The Confusion of the Fourth International
When WWII was over and the Soviet Union survived the war, James P. Cannon, an American Trotskyist and leader of the Socialist Workers Party, stated that the war is not over because the Soviet Union still exists:
“Trotsky predicted that the fate of the Soviet Union would be decided in the war. That remains our firm conviction. Only we disagree with some people who carelessly think the war is over. The war has only passed through one stage and is now in the process of regroupment and reorganization for the second. The war is not over, and the revolution which we said would issue from the war in Europe is not taken off the agenda. It has only been delayed and postponed, primarily for lack of a sufficiently strong revolutionary party.” 
The reaction of the Fourth International to the formation of the East European Stalinist regimes was denial calling them state capitalism.  In the course of the discussion on East Europe, James P. Cannon, wrote:
“I don't think you can change the class character of the state by manipulations at the top. It can only be done by a revolution which is followed by a revolution in fundamental property relations ... If you once begin to play with the idea that the class nature of the state can be changed by manipulations in top circles, you open the door to all kinds of revisions of basic theory.” 
Yet Eastern Europe went through a social transformation from above and the new state apparatus in the new states defended the working class form of property, while the capitalist class was eliminated as a class by expropriations. This was possible because the Soviet Union was still a degenerated workers’ state and because the pressure of the working class in these states and the threats of US and British imperialism. This brings to mind Napoleonic revolutions from above in the early 19th century. This point was already made by Isaac Deutscher who quoted Sorel:
“In the countries which France united with her territory or constituted in her image [says Sorel], she proclaimed her principles, destroyed the feudal system, and introduced her laws. After the inevitable disorders of war and the first excesses of conquest, this revolution constituted an immense benefit to the peoples. This is why the conquests of the Republic could not be confused with the conquests of the ancien régime. They differed in the essential characteristic that, despite the abuse of principles and the deviations of ideas, the work of France was accomplished for the nations.” 
In the other countries where deformed workers states were created it was done through revolutions led by petit-bourgeois leadership with the working class playing an active role in the revolution. We will examine this point in two different revolutions: those of China and Cuba.
It is not true that the working class in China in 1949 revolution was completely passive but it is true that the working class did not play the same role as in the Russian Revolution. As Ted Grant, a leader of the British section of the Fourth International, correctly noted at that time:
“One of the outstanding facts in the situation in China is the relative passivity of the working class. It is true that as a result of the collapse of the Chiang armies, there have been widespread strike struggles in the large cities, Shanghai, Canton, Hankow and Nanking, despite the repressive conditions. However, it is clear that as the Stalinists advance towards the big cities on the Yangtse, the workers, for lack of a mass alternative, can only rally to their banner. The workers never supported the Chiang Kai Shek regime.” 
The workers in the big cities were active during the revolution:
“Chinese workers were organized in the sense that they were organized to become part of a support base for the new government. But when we talk about this support base, we're talking about a very small minority of the Chinese working class as a whole. Those workers who lived in large cities like Wuhan, Shanghai, Beijing, did enjoy comparatively reasonable standards of living, health benefits, access to medical care, pensions, all very important things to working class people, of course. But they were a minority.
However the transformation of China to a deformed workers state did not happen in 1949 but in the early 1950…… In 1950 there was a large wave of industrial unrest where workers expressed disappointment with the gains of the revolution. Again in '55 after a process of nationalization of privately-owned industry in China, there was another wave of industrial unrest where workers were again expressing tremendous disappointment with the pace of change.
After 1953, and as the contradictions within the new regime, within the national barriers and parameters of the new regime became more and more apparent, the government was primarily interested in restraining and repressing labor dissent and militancy.” 
Thus in China the revolution could not take place without the participation of the working class in contradiction to the Cliffites and their theory of “deflected permanent revolution” which claims that where a revolutionary working class does not exist, the intelligentsia could, in certain limited circumstances, take the leadership of the nation and lead a successful revolution in the direction of a state capitalist solution. The outcome of such a revolution would be deflected from the goal of a social revolution as envisaged in Trotsky's original work.
The LRP denies that, under pressure from the working class and the masses on one hand and the pressure of imperialism during the Korea war on the other, the Chinese Stalinists founded a deformed workers state. They do not deny that a revolution took place in China. The question to ask, however, is what kind of a revolution it was? From their writings it is clear that they think it was a bourgeois democratic revolution.
