The politics of the International Socialist Organisation and

Restoring the validity of the socialist project is not merely academic. The events of 1989-90 have been seen as the death of communism and socialism and the final triumph of Western capitalism.

The standing of Marxism and the whole socialist project has never been lower. It is not only the former supporters of the Eastern European regimes that have disappeared (in the case of the Communist Party of Australia), or faded (in the case of the Socialist Party of Australia); the left as a whole has suffered a malaise. Neither the IS nor the SWP (both from anti-bureaucratic traditions) prospered, although the IS had constantly argued that the Soviet regime had little to do with socialism.

This inability to gain from the fall of these regimes reflected in part their small size, which never approached that of the CPA, or even that of the smaller SPA. Both the CPA and the SPA equated socialism with the USSR. The IS and the SWP were also victim to the views of the popular press, which confirmed that what the readers saw in the USSR was socialism.

Secondly, despite the presence of many working-class people in the challenge to the bureaucracies in 1989-90, the working class marched behind other banners and there was no mass independent working-class response to events, nor has this yet evolved in the post-communist free-market states. This put back further any revival of the socialist alternative in the popular mind.

Are the IS or the SWP parties that we can expect to play an important role in the revival of the working class political activity and the winning of the workers to the socialist cause?

Concretely, this means that the working class must develop confidence in such a Marxist party. It must have faith that the party will tell them the truth; that the party can correctly identify the real social forces involved; can distinguish between rhetoric and the real interests being pursued; can perceive the long-term interests of the class and the way to achieve them. Most importantly, the working class needs a party that will not sacrifice its political independence to an alliance with its national capitalist class.

Lastly, in the era of imperialism and the global economy, where the owners of capital span continents, more than ever such a party must have an internationalist perspective: that is one which views the struggle between the classes as an international one.

Three basic Marxist criteria

We can state three fundamental guides to a Marxist party if it is to carry out the tasks of winning leadership of the working-class and the more immediate task of re-establishing the validity of socialism as a real alternative to capitalism after the fall of the bureaucratic states. For a Marxist party such criteria are not arbitrary, because they are central to Marxism itself.

Remembering Lenin's dictum: "Without revolutionary theory there can be no revolutionary movement"¹, what should distinguish a Marxist party in its efforts to understand and change the world is the materialist conception of history², which starts with the nature of the productive forces and the relationships that they determine between the classes and the struggle between classes, which was neatly summarised by Marx in his Preface to a Contribution to the Critique of Political Economy (1857).

Secondly, from Marx's dictum that the liberation of the working class must be achieved by the working class itself and from The Communist Manifesto of 1848 to The Civil War in France of 1871, written after the fall of the Paris Commune, that the needs of the class struggle require that the working class must have an independent voice³ and that no other class or social layer can substitute for it.

Thirdly, and flowing directly from this, is the Marxist conception of internationalism. It was the international contacts made during the course of the Polish insurrection of 1863 that led directly to the creation of the International Workers Association (The First International) in 1864, which proclaimed the need for "international proletarian solidarity"⁴ a feature repeatedly emphasised in Marx's Civil War in France.

When we turn to the Second International, established in 1889, it is the question of internationalism that was the source of contention, when in 1914 the vast majority of the parties voted for war credits in the interests of their own capitalist class. This was contrary to the antiwar resolutions passed only months before. The Bolshevik Party of Lenin was a notable exception. After the abandonment of internationalism in 1914, the parties of the Second International, the "labour parties", confirmed their nationalist perspective and their reconciliation with their own ruling classes. To Lenin, and the Third International of 1919, the concept of internationalism was central.⁵ The revolutionary wave that brought the Russian Revolution of 1917 quickly faded, as did the tentative grip of the Russian working class upon the newly created Soviet state. It was replaced in the 1920s by an emerging Soviet bureaucracy based on the CPSU and the Soviet state. Its leader was Stalin. The term Stalinism will be used to designate views that express the interests of this social layer, the Soviet bureaucracy.

The conservative nature of this new social layer was nowhere better demonstrated than in the theory of socialism in one country.⁶ This was a theory that cut off the Soviet workers from the world's working classes and from its dependence on revolution in the rest of the world.⁷ It was an inward-looking policy, which facilitated the growth of the bureaucracy and put workers' loyalty firstly to a national state that was building socialism in one country. Like all forms of nationalism "Soviet" nationalism bound oppressed and oppressor behind the same banner. It subordinated the interests of the working classes locally and internationally to the interest of a national bureaucracy.⁸ The critical point is that before Stalin, Marxists opposed popular fronts, however they were named, which subordinated the interests of the working class to those of another class or layer.⁹

So the perspective of the Marxists, namely that of the international working class, is inseparable from the need of the class to maintain its class independence. The abandonment of one is the abandonment of the other. The politics of socialism in one country were imposed on the world's Communist parties.¹⁰

Their politics were now directly related to the needs of national Soviet foreign policy as determined by a privileged bureaucratic layer.

Relating to the former USSR

In examining the politics of the IS and the SWP, it is their relationship to the former USSR that will be primarily examined. Both parties took as part of their orientation, a rejection of the USSR as a model of socialism, and their inspiration from the ideas of Leon Trotsky. In the case of the SWP it came from the international organisation of workers' parties called the Fourth International, established by Trotsky and others in 1938. Both parties agreed that Stalin represented a defeat of the worker's revolution, and that the resultant bureaucracy was neither revolutionary nor internationalist, but a counter-revolutionary layer anxious for a status quo relationship with imperialism (of which "peaceful coexistence" would be a prime example), which was put ahead of the international class struggle.

There the similarities ended. The IS believed that capitalism had been restored in the USSR and that it took the form of "state capitalism". A similar view had first been put by James Burnham and Max Schachtman in the debate with Leon Trotsky in the US SWP during 1939-40.

Trotsky, on the other hand, argued that the Soviet bureaucracy was a caste but not a new social class. He described the Soviet Union as a "degenerated workers' state".¹¹ This difference of designation was important. For the forebears of the IS, a social, political, and economic revolution was needed to overthrow state capitalism in the USSR. In contrast, Trotsky envisaged only a political revolution, which would remove the bureaucracy and restore working class control of the state without requiring a fundamental change to the property relations established by the October revolution. Trotsky further insisted on the unconditional defence of the Soviet Union in the event of imperialist attack, whereas Schachtman and Burnham argued for working-class neutrality. This was a stance the British IS repeated during the Korean War on the basis that both sides were capitalist. Finally, and most importantly for us, these differences between the IS and the Australian SWP were critical in their analysis of the events in the USSR, in the years 1985-91.

