Rudolf Hilferding

Rudolf Hilferding

Rudolf Hilferding (10 August 1877 – February 11, 1941) was an Austrian-born Marxist economist, leading socialist theorist,International Institute of Social History, "Rodolf Hilferding Papers".] politician and chief theoreticianRobert Solomon Wistrich, "Who's Who in Nazi Germany".] for the Social Democratic Party of Germany (SPD) during the Weimar Republic,Smaldone, William, "Rudolf Hilferding and the total state.", 1994.] almost universally recognized as the SPD's foremost theoretician of his century, and physician.David E. Barclay, Eric D. Weitz, Michael Kreile. "Between Reform and Revolution: German Socialism and Communism from 1840 to 1990"]

He was born in Vienna, where he received a doctorate having studied medicine. After becoming a leading journalist for the SPD, he participated in the November Revolution in Germany and was Finance Minister of Germany in 1923 and from 1928 to 1929. In 1933 he fled into exile, living in Zurich and then Paris, where he died in custody of the Gestapo in 1941.German Resistance Memorial Center.]

Hilferding was a propounder for the "economic" reading of Karl Marx identifying with the "Austro-Marxian" group.The New School.] He was the first to put forward the theory of "organized capitalism". He was the main defender to the challenge to Marx by Austrian School economist and fellow Vienna resident, Eugen von Böhm-Bawerk. Hilferding also participated in the "Crises Debate" - disputing Marx's theory of the instability and eventual breakdown of capitalism on the basis that the concentration of capital is actually stabilizing. He edited leading publications such as "Vorwärts", "Die Freiheit", and "Die Gesellschaft". His most famous work was "Das Finanzkapital" ("Finance capital"), one of the most influential and original contributions to Marxist economics with substantial influence on Marxist writers such as Vladimir Lenin,Thomas Lane, "Biographical Dictionary of European Labor Leaders".] influencing his writings on imperialism.Ruth Fischer, "Stalin And German Communism: A Study in the Origins of the State Party".]


Life in Vienna

On August 10, 1877 Rudolf Hilferding was born in Vienna into a prosperous Jewish family,Malcolm Charles Sawyer, Philip Arestis, "A Biographical Dictionary of Dissenting Economists".] consisting of his parents, Emil Hilferding, a merchant, and Anna Hilferding, and of Rudolf's little sister, Maria. Rudolf was sent to a public gymnasium which he graduated from as an average student, allowing him access to the university. Directly afterwards, he enrolled at the University of Vienna to study medicine.William Smaldone, "Rudolf Hilferding", Dietz, 2000. ISBN 3-8012-4113-0. p. 14.]

Even before his school leaving examinations, in 1893 he joined a group of Vienna students that weekly discussed socialist literature and later formed with young university teachers the student-organization "Freie Vereinigung Sozialistischer Studenten", whose chairman was Max Adler. This is where Hilferding first intensely came in contact with socialist theories and first became active in the labour movement. The organization also participated in social-democratic demonstrations, which came in conflict with the police, drawing the attention of the Social Democratic Party of Austria (SPÖ). [William Smaldone, "Rudolf Hilferding". p. 15.]

As a university student, he became acquainted with many talented socialist intellectuals. Aside from his studies of medicine, he studied history, economy, and philosophy. He and his fellow socialist students and friendsWilliam Smaldone, "Rudolf Hilferding". p. 22.] Karl Renner, Otto Bauer and Max Adler also studied political economy, taught by the marxist Carl Grünberg, and attended the lectures of the philosopher Ernst Mach, who both influenced Hilferding significantly. [William Smaldone, "Rudolf Hilferding". p. 19.] He became one of the staunchest supporters of Victor Adler, founder of the SPÖ.

Having graduated with a doctorate in 1901, he began working in Vienna as a pediatrist,de icon Deutsches Historisches Museum, "Biographie: Rudolf Hilferding".] however not with much enthusiasm. He spent much of his leisure time studying political economy, where his real interest lay, but he would not give up his profession until his first publications gave him success. He also joined the social-democratic party in Austria. In 1902 he contributed to the social-democratic newspaper "Die Neue Zeit" on economic subjects as requested by Karl Kautsky, at that time the most important marxist theoretician worldwide and who developed a long-lasting personal and political friendship with Hilferding. [William Smaldone, "Rudolf Hilferding". p. 30.] His collaboration with Kautsky and his regular contributions to the "Neue Zeit", the leading theory organ of the socialist movement, made him become a mediator between Kautsky and Victor Adler, trying to reduce their ideological differences. [William Smaldone, "Rudolf Hilferding". p. 41.]

