphere of production and the sphere of circulation is found:

The so-called distribution relations, then, correspond to and arise from historically determined specific social forms of the process of production and mutual relations entered into by men in the reproduction of the process of human life. The historical character of these distribution relations is the historical character of the production relations, of which they express merely one aspect. (Capital III, p. 883)

In other words, the production relations are the basic forms in any social formation. Competition has an historical character that can be understood only as an aspect of these production relations; it is the latter which must be studied (historically) in order to make a concrete analysis of a social formation.

In this light, Goldfield and Rothenberg’s approach, which is to single out this or that feature of a social formation as the essence of capitalism (in their discussion of state capitalism, the existence of many capitals competing in the market), is seen to be at best one-sided even if they were more correct in their understanding of capitalism. In fact, it is necessary to carry out an historical-theoretical study of what the Chinese, in one of their earliest assessments of the Soviet Union, aptly called “The Historical Experience of the Dictatorship of the Proletariat.” This is the point of Bettelheim’s multi-volume study, Class Struggles in the USSR, whose historical method is the antithesis of the static sociology employed in The Myth of Capitalism Reborn. Goldfield and Rothenberg do not even consider any of the results Bettelheim obtains in his historical study. The single citation to this work refers only to the theoretical Introduction to Volume I.

The Myth of Capitalism Reborn exemplifies a view that it is possible to carry out a Marxist analysis of the Soviet Union without reference to the history of class struggle which gives that social formation its character. Goldfield and Rothenberg’s ahistorical method, borrowed from academic sociology dressed up with Marxist terminology, is unable to produce the new knowledge that is needed if, indeed, capitalism has been restored in the Soviet Union. It is hardly surprising that using this method they discover capitalism has not been restored. They deny the role and even the existence of class struggle, introducing a model of capitalism which gets its dynamic from capitalist competition alone. Not surprisingly, the existence of the class struggle is denied in socialism as well:

Stalin correctly understood that classes and class struggle did not exist under socialism; in so far as he took this position, he was basing himself on orthodox Leninism. (P. 29)

The reliance on Stalin here is symptomatic of Goldfield and Rothenberg’s erroneous views. With this approach the real history of the Soviet Union is hidden.

Bettelheim’s definition of the meaning of the phrase “restoration of capitalism” brings this into sharp focus:[16]

When the movement in the direction of the domination of the body of functionaries and administrators over the state apparatus has reached such a point (due to the development of political forces, as much within the apparatus of the state and party as outside them) that a movement in the opposite direction can no longer be anticipated–except through a rebellion of the masses–and when the masses cannot rely on the support of a part of the state management and the ruling party, we can say that the domination of the state bourgeoisie is completely installed, and that the transitional phase has been terminated by the restoration of capitalism.

In other words, capitalism can be said to be restored when the masses, led by the working class, need to make a revolution in order to restore the dictatorship of the proletariat. The restoration of capitalism is not primarily an economic question in the sense that one can add up so and so many economic facts and say: yes, at this point capitalism has been restored; or no, we have some characteristics of capitalism here but capitalism has not yet been restored. As Lenin never tired of saying, revolution is a question of which class holds state power. Goldfield and Rothenberg’s economist approach, with its total neglect of the class struggle, never asks whether the working class holds state power in the Soviet Union, and if not, what must be done.

Is the Soviet Union Capitalist?

I will now examine the empirical refutation of the restoration thesis presented in Chapters III and IV of The Myth of Capitalism Reborn, and summarized in the July 1980 issue of The Organizer. For many readers these are undoubtedly the most convincing part of Goldfield and Rothenberg’s work, whatever the methodological and theoretical defects in their overall understanding, and I shall analyze them in some detail.

The central part of the discussion is found in Chapter IV, where four characteristics of non-capitalist transitional societies not found in capitalism are given:

1. The capitalist class is eliminated. Surplus value in the major industries is no longer privately appropriated, since the means of production are no longer privately owned.

2. Economic production is subordinated to a national plan, which is not determined by the drive for maximization of surplus value and the demands of the market. Thus the anarchy of social production under capitalism and its consequences are largely eliminated. The plan is determined by social priorities, politically evaluated and decided.

3. While wage labor remains and wage inequalities persist, there is no true labor market (as labor is no longer fully a commodity) since workers are assured positions at their level of skills. Wages are determined centrally and not by market forces. The curse of unemployment and insecurity of labor is eliminated.

4. The means of production are not distributed in a commodity market but allocated by a national plan. They are, therefore, no longer commodities in any essential aspect, (p. 55)

Having come up with these four characteristic features post-capitalist societies on the socialist road, all that remains is to test the Soviet Union for their presence or absence:

To establish that capitalism has been restored in the Soviet Union, one must be able to prove that these four features are no longer true of the economy, that there has been a fundamental transformation of the Soviet economy with respect to these features, (p. 55)

Let me make several comments of a general nature before examining the four characteristics one by one. In the first place, the ahistorical and economist character of this model is apparent, particularly if we compare it with Bettelheim’s understanding of the restoration of capitalism cited above. Goldfield and Rothenberg’s model is consciously restricted to economic features. Furthermore, even within this limitation it identifies capitalism completely with market and circulation phenomena. Thus, not surprisingly, all of the weaknesses in their approach are found in focused form in their “empirical” model of capitalism.

The Form Taken by the Surplus

Characteristic number one states that capitalism requires private appropriation of surplus value based on private ownership of the means of production. Of course, this is true of private capitalism, but not necessarily of state capitalism. Thus Goldfield and Rothenberg’s incorrect dismissal of the concept of state capitalism has the effect here of drawing them into a one-sided approach to the study of capitalist social formations. We can say more, however, because formulation of characteristic number one reveals problems inherent in focusing on distribution and circulation rather than on production.

An exploitative class mode of production can be said to exist if the producing class is forced to produce a surplus for the benefit of a non-producing class as a condition of its physical existence. Different class modes of production are distinguished from each other by the mechanism through which this happens, and by the resulting specific form of the surplus.[17] Capitalism is that mode of production in which the surplus is appropriated in the form of value–surplus value. In other words, if the producing class is forced to produce a surplus as a condition of its existence, and if that surplus takes the form of surplus-value, then we are in the presence of capitalism and the exploiting class is properly called a bourgeoisie.

