The theory of state capitalism
of S. S. Gubanov: A critical analysis

by Yury Shakhin, a Ukrainian communist activist

(CV #46, November 2011 -- see State-capitalism or socialism for CV's introductin to this article)

The theory of state capitalism is very important. This is the dividing line that separates Marxism from Stalinism, and at the same time, it's a necessary component of the Renaissance of Marxism, to ensure its purification from the deforming influence of Stalinism. To date, there are several variants of the theory of state capitalism. Furthermore, not all of them are well developed. This is partly a consequence of the “Soviet” period, which is still not resolved. Marxists, critics of the official Soviet ideology, did not have the ability to freely share their views. As a result, study groups, often individual persons, worked out theories of state capitalism in complete isolation. Each cultivated his views on the matter. Because they were gained through suffering, their supporters were slow after the collapse of the Soviet Union to join a free discussion, let alone adjust their positions. On the other hand, after the collapse of the Soviet Union there was no influential Marxist party in any of the republics. A united organization stimulates discussion, supports the exchange of ideas, aligns the participants' attitudes. But this was not the case.  As a result, supporters of the theory of state capitalism further cultivated their systems. Some of them are of undeniable interest and worthy of critical analysis. One of these theories was developed by S. S. Gubanov, a member of the Executive Committee of the Workers’ United Front in Russia.

Gubanov’s theoretical model is valuable for its primary focus on the economic side of the issue. He proposed the following overview of capitalist development:

"Private capitalism is private-capitalist property, private-capitalist income mainly in the form of profit, and the private-capitalist way by which profit, as such, is appropriated.

"Monopolistic capitalism – much the same, only with a higher, monopolistic form of centralization: property, profit, and appropriation.

"Corporate capitalism raises the level of centralization even higher, developing the branch structure and transforming it across sectors, with greater consolidation of ownership, profit and appropriation.

"State-monopoly capitalism adds further to the corporate one a national standard of centralizing ownership, profit and appropriation.

"Finally, state capitalism establishes nationalized property, nationalized income and a state-wide way to appropriate such income. It economically denies private-capitalist ownership, profit and private-capitalist appropriation (where there is no profit, there cannot also be private appropriation). Without negating profit by means of nationalization of the economic income, state capitalism is not present, then nationalization turns into an empty, purely legal formality, a fiction" (What is to be Done? [a contemporary journal -- CV], # 16 (39), p. 1). 

The most advanced capitalist countries, according to Gubanov, by the 1960's had risen to the state-corporate stage. But a higher stage was reached in history only in the Soviet Union of the 30-50's. Soviet industry at that time made almost no profit. But a part of the added value created by it was incorporated by the state into the price of retail goods and withdrawn in the form of the turnover tax. From there part of the surplus value returned to the enterprises in the form of grants. Primarily this concerns heavy industry, which during the first five-year plans took a planned loss.

However, he explained further interesting things. Gubanov calls Soviet state capitalism "self-originated", "superstructural" and "non-economic". Having considered the Soviet economy, he concluded that it had never even been at the level of corporate capitalism. There never were in the USSR anything like western corporations that unite several industries into single technological chains of manufacture. Enterprises were formally nationalized, but did not know what vertical product integration is. The basic units of the economy always remained separate enterprises. Here is a very important difference of views between S. Gubanov and the theories, well-known in the CIS [Commonwealth of Independent States, comprised of most of the former Soviet Republics–CV], of the English Marxist T. Cliff. Cliff believed that the Soviet economy operates as a single factory. Gubanov insists that it has not yet come close to this level. This is certainly a more fruitful approach because it allows you to explain the anarchy of production in the USSR.

The question naturally arises: how could the USSR enter a higher stage of capitalism, without an economic basis? For a reply S. Gubanov also uses the definition of state capitalism as superstructural. It was held up and implemented only through the policy of the ruling party. While S. Gubanov does not slip into illusion, he also directly writes that the Soviet leaders did not understand what they were doing: spreading lies about building socialism while they really were intuitively entering state capitalism from above. "Thus, state-capitalism was supported by the political superstructure, while private-capitalism has stemmed from the economic base" (What is to be done?, # 17 (40), p. 2). Gubanov clearly distinguishes between formal and real nationalization and stresses that the first had prevailed in the USSR. Finally, he puts forward a tough diagnosis: "nothing, except for the plan, kept national-economic calculation. Without converting the base (and industrialization and collectivization is not enough, because it would require more interdisciplinary, vertical integration to maximize nationalized capital) the political superstructure, sooner or later, was to come into line with the economic basis, i.e. private-economic calculation" (What is to be done?, # 17 (40), p. 3). Because nobody in the leadership of the USSR understood this and they couldn't take the conscious actions recommended by Gubanov, the fate of Soviet society was predetermined. Into the State and party gradually infiltrated the representatives of interests of the private-economic basis, and the Soviet Union came to an end. Here you must specify that for Gubanov it is not a penetration of private capital into authority in the legal sense. He means the growing influence of groups associated with the directors of public companies: in juridical essence public, but in economic essence -- private.

Outwardly this theory seems harmonious, but it is not free from contradictions. If the USSR had not reached the economic criteria for state capitalism, as identified by Gubanov, on what grounds can you say that it entered this stage? Indeed, according to Gubanov, the basis of state capitalism -- the vertical integration of work and property. If nationalized income, which denies private-capitalist appropriation, had to have been the result of vertical integration, the development of corporations, and state participation in economic life, is that not a reason to think that the USSR was a qualitatively different phenomenon? Finally, the only economic indicator of state capitalism to Gubanov is the turnover tax. Can you, with only a specific tax policy talk, about state capitalism? These issues do not find a convincing answer.

