On our way from Palestine to Britain Chanie and I passed through Paris. We visited the headquarters of the Fourth International.
Until then I had concentrated my research on developments in the Arab East, above all Egypt and Palestine. I only glanced at developments elsewhere. We visited Paris just five months after the International Pre-Conference of the Fourth International, which took place in April 1946 (the founding conference was in 1938). I must say I read its resolutions with a feeling of unease. The description of the world in those resolutions jarred with reality. This could be recognised even at a glance.
For example, the Trotskyists in 1946 slavishly followed Trotsky’s statement that the Stalinist regime in Russia could not, would not survive the war. Thus the Fourth International of April 1946 stated, ‘Without any fear of exaggeration one can say that the Kremlin has never confronted a more critical situation at home and abroad than it does today’. 
In September 1946 I met Ernest Mandel in Paris. He was a leading member of the Fourth International and showed me an article he had written a few weeks earlier. In it he tried to demonstrate the profound instability of Stalin’s regime by quoting a working class woman in a mass meeting telling Kalinin, president of the USSR, ‘You have boots. I am barefoot.’ This, he argued, was indicative of mass resentment at bureaucratic privileges simmering away. I told Mandel that I had read the story years before and it related to events a quarter of a century earlier! A few months ago, when researching my book Trotskyism After Trotsky, I asked Ian Birchall, who has been extremely helpful in my research, whether he could locate this article. A few days later Al Richardson of the Socialist Platform Archive located the article, and it was exactly as I had remembered it.
I was shocked to read Mandel’s argument; As a matter of fact it was a hard blow to my trust in the leadership of the Fourth International. This reaction against a sloppy attitude to historical accuracy was not a matter of bourgeois morality, that by such deception one’s immortal soul is damaged. No. Revolutionaries need to tell the truth, good and bad, not only because not to do so cheats the workers they are addressing, but because they deceive themselves. Without an honest accounting it is impossible to orientate properly on a situation. A too pessimistic analysis can lead to passivity, an over-optimistic one leads to adventurism and in the long run to disappointment, which also leads to passivity. [1*]
Nevertheless the conference of the Fourth International in April 1946 continued to assert that ‘behind the appearance of power never before attained, there lurks the reality that the USSR and the Soviet bureaucracy have entered the critical phase of their existence’. 
The highest form of sophistry was used by James P. Cannon, leader of the Trotskyists in the US, when he stated that the fact that Stalin continued to rule Russia proved that the war had not ended!
‘Trotsky predicted that the fate of the Soviet Union would be decided in the war. That remains our firm conviction. Only we disagree with some people who carelessly think the war is over. The war has only passed through one stage and is now in the process of regroupment and reorganisation for the second. The war is not over, and the revolution which we said would issue from the war in Europe is not taken off the agenda. It has only been delayed and postponed, primarily for lack of a sufficiently strong revolutionary party.’ 
The position of the Fourth International leadership looked completely mistaken to me, although at the time I did not have an explanation of the developments in Russia and Eastern Europe.
The 1946 International Pre-Conference also took an absurd position when it used Trotsky’s pre-war analysis to describe the current state of world capitalism. Trotsky thought that capitalism was in terminal crisis. As a result production could not expand and, associated with this, there could be no serious social reforms or a rise in the masses’ living standards. In 1938, in The Death Agony of Capitalism and the Tasks of the Fourth International, he wrote that the Western world was ‘in an epoch of decaying capitalism: when, in general, there can be no discussion of systematic social reforms and the raising of the masses’ living standards ... when every serious demand of the proletariat and even every serious demand of the petty bourgeoisie inevitably reaches beyond the limits of capitalist property relations and of the bourgeois state’. 
It was impossible in 1946 not to see that capitalism did not suffer from general stagnation and decay. Full employment, a speedy rise of production and improvements in living standards were to be seen everywhere. But the Fourth International leadership was completely blind to reality and so the International Pre-Conference declared that ‘there is no reason whatsoever to assume that we are facing a new epoch of capitalist stabilisation and development...the war has aggravated the disorganisation of capitalist economy and has destroyed the last possibilities of a relatively stable equilibrium in social and international relations’. 
