In Trotskyist political theory, degenerated workers' states are states where capitalism has been overthrown through social revolution and the property forms have changed into a collectivized planned economy, but where the working class has lost its political power and socialist democracy has been replaced by a form of dictatorship. They are workers' states because they went through a revolution and have a planned economy, but they are degenerated because the economy and the government are not controlled by the people. A degenerated workers' state is an incomplete form of socialism - it has a planned economy, but not the democracy that is necessary for any fully socialist system. Trotsky considered the first degenerated workers' state to have been the Soviet Union under Stalin.

For some time after Stalin came to power in the Soviet Union, Leon Trotsky continued to believe that the country was a workers' state. But by the early 1930s, faced with Stalin's destruction of democratic institutions and autocratic ways, he came to believe that socialism in the Soviet Union had been effectively abolished. Trotsky argued that a revolution was needed to restore the working class to power. Nonetheless, he maintained that the collectivization that had taken place had changed the class nature of the state, so it could not be put on the same level as capitalist countries. He therefore began to describe the Soviet Union as a degenerated workers' state.

After Trotsky's death, the expansion of the Soviet Union into Eastern Europe proved an unexpected development for the Fourth International's theorists. They decided that all the East European states could be described as deformed workers' states. Rather than advocating a full revolutionary programme, they came to advocate a political revolution to oust the Stalinist bureaucracy.

Trotskyists consider the Stalinist bureaucrats to be a privileged parasitic layer of administrators that are contradictory in nature. From the orthodox Trotskyist viewpoint, the power of the Stalinists is derived from protecting the gains of the revolution, while at the same time seeking to advance their own personal interests by crushing dissent at home and making deals with the capitalists abroad.

Other Trotskyists came to disagree with this theory, and developed alternative explanations and tactics, describing the Soviet Union as being state capitalist or bureaucratic collectivist.

See also: new class, state socialism, state capitalism, coordinatorism.