The capitalist state, acting as the state of the ruling class, embodies this contradiction. It is comprised, in its day to day functioning, of the same professional middle-class that comprises the ranks of the functioning-capitalists – the same middle-class strata that also comprise the trades union bureaucracy - the superficial appearance of which gives rise to the idealist and subjectivist theories of a new class, put forward by Rizzi, Burnham, Hayek, Djilas, Dahrendorf and so on, whether characterised as a bureaucratic-collectivist, state-capitalist, or other managerialist class. It must promote the interests of its own national, socialised capital, which has, itself, now, burst the fetters of the nation state, and become multinational in nature, but must also defend the interests of the ruling-class of speculators and money lenders, themselves, now, also a global ruling class.
When asset prices crash, as in 1987 and subsequent crashes, this state, therefore, responded to the needs of this ruling class, concerned with its total returns, by creating additional liquidity that was pumped into financial and property markets to inflate these asset prices once more, causing price-earnings, and other such measures to rise to levels only previously seen just prior to earlier stock market crashes, such as 1929. But, the more this concern for total returns becomes dominated by the capital gain component of it, rather than the revenue component, the more this becomes a self-destructive, vicious circle.
Revenues, not only the interest/dividends paid to the owners of fictitious-capital, but also the profits, rents and wages are driven in search of these capital gains, for fear of missing out, and so drive asset prices higher still, draining revenues away from the real economy, and undermining the real capital accumulation needed to increase profits. It is the equivalent of the farmer that consumes their own seed-corn. It is the stripping of real assets in order to boost the prices of fictitious assets, on a huge scale, that must result in an enormous crash of those asset price, which 2008 gave notice of.
But, Marx and Engels could only see, and analyse the start of this process. Only after the passing of the Limited Liability Act, in 1855, did the huge growth of this fictitious-capital occur, some of which is detailed by Engels in his Supplement to Capital III. Here, in Anti-Duhring, they set out the other component of it, the expansion of the socialised capital, itself, and of the professional middle-class, and the consequent encroachment of the socialist society upon it, in the form of the need for extensive planning, regulation and standardisation, in place of the anarchy of production, seen in the early stages of capitalism. As Engels put it in his Critique of The Erfurt Programme,
“... when we pass on from joint-stock companies to trusts, which dominate and monopolise whole branches of industry, this puts an end not only to private production but also to planlessness.”
And, here, he and Marx note that all of these features of the socialist society are still utilised by the capitalists themselves, rather than for the benefit of workers.
“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.
But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.” (p 358)
They could not have foreseen that society would tolerate for so long the blatant theft of property by the ruling class, nor that the labour movement, including those that call themselves Marxists, would have reverted to those same Sismondist, petty-bourgeois, moralist ideas of the earlier period in their “anti-capitalist” attacks on large-scale, socialised capital. It represents an abandonment of the Marxist, scientific method, set out by Marx and Engels in this work, against a similar trend at that time.
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