In April 1902, he wrote a review of Eugen von Böhm-Bawerk's "Karl Marx and the Close of His System" (1896) defending Marx's economic theory against Böhm-Bawerk's criticism. [William Smaldone, "Rudolf Hilferding". p. 27.] He also wrote two significant essays concerning the use of the general strike as a political weapon. [William Smaldone, "Rudolf Hilferding". p. 33.] Already in 1905, his numerous publications have made him one of the leading social-democratic theoreticians and brought him into close contact with the party leadership of the SPÖ and of the Social Democratic Party of Germany (SPD). [William Smaldone, "Rudolf Hilferding". p. 40.] Together with Max Adler, he founded and edited the "Marx-Studien", theoretical and political studies spreading Austromarxism until 1923.Robert Benewick, Philip Green, "The Routledge Dictionary of Twentieth-Century Political Thinkers".]
Karl Renner, Adler and Hilferding founded an association to improve the worker's education, which established Vienna's first school for workers in 1903. [William Smaldone, "Rudolf Hilferding". p. 43.]

Hilferding married the doctor Margarethe Hönigsberg, whom he had met in the socialist movement and who was eight years his senior. She also had a Jewish background, had made her exams at the University of Vienna, and was a regular contributor to "Die Neue Zeit". Margarethe gave birth to their first child Karl Emil. Kautsky worried that Hilferding, who now complained about his lack of time, would neglect his theoretical work in favor of his good social situation as a doctor in Vienna. Kautsky used his connections to August Bebel, who was looking for teachers for the SPD's training center in Berlin, to suggest Hilferding for this position. In July 1906, Bebel recommended Hilferding for this job to the party executive, which agreed to give it to him for six months. [William Smaldone, "Rudolf Hilferding". p. 41, 42.]

Life in Berlin and World War 1

In 1906 he gave up his job as a doctor and, following August Bebel's call, started teaching Economics and Economic history at the training center of the SPD in Berlin. Having arrived in Berlin in November 1906, he taught there for one term, but a law forbade the employment of teachers without German citizenship. He had to give up this job and was replaced by Rosa LuxemburgWilliam Smaldone, "Rudolf Hilferding". p. 50.] after being threatened of eviction by the Prussian police in 1907.

Until 1915, he was the foreign editor of the leading SPD newspaper "Vorwärts", in the immediate proximity of the most important party leaders.William Smaldone, "Rudolf Hilferding". p. 47.] Bebel had recommended Hilferding for this job, after there was a conflict between the editors of "Vorwärts" and the party executive. His appointment was also meant to raise the share of marxism in the editing. In a short time, Hilferding took a leading role in the paper and was soon appointed editor-in-chief. [William Smaldone, "Rudolf Hilferding". p. 51.] Together with his work for "Die Neue Zeit" and "Der Kampf", it provided him an adequate income. He was also supported by his fellow Austrian, Karl Kautsky, who was his mentor and whom he succeeded in the 1920s as the chief theoretician of the SPD. [William Smaldone, "Rudolf Hilferding". p. 46.] Hilferding's theoretical abilities and his personal relationships to leading socialists allowed him to make his career in the party.

He published his most famous work, "Das Finanzkapital" ("Finance Capital"), in 1910, which was an important theoretical milestone that has kept its importance until today.William Smaldone, "Rudolf Hilferding". p. 52.] It built Hilferding's reputation as a significant economist, a leading economist theoretician of the Socialist International, and, together with his leading position in "Vorwärts", helped him raise into the national decision level of the SPD. It also confirmed his position in the marxist center of the SPD, of which he was now one of the most important figures. Since 1912 he represented "Vorwärts" at the meetings of the party commission, which allowed him to decisively take part in the decision-making of the socialist politics in the years before World War I. [William Smaldone, "Rudolf Hilferding". p. 70, 71.]

When World War I broke out in 1914, Hilferding opposed the SPD's politics of Burgfrieden and their involvement with the German war effort during World War I, including their voting for war credits from the very beginning. However, in an internal party voting, he was only in a small minority, led by Hugo Haase, a close friend of him, and thus they had to yield to the party's decision to grant war credits. Hilferding signed together with the majority of the editors of "Vorwärts" a declaration to oppose these politics. [William Smaldone, "Rudolf Hilferding". p. 77, 78.] In October 1915, the SPD leadership fired all these opposing editors, but Hilfering had already been drafted into the Austro-Hungarian Army as a medic long before. [William Smaldone, "Rudolf Hilferding". p. 85.]

