It is used by some Trotskyists to describe the nature of the Soviet Union under Joseph Stalin and other similar states in Central and Eastern Europe and elsewhere (such as North Korea).
[citation needed] A bureaucratic collectivist state owns the means of production, while the surplus or profit is distributed among an elite party bureaucracy (nomenklatura), rather than among the working class.
The idea has also been applied to Western countries outside the Eastern Bloc, as a regime necessary to institute in order to maintain capitalism and keep it from disintegrating in the post-war era.
[2] This different form of bureaucratic collectivism is supposed to integrate various sectors of society, such as labor unions, corporations, and government organizations, in order to keep contradictions in the economy from developing into a general meltdown.
Soon after the Workers Party in the United States (later the Independent Socialist League), led by Max Shachtman, split from the Fourth International, it adopted the theory of bureaucratic collectivism and developed it.
In 1948, Tony Cliff argued that it is difficult to make a critique of bureaucratic collectivism because authors such as Shachtman never actually published a developed account of the theory.
Mandel concluded that this undeniable fact is in itself incompatible with the characterization of the bureaucracy as a ruling class and with the USSR as a new "exploitative mode of production" whose "laws of motion" have never been specified.