As capitalism has moved into a period of open crisis and reconstruction, the necessity has increasingly been forced upon the working class movement to sharpen our understanding of the dynamic of capitalist accumulation and its relation to class struggle. One crucial aspect of this is the question of the relation­ship between capital and the state, since the state plays a vital part in the maintenance and reproduction of capital as a relation of class domination. Under the influence of reformism, revisionism and dogmatism, which for a number of reasons dominated Marxist thought from the 1930s to the 1960s, the analysis of the processes of capitalist accumulation became separated from that of class struggle and the state. The analysis of capital accumulation came to be thought of as 'economics' in a narrow sense, reified into the investigation of the relations between 'things', instead of between "social processes appearing in a thing-like shell" (Rosdolsky, 1974, p. 66). The contradictions of accumulation have too often been thought of as 'economic laws' operating from the outside upon oplitical class relations. The state has been thought of as "the state in capitalist society", rather than as being itself one aspect of the social relations of capital, and therefore stamped throughout, in all its institutions, procedures and ideology, with the contradictions of capital. Hence, there has been a constant undertow towards a reformist conception of revolution as being aimed essentially at the seizure of the existing state apparatus. At the same time, the failure to relate the developing contradictions of accumulation to the changing forms of class struggle within and around the state has made it difficult to develop a political approach to the crisis. Although, in economic terms, it has been recognised that crises are not only the effect of the developing contradictions of capital but also their temporary solution, little progress has been made in understanding the relation between the economic and political processes and the changing forms and functions of the state through which the ruling class attempts to control the outcome of the crisis.

Our basic argument in this article is that a theoretical and practical under­standing of the present crisis and of the role played by the state can be gained only by seeing the crisis not as an 'economic crisis', but as a crisis of the capital relation, i.e. as a crisis of an historically specific form of class domination, a crisis of accumulation which involves the totality of capitalist social relations and therefore a struggle waged on every front and through every mechanism, economic, political, ideological etc. In this view, the question of the relation between the crisis and the state is not a question of an external relation: it is not a question of how the state reacts to crisis, or of whether 'economic crisis' is accompanied by 'political crisis'. The development of the state must rather be seen as a particular form of manifestation of the crisis of the capital relation. Put more generally, the state must be understood as a particular surface (or phenomenal) form of the capital relation, i.e. of an historically specific form of class domination. In the two parts of this article, we shall try first to explain and develop this argument and then to draw some consequences for an understanding of the historical development of the state and of the current crisis.


(a) The state as a form of the capital relation

The starting point for a socialist theory of the state must be class struggle. "The history of all hitherto existing societies is the history of class struggle" (Communist Manifesto), and the development of the state is clearly no exception. Marx's great contribution to the struggle for socialism, however, was not merely to show that social development is a process of class struggle, but to show that class struggle assumes different historical forms in different historical societies and that an understanding of these forms is essential for an understanding of class struggle and its development. In each society, the historically determining form is the form assumed by the focal relation of class struggle, the relation of exploitation. "The specific economic form, in which unpaid surplus-labour is pumped out of the direct producers, determines the relationship of rulers and ruled ... Upon this, however, is founded the entire formation of the economic community which grows up out of the production relations themselves, thereby simultaneously its specific political form" (Capital, Vol. Ill, p. 791). To understand capitalist devel­opment, therefore, it is not enough to think simply in terms of class struggle: it is necessary to understand the particular historical form of class struggle in the capitalist mode of production, based on the particular historical form assumed by the relation of exploitation. This is why 'Capital' is such an important starting point for developing a materialist theory of the capitalist state (or any other aspect of capitalist society) — not as some economic textbook of Marxism, not because it analyses the 'economic base' to which the 'political superstructure' must be related, but because it is the work in which Marx analyses the particular historical form taken by class exploitation in capitalist societies — surplus value produc­tion — and shows that inherent in this form are certain determined contradictions and therefore tendencies of development.

It is a peculiarity of capitalist society that social relations appear not as what they are (relations of class domination), but "assume a fantastic form different from their reality" (Capital, Vol. I, p. 77). In 'Capital', Marx developed his analysis of surplus value production not in isolation but in the context of a critique of these 'fantastic forms', or, to be more precise, a critique of the categories of political economy — a materialist critique which did not simply show that the bourgeois political economists were wrong, but showed that the nature of exploitation in capitalist society is such as to generate certain determined forms of social relations, forms which appear on the surface and are apprehended by the economists in the categories of money, price, profit, rent etc. "The categories of bourgeois economy consist of such like forms (value, money, etc). They are forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production" (Capital, Vol. I, p. 76). The task of a materialist critique of these categories was not just to decipher them as forms in which the relations of production present themselves, but also to show what it is about the relations of production in capitalist society (unlike other societies) which makes them present themselves in this way.[1] 'Capital' is thus a materialist critique of the surface forms apprehended by political economy, a critique necessarily rooted in an analysis of the historical form of class struggle in capitalist society — surplus value production.

It is our argument that a materialist theory of the state must extend and develop this critique of the 'fantastic forms' assumed by social relations under capitalism. Just as the analysis of the categories of political economy must show them to be surface forms which have their genesis in surplus value production as capitalist form of exploitation, so the analysis of the state must show it to be a particular phenomenal form of social relations which has its genesis in that same capitalist form of exploitation. This implies, firstly, that a materialist theory of the state begins not by asking in what way the 'economic base' determines the 'political superstructure', but by asking what it is about the relations of production under capitalism that makes them assume separate economic and political forms. Secondly, it follows that, in analysing the capitalist state, it is not enough to start from class struggle: it is necessary to start from the capitalist form of that struggle, surplus value production. That is why Engels's treatment of the state in 'Origins of the Family, Private Property and the State', in which he relates the origins of the state simply to the emergence of class conflict, does not provide an adequate basis for a materialist understanding of the capitalist state. That is also why the work of Cramsci, Poulantzas and Miliband (whatever their respective merits) also fails to provide a systematic basis on which to construct a theory of the state. The problem is not simply to locate the state in the context of the relation between dominant and dominated classes, but to locate it in the context of the historical form taken by that relation in capitalist society, the capital relation.[2] Hence, the beginnings of a theory of the state must lie neither in the specificity of the political, nor in the dominance of the economic, but in the historical materialist category of the capital relation.

What is it, then, about class domination in capitalist society (i.e. the capital relation) that generates the 'fantastic form' of the state,[3] that makes the state assume a form apparently separated from the immediate process of production? Or to quote Pashukanis's classic formulation:

"Why does the dominance of a class not continue to be that which it is — that is to say, the subordination in fact of one part of the population to another part? Why does it take on the form of official state domination? Or, which is the same thing, why is not the mechanism of state constraint created as the private mechanism of the dominant class? Why is it disassociated from the dominant class — taking the form of an impersonal mechanism of public authority isolated from society?" (Pashukanis, 1951, p. 185).

The important distinguishing feature of class domination in capitalist society is that it is mediated through commodity exchange. The worker is not directly subject physically to the capitalist, his subjection is mediated through the sale of his labour power as a commodity on the market. "For the conversion of his money into capital the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour-power" (Capital, Vol. I, p. 169). Just as the latter freedom (the separation of the worker from control of the means of production) makes possible the abstraction of the direct use of physical force from the immediate process of exploitation, so the first form of freedom, i.e. the fact that exploitation takes place through the free sale and purchase of labour-power, makes this abstraction of direct relations of force from the immediate process of production necessary. The establishment of the capitalist mode of production necessarily involved the establishment of both sorts of freedom — the expropriation of the peasantry and the abolition of direct relations of dependence, sanctioned by force, on individual members of the ruling class. This abstraction of relations of force from the immediate process of production and their necessary location (since class domination must ultimately rest on force) in an instance separated from individual capitals constitutes (historically and logically) the economic and the political as distinct, particular­ised forms of capitalist domination. This particularisation of the two forms of domination finds its institutional expression in the state apparatus as an apparently autonomous entity. It also finds-expression in the separation of the individual's relation to the state from his/immediate relation to capital, in the separation of the worker into worker and citizen, in the separation of his struggle into 'economic struggle' and 'political struggle' — whereas this very separation into forms determined by capital, involves therefore an acceptance of the limits imposed by capital.

