State Owned Doesn’t Mean Socialist

Pedro Campos

Cuban workers. Photo: Bill Hackwell

HAVANA TIMES, April 27 — Recently in Granma, the newspaper of the Communist Party of Cuba, an article appeared about the economic efficiency of “socialist government enterprises” in the armed forces (4/16/10).

In the spirit of helping to clarify certain concepts, I have attempted to provide a few, more precise details here.

Apparently the comrades who wrote about the Military Agricultural Union “socialist government enterprise,” based themselves on the identification of state and socialist property by virtue of the fact that this property belongs to the Cuban state; they assume that all state property is, de jure, socialist.   However, what gives a property its social character —be it socialist or capitalist— is the form of its operation and the appropriation of its output, not its legal form.

This confusion was introduced in socialist theory by those who mistook estatización (state ownership) for socialization.  They thought that for property to be socialized, it was sufficient to place it under state ownership and then hold the state sacred above the rest of society.

The social character of a company is one thing and the legal structure of its ownership is something else.  The social character of property is determined by the form in which it is put to use, by the way in which work is organized, the mode of production (based on slave, serf, wage or freely associated labor) and the way in which the surplus obtained is distributed.  This is independent of the property’s legal structure, which can be state-owned, collective or privately owned.  This said, the natural tendency is for the content (the social character) of property to determine its legal form (structure), not the other way around.

Certainly, a government enterprise that exploits wage labor can be efficient.  There are many examples of this throughout the entire world capitalist, even in the USA, England and Japan.

However, though the legal form of such property is state-owned, those companies are not socialist.  They are capitalist because they respond to the capitalist logic of obtaining profits through wage labor, which in this case is appropriated by the state.  As a corollary, when that state seeks the “wellbeing” of the workers, with fairer distribution, this is what characterizes social democracy.

So what if the state is in the hands of the workers?” the statists might ask.

The same thing would happen as what has occurred in every “worker’s state”: the workers would continue being paid a wage (which would not be determined by the level of production), they would have no ownership or usufruct relationship with the means of production, and they would not participate in the distribution of profits.

Social workers. Photo: Bill Hackwell

On behalf of socialism, all those tasks would be overseen by a bureaucratic stratum, which in the long run —as has always occurred— winds up as the bureau-bourgeoisie (“the accidental class,” as described by Russian academics) who appropriate the means of production and the surpluses, and plunge the working class into deeper misery.

That “working class,” harnessed to their new capitalists (the bureaucrats), would not bring new production relations with them, since these laborers still would not have understood their need to liquidate themselves as a working class and become a new class of freely associated workers…of cultured cooperativists, the new class that bears the new production relations.

The government enterprise that exploits wage labor, seeks profits and concentrates the surplus in a few hands is in fact a state capitalist company given its content…given its social character.

Its juridical state form doesn’t matter.  This was what all the confusion was around concerning “state socialism,” which never transcended the limits of state monopoly capitalism.  This clearly occurred in Russia but also in Cuba.

Wage labor is what characterizes the form of capitalist exploitation, while freely-associated, cooperative or autogestionario (self-managed) work is the generic form of organizing socialist labor.

For the social character of a company to be described as socialist (it doesn’t matter if the property legally belongs to the state or the collective of workers) it must be managed through socialist methods – not capitalists ones; this is to say, with cooperative and self-managerial forms of work and management by freely associated workers who are directed and managed in a collective and democratic way by the workers themselves.

This would even include the election of management, which should be revolving, and the equal distribution of part of the profits (after paying taxes and other expenses due to the state and leaving another part for the extended reproduction of the company, emergency funds and other reserves.

Even under capitalism there are properties that are legally collective, but that in and of itself doesn’t make them socialist.  This is the case of the corporation, which legally belongs to its community of shareholders, a few or many of whom might work for that same company. However by organizing itself into a capitalist form of operation —that’s to say with wage labor, with hierarchical forms of management and control of the surplus by a group of owners who control most of the shares— it continues essentially as a capitalist company given its social character, even when it constitutes the first form of the decomposition of capital.

This is what they deceivingly refer to as “popular capitalism,” which capitalists sought to present as an alternative to cooperativist socialism.

