Leon Trotsky

Europe and America

(Part 2)

(February 1926)

Delivered: 15 February, 1926
First Published: In Russian, official anniversary volume issue in 1926 by the Bureau of Party History.
Source: Fourth International (New York), Vol.4 No.5, May 1943, pp.153-158.
Translated: John G. Wright (for Fourth International).
Transcription/HTML Markup: David Walters.
Copyleft: Leon Trotsky Internet Archive (www.marxists.org) 2002 & 2008. Permission is granted to copy and/or distribute this document under the terms of the GNU Free Documentation License.

EDITOR’S NOTE: Last month we published the first section of a speech delivered by Leon Trotsky on February 15, 1926; this is the second and concluding section. Most noteworthy in this section is Trotsky’s confident prediction that the British bourgeoisie would be confronted by a major struggle when the miners’ contracts expired; two and a halt months later his prediction came true when the miners’ fight led to the British General Strike of May 1926. Trotsky’s forecast was based on his fundamental analysis of the relations between Europe and America, which was hemming in the already-too-narrow base of European capitalism and thus driving Europe toward socialist revolution. Both economic developments and the workers’ struggles In the ensuing years verified Trotsky’s prognosis. But the false policies of Stalinism, already in control of the Soviet Union and the Comintern at the time of this speech, saved European capitalism. This speech was, indeed, one of the last to a Soviet workers’ audience which Trotsky was permitted to make; already he was being prevented from telling the workers what the Left Opposition stood for in its struggle against Stalinism. The next year Trotsky was expelled from the Communist Party by Stalin, and then exiled to Alma-Ata.

American Pacifism in Practice

Time is the best critic in all questions. Let us see then just what the American methods of peaceful penetration looked like in action during these last years. A mere tally of the most important facts will show us that American “pacifism” has triumphed all along the line; but it has triumphed as a noiseless (as yet) method of imperialist plunder and of half-masked preparations for the greatest of conflicts.

The most graphic expression and exposure of the essence of American “pacifism” was supplied by the 1922 Washington Conference. In 1919-20 many people, and I among them, asked themselves: What will happen in 1922-23 when through her ship-building program the US is assured of naval equality with Great Britain? England, the little island, had maintained her domination through the superiority of her fleet over the combined fleets of any other two countries. Would she abandon this superiority without a fight? There were many who, like myself, considered that in 1922-23 a war between England and America, with the participation of Japan, was not excluded. But what happened instead? In place of war came purest “pacifism.” The US invited England to Washington and said: “Please take rations. There will be 5 units for me, 5 for you, Japan 3, France 3.” There is a naval program! And England accepted.

What is this? This is “pacifism.” But it is pacifism of a sort that imposes its will by dint of monstrous economic superiority and prepares “peacefully” military superiority in the next historical period.

And what of the Dawes plan? While Poincare, after seizing the Ruhr basin, bustled about in Central Europe with his kindergarten plans, the Americans surveyed the scene with field glasses from their point of vantage, and waited. And when the falling franc and other unpleasant things compelled Poincare to beat a retreat, the American arrived with a plan for the pacification of Europe. He bought the right to supervise Germany for 800 million marks, half of which, furthermore, was supplied by England. And for this bargain price of a few million dollars Wall Street placed its Controller astride the neck of the German people. “Pacifism”? You cannot wriggle out of this pacifist strangler’s noose.

And what of the stabilization of currency? Fluctuation of currency in Europe discomfits the American. He is discomfited because this allows Europe to export cheaply. The American needs a stable currency both for collecting regular interest payments on his loans as well as for preserving financial order in general. How can one invest his capital in Europe otherwise? And so the American compelled the Germans to introduce a stable currency; he forced the English, too, by granting them a loan of 300 million dollars for this purpose; Lloyd George recently said: “The pound sterling now looks the dollar right in the face.” Lloyd George is a cocky old codger. If the pound can look the dollar right in the face, it is because this proud pound sterling has 300 million dollars propping up its spine.

And what of France? The French bourgeoisie is in dread of the transition to a stabilized currency. This is a very painful operation. Says the American: You won’t get a loan on any other terms; do as you like. The American insists that France disarm in order to be able to pay her debts. Pure pacifism, disarmament, stabilization of currency – one could hardly improve on this. America prepares “peacefully” to bring France to her knees.

