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ON THE INDISPENSABILITY of DIALECTICAL CLASS ANALYSIS
OpinionON THE INDISPENSABILITY of DIALECTICAL CLASS ANALYSIS in EXPLAINING the FUNCTIONS of the STATE (A.H.Yalaz)

December 1999

Contents

Introduction

1.Class-stratified capitalist society


2. The capitalist state and its functions
2.1. What is the capitalist state?
2.2. The state-society relations
2.3. Capital as a social production relation, capital accumulation and the state

3. Neoliberal (global) restructuring, classes and the state

Conclusion
Bibliography




On the indispensability of dialectical class analysis (1) in explaining the functions of the state

Introduction
In recent decades, the idea that the days of class analysis in order to study, explain and understand the workings of the capitalist society are over has become conventional, or fashionable, in social science circles. There is no doubt that the socio-economic, political and cultural structures of the contemporary capitalist society have undergone substantial changes. Capitalist economic development has led to more complex social structure. Particularly in the economically advanced capitalist societies where the Fordist mass-production as dominant mode of capital accumulation has been replaced by the flexible production systems and where the service sector has gained ever-increasing importance, the stratification of society has become especially complex. The functions of the state have also changed parallel to socio-economic developments. I wish to investigate whether class analysis can explain the functions of the state in the capitalist society. On the basis of the preceding I formulate the following research question: Can class analysis explain the functions of the contemporary capitalist state?

1. Class-stratified capitalist society
The contemporary capitalist society is a highly stratified society which consists of different socio-economic groups with conflicting interests. It is divided not only into social classes, class fractions and strata, but also, for example, into ethnic groups and sometimes into nations which are also class-divided. Whatever they might be called, the contemporary bourgeois society is divided into different social groups which are also economic groups. In other words, every class is essentially an economic fact.

The material production and reproduction of the human existence are, according to the materialist conception of history (historical materialism) developed by Marx and Engels, ultimately the determining factor in human history. ‘... The prevailing view, especially among European commentators, is that the site of production is indeed of diminishing relevance in understanding stratification systems...’(Grusky and Sorensen 1998: 1212). However, ‘production creates the material basis for all forms of social existence, and the ways in which human efforts are combined in productive processes affect all other aspects of social life, including the polity.’ (Cox 1987: 1). As Cox points out, ‘To assert the centrality of production, indeed, leads directly to the matter of social classes.’ (1987: 2). Social classes are agents of social life, and they occupy different positions in socio-economic, cultural, and political life.

How can social classes be defined? The term ‘class’ has been defined in many ways by many people. As Carchedi argues classes are first of all identifiable in terms of production relations: ‘all those people carrying the same aspects of production relations belong objectively to the same class. Classes thus become the basic (but obviously not the only) unit of social life and thus of social research‘(1987: 80). Max Weber, for example, defined it as ‘a phenomenon which operates independently of the individual’s perception of his situation, since it is given in the structure of the market.’ (Giddens 1977: 80). Talcott Parsons uses the term ‘class’ virtually equivalent to ‘status group’. He proposes ‘to define class status, for the unit of social structure, as position on the hierarchical dimension of the differentiation of the societal system; and to consider social class as an aggregate of such units, individual and/or collective, that in their own estimation and those of others in the society occupy positions of approximately equal status in this respect’(quoted in Giddens 1977: 315, n.19). M. Kohn and K. M. Slomcynski identify social classes as ‘distinct groups [that are] internally heterogeneous, each encompassing a wide spectrum of occupations.’ (Grusky and Sorensen 1998: 1189). Of all the definitions that I have so far encountered I find the definition given by V. I. Lenin, which I employ in this paper, as the most scientific and satisfactory:
‘... Classes are large groups of people differing from each other by the place they occupy in a historically determined system of social production, by their relation (in most cases fixed and formulated in law) to the means of production, by their role in the social organisation of labour, and, consequently, by the dimensions of the share of social wealth of which they dispose and the mode of acquiring it. Classes are groups of people one of which can appropriate the labour of another owing to the different places they occupy in a definite system of social economy.’ (1971: 231).
The capitalist state and its functions