Furthermore, ‘The revival of economic activity in capitalist countries weakened by the war, and in particular continental European countries, will be characterised by an especially slow tempo which will keep their economy at levels bordering on stagnation and decay.’ 
Using his theory of permanent revolution Trotsky argued that in backward, underdeveloped countries the accomplishment of bourgeois democratic tasks – national liberation and agrarian reform – could be advanced only by working class power. This too was refuted by actual events. In China, the most populous country in the world, Mao led a Stalinist party entirely divorced from the working class to unify the country, win independence from imperialism and institute land reforms. Similar processes occurred elsewhere, such as in Cuba and Vietnam. I did not yet have an answer to the question of why the world after the war was so different to Trotsky’s prognoses. In the coming few years I devoted a lot of time and effort to developing three interlinked theories to deal with the three areas of the world: Russia and Eastern Europe, advanced capitalist countries, and the Third World. The three theories were: state capitalism, the permanent arms economy, and deflected permanent revolution.
The basic points are dealt with in Trotskyism After Trotsky so what follows is the briefest of sketches. Trotsky’s theory of an insecure bureaucratic layer usurping power in what was basically a workers’ state predicted the downfall of Stalinism when faced with a serious crisis like war. The fact that Stalinism emerged from the Second World War immeasurably strengthened and in command of vast territories in Eastern Europe meant that Trotsky must have been mistaken. A different theory was needed. State capitalism fitted the facts. Since 1929 the Stalinist state bureaucracy had, through collectivisation of the farms and forced industrialisation in the cities, massively accumulated capital. It behaved like any other capitalist ruling class by exploiting the workers and competing internationally, in the form of an arms race. It differed from other capitalisms only in that formally all the means of production were owned by a corporate group – the state bureaucracy – rather than private individuals.
My rejection of Trotsky’s definition of Stalinist Russia as a ‘degenerated workers’ state’ took place in 1947-48. For two months I was riven by doubts about this definition. I did practically nothing during the day or night but think about it. Poor Chanie suffered. We slept in a narrow bed, and she had to get up at six every morning to go and work far away in Kent – in the worst winter for a long time. One early morning I jumped out of bed and told her, ‘Russia is not a workers’ state but state capitalist.’ It took me more than a year afterwards to put flesh on the skeleton. In Dublin I managed to research The Class Nature of Stalinist Russia. Completed in 1948, this was a very long duplicated document of 142 pages. On the Class Nature of the People’s Democracies followed in July 1950 (also in duplicated form), as did a book, Stalin’s Satellites in Europe two years after that.
It is important to note that though a break from Trotsky, the theory of state capitalism built on the Trotskyist tradition. My criticism of Trotsky’s position was intended as a return to classical Marxism. Historical development – especially after Trotsky’s death – demonstrated that the ‘degenerated workers’ state’ position was not compatible with the classical Marxist tradition which identified socialism as the self emancipation of the working class. To preserve the spirit of Trotsky’s writing on the Stalinist regime the letter of his writing had to be sacrificed.
There were other groups, such as anarchists and sectarian Marxist groups, which described Russia as state capitalist, but they argued it had been so from the very beginning – from 1917. Locating the move to state capitalism in 1929 meant recognising the importance of the tradition of the October Revolution which created die first workers’ state in history after the 1871 Paris Commune. It also meant defending the lessons of the struggle at home (of Trotsky against Stalin) and on the international scale (in particular the first four Congresses of the Communist International). The year 1929 is significant because it was the moment when Stalin transformed the programme of the dominant bureaucracy, making it one of deliberate accumulation of capital. It became a capitalist ruling class and simultaneously converted the mass of the population into an exploited proletariat through forced collectivisation and industrialisation.
The argument about state capitalism was confirmed and deepened by changes in Eastern Europe after the Second World War. If Trotsky had been right, the creation of governments identical to Russia by order of the Red Army, would have meant the creation of workers’ states (without the destruction of the existing state machines) by order of Stalin and entirely without the intervention or involvement of the working classes in these countries.
