The Myth of State Capitalism

Adam Marletta
7 min readDec 6, 2022

A common talking-point among left-wing anticommunists is that “actually existing socialist” countries like the Soviet Union, Cuba, and China under Mao are not actually socialist, at all. Rather, they insist, these countries are all examples of “state capitalism.”

But what do they mean by this? What, precisely, is “state capitalism”? And how does it differ from traditional, run-of-the-mill “capitalism”?

“We Want Socialism. Just Not That Kind!”

This “argument” is typically employed against the Soviet Union. It basically boils down to the fact that the Russian Revolution of 1917 did not result in the Russian working-class owning the means of production. In fact, the state did. While this may seem like a minor detail, anticommunists on the Left seize upon this discrepancy as “evidence” that the USSR was not “truly,” “authentically” socialist.

It is true that Lenin, in his classic text, State and Revolution, called for the state to be abolished. However, Lenin also understood that this process would not happen overnight. Rather, any revolution is bound to be a long, arduous, often drawn out process. Revolutionaries, after securing victory, may spend years defending the revolution from defectors and dissidents — both internal and external. This, indeed, was precisely the case in the Soviet Union.

“State Capitalism”: A Contradictory Term

Suffice to say, the means of production in the USSR were collectivized. Nearly all industries in Soviet Russia were unionized. Workers were guaranteed employment. If a factory or business closed the government was obligated to find the displaced workers new jobs. And Soviet workers had a basic right to housing, health care, and education.

Most importantly, nobody was making a profit from the means of production in the Soviet Union — which is the entire point of capitalism. (The exception of Lenin’s emergency N.E.P. measure, which temporarily allowed the limited reinstatement of small-scale capitalist production in order to prevent an economic crash, noted.)

Thus, to call the Soviet experiment “state capitalism” is, definitionally, inaccurate. There is no form of capitalism that does not allow for profit-making for a few.

Nor does the presence of a state alone indicate that a country is therefore “capitalist,” as capitalism always necessitates a state (in the form of the police, judges, the military, and other “special bodies of armed men,”) in order to protect the ruling class’s interests. In other words, all capitalism is “state capitalism.” The term itself is needlessly redundant.

As Lenin famously wrote, “While the state exists there can be no freedom; when there is freedom there will be no state.”

Even Trotsky rejected the notion that the Soviet Union was anything other than socialist. He argued that, under Stalin, the Soviet Union had become a “degenerated workers’ state.” But he still maintained that it was socialist. The irony is that it is contemporary Trotskyists — many of whom are followers of Max Shachtman and Michael Harrington — who tend to be the biggest proponents of the state capitalism “critique.”

Siege Socialism vs. “Pure” Socialism

I think it is fair to say that Soviet Russia was on its way towards “full-communism.” But factors such as the second World War, the Russian Civil War, and the invasion of 14 capitalist nations (including the U.S.) bent on overthrowing the Bolshevik government, all hindered the Soviet Union’s progress towards reaching that goal.

Yet, left anticommunists rarely acknowledge these historical factors. Instead, they make blanket assertions that the Soviet Union was not “really socialist.” Or that the Soviet working-class was “betrayed” by the “Stalinist” bureaucracy, which took power merely for the “sake of power.” Then they mutter vague platitudes about “workers’ power,” and “worker control” — as if these things were somehow absent from the Soviet’s planned, organized economy.

The (admittedly messy) reality of the Soviet Union did not match these Shachtmanites’ utopian vision they had conjured up of socialism. Thus, they rejected the real thing outright, childishly claiming it was never “really” socialist, in the first place. As Michael Parenti writes in his landmark 1997 book, Blackshirts and Reds, these left anticommunists “support every revolution except the ones that succeed.”

What’s in a Name?

Whether we define the USSR, Cuba, etc. as “socialist” may seem like an exercise in splitting hairs. And, indeed, it is. Regardless of what we call these countries, the fact is they established an economic and political alternative to capitalism. These countries organized their economies based on human need, rather than for the enrichment of a few. They aimed to establish a society that was not driven by the capitalist profit-motive and the exploitation of the working class.

We can certainly debate how successful these countries were in those efforts. Indeed, the Soviet Union was only able to progress to a certain “degree of socialism” before it was ultimately destroyed by both external and internal factors. But it is important to keep in mind that all of these examples of “actually existing socialism” are experiments — some of which are still ongoing. This does not mean we should casually sweep away their real deficiencies and democratic shortcomings. But we should not amplify and solely focus on those weaknesses, either.

