State capitalism has also come to refer to an economic system where the means of production are owned privately but the state has considerable control over the allocation of credit and investment, as in the case of France during the period of dirigisme. Alternatively, state capitalism may be used (sometimes interchangeably with state monopoly capitalism) to describe a system where the state intervenes in the economy to protect and advance the interests of large-scale businesses. This practice is often claimed to be in contrast with the ideals of both socialism and laissez-faire capitalism.[2]
There are various theories and critiques of state capitalism, some of which have existed since the 1917 October Revolution or even before. The common themes among them are to identify that the workers do not meaningfully control the means of production and that commodity relations and production for profit still occur within state capitalism. Other socialists use the term state capitalism to refer to an economic system that is nominally capitalist, such that business and private owners gain the profits from an economy largely subsidized, developed and where decisive research and development is done by the state sector at public cost.[3]
Marxist literature typically defines state capitalism as a social system combining capitalism—the wage system of producing and appropriating surplus value—with ownership or control by a state. By that definition, a state capitalist country is one where the government controls the economy and essentially acts like a single huge corporation, extracting the surplus value from the workforce in order to invest it in further production.[3] Friedrich Engels, in Socialism: Utopian and Scientific, argues that state capitalism would be the final stage of capitalism consisting of ownership and management of large-scale production and communication by the bourgeois state.[4]
This term is also used by some advocates of laissez-faire capitalism in reference to a private capitalist economy controlled by a state, often meaning a privately owned economy that is subject to statist economic planning. Some even use the term to refer to capitalist economies such that the state provides substantial public services and regulation of business activity. In the 1930s, Italian Fascist leader Benito Mussolini described Italian Fascism's economic system of corporatism as "state socialism turned on its head".[5] This term was often used to describe the controlled economies of the great powers in the First World War.[6]
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