It will be argued that the IS position was not a Marxist response based on the historical materialist method of Marxism, but a moral and impressionist position¹² that was inadequate as a tool of analysis and which locked them into a position that left them ill-prepared for understanding the post-communist societies of the 1990s.

Notes to The need to restore the socialist project

1. V.I. Lenin What is to be Done? Foreign Languages Press, Peking, 1973, p 28. See also p 29, Lenin's elaboration: "we only wish to state that the role of vanguard fighter can be fulfilled only by a party that is guided by the most advanced theory."

2. This is Marx's description of his theory. The terms "dialectical materialism" and "historical materialism" which are more explanatory, were coined later. See Marx by David McLellan, Fontana, London 1975, p 38

3. See also Theses, Resolutions and Manifestos of the First Four Congresses of the Comintern. London, Pluto Press, 1980 p 396

4. Franz Mehring, Karl Marx, Allen and Unwin, London 1936, p 327

5. V.I. Lenin, What is to be Done? op cit, p 29, and Theses, Resolutions and Manifestos, op cit, p 124: "the emancipation of the workers is not a local, not a national, but an international question". See also The Communist Movement by Fernando Claudin, Penguin, 1970, p 46, and Founding the Communist International: Proceedings and Documents of the First Congress, Pathfinder Press, New York, 1987

6. The first statement of this new social layer was in the second edition of J. Stalin, Foundations of Leninism, 1924. This was a revision of the first edition of the same year, which had repeated the Bolshevik orthodoxy that the victory of socialism in the USSR depended upon revolution in the advanced countries. Fernando Claudin, op cit, p 71-72. For dozens of examples of Bolshevik orthodoxy see Robert Black, Stalinism in Britain, New Park, London, 1970. See also Leninism under Lenin by Marcel Liebman, Jonathan Cape, London, 1975, pp 360-61.

7. The historical context of the Soviet Union from 1923 on was one of isolation as the post-war revolutionary wave had passed. The tentative Soviet republics of Hungary and Austria had been defeated, and 1923 confirmed the failure of revolution in Germany. The need to defend the remaining citadel in the Soviet Union could hardly be denied. The defeat of the British 1926 General Strike and the Chinese revolutions of the late 1920s confirmed the pessimism about the imminent extension of the revolution.

8. F. Claudin, op cit, p 387 "the theory of socialism in one country can be stated as the subordination of revolutionary action in any part of the world to the interests of the Soviet state".

9. The popular front was a tactic pursued by Communist parties from 1934, after the victory of fascism in Germany. It was different to the united front, which was an alliance of working-class parties around limited working class demands. The popular front was an attempt to unite with sections of the bourgeoisie who opposed fascism on a purely liberal platform. Working-class demands were subordinated to achieving this alliance. The Comintern had seen the independence of the Communist parties in relation to the bourgeoisie and "their complete freedom of action" as "the most important historical achievement of the proletariat". See Theses, Resolutions and Manifestos op cit, p 396.

10. Claudin op cit, p 117-124; also Victor Serge, From Lenin to Stalin, Monad, New York, 1937, p 52. See Tom O'Lincoln Into the Mainstream, Stained Wattle Press, NSW, 1985 p 36.

11. Reproduced as In Defence of Marxism, Leon Trotsky, New Park, London, 1966. Andrew Milner argues that the "degenerated workers' state" formulation is based on the transitory, unstable nature of the Soviet system, which he claimed proved to be perpetual. The Road to St Kilda Pier, Westgate, NSW, Stained Wattle Press, 1984, p 86.

12. The term "impressionism" refers to a political method that makes judgements on the surface appearance of events rather than examining the social and economic foundations and history of the thing studied. A non-IS example, the conclusion that Stalin and Hitler were essentially the same because both their countries adopted totalitarian practices, ignores completely the different class relationships and recent history of both countries.

Origins of the International Socialists

The International Socialists, established around 1972, have held the position of state capitalism on the Soviet Union since at least 1974.¹ Although the "bureaucratic collectivist" designation was still used as late as 1976,² the theory adopted by the IS was that of Tony Cliff of the British SWP in his book State Capitalism in Russia.

The state capitalist position of the Australian IS on the former Soviet states, and the connection with its mentor, the British SWP, has remained unchanged since that time. It is what immediately identifies the IS as a separate organisation on the far left, and what historically has separated the state capitalist parties from the Fourth International³ parties throughout the world, which continued to argue that the Soviet Union remained a degenerated workers state.⁴

The debate between these two formulations has continued until this day.⁵ The International Socialists, as they became known from 1977, have never wavered from or changed their state capitalist viewpoint and they believe the events in Eastern Europe have confirmed their analysis completely. They have left the theoretical defence of the theory to their British counterparts, but it has remained the fundamental thread in their analysis, which is applied equally to the USSR, China, the post-war East European states and Cuba, and by July 1989 Burma, Algeria and Iraq.⁶

The state capitalist theory

Prior to the crisis in the bureaucratic regimes, the validity of the state capitalist theory was not tested by events. It had undeniable propaganda advantages for the IS. It allowed it to argue for socialism without embracing Soviet-style regimes as socialist, without the explanatory problems the Fourth International had in designating regimes as "degenerated workers' states" when they were conspicuous by their absence of workers' power, but which the FI still qualified as "workers" states, however degenerate. An additional propaganda advantage allowed the IS to portray both the Western capitalist class, and the bureaucracies, as united against "socialism from below" which, taking its cue from Marx's observation that the liberation of the working class must be achieved by the workers themselves, looks solely to the self-activity of the working-class. This "socialism from below" had to fit into a state capitalist framework where Eastern Europe was concerned.

In assessing the IS, we must therefore deal with the policies of state capitalism. Is state capitalism a Marxist response to the developments in Eastern Europe? Does it correctly identify the principal contradictions in the bureaucratic state? But more to the point, what are the political results of this analysis and what does it tell us about the political methodology of the IS?

