Deborah Cook

In his appraisal of mass societies, Theodor W. Adorno briefly discussed those changes in Western economies that had helped to transform the earlier liberal phase of 'free market' capitalism at the turn of the twentieth century. Responding in part to these changes, governments legislated into existence social welfare institutions and agencies that quickly became more or less permanent fixtures in their liberal democratic states. Even as he recognized that the welfare state had alleviated some of the inequities caused by capitalism, Adorno was also concerned about the loss of individual autonomy and spontaneity that seemed to accompany its emergence. He was very critical of the increasingly oppressive extension of bureaucratic state agencies into the private lives of individuals, warning that state control might reach totalitarian proportions, even in purportedly democratic countries. Observing that individuals were growing more and more dependent on the state as its powers increased, and noting their often servile deference to the rule of 'experts' and technocrats, Adorno feared that individuals would relinquish the independence which serves as a necessary condition for resistance to repression and economic exploitation.

A number of commentators have misleadingly maintained that Adorno viewed the welfare state as a variant of what an associate and co-worker at the Institute for Social Research was calling 'state capitalism'. Simply put, with his state capitalism thesis, Friedrich Pollock alleged that the command and mixed economies of the 1920s and 1930s marked the 'transition from a predominantly economic to an essentially political era'.1 Initially, this state capitalism thesis will be contrasted with Adorno's own view of twentieth-century liberal democracies. Later in the article, I shall assess Adorno's position in light of contemporary criticisms that have been levelled against his work. This evaluation of Adorno's work is not only necessary to correct the secondary literature; it will also provide the opportunity to flesh out Adorno's ideas about the relationship between the state and the economy - ideas which, though sketchy, nonetheless implicitly occupied an important place in his work as a whole. In addition, these ideas may help to reframe historical and theoretical considerations about the role that democratic political systems have played, and might yet play, in capitalist economies.

Pollock and Neumann on the Third Reich

During the 1930s and 1940s, Pollock tried to account for what was being viewed as a new development within the capitalist economies of the West. With the command economy of the Third Reich, and the mixed economy of the United States (represented by the New Deal), a qualitative shift had taken place such that the earlier liberal phase of capitalism had been superseded by either totalitarian or non-totalitarian (formal democratic) variants of state capitalism. Production and distribution in the economies of these and other countries were increasingly being taken under direct political or state control. Acknowledging that industrial and business managers continue to play an important role in the newer phase, Pollock nonetheless maintained that the profit motive had been supplanted by the power motive in command or mixed economies. Of course, profits still accrue to producers under state capitalism, but they can now often be made only when goods are produced in accordance with the 'general plan' of a state or political party. Pollock further believed that by establishing wage and price controls, the state also succeeded in controlling distribution either through direct allocation to consumers or via a 'pseudo-market' that served to regulate consumption.

Pollock recognized that his thesis was not new; a number of writers had already studied the ways in which liberal economies had increasingly come under the control of the state. At the same time, he also admitted that his state capitalism thesis could not be verified empirically in every respect. Constructed 'from elements long visible in Europe and, to a certain degree in America', the thesis was meant to serve only as a model, a Weberian 'ideal type'.2 Moreover, although 'the trend toward state capitalism was growing ... in the non-totalitarian states', Pollock thought that relatively little work had been devoted to understanding the democratic form of state capitalism; a more comprehensive model still needed to be constructed for it.3 Additional research was also required to determine whether democracy could survive under state capitalism. While control over the economy might remain in the hands of a small political group or faction, Pollock speculated that, in the long run, economic planning could be carried out more or less democratically.

Pollock's thesis generated some controversy among his co-workers at the Institute for Social Research. One of these was Franz Neumann, a lawyer and administrator for the Institute who later worked as an economist for the United States government during World War II. In his Behemoth - which offers a detailed analysis of economic conditions under the Third Reich - Neumann launched a qualified attack on Pollock's view that Germany could be described as state capitalist. He argued that Pollock's state capitalism thesis actually amounted to the claim that there was no longer any freedom of trade, contract, or investment under National Socialism; that Germany's market had been abolished; that the German state had complete control over wages and prices, eliminating exchange value; and that labour was now appropriated by a 'political act'.4 Neumann called this thesis into question, showing that the National Socialists had no economic theory of their own, and rejecting the idea that Nazi Germany was organized along corporatist lines. He also demonstrated that private property and private control over capital had been retained in Hitler's regime.