Now this proposition is not one that is easily confirmed (or disconfirmed for that matter). By its very nature since value cannot be seen on the surface of capitalist society. It is predominantly a production category, while profit, which is not at all the same thing as surplus value, is predominantly a circulation category. It requires a sustained analysis (of the type Marx projected in Capital) to demonstrate that surplus takes the form of surplus-value, an analysis which takes as its guide the class struggle between the direct producers and the appropriators of the surplus.[18]

This type of analysis is a closed book to Goldfield and Rothenberg. They focus on market categories and so are completely unable to determine the form taken by the surplus. For this reason they substitute the question of the juridical category of ownership for the determination of the form taken by the surplus. For them, the question is whether surplus value is appropriated privately, rather than the more fundamental question of whether the form taken by the surplus is, indeed, the value form. Thus, they pose the empirical question: are the means of production owned privately? and, finding they are not, declare that the Soviet Union satisfies their first criterion. Interestingly enough, they concede the empirical question as I have formulated it, that is, they grant the fact that the surplus product is appropriated in the form of surplus-value when they say, “Surplus-value in the major industries is no longer privately appropriated.” (p. 55) Thus, I would argue that their own account establishes the presence of capitalism in the Soviet Union, although it demonstrates that it is not private capitalism.[19]

Agriculture is a key sector of any social formation; in a capitalist social formation it is a source of surplus-value as well as food. Goldfield and Rothenberg draw attention to the serious mishandling of this question in much of the restoration literature. But to the extent this literature does not ask the correct questions, neither do Goldfield and Rothenberg. For example, they rely heavily on a comparison of pre-1953 with post-1953 conditions to discredit the restoration argument. What they show however is that peasants in the Soviet Union have been increasingly transformed into agricultural wage-laborers. They ask (rhetorically, but with more significance than they realize):

Does capitalism mean the equalization and all-round rise of incomes, the extension of social benefits, the contraction of the significance of private plots, the increase of mechanization and fertilizer? (p. 34)

The answer is: Why not? Nothing about capitalism contradicts these trends, nor does state capitalism. Indeed, they could serve as evidence for the expansion of capitalism in the agricultural field. What must be determined, in agriculture as in industry, is whether the wage labor relation is formal, or whether it conceals the production and appropriation of surplus-value. In the US surplus-value is produced on farms as in factories, even while wages and social benefits rise. The contradiction of private plots in the Soviet Union means simply that an attempt is being made to wipe out the remnants of small-scale petty production; this says nothing about the character of what is replacing that petty production. The agribusiness land monopolies in California have reduced private plots to practical inconsequence; they employ wage labor; and have increased benefits due to the struggles of the United Farm Workers; they obviously use mechanization and fertilizer. Yet they are certainly capitalist. You can’t tell the difference between a socialist state farm or collective farm and an agribusiness monopoly by asking the questions that Goldfield and Rothenberg pose. Their entire discussion reveals a basic lack of knowledge of the nature of capitalist agriculture.

Plan vs. Market: The Role of Profit

Goldfield and Rothenberg’s second criterion for the existence or not of capitalism focuses on the question of the plan. If a plan exists, if the plan is not “determined by the drive for the maximization of surplus value,”[20] and if the priorities of the plan are “politically evaluated,” then, they say, capitalism is not present. One difficulty with this formulation is its vagueness. In their own analysis Goldfield and Rothenberg focus on only one question about the plan: Is it centralized (“a national plan” according to the language of characterization two) or is it decentralized? The thinking seems to be that a centralized plan is incompatible with capitalism, while a decentralized plan corresponds to a capitalist plan. The idea itself derives from Martin Nicolaus, and Goldfield and Rothenberg content themselves with showing (actually their demonstration is more an indication than a proof) that contrary to Nicolaus’ assertions, planning in the Soviet Union is centralized. They further show, again contrary to Nicolaus’ claim, that the amount of retained profit at the enterprise level is not very great.

The problem with this demonstration is that its relevance is simply assumed. The idea that centralized planning is not compatible with capitalism is once again based on the idea that only private capitalism exists. From this point of view the main aspect of capitalism is the anarchy resulting from market production and so a centralized plan (a concomitant of nationalization of the means of production) is in absolute contradiction to capitalism. The possibility of state capitalism throws a monkey wrench into this demonstration since here the plan displaces market anarchy to other realms.

Goldfield and Rothenberg write as if the contradiction between socialism and capitalism is the same thing as the contradiction between the plan and the market. It is precisely this conception which Bettelheim so effectively challenges. The important question is not whether the plan is centralized in a formal sense (i.e., whether it is a “national plan”). The question, rather, is how the plan is formulated, to what extent production is actually controlled by the plan, and above all, to what extent the masses control the plan. It is correct to say, as Goldfield and Rothenberg do, that the plan must be “politically evaluated,” but this is hardly sufficient. The real issue is to evaluate the politics behind the plan, are they capitalist politics or working class politics? This determines the class character of the plan itself.

Goldfield and Rothenberg reduce this evaluation to a single criterion: “it is a capitalist rather than a socialist plan because of the determinant role of profit.” (p. 61) This conclusion is the result of identifying capitalism with the existence of a market. Profit is the form taken by surplus-value in the sphere of circulation, so that reducing the content of a plan to the determinant role of profit is simply another way of saying “determinant role of the market.” It is another version of the centralization/decentralization question. At the same time, this is a very narrow way of discussing even private capitalism in which decisions are often made which violate the “determinant role of profit.” In fact, the arguments made by the anti-big government grouping around Ronald Reagan also argue that so-called government interference violates the “logic of capitalism” because it does not follow the “determinant role of profit.” In this context it is worth recalling Marx’s discussion of the Factory Acts in the first volume of Capital where he shows that even in the classical form of market capitalism, state intervention which limited the “determinant role of profit” at the enterprise level was to be expected and was completely consistent with capitalism. No simplistic formula such as “determinant role of profit” can substitute for the detailed analysis of the relations of production and their reproduction through the plan which is necessary to determine the class character of the plan.

