News | Analysis of Capitalism - Social Theory Rudolf Hilferding: What Do We Still Have to Learn from His Legacy?

The latest entry in the Luxemburg International Studies in Political Economy series

It is now the third time that Judith Dellheim and Frieder Otto Wolf to present a new volume in the Luxemburg International Studies in Political Economy series on the website of the Rosa-Luxemburg-Stiftung. This is not simply because of the unifying theme of “Luxemburg” in the title, but also because of the Rosa-Luxemburg-Stiftung’s sponsorship of the books themselves.

Edited by Jan Toporowski and Frieder Otto Wolf, the series is based on three elementary and foundational ideas:

  • The term “political economy” is used in an inflationary manner in contemporary public debates, whether academic or political. In light of this reality, we refer back to Karl Marx’s concern to radically criticize the relations of domination both theoretically and practically—as he particularly elaborated with regard to the relations of capital, the capitalist mode of production and its effects on people and their natural living conditions, and especially by systematically elaborating a critique of bourgeois political economy.
  • The capitalist mode of production with its social and ecological consequences, capital relations within their context, as well as other relations of domination in modern bourgeois societies arise and develop in reciprocal connection with finance. Finances in turn is evidently based on money—as an expression of existing power relations in the processes of reproduction of modern societies, which in turn are based on the established system of the social division of labour in the processes of metabolism with nature and which shape the social sphere of circulation. There, social actors/agencies also and especially move, concentrate, and centralize money signs and finance. Circulation has its own dynamics, which have an effect on the reproduction of society, capital, and power relations, as well as on people’s social and ecological living conditions.
  • In her examination of Marx’s critique of political economy, Rosa Luxemburg demonstrated in an inspiring way what a Marxian criticism of Marx can mean. In doing so, she again paid special attention to matters of finance. The question arises as to what extent a Luxemburgian criticism of Marx can again be taken up critically, further elaborated, and thus utilized in a productive manner.

This is why the first two volumes of Luxemburg International Studies in Political Economy dealt with Luxemburg’s Accumulation of Capital and Marx’s Third Volume of Capital. It is also why the present, third volume, Rudolf Hilferding: What Do We Still Have to Learn from His Legacy?, is particularly interested in the economic writings of Rudolf Hilferding, who sought to continue what Marx had begun in his manuscripts and working materials for the Third Volume of Capital, as had been rendered accessible by Friedrich Engels. In doing so, Hilferding focused on the development and use of the money function of means of payment or credit by the most powerful owners of capital.

The question has to be raised and discussed as to how Hilferding critically dealt with Marx’s writings that were accessible to him, to what extent and how he understood Marx’s method, and how far he was able to continue the theoretical and practical critique of the capitalist mode of production and the critique of political economy. A major disagreement between Luxemburg and Hilferding is particularly evident with regard to their understanding of society, their understanding of politics, and their conception of “critically continuing Marx”.

While Hilferding views society as the sum of individuals and the relationships between them, Luxemburg sees it as the totality of individuals in the relationships between them. She focuses on the self-transformation of individuals and, at the same time, on the transformation of relations between individuals through individuals.

On the one hand, Hilferding’s particular interest in circulation as a mediator between individuals results from this seemingly minor difference between Hilferding and Luxemburg, while Luxemburg focused on the social connection of individuals as transpires beneath the surface of the circulation process. This difference, then, has further consequences for the understanding of money, finance, and finance capital, which Hilferding saw mainly as matters of circulation. Luxemburg, on the other hand, viewed these phenomena primarily as an expression of relations between people in the social division of labour, where, due to property relations, surplus social labour in particular is continuously spent, and where the results of social labour are privately appropriated.

On the other hand, an important difference in the approach to politics against exploitation and oppression also results from the different theoretical understandings of society and concrete political-economic categories: while Luxemburg relied on the emancipative-solidary self-empowerment and self-organization of the oppressed and exploited, Hilferding, despite refusing to become a party mercenary, did not break with the idea of a hierarchically structured workers’ party adhering to the logic of parliamentarism.

If today, in light of overpowering financial market actors and transnational corporations, the aim is to understand their actions and functioning in order to radically criticize the contemporary forms of the capitalist mode of production both theoretically as well as practically, then the forces of critique and emancipation should reach for Hilferding’s writings, particularly Finance Capital, and read them with “Luxemburg’s eyes”. In other words, the phenomena of the financial market should not be explained via a linear extrapolation of Marx’s Capital as Hilferding understood it, but rather from a perspective of Marx’s critically appropriated conception of society and of method. The new volume Rudolf Hilferding. What Do We Still Have to Learn from His Legacy? challenges readers to find—and criticize—precisely such a perspective.

