Hilferding over Marx: A Political Economy Viewpoint of Struggles in the Left 1900-1933 and the Modern Revival

Recent heterodox economic literature makes reference to Hilferding’s “Finance Capital” and Lenin’s “Imperialism” as early insights on the phenomenon of Financialization of capital. In this regard ideas which became dominant in the left during the first decades of the previous century are applied in the explanation of the current crisis, as well as the understanding of contemporary capitalism from a methodological, analytical and political standpoint. This paper traces the underlying argument of the Monopoly model and its main political applications in the first three decades of the 20th century, in an effort to draw rough historical analogies with its revival in contemporary literature. It is argued that the Hilferding model, from which Lenin’s ”Imperialism” is derived, has very little or nothing to do with Marx’s economics but much to do with the neoclassical theory of Monopoly and Oligopoly. This theoretical association abolishes labor value theory from the analytical framework and with it any possibility of inherent breakdown (depression) in capitalist accumulation. Consequently political economy was pushed to the background and the confrontations between Lenin and Kautsky and subsequently Trotsky, Bukharin and Stalin were fought around political and geopolitical considerations a factor which played important part in the outcome. But the most astonishing historical fact is that the revolutionary flood which shook Europe until 1930 gave place to the dominance of the extreme right when circumstances were most favorable for the left in the years of the “great depression”. Drawing from this it is argued further that the main analogy between the 1930s’ and the present is that both back then and now the left is attempting to intervene in a depression environment without a depression theory. Disproportional growth between sectors was the cause of crisis in Hilferding, a contradiction which under the dominance of “Finance Capital” would be resolved and capitalism would move to an “organized stage”. In the same fashion disproportional growth of the financial sector relative to the corporate sector, which emerged following the “great stagflation”, is the cause of the present crisis for contemporary heterodox literature. Crisis can be resolved through state regulation in this line of thought, since Financialization of capital is understood independently from the inherent contradictions of profit motivated growth. In the absence of a depression theory this part of heterodox economics has drifted in a “witch hunt” on whether capital will resolve the crisis introducing a new era of “regulated capitalism” or power shifts in favor of financial capital will preserve the present state of affairs. In the meantime, economic policy suggestions and the political agenda is surrendered in the hands of mainstream economics and right wing politics.