Stalinism: It's Origin and Future. Andy Blunden 1993
The specifically Yugoslavian economic system did not take shape until the mid-1950s. In the immediate post-war period, Tito’s aim was to implement a copy of the Soviet economy in Yugoslavia, and this remained Tito’s idea until 1949. Stalin of course had a different idea for Yugoslavia - the return of the King and capitalism.
Tito defied Stalin, and the program of nationalisation and expropriation ensured that Yugoslavia, like the USSR, did not receive Marshall aid. Conflicts between the Yugoslav and Soviet parties continued over a range of issues until the Yugoslavs were expelled from Cominform on June 28 1948, marking the breakdown in relations between the USSR and Yugoslavia. Even after this, Tito speeded up collectivisation to try match Soviet levels of collectivisation.  In other words, the break between Tito and Stalin was not because Tito did not want to follow the Soviet model - on the contrary.
In March 1949, Milovan Djilas suggested that instead of denying Soviet criticism that they were not copying the USSR well enough or fast enough, they should be positively defending their economic policies. Between 1949 and 1953, the Yugoslavs sought to develop their own economic policy. In June 1950, Tito called for workers' councils to be established to run enterprises and later the Workers Self-Management Bill was passed in the National Assembly. Initially this did not lead to any real change, and the economy continued to be bureaucratically and centrally planned along Stalinist lines. The cessation of trade with the COMECON countries combined with the failure of bureaucratic planning to produce a stagnant economy.
In November 1950, Boris Kidric devised an argument to reconcile market relations with the Marxist concept of socialism. Eventually, the Yugoslavs developed their specific brand of market socialism, which combined elements of planning with production by independent enterprises controlled under a regulated system of workers control, and distribution of products by means of commodity exchange.
However, the expulsion of Tito from the Cominform in June 1948, and move which came as a surprise to Tito, marked a sharp change in relations between the USSR and all the other Communist Parties. The revolutionary pressure of the workers in Eastern Europe on the one hand, and the counter-revolutionary pressure of US imperialism on the other, created a crisis for Stalin. This crisis was resolved by a dramatic series of overturns in Europe between June 1948 and October 1949.
Despite Stalin’s best efforts to set up coalition governments with the 'progressive bourgeoisie' in Eastern Europe, events continued to run counter to this perspective.
In December 1947, anti-fascist and anti-monarchist sentiments in Rumania led to a rising proletarian rebellion, and King Michael abdicated and fled the country. The CP edged out its coalition partners, and in June 1948 a 'People’s Republic' was declared, controlled by the Communist Party, and the economy moved towards a state-owned system.
The founding meeting of the Cominform was convened in Poland in September 1947. The conference passed a resolution calling for the collectivisation of agriculture on the Soviet model. Gomulka had assured the Polish peasantry that they would be allowed to keep their land, and rather than break this promise, he rebelled.
Gomulka held on till September 1948, after the break between Tito and Stalin, when he was removed, along with 50,000 other members who were purged over the next two months. In December 1948, in line with Stalin’s mechanistic schema of one-party-per-class, the Socialist Party was 'absorbed' by the PPR to form the Polish United Workers Party (PUWP), and the two peasants' parties merged, and a 'People’s Republic' established. 260,000 members of the PUWP were expelled over the next two years.
The armed forces were also purged. Many officers who had fought with the Communist forces during the War were removed and in many cases arrested. Marshal Konstantin Rokossowski, a Soviet wartime commander, was appointed Minister of Defence and commander-in-chief.
The trade unions were taken over in 1949, and more than 80 per cent of local union officials were changed. A new Central Council of Trade Unions (CRZZ) was instructed that its duties were to assist the drive for increased production and to enforce factory discipline.
Despite all this, the Polish peasants successfully resisted collectivisation, and only 9 per cent of arable land had been collectivised by 1955.
Following the Czechoslovakian Communists' election victory in 1946, there was a sharp polarisation of classes. Workers' militias formed and demanded far-reaching changes. At the same time the US offered Czechoslovakia to be included in the Marshall Plan. Elections were due in May 1948, and in February the government of Klement Gottwald responded by reorganising the government, and using police terror to clamp down on all political opposition from left or right. The economy was integrated rapidly into the Soviet trading bloc. In the words of Jiri Pelikan:
'After February 1948 all political activity outside the Communist Party was impossible. Attempts to revive political groups branded as illegal were drastically obstructed by the police ...tens of thousands ended up in prisons or forced labour ... Czechoslovak communists - and the author was one of them - cannot be released from their responsibility for all this; they became aware of the extent and disastrous consequences of this tragedy only much later, at a time when the repressive machinery turned against themselves and brought in its wake the demoralisation of the entire movement.' 
Using racist invective, the property of the German and Hungarian national minorities was made the initial target for nationalisation.
In Soviet-occupied Hungary, Lazslo Rajk replaced Imre Nagy as Interior Minister in February 1946, and heavy industry and mines were nationalised. The banks were nationalised in 1947. In 1948, a sharp polarisation of class forces developed, and the crisis was resolved under the Red Army guidance by the institution of a Stalinist regime under M. Rakosi. Political opposition both inside and outside the Party was rapidly suppressed. On Easter Monday 1948, while workers were on holiday, state officials moved into the major factories and declared them state property.
