Socialist Equality Party (Australia)
The Historical and International Foundations of the Socialist Equality Party (Australia)

The Great Depression and the CPA’s “Third Period” line

66. The Wall Street crash of October 1929 marked the beginning of the greatest economic crisis in the history of capitalism. Within the space of three years world trade slumped by two-thirds, industrial production by half. Millions were thrown out of work as mass unemployment afflicted every major capitalist country, with the unemployment rate rising to one-third in the US and Germany, the two major industrial economies. The Great Depression was, and remains, the most powerful refutation of all the nostrums of the defenders of the private profit system, who maintain that it is the highest, and, indeed, the only possible form of economic and social organisation. Capitalism was only able to survive this catastrophe, and the horrors to which it gave rise—fascism, social misery and ultimately war—because of the betrayals of the social democratic and Stalinist leaderships of the working class.

67. The onset of the Depression had a rapid political impact in Germany, in the September 1930 election. From just 12 members in the Reichstag, the Nazi party now had more than 100. Opposing the Comintern’s “Third Period” line, which designated the social democrats as “social fascists”, Trotsky called for the development of a united front to meet the Nazi threat. Warning that the Nazis’ aim was to destroy the entire workers’ movement, Trotsky wrote, in his first statement after the election: “Assuming a defensive position means a policy of closing ranks with the majority of the German working class and forming a united front with the Social Democratic and nonparty workers against the fascist threat. Denying this threat, belittling it, failing to take it seriously is the greatest crime that can be committed today against the proletarian revolution in Germany. What will the Communist Party ‘defend’? The Weimar Constitution? No, we will leave that task to Brandler. The Communist Party must call for the defence of those material and moral positions which the working class has managed to win in the German state. This most directly concerns the fate of the workers’ political organisations, trade unions, newspapers, printing plants, clubs, libraries, etc. Communist workers must say to their Social Democratic counterparts: ‘The policies of our parties are irreconcilably opposed; but if the fascists come tonight to wreck your organisation’s hall, we will come running, arms in hand, to help you. Will you promise us that if our organisation is threatened you will rush to our aid?’ This is the quintessence of our policy in the present period. All agitation must be pitched in this key.”[1]

68. The Stalinists’ Third Period line, which sounded very left wing and radical, was actually a form of extreme passivity, summed up in the slogan of the German Communist Party “After Hitler, our turn.” It abandoned the struggle to expose the treacherous social democratic leaders and replaced the struggle to win the millions of workers still in their ranks with a bureaucratic ultimatum. It split the most powerful workers’ movement in the world, opening the way for the coming to power of the Nazis in January 1933.

69. In Australia, the Third Period line resulted in the CPA’s abstention from any struggle to expose the Labor Party, right at the point where broad layers of workers were beginning to engage in increasingly militant struggles. In 1929, after falling to almost nothing two years before, strike activity reached two-thirds of the level it had attained in 1919, the year of the great post-war upsurge. This movement of the working class was expressed politically in the landslide election of the Scullin Labor government in the October 1929 federal election. The conservative prime minister, Stanley Bruce, lost his seat. The coming to power of the Labor government—the first to hold office since the beginning of World War I—in a situation of deepening global crisis, created new conditions for exposing the Laborites and winning the most militant and class-conscious workers to the CPA. Denouncing the Labor Party, its members and supporters, as “social fascists” signified a total abandonment of such a struggle.

70. The Third Period line was brought into the CPA through an ECCI intervention. An open letter was sent to the central committee of the party, criticising its decision to support the ALP in the election. This decision, the letter claimed, constituted a failure to understand that Australian capitalism was passing through a “third phase”, marked by intensifying class antagonisms. The CPA could only fulfil its role as a revolutionary party if it ruthlessly unmasked “the treacherous social-fascist role of the Labor Party and the trade union bureaucracy. … Even at its conference of December 1928 the Party could not give a proper political estimate of the Labor Party, define its fundamentally social-fascist character, its aggressive counter-revolutionary role in the present situation. The Party by its tactics during the elections still appears to cling to the idea that the Labor Party of Australia continues to represent the working class when as a matter of fact its past history, when in and out of Government, proves it to be an instrument of the Australian bourgeoisie. … In regard to the Labor Party of Australia it must be said definitely that it has already gone over to the side of the bourgeoisie and to support it in any way means to support the enemies of the working class. Consequently, the decision of the majority of your CEC to support the Labor Party in the last elections is a glaring example of grave Right deviation deserving the severest condemnation.”[2]

71. The issue confronting the CPA was not a failure to recognise the bourgeois character of the ALP’s program or the role of Labor governments in defending the capitalist order, but how to break the working class from it. The federal ALP had not held office for more than 15 years. It commanded the allegiance of the majority of the working class, including some of the most militant layers, who looked to it to carry out socialist policies against the deepening offensive of the bourgeoisie. In NSW these illusions had been buttressed by the Lang state Labor government’s introduction of new social services in the mid-1920s.

