Leon Trotsky

The First Five Years of the Communist International

Volume 2


December 25, 1921

The Economic Conjuncture and the World Labour Movement

The capitalist world enters a period of industrial upswing. Booms alternate with depressions – an organic law of capitalist society. The current boom nowise indicates the establishment of equilibrium in the class structure. A crisis frequently helps the growth of anarchist and reformist moods among the workers. The boom will help fuse the working masses.


Symptoms of a new revolutionary flood-tide are becoming apparent in the European labour movement. It is impossible to foretell whether it will bring with it the gigantic, all-engulfing waves. But there is no question that the curve of revolutionary development is obviously swinging upward.

The most critical period in the life of European capitalism came in the first post-war year (1919). The highest manifestations of revolutionary struggle in Italy (September days of 1920), occurred at a time when the acutest moments of the political crisis in Germany, England, France seemed to be already surmounted. This year’s March events in Germany were a belated echo of a revolutionary epoch that had passed, and not the beginning of a new one. Early in 1920, capitalism and its state, having consolidated their first positions, already passed over to the offensive. The movement of the working masses assumed a defensive character. The Communist parties became convinced that they were in the minority, and at certain times they seemed to be isolated from the overwhelming majority of the working class. Hence the so-called “crisis” in the Third International. At the present time, as I have stated, a turning-point is clearly indicated. The revolutionary offensive of the working masses is mounting. The perspectives of struggle are becoming more and more extensive.

This succession of stages is the product of complex causes of different orders; but at bottom it stems from the sharp zigzags in the economic conjuncture which mirror the capitalist development of the post-war era.

The most dangerous hours for the European bourgeoisie came during the period of demobilization, with the return of the deceived soldiers to their homes and with their reallocation in the beehives of production. The first post-war months engendered great difficulties which helped aggravate the revolutionary struggle. But the ruling bourgeois cliques corrected themselves in time and carried through a large-scale financial and governmental policy designed to mitigate the crisis of demobilization. The state budget continued to retain the monstrous proportions of the war epoch; many enterprises were artificially kept in operation; many contracts were prolonged to avert unemployment; apartments were rented at prices prohibiting the repair of buildings; the government subsidized out of its budget the import of bread and meat. In other words, the national debt piled up, the currency was debased, the foundations of economy were undermined – all for the political purpose of prolonging the fictitious commercial-industrial prosperity of the war years. This gave the leading industrial circles the opportunity to renovate the technical equipment of the biggest enterprises and reconvert them to peacetime production.

But this fictitious boom very quickly ran up against universal impoverishment. The consumer-goods industry was the first to come to a standstill because of the extremely reduced capacity of the market, and it threw up the first barricades of overproduction which later obstructed the expansion of heavy industry. The crisis assumed unprecedented proportions and unparalleled forms. Starting in early spring across the Atlantic, the crisis spread to Europe by the middle of 1920, and reached its lowest depths in May 1921, the year now drawing to its close.

Thus by the time the open and unmistakable post-war commercial-industrial crisis set in (after a year of fictitious prosperity), the first elemental assault of the working class upon bourgeois society was already in its final stages. The bourgeoisie was able to hold out by dodging and veering, by making concessions, and in part by offering military resistance. This first proletarian assault was chaotic – without any definite political goals and ideas, without any plan, without any leading apparatus. The course and outcome of this initial assault demonstrated to the workers that changing their lot and reconstructing bourgeois society was a far more complicated business than they might have thought during the first manifestations of the post-war protest. Relatively homogeneous with respect to the inchoateness of their revolutionary mood, the working masses thereupon began quickly to lose their homogeneity – an internal differentiation set in among them. The most dynamic section of the working class, and the one least bound by past traditions, after learning through experience the need of ideological clarity and organizational fusion, cohered in the Communist Party. After the failures, the more conservative or less conscious elements temporarily recoiled from revolutionary aims and methods. The labour bureaucracy profited by this division in order to restore its positions.