In February 1949, the 'People’s Independence Front' was formed, comprising the Hungarian Workers Party (which had 'absorbed' the Social-Democrats) and a range of other parties (Peasants' Party, Working Peasants Association, etc) reflecting the Stalinists' mechanical schema for the class structure of Hungary. In May 1949, the Front not surprisingly swept the board in the election. The Front provided a fictitious 'popular front', while in reality a bureaucratic centralist regime was imposed, economically and politically controlled by the USSR. Hungary was declared a 'People’s Republic' in August 1949.
After the break between Tito and Stalin in August 1948, the popular Laszlo Rajk had been moved to the post of Foreign Minister. Rajk showed too much independence and in September 1949, he was accused of Tito-ism and of having been a Nazi agent during the War! After an obvious frame-up trial Rajk was hanged.
Georgi Dmitrov, long-standing leader of the Bulgarian Communist Party, returned to Bulgaria in November 1945 and began the statification of the Bulgarian economy. Bulgaria was proclaimed a People’s Republic in September 1946. Dmitrov however showed a degree of independence of Stalin, talking to Tito and the Rumanians of a South-east European socialist federation, and early in 1948 he was eased out of leadership by Stalin and died in July 1949.
In October 1949, the German Democratic Republic (DDR) was declared in the Soviet-occupied sector of Germany, with the usual range of artificial 'parties' forming a purported 'popular front' with the 'workers' party'. Some small-scale ownership of industry was tolerated and agriculture remained chiefly in the hands of small farmers. However, the great majority of the economy was administered by the Soviet occupation. Walter Ulbricht, who had lived in the USSR since 1933, provided the appearance of a German government.
Thus, within two years of the institution of the 'Truman Doctrine', Stalin’s attempts to resurrect capitalism in Eastern Europe had been abandoned, and 'People’s Democracies' had been created in all of the Eastern European countries.
The designation of these states as 'People’s Democracies' was in no way hypocritical or tongue-in-cheek! Stalin fully intended to establish Popular Front-type governments, that is multi-class governments, states representing an alliance between the working class and the bourgeoisie. It was quite explicitly envisaged that capitalist property would be protected.
When the Stalinists proved incapable of forming genuine 'popular fronts' they created their own. Artificial 'parties' were created to represent the various social classes who were 'invited' to form coalition governments. The presence of 'deputies' representing absolutely impotent 'parties' in rubber-stamp 'parliaments' does not make a two-class or three-class state.
This popular front charade was the inverse form of the popular front tactic applied before the war. In the mid-1930s, the Stalinists had participated in the formation of a popular front parliamentary government in France, for instance. In this case, the Stalinists only provided camouflage for the capitalist state. Now, under Red Army occupation, the 'popular front' governments were providing camouflage for workers' states.
The 'Peoples Democracy' program proved unworkable however. The combination of the pressure of the working class and peasantry in favour of expropriation of the capitalists and landowners and the inability of the Soviet bureaucracy to manage a capitalist economy forced Stalin into a policy that he never anticipated.
The outcome of the popular front tactic in Soviet-occupied Europe was quite different from what had happened with the popular front tactics applied previously. In the territories occupied by the Red Army, the Red Army was the State. The social relations upon which the Red Army rested, i.e. the political-economy of the Soviet Union, imposed themselves upon the countries it occupied. The Menshevik perspective proved as unworkable in 1947 as it did in 1917. Stalin’s diplomacy could not eradicate the fundamental antagonism between the workers' state and international capitalism.
But the rule of the Stalinist bureaucracy was threatened as much by an independent working class movement as it was by the bourgeoisie and imperialism. The Red Army provided the agent for the repression of the workers' movement in Europe. Thus, 'socialism in one country' also meant active and ruthless repression of political opposition within the occupied countries.
The strategy of the USSR since 1924 had been the theory of 'socialism in one country'. Since 1933, this had implied active opposition to socialist revolution in the capitalist world. How could the theory of 'socialism in one country' be applied in circumstances where the Red Army was in occupation of ten neighbouring countries? In the first place, it meant retaining them under military control as a part of a military and economic bloc. However, the intention was to restore capitalism in these occupied countries. However, as it transpired, the property relations of the USSR had to be extended into Eastern Europe, if Stalin was to retain the area under military and political control.
The left turn which followed the announcement of the Truman Doctrine was accompanied by a purge of the Communist Parties in which those leaders which reflected the revolutionary movement of the masses were ruthlessly purged. So, while the Communist Parties were taking exclusive power, and side-lining the bourgeois parties, they were also being transformed into impotent instruments of Stalin.
However, the irresistible momentum of the overturns taking place in Europe, the powerful upsurge of national liberation struggles spreading across the world, and the Cold-War activity of imperialism forced Stalin into a reluctant confrontation with imperialism. In a short-lived post-war left-turn, Stalin now urged Communist Parties to take a more aggressive line.