As Parenti writes:

The pure socialists had a vision of a new society that would create and be created by new people, a society so transformed in its fundaments as to leave little opportunity for wrongful acts, corruption, and criminal abuses of state power. There would be no bureaucracy or self-interested coteries, no ruthless conflicts or hurtful decisions. When the reality proves different and more difficult, some on the Left proceed to condemn the real thing and announce that they “feel betrayed” by this or that revolution.

If the USSR was “Capitalist,” What Was the Point of the Cold War?

Finally, this entire debate over the exact economic nature of “actually existing socialist” states begs a curious question — one, again, which its proponents offer no explanation for.

If all of these countries were or currently are, in fact, just examples of state capitalism (which, again, is no different from traditional capitalism) then what was the point of the Cold War…? Why, indeed, did the United States invest decades of taxpayer money, government and military resources, and American soldiers’ lives to overthrowing these countries if they, like the rest of the Western world, were merely capitalist?

The Bay of Pigs fiasco brought the world closer to nuclear annihilation than at any other point in human history — save, of course, for the current U.S. proxy war with Russia via Ukraine. The CIA made some 634 assassination attempts on Fidel Castro. Why? If Cuba was nothing more than “state capitalist,” why was the U.S. so threatened by it? What is the purpose of the decades-long U.S. embargo on Cuba?

The Vietnam War, likewise, claimed the lives of nearly 60,000 U.S. soldiers. This war — which like the war in Iraq was based on lies and government misinformation concerning the fabricated Gulf of Tonkin incident — was specifically fought to overthrow the communist government of North Vietnam. If Vietnam was merely state capitalist, it seems the U.S. would have had no problem with its existence. Are we really to believe that the state officials who run the U.S. Intelligence Agency are simply too stupid to understand the difference between state capitalism and “real socialism”? Figures like Condoleezza Rice and Hillary Clinton are, no doubt, many things (venal, inept, corrupt, narcissistic…) But they are not unintelligent.

The point is the U.S. ruling class obviously felt threatened by these nations’ very existence for some reason. And it was not because states like the USSR, Vietnam, Cuba, and the like represented a slightly different form of capitalism.

“Whether we call the former communist countries ‘socialist’ is a matter of definition,” Parenti writes. “Suffice it to say, they constituted something different from what existed in the profit-driven capitalist world — as the capitalists themselves were not slow to recognize.” [Italics mine.]

Again, left anticommunists make absolutely no effort to account for this massive inconsistency in their argument. They merely dismiss these socialist states outright, insist they were “never really socialist” in the first place, and assure us that The Real Thing will be controlled “by the workers,” and that they will “know it when they see it.” Their utopian view of a socialist society will be free of controversy, harsh realities, uncomfortable nuances, and any specific logistics for how daily activities will operate.

Left-Wing Opportunism

And how, exactly, do these “leftists” intend on building the groundwork for this utopian form of socialism in the here-and-now? Apparently by routinely voting for imperialist, capitalist Democrats who share none of their politics or vision.

This is the same Democratic Party, keep in mind, that would not even entertain for a second the prospect of a social democrat like Bernie Sanders becoming president. Twice now, Democratic Party elites have worked behind-the-scenes to sabotage Sanders’ presidential campaigns. If this is how the Democratic Party reacts to a tepid, Scandinavian-style social democrat like Sanders, I shudder to think how they would treat an actual socialist.

Let’s put this tiresome debate to rest, once and for all. The Soviet Union was socialist. There is no such thing as “state capitalism.” It is a meaningless, anticommunist buzzword which, alongside words like “totalitarianism,” or “Stalinism,” does not denote any actual political designation or ideology. Say what you will about Marxist-Leninists (cue “Tankie!” insults in three… two… one…!), but at least their tendency contributed to the creation of actual socialist states. What do the anticommunists — who seem far more devoted to denouncing and tearing down than building up — have to point to?

The frustrating irony is that these Left anticommunists are essentially doing the Right’s work for it. Indeed, who needs right-wing imbeciles like Tucker Carlson and Jordan Peterson when you have the equally virulent anticommunism of the contemporary Left?

Parenti, writing on the eventual fall of the Soviet Union and the Eastern Bloc observes:

Having never understood the role that existing communist power played in tempering the worst impulses of Western capitalism and imperialism, and having perceived communism as nothing but an unmitigated evil, the left anticommunists did not anticipate the losses that were to come. Some of them still don’t get it.



Adam Marletta

Writer, socialist, and coffee-fiend. I have written for the West End News, Socialist Worker, a bunch of decidedly less interesting publications.