There is an alternative to that. In the 1920's, for example, Italian and German workers began to occupy the factories and operate them under workers control, following the example of Russian workers. In other words, they no longer allowed profit to be the determining factor. But, that is not compatible with a continuation of capitalism. In turn, that means that this is no longer, simply, a question of labour negotiating terms with capital, via the mediating role of the social-democratic managers, be they trades union and management bureaucrats, or those at the level of the state. The question has to be resolved on the basis of the interests of one side or the other – capital or labour.
In Italy, the fascists arose as paramilitary adjuncts of the capitalist state to smash the workers organisations, and the same arose, in Germany, after the failure of the Communist Party to seize power in 1923. In the 1970's, crisis phase, the well established, by then, dominance of large-scale, socialised industrial capital – objectively the collective property of the workers – provided a golden opportunity for Left social-democracy and reformist socialists alike, to simply demand that workers be given their rightful control over their own property. Whilst, in Germany, workers had a limited right of such control, in the form of the co-determination laws, such participation on management boards was just a cover for corporatism, and a continuation of their own exploitation. Nevertheless, as Marx and Engels set out, and as will be discussed later, this was, itself, also, an indication of the extent to which capitalism must adopt the methods and forms of the encroaching socialist society. It was no coincidence that, during this period, social-democratic governments increased the role of national economic planning bodies, and, in the EEC, extended that beyond national borders. In Britain, the Bullock Report proposed measures of industrial democracy, and elected workers representatives on boards, and the EU drew up similar proposals.
But, again, the limitations of Left social-democracy and reformist socialism, become apparent. The bourgeois ruling-class was, at that time, established, not as owners of industrial capital – that was, now, the the collective property of the working-class (associated producers) – but as owners of fictitious capital. Their revenues came, not from profits, but from interest/dividends, and from the realisation of capital gains. But, as ruling class, they still exercised control over the state, and it ensured that, via company laws, they continued to exercise control over industrial capital, via their control of shares, and ability to appoint Directors.
In fact, the short-term interest of fictitious-capital, which is antagonistic to the interests of industrial capital, leads to a contradiction, which must itself lead to a crisis, as seen in 2008. The state, as a capitalist state, was never going, in the 1970's, to resolve the crisis of overproduction of capital, at the expense of capital, including not at the expense of fictitious capital, the form of wealth, now, of the ruling-class, even though, as Marx showed, the interests of that fictitious-capital are contradictory to, and a fetter on, the development of real capital itself.
In Italy, the Communist Party, by then a Left social-democratic party, looked likely to form a government, and that was enough for US imperialism to expose the sham nature of bourgeois-democracy, as it said openly that it would destabilise any such Italian government. In Britain, even the mildly progressive, social-democratic government of Wilson was threatened with coups, and so on, and the long-term decline of British capitalism left its economy always prey to capital strikes and runs on the Pound. In France, the Popular Front government of the social-democrats and communist party (itself by then, really, just another Left social-democratic party) repeated the failures of the Popular Front of the 1930's. It left capitalist production, and the rule of profit and the market intact, whilst attempting to impose measures of redistribution on top of it. Capital simply relocated elsewhere, again, showing, also, the utopian and reactionary nature of trying to construct socialism in one country.
In Chile, a similar Popular Front government failed even more disastrously, because the Chilean ruling-class, via its control of the state, gave a clear lesson in the difference between the state and the government. The state, faced with a government that threatened the interests of the ruling-class, simply swept it away. In Italy, Germany and Spain, in the 1930's, the state was supported by the fascist auxiliaries, whilst, in Chile, in 1973, the Chilean state was supported by the auxiliaries of the CIA.
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