Already on a collision course with the Chifley government, the CPA easily adapted itself to the new policy. CP members in the Miners' Federation co-ordinated and led a major strike action. The strike began in June 1949 and ended in a disastrous defeat four months later.
The methods of leadership applied by the Stalinists showed the effects of the change that had taken place in the CPA since before the war. Rather than organising and leading the rank-and-file of the union, the Stalinists used methods of bureaucratic manipulation which eventually redounded on them when the strike collapsed.
The Party was now incapable of using methods other than the unprincipled bureaucratic methods perfected during the war. The CP’s bureaucratic internal structure also made it impossible for the Party to learn the lessons of their mistakes or hear the messages coming from their supporters. The CPA judged the defeat of the miners' strike a victory since it had exposed the treachery of the ALP. As a result, just as the post-war militancy of the workers was starting to ebb, the CP initiated a further offensive. The CPA predicted big gains for their candidates in the December 1949 federal election, which in reality produced a landslide for R G Menzies.
In Vietnam in August 1945, the surrender of the Japanese sparked a general revolutionary uprising with widespread confiscation of landed property by the peasant masses and the establishment of Soviets all across the country.
The policy of the CP was to facilitate the re-establishment of French colonial power, to be followed by a negotiated transition to independence, in which landowners and colonial capitalists would be protected. When the British and French forces arrived, the Stalinists collaborated and the revolution was suppressed. The entire Vietnamese Trotskyist movement, which had the leadership of the Saigon working class, was massacred. Promises given to Ho Chi Minh by US President Truman that Vietnam would be granted independence were, of course, betrayed and the 10 year war against French imperialism began.
1945 also created a revolutionary situation in Indonesia. Indonesian Communist Party (PKI) leaders who had spent the War in Holland or Australia had been persuaded, with some difficulty, to lend their support to the Dutch in order to fight the Japanese. It had taken the Japanese only eight days to overthrow Dutch colonialism, a sight which much impressed the Indonesian masses. The Japanese however had proved just as brutal as their European predecessors - two million Indonesians died at the hands of the Japanese during the three year occupation.
On 17 August 1945, after the Japanese occupation collapsed, Sukharno declared an Indonesian Republic. The PKI leaders were flown home free-of-charge courtesy of the Netherlands government. Like the Netherlands Communist Party, the PKI leaders were for a re-establishment of the colonial regime.
Soon after the PKI leaders arrived from Holland, they realised that the Republic had the enthusiastic support of the masses, and joined the struggle. The Indonesian exiles in Australia organised Indonesian Independence Committees. In spite of Stalin’s policy, the CPA supported the Committees, and the maritime unions banned Dutch shipping in support of the Independence struggle.
'During the second week in September 1945, soldiers at the [Dutch] Harderwijk military camp near Amsterdam were informed that they were to embark for Indonesia. ... The soldiers protesting against the government order .. bluntly refused to go. They formed a committee representing at first 150 men, and went to the Communist Party headquarters to get aid .. since many of them were members of the CP. The leaders of the latter refused all help ...' 
British paratroops sent to Indonesia staged a sit-down strike, and British merchant seamen in Sydney mutinied. Boycotts on Dutch shipping spread across the world. Nevertheless, after four years of bitter fighting against British and Dutch imperialism, the Republic was finally recognised in December 1949.
Having broken from Stalin’s direction, and carried along by a powerful and youthful mass movement, the PKI submerged itself in the national struggle. D N Aidit, who was to lead a new generation of PKI leaders in 1951, said:
'During the Revolution, the Party abandoned political, ideological and organisational freedom and did not attach sufficient importance to it’s activities in labour and peasant circles. These were the reasons why the revolution failed! ... The Party failed to realise in the August revolution that there was no need for illegality. The Party failed to realise that the Dutch colonial era ended and that a new era opened. This was the first mistake: the failure to declare the party legal and lead the revolution'. 
By 1952, the PKI had grown to only 5,000 members, despite the enormous revolutionary upheavals of the previous seven years, and bourgeois nationalist leaders had control of the government.
Soon after the defeat of the Japanese, civil war broke out between the Kuomintang of Chiang Kai-Shek and the Red Army. Chiang Kai Shek had been trained by the Red Army in 1923 and supplied with arms from the USSR on and off from 1918 until 1945, and by Nazi Germany from 1933 till 945. The Kuomintang also enjoyed aid and operational support from the US.
The US and the USSR jointly endeavoured to pressure the two sides into a settlement, but reconciliation was impossible. Basing itself in the countryside, the Communist Party launched a protracted guerrilla war. Kuomintang strongholds in the industrial North were isolated, and the Red Army then moved into Central China. In the spring of 1948, the Red Army moved over to conventional warfare. After killing half a million Kuomintang troops at Suchow, the Red Army rolled down into Nanking, Shanghai, Canton and Peking, finally pushing Chiang Kai-Shek literally into the sea - leaving him occupying the island of Formosa under US protection. A Chinese People’s Republic was declared in October 1949.
The political and military genius of the leadership of the Chinese Communist Party in their conduct of the Civil War is undeniable. The war and insurrection that had raged across China since the overthrow of the Manchu dynasty by Sun Yat Sen in 1911, against European intervention, the Japanese invasion, the numerous warlords and against the powerful Kuomintang, armed and led by imperialism, had trained a military-political cadre of the first order.