With England the question of gold parity and of debts has already been settled. The English, if I am not mistaken, are henceforth to pay the US around 330 million rubles a year. England has, in her turn, settled the question of the Italian debt, of which she will receive but an insignificant part. France is the principal debtor of England and America, but has paid nothing thus far. However, she will have to pay unless events of an entirely different order – not financial but revolutionary – intervene to cancel all the old debts. Germany makes payments to France and England who demand payment of debts even of us. What then is the over-all picture of Europe?

The English bourgeoisie collects or is getting ready to collect her loans in dribs and drabs from the whole of Europe in order then to transmit these collected sums plus an increment added by herself across the Atlantic to Uncle Sam. What office does Mr. Baldwin or King George hold today? Merely that of chief tax collector for America in a province called Europe. The task of this agent is to squeeze out the arrears from the peoples of Europe and ship them to the US The organization is, as you observe, perfectly pacifist, peaceful. Under the system of American loan-rationing are organized the financial interrelations of the European peoples, supervised by the most punctual of taxpayers, Great Britain, who for this receives the title of Chief Tax Collector. The European policy of America rests wholly on this: Germany, pay France; Italy pay England; France, pay England; Russia, Germany, Italy, France and England, pay me, America. This hierarchy of indebtedness constitutes one of the pillars of American pacifism.

The world struggle for oil between England and America has already led to revolutionary shocks and military clashes in Mexico, Turkey, Persia. But tomorrow’s newspapers will perhaps inform us that England and America have arrived at a peaceful collaboration in the domain of oil. What will this mean? It will mean an oil conference in Washington. In other words, England will be invited to take a more modest ration of oil. Consequently, 14-carat pacifism, again.

In another field, that of struggle for markets, there also obtains up to a certain time and point a “peaceful” regulation. One German writer, former minister of I forget just which government – former ministers are plentiful in Germany – Baron Reibnitz has the following to say on the struggle for markets between England and America: England, you know, can avoid war provided she refrains, in favor of the USA., from any pretensions in Canada, in South America, in the Pacific and on the eastern coast of Asia and in Australia: “there will then remain for her the other fields outside Europe.” I can’t quite make out just what will remain for England after that. But the alternative is correctly posed: either resort to war or “pacifistically” sink to a meager ration.

And here is the latest chapter, a completely new one: it concerns foreign raw materials – a chapter interesting in the highest degree. The United States, you see, lacks many things of which others have no lack. In this connection American newspapers have published a map showing the distribution of raw materials over the whole globe. They now talk and think in terms of whole continents. The European pygmies get exercized over Albania, Bulgaria, corridors of one sort or another, and wretched strips of land. Americans think in terms of continents: it simplifies the study of geography, and, what is most important, provides ample room for robbery. And so, American newspapers have published a map of the world with ten black spots on it, the ten major deficiencies of the US economy in raw materials: rubber, coffee, nitrates, tin, potash, sisal and other less important raw materials. It appears that all these raw materials are monopolized (horror of horrors!) not by the US but by other countries. Rubber, about 70 per cent of the world output, comes from tropical islands belonging to England, while America, by the way, consumes 70 per cent of the world production for automobile tires and other requirements. Coffee comes from Brazil. Chile, financed by the English, furnishes the nitrates. And so forth and so on. Mr. Churchill, who does not cede to Lloyd George in cockiness, resolved to recover the sums paid out to America for the debts by raising the price of rubber. And Hoover, director of American trade, has computed with the aid of a calculating machine that in a single year, 1925, the US paid the English for rubber a sum of 600 to 700 million dollars over and above an “honest” price. That’s what he said. Hoover knows very well how to distinguish between honest and dishonest prices: that’s his job. As soon as the American newspapers learned about this, they raised an incredible hue and cry. I cite one quotation from The Evening Post:

“What good are all these Locarnos and Genevas, these leagues and protocols, these disarmament conferences and economic conferences, if a powerful group of nations intentionally isolates America?”