At the same time, however, Neumann did concede that, in Nazi Germany, 'possession of the state machinery ... is the pivotal question around which everything else revolves'. And, for Neumann, this was 'the only possible meaning of the primacy of politics over economics'.5 On Neumann's assessment, the National Socialist economy had two general characteristics: it was 'a monopolistic economy - and a command economy', a conjunction for which Neumann coined the term 'totalitarian monopoly capitalism'. In other words, the German economy under the Third Reich was 'a private monopolistic economy, regimented by the totalitarian state'.6 Recognizing, then, that aspects of a command economy had been put into place, Neumann proceeded to examine the extent of the German state's intervention in the economy, taking into account the state's direct economic activities, its control over prices, investments, profits, foreign trade and labour, and the role of the National Socialist Party.7 He concluded that economic activity in the Third Reich had preserved much of its former autonomy. However, owing to the way in which the economy had been monopolized by large industrial and business concerns, profits could not be 'made and retained without totalitarian political power'.8 This is allegedly what distinguished Nazi Germany from other Western states (though, given the growing monopoly on capital in these other states, one has to wonder why totalitarian political power arose only in Nazi Germany).

Commentators on this debate between Pollock and Neumann often maintain that Adorno simply adopted Pollock's state capitalism thesis in his own analyses of developments in the West. For example, Helmut Dubiel believes that both Adorno and Max Horkheimer sided with Pollock, adapting his argument to their assessment of changes in the development of capitalism.9 David Held agrees with Dubiel; and like Dubiel, Held also refers to Dialectic of Enlightenment by way of substantiation without quoting relevant passages from this work in order to support his view.10 Nevertheless, Held also points out that Horkheimer and Adorno expressed ambivalence about this thesis in their later work. Referring to Adorno, Held notes that, 'Though the main principles which underpin his view of capitalism are compatible with Pollock's position, a reading of essays like 'Gesellschaft' [Society] (1966) and 'Spätkapitalismus oder Industriegesellschaft?' [Late Capitalism or Industrial Society?] (1968) suggest ... that while Adorno thought that class conflict and crisis can potentially be managed, he did not think that they would necessarily be managed successfully.'11

In his recent work on Neumann's and Otto Kirchheimer's critique of the liberal rule of law under the welfare state, William Scheuerman also refers to Dialectic of Enlightenment (again without quoting it directly) to substantiate his claim that Horkheimer and Adorno adopted Pollock's state capitalism thesis in order to explain both the 'totally administered world' in non-totalitarian countries and 'the Nazis' success in overcoming all the tensions that had plagued earlier forms of capitalism'.12 Theoretical and political differences subsequently emerged between Neumann and Kirchheimer in the eastern United States, and Pollock, Horkheimer and Adorno in the West - differences that ended in the break-up of the original Frankfurt School. In his own assessment of Adorno's work, Douglas Kellner makes a similar point: 'Although Pollock's theses were sharply disputed by Grossmann, Neumann and the more orthodox Marxian members of the Institute ..., in various ways Horkheimer, Adorno and Marcuse built their theory of the transition to a new stage of capitalism on Pollock's analysis, while developing their Critical Theory of contemporary society from this vantage point.'13

What is surprising about Kellner's interpretation of Adorno is that Kellner also recognizes that Adorno was highly critical of Pollock's thesis. In a letter to Horkheimer, cited by Kellner, Adorno wrote that Pollock's essay 'was marred by the "undialectical position that in an antagonistic society a non-antagonistic economy was possible"'.14 Adorno maintained that Pollock's thesis failed to take into account the crisis- ridden nature of capitalism in the 1930s. In fact, Pollock had argued that the newly politicized economic order could respond to all the problems that had arisen in the earlier liberal phase and resolve successfully all the economic difficulties it might confront - albeit possibly only through totalitarian means. In what follows, I want to present Adorno's own discussion of the more salient features of late capitalism (or the phase of capitalism that succeeds its liberal 'free market' stage). I shall begin by examining Adorno's earlier work and then present some of his later ideas on the connections between the economy and the state in the West.

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