Quite apart from the obvious absence of working-class control of industry, growing inequalities, and the exclusion of the wording class from political power, the IS had solid grounds in Marxism for denying the label socialist to the Soviet-style states.⁷

Rather than repeat the detailed debate between the British SWP theoreticians and Ernest Mandel of the Fourth International, we can pose queries about the state capitalist position based on Marx's brief summary of historical materialism in his Preface to the Critique of Political Economy.⁸

The IS has argued consistently that the bureaucracy based on the Soviet party and the state came to power with the victory of Stalin after Lenin's death in 1924, and against which Lenin himself had begun to fight in collaboration with Trotsky.⁹ This bureaucracy began as a broker between the rival classes in Russia and the outside imperialist powers and then gradually began to rule in its own interests with its own theory, Stalin's theory of socialism in one country. The bureaucracy became, by the late 1920s, a new state capitalist ruling class living off the surplus value produced by the Soviet working class.¹⁰

According to the Preface, it is necessary if a new class is to establish new productive relationships that dominate society, for there to be, in Marx's words, "an epoch of social revolution". Where and when in Russia did such a revolution occur that put a "new" class in power? We are left to suppose that it happened gradually. It was a strange capitalist class indeed that, in its first five-year plan, attacked private property in land, and collectivised agriculture. What did occur was the separation of the Soviet state and the Communist Party from the working class that had made the revolution in 1917.¹¹ We can trace the bureaucratisation of the Soviet regime at the state level, but note that this did not require the destruction of the collective nationalisations, most of which took place as early as 1918 and 1919.¹² It was therefore a political, but not a social or economic counter-revolution.

More surprisingly the IS seems never to have been able to tell us exactly when this counter-revolution took place. We are left with references to the late 1920s, although mostly it is equated with the triumph of the Stalinist faction of the Communist Party without specifying any particular time. This lack of precision, in what is critical to their case historically, leaves open the suggestion that the new state capitalist class achieved power, not in a revolutionary way, but gradually over a period of years. This opens up the possibility of the peaceful, or gradual, transition from one class society to another, which entirely contradicts Marxist ideas and would no doubt be rejected by the IS.¹³

At first sight all the usual elements of capitalism appeared to be missing in the Soviet Union, namely capital,¹⁴ capitalists¹⁵ and commodities.¹⁶

Instead of the market allocating capital on the basis of profitability, the bureaucratic plan imposes a command economy, with its quotas and norms, in which the working class has no say. This is not socialism, but it is also not capitalism; nor were the lack of profits, and the often grossly over-manned factories and enterprises, temporary or recent, which were endemic to bureaucratic mismanagement over decades.¹⁷

One would also expect that if the Soviet bureaucracy were a capitalist class, then, in line with every other powerful capitalist class, it would act on the international arena to extract profit from overseas investments, exploiting Third World labour, etc. But, on the contrary, the Soviet economic links with its "colonies" consisted of Soviet subsidies for flagging Eastern European economies. The political consequence of the withdrawal of Soviet aid to Cuba (and Vietnam and Mongolia), shows clearly in which direction the funds were flowing, as Cuba's economy has been in acute crisis ever since.¹⁸

The state monopoly of foreign trade, plus the small part foreign trade has played in the Soviet economy in the past, has meant that market forces have been denied an obvious point of entry into the Russian economy.

With all these factors arguing against the state capitalist position, the IS has only one consistent explanation for why Russia is a capitalist country, which has appeared in many issues of the IS paper, formerly The Battler, now The Socialist. After using a very arguable interpretation of Frederick Engels, concerning Bismarck, Robert Bollard in 1992 argued: "What is important is who controls production and to what ends. In Russia a vast bureaucratic layer has controlled those means since it decisively entrenched itself in power during Stalin's first Five Year Plan. It used that control to build up the Soviet economy at the expense of the mass of the population—the workers and peasants—and gained wealth and privilege to itself. It competed on the world stage, attempting to match the US military—a competition which indirectly brought the pressure of the world market into the autarchic Russian economy. This surely is capitalism."¹⁹

This represents a new definition of class. It confuses the political regime of a society with economically dominating class in that society. Capitalism as an economic system has had a variety of political regimes, from parliamentary democracy to fascism, in which the capitalist class held little or no political power in the state, yet the country remained capitalist. Could it be argued that such a state, in which the working class seized state power and destroyed the capitalist class, might cede state power to a bureaucracy in conditions of backwardness and isolation, but still retain the collectivist nature of the productive forces?

Ultimately the test must be for Marxists: does the economy "generalise commodity production" or does it, as did the Soviet Union, restrain it? This will identify the class nature of the society and the context in which the nature of the state will be decided. It is clear that the working-class was not in control of state power from Stalin's time on, but did this make the USSR a capitalist country?

Apart from superficial similarities with the United States, the core IS argument lies in the pressure of military competition. The steps to Bollard's conclusion were more clearly set out in the IS paper. It argues that the surplus produced by Russian workers was needed to produce armaments to match the Americans. "This drive to accumulate capital in order to compete with its rivals is nothing less than the logic of capitalism" argues the IS. The whole of Russia is likened to a giant business, "Russia Inc".²⁰

Apart from an apparent confusion between competition and exchange value, the Soviet military need to compete militarily with the US, which took about 13 per cent of GNP in 1988²¹, clearly has not been reflected in any competition between Soviet and US washing machines and cars, nor has it ensured that the Soviet Union address the gross overstaffing and inefficiency of its factories.²²

The IS use of supra-historical categories, which have no necessary connection with the relations of production prevailing in a particular country, is a method that must be queried.
The logic appears to be:

Workers have no power under capitalism.

Workers have no power under the bureaucrats.

Therefore the bureaucrats must be capitalist.

One suspects that the demands of propaganda work are the driving force behind this piece of argument.²³

There is no analytical dynamic in the theory that prevents IS propaganda extending the analogies endlessly. The Soviet state control of the economy, in order to focus resources on armaments, is compared without reservation to Japan and Germany in both world wars.²⁴

Robert Bollard reveals the inherent weakness in his Socialist Review article when he concludes: "revolutionaries must reject any idea that the Stalinist regimes were in any way preferable to western capitalism" (my emphasis). This is the substitution of a moral judgment for an objective class analysis. One can argue whether such regimes are preferable or not; the point is, are they the same? A judgment based on moral preferences is a poor analytical tool.