At first, Hilferding was stationed in Vienna, where he led the field hospital for epidemics. He lived together with his wife and his two sons, Karl and Peter, who was born in 1908. Thanks to his correspondence with Kautsky, he got news about the party. Then, in 1916, he was sent to Steinach am Brenner, near the Italian border, as a combat medic. During the whole war, Hilferding remained active in writing and was politically involved. He published numerous articles in "Die Neue Zeit" and "Kampf". [William Smaldone, "Rudolf Hilferding". p. 85, 86.] One of these articles, published in October 1915, summarized the situation of the SPD and revised his theories of "Finance Capital" containing his first formulation of the concept of "organized capitalism". [William Smaldone, "Rudolf Hilferding". p. 87.]

Weimar Republic

Hilferding joined the anti-war Independent Social Democratic Party of Germany (USPD) in 1918. During the November Revolution in 1918, he returned to Berlin, shortly after the Republic was proclaimed and the emperor had fled.William Smaldone, "Rudolf Hilferding". p. 96.] For the following three years, he was editor-in-chief of the USPD's daily newspaper, "Die Freiheit", and thus member of the party executive. The "Freiheit" quickly became one of Berlin's most widely read dailies with a circulation of 200,000. [William Smaldone, "Rudolf Hilferding". p. 114.] Later, Kurt Tucholsky bashed him for his work for the newspaper in "Die Weltbühne" in 1925.

The Council of the People's Deputies, the provisional government of the November Revolution, consisting of members of the SPD and USPD, which had signed the cease-fire, delegated Hilferding to the "Sozialisierungskommission" (Socialization Committee). Its official task was to socialize industries which were suitable. He spent months with this project, which was, in spite of support among the workers, of no real interest to the government and the SPD leadership opposed its reforms. Hilferding gave a speech before the worker's councils' congress and presented them a plan to socialize the industry. It went down well with the congress and a resolution was passed, but the government didn't follow. The government's lack of support was the reason why this committee ceased in April 1919. [William Smaldone, "Rudolf Hilferding". p. 107, 108.] After the Kapp Putsch, the government, under pressure, appointed a new Socialization Committee, of which also Hilferding was a member, but still the government refused economic reforms. [William Smaldone, "Rudolf Hilferding". p. 112, 114.]

Tensions between the SPD and USPD escalated when Friedrich Ebert used troops for a suppression of riots in Berlin on December 23, 1918 without consulting the USPD. When the SPD rejected demands for military and economic reforms, the USPD withdrew from the government. Hilferding, who had accused the SPD of trying to oust the USPD from government, supported this decision. After a bad outcome in the elections for the National Assembly of Weimar, leading USPD politicians, including Hilferding, started to support workers' councils. Hilferding wrote articles in the "Freiheit" and made suggestions how they should be implemented, [William Smaldone, "Rudolf Hilferding". p. 101.] which were sharply critizised by Lenin. [William Smaldone, "Rudolf Hilferding". p. 104.]

In 1919, he acquired German citizenship and in 1920, he was appointed to the "Reich Economic Council". In 1922 he strongly opposed a merger of the USPD with the Communist Party of Germany, which he attacked throughout the 1920s, and instead supported the merger with the SPD, where he emerged as its most prominent and visible spokespersons. At the peak of the inflation in the Weimar Republic, he served as the German Minister of Finance from August to October 1923. He contributed to stabilize the mark, but couldn't stop the inflation. During his term of office the introduction of the Rentenmark was decided, but he resigned from office shortly before the monetary reform took place.

From 1924 to 1933 he was publisher of the theoretical journal "Die Gesellschaft". On May 4, 1924 he was elected to the Reichstag for the SPD where he served as the SPDs chief sposkeman on financial matters until 1933. Together with Karl Kautsky he formulated the Heidelberger Programm in 1925. Between 1928 and 1929 he again served as the finance minister, at the eve of the Great Depression. He had to relinquish this position because of pressure from the President of the Reichsbank, Dr Schacht, [Julien Steinberg, "Verdict of three decades; from the literature of individual revolt against Soviet communism: 1917-1950.".] causing his fall in December 1929 by imposing to the government his conditions for the obtention of a loan.

Life in Exile

After Hitler's coming to power,Bundeskanzler-Willy-Brandt-Stiftung, "Social democrats turned over to Germany".] Hilferding as a prominent socialist and Jew had to flee, together with his close associate Rudolf Breitscheid and other important party leaders, first to Denmark, then Saarbrücken, Paris, and finally Zurich, Switzerland, into exile in 1933. He was living in Zurich until 1938 and from 1939 on in Paris, France. However, he remained influential, having been appointed important posts in SPD's Sopade. Between 1933 and 1936, he was editor-in-chief of "Die Zeitschrift für Sozialismus" and contributor to "Neuer Vorwärts". Until 1939 he was also the party's representative for Socialist International and his advice was sought by the SPD leadership in exile.