But what was the class nature of this leadership? The following words written by Trotsky in 1932 are worth recalling:
'The peasant movement is headed by Communists or sympathisers. Isn't it self-evident that in the event of their coming together the workers and the peasants must unanimously unite under the Communist banner?
'Unfortunately the question is not at all so simple. ..
'It is one thing when a Communist Party, firmly resting on the flower of the urban proletariat, strives through the workers to lead a peasant war. It is an altogether different thing when a few thousand or even tens of thousands of revolutionists, who are truly Communist or only take the name, assume the leadership of a peasant war without having serious support from the proletariat. This is precisely the situation in China.
'... the Marxists [say]: 'We will arouse and organise the advanced workers, and through the workers we shall arouse the peasants'. Such in general is the only conceivable road for the proletarian party.
'The Chinese Stalinists have acted otherwise. ...
'The party actually tore itself away from its class. Thereby in the last analysis it can cause injury to the peasantry as well. For should the proletariat continue to remain on the sidelines, without organisation, without leadership, then the peasant war even if fully victorious, will inevitably arrive in a blind alley'. 
When the Chinese Stalinists entered the cities at the head of peasant armies, they did not set out to lay the basis of a workers' state, but to implement Stalin’s policy of a 'democratic dictatorship'. This meant maintaining capitalist property, and suppressing the independent organisation of the working class.
From 1949 to 1952, a program of land reform and nationalisation of the foreign companies was carried out simultaneously with attempts to retain bourgeois leaders in the government and protect capitalist property. Oppositionists based in the urban working class were consistently repressed throughout this period.
The determined defence of North Korea by the Chinese Army proved to imperialism that the Chinese People’s Republic was here to stay. US troops reached the Chinese border in June 1950, arrogantly ignoring warnings from the Chinese government. The Chinese chased the US out of North Korea in less than two months, and among 3 to 4 million casualties were 142,000 US soldiers. Peace talks were begun in July 1951, and a treaty signed two years later.
In 1952, the Chinese Stalinists changed economic course. The property of Chinese capitalists was nationalised and China moved towards a planned economy. This turn was a response to growing opposition from the bourgeoisie which had been growing in confidence and encouraged by the aggressive American policy in Korea. In December 1952 and January 1953, the entire Trotskyist movement (and their relatives) were rounded up and imprisoned, in most cases never to be seen or heard of again.
In 1945, revolutionary situations existed across most of Europe and much of the colonial world. The power and authority of the bourgeoisie in the old capitalist countries other than the US had been destroyed. The Red Army and its allies had defeated fascist Germany and were already in control of half the world.
But during the two years immediately after the War Stalin had used the power of the USSR and the Red Army to sell-out the workers of Western Europe and the colonies. Truman should have cried April Fool! as he announced the Cold War doctrine in March 1947. The world-wide revolutionary opportunity posed in 1945 had now passed. Given a correct policy, the initiative could be regained, but Stalin’s policies in the next period would be equally as effective in ensuring the continued survival of capitalism.
The CPs which had come to the rescue of capitalism in all the imperialist countries were committed to following the parliamentary road.  In the countries occupied by the Red Army, Stalin had tried but failed to reinstate capitalism. In countries like Vietnam, Stalin had facilitated the reimposition of colonial rule.
By the end of the civil war in China in October 1949, the post-war division of the world had been completed. All political, diplomatic and military means that Stalinism had at its disposal was directed at maintaining the stability of this order. The doctrine of 'peaceful co-existence' was not given its finished expression until Khrushchev’s day, but this was essentially the policy of Stalinism by 1949.
The corollary of 'peaceful co-existence' was military might.
The USSR exploded its first A-bomb in 1949 and the H-bomb in August 1953, only 9 months behind the US. The huge conventional strength of the Red Army was maintained. Despite the enormous losses of the war, the Red Army had defeated Nazi Germany and with China, occupied territories and populations covering half the Earth.
This vast fortress was a formidable deterrent to imperialist attack and it was complemented by a policy of retaining leadership of the revolutionary and national liberation movement across the world and using this leadership to further the USSR’s perspective of 'peaceful co-existence'.
Central to 'peaceful co-existence' was the doctrine of 'national road to socialism'. Every national Communist Party had its own 'Road to Socialism'. The 'national road to socialism' did not mean the concretisation of strategy and tactics for the development of the workers' movement in each country. On the contrary, it meant the abandonment of an independent working class perspective in favour of subservience to the national bourgeoisie. Insofar as the Communist Parties challenged capitalism in a country, they did so on the terms dictated by the national bourgeoisie.
In his testament to communists in the West, Left-wing Communism - An Infantile Disorder¶, Lenin had advised:
'It is now essential that Communists of every country should quite consciously take into account ... the concrete features which this struggle assumes and must inevitably assume in each country, in conformity with the specific character of its economics, politics, culture, and national composition, its colonies, religious divisions, and so on and so forth. Dissatisfaction with the Second International is felt everywhere and is spreading and growing, both because of its opportunism and because of its inability or incapacity to create a really centralised and really leading centre capable of directing the international tactics of the revolutionary proletariat in its struggle for a world Soviet republic. It should be clearly realised that such a leading centre can never be built up on stereotyped, mechanically equated, and identical tactical rules of struggle.