You must picture to yourselves this poor America who is being isolated and exploited on all sides. Rubber, coffee, tin, nitrates, sisal for ropes, potash – everything has been grabbed up and monopolized, so that an honorable American billionaire is no longer able to drive his automobile, nor drink enough coffee, nor get rope good enough to hang himself, nor even obtain a tin bullet with which to blow out his brains. The situation is really intolerable: exploitation on all sides! It is enough to make a man lie down alive in a “standardized” casket! Mr. Hoover wrote an article precisely in this connection – and what an article! It consists exclusively of questions – 29 by count – each sounds better than the one before. As you might well have gathered, the barbs of all these questions are aimed at England. Is it a nice thing to soak people over and above an honest price? And if it isn’t nice, isn’t it bound to introduce irritation into relations between one nation and another? And if it is bound to introduce irritation, isn’t the government bound to intervene? And if a self-respecting government intervenes, mightn’t grave consequences ensue? One English newspaper, less polite but more candid than the rest, wrote on this score that one fool can ask so many questions that a hundred wise men cannot answer. With this the patriotic newspaper unburdened itself. In the first place, I do not dare admit that a fool occupies so responsible a position. And even if that were the case ... comrades, it is not an admission on my part but merely a logical premise. I say, even if this were so, Hoover is nonetheless at the head of the colossal apparatus of American capitalism and consequently has no need for intelligence since the whole bourgeois “machine” does his thinking for him. And, at all events, after Hoover’s 29 questions, each of which came like a pistol shot under Mr. Baldwin’s very ears, rubber immediately became cheaper. And this fact illuminates the world situation far better than would scores of statistics. Such, comrades, is American pacifism in practice.

No Avenue of Escape for European Capitalism

It is to this United States, who brooks no obstacle on her path, who views each rise in prices of raw materials she lacks as a malicious assault upon her inalienable right to exploit the whole world – it is to this new America, wildly on the offensive, that dismembered, divided Europe finds itself counterposed – a Europe, poorer than before the war, with the framework of its markets still more restricted, loaded with debts, torn by antagonisms and crushed by bloated militarism.

During the period of reconstruction there was no lack of illusions among bourgeois and Social Democratic economists and politicians concerning the possibilty of Europe’s regeneration. European industry, first in France and then in Germany, picked up quite rapidly at certain moments after the war. This is hardly surprising; in the first place, the normal demand was regenerated, even if not to full proportions, because of the exhaustion of all previous stocks. There was nothing left. Furthermore, France remained with vast devastated areas which constituted an auxiliary market. So long as the most pressing needs of these war-stripped and devastated markets were being supplied, industry was able to operate at a healthy pace, giving rise to great hopes and great illusions. Now, so far as the essence of the matter is concerned, the balance sheet of these illusions has been drawn even by the more alert bourgeois economists. There is no avenue of escape for European capitalism.

The unexampled economic superiority of the US even independently of a conscious policy on the part of the American bourgeoisie, will no longer permit European capitalism to raise itself. American capitalism, in driving Europe more and more into a blind alley, will automatically drive her onto the road of revolution. In this is the most important key to the world situation.

This is revealed most graphically and incontestably in England’s situation. England’s trans-oceanic exports are cut into by America, Canada, Japan, and by the industrial development of her own colonies. Suffice it to point out that on the textile market of India, a British colony, Japan is squeezing out England. And on the European market, every increase of sales of English merchandise cuts into the sales of Germany, France and vice versa. Most often it is vice versa. The exports of Germany and France hit those of Great Britain. The European market is not expanding. Within its narrow limits, shifts occur now to one side, now to another. To hope that the situation will change radically in favor of Europe is to hope for miracles. Just as under the conditions of the domestic market, the bigger and more advanced enterprise is assured victory over the small or backward enterprise, so, in the conditions of the world market, the victory of the US over Europe, that is, first and foremost over England, is inevitable.

In 1925 England’s imports and exports reached respectively 111 per cent and 76 per cent of their pre-war levels. This implies an adverse trade balance of unprecedented proportions. The reduction in exports signifies an industrial crisis which strikes not at the secondary but at the basic branches of industry: coal, steel, ship-building, woolens, etc. Temporary and even considerable improvements are possible and even inevitable, but the basic line of decline is predetermined.

