Review: Capitalism and Theory

A collection of the writings of Mike Kidron casts light not only on the heterodox Marxist economist but also on the revolutionary socialist organisation he once belonged to, writes Brian Parkin.

Michael Kidron, Capitalism and Theory. Selected Writings of Michael Kidron, ed. Richard Kuper (Chicago: Haymarket Books, 2018). 400 pp.

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Mike Kidron was, along with Tony Cliff and Chanie Rosenberg, one of the founding members of the Socialist Review Group (SRG), the forerunner of the International Socialists (IS), which in its turn became the British Socialist Workers Party (SWP). Kidron is best known as the Marxist economist who developed the theory of the permanent arms economy to explain the post-war recovery, expansion and rate of profit of western capitalism. However, he was also a vigorous activist dedicated to restoring the reputation of revolutionary socialism within the British working class movement from the early 1950s to the mid-1970s

So it is timely, given the present-day marginalisation of the far left in the UK, that Haymarket Books has published some of Mike Kidron’s more illuminating essays and contributions to debates dating from a period when the far left was represented by the stark choices of Stalinism, left reformism or ‘orthodox’ Trotskyism.

It is also instructive in providing a sense of the period in which Kidron was making his contributions, when against a backdrop of contending imperialist rivalries, the existential threat of global nuclear annihilation seemed to be a real possibility. Of course, the nuclear threat has persisted to this day, as have the barbarities of imperialist proxy wars and resource conflicts – and now we have to add the likelihood of catastrophic climate change.

What is clear from reading the essays in Capitalism and Theory: Selected Writings of Michael Kidron is that the lack of a doctrinaire approach was characteristic of the SRG/IS at that time. This is not to say that the groups failed to develop serious theoretical contributions or to test them in the movement. Anyone engaged in serious debate with the SRG or the International Socialists could not escape the impression of a new Marxist current, keen to avoid a repetition of old tropes.

State capitalism

Perhaps the most outstanding – and controversial – theoretical offering from the early SRG was the theory of state capitalism as an analysis of the bureaucratic appropriation of Russia and its revolutionary credentials.[1] Although attributed to Tony Cliff ever since, it was in fact the result of a collaboration between Cliff and brother-in-law Kidron,[2] inspired by Cliff’s incisive critique of the Transitional Programme of the Fourth International of 1938. Trotskyists who remained bound by the Programme still held Russia, despite evidence to the contrary, to be a ‘degenerated workers state’ and therefore capable of restoration to full-blown revolutionary status by a process of internal reform.

The heresy of state capitalism was further compounded with an analysis of the many post-war anti-colonial wars of national liberation, which, in identifying the almost total absence of the working class in such struggles, questioned the designation of ‘socialist’ that much of the western left attributed to them. The SRG (and later IS) developed a theory of deflected permanent revolution.[3] This guided an approach of simultaneously giving every support to genuine anti-imperialist risings, while acknowledging the leading role of bourgeois nationalist liberals or radical junior officers and technocrats in substituting for the role of radicalised peasants and revolutionary workers in liberatory wars in South East Asia, Africa or Latin America.

To remind us of Kidron’s contribution here, Richard Kuper notes in his introduction to Capitalism and Theory,

Further contributions showed the breadth of his critique, from the previous Labour government’s record to Kenya, from Egypt to China, from Jamaicans in Britain (and racist responses in the labour movement to labour unrest in the docks and on the railways, from Rhodesia to the Gold Coast, from Cyprus to automation and redundancy. (p. 1)

For Kidron, then, capitalism’s post-war, post-colonial phase – with its consequences for the growth of racism in the metropolitan nation as the final and bloody phase of empire played out – was all part of a mode of production adapting itself.

Imperialism

An early attempt to refresh the Marxist theory of imperialism was an essay, ‘Imperialism: Highest Stage but One’ first published in 1962 (chapter 2 of Capitalism and Theory). Kidron, courting controversy as ever, starts with the sentence: ‘Fate was unkind to Lenin when it singled out his pamphlet Imperialism: The Highest Stage of Capitalism.’ The essay, while updating Lenin’s theory, was seen by some as debunking it – particularly the ‘Highest Stage’ postfix to the title, which Kidron took to mean that capitalism had reached the end of its road. The essay was reworked on a number of occasions, with its most developed version appearing in a collection entitled World Crisis: Essays in Revolutionary Socialism.[4]

The Permanent Arms Economy

Kidron’s reverential impatience with Lenin’s Imperialism was an early but formative step in a theory for which he is best remembered. The permanent arms economy rounded off the three theories – along with state capitalism and deflected permanent revolution – which marked out the International Socialist group (as it had become by 1968) on the British left.