To mark the volume’s publication, we asked our contributors to briefly answer two questions about Rudolf Hilferding’s work and legacy.

Join us for the book’s online launch event on 16 April together with several of the authors.

What do you think is Hilferding’s most important scientific legacy for our times?

Michael R. Kraetke: Hilferding saw very clearly that in order to analyse the most recent developments of capitalism in Marxist terms, one has to work on these terms, that is, one has to continue Marx’s theoretical work, expand and revise some of Marx’s concepts, which implies a thorough rethinking of Marx’s critique of political economy. And—even more important—in order to achieve any serious and accurate analysis of the new phenomena of the recent phases of capitalist development, one has to tackle the many problems of the theory of capitalism (and its critique) that Marx left unsettled. These are not philosophical problems or problems of the mode of presentation, but genuine problems of economic theory.

Nikos Stravelakis: Hilferding is proof of the strength of political economy. That is, he shaped and swayed men’s minds. Irrespective of whether this was for better or worse, it is his most important legacy. If left-wing politics is to make a difference in this new century, they must find a way of shaping men’s minds. Political economy is one of the main tools for achieving this.

Patrick Bond: In addition to the enormous respect we owe the memory of Hilferding and all he attempted in his political career, a negative analytical legacy—the overestimation of the power of finance capital to resolve capitalist crises—is important today, where similar reformist politics, finance-compliant regulatory strategies, and institutionalist analyses prevail. The reformism I worry about comes from overuse of “financialization” tendencies as a justification to critique what are mainly surface-level phenomena (associated with overloaded debt, chaotic credit systems, corrupt financiers, and speculative processes out of touch with the real economy), because by focusing so much on these institutional manifestations, the underlying problems of capitalist crisis formation are given short shrift.

Andrew Kilmister: In my view, Hilferding’s most important legacy is not any specific doctrine or theory—it is an approach to understanding the world. This starts from fundamental principles and follows them through a multitude of contemporary developments without losing sight of the connections between those developments and the underlying unity of the capitalist economy.

Stephen Maher and Scott M. Aquanno: Hilferding’s most important legacy lies in his attention to the development of particular institutional forms within the basic framework of capitalist social relations laid out by Marx. This applies especially to his analysis of the emergence of the modern corporation and financial system, and the ways in which these constitute and reproduce capitalist class power. Hilferding’s classic work remains the crucial starting point for any Marxist analysis of the corporate form today.

Radhika Desai: Hilferding has two most important legacies: his faithful elaboration of Marx’s sophisticated understanding of money, which both understood was not a commodity, and his distinction between the productive financial system of the “model countries of finance capital” and the archaic, predatory, speculative, and unproductive system of the United Kingdom. No distinction is of greater importance as we seek to escape the ills of financialization.

Claude Serfati: One of Hilferding’s major inputs was to underline that as a social relation, capital presents a double face: as capital-property and as capital-in-function (or productive capital). This hypothesis, long studied by Marx, provides a framework to analyse the contemporary thriving of finance capital.

John Grahl: The importance of Hilferding is that he advanced a more realistic view of economic tendencies than can be found in the theoretical works of Luxembourg or Lenin, and this gives his work greater current importance.

Jan Toporowski: Hilferding showed how the functioning of the modern economy is determined by the corporate structure of business, from large business corporations to small and medium-sized enterprises. This is so different from the standard narrative that pretends that capitalists are households that have decided to go into business. Hilferding’s breakthrough has important implications for government policy and strategies for social and environmental reform today.

Patrick Higgins: Hilferding’s most important contribution is that he demonstrates the value of “open-mindedness” in Marxist theory and politics, as in his life he was able to synthesize from many different theoretical approaches and work with many different political groups. In other words, he shows how Marxism can enrich discussions about the “Third Way” coming from the left to the centre, rather than for more traditional capitalist positions to gradually incorporate “social” elements.

Jan Greitens: Nowadays, Hilferding’s name is often used only as a catchword connected with any criticism of banks or financial markets. However, he is an author who, taking Marx as a starting point, presented in his opus magnum Finance Capital a comprehensive, undogmatic, and creative analysis of the economic, sociological, and political developments of his time.

Judith Dellheim: The personality and writings of Rudolf Hilferding represent an enormous theoretical and political challenge for those who see themselves critically bound to the Marxian tradition. Accepting them unreservedly opens up insights into the development of the capitalist mode of production, the method of its theoretical critique, and the politics of actors who seek to radically attack and ultimately overcome relations of domination and capital.

