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Social fascism was a theory supported by the Communist International (Comintern) during the early 1930s, which held that social democracy was a variant of fascism because—in addition to a shared corporatist economic model—it stood in the way of a dictatorship of the proletariat. At the time, the leaders of the Comintern, such as Joseph Stalin and Rajani Palme Dutt, argued that capitalist society had entered the "Third Period" in which a working class revolution was imminent, but could be prevented by social democrats and other "fascist" forces. The term "social fascist" was used pejoratively to describe social democratic parties, anti-Comintern and progressive socialist parties and dissenters within Comintern affiliates throughout the interwar period.
At the Sixth Congress of the Comintern in 1928, the end of capitalist stability and the beginning of the "Third Period" was proclaimed. The end of capitalism, accompanied with a working class revolution, was expected and social democracy was identified as the main enemy of the communists. This Comintern's theory had roots in Grigory Zinoviev's argument that international social democracy is a wing of fascism. This view was accepted by Joseph Stalin who described fascism and social democracy as "twin brothers", arguing that fascism depends on the active support of the social democracy and that the social democracy depends on the active support of fascism. After it was declared at the Sixth Congress, the theory of social fascism became accepted by the world communist movement.
The new direction was closely linked to the internal politics of the Communist Party of the Soviet Union (CPSU). After a faction fight inside that party following the death of Vladimir Lenin in 1924, the victorious group around Stalin shifted decisively to the left, advocating the end of the mixed economy New Economic Policy and declaring an intensification of the class struggle inside the Soviet Union. An atmosphere of revolutionary fervour was created that saw any enemy of the ruling group around Stalin denounced as "wreckers" and "traitors" and this attitude was translated on to the international stage where both social democrats and communist dissidents were denounced as fascists.
At the same time, under leadership of German chancellor Hermann Müller the Social Democratic Party of Germany (SPD) agreed with anti-communist parties that "red equals brown". This led to mutual hostility between social democrats and communists, which were additionally intensified in 1929 when Berlin's police (under control of the SPD government) shot down communist workers demonstrating on May Day (Berlin's Bloody May). This and the repressive legislation against the communists that followed served as further evidence to communists that social democrats were indeed "social fascists". In 1931, in Prussia—the largest state of Germany—the Communist Party of Germany (KPD), which referred to the Nazis as "working people's comrades", united with them in unsuccessful attempt to bring down the state government of SPD by means of a plebiscite. German communists continued to deny any essential difference between Nazism and social democracy even after elections in 1933. Under the leadership of Ernst Thälmann, the KPD coined the slogan "After Hitler, our turn!" – strongly believing that united front against Nazis was not needed and that the workers would change their opinion and recognize that Nazism—unlike communism—did not offer a true way out of Germany's difficulties (see also Wilhelm Hoegner and Walter Kolbenhoff.
After Adolf Hitler's Nazis came to power in Germany, the KPD was outlawed and thousands of its members were arrested, including Thälmann. Following these events, the Comintern did a complete turn on the question of alliance with social democrats and the theory of "social fascism" was abandoned. At the Seventh Congress of the Comintern in 1935, Georgi Dimitrov outlined the new policy of the "popular front" in his address "For the Unity of the Working Class Against Fascism". The "popular front" did not stop the conclusion of the Nazi-Soviet Pact.
Leon Trotsky argued against the accusations of "social fascism" and in the Bulletin of the Opposition of March 1932 declared: "Should fascism come to power, it will ride over your skulls and spines like a terrific tank... And only a fighting unity with the Social Democratic workers can bring victory". However, Trotsky said in the same essay that any cooperation with the social democrats was only tactical and temporary and that in the final analysis the social democracy would have to be defeated and subverted by the revolutionary faction:
The front must now be directed against fascism. And this common front of direct struggle against fascism, embracing the entire proletariat, must be utilized in the struggle against the Social Democracy, directed as a flank attack, but no less effective for all that... No common platform with the Social Democracy, or with the leaders of the German trade unions, no common publications, banners, placards! March separately, but strike together! Agree only how to strike, whom to strike, and when to strike! Such an agreement can be concluded even with the devil himself... No retraction of our criticism of the Social Democracy. No forgetting of all that has been. The whole historical reckoning, including the reckoning for Karl Liebknecht and Rosa Luxemburg, will be presented at the proper time, just as the Russian Bolsheviks finally presented a general reckoning to the Mensheviks and Social Revolutionaries for the baiting, calumny, imprisonment and murder of workers, soldiers, and peasants.