A new biography of Eugen (Jeno) Varga (1879-1964)

Eugen (Jeno) Varga was for many years Stalin's preferred economist, having specialised in international relations and economics. Varga was a 'man of study', not a gun-fighting revolutionary from the Balkans. Knowing him, is also knowing marxism of the European semi-periphery and how it later on was transformed into marxism-leninism.

This biographical study departs from the thesis that German and Austrian marxism of the Second International had partially laid the foundations for marxist-leninist economic analysis and thought. Varga was one of the fathers of this variant of marxism that was developed at the Soviet academies during the 1920s and 1930s and that was based on the works of Kautsky and Hilferding. By mixing them up with Lenin's imperialism theory and empirical research, Varga contributed to the formation of a corpus characterised by scientism and economism. Varga was neither an original nor a brilliant scholar of marxism and was therefore suited to the development of marxism as a kind of policy science for communist party leaders. The marxism he propounded could be textually transformed into books with a high educational use value; for his publications were aimed at party militants and academies and always set out to explain concrete problems by reducing them to choices to be made or to objective economic developments. Marx's Capital was the ultimate source of inspiration giving a conceptual answer to any question deriving from problems such as the cyclical nature of capitalist crises, the concentration movement of capital and the realisation problem of surplus-value. This allowed Varga to develop from orthodox marxism into the stalinist variant into which this was gradually transformed. His polemics with Kautsky, Hilferding and Bauer were therefore mainly based on different interpretations of this orthodoxy and inspired by a revolutionary belief in the inexorable decline of capitalism. Capitalism in its monopolist variant would not be able to guarantee the proletariat's survival and inevitably led to (civil) wars and revolutions.

Brief details of Varga's life are provided. If anybody can assist with contacts or suggestions regarding this project, please contact ahmommen01@hetnet.nl. I am particularly interested in information regarding the views and contacts with Varga of British marxist economists.

Biography

Varga started his early career as a social democratic journalist and teacher after having studied philosophy at the Budapest University. Before the First World War he became an epigone of Rudolf Hilferding, studying cartels and industrial concentration in Hungary. He became friends with Karl Kautsky through sending articles to the Kautsky's Die Neue Zeit. Though Varga belonged to the marxist left in the Hungarian social-democratic party, he never became involved in factional struggles or in outspoken 'revolutionary' activities challenging the reformist party leadership. Indeed, he did not actively participate in party politics. When the party debated for more than a decade its proposed agrarian strategy, Varga did not at any point come to the fore as its leading theoretician. Eventually, he was to draft the agrarian programme adopted by the party at the end of 1918 once the social democrats had entered into government. In March 1919, when the councils' republic governed by social democrats and communists was declared, Varga became People's Commissar of Finance. However, he left this post after a few weeks for a newly created post of People's Commissar for Production and would later on preside over the National Economic Council.

The councils' republic collapsed on 1 August 1919. Together with other people's commissars Varga fled to Vienna where a long period of exile began. By this time he was already forty years old: not the age for a married man with a child to begin a revolutionary career. His short-lived appointment as a people's commissar was for Varga an experience which exercised a deep influence on his way of thinking and behaving. During these 133 days of the dictatorship of the proletariat, he had become a communist. From a 'man of study' he had been transformed into a politician having to defend the economic and social reforms he implemented in a period of crisis and war. When he was interned in Vienna, he wrote and published a very interesting analysis of the economic reforms the councils' republic had implemented and the difficulties that had arisen.

In the summer of 1920, Varga and other leading communists left Vienna for Moscow. There, they were able to participate in the second world congress of the Communist International, held in July-August 1920. Varga was immediately received by Lenin who had been much impressed by his analysis of the difficulties faced by the Hungarian councils' republic during the short period in which it exercised power. At Lenin's behest, Varga remained in Moscow and began working for the Comintern and the Profintern whilst also publishing articles on agrarian politics and international economic relations - a topic in which he would soon specialise as the author of a quarterly survey published in International Press Correspondence. Meanwhile Varga had transformed himself into a bolshevik, joining the Communist Party of Russia and participating in the Comintern's revolutionary activities.