Goldfield and Rothenberg’s discussion of profit in the Soviet Union runs as follows: first they present their conception of the role of profit in private capitalism as the ”efficient” way to allocate resources; this is followed by an attempt to distinguish capitalist accumulation from socialist accumulation together with a short economic history of the Soviet Union; finally they come to the following somewhat astonishing conclusion:

While insisting that the reliance on profit criteria for assessing and guiding enterprise performance has serious negative consequences and implications in the Soviet Union, it is incorrect to say that profits are in command in the Soviet Union. For profits to be in command, profit criteria must be the main determinant of investment. In other words, capital must flow to these sectors which bring the highest rate of return, or more precisely, to those areas where the marginal productivity of capital is the highest, (p. 67)

In the first place, we see that once again Goldfield and Rothenberg look to capital and capital alone in discussing the characteristics of capitalism. To find out whether profits are in command, we need merely look at “investment decisions.” Even worse, we have to see whether those decisions are made in accordance with the “marginal productivity of capital.” This sounds profound and very “precise,” aside from the fact that one of the main points made in Capital is that capital is not productive at all. Marx’s comment on the illusion of the productivity of capital is very appropriately made in regard to this concept of Goldfield and Rothenberg’s:

With the development of relative surplus-value in the actual specifically capitalist mode of production, whereby the productive powers and the social interrelations of labor in the direct labor-process seem transferred from labor to capital, capital thus becomes a very mystic being since all of labor’s social productive forces appear to be due to capital, rather than labor as such, and seem to issue from the womb of capital itself. Then the process of circulation intervenes, with its changes of substance and form. .. . This is a sphere where the relations under which value is originally produced is pushed completely into the background. (Capital, III, p. 827)

If circulation and the market are taken as the essence of capitalism then one loses sight completely of the social nature of the production process in which labor produces surplus value. Thus capital is not productive of surplus value, only the working class is. The question, “Is profit in command?” can only be posed in terms of “marginal productivities” and “investment decisions” when the working class is left out of the picture. But the essence of capitalism is not found in corporate boardrooms, executive committees, or finance committees, the places where these “investment decisions” are made, although capital wants us to think so. The essence of capitalism is instead to be found in the relations of production which link the working class and the capitalist class, beginning in the dirt and noise of the factory floor.

Even within their own framework Goldfield and Rothenberg’s account of the role of profit in the Soviet Union is inadequate. It turns out that their claim to have shown empirically that profits are not in command in the Soviet Union comes down to a single paragraph, consisting of a single sentence which reads:

Although Soviet and Western economists have calculated this productivity [the “marginal productivity of capital”], sector by sector, in terms of capital/output ratios and Soviet economists have continually urged that capital/output ratios be taken into account in drawing up plans, there is no evidence that this has had any significant effect, (p. 67)

There are three footnotes in this sentence. The first is to the calculations by “Soviet and Western economists” but the reference lists only a single article by one Soviet economist which hardly supports the broad assertion of the sentence. The second reference is to those “Soviet economists” who have urged that capital/output ratios be taken into account. Again, only one economist is cited. The final reference comes at the end of the sentence, and here, a single volume Soviet Economy in New Perspective by the Joint Economic Committee is cited. Thus Goldfield and Rothenberg appeal to the data, a realm in which they have nothing bi contempt for supporters of the capitalist restoration thesis amounts to citing two articles by Soviet economists and one study sponsored by a committee of the US Congress. No attempt is made to assess the ideological biases of any these sources, the purpose for which the research was done or its representativeness. In other words, on the topic which they themselves put at the very center of the capitalist restoration thesis, namely, whether profits are in command of the Soviet economy, Goldfield and Rothenberg first pose the question in a completely mystified fashion (margin productivity of capital) and then offer a single reference to a volume of unknown competence to prove their case. At the very least, it appears justified to conclude that they set very different standards of evidence for themselves than for those who stand on the other side of the restoration argument.

I will make one final remark on Goldfield and Rothenberg’s treatment of profit, although much more could be said. As should be evident from their use of such concepts as the “marginal productivity of capital” and “investment decisions,” they accept the conservative view that competition of capitals in the market leads to the most “efficient” allocation of resources. Indeed, they argue that profit categories were introduced into Soviet planning in the 1965 Reforms precisely to overcome the inefficiencies which inevitably(!) occurred once industrialization was basically completed: “The type of inefficiency and waste that come from not having competition from other capitalists is precisely that which exists in the Soviet Union.” (p. 97) Elsewhere they say of the US: “That is why monopolies under capitalism which can fix prices independent of demand may be profitable without being efficient.” (p. 66) Apparently the existence of waste and inefficiency in the Soviet Union is evidence that it is not capitalist, while the efficiency of the US (aside from those inefficient monopolies) shows that it is capitalist. This hardly makes socialism look attractive. Indeed, this argument has a lot in common with the small producer outlook which has always been so influential in American ideology. There is a great deal about planning and its place in constructing socialism that we do not understand. But I do not think we can argue that capitalism is a more efficient productive system. Efficiency is one of those concepts like democracy and dictatorship that cannot be talked about in the abstract. Efficiency has a class content. It is perverse to present inefficiency and waste in Soviet society as evidence that it is not a capitalist society; it is equally perverse to argue that capitalism is ever efficient, except for the capitalists.

Is Labor-Power a Commodity?

This question occupies a central place in most arguments that oppose the capitalist restoration thesis, mainly because Marx clearly stated that this is a central feature of capitalism. Nevertheless, certain ambiguities exist here that are generally not recognized. I shall mention two. The first derives from the fact that labor-power is not a commodity in the exact same sense that things can be commodities. Labor-power is a unique commodity under capitalism, and obeys somewhat different laws. For example, workers can form unions and so partially free labor-power from the “laws” of the market place. Further, Marx pointed out the “historical and moral element” that enters into the value of labor power. Finally, the production of labor-power is not simultaneously production of surplus-value. The second point is related to socialism rather than capitalism. Money and wage-labor continue to exist for some time after the seizure of state power. Thus it is not a simple matter to determine whether labor-power is a commodity in any particular post-capitalist society. In fact, this determination cannot be made in isolation from the general question of the role of commodity categories in the given society. This is, in fact, the problem Bettelheim addresses in Economic Calculation and Forms of Property, his attempt to ascertain the social content of commodity categories in a planned economy.

Goldfield and Rothenberg’s approach is different. For them, the question of whether labor-power is a commodity can be reduced to the existence of an industrial reserve army. Not only does this approach fall into the error discussed above, namely, treating the question in isolation from the overall content of commodity categories, but it also exhibits a basic misunderstanding of the Marxist concept of the industrial reserve army. For Goldfield and Rothenberg, the essence of the industrial reserve army is its supposed central place in Marx’s theory of wages, and for this reason they use it as a test of the commodity character of labor power. This is wrong on two counts. First, there is no Marxist theory of wages. Marx himself never formulated one, although his outline for Capital shows that at one time he intended to. This is a weakness in Marxist theory, but it does no good to pretend it doesn’t exist, since this can only lead to the substitution of a non-Marxist theory in its place.

