State Socialism

Does State Ownership Make It Socialism?

'State socialism' has almost never been a name anyone claims for themselves; it is mostly applied to other people. The reason is that a conclusion is already lodged inside the word: that once the state owns and runs the economy, the result is socialism.

The Marxist objection is the same from beginning to end. The question to ask first is not what the state owns but whose state it is. In the Critique of the Gotha Programme (1875) Marx put it directly: "Freedom consists in converting the state from an organ superimposed upon society into one completely subordinate to it." Because 'state socialism' buries that question, it never became a tool of analysis and remained an object of criticism instead.

1. Lassalle: The State as a Lever

The German is Staatssozialismus, and the lineage begins with Ferdinand Lassalle (1825–1864).

Lassalle was a Hegelian. For him the state was not first of all an instrument of class rule but "the realisation of the universal actual Will," whose purpose was to educate and develop the human race towards freedom. His mockery of the liberal conception of the state as a night-watchman state (Nachtwächterstaat), in an 1862 Berlin speech, follows from that view: what is the use of a state that guards property and walks its rounds at night? The standard modern term for the minimal state began life as his jeer.

His economic premise was the 'iron law of wages' (ehernes Lohngesetz): under capitalism average wages are always driven down to the bare minimum of subsistence. If that is an iron law, trade-union wage struggle is futile in principle, and only one road out of the trap remains: workers must become their own employers by setting up producers' co-operatives. But workers have no capital. So the state must furnish the credit, and to move the state they must first win universal, direct suffrage. Suffrage to state credit, state credit to producers' co-operatives: those three links are the whole of Lassalle's programme. On that programme he founded the General German Workers' Association (ADAV) in Leipzig on 23 May 1863, the first organised German workers' party.

One point must not be missed here. The state Lassalle meant was not the Prussian state as it stood but the state the workers would take hold of through universal suffrage. His error was therefore not the 'worship of the state' he is usually charged with. The error was to think the class character of the state could be swapped at the ballot box while its apparatus stayed as it was. And it was on that premise that from May 1863 he entered secret meetings and correspondence with Bismarck, proposing that workers and the conservative state combine against bourgeois liberalism to win the franchise. Marx and Engels regarded the manoeuvre with deep suspicion, and reasonably so.

2. Bismarck: Where the Name Was Attached

Lassalle's design was half-realised by an unlikely hand. Bismarck's Anti-Socialist Law of 1878 banned the associations, meetings and publications of social-democratic, socialist and communist endeavour; alongside it he introduced sickness insurance in 1883, accident insurance in 1884, old-age and disability insurance in 1889, and nationalised the main Prussian railways. Repression and social legislation were two sides of one policy. The aim was to detach workers from the Social Democrats by showing them that the state was not merely a necessary institution but a benevolent one. It failed: the party kept growing regardless.

The name was attached here. Liberal and conservative opponents mockingly called the package state socialism, and Bismarck answered that he was a more practical socialist than the Social Democrats were. There was an academic current under the same banner: the so-called socialists of the chair (Kathedersozialisten), gathered around the Verein für Socialpolitik founded at Eisenach in 1872 and looking for a middle path between socialism and laissez-faire, of whom Adolph Wagner made Staatssozialismus the outright name of his school. 'Socialists of the chair' was itself a label pinned on them in derision by a liberal critic.

So the accounts stand thus. The state Lassalle presupposed was one the workers would win at the polls; the state Bismarck ran was the Junker-bourgeois state. The form of ownership is the same and the class character of the state is opposite. That is why the phrase has only ever functioned as an accusation.

3. What Marxism Answered

The Lassalleans (ADAV) and the Eisenachers (founded 1869 by Bebel and Wilhelm Liebknecht) merged at Gotha in 1875. Marx's demolition of the unity programme, point by point, is the Critique of the Gotha Programme, and most of its targets were Lassalle's legacy.

Of the iron law of wages he observed that the word "iron" is a label by which the true believers recognise one another, and that the proposition rests in the end on Malthusian population theory: the party had gone back to the dogma of a man who did not know what wages were. Of the demand for co-operatives founded with state aid he remarked that if you can build a new society with state loans then you may as well build a railway that way; co-operatives are worth something only as the independent creations of the workers, never as wards of the government. Of the slogan of the 'free people's state' he said flatly that it is by no means the aim of the workers to set the state free: the sentence quoted above is his answer.

Engels was blunter. In a footnote to Socialism: Utopian and Scientific (1880) he called the fashion for describing Bismarckian nationalisation as socialism a 'spurious socialism.' If the state taking over the tobacco trade is socialist, then Napoleon and Metternich must be counted among the founders of socialism. Belgium building its railways and Bismarck buying up the Prussian lines were done to have them in hand in case of war, not out of any socialist purpose, and on that reasoning the royal porcelain works and even the army's regimental tailor would qualify as socialist institutions.

Wilhelm Liebknecht, who had faced the Lassalleans at Gotha, settled the argument in a sentence in 1896: "Nobody has combatted State Socialism more than we German Socialists, nobody has shown more distinctively than I, that State Socialism is really State capitalism!" Whatever work the phrase was doing, he argued, belongs to state capitalism instead. Lenin stands in the same line. In The State and Revolution (1917) he called the claim that monopoly or state-monopoly capitalism is no longer capitalism but may now be called 'state socialism' an erroneous bourgeois reformist assertion.

4. What the Phrase Means Today

Once the Eastern bloc collapsed, Western scholarship adopted 'state socialism' as the standard classifying label for Soviet-type systems, as in titles of the form "why did state socialism collapse?" One thing is worth noting. The USSR and the Eastern bloc states never used it of themselves. The name was applied from outside and after the fact, and it works as a category that groups these cases while already presupposing that socialism failed. That is why the phrase, when met in the academic literature, has to be read together with the position of the writer using it.

Korean adds a translation problem on top. Nazi ideology was Nationalsozialismus, never the same word as the Staatssozialismus this entry treats, and it does not overlap in content either: it put nation in place of class and rejected Marxist class struggle and internationalism outright. Korean usage has accordingly been settling on 민족사회주의 for the Nazis and 국가사회주의 for Soviet-type systems. The party, however, is still commonly written as 국가사회주의 독일 노동자당, and that collision is exactly the argument for standardising on 민족사회주의.

The phrase, then, survives as an accusation rather than as a designation. To characterise an actual system one has to start not from the form of state ownership but from the relation between the state and the working class. And the counterpart built to put that question directly is state capitalism.