“Unable to crush the masses or to develop as rapidly as necessary, given the Cold War and the Russian threat, the CCP had to institute a series of measures embodying important democratic and material gains. These included distribution of the land to peasants and the destruction of landlord power in the countryside; elevating the status of women; kicking out imperialist firms and providing a measure of unity to a badly fragmented country; raising health and educational standards; beginning a system of job guarantees for urban workers. In the same period, the regime tamed inflation and corruption and increased industrial production, using the Soviet model of development. All this won it a large measure of popular support and willingness to sacrifice.” 
However, this claim is not consistent with Trotsky’s theory of the permanent revolution. Trotsky’s theory states that only the working class can win the democratic revolution by combining it with the socialist revolution. Assuming that they mean a deformed democratic revolution, did Trotsky argue that the petit bourgeois can carry out a deformed democratic revolution? Their theory is very similar to the Cliffites’ theory of a “deflected permanent revolution.”
In his book on Cuba, Michael Pröbsting of the RCIT has written:
“Contrary to the legend that the Revolution of 1959 in Cuba took place without the participation of the working class the M-26-7 movement organized an underground Sección Obrera which had about 15,000 members. Later the M-26-7 helped to launch the Frente Obrero Nacional Unido (FONU) together with other unions. This new organization adopted a 12-point programme that called for a 20% wage increase, for opposition to mechanization along with other measures against unemployment, for an end to racial discrimination, for social protection for women, children and the unemployed, for the reinstatement of victimized workers, for trade union democracy and the end to the compulsory check-off as well as for the reinstatement of the 1940 constitution. The workers section of the M-26-7 played an important role in organizing several political general strikes in which sugar workers were actively involved Thus, for example, during the strike which started on 30th November 1956, the workers in the processing plant of the ‘Ermita’ sugar estate, where the M-26-7 had two active cells, successfully attacked the police barracks on the plantation. While the M-26-7 supporters called this combination of mass action with armed resistance and sabotage ‘sindicalismo beligerente’, the fact remains that such working class action always only played a supportive role for the M-26-7’s main form of struggle – the rural guerilla war. In contrast to the Bolsheviks and the socialist revolution they led in 1917, the workers organizations and struggle never became the heart of the M-26-7’s struggle and the movement itself.” 
Like in China, where the social transformation took place in 1953 and not in 1949, the social transformation in Cuba did not occur in 1959, when the Castroites took power, but later on. The transformation took place because of mass pressure from below, US imperialist pressure from outside, and the existence of the Soviet Union that was ready to support the Cubans economically. The Cuban workers did go on general strikes in 1959 and were more active than the Chinese workers but, like in China, the Trotskyists were too few while the influence of the Stalinists and the Castroites was large and thus the working class did not have a revolutionary leadership; the result was the founding of a deformed worker state.
The Confusion over the Question of the Deformed Workers State versus State Capitalism
In the late 1940s the Forth International declared that the states of Eastern Europe remained regimes of state capitalism while the Soviet Union stayed a deformed workers state. This is illogical, as Tony Cliff wrote:
“No scholastic argument will succeed in convincing anyone that the “People’s Democracies” with state ownership, a monopoly of foreign trade, planned economy, the increasing collectivization of agriculture, are capitalist countries, while Russia, the motive force behind the development of all these traits in the “People’s Democracies”, is a workers’ state. In time the position of Germain and John G. Wright will become less and less tenable, and its main danger is not so much in itself, as its absurdity will become manifest, but that by preventing people from thinking it out to its logical conclusion, it can drive them to the other alternative, namely that if Russia is a workers’ state, then the “People’s Democracies” are also workers’ states. This position forces us to drop our definitions of Stalinism in general as counter-revolutionary.” 
However, Cliff’s incorrect conclusion was that the Soviet Union became a regime of state capitalism in 1928 when the rising bureaucracy responded to the threat of invasion from Britain and France by a shift towards rapid industrialization. For Cliff, the litmus test was whether workers were in control of the state and the means of production. But if the working class was in control of the economy and the state apparatus it would be not a deformed workers’ state but a “healthy” workers’ state.
The LRP maintains that the Soviet Union became a regime of state capitalism in 1939.