2.1. What is the capitalist state?
The state can be defined as a form of social relationships organised as different institutions required by the division of labour. Jessop defines the state ‘as a complex institutional ensemble of forms of representation and intervention, and the state power ‘as a form-determined reflection of political forces’ (1982: xiv). The state is one of the many organisations in the capitalist society that has a certain class character. The state in the capitalist society as an organisation of domination is mainly the coercive instrument of the economically powerful social class. It is the institutionalised power of the capitalist class. It is in essence organised violence, or, as Marx and Engels argued in the Manifesto of Communist Party, the political power is the organised power of one class for oppressing another (Marx and Engels 1980: 53). In The German Ideology ‘Marx and Engels argue that the state develops with the social division of labour and is the form in which the ruling class asserts its common interests....’ (Jessop 1982: 9). As Harvey argues, ‘The state, constituted as a coercive system of authority that has a monopoly over institutionalized violence, forms a second organizing principle through which a ruling class can seek to impose its will not only upon its opponents but upon the anarchical flux, change, and uncertainty to which capitalist modernity is always prone.’ (1995: 108).

In the capitalist society, the capitalist class is the ruling, or dominant, class that is in charge of the state. The state has a capitalist character and the capitalist state is the collective power of the capitalist class. This class is, however, not monolithic. It is divided into different strata, namely the big, medium-sized and small capitalists. There exist different fractions of capital, such as industrial, commercial, financial, agricultural, etc. The state power is controlled by the most powerful fractions of capital, that is, particularly in the highly developed capitalist countries, by the big (transnational) corporations.

The state of capitalist society has a capitalist nature, but this does not mean that there is a ‘command and execution relationship’ between the capitalist class and the state. The state enjoys a relative autonomy with regard to the social classes and the strata in general, and with regard to the dominant capitalist class. The capitalist state acts on behalf of the capitalist class. Bureaucratisation and centralisation of the political administration and socialisation make it possible for the capitalist class to leave the running of the state apparatus to those people and organs of the state to safeguard, improve, and promote the reproduction of the capitalist relations of production and bourgeois social relations as a whole. Thanks to the socialisation and self-interest, the state bureaucracy or the bureaucratic bourgeoisie needs not to be ordered to protect and maintain the capitalist society and defend the class interests of the capitalist bourgeoisie, particularly the dominant fraction of it. According to Miliband, the relative autonomy of the state ‘consists in the degree of freedom which the state (normally meaning in this context the executive power) has in determining how best to serve what those who hold power conceive to be the ‘national interest’, and which in fact involves the service of the interest of the ruling class.’ (1977: 83).

My conception of the relative autonomy of the state differs from the conception of Miliband. In my conception the state does not only consist of the organised salaried professional state functionaries (the state elite), but it is a class organisation run by a bureaucratic class which is the embodiment of the unity of economic and political power. The degree of the autonomy of the state depends, among other things, on the role of the state in economy. The bureaucratic class, that consists of the civilian and military senior state functionaries (the upper echelon of the state bureaucracy, the bureaucratic elite) who manage the state affairs, controls a substantial part of the means of production, financial and other economic resources and it has regulatory powers. The bureaucratic bourgeoisie has its own socio-economic and political interests and the ‘independent’ economic power base that it has makes it more possible that the state enjoys a relative autonomy with regard to economically powerful social classes or fractions of those classes. What makes this bureaucratic class a very important force in society is that it controls, and, sometimes, owns a substantial part of the means of production on the one hand, and it directly controls the means of coercion on the other. In other words, it combines the economic and political power. The bureaucratic class is, however, not a monolithic force. On the contrary, depending on the division of labour within the state and on the relations with domestic and international social forces, there exist different fractions of this class that represent different fractional class interests.

2.2. The state-society relations
The state as a complex instrument of class rule has to take into account complex class structure and class interests in society. One of the functions of the state in the capitalist society is to protect private property rights regarding the ownership of the means of production, transportation, information and communication against any domestic and external threat. For example, against threats coming from the only class that is capable of producing surplus value, that is, the working class. It must be emphasised that maintaining and protecting the capitalist proprietary rights is the central task of the bourgeois state.

