Rudolf Hilferding  

excerpt from 





Hillerding published his major work, Das Finanzkapital, in 1910; it was immediately hailed by such diverse figures as Kautsky (1911), Lenin (1916) and Bukharin (1917), as a path-breaking development of Marxist economic analysis. Essentially, Hilferding argued that the concentration and centralization of capital had led to the domination of industry and commerce by the large banks, which were transformed into ‘finance capital’ (19l0, p. 225). The socialization of production effected by finance capital required a correspondingly increased economic role for the state. Society could therefore plan production by using the state to control the banking system:

 The socializing function of finance capital facilitates enormously the task of overcoming capitalism. Once finance capital has brought the most important branches of production under its control, it is enough for society, through its conscious executive organ — the state conquered by the working class — to seize finance capital in order to gain immediate control of these branches of production . - - . Even today, taking possession of six large Berlin banks would mean taking possession of the most important spheres of large-scale industry… (ibid., pp. 367—8).

This chain of reasoning, however, tended to exaggerate not only the leverage of the banks over industry, but also the role of the state in the organization of production. While it convinced Hilferding that socialism could be introduced by a determined majority in parliament, it demonstrated to Lenin that socialism would not be possible unless the state was ‘overthrown’ by a determined minority outside parliament. Their common point of reference was the centrality of the state — rather than society — in the ‘latest phase of capitalist development’. It forced socialists to make a choice between parliamentarism and insurrection, the very nature of which contributed to the defeat of the labour movement in Germany and the rise of party dictatorship in Russia (Neumann, 1942, pp. 13—38). Although theory cannot be held responsible for the course of history, it may influence political judgments which tip the balance at decisive moments. Hilferding’s generation lived through many such moments,





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