Adopted by the Second International Conference of the
International Trotskyist Opposition
5 September 1998


One hundred fifty years ago the Communist League published Karl Marx and Frederick Engels's "Manifesto of the Communist Party." The "Manifesto" proclaimed the existence of the international workers' movement theoretically just weeks before the 1848 European revolutions proclaimed its existence in practice.

Declaring the history of all hitherto existing society to be the history of class struggles, the "Manifesto" identified the bourgeoisie as the historically rising ruling class and the working class as its successor. The first prediction -- the rise of the bourgeoisie -- has been fulfilled brilliantly. The second prediction -- the working class as its successor -- remains to be fulfilled.

The 150 years since the "Manifesto" have seen three great waves of economic development and political struggle. The first of these waves (expansion 1848-73, crisis 1873-96, with national variations) brought into being the world capitalist economy anticipated in the "Manifesto" and the world-historic political contest between the working class and imperialism. The second wave (expansion 1896-1914, crisis 1914-1949, again with national variations) brought the working class to power in Russia and, before it fully ebbed, in Eastern Europe and China, albeit in bureaucratically deformed workers' states.

The third wave (expansion 1949-71, crisis from 1971, also with national variations) has had more ambiguous results. The capitalists had to make major concessions to the working class to survive the 1914-49 crisis. But the failure of the workers' movement to overthrow imperialism worldwide and the resulting degeneration of the Russian Revolution allowed capitalism to restabilize and then expand through the 1950s and 1960s.

New struggles began in the late 1960s, as those excluded from or alienated by the post-World War II boom began demanding change. These struggles intensified, as boom turned to bust in the early 1970s. World capitalism retreated in the early 1970s, regrouped in the mid-1970s, and then began a counteroffensive in the late 1970s.

Disoriented by its class-collaborationist leaderships, the working class retreated through the 1980s and the early 1990s. The retreat included the collapse of the Soviet Union, with all its worldwide ramifications. There are signs that the working class is beginning to recover from its defeats. But the twentieth century seems to be ending much as it began, with imperialism dominant worldwide and the workers' movement strong but unable to translate its strength into political power.

Under these conditions, revolutionaries must ask and answer anew: What are our prospects? What are our tasks? The purpose of this document is to argue the continued relevance of the revolutionary perspective of the "Communist Manifesto," despite the passage of time and the changes it has brought.

This is a document of historical analysis. It does not take up programmatic questions in any detail. For those we refer the reader to the "Declaration of Principles of the International Trotskyist Opposition." Nor does it take up specific questions of building revolutionary parties and a revolutionary International. For these we refer the reader to "Theses on the Crisis of the Fourth International and the Tasks of Consistent Trotskyists."

The division of labor among these documents may seem arbitrary, since history, program, and party are linked, at moments inextricably so. But at the present moment, when Trotskyism barely shows on the historical radar, it seems particularly necessary to assert its relevance.

Thus this document focuses on the objective conditions for revolution -- the conditions other than the subjectivity of Trotskyists -- which must be present for revolutionary Marxism to become again an historical force.

"The Economic and Political Sway of the Bourgeois Class"

The "Communist Manifesto" described the rise of the bourgeoisie in stunningly powerful language.

We see, therefore, how the modern bourgeoisie is itself the product of a long course of development, of a series of revolutions in the modes of production and of exchange…

The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature's forces to man, machinery, application of chemistry to industry and agriculture, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization or rivers, whole populations conjured out of the ground -- what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor?

We see then: the means of production and of exchange, on whose foundation the bourgeoisie built itself up, were generated in feudal society. At a certain stage in the development of these means of production and of exchange, the conditions under which feudal society produced and exchanged, the feudal organization of agriculture and manufacturing industry, in one word, the feudal relations of property became no longer compatible with the already developed productive forces; they became so many fetters. They had to be burst asunder; they were burst asunder.

Into their place stepped free competition, accompanied by a social and political constitution adapted in it, and by the economical and political sway of the bourgeois class. (Marx and Engels, "Manifesto of the Communist Party," February 1848, in Karl Marx and Frederick Engels: Collected Works, vol. 6, New York: International Publishers, 1976, pp. 486,489)

Marx and Engels added substantially to their analysis of the political economy of capitalist society. But they had no reason to change the fundamentals. Nor have Marxists since then.

Lenin contributed the concept of imperialism to explain the economic and political developments leading to World War I -- monopoly, finance capital, financial oligarchy, capital export, division and redivision of the world among the capitalist great powers, interimperialist rivalries, and interimperialist wars -- as well as his other contributions on the vanguard party, proletarian dictatorship, workers' councils, national liberation, colonialism and semicolonialism, the labor aristocracy, the labor bureaucracy, reformism, and other matters.

Trotsky developed the concept of capitalist equilibrium and disequilibrium to explain the curve of capitalist development and class struggle apparent by the early 1920s, and the concept of the degenerated workers' state to explain the fate of the Russian Revolution and the place of the Soviet Union in the imperialist world order, as well as his contributions on permanent revolution, fascism, the united front, the transitional method, Stalinism, centrism, and other matters.

Other Marxists -- and non-Marxists -- have made contributions on aspects of the economics and politics of the world capitalist system. But these have updated, rather than invalidated, Marx and Engels's analysis in the "Manifesto."

Some contemporary observers argue that "globalization" or "post-industrialization" fundamentally challenge the Marxist view of capitalist society. This is incorrect.

Globalization is an important aspect of capitalist reality. But Marx and Engels well understood this. They saw globalization as part of the socialization of production, and the world market as one of capitalism's central contributions to human progress.

Globalization was no mystery to Lenin, who argued for the importance of capital export as a determinant of the world situation and against Kautsky and others who thought globalization would submerge the imperialist nation-state in a pacific "ultra-imperialism." Globalization was also familiar to Trotsky, whose analysis of events always started from the world situation.

Globalization is partly greater integration of the world economy and a dramatic extension of computerized telecommunications. But this must be kept in perspective. Only in the late 1990s has the world economy become again as integrated as it was in 1913, measured by the relative place of international trade and investment. And the railroad, steamship, and telegraph of Marx and Engels's day had much more economic impact than the Internet does today.

Mainly globalization is an ideology: an apology for unfettered capitalist exploitation, because, to use Margaret Thatcher's infamous slogan, "There is no alternative."

"Post-industrialization" fares no better as a refutation of Marxism. Industrial labor has declined as a proportion of total labor in the advanced capitalist economies over the past twenty years. But this is mainly the result of rapidly rising labor productivity in industry and stagnating output and living standards, resulting from the current capitalist disequilibrium.

While some production has shifted from the advanced capitalist countries to the less developed ones, this is quite consistent with Marx's description of the effects of combined and uneven capitalist development on India in the mid-nineteenth century. The advanced capitalist countries still produce more than two-thirds of the world's commodities and three-quarters of its industrial products.

The most important changes in the "post-industrial" working class are its greater size, its more diverse composition -- particularly the influx of women and immigrants, who in Europe are a post-World War II novelty -- and its better education. But these in no way refute the "Manifesto."

"The Organization of the Proletarians"

The "Communist Manifesto" described the political development of the working class in equally stunning language.

A similar movement is going on before our own eyes. Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. For many a decade past, the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeoisie and of its rule…

The weapons with which the bourgeoisie felled feudalism to the ground are now turned against the bourgeoisie itself.

But not only has the bourgeoisie forged the weapons that bring death to itself; it has also called into existence the men who are to wield those weapons -- the modern working class -- the proletarians…

Now and then the workers are victorious, but only for a time. The real fruit of their battles lies, not in the immediate result, but in the ever-expanding union of the workers. This union is helped on by the improved means of communication that are created by Modern Industry and that place the workers of different localities in contact with one another…

This organization of the proletarians into a class, and consequently into a political party, is continually being upset again by the competition between the workers themselves. But it ever rises up again, stronger, firmer, mightier. (Marx and Engels, "Manifesto of the Communist Party," pp. 489, 490, 493)

A first objection might be that this description is "objectivist" and presents the development of working-class consciousness and organization as an automatic consequence of capitalist economic development. But the subjective element is clearly present: The workers struggle, win, lose, struggle again; organize unions and political parties, have their organizations upset, and rebuild them.

