David North
The Workers League and the Founding of the Socialist Equality Party

The Historical Setting

Ten years since the split in the International Committee

As we meet this this weekend, we are approaching a very important anniversary: the tenth anniversary of the ICFI’s split with the opportunists of the Workers Revolutionary Party.

In the course of the fight against Healy, Banda and Slaughter, we frequently noted that all the great struggles within the Fourth International were bound up with profound changes in the world political situation. The faction fight of 1939-40 developed against the backdrop of the beginning of World War II. The split of 1953 came only months after the death of Stalin, the East German uprising and the beginning of what was to be the protracted death agony of the Stalinist regime. The theoretical principles defended by James P. Cannon and the other orthodox Trotskyists who founded the International Committee were to be practically vindicated only three years later with the eruption of the Hungarian Revolution.

The struggle within the International Committee between 1982 and 1986 anticipated the historic events which have changed, literally, the political map of the globe during the past decade. The criticisms made by the Workers League were to be directly vindicated by events which followed rapidly on the heels of the split.

There were, in essence, three interrelated issues that were raised in the struggle with the WRP: (1) the role of Stalinism; (2) the role of social democracy; and (3) the role of bourgeois nationalism. In the decade prior to the split the WRP had turned back to Pabloism in its assessment of the political role of these three dominant forces within the working class. To each of these forces, or at least to sections of them, the WRP attributed the possibility of a revolutionary role. Lenin’s theoretical legacy was distorted and reinterpreted to justify the adaptation of the WRP to these forces. It was declared politically illegal to assert, on the basis of scientific analysis, verified again and again by historical experiences, that these tendencies functioned as political instruments of imperialism within the workers movement.

The events of the past decade have demonstrated irrefutably the bankruptcy of Healy’s political line, and, for that matter, of the entire Deutscher-Pabloite perspective of the bureaucracy’s revolutionary potential. The International Committee’s insistence on the unalterably counterrevolutionary character of Stalinism has found its incontestable confirmation in the collapse of the Soviet state, which was the product not of its overthrow by an external force, but of the conscious actions of the bureaucracy. Nearly 60 years ago Trotsky warned that were capitalist relations to be reestablished in the Soviet Union, “a bourgeois restoration would probably have to clean out fewer people than a revolutionary party.” The accuracy of that prediction has been demonstrated by the political physiognomy of the former Soviet Union. The principal personnel of the Russian regime and all its leading parties consist, for the most part, of individuals who occupied comfortable posts within one or another section of the old Soviet bureaucracy and its associated nomenclature.

As for social democracy, it, too, has suffered a devastating political rout If this process has lacked the drama of the Stalinist catastrophe, it is because the pretensions of social democracy were far more modest: the parties of the Second International did not claim to represent an anti-capitalist alternative. Moreover, the process of degeneration was so protracted that the failures of social democracy were never attended by an atmosphere of exceptional tension and crisis. Even in its death agony, social democracy has maintained an attitude of passive indifference.

All over the world, the reformist utopia of a humanitarian capitalism has been doused with cold water. In country after country, the reformist parties and trade unions have gone from defeat to defeat and have endured massive losses in membership. In power or out of power, these parties and organizations have devoted themselves to only one task: the stifling of all working class resistance to the offensive of capital against the working class. The records of the NDP in Canada, the Labor Party in Britain, the Socialist Party in France, the Socialist Party in Italy, the Socialist Party in Spain, the Social Democratic Party of Germany, the Social Democratic Party of Sweden, the Socialist Party in Japan and the Labor Party in

Australia (to name only the most prominent) bring to mind, once again, words written by Trotsky more than 60 years ago: “The present crisis that is convulsing capitalism obliged Social Democracy to sacrifice the fruits achieved after protracted economic and political struggles and thus reduce the German workers to the level of existence of their fathers, grandfathers and great-grandfathers.”

Finally, we come to the role of bourgeois nationalism. In the early 1960s the Socialist Labour League had, in its writings on Cuba and Algeria, defended and developed the classical Marxist-Trotskyist analysis of the role of bourgeois nationalism. In opposition to the fashionable theories of the day, the SLL insisted that the nationalist movements, despite their radical anti-imperialist rhetoric, were not legitimate and viable representatives of the aspirations of the oppressed masses. In the 1970s, however, the SLL abandoned its principled positions and became ardent admirers of the petty-bourgeois nationalists, from Nkomo, Mugabe and Mandela in Africa to Gaddafi and Arafat in the Middle East.

