- A Marxian Introduction to Modern Economics -
This site is dedicated to the editor of the "4th" volume of Capital,
Das Finanzkapital, Eine Studie zur jüngsten Entwicklung des Kapitalismus
Vienna; Verlag der Wiener Volksbuchhandlung Ignaz Brand & Co. 1910.
Rudolf Hilferding and his first wife Margarete
This dedication does not imply acceptance of Hilferding's political attitude. In fact, Rudolf Hilferding was a leading politician of the II. International and as such very much responsible for its disastrous failure. Furthermore, his role in the German November Revolution 1918-19 - he was a member of the commission of socialisation of the economy and had opposed Rosa Luxemburg and Karl Liebknecht - has to be firmly condemned. The comment in the Great Soviet Encyclopedia's entry on Hilferding appears to be rather fair: "After the war Hilferding openly professed revision of Marxism, advancing the theory of “organized capitalism”. He was hostile to Soviet power and the dictatorship of the proletariat. After 1924 he was a deputy in the Reichstag. In 1923 and 1928-29 he was the minister of finance in the bourgeois government of the Weimar Republic. Hilferding's opportunism was criticised by V.I. Lenin, who included him among the people who exerted “the bourgeoisie's influence on the proletariat from within the working-class movement” (Poln. Sobr. Soch., vol. 41, p. 296)." Great Soviet Encyclopedia, London, New York: Macmillan; 1975. Vol. 6, pp. 615-616.
When Hilferding is still honoured, this is because his Finance Capital is really a great advance in Marxian economic analysis, in particular his analysis of money and even more important his analysis of the cyclical crises of monopolistic capitalistic development. That Hilferding himself did not draw the proper conclusions from his economic analysis seems to be indeed due to his bourgeois background. In this context it should be noted that his first wife Margarete was a psychiatrist from Vienna and he himself had graduated in medicine. It is not that errors in his economic analysis led him to a quasi schizophrenic attitude in politics (see below), but he has to be considered as a political agent of the Habsburg Empire. His intellectual abilities were outstanding and Karl Kautsky as the Marxian authority was simply not able to grasp Hilferding's economic analysis properly as can be readily seen from his review (Kautsky: Finanzkapital und Krisen, Die neue Zeit, 1911). Lenin, who had first welcomed Finance Capital, together with Trotsky finally condemned Hilferding's political actions. That this was indeed justified becomes most clearly concerning Hilferding's attitude towards Hitler as the following comments in the introduction by Yvon Bourdet to the French edition “Le capital financier” indicate:
“Le 30 janvier, tandis que Lazarsfeld [un professeur] donnait une conférence, on vint annoncer l'arrivée de Hitler à Berlin; de sept heures du soir à une heure du matin, les hommes du Casque d'Acier, noyés au milieu des sections d'assaut, dont les bataillons n'étaient séparés que par des cliques militaires, défilèrent en une immense retraite aux flambeaux. Selon Lazarsfeld, Hilferding ne prit pas cette mascarade au sérieux. A son avis, le pouvoir de Hitler ne pouvait durer plus de six ou huit semaines; dès qu'il toucherait à la Reichsbank, il serait rejeté par la bourgeoisie capitaliste.” (Introduction de Yvon Bourdet, to the French edition "Le capital financier", p. 31).
Hilferding appears even more ridiculous confronted with the comments of a party member who in 1933 had pressed for a general strike as a response to the nomination of Hitler as chancellor.
“One party comrade has vividly described Hilferding's reaction to his proposal for a general strike in February:
“He was sitting in a comfortable easy chair with warm felt slippers on his feet and remarked with a benign smile that I was a young firebrand and that political skill consists of waiting for the right moment: After all, he said, Hindenburg is still the President, the government is a coalition government, and while Hitlers come and go, the ADGB is an organization that should not risk its entire existence for a fleeting political purpose.”
For Hilferding, the right moment never came. Within weeks Hitler was able to assume dictatorial powers. In June 1933 the SPD was banned.” (William Smaldone, Rudolf Hilferding. The Tragedy of a German Social Democrat. DeKalb: NIUP; 1998. p. 171,172)
These are comments on the behaviour of a man, who 23 years earlier had published the following lines:
"The demand for an expansionist policy revolutionizes the whole world view of the bourgeoisie, which ceases to be peace-loving and humanitarian. The old free traders believed in free trade not only as the best economic policy but also as the beginning of an era of peace. Finance capital abandoned this belief long ago. It has no faith in the harmony of capitalist interests, and knows well that competition is becoming increasingly a political power struggle. The ideal of peace has lost its lustre, and in place of the idea of humanity there emerges a glorification of the greatness and power of the state. The modern state arose as a realization of the aspiration of nations for unity. The national idea, which found a natural limit in the constitution of a state based upon the nation, because it recognized the right of all nations to independent existence as states, and hence regarded the frontiers of the state as being determined by the natural boundaries of the nation, is now transformed into the notion of elevating one's own nation above all others. The ideal now is to secure for one's own nation the domination of the world, an aspiration which is as unbounded as the capitalist lust for profit from which it springs. Capital becomes the conqueror of the world, and with every new country that it conquers there are new frontiers to be crossed. These efforts become an economic necessity, because every failure to advance reduces the profit and the competitiveness of finance capital, and may finally turn the smaller economic territory into a mere tributary of a larger one. They have an economic basis, but are then justified ideologically by an extraordinary perversion of the national idea, which no longer recognizes the right of every nation to political self-determination and independence, and ceases to express, with regard to nations, the democratic creed of the equality of all members of the human race. Instead the economic privileges of monopoly are mirrored in the privileged position claimed for one's own nation, which is represented as a 'chosen nation'. Since the subjection of foreign nations takes place by force - that is, in a perfectly natural way - it appears to the ruling nation that this domination is due to some special natural qualities, in short to its racial characteristics. Thus there emerges in racist ideology, cloaked in the garb of natural science, a justification for finance capital's lust for power, which is thus shown to have the specificity and necessity of a natural phenomenon. An oligarchic ideal of domination has replaced the democratic ideal of equality."