Second, whatever the status of Marx’s theory of wages, the main thrust of the concept of the industrial reserve army lies elsewhere. Marx developed this concept in order to combat Ricardo’s view that technological innovation was bound to benefit the working class in the long run, since it would create more jobs in the machine building industry than it would destroy in the machine using industry. The early 19th century development of the industrial revolution seemed to bear this out as more and more people were swept into wage labor with the spread of machine production. The theory of the industrial reserve army argues otherwise. Marx argues that while the absolute size of the labor force may indeed rise, its size relative to the total social capital must fall. That is, if capital accumulation occurs at a fast enough pace, the tendency for each fraction of capital to employ fewer workers will be overcome at the level of total employment; more workers will be employed although each fraction of capital employs fewer workers. Marx called this tendency the creation of a relative surplus population and this relative surplus population is what he called the industrial reserve army. Thus the concept of the industrial reserve army is closely connected to the rising organic composition of capital and the tendency of the rate of profit to fall; it has great relevance to the current problem (for the working class) of the effect of industrial robots; but it has only indirect connection to the theory of wages.

Of course, this is not to argue that unemployment has nothing to do with the wage level in private capitalism. But unemployment is not the same thing as the industrial reserve army; nothing is gained by identifying the two. In his lecture, Value, Price and Profit (delivered in 1865, only two years before the publication of the first volume of Capital) Marx discusses wages and unemployment at great length and never once mentions the industrial reserve army of labor! Those who claim that the industrial reserve army is central to wage formation have to explain why Marx dispensed with this supposedly central concept in a popular lecture devoted to precisely this question. In fact, Marx does discuss unemployment, but in terms of the fluctuation of total employment over the course of the business cycle. (This fluctuation, a cyclical phenomenon, is mistakenly taken for the industrial reserve army, a secular phenomenon, by many contemporary Marxists including Goldfield and Rothenberg.) Marx’s point is that while workers must struggle for wage increases during the boom phase, these gains will inevitably be eroded during the bust phase. Now it is not at all clear how to apply these ideas to the contemporary US, with its array of devices (inadequate, to be sure, and always objects of struggle) designed to “smooth over” the cycle. It is even less clear how they should be applied to the Soviet Union where, among other things, wages and employment are determined by the plan. In any event, little is to be gained by misusing the concept of the industrial reserve army of labor.

To determine whether labor power is a commodity in the Soviet Union (more precisely, whether generalized commodity production prevails) we must look at the plan and its functioning, particularly in regard to wages, rather than insist that concepts Marx discussed in regard to the early stages of private capitalism (and, in his empirical discussion of the reserve army, in regard to a certain phase in the transition to capitalism) apply. It is also necessary to look at the relationship between the individual worker and the enterprise in some detail. Goldfield and Rothenberg do neither. They content themselves once again with a broad and sweeping assertion:

It is the unanimous view of Western experts that there is nothing in the Soviet Union comparable to the reserve army of labor found in the capitalist world. (p. 71)

Unfortunately, they do not give a single reference to even one of these “unanimous” Western experts. In fact, a little reflection makes clear that this assertion (and many other in this supposedly “empirical” study) is, at best, a vast overstatement. After all, Western experts are rarely “unanimous” about anything, let alone the Soviet Union. Even more to the point, it is very unlikely that even a substantial minority of Western experts use Marxist concepts such as “reserve army of labor” when studying the Soviet Union.

What Goldfield and Rothenberg apparently have in mind is the fact that the Soviet Union is a labor scarce economy, and they translate the idea of labor scarcity into the nonexistence of a reserve army of labor. But as I have pointed out, the reserve army is a dynamic concept expressing the balance between accumulation and technical change. The rate of accumulation in the Soviet Union has been high, in part because of its socialist past, and in part perhaps because of its non-socialist present. This accumulation has been based mainly on the extensive use of labor inputs, rather than on technological innovation as in the labor scarce US.[21] Thus it is not that surprising to find that the Soviet Union is still a labor scarce economy with a low rate of unemployment. Does this contradict the assertion that labor-power there has a commodity character? Not at all. Wages in the Soviet Union are determined at the national level according to the plan, and only secondarily at the enterprise level. Therefore, the characteristic form of struggle over wages would occur over the content of the plan, rather than in trade union struggle at the enterprise level.[22] Goldfield and Rothenberg refuse to examine this question, sidestepping it with a shallow rejection of Bettelheim’s work and the narrow assertion that only private capitalism can exist. They are thus unable to determine whether labor power is indeed a commodity in the Soviet Union.

Furthermore, Goldfield and Rothenberg accept official statistics concerning the level of unemployment in the Soviet Union at face value, something they certainly would not do (I trust) in the US. They do not consider the fact that the Soviet Union has quite a large army, something over four million soldiers in uniform (the Soviet population is roughly the same as that of the US), and spends, according to current (although disputed) estimates, between 11% and 13% of its Gross National Product on its war machine. Many of these soldiers perform civilian jobs, for example on the railroads, a sign of hidden unemployment since they earn considerably less than Soviet civilian workers. The arms budget itself must be considered in estimating unemployment, at least if Marxists extend the same criteria they apply in analysing the US to the Soviet Union in estimating the potential size of unemployment in the absence of armament production. The inefficiency of Soviet agriculture, which requires some 25% of the active population on the land is yet another source of labor scarcity and hidden unemployment.

It is also worth pointing out that labor scarcity is not at all an unknown feature of private capitalism. Consider the US during the second world war for example. Unemployment was virtually zero, while workers labored under the limitations of a no-strike pledge which was generally honored and enforced by the unions themselves. Would Goldfield and Rothenberg conclude the US was not capitalist during this period, during which many elements of a planned economy existed and during which that “characteristic feature” of capitalism, the reserve army labor, was all but depleted? The case of Nazi Germany is even better example. Here a corporate industrial system supplemented by slave labor was the dominant form, and again, there was no “unemployment.” For more contemporary examples we could point to Japan in the 1950s and 1960s or Taiwan today, where the unemployment rate is currently 2%.[23] Does this mean that labor-power is not a commodity in Taiwan? Of course not. Taiwan has a military dictatorship which serves as the functional equivalent for the goad of unemployment, just as the plan can serve this function in the Soviet Union.

Finally, consider the following opinion from a “Western expert,” one who slipped through the net of Goldfield and Rothenberg’s supposedly careful and rigorous study:[24]

Soviet planners today depend primarily on market forces to allocate manpower among enterprises and industries. Individual workers generally are free to select their place of employment and to respond to higher wages and better working conditions. However, in the Soviet Union, as in the West, it is possible to influence choice by tinkering with the “profitability” of various choices. In the Soviet Union, wage rates are fixed on a national basis and are designed to attract manpower into high priority sectors. [My emphasis].

This describes a system which is compatible with capitalism, although it does not prove the Soviet Union is capitalist. The point is that Goldfield and Rothenberg ignore a vast amount of secondary material on the Soviet Union. Their claim to summarize the “unanimous opinion of Western experts” seems impressive at first sight, but appears hollow upon examination.

