Academic journal article History of Economics Review

Hilferding's Finance Capital in the Development of Marxist Thought

Academic journal article History of Economics Review

Hilferding's Finance Capital in the Development of Marxist Thought

Article excerpt

When Rudolf Hilferding's Finance Capital was first published, it was regarded as a major event in the development of Marxian political economy. Two of the most important contemporary social democratic theorists greeted its publication with great enthusiasm. For Otto Bauer the book read like a fourth volume of Marx's Capital, while Karl Kautsky concluded that Hilferding had vindicated Marx's approach to economics. Kautsky described Finance Capital as 'a completion of Capital', which both supplemented and revised volumes II and III (Bauer 1909-1910; Kautsky 1910-1911). Otto Bauer (1881-1938) was one of the leading theoreticians of the Austrian socialist party, and himself the author of an acclaimed text on the Marxian interpretation of nationalism (Bottomore and Goode 1978). Karl Kautsky (1854-1938), sometimes described as 'the Pope of Marxism', had been the most influential theorist in the German socialist movement since the death of Friedrich Engels in 1883 (Geary 1987). Their praise was not given lightly.

The original German text of Finance Capital was reissued in 1920 by the Wiener Volksbuchhandlung, in 1955 by Dietz in East Berlin, and in 1968 by Europaische Verlagsanstalt of Frankfurt. Italian, Spanish and French translations appeared between 1961 and 1970. (1) The English version was delayed until 1981, when the eminent British sociologist Tom Bottomore drew upon unpublished translations by Sam Gordon and Morris Watnick in preparing the English version. Bottomore does not explain why neither Gordon nor Watnick had themselves been able to publish an English translation. It is a sad reflection on the current level of interest in Marxian political economy that the English translation is now out of print.

Its author was a major intellectual figure in the Second International. Born in Vienna on 10 August 1877, Rudolf Hilferding (2) grew up in a prosperous middle-class Jewish family. He studied medicine at the University of Vienna, qualifying as a doctor in 1901 and practising for some years afterwards. At the same time he studied economics, in 1905 taking part in Eugen von Bohm-Bawerk's seminar in economic theory at the University of Vienna, along with Bauer and the young Joseph Schumpeter (Michaelides and Milios 2005). He was already writing on economic and political issues for the socialist press, and by 1906 he had completed a first draft of Finance Capital. A brief spell in Germany was ended when the police expelled him, but Hilferding returned permanently to Germany at the end of the First World War to edit the journal of the independent socialist party (USPD), which took a 'centrist' position between Communism and mainstream social democracy; he rejoined the latter when the USPD and SPD merged in 1922. By now a German citizen, he sat as a socialist member of the Reichstag from 1924 to 1933, and served as Finance Minister in both the Stresemann government in 1923 and that of Muller in 1928-29. Despising inflation as a capitalist device to cut real wages, (3) Hilferding was a consistent supporter of 'sound finance' while in office (James 1981). In 1933 he went into exile, spending his final years in Denmark, Switzerland and finally in France, where he was handed over to the Gestapo by the Vichy authorities in February 1941 and murdered soon afterwards.

Finance Capital was, first and foremost, an intervention in the revisionist controversy within German Marxism that had begun with Eduard Bernstein's attack on orthodoxy in the mid- 1890s and was still simmering ten years later (Howard and King 1989, chapter 4). (4) Throughout the book Hilferding defends Marx's vision of capitalism, and the inevitability of socialism, against his critics inside the party. This, and not its detailed analysis of money and finance, is the core message of his text. Bernstein had argued that capitalism had changed, its internal contradictions having become much less sharp. German society was becoming less polarised, he claimed, not more so as the orthodox Marxists maintained, and there was real scope for an alliance between the working class and the liberal bourgeoisie to implement economic and social reforms in the interests of the workers. …

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