Horkheimer and his co-workers are well aware of the need to develop a new social-scientific crisis theory to deal with the historical events confronting them. ¹⁹

This brief analysis of Horkheimer's 1937 essay and the epilogue on 'Philosophy and Critical Theory' co-authored with Marcuse reveals the unresolved tension in these formulations: on the one hand, it is acknowledged not only that there is no convergence between the standpoint of the theorist and that of working-class movements, but, in fact, that there is an ever-widening gap. Although critical theory names certain sectors of the working class its 'addressees', the latter are viewed less and less as an empirical social group; increasingly, all individuals who share a 'critical sense' are designated as the addressees of the theory. On the other hand, Horkheimer holds fast to the critique of political economy as a research paradigm and insists upon the emancipatory interests inherent in this kind of critique.

[. . .]

The precarious balance that Horkheimer brilliantly sustains in his 'Traditional and Critical Theory' essay is upset by historical developments. In view of the realities of World War II, the entire Marxian paradigm of the critique of political economy is thrown into question. The paradigm shift from 'critical theory' to the 'critique of instrumental reason' occurs when this increasing cleavage between theory and practice, between the subjects and potential addressees of the theory, leads to a fundamental questioning of the critique of political economy itself. The transformation in the nature of liberal capitalism between the two world wars and the consequences of this for the Marxian critique of political economy are developed by Friedrich Pollock in an article published in the last issue of the Institute's journal, now appearing as Studies in Philosophy and Social Science.

In 'State Capitalism: Its Possibilities and Limitations', Pollock describes the transformations in the structure of political economy that have occurred in Western societies since the end of the First World War as 'transitional processes transforming private capitalism into state capitalism'. ²⁰ Pollock adds:

the closest approach to the totalitarian form of the latter has been made in National Socialist Germany. Theoretically, the totalitarian form of state capitalism is not the only possible result of the present form of transformation. It is easier, however, to construct a model for it than for the democratic form of state capitalism to which our experience gives us few clues. ²¹

The term 'state capitalism' indicates that this formation is 'the successor of private capitalism, that the state assumes important functions of the

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