The state is also a major economic actor as well as a political one and plays an indispensable role in the economic life of society. It fulfils several economic functions and functions as promoter and protector of the capitalist economic system. It functions as investor, producer and consumer at the same time. The state owns and manages diverse industrial and service enterprises. It invests in infrastructure, particularly in big projects in which the individual or corporate capitalists cannot or will not invest. Many ‘Research and Development’(R&D) projects are subsidised by the state, or, the state has influence upon the projects. The state buys labour-power and appropriates the surplus value created by the working class. So far as the capitalist state represents the collective interests of the individual capitals, it is a collective capitalist. For these reasons, the state ownership of the means of production, transportation, communication and information has a capitalist character. Although maintaining and protecting the capitalist ownership of the means of production, or the bourgeois relations of ownership in general is the most fundamental task of the capitalist state, it must be said that without state expenditures capitalist economic system cannot function.

It is true that the state protects the capitalist proprietary relationships and is the most important means in the hands of the capitalist class in the class struggle (the relationship between social classes) against the exploited working class and the economically oppressed social classes and groups. The state is also a site, an object of class struggle between different social forces, especially between capital and labour. It operates within a certain historical-social context and cannot confine itself wholly to protecting the class interests of the capitalist class or particular fractions of this class. The regulation of the conflict between the private interests of the capitalist individuals and the collective interests of the capitalist system is one of the functions of the bourgeois state. It functions as a safeguard against the collapse of the capitalist society.

The state must legitimise itself and must pretend that it stands above the class struggle. When the class struggle threatens the integrity of the capitalist order, the state acts as if it is a mediator between the capitalist class and the working class. Under such circumstances the state may be forced to make concessions to the working class. As Cox points out, the capitalist state supports capital in its drive to accumulate as well as it legitimates this accumulation in the minds of public by moderating the negative effects of accumulation on welfare and employment (1987: 281-82). In order to do this the capitalist state must enjoy a relative autonomy with regard to the capitalist class, especially with regard to the dominant fraction of this class. In so far as ‘the state loses its general, impartial, external form and gets directly involved in economic reproduction on behalf of particular capitalist interests, its fetishised appearance of class-neutrality declines and an important basis of bourgeois domination over the working class is thus weakened.’ (Holloway and Picciotto paraphrased in Jessop 1982: 97.) E. Altvater specifies the following four social preconditions of capitalism that must be guaranteed through the actions of the state as an ‘ideal collective capitalist’:
‘... the implementation of the general material conditions of production (or infrastructure); the creation and enforcement of the bourgeois legal order; the regulation of the conflict between capital and wage-labour; and the promotion of the total national capital in the capitalist world market....’ (paraphrased in Jessop 1982: 91.)
2.3. Capital as a social production relation, capital accumulation and the state
The accumulation of capital is the essence of the capitalist economic system, and, as Marx put it, the capitalist process of production is simultaneously a process of accumulation (1984: 218). Capital accumulation is the driving force of the capitalist system, and ‘capital is the economic power that dominates everything in bourgeois society’ and ‘must form both the point of departure and the conclusion’ (Marx 1981: 213), but what is capital in the Marxist sense of the concept? Capital can be defined as the money and goods that are used to create surplus-value. It is ‘a kind of stored-up labour’ or ‘dead labour’(Engels 1979: 15-16). To the question ‘What is capital?’ Engels replies: ‘... Money which is changed into a commodity in order to be changed back from a commodity into more money than the original sum. ...’(1979: 24). Capital as self-expanding value embraces, among other things, ‘class relations, a society of a definite character resting on the existence of labour in the form of wage-labour’(Marx 1986: 108). As Marx pointed out, ‘the growing accumulation of capital implies its growing concentration’ and ‘capital comes more and more to the fore as a social power, whose agent is the capitalist.’ (1986: 264). Marx emphasised this social character of capital when he discussed revenues and their sources:
‘Capital, land, labour! However, capital is not a thing, but rather a definite social production relation, belonging to a definite historical formation of society, which is manifested in a thing and lends this thing a specific social character. Capital is not the sum of the material and produced means of production. Capital is rather the means of production transformed into capital, which in themselves are no more capital than gold and silver in itself is money. It is the means of production monopolised by a certain section of society, confronting living labour-power as products and working conditions rendered independent of this very labour-power, which are personified through this anti-thesis in capital....’ (1984: 814-15).
Capital arises from social labour and must be understood as a fundamental social relation that denotes a mode of division of labour. Capital accumulation must be conceived as a social relation of exploitation. The accumulation of capital forms an integral part of the production of surplus value. A part of surplus value is not used to satisfy the consumption needs of the individual capitalists and their families, but to enlarge capital. Marx defined the accumulation of capital as the reconversion of a portion of the surplus value (unpaid labour) into capital. ‘If a certain rate of profit is given, the mass of profit will always depend on the magnitude of the advanced capital. The accumulation, however, is then determined by that portion of this mass which is reconverted into capital. ...’(1984: 245). The production of surplus value, according to Marx, is the immediate purpose and compelling motive of capitalist production (Marx 1984: 243-44). As J. Holloway and S. Picciotto argues the development of the form and functions of the bourgeois state ‘must be located in terms of an ever-renewed reorganisation of the historical complex of economic, political, and ideological conditions necessary to capital accumulation as a social relation of exploitation.’ (paraphrased in Jessop 1982: 96.)