The theory of state capitalism was not only important in explaining what was going on in one sixth of the world. It was an essential guide to future action of the international working class. This would be shown in a number of ways. It was not just useful in debates with Stalinists organised in the Communist Party (which was then a powerful force on the industrial front). It helped us in arguments with non-Stalinist workers who looked at Russia and said, ‘If revolutionary socialism really equals labour camps and vicious repression of workers, then we don’t want to have anything to do with it.’ Finally, it avoided the difficulties and ambiguities that orthodox Trotskyists faced, which, in a sharply polarised situation of Cold War, often turned them into apologists for Stalinism.
Crucially, the theory of state capitalism put the concept of the emancipation of the workers as the act of the working class itself back at the centre of Marxism. Although it might have seemed miles away from issues such as struggle over wages and conditions in the factories, building a non-Stalinist tradition among workers meant there was an alternative to depending on trade union officials claiming to act on their behalf. This would be the workers acting in their own interests. The concept of rank and file action, of socialism from below, logically followed on from the definition of Russia as state capitalist. A few years later I took the first step to deal with the theory of the deflected permanent revolution in my book Mao’s China (1957) and developed it further in my article Deflected Permanent Revolution.  If the theory of state capitalism dealt with the ‘Second World’, then deflected permanent revolution covered the Third World. Once again the notion of workers’ self activity was crucial. In the same way that it seemed to me impossible that a workers’ state could be imposed by Russian army tanks in Warsaw, Berlin or Prague, so it was impossible that Mao’s peasant army or Castro’s rural guerrilla forces could bring socialism to the workers of China and Cuba. The explanation for what had happened did not involve rejecting Trotsky’s theory of permanent revolution but reorienting it. Trotsky predicted the weakening of imperialism and social change here being driven by the working class struggling to complete the tasks of the bourgeois revolution and at the same time carrying on through to the struggle for socialism.
What happened in China and Cuba did not depend on working class action in any way. In both cases the conquering military forces came from outside the industrial cities and demanded that the workers remain passive. In a social crisis where the revolutionary subject, proletarian activity and leadership were absent, the result could be a different leadership (a political/military elite) and a different goal – state capitalism. Using what was of universal validity in Trotsky’s theory (the conservative character of the bourgeoisie) and what was contingent (the subjective activity of the proletariat), I came to a variant that, for lack of a better name, was called ‘deflected permanent revolution’. Reaching this idea actually helped preserve the central theme of Trotsky’s theory – the proletariat must continue its revolutionary struggle until it is triumphant the world over. Short of this target it cannot achieve freedom.
While arguments about China and Cuba might have seemed rather abstract in the 1950s and early 1960s they were to be important later. If, as many Trotskyists and Maoists came to believe, socialism could be created by social forces other than the workers, and without workers’ involvement, then, if the working class failed to respond to appeals, it could be dropped and forgotten about. Belief that Cuba and China were socialist therefore became a bridge leading away from working class politics. This could be a very strong pull. In 1968 it led Trotskyists in the International Marxist Group (the British section of the Fourth International) to the idea that students could bring about socialism. The International Socialists also recruited students, but we never believed that they could substitute for the working class and its activity. For the Maoists, who led the revolutionary movements in places like Italy and Portugal, confusion about the central role of the workers led to the idea that a determined minority could, through sheer will, bring about social transformation. Later on a variety of ‘movements’ of the oppressed – women, blacks and gays – and the environmental movement were substituted for the hard slog of winning over the working class, which alone has the power to fundamentally challenge capitalist society.
The theory of the permanent arms economy dealt with events in the ‘First World’. It was evolved over a number of years. It first appeared as part of the theory of state capitalism in the duplicated document The Class Nature of Stalinist Russia. In 1957 the argument became more specific in an article entitled Perspectives for the Permanent War Economy, which moved from the effect of military expenditure on the dynamics of Stalinist Russia to its effect on capitalism in the West and in Japan. 