An assessment of the historical role of bourgeois nationalism requires only that one compare the present activities of the national movements with the claims that they were making as recently as a decade ago. Arafat, to use his own words, continues his humiliating political striptease. The would-be liberator of Palestine has become the chief policeman of Gaza. Nelson Mandela has assumed responsibility for the defense of capitalist interests in South Africa. The list of such “betrayals” is almost endless, except that the word “betrayal” is not really appropriate. For the present policies of these leaders developed organically out of the objective character of the nationalist movements that they led, and the disastrous consequences of their policies were entirely predictable. In a more profound sense, the term “betrayal” applies to those opportunists who utilized Marxist phraseology to provide political cover for the bourgeois nationalists.

The end of the postwar era

For an extended historical period, the parties and organizations that could be defined as Stalinist, social democratic or bourgeois nationalist were in the leadership of hundreds of millions of people. In one form or another, with varying degrees of militancy and/or demagogy, these movements identified themselves with and appealed to the elementary social discontent and aspirations of the working masses. They claimed to stand for the overthrow, radical transformation, or at the very least, gradual reform of the capitalistic system.

Such claims are no longer made. All these organizations accept and believe in the triumph of capitalism. Those who come late to Thatcher come hardest. Given the universal character of the transformation that has occurred in the political agendas of these organizations, it is not possible to explain this process on the basis of their individual failings or the unworthy character of their leaders. We must root the political transformation in objective changes in the political economy and process of production of world capitalism.

Of course, Stalinism, social democracy and bourgeois nationalism each has its own specific origin and history. None of these tendencies, moreover, represents a homogeneous formation. Nevertheless, the influence of these organizations represented definite political relations that arose out of the Second World War and which were essential to the equilibrium of capitalism for an entire historical period after 1945.

The term “postwar” designated and defined an entire historical era. ft signified more than a simple fact of historical chronology. The term expressed the obvious fact that the vast and complex structure of international politics and economics was a direct product of the outcome of World War ll.

World capitalism was, in a fundamental sense, resurrected in 1945. The direct instrument of this resurrection was the vast industrial and financial power of the United States. The indirect instrument of this resurrection was Stalinism, which utilized the material resources and prestige of the Soviet Union to disarm and betray the international working class.

In the broadest historic terms, it was not only the world war that ended in 1945. The Second World War itself was the climax of the greatest economic, social and political breakdown in world history. For some 31 years, since the outbreak of World War I in August 1914, the capitalist world had been convulsed by wars, revolutions and a breakdown of the entire mechanism of capitalist production. The restoration of this equilibrium, after 31 years of upheaval, came only after more than 100 million lives had been sacrificed, in the trenches and on the battlefields of two world wars, in the cities subjected to saturation bombings and, of course, in the gas chambers of the Nazis’ death camps.

When the Second World War came to an end, the only capitalist power in the world that remained economically dynamic was the United States.

The old European capitalist powers, England included, were all exhausted. The world that took shape in the closing months of the war and its aftermath was largely the product of political and financial institutions created by American imperialism. It must be immediately added that these institutions would not have had the opportunity to take root and establish a new equilibrium without the crucial assistance provided by the Soviet Union and the Stalinist parties.

In Germany, for example, the collapse of the Third Reich gave rise to the formation of workers committees that seized control of the factories. In some cases, these committees had driven out SS units that had been instructed to destroy the plants. These committees, like the one formed by Krupp workers, often advanced the demand that the industries be expropriated without compensation. The US military authorities were hostile to these committees; but the dampening of political militancy required the services of the KPD, the German Communist Party. Its program stated that economic reconstruction was to take place on the principle of the “completely unrestricted development of free trade and private entrepreneurial initiative on the basis of private property.” As a matter of fact, in certain instances the CDU went further than the KPD, actually calling for the nationalization of “key monopoly industries.”

The same pattern was followed throughout Europe. In January 1947, Palmiro Togliatti boasted in the Constituent Assembly that there were less strikes in Italy than in most other European countries:

“In the last years no political strike has taken place in Italy.... This is a country where the unions have signed a wage truce, a pact which is unique in the history of the working class movement, because it determines a maximum wage, not a minimum one. This is really the striking and absurd feature of the economic situation in which we live: it is the working class and the unions who are giving the best example and are taking all the necessary steps to preserve the discipline of production, order and social peace” (Capitalism Since 1945 [Blackwell, 1984], p. 55).