One becomes filled with justifiable contempt for the “statesmen” of England who have retained all their old conformities so incompatible with the new conditions and who lack the most elementary understanding of the world situation and the inevitable consequences inherent in it. The reigning English politicians, Baldwin and Churchill, have recently favored us again with their candor. At the end of last year Churchill announced that he had twelve reasons (yes, he said that) for being in an optimistic mood. In the first place, a stabilized national currency. The English economist Keynes has called Churchill’s attention to the fact that this stabilization meant a minimum reduction of 10 per cent in the prices of merchandise exported, and consequently a corresponding increase in the adverse trade balance. The second reason for being optimistic was the excellent price of rubber. Sad to say, Mr. Hoover’s 29 questions have considerably reduced the rubberized optimism of Churchill. Thirdly, there was the decrease in the number of strikes. But let us wait on this score until the end of April when the collective contract of the miners comes up for consideration. Fourth reason for optimism – Locarno. From one hour to the next, there is no improvement. The Anglo-French conflict far from diminishing has intensified since Locarno. As touches Locarno let us wait, too; one counts one’s chickens when they are hatched. We refrain from enumerating the remaining reasons for optimism; on Wall Street the price they fetch is still dropping. It is interesting to note that The Times of London published an editorial on this same subject entitled: Two Rays of Hope. The Times is more modest than Churchill; it has not twelve but only two rays of hope, and these too are x-rays, that is, rather problematical rays.

To the professional light-mindedness of Churchill one can counterpose the more serious opinions of the Americans who make an appraisal of British economy from their own standpoint, and also the opinion of British industrialists themselves. Upon returning from Europe, Klein, the director of the US Department of Commerce, made a report to industrialists which, notwithstanding its purely conventional tone of reassurance, lets the truth break through.

“From the economic point of view,” he said, “the only gloomy spot, [abstraction evidently made from the situation of France and Italy as well as the relatively slow restoration of Germany] – the only gloomy spot, I say, is the United Kingdom. It seems to me that England is in a doubtful commercial position. I would not want to be too pessimistic because England is our best customer but a number of factors are developing in that country, which, it seems to me, must give rise to serious consideration. There exist In England formidable taxes, the reason for which, according to certain people, must b found in our thirst for money, not to say more. Still it is not entirely correct ... The stock of tools of the coal industry is the same as a few dozen years ago, with the result that the cost of manual labor per ton is three or four times more than in the United States.”

And so forth and so on in the same vein.

Now, here is another comment. J. Harvey, American ex-ambassador in Europe, considered by the English as a “friend and well-wisher,” which is in a sense true for he speaks as a rule sentimentally of the need of coming to England’s aidthis same J. Harvey recently published an article entitled: The End of England (the title alone is priceless!), in which he comes to the conclusion that “English production has had its day. Hereafter the lot of England is to be an intermediate agent.” That is to say, the sales clerk and bank teller of the United States. Such is the conclusion of a friend and wellwisher.

Let us now see what George Hunter, a great English shipbuilder, whose note to the government made a stir in the entire British press, has to say:

“Has the Government” [and the government, after all, is Churchill with his 12 reasons for optimism], he says, “a clear idea of the disastrous condition of English industry? Does it know that this condition, far from improving, is worsening progressively? The number of our unemployed and of our partial unemployed represents at the minimum 12.5 per cent of the employed workers. Our trade balance is unfavorable. Our railroads and a large part of our industrial enterprises pay dividends out of their reserves or pay none at all. If that continues it is bankruptcy and ruin. There is no improvement In prospect.”

The coal industry is the keystone of English capitalism. At present it is completely dependent upon government subsidies. “We can,” says Hunter, “subsidize the coal industry as much as we like; that will not prevent our industry generally to wane.” But if subsidies stop, English industrialists could not continue to pay the wages they now pay; and that would provoke, beginning with the next First of May, a grandiose economic conflict. It is not hard to imagine what would be implied by a strike embracing not less than a million miners, backed, according to all indications by approximately a million railwaymen and transport workers. England would enter into a period of greatest economic shocks. One must either continue to grant ruinous and hopeless subsidies, or resign oneself to a profound social conflict.

Churchill has twelve reasons for optimism, but the social statistics of England testify that the number of employed workers is decreasing, that the number of miners is decreasing, but that there is an increase in the number of restaurant employees, cabaret personnel and elements of the lumpenproletarian type. At the expense of producers the number of lackeys increases, and, by the way, these figures do not include the political lackeys and ministers who with servility implore the generosity of Americans.

Let us once again counterpose America and England. In America there is a growing aristocracy of labor which aids in the establishment of company unions; while in England, fallen from her supremacy of yesterday, there grow layers of lumpen. proletariat below. Revealed best of all in this juxtaposition and counterposition is the displacement of the world economic axis. And this displacement will continue to operate until the class axis of society is itself displaced, that is, until the proletarian revolution.