(b) The autonomisation of the state and the fetishisatlon of social relations

This real, historically determined separation of the economic and the political as two forms of class domination gives rise to illusions about the autonomy of 'the state' from 'the economy'. The state, like other social forms in capitalism (rent, interest etc) is seen as a 'thing' standing apart from other 'things' rather than as an historically determined form of the social relation of capital. The so-called autonomy of the state is but one aspect of commodity fetishism. Under capitalism, social relations are continually reproduced in a fetishised form, for in commodity production (and only under capitalism is there generalised commodity production), "the relations connecting the labour of one individual with that of the rest appear, not as direct social relations between individuals at work, but as what they really are, material relations between persons and social relations between things" (Capital, Vol. I, p. 73). The reproduction of social relations in fetishised form, i.e. in a'fantastic form' which conceals their reality as relations of class domination, is an essential part of the reproduction of that domination. The autonomisation of the state must be seen as part of this fetishisation, as part of the process through which reproduction imposes the dead hand of capitalist 'reality', a false reality of fantastic forms, upon the struggles of the working class. The essential inequality of the capital relation is transformed in the political sphere into the fantastic form of equality before the state: for it is a complement to the 'freedom' of the worker that in capitalism (unlike other societies) the political status of the individual is in no way determined by his place in the relations of production. The equality of political status enshrines and reinforces the inequality of its essential basis.

"For, as distinct from other forms of exploitation, the capitalist form consists precisely in converting labour power into a commodity which circulates freely. The coercive character of the society consists in ensuring that the possessors of the commodity labour-power are in a position to take only its exchange-value to market. Hence the class character of the bourgeois state is also established as soon as the state does not distinguish between the posses­sors of different 'revenue-sources'" (Cerstenberger, 1977).

Seen through the prism of the state, the capital relation is concealed, class struggle is defused, classes are atomised into a mass of individual citizens — 'the public', class consciousness is broken down into 'public opinion' to be expressed individually through opinion polls or the ballot box.

The autonomisation of the state is, like all forms of fetishism, both reality and illusion, the reality depending ultimately on the successful struggle of the ruling class to maintain the complex of social relations on which the illusion rests. The autonomisation of the state, which forms part of, and is a necessity for the accumulation of capital, involves not only the necessity of separate political institutions, but also a constant class practice involving the structural and ideological separation and fetishisation of economics and politics and of the private and the public. The survival of the political institutions and hence of capital depends on the success of that struggle in maintaining this separation, by channelling the conflicts arising from the real nature of capitalist society into the fetishised forms of the bourgeois political processes. Thus the very separation of economics and politics, the very autonomisation of the state form is part of the struggle of the ruling class to maintain its domination. It is thus the task of the working class constantly to combat fetishisation as a bourgeois class practice, to transcend those fetishised forms, transforming the fragmented 'economic' and 'political' struggles into a total class struggle, and through the seizure and transfor­mation of the state, to turn state power into working class power. It is therefore not only scientifically unfounded to speak of a "characteristic autonomy of the economic and the political" which "permits us to constitute the political into an autonomous and specific object of science" (Poulantzas, 1973, p. 29), it also runs counter to the task of working class theory. It has ever been characteristic of reformism that it emphasises the reality and not the illusion of the fragmentation of social relations, that it accepts as given the fetishisation of class struggle into distinct economic and political channels. The dialectic method has always been "a scandal and abomination to [reformism] and its doctrinaire professors, because it includes in its comprehension and affirmative recognition of the existing state of things, at the same time also, the recognition of the negation of that state, of its inevitable breaking up; because it regards every historically developed social form as in fluid movement, and therefore takes into account its transient nature not less than its momentary existence; because it lets nothing impose upon it, and is in its essence critical and revolutionary". (Afterword to the Second German Edition of Capital, Vol. I, p. 20).

(c) Fetishism, "Marxist political theory" and "Marxist economics” [4]

The analysis of the state as a particularised surface form of the capital relation of class domination gives us not only a basis for relating the development of the state to the development of the contradictions of capital (see Part II below), it also provides a basis for criticising both bourgeois theories of the state (which fail to pierce beyond the surface appearance of the state's autonomy and are thus unable to understand the relation between the state and 'the economy', an inability not without its practical consequences) and other Marxist approaches. It is on these latter that we concentrate in this section. In our view, there are two tendencies which underlie most of the Marxist analyses of the state current in this country. One tendency is to argue (or more often assume) that the actions of the state flow more or less directly from the 'requirements of capital': such analyses are sometimes accused of 'reductionism' or 'economic determinism', and their failing in our view is to overlook the necessary particularisation of the state as a discrete form of the capital relation. The other tendency, often basing itself on a criticism of the simplifications of 'reductionism', is to insist on the 'relative autonomy' of the political, denying (or more often overlooking) the need to relate the forms, functions and limits of the political to capital accumulation and its contradictions. In our view, this tendency, which may be referred to as'politicist', falls prey to the fetishised illusions created by the real particularisation of the social relations of capitalism. What both tendencies have in common is an inadequate theorisation of the relation between the economic and the political as discrete forms of expression of social relations under capitalism, and the failure to found both the specificity of the political and the development of political forms firmly in the analysis of capitalist production.

The discussion in Britain of the Marxist theory of the state has tended to become stuck in the rather infertile rut of the Miliband-Poulantzas debate. This debate has given rise to an illusory polarity between the approaches of these two writers, between what has sometimes been called the 'instrumentalist' and the 'structuralist' approach (cf Gold, Lo and Wright, 1^/5; Poulantzas, 1976), a false polarity which has done much to delimit and impoverish discussion. From our perspective it is quite wrong to regard Miliband and Poulantzas as representing polar alternatives in the Marxist analysis of the state: for all their real differences, that which Poulantzas and Miliband have in common is at least as significant as that which separates them. Both authors focus on the political as an autonomous object of study, arguing, at least implicitly, that a recognition of the specificity of the political is a necessary pre-condition for the elaboration of scientific concepts. To some extent, this is a matter of emphasis: clearly neither Poulantzas nor Miliband would deny the validity of Marx's dictum that 'political forms' can be understood only on the basis of the 'anatomy of civil society' (Preface to the Critique of Political Economy, p. 20), but neither of them considers it important to analyse this relation with greater precision. An important consequence of this is that neither tries to build systematically on the historical materialist categories developed by Marx in his analysis of that 'anatomy' in 'Capital' in order to construct a Marxist theory of the state. On the contrary, for Poulantzas (explicitly) and for Miliband (implicitly), 'Capital' is primarily (although not exclusively)[5] an analysis of the 'economic level' and the concepts developed there (value, surplus value, accumulation etc) are concepts specific to the analysis of that level. In the same way as 'Capital' analysed the economic as an "autonomous and specific object of science" (Poulantzas, 1973, p. 29), the task of Marxist political theorists, in this view, is to take the political as an "autonomous and specific object of science" to elaborate new concepts specific to the 'political level' (concepts such as 'hegemony', 'power bloc', 'governing class' etc). In so far, therefore, as these authors base themselves on Marx's writings, they consider it necessary to develop not the 'economic concepts' mentioned above, but the 'political concepts' developed in fragmentary fashion in Marx's 'political writings' and the more 'political' parts of 'Capital' (the discussion of the 'Factory Acts' etc). Such an approach rests, in our view, on a misunderstanding of Marx's great work, which is not an analysis of the 'economic level' but a materialist critique of political economy, i.e. precisely a materialist critique of bourgeois attempts to analyse the economy in isolation from the class relations of exploitation on which it is based. The consequent failure of both Miliband and Poulantzas — and much the same can be said of Gramsci — to base their analyses of the state in the contradictions of the capital relation leads, it can be shown,[6] to two consequences of fundamental importance: firstly, they are unable to analyse the development of political forms, and secondly they are unable to analyse systematically the limitations imposed on state action by the relation of the state to the process of accumulation.