The most destructive aspect of Stalinism was its role in politically disorienting the working class. The glorification of the economic achievements of the Soviet Union, aside from the exaggerations, distortions and lies of Stalinist propaganda, vulgarized socialism into a mere nation-building exercise, separated from its essential foundations in the international struggle of the working class. This especially benefited the national bourgeoisie of the colonial and backward countries, which sought to legitimize its own capitalist program by portraying it as a variety of the “Soviet model.” At the same time, workers in the advanced countries, to the extent that this model was associated with police-state dictatorship and chronic shortages, were alienated from socialism.

While politically and ideologically subordinating the working class to imperialism, the Soviet Union also provided a vital rationale for the political and economic arrangements upon which the hegemonic role of the United States was based. The specter of the so-called Soviet threat provided support for the political and economic hegemony of the United States and thereby suppressed inter-imperialist antagonisms.

The postwar system and class relations

The United States emerged from the war as the undisputed master of the affairs of world capitalism, its unchallenged industrial leader and the principal source of international liquidity. The value of all other currencies was expressed in terms of dollars, convertible into gold at the price of $35 to an ounce. Four D-marks, 360 yen and 4.32 Sfr. “equaled” one greenback. All international transactions were calculated and completed in dollars. For nearly a quarter century, world trade and international finance were entirely regulated by the organizations and mechanisms created on the basis of the 1944 conference at Bretton Woods.

But the very success of Bretton Woods in rebuilding capitalism gradually undermined that system. The rebuilding of European and Japanese capitalism weakened the dominance of the United States. The shifting trade payments and the balance of trade called into question the role of the dollar. The end of dollar-gold convertibility in August 1971 marked the beginning of a protracted breakdown of the postwar economic equilibrium, which had been based on the preeminent role of the United States.

Between 1973 and 1982, American and world capitalism was gripped by deepening economic crisis: first the eruption of inflation signaled by the “oil shocks” of 1973 and 1979, along with it “stagflation” and finally deep recession. The depth and gravity of this crisis necessitated a fundamental change in the social policy of the bourgeoisie, from a policy of compromise to one of increasingly ruthless confrontation.

In all capitalist countries, but especially in the United States and Britain, the 1970s and early 1980s were marked by deepening class struggle. The technological revolution, whose scientific foundations were developing throughout the twentieth century, above all in the development of quantum mechanics, was driven by a fundamental economic imperative: to counteract the pressure on profits. This was inextricably linked to a conscious sociopolitical aim: the weakening of the working class. I make this point to stress that the technological revolution of the last two decades was not only, in some abstract sense, a purely scientific phenomenon. Of course, the process of scientific progress is not simply a response to immediate political or economic needs and interests. But it is also wrong to entirely abstract scientific developments, technological innovations or economic processes in general from the living interaction of social classes.

Certainly the experiences of the 1930s alerted the American bourgeoisie to the social danger that was posed by vast industrial complexes in heavily-populated urban centers. Both the dispersion of industries from urban centers to more rural areas and the automation of industrial processes, which became fairly widespread in the 1950s, reflected the social concerns of the bourgeoisie.

The growing economic pressures of the 1970s, associated with increasingly bitter class conflict, accelerated the process of technological transformation. The following fact should be considered: the very section of the working class, both in Britain and the United States, that had for decades stood as the main pillar of resistance to the power of capital, the coal miners, has since the late 1970s all but ceased to exist as a significant industrial force. In Britain the NUM, which humiliated the Tories in 1972 and then forced them from office in 1974, was utterly defeated in the 1984 strike and has since been reduced to a few thousand members. The same fate, more or less, has befallen the United Mine Workers here in the United States.

The fate of the miners in Britain and the United States was only one of the most dramatic consequences of the offensive launched by capital against labor at the end of the 1970s. When Paul Volcker was appointed chairman of the Federal Reserve and immediately raised interest rates to unprecedented levels, the Workers League warned that this marked the beginning of a general offensive by the bourgeoisie against the working class. We were certainly correct. The recession of 1979-82 marked a turning point in international class relations.

The offensive of capital

There was, first of all, a change in the governments of Britain and the United States. Thatcher came to power in May 1979. Volcker came to power, without an election, in July 1979 and introduced economic policies which guaranteed the formal defeat of Carter in November 1980. Even before the election, as the Workers League warned at the time, the impending change was indicated in the pronouncements of the leading business journals. We noted the frequent use of a new term, “reindustrialization,” and called attention to an article that had appeared in Business Week in June 1980:

“Reindustrialization will require sweeping changes in basic institutions, in the framework for economic policy making, and in the way the major actors on the economic scene—business, labor, government and minorities—think about what they put into the economy and what they get out of it From these changes must come a new social contract between these groups, based on a specific recognition of what each must contribute to accelerating economic growth and what each can expect to receive.”

