Leon Trotsky & Prof. E. Varga

The International Situation

A Study of Capitalism in Collapse

(Presented to the Moscow Congress, 1921)

Date: 1921
Publisher: The Communist Party of Great Britain, 16 King Street, Covent Garden, London, W.C.2.
Printer: Frowde & Co., 242-244, Old Kent Road, S.E.1
Transcription: Ted Crawford
HTML Markup: Brian Reid
Public Domain: Marxists Internet Archive (2010). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.


The International Situation

1. The root of the problem.
2. The war, the crisis, and the countries of Europe.
3. The U.S.A., Japan, Colonial countries and Soviet Russia.
4. Social conditions intensified.
5. International relations.
6. The working class and the post-bellum period.
7. The perspective and problems involved.

The Root of the Problem

1. The revolutionary movement at the close of the imperialist war, and during the succeeding period, has been marked by unprecedented intensity. The month of March 1917 witnessed the overthrow of Tzarism. In May 1917 a vehement strike movement broke out in England. In November 1917 the Russian proletariat seized the power of Government. The month of November 1918 marked the downfall of the German and Austro-Hungarian monarchies. In the course of the succeeding year, a number of European countries were being swept by a powerful strike movement constantly gaining in scope and intensity. In March 1919 a Soviet Republic was inaugurated in Hungary. At the close of that year the United States were convulsed by turbulent strikes involving the metal-workers, miners and railwaymen. Following the January and March battles of 1919, the revolutionary movement in Germany reached its culminating point shortly after the Kapp uprising in March 1920. The internal situation in France became most tense in the month of May 1920. In Italy we witnessed the constant growth of unrest among the industrial and agrarian proletariat leading in September 1920 to the seizure of the factories, mills and estates by the workers. In December 1920 the Czech proletariat resorted to the weapon of the proletarian mass strike. March 1921 marked the uprising of workers in Central Germany and the coal miners’ strike in England.

Having reached its highest point in those countries which had been involved in the war, particularly in the defeated countries, the revolutionary movement spread to the neutral countries as well. In Asia and in Africa, the movement aroused and intensified the revolutionary spirit of the great masses of the colonial countries But this powerful revolutionary wave did not succeed in sweeping away international capitalism; nor even the capitalist order of Europe itself.

2. A number of uprisings and revolutionary battles have taken place during the year that elapsed between the Second and Third Congress of the Communist International, which resulted in sectional defeats. (The Red Army offensive near Warsaw in August 1920, the movement of the Italian proletariat in September 1920, and the uprising of the German workers in March 1921).

Following the close of the war which has been characterised by the elemental nature of the revolutionary onslaught, by the considerable formlessness of its methods and aims, and the extreme panic of the ruling classes, the first period of the revolutionary movement may now be regarded as having reached its termination. The self-confidence of the bourgeoisie as a class, and the apparent stability of its governmental apparatus, has undoubtedly become strengthened. The fear of Communism haunting the bourgeoisie, without having disappeared, has nevertheless somewhat relaxed. The leading spirits of the bourgeoisie are now even boasting of the might of their governmental apparatus, and have assumed the offensive against the labouring masses everywhere, on both the economic and political fields.

3. This situation presents the following questions to the Communist International and to the entire working class:

To what extent does this transformation in the relations between the bourgeoisie and the proletariat correspond to the actual balance of the contending forces? Is it true that the bourgeoisie is about to restore the social balance which had been upset by the war? Is there any ground to suppose that the period of political upheaval and of class war is going to be superseded by a new epoch of restoration and Capitalist development? Does not this necessitate a revision of the programme and tactics of the Communist International?

The War, Artificial Business Stimulation, the Crisis, and the Countries of Europe

4. The high tide of capitalism was reached in the two decades preceding the war. The intervals of prosperity were superseded by periods of depression of comparatively shorter duration and intensity. The general trend was that of an upward curve; the capitalist countries growing rich.

Having scoured the world market through their trusts, cartels, and combines, the masters of world-capitalism well realized that this mad growth of capitalism would finally strike a dead wall confining the limits of the capacity of the market created by themselves. They therefore tried to get out of the difficulty by a surgical method. In place of a lengthy period of economic depression which was to follow and result in wholesale destruction of productive resources, the bloody crisis of the world war was ushered in to serve the same purpose.

But the war proved not only extremely destructive in its methods, but also of an unexpectedly lengthy duration. So that besides the economic destruction of the “surplus” productive resources, it also weakened, shattered, and undermined the fundamental apparatus of European production. At the same time it gave a powerful impetus to the capitalist development of the United States and quickened the aggrandisement of Japan. Thus the centre of gravity of world industry was shifted from Europe to America.