It should not be thought that what we have termed 'politicism' (i.e. over­emphasis on the autonomy of the state from the process of accumulation) is peculiar to those who consider themselves to be 'political theorists'. The distinction between the two tendencies which we mentioned at the beginning of this section depends not on the starting point of the analysis but on the conception of the social totality which underlies it. The superficiality (i.e. the failure to go beyond the surface and analyse social forms as forms of the capital relation) which is characteristic of Miliband and Poulantzas is equally the hallmark of the 'Neo-Ricardians'. The 'Neo-Ricardian' approach is characterised above all by an emphasis on surface categories such as price, profit, wage etc. The materialist categories developed by Marx to explain the movement of these phenomenal forms are either rejected completely or considered to be 'mere abstractions', of no practical significance for concrete analysis. Starting as they do from surface categories, it is not surprising that the 'Neo-Ricardians' accept as a positive datum the distinction between economics and politics. It is symptomatic that Ian Cough, in his article on 'State Expenditure in Advanced Capitalism' (1975), probably the most elaborate treatment of the state from this particular perspective, begins with an economic analysis of state expenditure and then turns for an understanding of the general character of the state to the expert political theorists, Miliband and Poulantzas. He quotes them as authority for emphasising the autonomy of the state:

"For both Poulantzas and Miliband the capitalist state is a relatively autono­mous entity representing the political interests of the dominant classes and situated within the field of class struggle" (1975, p. 64).

Since the state is thus liberated, on the authority of theorists of the political, from the exigencies imposed by capital accumulation, Cough is also liberated from the need to analyse the limits imposed on state action by its structural relation to the process of capitalist production. For him (and for the 'Neo-Ricardians' in general), the determinants and limits of state action arise not from the contradictions of the capital relation, but from "the impacts of both sets of factors : the 'demands' of contemporary capitalism and the state of the class struggle" (1975, p. 73). As with Poulantzas, Miliband and their followers, so too for the Neo-Ricardians class struggle is a process extraneous to capital accumulation: the latter is seen essentially as economic, the former as political. Since the relation of the economic and the political is never systematically derived from their unity as forms of the capital relation, the determinants of state action can never be understood except as an eclectic combination of 'factors'.[7]

If those approaches which start from the autonomy of the political are to be rejected as necessarily failing to provide an understanding of the determinants and limits of state action, does this bring us back to the 'iron economic determinism' (Gramsci, 1971, p. 223) which these authors criticize? If we insist on starting with the category of capital because it is the contradictions of the capital relation (as the basic form taken by class antagonism in capitalist society) which provide the basis for understanding the dynamic of social and political development in capitalism, the problem of the nature of the relation between the actions of the state and the accumulation of capital remains. Or should this problem simply be dismissed as being no problem, the autonomy of the political denied, the corres­pondence between the actions (and structure) of the state and the requirements of capital accumulation taken for granted? Certainly this assumption is present in the work of many Marxists, among them the so-called 'Fundamentalists'.[8] Thus Yaffe, for instance, has correctly laid great stress on the role of state expenditure in the present crisis; in criticising the 'Neo-Ricardians', he has correctly pointed out that state expenditure is not a panacea which will cure the ills of capitalism, that there are limits to the extent and effect of state expenditure which result from its unproductive nature and hence the requirements of accumulation. This is important and a great advance on the common 'leftist' view which gets no further than pointing to the capitalist content of state action without considering the limitations inherent in the form of that action. What is significant, however, is that, although he attributes great importance to state expenditure, Yaffe does not find it necessary to consider further the analysis of the state. What results is a rather monolithic view of the state in which the growth of the state apparatus is attributed simply to the state's post-war commitment to full employment, and which the effect of state expenditure is seen as being adequately grasped by its classification into the categories of 'productive' or 'unproductive' expenditure.

While Yaffe's analysis may be valid in crude outline, it leaves many problems unsolved. The question of the way in which the interests of capital are established through the political system is not even posed. For him, "the intervention of the bourgeois state arises directly from the needs of capital" (Bullock and Yaffe, 1975, p. 33). But then how are we to understand the role of bourgeois democracy, and how are we to see individual state actions which apparently do not correspond to the interests of capital? Again, the problem of contradictions within the state apparatus is not posed: "This apparatus is simply an increase of unproductive expenditure" (1975, p. 34). Yaffe's great advance on the analyses of the Neo-Ricardians is to point out that, although the actions of the state favour capital in their content, there are certain limitations inherent in the form of the state, limitations imposed on state action by the nature of its relation to the process of accumulation. However, Yaffe focuses exclusively on one aspect of these limitations, namely on the fact that state expenditure represents a deduction from total social surplus value and is thus limited by the competing claims of private capitals on that surplus value which must be met if accumulation is to continue. Within these limits it is assumed that the state acts rationally in the interests of capital. However, this is surely only one aspect of the limitations on state action: for a fuller understanding of the state, it is necessary to analyse the other limitations arising from the nature of the state's structural relation to, and separation from the immediate process of exploitation — limitations which greatly restrict or render impossible state action in the rational interests of capital, irrespective of the limits of state expenditure.[9]

Fine and Harris attempt to transcend the Neo-Ricardian-Fundamentalist debate and to take the analysis of the state a step further in their critique of Gough (1976a) and their review of recent debates (1976b). Correctly they criticise Cough for not starting from the category of capital; correctly too, they nevertheless emphasise the specificity of the political and the importance of developing a materialist theory of the state. They do not progress very far, however, in analysing the relation between capital and the state, basically because they appear to see capital as an economic category and adopt a simple base-superstructure model of society in which the economic base is determinant. Capital and the economic are thus posited a priori as being separate from the political, so that it is not clear how the unity (and interrelation) of the separate spheres can be analysed. We would argue that this starting point is incapable of yielding a solution: what is required is not an economic but a materialist theory of the state. The economic should not be seen as the base which determines the political superstructure, but rather the economic and the political are both forms of social relations, forms assumed by the basic relation of class conflict in capitalist society, the capital relation, forms whose separate existence springs, both logically and historically, from the nature of that relation. The development of the political sphere is not to be seen as a reflection of the economic, but is to be understood in terms of the development of the capital relation, i.e. of class exploitation in capitalist society. The starting point must be not the specificity of the political nor the reduction of state action to the "logic of capital", but an analysis which founds the specificity of the political in the nature of the capital relation.[10] Without taking this as a starting-point, it seems to us impossible to progress beyond the inherent failings of 'politicism' and the over-simplifications of 'economic reductionism'.


In the first part of this article we emphasised the importance of seeing the state as a form of the capital relation, i.e. as a particular surface form of an historically specific form of class domination. It is essential, however, to understand the capital relation as an historical materialist and not just a logical category. To emphasise the importance of starting from the analysis of the capital relation is not to reduce the analysis of the state to the analysis of the 'logic of capital'. The failing of the so-called 'capital-logic' approaches to the state[11] is that, while they emphasise the importance of seeing capital as a social relation, they do not stress sufficiently that this is a relation of class struggle; or, in those cases where capital is presented as a relation of class struggle, class struggle tends to be subsumed totally into its form. This over-estimates the possibilities of form analysis and consequently leads to an over-determinist and one-dimensional view of social development. It is important, however, to understand the limits of form analysis: while the class struggle cannot be understood except in relation to its contra­dictory form (capital), this does not mean that it can simply be reduced to its form. Form analysis is essential to give us an understanding of the limits and dynamic of class struggle under capitalism, but if we are to understand the actual development of that struggle (of which the state is but a form), this must be complemented by conceptually informed historical research. As Hirsch puts it:

"The investigation of state functions must be based on the conceptual analysis of the historical course of the process of capitalist accumulation; It must be borne in mind, however, that this is not a question of the logical deduction of abstract laws but of the conceptually informed understanding of an historical process" (1977).

