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Kautsky was born in Prague on 16 October 1854 and died in Amsterdam on 17 October 1938. Marxist thinker and writer, leading theoretician of the German Social Democratic Party (SPD) and the Second International, he studied law and arts in Vienna. Fascinated by the theories of Marx and Engels (both of whom he met and befriended in London in 1881), Kautsky must be credited with the spread and development of their ideas in all his embodiments – as a prodigal and versatile columnist; as founder and editor (1883–1917) of the SPD theoretical journal Die Neue Zeit, which soon became the chief Marxist forum in Europe; as editor of Marx’s books and unfinished manuscripts (Kautsky edited them in three volumes called Theorien über den Mehrwert, which appeared in 1905–10); and also as socialist thinker. Kautsky presented his ideas systematically in Die materialistische Geschichtsauffassung (1927), expounding a theory of social development which combined Marx’s and Engels’s historical materialism with Darwin’s naturalism.

Kautsky’s first major popular book designed to spread Marxian theories was Karl Marx’ ökonomische Lehren (1887), which expounds the substance of the first volume of Das Kapital. It went into numerous editions in German and other languages, and in some countries (as in Russia) its effect on the spread of Marxism was significant.

His original contribution to Marxian theory was his Agrarfrage (1899), described by Lenin as the most outstanding work since the third volume of Das Kapital had appeared in print. In it, Kautsky analyses trends of development in agricultural production against the backdrop of Marx’s theory of capitalism, of capitalist development’s own specific features and, in particular, of the then much-discussed question of persistence of small peasant holdings. Kautsky studied the causes of small private farms’ relative viability, a phenomenon which at that time was often cited as evidence that Marx’s concentration theory was wrong. He attributed the survival of small peasant holdings to the undernourishment and excessive toil of peasant families, to the demand for seasonal labour by large landed estates and to their interest in preserving local labour reserves. Kautsky also pointed out that, in agriculture, concentration of production does not necessarily go along with increases of crop area but may result from more intensive cultivation. Generally, though, he believed that the conquest of agriculture by capitalism was just a question of time.

Kautsky’s motive for studying the agrarian question was pragmatic; he wanted to answer the question of whether or not the SPD needed an agricultural policy of its own. In particular, it was unclear whether the SPD ought to defend peasants on their own holdings against the adverse effects of capitalism. Kautsky came to believe that such a move would only hamper what was an inexorable social process, namely, the emergence of large capitalist farms relying on hired labour, and hence would hamper the ascent of socialism. Without compromising its own tenets and aspirations, Kautsky said, the SPD could demand the abolition of all vestiges of feudalism in the countryside and defend peasants as working people, as semi-proletarians. But he thought the idea of defending peasants as smallholders a reactionary utopia. He used the same logic to interpret the role of the capitalist metropolitan countries in subjugating colonies.

Kautsky wrote the Agrarfrage, as well as his studies concerning crises, as polemics against ‘revisionists’, who argued that the spread of cartels and trusts, along with the expansion of bank activities, eliminated the anarchy in capitalist production and hence was likely to allay or forestall crises in the future. Kautsky opposed these theories in a series of articles (1901–2) in Die Neue Zeit which he wrote in reaction to a German translation of Mikhail Tugan-Baranovsky’s Studien zur Theorie und Geschichte der Handelskrisen in England (1901). Tugan-Baranovsky reinterpreted Marx’s reproduction models in terms of Say’s Law and attributed the causes of crises to the disproportions of capitalist development. The spread of cartels, Tugan- Baranovsky argued, eliminated those disproportions and hence also forestalled crises.

Kautsky defended the theory of underconsumption as the basis of business cycles and argued that cartels and other similar organizations of capitalists, keen as they were on maximizing profits, were unable to keep control of production and demand on a national scale, to say nothing of the world economy. He countered the optimistic picture presented by the ‘revisionists’ with his own hypothesis of capitalism’s inexorable drift toward ‘a chronic depression’. That was one of the first-ever theories of stagnation. Later (1910), Kautsky was inclined to attribute the principal cause of ‘recent’ crises to the circumstance that agricultural growth was slower than and lagging behind industrial growth. He also cited this particular disproportion in his concept of imperialism as the expansion of advanced industrial countries into agrarian markets. During the First World War Kautsky formulated his well-known hypothesis portraying ultra-imperialism as an alliance of previously rival imperialist powers for a joint exploitation of world resources.

