In 1910 the Austro-Marxist Rudolf Hilferding came forward with a massive treatise whose very title, Das Finanzkapital, proclaimed its author’s belief that the time had come to bring Marx up to date. Hilferding’s work at once established its author as the leading authority in the field of neo-Marxian economics, and for good measure enabled every contemporary socialist (including Lenin) to relate the theory of imperialism to the analysis of monopoly and protection. This was something the academic economists had failed to see, economic sociology not being there strong point. It was left to the neo-Marxians to describe the functional change in protectionism which enabled cartelized or trustified industries to turn tariffs to their advantage, while at the same time engaging in the policy of price dumping and intensified capital export abroad. Otto Bauer’s work on the national question and Rudolf Hilferding’s study of finance capitalism represented something new and important despite their dissimilar starting points; they terminated in an analysis of imperialism which was to become the special characteristic of the neo-Marxist school and which was to be adopted and popularized by Lenin.

To summarize the argument, the growing concentration of corporate ownership in all major industrial countries has the effect of narrowing the range of competition, while at the same time it creates a homogeneous class of decision-makers in charge of the leading banks and industrial monopolies. It makes possible a degree of conscious control over the economy, but without eliminating the conflicting class interests characteristic of capitalism. The contradiction between the rational management of particular branches of production, and the basic irrationality of the system as a whole, finds expression in attempts to ‘plan’ those sections of the economy which have fallen under corporate control. The counterpart of this increasing trend towards monopoly is a growth of tariff protection. Nationally, this trend leads to the gradual disappearance of competition and the subordination of the smaller entrepreneurs to the large corporations. Internationally, it eliminates free trade and thereby intensifies political antagonisms. Rival groups in different countries seek to monopolize markets and raw material sources. The purpose of tariffs now is to exclude all foreign imports which might compete with the monopolies, while products unsalable at home at the higher price are dumped abroad. Colonial imperialism, i.e., armed expansion into undeveloped regions, is a byproduct of this process, for in conjunction with tariff protections it enlarges the area controlled by the national monopolies. The end result of this contest is war, or at least war-like tendencies, on the part of the nations concerned. Thus in the last analysis the centralization of capital leads to international anarchy, mounting national antagonisms, and finally armed conflict. [1961]