As Rubin points out, Marx's method consisted in analysing the totality of social relations in a logical-historical manner, working from the most basic and elemental category to relations of increasing complexity. "Marx's system examines a series of increasingly complex 'economic forms' of things or 'definitions of forms' (Formbestimmtheiten) which correspond to a series of increasingly complex production relations among people" (Rubin, 1972, p. 37). Rubin correctly emphasises two crucial aspects of Marx's method: first, that it is a logical analysis, beginning with the most basic category (carefully isolated, of course, by a prior process) and proceeding to categories which are logically dependent and express relations of increasing complexity (Rubin, 1972, p. 31 ff); but also that "the power of Marx's theory does not reside in its internal logical consistency as much as in the fact that the theory is thoroughly saturated with complex, rich socio-economic content taken from reality and elucidated by the power of abstract thought" (p. 91). Marx's categories are thus not to be treated as mere logical abstractions but as attempts to elucidate "by the power of abstract thought" the changing forms of class struggle as they develop historically:

"Marx's logical mode of conceptualising the economy, as Engels says, 'is ultimately an historical one, stripped of its historical form and disturbing accidents'. It provides therefore — albeit abstractly — a mirror image of the real historical process, a corrected mirror image, but corrected according to principles which permit us to grasp the real historical processes so that every moment can be viewed at the developmental point of its full maturity, at the moment of its classical perfection" (Rosdolsky, 1974, p. 65).

In developing the analysis of the state from the contradictions of capital, therefore, we are not concerned with a purely logical exercise of 'derivation', nor are we putting forward a metaphysical view of capital: capital is a social relation of exploitation, and the accumulation of capital is the form taken by the class struggle to recreate, develop or destroy that relation. But this relation has certain contradictions and therefore tendencies of development inherent in its form and a proper understanding of these tendencies is important for the outcome of that struggle. "Men make their own history, but not in circumstances of their own choosing".

In the remainder of this part of the article, we try to outline a framework for analysing the development of the state and its relation to the changing forms of capital. The development of the struggle to accumulate capital itself takes on particular historical forms, conceptualised by Marx in the categories of absolute and relative surplus value production: we suggest that it is on the basis of these succeeding dominant forms of surplus value production that the development of the established capitalist state should be understood. Before that, however, it is necessary to establish the theory of the state at the general level of commodity production, historically the original and logically the most general determination of capital as a social relation.

(a) The generalisation of commodity production:

the establishment of the preconditions of accumulation

The first moment of the capitalist state, and therefore its first limitation, is the establishment and maintenance of generalised commodity production. The centralised state, in which political status is separated from economic activity, results from and reinforces or reproduces the fetishised social relations which are produced by commodity production. The capitalist state results from the separation of production and consumption;[12] its first function therefore is to guarantee exchange as the mediation of production and consumption. Exchange in developed commodity production (as opposed to the peripheral trade of petty commodity production) exhibits a basic contradiction: it involves on the one hand reciprocal advantage but also the compulsion deriving from the need to exchange. This contradiction is overcome by the separation of the 'political' aspect of the exchange relationship and its control by a central power — the state. So it is the state through which the general terms on which exchange is conducted are established, leaving the individual 'economic' bargain to be struck by individuals. The separation of production from consumption also involves the creation of individuals as economic subjects and therefore the establishment of a system of private property. This individualisation of private property historically consisted of the dissolution of the various 'feudal' systems of communal property, and thus the separation of the labourer from the means of production (mainly the land), whereby the labourer is left with only labour power to sell.

Historically, the spread of commodity production was from the 15th and 16th centuries dominated by the European Absolutist states, which in fact developed to contain the political conflicts created within feudalism by the very growth of commodity production and mercantile trade.[13] It was during this period that the broad framework of the state system, national and international, was initially established. The establishment of a political unity as a result of and in order to further the development of production for exchange occurred historically within different defined social, economic and geographical conditions. Thus the history of different nation states is initially strongly influenced by the different particular circumstances of their origins — geography etc. It is with the increasing accumulation of capital that there begins to occur some convergence: as a result of the effects on the political system of combined and uneven development, as well as of the effects on the pattern of economic activity of conscious political direction resulting from imitation.[14] The political unity is defined in terms of geographical boundaries, since these are what is left after exchange has dissolved the social unities based on production for use over a settled geographical area. The abstracted political processes become dominated by the particular power emerging from conflict as the best able to secure such a political unity over a social space defined geographically. This, then, is the origin of the nation-state system, dominated from its inception by the European states.

We have said that the initial moment of the formation of the capitalist state is dominated by the spread of commodity relations. However, until commodity production becomes fully established (when labour power becomes a commodity and primary accumulation of capital achieved), social relations and state forms are by no means dominated by equal exchange, but rather by its opposite: compulsion. Thus the mercantile state is structured around trade privileges, monopolies and regulations of commerce. It facilitates the commercialisation of agriculture and the consequent expropriation of the labourer from the land. A major feature is the direct management of the 'surplus population' thus created as a labour force, by various systems of direct and forced labour: vagabondage laws, houses of correction, deportation to the colonies etc. All the forms, policies and ideology of such a state exhibit the startling contradictions of a state power purporting to be the state of society as a whole, but continually exercised to favour commercial privilege and the accumulation of property. The mercantile state, therefore, is characterised not by equal exchange but by unequal relations of appropriation backed by authority and force.

We differ here from Heide Cerstenberger's view that the mercantile/absolutist state represented a conflict between form and function, in that the functions of the state were bourgeois but its form was not yet. In our view, both form and functions represented the first moment of development of the capitalist state, imperfectly developed. The transformation of the state does not stem from the developing conflicts between form and functions, but derives from the contra­dictions of the mode of production driving beyond the limits of the forms in which it had so far developed, and the emergence through struggle of capitalist production on a more adequate basis. It is as part of this that we must see the struggles over the changing forms and functions of the state. We must also emphasise here that the analytical moments remain an aspect of the capitalist state, since they remain an element of the capital relation, although overlaid and dominated by its subsequent development. It is because these moments cannot be analysed as purely abstract concepts logically deduced from the capital relation that we trace their development as an historical movement, but in terms of a conceptually informed, stylised analysis of that history. Hence, since the primitive accumulation of capital continues to be an element of the movement of capital, in combination with other generally more dominant elements, aspects such as the paternalistic and authoritarian state form, the very national basis of the state and functions such as the privatisation of property continue to be elements of the state form. This is not to say, however, that specific institutions, such as the monarchy for example, established as part of an earlier historical movement, remain unchanged, nor that they alone embody these more primary and now dominated moments of the capital relation.

(b) The primary contradictions of accumulation

and the liberal moment of the state

Where the preconditions for capitalist accumulation are established, the more rigorously equality of exchange can be enforced the more effectively will accumulation itself reproduce social relations, or so it appears. Capitalist accumulation is marked by the unification of the opposition of production and circulation, and from the point of view of accumulation the circulation of commodities is simply the sphere in which commodity-capital is realised as money-capital and returns to the sphere of production, in the shortest possible time. Thus it is no accident that classical economics as well as liberal political theory were formulated in Britain from the end of the 18th century overtly to reform the policies and structures of that dominant capitalist state in such a way as to give the freest scope for accumulation. This completes the separation of politics and economics. "The organisation of the capitalist process of production, once fully developed, breaks down all resistance ... The dull compulsion of economic relations completes the subjection of the labourer to the capitalist" (Capital Vol I, o. 737).

We pointed out above that the emergence of the liberal ideal of equal exchange was only possible through the application of its opposite: compulsion. And of course, the application of this ideal of equality produces its opposite: inequality. The principle of equality operates only in the sphere of circulation:

"This sphere within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents and the agreement they come to is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other as with a simple owner of commodities, and they exchange equivalent for equivalent.

Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other is the selfishness, the gain and the private interests of each" (Capital, Vol. I, p. 176).

Things look very different when we venture into the realm of production, for there we see that:

"the laws of appropriation or of private property, laws that are based on the production and circulation of commodities, become by their own inner and inexorable dialectic changed into their very opposite .. The ever-repeated purchase and sale of labour-power is now the mere form; what really takes place is this — the capitalist again and again appropriates, without equiva­lent, a portion of the previously materialised labour of others and exchanges it for a greater quantitiy of living labour" (Capital, Vol. I, p. 583).

The contradictions of accumulation derive from the need to extract surplus-value from living labour. The immediate contradictions of this process consists of the continual undermining of the appearance of equality of exchange in the sphere of circulation by the inequality in the sphere of production. These are the contradictions of liberal capitalism and of the liberal moment of the state. Marx's analysis of the struggles over the length of the working day provide the classic insight into the nature of these contradictions. He points out (Capital, Vol. I, p. 510) that it was only after the capitalist mode of production in the developed form of modern industry became the generally dominant form of production that the rapaciousness of capital took the form of a thirst for absolute surplus-value and the excessive prolongation of the working day. The struggle between capital and labour over the length of the working day (absolute surplus-value) exposes most clearly the contradictions of exchange equality (Capital, Vol. I, pp. 234-5); the social relations of production having been established on the basis of wage-labour and the apparent equality of exchange of wages for labour-power, the working class finds capital pressing to the limits of extraction of absolute surplus value from that labour-power. The class struggles of that period resulted in the integration of the working class and the recomposition of capital in forms, including forms of state, which permitted the continuation of accumulation of capital while inevitably leading to a further heightening of the contradictions of capitalism. The forms of the liberal moment of capitalism essentially involve the attempt to overcome the contradictions deriving from capitalist production by resolving all conflicts in the sphere of circulation and in terms of relations of exchange.

The liberal capitalist state is therefore engaged in a continual process of upholding the principles of freedom and equality, while constantly modifying their application in practice, in order to overcome the contradictions continually created by the central contradiction at the heart of the relations of production.

Hence its ideologies and institutions, based on the equivalence of exchange in the sphere of circulation, are constantly riven by the contradictions engendered by the lack of any such equality in the sphere of production. One example of the constantly renewed liberal dilemma: does the 'freedom of the individual' entail unrestricted rights to form trade-union combinations?[15] Small wonder that liberalism generally shrinks into the pragmatism of ideologies such as the 'shop­keeper's philosophy' of utilitarianism. However, so long as politics can be confined to the sphere of circulation and separated from the 'economic' spheres of production, liberalism has achieved its object.

Liberal state structures exhibit the same basic contradictions as liberal ideology. The mechanism which most clearly reflects the contradictions of commodity exchange is the juridical process. In the pre-bourgeois period this apparatus developed as part of the process of fostering the generalisation of commodity exchange under the domination of the increasingly mercantile centralised autocracies of the Absolutist period: in England the 'King's justice' in its various ramshackle ramifications; elsewhere the Reception of a glossated so-called 'Roman' law which combined the ideals of petty commodity production with a procedural and ideological guarantee of the dominance of a 'Sovereign' central state power (see Anderson 1974, p. 26 ff). The Napoleonic and early-Victorian reforms of juridical procedures bring them closer to reflecting the ideal of equivalent exchange which becomes dominant as the sphere of circulation becomes the sphere of realisation of industrial capital rather than the sphere of primary accumulation of mercantile capital. The juridical process serves to provide procedures and ideologies for the recuperation of market transactions that have failed: the availability of adjudication of a dispute between two individual 'parties' by a judge 'neutral' to that dispute. This also serves to establish general conditions to facilitate circulation by preventing breakdown in individual transactions: the parties themselves must carry through or reconstitute the terms of disputed transactions in anticipation of the probable outcome of the recourse to the available procedure (Weber gives appropriate emphasis to the character­istics of predictability etc which make juridical procedures appropriate to 'market' capitalism). However, from the very start of the domination of capital accumulation the basic contradiction of inequality in production creates contradictions in the sphere of circulation. Thus there begins at the same time the development and propagation of juridical procedures under the banner of the 'rule of law' simultaneously with their progressive breakdown and recuperation. The reference of social conflict situations to adjudication cannot be left to individuals, but is supplemented by the growth of bodies of state officials who can selectively initiate state intervention to impose exchange equivalence (notably in the growth of the Inspectorates — Factory, Education, Poor Law etc in Britain). Furthermore, legal ideology can no longer be elaborated on a case-by-case basis from general principles such as 'justice', 'reasonableness', 'foreseeability' etc. Increasingly what is required are specific codes, i.e. legislation. Parliamentary legislation is thus the classic form of liberal state action, utilising the individualistic but 'egalitarian' institutions of bourgeois representative democracy to establish generally applicable but specifically formulated regulations ensuring social welfare: i.e. the containment of the immediate contradictions of accumulation.

We see therefore that the forms of state are re-established, supplemented or reformed as part of the process of containment of the new contradictions created by the new stage of development of capital, to re-create or re-compose the capital relation in new forms. Equally, the functions of the state are also revised and supplemented, since they too are inflected by the dominant contradictions of each moment of capitalism. For instance, we have seen that the control of money and systems of commensuration was first centralised in the state as a means simply of fostering commodity exchange and primary accumulation. In relation to the accumulation of capital these functions are transformed, since industrial capital requires the closer control of money-capital and credit to minimise speculation and facilitate the rapid realisation of commodity-capital on the basis of equivalence of exchange.

(c) The socialisation of production

and the tendency of the rate of profit to fall

From the last part of the nineteenth century onwards, accumulation becomes increasingly dependent upon relative surplus value production as the dominant form of exploitation. The extraction of absolute surplus value had rapidly come up against natural limits — the exhaustion of the latent reserve army and the danger of physical destruction of the labour force. Historically, this created conflicts which led to the imposition on individual capitals of restraints necessary in the interests of capital in general, and the undertaking through the state of activities which would permit the continued reproduction and accumulation of capital. But accumulation based on relative surplus value is no less contradictory than accumulation based on absolute surplus value: it tends not to destroy the labour force physically, but relatively to expel living labour from the process of production. Again, capital tends to eliminate (not physically, but from the valorisation process) the basis of its own accumulation. This contradiction expresses itself in a tendency for the rate of profit to fall.

Those who read "Capital" as an economic text rather than as a materialist critique of political economy (and of the "discipline" of economics as a fetishised form of thought) often fail to grasp that the tendency of the rate of profit to fall is not an economic law: it is not the same as a "falling tendency", as it is cometimes referred to (e.g. by Cough, 1975, p. 57), nor does it necessarily manifest itself as an empirically observable decline in the rate of profit due to a measurable increase in the value-composition of capital (cf Mattick, 1959). The law of the tendency of the rate of profit to fall is nothing but the value-theoretical expression of the contradictions inherent in the form taken by class exploitation in advanced capitalist society. In capitalism the ruling class is compelled, in the pursuit of relative surplus value, constantly to expel from the production process the class whose exploitation is the essential pre-condition of its own existence, constantly to undermine its own basis. This expresses itself as a tendency for the organic composition of capital to rise and a consequent tendency for the rate of profit to fall. In order to survive the consequences of this tendency, capital must unceasingly strive to reorganise and intensify the relations of exploitation of labour, and also to reorganise the distribution of social surplus value among individual capitals and other capitalist instances. For the purposes of understand­ing class struggle and the development of the state, it is this unceasing and crisis-ridden (and in essence unplanned and unconscious) struggle by capital to erode or counteract its effects which is the significant manifestation of the tendency of the rate of profit to fall.