Another objection might be that 150 years is a long time to wait. The organization of workers into a class and a political party has been upset many times, and yet "stronger, firmer, mightier" are hardly the words to describe the workers' movement today.

Marx and Engels clearly didn't expect the workers' struggle for power to take 150 years. But they also didn't expect it to be brief, easy, or automatic.

They understood that the working class wasn't strong enough to take power in 1848 and proposed that the communists position themselves as the extreme left of the necessarily petty-bourgeois revolution. They realized after1850 that the renewed economic expansion made revolution unlikely until the next major crisis. They hailed the 1871 Paris Commune but doubted that it could hold the power it had seized.

Marxism is not deterministic. It argues that capitalist economic development strengthens the working class numerically and socially and tends both to unite it through common conditions and to divide it through competition. This applies to contemporary developments, including globalization and the changing social composition of wage laborers. The solution of the "Manifesto" still rings true: "Workers of the world, unite!"

Capitalism forces workers to struggle and build organizations of struggle. This gives communists the opportunity to politically defeat the class collaborators, win the vanguard to their party, and lead the working class in emancipating itself.

Capitalist development creates the possibility of socialist revolution, but doesn't guarantee it. The problem is not that Marx and Engels were wrong about the opportunities, difficulties, or timeline. The capitalist crisis of 1914-49 presented revolutionaries with many opportunities, many difficulties, a relatively short timeline, and a high penalty for failure. The capitalist crisis through which we are living presents us with the same.

The Overall Situation

Superficially, capitalism seems to have triumphed over socialism in the twentieth century, as its apologists never tire of repeating. Having lost control of nearly a third of the globe during the first half of the century, capitalism staged an historic comeback, expanding in the 1950s and 1960s, surviving the 1970s, and triumphing in the 1980s and 1990s. Superficially, socialism seems nothing more than a discredited dream.

The condition of this apparent capitalist triumph is the worldwide retreat of the working class since the late 1970s. The workers have not been able to defend their social position, mainly because of the failures and betrayals of their leaderships. As a result, the capitalists have been able to maintain their profits, despite the generally stagnant economy. They have jacked up the rate of exploitation and intensified inequality, poverty, and misery worldwide. The stock markets in most of the advanced capitalist countries have soared in the 1990s, based on speculation that the working class is finished as an independent historical force.

The high point for the capitalists -- and the low point for the workers -- was the collapse of the Soviet Union and restoration of capitalism in the land of the October Revolution. The Soviet Union was the most important historic experiment in non-capitalist economic development and the condition for all the other experiments. When the Soviet Union went under, the bourgeois apologists portrayed this as proof that capitalism is the best possible -- indeed, in modern times, the only possible -- economic system.

With the workers' movement in retreat and the Soviet Union gone, bourgeois and petty-bourgeois nationalism succumbed too. Bourgeois-nationalist governments from Argentina, Brazil and Mexico through Algeria, Egypt and Turkey through India, Indonesia and South Korea have been forced to open their economies fully to imperialism. The few surviving national liberation movements and governments have abandoned even the pretense of anti-imperialism, from South Africa, Angola and Mozambique to Palestine and Ireland.

The absence of common enemies has not yet led to open conflict among the imperialist powers. The US is even more dominant militarily, having "won" the Cold War. But it has not tried to bully the other imperialists since the 1991 Gulf War. Reduced military expenses and the continuing upturn in the world economy have meant that the US could maintain its economic lead without noneconomic pressure. Absorbed with their own economic problems, the other imperialists have not challenged the US or each other.

Imperialism's preferred economic policy these days is neoliberalism, which it has forced on virtually the entire world. The elements of this policy include "free markets" open for imperialist trade and investment, currency stabilization, regulation only to protect the rights of capital, privatization of state-owned industry, reduction of government spending, public service cuts, the elimination of consumer subsidies, and less cronyism and corruption.

Imperialism's preferred political policy these days is bourgeois democracy, in which the oppressed periodically elect representatives of their oppressors. Generally speaking, democracy is a cheaper and more efficient form of government for the capitalists than dictatorship, because consent is less costly and more effective than coercion, and dictators usually take too much for themselves. With the Cold War over, the capitalists want cheap, relatively clean government -- "the best that money can buy."

On closer examination, the contradictions of the "new world order" are readily apparent. The world capitalist economy is still stagnant, suffering from a fundamental overaccumulation of capital and means of production. Unable to make 1950s-scale concessions to workers, the capitalists keep ratcheting down living standards to maintain their profit rates.

There is a limit to what the workers will accept, however. And as that limit is reached country by country, defensive and then revolutionary struggles arise. Whether these struggles succeed depends on the consciousness and organization of the workers and the development of revolutionary parties and a revolutionary International.

The Imperialist Countries

The ruling classes of all the advanced capitalist countries have pursued the same objective: to augment their profits by taking back trade-union, social, and democratic gains they had conceded to the working class from the 1940s through the 1960s.

This has meant "rationalizing" wage labor through closings, layoffs, firings, part-time and contingent (precarious) work, compulsory overtime, speedup, reduction or elimination of cost-of-living allowances, two-tier wage and benefit systems, and other measures. These are often portrayed as necessary to compete globally and combined with phony measures of labor-management "jointness" to try to minimize resistance.

It has meant running state enterprises like private ones and then privatizing them when they become profitable; cutting health, education and other social services; and gutting the welfare state by reducing unemployment benefits, converting welfare to "workfare" without offering work, throwing indigent people off the dole, raising the retirement age, and reducing pensions.

It has meant curtailing democratic rights as necessary to enforce these measures. In most countries, employers and governments have restricted union rights to organize and strike and reduced the powers of shop stewards and factory committees. They have "streamlined" health and safety and other regulations and restricted the power of administrative courts to intervene in labor relations. They have also imposed restrictions on union political activity and limited proportional representation and other measures favorable to the development of left-wing political parties.

It has meant attacks on immigrants and racial minorities. Governments have tightened borders against immigrants from the south, restricted the right of asylum, deported undocumented workers, cut back social welfare for noncitizens, and reduced instruction in immigrants' languages. They have eliminated affirmative action (positive discrimination) programs and curtailed enforcement of civil rights laws. They have criminalized, arrested, imprisoned, beaten, and shot minority youth, claiming to be fighting crime and drugs. Discrimination and bigotry have flourished. The far right has built its electoral strength on anti-immigrant and racist demagogy. And fascist nuclei have proliferated.

It has meant attacks on the social position and legal rights of women. The cutbacks in social welfare have hit women particularly hard, since they usually have to compensate for what the state no longer provides. The elimination of affirmative action programs has closed doors only beginning to be opened. In some countries, restrictions on abortion and birth control have endangered reproductive rights. The media, churches, schools, and politicians promote patriarchal "family values," trying to force women back into traditional roles.

The ruling classes have used governments of both the left and the right to implement their policies. Generally, they leaned "left" in the 1970s, turning to liberal and bourgeois-workers' parties to contain the upsurge of workers and youth. They then leaned "right" in the 1980s and early 1990s, turning to conservative parties to impose measures the liberals and social-democrats could not sell to their ranks. And now they are again leaning "left" to impose measures the workers would not accept from conservatives or to consolidate measures already imposed by conservatives.

Redefining themselves in the new world order, conservative parties have shifted toward the far right, liberal parties have become conservative, social-democratic parties have recast themselves as liberals, green parties have allied with polluters and warmongers, Stalinist parties have become social-democratic, and former revolutionaries have become reformists.