In the development of his theory of the permanent arms economy, Kidron attempted to address two very evident paradoxes. The first was the clear contradiction between the catastrophism of the Transitional Programme and the reality of recovered, if not booming, post-war western economies. The second was an apparent disproof of a central tenet of Marxist economic theory, which held that as capital investment increased productivity, it displaced the contribution of labour. Since labour was the source of surplus value – which in turn was the sole source of profit – the rate of profit over time would fall. However, the rise in investment in the means of production (machinery, plant, etc.) relative to investment in wages (the rise in the ‘organic composition of capital’) was not leading to a decline in the rate of profit. So, Kidron asked, what was wrong?

Kidron identified the possible explanations for these anomalies in what he felt was probably an aberrant and therefore a limited period of sustained profitability. The most obvious evidence was in the US economy and its already largely state-funded defence sector. Further evidence was provided in the post-war arms race of the Cold War and the intense competition between (mainly) the US and Russia, which created a drive for more and more sophisticated weapons systems.

With the government playing the role of sole customer, research and development (R&D) investor and with the Treasury acting as guarantor, the element of risk was minimal and a rate of profit ensured. The technology spin-off into civilian spheres of production meant that the economy as a whole would be drawn along in the wake of arms spending. But Kidron’s most contentious proposition was the idea that the arms economy was in fact no more than production dedicated to the manufacture of waste.

To support this theory, he referred to Marx’s volume 2 of Capital, where Marx argues that the output of luxury goods (referred to by Marx as ‘Department III’), in providing no inputs to the production circuit, are waste. For Kidron, defence production drew off capital from the overall circuit and in doing so drew down the organic composition of capital to a level at which a rate of profit could be maintained.

The theory found a widespread audience within and beyond the academic left with the decision by Penguin to publish Kidron’s Western Capitalism since the War in 1968.[5] Although a relatively slender contribution to the debate, its 210 pages constituted the final stage of the IS’s rejection of the Fourth International and its mechanistic, fatalistic, Transitional Programme. From now on, the IS was an outcast from mainstream Trotskyism. Yet in relative terms, within an almost sub-atomic British revolutionary left, it thrived.

So for those of us discovering – and later joining – the IS in the late 60s or early 70s the experience was one of finding an organisation full of vibrancy and daring. An organisation with new but rigorously developed ideas that challenged the shibboleths of both Stalinism and of various outmoded and conflicting versions of Trotskyism: the kind of organisation with fresh ideas and a willingness to debate them that a ‘new left’ would benefit from emulating.

Theory and humility

The International Socialists also developed in that period and grew in terms of size and influence from a confident approach based on a unity of revolutionary theory with revolutionary action. This was underwritten with a shared understanding that in a changing and unpredictable world, few ideas were worthy of being written in stone.

Although I did not get to know Mike Kidron, I do have some enduring memories of him. One such is that of a debate I attended at the Students Union at the University of Leeds (long before I became a student and an academic) in 1969. The debate was on the theme of ‘Opportunities for the Left’, which I seem to recall was initiated by the May Day Manifesto group.

Mike was up against Dave Purdy of the Communist Party, Bob Pennington of the International Marxist Group and someone whose name I can’t recollect from the Independent Labour Party. In the midst of the Vietnam War and the shadow of the revolutionary events in France the preceding year, the debate was both lively and ill-tempered. Yet one thing that united most of the panel was the temptation at every turn to attack Mike Kidron as an apostate for his adherence to the state capitalist theory with regard to Russia and his ‘half-baked’ notion of a permanent arms economy.

Throughout Kidron listened, smiled, and sometimes gently chuckled, but he never showed anger. Then during his summing up he insisted calmly but determinedly that the state capitalist analysis of Russia was near inalienable – if only because it reinforced Marxism’s insistence that socialism could only ever come by a worker’s revolution from ‘below’ and be sustained by means of direct democracy. But as for the permanent arms economy – and this is what amazed me – he stated quite calmly that with this theory he had only done his best to explain the long boom of western capitalism since around 1953. The theory was no more than an honest attempt, was incomplete and required considerably more work on it. Furthermore, if anyone had a better explanation as to why capitalism had evaded its ‘death agony’ and instead grown four-fold in its productive capacity and means of exchange in just 16 years, he would gladly accept it.

Unresolved problems

The permanent arms economy theory, was, for Kidron, only a partial explanation for a long post-war boom that, according to most currents of Marxist opinion, should never have happened. At the core of that theory was the highly contentious suggestion that as arms production, as a form of luxury-goods production, was an endpoint in the reproduction of capital, workers engaged in such production were not in reality producing surplus value.

