The Marxist theory of the State is as an instrument of class oppression, not all forms of government. The idea is that the Proletariat, after destroying the Capitalist State and replacing it with a Proletarian State, this “dictatorship of the proletariat” will gradually fold Private Property into the Public Sector after markets cease to be an effective tool for developing and Public Ownership and Central Planning becomes more effective.

This happens unevenly, and there are different points where some sectors can be publicly owned much earlier than others, so this doesn’t happen overnight. Once all property is in the Public Sector, there are no more classes, and thus all instruments that protected against the bourgeoisie become superfluous and “dies out,” leaving a stateless, classless society with central planning. Engels calls this the “administration of things.”