The state, for example, of Britain or France or the USA, to function and govern, needs to have money, it needs financing.
You might think that the
state need not owe anybody, since it holds the power of the land, but this is
not the case.
Where does is get its
money?
It gets it from the
public and public/private entities.
In a capitalist economy
the state acts like a regular private enterprise, it must have an income,
revenue, accounts, and it can and does borrow money and lend or give financing
for projects.
The state borrows money
from the private sector. The state usually raises money by issuing kinds of debt,
government bonds or promissory notes, to investors who buy these to store and
increase the value of their wealth over time in this usually safe manner.
The government of the
day therefore becomes like a bank manager and the administration like a bank
(hence the department of the Treasury), which must itself borrow money from
larger banks.
You can see from this
that the state and government is embedded thoroughly in the capitalist economic
system and is not a distinct entity.
It is, however, rare
that the state makes a profit on its social investments.
This is because for
politicians and media commentators the ideal state is one that balances its
books or is in debt to a manageable extent, so has a ‘deficit’.
Why? – Well, a deficit
means safe long-term payments on the debt to some big bourgeois entities, so an
income. It also implies some control by these enterprises over the government.
If on the contrary the
government made a profit, a surplus, this would belong theoretically to the system
chosen by the voters, so will be seen as a loss to private wealth and considered
unfair competition and an example of socialism.
Considered as an
enterprise, the state is of course unique in that it can make and repeal the laws
of the land. So, the potential obviously exists for the state to create an
uneven and biased market for itself or for certain enterprises.
But this does not
usually happen. It tends instead to denegate its own authority. The politicians
do not usually drastically change the financial laws which also set the limit
on its own actions as an enterprise.
Why? It is partly because
the government is, as said already, fundamentally a capitalist enterprise, not
a socialist entity, but the government can always be threatened by the broader capitalist
economy if it does not act in the interest of the capitalist class in general.
A state that is
capitalist thus has a kind of dual personality. It is a state and therefore a
social entity but is capitalist and therefore must act like a private entity.
The social nature of
the state is why many elected administrations can be heard wanting to reduce
the government and state powers, like Musk’s current 2025 Doge, for whom these
powers are characterized as socialist and against free enterprise.
Ironically, this can
often be the stated government policy, a policy of the state to dismantle the
state. At the same time, this same state rarely reduces its police or military,
its basis of state authority. On the contrary, it usually wants to extend this
strength, a hard shell over civil society, and it claims that it needs it to
make its reforms. This can become corrupt and end up supporting certain
enterprises over others.
This kind of state, in
extreme circumstances, always requires enemies to fight against who oppose it
and seek a socialist state. It becomes an aggressive overbearing authoritarian state,
a fascist state, even while posing itself as dissolving the state.