From Luxemburg to Sweezy: Notes on the Intellectual Influence of Hilferding’s Finance Capital

This chapter is about the key contributions to political economy that originated from Hilferding’s Finance Capital. It covers the period from its publication in 1910 to 1966, the year Monopoly Capital by Paul Sweezy and Paul Baran appeared. I will show that the ideas associated with Finance Capital dominated economic thinking on the left during the second and third decades of the twentieth century. In the 1930s, the Great Depression marked a setback for the book’s prestige. However, important economists like Natalie Moszkowska and Paul Sweezy, who elaborated on the realisation/underconsumption version of monopoly theory during that period, sparked fresh interest in this line of thought, concluding an intellectual effort that stemmed from the insights of Rosa Luxemburg. Their input established a paradigm that gained recognition among economists. Moreover, it offers an analytical explanation for the booming growth of finance following 1980 and the economic crisis that began in 2007/8. The most serious criticism of Hilferding is that Moszkowska and Sweezy’s conclusions rely on the neoclassical theory of perfect competition and its ‘dark side’ of monopolistic price setting. Neoclassical monopoly pricing implies the rejection of the labour theory of value and stands in stark contrast to Marx.