ABSTRACT OF PAPER
Title: Austrian Theories on Money: Komorzynski and Hilferding
Author: Greitens Jan
Up to the beginning of the 20th century, the descriptions of credit by Karl Knies and Adolph Wagner were the central concepts in the German-speaking region. In addition to the work by Georg Friedrich Knapp (1905), the Viennese Johann von Komorzynski and Rudolf Hilferding in particular provided new momentum to the theory of credit. Both attempted to develop credit theory beyond the pure definitions of the Historical School. Following Valentin Wagner’s system of classification, Komorzynski published his version of a study of “Social Credit Theory” under the title “Die nationalökonomische Lehre von Credit” (The National-economic Teachings on Credit) in 1903. According to it, credit binds individual economic units into a cooperative economy. In this sense, Komorzynski defined credit as private business transaction between individual economic units. In this, the creditor transfers this asset to the borrower with full legal access and ownership, while however retaining a legal claim on the money provided, which would remain among the creditor’s assets. In this manner, borrowers extend their economic power to generate income beyond the scope of their own assets. Entirely in the sense of modern theories of finance and human capital, Komorzynski understood assets to be everything from which income can be achieved. Komorzynski saw the function of credit in the productive use of capital and in the development of even small amounts of capital for this productive use. He also saw credit as the foundation for the creation of the modern large company and the concentration of capital. Hilferding also assigned this view to credit in his work “Finanzkapital” (Financial Capital), dated 1910. His analysis was based on Marxist descriptions of circulation and divided credit into short-term “circulation credit” and long-term “capital credit”, extending the base of capital and production. As with Komorzynski, this would promote expansion and concentration of the capital and make the use of smaller amounts of capital possible. According to Hilferding, the socialist dimension of analysis is found in the power structure bound with the credit, which was core to Hilferding’s further analysis of financial capital. Most likely, Johann von Komorzynski did not know Rudolf Hilferding. The former had been born in 1843, was commercially active (particularly in real estate), a wealthy follower of Menger and a professor at the University of Vienna; the latter was thirty years younger, a medical doctor, and had already moved to Berlin in 1906. Precisely because of the theoretical and biographical differences, the parallels in the theory of credit are surprising and can be explained by the particular experiences with the Austrian financial system at that time. Whereas Komorzynski garnered heavy resistance with his theses, in particular his definition of credit, among other representatives of the Austrian School, Hilferding’s paper was quickly greeted among the Marxists of his time.
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