'As long as national and state distinctions exist among peoples and countries - and these will continue to exist for a very long time to come, even after the dictatorship of the proletariat has been established on a world-wide scale - the unity of the international tactics of the communist working class movement in all countries demands, not the elimination of variety or the suppression of national distinctions (which is a pipe dream at present), but an application of the fundamental principles of communism (Soviet power and the dictatorship of the proletariat), which will correctly modify these principles in certain particulars, correctly adapt and apply them to national and national-state distinctions'. 
However, such a concretisation of strategy and tactics was not the content of the Stalin’s 'national road to socialism'. The 'stereotyped, mechanically equated, and identical tactical rules of struggle' continued just as before. The same popular front policy of collaboration with the national bourgeoisie was imposed on countries as diverse as Bulgaria, Vietnam, Britain and Italy. The 'national road to socialism' simply meant adaptation to the pressure of the national bourgeoisie in each country, regardless of the interests and aspirations of the workers.
The USSR was also to pay a price for this pact with imperialism which left the war-shattered economies of the USSR, Eastern Europe and China isolated from the world market. Not only was the Stalinist bloc isolated within an economically backward sector of the world economy, but they were cut off from the vital US economy which provided the engine for reconstruction of Europe, and cut off from the qualitative development in the productive forces taking place.
How had Stalin’s perspective of catching up and overtaking the West fared so far? By 1940, heavy industry in the USSR had come some way towards catching up with the West: the per capita production of electric energy had reached 40% that of France, 33% that of Germany. Per capita production of steel had reached 30% that of the US.
Agricultural production however was way behind. The total production of meat, eggs and wool was still below the level of 1913, and milk only slightly more than in 1913, despite a 25% increase in population!
The purchasing power of the average wage of the Soviet worker in terms of food was already falling behind. In 1928 it was 70% that of Germany, 27% that of the US; in 1938 it was less than 50% of Germany’s, less than 25% that of the US; in 1950, 37% of Germany’s, 14% of the US’s.
Thus, not only was the productivity of labour in the USSR well short of that in the West, it was lagging further behind. But this was no 'level playing field'! The crippling burden imposed by having to maintain the nuclear balance of terror with the US military industrial complex was like an iron collar around the neck of the Soviet economy.
The workers' states would pay a heavy price for passing up the revolutionary opportunity posed in the aftermath of the War. Stalin’s perspective of catching up and overtaking the West was founded in the belief that the productive forces could be developed in this period within the confines a single country. This conception of political economy was fundamentally false. Imperialism, on the other hand, was thinking in terms of the world market.
The attempt to build a modern economy by means of bureaucratic command within the Soviet bloc isolated from the rest of the world economy by imperialist blockade was doomed to failure. This catching up and overtaking perspective for the USSR was all that Communists outside of the Soviet Union had to offer workers in exchange for selling out their own revolutions. The purpose of abandoning a revolutionary perspective in other countries was based on the expectation that the USSR would become a powerful leader and model for workers living under capitalism.
Why did the Red Army bring about the statification of the economies of the countries it occupied, despite a policy of retaining capitalism? Because of the fundamental antagonism between a workers' state and capitalism.
A workers' state cannot foster capitalist social relations without sowing the seeds of counter-revolution. It is not possible for a workers' bureaucracy to organise a 'healthy' capitalist economy without sooner or later, facing a bourgeois counter-revolution.
Capitalism cannot grow without growing a capitalist class. That capitalist class has its roots in the social relations of production, domestically and internationally. The bourgeoisie will inevitably challenge the workers' state for the right to control the economy, and therefore the state.
At the same time, the rule of the workers' state bureaucracy is fundamentally antagonistic to workers' democracy. Expansion of workers' democracy inevitably threatens bureaucratic privilege.
'The conquest of power by the proletariat does not complete the revolution, but only opens it. Socialist construction is conceivable only on the foundation of class struggle, on a national and international scale'. 
Either the capitalist class rules, and develops a capitalist economy with whatever measures of state regulation are possible and necessary to moderate the anarchy of the market, or the proletariat rules, with whatever measures of 'free market' are necessary at a given stage of development. The attempt of a petit-bourgeois workers' bureaucracy to suppress the political development of both classes and organise a so-called 'planned economy' - in reality a bureaucratic-centralist 'command economy' - are doomed to stagnation and decline and eventual overthrow either by workers' political revolution or capitalist counter-revolution.
The Second World Congress of the Fourth International met in France in April and May 1948, and attempted to understand the process that was taking place. The majority of delegates believed that the states being set up under Red Army occupation were capitalist states. This prognosis corresponded to Stalin’s declared objectives. It also corresponded to the status of the economies at that time. Much of the economies, especially the rural sectors, remained under private ownership.
