“What is State Capitalism under Soviet power? To achieve State Capitalism at the present time means putting into effect the accounting and control that the capitalist classes carried out. We see a sample of State Capitalism in Germany. We know that Germany has proved superior to us. But if you reflect even slightly on what it would mean if the foundations of such State Capitalism were established in Russia, Soviet Russia, everyone who is not out of his senses and has not stuffed his head with fragments of book learning, would have to say that State Capitalism would be our salvation.”-Vladimir Lenin, Session of the All-Russia CEC, ca. April 29, 1918
To understand what State Capitalism is, we need to recall the key characteristics of Capitalism as they were outlined in The Work-Standard (2nd Ed.) and The Third Place (1st Ed.).
Every nation in the State of Total Mobilization has five institutions of political and socioeconomic power in this century: the national educational system, the national economy, the financial regime, the national government, and the digital realm. The national educational system guides the next generation toward the national economy and the national government, the financial regime sustains everything, and the digital realm connects everything to form a shared National Consciousness defined by a National Identity and National Essence.
I identified those five institutions under Neoliberalism as the following:
- OECD-Type Student Economy
- Market/Mixed Economy
- Fractional-Reserve Banking System
- World Wide Web (WWW)
Socioeconomic life under Neoliberalism is organized by a Society operating under a Class-based system, centered around Kapital and Schuld and governed by the Incentives of Supply and Demand. Everyone’s status is determined by how much Kapital and how much Schuld they have at any given period of Zeit. Everyone’s employment is motivated by the pursuit of the greatest Quantity of Kapital for the least Quantity of Schuld. The purpose of the OECD-Type Economy, from its educational curriculum to its Student Loans, is to induct the youth from an early age.
All economic organizations are distinguished based on whether they are Private Property-as-Wealth or Common Property-as-Wealth. Unlike Common Properties, Private Properties are essentially any economic organization not under the control of Society vis-à-vis the Parliament. Every conceivable form of economic activity is conducted at the Market/Mixed Economy, whose mode of economic governance relies on a precise balance between Production for Profit and Production for Utility. Private Properties tend to be oriented toward Production for Profit, whereas Common Properties perform Production for Utility. All aspects of Welfare Capitalism, from Social Insurance to Social Welfare, stem from Production for Utility and are meant to compliment Production for Profit. Only the Social-Democrats have been able to grasp this aspect well.
Providing Kapital and Schuld for the Market/Mixed Economy are Financial Markets and privatized commercial banks, subordinated by a Central Bank’s Fractional-Reserve Banking System. Privatized commercial banks lend Kapital for Schuld at a predetermined Interest Rate. Financial Markets offer assorted Liberal Capitalist Financial Instruments (LCFIs) such as Stocks, Bonds, Commodities, Derivatives, Cryptocurrencies, and so forth. The Fractional-Reserve Banking System may create Kapital and Schuld as a conception of Currency that is either Commodity, Representative, or Fiat Currency. Any conception of Currency relying on Kapital and Schuld will be relying on a Inflation/Deflation Rate whose effects of Currency Depreciation/Appreciation can be manipulated by the Interest Rate.
Accounting and control methodologies under Neoliberalism involves the Double-Entry Account Bookkeeping System. The Quantities of Kapital and Schuld can be easily recorded and monitored by a trained accountant employing accounting methods custom-made to suit Kapital and Schuld. There is even a Parliamentary Budget that pours Kapital toward a series of Parliamentary Funds intended for Ministries and all Government Spending. Those too are designed to accommodate Kapital and Schuld.
The creation of new Kapital and Kapital relies on another balance between Consumer Spending and Government Spending. Society and Parliament must create Schuld into order to create more Kapital. People spend Kapital and reap Schuld through their everyday transactions. Parliament can influence both Government Spending and Consumer Spending through heavy overreliance on Taxation and Spending. The Market/Mixed Economy employs Commercial Advertising in the same manner that Parliament deploys Propaganda during wartime in order to encourage more Consumer Spending. The Class-based system is supposedly kept in check through Income Taxation and Welfare Capitalism. Again, this too is another instance where the dynamics of Production for Profit and Production for Utility are at play. Parliament also views Free Trade Agreements (FTAs) emphasizing high Exports and low Imports to be the most ideal way to conduct international trade. Somebody else should earn Schuld for Society high standard of living.
Speaking of living standards and the OECD-Type Economy by extension, Liberal Capitalist Technologies (LCTs) display a recurring characteristic of eliminating Arbeit in the interests of Kapital. Either the LCT yields Arbeit of poor Quality or all Arbeit is eliminated altogether. Most LCTs are rooted in this design philosophy where Arbeit is worthless, a liability in the effort to attain the most Kapital from economic activity. Unfortunately, this has also led to the digital realm failing to achieve its fullest potential. I have discussed that implication before in Economic History Case Studies: Fourth Industrial Revolution (2000-2100).
Everything discussed here is only the economic aspects of the “Capitalism” in Liberal Capitalism. The political and social aspects bound to the “Liberalism” in Liberal Capitalism are beyond the focus of this three-part post. Here, the purpose is to assist in the definitions of State Capitalism with regard to the Work-Standard. I am convinced implementing the Work-Standard will pivot the dynamics of State Capitalism toward a Socialistic direction, transforming it into State Socialism.
Compared to various people on the Political Left, I have my own interpretation on why Lenin spoke about the need to develop State Capitalism in order to later implement State Socialism in Soviet Russia. Lenin, like Spengler in Prussianism and Socialism, knew that there are certain versions of Capitalism that will a nation directly toward its own Socialism. When he mentioned about needing to acquire the necessary “accounting and control methods,” I recognized immediately that Lenin stressed the need to understand the Double-Entry Account Bookkeeping System, and make an attempt at replacing it with a more Socialistic alternative.
If there is anything that I had just described earlier in this post that would make everything tick, it is arguably the Double-Entry Account Bookkeeping System. Since everything relies on Kapital and Schuld, the Double-Entry Account Bookkeeping System is what keeps everything together. Without it, it would be impossible to measure and gauge the creations of Kapital and Schuld, let alone keep track of any newer ones. I even made that point clear in my discussions of the Work-Standard, which explains why The Work-Standard (2nd Ed.) had to be written in a specific manner. Every discussion about the Work-Standard therein was meant to build toward the development of distinctive accounting methods and their equations.
With the Double-Entry Account Bookkeeping System in mind, I will be spending the next two parts discussing State Capitalism. Part II delves into how it exists in practice under Kapital and Schuld, while Part III addresses how it will function under Arbeit and Geld. By Part III, I should already have a definitive conclusion on whether certain forms of Capitalism lead straight to Pure Socialism.