Today’s “year in which the contemporary world began” is 1910. In that year, the German Social Democratic politician Rudolf Hilferding published Finance Capital in Vienna. The title suggests its purview: it was a conscious extension of Marx’s theory of capitalism to a new era. This was an era in which banking and finance capital had become autonomous from, and dominant over, industrial capital; an era in which the “joint-stock” limited liability corporation had become the dominant ownership form, and in which this whole structure had become fused to the vast enterprise of global imperialism.
The structure looked unassailable. In fact, Hilferding argued, these were all developments which made socialism possible. Taking Marx’s point that the next social system develops within the contradictions of the previous one — as merchant capital became industrial capital within the dying structures of feudalism — Hilferding argued that via financialisation and monopolisation, capitalism was socialising itself. What Marx had called “the anarchy of production” (small proprietors competing, railway companies laying separate tracks side-by-side, etc) was being transformed into a system of planned production. The content of it was currently capitalist; the form could be taken over and rendered socialist.
Finance Capital is the most influential book you’ve never heard of, because the Austrian liberal tradition — running from Menger through Boehm von Bawerk to Von Mises and Hayek — recognised it as the most persuasive argument, and blueprint, for socialism yet. It had to be answered at the most fundamental level, and this was the beginnings of the Austrian school’s “long game”: the creation of a political-economic theory anchored in epistemology (the theory of knowledge), to argue that socialism was something not to be judged ethically, but analytically; that it could not work, because of the very structure of human action. What began in the 1920s would take a half-century to come to fruition in the Reagan-Thatcher era.
What happened to Hilferding’s optimism? World War II, and the collapse of the European socialist movement into national patriotism and lethal division. Only the left of the movement — the Bolsheviks and other groups — opposed the war. The Bolsheviks lurched from command “communism”, to a mixed economy, to Stalinism. Labour and social democratic parties became liberal capitalist rather than Marxist, and the century-defining disaster — the collapse of a multidimensional, sophisticated, reflexive Marxism — had occurred.
Every day, from Syria to Beijing, the landscape of past and future becomes clearer: Bolshevism was an extraordinary event, decades-long, and the world is now resuming a process of capitalist development and contradiction predicted with reasonable accuracy by Marx.
Syria, Beijing and the Commonwealth Law Courts Building in Melbourne, because in a few short weeks, the banking royal commission has revealed exactly what those who tried to stop it feared it would: not that the finance sector has become utterly corrupt (though it has); nor that it has come to dominate politics and set an agenda (though it also has); but that finance, above all, cannot be run as a set of private businesses. The finance sector is a social resource. In a modern society it is an essential utility, as much as the water or power system is. What is coming out in the commission is a simple truth: the finance sector must be socialised.
The finance sector was socialised, of course. AMP, which is producing the most jaw-dropping revelations — this week, anyway — was once a mutual society, of which there were hundreds. For generations, Australians built their homes, paid for their healthcare and their year-and-a-half of retirement, before the ague got them, through mutual funds, run by public boards, in the collective interest. Mutual funds get the big banks in some sort of check; not enough for there not to be an excellent case for their socialistion, which the Chifley government put to the people in 1949. The loss of that set Australia on its contemporary course.
Now we’re here, and the contradictions within the content of the sector — that oligopoly capitalism breeds cynicism, corruption, nihilism and the abasement of all values — expose what needs to be done with the form. We need, in the first instance, for banks to be supervised by a plurality of boards: a customers’ board, a workers’ board, a community board, and for each of those boards to send representatives to the overall board. We need legal changes so that fiduciary duty is not the sole criteria of performance and corporate aim. Ultimately, through universal share issues, we need the major banks to be 50% publicly owned — socialised, not nationalised.
That was an impossible argument to get a hearing for 10 years ago, five years ago. It was a blue sky possibility two years ago. The bankers have done what we could not; they have made it clear to the public that structural change and democratisation of the finance sector is essential to the health of our society.
The same has happened with Facebook and Google. Soon it will happen with Amazon and others. Oligopoly/monopoly, plus new technology is producing a system in which capitalism is the main barrier to human progress — and the very processes which make it so, are making that universally visible. One century later, Hilferding’s vision resumes. What an exciting time to be alive.