Likewise, there exists property that is private by its legal form and socialist by its self-managerial social form of operation.  This is the case of many small family-owned businesses, which manage the company democratically, distribute the profits equally and do not exploit wage labor.

Socialist government enterprises would be those where the state maintains the ownership of the means of production in a legal form, but where the social form of its operation is carried out in a socialist, self-managerial and cooperative manner.  This would be the case of a type of company that is co-managed between the state and the workers.

By the same token, just as cooperatives are socialist firms in capitalist countries, it’s possible for there to exit in socialist countries reminiscences of capitalist companies (not in name, but because some day cooperative and self-management types of freely associated production relations will prevail), be they state, private or mixed ownership.

The interesting experience of Perfeccionamiento Empresarial (Managerial Improvement), originally conceived and applied in the Cuban armed forces (MINFAR), was a step forward in connection with the traditional statist wage-labor scheme, though still without breaking from it.

21 thoughts on “State Owned Doesn’t Mean Socialist

  • May 1, 2011 at 8:01 am

    Marx’s Capital is not too difficult to read, but reading it is necessary to understand both capitalism and post-capitalism. Lenin once remarked that if one did not read and understand Hegel’s Logic, that one would have a tough time understanding Capital. This is probably correct because the dialectic process involved in commodity production can be projected onto both the social super-structure of capitalism, global commodity production, and how post-capitalist economic transformations relate nation-states and their economic classes vis-a-vis commodity production, to each other. The relationship is complex but understandable if parsed.

    It is simply not enough to wave a flag or banner of any nationalism to describe post-capitalism. We have seen that post-capitalism can revert to capitalism. Capitalist politicians and planners certainly have reversion on their agendas. So, let us begin by affirming that workers have no nation and their goal is internationalism. The most significant hinderance on the Cuban workers and their revolution has been identification of their revolution with the concept of the nation-state instead of their class. Conversely, the capitalist hostility to the Cuban workers is always expressed (concealed) by expressions of hostility to the Cuban national leadership, never as hostility to the cuban workers. By using expressions phrased in bourgeois concepts of nation-states, one and all fall prey to the bourgeois anti-worker campaigns. Look at what is happening in Libya, China, and Syria as other examples of restricting worker revolutions to the bourgeois concept of the nation.

  • December 27, 2010 at 8:06 pm

    Julio, with all due respect, if you are going to try to monopolize the conversation, would you please pay more attention to what you write? Your command of the language is such that I cannot decide whether you did not really understand Pedro’s well written and thoughtful article or whether you did understand it but cannot express yourself clearly. All that comes through, over and over, ad nauseum, is that you did not like the article. We all know that now so I suggest you switch to decaf, chill out, write less and think and read more.

  • June 8, 2010 at 5:45 pm

    Interesting analysis. I would add that, in general, the notion of collective property as an alternative to private property seems to have run its course. It seems to create dangerous concentrations of economic and political power that constitute at least the condition of the possibility for Stalinism. The next wave of leftist revolutionaries should devote their efforts to establishing cooperative, or directly worker-owned, property.

  • June 5, 2010 at 9:08 am

    Usefull idiots for the cause of socialism. Have any of you even been to Cuba? I doubt it. Why don’t you people get jobs and create some wealth. All you people do is whine about how every socialist country that has attempted to “do” socialism properly to date “missed” something or did not apply the theory to the practical. Please people, get a life!

  • May 16, 2010 at 11:11 pm

    An extremely well-written analysis. 2 bad the confusion continues-on in the commentary! As 4 the likes of Mondragon: some1 below, I believe, mentions the debasement of the project over the long-term due to the relentless capitalist logic of surplus-value extraction/exploitation — which remains, regardless of intent. & we have the demise of the Kibbutz movement 2 point 2 as a prime example of that pathology driven to its logical conclusion… as well, as the pathetic failure of the hippie “commune” ideal from the `60s, 4 that matter.

    What you write is right on: workers must democratically-control the means of production, whatever the legal details. & indeed: the relations of production do indeed wag the tail of the legal forms which form its overall shape.

    All Power to the Workers’ & Farmers’ Councils & Communes, then.

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