Within this general framework, there are important differences among the advanced capitalist countries. The collapse of the Soviet Union, the Gulf War and other military interventions, and the relatively good performance of the US economy since 1992 have reinforced US hegemony among the imperialists. For the first time in 25 years the US is unashamedly putting itself forward as the model the world should follow. Bourgeois politics in the US have become an empty exercise in advertising and scandal, as the ruling class and its parties see no need to change anything significant.

The other English-speaking imperialist countries have "Americanized" their politics, with Bill Clinton imitators like Tony Blair putting a more youthful face on conservative policies.

The situation in continental Europe is more complicated. The conservatives had less success there, so the ruling classes have turned to the "left" to finish the job. In France and Italy "left" and "center-left" governments are imposing neoliberal policies, masked by the illusory promise of a shorter workweek. Germany may soon follow. The watchwords for these policies are Europe and the euro.

The European Economic and Monetary Union has removed many barriers between its members, but it cannot create a European state. The ruling classes of the major European powers will not relinquish their control of their own state apparatuses. In future economic and social crises, they will turn to these apparatuses to protect them from competition and class struggle, and Europe will fracture along its historic fault lines.

For now, however, the European Union provides a measure of protection against the US and Japan, and the euro is a marvelous excuse for attacking what remains of the welfare state and other working-class gains.

Throughout the 1970s and 1980s Japan seemed an exception among the imperialists, growing at their expense, whatever the economic conditions. But by the 1990s the contradictions of advanced capitalism had caught up with Japan. Its pool of peasant labor was exhausted, it lacked critical natural resources, it could no longer rely on borrowed technology, its domestic and export markets were too small to guarantee growth, and its costs were too high to undercut its competitors. Its speculative bubbles burst, and its economy began to stagnate.

Revolution looks unlikely in any of the advanced capitalist countries anytime soon. But militant strikes over the past few years in France, Greece, Germany, Canada, the US, Australia, and Denmark show the potential for struggle. So do the demonstration of youth against racism and for immigrant rights. Even the election of the "left" governments partly reflects the anger of workers against the capitalist carnival.

The Rise and Fall of the Soviet Union

The most striking event of twentieth century history is surely the rise and fall of the Soviet Union. Born of the crisis of backward, autocratic Russia in the First World War, the Russian workers' state against all odds survived the devastation of the war, civil war, and imperialist blockade. Saved by the determination of the Russian working class, the political intelligence of the Bolshevik leadership, the sympathy of workers around the world, and the revolutionary upsurge that ended the war, the workers' state in the end was isolated by the defeat of the European revolution.

The state bureaucracy took advantage of Russia's isolation and backwardness to consolidate its political power over the working class, despite the overthrow of capitalism. Key events in this process were the defeat of the Trotskyist Left Opposition in 1923-24, the victory of Stalin faction in 1927-28, the forced industrialization and collectivization of 1929-33, and the bloody purges of 1936-38, intertwined with the defeat of the German revolution in 1923, the defeat of the Chinese revolution in 1927, and the victory of Hitler in 1933.

The political counterrevolution in the Soviet Union was complete by the mid-1930s. But the momentum of the revolution was so great that the economic and social counterrevolution took another 60 years and is still continuing. The economic superiority of state property in the means of production and central planning allowed the Soviet Union to avoid the ravages of the 1930s depression, industrialize, arm, and survive the onslaught of Hitler's Germany.

World War II provoked an even more profound revolutionary crisis than World War I. By the time it ended, capitalism had been overthrown in Eastern Europe, China, and much of Indochina and Korea. But the collaboration of the Stalinist and social-democratic leaderships with imperialism and the weakness of the Trotskyist forces meant that capitalism retained its hold on most of the world, including all the advanced capitalist countries.

The 1950s and 1960s saw repeated confrontations between the Soviet Union and the US, but their underlying relationship was "peaceful coexistence," as the Stalinists called it, or "containment," as the imperialists called it. Neither side really threatened the existence of the other.

This changed in the 1970s, as the Soviet bureaucracy supported aspects of the worldwide challenge to imperialism, most importantly the Vietnamese revolution, and the US and other imperialists launched a counteroffensive, including the Carter-Reagan arms race.

The Soviet Union had withstood far worse in its early years, but by the 1970s its contradictions were catching up with it. Like a patient whose constitution has been undermined by years of abuse and disease, the Soviet Union lacked the stamina and morale to overcome this last crisis.

The two fundamental contradictions of the Soviet Union for most of its existence were the contradiction between the international character of the world economy and the isolation of the Soviet Union in an imperialist-dominated world, and the contradiction between the need for workers' democracy to develop the potential of the collectivized, planned economy and the rule of the Stalinist bureaucracy.

The Carter-Reagan arms race imposed a tremendous burden on the Soviet Union, and the stagnation of the world capitalist economy limited its economic room to maneuver. But the main problems were at home.

The Soviet economy had matured and could no longer grow rapidly by the "extensive" methods of applying more labor, land, raw materials, energy, machinery, and other means of production in the old way. It needed to shift to the "intensive" methods of raising labor productivity and improving technology and product quality. But this would have required replacing bureaucratic command with the collective self-motivation and creativity of workers' control.

By the 1980s the Soviet economy was clearly stagnating. Sections of the bureaucracy and the middle classes were making invidious comparisons between the freedom of Western capitalists to exploit workers and enrich themselves and the constraints of their own system. As the system failed to deliver and historic memories grew dim, fewer and fewer workers cared much what happened to the Soviet Union.

The bureaucracy under Mikhail Gorbachev tried to arrest this process, borrowing perestroika from capitalist markets and glasnost from bourgeois democracy. But these policies only hastened the collapse by weakening the bureaucratic center without providing an alternative. Stagnation became crisis, as the bureaucrats and managers of every political and economic unit in the country scrambled to protect themselves from the impending disaster.

The failure of the bungled coup of August 1991 brought Boris Yeltsin to power. Four months later he and capitalist-restorationist bureaucrats in the other republics dissolved the Soviet Union.

Capitalist Restoration in the Former Soviet Union

Yeltsin's victory set the course for capitalist restoration, but several more years were needed to achieve it. The new governments of the former Soviet republics annulled the central plan and the state monopoly of foreign trade. They progressively freed prices and privatized most state enterprises, initially with a large component of nominal employee ownership. They cut back on government subsidies and bank credit to money-losing enterprises.

A new capitalist class quickly developed, as bureaucrats and managers found ways to turn the crisis to their advantage. Shrewd, ruthless, corrupt, violent, and lucky, the new capitalists resembled the robber-barons during the rise of imperialism.

The process of capitalist restoration had catastrophic effects on the economy and society. Industrial production fell 50 percent. Prices skyrocketed, and bills, taxes and wages weren't paid. Living standards plummeted. Healthcare deteriorated. Infant mortality rose, and life expectancy fell. Mass misery formed the backdrop to the ostentation of the newly rich.

Only two forces might have prevented capitalist restoration: elements of the old bureaucracy and military who saw state property as necessary for the Soviet Union to remain a great power with themselves at its head, and the Soviet working class, which in the end could defend itself only by opposing capitalist restoration.

The Russian parliament became the center of bureaucratic political resistance to capitalist restoration. But it hesitated too long and found itself without military support when Yeltsin moved to disband it. October 1993 was a replay of August 1991, except that this time Yeltsin had the guns and used them.

The Yeltsin government was immensely unpopular, particularly the ministers associated with the economic "shock therapy." Voters turned to nationalists and the fragments of the former Communist Party of the Soviet Union. But neither offered a real alternative to Yeltsin. This became clear to all when the Communist Party of the Russian Federation essentially conceded the second round of the 1996 presidential election to Yeltsin and converted itself into a parliamentary loyal opposition.

The workers of Russia, Ukraine, and other former Soviet republics have struck repeatedly for jobs and wages, and occasionally for political demands. But these struggles have been too sporadic to win most of their partial demands, let alone to arrest the process of capitalist restoration. The working class has been too confused and demoralized by its experience under Stalinism to see or fight its way past its CP and trade-union leaders.