The commercial-industrial crisis of 1920 broke out in the spring and summer, as has been said, at a time when the foregoing political and psychological reaction had already set in inside the working class. The crisis unquestionably increased the dissatisfaction among considerable working-class groups, provoking here and there stormy manifestations of dissatisfaction. But after the failure of the 1919 offensive, and with the resulting differentiation that took place, the economic crisis could not by itself any longer restore the necessary unity to the movement, nor cause it to assume the character of a new and more resolute revolutionary assault. This circumstance reinforces our conviction that the effects of a crisis upon the course of the labour movement are not all so unilateral in character as some simplifiers imagine. The political effects of a crisis (not only the extent of its influence but also its direction) are determined by the entire existing political situation and by those events which precede and accompany the crisis, especially the battles, successes or failures of the working class itself prior to the crisis. Under one set of conditions the crisis may give a mighty impulse to the revolutionary activity of the working masses; under a different set of circumstances it may completely paralyse the offensive of the proletariat and, should the crisis endure too long and the workers suffer too many losses, it might weaken extremely not only the offensive but also the defensive potential of the working class.

Today, in retrospect, in order to illustrate this thought, one might formulate the following proposition: Had the economic crisis with its manifestations of mass unemployment and insecurity followed directly upon the termination of the war, the revolutionary crisis of bourgeois society would have been far sharper and deeper in character. Precisely in order to avert this, the bourgeois states took the edge off the revolutionary crisis by means of a speculative financial prosperity, that is, by postponing the unavoidable commercial-industrial crisis for twelve to eighteen months, at the cost of further disorganizing their respective financial and economic apparatuses. By reason of this, the crisis became still deeper and sharper: in point of time, however, it no longer coincided with the turbulent wave of demobilization, but came instead at the moment when the latter had already receded – at a moment when one camp was drawing up the balance sheet and re-educating itself while the other camp was going through disillusionment and the resulting splits. The revolutionary energy of the working class turned inward and found its clearest expression in the strenuous efforts to build the Communist Party. The latter immediately expanded into the biggest single force in Germany and in France. With the passing of the immediate danger, capitalism, having artificially created a speculative boom in the course of 1919, took advantage of the incipient crisis in order to dislodge the workers from those positions (the 8-hour day, wage increases) which the capitalists had previously surrendered to them as measures of self-preservation. Fighting rearguard battles, the workers retreated. The ideas of conquering power, of establishing soviet republics, of carrying through the socialist revolution, naturally grew dim in their minds at a time when they found themselves compelled to fight, not always successfully, to keep down the rate at which their wages were being slashed.

Wherever the economic crisis did not assume the shape of overproduction and acute unemployment, but retained instead the profounder form (as in Germany) of the country’s being auctioned off and the living standard of the toilers being degraded, there the energy of the working class, directed toward raising wages to compensate for the declining purchasing power of the mark, resembled the efforts of a man chasing his own shadow. As in other countries, German capitalism went over to the offensive; the working masses, while resisting, retreated in disorder.

It was precisely in such a general situation that this year’s March events occurred in Germany. Their gist comes down to this, that the young Communist Party, taking fright at the obvious revolutionary ebb of the labour movement, made a desperate bid to exploit the action of one of the dynamically inclined detachments of the proletariat for the purpose of “electrifying” the working class and of doing everything possible to bring matters to a head, to precipitate the decisive battle.

The Third World Congress of the Comintern convened under the fresh impressions of the March events in Germany. After a careful analysis the congress fully assayed the danger inherent in the lack of correspondence between the tactic of the “offensive”, the tactic of revolutionary “electrification”, etc. – and those far more profound processes which were taking place within the entire working class in accordance with the changes and shifts in the economic and political situation.

Had there been in Germany in 1918 and 1919 a Communist Party comparable in strength to that which existed in March 1921, it is quite probable that the proletariat would have assumed power as early as January or March 1919. But there was no such party. The proletariat suffered defeat. Out of the experience of this defeat the Communist Party grew up. Once arisen, if it tried in 1921 to act in the manner that the Communist Party should have acted in 1919, it would have been battered to pieces. This is exactly what the last World Congress made clear.

