"Death to Traitors," reads the white-lettered red sign above deeply rutted Saint Michel Boulevard in downtown Cotonou, the regional center for this Marxist country's capitalist trade with its West African neighbors.

The boulevard is crowded with pedestrians. African traders from Nigeria and Upper Volta mingle with Europeans, all haggling with myriad shopkeepers for the consumer goods they will carry across Benin's borders, taking care to hide most of them from the prying eyes of custom officials.

Le Benin Movie House is showing the usual West African fare or romance movies from India, Japanese karate films and French spy thrillers -- all banned as bourgeois entertainment in most other leftist revolutionary countries.

One of the ironies in this Pennsylvania-sized Marxist country is that the freewheeling capitalist commercial activity is the only healthy sector of the economy.

Beyond the billboards and deteriorated streets, it is hard for Western visitors to assess what Benin's six-year-old Marxist revolution has achieved. Visitors to Benin's Information Ministry are received brusquely and suspiciously.

Benin, one of Africa's poorest countries, became independent from France in 1960 as the nation of Dahomey. Dahomey was plagued with upheaval almost from the start and established an African record of six bloodless military coups in its first 12 years of independence.

The country's troubles could be traced to discontent among the large number of unemployed among the educated elite and rivalries among the more than 40 tribal groups that make up Benin's 3.4 million people.

In 1972, Lt. Col. Mathieu Kerekou seized power in a coup and since then, Benin has enjoyed its longest period of relative domestic peace. Two years later, Kerekou declared a Marxist state and changed the country's name from Dahomey to Benin. He declared the Benin People's Revolutionary Party the country's only legitimate political organization.

Since then, Kerekou's government has uncovered two alleged coup plots. But the most serious challenge to his government was a bungled mercenary-led invasion of Contonou three years ago by disgruntled Beninese exiles.

A U.N. commission report on the invasion said it was mounted by an exile group called the Dahomean Liberation Front and was launched from Libreville, the capital of Gabon. The group of invaders reportedly included a French adviser to Gabon's president, Omar Bongo.

The invaders flew into the airport at Cotonou and shot their way into the downtown area. But when they did not inspire the civilian uprising they had hoped for, they retreated to the airport and left. Only a few casualties were suffered on each side.

The exiles belonged to Benin's perpetually disgruntled elites, who have been leaving the country in increasing numbers in recent years despite the restrictions on obtaining government exit visas. This exodus has drained the country of much-needed trained manpower.

But Kerekou's government is popular among Behin's traders and peasants, who had been unhappy under previous governments, according to several foreign observers.

Following the example of Benin's three major trading partners, Nigeria, Ghana and Upper Volta, Kerekou has put a civilian face on his government.

The 350-member Revolutionary National Assembly was handpicked by Kerekou last November and was seated in February. Peasants were given 76 seats, the bourgeoisie holds eight, Protestants, Catholics and Moslems were given a seat each, while animists, the followers of traditional religious who comprise 65 percent of the population, were given 3 seats.

Kerekou also recently reshuffled his all-military Cabinet, dropping more radical members in favor of more pragmatic civilians. This move may have caused some resentment among the officers he returned to the barracks, according to one informed observer.

The shakeup is interpreted to be part of an effort to break the inertia in the government bureaucracy. The government is not oppressive, a Western source said, but bureaucrats do not like to take the initiative for fear of being accused of being counterrevolutionary. Nothing, he added, is done without the written approval of the Revolutionary Party's Central Committee.

Although statistics are impossible to come by, agricultural exports, which supply most of Benin's revenue, have declined sharply since the mid-1970s. Foreign observers blame several years of drought and mismangement of the central government marketing system. Spiraling oil prices have also hurt Benin, whose yearly budget is less than $100 million.

Despite Benin's close ties to the Soviet Union, Cuba, China, North Korea and Libya, the lion's share of the $20 million in aid it annually receives comes from France, although relations between the two countries are cool. American aid financed building of a $13 million bridge that opened last year.

But official contacts between Beninese officials and American diplomats are sparse. All approaches must be approved by a note from the Security Ministry. Relations degenerated in February when the government gave the U.S. consul 24 hours to leave the country after he had been identified in the Paris-based magazine, Jeune Afrique, as a CIA spy. Last month, the U.S. government retaliated by giving the Beninese consul a week to leave Washington.