5. The period following upon the termination of the four years’ slaughter, the demobilisation of the armies, the transition to a peaceful state of affairs, and the inevitable economic crisis coming as a result of the exhaustion and chaos caused by the war—all this was regarded by the bourgeoisie with the greatest anxiety as the approach of a most critical moment. As a matter of fact during the two years following the war, the countries involved became the arena of a mighty movement of the proletariat.

One of the chief causes which enabled the bourgeoisie to preserve its dominant position was furnished by the fact that the first months after the war, instead of bringing about the seemingly unavoidable crisis, were marked by economic prosperity. This lasted approximately for one year and a half. Nearly all the demobilised workers were absorbed in industry. As a general rule wages did not catch up with the cost of living, but they nevertheless kept rising, and that created the illusion of economic gains.

It was just this commercial and industrial revival of 1919 and 1920, which to some extent, relieved the tension of the post-war period, that caused the bourgeoisie to assume an extremely self-confident air, and to proclaim the advent of a new era of organic capitalist development. But as a matter of fact, the industrial revival of 1919-20 was not in essence the beginning of the regeneration of capitalist industry, but a mere prolongation of the artificially stimulated state of industry and commerce, which was created by the war, and which undermined the economy of capitalism.

6. The outbreak of the imperialist war coincided with the industrial crisis which had its origin in America (1913) and began to hover menacingly over Europe. The normal development of the industrial cycle was checked by the war which had itself become the most powerful economic factor. It created an unlimited market for the basic branches of industry and secured them against competition. The war played the part of a solid customer ever in want of goods. The manufacture of productive commodities was supplanted by the fabrication of means of destruction. Millions of people not engaged in production, but in work of destruction, were continuously using up necessities of life at ever-increasing prices. This process is the cause of the present economic decline. By the contradictions of capitalist society the masters lent the cloak of prosperity to this ruinous prospect. The State kept issuing loan after loan, one issue of paper money following upon another, till State accounting began to be carried on in billions instead millions. The wear and tear of machinery and of equipment was not repaired. The cultivation of land was in a bad state. Public constructions in the cities and on the high-roads were discontinued. At the same time the number of government bonds, credit and treasury bills and notes, kept growing incessantly. Fictitious capital increased in proportion as productive capital kept diminishing. The credit system instead of serving as a medium for the circulation of goods, became the means whereby national property, including that which is to be created by the growing generations, was being mobilised for military purposes.

The capitalist State, dreading the impending crisis, continued after the war to follow the same policy as it did during the war, namely: new issues of paper money, new loans, regulation of prices of prime necessities, guaranteeing of profits, government subsidies, and other additions of salaries and wages, plus military censorship and military dictatorship.

7. At the same time the termination of hostilities and the renewal of international relations, limited though it was, brought out a demand for various commodities from all parts of the globe. Large stocks of products were left without use during the war, and the enormous sums of money centred in the hands of dealers and speculators, were mobilised by them to where they could produce the largest profits. Hence the feverish boom accompanied by an unusual rise of prices and fantastic dividends, while in reality none of the basic branches of industry, anywhere in Europe, approached the pre-war level.

8. By means of a continuous derangement of the economic system, accumulation of inflated capital, depreciation of currency (speculation instead of economic restoration), the bourgeois governments in league with the banking combines and industrial trusts, succeeded in putting off the beginning of the economic crisis till the moment when the political crisis, consequent upon the demobilisation and the first squaring of accounts, was somewhat allayed.

Thus, having gained a considerable breathing space, the bourgeoisie imagined that the dreaded crisis had been removed for an indefinite time. Optimism reigned supreme. It appeared as if the needs of reconstruction had opened up a new era of lasting expansion of industry, commerce, and particularly of speculation. But the year 1920 proved to be a period of shattered hopes.

The crises—financial, commercial, and industrial, began in March, 1920. Japan saw the beginning of it in the month of April. In the United States it opened by a slight fall of prices in January. Then it passed on to England, France, and Italy, (in April). It reached the neutral countries of Europe, then Germany, and extended to all the countries involved in the capitalist sphere of influence during the second half of 1920.

9. Thus the crisis of 1920 was not a periodic stage of “normal” industrial cycle, but a profound reaction consequent upon the artificial stimulation that prevailed during the war and during the two years thereafter, and was based upon ruination and exhaustion.

The upward curve of industrial development was marked by turns of good times followed by crises. During the last seven years, however, there was no rise in the productive forces of Europe, but, on the contrary, they kept at a downward sweep.

The crumbling of the very foundation of industry is only beginning and is going to proceed along the whole line.

European economy is going to contract and expand during a number of years to come. The curve marking the productive forces is going to decline from the present fictitious level. The expansions are going to be short-lived and of a speculative nature to a considerable extent, while the crises are going to be hard and lasting. The present European crisis is one of under-production. It is the form in which destitution reacts against the striving to produce trade, and resume life on the usual capitalist level.