It is wrong, therefore, to think of the tendency of the rate of profit to fall as an "economic law": it is merely the economic expression of a process of class struggle — a process inherent in, and structured, by, the form of capital, a form-determined process of class struggle. What worries the bourgeoisie about the tendency of the rate of profit to fall, says Marx, is that the historical, relative nature of the capitalist mode of production "comes to the surface here in a purely economic way — i.e. from the bourgeois point of view, within the limitations of capitalist understanding, from the standpoint of capitalist production itself" (Capital, Vol. Ill, p. 269 — our emphasis). If, then, the contradictions of capitalist class conflicts come to the surface in an economic way as the tendency of the rate of profit to fall, and if class relations in capitalism necessarily assume, as we have argued, two particular forms — an economic and a political — the question necessarily arises as to how the contradictions of capital express themselves in political form and what is the relation between the tendency of the rate of profit to fall (and the underlying crisis tendency of the capital relation) and the dynamic of political development.

This problem is often approached through a discussion of the relation between "economic crisis" and "political crisis". Many authors argue against the widespread but simplistic assumption that economic crisis leads more or less automatically to a crisis of the political system (cf especially Cramsci's critique of Roas Luxemburg: 1971, p. 233). In countering this view, however, these authors either evade the problem by emphasising the relative autonomy of the political or, in the better cases (cf. Autorenkollektiv, 1976), suggest that whether the crisis in the economic base gives rise to a "political crisis" and "ideological crisis" will depend on the organisation and militancy of the class struggle, an organisation and militancy which cannot be derived from the capital form. Superficially, of course, that is correct. It does, however, lead to a voluntarist notion of political and ideological crisis, which is apparently precipitated by working class struggle, unlike economic crisis which is inherent in the nature of capitalist domination and is, in this sense, precipitated by capital. This seems unsatisfactory in a number of ways. The crisis (i.e. the periodic crisis of capitalism) is neither an economic nor a political crisis: it is a crisis of the capital relation, a crisis made inevitable by the inherent contradictions of that relation. The crisis inevitably involves a restructur­ing of the capital relation, a restructuring which necessarily takes on economic and political forms. What is involved on both levels is an assault by capital to maintain the conditions of its own existence. Whether this process manifests itself in open crisis depends on the resistance of the workers, the degree of its organisation and militancy etc. The precise form taken by the restructuring of the political system will of course depend on the nature of working class resistance, but the impetus to political reorganisation arises not from working class struggle (detached from the "economic base") but from the dynamic forces of capital accumulation as form-determined class struggle. It is not a question of seeing class struggle as providing a mediating link between economic base and political superstructure, but rather of seeing the economic and the political as separate forms of the single class struggle, a single class struggle informed and bounded by the exigencies of capital accumulation.

The question of the relation between political development and the contra­dictions and crisis of the capital relation seem to us to be best approached not through a discusssion of the relation between economic and political crisis but through a development of the notion of restructuring. The contradictions of relative surplus production impose on capital the constant necessity to reorganise or restructure the social relations on which its existence is based — a process of reorganisation which brings into play the counteracting tendencies to the falling rate of profit. To some extent this process is a continuous one, but the inherent anarchy of capital ensures that it cannot be a planned, rational process, that it must take place essentially through a process of fierce competition where capitals meet as "hostile brothers" (Capital, Vol. Ill, p. 253), and in response to a crisis of profitability. Periodic crisis is inevitable not because of the inherent weakness of the counter-tendencies, but because it is the only way in which the counter-tendencies can operate effectively. As Marx says of the counter-acting tendencies:

"These different influences may at one time operate predominantly side by side in space, and at another succeed each other in time. From time to time the conflict of antagonistic agencies finds vent in crises. The crises are always but momentary and forcible solutions of the existing contradictions. They are violent eruptions which for a time restore the disturbed equilibrium" (Capital, Vol. Ill, p. 249).

How is the equilibrium restored? What is involved in the restructuring of the capital relation? From the formal analysis of capital and the tendency of the rate of profit to fall we can derive the basic, formal conditions for the restoration of "equilibrium", i.e. of the process of accumulation. The crisis of accumulation results from the inability of the rate of surplus value to rise sufficiently rapidly to counteract the effect of the rise in the organic composition of capital. It follows that the two elements essential for the restoration of the total social rate of profit are the lowering of the organic composition of capital (e.g. by the devalorisation of constant capital) and the raising of the rate of surplus value. Further, since the effect of the crisis of surplus value production on individual capitals and on capital accumulation will be affected by the distribution of social surplus value, particularly as between the centres of accumulation (productive capitals) and those instances which will not employ the surplus value for further accumulation (the state, unproductive capitals etc.), the restoration of accumulation may be affected by the redistribution of surplus value to the centres of accumulation.

This tells us, however, only the formal requirements for the restoration of accumulation. Even if, for the sake of exposition, we leave aside the myriad extraneous circumstances which affect the way in which the crisis presents itself and may provide escape routes for particular national capitals — analysis of the world market is particularly important here — even if we leave these aside, it is clear that the basic, formal requirements cannot realise themselves automatically. The outcome of the crisis cannot be read off from the requirements of capital in general. It is clear that what is involved is a process of struggle, a struggle primarily between capital and labour but, flowing from that, also between different capitals and fractions of the capitalist class. It is on the outcome of these struggles that the restoration of accumulation, and the new pattern of accumula­tion relations, will depend. The struggle is not just an economic struggle but a struggle aimed at the reorganisation of the whole complex of social relations of production. As Hirsch puts it (1977):

"Mobilisation of counter-tendencies means in practice the reorganisation of an historical complex of general social conditions of production and relations of exploitation in a process which can proceed only in a crisis-ridden manner".

Thus, to take an obvious example, it is clear that the present attempt by British capital to raise the rate of surplus value does not simply mean the introduction of new technology or the announcement of wage cuts by individual employers; what is involved is rather a very long and extremely complex struggle conducted at all levels, embracing such elements as the repeated attempt to restructure the relations between trade unions and the state and within the trade unions themselves (Donovan Commission, In Place of Strife, Industrial Relations Act, Social Contract), massive ideological campaigns (on productivity, inflation etc.), changes in state expenditure and taxation, the complex interplay of political parties, plans to introduce worker directors, etc., etc.

The ramifications of the restoration of accumulation thus go far beyond what is immediately apparent from the analysis of the formal requirements of this restoration. Firstly, the fulfilment of those requirements will normally require far-reaching changes in the patterns of social organisation. Secondly, such changes can be wrought only through class struggle, the outcome of which can never be predicted with certainty. But if social and political development cannot simply be derived logically from the formal analysis of capital, this does not mean that the formal analysis is irrelevant: for it explains not only the inevitability of class struggle, it provides also the point of reference and framework for that struggle. What is required for an analysis of restructuring is thus not just a formal analysis of capital, nor an empirical analysis of the course of class struggles, but an analysis which embraces both moments, which tries to understand social development in the dialectical interaction of the form and content of class struggle.

It is in this context of the ever-renewed reorganisation of the social relations of capital that the development of the state must be situated. The "mobilisation" (to adopt Hirsch's expression) of the counter-tendencies to the falling rate of profit takes place increasingly through the state form. As the forces of production develop under the impulsion of the contradictions of capital, as the working class grows and the structurally intensified conflict of classes expresses itself in growing difficulties of accumulation, capital is less and less able to reproduce directly its own existence as class rule: increasingly that reproduction must take place through the mediation of the state, and the state apparatus must grow to ensure that reproduction. We cannot here trace the growth of state activity (cf Cough, 1975 and esp. Hirsch, 1977), but it would be necessary to trace historically how each crisis imposes on capital a new relation between its economic and political form of domination, a new relation shaped in practice by concrete class struggle. This changing relation was discussed already at the turn of the century by Bukharin, Lenin and Hilferding, and it has clearly undergone major changes since then, most notably under the slogan of Keynesianism. It is important to realise however, that this is not a smooth or unilinear process, nor clearly does it represent the growth of either a neutral state or an "instrument" of capital; it is, rather, a shift in the form of capital's rule imposed upon capital by the pressure of class struggle expressing the contradictions of its own domination, a shift in the form of capital's crisis-ridden struggle to accumulate and one which is by no means necessarily irreversible.