The law of value still does not operate freely in Russia or the other the ex-Soviet states. Their economies are too chaotic for that. And the situation very likely will get much worse before it gets better, possibly going through a period of military or even fascist dictatorship before Russia restabilizes as a capitalist great power, if it is still capable of doing that.

But the governments of the former Soviet republics defend capitalist property in the means of production and have enough control over their territory and economies to mark the new states as capitalist.

National and civil wars are among the consequences of the breakup of the Soviet Union and the scramble for position by its fragments. Armenia and Azerbaijan were fighting even before the Soviet Union broke up. Russia has fostered separatism in Georgia to keep it tied to Russia. In a war disastrous for both sides, Russia all but destroyed Chechnya to keep it from leaving the Russian Federation. Civil wars in the Central Asian republics have involved not only bureaucratic and capitalist ambition but also national and ethnic conflict, religious fundamentalism, and foreign intrigue.

Workers reacted too slowly to the disaster to prevent capitalist restoration. But their living standards and democratic rights are still under attack. Capitalism has no mass constituency. Nowhere are the objective conditions for revolution more ripe.

Capitalist Restoration in the Other Deformed Workers' States

The process of capitalist restoration has gone further in the more advanced parts of Eastern Europe. East Germany has been absorbed by West Germany. Poland, Hungary and the Czech Republic are now associates of the European Union and NATO. Slovenia has essentially the same status, although on an informal basis. Less attractive to the imperialists, the Baltic states, Romania, and Bulgaria are being integrated more slowly.

Yugoslavia was torn apart by the maneuvers of the Stalinist bureaucracies of its national republics, each seeking capitalist restoration on the most favorable terms, and by the intrigues of the imperialist powers as they vied for influence in the region. Germany played a particularly pernicious role in the breakup.

The fighting in multinational Croatia and Bosnia caused immense destruction and led to the partition of Bosnia into three nationally exclusive zones and the ethnic cleansing of Serbs from Croatia. Now the fighting has spread to the Serbian province of Kosova, whose Albanian majority was the only really oppressed nationality in the former Yugoslavia. From there it could easily spread to Macedonia, which also has a large Albanian minority, and to Albania.

Albania, the most economically backward of the Eastern European countries, is also the only one to have had a revolution partially directed against the disastrous consequences of capitalist restoration. Conditions there became so desperate in 1997 that workers and peasants rose, arms in hand, and overthrew the corrupt government of Sali Berisha. The former Communist Party then formed a popular-front coalition government and saved the situation for the imperialists.

China, the world's most populous country, remains a workers' state -- deformed and in dissolution, but still a workers' state. Since the mid-1980s, the Chinese bureaucracy has pursued a policy of perestroika without glasnost, markets without bourgeois democracy. So far, the policy has succeeded.

China's size and backwardness have made it possible for the bureaucracy to keep control of the "commanding heights" of the economy, while permitting capitalist investment and exploitation in labor-intensive export industry. The combination has allowed China to grow more rapidly and uninterruptedly than any predominantly capitalist economy anyway near its size.

China's size and backwardness have also made it difficult for either pro-capitalist or pro-worker oppositions to become strong enough to challenge the bureaucracy. Capitalist defiance is mainly in the form of tax evasion, smuggling, and corruption. Workers' defiance is mainly in the form of individual resistance to work, although China has seen an impressive number of strikes, despite the high level of repression. Remembering Tienanmen Square, however, political opponents to the regime are still cautious.

This situation cannot continue indefinitely. China's creation of a domestic capitalist market and its opening to the world capitalist market mean that the commanding heights will fall. The bureaucracy may remain coherent long enough to make a deliberate choice for capitalist restoration. Or it may fracture, as in the Soviet Union, and be swept along in a restorationist tide. But capitalism will be restored in China one way or another, unless a workers' revolution prevents it.

Indochina, North Korea, and Cuba are also being drawn into the imperialist vortex. Capitalist restoration is inevitable, unless workers' revolutions there and in neighboring countries prevent it.

Developments in the Semicolonies

The large majority of the world's population lives in semicolonial countries dominated by imperialism. Imperialism's current preferred policy in these countries, as at home, is neoliberalism overlaid with bourgeois democracy.

Neoliberalism is nothing new for traditional comprador regimes, which have always opened their economies to imperialism. But these regimes find themselves under closer scrutiny today than they were during the Cold War. The imperialists now criticize instances of inefficiency, corruption, election fraud, and human rights abuses they would have ignored ten years ago. They see no reason to overpay expendable local agents or to be blamed for their excesses, as Zaire's Mobutu, Indonesia's Suharto, and even Mexico's Salinas found out to their dismay.

Military dictatorships are out of favor with the imperialists, who regard them as economically and politically too costly. Under present circumstances of relative social peace in most countries, the imperialists prefer the military to withdraw from direct involvement in politics and to allow civilian governments to front for them. At the same time, they continue to sponsor military forces around the world as customers for their arms industries and as insurance against future unrest.

Bourgeois-nationalist regimes have had to trim their aspirations to independent economic development over the past decade. To make deals with the imperialists and win a place in the global economy, they have had to open their domestic markets fully, end their protection and subsidy of domestic industry, and annul their corporativist arrangements for social peace.

Petty-bourgeois nationalist regimes which yesterday claimed to be "Marxist-Leninist" today confess their error, impose austerity policies dictated by the International Monetary Fund, and hold elections with still-armed counterrevolutionaries. National liberation movements out of power now renounce their revolutionary aspirations, become parliamentary oppositions, and promise to continue IMF policies if elected.

The surviving Stalinist parties sometimes resist the neoliberal measures, but they are so deeply enmeshed in popular-front coalitions with bourgeois forces that their resistance quickly collapses.

The retreat of the traditional semicolonial leaderships has left a political void, which in many countries has been filled by religious fundamentalism. The fundamentalist parties are every bit as committed to capitalism as their secular counterparts, but their apparent antagonism to imperialism makes them attractive to sections of the urban middle classes, the peasants, and the urban poor suffering the effects of imperialist policy.

The current "Asian crisis" shows the limits of neoliberalism. Until last year, East Asia was capitalism's showcase. Even after Japan began to falter, the "four tigers" of South Korea, Taiwan, Hong Kong, and Singapore were portrayed as models for successful economic development.

Now their bubbles have burst. Hong Kong and Singapore turn out to have been isolated and ultimately expendable imperialist outposts for trade and investment in their regions, rather than independent economic entities, as Britain's cession of Hong Kong to China has made clear. South Korea and Taiwan turn out to have been Cold War garrisons whose local rulers could hold down wages and develop a labor-intensive export industry only because they were protected by US guns.

The Asian "tigers" have been caught in the same trap as the earlier "economic miracles" of Argentina, Brazil, and Iran. Their living standards are too low to create an adequate home market for their goods. Their labor productivity is too low to compete with the advanced capitalist countries. Their wages are too high to compete with the next group of "tigers." Their people want democracy. Their youth are rebelling. And their working classes are too strong to put down.

In the 1990s four additional countries joined the Asian "tigers" club: Thailand, Malaysia, Indonesia, and the Philippines. Less immediately dependent on imperialism and more representative of Asian reality, they never really got the chance to leap before they fell. But their economies have developed enough to create many of the class and political contradictions that have transformed South Korea, as the mass upsurge in Indonesia has shown on a gigantic scale.

Far bigger than Indonesia, soon to be even bigger than China, India contains the widest range of social conditions in the world: from mass illiteracy to the most advanced mathematics, from humans as beasts of burden to nuclear weapons. India's combined and uneven development has created an enormous urban working class, coexisting with an even larger rural population of peasants and agricultural laborers.