Mr. Baldwin of course demurs to this. Though Mr. Baldwin carries more weight than Churchill, he understands as little. At a gathering of industrialists, he outlined a means of getting out of the predicament – a Conservative Prime Minister always has patent remedies for all ailments. “It sometimes seems to me,” he said “that some of us have slept for at least six or seven years.” Much longer! Mr. Baldwin himself has been asleep for at least fifty years, while others stayed up. “We will do well,” continued the Prime Minister, “to be guided by the progress realized during this period by the United States.” It would indeed take a bit of trying to be guided by the “progress” of the United States. In that country they dispose of a national wealth of 320 billions, 60 billions in the banks, an annual accumulation of 7 billion, while in England there is a deficit. Let us be guided a little! Let us try!

“The two parties [capitalists and workers],” continues Baldwin, “can learn much more at the school of the United States than in the study of the situation in Moscow.”

Mr. Baldwin should refrain from spitting into the Moscow well. We could teach him a few things. We know how to orient ourselves among facts, analyze world economy, forecast a thing or two, in particular the decline of capitalist England. But Mr. Baldwin cannot do it.

Churchill, the Finance Minister, also referred to Moscow. Without it, you can’t make a good speech nowadays. Churchill, you see, had read that morning a horrible speech by Mr. Tomsky, who is not a member of the House of Lords. He happens to be, as Mr. Churchill truthfully asserts, a man who occupies an extremely important post in the Soviet Republic. Mr. Tomsky did not spend his youth at Oxford or at Cambridge with Mr. Churchill but in the Boutirky Prison, here at Moscow. Nevertheless Mr. Churchill is obliged to speak of Mr. Tomsky. And, it must be admitted, he does not speak very kindly about Mr. Tomsky’s speech at the conference of trade unions at Scarborough. Mr. Tomsky did indeed make a speech there, and apparently not a bad one, judging from the impression it made on Mr. Churchill. The latter cited extracts from the speech which he characterized as “ramblings of a barbarian.”

“I estimate,’ he said, “that in this country we are capable of managing our own affairs without unwarrantable interference from outside.” Mr. Churchill is a very proud man but he is wrong. His patron Baldwin says that one must learn at the school of the United States.

“We do not want to have a freshly laid crocodile egg for breakfast,” continues Mr. Churchill. It is Tomsky, it seems, who laid a crocodile egg in England. Mr. Churchill does not like it; he prefers the politics of the ostrich that hides its head in the sand, and, as you know, both the ostrich and the crocodile propagate themselves in the self-same tropical colonies of England. Then Mr. Churchill gets really cocky: “I am not afraid of the Bolshevik revolution in this country. I do not criticize personalities.” And so forth and so on. That does not prevent him from delivering a wild speech against Tomsky. So he is afraid, after all. He does not criticize the personality of Tomsky. God forbid, he merely calls him a crocodile.

“Great Britain is not Russia.” Very true. “What use is there in introducing to the English workers the dull doctrine of Karl Marx and in making them sing out of tune the Internationale?” It is true that the English workers sometimes sing the Internationale off key, with music supplied by MacDonald, but they will learn to sing it without any false notes precisely from Moscow. In our opinion, despite all the 12 reasons for optimism, the economic situation of England brings nearer that hour when the English working class will sing the Internationale at the top of their voices. Prepare your ear drums, Mr. Churchill!

As touches Germany and France, I shall limit myself to brief remarks.

The day before yesterday I received from one of our engineers, who made a tour of the German factories where our orders are being filled, a letter in which he characterized the situation in these terms: “As an engineer, I became very depressed. Industry here is declining for lack of market, and no number of American loans will provide this market.” The number of unemployed in Germany has passed the two million mark. Owing to the rationalization of production, skilled workers comprise about three-fourths of the total unemployed. Germany has gone through a crisis of inflation and then through a crisis of deflation; now a boom ought to start but instead there is a terrible collapse – over two million are without employment. And the most onerous consequences of the Dawes regime for Germany are still to come.