Michel Pablo argued that in Yugoslavia the active participation of the organised working class had created a workers' state. A minority of the US section, including Joseph Hansen, argued that all the states were workers' states. Hansen argued that despite their being saddled with a Stalinist bureaucracy, their economic foundations were generically similar to those of the USSR.
The final resolution of the Congress characterised the Eastern European states as 'buffer states'. This signified the occupation of these countries as part of Stalin’s defensive military strategy, without indicating their social or economic character. The Congress also introduced the concept of 'structural assimilation', to account for the socialisation of the economies as they were tied into the economy of the USSR.
Central to the idea of structural assimilation, as it was formulated by the Congress, was the tendency towards abolition of national borders. This idea was based upon the annexation of the Baltic states which many believed would also prove to be the fate of the other East European nations. Such annexation did not however continue. Nevertheless, the idea of structural assimilation was important. It recognised the inherent political and economic tendency of Soviet occupation to set off transformation of the economic base, introducing their own economic forms into the occupied territories through bi-lateral trading relationships within a common market .
The idea of structural assimilation contradicted the thesis that a workers' state could not come into being without a social revolution. Apart from Yugoslavia, where the power of the bourgeoisie had been destroyed by civil war, elsewhere in Europe the bourgeoisie had been destroyed either by German or by Russian invasion or a combination. They had not been destroyed by social revolution, but destroyed they had been.
In the interval between the Second World Congress in April 1948 and the Third World Congress in August 1951, the abolition of capitalist property relations in those countries which remained under Stalinist control was virtually completed, at least in the main industries.
In most of the countries of the Stalinist bloc agriculture remained predominantly in the hands of small private proprietors. Some argued that the capitalist character of the rural sector required the economies that be regarded as capitalist, since in all the countries concerned agriculture formed a large sector of total production. However, it was recognised that economic relations in the countryside are not decisive in relation to the economy as a whole.
The Third Congress resolved that the newly formed states must be described as 'deformed workers' states'.
The Congress also passed a separate resolution acknowledging that in Yugoslavia something qualitatively different had occurred - a revolution had established the Yugoslav workers' state. This revolution had been carried out independently of the Soviet State.
This meant that the Fourth International had to grapple with the fact that not only was Stalinism capable of bureaucratic overturns as had occurred in Eastern Europe, but that it was possible for a Stalinist (such as Tito) to lead a revolutionary struggle leading to the establishment of a workers' state.
The civil war in China had ended in October 1949 in victory for the Communist Party’s forces. It was still not clear at the time of the Third Congress what direction would be taken in China, since Stalin and Mao’s policy was for a Popular Front-type government, and steps towards institution of a planned economy were not taken till 1952.
'Our present policy is to regulate capitalism, not to destroy it'  were Mao’s exact words.
Subsequent events proved however that the theoretical conclusions drawn from what had taken place in Europe were applicable to the Chinese Revolution as well. Despite Mao’s perspective of maintaining capitalism, and building a 'popular front' government, a deformed workers' state would inevitably follow in China.
These states were referred to as deformed workers' states because they were born disfigured. By contrast, the Soviet Union, which was born of socialist revolution, but had later degenerated, was described as a 'degenerated workers' state'.
The significance of the characterisation of these countries as deformed workers' states was that the Trotskyists recognised that they had to defend the property relations of the deformed workers' states against capitalist restoration at the same time as fighting for the overthrow of the Stalinist governments. This was basically the same task as revolutionaries had in relation to the USSR.
Looked at in isolation, the reactionary character of the Stalinist regimes did not pose any dilemma. Revolutionaries sought their overthrow. But these states did not exist in isolation. They existed in a world dominated by imperialist powers that also sought the overthrow of Stalinism, in order to regain their territories for capitalism. Consequently, revolutionaries had to understand the problems posed by the Stalinist states in the context of their overall strategy.
World revolution is the underlying strategy of communism. Defence of the USSR, the deformed workers' states, or any other gain of the working class must be seen as a tactic within that strategy. The struggle against the reactionary influence of Stalinism has to be based on the defence of these gains.
Trotsky considered these same problems in 1939:
'The primary criterion for us is not the transformation of property relations in this or another area, however important these may be in themselves, but rather the change in the consciousness and organisation of the world proletariat, the raising of their capacity for defending former conquests and accomplishing new ones. From this one, and the only decisive standpoint, the politics of Moscow, taken as a whole, completely retains its reactionary character and remains the chief obstacle on the road to the world revolution.
'Our general appraisal of the Kremlin and the Comintern does not, however, alter the particular fact that the statification of property in the occupied territories is in itself a progressive measure. ...
'The statification of the means of production is, as we said, a progressive measure. But its progressiveness is relative; its specific weight depends on the sum-total of all the other factors. Thus, we must first and foremost establish that the extension of the territory dominated by bureaucratic autocracy and parasitism, cloaked by 'socialist' measures, can augment the prestige of the Kremlin, engender illusions concerning the possibility of replacing the proletarian revolution by bureaucratic manoeuvres, and so on. This evil by far outweighs the progressive content of Stalinist reforms in Poland. In order that nationalised property in the occupied territories, as well as in the USSR, become a basis for genuinely progressive, that is to say, socialist development, it is necessary to overthrow the Moscow bureaucracy. ...