The dispute over the theory of the offensive became closely interwoven with the question of appraising the economic conjuncture and its future evolution. The more consistent adherents of the theory of the offensive developed the following line of reasoning: The whole world is in the grip of a crisis which is the crisis of a decomposing economic order. This crisis must ineluctably deepen and thereby revolutionize the working class more and more. In view of this it was superfluous for the Communist Party to keep a watchful eye on its rear, on its main reserves; its task was to take the offensive against capitalist society. Sooner or later the proletariat, under the lash of economic decay, would come to its support. This standpoint did not reach the floor of the congress in such a finished form because the sharpest edges had been blunted during the sessions of the Commission that took up the economic situation. The mere idea that the commercial-industrial crisis could give way to a relative boom was regarded by the conscious and semi-conscious adherents of the theory of the offensive almost as centrism. As for the idea that the new commercial-industrial revival might not only fail to act as a brake upon the revolution, but on the contrary gave promise of imparting new vigour to it – this idea already seemed nothing short of Menshevism. The pseudo-radicalism of the “lefts” found a belated and rather innocent expression at the last convention of the German Communist Party where a resolution was adopted in which, let me note in passing, I was singled out for a personal polemic, although I expressed only the views of our party’s Central Committee. I reconcile myself all the more readily with this tiny and harmless revenge of the “lefts” because, on the whole, the lesson of the Third World Congress did not fail to leave its mark on any one, least of all, our German comrades.


There are incontestable signs today of a break in the economic conjuncture. Commonplaces to the effect that the present crisis is the final crisis of decay, that it constitutes the basis of the revolutionary epoch, that it can terminate only in the victory of the proletariat – such commonplaces cannot, obviously, replace a concrete analysis of economic development together with all the tactical consequences flowing therefrom. As a matter of fact, the world crisis came to a halt, as has been said, in May of this year. Symptoms of improvement in the conjuncture became revealed first in the consumer-goods industry. Thereupon heavy industry too got under way. Today these are incontrovertible facts which are mirrored by statistics. I shall not adduce these statistics so as not to make it harder for the reader to follow the general line of thought.

Does this mean that the decay of capitalist economic life has halted? That this economy has regained its equilibrium? That the revolutionary epoch is drawing to a close? Not at all. The break in the industrial conjuncture signifies that the decay of capitalist economy and the course of the revolutionary epoch are far more complex than certain simplifiers imagine.

The movement of economic development is characterized by two curves of a different order. The first and basic curve denotes the general growth of the productive forces, circulation of commodities, foreign trade, banking operations, and so on. On the whole, this curve moves upward through the entire development of capitalism. It expresses the fact that society’s productive forces and mankind’s wealth have grown under capitalism. This basic curve, however, rises upward unevenly. There are decades when it rises only by a hair-breadth, then follow other decades when it swings steeply upward, only in order later, during a new epoch, to remain for a long time on one and the same level. In other words, history knows of epochs of swift as well as more gradual growth of the productive forces under capitalism. Thus, by taking the graph of English foreign trade, we can establish without difficulty that it shows only a very slow rise from the end of the Eighteenth Century up to the middle of the Nineteenth Century. Then in a space of twenty-odd years (1851 to 1873) it climbs very swiftly. In the ensuing epoch (1873 to 1894) it remains virtually unchanged, and then resumes the swift upward climb until the war.

If we draw this graph, its uneven upward curvature will give us a schematic picture of the course of capitalist development as a whole, or in one of its aspects.

But we know that capitalist development occurs through the so-called industrial cycles, which comprise a set of consecutive phases of the economic conjuncture: boom, lag, crisis, cessation of crisis, improvement, boom, lag, and so on. Historical survey shows that these cycles follow one another every eight to ten years. If they were placed on the graph, we would get, superimposed on the basic curve which characterizes the general direction of capitalist development, a set of periodic waves moving up and down. Cyclical fluctuations of the conjuncture are inherent in capitalist economy, just as heart beats are inherent in a living organism.

Boom follows crisis, crisis follows boom, but on the whole the curve of capitalism has climbed upward in the course of centuries. Clearly the sum total of booms must have been greater than the sum total of crises. However, the curve of development assumed a different aspect in different epochs. There were epochs of stagnation. The cyclical oscillations did not cease. But since capitalist development as a whole kept climbing, it therefore follows that the crises just about balanced off the booms. During epochs in which the productive forces climbed upward swiftly, the cyclical oscillations continued to alternate. But each boom obviously moved economy a greater distance forward than it was thrown back by each succeeding crisis. The cyclical waves might be compared to the vibrations of a wire string, assuming that the line of economic development bears a resemblance to a string of wire under tension: in reality of course this line is not straight but of a complex curvature.

