Poster of the Portuguese MRPP
from the 1970s, commemorating a killed party member, whose slogan reads: "Neither Fascism, nor Social fascism. Popular Government"
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 in what became called Blutmai (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 1929 the KPD's paramilitary organisation, the Roter Frontkämpferbund ("Alliance of Red Front-Fighters"), was banned as extremist by the governing social democrats. A KPD resolution described the "social fascists" [social democrats] as the "main pillar of the dictatorship of Capital." 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 Landtag referendum. 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 ""For the Unity of the Working Class Against Fascism". The "popular front" did not stop the conclusion of the Nazi-Soviet Non-aggression Pact.
Theodore Draper argued that "the so-called theory of social fascism and the practice based on it constituted one of the chief factors contributing to the victory of German fascism in January 1933."