In this work, first serialized in Pravda in September 1925, Trotsky analyzes the achievements and principal dynamics of the Soviet economy eight years after the socialist 1917 October Revolution. Such an extensive analysis had become possible thanks to the publication of the control figures for 1925–1926 by the State Planning Commission (Gosplan). Based on these figures, Trotsky examines the respective weight of the “socialist” sector of the economy, centered on nationalized industry, and the “capitalist sector”, centered on private property in the countryside.

In opposition to the Stalinist course toward building “socialism in one country,” i.e., within a closed economy, Trotsky shows that, because of its growing integration into the world economy, the Soviet economy had already become fundamentally intertwined with the world capitalist economy. This posed immense dangers but also opportunities. Only through a planned and deliberate utilization of the resources of the world market, he wrote, could the Soviet Union accelerate the pace of its economic development and withstand the economic, political, and military pressure of world imperialism. By contrast, if the Soviet Union proved unable to keep up with the increases in the productivity of labor in the advanced capitalist countries, he warned, the conquests of the revolution could not be maintained. 

Trotsky wrote this work at a time when he himself was deeply involved and intimately familiar with the workings of the Soviet economic state apparatus. In 1925, he was in charge, among other things, of the division for the scientific organization of labor under the Supreme Council of the National Economy (VSNKh) and the Main Concessions Committee (Glavkontsesskom).

Though relatively short, this pamphlet is a masterpiece of Marxist economic analysis and ranks as one of the most important works by Trotsky from the 1920s. The first English translation of “Towards Socialism or Capitalism” was published in 1926. Another translation was published in 1975. However, both of these translations contained numerous errors. The WSWS is publishing here a significantly revised and updated translation.