After the attack on France he and Breitscheid fled to the unoccupied Marseille. Efforts were undertaken by the Refugee Committee, under Varian Fry, to get him out of Vichy France, along with Rudolf Breitscheid. However, they both refused to leave illegally, because they didn't have identification papers. [Donna Frances Ryan, "The Holocaust & the Jews of Marseille: The Enforcement of Anti-Semitic Policies in Vichy France".] They were arrested by the police of the Vichy government in southern France and, despite of their emergency visa to enter the United States of America, handed over to the Gestapo on February 9, 1941. He was brought to Paris and was severely maltreated on the way. After being tortured, he died of unknown circumstances in a prison in Paris, the Gestapo dungeon of La Santé. [de icon] His death was not officially announced until the fall of 1941. Fry, among others, believed that Hilferding was murdered by the Gestapo on the orders of Adolf Hitler or another senior Nazi Party official.Hilferding's wife, Rose Hilferding, died in the Auschwitz concentration camp in 1943.

"Finance Capital"

Hilferding's "Finance Capital" ("Das Finanzkapital", Vienna: 1910) was "the seminal Marxist analysis of the transformation of competitive and pluralistic 'liberal capitalism' into monopolistic 'finance capital'", [Robert Bideleux and Ian Jeffries, "A History of Eastern Europe: Crisis and Change", Routledge, 1998. ISBN 0-415-16111-8 hardback, ISBN 0-415-16112-6 paper. p. 356.] and anticipated Lenin's and Bukharin's "largely derivative" writings on the subject. [Bideleux and Jeffries, p. 361.] Writing in the context of the highly cartelized economy of late Austria-Hungary, [Bideleux and Jeffries, p. 357–359.] Hilferding contrasted monopolistic "finance capitalism" to the earlier, "competitive" and "buccaneering" capitalism of the earlier liberal era. The unification of industrial, mercantile and banking interests had defused the earlier liberal capitalist demands for the reduction of the economic role of a mercantilist state; instead, finance capital sought a "centralized and privilege-dispensing state". [Bideleux and Jeffries, p. 359.]

Whereas, until the 1860s, the demands of capital and of the bourgeoisie had been, in Hilferding's view, constitutional demands that had "affected all citizens alike," finance capital increasingly sought state intervention on behalf of the wealth-owning classes: capitalists, rather than the nobility, now dominated the state. [Bideleux and Jeffries, p. 359–360.]

In this, Hilferding saw an opportunity for a path to socialism that was distinct from the one foreseen by Marx: "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 financial capital in order to gain immediate control of those branches of production." [Quoted in Bideleux and Jeffries, p. 360.] This would obviate the need to expropriate "peasant farms and small businesses" because they would be indirectly socialized, through the socialization of institutions upon which finance capital had already made them dependent. Thus, because a narrow class dominated the economy, socialist revolution could gain wider support by directly expropriating only from that narrow class. In particular, according to Hilferding, societies that had not reached the level of economic maturity anticipated by Marx as making them "ripe" for socialism could be opened to socialist possibilities. [Bideleux and Jeffries, p. 360.] Furthermore, "the policy of finance capital is bound to lead towards war, and hence to the unleashing of revolutionary storms." [Quoted in Bideleux and Jeffries, p. 360.]



* Michaelides, P. and Milios, J. (2005), Did Hilferding Influence Schumpeter?, History of Economics Review, Vol. 41, Winter, pp. 98-125.
* Milios, J. (2001), Rudolf Hilferding, Encyclopedia of International Economics, Vol. 2, Routledge Publishers, pp. 676-79.
* Michaelides, P. and Milios, J. (2004), Hilferding’s Influence on Schumpeter: A First Discussion, European Association for Evolutionary Political Economy Proceedings of the 16th Annual International Conference, Crete, Greece, 28-31 October (CD-ROM).
* Michaelides, P., Milios, J. and Vouldis, A. (2007), Emil Lederer and the Schumpeter, Hilferding, Tugan-Baranowsky Nexus, Research Workshop in Political Economy, International Initiative for the Promotion of Political Economy, organized by : University of London and University of Crete, Rethymnon, 14-16 September.
* Michaelides, P., Milios, J. and Vouldis, A. (2007), Schumpeter and Lederer on Economic Growth, Technology and Credit, European Association for Evolutionary Political Economy, Proceedings of the 19th Annual International Conference, Porto, 2007, 1-3 November (CD-ROM).

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