6. Stabilisation¶
Core Argument¶
This chapter traces the arc of German capitalism from the revolutionary defeat of 1923 through to the eve of the 1929 crash, arguing that the period of so-called stabilisation was in fact a fragile, borrowed prosperity that laid the groundwork for catastrophe. The core narrative thrust is that the stabilisation of German capitalism was purchased at the price of the political demoralisation of the German and international working class, and that this demoralisation was exploited and deepened by the Stalinist bureaucracy in the USSR and its instruments in the Comintern.
The chapter opens with the consequences of the 1923 German defeat: it provided the political premise for capitalist stabilisation, dashed the hopes of the Russian masses, and strengthened the grip of the growing Soviet bureaucracy. Stalin’s theory of “Socialism in one country” is presented as a direct reflection of the bureaucracy’s desire for a stable existence, formulated on the basis of these setbacks. The economic recovery is then detailed: the Dawes Plan, which saw American imperialism pour colossal sums into rebuilding German industry, provided a loan of 5 billion dollars. Output rose from 55 percent of 1913 levels in 1923 to 122 percent by 1927. Yet this was a period of “borrowed prosperity”, with foreign indebtedness reaching half the national income. The chapter notes that despite increased trade union activity in 1924—13.2 million days lost through strikes and 22.6 million through lockouts—union membership declined sharply from 7.8 million in 1922 to 4.6 million in 1924, as state arbitration was increasingly used to settle disputes.
The political consequences are traced through a series of key events. The 1925 presidential election saw the SPD withdraw its candidate Otto Braun in favour of the reactionary Catholic Centre Party’s Dr Wilhelm Marx, a policy of the “lesser evil” that the chapter condemns as having dire consequences. This allowed the militarist Hindenburg to be elected by a small margin. The successful 1926 referendum campaign for the expropriation of the Hohenzollern nobility, which won 14.5 million votes, is presented as the most successful joint action of the workers’ parties since the Kapp putsch. By the 1928 general election, the Nazi Party was in the doldrums with only 12 seats, while the SPD and KPD together won 42 percent of Reichstag seats. Yet the SPD-led “Grand Coalition” pursued pro-capitalist policies, causing widespread disillusionment.
The chapter’s central polemic is directed against the Stalinist Comintern’s “Third Period” policy, adopted at the Sixth World Congress in August 1928. This policy erroneously declared that capitalist stability had ended and a new period of wars and revolutions had opened, when in fact the boom did not peak until April 1929. The Stalinists denounced social democrats as “social fascists” and the main enemy, ordering the break with official trade unions and the reestablishment of “Red” unions. In Germany, the KPD under Thälmann declared that with the election of the Müller administration, fascism had triumphed. The chapter argues this ultraleftism isolated the KPD from the broad labour movement, turning it into a party of the unemployed. The brutal police repression of the 1929 May Day demonstrations in Berlin, ordered by the SPD police president, is presented as the logical outcome of this fratricidal policy, with 25 workers killed.
The chapter concludes with the 1929 crash, which proved a catastrophe for German capitalism. Exports slumped from 13 billion marks in 1929 to 5 billion by 1933. Unemployment soared from just over one million to three million within six months. The “Grand Coalition” collapsed, the last Weimar government to rest on a parliamentary majority. A decisive section of the German bourgeoisie now recognised that the only solution was fascist reaction, seeking revenge for the concessions they had been forced to make in 1918. The chapter draws on the theoretical framework of Trotsky’s Left Opposition, arguing that the Stalinist bureaucracy’s subordination of the Comintern to its own interests, combined with the false “Third Period” policy, prepared the way for absolute catastrophe, particularly in Germany.