[PEN-L:32867] Hilferding on finance capital

[Chris Burford <cburford@xxxxxxxxxx>]

[thanks to Google and according to Kautsky: Finance-Capital and Crises: 
Social Democrat, London, Vol XV., 1911 - before Kautsky's soul had been 
irredeemably corrupted by the evil of revisionism??

He seems to decribe a different degree of unity between industrial and 
finance capital in Germany and England.  CB]



What Hilferding understands by finance-capital and its development can best 
be told in his own words. In one place he gives a short resume, which helps 
considerably in following the line of thought which runs through a great 
portion of his book. He says:?

"We have seen how in the beginning of capitalist production the money of 
the banks comes from two sources. First, from the money of the 
non-producing classes; secondly, from the reserve capital of the industrial 
and commercial capitalists. We have seen, further, how the development of 
credit tends to place at the disposal of industry not only the whole 
reserve capital of the capitalist class, but also the greatest part of the 
money of the unproductive classes. Present-day industry, in other words, is 
carried on by means of a capital far larger than the total capital in the 
possession of the industrial capitalists. With capitalist development the 
sum of money constantly grows which is placed by the non-producing class at 
the disposal of the banks, and by these latter at the disposal of industry. 
The disposal over these sums, so indispensable to industry, belongs to the 
banks. With the development of capitalism and its credit organisations 
there thus grows the dependence of industry upon the banks. On the other 
hand, the banks can only draw the moneys of the non-productive classes, and 
keep the ever-increasing foundation stock of the same at their permanent 
disposal by paying interest on these moneys. This they could do, as long as 
these sums were not too extensive, by making use of them for speculation 
credit and circulation credit. With the growth of these sums on the one 
hand, and, on the other, with the decreasing importance of speculation and 
commerce, it became necessary to convert them more and more into industrial 
capital. Without the steady extension of production credit the possibility 
of making use of the deposits, and therewith also the paying of interest on 
the bank deposits, would long ago have sunk much lower. This is partially 
the case in England, where the deposit banks only negotiate circulation 
credit, the interest on the deposit being therefore only minimal. Hence the 
continual departure of the deposits into spheres of industrial investment 
by the purchase of shares. Here the public does directly what, in the case 
the founder's profit does not come to them. But for industry, it means less 
dependence on bank-capital in england in comparison with Germany.

"The dependence of industry on the banks is thus the result of the 
conditions of property. An ever-increasing portion of the industrial does 
not belong to the industrials who use it. They only receive the disposal 
over it from the bank, which, as far as they are concerned, represents the 
owner. On the other hand, the bank has to fix an ever growing portion of 
its capital in industry. It therefore, becomes, in an ever-growing measure, 
an industrial capitalist. I call this bank-capital?that is, capital in 
money form?which in this way is converted in reality into 
industrial-capital, the finance capital. Towards the owners it always 
conserves its money-form, is invested by them in the form of money-capital, 
and can at any time be withdrawn by them in money form. But in reality the 
greater part of the capital thus invested in the banks is converted into 
industrial, productive capital (means of production and labour-power) and 
fixed in the process of production. An ever greater portion of the capital 
employed in industry is finance-capital, capital at the disposal of the 
banks, and being made use of by the industrials.

"The finance-capital develops with the development of the joint-stock 
companies and reaches its height with the monopolisation of industry. The 
industrial revenue becomes a steady and increasing one. Thus the power of 
the bank-capital to invest in industry gains ever further extension. But 
the bank-capital is at the disposal of the bank, and the bank is ruled by 
the owners of the majority of the bank shares. It is clear that with the 
increasing concentration of property the owners of the fictive capital, 
which gives power over the banks, and of that which gives power over 
industry, are becoming more and more identical. All the more, in that, as 
we have seen, the large banks are ever gaining more and more power of 
disposal over the fictive capital.

"Though we have seen how industry is becoming more and more dependent upon 
bank-capital, that by no means involves the industrial magnates. Just as, 
on the contrary, capital itself, on reaching its highest stage, becomes 
finance-capital, so the magnate of capital, the finance capitalist, comes 
more and more to unite the disposal over the total national capital by 
ruling over the bank-capital. Here, too, the personal union plays an 
important part.

"With cartellisation and trustification, finance-capital reaches the 
highest stage of its power, while the commercial capital experiences its 
deepest degradation."

One sees Hilferding is far from believing in the utopia of the 
democratising of capital through shares. With a light turn of the hand he 
puts aside this "petty-bourgeois theory." (Page 166; compare also 144.)

These quotations are already sufficient to show that Hilferding's book has 
not only academic importance. It is of the greatest weight also for 
practical workers in the Labour movement, and especially for its 
representatives in the Parliaments, who must not limit themselves to purely 
Labour questions.

But it is true that the principal importance of the book is on the 
theoretical plane. Starting out from the Marxist fundamental ideas, 
Hilferding unites a complete control of his methods with the control of a 
comprehensive material, and he develops in a compact representation, on the 
foundation of the theory of the nature of money, of credit, of the banks, 
of the shares system, of carttells, of crises. There is hardly one of the 
phenomena on these planes about which he has not something new to say, and 
which is not made clearer by the connection which he traces between it and 
the total process.

His book is a new brilliant confirmation of the fruitfulness of the Marxian 
method. That is not to say that Hilferding swears by the letter of the 
master's words. He knows how to use his method while preserving his own 
complete independence.