Chapter 4 of The Nature and Logic of Capitalism is titled “The Role of the State.” The issue here is the nature of the relationship between two kinds of power, political and economic.
Heilbroner begins by noting that a social formation is a complex totality consisting of many different elements; some of these elements function harmoniously while others may be in conflict with each other. Obviously, it would be a mistake to describe any given social formation by paying attention only to its most obvious or most active element. At the same time, all of the various elements of a social formation should not receive the same amount of attention, for some of them play a more central role than others in determining its nature and logic. Indeed, every social formation is characterized by a “central organizing principle,” i.e., a key element that exerts a disproportional influence over all other aspects of society. In the case of capitalist social formation, that principle is “capital with its self-expanding attributes” (p. 79). While we don’t want to reduce everything that happens in a capitalist social formation to the sole influence of capital, we cannot afford to ignore its pervasive influence either. Heilbroner summarizes his point as follows:
Thus it seems to me that the failure to accord centrality to one principle and its embodying institutions — not, of course, the same ones for all social formations — robs social analysis of its clarificatory potential as gravely as the dogmatic insistence that all attributes of any given society can be explained as mere epiphenomena of its mode of production or of any other organizing structure. (p. 83)
Given that capital is “the dominating principle” of a capitalist social formation, Heilbroner argues, its influence cannot possibly remain restricted to the economic sphere alone; rather, it “must color and infiltrate the institutions and beliefs that lie beyond its immediate ambit of operation” (p. 84). This does not mean that capital acts like a puppet-master, controlling all of our beliefs and behaviors in a mechanical or deterministic way. Heilbroner’s point, rather, is that we cannot underestimate capital’s influence over all aspects of society without compromising our understanding of what’s really going on around us. In order to establish that capital is indeed the central organizing principle of modern societies, we need not argue that powerful interests other than those of capital either do not exist or are too weak to have any effect; rather, we only need to show that there is an overall compatibility between the demands of capital and those of other interests. According to Heilbroner, “The influence of the economic realm on its intertwined political and social realms does not therefore involve any mechanical dependency or slavish passivity of the latter but only their congruence with, and complementarity to, the operating relationships of capital” (p. 84). While emphasizing that the “general priorities and interests” in a capitalist social formation are mostly shaped according to the needs and preferences of capital, Heilbroner acknowledges that other aspects of society do enjoy some degree of independence from the dominating influence of capital. We must, in other words, “accord to the political and ideological realms a degree of freedom to act on behalf of motives that antedate those of capital accumulation and that persist alongside it, although generally subordinated to it” (p. 85). To summarize, even though capital calls the tune, it cannot eliminate all anti-capitalist tendencies from society; its reign is pervasive but not total.
In the capitalist social formation, therefore, the state is not a mere tool in the hands of capital, though it normally does act in ways that tend to prioritize the needs and preferences of capital over all other interests. To understand this phenomenon, we must begin by comparing the properties of the economic sphere (consisting of the productive and distributive activities of society) and those of the political sphere (the realm that deals with governance).
In precapitalist societies, there is no formal boundary between economic and political spheres. There are two reasons for this: first, there is no independently existing economic sphere, and second, there is no mechanism that prevents the state from exercising its power over the processes of production and distribution (pp. 85-86). As a result, an economic sphere cannot emerge in a society unless the ruling elite or the state bureaucracy gives up some of its power and thereby allows the emergence of an independent realm that deals with production and distribution. This phenomenon began only in the tenth century, when the fall of the Roman Empire created a widespread political vacuum in which the merchant class was able to gain increasing prominence. An independent economic sphere, in other words, began to appear as a nascent phenomenon even when feudalism was still in its early stages. This was a slow process that took several hundred years to mature. Heilbroner notes:
Very gradually, there arose from the widening importance of mercantile dealings, and from the increasing dependence of all levels of society on the market mechanism, the foundations of a regime of capital. On the land, surplus continued to be gathered through the lord’s political domination over the serf, but in the towns and cities, surplus more and more welled up in the form of profits accruing to merchant traders, later in merchant guilds (p. 87).
In his book Class and Nation (1980), Samir Amin suggested that a key difference between an imperial social formation and a feudal one was that only the former was based on centralized tribute collection; he used the term “incomplete tributary society” to describe the nature of feudalism. Following Amin’s analysis, Heilbroner explains that “the logic of feudalism was to remedy its incompletion by seeking self-sufficiency through military and dynastic struggles and alliances” (p. 87). In late medieval Europe, the hundreds of autonomous political fiefdoms were feeling an enormous pressure toward unification in order to centralize tribute collection and consolidate political power. The same was true of the mercantile world. As the small political units of medieval Europe coalesced to form nation-states, the small centers of mercantile power began to combine as well; the latter phenomenon gave rise to large commercial operations that eventually turned into the modern business corporation. It’s hardly a coincidence that two of the most powerful forces of our world, i.e., capitalism and nationalism, emerged in the same place and at the same time.
