state expendituresthe several different kinds of expenditure undertaken by the STATE. On the assumption that the state in capitalist society has two contradictory functions, accumulation and legitimization, O’Connor (1973) and Gough (1979) identify three main categories of expenditure:
- social investment, ‘projects and services that increase the productivity of labour’;
- social consumption. ‘projects and services that lower the reproduction costs of labour’;
- social expenses, projects and services which are required to maintain social harmony It is evident that the load on the state from state expenditures has increased historically imposing, according to both O’Connor and Gough, ‘new economic strains on the system’, and 'simultaneously threatening both capitalist accumulation and political freedoms’ (FISCAL CRISIS IN THE CAPITALIST STATE.) It is for this reason that the WELFARE STATE and state expenditures in general have been a site of central social and political conflict in recent decades (see also CULTURAL CONTRADICTIONS OF CAPITALISM. THATCHERISM, NEW RIGHT).
the spending by a state in carrying out its functions, which are determined by the nature of its socioeconomic structure. State expenditures are not the same as state budget expenditures, since they also include the expenditures of state enterprises financed through their own sources.
Under capitalism, state expenditures are used primarily for militarizing the economy and maintaining the apparatus of oppression. Under state-monopoly capitalism, expenditures associated with state interference in the process of economic reproduction grow side by side with increasing allocations for military purposes: these include repayable loans and free grants to monopolies, allocations for major capital investments in the least profitable branches of the infrastructure (highway, bridge, canal, and airport construction), and allocations for conducting scientific and technical research and other work. In 1970 approximately one-third of all capital investments in the USA (approximately 40 percent in West Germany and more than 50 percent in Great Britain) were financed at the expense of the state. Some of the state expenditures are used for so-called social and cultural measures, but they are associated with the monopolies’ shift to the state of part of the costs of maintaining and expanding the labor force. Some of the increase of these expenditures in the 1960’s was caused by the intensified class struggle of the proletariat and the effect of the competition between the two world systems.
Under socialism state expenditures are used completely in the interests of the toiling masses. They include the expenditures of the state budget and of state enterprises and organizations (for the expansion of their activities and the formation of public consumption funds). State expenditures are subdivided into expenditures in the productive and nonproductive spheres, according to their economic content and role in the creation of the national income and the total social product. State expenditures are also grouped according to industrial branch and territorial criteria and according to the purpose of the expenditures (such as capital investments, working increases of capital, state subsidies, operational expenses, and wages in institutions financed from the budget).
Under socialism, state expenditures are used for a large share of the costs of financing the national economy and social and cultural measures. In 1971, 135.5 billion rubles (or 84.3 percent of all budget allocations) and 75.7 billion rubles from enterprise resources were allotted from the state budget in the USSR for these purposes. State expenditures in socialist countries are used for preferential financing of the key sectors of the economy that determine the rates and direction of scientific and technical progress. The most important principles of state expenditure financing are planned development, the use of capital for specific purposes, the step-by-step financing of plan fulfillment, thrift, and control to ensure the highly efficient use of capital.
R. D. VINOKUR