When the IS confronts opponents of its views, it is strongest when the opponent takes their stand on the defence of the Soviet regimes as socialist, and in the case of the SWP/DSP, which saw the Gorbachev reforms as a socialist renewal of Soviet society. The IS criterion of workers' power, "socialism from below", allows it to embarrass the SWP/DSP, which was effectively identifying the socialist cause with Gorbachev's attempted reforms. Gorbachev's increasingly authoritarian stance and the failure of perestroika made it easy for the IS to argue that this was not the road back to workers' power in the USSR.

When confronting views that see the USSR as neither socialist nor capitalist, but rather a highly unstable and contradictory formation that was transitional in its character, capable of allowing the restoration of capitalism, but also vulnerable to a political revolution by the working class against the bureaucracy, the IS is incapable of breaking out of its moralistic dichotomy. It is surprising that the IS so rarely addresses the degenerated workers state scenario, given that it is the principal rival view that does not defend the USSR as being socialist. It is not until September 1989²⁵ that The Socialist addresses the problem. The IS argues that Trotsky was "forced" to argue that the working class had to make the revolution against "their" state to restore workers' control. This, according to Mick Armstrong, was based on Trotsky's misconception that workers' power was determined by the nationalisation of the economy. In any event, no evidence is offered. The IS returns to the subject²⁶ in a polemic against the SWP/DSP and its support for the Gorbachev leadership as the agent of democratic socialist renewal in the USSR.

However, the IS lumps the SWP/DSP position together with the degenerated workers' state theory of Trotsky and the Fourth International, which explicitly rejected the role of Gorbachev as having anything to do with the restoration of working-class power in the USSR.²⁷

The sympathy of the IS for the working class is never in doubt, but they remove the dialectical and scientific heart from Marxism, which sees change as proceeding from contradiction, and replace it with a moral stance that views the world in fixed, stable categories. To the IS, either it is full socialism from below, the self-emancipation of the working class, or it fails to meet the criteria for socialism anywhere. Furthermore, it is morally bad and therefore there is no difference between the capitalist societies of the West and the allegedly state capitalist societies of the East.

State capitalism and the fall of the bureaucracy

The fall of the Communist party regimes in Eastern Europe in 1989-90 was a test of the various theories of the nature of these regimes, and the political method behind these theories. Despite the demonstrations and the strikes, particularly the Soviet miners'²⁸ strikes of June and July 1989, and the large number of workers on the street (except in Poland and Hungary) during 1989,²⁹ the workers presented no coherent program of working-class opposition to the advocates of the market, and certainly nothing like a "revolution from below" or the political working-class revolution envisaged by Leon Trotsky.

The IS, for its part, lauded each expression of working class revolt and the theory and method of state capitalism was said to have been completely confirmed.³⁰

To the IS the crisis in the East was just part of the special crisis of the capitalist system. Like the West, the East was affected by the falling rate of profit, but again, arguing by analogy, we are told that this was expressed by falling growth rates.³¹ State capitalism and the free market are seen as two sides of the same coin.³²

The IS saw no essential difference between the pre-1989 regimes in Eastern Europe and the free-market regimes that followed them. It was only a "step sideways", according to lan Rintoul.³³ The IS may acknowledge that neither option is a realisation of working-class interests, but it eliminates any understanding that the working class, although it has no interest in defending the Communist parties and their rule, does have a stake in defending certain protections, or even gains, by the working class under that system. Job security, subsidised food and housing and a stable currency are a few of the obvious ones.

The IS response also underestimated the significance of glasnost, which it saw only as a propaganda adjunct to perestroika, but glasnost had more important effects. It allowed political criticism of the political monopoly of the CPSU and its privileges. It saw the emergence of independent working-class activity (the miners' strikes for example) and strengthened demands for independence by the oppressed nationalities. The rapid decay of bureaucratic rule proceeded to the point where the ruling "class" in Hungary could, in October 1989, vote to dissolve itself without waiting for an onslaught of popular revolt.³⁴

This apparently unique behaviour by a supposed ruling class, in abdicating power, showed that unlike the capitalist class in the West, the bureaucracy rested only upon a brittle form of rule through the political monopoly of the Communist Party. Once this went, as it did in early 1990, the days of the bureaucracy were numbered. It had no other long-term options. Compare this with upheavals in the West, which can bring enormous change in the form of political rule without the economic and social dominance of capital being disturbed.³⁵ This is the point: that the dominance of the bureaucracy flowed almost exclusively from its political control, and not from its economic and social dominance of society. Such reasoning was not considered by the IS.³⁶

The inadequacy of the state capitalist position to give any understanding of the events of 1989-91 flows from its determination throughout its history to see no difference between capitalism and "state capitalism". The events of 1989-90 and since, particularly in terms of the living standards of the working class, would appear to contradict this view.

Even as late as April 1989 the IS was stating that the crisis in Eastern Europe was just part of the special crisis of the capitalist system, and no different to the crises in China and Chile (sic),³⁷ although it notes some differences, such as the mass of unprofitable enterprises that would not have survived in the West, but which, until the fall of Gorbachev, were a fact of Soviet life.³⁸ It elsewhere acknowledged that profitability was not a factor in production in the USSR.³⁹ The IS clearly sees such differences, with their obvious effect on the working class, as of little significance because to do so would be to recognise the increasingly obvious differences between state capitalism and capitalism. This does not imply, as the IS suggests, a preference for either alternative.

Ian Rintoul, in an article titled Is Capitalism Being Restored in the Soviet Union?⁴⁰ shows the dilemma the IS is facing. According to Rintoul, the introduction of the market into the Soviet Union does not mean a restoration of capitalism because capitalism run by the state was introduced in the late 1920s. To Rintoul, what matters "is not the property forms but the relations of production—what portion the worker has in the process of production".

Given that the IS is arguing that the position of the worker remains the same, its stance of opposing privatisation of the Eastern European economies is never explained. "But socialist opposition to privatisation is not based on opposing capitalist restoration," he concludes.

"The command economy of the East and the market economy of the West are not fundamentally counterpoised economic systems, but rather different aspects of development of the same system. Both produce resistance from workers and therein lies the hope for the future."

