The apparent refutation of the predictions drawn from Marx's model led to a crisis within Marxist ranks, known as the revisionist controversy. Out of it emerged two very diferent trends in the analysis of capitalism which were to confront each other again and again over the next century.
Edward Bernstein, only a few years previously a close collaborator of Engels, produced a root and branch critique of Marx's methods and conclusions. "Signs of an economic worldwide crash of unheard of violence have not been established", he wrote. "Overproduction in single industries does not mean general crises" .8 "Workingmen", he concluded, are not "universally pauperised as was set out in the Communist Manifesto".9 These changes, he argued, had arisen because of "the enormous extension of the world market" and the regulation of production with "the rise of the industrial cartels" so that "general commercial crises" were "improbable" .
Bernstein's "revision" of Marx was rejected by Engels' other collaborator, Karl Kautsky. But this did not prevent many socialist activists coming to accept in practice that capitalism had stabilised itself for the indefinite future. Challenging such views meant going further than Kautsky and adding to Marx's analysis. It is this which, each in their own way, Rudolf Hilferding, Vladimir Lenin, Nicolai Bukharin and Rosa Luxemburg tried to do.
Soon it was not only the purely economic functioning of the system that required something more than the basic account provided by Marx. So too did a new period of immense political convulsions as 44 years of peace in western Europe gave way to the most horrific war humanity had yet known.
Hilferding: finance capitalism and imperialism
The first Marxist economist to publish a detailed analysis of the changes was the Austrian Rudolf Hilferding in his work Finance Capital, in 1910. Basing himself on developments in Germany, he argued that banking capital and industrial capital were merging to produce a synthesis of the two, which he labelled "finance capital". On this basis giant trusts and cartels were emerging that could dominate whole sectors of industry:
Beyond Marx: Monopoly, War and the State
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