Both the previous governments of the secular nationalist Congress Party and the present government of the Hindu-fundamentalist BJP accept the neoliberal imperialist framework. Both support the disastrous policies of nationalism and militarism, including the nuclear arms race with Pakistan. The BJP adds to this an open contempt for secular democracy and protection for the paramilitary RSS.

Latin America looks peaceful compared to Asia. But it shows many of the same contradictions at a generally higher level of economic development. The neoliberal model for Latin America was developed by the Pinochet dictatorship in Chile and has now been embraced by ostensibly democratic governments from Argentina and Brazil to Mexico.

In most countries, the military has returned to the barracks, although the police and paramilitaries continue to terrorize peasants, indigenous people, and the urban poor. But Fujimori heads a de facto military dictatorship in Peru, and the Colombian government is waging a dirty war against peasants and leftist rebels similar to the 1980s wars in El Salvador and Guatemala, complete with US military aid and covert operations.

In every country, neoliberalism has meant deep cuts in income and living standards for workers and middle class. Only the very rich have benefited from the modest economic recovery of the last few years. The imperialists and the local ruling classes have managed to ride out every storm so far, but social tensions are high.

North Africa and the Middle East are stagnating economically and torn politically between the failed comprador and bourgeois-nationalist regimes of yesterday and the Islamic fundamentalists who seek to replace them. The working class is restive but sees no way forward.

Iran has passed through the worst of its fundamentalist counterrevolution and is seeing a modest revival of trade-union and political struggles. Algeria is in the throes of a struggle between the corrupt and discredited nationalists and the fundamentalists. Turkey seems headed that way.

Iraq is still in ruins from the Gulf War and the imperialist economic sanctions. The Kurdish national liberation struggle is hopelessly compromised in northern Iraq, still suppressed in northern Iran, and unable to advance in eastern Turkey. Palestine's agony continues, as the PLO's concessions fail to move Israel or the US, despite the complaints from the Clinton administration that Netanyahu should do more.

Sub-Saharan Africa, apart from South Africa, is in the worst shape it has been in since independence. During the Cold War the imperialists and the Soviet Union vied for influence in the region, subsidizing and arming friendly governments. Now the subsidies have ended, while the arms remain. Many governments have disintegrated, their generals becoming warlords and their soldiers bandits.

Ethnic divisions fostered by colonial and post-colonial governments aggravate the chaos. The result is frequent and sometimes genocidal ethnic conflict, of which Rwanda is the worst but far from the only example. Tens of millions are refugees, and malaria, AIDS, and other diseases ravage the population.

The national liberation movements generally have accepted imperialism's dictates. South Africa, Mozambique, Angola, Congo, Ethiopia, Eritrea, Palestine, Nicaragua, El Salvador -- the names still evoke memories of heroic struggles, but the romance is long gone.

Ireland fits this pattern too, in political if not economic terms, as the IRA seems willing to abandon the republican struggle for an unwritten promise of a reunification that may or may not happen fifty years from now.

Only the most determined and ruthless of the liberation struggles remain true to themselves: Shining Path in Peru, the PKK in Kurdistan, and the Tamil Tigers in Sri Lanka. (Since this document was written, the PKK has abandoned its armed struggle and its call for a free Kurdistan.)

The abdication of most of the radical petty-bourgeois nationalists contributes to the political vacuum.

Capitalist Equilibrium and Disequilibrium

In 1921-22 the Communist International discussed revolutionary perspectives, following the defeat of three waves of European revolutionary struggle in 1918, 1919 and 1921. Leon Trotsky, incorporating the empirical observations of Nikolai Kondratiev and others, developed the concept of capitalist equilibrium and disequilibrium to explain the apparent "long waves" in the curve of capitalist development. In a report to the Third Comintern Congress Trotsky explained this concept.

With the imperialist war we entered the epoch of revolution, that is, the epoch when the very mainstays of capitalist equilibrium are shaking and collapsing. Capitalist equilibrium is an extremely complex phenomenon. Capitalism produces this equilibrium, disrupts it, restores it anew in order to disrupt it anew, concurrently extending the limits of its domination. In the economic sphere these constant disruptions and restorations of the equilibrium take the shape of crises and booms. In the sphere of interclass relations the disruption of equilibrium assumes the form of strikes, lockouts, revolutionary struggle. In the sphere of interstate relations the disruption of equilibrium means war or -- in a weaker form -- tariff war, economic war, or blockade. Capitalism thus possesses a dynamic equilibrium, one which is always in the process of either disruption or restoration. But at the same time this equilibrium has a great power of resistance, the best proof of which is the fact that the capitalist world has not toppled to this day. (Trotsky, "Report on the World Economic Crisis and the New Tasks of the Communist International," 23 June 1921, in The First Five Years of the Communist International, 2nd ed., New York: Pathfinder Press, 1972, vol. 1, p. 174, original emphasis)

Trotsky's image of a ship in stormy weather vividly conveys the conflictual nature of both capitalist equilibrium and capitalist disequilibrium. Neither is calm; neither is purely economic. The transition from one to the other is far from automatic.

Trotsky reviewed the events of the previous few years -- World War I, the Russian Revolution, the postwar revolutionary upsurge, and the defeat of that upsurge -- and asked: Has capitalist equilibrium been restored? He examined this question in terms of economic equilibrium, class equilibrium, political equilibrium, international equilibrium, and their interaction.

Trotsky concluded that equilibrium had not been restored, although he acknowledged the possibility that it could be restored, if the working class did not succeed in overthrowing capitalism first.

If we grant -- and let us grant it for the moment -- that the working class fails to rise in revolutionary struggle, but allows the bourgeoisie the opportunity to rule the world's destiny for a long number of years, say, two or three decades, then assuredly some sort of new equilibrium will be established. Europe will be thrown violently into reverse gear. Millions of European workers will die from unemployment and malnutrition. The United States will be compelled to reorient itself on the world market, reconvert its industry, and suffer curtailment for a considerable period. Afterwards, after a new world division of labor is thus established in agony for 15 or 20 or 25 years, a new epoch of capitalist upswing might perhaps ensue.

But this entire conception is exceedingly abstract and one-sided. Matters are pictured here as if the proletariat had ceased to struggle. Meanwhile, there cannot even be talk of this if only for the reason that the class contradictions have become aggravated in the extreme precisely during the recent years. (Trotsky, "Report on the World Economic Crisis," p. 211, original emphasis)

As it turned out, the Stalinists, social-democrats, and bourgeois nationalists prevented the working class from overthrowing capitalism. After 25 years of agony, including the counterrevolutions in China and Spain, the rise of Hitler, the Japanese assault on China, World War II, the Holocaust, the atomic bomb, the Cold War, the Korean War, and the hydrogen bomb, capitalism achieved a new equilibrium.

The Post-War Equilibrium and Its Breakdown

The post-World War II equilibrium included five elements. The first element was equilibrium between the capitalists and the workers in the imperialist countries. The workers accepted capitalist rule, and the capitalists accepted bourgeois democracy, trade unions, rising living standards, and a social security system.

The second element was equilibrium among the imperialists. The imperialists other than the US accepted US economic and military hegemony, and the US accepted that the others would grow faster than it did.

The third element was equilibrium between the imperialists and the semicolonies. The semicolonial elites accepted imperialist domination, and the imperialists, sometimes after bitter struggle, accepted decolonization -- working through local agents, rather than ruling directly -- and limited economic development for their ex-colonies.

The fourth element was equilibrium between the imperialists and the Soviet Union. The Stalinist bureaucrats accepted "peaceful coexistence" with capitalism in an imperialist-dominated world, and the imperialists accepted Stalinist rule over one-third of the world's population.

The fifth element, based on the previous four, was equilibrium between capitalist profitability and economic growth. The capitalists found they could profitably invest to rebuild the world economy, to incorporate 35 years of new technology, and to realize the economic potential of the post-World War II order.

The elements of the equilibrium interacted. For example, the mutual conditioning of imperialism and Stalinism required both to make concessions to their working classes and gave them excuses for repression, which helped to maintain the class equilibrium.