The theory makes it difficult to see on what basis the workers would oppose the sackings, the removal of subsidies on daily goods, or the closure of unprofitable enterprises, with resultant unemployment. The IS quotes a Harvard study that envisages 38 million workers unemployed as a result of the successful introduction of the market.⁴¹ "Different aspects of development of the same system … different sides of the same rotten coin" explained nothing. "Hope for the future" is a moral stance and is no substitute for a Marxist analysis that can supply a program to fight for the political leadership of the working class today in Eastern Europe.⁴²

Despite the politics of the IS, the actual differences between the command economies of the East and free-market capitalism inevitably emerge.

David Lockwood, in China, Marx, Mao or the Market? in examining the new free-market economic zones of China, reveals conditions substantially worse than in the rest of China. Here, Lockwood notes, the money-based class system has produced conditions "not out of place in Victorian England based on the narrowest class interest", seeing workers as "the object of market forces and not the subject of history". In June 1990, Lockwood notes the emergence in China of a wealthy new class outside the party hierarchy, which is producing tensions with party control.⁴³

The point was not lost on other IS members. Diane Fields, in a letter, chastises Lockwood for describing the emerging rich as if they were members of a separate class to those who dominate Chinese society. Despite noting that the emerging rich want the stability of law rather than the whim of the bureaucracy, Fields sees the new rich as a section of the same wealthy class that makes up the party hierarchy: that is, a capitalist class.⁴⁴ But clearly, one wing of this class has political power and the other does not, so the criterion of class offered contradicts the IS insistence that the nature of the state capitalist class flows from its control of the state. Again, apart from the call to the Soviet working class to take matters into their own hands, and applauding their role in thwarting the August 1991 attempted coup in the USSR⁴⁵, the IS was unable to make much sense of the differences between the wings of the bureaucracy.

The Socialist saw the coup as an attempt by a section of the bureaucracy to shift politics to the right and was carried out, in the "interests of the ruling class".⁴⁶ As David Lockwood pointed out in a letter,⁴⁷ this does not help to distinguish between the coup forces and the anti-coup forces. Having labelled both the state bureaucrats and the free marketers as different forms of the same thing, their opposition to the coup, or the role of the working class strikes against the coup, is not clear. The IS says only that the workers opposed a "very sharp shift to the right" because it threatened the recent rights gained.⁴⁸

David Lockwood, criticising the IS response to the coup attempt, points out that the programs of the State Emergency Committee on one side, and Yeltsin and Gorbachev on the other, were quite different: "and that it would be a serious mistake to dismiss the coup as simply an exercise in the ruling class changing its outward appearances. Just as in the East European revolutions of 1989-90 there is more to it than that. Something has changed in these societies. One wing of the ruling class has decisively defeated the other. The victors intend to proceed with a program of restructuring which will necessarily destroy the state as we have come to understand it."⁴⁹

Ian Rintoul defends⁵⁰ the IS line by arguing that the decisions within the bureaucracy reflect the economic strength of the various republics, and not the programmatic differences listed by Lockwood as involving preservation of the Soviet Union, whether the introduction of the market could be achieved within the Union or under the auspices of the party. Rintoul further suggests that little has changed in the USSR, because the USSR remains capitalist and the Soviet ruling class remains the ruling class.

This is an effective denial of the differences between the command economy and Western capitalism, which leaves the working class ill-prepared for the enormous sacrifices that the full-blown introduction of the market outside any state control will bring. These will inevitably bear heaviest on the working class in terms of jobs and living standards—a point one suspects is not lost on David Lockwood, who in a letter in the next issue,⁵¹ argues for a recognition of the differences between state capitalism and Western capitalism. Although he describes it as "useful to see state capitalism as a continuum stretching … from the local electricity board to all the way through to the Gosplan", he diplomatically suggests a cut-off point is needed to distinguish the two systems.

Of course, as a member of the IS he has to work within the state capitalist theoretical framework. His proposed solution is that the most important cut-off point for "full-blown state capitalism" is the fact "that military competition takes precedence over everything else since the Soviet economy was too weak to compete in any other way". There is no doubt that military expenditure represented an intolerable burden on the Soviet economy and hastened its crisis, but this also meant identifying the crises, not as the waste and inefficiency of the bureaucratic command system, but a purely external pressure imposed by imperialism.⁵²

Having raised the inadequacies of the state capitalist approach, David Lockwood, committed as he is to state capitalist dogmas, is unable to find a way out.

One last aspect of the fall of communism, which illustrates the essential differences between western capitalism and the bureaucracies, was the Gulf War of 1991. The collapse of the regimes in the East gave an unparalleled freedom to the United States and contributed to the isolation of the Iraqi regime.

To the workers and peasants of Iraq and Cuba, the historical differences were by no means academic, and yet IS does not address the reasons that now allowed first Bush and then Clinton to impose, at will, a New World Order. Such a query is obscured by the IS insistence on the essential similarity between free-market capitalism and the bureaucratic states of the East.

Local practice and perspectives

The Socialist

It is hard to trace accurately from the IS press its involvement in various activities. Phil Ilton has given a detailed summary of IS activity in the period up to 1976. IS membership was said to be 70 at the end of 1977, rising to 100 in 1980; it is said to be 220 in 1993.⁵³ Branches were established in Sydney and Brisbane, and temporarily elsewhere.

Attempts to build rank and file groups in the unions continued throughout the 1970s through a policy of industrialisation — sending students into factories. This policy collapsed by 1976, although the organisation was not without success according to Ilton⁵⁴, particularly in the public sector.⁵⁵ Even at this early stage, IS involvement in student politics was evident in their particiapation in the struggle against assessment and police intervention at Monash. Typical also, was the IS disruption of lectures by the racist theorists Eysenck and Jensen at the universities.⁵⁶

By the early 1980s this rank-and-file work seemed to have substantially receded with the admission that the IS had no real influence in the working class.⁵⁷ This, it was said, was related to the declining militancy of the working class, particularly once the Labor Party took power in 1983.⁵⁸ From 1982 to 1984 the IS began to retreat from activity in the working-class movement, even from the multi-class politics of the People for Nuclear Disarmament. In 1984 the IS conference formally accepted the new position of "propagandism", which it stated had been in place since 1982.

