State Capitalism

State capitalism, in its classic meaning, is a private capitalist economy under state control. This term was often used to describe the controlled economies of the great powers in the First World War. In more modern sense, state capitalism is a term used to describe a system where state is intervening in the markets to protect and advance interests of big business. This practice is in sharp contrast with the ideals of free market capitalism. This term is also used by some heterodox economists to describe a society wherein the productive forces are owned and run by a state in a capitalist way, even if such a state chooses to call itself socialist. Within Marxist literature, state capitalism is usually defined in the latter sense: as a social system combining capitalism — the wage system of producing and appropriating surplus value — with ownership by a state apparatus. By that definition, a state capitalist country is a country where the government controls the economy and essentially acts like a single giant corporation. The term itself was in use within the socialist movement from the late nineteenth century onwards. Wilhelm Liebknecht in 1896 said: "Nobody has combatted State Socialism more than we German Socialists; nobody has shown more distinctively than I, that State Socialism is really State capitalism!" There are various theories and critiques of state capitalism, some of which have been around since the October Revolution. The common themes among them are to identify that the workers do not meaningfully control the means of production and that commodity relations and production for profit still occur within state capitalism. An alternate definition is that state capitalism is a close relationship between the government and private capitalism, such as one in which the private capitalists produce for a guaranteed market. An example of this would be the military-industrial complex where autonomous entrepreneurial firms produce for government contracts and are not subject to the discipline of competitive markets. Many see this as part of a continuum characterizing the modern world economy with 'normal' capitalism at one extreme and complete state capitalism like that of the former USSR at the other. This continuum has narrowed somewhat since the 1980s with the collapse of the USSR and its satellites and with large-scale privatization in Eastern Europe and most of the third world. Both the first definition (the one used by Trotskyists) and this fourth one flow from discussion among Marxists at the beginning of the twentieth century, most notably Nikolai Bukharin who, in his book Imperialism and the world economy thought that advanced, 'imperialist' countries exhibited the latter definition and considered (and rejected) the possibility that they could arrive at the former. State capitalism is practised by a variety of Western countries with respect to certain strategic resources important for national security. These may involve private investment as well. For example, a government may own or even monopolize oil production or transport infrastructure to ensure availability in the case of war. Examples include Neste, Statoil and OMV.