Even worse is the case with the class analysis of the Soviet society. Gubanov has not developed this block very much. He defines the Soviet state as a cumulative capitalist, and he talked about the preservation of exploitation in the USSR (What is to be done?, # 21 (44), p. 1). At the same time, he writes that the political elements of Soviet state capitalism were embodied in "Soviet power as a power of the labor majority" (What is to be done?, # 21 (44), p. 1). This is stated in the same article! He said also that the Soviet State ruled out "unearned accumulation and consumption" (What is to be done?, # 21 (44), p. 2). How could this be, when the USSR maintained exploitation?

Elsewhere, S. S. Gubanov declares: "an assessment of the evolution of Soviet power: evolution from workers' and peasants' dictatorship to the dictatorship of the party apparatus, and then the personal dictatorship" (What is to be done?, # 19 (42) p. 2). He does not consider it necessary to give it a class evaluation. It remains a mystery: does it rely on a labour majority, or on the collective capitalist? However the class nature of the VKP(B)-CPSU [All-Union Communist Party (Bolshevik) -- Communist Party of the Soviet Union] Gubanov defines more clearly: "turning the party of socialism into a party, initially only of the top-level superstructural state-capitalism, and afterwards into a party of private capitalism" (What is to be done?, # 19 (42) p. 2).  As we see, the state and the party, which has grown together with it, received from Gubanov rather ambiguous estimates. To put it mildly, this is an inconsistency.

Continuing his vacillations, Gubanov writes about the "bourgeoisification" of the CPSU and the Soviets, which led to restructuring [perestroika]. However, he writes the word "bourgeoisification" in quotation marks. But this does not diminish the issues. If the Communist Party had already under Stalin turned into a party of state capitalism, then can we talk about it becoming further bourgeoisified if this party had already become bourgeois?

From our point of view, Soviet power and the ruling party disintegrated as early as the 1920s. The power of the Soviets turned from the dictatorship of the proletariat into the dictatorship of the state bourgeoisie. Then in 1936, this new regime even did away formally with Soviet power. Under the new Constitution the Soviets were turned into analogues of bourgeois parliaments.

Furthermore, S. Gubanov apparently simply denies the class struggle in the USSR. He enters into a debate with one of its targets, who writes: "the imbalances and inflation contributed to the poverty of working class and aggravation of the class struggle." In response, Gubanov states: "truly, imbalances and inflation cause the aggravation of class struggle, but not from the working class but the self-financing [i.e. directors of state enterprises that operated on the khozraschet or self-financing basis] and ‘shadow’ bourgeoisie, speculators, mediators etc." (What is to be done?, # 21 (44), p. 3). Here Gubanov openly departs from the class view of a Marxist and goes over to the side of the exploiter — entirely capitalist. From actual Soviet history it is well known that worsening imbalances and inflationary pressures, the deterioration in living conditions caused the working class to strike. So it was in 1932 in Ivanovo, so it was in 1962 in Novocherkassk. And these are not the only instances. These examples are given because they have been well studied by historians.

This leads to a conclusion. Gubanov was unable to completely overcome illusions from Stalinism, and take a coherent class position in assessing Soviet society. Gubanov revealed his remaining Stalinist views in assessing the Khruschev period. Together with the Stalinists he evaluates the then reforms extremely negatively. But if Stalinists see them destroying socialism in the USSR, for Gubanov they have undermined state capitalism. Gubanov evaluates perestroika in a Stalinist manner as a bourgeois counterrevolution. Finally, he takes seriously the official Russian leftists as Communists. He criticizes Zyuganov, Anpilov and others like them just for their opportunism. Meanwhile, in our opinion, they are true-conservative parties. The Communist Party of the Russian Federation,"Labour Russia", VCU [Vanguard of Communist Youth], etc. -- these are right-wing, social-chauvinist organizations. Characterizing them as "opportunists" is too soft. Finally, just like the Russian social-chauvinists, Gubanov called modern Russian capitalism compradorism. From this view he excluded only the second presidency of Putin, when this view finally became completely obvious.

Gubanov tried to deduce the inevitable compradorism of Russian capitalism from his theory of state capitalism. According to Gubanov the Soviet economy excluded the whole cycle of reproduction of private capital by freezing its industrial use. As a result, the shadow capital accumulated in the depths of Soviet society was quite indifferent to the problem of industrial production and showed itself only as speculative. All this is good, but the Gubanov’s theory leads to one more conclusion: the directors of Soviet enterprises were representatives of private industrial capital. Gubanov, true, calls the enterprises bearers of private-economic elements, but this terminology does not display the contradictions. It turns out, the private elements in the USSR’s economy were different, and some of them were related to industrial production. Why have just the destructive elements representated by shadow capital won?  S. Gubanov does not give an answer, because he cannot pose this question.

An answer requires a specific analysis of class struggle in the perestroika period and the first years after the collapse of the USSR. Some attempts in this direction have already been undertaken, including from Marxist positions, but the problem still requires further discussion.

Thus, we have examined the strengths and weaknesses of the theory of state capitalism, developed by S. S. Gubanov. Hopefully, this ana

lysis will help clarify the problems of Soviet history and achieve clarity in its Marxist assessment.

[English translation by the Communist Voice. This article has been printed here with the permission of comrade Shakhin.]    <>

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