The evolution of the modern capitalist state

At a meeting in early February, an activist from South Korea told me: “We only wish Bush could run for office a third time. No other political force could have helped the progressive and pro-reunification movement in Korea make so much progress. Bush’s hard-line threats against North Korea have created a groundswell of anti-imperialist sentiment in South Korea and weakened the United States’ hold over the people.”

Under modern capitalism, imperialist governments use free trade agreements like the FTAA to profit the capitalist class. Photo: AFP/Martin Bernetti

That is an interesting statement. Contrast it with all the hubbub from the left in the United States about how the “world can’t wait to get rid of the Bush regime” or other agitation that implies replacing Bush with a Democrat is the movement’s most urgent task.

South Korea has functioned as a virtual puppet for U.S. imperialism for more than a half century. Although it was poorer than socialist North Korea until the late 1960s, successive U.S. governments and U.S. corporations pumped huge amounts of capital into South Korea to build up its economy. The United States wanted to showcase a thriving capitalist South Korea as a counterpoint to the impressive gains made by North Korea in the first twenty-five years of its existence.

By 2004, South Korea became the tenth largest economy in the world. The 37,000 U.S. troops that occupy the country signal the nature of its relationship with the United States.

Now, political forces in South Korea are moving in a different direction. The unleashing of Bush’s hyper-aggressive foreign policy has created a backlash by the people. It is unlikely that this anti-U.S. genie will ever be forced back into its neo-colonial bottle. It is a new day in Korean politics.

Bush’s strategy of “endless war” and aggressive “regime change” against any independent government has fueled anti-U.S. sentiment not only in Korea but throughout other strategic arenas in global politics. Latin America has swung to the left. Iraq is a bastion of armed resistance. Iran and its people are organizing to resist U.S. threats.

The Korean activist understands something that a big sector of the U.S. capitalist establishment now believes: Bush’s foreign policy, while continuing to pose an ongoing threat to independent governments, has also weakened the global position of U.S. imperialism.

After September 11, 2001, the moral standing of the U.S. government was at a zenith. Today, less than five years later, the U.S. government is perceived as the number one enemy of the people of the world.

This is bad for business. Bush’s imperialist arrogance has facilitated the resurgence of anti-imperialist sentiment at the grassroots level all over the planet. The capitalists are not happy that wherever Bush travels, this erstwhile leader—who supposedly is protecting their global interests and investments—is met by mass demonstrations and street rebellions.

Although U.S. capitalism is the dominant force in the world economy, it is extremely dangerous from the ruling class’s point of view to create such global enmity and stimulate anti-imperialist organizing and consciousness. This in turn creates an atmosphere increasingly hostile to U.S. hegemony.

Since there is disenchantment now with Bush in significant sectors of the capitalist establishment, it is important for communists, revolutionary socialists and genuine anti-imperialists to have a deep understanding of the basic mechanisms and functions of the capitalist political system and specifically the modern state. Otherwise, progressive sectors of society can be easily manipulated and devolve into cheerleaders for a group of capitalists that for the moment poses as an “opposition.”

The emergence of the modern state

In its essence, the national state in any capitalist country is an instrument of coercion, a tool of violence to oppress and hold down the working class. It appears as a “public power” standing above society. In essence, the capitalist state is composed of an army, a police force, courts and prisons, all of which exist as a bottom-line defense for capitalist private property. In addition, the state performs other essential tasks to promote the interests of the capitalist class, including subsidiary functions necessary for the management of any complex modern-day society, such as sanitation, traffic regulation, fire department and so on.

In the 1848 Communist Manifesto, Karl Marx and Fredrick Engels made this important and enduring observation: “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

Today, long after free market capitalism has transformed into monopoly capitalism and fused with the state in a thousand and one ways, this may seem like a simple statement. But Marx and Engels were drawing the working class’s attention to an evolving political phenomenon.

The Manifesto was written in 1848, at the early stage of the Industrial Revolution and before the European bourgeoisie had fully consolidated its political power from the old feudal social order. The generalization about the role of the modern state was loaded with acute observational analysis of a trend that had not fully matured.

The modern-day capitalist bourgeoisie, which first took root in Europe, accumulated its primary capital—its foundational wealth—from colonies and from the enslavement of millions of Africans and Indigenous on the plantations and in the mines of the Americas.

Private companies played a key role in the trans-Atlantic slave trade.

All this is well known today and has been documented in countless books and articles. What is less understood is the essential role that the private corporate and capitalist entities—the factories, the shipping companies and the like—played in providing their own tools of coercion and violence in extracting wealth. It was not the state but the capitalists themselves who played this role.

When the capitalists functioned directly

The colonization of India provides a useful example. P.W. Warner, in his book “Corporate Warriors” (Cornell University Press, 2003), describes the rule of the trading companies.

In 1599, the English East Indies Company began its vast colonial plunder in Asia. In 1602, the Dutch capitalists formed the Dutch East India Company to challenge British plans to acquire hegemony in the region. Technically, under the license from their home governments, these companies not only monopolized trade in gold, spices, opium, silk, Chinese porcelain and other goods, they also took control of territories with huge armies and navies that were in fact larger than the British or Dutch official armies and navies.

By 1782, the English East India Company army was made up of more than 100,000 soldiers, all mercenaries—far larger than the British army at the time. The Dutch company armed forces grew to more than 25,000 full-time soldiers and an armada of 140 ships.

