In their landmark 1950 work, “State Capitalism and World Revolution,” CLR James (aka JR Johnson), Raya Dunayevskaya (aka Freddie Forest), and Grace Lee Boggs (aka Ria Stone) (or Johnson–Forest Tendency, JFT for short) argued that we’ve entered a new stage of capitalism: state-capitalism. Their work was a response to profound economic transformations that re-shaped the political landscape and led to critical theoretical disagreements. During the Great Depression and World War II, the United States, Nazi Germany, and the Soviet Union centralized control and extensively planned their economies. Unlike their Orthodox Trotskyist counterparts, the JFT refused to support the so-called Actually Existing Socialist Countries in principle and split from Orthodox Trotskyists. This led to the fundamental question: “What is capitalism, really? How is capitalism different from socialism and how does it manifest itself in the life of the worker?”

In the midst of an inter-imperialist war, the question that gripped the JFT is neither historical nor tangential. It cuts to the core of how we understand the prospects of real workers’ emancipation. If both “socialist” and “capitalist” states planned their economies, then the boundary between the two comes into question and begs the question: does planning transcend alienated labor? Orthodox Trotskyists and Stalinists tend to give the conventional answer to the question: capitalism is a planless market economy in which production of goods, privately owned by capitalists, is blindly guided by the market through competition. In this way, for them, capitalism meets the effective demands of consumers. For simplicity, I’ll call the aforementioned conventional answer the “conventional view” as a shorthand description.

Since, for the Trotskyists and Stalinists, production is blindly guided by the market rather than being consciously planned, the conventional view continues, there is an “anarchy of the market.” This creates a contradiction between meeting the effective demands of consumers and unplanned, market-guided production. The Trotskyist and Stalinist solution to resolve this contradiction is to centralize the means of production in the hands of a workers’ state. CLR James, Raya Dunayevskaya, and Grace Lee Boggs (or the JFT) reject the conventional view. For them, the conventional view rules out the possibility of a state-planned capitalist economy from the get-go. To make a convincing case, the JFT turns to some of the works of Marx, Engels, and Lenin and demonstrates that, in its theoretical foundations, capitalism isn’t defined by a planless market

In A Critique of the Draft Social-Democratic Program of 1891, Engels rejected Karl Kautsky’s view that planlessness, or anarchy of the market, is an essential feature of capitalism. Engels observes that when many businesses are eliminated through competition, capital is centralized in fewer hands. This creates the conditions for planned capitalist production. Engels’ criticism of Kautsky, however, prefigures Lenin’s work Imperialism. In the text, Lenin argues that free market competition transforms into its opposite: monopoly capitalism. And within this form of capitalism, the condition for overcoming the anarchy of the market through planned production is ripe. In the preface of State & Revolution, he also discusses state-monopoly capitalism. In this analysis, Lenin argues that states play a larger role in working with trusts in managing and planning a capitalist economy, especially during wartime.

In Capital Volume 1, Marx also considered the theoretical possibility of complete monopoly. In this scenario, all the capital in one country is concentrated and centralized in the hands of one organization. For Marx, such an organization would plan and manage capitalist production. In this scenario, Marx takes the law of the accumulation of capital to its logical end. He wants to show that the complete centralization of capital doesn’t resolve the contradiction of capitalism. Marx’s theoretical model turns out to resemble the centralization of the Soviet Union and many of the So-called Actually Existing Socialist Countries.

If capitalism–through centralization of capital in the hands of fewer trusts or the state–gets rid of the anarchy of the market, or planlessness, then the real contradiction of capitalism cannot be reduced to the market. The JFT argues that, instead, the real contradiction of capitalism is located at the point of production: alienated labor. Workers sell, or in other words, alienate their labor time through their labor, and in turn, accumulate capital for capital’s sake. Precisely at this point, capital confronts workers as an alien power to extract more labor time. Of course, as an alien power, capital accomplishes this thanks to capital’s disciplinary managers: capitalists. Even if all of capital is centralized in the hands of a self-avowed workers’ state in one country, this wouldn’t resolve the real contradiction of capitalism. It would only further intensify it.

What makes state-capitalism a stage of capitalism is that the centralization of capital in the hands of the state and a few trusts intensifies–rather than resolves–the real contradiction of capitalism. Lenin’s main contribution is that, as a stage of capitalism, imperialism supersedes free market competition through the impulse toward centralization. JFT shows that imperialism, as part of the stage of capitalism, naturally transforms into state-capitalism as the next stage because the centralization of capital continues to develop in the most extreme form. As centralization of capital takes on the extreme form, the real contradiction of capitalism becomes acute.

