Theory of State Capitalism

Lenin’s theory of using capitalism to build socialism under the condition of proletarian dictatorship.

Lenin put forward the concept of state capitalism in 1916. After the October Revolution in 1917, he first discussed the state capitalism under the dictatorship of the proletariat. He made a strict distinction between “state capitalism in a society in which regime belongs to capital” and “state capitalism in proletarian countries”. The former is capitalism of capitalist enterprises directly controlled by the state power of capitalist countries; the latter is capitalism that can be restricted and its scope can be defined. This state capitalism is connected with the state, and the state is the worker, the advanced part of the workers and the vanguard. The nature of state capitalism is determined by the nature of the state, and the nature of state capitalism determined by the nature of state is also different.

State capitalism under the dictatorship of the proletariat has both negative and positive aspects. On the negative side, it is necessary to pay a certain amount of “tribute” to the capitalists and hand over many of the most valuable products to the capitalists at the cost of adopting state capitalism, while the capitalists obtain raw materials that are extremely difficult to obtain and extra profits higher than the general profits; evaluating from the positive side, state capitalism is a centralized, statistical, supervised and socialized form of production. It can be used as an intermediate link between small-scale production and socialism and as a means, way, method to develop productive forces. In relatively backward countries, it is impossible to realize the direct transition from small production to socialism, so a roundabout path becomes a necessity.

We must take advantage of the positive side of state capitalism and limit its negative side to make it a transitional economy in the transition period to socialism. Lenin also put forward that the main forms of state capitalism under the dictatorship of the proletariat are: concessions, leases, cooperatives, consignment sales, joint stock companies, etc. The objects of the redemption and use of the various forms of state capitalism were different: the object of the use of concessions and joint-stock companies were foreign capitalists; the object of the use of leases, cooperatives and consignment sales were domestic capitalists. The use and redemption of capitalists by the various forms of state capitalism also have different aims and functions. The redemption and use of foreign capitalists by concessions and joint stock companies is to use their capital and technical equipment for the development of socialist production; the use and redemption of capitalists by cooperatives and leases is to develop small-scale production and to make a transition to large-scale production on the basis of voluntary participation.

Lenin’s theory of state capitalism under the condition of proletarian dictatorship did not see substantial development due to the limitation of historical conditions and due to questions of cognition determined by historical realities. On the other hand, China has gradually transformed the state capitalist industry and commerce into a socialist economy through state capitalism. At the present stage, those enterprises jointly run by the Chinese state-owned capital and foreign funded capital are also a form of state capitalist economy, which is conducive to the development of social productive forces.