The Means of Production

Goldfield and Rothenberg’s fourth “characteristic feature” of capitalism is the existence of a market in the means of production. The remark I have made in regard to the plan and the commodity character of labor power apply equally to this question. Only if capitalism is defined as a system of production and sale on the market (as Goldfield and Rothenberg and Nicolaus do) does the question even arise in this context. Since Goldfield and Rothenberg themselves devote only three paragraphs to this “characteristic feature,” I shall omit any further examination of it myself, aside from the following comment. Goldfield and Rothenberg do not explain why a market in the means of production is a “characteristic feature” of capitalism, but it is notable that the entire question is one involving relations among capitalists, since they are the only class that owns means of production. Thus, once again Goldfield and Rothenberg substitute a relationship within capital for the fundamental characteristic relationship of capitalism, that between the working class and the capitalist class.

Sociological Analysis or Class Analysis?

No serious study of the restoration thesis can ignore the enormous amount of material on the Soviet Union produced by Western scholarship. But this material cannot be used as casually as Goldfield and Rothenberg do. First of all, it must be examined comprehensively. This is an enormous undertaking for non-specialists, but it must be done, particularly if exclusive reliance is placed on translated (and within that category, only English language) material and secondary sources. In the absence of a comprehensive survey of the literature we cannot know how representative any piece of it is, and so we have no reason to rely on it. Goldfield and Rothenberg are far from comprehensive. They tend to use the formulation “It is the unanimous opinion of Western experts . . .” as a substitute for an evaluation of different sources, a formulation that has no basis in reality. In fact, there is little unanimous opinion among Western experts, which only makes the task of establishing their credibility more difficult. Goldfield and Rothenberg’s method is to ignore opinion that differs from their own.

Beyond this question lies an even more difficult one, namely, the biases inherent in the outlook of these Western experts and their Soviet sources. This is a particularly acute problem for Goldfield and Rothenberg’s sociological approach. The point is that the primary data they rely on was collected by: “Soviet economists, statisticians, and sociologists, including detailed empirical surveys and studies of various aspects of Soviet life.” (p. 110) They comment that undoubtedly the Soviet state resorts to “schemes to cover-up unattractive aspects of Soviet life,” (p. 111), but this is an insufficient basis on which to critically evaluate the source material. Oddly enough, Goldfield and Rothenberg rely on the Western experts to correct for the biases of Soviet material, arguing that: “These scholars are all highly critical of Soviet reality and have no vested interest in arguing for the socialist character of Soviet society; hence their descriptions have a certain neutral character.” (p. 112) This is an error. The work of social scientists is not “neutral”; it may be objective in parts and in a particular sense, but it is never “neutral.” Academic social science in the US is guided by a particular ideology, which leads it to ask certain questions, such as: How can industrial peace be promoted? or, How can revolution be prevented? (usually phrased as How can disorder be prevented?) and not ask other questions, such as: How can the interests of the working class be promoted? It has a theoretical apparatus that excludes certain problems as “non-problems.” Of course, this social science has developed an ideology of neutrality, and a vocabulary designed to foster this impression. Marxists, however, should not fall into the trap of taking the “objectivity of the social sciences” at face value. That the Soviet Union has encouraged an academic social science using the methods and concepts of Western social science is not evidence for the objectivity of that science but for the class character of the Soviet Union. After all, Western social science has several times demonstrated “scientifically” that classes do not exist in the US, only strata. Yet Marxists rightly reject this view. Why then put credence in work from Soviet sociologists which purportedly demonstrates that classes do not exist in the Soviet Union?

The statement that “these scholars . . . have no vested interest in arguing for the socialist character of the Soviet Union,” reveals startling innocence on Goldfield and Rothenberg’s part. First of all, they themselves deny the socialist character of the Soviet Union, so the relevance of the assertion is questionable. More importantly, their argument about interests is fallacious. Of course Western experts have “interests,” and so do their sources of funding, which is perhaps more important. Among other things, Western experts have an interest in keeping on the good side of Soviet authorities, so they can continue to spend time in the Soviet Union and gain access to the sources of information on which careers depend; Western experts have an interest in denying the very existence of an exploitative mode of production called capitalism, let alone that it exists anywhere; many Western experts have an interest in the “spirit of detente” and wish to promote friendly relations between the US and the Soviet Union; some Western experts are unreconstructed cold warriors; some Western experts are technocrats who believe they see their own kind in charge in the Soviet Union. Detente itself is supported by powerful capitalist financial and industrial interest in the US and Western Europe, many of which have quite a lot of influence on the direction taken by Western scholarship. And if capitalism has been restored in the Soviet Union, then the problems are magnified since Soviet social scientists will themselves have biases which will be presented as scientific “objectivity.” To ignore all these things and speak only of the “neutral character” of Western scholarship seems, at the least, quite naive.

If it is disturbing to find professed anti-revisionist Marxist-Leninists who ignore the information contained in Peking Review because it is biased and not objective, but who rely on Soviet sources and Western scholarship because of its supposed neutral character, it is even more disturbing to note that no effort at all is made to analyze whatever information can be gleaned from the struggles of Soviet workers, national minorities and dissidents. To understand the nature of the Soviet Union we have to learn from people who are trying to change it, an endeavor in which neither Western experts nor their Soviet counterparts are engaged. Ultimately, it will be revolutionaries in the Soviet Union who will make major breakthroughs in understanding. We do not have to wait for this to happen, but it does point in the direction of analyzing the class struggles in the Soviet Union, Bettelheim’s direction, rather than toward static sociological analysis, Goldfield and Rothenberg’s direction.

At several places in The Myth of Capitalism Reborn Goldfield and Rothenberg opt for a basically sociological approach. I shall discuss two of them here: measures of social inequality in the Soviet Union and the sociological transformation of the CPSU. The first thing to say about these issues is that they are quite peripheral to the restoration thesis (although not, unfortunately, to much of the restoration literature). Consideration of social equality or inequality, for example, essentially substitutes an academic sociological notion of stratification, with its focus on social mobility, for the Marxist category of class.[25] The issue that must be resolved in regard to the Soviet Union is whether one group of people can live without working because another group of people must provide them with surplus labor in order to be allowed to live at all (to do necessary labor). “Life-style” may be an index to this, but it is a secondary phenomenon.

