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Industrial feudalism is a socioeconomic formation that the Polish Marxists Ludwik Krzywicki and Oskar Lange associated with monopoly finance capital. Industrial feudalism arises in a socially static capitalism where mobility between hierarchically defined social strata is restricted. Krzywicki's account predates Hilferding's Finance Capital and outlines the functioning of the capital market-based finance capital that has become more common in capitalism. Seemingly unaware of Krzywicki's pioneering articles, Oskar Lange then presented his own account of monopoly finance capital in the United States with similar social consequences in the early 1940s with state support for monopolies. Krzywicki's work on monopoly finance capital was discovered in the 1950s by Tadeusz Kowalik.

For almost half a decade, after World War II, capitalism and socialism coexisted on the European continent. Some believed that these systems would converge, with state intervention stabilising capitalism in the west and socialism became more democratic in the east. Michał Kalecki, in his last published article, co-written with Tadeusz Kowalik, wrote about how governments had implemented a crucial reform in the developed capitalist economies. State investment had filled the demand gap, which could potentially result in the long-term mitigation of capitalism's slumps and crises. Tadeusz Kowalik later extended this notion of the crucial reform, to the troubled socialist systems in Eastern Europe during the 1980s. He argued that previous economic reforms had failed in the socialist countries as they had not been accompanied by sufficient democratic political reforms, which needed to be extended in order to fully revitalise the socialist economies. Ultimately the proposals for a crucial reform of capitalism and socialism were not realised and these systems did not converge economically or politically. This chapter examines the theses of Kalecki and Kowalik within the historical and intellectual tradition of Polish socialist and Marxist thought.

The aim of this chapter is to compare the content of two essays: Oskar Lange's 1931 ‘Crisis of Socialism’ and Tadeusz Kowalik's 1996 ‘August – the Bourgeois Revolution of the Epigones’ in order to try to determine the extent to which Lange's paper influenced Kowalik's ideas. We find that Lange's article was possibly Kowalik's only source of theoretical knowledge about bourgeois revolutions and their course when he wrote his 1996 piece. What probably struck Kowalik most in ‘Crisis of Socialism’ in the context of Polish transformations was the similarity (real or apparent) between the situation in Poland in 1905–1918 and that in 1980–1989 (or even 1980–1992), that is, the possibility of constructing a ‘bourgeois class state’ only through a workers revolution immediately preceding such a construction. On the basis of this analogy, in ‘August…’ Kowalik, as we argue, introduced a novelty into his reflections: he fortified his earlier, more lax analyses with the concept of ‘bourgeois revolution.’

While a political activist organising Jewish workers in Galicia, before the First World War and in the Communist Workers' Party of Poland, between 1919 and 1925, Henryk Grossman wrote substantial Marxist works on the economic history of Galicia and Poland. His principal contributions to economic theory, from 1919 and into the 1940s, were the identification of Marx's method and the fundamental structure of Capital; the significance of the distinction between use value and value, at all levels of Marx’s economic analysis; and the elaboration of Marx's account of capitalism's tendency to break down and its consequent, unavoidable proneness to economic crises, grounded in the tendency for the rate of profit to fall and its counter-tendencies. While the reception of Grossman's analyses was generally hostile, they are of vital importance for those seeking to understand and overturn capitalism today.

The 15 years spanning from the end of the nineteenth century till the outbreak of the First World War formed, perhaps, the richest period in the history of Marxian economics. The main development between the time of Marx's writing and that of the German-Russian debates was the change in the competitive nature of the capitalist system. In the early stages of capitalism, the forces of competition created an imperative for capitalist firms to invest all their profits, or lose out in the competitive struggle to other firms which did. However, as large firms and oligopolistic structures emerged, the nature of competition changed, with price competition no longer the only form, leading to an erosion of this imperative, and an increase in capitalist consumption. Kalecki showed that, in this case, total profits were determined by capitalist's consumption and investment expenditures. The result, according to Kalecki, was a chronic tendency towards stagnation in capitalist economies. The long boom could be explained as ‘exports’ to a market external to the private sector, namely armaments and military expenditures.

The thesis that the institutional arrangements, social organizations, and ideology in Eastern Europe are not conducive to the establishment of capitalism, and certainly not the laissez‐faire variety, with Poland cited as the illustrative case. Karl Polanyi′s necessary conditions for laissez‐faire capitalism in the nineteenth century represent the point of origin for the analysis, i.e. the maintenance of rules to permit the self‐regulating market. The focus is on the ongoing process of privatization, citing the primary institutional shortcomings. Also examines governmental structural problems in addition to historical institutional developments. Considers the history of property rights from legal and cultural perspectives. The final concern is to offer a different interpretation of markets, i.e. markets as cultural and political institutions.

Lange's rejection of bureaucratic socialism can be traced throughout his works, from the very beginning to the end. Planners and economic agents have to act under mandatory rules provided by economic theory to avoid the risk of an autocratic regime detached from the people's needs. Drawing upon this premise, Walrasian theory played a pivotal role to introduce rules to tie the hands of socialist bureaucrats based on scientific, economic theory. In this sense, Lange's anti-bureaucratism and Walrasianism descended from a similar political premise. However, the coexistence of conflicting views into the same theory (such as Marxian and Walrasian theories) also implied potential risks, mainly when socialist democracy is conceived in technocratic terms and Marxian theory assimilates to natural sciences.

The chapter presents a short biography of Kalecki, from his early years in Łódź, through his economics research and development of his theory of business cycles, participation in the Keynesian Revolution and work after the Second World War on the economics of socialism and the developing countries. The key role of capital accumulation (investment) in determining levels of employment and total output is put forward as Kalecki's main innovation. There are evident similarities between Kalecki's theory of the business cycle and that of the Austro-Marxist Emil Lederer, as well as in the distributional analysis of Rudolf Hilferding. Kalecki's analysis of monetary circulation, and the centrality of his theory of profits was anticipated by Rosa Luxemburg in her Anti-Critique. But that monetary theory is rooted in a Marxian understanding of money as a means of settlement between capitalists.