Hilferding, Woytinsky and the Fiscal Orthodoxy of Interwar Social Democracy

Abstract In 1931, when the Great Depression hit Germany, German social democrats discussed a proposal for a proto-Keynesian public-debt financed employment programme. This was the so-called WTB plan drafted by Wladimir Woytinsky. But under the leadership of Rudolf Hilferding, the SPD rejected the proposal. This paper introduces Woytinsky and the WTB plan. It documents how Hilferding’s endorsement of the gold standard and fiscal austerity can be traced to his theoretical analysis in Finance Capital . It also shows that support for orthodox policies spanned the political spectrum and can also be found in non-Marxist socialist movements, as is illustrated by the British experience. Finally, it argues that the WTB plan represents a missed opportunity to develop a socialist Keynesianism that would have complemented the Austro-Marxist political strategy of a democratic socialism.