72. If there were illusions in the CPA about the Labor Party, including the conception that somehow it might be able to be transformed, through new leadership, into a revolutionary party, it was not least because they had been encouraged by the policies of the Comintern following the Fifth Congress in 1924. The incorrect analysis made by that congress—that even following the defeat of the 1923 German revolution, a new revolutionary upsurge lay immediately ahead—led to a further series of false assessments. Finding its analysis of the world situation contradicted actual conditions, the ECCI, Trotsky explained, had to cling to fictitious factors, discovering revolutionary forces and signs where there were none. The Comintern representative for the Communist Party of the USA, John Pepper, who was also responsible for the CPA, promoted the conception that the American Farmer-Labor Party was becoming “ever more radical” and drawing closer to the Communists. In Britain, Trotsky noted, the weakness of the British Communist Party gave rise to the idea of replacing it with a “more imposing factor”, leading to a false estimate of the tendencies of British trade unionism and the idea of the revolution “finding an entrance not through the narrow gateway of the British Communist Party, but through the broad portals of the trade unions.” Though not as pronounced, the ECCI had evinced the same general tendency with regard to Australia. In a resolution issued in October 1927, it insisted that the CPA was “duty bound” to carry out a campaign with the trade unions against the leaders of the Labor Party, and that the “so-called Australian Labor Party cannot become a genuine Labor party unless big sections of workers and first and foremost members of trade unions do their utmost to purge the Labor Party of ministers, ex-ministers and all other officials who while sailing under the colours of the Labor Party have learned to defend more or less skilfully the interests of the Australian bourgeoisie.”[3]

73. Having promoted the conception that somehow the Labor Party could be transformed, if only a new leadership were installed, the Comintern did a radical about-face, demanding strident denunciations of the ALP’s “social fascism.” As Trotsky had explained in relation to the struggle against fascism in Germany: “We must understand how to tear away the workers from their leaders in reality. … This stage cannot be skipped. We must help the Social Democratic workers in action—in this new and revolutionary situation—to test the value of their organisations at this time when it is a matter of life and death for the working class.” Any such approach was now condemned as support for the “social fascists” and the bourgeoisie.[4]

74. Following publication of the ECCI’s Open Letter in the Workers’ Weekly of December 6, 1929, the CPA Congress, held at the end of the month, denounced the outgoing leadership for “treachery and bankruptcy” and installed a new leadership that declared its “unswerving loyalty” to the “new line.” However, the Comintern was still not satisfied and in March 1930 sent Harry M. Wicks (known as Herbert Moore) from the United States to reorganise the Australian party. Over the next year Wicks, who, it was later discovered, was a long time spy and agent for the FBI, took control of the party, rewriting its program and constitution and re-organising the leadership through a series of purges and denunciations. The changes in Australia were part of an international process. Having suppressed the Left Opposition and expelled Leon Trotsky from the Soviet Union, the Stalinist leadership of the Comintern could not tolerate an independent leadership in any section. As Trotsky put it: “It removes, sweeps away, deforms and tramples underfoot all that is independent, ideologically firm, and inflexible. It needs conformists. And it finds them without much difficulty, groups them together, and arms them.” The grouping brought into the leadership of the CPA in 1929 was to remain intact for the next several decades, following every bureaucratic manoeuvre ordered by the Stalinist regime with declarations of total loyalty to each “new line.”[5]

75. The Stalinisation of the CPA and the adoption of the “social fascist” line took place as Australian capitalism plunged into its deepest ever economic crisis. It isolated the party from the mass movements in the working class and cut it off from the shifts to the left in the ranks of the Labor Party, in particular the movement around the “Socialisation Units” in the NSW ALP and the eruption that followed the sacking of the state premier Jack Lang.

76. The global depression rapidly took hold of the Australian economy. Export revenues fell by a quarter, foreign loans dried up and unemployment, which had reached 12 percent at the end of 1929, rapidly climbed to 30 percent in 1931–32. Just as in World War I, the federal Labor government responded by implementing the dictates of the banks and finance capital. Together with the state governments, it accepted the demands of the Bank of England for the slashing of wages and government spending. The mounting class and political tensions of the period were recorded five years later by a leading parliamentary press gallery journalist: “It has to be remembered that the background to the story of the Scullin government was the worst period of Australia’s worst depression. It was a period when the placid day-to-day life of Canberra was made perilous and pregnant by rumours of riots in the great cities. Human impatience was aroused to fever pitch by unemployment, poverty, and suffering. Almost hourly, for months, Canberra dreaded tidings of a major uprising. The Rothbury miners were in revolt, wavering dangerously on the verge of an armed industrial war, until they were stemmed by the ruthless rule of baton law. Ravenous unemployed threatened to march on to Canberra, to wreak a blind vengeance on the legislators whom they blamed for it all. Armed forces paraded in the open and organised in secret. The air hung heavy with menace. Today, so resilient is the human mind, that these things seem as unreal as melodrama. It is well that people should remember that in fact they were cold reality.”[6]

