Origins and Early Uses of The Term
The term itself was in use within the socialist movement from the late 19th century onwards. Wilhelm Liebknecht in 1896 said: "Nobody has combatted State Socialism more than we German Socialists; nobody has shown more distinctively than I, that State Socialism is really State capitalism!"
It has been suggested that the concept of state capitalism can be traced back to Mikhail Bakunin's critique during the First International of the potential for state exploitation under Marxist-inspired socialism, or to Jan Waclav Machajski's argument in The Intellectual Worker (1905) that socialism was a movement of the intelligentsia as a class, resulting in a new type of society he termed state capitalism. For anarchists, state socialism is equivalent to state capitalism, hence oppressive and merely a shift from private capitalists to the state being the sole employer and capitalist.
During World War I, using Vladimir Lenin's idea that Czarism was taking a "Prussian path" to capitalism, the Bolshevik Nikolai Bukharin identified a new stage in the development of capitalism, in which all sectors of national production and all important social institutions had become managed by the state; he termed this new stage 'state capitalism.'
After the October Revolution, Lenin used the term positively. In spring 1918, during a brief period of economic liberalism prior to the introduction of war communism, and again during the New Economic Policy (NEP) of 1921, Lenin justified the introduction of state capitalism controlled politically by the dictatorship of the proletariat to further central control and develop the productive forces:
Reality tells us that state capitalism would be a step forward. If in a small space of time we could achieve state capitalism, that would be a victory. (Lenin 1918)
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