10. Of all the countries of Europe, England is economically the strongest and has been the least damaged by the war but, even with regard to this country, one cannot say that it has, in any way, gained its capitalist equilibrium after the war. Owing to its international organization and to the fact that it came out victorious from the war, England did indeed achieve some commercial and financial success. It improved its commercial balance, it raised the rate of the pound and reached an accounting surplus in its budget. But, in the industrial sphere, England, after the war, not only did not progress, but made big strides backward. The productivity of labour in England today, and her national income, are much below that of the pre-war period. The coal industry, which is the fundamental branch of her national economy, is getting ever worse and worse, pulling down all the other branches of industry. The incessant disturbances caused by the strikes are not the cause but the consequence of the derangement of English economy.

11. The ruin of Belgium, Italy and France brought about by the war is no less than that inflicted on Germany. The post bellum “reconstruction” of France is being parasitically carried on by means of the progressive ruination of Germany, robbing the latter of her coal, machinery, cattle and gold. The French bourgeoisie is striking heavy blows at the entire capitalist order. France is getting much less than what Germany is losing. The so-called reconstruction of France is nothing more than piracy accompanies by diplomatic black-mail. The economic decline of that country is imminent. When the last period of expansion came to its end (in March, 1920) the depreciation of French paper money reached 60 per cent., while that of Italy came down to 75 per cent. of its face value.

12. A striking illustration of the illusory nature of this kind of business expansion is presented by Germany, where a seven-fold increase in prices coincided with a sharp decline of production. Germany won her apparent success in international trade relations at the cost of both the deterioration of the nation’s basic capital (the destruction of industry, transportation and credit systems) and the progressive lowering of the standard of living of her working class. From the social and economic standpoint the profits gained by German exporters represent pure loss. For this export in reality amounts to selling out the country’s resources at a low price, while the capitalist masters of Germany are securing for themselves a constantly increasing share of the ever decreasing national wealth, the workers of the country are becoming the coolies of Europe.

13. As to the smaller neutral countries, they preserve their deceptive political independence thanks to the antagonistic contentions of the great powers. They maintain their economic existence on the fringes of the world market, whose essential nature used to be determined in the ante-bellum period by England, Germany, America and France.

During the war the bourgeoisie of these countries were making enormous profits, but the devastation of those countries which had been involved in the war led to the economic disorganization of the neutral countries as well. Their debts have increased, their currency exchange has dropped. The crisis spares them no blows.

The United States, Japan, Colonial Countries and Soviet Russia

14. The development of the United States during the war proceeded in an opposite direction, in a certain sense, to that of Europe. The part played by the United States in the war was chiefly that of a salesman. The destructive consequences of the war had no direct effect upon that country, and the damage caused to its transport, agriculture, etc., was only of an indirect nature and of a far smaller degree than that caused to England, not to speak of either France or Germany. At the same time, the United States, taking full advantage of the fact that European competition had either been removed entirely or had become extremely weak, succeeded in raising some of its most important industries (such as petroleum production, ship-building, automobile and coal industry) to such a height as it had never anticipated. today most of the countries of Europe are dependent on America not only for their petroleum and corn, but also for their coal.

While America’s export prior to the war consisted chiefly of agricultural products and raw materials (making up more than two-thirds of the entire export), her main export at the present time is made up of manufactured articles (60 per cent. of her entire export). Having been in debt prior to the war, the United States is now the world’s creditor, concentrating within its coffers about one-half of the world’s gold reserve and continually augmenting its treasury. The dominating part played by the pound sterling in the world’s financial market has now been taken over by the American dollar.

15. This extraordinary expansion of American industry was caused by the special combination of circumstances, namely, the withdrawal of European competition and, above all, the demands of the European war market. But American capitalism today has also lost its balance. Devastated Europe as a competitor of America is not in a position to regain its pre-war role on the world market. And the American market can only preserve an insignificant part of its former position with Europe as a customer. At the same time, America today is producing goods for export purposes to a much greater extent than prior to the war. The over-expansion of American industry, during the war, cannot find any outlet owing to the scarcity of world markets. As a consequence, many industries have become part time, or seasonal, affording employment to the workers only part of the year. The crisis in the United States resulting from the decline of Europe signifies the beginning of a profound and lasting economic disorganization. This is the result of the fundamental disturbance of the world-wide subdivision of Labour.

16. Japan also took advantage of the war in order to extend its influence on the world market. Her development has been of a much more limited scope than that of the United States and some branches of Japanese industry have acquired the character of what might be termed “hothouse” production. Her productive forces were sufficiently strong to enable her to take hold of the market while there were no competitors. But they are utterly insufficient to retain that market in a competitive struggle with the more powerful capitalist countries. Hence the acute crisis which had its starting point particularly in Japan.

17. The Trans-Atlantic countries and the colonies (such as South America, Canada, Australia, China, Egypt and others), which used to export raw materials, in their turn took advantage of the rupture in international relations for the development of their home-industries. But the world crisis has now involved these countries as well, and their internal industrial development is going to be checked, thereby serving as an additional cause for the trade handicap of England and of the whole of Europe.