In France, industry made a significant step forward after the war This deceived many people and gave birth to the illusions of “reconstruction.” As a matter of fact, France has been living beyond her means; her industry picked up on the basis of a temporary internal market (devastated regions) and, in addition, at the expense of the whole country (depreciation of the franc). Now the hour of payment has come. America says: “Disarm, retrench, tighten your belt, go over to a stable currency.” A stable currency means the reduction of production and exports; it means unemployment, deportation of foreign-born proletarians, lowering the wages of the French workers. The period of inflation ruined the petty bourgeoisie; the period of deflation will spur the proletariat to action. The French government dares not even approach the solution of the financial question. Finance ministers succeed one another every two months and continue to print fraudulent banknotes. This is the sole means at their disposal for the regulation of the country’s economic life. In Hungary, Admiral Horthy, believing that there was nothing complicated about this art, began to counterfeit French notes, not with an eye to sustaining the Republic but rather in order to restore the monarchy. Republican France refused to tolerate this monarchist competition and proceeded to make arrests in Hungary, but, aside from this, very little has been done to restore French currency. France is heading toward an economic and political crisis.

In these conditions, i.e., against the background of a disintegrating Europe, the League of Nations wants to convene two conferences this year: one on disarmament, the other on the economic regeneration of Europe. Let us, however, not hurry to reserve our seats. The preparations for these conferences are proceeding with extreme slowness, encountering contradictions of interests at every step.

As touches the preparation of the disarmament conference, of exceptional interest is a semi-official article recently published in an English review and eloquently signed “Augur.” Everything points to the fact that this Augur has close ties with the Ministry of Foreign Affairs and is generally well acquainted with what goes on behind the scenes. Under the banner of preparing the disarmament conference the British Augur threatens us “with measures which will not be pacific measures.” This amounts to a direct threat of war. Who is threatening? England, who is losing her foreign markets; England, where unemployment prevails; England, where the lumpenproletariat is growing; England, who has only a single optimist left, Winston Churchill – this England is threatening us with war in the present situation. Why? Under what pretext? Is it not because she wants to take it out on somebody else because of the affronts dealt her by America? As for us, we do not want war. But if the British ruling classes wish to accelerate the birth pangs, if history wishes to deprive them of their reason before depriving them of power, it must, precisely now, push them over the steep slope of war. There will be incalculable suffering. But should the criminal madmen let loose a new war on Europe, those who will emerge victorious will not be Baldwin, nor Churchill, nor their American masters, but the revolutionary proletariat of Europe.

Has Capitalism Outlived Itself?

In conclusion, let me pose a question which, it seems to me, flows from the very essence of my report. This question is: Has capitalism outlived itself? Or to put it differently: Is capitalism still capable of developing the productive forces on a world scale and of heading mankind forward? This is a fundamental question. It is of decisive significance for the proletariat of Europe, for the oppressed peoples of the Orient, for the entire world, and, first and foremost, for the destiny of the Soviet Union. If it turned out that capitalism is still capable of fulfilling a progressive historical mission, of increasing the wealth of the peoples, of making their labor more productive, that would signify that we, the Communist Party of the USSR, were premature in singing its De profundis; in other words, it would signify that we took power too soon to try to build socialism. Because, as Marx explained, no social system disappears before exhausting all the possibilities latent in it. Confronted with the new economic situation unfolding before us at present, with the ascendancy of America over all capitalist mankind and the radical shift in the correlation of economic forces, we must pose anew this question: Has capitalism outlived itself? Or has it still before it a perspective of progressive work?

For Europe, as I have tried to show, the question is definitively decided in the negative. Europe, after the war, fell into a far worse situation than before the war. But the war itself was not an accidental phenomenon. It was the blind revolt of the productive forces against capitalist forms, including those of the national state. The productive forces created by capitalism could no longer be contained within the framework of the social forms of capitalism, including the framework of national states. Hence the war. What has the war brought Europe? A situation ten times worse than before: the same capitalist social forms, but more reactionary; the same tariff walls but more rigid; the same frontiers but narrower; the same armies but more numerous; an increased indebtedness; a more restricted market. Such is the general situation in Europe. If today England rises a little, it is at the expense of Germany; tomorrow it will be Germany’s turn to rise at the expense of England. If you find a surplus in the trade balance of one country, you must seek for a corresponding deficit in the trade balance of another country. World development – principally the development of the US – has driven Europe into this blind alley. America is today the basic force of the capitalist world, and the character of that force automatically predetermines the inextricable position of Europe within the framework of the capitalist regime. European capitalism has become reactionary in the absolute sense of the term; that is, not only is it unable to lead the nations forward, but it is even incapable of maintaining for them living standards long ago attained. Precisely this constitutes the economic basis of the present revolutionary epoch. Political ebbs and flows unfold on this basis without in any way altering it.

