Thus Spoke Lenin: On Prussian State Capitalism (Pt. III of III)

“But this again is a fundamental importance. It is one thing to draw out fantastic plans for building Socialism through all sorts of workers associations, and quite another to learn to build Socialism in practice in such a way that every small peasant could take part in it. That is the very stage we have now reached. And there is no doubt that, having reached it, we are taking too little advantage of it.

We went too far when we reintroduced NEP [New Economic Policy], but not because we attached too much importance to the principal of free enterprise and trade — we want too far because we lost sight of the cooperatives, because we now underrate cooperatives, because we are already beginning to forget the vast importance of the cooperatives from the above two points of view.

I now propose to discuss with the reader what can and must at once be done practically on the basis of this ‘cooperative’ principle. By what means can we, and must we, start at once to develop this ‘cooperative’ principle so that its Socialist meaning may be clear to all?

-Vladimir Lenin, “On Cooperation,” ca. January 4-6, 1923

In Part I as well as Part II, I adamantly maintained that the Double-Entry Account Bookkeeping System ought to be recognized as the most characteristic feature of every conceivable version of Capitalism that anyone and everyone has conceptualized since Adam Smith wrote The Wealth of Nations. Without it, nobody can record and process the movements Kapital and Schuld (Debt/Guilt), marshal goods and services under the Incentives of Supply and Demand, transfer Private/Common Property-as-Wealth, control the Inflation/Deflation Rate, set Interest Rates, determine Wages and Prices, levy Taxation Rates, and so forth. None of those things and more could be achieved if not for some way to oversee Kapital and Schuld.

Moreover, another important argument posited in both preceding posts was that, like the Socialisms, not all Capitalisms are equal. There is a lot more to the inequalities of Capitalism than the Nietzschean Ressentiment that comes with one Self having less Schuld and more Kapital than another Self or vice versa. Certain versions are more likely to realize some form of Pure Socialism than others. Such Pure Socialism could be Scientific or Artistic, with the former being Marxist and the latter being non-Marxist. This aspect of course depends on who is ultimately spearheading the Totality’s transition away from State Capitalism.

Clearly, throughout his writings of NEP, Vladimir Lenin was confident that the key to developing a State Capitalist model involved achieving complete mastery over the Double-Entry Account Bookkeeping System and the Fractional-Reserve Banking System that would employ it across everyday transactions. Since most conceptions of Currency involve a Financial Regime (Read: the Central Bank, the National Legislature and the Head of State) presiding over the creation and dissemination of that Currency. Here, a direct line between the Fractional-Reserve Banking System and the various State, Social, Private and Foreign Enterprises is forged, with Financial Markets, State Banks and privatized commercial banks serving as the conduit. The processes of Industrialization, Urbanization, Mechanization, Automation, and Digitalization can then be facilitated and sustained from that point forward. Everyone and every single economic organization will borrow Kapital for Schuld at varying Interest Rates to create more Kapital to not only pay down their Schuld but also create even more Kapital to keep everything going. Liberal Capitalist Financial Instruments (LCFIs) such as Stocks, Bonds, Commodities, Derivatives, and others are bought and sold to provide additional vehicles to transmit the additional Kapital and Schuld throughout the national economy. Prices and Wages are settled between the Market and the Financial Regime.  

The Financial Regime will be playing an integral role in the financial side of trade policy. There may be Free Trade Agreements (FTAs) or some form of Protectionism involving Tariffs, Duties, and Quotas. The Central Bank may be letting the Financial Markets decide the Values and Prices of Currency vis-à-vis Floating Exchange Rates or some limited hybridization between that and the Fixed Exchange Rate. The types of trade agreement and exchange rate will impact the shipments of Imports and Exports across international borders.   

Over the course of these developments, two important Modes of Production begin to emerge: Production for Profit and Production for Utility. Production for Profit creates the Kapital and Schuld, Production for Utility provides the support structures for said creation of Kapital and Schuld. Insurance plans, pensions, healthcare, childcare, education, housing, mass transportation, and countless other facets of Welfare Capitalism often stem from Production for Utility, bolstering the integrity of Production for Profit.  The social and organizational distinctions between State, Social, Private and Foreign Enterprises also become clearer during the synchronizations of Production for Profit and Production for Utility. Again, this does account for why the Social-Democrats have consistently been the only ones who have been able to grasp that relationship in their proposals and applications of Neoliberalism.  

