by William E. Scheuerman

Commemorations of the 100th anniversary of the founding of the Institute for Social Research—the Frankfurt School—have taken place around the world this year, many of them at prestigious universities and featuring illustrious contemporary representatives. Yet those events have overlooked a crucial and still relevant conjuncture in the Institute’s intellectual history. That oversight points to some unfortunate lacunae within recent Frankfurt-oriented critical theory.

By 1941 the Institute’s resident political economist, Friedrich Pollock, had embraced the idea that a qualitatively new model of state capitalism had crystallized. Pollock had spent much of the previous decade studying real-world experiments in state planning and major structural shifts within capitalism. Written while in exile in New York City, his reflections on state capitalism represented the impressive result of those longstanding efforts. Its emergent forms were diverse—they ranged from Nazi Germany, Stalinist Russia, to New Deal USA. Yet they all shared one overriding trait: though still capitalist in important respects, the state had come to play a decisive role in overseeing economic affairs. In this new system, Pollock (1941, 445) wrote, “all basic concepts and institutions of capitalism have changed their function: interference of the state with the structure of the old economic order has by its sheer totality and intensity ‘turned quantity into quality,’ transformed monopoly capitalism into state capitalism.”

Although state capitalism remained an “ideal type” (in Max Weber’s sense) and thus never fully realized, political imperatives had effectively supplanted the workings of the market and the central functions that accrued to it during capitalism’s previous historical stages. State economic involvement was not only extensive but increasingly entailed the more-or-less direct planning and administration of prices and wages. To be sure, capitalists still made profits. Yet they were now frequently subordinated to state-determined political goals, with the pursuit of political power supplanting the profit motive. Investment decisions even by “the mightiest combines” were shaped by political decisions. The growing gap between de facto and de jure capitalist control over property had taken on new and strikingly far-reaching manifestations, with capitalists reduced to “rentiers.”

For Pollock these trends pointed to an unprecedented shift in bourgeois society, namely: the end of “the primacy of production,” a constitutive element of earlier forms of capitalism and, correspondingly, core socio-theoretical feature of traditional Marxism. State capitalism rested instead on the “primacy of politics,” with the old idea of an autonomous economic sphere “into which the state should not intrude, essential for the era of private capitalism…radically repudiated” (207). The state’s central role meant that the “primacy of politics over economics, so much disputed under democracy, is [thus] clearly established” (453). That primacy derived from the fact that the state, if only in the last instance, now determined the contours of capitalist production.

Those familiar with the history of the Frankfurt School know that Pollock’s views ignited a fierce debate within the interdisciplinary group of unorthodox left-wing scholars who composed its ranks. Most importantly, Pollock’s thesis immediately gained the imprimatur of the Institute Director (and his life-long friend), Max Horkheimer, as well as Theodor Adorno. Beginning in the 1940s, many of their writings, including the pivotal Dialectic of Enlightenment (1947), either expressly endorsed or implicitly presupposed it. In contrast, Franz Neumann, Otto Kirchheimer, and Herbert Marcuse pushed back, with Neumann leading the charge in Behemoth: The Structure and Practice of National Socialism, 1933-1944 (1944), which offered both an empirical and theoretical rebuttal to Pollock’s claim that Nazi Germany was identifiably state capitalist.

Pollock’s contributions remain timely. If one looks, for example, to contemporary China, where the state and ruling party are deeply intermeshed in every aspect of what constitutes an identifiably capitalist economy, and where many business owners live in fear of overstepping politically determined—but legally unclear—boundaries to their activities, the notion of state capitalism possesses real plausibility. Pollock’s theory offers a useful analytic launching pad for those trying to make sense of developments there. Even in liberal societies that have undergone neoliberal restructuring, the state’s role remains decisive. Contra neoliberalism’s ideologues, it has not typically meant rolling back but instead reconfiguring state intervention. To be sure, neoliberal policy has often worked to the advantage of private capitalists who resisted efforts to reduce their power and traditional prerogatives, fighting ferociously to make sure they did not become mere “rentiers.” Even if in hindsight Pollock mistakenly overgeneralized about some key trends, his ideas provide a useful starting point for thinking about the massive shifts that have in fact taken place.

Pollock may have overstated the “primacy of politics,” at least for liberal democracies. Yet his occasional exaggerations remain suggestive: they invite us to explore how business and its political allies since the 1970s have successfully warded off a more far-reaching statization of private property. Neoliberalism can be plausibly interpreted, in part, as a sustained effort to circumvent full-fledged state capitalism.

Pollock’s contributions also remind us that during some of its most productive years in exile the Institute for Social Research engaged in theoretically motivated interdisciplinary social research and viewed political economy as pivotal to that project. First-generation Frankfurt critical theory always involved a wide range of intellectual endeavors. Yet, its associates recognized that to say something serious about capitalist society they had to tap the sort of rigorous empirical research in political economy that Pollock had pursued. Looking back at the writings of Pollock and his Institute interlocutors, one can only marvel at the attention they paid to real-life trends within political economy and many relevant debates among economists and social scientists.

Unfortunately, one would be hard-pressed to identify similarly productive exchanges involving contemporary Frankfurt critical theory. For many reasons, critical theory today is now chiefly the purview of cultural and literary theorists, historians of ideas, philosophers, and political and social theorists. The stultifying academic division of labor under which many of us work means that it has had an exceedingly limited impact on empirically minded social scientists, and probably none on economists. The result is a serious theoretical and political lacuna: without a proper political economy of contemporary capitalism, there can be no critical theory of society.

