I have often heard the term “state capitalism” being used by Western academics to refer to AES states like China or Vietnam. Lenin also uses the term a lot in The Tax in Kind and distinguishes it from true socialism.
@WaterBowlSlime@lemmygrad.ml and @amemorablename@lemmygrad.ml already provided good answers to this question, so I will just add my 2 cents.
I dislike the term state capitalism, because capitalism per se is a state system. The nation-state is the way the bourgeoisie thought it would be best to organize a country ever since the end of the monarchies in Europe in the 19th century. Nation states have laws (which secure private property, and how agents that hold private property should engage each other), have clearly defined borders, an official language (in feudalism many villages within a territory would speak many different dialects), concentrate all the power of violence and bureaucracy under the nation-state (a move that started to happen since the advent of absolutist monarchies), will issue a currency and will define the laws on how foreign actors will engage in the domestic economy.
So the capitalist market is a superstructure created by the nation-state to uphold the interests of the capitalists. The state creates the conditions for the market to exist. It creates the entire legal framework that is used by the market, and even runs state services (transportation, energy generation, police, roads, railways, airports, military, diplomacy, urban zoning etc) that will support capitalist enterprises. There is a dialectical relationship between the market and the state, both a positive relationship, as the market depends on the state to exist and a contradiction in the sense as the market battles the state bureaucracy to have more power over it (as in neoliberalism) and/or the state fights the market in order to establish the dominance of state-based economic development (as it happened in the Keynesian phase of post WW2).
Note that socialism and capitalism are not different from each other because of economic planning. Both Japanese and South Korean economies heavily depended on central planning, with South Korea having a dictatorship and central planning that was even more centralized than we ever had in the post communist revolution China. The SK state was draconic with capitalists regarding their returns and how they should invest their capital and they would be disposed if they didn’t achieve state development goals.
This reasoning about planning was what motivated Deng Xiaoping’s market reforms in China:
Why do some people always insist that the market is capitalist and only planning is socialist? Actually they are both means of developing the productive forces. So long as they serve that purpose, we should make use of them. If they serve socialism they are socialist; if they serve capitalism they are capitalist. It is not correct to say that planning is only socialist, because there is a planning department in Japan and there is also planning in the United States. At one time we copied the Soviet model of economic development and had a planned economy. Later we said that in a socialist economy planning was primary. We should not say that any longer.
So the idea that state-capitalism is an initial form of socialism is wrong. The real question is, who holds power over who? The communist party, controlled by fractions of the proletariat is the controller of the state in the case of socialist economies. In capitalist economies, even in case of countries with good welfare programs, the state is still controlled by the bourgeoisie. Let’s never forget the politics in political economy. This is essential to understand how both capitalism and socialism work. Let’s not fall in the same trap the traditional neoclassical economics does in order to label economic systems.
State capitalism is what libs call socialism whenever it’s objectively doing too much better economically than their own shit.
Soothes the butthurt to also puff some copium.
When Lenin says capitalism, he doesn’t necessarily mean dictatorship of the bourgeoisie. That’s what people get hung up about because nowadays the word is inseparable from liberalism. But when he says state capitalism, he’s just talking about using the state to direct a capitalist economy. You can do that communistly like how China directs its economy towards renewables, research, infrastructure, poverty alleviation, etc. Or you can do that liberally like how the US gears its economy towards war, racketeering, and debt.
This is a great answer
In practice, IME, a confused term generally put forward by people who for some reason don’t want to call AES states socialist projects (possibly in part because of how vilified the words socialism and communism are in the west). The most important question is, who / what interest group is in power. In China, the working class is in power through the dictatorship of the proletariat. In the US, the capitalist class is in power through a dictatorship of capital. Beyond this, it can get nuanced on what the conditions are of a given state and how they go about designing and carrying out policies and so on.
But it’s more literally accurate to say the US is “state capitalism”, though in this regard it’s kind of redundant; the state ensures that capitalism is the only mode that can be in power. Corporate lobbyists and representatives are a revolving door. In other words, in the US, the operations of capital and the operations of the state often work hand in hand; they just do it more indirectly than you’d see in something centrally planned. If the capitalists were to abolish the state (such as in the anarcho-capitalist fantasy), they would also abolish a vital mechanism through which they enforce the capitalist reality and so they would lose/dilute much of their power in the process. This is important because some people get confused and think of socialism as “state doing stuff” and capitalism as “private enterprise doing stuff”, but it’s not that simple. Capitalism is a specific mode of private enterprise having supreme power through its ownership of the means of production and distribution; land, factories, etc. China is not capitalist because the capitalists are not in charge. Capitalists are subservient to the state rather than using the state to define and enforce their power.