Should the Totality not succeed in developing Council Democracy, which is guaranteed to be very likely, their country will feature the following five institutions of political-economic, social, cultural, financial and technological power:

  • The National Educational System → OECD-Type Student Economy
  • The National Economy → Market/Mixed Economy or low-tier Planned Economy
  • The Financial Regime → Fractional-Reserve Banking System
  • The National Government → Parliamentary Democracy, Council Democracy, Authoritarianism, or Military Dictatorship
  • The Digital Realm → Complete, Limited, or Restricted Access to the World Wide Web (WWW)  

From here, the question of whether to adopt Liberal Capitalism, Illiberal Capitalism, or State Capitalism emerges. The Political Left knows that Illiberal Capitalism, which they erroneously call “fascism,” is just a roundabout way of returning to Liberal Capitalism. Even Friedrich von Hayek had recognized that fact in reference to the Illiberal Capitalism of Pinochet’s Chile in the 1970s and 1980s. Similar conclusions can also be made about various Latin American, African, Middle Eastern, and Asian nations throughout the late 20th century. By process of elimination, all that remains is State Capitalism.

Remember, the State Capitalist model involves a Parliament or Council State playing a predominant role in economic life. But unlike most conceptions of Pure Socialism, State Capitalism will still be maintaining the shared paradigm between Production for Profit and Production for Utility and continuing to depend on the Double-Entry Account Bookkeeping System and the Fractional-Reserve Banking System. This is discernible in State Capitalist approaches to the National Educational System, the National Economy, the Financial Regime, the National Government, and the Digital Realm.

The National Educational System, unlike most Western countries, will be locked in Production for Utility. The Parliament or Council State funds it to better facilitate the Student Body’s formation and training.

The National Economy will be split between Production for Profit and Production for Utility. Expect a Market where economic life is dominated by the largest Private and State Enterprises, which rely on access to Kapital and Schuld in the forms of Subsidies, Low-Interest Loans, lower Taxation Rates, and other larger-scale methods of Welfare Capitalism. While Foreign Enterprises provide access to raw materials, foreign currencies, and even technical expertise, they are expected to play by the rules that the Market has set for them by the largest Private and State Enterprises. Social Enterprises are either too insignificant to be influential or else they do not exist altogether. Thus, Wages and Prices are determine by the Market under the guidelines of the Parliament or Council State.

Similarly, the Financial Regime will also be split between Production for Profit and Production for Utility. The Fractional-Reserve Banking System is employed to ensure the distribution of Kapital and Schuld across the National Economy. The Parliament or Council State will, with limited results, direct the Fractional-Reserve Banking System toward sustaining the largest State and Private Enterprises. State Enterprises and Private Enterprises that fetch the most Kapital within international trade are prioritized first before the rest of the National Economy.  

It should not be too surprising to expect the National Government to be running on Production for Utility and the Digital Realm operating on either Production for Profit or Production for Utility. The Digital Realm’s Mode of Production is affected by the political structures of the National Government. The National Government has a vested interest in promoting stability within the National Educational System, the National Economy and the Financial Regime. It cannot afford to tolerate political dissent or social trends which might destabilize those three and disrupt their production processes. Thus, it is natural for less democratic National Governments to minimize access to the World Wide Web (WWW) or impose censorship and propaganda to reinforce its overall political legitimacy. More democratic National Governments, while not having to resort to such measures, are trying to perpetuate the shared paradigm between Production for Profit and Production for Utility.   

Once every known facet of economic life has been mapped out and recorded in the Double-Entry Account Bookkeeping System, it then becomes feasible to implement the Work-Standard and begin the transition to Pure Socialism. If the People’s Party and their United Front succeeded in taking power, they can introduce a new Sociable Currency pegged to the Work-Standard and replace the old Currency at a favorable Exchange Rate. The political, economic, and social lives of the Totality and the State will be restructured to reflect the Work-Standard’s implementation. The rest will follow suit after enough dedication and encouragement from the preexisting or newly formed Council State. More specifically, the Work-Standard’s adoption will herald the replacement of the Double-Entry Account Bookkeeping System with Command-Obedience Account Bookkeeping and the Reciprocal-Reserve Banking System that employs it.

Categories: Philosophy

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