First Published: In Struggle! No. 232, January 5, 1981
Transcription, Editing and Markup: Malcolm and Paul Saba
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The First World War was over. But none of the problems which had brought it about had been resolved. The 1918 peace was thus in this respect merely a truce. And it was to be a rather tumultuous truce at that.
In the two decades between 1920 and 1940 there was first a period of prodigious economic growth and then, like raging water bursting over a dam, there followed just as quickly the worst economic crisis in the history of capitalism. The so-called “civilized” world was to be the stage for sharp clashes between States and between social classes. These contradictions brought home to one section of the working class that a socialist revolution was imperative. The bourgeoisie was pushed to draw a very different conclusion. The bourgeoisie’s solution was fascism. It would win the support of a very significant number of working people and spread like wildfire, mainly in Europe.
That is what the scene was in the imperialist countries in the twenty years of transition between one world war and another.
We already saw earlier (see issue 218) how the First World War resulted in the redivision of the world to the benefit of the victors and to the disadvantage of the defeated. A revolutionary storm was sweeping most of the continents in the world.
The revolutionary storm was not to subside until late 1923. The need for reconstruction after the war had stimulated a rapid revival of economic activity but it did not last long. From 1920 on industrial production actually dropped (it plummeted by one-third in Great Britain). Unemployment levels shot up. Another economic crisis had arrived, this one accompanied by an inflationary spiral that hit Germany particularly hard (you could exchange one U.S. dollar for billions of paper marks). Inflation also pushed the monetary systems in most of the newly created Central European countries over the brink into bankruptcy and collapse.
Germany was unable to pay the war reparations whiCh had been imposed on it by the Treaty of Versailles. In January 1923, the Belgian and French armies occupied the industrial region of the Ruhr. Political crises broke out in the fall of 1923 in Bulgaria, Poland, and the German provinces of Saxony and Thuringia. Communists played a prominent role in all of them. Each crisis ended with the brutal suppression of the people.
The ebb of the revolutionary wave in the next period coincided with the onset of a period of political conservatism in the whole capitalist world. Authoritarian and even outright fascist regimes came to power in many European countries. That is what happened in Hungary in 1919, Italy in 1922, Spain and Bulgaria in 1923, Portugal in 1925, Czechoslovakia and Poland in 1926, and Yugoslavia and Albania. The ruling elites in those countries where the bourgeois revolution was of recent vintage, facing and economic crisis, felt that the struggles of working people were threatening their control of State power. To the ruling classes, fascism was a bulwark against Bolshevism.
These major changes in international conditions led the Communist International (Comintern) to alter its tactics. There would be a shift from the offensive to the defensive while waiting for revolutionary conditions to reappear. The Comintern undertook a campaign to bolshevize the communist parties, i.e. it promoted a struggle to build workers’ parties on the model of the Communist Party of the Soviet Union (Bolshevik). To (this day, communists around the world view the Bolshevik party of that period as a model. The Comintern also promoted tactics of getting more fully involved in the immediate mass struggles in order to penetrate the masses and win over the majority of the working class. From the 1922 Fourth Comintern Congress on, it put forward the tactic of the united front: unite all workers regardless of their political allegiance. That unity was to be built both “from below” among the rank and file and “from above” by concluding alliances with the social-democratic parties and unions.
But the efforts to build unity “from above” failed. The negative experiences led communists bit by bit to oppose the social democrats more and more strenuously. By the Sixth Congress in 1928, the struggles against social democracy was defined as the main way to carry out the fight against fascism.
In the 1920s, the communist forces in the capitalist countries continued to decline, dropping from a high of 900,000 in 1921 to 558,000 in 1928. The membership slide came in the midst of splits, divisions and expulsions at each Comintern Congress. The political divisions were as often as not closely parallel to the development of various opposition trends in the Soviet Union, which was battling furiously to carry out an arduous economic recovery.