The change in domestic social relations was accompanied by a shift in international policy. From the signing of the Nuclear Test Ban Treaty in 1963 to the initially successful SALT negotiations, the United States had pursued in relation to the USSR a policy that, for a time, was known as “detente.” This phase also came to an end in 1979. The invasion of Afghanistan was utilized as a pretext to adopt a far more hostile attitude toward the Soviet Union. The SALT II Treaty was never ratified by the Senate. With the election of Reagan, the United States adopted a policy of belligerent confrontation toward the Soviet Union. If a number of recently published memoirs are to believed, elements within the Soviet bureaucracy were seriously concerned that the United States was contemplating military action against the USSR. At the very least, the massive military spending undertaken by the Reagan administration was intended to enormously increase the pressure on the limited budget of the Soviet Union.

The shift in international policy was also indicated in the Middle East and Latin America. The Malvinas War, the Israeli invasion of Lebanon and the expulsion of the PLO from Beirut, the dirty wars conducted by the United States in Nicaragua, El Salvador and Guatemala, not to mention the invasion of Grenada—all these developments reflected the change from compromise to confrontation.

In their own way, Stalinism, social democracy and bourgeois nationalism quickly adapted themselves to the new situation. The German social democracy surrendered power to the CDU. Mitterand, who had come to power in 1981 promising radical reform, repudiated his program after the French bourse fired a few shots across his bow. In Australia, the Hawke government introduced policies far more reactionary than the Liberals had dared to attempt. In the Soviet Union, the enfeebled state of the Stalinist gerontocracy was the most glaring expression of the passivity and disorientation of the entire regime. As for the bourgeois nationalists, they began to rein in their demands as soon as it became clear that the crisis of Stalinism deprived them of their most important patron.

The crisis of imperialism

The international bourgeoisie realized great successes in its attack on the working class; but it could not control the process of globalization that has undermined the entire economic foundation of postwar capitalist stability. In 1989-90 the International Committee was virtually alone in insisting that the breakdown of the Stalinist regimes in Eastern Europe was a harbinger of a world crisis of historic dimensions.

Today, no serious observer of the international scene would deny that the general equilibrium of the old post-World War II order has broken down. The present conflicts among the imperialist powers—first of all, between the United States and Japan—foreshadow new upheavals as the struggle for markets, precious resources and sources of cheap labor intensifies. The policy of the Clinton administration reflects an emerging consensus within significant sections of the bourgeoisie that the United States must utilize whatever pressure necessary to preserve its preeminent position. In World Policy Journal, Ronald Steel writes:

“The collapse of the Soviet Union meant the collapse of communism as an animating faith of the discontented and the ambitious. Market capitalism is everywhere triumphant But this is less a victory for the United States than celebrants seem to imagine. Capitalism is a game that every nation can play. Like the Cold War, it is a game of power. Some nations play that game as well as the United States does—or even better. In real politics—unlike in economic theory—-it is relative gains that count: it is not how much the total pie grows, but whose slice is getting larger. The American slice is not growing; that of its economic competitors (read ‘former Cold War allies’) is. Having triumphed over communism, the United States is now falling behind in the trade wars of capitalism.

“The American public cannot be expected to continue to permit Cold War allies such as Japan and South Korea, or anti-Soviet partners such as China, to decimate America’s own industrial base in the name of free world internationalism. A nation that is unwilling or incapable of protecting its own workers, because it is bound to intellectual abstractions such as open markets and internationalism, is a nation doomed to internal strife and second-class status. An enlightened American nationalism will put a higher priority on the protection of American jobs than on helping corporations move abroad in pursuit of cheap labor. It will also stop providing free military protection for its economic competitors under the illusion that this preserves America’s self-declared status as a ‘superpower.’ ‘Unpaid security guard’ would be a more accurate term.

“Internationalism should not be viewed, like charity, as a badge of good intentions. Nor is it an absolute good in itself. It is simply a method to advance the interests of people organized into national societies. Where it does this it will be embraced. Where it does not, it will, quite reasonably, be rejected.”

The postwar order is clearly in a shambles. Within this disequilibrium, or, more precisely, at the heart of it, is the frenetic drive of global investors to lay hold of their share of a declining international pool of surplus value, which is the outcome of the relentless drive by the bourgeoisie to eliminate ever wider sections of the working class from the process of production. The daily upheavals on the global currency, bond, equity and commodity markets record the relentless pursuit of surplus value by the financial insomniacs. The scale of these transactions is staggering: the global currency markets trade over $1.1 trillion a day. Each week they shift wealth equal to the GDP of the United States.