Capital and the State: a Marxist view

by Guy Alexander                                                                                                                                                  (Originally published in the Christchurch-based Marxist magazine, revolution #4, Oct ’97/Jan ’98)

For much of the 1980s and 1990s the relevance of the state and its role in society were brought into question by sections of the right. There were even calls for it to be “rolled back” or even retired. And so it partially was, in the fields of health and education and other public services people need.

During the heyday of neo-liberalism it was claimed that the market and civil society more generally could handle many of the past functions of the state in a more efficient and realistic manner. Even the traditional parties of labour and reform abandoned their ‘statist’ politics and endorsed this process as a necessary economic reality. Sections of the old radical left, however, still cling to the notion of state intervention in the economy and society.

But what does such interventionism represent? Where did the state come from and what does it represent? What is the nature of the state under various social systems, such as feudalism and capitalism? Providing answers to these questions requires the application of Marxist analysis and an understanding of the historical process and the way in which different forms of society have given rise to different forms of the state.

Origin of the state

The state arose as an apparatus of domination as the old prehistoric subsistence-level communal societies reached the point of being able to produce a surplus. The surplus became the property of individuals and society was differentiated into classes as the private property system developed. Prior to this there was no need for a state and there was no way for a section of society could be freed up from labour to take on state functions anyway.

The state is therefore not eternal, but arises out of certain socio-economic conditions and its forms and functions reflect these conditions. As Engels put it, “The ancient and feudal states were instruments for the exploitation of slaves and serfs, likewise the modern representative state is an instrument of exploitation of wage labour by capital.”

The state is a reflection of class antagonisms that have become irreconcilable – between the minority of owners of large-scale property and those of little or no property who have to work for them. As a superficially ‘public’ power, the state comes in formal terms to stand above society and becomes more remote from it.

This does not preclude the fact that the state is organisationally a reflection of the dominant classes and their desire to order society in a way that protects and advances their interests over those of the rest of society. These necessities are part of the explanation of why the state is not simply a crude device for repression but a power seemingly standing above contending classes. This process is analysed by Engels in The Origin of the Family, Private Property and the State and elsewhere and by Lenin in State and Revolution.

But if the state arose in this way, we still have to explain its connection to capital.

The state and capital

To do this, it is essential to move beyond a general analysis of the state such as that in the works of Engels and Lenin cited above. Neither of those two important works aimed at dealing with the specific relation of capital and the state. As Wolfgang Muller and Christel Neususs noted back in the 1970s, “Lenin’s theory of imperialism is more relevant than his explanation of the Marxist theory of the state in State and Revolution for the evaluation of the bourgeois state and its function in the capital valorization process.”

The starting point of an analysis of the capitalist state, as Joachim Hirsch noted, “must therefore be the examination of the ‘anatomy of bourgeois society, that is, an analysis of the specifically capitalist mode of social labour, the appropriation of the surplus product and the resulting laws of reproduction of the whole social formation, which objectively give rise to the particular political form.” In an article like this it is only possible to (re)state some key points of such an analysis.

First, it is necessary to make some genera points about capitalism in comparison with preceding social systems. Unlike slavery and feudalism – where political and economic power are combined in the same people – capitalism is marked by the formal separation of the economic and political spheres. The capitalists are the dominant class through their ownership of the means of production and the reduction of most of the rest of society to being wage labourers, but the capitalists do not hold direct power.

Bourgeois politicians manage the system and are also, as Bob Jones once put it, “a buffer zone between the public and the people who really run the country”. Thus the politicians run the state/political sphere and the capitalists run the economic sphere which constitutes the base of society that is the site of the production which allows everything else, including the sate itself, to exist.

The formal separation of the economic and political spheres is the source of a great deal of confusion to liberals and the left who, by and large, analyse society only at its surface level. Along with the mass of the citizenry, these liberal and left elements think this separation makes the state autonomous from capital. From this they draw the conclusion that the state is some kind of big public space which can be filled up with any content and thus can be the site of progressive reforms which can liberate people.

Secondly, the separation of these spheres is a result of the workings of a system which in its totality exploits and oppresses people. At the most basic level the state is essential because capitalism, as an anarchic, unplanned system cannot spontaneously produce and reproduce bourgeois society. As Muller and Neussus note, “The concentration of bourgeois society in the form of the state, that is to say its concentration in an institution which appears as external to itself, which appears to float above it as a ‘particular existence’ is necessary because only in this way can the existence of (capitalist) society be assured at all.”

This is because under capitalism the production of goods and services necessary to sustain life is privatised, carried out to make profits and driven by economic laws which operate behind the backs of people – “the hidden hand of the market”, to use Adam Smith’s famous phrase. Capitalism cannot spontaneously construct and reproduce society.

Thirdly is the recognition that ‘capital in general’ consists of many different and competing capitals. As another state theorist of the 1970s, Elmar Altvater, noted, “(I)t is not total social capital which carries out transactions but the many individual capitals; but through their transactions the individual capitals produce the existence of total social capital: average conditions of exploitation, equivalent rates of surplus-value, average rates of profit.”

The state acts in the interests of ‘capital in general’, maintaining the conditions for the overall process of accumulation (profit-making and reinvestment in expanding production) to take place. Because individual capitals are not just opposed to their workers but are at war with each other they cannot guarantee these conditions. So, a crucial aspect of the functioning of the state in the general interests of total social capital arises out of the inability of individual competing capitals to spontaneously produce the conditions necessary for their own existence. There are several corollaries to this.

