Understanding Monopoly Socialism

Lenin (1917), in complete agreement with Marx, and with the true meaning of socialism, lays out the economic and organizational identity between state-capitalism and socialism. The only difference - which isn't one - is the "class" of the leaders of the system. But, of course, as leaders running the system, either one belongs to the "class" called bureaucrat. Hence, Lenin laid out the answer to Bukharin's Leviathan problem (see below).

Everybody talks about imperialism. But imperialism is merely monopoly capitalism.

...And what is the state? It is an organisation of the ruling class ...

For if a huge capitalist undertaking becomes a monopoly, it means that it serves the whole nation. If it has become a state monopoly, it means that the state (i.e., the armed organisation of the population, the workers and peasants above all, provided there is revolutionary democracy) directs the whole undertaking. In whose interest?

Either in the interest of the landowners and capitalists, in which case we have not a revolutionary-democratic, but a reactionary-bureaucratic state, an imperialist republic.

Or in the interest of revolutionary democracy—and then it is a step towards socialism.

For socialism is merely the next step forward from state-capitalist monopoly. Or, in other words, socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people and has to that extent ceased to be capitalist monopoly.

Bukharin, of course, expressed disgust that state-capitalism was the most evil administrative totalitarianism to crawl the wretched Earth. In Imperialism and the World Economy (1915) he wrote:

Thus arises the final type of the contemporary imperialist robber state, an iron organization which envelops the living body of society in its tenacious, grasping paws. It is a New Leviathan, before which the fantasy of Thomas Hobbes seems child's play. And even more “non est potestas super terram quae compateur ei” (“there is no power on earth that can compare with it”).

Bukharin was, of course, right.

Bukharin did consider that a planned a totalitarian society could exist which was not socialism (as conceived by Marx), he pondered a possible "third system"; but he could not see that in fact it was socialism - that the only difference between central planning as socialism, and central planning as this "third system", was a change in human nature which would allow the people to enjoy this slavery.

He described this "third system" in the same 1915 book:

We would have an entirely new economic form. This would be capitalism no more, for the production of commodities would have disappeared; still less would it be socialism, for the power of one class over the other would have remained (and even grown stronger). Such an economic structure would, most of all, resemble a slaveowning economy where the slave market is absent. (italics in original)

However, the flaw in Bukharin's reasoning is that he is considering a non-economic effect (the domination of one class over another) as part of the definition of an economic system. Instead, an economic analysis must consider just the economic organization of the system - its institutions and their effects - and from there determine the expected outcome: whether it will resemble a slaveowning economy without a slave market.

From this standpoint, there is no basis on which to distinguish the "third system" from socialism. Indeed, it has no commodities - no trade, no market, no prices - so it isn't capitalism. Instead, it has central planning. This is the same as socialism. The only differences from socialism which Bukharin observes are that (1) one class may still dominate another and (2) that this class may not serve the needs of the people. But these two are potential results of the economic structure, not part of the structure itself.

The steps that socialists believed would prevent the outcome described above include a change in human nature on the part of the people, and the motives of the working class, who were to take the reigns of their new society. But their new society, they knew, would need to help change the nature of the people, and the structure must also allow the working class to achieve their good intentions. As any good economist knows, intention is not result.

If the economic structure is identical, why would this "third system" not also produce the desired change in human nature? The distinction is only in the "class" which has the reigns. But, this implies that the intention of the class will be accomplished through this structure. It must then be proven that this economic structure will indeed allow the working class to accomplish its goals and that these goals not only exist at the start but also remain, even as they take on the "class" of bureaucrat.

Socialists asserted that the economic structure - planning - would create a society of abundance. But this assertion was tied in to the "socialist" nature of their system - that the working class ruled it. Hence, Bukharin could not show that planning itself would produce enough plenty to allow the working class to accomplish their goals. In fact, Marxists relied primarily on their argument of inevitability to show this result. But the economic organization itself can only promise the need to direct the actions of the people, the result of abundance does not directly follow from the collective ownership of the means of production, and the "rationality" of the planned system.

If it could be shown that (a) the planned system will lead to higher output and that (b) the requirements for planning efficiently still allow for the egalitarian distribution required for the fulfillment of the socialist ideal, then it would only remain to show that the desire of the planners would remain benevolent, and the nature of the citizens would be such that the planned system would not feel oppressive (or that the system would allow for democracy, a much harder case). But Marxists proved none of these.

Bukharin also broached the subject as late as 1928 - just before Stalin helped to bring a fully socialist planned economy to the Soviet Union (and Bukharin at this point was losing his hold on the reigns of the system). He explained how it might look:

Here a planned economy exists, organized distribution not only in relation to the links and interrelationship between the various branches of production, but also in relation to consumption. The slave in this society receives his share of provisions, of goods constituting the product of the general labor. He may receive very little, but all the same there will be no crises.

The crises referred to are, of course, the crises Bukharin believed to be inevitable under capitalism. Again, he sees that economically the organization is identical. He is one step away from seeing that this is in fact the system he has been advocating and putting into place in Russia. What is he missing?

He is missing the fact that this economic system does not allow for any other outcome. The "very little" product that the "slave" receives is, of course, all there will be. The bureaucrats in power not only will not, but cannot, give the people any more. Despite the best of intentions which they may or may not have, they can do no more than act as slave masters. They are forced to direct the actions of individuals. They cannot change human nature. They cannot wave a magic wand and effect the higher output, the perfect order, or the master plan which they may desire.

The planned economy - the institutional organization of the economy - determines the outcome. The best intentions of the best people in the highest leadership positions cannot turn a slave economy into a socialist paradise, just because they wish it so.