The reality of global capitalism being such a pervasive part of the world economy no doubt gives China some capitalist characteristics in spite of its best efforts if for no other reason than because in order to not be isolated, it has to trade and deal with the capitalist global economy. But the nature of its society as a whole is still going to be significantly different than the US, for example, because of where power derives from and whose interests it is for.
Very well put 👍
Thanks!
What I think “state capitalism” is is a terrible term, so I don’t use it.
What it usually means is state-owned production, which is publicly owned means of production. https://en.wikipedia.org/wiki/State_capitalism
State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital accumulation, centralized management and wage labor).
I think it’s a terrible term because they aren’t bound to the M-C-M’ capitalist mode of production. They’re not capitalist. Why would they be when the state can simply print money? It makes no sense to “accumulate capital” when you’re the sovereign and can create money by fiat.
I don’t think this is correct either. China does engage in the M-C-M’ cycle and thus there is surplus value being extracted in China, by private capitalists and by the state too. The main reason why China is different than the rest of the world is that private capitalists hold no political power. Unfortunately, China does not exist in a vacuum and still has to accumulate foreign USD reserves to achieve political goals outside China, like the belt and road policy.
There is surplus value extracted in some cases, there is break-even in some cases, and there are losses in some cases. But the state can run at a deficit indefinitely, because you can’t run out of the currency that you’re the issuer of. Any renminbi that the Chinese state receives basically ceases to exist. Taxes & fees payed to the currency issuer pay for nothing. Any money the state spends is basically created on the spot. Taxes and fees serve several purposes, but none of them are to fund the state.
Somewhat similarly, when private banks[1] make loans, they create the money out of thin air. Every time a loan payment is made, the principal ceases to exist, and the bank pockets the interest. Once the loan is paid off, all the money that had been created has been destroyed.
Foreign currency is a different matter, since China can’t will them into existence.
Specifically, private banks that the sovereign state has authorized to do this. ↩︎
I found a YouTube link in your comment. Here are links to the same video on alternative frontends that protect your privacy:
Yep. I don’t like it either. It is one of the worst misnomers in all of Marxist theory, because actually it’s not a form of capitalism but a form of socialism. But the fact that it has “capitalism” in the name causes so much unnecessary confusion.
Central planning with private ownership of capital. The economy is dominated by private enterprise that employs workers for a wage and collect profits from the surplus value created by workers, but politics are in command instead of the anarchy of markets.
Ultimately it’s a strategic step towards achieving socialism; a developmental stage that allows the centrally planned economy to attract foreign investment and implement rapid development until it’s not needed. China, for example, is replacing more and more of its private sector with fully/majority publicly owned companies. I believe a majority of China’s economy is now public, not private. If the trend continues, most private ownership will whither away.
Was it necessary? I don’t think so - this is just how history happened to unfold.
What source do you have that a majority of China’s economy is publicly-owned? The estimates I’ve heard suggest that it is more like 60-80% privately-owned.
Another source from PIIE in January of this year has the private sector declining from 55 percent in mid-2021 to 33 percent in late-2024, with a small uptick back to 34% at the end of the year. Public sector ownership over that same time period went from 31 percent to 51 percent.
Honestly, i don’t see how the percentage of state owned vs privately owned matters. As long as the banks are state owned, everything else could be privately owned really. Tho it’s certainly better to have nationally estrategic industries being state owned. Many capitalist countries hold a large amount of SOE, and it doesn’t make them any less capitalist since capitalists hold the political power.
its important that banks and other financial institutions are state owned because it effectively means that the state controls the savings of all society and gets to decide on what to invest these savings, which in the case of China it’s clear that it is invested in national development.
It’s a way to measure socialist development post-revolution.
State capitalism is an example of an early stage of development, where they need to attract foreign capital in addition to just using domestic banks to fund development. Once that’s no longer necessary because they have built up their domestic capacity they can start to phase it out entirely and public companies/public investment can replace private and foreign capital.
This one also doesn’t seem to include township village enterprises (TVE) which is probably 10-15% of economy
This is from 2009 but provides a lot of good data on the subject.
An important note from it is that most private companies in China at the time had less than 10 employees so it’s not big Bourgeoisie just because it is private. The majority of the GDP at the time came from SOEs
Edit: some more recent data says “The total capital of firms with some level of state ownership has risen to roughly 68% of total capital of all firms (40 million) in the economy in 2017. The share owned by the central government has declined while that of local governments has risen.” https://sccei.fsi.stanford.edu/china-briefs/reassessing-role-state-ownership-chinas-economy#%3A~%3Atext=The+total+capital+of+firms%2Cin+the+economy+in+2017.
Note that SOEs doesn’t include township village enterprises which are publicly owned at the local level