They argued their new position in The Socialist and in a pamphlet by full-timer Mick Armstrong, titled What is a Propaganda Group?⁵⁹ This argued that IS influence in the outside world and the working class was limited, and therefore IS had to act primarily as a propaganda group in order to win people to socialist ideas in preparation for the next period of radicalisation; to seek out socialists and convince them to join the IS.⁶⁰

Until "there is an extreme radicalisation amongst masses of workers" the IS argued, it will be impossible to take strides towards a mass revolutionary party in Australia. In the past, they said that agitational activity was designed to produce sympathisers and influence in the working class, as a prelude to recruiting workers, but now the downturn had put an end to such notions and the IS was more realistic.⁶¹

Yet the IS had always stood for "revolution from below", which in the Australian context means rank-and-file activism, led by socialists or the Leninist party, in which the workers, by engaging in struggle, through their experiences gained an understanding of the nature of class society, their place in it and the need for a revolutionary struggle against it. Thus, for Marxists, it is not abstract alternatives or pure propaganda that will accelerate this process, but the actual praxis of the class engaged in struggle.

Given that the IS agreed that the only class objectively capable of challenging the capitalist system was the working class,⁶² the move to propagandism was a move away from this perspective. The downturn in the class struggle, mechanically equated with strike days by IS, does not alter the perspective of activity in the class that must dominate a Marxist party's strategy. The frustration of a demoralised class and small numbers are understandable, but the turn to propaganda alone is the adoption of a quite different perspective. The method at work here has its links with the shibboleth of state capitalism, because the method is the same: ie impressionism.

Just as the IS proceeds from the surface similarities between capitalism and the Eastern European regimes to deduce they are the same, so the IS, when faced with a downturn in working-class industrial activity, impressionistically abandons the working class, as if such a downturn in workers' militancy was, by its nature, fundamental. In place of the workers, there was a turn to students. The IS conceded that groups like students could never substitute for the self-activity of the working class.⁶³ Students and youth, it was said, were more interested in the concepts of socialism than in specific industrial disputes and, perhaps most importantly for the IS, they were said to be more rapidly politicised than workers, and to present a greater opportunity for recruitment.⁶⁴

There is no doubt that trade union militancy declined once the Prices and Incomes Accord between the Labor government and the ACTU began to take effect, and that the opportunities for activism declined. Although it was perhaps isolated, a Marxist party would have remained in the class organisations with the perspective of laying the groundwork for a rise in activity as circumstances changed; instead, the IS adapted to the downturn in militancy (under the banner of "propagandism"), by turning away from the working class to students. This meant arguing socialist ideas as a "counter against the prevailing pessimism", according to Phil Griffith, who seems to share this pessimism.⁶⁵

This is an understandable mood in reaction to the downturn, but not a materialist analysis that is built on the understanding that the working class has material interests that are hostile to capital and that in the longer term the increasing polarisation of wealth in Australia that developed in the 1980s could only make that hostility more likely. In short, the IS, because of their impressionism, had lost faith in the Australian working class.

Students and selling its paper became the main areas of IS activity. In 1990, when the IS reunited with Socialist Action to become the ISO, they reaffirmed this approach with an emphasis on building the organisation.⁶⁶

This emphasis on building the organisation and increasing sales of the paper were the only measure of the success, or otherwise, of the propaganda group, and demonstrations became the high point of political activities. The latter included forays on the Melbourne Club and the Stock Exchange, demonstrations against the AIDEX⁶⁷ military exhibition, the Bush⁶⁸ visit, student protest against the tertiary tax, and the most recent Ausstudy demonstration in 1992, as a result of which five IS members faced charges. During the Bush visit to Australia, The Socialist could enthuse: "This was a celebration of rebellion — a rejection of everything rotten about Keating and Bush's world".⁶⁹

It is also a substitute for activity in the working class. On page 12 of the same issue, Mick Armstrong, in an article titled Why Mass Action is Central in Turning Anger into Victory, argues for the militancy of the anti-AIDEX demonstrations as a key part of a way forward for "militant mass action that can inspire workers in their own power to change the world". This is a quite different order of things to the self-emancipation of the working class, or revolution from below. The demonstration takes place outside the working class.

For the IS the demonstration becomes a symbolic enactment, or recreation, of the class struggle in society itself. This is not to deny either the need for Marxists to be involved in such protests, or in the legitimacy of demonstrations, but the IS sees this related to the working-class struggle as "inspiration". Inspiration from outside the working class must, of necessity, have much of a moral stance about it, a protest against symbols of Australian capitalism, like the sale of arms or the visit of a US president in a war mood.

In April 1992, the new politics of the IS were confirmed with an article on students as a catalyst to revolution.⁷⁰ Just as the IS had impressionistically reacted to the downturn in working-class militancy by abandoning agitation for propaganda, so it did when, in the aftertmath of the election of the Kennett Liberal government in Victoria in October 1992, a rally of 150,000 people was held in Melbourne on November 10, 1992. The IS response to this upsurge was revealing. One article, The Return of Class by Sandra Bloodworth,⁷¹ hailed the working class as the only force in society capable of inspiring a fightback, and without irony mocks "most on the left" who, during the 1980s, had "turned their backs on the concerns of workers to take up an array of cross-class ideas such as feminism, green politics, lifestylism"; while Phil Griffiths, in the same issue, seemed totally surprised: "Who could have imagined the speed and scale of the turn-around in Melbourne".

A party that had remained with its orientation in the working class would have not only imagined it, but been part of its development. That its influence would have been tiny cannot be doubted, but its members would have been well-placed to take advantage of any chance for influence and growth. As it is, IS is condemned to the role of cheer squad.

The history of IS demonstrates the importance of the materialist method of Marx and Engels. What appears on the surface a semantic difference on the Soviet Union, underlies a different method of political analysis, which Trotsky locates as petty bourgeois and which, like a scratch that turns to gangrene, infects every area of political activity.

Notes to Origins of the ISO

1. The IS began in Melbourne as the Marxist Workers Group in December 1971. For a detailed history up to 1978 see History of the Socialist Workers Action Group by Phil Ilton. IS Publications Melbourne, 1984, pp.1-6.

2. The Battler, No 26, September 29, 1976

3. An international organisation of workers' parties established by Leon Trotsky in 1938. Its founding document is the Transitional Program of the Fourth International.