The state power is used, among other things, to create the necessary economic, social, political and ideological conditions for the accumulation process of capital. The capitalist state upholds the rules and necessities of capitalist reproduction. The dominance of the state in the monopoly capitalist stage, according to Poulantzas, corresponds to the considerable growth of its economic functions that is absolutely indispensable to the extended reproduction of big capital. ‘... The economic functions of the state are in fact expressions of its overall political role in exploitation and class domination; they are by their nature articulated with its repressive and ideological roles in the field of class struggle of a social formation ...’(1975: 81). Besides its coordinative and supportive functions in the processes of production and distribution, the capitalist state actively intervenes in the economic system and in determining the economic strategy. This is why the state intervention in the process of capital accumulation is one of the most debated subjects in political economy.

As Van der Pijl argues, ‘Concrete class struggles revolve around the imposition of capital in production, but in real life are entwined with struggles on the two other dimensions (original accumulation, reproduction) and by the community legacy bequeathed by the past to modern society.’ (1998: 49). Besides the class struggles involving the working class, the capitalist class and other social classes and strata, the struggle or competition between different fractions of capital plays a substantial role regarding the mode of capital accumulation within each social formation. Despite the neoliberal underrating of the role of it in economy, the state occupies a central place in economy in general and in the process of capital accumulation in particular. Besides such political decisions as economic liberalisation and deregulation, denationalisation or privatisation of the state-owned economic enterprises strengthens this line of argument. The state facilitates ‘the formation of dominant-subordinate configurations of modes of social relations of production and thereby influence[s] the process of accumulation that takes place through transfers of surplus value from subordinate to dominant ones.’ (Cox 1987: 106).

The structure of the capitalist state is not static and the functions of the state in the economic life of society change in accordance with the change in the mode of capital accumulation and vice versa. There is a dialectical relationship between the economic structure of a society and its superstructure in general and political superstructure in particular. In different stages of capitalist development the state has economic functions corresponding to those stages. The transition from one stage of capitalism to another is characterised, among other things, by economic crisis, changes in the division of labour and the mode of capital accumulation. The economic role of the state changes in accordance with these changes, and, as Kolko points out, besides maintaining public order, the state’s primary function is to renew the conditions for capital accumulation in a process of restructuring economy (1988: 188). ‘States create the conditions in which particular modes of social relations achieve dominance over coexisting modes, and they structure either purposively or by inadvertence the dominant-subordinate linkages of the accumulation process. States thus determine the whole complex structure of production from which the state then extracts sufficient resources to continue to exercise power. ...’(Cox 1987: 399).

3. Neoliberal (global) restructuring, classes and the state
Between 1945-73 the state in the core advanced capitalist countries played an important role in the economic life through, among other things, state expenditures. However, this did not mean that the state was the only major player that made the economic expansion possible and suspended it for almost thirty years. In the 1950s and 1960s the profitability was high and the amount of profit grew rapidly and the state rode the waves. When economic problems worsened, such as a fall in profitability and investment, an increase in unemployment, etc., the state had to pump financial resources in economy in order to support credit system and suspend employment. This meant that the state increasingly appropriated the ever greater part of the surplus value and an increasingly small part of the surplus value went to investment and thus expansion. What happened was this: the state was forced to pump financial resources in the system because of the fall in the average rate of profit and the rate of economic growth to ease the problems in the short run. However, this caused further drop in the rate of growth and worsened the future problems that required more state intervention and so on. As the rate of potential expansion (growth) of the system fell, the increased pumping of resources in the system caused an increasingly growing inflation and a decrease in real expansion, that is, stagflation (Shaikh 1986: 99-100).

