Meaning: Rudolf Hilferding, an Austrian-born Marxist economist and politician, made this statement in his influential work "Finance Capital: A Study of the Latest Phase of Capitalist Development." Published in 1910, the book is regarded as a classic in Marxist economic theory and has significantly contributed to the understanding of the relationship between capitalism and finance. In the quote, Hilferding addresses the distinct nature of price formation in capitalist society compared to social conditions based on the simple production of commodities.

Hilferding's assertion reflects his analysis of the fundamental differences between the functioning of prices in capitalist economies and those in simpler, pre-capitalist economic systems. He argues that under capitalist society, the formation of prices is shaped by specific economic and social relations that are fundamentally different from those found in societies based on the simple production of commodities.

In pre-capitalist societies, where production is primarily geared towards meeting immediate needs and where exchange is often based on barter, the formation of prices is largely determined by the direct interaction between producers and consumers. There is a direct correlation between the labor invested in producing a commodity and its exchange value, leading to a relatively straightforward relationship between supply and demand.

However, in capitalist society, the formation of prices is influenced by a complex set of factors that go beyond the simple exchange of commodities. Hilferding highlights the role of finance capital, which refers to the dominance of financial institutions and the integration of banking and industrial capital, in shaping the pricing mechanisms within capitalist economies. In this context, prices are not solely determined by the labor expended in production or the immediate interaction between producers and consumers. Instead, they are influenced by financial speculation, credit mechanisms, and the pursuit of profit by capitalist enterprises.

Hilferding's analysis underscores the importance of understanding the broader economic and social relations that underpin the formation of prices in capitalist societies. In these societies, the interplay between finance, industrial production, and consumption leads to a more intricate and dynamic price formation process. This complexity can result in price fluctuations, speculative bubbles, and financial crises, all of which are inherent to capitalist economies.

Moreover, Hilferding's insights have implications for the understanding of exploitation within capitalist societies. The divergence between the simple production of commodities and the dynamics of capitalist price formation sheds light on the mechanisms through which surplus value is extracted from labor. In capitalist economies, the pricing of commodities is shaped by the imperatives of capital accumulation and the pursuit of profit, leading to a system in which the labor of workers generates surplus value that accrues to the capitalist class.

In conclusion, Rudolf Hilferding's quote encapsulates his critical analysis of the distinct nature of price formation in capitalist society compared to social conditions based on the simple production of commodities. His work continues to be influential in Marxist economic theory, providing valuable insights into the complexities of capitalist economies and the dynamics of pricing within these systems. By highlighting the role of finance capital and the broader social relations that underpin price formation, Hilferding's quote invites further exploration of the intricate mechanisms at play in capitalist economies.