Rudolf Hilferding. Finance Capital. A Study of the Latest Phase of Capitalism. London: Routledge & Keagan Paul; 1981. Chapter 22.
How could someone provide such clear insights and then acting and totally ignoring them. Was Rudolf Hilferding schizophrenic? The considerations above must lead to this conclusion. Hilferding's Finance Capital served the German bourgeoisie as a scenario for its imperialist strategies and Rudolf Hilferding, although like Lenin and Trotsky very intelligent, was in contrast to the latter just a political puppet of the bourgeoisie, like Ebert, Noske and so many modern social democrats.
When we are not dedicating this Internet site to some of the avant-garde communists, e.g. Rosa Luxemburg, Leon Trotsky or even Lenin himself, this is because this is not a political site but a site on Marxian Political Economy and it is Finance Capital and not the writings of the communists which constitutes a real benchmark in Marxian economic analysis. In her very favourable introduction to Rosa Luxemburg's “The Accumulation of Capital”, Joan Robinson regards it as “prescience”.
The Reader is confronted on this page regularly with anti-communist authors, but this is not done in order to induce him to abandon communism but to understand the principles of political economy properly in order to discover what a world could be like in which “the free association of all will make the international to be a genre humane.”
The discussion of Marxian Political Economy is at the centre of the class struggle and as such there will never be any agreement amongst different interests. This does not mean that one cannot improve the arguments. But in fact, the (Western) Marxists have not succeeded in providing a body of economic analysis which could successfully defeat the orthodox mainstream and unite the labour movement in its struggle for emancipation and liberation. This is mainly due to a careful control and manipulation of the discussion by bourgeois intelligence. A fundamental characteristics of Western critical Marxism is that it had and has to be Anti-Soviet, if it was to be tolerated as part of the economics profession and the academia. A practical consequence is that most academic Western Marxists do not speak or read Russian which is of course an important limitation and this limits also the discussions on this site. In the 1960s and 1970s the generations of Western Marxist mathematical economists were prevented from taking full advantage of modern developments in Soviet economic theory. The “Cambridge Marxists”, most prominently Piero Sraffa, did everything to ban marginal analysis of labour values from left economic discussions. But it is mainly marginal analysis which reveals the optimal use of labour! The Reader should notice that the Cambridge Marxist Maurice Herbert Dobb in his “Theories of Value and Distribution since Adam Smith” (1973) does not discuss neither H.H. Gossen (1854) nor Jevon's “theory of labour” (1871, ch. 5) where the marginal approach to the labour theory of value had first been introduced.
It is hoped that this site offers useful contributions to the build up of a modern body of Marxian economic analysis even though Russian works have not been taken into account sufficiently. This is because the roots of modern economic analysis are found in the writings of the French authors, Jules Dupuis, Auguste Cournot, Léon Walras, the German authors H.H. Gossen (1854), Hans von Mangoldt, Karl Marx, Friedrich Engels, and Rudolf Hilferding, the English classical economists Adam Smith and David Ricardo, and W. S. Jevons and John Bates Clark, just to mention the most important authors.
But the modern Marxist position is of course best expressed by a Soviet economist, Leonid V. Kantorovich (Nobel Prize 1975). It is his writings which enable us to span the bridge from the classical economists to modern economics, a bridge which rests entirely upon the labour theory of value.
Leonid V. Kantorovich (19.1.1912 Saint Petersburg – 7.4.1986 Moscow)
Nobel Prize 1975
The most incredible aspect of the MIME project is that by re-establishing the proper (marginal) analysis of labour values we have discovered the law of Historical Materialism of the transformation of the capitalist mode of production to the socialist mode of production as a process of “crowding out capitalism”. This process, which can also be regarded as labour's strategy, appears at first as some reformist approach. Closer investigation reveals that it is the revolutionary approach of the labour movement. As such it is the proper outcome of the analysis of Finance Capital. Hilferding's theory of “organized capitalism” - also supported by Jean Jaurèz already in 1912! - is indeed a terrible error. On the other hand Lenin's approach of a military revolution appears as an exceptional path, only appropriate under the extreme conditions of open war. “Crowding out capitalism” seems to be a “Third Way” approach but in contrast to the “Third Way” theories it is not anti-Soviet and neither anti-communist but the modern Marxist communist approach to social progress and the pursuit of the realization of human rights.
Université Paris Ouest – Nanterre, La Défense, 22.4.2011
Copyright © 2011, Klaus Hagendorf. All Rights Reserved!