AbstractThe current stage of ‘neo-capitalism’ or ‘state monopoly capitalism’ is characterized by a qualitatively expanded role of the state in capitalist social formations.  One expression of this huge politico-economic weight of the modern state is the prolonged expansion in state expenditures, such that they now exceed one half of gross domestic product in contemporary Britain.  Yet despite this, there have been only isolated studies by Marxists which systematically examine the causes and consequences of this unprecedented growth. In the following sections we propose to outline the patterns and trends in state expenditure in the major capitalist economies; briefly to analyse the nature of the modern capitalist state and its socio-economic setting; in the light of this to attempt an explanation of the growth and composition of state expenditures; and finally to consider briefly some of the major economic and political consequences of this phenomenon. Beforehand, however, it is incumbent on us to consider current theories and state why we regard them as unsatisfactory or incomplete. To this end, the recent studies of O’Connor, Yaffe and Barratt Brown will be singled out for attention.