Why was all this happening? The workers’ movement had been knocked back by a string of defeats and heavy repression. The parties had been bolshevized. Yet in many countries the working class was listening more sympathetically to the promises of the reformists than to the communists. Reformism was on a bit of an upswing again throughout the period of prosperity between 1923 and 1929.
The years between 1923 and 1929 were a period of catching up again and of fabulous wealth-making for some. The pre-war standard of living was attained again in terms of wages and industrial production levels. Indeed, the pre-war levels were exceeded.
The main feature of this period was the bitter rivalry between the United States and Great Britain for control over world trade, The U.S. was becoming the supreme world industrial power and it seized the position of supremacy over international trade from Great Britain. The United States was experiencing a period of incredible prosperity: Great Britain was going through the worst economic crisis it had ever seen. There was a revival of prosperity in France, Germany and Japan. Germany, thanks to the acceptance and holding of billions of “Anglo-American marks” by the British and Americans, even managed to overtake the economies of France and Great Britain.
Many historians nail this period the Second Industrial Revolution. The adoption on an increasing scale of gasoline and electricity as power sources is termed the “energy revolution”. That revolution engendered another in transportation and communications: the use of airplanes, the spread of the telephone, radio, film “talkies”. The new energy sources made it possible to produce new goods such as aluminum and nylon. Henry Ford established assembly-line production in his auto plants: the machine moved instead of man, Before, each worker had a complicated job requiring the carrying out of many different operations. Now each of those operations was assigned to a different worker who merely had to execute a single simple operation over and over again. A number of trades thus went by the boards and there was an increase in the number of unskilled workers.
All these changes in the organization and output of industry were the product of a vast movement towards concentration and monopoly. The 1920s was an era when financial and industrial empires were built.
These developments in capitalism led to an increase in the number of “white collar” employees everywhere in the major industrialized countries. The increase is all the more significant when you consider that, over all, the percentage of manual “blue collar” workers did not go down much hilt remained relatively stable.
The average wage level went above the pre-war level during the 1920s. A section of the working class was able to meet new consumer needs. People bought cars, radios, refrigerators and washing machines.
The years of prosperity made many people euphoric. The Socialist Labour International declared that imperialism no longer needed to be imperialistic. Perpetual peace was now possible in the imperialist countries. The highly respected German Social Democrat Rudolf Hilferding announced that State monopoly capitalism would henceforth be able to overcome its crises and the anarchy of capitalist production. Jay Lovestone, general secretary of the Communist Party of the U.S.A., said in that American capitalism was not typical of capitalist countries, but was an exceptional case. American capitalism had developed the mechanisms such that it would develop in accordance with the interests of all classes in society and would be transformed little by little into a kind of American socialism.
All these euphoric visions were just that, a mirage. The Communist International expended a great deal of time and energy to condemn these views at its 1928 Congress. The onset of the Crash and Depression in 1929 put them to rest completely. The increase in prosperity had been real but it was also relative. Agriculture was getting mechanized but the number of peasants was dropping rapidly in most imperialist countries. There were new industries based on new technologies – aeronautics, auto, chemicals. But the old industries like coal and textiles, which now competed with the new substitute products that new technologies had made possible, stagnated. The serious crisis in Great Britain in these years is explicable in part by the fact that some of its key industries were precisely those which stagnated. Unemployment remained chronic in good times as well as bad. Even in the United States, the wealthiest country of all, 60% of American families subsisted below the official minimum income poverty line.
In the period of prosperity, productive capacity went up considerably. Capitalists produced at a quicker rate than society could consume (or rather than workers could afford to pay for). Stocks of unsold goods piled up in the factories: This was to lead to a crisis of overproduction affecting all sectors of the economy. The crisis would spread to encompass the whole capitalist world, including the colonies and backward economies.
Industrial production in the capitalist countries fell by 38%. International trade declined one-third in value. Money was devalued in 56 countries. The price of raw materials would sink by more than 50% between 1929 and 1931. Foodstuffs dropped the same amount between 1929and 1932. Agricultural production declined by one-third, Some 35 million workers were unemployed.