For instance, the state can and does act against particular employers in order to ensure the stability and flow of the overall accumulation process. This kind of state action gives further currency to the liberal misconception that the state under capitalism is not a capitalist state but floats above class society.

Secondly, the state does things that individual capitals cannot. To quote Altvater again, capital “requires at its base a special institution which is not subject to its limitations as capital, one whose transactions are not determined by the necessity of producing surplus-value, a special institution ‘alongside and outside bourgeois society’, which at the same time provides, on the undisputed basis of capital itself, the immanent necessities that capital neglects. Consequently, bourgeois society produces in the state a specific form which expresses the average interest of capital.”

What this means in the New Zealand context is explored, for instance, here.

Moreover, just as the state represents the interests of capital in general, in particular at a national level, it also operates to advance the global interests of national capitals through subsidies, tariffs and protection against other industrial nations and a range of measures guaranteeing profitable conditions for expansion into the rest f the world. As Noam Chomsky has contended, “A free market is really intended for the victims. That’s what the IMF is about, to try to impose on Third World countries free market structures that the industrial societies would never accept for a moment.”

The state, of course, also includes a whole range of repressive bodies – police, army, courts (and, increasingly, social welfare and employment ‘services) – and therefore can be reduced in the end to “bodies of armed men”, as Lenin put it. However, this is only one dimension of the state, one emphasised by Lenin in State and Revolution because he was writing it in the midst of a revolution. But there is, as we have briefly touched upon, a great deal more to the Marxist analysis of the state than that alone. The narrow and superficial analysis often presented by the ‘Marxist’ left simply plays into the hands of bourgeois sociologists who can easily dismiss one-dimensional caricatures of the state. It also tends to lead to reformist politics by such a left because they focus only on the repressive features of the state and not the crucial place of the state in the process of the reproduction and expansion of capital.

It is also important not to be taken in by rhetoric about the rolling back of the stat. In many senses the state is more powerful and intrusive than ever. As Canterbury University sociologist Jane Higgins noted back in the late 1990s, shortly after the heyday of neo-liberalism, “One of the curious aspects of rolling back the state is that as it disappears in one form it tends to reappear in another. In particular, as the state retreats to a minimalist form of welfare its presence in the lives of those receiving this assistance grows, taking the shape of increased surveillance.”

It tends, moreover, to go further than surveillance. The lives of those on welfare are massively regulated by the state today. Moreover, when it was supposedly ‘shrinking’ it was providing massive handouts to private capital through bail-outs, sell-offs of assets at below market value (and even below cost), tax credits and the conversion of government departments into State-Owned Enterprises, producing surplus-value. It also implemented repressive labour legislation such as Labour’s Industrial Relations Act (see here), National’s Employment Relations Act and then Labour’s Employment Relations Act. The state also became heavier in terms of its interventions in industrial disputes, including on the picket line.

Reform, revolution and the state

Attitudes to the state demarcate divisions on the left between revolutionary and reformist. Reformists see the state as what it appears to be, an institution standing above society, while lacking an understanding of what lies behind this appearance, how the state reflects the needs of capitalism and the way in which the economic and political spheres while formally separate are closely related.

In fact it is the formal separation of these spheres which helps explain why the conquest of parliamentary power by workers is incapable of delivering liberation. Because capitalist production and exploitation primarily takes place in civil society, the capitalists can go on operating regardless of what party is in government and what policies they use to manage the system. If a party in government ever came to represent any real threat, the capitalists can deploy the power they still possess in the economic realm, along with the support of ‘bodies of armed men’ in the state to prevent social transformation being organised through parliament and overthrow any troublesome government.

The state after the revolution

The emergence of repressive states after previous revolutions has been a major point of disillusionment with Marxism. One way to answer this criticism is to fall back on utopian and ahistorical approaches to the state, as if paradise arrives on the day of the revolution and capitalism internationally drops dead. Another is to recognise historical realities – for instance, that ruling classes are generally reluctant to give up power and, even when it is taken from them, tend to attempt counter-revolutions.

A revolutionary state is therefore required to defend the revolution and help remove remaining obstacles to the development of socialism. As socialism develops in a society of material abundance, the need for any sort of state decreases and it can then wither away. As Engels put it, “Society, which will reorganise on the basis of a free and equal association of the producers, will put the whole machinery of the state where it will then belong; into a museum of antiquities, by the side of the spinning wheel and the bronze axe.”

See also: Bringing back the state to revolution


  1. I am not so concerned with the state in general as I am with the particular case of the New Zealand state. My views of that state have changed dramatically from the time when I grew up as a working class kid in the nineteen fifties being taught, and believing, that the state was the “protector of the working class”. Only later, and especially after the period of the fourth Labour government, did I come to the full realisation that the colonial state (let’s not kid ourselves, it is exactly that) has always been the greatest impediment to the independence, security and prosperity of our people. Not the communists, not the Asians or the Islamists, not even the Americans or the British, but the New Zealand state itself.

    It seems curious to me now that despite having personally experienced the very worst excesses of the New Zealand state – the brutality of the prison system, the corruption of the bureaucracy, the blatant discrimination, the racial bias, fraud, dishonesty, deception and greed – I still felt that the state was in some way the steward, tribune, shield and defender of the common people. No longer. That is one reason why I am not sorry to see state asset sales, which will further undermine the New Zealand state, leaving it materially weakened and ill-equipped to carry on the pretence that it represents the interests of the people.

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