This internal mechanics of capitalist development through the incessant alternation of crisis and boom suffices to show how incorrect, one-sided and unscientific is the idea that the current crisis must, while becoming increasingly graver, endure until the proletarian dictatorship is established, independently of whether this happens next year, or three years or more from now. Cyclical oscillations, we said in refutation in our report and resolution at the Third World Congress, accompany capitalist society in its youth, in its maturity and its decay, just as the beatings of a heart accompany a man even on his deathbed. No matter what the general conditions may be, however profound might be the economic decay, the commercial-industrial crisis acts to sweep away surplus commodities and productive forces, and to establish a closer correspondence between production and the market, and for these very reasons opens up the possibility of industrial revival.

The tempo, scope, intensity and duration of the revival depend upon the totality of conditions that characterizes the viability of capitalism. Today it can be stated positively (we stated it back in the days of the Third World Congress) that after the crisis has levelled the first barricade, in the shape of exorbitant prices, the incipient industrial revival will, under present world conditions, run up quickly against a number of other barricades: the profoundest disruption of the economic equilibrium between America and Europe, the impoverishment of Central and Eastern Europe, the protracted and profound disorganization of the financial systems, and so forth. In other words, the next industrial boom will in no case be able to restore the conditions for future development in any way comparable to pre-war conditions. On the contrary, it is quite probable that after its very first conquests this boom will collide against the economic trenches dug by the war.

But a boom is a boom. It means a growing demand for goods, expanded production, shrinking unemployment, rising prices and the possibility of higher wages. And, in the given historical circumstances, the boom will not dampen but sharpen the revolutionary struggle of the working class. This flows from all of the foregoing. In all capitalist countries the working-class movement after the war reached its peak and then ended, as we have seen, in a more or less pronounced failure and retreat, and in disunity within the working class itself. With such political and psychological premises, a prolonged crisis, although it would doubtless act to heighten the embitterment of the working masses (especially the unemployed and semi-employed), would nevertheless simultaneously tend to weaken their activity because this activity is intimately bound up with the workers’ consciousness of their irreplaceable role in production.

Prolonged unemployment following an epoch of revolutionary political assaults and retreats does not at all work in favour of the Communist Party. On the contrary the longer the crisis lasts the more it threatens to nourish anarchist moods on one wing and reformist moods on the other. This fact found its expression in the split of the anarcho-syndicalist groupings [1] from the Third International, in a certain consolidation of the Amsterdam International and the Two-and-a-Half International, in the temporary conglomeration of the Serrati-ites, the split of Levi’s group, and so on. In contrast, the industrial revival is bound, first of all, to raise the self-confidence of the working class, undermined by failures and by the disunity in its own ranks; it is bound to fuse the working class together in the factories and plants and heighten the desire for unanimity in militant actions.

We are already observing the beginnings of this process. The working masses feel firmer ground under their feet. They are seeking to fuse their ranks. They keenly sense the split to be an obstacle to action. They are striving not only toward a more unanimous resistance to the offensive of capital resulting from the crisis but also toward preparing a counter-offensive, based on the conditions of industrial revival. The crisis was a period of frustrated hopes and of embitterment, not infrequently impotent embitterment. The boom as it unfolds will provide an outlet in action for these feelings. This is precisely what the resolution of the Third Congress, which we defended, states:

“But should the tempo of development slacken, and the current commercial-industrial crisis be superseded by a period of prosperity in a greater or lesser number of countries, this would in no case signify the beginning of an ‘organic’ epoch. So long as capitalism exists, cyclical oscillations are inevitable. These will accompany capitalism in its death agony, just as they accompanied it in its youth and maturity. In case the proletariat should be forced to retire under the onslaught of capitalism in the course of the present crisis, it will immediately resume the offensive as soon as any amelioration in the conjuncture sets in. Its economic offensive, which would in that case inevitably be carried on under the slogan of revenge for all the deceptions of the war period and for all the plunder and abuses of the crisis, will tend to turn into an open civil war, just as the present offensive struggle does.”