“We agree with Trotsky’s outlook up to 1939. But we hold that the counterrevolution culminated on the eve of World War II. It created a new ruling class by transforming the state apparatus and destroying the Bolshevik party; contrary to Trotsky, the restoration of capitalism was completed. Accompanying the well-known centralized power of the Stalinist state were qualitative steps toward the effective decentralization of state property, forerunners of the “markets” and anarchy clearly visible today.” 
The LRP’s main argument is that only a working class revolution can form any kind of a workers’ state. Their method denies concrete reality and “corrects“ Trotsky’s analysis of the USSR by means of a pragmatist theory. They argue that only the working class can liberate itself which is very true, but then they equate the healthy workers’ state with the deformed workers’ state. If the two were essentially the same, there would be no need for a political revolution by the workers in the deformed workers states.
There is nothing new in any of these arguments which Trotsky did not already reply to in 1940. The Stalinists are a counterrevolutionary force which blocks the road to socialism. They must be removed by political revolution to prevent the restoration of capitalism. A workers’ state is not the first stage of socialism but a transitional formation between capitalism and socialism. Because of its transitional nature, it is possible that the bureaucracy itself restore capitalism in a deformed workers’ state as we saw in the former Soviet Union, Eastern Europe, China, and Cuba. The difference between state capitalism and a deformed workers’ state is the elimination of the capitalist class as a class when the transition from capitalism to a deformed workers’ state is taking place. The cases where the Stalinists or the Fidelists founded deformed workers’ states is not the historical norm, but the result of exceptional circumstances which pushed them further than they intended to go; pressure from below by the working class and from the imperialists. Under different circumstance, they would have turned themselves into a new capitalist class and restore the capitalist mode of production. The proof is the fact that the USSR became a capitalist economy in the early 1990s and not in 1928 or 1939.
The Spartacists and the League for the Fourth International tried to defend the USSR by allying themselves in East Germany with the army, the Stalinists state apparatus, and simply ignored the fact that the Stalinist state apparatus no longer defended the workers form property, because under the Stalinist bureaucracy the forces of production stopped developing. The circumstances were very different in WWII, when the Stalinists defended the degenerated workers’ state using counterrevolutionary methods. The argument of the Sparticists and company that the Stalinists are both revolutionaries and counterrevolutionaries at one and the same time is entirely false, and simply an apologetics for the Stalinists, as we saw when they defended the Stalinists against the working class
Ted Grant’s theory of proletarian Bonapartism which claims that presumably every party, including the army, can under pressure form a deformed workers’ state is false as well. Iraq, Syria, or Yemen, to mention a few examples which were claimed to be deformed workers’ states were not in fact deformed workers’ states but regimes of state capitalism. Furthermore, in their politics these states not only tailed Chavez, but regarding Cuba they denied the need for a political revolution at the time that Cuba was still a deformed workers state.
 James P. Cannon: The Russian Revolution – Twenty-eight Years After (November 1945), in: James P. Cannon: The Struggle for Socialism in the “American Century”, New York 1977, Pathfinder Press, p. 200
 See e.g. SWP (U.S.): Internal Bulletin, Vol. XI, No. 5 (October 1949). We have dealt with the Fourth International’s failure to understand the bureaucratic social transformation in the late 1940s and early 1950s in Workers Power (Britain) and Irish Workers Group: The Death Agony of the Fourth International, London 1983 as well as Workers Power: The Degenerated Revolution. The Origin and Nature of the Stalinist States (1982).
 SWP (U.S.): Internal Bulletin, October 1949, p. 25
 Albert Sorel, L'Europe et la Révolution Française, Part I (Paris, 1893), quoted in Isaac Deutscher : Two Revolutions (1950), in : Isaac Deutscher : Russia in Transition, Grove Press, New York 1960, p. 171
 Ted Grant: Stalinist land programme wins peasants (1949), in: Ted Grant: The Unbroken Thread, Fortress Books, London 1989, p. 286
 Michael Pröbsting, Cuba’s Revolution Sold Out? RCIT, Vienna 2013, pp. 17-18
 Tony Cliff: On the Class Nature of the “People’s Democracies (1950), in: Duncan Hallas (ed.), The Fourth International, Stalinism and the Origins of the International Socialists, Pluto Press, London 1971, pp. 22-23
 Walter Daum: The Life and Death of Stalinism, Socialist Voice Publishing Co., New York 1990, pp. 9-10