Furthermore, Goldfield and Rothenberg’s own evidence on the existence of stratification in the Soviet Union is quite ambiguous. It is well known that there are privileged groups in the Soviet Union.[26] The best studies of this, however, are quite frank that the Soviet elite does not appreciate being the object of scrutiny. Since the original data for such studies come from Soviet sociologists who, on the one hand have adopted the Western sociological fetish with stratification at the expense of class, and who, on the other hand, owe their positions to the tolerance of the Soviet elite (Goldfield and Rothenberg use this expression), it is necessary to be wary of claims that no privileged elite exists based on them. Yanowitch, for example, warns:[27]

The upper reaches of the social structure have been systematically excluded from the best of the Soviet studies. . . . Those groups whose macroeconomic and macrosocial decisions control the allocations of society’s productive resources and its reward structure are excluded from scrutiny.

In the light of this warning (of which Goldfield and Rothenberg do not inform their readers) it is evident that these stratification studies are not going to be of great value in determining the class nature of the Soviet Union.

The class composition of the CPSU is another question that is considered in an essentially mystified fashion. Goldfield and Rothenberg look at various struggles in the party’s history, arguing:

No one would seriously argue the restoration of capitalism in the Soviet Union without maintaining that the CPSU underwent a profound transformation, (p. 43)

Of course this is correct. But Goldfield and Rothenberg look in the wrong place for the evidence of this transformation. They focus on the general membership of the Party and make two observations: (1) The decline in the proletarian composition of party membership that characterized the twenty years preceding the XXth Congress of 1956 was reversed beginning with that Congress; (2) The purges in leadership and membership that occurred immediately prior and subsequent to the XXth Congress were by no means unprecedented in the Party’s history. Indeed, relatively speaking even greater purges and upheavals took place in the periods 1923-30 and 1933-38.

This second observation is important, although their measure of the significance of such purges is empirical and difficult to assess. However, the point does not prove their contention at all. Instead, it draws our attention to Bettelheim’s studies of the class struggle in the Soviet Union and inside the party in the 1920s and 1930s. (A comparison of Bettelheim’s work with Goldfield and Rothenberg’s reveals the superficiality of the sociological method adopted by them.) Only if one accepts that the restoration thesis stands or falls on capitalism being restored on a definite date in the 1950s or 1960s, a la Nicolaus or the Red Papers, can Goldfield and Rothenberg’s study of party purges be anything but a confirmation of the correctness of Bettelheim’s historical approach of studying the class struggles in the Soviet Union.

Studying the composition of party membership is important, but it cannot stand alone. Class origin cannot be equated with class stand. The proletarian character of a party should be reflected in its membership, and that character is safeguarded by a proletarian membership, but it is not at all guaranteed in this way. There are many examples of proletarian organizations whose working class membership did not prevent them from degenerating–the German Social Democratic party prior to the First World War is a well-known case in point.

Ultimately, the class character of a party is determined by its line, its practice, and its relations with the masses. It is significant that nowhere in their study of the CPSU do Goldfield and Rothenberg refer to the Party’s line. This is quite remarkable. After all, we are talking here about a Communist Party, a voluntary organization which is united around a line and exists in order to carry out that line in practice. This is as true for parties in state power as well as for those that are in opposition. Indeed, when a party holds state power the line it carries out has the force of law and the power of the state behind it. A party is proletarian based on its line and its ability to carry out that line. As such it will attract a substantial working-class membership. But the sociological composition of its membership cannot be the primary evidence for the class character of the party. Perhaps Goldfield and Rothenberg would reject this idealism in comparison with their own materialist approach. Here I will only point to the strange phenomenon of two authors, at least one of whom is associated with the view that “rectification of the general line” is the route to party building, whose book is sponsored and published by these “rectification” forces, and who have nothing to say about the line of the CPSU in a book devoted to the restoration of capitalism in the Soviet Union.

The Soviet Union: Ally or Enemy?

The immediate political stake in the debate over the nature of the Soviet Union is an assessment of its role in world today. Thesis number two, the social-imperialism thesis, rather than thesis number one, the capita restoration thesis, is of urgent and immediate significance to the people of the world. Thus it is disappointing that Goldfield and Rothenberg limit their discussion to the proof or disproof of the first thesis. Their reasons are worth discussing:

. . . from a rigorous theoretical perspective, Soviet international practice can at best provide secondary evidence for or against the thesis of capitalist restoration. It cannot be decisive. The question of the existence or non-existence of capitalism in the Soviet Union is a question of the relations of production that exist there. These relations cannot be deduced from the foreign policy of the Soviet government. To hold otherwise is idealism, not Marxism. (p. 5)

It is clear from this passage that Goldfield and Rothenberg conceive of the world as a set of interacting national social formations, each with an “internal” set of relations of production and an “external” foreign policy. The internal realm is fundamental and can be studied in isolation from the external realm which is secondary. Indeed, these external relations can be derived from the logically and theoretically prior internal relations. Although they do not do so, perhaps for obvious reasons, Goldfield and Rothenberg could have invoked Mao’s useful metaphor explaining the primacy of internal contradictions: the impossibility of hatching chickens out of stones.

This approach is not unique to Goldfield and Rothenberg. It is quite common to accord primacy to thesis number one over thesis number two on the ground of the primacy of the internal. In this way capitalism is understood as a category that applies to the “internal” relations of production, while imperialism is the “effect” of these internal relations externally, in relations between nation-states. There are good reasons, however, to question the soundness of this division. Goldfield and Rothenberg counterpose the relations of production to foreign policy and thus make it clear they view this further as a relationship between economics (the relations of production) and politics (Soviet foreign policy, which they call, somewhat curiously, “Soviet international practice”). They thus superimpose a further division on the internal/primary vs. external/secondary relation in which internal/primary also corresponds to economic/primary and external/secondary also corresponds to politics/secondary.

But the concept of mode of production is not at all the same thing as the economy. A mode of production is an abstract concept which exists at an intermediate level of theorization. As such, it does not have a geographical location, it is neither internal nor external to national social formations.[28] In any event, it is a real question whether any national social formation can be theorized as a closed system in the era of imperialism. Are the relations of production of an imperialist power internal to it? To argue this one has to abandon many of Lenin’s arguments on the nature of imperialism. For example, the Soviet imposition of an “international socialist division of labor” on its dependencies can only be understood as an extension of the relations of production outside of the borders of the Soviet Union. In other words, in the imperialist stage it is doubtful that nation states are units comparable to Mao’s stones and eggs.

One of Lenin’s achievements in his pamphlet Imperialism, The Highest Stage of Capitalism was to combat the view that imperialism referred mainly to relations between states. By emphasizing that imperialism is a state of capitalism he wanted to draw attention to the fact that the internal and external relations of production and policies of various states were inextricably linked. The issue is not whether a particular action is or is not a policy. Any action (or inaction) is a policy. Nor is the issue whether a particular policy is or is not a mistake. From the vantage of hindsight, it is clear that the US occupation of Vietnam was a policy mistake. Only the most dogmatic determinist would claim the US had to invade Vietnam. Lenin’s dispute with Kautsky is not an argument in favor of determinism as opposed to the subjective factor in politics. It is precisely this misunderstanding that leads to an analysis which says first analyze the internal relations of production and then “derive” imperialism from them.

