I lately reviewed Janek Wasserman’s ebook The Marginal Revolutionaries: How Austrian Economists Fought the Conflict of Concepts for EH.web, the web site of the Financial Historical past Affiliation. I loved the ebook, which gives a really participating historical past of the Austrian college of economics.
One factor I appreciated about Wasserman’s ebook was his description of the contentious debates that Austrian economists had in Vienna, particularly their debates with Marxists. I used to be particularly intrigued by Wasserman’s dialogue of debates between Austrians and Marxists concerning the causes of imperialism.
Once we consider Marxist evaluation of imperialism, we frequently consider Vladimir Lenin’s Imperialism, the Highest Stage of Capitalism. However Lenin’s evaluation was closely influenced by an Austrian-born Marxist named Rudolf Hilferding. And as Wasserman explains, Hilferding’s influential ebook Finance Capital was formed by his debates with Austrian college economists:
“Within the confines of the Böhm seminar, Hilferding fleshed out the core arguments of his magnum opus. The ebook bears the imprint of repeated exchanges with Schumpeter and notably Mises. Hilferding launched Finance Capital as an inquiry into cash and capital. Solely by analyzing the “processes of focus” that eradicate free competitors in trade and the ever-closer relationship of financial institution and industrial capital—which he calls “finance capital”—can one grasp the contours of “the present part of capitalism,” with its cycles of increase and bust. He additionally provided a penetrating statement concerning the connection between finance capital and imperialism. Due to capitalism’s want for continued enlargement, and the economic and monetary sectors’ determined quest for earnings, capitalists continuously sought new sources of uncooked supplies, new markets for items, and new websites for capital funding. This tendency led to bigger and bigger empires, based mostly on financial imperatives however sustained by political and army pressure. Opposite to liberal apologists, Hilferding rejected the concept capitalism was inherently pacifistic; capitalist enlargement got here on the tip of a bayonet.”
That’s proper, one of the crucial influential Marxist analyses of imperialism was honed by arguments in Austrian college icon Eugen von Böhm-Bawerk’s seminar.
Was Hilferding proper that capitalism results in imperialism? Main Austrian college economists disputed his declare. Joseph Schumpeter, for instance, challenged Hilferding’s evaluation of imperialism:
“Like Hilferding, Schumpeter devoted appreciable consideration to the connection between capitalism and imperialism, and he acknowledged the penetration of Hilferding’s perception. He agreed that capitalism had a bent towards cartelization, monopoly costs, aggressive financial and overseas coverage, and warfare. That mentioned, it was political motion and never the logic of competitors and capitalism that produced these phenomena. He subsequently rejected Hilferding’s historic argument concerning the nexus of finance capital and imperialism: “It’s basically false that imperialism is a vital stage of capitalism. . . . Now we have seen that imperialistic tendencies are in truth unfavorable for the life type of the capitalist world.” Schumpeter maintained that capitalism tended towards peace.”
Whereas Schumpeter noticed most of the similar tendencies as Hilferding, he argued that the issue was not capitalism, however political motion.
Ludwig von Mises went additional nonetheless in his challenges to Hilferding. Wasserman explains that Mises’s ebook Nation, State, and Economic system “flipped Hilferding’s argument on its head.” Mises argued that capitalism promotes peace whereas socialism engenders imperialism and warfare. As Wasserman places it:
“Solely a liberal capitalist society, he averred, might safeguard civilization from socialism and its authoritarian, imperialistic tendencies. Since socialism required heavy state intervention within the financial system, it additionally inspired interstate rivalry and violence. Liberalism, alternatively, engendered irenic relations between people based mostly on noncoercive financial trade.”
Mises noticed capitalism as a supply of social cooperation and socialism as a system that leads societies down a violent path.
Hilferding, Lenin, Schumpeter, and Mises had been all grappling with an essential query: what are the causes of warfare and imperialism? Given the devastation wrought by warfare, political economists of all stripes ought to proceed rigorously investigating these points.
Nathan P. Goodman is a Postdoctoral Fellow within the Division of Economics at New York College. His analysis pursuits embody protection and peace economics, self-governance, public selection, institutional evaluation, and Austrian economics.
