Socialist Viewpoint

“The Death Agony of Capitalism and the Tasks of the Fourth International” is also known as the Transitional Program for Socialist Revolution, or the Transitional Program for short. It was written by Leon Trotsky in 1938 and originally published in the May-June 1938 edition of Bulletin of the Opposition as a discussion document for the Founding Congress of the Fourth International (World Party of Socialist Revolution). The following copy is based on the 1981 printing of the Transitional Program by Labor Publications, and checked against the original Russian by Martin Sayles.

The Transitional Program is essentially a codification and amplification of the lessons of the first successful socialist revolution, which was carried through by the workers of Czarist Russia in October 1917 under the leadership of the Bolshevik Party of V. I. Lenin and Leon Trotsky.

Central to the Transitional Program is the Marxist analysis of capitalist economy and its fundamental contradictions. These are today swiftly reaching a critical stage which is unlike any that have occurred since the Great Depression of the 1930s. That worldwide catastrophe was only brought to an end by war production for World War II.

Today, for the first time since the end of the second World War, the three major sectors of the capitalist world—one dominated by the United States, another dominated by Japan, and a third dominated by Western Europe—are sinking steadily into a major crisis of over-production that is engulfing the entire capitalist world.

The current crisis actually began in Japan at the end of a period of rapid economic expansion that extended through most of the 1980s. The steadily deepening stagnation beginning at the end of that decade continues to the present day.

While Japan stagnated, the United States, starting in 1992, also experienced an economic boom that lasted until the spring of 2000. Today, the American economy languishes in the netherworld between a boom that has ended but has not yet resulted in a classic bust.

And now, Europe is also sliding into a recession precipitated by the effects of the deepening crisis of overproduction in Japan and the United States. Meanwhile, the rest of the world, dependent largely on the economic stability of the three imperialist sectors of the world economy had begun to feel the adverse effects of the global capitalist decline as early as 1997. In Southeast Asia, the crisis took the form of a sharp economic decline that triggered a chain of collapsing currencies that spread to Russia and then to Latin America and threatened to destabilize the economies of the rest of the world including the United States, Europe and China—and further destabilize Japan.

This confluence of economic decline embracing the three major sectors of global capitalism is what is really new. Such a global downturn has not re-occurred since the bottom fell out of the world economy in 1929. The Great Depression that followed was brought to an end by the second imperialist World War that began in Europe in September 1939.

Then, near the end of World War II the imperialist bloc, soon to emerge as the victors, met in Bretton Woods in 1944 to establish a complex financial, economic and monetary mechanism to prevent, or at least postpone indefinitely another Great Depression.

While the boom-bust cycles of capitalist production could not be eliminated, the mechanism erected at Bretton Woods succeeded in softening and limiting the cycles of economic expansion and contraction for more than half a century. The many recessions experienced at different times by major sectors of the global capitalist economy since the end of the Second World War, however, were kept within local bounds and were relatively short-lived.

The mechanism established in Bretton Woods thus served to maintain the equilibrium of global capitalism as a whole. The key innovation introduced at that time was the gradual separation of the global monetary system from its historic base in gold. Instead, through various devices, the relative values of the world’s currencies were measured against each other rather than in an objective standard such as gold, the most perfect of all money commodities.

That permitted an unprecedented extension of credit that provided a means by which capitalism was able to borrow its way out of recessions. In this way, world capitalism has gone without a major economic crisis for over half a century—a period of time far exceeding any before in the history of capitalism.

However, the price that has to be paid—since there is “no free lunch,” as capitalists like to remind us—is a mounting debt incurred by all countries as each borrowed its way out of the periodic cycles of capitalist production of boom that always ended in a bust. But although governments tried paying down the debt accumulated by borrowing to buffer the periodic busts during the periods of economic boom, the tendency is for total global indebtedness to mount since bankers and other capitalist lenders can be counted on to demand payment of the going rate of interest on their loans.

Thus, like all things, this stabilizing mechanism based on a vastly expanded system of credit is also foredoomed to come to an end.

That helps explain why Japan which has been printing paper currency at an accelerated rate for the last decade is now facing the consequences of actually borrowing or simply printing trillions of yen in their so far vain attempt to jumpstart their foundering economy. While rampant deficit spending has been proportionally reducing the value of every yen in circulation (whether borrowed or simply issued by government printing presses), however, its full effect has so far been kept largely hidden.