The real issue is determining the objective content of particular policies. This content does not simply flow out of the “nature” of the social formation, in the sense that somehow political phenomena flow out of an economic essence. In fact, the objective content of a policy is itself an aspect of the nature of the social formation. When we see a country claim the right to dictate the policy of other states, to invade them if they do not toe the line, when we see a state overthrow legitimate governments, set up puppet regimes, and viciously suppress or eliminate all resistance, then we must conclude that such a policy can only be the actions of a society marked by class contradiction and antagonism. In the stage of imperialism, trampling on the right of small countries to national independence is the mark of an imperialist power. Invasions, occupations, and anti-popular repression are not socialist if done by socialist countries and imperialist if done by capitalist countries; they are not mistaken if done by socialist countries and “no accident” if done by capitalist countries. Invasions, occupations, and anti-popular repression have content, and that content is not socialist.

At best, The Myth of Capitalism Reborn asks some important questions and raises legitimate doubts about some answers that many Marxists thought were correct. Its own attempt to provide an alternative view of the Soviet Union, however, founders on the rocks of its non-Marxist methodology, economist theory, and ignorance of the place of class struggle in both capitalism and socialism. Its refutation of the restoration thesis is fatally flawed insofar as it fails to understand the state capitalism hypothesis. Its view that the Soviet Union is on the road to socialism is unsupported.

The Myth of Capitalism Reborn is a particular response to the new world of the 1980s. It responds to the failure of the anti-revisionist movement of the 1960s and 1970s, to the Soviet Union’s new aggressive foreign policy, and to a loss of faith in the leading role of the Communist Party of China, which was unseemly in the first place. To those who are temporarily disoriented by these failures The Myth of Capitalism Reborn offers an old certainty in a new bottle. You don’t know what socialism is? The Soviet Union is building socialism. You think there’s a crisis of Marxism? Marxism is economic determinism and “orthodox” Leninism according to Stalin. These answers might appear momentarily attractive to the weary, but they are part of a world-wide retreat in which genuine advances made in the 1960s and 1970s are being abandoned, along with the errors of that period. The Myth of Capitalism Reborn is a document of the current crisis of Marxism. But it is not a resolution of that crisis so much as another symptom of it. And to the extent it elaborates a regressive confusion of exploitative class society with socialism, and supports the idea that socialism can result from invasions and loss of independence, it is a obstacle to the necessary reconstruction of Marxism in the 1980s.

Appendix: Never Forget the Class Struggle: The Two Variants

Goldfield and Rothenberg divide the restoration literature in two categories. The difference is put this way in The Myth of Capitalism Reborn:

Theory Number One purports to base itself on an analysis of the fundamental social and economic forces governing Soviet society; it attempts to show the existence of capitalism in the Soviet Union by an empirical analysis of Soviet society, particularly of the economy. Theory Number Two is a more political theory, which attempts to show the existence of capitalism on the basis of certain non-economic features of Soviet society... [It] is a theory which takes as key, not the social and economic reality of Soviet society, but the political line of the Soviet leadership ... since the political line of the CPSU is anything but revolutionary, it is easy to prove all sorts of bad things about the Soviet Union once one takes political line as decisive. (p. 23)

In his articles in The Organizer Goldfield calls Theory Number One the Economic Variant, and Theory Number Two the Political Variant, and that is how I shall refer to them here.

The Economic Variant takes the economy as decisive, and it studies this economy “empirically.” Sometimes the empirical study is described in broader terms to be of the “economic and social reality.” The specific content of the term “social” is not explained, but it seems to include certain phenomena thought to be the province of sociology as opposed to economics (or politics) in the academic division of labor practiced in the US university. These include such things as income inequality, status differences, and social class. It is worth noting at this point that none of these things corresponds exactly to a Marxist category.

Goldfield and Rothenberg are much less specific about the characteristic features of their Political Variant. Mainly, they say, it takes the political line of the Soviet leadership as decisive and studies nothing but that line. One gets the distinct impression that Goldfield and Rothenberg believe that the Political Variant avoids any study of “economic and social reality” as a matter of theoretical principle, and indeed, any study of political reality outside of the question of line. Interestingly enough, no concept of politics beyond the line the leadership is found in The Myth of Capitalism Reborn, nor does the concept of ideology appear. They have apparently been displaced by the catch-all “social.”

It should be clear from the above quote that Goldfield and Rothenberg do not think highly of what they call the Political Variant. Indeed, they reject it out of hand, because it “is based on a radical revision of Marxism in the direction of idealism” (p. 23). By the same criterion they treat the Economic Variant as the embodiment of correct Marxist method. If capitalism has been restored in the Soviet Union then the analysis must be made along the lines of the Economic Variant, which “attempts to place itself within a classical Marxist and materialist framework” (pp. 22-23). Goldfield and Rothenberg’s approach then is to first sort statements of the capitalist restoration thesis into either the Economic Variant or the Political Variant. Those which fall in the latter category are rejected because they fail to measure up to Goldfield and Rothenberg’s understanding of Marxist theory. Those which fall into the former category are subjected to an empirical test stance:

[The Economic Variant] gives a definition of capitalism, then tries to show, largely by an empirical examination of Soviet society, that the Soviet Union functions, starting with its economy, according to capitalist principles. (The Organizer, June 1980.)

The problem is that neither the Political Variant nor the Economic Variant, as described by Goldfield and Rothenberg, corresponds to Marxism. Goldfield and Rothenberg’s presentation of the so-called Political Variant is idealist. Undoubtedly one can find articles in the restoration literature which look at political line to the exclusion of anything else, but such an approach is by no means the only alternative to the Economic Variant. For example, Goldfield and Rothenberg treat Bettelheim under the heading of the Political Variant, despite the fact that Bettelheim by no means restricts himself to an analysis of political line only. Goldfield and Rothenberg have reasons for presenting a caricature of theories which take politics as decisive, however. First, correctly understood, such theories are in fact closer to Marxism than approaches Goldfield and Rothenberg group under their Economic Variant; and second, the Economic Variant seems almost self-evident when put up against such a caricatured version of a more correct theory.

Linking Economics and Politics

... the starting point for any scientific understanding of a society must be an examination of the functioning of its economy. (The Organizer, Oct. 1980.)