When challenged, initially by the late Colin Barker but then by Chris Harman, Kidron proved to be evasive. In part, this was because he had always insisted that the theory was only a partial explanation, but it was also because he insisted on the need to proceed with the task of developing a ‘general theory’ which would better explain the dynamics and underlying nature of contemporary capitalism.

When asked by Alex Callinicos in 1977 to consider reviewing the then current situation, Kidron replied, ‘The world of the late 70s presents new problems… faced with them our theory is like an old snapshot, yellowing and curling up at the edges. It needs updating’.[6]

Yet Kidron refused to take responsibility for such a task, which led to some exchanges between himself and Chris Harman – the most noted of which was in 1977 with Kidron’s observation, ‘Two insights don’t make a theory’. This elicited a response from Harman entitled ‘Better a valid insight than a wrong theory’.[7] But Kidron chose not to reply and that appeared to be very much the end of the matter.[8]

In conclusion

Throughout the course of his life, Mike Kidron had argued that in the course of its late development, productive capitalism would move inexorably closer and closer into a unity with the state – a set of competing state capitalisms within a matrix of imperialist rivalries. As it happened, the managerial function of the state in relation to capital certainly did develop, but in the form of neoliberal ‘free’ market capitalism and a partnership with the banking sectors – finance capital – that opened up an era of footloose credit (and debt) that facilitated global mobility of production.

Yet despite this unexpected turn in the precarious fortunes of capitalism, Kidron was right in anticipating a continued and deepening dependency between capitalism and the state, one in which the state could legislate to deepen of the bonds of exploitation and alienation that tie the lives of workers and the oppressed to the means of their immiseration.

While in the wake of the self-inflicted crisis of the British Socialist Workers Party in 2012-13, it may be fashionable to enlist the memory of Mike Kidron and others to the cause of left-bashing, it would be worthwhile reminding ourselves of some of his early words:

[Socialist Review’s] programme is one of transition from politically unconscious battles to conscious class struggle within our system; it is equally a programme of transition from capitalism to socialism. It is a programme of both reform and revolution. It is one of transition from the one to the other through class consciousness and action.[9]

Michael Kidron finally broke away from the IS around the mid-1970s and probably more decisively over the decision to reconstitute the organisation into the SWP. Yet the relationship between Cliff and Kidron still continued – albeit in a more distant and grumpy form. Ian Birchall has told me how the annual Christmas dinner at Kidron’s home persisted more or less up to Cliff’s death in 2000. They would sit (Ian recalls) at either end of a long dinner table, Cliff glowering at Kidron, his brother-in-law, in silence.

A great shame – if only because if there was one thing they would have surely still agreed on it would be some words that Kidron made in 1977: ‘Without theory an organisation can do more than ride the tides of working class consciousness, which might be exhilarating as a sport but is irrelevant as revolutionary politics’.[10]

Footnotes

[1] Tony Cliff, Stalinist Russia: A Marxist Analysis (London: IS Books, 1955); reprinted as book I of Russia: A Marxist Analysis (London: IS Books, 1964) and in revised form as State Capitalism in Russia (London: Pluto, 1974).

[2] In conversation with me, Ian Birchall recalled how the period of close collaboration between Cliff and Kidron brought about the finest output in both of them.

[3] The theory of Deflected Permanent Revolution was later greatly enriched by Nigel Harris, whose finest work on the subject is undoubtedly his account in his: The Mandate of Heaven. Marx and Mao in Modern China (London; New York: Quartet Books, 1978); republished (Chicago: Haymarket Books, 2015).

[4] Nigel Harris and John Palmer (eds.), World Crisis: Essays in Revolutionary Socialism (London: Hutchinson, 1971), where the essay was re-titled ‘Capitalism: The Highest Stage but One’. The book is probably the finest collective statement of the salient and founding views of the International Socialist tradition but is now sadly out of print with little chance of republication.

[5] Michael Kidron, Western Capitalism Since the War (London: Penguin, 1968).

[6] Alex Callinicos, ‘Modern capitalism: Mike Kidron’, International Socialism Journal, 162 (2019) 141.

[7] Michael Kidron, ‘Two insights don’t make a theory’, International Socialism, 1st series, 100 (1977); Chris Harman, ‘Better a valid insight than a wrong theory’, International Socialism, 1st series, 100 (1977), 9-13.

[8] In fact Kidron did elaborate on his argument, albeit not necessary in written form, as John Rudge has uncovered in the course of his archival work.

[9] Kidron, Capitalism and Theory, p. 177.

[10] Kidron, Capitalism and Theory, p. 1.