77. The radicalisation of the working class was reflected in the Labor Party. In April 1930, the Lang leadership of the NSW Labor Party, at that time out of office and anxious to maintain its grip on the working class, set up Socialisation Units to “devise ways and means to propagate the first and principal platform of the party—the socialisation of industry”. The Lang leadership regarded the Socialisation Units as harmless propaganda adjuncts to local branches. But in major working class areas they became larger than the party branch to which they were attached, as support grew for the demand of “socialism in our time.” At the height of the movement, Socialisation Units were attached to 178 of the 250 branches around Sydney, and the organisation’s newspaper Socialisation Call had a circulation of around 40,000.

78. In the NSW state elections of October 1930, Lang was swept into office after he denounced the federal government’s spending cuts and the banks’ demands. His perspective was to contain the growing radicalisation of the working class. Attacking calls emanating from the socialisation movement for the taking of political power and the expropriation of industry and the banks, he declared that “the revolution has come—is being fought now, and will continue a little way into the future. It has come without our streets being barricaded, but in the way the Labor Movement has always said it would come, by Act of Parliament.”[7]

79. The greatest assistance to Lang was rendered by the CPA, which denounced members of the Socialisation Units and their leaders as “left social fascists”, as well as members of the Labor Army formed to protect ALP meetings from attacks by the fascist New Guard. Right at the point where the working class was coming into intense conflict with its Labor and trade union leadership, the CPA abandoned any struggle to expose it. “It is correctly realised by our Party,” the Workers Weekly had declared in November 1930, “that the slogan ‘Make the officials fight’ in industrial struggles is now obsolete …” Thousands of workers had become active in the socialisation units but they remained trapped behind the conception that socialism could be realised through the Labor Party. Denounced by the Stalinists and in the absence of an alternative perspective, they had no answer when the Lang machine dismantled the units in 1933.

80. Late in 1931, Lang demanded the federal Scullin Labor government withhold payments of debts to British banks until interest rates were reduced. In May 1932 Lang’s NSW state government was sacked by the Governor of NSW, Sir Philip Game, on the grounds that its withholding of money from the federal government was illegal. Accepting his dismissal, Lang enunciated the loyalty to the capitalist state that has been the essential and enduring characteristic of every Labor politician: “Paramount in my mind before reaching my decision was the fact that I had always stood for law and order, and had always been opposed to violence of any kind. If we defied the Governor, we would be defying the authority of the King, whose representative he was. This might be accepted as an open invitation to the British navy and end in the arrival of British warships off Sydney heads to shell the city. So rather than risk civil war and have bloodshed in the streets of Sydney, I have decided to accept the dismissal.”[8] Lang’s chief concern was not British warships, but the fear of the very revolutionary upsurge by the working class that he had worked so hard to prevent. When more than half a million people rallied in Sydney in response to his sacking, Lang told them to go and vote in the election.

81. The demonstration against Lang’s dismissal was the largest in Australian history. The CPA completely abstained. It declared that whether debt was repudiated or not was of “no concern to the working class” and denounced those workers who opposed Lang’s sacking as “social fascists.” In conditions of a radicalisation of large sections of the working class and the eruption of a deep political crisis, the CPA ensured that the Labor Party leadership remained in control.


Leon Trotsky, ‘The Turn in the Communist International’, The Struggle Against Fascism in Germany, Penguin, Hammondsworth, 1971, p. 29.


‘Open Letter to the CEC of the Communist Party of Australia, October 13, 1929’, Our Unswerving Loyalty, A documentary survey of relations between the Communist Party of Australia and Moscow, 1920–1940, David Lowell & Kevin Windle (eds), ANU E Press, Canberra, 2008, p. 285.


‘Resolution on the tasks of the Communist Party of Australia’, Our Unswerving Loyalty, op. cit., p. 23.


Leon Trotsky, ‘For a Workers’ United Front Against Fascism’, The Struggle Against Fascism in Germany, op. cit., p. 105.


Leon Trotsky, ‘Who is Leading the Comintern Today?’ The Challenge of the Left Opposition, 1928–29, Pathfinder, New York, 1981, p. 202.


Warren Denning, Caucus Crisis: The rise and fall of the Scullin government, Hale and Ironmonger, Sydney, 1982, p. 24.


‘Mr. Lang: Revolution has come’, Sydney Morning Herald, 5 October, 1931.


Gerald Stone, 1932, Pan Macmillan, Melbourne, 2005, p. 293.