BOOK REVIEW / NOVEL : Wading Into the Watery Grave of Left-Wing Politics : THE TAKING OF THE WATERS <i> by John Shannon</i> ; John Brown Books $13, 403 pages

Historical fact: Los Angeles stole the Owens Valley’s water. Nobody argues otherwise. Even Hollywood, one of the indirect beneficiaries of the crime, lifted it out of history and into the popular imagination with “Chinatown.”

Yet a crime so huge seems beyond rectifying. Who would dismantle the city to make the desert green again? We can’t spit out what the L.A. oligarchy--including The Times--did in the 1920s, any more than we can swallow it. It sticks in our craw.

John Shannon describes the “taking of the waters” in the first part of this novel about three generations of left-wing activists. He also uses it as an overall metaphor for the drying up of radical politics in the United States.

This is a big subject that has been explored remarkably little in recent years. After E.L. Doctorow’s 1971 novel “The Book of Daniel” and Warren Beatty’s movie “Reds,” the list gets thin indeed. Hardly anybody has told the story in the straightforward way Shannon has here.

Even Shannon, a San Pedro native who had three novels published in England, couldn’t find a major publisher for “The Taking of the Waters,” despite its thoughtfulness, its wit, its well-rounded characters and its lean, readable prose. (Copies can be obtained from John Brown Books, P.O. Box 2355, Culver City, Calif. 90231; (310) 836-6583.)

Shannon’s shrewdest tactic is to have a foreigner, German journalist Dieter Sachs, narrate the story. What he loses in plausibility--the framework sometimes creaks--he gains in tone. America seems off-center and bizarre to Sachs; seeing things as he does, we are moved to reconsider them.

At first with a wry, almost anthropological detachment, then with mounting anxiety, Sachs accompanies his American friend and counterpart, Clay Trumbull, on a doomed last crusade into the Owens Valley. Later, in researching Clay’s family, he traces the deep, dusty channel where the American Left once flowed.

Clay’s grandmother, Maxi, a New York muckraker and feminist, arrives in the valley when its farmers are making a final stand against the L.A. water barons. She falls in love with Kiel Everett, a leader of the farmers, and helps him rally his neighbors to an inspiring--if temporary--victory. Then force and financial chicanery prevail and she dies in a despairing attempt to dynamite the Los Angeles Aqueduct.

Maxi’s son, Slim, remembers Everett telling him: “Not everything that wins is honorable, but to be honorable you have to win “--because it’s the winners who write history.

So Slim Trumbull dedicates his life to winning. A hard-line Communist labor organizer, he leads a landmark strike at a tractor plant in Michigan, braving management goons and National Guard tanks.

The workers do win. But the Communists lose. The Cold War drives them underground and wipes out public memory of any good they have done. Khrushchev’s 1956 “secret speech” about Stalin’s atrocities tells die-hards such as Slim that they have wasted their lives--a disillusionment that drives his wife, Myra, to suicide.

At age 80, Slim clings stubbornly to socialism, but he can’t answer Sachs’ question: “Tell me why so much horror was done in (its) name. . . . And why it failed.”

“I don’t plan to discuss the Soviet Union.”

“Cambodia, then. Genocide, for Christ sake. “

Disillusionment also haunts Slim’s son, Clay, a New Left journalist reduced to a sullen, Harley-riding parody of Hunter S. Thompson. His crusade in the Owens Valley--against a Mafia-run porno film studio--doesn’t even pretend to counter the main thrust of electron-swift, media-savvy, post-industrial capitalism, and he knows it. He also knows that he has little hope of winning. But in defiance of Everett’s dictum, he insists on salvaging a measure of honor.

This is Shannon’s intention, too. He reminds us that the American Left has often been on the side of the angels. Its partial victories humanized capitalism; its defeat, the negation of so much courage and hope, Sachs warns, is breeding “gangrene . . . corruption, complacency and a world order without opposition.”

This is an unpopular conclusion these days. Many will refuse to swallow it, but few who read “The Taking of the Waters” will be able to spit it out, either. It sticks in Shannon’s craw; he makes sure that it sticks in ours as well.