18. Thus, there is no ground whatsoever to speak of regarding any restoration of lasting balance today, either in the sphere of production, commerce or credit with reference to Europe or even with reference to the world as a whole. The economic decline of Europe is still going on, and the decay of the foundation of European industry will manifest itself in the near future.

The world market is in a state of disorganisation. Europe wants American products, for which, however, it can give nothing in return. While the body of Europe is suffering from anaemia, that of America is affected with plethora. The gold standard has been destroyed, and the world market has been deprived of its general exchange medium.

The only way by which the restoration of the gold standard in Europe could be achieved would be by getting the export to exceed the import. But this is just what devastated Europe is not in a condition to do. America, on the other hand, is trying to check the influx of European goods by raising her tariff.

Thus, Europe has become a bedlam. England has introduced prohibitive customs duties. The export as well as the entire economic life of Germany is at the mercy of the Parisian speculators. The former Austria-Hungary is now broken up into a number of provinces divided by custom borders. The net in which the Versailles Treaty has entangled the world is becoming more and more tightened.

19. The reappearance of Russia on the world market is not going to produce any appreciable changes in it. Russia’s means of production have always been completely dependent upon the industrial conditions of the rest of the world, and this dependence particularly with regard to the allied countries became intensified during the war, when her home industry was almost completely mobilised for war purposes. But the blockade cut off these vital connections between Russia and the other countries. There could be no question of setting up any new branches of industry which were needed to prevent the general decay caused by the wear and tear of machinery and equipment in a country completely exhausted during three years of incessant civil war. In addition to this, hundreds and thousands of our best proletarian elements, comprising a great number of skilled workers, had to be recruited for the Red Army. Under these conditions, surrounded by the iron ring of the blockade, carrying on incessant wars and suffering from the heritage of an industrial collapse, no other could have maintained the economic life of the country and create such conditions as would permit of its centralized administration. There is no denying, however, that the struggle against world imperialism was carried on at the price of the progressive diminution of the productive resources of industry in various branches. Now, since the blockade has relaxed, and the relations between town and country are becoming more regular, the Soviet power has, in a centralized manner, been enabled for the first time gradually and steadily to direct the country upon the road to economic prosperity.

Social Conditions Intensified

20. The unprecedented destruction of industrial resources brought about by the war did not check the process of social differentiation. Quite the contrary, the proletarization of the intermediary classes, including the new middle-groupings of employees, officials, etc., and the concentration of wealth in the hands of the small clique of trusts, combines, and so on, have for the last ten years, made enormous strides in the more backward countries. The Stinnes combine is now the most important factor of the economic life of Germany.

The soaring of prices of all commodities coincident with the catastrophic depreciation of currency in all countries involved in the war meant a redistribution of the national incomes to the disadvantage of the working class, officials, employees, and small owners and all other persons with a more or less fixed income.

Thus we see that though Europe has been thrown back for a number of decades with reference to its material resources, the intensification of the social contradictions so far from having retrograded or been suspended, has, on the contrary, assumed a particular acuteness.

This cardinal fact is, of itself, sufficient to dispel any illusions of the possibility of a lasting and peaceful development under a democratic form of Government. The social differentiation proceeding along the line of economic decline predetermines the most intense, convulsive, and cruel nature of the class struggle.

The present crisis is only a continuation of the destructive work done by the war and the post-bellum speculative boom.

21. Owing to the fact that agricultural products have risen in price, the country places have accumulated a large amount of cheap money. This produced the illusion that the villages were prosperous. The farmers did, indeed, succeed in paying off in paper money the debts they had contracted in currency at its face value. But the well-being of the farmer is not to be brought about merely by settling mortgages. The lack of labour power, the diminution of cattle, the scarcity of fertilisers, and the high cost of manufactured products brought European agriculture into a state of complete decline.

On the other hand, the universal impoverishment of Europe, rendering it incapable of purchasing the necessary amount of American or Canadian corn, resulted in getting the farming industry of the trans-atlantic countries into a critical situation. The ruin of the peasants and small farmers is going on not only in Europe, but also in the United States, Canada, Argentine, Australia, and South Africa. The capital newly acquired during the war is being used for buying up country estates. The village is being disintegrated, proletarianised, and pauperised, and is becoming the hotbed of discontent.

22. Owing to the fall of the purchasing power of money the position of State and private salaried employees has, as a rule, become even worse than that of the proletarians. This condition is tending to go on in the same manner. Having lost their usual stability, the middle and lower officials are becoming the factors of political unrest and undermine the government apparatus which they are called upon to serve. This “new middle state” which has been regarded by the reformists as the bulwark of conservatism, is in the present transitional period becoming a factor of revolution.