In this, military competition between Russia and the Western capitalist countries was identified as the chief mechanism enforcing the dynamic of capital accumulation in Russia. The converse was also true – on the other side of the Iron Curtain the Cold War ensured that arms spending remained at a high level. The massive cost of weaponry ensured that demand was kept high and employment maintained through the production of goods that were in effect pure waste. They were stockpiled and did not return to the economy for sale. As a result not only could there be full employment, but overproduction of goods for sale was avoided and the tendency of the rate of profit to fall (because investment in machinery grows faster than investment in surplus value making labour) was offset.
Another factor helped me to grasp the workings of the permanent arms economy. Coming to Britain from Palestine in 1946, and viewing the conditions here from the perspective of a colonial country, I was struck by the fact that:
The standard of living for workers was high. When I first visited a worker’s house – just an ordinary house – I asked his job and he said he was an engineer. My English wasn’t very good so I thought he meant an engineer with a degree. But he was a semi-skilled engineering worker. It was a complete shock. Children were better off than in the 1930s. The only time I saw children without shoes in Europe was in Dublin. Children didn’t get rickets any more. This helped me to realise that the final crisis wasn’t just around the corner. 
The permanent arms economy predicted a quite different evolution to that expected by Trotsky’s followers and proved useful in escaping dangerous political traps. For example, Gerry Healy insisted that Trotsky’s reading of the late 1930s was valid for the 1950s and that capitalism was on the brink of catastrophe. So his Trotskyist organisation, the Socialist Labour League (SLL), which was the largest of the post-war groups, was always calling for general strikes and expecting imminent revolution. It also believed that a transitional programme of demands could provide a shortcut to influence over a mass of workers rapidly moving to the left. When none of this happened the members either became disillusioned and left, or gradually found it harder and harder to relate to the real (if limited) struggles of workers under a booming capitalism. This led the SLL ultimately into a sectarian dead end where it was isolated politically from the real debates and arguments in the movement. A practical example of this was the launching of a daily paper which ruined the organisation very quickly. Not only did the situation in the outside world mean that the circulation of such a paper was bound to be very limited, but the organisation itself was far too small to sustain the burden.
The permanent arms economy theory suggested there were no shortcuts like transitional programmes or calls for general strikes. Instead work would have to be adapted to the actual level of the struggle on both the ideological and industrial planes.
On the other hand there were those on the left who, consciously or unconsciously, understood that post-war capitalism was booming. However, without a Marxist theory to explain it, they took the surface appearance of things to be all there was. There were many former Marxists who were now prophets of an eternal capitalist boom, such as John Strachey. He argued that the system would thrive so long as Keynesian economic policies were followed. The right wing reformist Anthony Crosland also waxed lyrical about a capitalism reformed by Keynesian methods. His book The Future of Socialism published in 1956, argued that the anarchy of capitalism was withering away, and so also class conflicts. The system was becoming more and more rational and democratic. Capitalism itself would peacefully dissolve. Now that Keynesianism guaranteed uninhibited growth, said Crosland, the state could look forward to high tax revenues which could finance social reforms and social welfare plans. Instead of class struggle, we socialists would:
... turn our attention increasingly to other, and in the long run more important spheres – of personal freedom, happiness, and cultural endeavour, the cultivation of leisure, beauty, grace, gaiety, excitement...more open-air cafes, brighter and gayer streets at night, later closing-hours for public houses, more local repertory theatres, better and more hospitable hoteliers and restaurateurs ... more murals and pictures in public places, better designs for furniture and pottery and women’s clothes, statues in the centre of new housing estates, better designed street lamps and telephone kiosks, and so on ad infinitum. 
The theory of permanent arms economy explained that capitalism had not changed its spots, and that the reprieve from declining profit rates and the boom/slump cycle was only temporary. The fundamental contradiction between capital and labour had not disappeared. The employment effects of arms spending would decline once weapons production moved from being concentrated in the metal-bashing industries (engineering factories turning out lorries and simple tanks) to sophisticated, expensive weapons plants which employed fewer workers. The cost of arms spending might lead to stability at first but, because it was unevenly shared, would lead to ever greater instability in the future. So it was that Germany and Japan, with small military budgets, grew very fast and posed problems for Britain and the US, while Russia and its Eastern Bloc were thrown into turmoil, which has brought war back to the continent of Europe. Without a long term perspective of the breakdown of capitalism it would have been easy to have been drawn into the reformist road of Labour politics or bureaucratic trade unionism.
