— Ch. 1 · Vienna Origins And Medical Training —
Rudolf Hilferding.
~7 min read · Ch. 1 of 5
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.
Finance Capital Theory Development
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.