The bourgeoisies in the various capitalist countries did not exactly respond to the Depression by sitting back and waiting for it to go away. Repression was stepped up. Capitalists agreed among one another by and large that the State, their State, should be allowed to intervene directly in the economy. The State would play the role of banker. It would absorb the fallout from the corporate bankruptcies, plan public investments, oversee agriculture, encourage the development of concentration and monopoly, The State would organize work camps for the unemployed and cut back social service expenditures. In some countries, the wages of government employees were reduced outright.
But the cardinal principle of all bourgeoisies was that they sought to steer their way out of the mess by relying on their own national State. Thus, each and every bourgeoisie adopted its own nationalist measures: boosting of tarriff harriers to bar competing imported goods; undertaking various actions to protect the value of the local currency relative to others: imposing severe limits on immigration; propagandizing against foreign capital in the media; adopting laws requiring foreign-based companies to hire local people.
These policies would work to a degree in those economies which had a large enough internal market. The United States met that description. So did France, which could fall back on its relatively large colonial empire. Great Britain managed to establish a trading bloc composed of the Scandivanian countries and its ex-colonies in the Commonwealth.
The crisis policies enabled the bourgeoisies to maintain the allegiance of a section of the working class. While many workers suffered because of lack of work, and indeed eked out a rather miserable existence, some workers remained at roughly the same standard of living as before. Prices went down. Those who kept their jobs were able to weather the Depression without too much pain or difficulty. This was what happened with skilled workers, especially those in the new-technology industries in Great Britain, the United States and Canada. Such workers were often protected by very corporatist-minded craft unions.
Some countries were able to ride high as the result of their economic nationalism. Others were to suffer greatly from the closing of the markets of other countries to them. The newly-carved-up States of central Europe were in the latter category. Italy and Germany were particularly hard hit. They lacked foreign exchange and raw materials. The central European countries found the markets for their exports cut off while they were obliged to import to supply their industry with raw materials and their people with food. And they had no colonies to milk. Germany had an industrial capacity built up which required a huge market to absorb what it produced. Japan was in a parallel situation.
As a result, the central European States sought a military solution. Japan invaded Manchuria in 1931, Italy marched into Ethiopia in 1934 and into Albania in 1939. Germany annexed Austria and part of Czechoslovakia in 1938; it attacked Poland in 1939, provoking Britain into declaring war on Germany. The Second World War was “officially” under way.
The countries which embarked on all these military adventures abroad had to do something else first: they transformed their own internal form of rule to fascism. Fascism appeared wherever the Depression had struck hardest.
What is the difference between fascism and an authoritarian dictatorship? Fascism is not just repressive and bloodthirsty: it also has won a mass base through clever demagoguery.
Take, for example, German fascism or Nazism (so termed by abbreviating the party name, National Socialist). The Nazis presented themselves as a socialist party that was against the bankers, trusts and plutocrats. They proclaimed that they were anti-Bolshevik and nationalist, trying to exploit the wounded pride of the German people whose nation was oppressed by the terms set by the victors in the First World War.
The fascists managed to win to their side the petty bourgeois in the rural areas and middle-sized towns, farmers, small businessmen and various categories of self-employed workers with their rhetoric. They also won the support of a part of the working class. To put it another way, the fascists gained a following among all the classes and strata which the Depression was ruining. Those people hated both the trusts and banks which were getting fat from their misery and the trade-union movement which won benefits for unionized workers but not for them. The German fascists took power in January 1933. The big German bourgeoisie was in a fix: its internal market was too small. the workers’ movement was pushing it hard with its solid militancy which resulted in a number of successful strikes. The workers were, however, divided into two camps. the communists and the social-democrats, that tore at one another more ferociously, perhaps, than they fought the bosses.