But what about America? So far as America is concerned the picture seems to be quite different. And Asia? After all, it is impossible to leave Asia out of the calculation. Asia and Africa represent 55 per cent of the earth’s surface and 60 per cent of the world’s population. They certainly merit a special and extended examination; but this lies outside the scope of the present report. From everything that has been said, however, it is clear that the struggle between America and Europe is above all a struggle for Asia. How then do matters stand? Is capitalism still capable of fulfilling a progressive mission in America? Has it such a mission to perform in Asia and Africa? In Asia, capitalist, development has taken only its first major steps; while in Africa, the new relations penetrate the body of the continent itself only from the periphery. Just what are the perspectives here? The conclusion seems to be the following: capitalism has outlived itself in Europe; in America it still advances the productive forces, while in Asia and Africa it has before it a vast virgin field of activity for many decades if not centuries. Is that really the case? Were it so, comrades, it would mean that capitalism has not yet exhausted its mission on a world scale. But we live under the conditions of world economy. And it is just this that determines the fate of capitalism-for all the continents. Capitalism cannot have an isolated development in Asia, independent of what takes place in Europe or in America. The time of provincial economic processes has passed beyond recall. American capitalism is far stronger and stabler than European capitalism; it can look to the future with far greater assurance. But American capitalism is no longer self-sufficing. It cannot maintain itself on an internal equilibrium. It needs a world equilibrium. Europe depends more and more on America, but this also means that America is becoming increasingly dependent upon Europe. Seven billions are accumulated annually in America. What to do with them? If simply put in a vault, they, as dead capital, would drag down the profit level in the country. All capital demands interest. Where could the available funds be placed? Within the country itself? But there is no need of them, they are superfluous, the internal market is supersaturated. An outlet must be found abroad. One begins to lend to other countries, to invest in foreign industries. But what to do with the interest, which returns, after all, to America? It must either again be placed abroad, if it happens to be gold, or else European commodities must be imported. But these commodities will tend to undermine American industry whose enormous production already requires outlets abroad. Such is the contradiction: they must either import gold of which there is already a surplus, or import commodities to the detriment of the entire national industry. Gold “inflation” (permit me to call it that) is just as dangerous for economy in its own way as currency inflation. One can die not only of anemia but also of plethora. If there is too great a quantity of gold, no new revenues can be derived from it, the interest on capital is lowered and thereby the further expansion of production made inexpedient and even irrational. To produce and to export for the sake of locking up one’s gold in cellars is equivalent to throwing one’s goods into the sea. Consequently, as time goes on, America’s need to expand grows greater and greater; that is, she must invest her surplus resources in Latin America, Europe, Asia, Australia, Africa. The more this happens, all the more does the economy of Europe and other parts of the world become integrated with that of the United States.

In military art there is a saying that whoever moves into the enemy’s rear in order to cut off, is often cut off himself. In economy something analogous takes place: the more the United States puts the whole world under its dependence, all the more does it become dependent upon the whole world, with all its contradictions and threatening upheavals. Already today, revolution in Europe means convulsions in Wall Street; tomorrow, when the investments of American capital in European economy have increased, it will mean a profound upheaval.

And what of the national-revolutionary movement in Asia? Here the same mutual dependence exists. The development of capitalism in Asia inevitably implies the growth of the national-revolutionary movement, which comes into an ever more hostile clash with foreign capital, the bearer of imperialism. We observe how the development of capitalism in China which takes place with the assistance and under the pressure of imperialist colonizers leads to revolutionary struggle and upheavals.

I spoke previously of the power of the US vis-à-vis weakened Europe and the economically backward colonial peoples. But precisely in this power of the United States is its Achilles’ heel; in this power lies its growing dependence upon countries and continents economically and politically unstable. The US is compelled to base its power on an unstable Europe, that is, on tomorrow’s revolutions of Europe and on the national-revolutionary movement of Asia and Africa. It is impermissible to look upon Europe as an independent entity. But America, too, is no longer a self-sufficing whole. In order to maintain its internal equilibrium the United States requires a larger and larger outlet abroad; but its outlet abroad introduces into its economic order more and more elements of European and Asiatic disorder. Under these conditions a victorious revolution in Europe and in Asia would inevitably inaugurate a revolutionary epoch in the United States. And we need not doubt that once the revolution in the US has begun, it will develop with a truly American speed. That is what follows from an evaluation of the world situation as a whole.