23. Capitalist Europe has completely lost its dominating position in the world economy. But, it was just this domination that had lent some relative equilibrium between its social classes. All the efforts of the European countries (England and partly France) to restore former conditions only tend to intensify their instability and disorganisation.

24. While the concentration of wealth, going on in Europe, has its foundations in the ruinous conditions of that Continent, in the United States the concentration of property and the extreme intensification of class distinctions are proceeding on the basis of the feverish growth of capitalist accumulation. The class struggle going on in America has assumed an extremely tense revolutionary character owing to the sharp vacillations produced by the general instability of the world market. The period of an unprecedented rise of capitalism is bound to be followed by an extraordinary rise of revolutionary struggle.

25. The emigration of workers and peasants across the ocean has always served as a safety valve to the capitalist régime in Europe. It grew during prolonged periods of depression and upon unsuccessful revolutionary outbreaks. At present, however, America and Australia are putting ever-growing obstacles in the way of emigration. Thus this safety-valve, so necessary to the capitalist régime, has ceased to exist.

26. The vigorous development of capitalism in the East, particularly in India and in China, has created new social foundations for the revolutionary struggle. The bourgeoisie of the Eastern countries has bound up its fate even more closely with foreign capital, and has thus become a very important weapon of capitalist domination. The contest between this bourgeois and foreign imperialism is the contest of a weaker competitor against a stronger rival, and is by its very nature only half-hearted and unreal. The development of the native proletariat paralyses the nationalistic-revolutionary tendencies of the capitalist bourgeoisie: At the same time the great masses of the peasants of the Oriental countries look upon the Communist vanguard as their real revolutionary leader. This is particularly true of the more progressive elements of these masses.

The combination of the military nationalistic oppression of foreign imperialism, of the capitalist exploitation by foreign and native bourgeoisie, and the survivals of the feudal disabilities are creating the conditions in which the immature proletariat of the colonial countries must develop rapidly and take the lead in the revolutionary movement of the peasant masses.

The revolutionary national movement in India and in other colonies, is today an essential component part of the world revolution to the same extent as the uprising of the proletariat in the capitalist countries of the old and the new world.

International Relations

27. The economic condition of the world in general, and the decline of Europe in particular, presages a long period of hard times, disturbances, crises of a general and partial character, and so forth. The international relations inaugurated by the war and the Versailles Treaty are rendering the situation more and more hopeless. The trend of the economic forces tending to sweep away national boundaries and convert Europe and the rest of the world into one economic territory gave birth to imperialism but, on the other hand, the scuffle between the contending forces of this imperialism led to the creation of a multiplicity of new national boundaries, new custom-barriers and new armies. With regard to State administration and economy, Europe has been thrown back to the medieval state.

The soil which has been exhausted and laid bare is now being called upon to feed an army exceeding in numbers that of 1914, the hey-day of the “world in arms.”

28. The policy of France which is playing a dominant part in Europe today, is based upon the following two principles:

The blind rage of the usurer, ready to pounce upon and strangle an insolvent debtor and the greed of the predatory heavy industry striving to create favourable conditions for industrial imperialism to supplant financial imperialism with the aid of the Saar, Ruhr, and Upper Silesian Coal Basins.

But this striving runs counter to the interests of England, whose aim it is to keep the German coal away from the French ore, which, if brought together, would create the conditions necessary for the reconstruction of Europe.

29. Great Britain today has reached the high-water mark of her power. Having retained all her dominions, she also acquired new ones, nevertheless, it is just at this moment that it is becoming most evident that the dominating international position of England stands in contradiction to its actual economic decline. German capitalism, which from the standpoint of technique and organisation, is much more progressive than that of England, has been crushed by force of arms. The United States, having taken possession of both Americas, has now come out as a triumphant rival even more menacing than Germany was. The productivity of labour and of industry in the United States, owing to its superior organisation and technique, is now above that of England. Within the territory of the United States, from 65 to 70 per cent of the world’s petroleum is being produced upon which depends the automobile industry, tractor production, the fleet and aviation. England’s dominant position in the coal market which used to be almost a monopoly has been shaken. America has now assumed first place and her European export is ominously increasing. America’s commercial marine has nearly come up to that of England, neither is the United States content to put up any longer with England’s monopoly over the Atlantic cables. Great Britain has taken up a defensive position with regard to her industry and is now resorting to protective legislation against the United States under the guise of combatting the “unwholesome” German competition. Finally, while the English fleet, comprising a large number of battleships of the old-type, has been checked in its latest development, the Harding administration has taken up the Wilsonian programme of naval construction intended to secure the superiority of the American flag on the sea within the next couple of years.

The situation has become such that either England will be automatically pushed back, and, in spite of her victory over Germany, will become a second-rate power or, she will be constrained in the very near future to gather up all the power she had inherited from former times and engage in a mortal struggle with the United States.