Frieder Otto Wolf: Hilferding has specifically raised the question as to how and how far the processes of reproduction of the capital relation, and of the domination of capital, can be reconstructed and theoretically articulated on the basis of available official statistics. This was a decisive contribution to founding a line of research in the field of the critique of political economy , even if his contribution—as a result of the political divisions in the workers’ movement—was widely ignored.

What would you recommend to readers of our volume?

Michael R. Kraetke: I would recommend to anybody who wants to know more about the Austro-Marxist background of Hilferding’s work and his continuing links with the Austro-Marxist school to have a good look at my article on Austro-Marxism and political economy, published in German in the Beiträge zur Marx-Engels-Forschung NF 2018/19, and soon to be published in English in Historical Materialism.

Nikos Stravelakis: Usually books that look into the legacy of an author either praise or criticize him. This collective volume has both praise and criticism for the ideas of Rudolf Hilferding. It is an original approach that enables the reader to look from different angles and perspectives into ideas and events that marked a good part of the past century. At the same time, this pluralistic approach offers insights for understanding contemporary capitalism.

Patrick Bond: Hilferding should be seen not primarily for his theoretical certitude, but in historical context: the era of financial ascendance that allowed him to make advances on Marx’s unfinished theory of capitalist crisis in Volume III of Capital, on the one hand. On the other, as some of the authors show, Hilferding neglected the spirit and content of Marx’s thinking about capitalist contradictions, including overaccumulation crisis tendencies and persistent primitive accumulation as part of imperialism, in the way Rosa Luxemburg later described more accurately. Indeed, from 1909 (Finance Capital) to 1913 (Luxemburg’s Accumulation of Capital) to 1929 (Henryk Grossmann’s The Law of Accumulation and Breakdown of the Capitalist System), these rich works analysing mainly European capitalism—but also imperialism—show the growing capacities of German, Austrian, and Polish authors to move from empirical to theoretical contributions, and these will stand as vital markers of the system’s laws of motion for all time.

Andrew Kilmister: I would suggest to the readers of the book that they see it as a contribution to an ongoing debate about the legacy of classical Marxism for understanding the world we live in. This is not a debate about uncovering revealed truths but a collective discussion about how the ideas of this tradition can help us today, including, and perhaps especially including, the mistakes made a century ago.

Stephen Maher and Scott M. Aquanno: We hope that this volume will draw attention to the ways in which Hilferding’s rich methodology can advance Marxist understandings of contemporary corporate capitalism, and the various stages of its development—especially in relation to the much-misunderstood phenomena of financialization. We believe the volume shows the continuing importance of Hilferding’s ideas today, as we strive to develop a more sophisticated theorization of the modern capitalist corporation as an organizational form.

Radhika Desai: This book is a major review of Hilferding for our times, including some of the most important critical thinkers of our time. It explores the full scope of Hilferding’s work on political and geopolitical economy, including changes in industrial organization, money, and finance, his relations to the intellectual milieu of his time and significance for later thinkers.

John Grahl: Recommendation of our work could be based on the need to develop an account of contemporary economic developments which draws on Marxist positions, while recognizing the deep transformations to give them present-day relevance.

Jan Toporowski: Readers of our book should be inspired by Hilferding’s monumental effort to understand the politics of his time not as the choices of individuals and still less a conspiracy of the elite, as Hobson was inclined to do, but as an institutional outcome of the way in which business operates. The finance that appears as a new protagonist today is, as Hilferding showed, an essential part of a system dominated by big business. But the major change from Hilferding’s time is the vital role that government now plays in finance. The transition to a better society lies through understanding finance.

Patrick Higgins: Hilferding’s more flexible and heterogenous approach to understanding “capital” and its consequences for the development of global finance and modern capitalism present fertile ground in the history of economic theory, developmental economics, as well as the history of economic thought. Some of his statements on cartelization and hierarchization of financial structures as both solutions to as well as creators of global financial crises sound prophetic in an era where “too big to fail” has become a staple in our political discourse.

Jan Greitens: Like any author, Hilferding is tied to his time’s problems, debates, and political events. The book makes visible some of these influences on Hilferding, and one must take his historical circumstances into account in any attempt of actualization.

Judith Dellheim: The reading of our book should help us to empathise with Hilferding in his situation and to pursue the question of how Hilferding’s writings and his biography help us to understand our own way of thinking, the world today, and our own conditions for political action. Productive Hilferding criticism requires radical self-criticism.

Frieder Otto Wolf: Hilferding should be used as an important point of reference for contemporary debates—not just as an undeniable heritage to be honoured and kept in good shape. The new debate on Hilferding, as it has materialized in this volume, should be able to make an important contribution to our understanding of the ways in which inquiries into the Marxist tradition are capable of contributing to a substantial advance in the scientific understanding of present tendencies of capitalist development.