4. The point of the debate between Trotsky and James Burnham and Max Shachtman was Trotsky's insistence on unconditional defence of the Soviet Union against imperialism despite there being a simultaneous need for the working class to politically overthrow the bureaucracy. Although Burnham and Shachtman were theoretically bureaucratic collectivists rather than state capitalists, the difference with Trotsky was the same.

5. See The SWP and Eastern Europe, by Phil Hearse, Socialist Outlook (UK), No 27, October 1990, p 26. For an IS reply see Labor College Review, No 17, Melbourne, Victorian Labor College, June 1992. See also State Capitalism versus Marxism by Dave Windsor, International, No 2, 1974, p 6.

6. The Battler, July 1989, No 277, p 12.

7. According to Marx, socialism must include the abolition of commodity production and the gradual disappearance of money, the abolition of trade in consumer goods at least within the commune, control of freely associated producers over the product of their labour and over their conditions, and lastly the control by the people over the mode of their material relations (which implies the absence of a repressive state apparatus). In other words, socialism remains an unattained goal not least in the former Soviet Union. Marx Critique of the Gotha Program in The First International and After, London, Harmondsworth, 1974, pp 345-6. See also Power and Money: A Marxist Theory of the Bureaucracy, Ernest Mandel, Verso, London, 1992, especially chapter 1.

8. Preface to the Critique of Political Economy, Marx and Engels Selected Works, Moscow, 1950 p 327.

9. See in particular Moshe Lewin, Lenin's Last Struggle, London, Wildwood House, 1969.

10. The Battler, No 7, June 21, 1975, What About Russia, by Tom O'Lincoin p 7. Also No 26, September 29, 1976; No 51, May 20, 1978, p 4; No 40, November 22, 1977 and Nos 187, 188, 176, 206.

11. The Socialist No 235, April 1990, p 10. There can be no doubt about the representativity of the Bolsheviks in October 1917, or the scope of the mass movement before, during, and after the October Revolution. For eyewitness accounts see John Reed,Ten Days That Shook the World, Penguin; N.N. Sukhanov, The Russian Revolution, 1917, Vol II, Oxford, 1955, pp.528 and pp.579-585. Martor-Dan Geschichte der Russisi Socialdennnmokrate. Berlin, 1926, pp 300-301. Sheila Fitzpatrick, The Russian Revolution, 1917-32, p 57 and p 60. Deitrich Geyer, The Bolshevik Insurrection in Petrograd in Revolutionary Russia, edited by R. Pipes, Harvard, 1968, p.164. Ernest Mandel, October 1917: Coup d'etat or Socialist Revolution? Notebooks (IIRE No 17-18 , 1992, pp 8-12. Mandel cites many sources.

12. Mandel, Power and Money, op cit. chapter 1.

13. Engels and Marx remained revolutionaries to the end, although David McLellan cites some quotations from the late Marx that suggest Marx did not rule out a peaceful transformation in the US and UK as a result of universal suffrage. See David McLellan, The Thought of Karl Marx, Fontana p 228. Some question whether or not Engels believed in his last years in the possibility of a peaceful transformation flow from deletions made to his preface to the 1895 edition of Marx's Class Struggles in France by the Social Democratic Party of Germany, against which Engels protested. See for details Engels' Letters to Kautsky by Leon Trotsky, New York, Merit, July 1969.

14. Yeltsin's appeals today to the capitalist world for capital for the Soviet economy show the lack of free or fixed capital, which the economy needs to function in the world market. The IS appears to confuse the accumulation of capital with the accumulation of things in the USSR, in particular military equipment. See The Socialist No l76, June 8, 1985, p 8, and No 221, January 1989, p 12.

15. Not only is there a lack of capital but also a lack of capitalists in Eastern Europe. The dumping of many Eastern European bureaucrats in 1989-90, which abruptly ended their "capitalist status" without seizing their property, showed what was plain to see: that the real landlords and capitalists had been expropriated decades earlier. The absence of a stock exchange, private property and company law are problems that free-market investors have recently had to face.

16. Marx, Capital, Vol. 1, p 1, describes the capitalist mode of production as "an immense accumulation of commodities" and elsewhere defines capitalism as generalised commodity production. Yet the absence of commodities has been the most glaring failure of USSR-style bureaucratic societies. The periodic crises of overproduction of commodities that occur under capitalism are not found in bureaucratic societies. Tony Cliff himself considers that there is no commodity exchange in the USSR as far as the means of production is concerned, and goes further in saying that labour power is not a commodity in the USSR because only one buyer of labour power exists, namely the state. Further on, Cliff admits that investment is not determined by the capitalist law of the tendential decline of the rate of profit. Tony Cliff, State Capitalism in Russia, London, 1955, p 158, pp 172-3.

17. In fact an important consequence of the entry of the free market into these countries is the number of industries that would become open to the market, but which would produce little or no profit. In the case of the Soviet Union this could mean up to 30 million Soviet workers would be sacked and a third of the East German work force would be dismissed. According to Harvard figures quoted in The Socialist, No 256, September 1991, p 8, it was the exclusion of the market that enabled industry to be built in the first place and that prevented since then any modernisation processes that would eliminate jobs or cut workers' living standards. Poland has shown already that this is the result of the entry of the free market into such economies, and the first casualties have been jobs and living standards for many workers.

18. Everything Within the Revolution, Thomas C. Dalton, Oxford, Westview, 1993, p. 136.

19. The Left and Gorbachev, Robert Bollard. Socialist Review, No 5, Autumn 1992, pp 57-58, IS Publications, Melbourne.

20. The Socialist, No 214, July 1988, p 819. See also Tony Cliff, p 161.

21. Cited in The Socialist No 221 , January 1989, p 12. See also Mandel, Power and Money, op cit.

22. Ken Tarbuck has also pointed out that any real workers' state may need to produce comparable arms if it is faced with external attack. Ken Tarbuck, State Capitalism: The Clock Without a Spring, International, London, 1970. Would this need then mean that the law of value of capitalism would be introduced into the workers' state which, by virtue of this, would become a state capitalist regime? This would mean that a workers' state would not be possible while one capitalist state remained intact. Given that all states throughout history have applied part of their social surplus for military defence, or in the IS's terms, competed with their rivals, what is there in military competition that is specifically capitalist? The cost of rearming can hasten the decline of a system, but it does not define that society.