'It is necessary to understand clearly that sharp contradictions are contained in the character of the USSR and in her international position. It is impossible to free oneself from those contradictions with the help of terminological sleight-of-hand ('workers' state' - 'not workers' state'). We must take the facts as they are. We must build our policy by taking as our starting point the real relations and contradictions.
'We do not entrust the Kremlin with any historic mission whatsoever. We were and remain against seizures of new territories by the Kremlin. We are for the independence of Soviet Ukraine, and if the Byelo-Russians themselves wish - of Soviet Byelo-Russia....
'We must not lose sight for a single moment of the fact that the question of overthrowing the Soviet bureaucracy is for us subordinate to the question of preserving state property in the means of production in the USSR; that the question of preserving state property in the means of production in the USSR is subordinate for us to the question of the world proletarian revolution'. 
The class characterisation of a state is a means of expressing its relation to the historical tasks of the working class. In describing the new states as 'deformed workers' states' the Trotskyists expressed the understanding that the foundations of workers' power had to be defended against imperialism, but the political superstructure had to be overthrown and reformed.
In 1950, a tendency emerged from the Fourth International which fundamentally rejected the deformed workers' state position. The Socialist Review Group in Britain, known as the International Socialists is characterised by its adherence to the theory of 'state capitalism'.
Just as the deformed workers' state characterisation has to be understood in relation to the perspective of political revolution and defence of nationalised property relations, so 'state capitalism' has to be understood in relation to the political perspective that it is connected with.
The emergence of this grouping coincided with the beginning of the Korean War in June 1950. Their orientation in relation to the Korean War was quite clear: 'Neither Western Capitalism nor Stalinist Totalitarianism ... we lend no support to either side in Korea'.
The Trotskyist movement meanwhile was agitating against the imperialist intervention, organising wharfies to ban the shipment of materials, lobbying 'left' parliamentarians to withdraw support from the war, holding public meetings to expose the cynical nature of the 'United Nations' action, and defending the right of Korean workers to solve their own problems.
The IS claimed 'instead our solidarity is with the Koreans in their struggle against both war camps and for national independence and democratic socialism'. This appears to be an honourable and more left-wing position, refusing to lend support to Stalinism, standing by the masses in opposition to both Stalinism and imperialism. But this is not so.
The context of the time was rising anti-communist witch-hunting. The meaning of this 'Third Camp-ism' (a characterisation accepted by the IS at the time) is given in the perspective of supporting neither side, that is, of explaining why workers in an imperialist country should not work for the defeat of their 'own' government, why for all practical purposes the war was nothing to do with them. It amounted to washing one’s hands of responsibility for defence of nationalised property relations. It was a capitulation before anti-communism and an adaptation to the prevailing mood of the middle-classes who were losing confidence in the proletariat as a revolutionary force.
If this tendency had emerged in Korea that would be something different. It would have posed the complex tasks of fighting on two fronts. But it emerged in Britain, an imperialist country supporting the war against Korea. In this circumstance, it posed not fighting imperialism, under the guise of not defending Stalinism.
Political tasks cannot be posed hypothetically, but only in concrete. It is of little to value for British workers to consider the situation in Korea as if they were in Korea. The issue is what must British workers do from Britain to aid the workers in Korea.
There is another aspect of this position to consider as well. The deformed workers' states are gains of the working class. Without being able to defend the past gains of the working class, however miserable, however distorted and bureaucratised, it is impossible to make new gains. This is the essence of the revolutionary content of the deformed workers' states orientation.
It is the easiest thing in the world to turn one’s back upon workers' conservative trade unions, miserable economic gains and facile democratic rights, to keep one’s banner clean. But revolutionary methods arise only on the basis of struggling to defend the achievements of earlier periods and transcending them.
The apparently left characterisation of the deformed workers' states as 'just another form of capitalism' was a means of standing aside from the struggle to defend a gain of the working class, albeit a distorted and bureaucratised gain. The same political method is shown when the IS refuse to take responsibility for the leadership of trade unions on the basis that the union is not yet sufficiently militant for their leadership.
The 'state capitalist' position is supported by arguments which seek to prove that the bureaucracy has exactly the same position in the productive process as does a capitalist class. On this basis the IS argued that the bureaucracy is a social class in its own right.
Now, it is true that the bureaucracy monopolises social and political power and retains for itself the surplus of production and 'exploits' and oppresses the working class just as do the ruling classes of other societies.
But it is false to elevate the bureaucracy to the status of a new ruling class. The bureaucracy rests not on its own relation to the forces of production but on the conflict between social classes.
To characterise the bureaucracy as a social class in its own right implies an independent role for the bureaucracy in the historical development of the forces of production. It is tantamount to the insertion of a new, distinct epoch between capitalism and socialism.
The present period is the transitional epoch, a period transitional between capitalism and socialism, a period of hybrids and contradictions, wars and revolutions. If the bureaucracy has managed to gain its independence from the other social classes absolutely, then this implies a perspective of a whole historical epoch of bureaucratic centralist states.