The overall capitalist equilibrium held for nearly twenty years, as its various elements reinforced each other in an upward spiral. But by the end of the 1960s the equilibrium began to break down. The capitalists had filled the available economic space and developed immense excess capacity in almost all spheres of production -- raw materials, producer goods, consumer goods, and even services.

They could have continued the economy expansion, if they had been able to act on the basis of a plan for worldwide economic development. Being capitalists, however, they couldn't do this. And the world market gave them the wrong signals. Their overaccumulation of capital caused a sharp fall in profit rates, which led them to cut back investment and drive down living standards. This aggravated the imbalance between supply and demand, since supply remained the same while demand fell sharply. The upward spiral became a downward one.

The social equilibrium in the advanced capitalist countries began breaking down even before the end of the economic expansion. Previously excluded sectors of the population began demanding inclusion: racial and national minorities, immigrants, women, lesbians and gay men, and youth.

As their profit rates declined, the capitalists began reneging on their promises to the working class. The previously sectoral confrontations became more class-wide. Sharp economic and political struggles erupted, with the May 1968 events in France setting the tone.

As the expansion slowed, the imperialists found themselves competing for shares of the world market. No longer economically hegemonic, the US retreated from its role of guardian of the world capitalist economy. The European Economic Community consolidated to protect its home market and provide a base for competing abroad. And Japan emerged as an industrial and export power.

Interimperialist rivalry intensified. The most aggressive move was the so-called "OPEC oil crisis." Exploiting their position as the main imperialist oil powers, the US and Britain conspired with their OPEC clients to quadruple oil prices in 1973 and triple them in 1979. They raked in immense profits for their oil companies and banks, caused havoc for the other imperialist countries and the non-oil-producing semicolonies, and set up a scapegoat for the rapid inflation which helped drive down real wages at home.

The equilibrium between the imperialist countries and the semicolonies also broke down, as the imperialists began taking more profits out of the semicolonies than the capital they were investing. National liberation struggles intensified, as Stalinists, radical petty-bourgeois nationalists, and even bourgeois nationalists began to resist. From Vietnam to Palestine to Mozambique and Angola to Chile and Nicaragua, anticolonial struggles became or threatened to become anticapitalist.

When the Soviet Union got drawn into these conflicts, as it often did, the bureaucrats' "peaceful coexistence" with the imperialists broke down too. The US defeat in Vietnam forcefully registered these changes.

The Capitalist Counteroffensive

The capitalists did not roll over and die. They retreated, regrouped, and began a counteroffensive. They were able to do this because of the limitations of the leaderships of the mass movements, none of whom really sought to overturn the post-World War II order, let alone replace it with world socialism.

The upsurge of the late 1960s and early 1970s was, in a sense, a victim of its own success. It achieved enough of its objectives to demobilize the workers and youth it had activated, without setting clear objectives for a new mass mobilization. For example, it secured the victory of the Vietnamese revolution and the revolutions in Portugal and the Portuguese colonies, without adequately posing the need to overthrow imperialism and Stalinism worldwide.

Most of the "generation of 1968" had no perspective for continuing the struggle. Disillusioned by the results of the 1970s, they and their children became the older and younger "me generations" of the 1980s. The vanguard and the masses became relatively depoliticized.

Not always and not everywhere. But the Iranian and Nicaraguan revolutions in 1979 and the near-revolution in Poland in 1981 were the last gasps of the 1970s upsurge. And the near-revolution in South Africa in 1985-86 and the very limited revolutions in Haiti and the Philippines in 1986 were the exceptions that proved the rule.

In the advanced capitalist countries, the ruling classes used the trade unions and the liberal and social-democratic parties to contain the workers' struggles in the 1970s and then generally discarded them in the 1980s, turning to conservative bourgeois parties.

The victory of Margaret Thatcher in 1979, after five years of sellout by Labour governments, set the pattern. The Thatcher government systematically dismantled one of Europe's strongest trade-union movements and social welfare systems. The only real resistance to this was the 1984-85 coal miners' strike. If that had become an all-out general strike, it might have turned the tide. But it was isolated and defeated, because of the unwillingness of the trade-union bureaucracy, including the National Union of Mineworkers bureaucracy, to generalize the struggle into a class confrontation for power.

The pattern was similar in other advanced capitalist countries. The reformist left, carried to the top by the 1970s upsurge, failed the challenge. The capitalists counterattacked. The workers fell back. And the result was either a conservative government (Reagan, Kohl) or a social-democratic government carrying out conservative policies (Mitterrand).

The imperialist counteroffensive against the semicolonies was both economic and military. In the 1970s the imperialists had lent enormous sums to governments, banks and corporations in the semicolonies, partly to help stabilize these countries and partly to try to find profitable outlets for their surplus capital. In the 1980s the imperialists demanded repayment of these debts, reversing the flow of capital from inflow to outflow for many countries, particularly in Latin America and Africa.

Massive excess capacity drove down the prices of the raw materials and labor-intensive industrial products exported by the dependent countries, while the imperative to repay the debts forced them to sell their products despite the unfavorable terms of trade. When they couldn't meet their payments, the imperialists through the IMF demanded austerity and the opening of their economies.

Countries refusing to accept the imperialist dictates were branded "rogue states" and subjected to economic sanctions and military pressure. The US imposed sanctions on Cuba, Nicaragua, North Korea, Vietnam, Cambodia, Afghanistan, Iran, Iraq, Syria, Libya, Ethiopia, Sudan, and other countries it accused of "supporting terrorism." The other imperialists generally went along, unless they had overriding economic interests in the sanctioned country.

The US also provoked war between Iran and Iraq; supported the Israeli invasion of Lebanon; invaded Grenada and Panama; bombed Libya; sent UNITA against Angola, the MNR against Mozambique, the contras against Nicaragua, and the Mudjahedin against Afghanistan; and waged war on Iraq. Britain supported the US in most of these actions and waged its own war on Argentina in 1982. France usually supported the US and frequently sent troops to "police" its former African colonies.

The main foreign target of the imperialist counteroffensive was the Soviet Union, whose existence allowed the national liberation movements and nationalist governments to resist.

Combining economic and military measures, the imperialists did everything they could to undermine the Soviet bloc. They drew Eastern Europe into a web of trade and debt and threatened it with new deployments of nuclear weapons. They went all out to subvert antibureaucratic mobilizations, most importantly Solidarnosc.

The US also put direct pressure on the Soviet Union. Using the 1979 Soviet invasion of Afghanistan as an excuse, the Carter administration sharply escalated the arms race. Reagan continued this policy, adding the nutty "star wars" program to the already astronomical US military expenditures. The need to compete with this buildup helped bring down the Soviet Union, already rotten from the contradictions of its Stalinist regime.

The collapse of the Soviet Union cleared the way for the establishment of the "new world order" proclaimed by US President George Bush after the Gulf War and the contemporary scene described above.

Looking to the Future

Having looked at the past and the present, we must now look to the future. We should do so with a certain humility, recognizing that the best brains of Marxism have gotten such assessments wrong.

For example, Marx and Engels in 1850 thought the 1848 revolutions would revive quickly, but the long expansion already underway postponed the next revolutionary upsurge until 1871. Lenin in 1916 thought he might not live to see the revolution. And most Trotskyists, following Trotsky's prognosis on the eve of World War II, expected the war to provoke a revolutionary crisis that would continue until it brought down capitalism.

In each case, the assessments were reasonable, based on the facts, and were corrected when they turned out to be wrong. But they remind us of the wisdom of Lenin's self-correction in his April 1917 "Letter on Tactics," published with the "April Theses."

Marxism requires of us a strictly exact and objectively verifiable analysis of the relations of classes and of the concrete features peculiar to each historical situation. We Bolsheviks have always tried to meet this requirement, which is absolutely essential for giving a scientific foundation to policy.