One of the real paradoxes of this story is that Pollock’s contributions unintentionally contributed to precisely this lacuna. As the late Helmut Dubiel pointed out many years ago in his introduction to a collection of Pollock’s essays, the theory of state capitalism provided leading figures in postwar critical theory with a political-economic justification to sideline political economy as part of their project. With one foot still clearly planted in Marxism, Pollock described state capitalism as socially antagonistic and fundamentally irrational. Simultaneously, it represented a social order that, in principle, might realize effective planning and overcome the internal economic pathologies that had long plagued capitalism. He predicted that the new system might raise living standards, generate full employment, avoid economic downturns, and, most importantly, defuse class conflict. Even under capitalist conditions, in other words, extensive planning could prove economically advantageous.

Pollock struggled to identify any internal economic limitations to state capitalism, ultimately concluding that its main limits were noneconomic. State planning, for example, might by thwarted by conflicts between and among ruling groups in the political apparatus. Or state capitalist regimes might simply be denied access to essential natural resources. Yet even these non-economic crisis possibilities, he suggested, could in principle be successfully quarantined. Material production, at any rate, was no longer a direct source of instability or social conflict—thus, the “primacy of politics.”

This final claim justifiably irritated Neumann, Pollock’s most incisive critic within the Institute. Like Pollock, Neumann had spent years studying Nazi economics; in contrast to Pollock, he also interrogated its political and legal dynamics. His magnum opus, Behemoth, pointedly rejected the idea of state capitalism. In particular, Neumann worried that Pollock and others who endorsed it had succumbed to the misleading conclusion “that their system may very well be the millennium” (225). Absent internal economic and perhaps also noneconomic crisis tendencies, what prevented state capitalism from operating for millennia? “If we share this view, we must also conclude that nothing but a series of accidents can destroy such systems” (226). This angered Neumann because he thought Pollock and others in the Institute had inadvertently reproduced Nazi Germany’s deceptive ideological self-representation as a “new order” free of the weaknesses of liberal capitalism. As Neumann endeavored instead to document, “the antagonisms of capitalism are operating in Germany on a higher and, therefore, more dangerous level, even if these antagonisms are covered up by a bureaucratic apparatus and the ideology of the people’s community” (227).

The story is complicated, but the bottom line is that postwar Frankfurt critical theory marginalized Neumann’s critique, in part because of his premature death in an automobile crash in Switzerland in 1954. In contrast, Pollock returned from exile in New York City to Frankfurt with Adorno and Horkheimer and continued to work closely alongside them. Paradoxically, yet not surprisingly, political economy became marginal to postwar Frankfurt theory: why devote sustained attention to political economy if capitalism’s internal economic tensions are no longer operative?

This troublesome legacy has long haunted Frankfurt School theory. Even Jürgen Habermas’ important Legitimation Crisis (1973), which rejected key elements of Pollock’s state capitalism thesis, nonetheless endorsed an updated version of the idea that contemporary capitalism’s crisis tendencies are no longer, strictly speaking, economic, and thus, consequently, have ceased to manifest themselves primarily as class struggle. For Habermas, as for Pollock before him, far-reaching state intervention had transformed liberal into “organized” capitalism, with extensive Keynesian state economic management effectively defusing class-based conflict. Legitimation Crisis pointed not to the prospect of immanent economic crises, but instead to what Habermas called “motivation crises” in which capitalism’s system imperatives conflicted with universalistic norms and cultural orientations that no longer motivated social actors to perform tasks necessary to its operations. With the recent 1968 upheavals in mind, Habermas clearly thought that the emergence of dissent and radicalism among young people meshed with this theoretical claim. As Wolfgang Streek has correctly pointed out, however, the main “capitalist line of fracture” was no longer located in the economy per se, but instead in what Habermas called the “socio-cultural system.”

It should come as no surprise that Habermasian critical theory, despite its many major accomplishments, has not been particularly interested in pursuing or encouraging others to pursue a critical political economy of contemporary capitalism. That remains a problem since any critical theory worth its name needs to pay attention to political economy.

Even as some recent critical theorists have sought to revitalize the critique of capitalism, we still find nothing along the lines of what Pollock, Neumann, and other empirically minded Institute colleagues endeavored. For example, Nancy Fraser’s provocative Cannibal Capitalism: How our System is Devouring Democracy, Care, and the Planet –and What We Can Do About It (2022) again pursues a radical brand of Kapitalismuskritik (capitalism-critique). However, her analysis rests on some implicit, occasionally underdeveloped empirical claims about contemporary political economy that require more sustained consideration. Though Fraser acknowledges key shifts in the state’s role, she risks downplaying precisely what Pollock creatively highlighted, namely its formative and sometimes decisive role in contemporary capitalism. Without proper grounding in theoretically driven interdisciplinary social research and careful attention to political economy, contemporary critiques of capitalism risk falling short. We should honor the Frankfurt School on its 100th birthday because it recalls the advantages of interdisciplinary, empirically grounded critical theory—and also because it reminds us of the vital intellectual and political tasks that remain to be done.

William E. Scheuerman is the James H. Rudy Professor in the Department of Political Science at Indiana University. His primary research and teaching interests are in modern political thought, German political thought, democratic theory, legal theory, and international thought.

Edited by Thomas Furse

Featured image: Group photograph of the Marxist Working Week Geraberg 1923. Friedrich Pollock is standing, second on the left. Wikimedia Commons.