THE PROPOSITION, a political, musical, musical, satirical, and, occasionally, mechanical review in Inman Square, has been in operation since February, 1968. That's a long time, and given what theater audiences seem to support, it may be a dubious distinction. But as their ads say, "1,250,364 laughs can't be wrong."

Last year, one ad said, "What, you mean you've only seen The Proposition once??" I had already seen The Proposition twice, but I went again last Wednesday to a free Vietnam Moratorium Performance. They had decided not to close, in the conviction that art doesn't suspend itself for politics, but a member of the cast announced at the beginning that they wanted to give a show about what had happened during the day.

Because they are using an almost entirely improvisational approach this year, most of their material was in the hands of the audience, who suggested the same sort of cute bits The Proposition usually does: "the Mets," and "French kissing." No one through two shows suggested Vietnam, so the Moratorium aspect of the show was never realized.

Still, the show had a different flavor than it had when I saw it last spring. At that time, the original Proposition was running out of gas. The show had started with a small group of Harvard people, but the founder and original director, Jerome Leven, had left to form The Light Company, which had turned out to be as much of a flop as the Proposition has been a success. The cast was tired, and spent a lot of time anguishing over what was wrong. But the show kept going, and the laugh count, despite the problems, kept building.

At the end of the spring, a new director, Allan Albert, was hired. Albert at least had a new perspective: He went to Yale.

Albert seems to have brought things back together. The old format of pre-rehearsed improvisations has been dropped in favor of more spontaneous improvisations in which both locations and characters are solicited from the audience. Just from watching the group, one could tell that there was not so much anguish: the cast enjoyed what was happening, and worked as a team.

I WENT to see Albert at The Proposition's new office to find out what had happened. He is attractive, if slightly ferocious looking, and seems to have a theater person's compulsive need to create; he is capable of seeing a sexual component in almost everything he or anyone else does. He is working now at the Yale Drama School and is writing a thesis on "sex in the theater."

Albert says of the show when he came to it. "It was a history of doing things the wrong way. This little theater group was operating under 'the star system.' The actors would cut each other's throats for laughs. It had a canned quality, and in that, it was almost like a TV show. The show was artistically bad, and it was boring. The actors didn't respect themselves or each other."

The first thing Albert did was sponsor parties for the cast. This went on all summer: "I had to prove to them that they liked each other. The Living Theater says that you have to screw together to act together."

With the cast of The Proposition, a Living Theater approach seemed unreasonable. So Albert worked with the cast, using sensitivity training, bio-mechanics, and games therapy, which he admits are non-sexual substitutes. "We played games because The Proposition is about games. 'Dating Bar' [one of the skits in the show] is only a very sophisticated game between frightened people. To help our improvisational skills, we played 'ghosts,' which shows you that you've got to link words together.

"We also worked on sense awareness. One day I told the group to be a donut. They spent a long time just standing in a circle until they began to understand doneness. Then we took bites away by having people leave the room, and we tried to understand at what point the donut stopped being a donut. Then I had them be the hole, then try to understand the difference between a jelly donut and a glazed donut. If you can understand how to convey 'donut' theatrically, you can play any character. Also we tried to understand what nonverbal communication means, because in 1969, silence is more articulate than words."

Albert sees this sort of approach to the theater as part of a fight everywhere for humanness. He sees what he does as linked with the sexual revolution, radical polities and drugs. He finds working in Cambridge important because the city represents the very rationality that is choking us. "What's happening on stage must always be alive. That's why we don't have rehearsals anymore. The show is a dramatic moment, whose components are actors and an audience involved in time and space by what happens on stage. When an improvisation goes badly, the audience feels as badly as we do. So that dramatic moment cannot be approximated in a rehearsal.

SOINSTEAD of rehearsing, the company plays games, goes on field trips, or reads strange magazines. Albert wants the actors to rediscover their own human-ness, and put it on stage. But he raises some questions about what is theatrically valid in the name of "life" and "humanity" and what is not: "One wants a theatre of bare ago. Not a theatre of id, which is what we're seeing today. For example, if one wants to see a prick on stage, one wants to see an creation. A limp phallus means nothing, and it's unattractive. And because of that, I Am Curious, Yellow and Oh Calcutta! are Antarctic and anti-sexual. But on the other hand, what is on the stage must be one step away from reality, and that one step is what separates art from life. We want something halfway between reality and fantasy. And thus when the first real stage fuck happens, you will not be seeing art. Implied in art is aesthetic distance."

It is apparent that Albert has conceptions of the theater for which our old friend The Proposition may not be the best vehicle. With Albert directing a program of psychic betterment, with the cast believing in the show, and with the new dynamic of improvisational theater to involve the audience, something big should happen.

But the show is basically just a happier edition of the old Proposition. It is still funny, but not vital, and still concerned, but neither political nor socially significant.

In his more wistful moments. Albert muses over the contradictions between what he wants The Proposition to be and what it is: "We live in a Beckett world, filling up time. The Proposition presents the games we play and simply satirizes them. It offers no way out, and in that, it is a theatre of desperation. But I'm not sure that theatre can ever be therapeutic. People come to laugh and be entertained. They want to see bedrooms and bathrooms, and that's what we give them in The Proposition.

"I do this job because I believe in the form of improvisational theatre. But improvisational theatre is like a magic show, because we don't actually improvise from scratch. And the audience knows that the rabbit just doesn't appear. But how did it get there? A good magician, like a good director, uses illusion to achieve effect. People get pleasure out of seeing The Proposition, but they are not fulfilled."