The falling values of currencies are hidden in two basic ways: by the general fall in absolute values of the world’s currencies which tend to float downward in tandem due to the generalized growth in indebtedness; and by the joint purchase of yen by Japan’s strongest imperialist competitors when its collapse appears imminent,.

Japan’s competitors, of course, are not motivated by altruism. They are compelled to take these extraordinary measures to prevent the collapse of the yen because it would likely trigger a collapse of the entire world monetary system.

Nevertheless, this drain on Japanese resources, without having revived its stagnant economy, has already bankrupted most of its financial institutions. Meanwhile, the Japanese government itself is indebted to the tune of 130 percent of its gross domestic product (about six trillion US dollars). Consequently, the interest that Japan must pay its lenders adds substantially to what some economists call its “Mt. Fuji debt.”

Sooner or later—assuming there is no solution to the current crisis—a mere rumor from a credible source that the country was on the verge of defaulting on its debt could precipitate a run on the Japanese currency that could bring its value down to a fraction of its present value relative to the world of currencies.

Such a calamity in Japan would send a destructive shock wave that could sink the world economy as a whole, ending in something even worse than a 1930s-style Great Depression. That is, a combined crisis of overproduction, massive unemployment and raging inflation! Meanwhile, the drop in US trade last month, with imports falling 2.2 percent and exports sinking by 2 percent, the sharpest fall in the value of US trade since November 1992, contributes to the fears of the most sophisticated of capitalism’s economic experts.

That takes us to one of the central transitional demands advanced and elucidated in the Transitional Program that is appropriate for today but will become immeasurably more urgent in the coming period of global capitalist crisis.

Minimum, maximum and transitional demands

The foregoing description of the current state of world capitalism and its trajectory was necessary for understanding what the world was like when the Transitional Program was written. And while the masses have been lulled into the delusion that such a calamitous scourge is ruled out, the most perceptive of capitalism’s serious economists are fully aware that the laws of capitalism are still in full effect and that the threat of another 1929-style Depression is all too real.

Trotsky, writing in the depths of that catastrophe gets to the heart of the methodology of the Transitional Program when he deals with the severe problems of unemployment and inflation affecting great masses of workers at that time. It will also serve to help explain what is meant by the term “transitional demands” as opposed to “minimum” and “maximum” demands. He writes:

Under the menace of its own disintegration, the proletariat cannot permit the transformation of an increasing section of the workers into chronically unemployed paupers, living off the slops of a crumbling society. The right to employment is the only serious right left to the worker in a society based upon exploitation. This right today is left to the worker in a society based upon exploitation. This right today is being shorn from him at every step. Against unemployment, “structural” as well as “conjunctural,” the time is ripe to advance along with the slogan of public works, the slogan of a sliding scale of working hours. Trade unions and other mass organizations should bind the workers and the unemployed together in the solidarity of mutual responsibility. On this basis all the work on hand would then be divided among all existing workers in accordance with how the extent of the working week is defined. The average wage of every worker remains the same as it was under the old working week. Wages, under a strictly guaranteed minimum, would follow the movement of prices. It is impossible to accept any other program for the present catastrophic period.

What is missing from the so-called minimum and maximum demands conceived by the international socialist movement prior to the theoretical conquests learned by the Bolsheviks from the Russian Socialist Revolution, is the organic connection between shorter and longer-term demands.

Minimum, or immediate demands, are demands such as for the 8-hour day and public works. They are designed to mitigate the material effects of mass unemployment on the working class. Maximum demands, on the other hand, are those that add up to the socialist program of the revolution. Trotsky explains that an organic connection between today’s immediate reforms like the shorter workday without a reduction in a week’s pay, and the ultimate goal of the workers’ struggles is vitally necessary. That it’s necessary to help the masses find a “bridge between present demands and the socialist program of the revolution. This bridge should include a system of transitional demands, stemming from today’s conditions and from today’s consciousness of wide layers of the working class and unalterably leading to one final conclusion: the conquest of power by the proletariat.”

The point being that there is more to the struggle to defend the living standards of the workers than just that, as important as that is. It is even more important to utilize such struggles to raise mass consciousness to the point where they gain the confidence that they can not only win the day-to-day battles between workers and bosses but that they can win the war and end capitalist exploitation and oppression for all time.

But we will let Trotsky show in much greater clarity and detail how the bridge between current consciousness and mass revolutionary consciousness can be built based on the experience of the Bolsheviks in leading the workers in Russia to the first and most far-reaching socialist revolution in history in the following pages of the Transitional Program itself.

—Nat Weinstein