The Marxists of the late 1940s correctly analysed that this was not the case! The characterisation of the deformed workers' states as transient, hybrid phenomena has been confirmed by history. They must develop either in the direction of socialism, with the overthrow of the bureaucracy by the working class, or towards capitalism by the destruction of the workers' state. 
As frequently happens in times of crisis, the revolutionary movement suffered both a split to the 'left' (the IS) and a split to the 'right' - Pablo.
In January 1951, during the lead up to the Third World Congress, the Secretary of the International Secretariat of the Fourth International, Michel Raptis (Pablo), published an article entitled Where are We Going?. The drift of Pablo’s position was this:
This position was correctly characterised as 'liquidationism' by those who opposed Pablo, notably the French section. What resulted was a split in the Fourth International. Pablo himself left the International not long after the split as the implications of his positions developed, but differences remained within the International on the orientation of Trotskyists in relation to Stalinism.
The principle questions which were at issue here were these.
Firstly, did the formation of deformed workers' states characterise a whole epoch, or was it a transitory phase?
Secondly, given that the existence of the deformed workers' states placed the Stalinists in a position to lead the major struggles against capitalism and imperialism, did this imply that revolutionaries should support them, while endeavouring to 'push them to the left', or should revolutionaries continue to regard Stalinism as a counter-revolutionary trend in the working class, and retain their own organisational and political independence?
Thirdly, would 'objective pressures', i.e. the responsibilities of leading the struggle against imperialism, push the Stalinists to the left, or would they become more and more reactionary?
History has confirmed the position of the majority of Marxists on this question: Stalinism proved incapable of defending or extending the gains made and became more and more reactionary.
The same question sometimes arises in solidarity movements supporting struggles in other countries. Does the solidarity movement have the right and obligation to politically oppose or criticise a leadership insofar as it is influenced or led by Stalinists and remain organisationally independent? Or should the solidarity movement be subordinate to the movement being supported, and consequently by the Stalinist leadership?
History has shown that we do no service to the people in developing countries whose leaders are influenced by Stalinism if we wait vainly for 'objective pressures' to deal with Stalinism. A political struggle is necessary.
In countries where workers' parties are illegal, it is extremely difficult if not impossible to conduct a fruitful political struggle against Stalinism. The main political struggles within the Bolshevik Party before 1917 were fought out in Europe, not Russia. The 'objective pressure' of bourgeois repression does not aid, but hinders the political development of the working class. All opportunities should be utilised for constructive, revolutionary criticism of Stalinism.
Above all, revolutionary parties should never sacrifice their political independence and certainly not for the purpose of 'winning friends' in the national liberation movement. A political party will be listened to by others, only to the extent that it represents a tendency of its own in the working class.
In common parlance people talk of 'capitalist countries' and 'communist countries'. If we are to understand the historical processes at work in this period these concepts are quite insufficient. We live in an epoch transitional between capitalism and socialism. Because the world is undergoing change, there are sharp contradictions between the superstructure (state, politics, culture and the institutions of government, etc) and the economic base (the techniques and organisation of production, the means of production, etc). There are also sharp contradictions within both the superstructure and the economic base.
In understanding the dynamics of a nation-state it is essential to identify the relations of production and the state as two distinct entities which may be in sharp contradiction with one another. In each case we must understand them in relation to the fundamental social classes in society, and in the context of the world division of labour and the world market.
Class analysis of the relations of production is a question quite distinct from the question of the class characterisation of the state. Seizure of public political power can happen overnight. Transformation of the social relations of production takes time. Capitalist social relations, equally as socialist relations of production, cannot be created overnight.
The relations of production are by their very nature 'impure', hybrid. The economy is a 'field of struggle' between the classes. While in a typical capitalist country we characterise the relations of production as capitalist, this by no means excludes significant elements of planning, social welfare, nationalised property, etc, or for that matter, feudal bonded labour.
On the other, the state is an instrument of repression, and is in general the weapon of a specific social class. The state tends to determine the essential character of the social relations of production, or rather, the direction of their development. The elements of planning and statification found in most capitalist countries does not weaken the capitalist character of the economy, for these enterprises are run by the capitalists' state, which ensures that they serve and reinforce capitalism. Equally, a healthy workers' state must tolerate elements of market relations appropriate to the stage of development of the productive forces, and insofar as they enhance the productivity of labour.
Insofar as market relations exist within a workers' state, there is an inherent tendency towards the growth of counter-revolutionary forces. At the same time, a state which cannot develop the productivity of labour cannot in the last analysis survive, and at a certain stage of development of the productive forces 'abolition' of commodity exchange is not feasible. It is hardly surprising that in a degenerated workers' state such as the post-war USSR, where the market has been illegalised but the cultural level still lags behind the norm of the advanced capitalist countries, market relations took the form of organised crime and the 'black market'.
That is, it is impossible to 'abolish' bourgeois relations of production where the cultural level of the society, and its relations to the world division of labour, make such bourgeois relations obligatory. To attempt such an 'abolition' means either to engage in massive self-deception, or to throw society back to more backward relations, or both. These were the lessons of the first two decades of the USSR.