Rudolf Hilferding
On the 10th of August 1877, Rudolf Hilferding was born in Vienna into a prosperous Jewish family. His parents were Emil and Anna Hilferding, and he had a younger sister named Maria. He attended a public gymnasium where he graduated as an average student. This academic record allowed him access to the University of Vienna to study medicine. Even before his school leaving examinations in 1893, he joined a group of Vienna students who weekly discussed socialist literature. They later formed a student-organization whose chairman was Max Adler. Here Hilferding first intensely came in contact with socialist theories and became active in the labour movement. The organization participated in social-democratic demonstrations that conflicted with police actions. These events drew the attention of the Social Democratic Party of Austria. As a university student, he studied history, economy, and philosophy alongside medicine. He and fellow socialist students Karl Renner, Otto Bauer, and Max Adler studied political economy under Marxist Carl Grünberg. They also attended lectures by philosopher Ernst Mach. Both men influenced Hilferding significantly. 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 paediatrician. He did not work with much enthusiasm. He spent leisure time studying political economy, which was his real interest. He would not give up his profession until his first publications gave him success. In 1902 he contributed to the Social-Democratic newspaper on economic subjects as requested by Karl Kautsky. Kautsky was at that time the most important Marxist theoretician worldwide. Their collaboration developed into a long-lasting personal and political friendship.
Hilferding published his most famous work Finance Capital in 1910. This book became an important theoretical milestone that kept its importance until today. It built Hilferding's reputation as a significant economist and leading theorist of the Socialist International. The text analyzed the transformation of competitive liberal capitalism into monopolistic finance capital. Writing in the context of the highly cartelized economy of late Austria-Hungary, Hilferding contrasted this new phase with earlier buccaneering capitalism. The unification of industrial, mercantile and banking interests had defused demands for reducing the state's economic role. Instead, finance capital sought a centralized and privilege-dispensing state. Until the 1860s, capital demands affected all citizens alike according to Hilferding. Finance capital increasingly sought state intervention on behalf of wealth-owning classes. Capitalists rather than nobility now dominated the state. Hilferding saw this as part of the inevitable concentration of capital called for by Marxian economics. He identified an opportunity for a path to socialism distinct from Marx's original vision. The socializing function of finance capital facilitates the task of overcoming capitalism. Once finance capital controls the most important branches of production, society can seize these institutions through the state. This would make it unnecessary to expropriate peasant farms and small businesses directly. A narrow class dominated the economy, so socialist revolution could gain wider support by targeting only that class. Societies not yet economically mature enough for socialism could be opened to socialist possibilities. Furthermore, the policy of finance capital is bound to lead towards war and revolutionary storms.
Hilferding joined the anti-war Independent Social Democratic Party of Germany in 1918. During the November Revolution he returned to Berlin shortly after the Republic was proclaimed. For three years he served as editor-in-chief of the USPD's daily newspaper. The publication quickly became one of Berlin's most widely read dailies with a circulation of 200,000. In 1925 Kurt Tucholsky argued that Hilferding had made the newspaper harmless. The Council of the People's Deputies delegated him to the Socialization Committee. Its official task was to socialize suitable industries. He spent months on this project despite lack of government priority. The SPD leadership opposed socialization since armistice and demobilisation seemed more pressing issues. Hilferding gave a speech before the worker's councils' congress and presented a plan to socialize industry. It went down well with the congress but the government largely ignored it. Tensions between the SPD and USPD escalated when Friedrich Ebert used troops to suppress an uprising by revolutionary sailors on the 24th of December 1918. To protest these policies, the USPD withdrew its representatives from the government. Hilferding supported this decision after accusing the SPD of trying to oust them. In 1919 he acquired German citizenship and in 1920 was appointed to the Reich Economic Council. At the peak of inflation in the Weimar Republic, he served as German Minister of Finance from August to October 1923. He contributed to stabilizing the mark but could not stop the inflation. During his term the introduction of the Rentenmark was decided. He resigned from office shortly before the monetary reform took place. From 1924 to 1933 he published the theoretical journal Die Neue Zeit. On the 4th of May 1924 he was elected to the Reichstag for the SPD. He served as the SPD's chief spokesman on financial matters until 1933. Between 1928 and 1929 he again served as finance minister on the eve of the Great Depression. He had to relinquish this position due to pressure from Hjalmar Schacht, President of the Reichsbank.