This is just the reason why England is maintaining her alliance with Japan and is making concessions to France in order to secure the latter’s assistance or neutrality at any rate. The growth of the international role of the latter country within the European continent during the last year has been caused not by a strengthening of France, but by the international weakening of England.

Germany’s capitulation last May on the indemnity question signifies, however, a temporary victory for England, including as it does a supplementary guarantee of further economic decay of Central Europe, without in any way excluding seizure by France of the Ruhr district and Upper Silesian basin in the near future.

30. The antagonism between Japan and the United States which was temporarily veiled by the former’s participation in the war against Germany is now tending to come out into the open. In consequence of the war, Japan has approached the American coast having secured for itself a number of islands on the Pacific which are of great, strategic importance.

The crisis of Japanese industry, following upon its rapid expansion, has again put to the front the problem of emigration. Being very thickly populated and poor in natural resources, Japan must export either her goods or her men, but, whether she does the one or the other, she gets into collision with the United States: in California, in China, and in the Yap Islands.

Japan is spending one half of its budget on the maintenance of its army and fleet. In the impending struggle between England and the United States, Japan is going to play on the sea the same part as that played by France on land during the war with Germany. Japan today is making use of the antagonism between Great Britain and America but, when the final struggle between these two giants for world hegemony breaks out, Japan is going to be the battleground of that fight.

31. Both the original causes that called forth the recent great slaughter and the chief combatants that took part in it marked it as a European war, the crucial point of which was the antagonism between England and Germany. The intervention of the United States only widened the scope of the struggle, but it did not divert it from its original direction. The European conflict was being settled by world-wide means. The war settled the English-German and German-American quarrel in its own way, but it did not solve the problem of the relations between the United States and England. Now, however, this problem has been put forward prominently as one of the first order and the question of the American-Japanese as one of the second order. Thus the last war was in reality only a prelude to a genuine world war which is to solve the problem of imperialist autocracy.

32. This, however, forms only one focus of international policy which has yet another focus located in the Russian Soviet Federation and the 3rd International, brought about by the war. All the forces of the world revolution are arraying themselves against all the imperialist combinations.

Whether the alliance between England and France is going to be maintained or broken up, whether the Anglo-Japanese treaty is going to be renewed or not, whether the United States are going to join the League of Nations or not—all this is of little value so far as the interests of the proletariat or the securing of peace is concerned. The proletariat can see no guarantee for peace in the vacillating, predatory, and treacherous combinations of capitalist powers, whose policy turns to an ever increasing extent around the antagonism between England and America, fostering that antagonism and preparing for a new bloody outbreak.

The fact that some of the capitalist governments have concluded peace and commercial treaties with Soviet Russia does not mean that the bourgeoisie of the world has given up the idea of destroying the Soviet Republic. What we are witnessing now, is nothing but a change, a temporary change perhaps, of the forms and methods of struggle. The uprising caused by the Japanese troops in the Far East may serve as an introduction into a new stage of armed intervention.

It is altogether obvious that the longer the revolutionary movement of the world proletariat will go on, the more inevitably will the bourgeoisie be impelled by the contradiction of the international economic and political situation to make another bloody denouement on a world-wide scale.

If this should come to pass, the “restoration of capitalist equilibrium” consequent upon a new war would have to proceed under conditions of economic exhaustion and barbarity in comparison with which the present state of Europe might be regarded as the height of well-being.

33. In spite of the fact that the late war has furnished terrible evidence of the fact that “wars are unprofitable”—a truth lying at the bottom of bourgeois and socialist pacifism—the process of political, economic, ideological and technical preparation for a new war, is going on at full speed all through the capitalist world. Humanitarian anti-revolutionary pacifism has become an auxiliary force to militarism.

The social-democrats of every variety and the Amsterdam Trade unionists who are trying to make the workers of the world believe that they ought to adapt themselves to the economic and political conditions resulting from the war, are rendering the imperialist bourgeoisie most valuable services in the matter of preparing a new slaughter which threatens to completely annihilate civilisation.

The Working Class and the Post-Bellum Period

34. The problem of capitalist reconstruction along the lines outlined above, essentially puts forward the question as to whether the working class is willing to bear any more heavy sacrifices in order to perpetuate its own slavery, which is going to be ever more heavy and more cruel than it has been prior to the war.

The industrial and economic reconstruction of Europe requires the setting up of new machinery to replace that destroyed during the war and the creation of new capital. This would be possible only if the proletariat were willing to work more and to accept a lower standard of living. The capitalists are insisting on this, and the treacherous leaders of the Yellow International urge the proletariat to assist in the reconstruction of capitalism in the first place, and then to proceed fighting for the betterment of their own conditions. But the European proletariat refuses the sacrifice. It demands a higher standard of living, which is utterly incompatible with the present state of the capitalist system. Hence the everlasting strikes and uprisings; hence the impossibility of the economic reconstruction of Europe.