In light of the above discussion, we can see that the economic sphere has come into being through a gradual process of separation from the political sphere. Instead of a single sphere that was responsible for governance as well as production and distribution, we now have two interdependent spheres. The political sphere “retained the ancient trappings and much of the military power of the original imperium and was vested with the formal responsibility of enforcing the will of the state, both through its monopoly of legal violence and its position of moral authority” (p. 88). The economic sphere took over “the task of superintending the daily work of the population of amassing the surplus” (pp. 88-89). The relationship between the two spheres, however, is clearly asymmetrical. As the economic sphere gained prominence and autonomy, constraints were placed on “the power of the state to violate the private space of the individual or to commandeer his or her property.” The state was excluded from the workings of the market, leading to “the gradual loss by the state of its right of direct access to surplus,” as well as “its command over the labor or materials, or even the money.” In effect, “even though the state retained the ultimate weaponry of rule and the authority of awe, it became dependent on the operation of its self-created republic for the nourishment of revenues” (p. 89). It is for this reason that “the regime of capital is the dominant active influence in the normal relationship between the two realms,” and that “the state is normally its obliging servant.” The state has access to a tremendous amount of violent force while capital lacks any means of direct coercion; yet, the state must “support and advance the accumulation of capital” if it is to maintain its own power (p. 90).
What all of this means is that “at the very heart of capitalism” there lies a tension that vastly complicates the relationship between state and capital. The tension results from a fundamental conflict between the logic of political power and the logic of economic power. The logic of economic power dictates that chains of production and distribution be organized solely “according to opportunities of profit,” while the logic of political power is “concerned primarily with considerations of boundaries” as well as other limits and constraints (p. 90). In precapitalist societies, the logic of political power reigned supreme. With the emergence of an autonomous economic sphere, the logic of political power was increasingly disrupted as society’s surplus began to flow not toward the centers of political power but toward those of economic power.
Despite the state’s control over the means of mass surveillance and legitimized violence, the logic of economic power is such that it often brings capital “into conflict with, or beyond the effective control of, the state” (p. 93). This allows capital to become “increasingly capable of defying, or of existing ‘above,’ the state.” Basically, a “network of commodity flows” comes into existence that “cuts through the boundaries of national sovereignty,” forming an increasingly autonomous system capable of operating “according to the dictates of its own logic, with less and less regard for those of politics” (p. 94). As the logic of economic power gains momentum, capital becomes increasingly able to shape and influence all aspects of society, while the “full powers of the state . . . remain largely in the background.” It’s only during “periods of overt internal disruption or external war” that the state exerts its full power; during such times, the state “advances the interests of capital as a natural response to the appeals of capital, as well as in a calculating fashion to promote its own peacetime strength” (p. 95).
We may generalize at this point by observing that the “basic interests of capital usually exert their sway without opposition” (p. 95). Under the capitalist social formation, the political and the economic spheres remain interdependent rivals with capital almost always prevailing over the state.
In reality, the political and economic spheres penetrate each other in a variety of ways. Exploitation, for example, is a political phenomenon. In precapitalist societies, the surplus produced by peasants and other workers is made to flow upwards to the ruling elite, and this is accomplished through the use of coercion and the threat or use of violence. In capitalist societies, on the other hand, the political and economic realms exist separately, yet the upward flow of surplus continues. The exploitation of the labor force is a political act in both cases, but its political nature becomes concealed or masked in the latter instance. Heilbroner writes that the political nature of exploitation is obvious “when a lord wrests his share from a serf’s crops” but that it “becomes invisible when the same diversion of output is carried out by the market mechanism.” The reason for the invisibility of this exploitation is the lack of direct coercion of the labor force that characterizes capitalism. It is “precisely because the worker under capitalism is free to quit and to appeal at law if the wage contract has been abrogated that the continuing exploitative diversion of surplus remains unnoticed” (p. 99). The “freedom” enjoyed by the workers under capitalism is precisely the mask that hides their exploitation.
Heilbroner then goes on to explain another characteristic of capitalism that conceals the political nature of the economic sphere. The very capacity to organize production and distribution, he points out, is an instance of political power. “The deployment of the legal authority of the capitalist within the confines of his business enterprise thus constitutes an unrecognized transfer of political power from the state into private hands” (p. 100).
Just as there are important political elements within the economic sphere, we can find economic elements within the political sphere. Thus, the power of the state is used “for the protection of activities within the economic realm.” The state ensures that the rights of private property are maintained; it also provides law and order so that the the process of production and the generation of surplus can go on without interruption (p. 101). The military and diplomatic resources of the state are routinely used to enhance and promote the interests of the economic sphere (p.103). At a more fundamental level, it is clear that the economic sphere needs a variety of goods and services for its proper functioning, but that many of these goods and services cannot be produced and maintained profitably. The state provides these goods and services at public expense; the public bears the cost while private businesses reap the resulting profits. Examples include “the network of canals, railways, highways, and airways that have played an indispensable part in capitalist growth, as well as the provision of literate and socialized work forces through public education programs, [and] the protection of public health” (p. 102). The fact that the public at large also seems to benefit from these state activities shouldn’t prevent the observer from noticing that they are meant primarily to serve the interests of capital while also strengthening the domination of the ruling elite. Indeed, the conventional distinction between “private” and “public” seems to break down at this point.
Toward the end of the chapter, Heilbroner summarizes the nature of the relationship between capital and state as follows:
Remove the regime of capital and the state would remain, although it might change dramatically; remove the state and the regime of capital would not last a day. In this sense politics is prior to economics in that domination must precede exploitation. Thus one again we encounter the tense relation of realms characteristic of the social formation in which capital calls the tune by which the state normally dances but takes for granted that the state will provide the theater within which the performance takes place. (p. 105)