"Our theory is not a dogma, but a guide to action," Marx and Engels always said, rightly ridiculing the mere memorizing and repetition of "formulas" that at best are capable only of marking out general tasks, which are necessarily modifiable by the concrete economic and political conditions of each particular period of the historical process.

What, then, are the clearly established objective facts which the party of the revolutionary proletariat must now be guided by in defining the tasks and forms of its activity? (Lenin, "Letters on Tactics," April 1917, in Lenin: Collected Works, vol. 24., Moscow: Progress Publishers, 1964, p. 43, original emphasis)

The letter includes the well-known quotation of the words of Mephistopheles from Goethe's tragedy Faust.

"Theory, my friend, is grey, but green is the eternal tree of life." (Lenin, "Letters on Tactics," p. 45)

Like our revolutionary forbears, the best we can do is to apply our Marxist analysis to the facts, intervene on that basis, and adjust our analysis as new facts, including the results of our intervention, require.

Two Erroneous Views

To begin with, we must set aside two views that are clearly not supported by the facts: the view that world capitalism has already entered a new period of equilibrium and expansion, and the view that it is about to suffer a catastrophic collapse. Both views represent a combination of impressionism and wishful thinking.

The view that capitalism has entered a new period of equilibrium begins with the impression created by the relative prosperity and stability of the advanced capitalist countries, especially the US. With its business cycle peaking, the US growth rate is relatively high, unemployment and inflation rates are relatively low, real wages are rising, profits are ample to finance and motivate investment, the government is running a budget surplus, and the stock market is at record highs.

The European economies are beginning to revive and may soon reach US levels of expansion, which could prolong the US recovery. The weak link in the imperialist chain is Japan, whose recession is deepening. But this seems just balance for all the years in which Japan grew and the other advanced capitalist countries didn't. For the moment, Japan's stagnation seems manageable.

True, most of the world remains economically depressed, and the Asian crisis has undermined the most rapidly developing capitalist countries. But the weight of the US and Europe in the world economy is so great that it seems more plausible that they will pull up the rest than that the rest will pull them down, at least for the next several years.

Theoretically inclined observers add additional considerations. The threat of global competition seems to have tamed the class struggle so much in the US and the other the advanced capitalist countries that wage increases remain relatively small, despite low or declining unemployment rates. Capitalist restoration in the former Soviet bloc and neoliberalism in the semicolonies have opened potentially immense new opportunities for capitalist exploitation. And 25 years of technological development are ripe for profitable investment.

In fairness, Marxists must acknowledge that the capitalist counteroffensive has been successful enough on all fronts so that it, along with passage of time, could provide the basis for a new period of expansion. But one key element is missing: massive concessions from the capitalists to guarantee social peace, as in the 1950s and 1960s.

Naming the missing element makes clear why the "new equilibrium" perspective is false. The whole basis of the "new world order" and the current imperialist prosperity is shifting income and wealth from working and poor people to the big capitalists and their retainers. Reversing this might be in the long-term rational self-interest of the capitalists, but they are incapable of acting on this basis.

The capitalists will continue to do what they have been doing: driving down the living standards of the workers and the oppressed. If the masses continue to acquiesce, the capitalists will maintain bourgeois democracy. If they begin fighting, the capitalists will try to dump democracy and turn to open reaction.

The world today is far too unstable a place for careful observers to speak of a new equilibrium. Even in the advanced capitalist countries, the ongoing expansion is based mainly on heightened exploitation and inequality, not rising labor productivity. This cannot last. The illusion will evaporate with the next recession.

The other erroneous view we must set aside is that world capitalism is about to suffer a catastrophic collapse.

Conditions in many places in the world give this impression. For example, it seems almost inconceivable that output and living standards could fall as much as they have in the former Soviet Union without provoking a revolution. Or that the fall of such key players in the Cold War order as Zaire's Mobutu and Indonesia's Suharto could lead to so little improvement for the masses of people. Or that 31 million people -- 21 million of them in sub-Saharan Africa -- could be infected with HIV with no consequences for the capitalists, whose greed denies most of them treatment and condemned two million to an early death from AIDS last year.

It would be tempting to say that the stock market boom in which the capitalists glory will soon be their undoing. The speculatively overpriced markets certainly invite a crash. In fact, crashes are inevitable sooner or later, triggered by a rise in the class struggle at home, a crisis somewhere in the world, or just the panicked realization that stock prices are far too high. But the October 1987 crash showed that stock markets could fall more than they did in 1929 without dragging down the real economy of production and distribution.

It would be tempting to say that the democracy with which the capitalists disguise their exploitation is a response to mass pressure and that the new "left" and "center-left" governments are a desperate attempt to head off revolution. But really they are, at the moment, the cheapest and most convenient way for the capitalists to impose their neoliberal policies.

Many countries could see explosions in the coming months, particularly some of the former workers' states and semicolonies in which social tensions are highest. But these explosions will not threaten the world capitalist system until they cause much more of a crisis in the imperialist centers. And this won't happen until the world economy declines considerably more, and the US and the other imperialists become drawn into wars and revolutions they don't have the economic, political, and military resources to contain.

Prospects for Revolution

Proletarian revolutions occur when the capitalist class is unable to rule in the old way, the working class is unwilling to be ruled in the old way, and a revolutionary workers' party has enough strength in the vanguard and the class to lead the revolution. World revolution occurs when these conditions are generalized enough, including in the advanced capitalist countries, to bring down the imperialist system.

The deepening crisis of world capitalism is creating the first two conditions. The crisis is somewhat masked by the current upturn in the business cycle, the capitalists' maneuvers to shift the burden of the crisis to the workers and the oppressed, and their continuing ability to contain explosions as they occur. But the world is profoundly unstable. All the elements of the disequilibrium will be aggravated in the months and years ahead.

The capitalists are still confronted with an insoluble economic problem. They have realized Marx and Engels's prediction of a highly socialized world economy they cannot control. They have accumulated too much and can produce too much. Their private ownership of the means of production and national borders block the planning they would need to continue to develop the world economy. And no system rational enough to plan would tolerate the irrationality of their private ownership of the means of production and national borders. The long-term economic disequilibrium continues.

The economic disequilibrium creates political problems for the capitalists. They cannot continue to raise the rates of exploitation and drive down the living standards of workers in the advanced capitalist countries without provoking a reaction. Yet labor productivity is rising too slowly for them to maintain their profit rates without raising the rates of exploitation and driving down living standards.

Class confrontations are inevitable. And so are the capitalists' attempts to head them off through shifts to the right and to the left. The period immediately ahead should continue to see a mix of conservative and liberal or bourgeois-workers' governments following generally neoliberal policies, with racism and xenophobia in the background. But as the social crisis deepens, the oscillations will widen to include 1930s-style Bonapartism and popular fronts.

These oscillations will not resolve the political crisis. They will continue until the workers decisively defeat the capitalists through socialist revolution, or the capitalists decisively defeat the workers through military dictatorship or fascism.

Confrontations among the imperialists are inevitable too. As the crisis of overaccumulation and overproduction deepens, the imperialists will collide more and more sharply with each other, competing for market and investment shares. These collisions almost certainly will doom the European Union and other attempts to overcome interimperialist rivalry on the basis of relative equality and mutual accommodation.

For now, the collisions among the imperialists are relatively peaceful. But as the stakes become higher, the better-armed imperialists will be tempted to take by force what they can't get by economic means. In particular, the US will be tempted to use its overwhelming military superiority to compensate for its relative economic weakness. The Gulf War, which forcibly reminded Germany and Japan who controls their oil supply, was just shadow-boxing compared to what the US might do, if it felt desperate enough.

The present German and Japanese governments could not resist aggressive US moves. But deepening social crisis could bring to power militaristic or fascist governments that would respond with equal aggression. The result would be a nuclear arms race much more dangerous than the India-Pakistan one, since these countries would have the technology and wealth to produce thousands of deliverable warheads.