If the growth of state activity is seen merely as a shift in the form of capitalist domination (and in no sense a shift away from capitalist domination), it is clear that it can do nothing to escape from the fundamental contradictions of that domination. The difficulties of capital accumulation arise not from capitalist anarchy but from the capital relation itself, even if capital could "organise" itself through the state, the basic contradiction of capital accumulation would remain – the fact that the pursuit of surplus value implies the tendential destruction or elimination of the basis of surplus value production — the productive worker. Far from solving capital's problems, the growth of state expenditure diverts an increasing amount of surplus value away from the centres of accumulation,making it unavailable for the direct exploitation of more labour power (cf.Bullock and Yaffe, 1975). But although surplus value production marks the finalbounds to capital's domination (whatever form it takes), this is not the onlylimitation on the effectiveness of state intervention. Firstly, the state does not doaway with the anarchy of capitalism: its political form is as anarchic as theeconomic — here too capitals meet as "hostile brothers" when social surplus valueis scarce. In so far as the state intervenes in the equalisation of the rate of profit,it does not simply negate competition, it acts merely in a different manner toredistribute surplus value among individual capitals. The inherent antagonism ofindividual capitals in the market place necessarily duplicates itself, reproducingitself within the state apparatus. In the liberal state of the nineteenth century,where monopolisation had not yet developed to any great extent and the "dullcompulsion of economic relations" had not been sufficiently established to makepossible the political integration of the working class through parliamentarymeans, the ideal forum for reconciling competing capital interests was parliament.With the extension of the franchise to the working class, the growth of monopoliesand the growing intervention of the state in the reproduction of capital —increasingly by means of individual, discriminatory measures of the bureaucracy

—the competition between capitals reproduces itself in more intense form andincreasingly within the bureaucracy itself, in such "political" forms as lobbying,pressure group activity, institutional ties with specific ministries and departmentsetc. The increased intervention of the state in the reproduction of capitalnecessarily creates closer ties between capitals and the state, thus providing thematerial basis for theories of state monopoly capitalism. However, in so far as theyassume that this makes capitalism more organised, more capable of beingplanned, such theories clearly overlook the fact that the development of closerties between capital and state does not replace capitalist anarchy, it merelyensures that capitalist anarchy is increasingly reproduced within the stateapparatus itself. [18] One consequence of this is that even within the bounds set bysurplus value production, it cannot be assumed that the state will act rationally inthe interests of capital in general. On the contrary, the reproduction of competi­tion within the state apparatus ensures an inevitable dislocation, an inevitabletension between state' activity and the interests of capital in general — aninevitable arbitrariness and imbalance in the way that the state ensures thereproduction of capital.[19] This reproduction of antagonistic relations within thestate apparatus comes to the fore in time of crisis when the bourgeoisie bemoan the "inefficiency" of the state[20] and attribute the contradictions to a failure of the techniques of public administration. The problem is perceived as a technical one and the solution (Fulton, Redcliffe-Maud, Bains Reports etc.) presented as a technical one: in fact the problem is a necessary reflection of the antagonistic relations of capitalist society and the "solution" necessarily plays a part in the struggle between individual capitals as well as between capital and labour. [21]

The other major limitation on state activity results simply from the separation of the political and the economic. If this separation gives the state more freedom of action than an individual capital (since it is not directly subject to the constraints of profitability (cf Altvater 1973}), it also imposes constraints in that the state must remain essentially external to the process of accumulation. While the purpose of state action must be to promote the accumulation of capital, it must, by reason of its form, remain external to that process. Its action on accumulation is essentially of a mediate nature — mediated basically through the forms of law and money.[22] This imposes a certain bluntness on state measures to restructure capital: the lack of specificity of the effects of the restriction of credit and of the money supply in the present crisis situation in Britain provides a good illustration of this.

Both the necessity and the limits of state activity are inherent in the state form. As capitalism advances, the state develops through the contradictory inter­action of the necessity and limits arising from the contradictions of capitalist reproduction. This contradictory development is expressed not in a smooth, even growth of state activity, but in the constant crisis-ridden attempts to overcome the limits of state activity and render it more 'functional' for capital accumulation.[23] What is significant in the present 'cuts' in state expenditure is not so much any reduction in state activity as the attempt to 'functionalise' the state for the accumulation of capital. The denunciation of state expenditure by the bourgeoisie goes hand in hand with demands for more aid to industry. The cuts involve not only a reduction of unproductive expenditure: this is an important element in the analysis, but it is not sufficient, for the necessity of the state form implies the necessity of unproductive expenditure: what is involved is the attempt to make this unproductive expenditure serve more closely the reproduction needs of capital. The restructuring of capital thus involves a necessary struggle to restructure the relation between state and society and to restructure the state apparatus itself: a struggle that involves a major offensive not just on the working class but also on sections of capital, a struggle whose bitterness is well evidenced by the reactions to each announcement, by the repeated attempts of the Chancellor 'to get it right' and by the repeated reactions of the press — 'Always Too Little' (Times, December 16, 1976). This reorganisation of the state is expressed not so much in the overall figures on state expenditure, nor just in the shift of resources from, say, education to industrial aid — it is reflected also in the way each function performed by the state is remoulded. Thus the crisis has led not only to an increase in aid to industry, but also to a reorganisation of the way in which such aid is administered — a move away from blanket assistance to selective aid based on specific needs. And of equal importance to the cuts in education expenditure is the attempt to gear education more closely to the needs of industry — by condemning 'progressive methods', encouraging industrial scholarships etc.

"Crisis is the forcible establishment of unity between elements that have become independent" (TSV, Vol. II, p. 513). The autonomy of state action from the immediate demands of the valorisation process, implicit in the particular-isation of the state as a distinct form of capitalist domination here comes up against its barriers. As capital is forced, in the struggle for accumulation, to strive to overcome the limitations of the state form, it tendentially undermines that particularisation of the state which is a precondition of its own existence. Increasingly the state intervenes directly in the production process, taking over particular industries and reorganising the actual process of value creation and exploitation (cf Fine and Harris, 1975, 1976c). Increasingly the state breaks through the generality implicit in its form in its attempts to respond to the necessity of and limitations on its activity by complementing general measures (e.g. the restriction of credit) by selective measures to exempt or assist the chosen few (industrial aid, tax concessions etc) — thus giving rise to intensified political competition as each section of capital seeks to identify the 'general interest' with its own particular interests, to growing animosity on the part of the many less favoured capitals towards the state and 'socialism', to heightened tensions between the executive and the judiciary as upholders of the rule of law and generality. This trend finds its expression too in apparently technical, adminis­trative changes in the state apparatus in the interests of 'efficiency' as the state apparatus adapts its structure to the new pattern of closer ties with monopoly capital.[24] It is in this context, i.e. in the light of the development of the state through the contradictory tension between the necessity and limits of state activity (rather than in the context of any view which suggests a unilinear growth of state activity in support of a declining capitalist industry) that we must approach a critique of theories of corporatism and state monopoly capitalism.

The tendential undermining of the separation of state from society does not mean that that separation is overcome: even in the most extreme forms of corporatism, there has not been a fusion of state and monopolies, and indeed there cannot be such a fusion as long as social reproduction is based on the production of surplus value. The undermining does, however, pose a threat to the mystification of the political, to the fetishised appearance of the neutrality of the state. The state is increasingly identified with capital, reformism — the strategy of using the state against capital — is increasingly abandoned, even as a justificatory ideology used by the traditional reformist parties (cf Callaghan's speech at the Labour Party Conference, 1976). The appeal for popular support is no longer based on a claim to gradually transform social relations, end inequality etc, but on the assertion that there is just no alternative to capitalism (communism being ruled out and identified with Russia, loss of human rights, etc, 'socialism' being identified with state intervention, thus establishing a phoney alternative). The problem is to assess the importance of this erosion of the basis of reformism. It is now clear that those who saw bourgeois domination as being largely dependent on the apparent neutrality of the state (e.g. Flatow/Huisken, 1973; Miiller/Neususs, 1975) held, as Cerstenberger (1977) has pointed out, an inflated view of the importance of that apparent neutrality. Its erosion has clearly not dealt a death blow to capitalism, but it does place new problems on the agenda.