It is notable that despite their appeal to Marxist orthodoxy Goldfield and Rothenberg never attempt to establish that this is what Marx (or Engels, Lenin, Mao Zedong) said. They appeal instead to the reader’s “knowledge” of Marxism. After all, everyone “know Marxist analysis starts with the economy; everyone ”1 that this is because the economy is decisive; everyone “knows” that socialism and capitalism are economic concepts; everyone “knows” that the question we need to answer about the Soviet Union is whether it has a capitalist or socialist economy.

Engels commented on views very similar to these in several places. In his letter to J. Bloch (Sept. 21-22, 1890) he wrote:

According to the materialist conception of history, the ultimately determining element in history is the production and reproduction of real life. More than this neither Marx nor I have ever asserted. Hence if somebody twists this into saying that the economic element is the only determining one, he transforms that proposition into a meaningless, abstract, senseless phrase.

Goldfield and Rothenberg do not state right out that the economic element is the only determining one, but there can be no doubt that this is the essence of the Economic Variant. (I shall pass over, for the moment, the fact that Engels refers to the “production and reproduction of real life,” rather than the economy, and the more significant fact that Engels refers to historical explanation whereas Goldfield and Rothenberg present an ahistorical and static discussion of the Soviet Union.) In another letter to H. Starkenberg (Jan. 25, 1894) Engels returned to this theme:

Political, juridical, philosophical, religious, literary, artistic, etc., development is based upon economic development. But all these react upon one another and also upon the economic basis. It is not that the economic situation is cause, solely active while everything else is only passive effect.

The Myth of Capitalism Reborn takes as Marxism a theory (the Economic Variant) in which the economy is “cause, solely active,” and so, in Engels words, transforms Marxism into a “meaningless, abstract, senseless phrase.” Not only does Engels imply that politics can be a cause, can be active, and can even be a determining element, he accords the same possibility to philosophy, religion, literature, and even art![29] The point is not to set up a Philosophical Variant, Religious Variant, Artistic Variant, or Literary Variant as further competition to the Economic and Political Variants. But it is foreign to Marxism to privilege the economic level over the others on principle prior to carrying out a concrete analysis.

Despite the evident relevance of Lenin’s writings on the construction of socialism to the problem of the restoration of capitalism, Goldfield and Rothenberg make no use of them in their exposition of the elements of Marxist theory. This is most likely a consequence of their view that Marxism consists of a completed body of principles which need only be applied to each new situation as it arises, rather than as a science which grows through analyzing new situations. In a subsection of his well-known essay, “Once Again on the Trade Unions, the Current Situation and the Mistakes of Trotsky and Bukharin,” entitled (significantly for our purposes) “Politics and Economics. Dialectics and Eclecticism,” Lenin wrote:

Politics must take precedence over economics. To argue otherwise is to forget the ABC of Marxism. ... What the political approach means is that the wrong attitude to the trade unions will ruin the Soviet power and topple the dictatorship of the proletariat . . . without a correct political approach to the matter the given class will be unable to stay on top, and, consequently, will be incapable of solving its production problem either. (LSW, III, 527-28.)

This appears perilously close to Goldfield and Rothenberg’s Political Variant: “Politics must take precedence over economics.” If this is the “ABC of Marxism” then it would appear that Lenin and Goldfield and Rothenberg use different alphabets! Lenin even talks about the importance of “a correct political approach.”

If we study this passage closely, however, it is apparent that Lenin is not promoting his own Political Variant, although he is criticizing something very close to Goldfield and Rothenberg’s Economic Variant. His approach is to link politics and economics. Without a correct political approach the “given class . . . will be incapable of solving its production problem either.” Lenin does not say, with a correct political approach the class will automatically solve its production problem (Goldfield and Rothenberg’s Political Variant), nor does he say that production problems are solved simply in the realm of production (Goldfield and Rothenberg’s Economic Variant). In fact, this statement is a concrete illustration of Engel’s general comment that “all these react upon one another and also upon the economic basis.” Of course, it is not without interest that in this concrete analysis of the construction of socialism and maintenance of the dictatorship of the proletariat, Lenin finds “politics must take precedence over economics.”[30]

To summarize. Neither the so-called Economic Variant nor the so-called Political Variant corresponds to historical materialism. Historical materialism does not privilege one particular element, either as “starting place” or as “cause, solely active.” Social formations are complex objects containing economic, political, juridical, ideological, etc. elements, which must be analyzed concretely. The economy is “ultimately determining,” but this is not the same thing as the Economic Variant. In any particular social formation, at any particular moment (what Lenin called the “current moment”) politics (or even philosophy) might well be decisive in the sense that the class struggle focuses on that element. In fact, if Marxism puts anything in the center of the analysis it is the class struggle, which links the elements of the social formation and determines the decisive element. One is bound to fall into either economism and mechanical materialism (as Goldfield and Rothenberg do with the Economic Variant) or idealism and political voluntarism (taking the Political Variant to be the same as Marxism) as long as the class struggle (and so history) is not made the center of analysis. Mao Zedong said “Never forget the class struggle.” Unfortunately, Goldfield and Rothenberg do forget it. At the methodological level this error leads them to embrace the Economic Variant and mechanical materialism. It has equally serious effects on their concrete analysis.

Through Whose Eyes?

Goldfield and Rothenberg confuse propositions about historical materialism (their Variants) with theses concerning the restoration of capitalism (the private capitalism thesis and the state capitalism thesis) by identifying the private capitalism thesis with their Economic Variant and the state capitalism thesis with their Political Variant.[31] It is easy to see why they fall into this error. In the case of state capitalism the bourgeoisie is located in the political apparatus, while in the case of private capitalism the bourgeoisie is located in the economic apparatus. What Goldfield and Rothenberg seem to have done is identify each theory with that Variant whose decisive instance is the apparatus in which the bourgeoisie is located. Thus the state capitalism thesis, whose bourgeoisie is located in the political apparatus, is identified with a theory in which politics is decisive and economics doesn’t count, while the private capitalism thesis, whose bourgeoisie is located in the economic apparatus is identified with a theory in which economics is decisive and politics doesn’t count.

There are several problems here. In the first place, it is not true that economics is decisive and politics doesn’t count in private capitalism, although the daily working of private capitalism, based as it is on the relative autonomy of politics and economics, spontaneously engenders this ideological view of things–economism in the broadest use of the term.[32] That Goldfield and Rothenberg link their concentration of capitalism so tightly to the economist Economic Variant is further indication of the basically incorrect way they view the world.

More important though is what happens when one confuses the dominant class with the dominance of its structural place in the social formation. This amounts to seeing the social formation through the eyes of the dominant class alone. It is striking that the working class does not appear as a participant in the class struggle anywhere