A Brief Note on Simon Clarke’s “The State Debate”

by Jehu

I have been reading the introduction to Simon Clarke’s, 1991 book “The State Debate”. The book is an interesting collection of paper produced by writers in the 1970s trying to come to grips with the fascist state. It does not appear any of them are directly trying to grapple with fascism; rather they seem to grappling with the previous formulations of the problem of the state and society.

Clarke makes this interesting statement:

“There was no way in which economic issues could be isolated from political questions in the atmosphere of growing economic crisis and sharpening political and ideological conflict through the 1970s.”

Yet, most of the authors referred to in this book are attempting just this: to isolate economic issues from political questions. As Clarke describes it, at the outset there were two poles in the debate: The first pole proposed “an immediate identification of the state with the interests of capital”. The second pole proposed, “institutional separation of the state from the economy, and so stressed the autonomy of the state as a political institution.”

Perhaps I am wrong, but there seems to have been a consensus among all the contributors to the debate that the first idea is erroneous. The debate appears to be over the character and actual degree of separation between political and economic issues. Which is to say, the contributors are debating the extent to which the political struggle between classes can be addressed in isolation from mode of production. In concrete terms: the debate is over the extent to which the struggle over wages can be fought, while ignoring wage slavery itself.

The background to the debate is the depression of the 1970s, which depression does not appear in the state economic data of the period. Everyone acknowledges the 1970s was a period of intense crisis. Yet this crisis did not appear in the form they had expected. There was no replay of the Great Depression although the actual devaluation of capital easily outstripped the 1930s.

What made this possible was the detachment of commodity money from state issued fiat. Measured in commodity money terms, the depression clearly shows up; but it does not appear at all in fiat currency terms.
To give an example of the imapct the separation of state issued fiat had on the data of the 1970s, here is US GDP as measured in US dollars for the period 1970-1981:


US GDP 1970-1981 (Dollars)

And here is GDP for that same period as measured in commodity money:


US GDP 1970-1981 (Gold)

The 1970s depression was not only deeper and more intense than the Great Depression, the contraction phase last more than twice as long — we could call it the silent depression. A large part of the difficulty the contributors to the debate encountered can be seen in the two different realities portrayed in the data. Clearly the period was one of intense crisis, however the nature of the crisis is still little understood by labor theorists. The world market experienced an intense contraction, but this contraction did not lead to a wholesale depression precisely because the state intervened to prevent it from being expressed in the form of catastrophic unemployment and devaluation.

Unlike the 1930s, by intervening, Washington ensured that employment and output increased year over year throughout the depression. The 1970s depression was a great example of the success of Keynesian economic measures in preventing a replay of the Great Depression; which should make the rise of “neoliberalist” Thatcher and Reagan policies at the end of the decade all the more puzzling. By all accounts of labor theorists the ambiguity of the subsequent economic data regarding the falling rate of profit begins with the depression of the 1970s.

I have seen no empirical research that suggests the crisis of the 1970s was anything but one produced by a fall in the rate of profit; the problem becomes fuzzy once the world market emerges from the crisis. The emergence of Thatcher/Reagan “neoliberalist” policies at the end of the decade should suggest the Keynesian methods employed to avoid a full-blown depression in the 1970s somehow made those policies necessary.
By this, I don’t mean to suggest that any specific policy Thatcher or Reagan pursued was necessary (e.g., Reagan’s championing of the anti-abortion cause); only that some menu of economic policies similar to those was made necessary by the methods employed to prevent a depression.

According to Clarke,

“[The] growth of the welfare state, and the election of social democratic governments, particularly in Britain and Germany, undermined the crude identification of the state with the interests of monopoly capital.”

Seen against the backdrop of the post-war boom, and in isolation from “politics”, what does this mean? In the period immediately leading to the depression of the 1970s, the wages paid (directly or indirectly) to the working class rose. But this rise in wages always happens during periods of boom according to labor theory. The illusion here is simply the idea the rise in wages resulted from the election of social democratic governments, rather than the boom itself.

By contrast, as the crisis deepens in the 1970s,

“[The] limited impact of the welfare state on problems of poverty undermined the rosy optimism of the social democratic view of the state as the decade wore on.”

In both instances, the effects of boom and bust on wages are attributed by Clarke to political causes, not to capital itself. In fact, even if we were to completely abstract from politics and political causes, we would expect exactly the same outcome. Which is to say, we gain no additional insight into the mode of production by seeking political explanation for the conditions of the class.

In periods of boom, we expect wages to rise; in periods of bust, we expect them to fall. If we expected something other than this result, politics might offer some useful additional insights to explain society.