To restore the value of paper money means for a number of European countries (Germany, France, Italy, Austria, Hungary, Poland, the Balkans etc.) first of all to throw off the burden of too heavy obligations, i.e., to declare themselves bankrupt; but this would mean a strong impulse to the struggle of all classes for a new distribution of the national income. To restore the value of paper money means further reduction of state expenditures to the detriment of the masses (to forego the regulation of wages and of articles of prime necessity); to prevent the import of cheaper foreign manufactures and increase the amount of exported articles by lowering the cost of production which can be achieved, above all by increasing the exploitation of Labour.

Every radical measure tending to restore capitalist equilibrium must by the very nature of the case tend to disturb class equilibrium to a still greater extent than heretofore, lending additional impetus to the class war. Thus the attempt at a revival of capitalism involves a contest of vital forces, of classes and parties. If one of the two contending classes, namely, the proletariat, should decide to refrain from the revolutionary struggle, the bourgeoisie would undoubtedly establish some sort of a new capitalist equilibrium, an equilibrium based upon material and spiritual deterioration, leading to new wars, to the progressive impoverishment of entire countries, and to the continuous dying out of these millions of toiling masses.

But the frame of mind of the world proletariat today furnishes no ground whatever for any such supposition.

35. The elements of stability, of conservatism, and of tradition have, to a considerable extent, lost their power over the minds of the labouring masses. It is true that social democracy and the trade unions still exercise an influence over a considerable part of the proletariat, thanks to the apparatus of organisation that has come down to them from former times. But the nature of this influence as well as that of the proletariat itself has undergone considerable changes in no way consistent with the “step by step” methods of the pre-war period.

The upper crust of the proletariat, the labour bureaucracy, being closely knit together, and resorting to certain methods of domination that have become habitual, still preserves its usual position and is bound up by numerous ties with the institutions and organizations of the capitalist state. Then come those of the skilled rank and file whose position is more favourable than that of the rest of the workers, who occupy or look forward to occupying some administrative post in the industry itself, and on whom the labour bureaucracy mainly relies for its support.

The older generation of social democrats and trade unionists, consisting in the main of skilled workers, have become attached to their organizations through decades of struggle, and cannot make up their minds to sever connections with them, disregarding the treacherous nature of their activity. But in many industries unskilled workers and female workers are entering the ranks in considerable numbers.

Millions of workers having gone through the experiences of the war, and having acquired the ability to use the rifle, are now prepared, in some countries, to turn these weapons against their class enemies, provided they are given the strong leadership and serious training which are essential for victory.

Millions of working men and particularly women have been newly recruited for industrial pursuits during the war. These new workers brought with themselves their petty-bourgeois prejudices. But they also brought along their impatient claims for better conditions of life.

There are also millions of young working men and women who have grown up in the storm and stress of war and revolution, who are more susceptible to the communist ideas and are anxious to act.

The ebb and flow of the gigantic army of unemployed, some of whom are unattached to any class, while others possess only partial class attachments, form a striking illustration of the disintegration of capitalist production, and represent a constant menace to the bourgeois order. All these proletarian elements, varying so much in origin and character, have been enlisting in the post-bellum revolutionary movement at various times and in varying degrees. This explains the vacillations, the ebbs and flows, the attacks and retreats, characterising the revolutionary war. But the shattering of old illusions, the terrible uncertainty of existence, the arbitrary domination of the trusts and the practical methods of the militarised state—all this is rapidly welding the overwhelming majority of the proletarian masses together. The great masses are searching for a determined and definite leadership and for the closely welded and centralising Communist Party to take the lead.

36. During the war, the condition of the working class became perceptibly worse. It is true some groups of workers improved their condition, and in those cases where several members of a working man’s family were in a position to hold their place near the loom, the workers succeeded in maintaining and even in raising their standard of life. But as a general rule wages did not keep up with the rise in prices.

The proletariat of Central Europe has been doomed to ever greater privations since the war began. The lowering of the standard of life was not so noticeable in the allied countries up till lately. In England the proletariat succeeded in stopping the process of lowering the standard of life by means of an energetic struggle carried on during the last period of the war. In the United States some of the workers succeeded in improving their conditions, others only retained their previous standard of living, while still others have had their standard of living lowered.

The economic crisis has come down upon the proletariat at a terrific rate. The falling of wages began to exceed the fall of prices. The number of unemployed and semi-employed has reached such dimensions as have never been equalled in capitalist history.

The ups and downs in the condition of existence not only have an unfavourable effect on productivity, but also prevent the restoration of class equilibrium in its most essential domain, that of production. The instability of the conditions of life reflecting the general instability of the economic conditions nationally and internationally, is today the most revolutionary factor of social development.

The Perspective and Problems Involved

37. The war did not have, as its immediate consequence, a proletarian revolution, and the bourgeoisie has some ground to register this fact, as a great victory for itself.