The companies had a monopoly position in trade and assumed all the “normal” state functions of sovereign countries. The Universal Dictionary of 1751 wrote: “One of the reasons why the Dutch East India Company flourishes, and has become the richest and most powerful … [is because it] makes peace and war at pleasure, and by its own authority; administers justice to all … settles colonies, builds fortification, levies troops, maintains numerous armies and garrisons, fits out fleets, and coins money.”

By assuming the absolute powers that later fell exclusively to the modern capitalist state, these individual corporate entities conducted themselves narrowly based on their own profits without regard for the needs and interests of the other capitalists. For example, King James I told the English East India Company to avoid unnecessary conflict with Portugal, since the British crown was seeking a diplomatic alliance with Portugal. The company nonetheless sank most of the Portuguese ships in the region. More than a century later, in 1759, the British and Dutch companies fought a land and sea war with each other when the English East India Company tried to defeat all commercial rivals in India. The English company prevailed.

Indian revolt changed the equation

The economic establishments back home gradually rejected the massive unilateral powers that these companies held. The companies pursued their own narrow commercial interests and the cost of maintaining their own armies, navies and forts was an increasing drain on profits. Investors turned sour on both the Dutch company, which went bankrupt in 1798, and the English company, which began losing major powers to the British crown in the early 1800s.

The great 1857 Indian Revolt ended with the English East India Company’s dissolution and with the British state replacing the company’s more or less direct rule. Thousands of Indians and British forces were killed before the rebellion was put down.

In response to the 1857 Revolt, an act of parliament replaced the East India Company with a secretary of state for India who would be directly responsible to the British cabinet. By November 1858, Queen Victoria conferred on the governor-general of India the title of viceroy.

The common affairs of the bourgeoisie

Marx and Engel’s generalization about the evolution of the “modern state,” and especially its executive, as managing the “common affairs” of the bourgeoisie was not an observation of a finished process. Instead, it predicted the growing and indispensable role of the state in maintaining the interests of not only some capitalists but also the entire class, at home and abroad.

Today, that trend is a finished product. All U.S. corporate and banking entities count on the U.S. government and the army, navy, marines and air force to protect and guarantee their domestic and global interests.

When Hurricane Katrina hit in August 2005 and the insurance companies faced huge losses, they expected the government to move in with a massive inflow of taxpayers’ money to bail them out from their liabilities. When the New York City transit workers went on strike in December 2005 to maintain their pensions, the capitalists knew they could count on the courts to impose huge fines on the workers and throw their leaders in prison if they persisted.

This relationship with the state is especially important for the capitalists’ far-flung global interests. They count on the U.S. government to negotiate preferential trade agreements in their interests, like NAFTA, the FTAA and CAFTA. They expect the government to provide loan guarantees and credits to bail them out when their investments abroad go badly, as happened in 1994 when Clinton and Congress provided a $20 billion bailout to U.S. investors in Mexico because their peso-denominated investments collapsed. They expect the International Monetary Fund to force foreign governments to privatize key industries so that U.S. corporations can purchase the most lucrative ones.

In short, the capitalists expect the executive of the state to manage the common affairs of the whole bourgeoisie. But this is in the modern era. At the rosy dawn of capitalism, the bourgeoisie was its own enforcement agency.

Ruling class opposition to Bush

This brings us back to George W. Bush and his current problems.

In the last year, Bush has been getting more bad press from the capitalist media. The big business media is typically the preferred way for the capitalists to start to express their grievances with the way the “executive” is “managing their common affairs.”

Congress, too, can become a vehicle for expressing the unhappiness of sectors of the capitalist establishment. But with the exception of a tiny lot of demonized souls, the 535 politicians who fill up those hallowed halls are such a corrupt and cowardly lot that they usually only complain about Bush by taking an even more right-wing position than the White House. The Democratic Party leaders’ statements about Iran or the Dubai company managing U.S. ports are notable examples.

If Bush had presided over victory in the Iraq adventure, the media and politicians of both parties would be ritualistically bowing before his “endless war” and his “march of democracy.” But the armed resistance in Iraq has proved so intractable that the United States government is now perceived not only as a bully, but a vulnerable bully—a force that can be defeated. The people of the world have been re-galvanized with anti-imperialist consciousness.

The Bush administration’s hyper-aggressive strategy and its program of unilateral militarism, threats and intimidation have created a growing sense of isolation among the U.S. capitalist class. Because the U.S. military is bogged down in Iraq, it is harder to send hundreds of thousands of troops to fight somewhere else.

With the world changing dramatically in both the realms of economics and politics, a growing section of the bourgeoisie is filled with unease about what is unfolding. The post-Soviet era was supposed to bring stability—the “end of history,” in the words of right-wing ideologue Francis Fukuyama— to the rule of world imperialism after decades of fierce global class war. The unbridled run of the roost by the neo-conservative policymakers has, at least temporarily, caused some capitalists to wish they had a different leadership managing the common affairs of the bourgeoisie.

Contrary to Marxism’s understanding of the modern capitalist state and its executive, liberalism and social democracy preach that the state can be turned into an instrument for social change. True communists want to build an independent movement that aims at gaining political power for the working class, destroying the ruling class’ state and building a new state power to defend the working class’s interests. Only then can the state function as a progressive instrument for the majority of the people.