The capitalist press is beating the drums over the successes of economic “rehabilitation” and the perspectives of a new epoch of capitalist stability. These ecstasies are just as groundless as the complementary fears of the “lefts” who believe that the revolution must grow out of the uninterrupted aggravation of the crisis. In reality, while the coming commercial and industrial prosperity implies economically new riches for the top circles of the bourgeoisie, all the political advantages will accrue to us. The tendencies toward unification within the working class are only an expression of the growing will to action. If the workers are today demanding that for the sake of the struggle against the bourgeoisie the Communists reach an agreement with the Independents and with the Social Democrats, then on the morrow – to the extent that the movement grows in its mass scope – these same workers will become convinced that only the Communist Party offers them leadership in the revolutionary struggle. The first wave of the flood-tide lifts up all the labour organizations, impelling them to arrive at an agreement. But the self-same fate awaits the Social Democrats and the Independents: they will be engulfed one after the other in the next waves of the revolutionary flood-tide.

Does this mean – in contrast to partisans of the theory a the offensive – that it is not the crisis but the coming economic revival which is bound to lead directly to the victory of the proletariat? Such a categorical assertion would be unfounded. We have already shown above that there exists not a mechanical but a complex dialectical interdependence between the economic conjuncture and the character of the class struggle. It suffices for understanding the future that we are entering the period of revival far better armed than we entered the period of crisis. In the most important countries on the European continent we possess powerful Communist parties. The break in the conjuncture undoubtedly opens up before us the possibility of an offensive – not only in the economic field, but also in politics. It is a fruitless occupation to engage now in speculations as to where this offensive will end. It is just beginning, just coming into sight.

A sophist may raise the objection that if we grant that the further industrial revival need not necessarily lead us directly to victory, then a new industrial cycle will obviously take place, signifying another step toward the restoration of capitalist equilibrium. In that case wouldn’t there actually arise the danger of a new epoch of capitalist restoration? To this one might reply as follows: If the Communist Party fails to grow; if the proletariat fails to gain experience; if the proletariat fails to resist in a more and more far-reaching and irreconcilable revolutionary way; if it fails to pass over at the first opportunity from defence to offence, then the mechanics of capitalist development, supplemented by the manoeuvres of the bourgeois state, would doubtless accomplish their work in the long run. Entire countries would be hurled back economically into barbarism; tens of millions of human beings would perish from hunger, with despair in their hearts, and upon their bones some new sort of equilibrium of the capitalist world would be restored. But such a perspective is sheer abstraction. On the way toward this speculative capitalist equilibrium there are many gigantic obstacles: the chaos of the world market, the disruption of currency systems, the sway of militarism, the threat of war, the lack of confidence in the future. The elemental forces of capitalism are seeking avenues of escape amid heaps of obstacles. But these same elemental forces lash the working class and impel it forward. The development of the working class does not cease even when it retreats. For, while losing positions, it accumulates experience and consolidates its party. It marches forward. The working class is one of the conditions of social development, one of the factors of this development, and moreover its most important factor because it embodies the future.

The basic curve of industrial development is searching for upward avenues. Movement is rendered complex by cyclical fluctuations, which in the post-war conditions resemble spasms. It is naturally impossible to foretell at which point of development there will occur such a combination of objective and subjective conditions as will produce a revolutionary overturn. Nor is it possible to foretell whether this will occur in the course of the impending revival, at its beginning, or toward its end, or with the coming of a new cycle. Suffice it for us that the tempo of development does to a considerable measure depend upon us, upon our party, upon its tactics. It is of utmost importance to take into account the new economic turn which can open a new stage of fusing the ranks and in preparing a victorious offensive. For the revolutionary party to understand that which is, already implies in and of itself an abridgement of all time intervals and the moving up of dates.


1. The reference here is to the KAPD which split away from the Comintern and sought together with other groups to set up a rival organization at the time.

First 5 Years of the Comintern (Vol.2) Index

History of the Communist International Section

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Last updated on: 16.1.2007