The implication of JFT’s theory is clear: the Soviet Union is an extreme version of a state capitalist country. It centralizes capital in the hands of a single state-run apparatus. The Soviet Union may have subdued the anarchy of the market through state planning, but, at the point of production, it only intensifies the real contradiction of capital. One might ask how the Soviet Union could be a state capitalist country without capitalists. In anticipating this question, the JFT draws from Marx, Engels, Lenin, and Trotsky to develop a new component of their theory: their analysis of the Bureaucracy.

Marx argues that capitalists aren’t simply private owners of the means of production, but more importantly, capitalists are also representatives and functionaries of capital. Specifically, capitalists manage and discipline labor to increase productivity and profit for capital. Engels observes that as owners of capital become more remote from their managerial role of disciplining labor, capitalists employ salaried employees to manage workers. Lenin and Trotsky observed that salaried employees in the Soviet Union form a bureaucracy and this bureaucracy disciplines workers to perform labor for the accumulation of capital. While the Soviet Union had no capitalists in the classical sense, there were party bureaucrats who, essentially, managed and disciplined labor on behalf of capital. This came fully into existence only after Stalin took power, eliminating Trotsky and others.

The bureaucracy isn’t unique to the Soviet Union. It can also be found in the United States. Unlike the Soviet Union, whose form of state-capitalism is state ownership and total state planning of capitalist production, in the United States, state-capitalism is state management of capital through large corporations and the labor bureaucrats. Especially in periods when labor unions are strong, the labor bureaucrats lead the trade unions, who help manage and discipline workers on behalf of capital. Many of the large capitalist firms, such as Palantir, Tesla, Raytheon, Lockheed, and others, have a close symbiotic relationship with the U.S. government agencies through multiple contracts. Additionally, President Obama bailed out Wall Street during the 2008 financial crisis by saving General Motors and bailing out Wall Street.

While the U.S. is currently the most powerful state-capitalist country, China, Russia, North Korea, Iran, Syria (under Assad), and Cuba are also essentially state-capitalist.  In these countries, authoritarian regimes exert significant influence over capitalist production in various ways. In the case of Russia, many Russian capitalists, who are aligned with Putin, manage state-owned enterprises. In the case of China, the Communist Party of China manages and plans the economy through the state bureaucracy and private companies. For example, while the Communist Party of China doesn’t manage and plan the economy in the old Soviet fashion, it was able to plan the production of masks and vaccines to combat COVID-19. The Communist Party of China also assigns provincial governors to manage the economy of their respective provinces to promote the growth of capital and GDP.

With all this being said, this leaves us with the remaining question: How is socialism different from capitalism? The answer lies in resolving the real contradiction of capitalism at the point of production. At the point of capitalist production, capital expands through extracting from workers’ surplus labor-time through their alienated labor. Under these conditions, when workers produce things not for direct use, but as commodities, they’re giving up their time for capital’s growth.

In other words, to truly solve the contradiction at the point of production and overcome alienation, workers must qualitatively change their relationship to why and how they work. Workers can’t transcend alienated labor if labor bureaucrats continue to manage and discipline labor on behalf of capital. Instead of alienating time through labor for capital’s accumulation of workers’ alienated time, workers must create conditions where labor is an expression of their own irrevocably unique, essential being. In this way, alienation is overcome, and what they create is not a means to an end (i.e. profit), but an end in itself. In State and Revolution and elsewhere, drawing from his observation of the self-movement of workers, Lenin records that the councils of workers embody workers’ self-activity. In the Hungarian Revolution of 1956, the councils of workers again made an appearance against state-capitalism. What needs to replace all bureaucracies (e.g. state, corporate, and trade unions) is a new form of organization that best expresses workers’ self-activity.

In the midst of an inter-imperialist war, we ask how “State Capitalism and World Revolution” is relevant to us today? On one hand, the United States and its allies, and on the other hand, Russia, China, Iran, North Korea, and many others, are state capitalist countries that compete with each other over the accumulation of capital. In the midst of an inter-imperialist war, the question arises: in order to overcome alienation, do we extend our solidarity to one state-capitalist nation in opposition to the more powerful state-capitalist country? For example, do we extend solidarity to Russia in opposition to the U.S. and NATO, and in the process, throw Ukraine under the bus? The content of the councils of workers in the 1917 October Revolution and the Hungarian Revolution is the self-movement, self-activity, and the dialectics of workers as subjects imbued with the philosophy of revolution. Without the self-movement of workers as subjects, there is no hope of overcoming alienation. The Theory of State Capitalism, as developed by the JFT, directly responds to the question of inter-imperialist war and revolution. It gives a foundation for supporting workers’ emancipation on the international stage, emphasizing that it is not allegiance to any state, but the self-movement of workers, that can truly overcome alienation. In this framework, we don’t blindly support one state-capitalist camp in opposition to another state-capitalist camp, but rather we unwaveringly support the international camp of the working class and all oppressed peoples across the globe.