Once in power the Nazis welded the bourgeoisie into a unified bloc. They won the active support of all the reactionary organizations which had grown up for the previous decade within Germany. The economy was reorganized into a war economy. Unions were banned and the worker parties. socialist as well as communist, crushed. In 1945, after 12 years in clandestinity, the Communist Party of Germany (KPD), at one time the largest communist party in the capitalist world, was not strong enough to rebuild on even a minimal level.
In 1934, Austria followed in Germany’s wake to become fascist. In 1936, Japan, Italy and Germany signed the anti-Comintern, pact which committed the parties to eliminating Bolshevism from the face of the earth. The ruling classes in Great Britain, France and the United States gave them all the manoeuvring room they wanted for their policies of agression during the 1930s, hoping that Nazi Germany and fascist Italy would hurl themselves with full force against the Soviet Union.
Communists did not sit back any more than the capitalists did when the Depression hit. There were twice as many workers’ struggles in the 1930s and the communists were right there in the middle of most of them. Communists were especially active in organizing the unemployed.
The rise of fascism, and reactionary movements created a very difficult situation for the Comintern, In 1935, only 22 of the 75 sections belonging to the Comintern were able to operate in conditions of legality or semi-legality.
The German party, biggest party in the Comintern after the CPSU, was crushed. On the other hand, the sentiment was growing within the working class for strong action to be taken against fascism. The social-democratic leadership made some efforts at patching up differences with the Comintern. The left in the social-democratic parties talked about uniting with the communists in a single party. The Comintern reponded to these conditions by changing its tactics at the 1935 Seventh Congress.
The tactical switch ushered back in the idea of building unity “from above” and “from below”. The new approach was justified by thea observation that fascism was not simply a change of government where one party replaces another. Fascism was in contradiction with bourgeois democracy as well as the proletariat.
The new tactic led to Popular Fronts being formed in France (1935-38) and Spain (1936-39). This meant electoral alliances with all sorts of different parties which had influence among workers and petty bourgeois in order to ward off fascism. The Popular Front in France, contrary to the experience in Germany for example, was directed at building unity between industrial workers and “white collar” employees. This was possible in France because government workers and other “white collar” employees were unionized.
As far as we are concerned, the work of evaluating the Popular Fronts and the tactics put forward by the Seventh Congress has yet to be done. But the simple fact that the Popular Fronts failed to hold back fascism is grounds for raising a lot of questions. We will confine ourselves for the moment to saying that the new tactic enabled communists to become more deeply rooted in the masses. The Communist Party of France increased in size from 38,000 to 300,000 between 1932 and 1937. The tiny Spanish party of 500 members in 1931 had built up to 301,000-strong by June, 1937. On the eve of the war, in 1939, the Comintern estimated that it had three times as many members in the capitalist countries as it had had in 1928.
To sum up, the 1920-1940 period saw capitalism go through some major ups and downs. Depression enveloped the whole capitalist world. But the contradictions were sharper in some places than in others. Contradictions were worst in places like Germany where it was not revolutions that broke out but the counter-revoltition, fascism, which came to power. And as the twenty-year period came to an end, imperialist war shook the world again.,/p>
However, despite the difficult conditions it faced, the international communist movement managed to strengthen its influence among the masses of working people. By the end of the 1930s, it had become the focal point for all those who wanted to fight against fascism.
 The Socialist Labour International was created in May 1923. Successor to the Second International, the SLI brought together the rightists from the Second International and the centrists which had broken away from it during the war but which chose not to join the Communist International.
 Benito Mussolini, el Duce, was the dictator of fascist Italy. At the outbreak of World War One he was a Socialist activist, editor of Socialist Party magazine.
If you want to learn more about fascism and the actions of the Comintern, read:
Fascism and Social Revolution, Palme Dutt, Proletarian Publishers.
For the Unity of the Working Class Against Fascism, Georgi Dimitrov, Red Star Press.
The United Front, Georgi Dimitrov, Proletarian Publishers.
Outline History of the Communist International, Progress Publishers, Moscow, 1971.
From Comintern to Cominform (2 vol.), Fernando Claudin.