Leon Trotsky: Thesis on the International Situa­tion and

the Problems of the Communist International

Adopted at the 16th Session, July 4, 1921

[Theses and Resolutions adopted at the Third World Congress of the Communist International (22 June - 12 July, 1921). New York 1921, p. 5-33]

1. 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 Czarism 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 was convulsed by tur­bulent strikes involving the steel 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 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 its 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 government apparatus have undoubtedly become strengthened. The panic of Communism haunting the bourgeoisie, not having disappeared, has nevertheless somewhat relaxed. The leading spirits of the bourgeoisie are now even boasting of the might of their government apparatus, and have assumed the offensive against the labouring masses everywhere, on both the economic and the 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-wars is going to be superseded by a new epoch of restoration and capitalist development? Does not this necessitate revision of program or tac­tics of the Communist International? ,

II. 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 were growing rich.

Having scored the world market through their trusts, cartels, and consortiums, the masters of world-capital­ism well realised that this mad growth of capitalism will 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 the 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 postwar 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 made them secure against competition. The war played the part of an insatiable customer ever in want of goods. The manufacture of productive commodities was supplanted by the fabrication of the 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 followed upon another, till state accounting began to be carried on in billions instead of millions. The wear and tear of ma­chinery and of equipment was not repaired. The culti­vation of land was in a bad state. Public construction 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 a new era of lasting expansion of industry, commerce and particularly speculation. But the year 1920 proved to have been a period of shattered hopes.

The crisis — 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 is 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 only 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 underproduction. 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 countries of Europe, England is economical­ly the strongest and has been the least damaged by the war but, even with regards to this country, one cannot say that it has, in any way, gained its capitalist equili­brium after the war. Owing to its international organ­isation 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, it 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 war has brought about the irretrievable economic ruin of France, Belgium and Italy. The attempt to restore the economic situation of France at the expense of Germany is nothing but crass robbery coupled with diplomatic extor­tion which spells the further ruination of Germany (coal, machinery, cattle, gold) without, however, bringing about the salvation of France. This attempt is causing heavy dam­age to the entire economy of Continental Europe. France is gaining much less than Germany is losing. And in spite of the fact that the French peasants have through super­human exertions recovered for agricultural use large tracts of the devastated district; in spite of the fact that certain industries (for example, the chemical industry and war in­dustries) made a swing upwards during the war, neverthe­less, France is rapidly steering towards economic ruin. State debts and government expenses (on militarism) have reached an insupportable amount. At the close of the re­cent economic advance French currency had dropped to 60% of its face value. Owing to the heavy losses in manpower caused by the war — which cannot be made good since the increase of population is in a stagnant condition — the econ­omic reconstruction of France cannot be brought about. The same is true, Carrying some deviations, with regard to the economic position of Italy and Belgium.

12. A striking illustration of the illusory nature of this kind of business expansion is presented by Germany, where a sevenfold 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 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 and maintain their economic existence on the outskirts 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 disorganisation of these neutral countries as well. Their debts have increased, their currency ex­change has dropped. The crisis spares them no blows.

III. The United States, Japan, Colonial Countries and Soviet Russia.

14. The development of the United States during the war proceeded, in a certain sense, in an opposite direc­tion 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 grain, 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 'her coffers about one-half of the world’s gold reserve and contin­ually augmenting her treasury. The dominating part played by the pound sterling has now been taken over by the American dollar.

15. This extraordinary expansion of American indus­try was caused by a 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 got out of balance. Since devastated Europe as a competitor of America is not in a position to regain its pre-war role on the world market, the American market as well can preserve only 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 industries, 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 disorganisation. This is the result of the fundamental disturbance of the world’s subdivision of labour,

16. Japan also took advantage of the war in order to extend her 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 Transatlantic 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 trade handicaps to England and of the whole of Europe.

18. Thus, there is no ground whatsoever to speak of 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 exchange of goods on the world market is being greatly hindered by the devaluation of currency in Western European countries, reaching in some cases 99 per cent. The incessant rapid fluctuation of the rate of exchange has converted capitalist production into wild speculation.

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 anemia, 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. Prohibitive measures concerning import and transit and increasing the pro­tective tariff manifold have been passed by many a state. England has introduced prohibitive customs duties. The ex­port as well as the entire economic life of Germany is at the mercy of the Allies and particularly by the French 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. The elimination of Soviet Russia as a market for manufactured goods and as a supply of raw materials has contributed in a very high de­gree to the disturbing of the economic equilibrium of the world.

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 been always com­pletely dependent upon the industrial conditions of the rest of the world and this dependence particularly with regard to the allied countries has become 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 regime could have maintained the economic life of the country and create such conditions as would permit of centralised 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 for the first time, has been enabled to gradually and steadily direct the country upon the road to economic prosperity in a centralised manner.

