The 1923 defeat in Germany had profound consequences. The defeat provided the political premise for the stabilization of capitalism. Within the USSR, it dashed the hopes of the Russian masses, who closely followed the revolutionary events in Germany. The demoralization strengthened the grip of the growing bureaucracy, which had developed out of the isolation of the Russian Revolution under conditions of economic and cultural backwardness. The death of Lenin in January 1924 provided a further setback for the Soviet working class. These events sharpened the struggle between Stalin, the figurehead of the bureaucracy (who had formed an unprincipled block with Zinoviev and Kamenev), and the newly-formed Left Opposition headed by Leon Trotsky (which fought for Party democracy and a plan to coordinate industry and agriculture). It was on the basis of these setbacks that Stalin came forward in the autumn of 1924 with the anti-Bolshevik theory of “Socialism in one country”, which reflected the desire of the bureaucracy for a stable existence.
By the beginning of 1924, the KPD had been banned, the eight-hour day abolished, and the government embarked on a programme of economic recovery based on the introduction of a new and stable currency, the Rentenmark.
The imperialist powers, alarmed by the revolutionary events of 1923, were terrified by the perspective of “Bolshevism” sweeping through Germany and Europe. As a result, their attitude towards the Weimar Republic turned 180 degrees with the acceptance of the United States government’s Dawes Plan. This financial agreement secured the withdrawal of French troops, and instead of bleeding Germany white, American imperialism poured in colossal sums to rebuild German industry. The payment of reparations was drastically reduced, while German big business received a loan of 5 billion dollars to rebuild the economy. By 1929 she had paid 8 billion Rentenmarks in reparations, and in return had received 13 billion Rentenmarks in loans of various types. These quasi-“Keynesian” methods had a stimulating effect on the German economy.
Output in 1923 was 55 percent of 1913 levels (the peak of prewar production); by 1927 it was 122 percent of the 1913 levels. By 1927 the average monthly production of iron ore and steel amounted to 1.136 billion tons and 1.395 billion tons respectively, as against 1.397 billion tons and 1.429 billion tons in 1913. This economic upturn, based on international credit and loans, resulted in a period of falling inflation and economic stability. By this time, foreign indebtedness increased to one half of the national income. It was a period of “borrowed prosperity”.
With trade and industry returning to “normality” the number of industrial disputes rose sharply. In 1924 there were more working days lost as a result of strikes and lockouts than in any other year between the two world wars: 13.2 million days were lost through strikes, and 22.6 million days due to lockouts. Despite this increase in trade union activity after the October defeat, membership of the trade union federations declined from 7.8 million in 1922 to around 4.6 million in 1924. In the period after 1924, strike figures fell rapidly as state arbitration was increasingly used to settle disputes.
Germany’s economic revival, and the relative stability that went with it, coincided with the considerable increase in support for the Social Democratic Party. And although it was out of office until 1928, it still remained the single largest party within the Reichstag. Almost without interruption, the SPD ran the government of Germany’s most important state, Prussia, which included the capital, Berlin, and two-thirds of the country’s population.
On the other hand, the KPD, which had experienced its biggest defeat in October, had been declared illegal by General von Seekt. After the October debacle, Brandler was removed from the KPD leadership by the Comintern and the party was now led by the ultralefts, Ruth Fischer and Arkadi Maslow. Despite everything that Lenin had written, the new leadership introduced an adventurous policy of creating separate “red” trade unions which completely isolated them from the official labour movement and resulted in the loss of over one million votes at the election in December 1924. The proportion of trade unionists in the Berlin branch of the KPD fell to less than 30 percent in 1924.
The degree to which the party’s influence had declined in the official organizations was shown by the decline in KPD delegates to the Trade Union Congress: in 1922 they had 88 delegates, but by 1925 it was reduced dramatically to four. The ultraleft leaders were a complete disaster; and, once again, at the behest of the Stalinist Comintern, they were expelled and replaced by leaders more in tune and more pliant to Moscow. Within a year, with a more opportunist policy being pursued by the Communist International and with the creation of the Anglo Soviet Trade Union Committee, the KPD began to push for trade union unity.