From what has been said it also follows that America stands second in the line of revolutionary development. First in line are Europe and the Orient. Europe’s transition to socialism must be conceived precisely with the following as a prospect: against capitalist America and against its powerful opposition. It certainly would be more advantageous to begin the socialization of the means of production with the richest country, the United States, and then extend this process to the rest of the world. But our own experience has shown us that it is impossible arbitrarily to fix the order in which revolutions will occur. We in an economically weaker and backward country turned out to be the first called upon to make the proletarian revolution. It is now the turn of the other European countries. America will not permit capitalist Europe to rise again. Therein is the revolutionary meaning of American capitalist power. Whatever political fluctuations Europe may undergo, her economic impasse remains throughout the fundamental factor. And this factor, a year sooner or later, will impel the proletariat onto the revolutionary road.

Will the European working class be able to hold power and build a socialist economy without America and against America? This question is closely bound up with the question of colonies. The capitalist economy of Europe and especially that of England is intimately linked with colonial possessions, which supply foodstuffs as well as the indispensable raw materials for industry. Left by itself, that is, cut off from the external world, the population of England would be condemned to economic and physical death within a very brief period. The industry of all Europe. depends, in a large measure, on ties with America and the colonies. But the European proletariat, after wresting power from the bourgeoisie, will make it its first business to help the oppressed colonial peoples break their colonial chains. In these conditions will the European proletariat be able to hold out and build a socialist economy?

We, the peoples of Czarist Russia, were able to hold out during the years of the blockade and Civil War. We endured poverty, famine, epidemics – but we held out. Our backwardness proved temporarily to be also our advantage. The revolution held out by relying primarily on its rear, the gigantic peasantry. Starved and ravaged by epidemics the revolution held out. Industrialized Europe, and particularly England – that is something else again. There cannot even be talk of a partitioned Europe being able, even under the dictatorship of the proletariat, to hold out economically so long as it remains dismembered. The proletarian revolution signifies the unification of Europe. Bourgeois economists, pacifists, business sharpers, daydreamers and mere bourgeois babblers are not averse nowadays to talk about a United States of Europe. But that task is beyond the strength of the European bourgeoisie which is utterly corroded by contradictions. Europe can be unified only by the victorious European proletariat. No matter where the revolution may first break out, and no matter what the tempo of its development may be, the economic unification of Europe is the first indispensable condition for its socialist reconstruction. Back in 1923 the Communist International proclaimed that it is necessary to drive out those who have partitioned Europe, take power in partitioned Europe in order to unify it, in order to create the Socialist United States of Europe.

Revolutionary Europe will clear a road for herself to raw materials, to food products; she will know how to get help from the peasantry. We ourselves have grown sufficiently strong to be able to extend some help to revolutionary Europe during the most difficult months. Over and above this, we will provide for Europe an excellent bridge to Asia. Proletarian England, shoulder to shoulder with the peoples of India, will insure the independence of that country. But this does not mean that England will lose the possibility of a close economic collaboration with India. Free India will have need of European technology and cuture; Europe will have need of the products of India. The Soviet United States of Europe, together with our Soviet Union, will serve as the mightiest of magnets for the peoples of Asia, who will gravitate toward the establishment of the closest economic and political ties with proletarian Europe. If proletarian England loses India as a colony, then she will gain in her a companion in the European-Asiatic Federation of peoples. The mighty bloc of peoples of Europe and Asia will be impregnable and, above all, invulnerable against the power of the United States. We do not for a moment minimize this power. In our revolutionary perspectives we proceed with a clear understanding of facts as they are. Much more, we consider that the power of the United States – such is the dialectic – is now the greatest lever of the European revolution. We do not close our eyes to the fact that, politically and militarily, this lever will be turned against the European revolution when it breaks out. We know that when its own skin is at stake, American capitalism will unleash the fiercest energy in the struggle. It is quite possible that all that books and our own experience have taught us about the fight of the privileged classes for their domination will pale before the violence that American capital will try to inflict upon revolutionary Europe. But unified Europe, in revolutionary collaboration with the peoples of Asia, will prove infinitely more powerful than the United States. Through the Soviet Union, the toilers of Europe and Asia will be indissolubly linked. In alliance with the insurgent Orient, the European revolutionary proletariat will wrest from American capital the control of world economy and will lay the foundations for the Federation of Socialist Peoples of the whole earth.

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Last updated on: 26.8.2008