IV. Social Contradictions 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 proletarisation 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 on 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 as to its material re­sources, the intensification of the social contradictions has not only not retrograded or been suspended but 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 convulsions 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. The prices of agricultural products have risen, bring­ing about an apparent prosperity in the country and increas­ing in reality the income and the property of the rich peas­antry. The peasants thus succeeded in paying off the debts contracted by him in currency at its full value with the aid of the paper money which he had accumulated in large quantities. But the paying off of mortgages is not the only thing necessary for agricultural prosperity. In spite of the enormous increases of the prices of farm land, in spite of the advantage unscrupulously taken of the situation by the monopolists of prime necessities, and in spite of the fact that the big landlords and owners of large farm estates have grown rich, the agricultural situation of Europe has unmis­takably declined. We witness a great retrogression of ex­tensive agriculture, the conversion of farmland into pas­ture farmsteads deprived of cattle, three-field farming, etc. This decline has been caused also by the lack of labour power, by the decline of cattle breeding, by the lack of fertiliser, by the increase of prices on manufactured goods, and in Central and Eastern Europe also by the intentional curtail­ment of agricultural production coming as a result of the at­tempt made by the state to get hold of the products of agriculture. The owners of large, and partly also, of medium farms have organised strong political and economic organisations in order to protect themselves against the burdens imposed upon them by the needs of reconstruction and are taking advantage of the embarrassment of the bourgeoisie to get the government to pass tariff and taxation measures favourable to them, as a reward for the support they are ren­dering the bourgeoisie in its struggle against the proletariat.

In this manner they hamper the reconstruction of capitalist economy. Thus here arose a conflict of interests between the town and the country bourgeoisie which impairs the strength of the bourgeoisie as a class.

At the same time large numbers of the poorer peasantry have become proletarians and paupers, the village has be­come a breeding place of discontent, and the class-conscious­ness of the country proletariat has become sharpened.

On the other hand, the general improvement of Europe, making it incapable of purchasing sufficient American grain, has caused a heavy crisis in the farm industry across the ocean. We are approaching a crisis of peasant and farming economy, not only in Europe, but also in the United States, Canada, Argentine, Australia and South Africa.

22. Owing to the fall of the purchasing power of money, the position of the State and private employees has, as a rule, become even worse than that of the pro­letarians. Having lost their usual stability the middle and lower officials are becoming factors of political un­rest and undermine the Government apparatus which they are called upon to serve. This “new middle estate" which has been regarded by the Reformists as the bul­wark of conservatism, can be utilised as a factor in the revolution in the present transitional period.

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 now being waged on American soil is assuming 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 regime in Europe. It grew during prolonged pe­riods of depression and after 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 regime, 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 bourgeoisie and foreign imperialism is the contest of a weaker competitor against his stronger rival, and is by its very nature only half-hearted and ineffective. 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 feudalism are creating favourable conditions in which the young 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.

V. International Relations.

27. The economic conditions of the world in general and the decline of Europe in particular presage 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 struggle between the contending forces of this imperialism led to the cre­ation of a multiplicity of new national boundaries, new custom-barriers and new armies. In regard to State administration and economy, Europe has been thrown back to the Middle Ages.

The soil which has been exhausted and laid waste is now being called upon to feed an army one and a half times as large as that of 1914, in the hey-day of "armed peace.”

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 strangle an in­solvent debtor and the greed of predatory big industry striving to create preliminary conditions for industrial im­perialism to supplant bankrupt 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 is to keep the German coal away from the French ore which, if brought together, would create one of the most important conditions necessary for the re­construction of Europe.

29. Great Britain today has reached the high-water mark of her power. Not only has she retained all the dominions, but she has 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 her actual eco­nomic decline. German capitalism technically and or­ganisationally much more progressive than that of Eng­land, has been crushed by force of arms. The United States, which has made both Americas economically sub­ject to her, 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 century-old mon­opoly in the coal market has been decisively broken. 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. Nor is the United States content to put up any longer with England’s cable monopoly. 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 further develop­ment, the Harding administration has taken up the Wilsonian program 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 test in mortal combat with the United States its power gained in former years.

That is just the reason why England is strengthening 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 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 the Upper Silesia 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 devel­oping with full force. 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 collides with the United States: In California, in China and on 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 to-day 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 battle-ground 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, having settled the English-German and German-American quarrel in its own way, not only did not solve the prob­lem of the relations between the United States and Eng­land, but has, for the first time, put that problem promi­nently forward 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 Federated Republic and the Third 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 is going to join the League of Na­tions or not — all this is of little value as 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 to 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 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.

