From “Finance Capital” to “Organized Capitalism:” Socialization in Rudolf Hilferding’s Writings Under the Influence of Ferdinand Tönnies

Rudolf Hilferding’s ideas regarding the development of capitalism, as presented in his seminal work entitled “Finance Capital” (published 1910) and in his concept of “Organized Capitalism” (developed after the war and finalized in 1927) both describe the transition to socialism. They differ in the instruments used to reach this aim, their understanding of property, and the role of the state. This paper presents the development to socialism as described by Hilferding in “Finance Capital,” his ideas during his time in the Socialization Commissions in Germany (1918–1920), and his concept of “Organized Capitalism.” Afterwards, the ideas of Ferdinand Tönnies regarding socialism and property, along with his enormous influence on Hilferding’s concepts, are presented. The astonishing thing about Hilferding’s ideas is the unbroken continuity in his theoretical constructions. The experiences of the years around 1918 did not make Hilferding change his theoretical positions. Only the question of how socialism can be achieved, whether revolutionary (as in “Finance Capital”) or democratic (as in the “Organized Capitalism”), has changed. Instead of despairing on the failure of the 1919 revolution, he interpreted the new political situation positively and adapted his theory with the new concept of “Organized Capitalism” into one that posits a democratic and gradual transformation instead of a revolution. He now regards the state as a political instrument with which to build socialism. Hilferding rejects a (second, which would mean a Bolshevik) revolution, a political overthrow, and wants to effectively transform the economy over a longer period by means of a democratic state. Along with this continuity, Hilferding was not able to include new approaches focusing on the demand side of the economy.