In 1922, he moved to Berlin where he occupied an office at the Soviet legation as a specialist in international trade relations. At the same he was involved in political activities and the writing of articles on German politics or economic reports discussed at the congresses of the Comintern. As a 'man of study' he kept his distance from the different factions in the Russian and German communist parties. At the third world congress of the Comintern in 1921 he had reported together with Trotsky on international economic stabilisation. Then he moved in the direction of Bukharin. Though Varga always stressed that capitalist economic instability was due to imperialist rivalries and the uneven development of capitalism, he was well aware of the impossibility of predicting the moment of collapse of capitalism. Therefore, he always stressed the importance of revolutionary movements conducted by a proletarian vanguard party. In his theory of the 'decline of capitalism' one can find several elements of Hilferding's Financial Capitalism, Rosa Luxemburg's 'underconsumptionist' thesis or Lenin's theory of imperialism, which Varga incorporated into his theory of the decline of capitalism. He rejected Hilferding's theory of organised capitalism as a stage towards socialism and pointed to the fact that the national capitalist economies were exporting their problems with the realisation of surplus-value to other countries of the colonies and the capitalist periphery. This, Varga argued, would inevitably lead to wars and economic and monetary divisions.

In 1927 Varga moved back to Moscow where he was appointed director of the Institute of World Economy and Politics. Stalin, who had defeated the leftists, was now preparing for his turn to the left. Bukharin, who was directing the Comintern and as leader of the right, also promoted the idea of an alliance with the peasants, and was removed from his leading functions. Though Varga had never taken a clear stand in the Stalin-Bukharin rivalry, he was nonetheless to be attacked by several militant stalinists and soon lost his position as a leading Comintern economist. In the last analysis, he kept his post of director of his institute working for the Comintern because he had never opposed Stalin's turn to the left. Though not a typical sectarian, Varga was a convinced enemy of social democracy and reformism and was eagerly to subscribe to the then official Comintern theory of 'social fascism'. His eclipse lasted until Dimitrov took over the Comintern leadership at Stalin's behest in 1934. Varga was asked to help preparing the seventh world congress of the Comintern that convened in 1935. He wrote its economic report, The Great Crisis and its Political Consequences, which gave an overview of economic and political events since the sixth world congress in 1928. He also contributed to the report which Dimitrov as secretary presented to the congress. This indicates that Varga's influence on the Comintern's direction was still of some importance. Though he had followed Dimitrov's move to popular front politics, on the other hand, one can continue to find in his texts several leftist influences.

Varga survived the ensuing stalinist purges that hit the Comintern bureaucracy. However, his influence declined after the collapse of the popular front in France and of the Spanish republic. During the Second World War, Varga became an adviser to the Ministry of Foreign Affairs with responsibility for German reparation-payment problems. Disgrace followed in 1947 because he had the previous year published an analysis of post-war economic problems considered too accommodating to capitalism and overestimating the capabilities of the bourgeois state to prevent a new economic crisis. Again, Varga managed to survive and make a comeback after Stalin's death in 1953 as an 'elder Academician' once again publishing books and articles. However, Khrushchev's politics of 'peaceful coexistence' also meant the obsolescence of Varga's analytical framework based on inter-imperialist rivalries and economic stagnation.

With more than seventy books and pamphlets and some 1,000 articles published in a multitude of journals and newspapers, Varga was the Comintern's most prolific author. However, he never published a book or paper promoting him to the status of one of the outstanding theoreticians of marxist economics. His work consisted mainly in compiling lengthy reports and generating articles based on newspaper clips, official statistics and comments on bourgeois authors. Because he was a party man, his publications were aimed at educating militants and workers, not at developing marxist economic theory beyond the Kautskyist variant of marxism. Bukharin, who was also Varga's rival in the 1920s, called him a man always writing comments on statistics he had collected elsewhere. Trotsky called him the 'Polonius of the Comintern'. Others saw in him a typical German professor, a bookkeeper, or a vulgar pedant working backstage producing reports the wielders of power needed.

This no doubt explains why he survived successive purges and persecutions. Though he did not return to Budapest in 1945, he did not forget his old comrades in arms who were now exercising power there. Nevertheless, except for some visits as a consultant and the advice he extended to Rákosi, he was never to lose his faith in Soviet communism.

Andre Mommen