VI. 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 even more heavy and more cruel than it was 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 effective recreation of capi­tal. This would be possible only if the proletariat were willing to work more under a far 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 proceed fighting for the bet­terment of their own conditions. But, the European proletariat is not ready to make this 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 be 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 real 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, and lend 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.

In the upper crust of the proletariat the labour bureau­cracy having grown out of proportion, being closely knit together, 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 organisations of the capitalist state. Then come those of the 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 union men consisting in the main of skilled workers, have become attached to their organisations through de­cades of struggle and cannot make up their minds to sever connections with them, regardless of 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 experi­ence of the war and having acquired the ability to use the rifle are now prepared to a large extent to turn the weapons against their class enemies, provided they be 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 distintegration 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 bloody methods of the militarised state — all these are rapidly welding the overwhelming majority of the proletarian masses together. The great masses are searching for a determined and definite leadership and for a closely welded and centralised 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, ever since the war began. The low­ering of the standard of life was not so noticeable in the allied countries 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 strata of the workers succeeded in improving their conditions, others only retained their previous standard of living, while still others had their standard of living lowered.

The economic crisis has come down upon the proletariat with terrific force. 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 nationally and internationally the general instability of economic conditions is to-day the most revolu­tionary factor of social development.

VII. — 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 petty bourgeois dullards can imagine that the fact that the European proletariat did not succeed in overthrowing the bourgeoisie during the war or immediately after it, 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 but a struggle of living forces carried on within given historic conditions. The war has destroyed capitalist equilibrium all over the world. It has thus created 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 /he 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.

But, during the two and a half years following the war, the proletarians of various countries have exhibited their self-sacrifice, energy, and readiness for the struggle to such an extent as would amply suffice to make the revolution triumphant, provided there had been a strongly 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 organisation 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, the Independents, and the unions used all their traditional in­fluence and their whole apparatus for the purpose of return­ing the power into the hands of the bourgeoisie.

In Italy, the stormy revolutionary movement of the prole­tariat during one and a half years has been marked by power­ful currents and it was only thanks to the petty bourgeois impotence of the Socialist Party, to the treacherous policy of the parliamentary factions, and to the cowardly opportunism of the trade union organisations, that the bourgeoisie got 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 was frustrated again and again during the last year, not so much by the government forces as by the conservative trade unions whose apparatus was most shamefully used to serve counter­revolutionary ends. Had the leaders of the trade unions remained faithful to the cause of the working class, the machinery of the trade unions could have been used for revolutionary battles despite their defects. The recent crisis of the Triple Alliance furnished the possibility of a break with the bourgeoisie, but this was frustrated by the con­servatism, cowardice and treachery of the trade union lead­ers. Should the machinery of the English trade unions develop half the amount of energy in the interests of social­ism which it had been using 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 in many countries the open revolutionary struggle of the proletariat for power has been temporarily 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. 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 some of its positions which were too easily won usu­ally experience some temporary depression in its ranks. But it is an 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.

Since the reconstruction of capitalism presupposes a great intensification of exploitation, the annihilation of millions of lives, the lowering of millions of other lives below the minimum of existence, the constant insecurity of the condi­tions of the proletariat, the working class will be forced to repeated revolts, to continuous strikes and riots. Under this pressure and in the course of these struggles the will of the masses to overthrow the capitalist order will grow in strength.

40. The fundamental task of the Communist Party in the current crisis is to conduct, extend, widen and unite the present defensive fight of the proletariat and sharpen it towards the final political struggle in accordance with the course of evolution. Should, however, the pace of develop­ment slacken and the present economic crisis be followed by a period of prosperity in a greater or less number of coun­tries, this would by no means be an indication of the be­ginning of the “organic” epoch. So long as capitalism exists periodic vacillations are inevitable. These vacillations are going to accompany capitalism in its death agony as was the case during its youth and maturity. In case the proletariat should be forced to retreat under the onslaught of capitalism in the course of the present crisis, it will immediately resume the offensive, as soon as a more favourable combination of circumstances sets in. 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. 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. This Party stands at the head of the struggling masses. It must firmly and clearly formulate its slogans and must expose and sweep aside all equivocal slogans of the Social Democrats, which always tend toward compromise. What­ever the turns in the course of the struggle, the Communist Party should always strive to fortify the contested positions, to get the masses used to active maneuvering, to equip them with new methods calculated to lead to an open conflict with the enemy forces. Taking advantage of every breath- in space offered in order to appreciate the experience of the preceding phase of the struggle, the Communist Party should strive to deepen and widen the class conflicts, to com­bine them nationally and internationally by unity of goal and practical activity, and in this way, at the head of the proletariat, shatter all resistance on the road to its dictator­ship and the social revolution.