After Hitler came to power, Hilferding fled into exile in 1933. He left Germany together with close associate Rudolf Breitscheid and other important party leaders. They went first to Denmark, then Saarbrücken, Paris, and finally Zurich, Switzerland. He lived in Zurich until 1938 and from 1939 onwards in Paris, France. Despite being in exile, he remained influential. He was appointed to important posts in SPD's Sopade. Between 1933 and 1936 he was editor-in-chief of a publication and contributor to another. Until 1939 he was also the party's representative for the Socialist International. His advice was sought by the SPD leadership in exile. After the attack on France he and Breitscheid fled to unoccupied Marseille. Efforts were undertaken by the Refugee Committee under Varian Fry to get him out of Vichy France. Both men refused to leave illegally because they lacked identification papers. They were arrested by police of the Vichy government in southern France. Despite having an emergency visa to enter the United States of America, they were handed over to the Gestapo on the 9th of February 1941. Hilferding was brought to Paris and severely maltreated on the way. After being tortured, he died of unknown causes in a prison in Paris, the Gestapo dungeon of La Santé. His death was not officially announced until the fall of 1941. Varian Fry believed that Hilferding was murdered by the Gestapo on orders of Adolf Hitler or another senior Nazi Party official. His wife at the time of his death was Rose who escaped to the United States. His earlier wife Margarete died in the Theresienstadt Ghetto in 1942.
Hilferding's Finance Capital anticipated Vladimir Lenin and Nikolai Bukharin largely derivative writings on the subject. He participated in the Crises Debate disputing Marx's theory of instability and eventual breakdown of capitalism. He argued that concentration of capital is actually stabilizing rather than destabilizing. Hilferding disagreed with Bolsheviks led by Lenin and opposed the October Revolution. He later described the USSR as the first totalitarian state and a totalitarian state economy. His work influenced Marxist writers such as Vladimir Lenin and Nikolai Bukharin. These figures shaped their own writings on imperialism based partly on Hilferding's theories. The text provided substantial influence on how Soviet revolutionaries understood capitalist development. Hilferding formulated concepts like organized capitalism during World War I while serving as a medic. One article published in October 1915 summarized the situation of the SPD. It revised his theories of Finance Capital containing his first formulation of organized capitalism. This theoretical framework challenged traditional Marxist predictions about economic collapse. He believed finance capital created conditions where socialism could emerge more easily through state seizure. Societies not yet economically mature could be opened to socialist possibilities under this model. The policy of finance capital was bound to lead towards war according to his analysis. Hence revolutionary storms would follow inevitable conflicts between imperialist powers.
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Common questions
When was Rudolf Hilferding born and where?
Rudolf Hilferding was born on the 10th of August 1877 in Vienna. He entered a prosperous Jewish family as the son of Emil and Anna Hilferding.
What is the main argument of Rudolf Hilferding's book Finance Capital published in 1910?
The text analyzes the transformation of competitive liberal capitalism into monopolistic finance capital. It argues that the unification of industrial, mercantile, and banking interests leads to state intervention favoring wealth-owning classes rather than reducing the state's economic role.
How did Rudolf Hilferding die during World War II?
Rudolf Hilferding died of unknown causes after being tortured by the Gestapo in a prison in Paris known as La Santé. His death occurred before the fall of 1941 following his arrest by Vichy government police in southern France.
Why did Rudolf Hilferding oppose Lenin and the October Revolution?
Rudolf Hilferding opposed the October Revolution because he argued that concentration of capital stabilizes rather than destabilizes the economy. He later described the USSR as the first totalitarian state and a totalitarian state economy.
When was Rudolf Hilferding elected to the Reichstag for the SPD?
Rudolf Hilferding was elected to the Reichstag on the 4th of May 1924 representing the Social Democratic Party. He served as the party's chief spokesman on financial matters until 1933.
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