In 1974-75 the worst world recession since the 1930s occurred. ‘The combination of inflation and recession that confronted the capitalist states in the 1970s led to contradictory imperatives in government policy, restricted as governments are by the boundaries of capitalist economic categories. The anti-inflationary responses had nothing to do with inflation and only worsened the situation. But all the governments chose, in essence, to ascribe the source of inflation to higher labor costs. ...’(Kolko 1988: 17-18).

The strategy of the capitalist class was to force the working class and economically oppressed and disadvantaged social groups, particularly the former, to carry the burden of crisis and thus to restructure the economic system in order to increase the average rate of profit. Not only the high labour costs, but also the welfare system were perceived as the main causes of the crisis. It was high time the dominant mode of capital accumulation in the advanced capitalist countries, that are the centres of capital accumulation on international level and the main motive force of the capitalist world economy, was changed. Therefore, neoliberal restructuring of the capitalist world economy (‘neoliberal globalisation’) began in those advanced economies that form the core of the system.

As far as state’s intervention in economy and in the relationship between the state, capital and labour in general, and the struggles among different fractions of capital in particular are concerned, privatisation, for example, has played and plays a special role in global restructuring. Despite all the neoliberal rhetoric, privatisation is nothing but an “extreme” form of state intervention in the process of capital accumulation in general, and in the relations of forces between capital and labour in particular. It is a state intervention in favour of capital ¾ domestic as well as global. It is an integral part of the neoliberal offensive against the working class, the so-called welfare state, and all other economic and social gains by workers and other working people who neither own nor control the means of production. The complete or partial abolition of state ownership of capital leads to the further concentration and centralisation of capital in private hands and enhances political power of the capitalist class. In the age of the so-called neoliberalism the state functions as an agent of transformation of the state capital form of social capital into the private form of capital.

There is a very close relationship between restructuring of the world economy and the further internationalisation of the state. ‘The internationalizing of the state,' according to Cox, ‘is the global process whereby national policies and practices have been adjusted to the exigencies of the world economy of international production. Through this process the nation state becomes part of a larger and more complex political structure that is the counterpart to international production.’ (1987: 253). States are not only mediators between domestic and global economic relationships, but they are also active actors within the world economy:
‘... They [states] are themselves market actors. As Philip G. Cerny has noted, states represent ‘a kind of national “firm” or cartel operating directly in the transnational environment.’ Therefore, states have both a direct and indirect role to play in the global economy. They act as “national firms,” at the same time shaping the domestic market through laws and regulations and the international market through treaties and agreements. Thus, as the global economy has expanded over the last few decades, the activities of states have become increasingly complicated.’ (Stubbs and Underhill 1994: 423).
As Panitch argues ‘capitalist globalization also takes place in, through, and under the aegis of states; it is encoded by them and in important respects even authored by them; and it involves a shift in power relations within states that often means the centralization and concentration of state powers as the necessary condition of and accompaniment to global market discipline.’ (1996: 86). In recent decades, the nature of state intervention has changed considerably, but the role of the state has not necessarily been diminished. States function ‘as the authors of a regime that defines and guarantees, through international treaties with constitutional effect, the global and domestic right of capital.’ The nation-states’s central role in organising, sanctioning, and legitimising class domination within capitalism continues (Panitch 1996: 85, 89).

Conclusion
As we have seen capital accumulation is the essence of the capitalist system, and in this system two main social classes face each other: the capitalist class as the owner of the means of production, transportation, information and communication, and the working class as the owner of labour-power. The site of production plays a crucial role as far as stratification of capitalist society is concerned and class is the basic unit of social life. Since class relationships (read class struggles) are basic to the contemporary (global) capitalism, class is still a key concept for analysing social forces and their relationships to the state which is itself a social force. The state plays a central role in domestic as well as world politics which can be defined as the theory and practice of different class forces regarding the maintaining or changing the existing power relations. Therefore, dialectical class analysis can still explain and will explain the functions of the capitalist state as long as a class-divided society exits. In other words, social reality necessitates class analysis of the functions of the state.

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(1) As Carchedi argues ‘... It is the fusion of dialectics and class analysis which gives its specific characteristics to both Marxist dialectics and Marxist class analysis....’ (1987: 89).