In many studies Kautsky returned to the political and economic problems of the transition to socialism and to the organization and operation of the socialist economy. At first, those problems were overshadowed by the dominant question of political revolution to seize power and of proletarian dictatorship, and Kautsky’s casual remarks indicate he regarded a socialist economy simply as the negative of a market- dominated capitalist economy. But from the war onwards, especially in the 1920s, he interpreted socialism and the socialist economy as a continuation and further development of capitalist accomplishments not only in economics but also in terms of social advancement and political progress. His writings are pervaded by a concern for freedom and democracy. Accordingly, he views the transition period as a long process of socialization of production during which those accomplishments would be preserved and economic efficiency would be maintained.

Kautsky was one of the first socialist writers to dispute the idea of a natural, that is money-free, socialist economy. Already at the turn of the century (1902) he argued that money and market were indispensable if freedom of choice in consumption and jobs was to be preserved. Two decades later, when the wave of revolution in Germany, but especially in the Soviet Union, made the construction of socialism a topical question, Kautsky considered the question in a systematic manner (1922). Apart from reaffirming the advantages of money and prices, Kautsky acknowledged the importance of money as a measure of value which permitted the quantitative assessment of production by means of accounting techniques and as a device for identifying benefits that may be gained from trade transactions. However, he failed to furnish a clear picture of how he interpreted economic choice in the allocation of resources. He was probably not quite consistent on this point. On the one hand, he wrote in the spirit of ‘market socialism’ that socialist society would be governed by the law of value. On the other hand, he overrated the benefits of economies of scale, that is, the supremacy of large-scale over small-scale production, and he was adamant in his faith in vertical and horizontal integration. If his beliefs came true, the integration was bound to lead to ubiquitous monopolistic practices on the part of socialist industrial giants.

He also believed that full socialization of production and of the bank credit system would render the latter superfluous. He accepted that interest rates might be charged by the socialized banks, but solely in order not to deprive them of their competitive edge in relations with capitalist banks and only in the transition period. His idea of economic planning also seems incompatible with ‘market socialism’. In his view, economic planning would amount to the entire community of consumers negotiating output volumes and prices with the branch producers. Since this implied that a lot of time would be needed to build an efficient system of statistical records, Kautsky believed full economic planning was a remote prospect. But what would a fulfilment of those plans actually guarantee? Kautsky failed to realize how complex a question that was, although some of his remarks, such as his comments about the important part that talented production organizers, who are as rare as talented artists, might play in socialism, sound quite up-to-date.

Opposed as he was to total state control. Kautsky was an advocate of a plurality of ownership forms in socialism. Apart from a certain scope for state ownership of production (which would not be managed by state-employed functionaries), he saw in socialism room for production cooperatives, for municipal enterprises, and for union-sponsored autonomous enterprises similar in character to those advocated by Guild Socialists. He regarded the general idea of guild socialism as excellent and inspiring, but he thought that this school focused its attention too much on producers to the detriment of consumers, and he resisted in particular attempts to present guild socialism as the only feasible production organization model for socialism.

Selected Works

  • 1887. Karl Marx’ ökonomische Lehren. Stuttgart.

  • 1899. Agrarfrage, Eine Ubersicht über die Tendenzen der modernen Landwirtschaft und die Agrarpolitik der Sozialdemokratie. Stuttgart.

  • 1901–2. Kriensentheorien. Neue Zeit, Nos. 2, 3, 4 and 5.

  • 1902. Die soziale Revolution. Berlin. Trans. J.B. Askew as The social revolution and on the morrow of the revolution, London: Twentieth Century Press, 1903.

  • 1910. Vermehrung und Entwicklung in Natur und Gesellschaft. Stuttgart.

  • 1922. Die proletarische Revolution und ihr Programm. Trans. H.J. Stenning as The labour revolution, New York: Dial Press, 1925.

  • 1927. Die materialistische Geschichtsauffassung. Berlin.