The theory of permanent arms economy took it for granted that the irrationality of capitalism did not lessen with its ageing. Capitalism, which in Marx’s words, was covered throughout its history in blood and mud, did not become more benevolent in old age. As a matter of fact the permanent arms economy is the most extreme expression of the horrors and barbarism of the system. The economic growth, a byproduct of the permanent arms economy, meant prosperity balancing on the cone of a nuclear warhead.
The troika – state capitalism, the permanent arms economy, and deflected permanent revolution – make a unity, a totality, grasping the changes in the situation of humanity after the Second World War. This is an affirmation of Trotskyism in general, while at the same time partially its negation. Marxism as a living theory must continue as it is, and change at the same time. However, the troika was not conceived as a unity and did not come into being in a flash. It was the result of several long explorations into economic, social and political developments in three portions of the globe: Russia and Eastern Europe, the advanced industrialised capitalist countries, and the Third World. The paths of research criss-crossed each other again and again. But it was only at the end of the process that the interrelationships between the different spheres of research became clear. Only at the top of a mountain can one see the relationship between the different footpaths designed to reach the summit and from the vantage point the analysis turns into a synthesis.
Once the old has been moved out of the way it is much easier to accept the new. The idea that the earth moves round the sun becomes quite convincing once the age-old common sense idea that the sun moves round the earth is rejected.
We have moved very much ahead with our story, for which the justification is that the critique of Trotsky’s theory has to be taken as one whole. It was a radical change in the theory, and was advanced slowly, through many doubts and real soul searching. However, it was not true that I did nothing but engage in study, in theoretical work.
Parallel to this activity I spent a marvellous year in Britain, engaged in talking to real ‘worker intellectuals’, or what Gramsci called ‘organic’ intellectuals of the working class. I learnt such a lot from them about real workers and their struggle. I went through a learning curve, not sharp but continuously upward. I did not jump up shouting, ‘Eureka!’ as I was not faced with a sharp turn like in my theoretical work. But it was a most enjoyable, most inspiring experience.
1*. A couple of incidents, quite tiny, happening at our meeting with the International Secretariat of the Fourth International, helped us become sceptical towards it. Incidents can play a general role when they throw light on the general issue, when one can ‘see a world in a grain of sand’.
When Chanie and I met J. Stuart (Sam Gordon), the American SWP member of the International Secretariat, he suggested to me that I stay in Paris so as to be able to help the subsequent congresses as they needed simultaneous translations. The fact that my linguistic prowess was not up to it was not the issue for me. What made me laugh was the clear picture I had of the last conference a few months earlier. At this conference a representative of our Palestinian group was present, and he wrote telling us that the total number of people present was just two dozen and that they all knew English except for one, who needed a French translator. Stuart had simply tried to impress us.
When we met Stuart he made us wait for him for nearly an hour, while he turned his back on us and went on typing. Had he asked us whether we minded, of course we would have said no. We were not in a terrible rush. But again, I believe he did this simply to impress.
Finally, he offered us cups of coffee with cream and sugar. At this time scarcity prevailed in France. A day earlier we had visited a relative of mine and his wife who had a young child, and they complained bitterly that they could not get hold of milk for the kid. And here we had cream and sugar. Was this also done to impress us?
1. Fourth International, April 1946.
2. Fourth International, June 1946.
3. This statement was made in November 1945. See J.P. Cannon, The Struggle for Socialism in the ‘American Century’ (New York 1977), p.200.
4. W. Reisner (ed.), Documents of the Fourth International (New York.1973), p.183.
5. Fourth International, June 1946.
7. International Socialism 1:12, Spring 1963.
8. T. Cliff, Perspectives for the Permanent War Economy, Socialist Review, March 1957, reprinted in T. Cliff, Neither Washington Nor Moscow (London 1982), pp.101-107.
9. T. Cliff, Fifty Years a Revolutionary, Socialist Review 100, 1987, pp.14-19.
10. A. Crosland, The Future of Socialism (London 1956), pp.520-522.
Last updated on 19.12.2004