I am trying to understand this issue with more clarity and was hoping some comrades here could help out.

In the debates started between Trotsky, CLR James and Dunayevskaya and still more recently rehashed, it seems that both parties viewed "state capitalism" and the "degenerated workers' state" (socialism) as being in contradiction. Where there is "state capitalism", there cannot be a "(degenerated) workers' state" and vice versa. But why?

In the same way that a private business can be democratically managed by its workers as a cooperative, with profits equally shared or donated,etc. (or in the same way that a publicly owned business can be managed by self-enriching, corrupt bureaucrats) in a capitalist economy, couldn't a workers' state also operate capitalism?

How did their theory of state capitalism relate to the New Economic Policy which Lenin characterized as state capitalism? Did Trotskyists believe that capitalism ceased to exist with Stalin's turn away from the NEP?

And doesn't the rejection of using "state capitalism" to characterize a state operating in the context of a capitalist world economy mean embracing the feasibility of "socialism in one country"?