23. John Minns, The Socialist, No 187, May 1986, p 9. Or when Diane Fields argues: "USSR is capitalist because workers sell their labour power to those who control the means of production. (The Socialist , No 255, August 1991, p 13. See also No 250, April 1991, p 8; No 233, January 1990, p 7; No 248, March 1991, p 5; No 247, December 15, 1991, p 5). Elsewhere Gorbachev's Perestroika is said to be similar to Paul Keating's restructuring (The Socialist, No 214, July 1988, p 8-9). The writer notes, however, that in Australia unprofitable businesses would be closed down, and that in Russia this does not happen. The various non-Russian national states in the USSR are equated with Western colonies despite the quite different economic relationship involved. (The Socialist, No 214, July 1988, pp 8-9). Again based on similar appearances, the strong accumulation undertaken by the Stalin regime in the 1930s is equated with the policies of the Meiji restoration in late 19th century Japan although the domestic and international political situation of each was quite different. On the Meiji restoration see Theda Skoepol, States and Social Revolutions, London, CV Press, 1979, pp 100-104.

24. The author could have also included Napoleon Bonaparte and the Roman Empire using such a criterion. See The Socialist, No 221, January 1989, p 12.

25. The Socialist, No 229, September 1989, p 5.

26. The Socialist, No 252, June 1991, p 13.

27. The Significance of Gorbachev, Ernest Mandel, FI Publications, International Marxist Review, reprinted Labor College Review, No 8, March 1990, Melbourne.

28. Hedrick Smith, The New Russians, New York, Random House, 1990, pp 433-498.

29. Judy Blatt, The End of Communist Rule in Eastern Europe. Government and Opposition Vol 26, No 3, 1991 pp.368-390. Blatt details the limited role played by the workers in the fall of the bureaucracies.

30. The Socialist, No 248, March 1, 1991, p 5.

31 The Socialist, No 233, January 1990, p 6.

32. The Socialist, No 255, August 23, 1991, p 12. See also 252, July 1991.

33. The Socialist, No 257, October 1991, p 13.

34. As the IS itself observed, only in Romania did the dictatorships make any attempt to save themselves. The Socialist, No 238, July 1990, p 9. See also Judy Blatt, op cit.

35. One need only take the case of France, where capital has ruled under a presidential system, under emperors (the Bonapartes), a fascist government (during World War II) and a wide range of parliamentary regimes from limited property franchise and a wide range of parliamentary regimes (during the rule of Louis Phillippe) to universal franchise. The last century in Germany, Spain and Italy show a similar diversity in forms of capitalist rule.

36. When the CPSU lost its leading role in the Soviet Union in February 1990, the IS saw fit to limit its explanation of this historic retreat by a reference to a demonstration of 200,000 against the monopoly position of the CP. The Socialist, No 234, January 1990, p 61.

37. The Socialist, No 227, July 1989.

38. The Socialist, No 233, January 1990, p 6.

39. The Socialist, No 255, August 23, 1991, p 13.

40. The Socialist, No 257, October 1991, p 13.

41. Cited in The Socialist, No 256, September 1991, p 8.

42. The Socialist, No 227, July 1989, p 12.

43. The Socialist, No 237, June 1990, p 4.

44. The Socialist, No 239, August 1990, p 15.

45. The Socialist, No 256, September 1991, p 2.

46. The Socialist, No 255, August 1991, p 2.

47. The Socialist, No 257, October 1991, p 14.

48. The Socialist, No 255, August 1991, p 3.

49. Letter to The Socialist, No 257, October 1991, p 14.

50. The Socialist, November 1991, p 11.

51. Letter to The Socialist, No 259, December 1991, p 11.

52. One might ask did not this burden in part contribute to the decline of the US in its competition with rival imperialist powers? Does it mean that state capitalism was part and parcel of the US system? And what of indisputably capitalist nations like Germany or Japan in the period of huge rearmament prior to the world wars? Did they become state capitalist societies? No longer is the internal class structure the criterion of the nature of the society but an arbitrary cut-off point. Armaments may be a factor in the decline of a nation's power but they are no definition of a social system itself.

53. According to full-timer Mick Armstrong.

54. Ilton, op cit, p 54.

55. See also The Battler, Nos. 11-19.

56. The Battler, No 39, October 1, 1977.

57. The Socialist, No 160, May 12, 1984.

58. The Socialist, No 191, January 1987, p 10.

59. IS Publication, 1986, Melbourne.

60. Crisis and the IS Strategy, The Socialist, No 160, May 12, 1984.

61. Building in a Period of Retreat, The Socialist, No 191, January 1987, p 10.

62. What Class are Students? The Socialist, No 224, April 1989, p 4.

63. The Socialist, No 191, January 1987, p. 10.

64. Rather than judging the success or otherwise of the party in terms of its influence on the class in the actual course of the class struggle, the IS, while recognising that the students were less significant than the workers in offering a challenge to the plans of the Labor govemment, saw the students' action in the fee campaign "as more important to us." (The Socialist, No 216, August-September, 1988, p 151) because it was easier to intervene in the fees campaign and "we stand to get more out of it". See also The Socialist, No 223, January 1990, What is to be Done, by Phil Griffiths.

65. The Socialist, No 219, November 1988, p 9.

66. The Socialist, No 233, January 1990. See also The Socialist, No 235, April 1990, p 8.

67. IS tactics at the AIDEX demonstration were debated with the SWP/DSP, which objected to the super-militancy of the IS, but the SWP proposals included the possible arrest of people like the IS. The Socialist, No 263, April 1992, p 12.

68. The Socialist reported the anti-Bush demonstration earned the IS nine new members, all between 17 and 22, six of whom were students. The Socialist, No 260, January 1992, p 3.

69. The Socialist, No 260, January 1992, p 7.

70. The Socialist, No 263, April 1992, p 9. Also The Socialist No 265, June 1992, p 9.

71. The Socialist, No 271, December 1992, p 3.

Part II: The politics of the Democratic Socialist Party

First published in Labor Review, No 19, 1994

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The politics of the International Socialist Organisation and the Democratic Socialist Party

Part I. The political method of the International Socialist Organisation

The need to restore the socialist project