Section Three: Economics of the Transitional Period¶
Core Argument¶
This chapter delivers a sustained Marxist critique of Tony Cliff's theory of state capitalism in Stalinist Russia, arguing that his method is fundamentally unscientific. Cliff's central failing lies in forcing preconceived conclusions onto evidence rather than deriving them from concrete analysis. Most damningly, he abandons the essential Marxist criterion of whether a system develops the productive forces, a criterion that, if applied consistently, would force the conclusion that state capitalism represents a new, higher stage of capitalism—thereby undermining the Leninist-Trotskyist theory of permanent revolution.
The critique exposes Cliff's misuse of Trotsky's writings, showing that Trotsky consistently maintained the USSR's class basis remained proletarian due to nationalised property, despite bureaucratic distortions. The French Revolution analogy is deployed to demonstrate that struggles over surplus product can occur between strata of the same class, not only between distinct classes. Cliff's claim that the law of value operates only through Russia's external relations with world capitalism is rejected as unsound Marxism. The law of value, the author insists, manifests in exchange across all historical forms of society; if it operated in Russia only through foreign trade, the internal economy would require separate analysis. Recognising this weakness, Cliff relocates the law of value from exchange to armaments competition between social systems—a concession to Shachtman's bureaucratic collectivism that transforms an economic category into a mystical one.
The chapter's central theoretical contribution is its insistence on the transitional character of the Soviet economy. Money, value, surplus value, and wage labour persist in modified form, regulated but not abolished by the state. The turnover tax is based on the value of the product, proving the law of value operates internally. The author distinguishes sharply between mode of production and mode of appropriation: under capitalism, production is social but appropriation private; under state ownership, appropriation by the state abolishes the fundamental capitalist contradiction. Complete statification transforms the capitalist relation into its opposite, as Engels indicated.
The bureaucracy's relationship to production is parasitic, not that of a ruling class. The state is an instrument of class rule; its officials are not a class but an instrument. Cliff's reduction of the bureaucracy to a new ruling class amounts to saying the state owns the state—a fetishism that changes a name and mistakes it for changing essence. Events in Eastern Europe, where the Red Army's advance sparked revolutionary movements subsequently bureaucratised by Stalinism, can only be explained by Trotsky's theory: the masses accomplished the basic social revolution but now require a second, political revolution to establish workers' democracy without changing property forms.