Russia might well be drawn into an interimperialist confrontation. The Russian military and the emerging financial oligarchy would like to reunite the territory of the former Soviet Union in a new Russian empire. This plus a corporativist drive for economic development modeled on Germany's or Japan's might establish Russia as an imperialist power quite quickly. Alternatively, Russia could be a formidable ally of Germany or Japan, giving them resources and military capability to match the US.

The imperialists will squeeze the semicolonies, and the semicolonial ruling classes will squeeze their workers and peasants. The conditions of the masses will be much worse than in the imperialist countries, because labor productivity is lower and both national and foreign masters claim surplus value.

The current policy of democratic neoliberalism is a luxury the imperialists and national ruling classes will indulge only so long as the semicolonial masses suffer quietly. As resistance develops, the dictatorships and death squads will be back. When revolution threatens, the capitalists may turn to popular fronts in various countries to try to contain the struggle. But if they succeeded in containing the struggle, the popular fronts would be only a prelude to savage repression.

This oscillation between greater and greater extremes will continue until the workers and peasants decisively defeat the imperialists and national capitalists, or the imperialists and national capitalists decisively defeat the workers and peasants.

The emerging ruling classes of Russia and the other former workers' states will also squeeze their working classes even harder than the imperialists squeeze theirs. Those with imperialist ambitions must overcome the disadvantage of starting far behind their competitors in labor productivity and capital accumulation. And those sliding into dependency are caught in the same squeeze as the existing semicolonies.

The workers will resist the attempts by the capitalists to shift the burden to them. The current relative quiet cannot last. The process by which the workers move into struggle around the world will be uneven and combined. Uneven, because different contingents of workers will come into struggle at different times. Combined, because the struggles of the different contingents will affect each other, as workers are inspired by and learn from each other's victories and defeats.

In many of the semicolonies and former workers' states conditions are already bad enough to provoke revolutions. The intensification of suffering provides the combustible material. Events will provide the spark. Albania, Congo, and Indonesia are only preliminary skirmishes. As the upsurges become more radical and more frequent, the imperialists will not be able to contain them.

The revolutionary process will develop more slowly in the advanced capitalist countries. Conditions will worsen as the economy worsens. This will provoke trade-union and political struggles over partial demands. These are unlikely to develop into revolutionary struggles based on economic conditions alone. But the economic crisis will be aggravated by political crises, as the imperialists are buffeted by the storms of wars and revolutions. And the combination will, over time, provoke revolutionary crises even in the imperialist heartlands.

One hundred fifty years of working-class history tell us that the workers will struggle. They also tell us that the indispensable condition for victory is a revolutionary workers' party. In the final analysis, the prospects for revolution come down to the prospects for building revolutionary parties and a revolutionary International.

Tasks of Revolutionaries

The general task of revolutionaries is to lead revolutions, that is, to guide the working class as it establishes its dictatorship over capital and organizes its rule on the basis of workers' democracy and a collectivized, centrally planned economy -- the political and economic foundations of the transition from capitalism to socialism. But the particular task of revolutionaries today is to prepare for this by building revolutionary parties and a revolutionary International.

No party anywhere in the world is capable of leading a revolution today. Those big enough to lead a revolution are not revolutionary enough to do so. Those revolutionary enough and politically clear enough are not big enough. The situation is even worse at the international level.

The retreat of the working class, the fall of the Soviet Union, and apparent triumph of capitalism complicate the task of building revolutionary parties. Many workers no longer believe in the possibility of a socialist solution to the problems they face. Many equate the failure of Stalinism with the failure of socialism. Many are convinced that their best bet is a market economy with bourgeois democracy.

At the same time, however, the failures of the traditional leaderships have made politically advanced workers and youth more receptive to revolutionary Marxism. They want an explanation of events, a program to fight for, and a strategy to win. And they know the Stalinists, social-democrats, and bourgeois and petty-bourgeois nationalists have no answers.

Revolutionary parties and a revolutionary International will be built through the coming together of the revolutionary movement and the workers' movement -- their linking, as the revolutionary organizations transform themselves from isolated circles into mass organizations of the working-class vanguard.

The workers' movement has already begun to recover from the effects of the capitalist counteroffensive and the fall of the Soviet Union. The level of struggle has increased in almost all parts of the world. The workers and the oppressed are defending themselves more often and more effectively.

This can be seen in the semicolonies in the overthrow of Mobutu and Suharto, the South Korean general strikes, the insurrections in Mexico and Colombia, the landless movement in Brazil, and the popular resistance in Palestine. It can be seen in the former workers' states in the overthrow of Berisha in Albania, the rebellion in Kosova, and the Russian miners' strikes. It can be seen in the advanced capitalist countries in the French public sector strikes, the Danish general strike, and the UPS and GM strikes in the US.

The workers' movement has far to go in rebuilding the strength it had 20 or 25 years ago. But the capitalists' attacks are provoking a reaction. Not just a trade-union reaction, but a reaction of all sectors of the working class, including the unemployed, immigrants, racial and national minorities, women, lesbians and gay men, and youth. And not just workers, but also landed and landless peasants, artisans and small shopkeepers, slumdwellers, students, and even professionals and academics.

The revolutionary movement still lags behind. This is somewhat paradoxical, since there are many revolutionaries in the world today. They are coming together in large numbers in the workers' movement, but not yet in the revolutionary movement.

Many leaders of the workers' movement were radicalized in the upsurge of the 1960s and 1970s. Some retain their revolutionary convictions, as do many rank-and-file workers radicalized in this period, even if they have been out of the revolutionary movement for years. Many of the most active fighters today are youth who regard themselves as revolutionaries of some sort. They too are becoming workers' leaders.

As Lenin said of the Russian movement in the first years of the twentieth century, there are people, and yet there are no people. Most revolutionaries of the older and younger generations are not in revolutionary organizations.

Revolutionary Marxism -- Trotskyism -- provides a correct theory, program, and strategy. But the theory must be elaborated to take account of developments in the world and in human understanding of the world. The program must be concretized in transitional demands that make sense to the vanguard and, increasingly, to the masses. And the strategy must be concretized in tactics appropriate to the situation.

The revolutionary organizations must intervene in the real struggles of workers and the oppressed, propose courses of action, provide practical leadership, and on that basis win individuals and groups of workers to join them.

The task is complicated by the multiplicity of revolutionary organizations. In most countries, there are several or many self-identified revolutionary organizations, most with centrist political deviations of one kind or another. So far, the class struggle has not tested their perspectives in action enough to sort out political differences, produce new alignments, and establish a hegemonic revolutionary workers' party.

The situation is worse at the international level. There are several international Trotskyist currents and national currents with cothinkers in other countries. But they are all tiny in relation to the tasks, and most of them suffer from centrist deviations to one degree or another.

The interaction of developments in the class struggle, the workers' movement, and the revolutionary movement is much too complicated to determine in advance. It will be determined by events and the intervention of revolutionaries.

There is no doubt, however, that the building of revolutionary parties and a revolutionary International will require both the overcoming of the political confusion and organizational fragmentation of the revolutionary movement and the coming together of the revolutionary movement and the workers' movement.

A strategically important task is the political regeneration and organizational reconstruction of the Fourth International as the nucleus of the future World Party of Socialist Revolution -- the refounding of the Fourth International.

The Trotskyist movement has special importance. Trotskyist organizations claim to adhere to revolutionary Marxism. This means that they attract and will continue to attract revolutionaries breaking to the left of Stalinism, social-democracy, and nationalism. Our party-building task would be much easier if there were a single, hegemonic center of revolutionary regroupment. But that is yet to be created.

The deepening capitalist crisis should give revolutionaries many opportunities to intervene in mass struggles. Reaffirming the program and method of revolutionary Marxism, Trotskyists must win to that program and method all revolutionaries who are ready to leave centrist vacillation and sectarian irrelevance behind.