In a paper that forms chapter 3 of Simon Clarke’s book, The State Debate, Holloway and Picciotto, having decided “the political” is relatively separate from “the economic” must explain why this is so. But they have to do this while avoiding being associated with “orthodox Marxist determinism” prevalent in the Third International variant of Marxism.
As I argued, to do this, they redefine capital as a historically “specific form of class domination” and set this definition against Marx’s definition of capital as the production of value and surplus value. Within this historically specific form of class domination, “the political” and “the economic” are two separate moments of the totality. This, they argue, avoids the “iron economic determinism” by providing “an understanding of the determinants and limits of state action”. 
The state sphere is separate from the sphere of direct exploitation, but it is not separate from capital as a specific form of class domination.
The solution, however, is made more difficult because Holloway and Picciotto cannot employ Engels as their convenient whipping boy: Engels’s “positivism” did not lead to the formulation of the foundation-superstructure analogy; Marx’s “dialectical method” did.
Ignoring for the moment that their definition of capital as an historically specific form of class domination flies completely in the face of Marx’s definition of capital as the production of value and surplus value and his elaboration of the whole base-superstructure thingy, what is gained by this redefinition of capital? While this redefinition might be useful in critiquing the reformism of Second International Marxism, it still doesn’t explain how “the political” is actually determined by “class domination”, since there is no obvious mechanism outside Marx’s own base-superstructure analogy. Holloway and Picciotto admit:
“If we insist on starting with the category of capital because it is the contradictions of the capital relation (as the basic form taken by class antagonism in capitalist society) which provide the basis for understanding the dynamic of social and political development in capitalism, the problem of the nature of the relation between the actions of the state and the accumulation of capital remains.”
This, I really need to emphasize, IS NOT a mere theoretical question: “Open Marxism” is trying to grapple with the fascist state, in order to explain so-called “progressive” legislation. In the United States, for instance, since the end of WWII, we saw, among other things, the collapse of segregation, the Civil Rights Act, the Environmental Protection Agency, the establishment of a woman’s right to choose, and a host of other reforms. Any argument on the relation between the mode of production and the state had to explain how this “progressive” legislation came about. At the same time: we have Vietnam and Chile, which horrors requires little or no elaboration, not to mention Thatcher/Reagan neoliberalism. The state appeared to accommodate a very wide spectrum of activity that could not be directly traced to exploitation in the factory.
“Open Marxism” argued the whole base-superstructure analogy did not seem to captures the true nuance of the relation between state and the mode of production. Holloway and Picciotto ask:
“[Should] this problem simply be dismissed as being no problem, the autonomy of the political denied, the correspondence between the actions (and structure) of the state and the requirements of capital accumulation taken for granted?”
The key phrase in the question is “Should this problem simply be dismissed as no problem”. The writers are reacting to the tendency among Marxists to simply dismiss the range or spectrum of fascist state action. If, in the end, all fascist state action boils down to the requirement of capital, even profound developments like the end of segregation can be ignored.
But ignored by whom? Certainly black workers did not ignore the end of a century of segregation; women workers did not ignore the end of the prohibition on abortions in the United States; and anyone concerned with the environment did not ignore the establishment of the EPA by the Nixon administration. Finally, no Marxist could ignore the collapse of Bretton Woods, which signaled either the death of capitalism or the death of labor theory.
Placing these real historical events in a consistent theoretical context seemed necessary, but neither 2nd International Marxism nor 3rd International Marxism seemed up to the task. In this regard, the example Holloway and Picciotto refers to in this section is telling because it deals with a cornerstone policy of the fascist state. Some writer named David Yaffe pointed out that the fascist state policy of full employment runs into the problem, “that there are limits to the extent and effect of state expenditure which result from its unproductive nature and hence the requirements of accumulation.” The constant extension of total social hours of labor came at the cost of an increasing mass of unproductive fascist state expenditures. There is, in Yaffe’s view, a limit to the policy of full employment. The argument is compelling and relevant to our situation today — unfortunately Holloway and Picciotto tells us little else about the paper. However another of Yaffe’s papers along these line can be found here.
In their response, Holloway and Picciotto criticize Yaffe for not expanding on his analysis of the state in this discussion:
“What results is a rather monolithic view of the state in which the growth of the state apparatus is attributed simply to the state’s post-war commitment to full employment, and in which the effect of state expenditure is seen as being adequately grasped by its classification into the categories of ‘productive’ or ‘unproductive’
However no matter their criticism of Yaffe for neglecting the state, Holloway and Picciotto are forced to concede his analysis “may” be crudely valid:
“But then how are we to understand the role of bourgeois democracy, and how are we to see individual state actions which apparently do not correspond to the interests of capital?”
Yaffe’s argument, they explain, focuses on one aspect of the limitation of fascist state action: that its expenditures represent a deduction from the total surplus value! In this assertion, Holloway and Picciotto are not only wrong, but horribly off-base in their criticism of Yaffe, which appears to make three questionable assumptions: First, they assume that the full employment policies of the fascist state were undertaken for the benefit of the working class. Second, they assume this alleged benefit is paid for by a deduction from the total surplus produced by capital. Third, they assume this deduction is “limited by the competing claims of private capitals on that surplus value which must be met if accumulation is to continue.”
All three of these assumptions were terribly wrong.
The constant extension of hours of labor (so-called full employment) was itself the “class domination” imposed on the working class for the purpose of expanding (not deducting from) the production of surplus value by unproductively consuming the resultant product of labor. Holloway and Picciotto (and perhaps also Yaffe, it is not clear) all begin their analysis of full employment with the totally outlandish assumption that longer hours of wage slavery is a benefit for the working class!!!!
From their point of view, if there is anything to be explained regarding this “benefit”, it is the limit on the state’s ability to grant it. Apparently it never occurred to these bumbling fools that the interest of capital is always to extend hours of labor even if this can only happen in the form of increasingly unproductive activity on behalf of the fascist state. Having assumed (apparently along with Yaffe) that ever longer hours of labor is a “benefit” for the wage slave, Holloway and Picciotto then have the gall to chastise the writer for not recognizing,
“the other limitations arising from the nature of the state’s structural relation to, and separation from the immediate process of exploitation — limitations which greatly restrict or render impossible state action in the rational interests of capital, irrespective of the limits of state expenditure.”
Which is to say, since longer hours of labor benefit wage labor, not capital, there must be a separate political limit on the state providing this benefit that arises from the nature of the state itself.
SMGDH!
Peter Bratsis over at Jacobin is trying to manage down your expectations regarding the probable impact of a now likely SYRIZA win:
The resistance of the Left to the term fascism is understandable for reason I will show. However, I insist my use of the term fully conforms with historical materialism, no matter how grating it may be for “progressives” and other Leftists. I base my assessment of the present state wholly on the argument made by Marx and Engels throughout their entire careers. In particular, I base it on the explicit argument made by Engels in 
There is a truism of sorts stated in 
