The defeat of the German revolution of 1923 contributed to strengthening conservative tendencies in the Soviet state and Communist Party bureaucracies. These tendencies grew further after the Soviet regime implemented the New Economic Policy in the spring of 1921. The NEP sanctioned a revival of the capitalist market, and significant economic concessions to capitalist strata in the city and countryside. The aim of these concessions was to revive economic activity, which had been shattered by years of war and revolution. While Lenin and Trotsky had hoped that the NEP would be a relatively short-term policy—to buy time for the Soviet Union until a renewed upsurge of international revolutionary struggle—it strengthened conservative social forces and changed the economic and political dynamic of Soviet life. These processes were reflected in the Bolshevik Party and undermined Trotsky’s position in the leadership. Within the ruling strata and the rapidly expanding ranks of the party and state bureaucracy, moods of conservatism and complacency began to find ever-more open political expression. As Trotsky recalled in his autobiography:

...The sentiment of “Not all and always for the revolution, but something for oneself as well,” was translated as “Down with permanent revolution.” The revolt against the exacting theoretical demands of Marxism and the exacting political demands of the revolution gradually assumed, in the eyes of these people, the form of a struggle against “Trotskyism.” Under this banner, the liberation of the philistine in the Bolshevik was proceeding. It was because of this that I lost power, and it was this that determined the form which this loss took.^[1]

The attacks on Leon Trotsky and the Theory of Permanent Revolution—initiated with the lie that “Trotsky underestimates the peasantry”—were the political reflection of the hostility of the state and party bureaucracy to the internationalist program of the October Revolution. The growing political power of Stalin, and the bureaucratic dictatorship with which his name is associated, was not an inevitable product of socialist revolution, but developed out of contradictions specific to a workers’ state established in a backward country and isolated by the defeats of the international revolution. The legacy of economic backwardness inherited from Tsarist Russia was compounded by the disastrous consequences of seven years of imperialist war (1914-17) and civil war (1918-21). These conditions imposed immense burdens on the effort of the Bolshevik regime to build the Soviet economy. Moreover, the civil war had exacted an enormous human toll on the working class and the Bolshevik Party itself. Tens of thousands of class-conscious workers, who had formed the basis of the popular support for the Bolshevik seizure of power, had been killed. Another major factor in the degeneration of the Bolshevik Party was the integration of a substantial portion of its cadre into the burgeoning state and party bureaucracy. Long-time revolutionists were transformed into administrators, and this change had, over time, an impact on their political orientation. Moreover, the demands of the new state for capable administrators required the recruitment of many people who had served before 1917 in the bureaucracy of the old regime. These cumulative changes in the state structure, the social function of many “Old” Bolsheviks, and the overall position of the working class ultimately found political expression.

As Trotsky explained, the Soviet state that emerged from revolution and civil war was a highly contradictory phenomenon. As the product of a genuine working class revolution, the new state rested upon, and defended, new property relations, based on state control of finances and ownership of the means of production. To this extent, the new regime created by the October Revolution of 1917 was a workers’ state. But there was another side. Given the low level of the productive forces and the conditions of “generalized want” that persisted in Soviet Russia, the new state presided over a bourgeois—i.e., unequal—mode of distribution. This basic contradiction between the socialist form of property ownership and the bourgeois form of distribution imparted to the Soviet regime its peculiar and increasingly repressive form.

Trotsky and his supporters—including many of the most important leaders of the Russian Revolution—formed the Left Opposition in 1923 to reform Communist Party policy in the Soviet Union and fight for a correct line in the Communist International. Supporters of the Left Opposition criticized the decay in inner-party democracy and advocated an economic policy that placed greater emphasis on the development of state industry, to strengthen socialist planning and bring down the prices of industrial goods. The Stalin faction pushed for greater market liberalization, an orientation to better-off sections of the peasantry (the kulaks), and limited development of the state sector and economic planning. The death of Lenin in January 1924 strengthened the faction led by Stalin. In his last writings, Lenin had warned of the increasing bureaucratization of the Communist Party and called for the removal of Stalin as general secretary.