1 Marx distinguished his analysis from that of the bourgeois economists onprecisely these grounds: "Political Economy has indeed analysed, howeverincompletely, value and its magnitude, and has discovered what lies beneaththese forms. But it has never once asked the question why labour is repre­sented by the value of its product and labour-time by the magnitude of thatvalue" (Capital, Vol. I, p. 80).

2 The starting point for the analysis of the capitalist state is thus capitalistsociety, not the state in general: on this see Muller/Neusiiss, 1975 (extractsin Holloway and Picciotto, 1977). The state in pre-capitalist societies did not,in any case, exist in the same form as a particularised relation of class domina­tion separated from the immediate process of production.

3 The state must be derived from the historical form of class domination and notsimply from commodity exchange or the relations between individual capitals.The latter approach neglects the essence of the state as a relation of classdomination and can lead to illusions in the possibilities of bourgeois demo­cracy. For an expansion of this point, see our criticisms of Flatow/Huisken andof Altvater and the 'Berlin school' in our Introduction ('Towards a MaterialistTheory of the State') to Holloway and Picciotto, 1977. The combination of thetwo derivations of the state in our critique of Cough (Holloway and Picciotto,1976a) now seems to us eclectic.

4 For a much fuller discussion of Marxist theories of the state current in Britain,see our Introduction to Holloway and Picciotto, 1977.

5 It is seen by Poulantzas as being also a more general work embracing theoverall articulation of the capitalist mode of production and the developmentof basic concepts such as mode of production, relations of production, etc.Our point of criticism, however, is that the categories developed specificallyin 'Capital' (value, surplus value, accumulation etc) are seen as being conceptsspecific to the analysis of the economic level.

6 On this, see our Introduction to Holloway and Picciotto, 1977.

7 Thus, for example: "So the interaction of long-term socio-economic trends, thepolitical strategy of the capitalist state and the ongoing class struggle rule outany simple, single-factor explanation of social policies" (Gough, 1975, p. 76).Superficially, this is of course true, but the interconnection of these three'factors' and how they relate to the contradictions of the capital relationremains unexplained.

8 Cf Fine and Harris, 1976a. We do not use the term in a derogatory sense. Wemight also have cited Mandel's work as an example of the 'reductionist'tendency. This is particularly clear in his treatment of European integration,in his argument that the future of European integration depends entirely on theform taken by the centralisation of capital. For a discussion of Mandel's theorywhich points in this direction, see Holloway, 1976.

9 For a fuller discussion of the limitations on state action, see particularlyBlanke/Jurgens/Kastendiek, 1977 and Hirsch, 1977.

10 The great merit of the debates in West Germany, whatever their own limita­tions and blind-alleys, is that they have started from the capital relation and sought to found the specificity of the political in that relation. For a translation

of some of the major contributions to the German debate and a discussion of the main strands of argument, see Holloway and Picciotto, 1977.

11 Here we have in mind particularly the work of Altvater, Miiller/Neususs andBlanke/Jurgens/Kastendiek. It is by no means justified, however, to regard allthe recent German work as following a 'capital-logic' approach.

12 This is not simply a logical point but an actual historical movement. See E.P.Thompson's famous article on 18th century food riots (Thompson, 1971) for anexcellent account of the class struggles surrounding the commercialisation ofbread production and how these were reflected in changes in the form of thestate, state action and ideology.

13 Thus there is only an apparent contradiction between Anderson (1974) whoinsists on the feudal nature of the political structure of the capitalist state andGerstenberger (1973) who stresses that during the mercantile period all thebasic functions of the capitalist state and the preconditions for accumulationwere established, but that the liberal forms of the classical Rechtsstaatremained to be fought for in the bourgeois revolutions.

14 This point is well made by Gerstenberger, 1975. This should be borne in mindin relation to European integration, which is in some ways the institutional-isation of a process of transplanting or coordinating political structures inresponse to or in order to foster combined economic development. For anelaboration of this, see our earlier paper relating much of the argumentpresented here to the process of European integration: Holloway and Picciotto,1976b.

15 Marx gives one example where equal-exchange ideology was oddly pressedinto service: the legislation attempting to limit child labour was apparently atone point rationalised in Parliament as the prevention not of the 'free' sale oflabour, but because the selling of children's labour by their parents is not 'free'but equivalent to a form of slavery. Cf Capital, Vol. I, p.397. This clearly showsthe limitations of liberal ideology.

16 On this, see Roberts, 1960

17 We do not intend here to examine the whole controversy surrounding thetendency of the rate of profit to fall. It seems clear that once the relationsbetween c, v and s are understood as social and not just mathematical rela­tions, there is little difficulty in establishing that there is indeed such atendency. The actual movement of the rate of profit will depend on theoutcome of the class struggle focused on what Hirsch terms the 'mobilisation'of the counter-tendencies to the falling rate of profit. Cf Hirsch 1977.

18 On this and much of the argument here, see Hirsch, 1977. Hirsch's approachseems to us one of the most fruitful to have emerged from the German debate.

19 This does not mean, however, that the development of the state's functionscan be understood solely in terms of an interplay of competing groups orfractions, can be reduced to a Marxified pressure group analysis in which onefraction simply battles it out with another. Firstly, the political influence ofthe competing capital groups will be established in large measure by theirplace in the process of capital reproduction. Secondly, there are limits (estab­lished in practice through class struggle) to the extent to which the state canpursue the interests of any particular group or function over against therequirements of the reproduction of capital as a whole. The analysis of conflicts between fractions of the capitalist class (and also of the structure of the 'power bloc') is important, but only if placed very firmly in the context of the analysis of the form-determined struggle between capital and labour to accumulate, to exploit. Hence the development of state functions will be determined not by competition between powerful capitalist interests, nor simply by the logic of capital, but by the contradictory tension between the partial interests of capital groups and the reproduction demands of capital as a whole. Moreover, in considering contradictions within the capitalist class, it is important not to confuse competing 'capital groups' with class fractions. In the very brief fragment on Classes at the end of Vol. 111 of Capital, Marx makes it clear that one cannot constitute an analysis of social classes by establishing "the identity of revenues and sources of revenue". In the remainder of that section of Vol. Ill, he had shown that nothing can be understood about the relationship and movement of profit, rent and wages if they are treated at the fetishised level of 'revenues': "They have about the same relation to each other as lawyers' fees, red beets and music" (p. 814). So equally he began to demon­strate in the unfinished fragment that it is not possible to understand social classes by establishing an external relationship between the revenues as they appear in the narrow 'economic' sphere and social groups constituted by the social division of labour as owners of different revenue sources.

20 The apparent inefficiency or wastefulness of much of state activity thus resultsnot only from the fact that the labour process is not directly subject to the lawof value, but also from the inherent anarchy of the state apparatus. Perhapsone should distinguish between the two sorts of 'inefficiency' by referring to itas 'inefficiency' in the former case, 'irrationality' or 'inconsistency' in the latter.

21 This suggests that a materialist critique of the discipline of 'Public Administra­tion' might throw considerable light on conflicts within the bourgeoisie and onchanging forms of class rule.

22 This point is argued at length by Blanke/Jiirgens/Kastendiek, 1977. While theirargument is not totally convincing, the generally mediate nature of stateactivity is a very important limitation on its effectiveness.

23 What is 'necessary' or 'functional' for capital in general (or a particular nationalcapital) can, of course, be derived only in the most general terms. What isperceived as being in the interests of capital in general, the strategies actuallypursued to achieve those interests, and a fortiori the actual performance offunctions by the state are all established through class struggle.

24 See in particular the interesting discussion of the introduction of PPBS inO'Connor, 1973, ch. 3.


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