Only dullards can find consolation in the fact that because the European proletariat did not succeed in overthrowing the bourgeoisie during the war or immediately after it, this is an indication that the programme of the Communist International failed. The Communist International is basing its policy on the proletarian revolution, but this by no means implies either dogmatically fixing any definite date for the revolution, or any pledge to bring it about mechanically at a set time. Revolution has always been, and is today, nothing else than a struggle of living forces carried on within given historic conditions. The war has destroyed capitalist equilibrium all over the world, thus creating conditions favouring the proletariat, which is the fundamental force of the revolution. The Communist International has been exerting all its efforts to take full advantage of these conditions.

The distinction between the Communist International and the social democrats of all colours, does not consist in the fact that we are trying to force the revolution and set a definite date for it, while they are opposed to any utopian and immature uprisings. No, the distinction lies in the fact that Social Democrats hinder the actual development of the revolution by rendering all possible assistance in the way of restoring the equilibrium of the bourgeois State, while the Communists, on the other hand, are trying to take advantage of all means and methods for the purpose of overthrowing and destroying the capitalist government and establishing the dictatorship of the proletariat.

During the two and a half years following the war, the proletarians of certain countries exhibited such self-sacrifice, energy and readiness for the struggle as would have sufficed to have made the revolution triumphant, provided there had been a strong centralised international Communist Party on the scene ready for action. But, during the war, and immediately thereafter, by force of historic circumstances, there was at the head of the European proletariat the organization of the Second International which has been and remains up to date the invaluable political weapon in the hands of the bourgeoisie.

38. By the end of 1918 and the beginning of 1919, the power of the government in Germany was practically in the hands of the working class, but the social democracy and the professional unions used all their traditional influence and all their apparatus for the purpose of returning the power into the hands of the bourgeoisie.

In Italy, the revolutionary movement of the proletariat during one and a half years has been marked by abundant force, and it was the petty bourgeois impotence of the socialist party, the treacherous policy of the parliamentary fractions, and the cowardly opportunism of the trade union organizations, that enabled the bourgeoisie to get into a position to reconstruct its apparatus, to mobilise its white guards, and to assume the offensive against the proletariat which has thus been temporarily discouraged by the bankruptcy of its leading organs.

The mighty strike movement in England has been frustrated once again during the last year, not so much by the government police forces as by the conservative trade unions whose apparatus has been most shamefully used to serve counter-revolutionary ends. Should the machinery of the English trade unions develop half the amount of energy in the interests of socialism which it has used in the interests of capitalism, the English proletariat would conquer power and would start the reconstruction of the economic organisation of the country with only an insignificant amount of sacrifice.

The same refers to a greater or less extent to all other capitalist countries.

39. It is absolutely beyond dispute that the open revolutionary struggle of the proletariat for power has been temporarily halted and its tempo delayed. But, in the very nature of the case, it was impossible to expect that the revolutionary offensive after the war, not having resulted in an immediate victory, should go on developing incessantly along an upward curve. The political evolution proceeds in cycles and has its ups and downs. The enemy does not remain passive but fights for his existence. If the offensive of the proletariat does not lead to direct victory, the bourgeoisie embraces the first opportunity for a counter-offensive. The proletariat in losing several of its positions, which were too easily won, usually experiences some confusion in its ranks. But it is undoubted mark of our time that the curve of the capitalist evolution proceeds through temporary rises constantly downwards, while the curve of revolution proceeds through some vacillations constantly upwards.

40. Should the rate of development prove to be more protracted and should the present industrial crisis be superseded in a number of countries by a period of prosperity, this would not in the long run signify the advent of the “organic” epoch. So long as capitalism exists periodic vacillations are inevitable. These vacillations are going to accompany capitalism in its agony, as was the case during its youth and maturity. The proletariat having been somewhat repulsed during the present crisis, by the onslaught of capitalism, is going to assume the offensive as soon as the situation begins to improve. The offensive character of the economic struggle of the proletariat which would 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 defensive stage of the struggle does.

41. No matter whether the revolutionary movement in the near future is going to proceed at a rapid or protracted rate, the Communist Party must, in either case, be the Party of action. The party stands at the head of the struggling masses, it must firmly and definitely proclaim their war cries and must expose and sweep aside all equivocal slogans of the social-democrats which always tend towards compromise. Whatever the turns in the course of the struggle, the Communist Party always strives to fortify the contested positions, to get the masses used to active manoeuvring, to equip them with new methods calculated to lead to an open conflict with the enemy forces. Taking advantage of every breathing space offered in order to appreciate the experience of the preceding phase of the struggle; the Communist Party strives to deepen and widen the class conflicts, to combine them nationally and internationally by unity of goal, and of practical activity, in such a way as to remove the hindrances in the way of the proletariat and lead it on to the socialist revolution.