Three Karl Marx and the Contradictions of Capitalism

Three Karl Marx and the Contradictions of Capitalism

Our goal in this chapter is to present a coherent summary of Marx's analysis of economic forces in society and how they shape human lives. We will do that in two parts. The first briefly outlines a theory of historical change that Marx developed with his long-time collaborator, Friedrich Engels. In eighteen forty-five to eighteen forty-six the two wrote a manuscript, The German Ideology, that contained their explanation of historical change, called "the materialist conception of history." We will briefly provide a structural outline of this conception of history with a few examples to help the reader learn the basic terminology of the system.

We then turn to a more lengthy examination of how Marx applied his theory of historical change to capitalism. This application is spread over thousands of pages of material that Marx and Engels wrote. However, the single most compact presentation is in Capital, Volume One (hereafter referred to as Capital), and the second part of this chapter will concentrate attention on the arguments about capitalism in that book. Capital is by far Marx's most thorough application of his materialist conception of history, and by presenting them in sequence we hope to clarify the "Marxian" view of capitalism. Marx's analysis of capitalism is an intricate theoretical structure, bolstered by a huge compendium of historical description, and when studied closely it can be genuinely breathtaking in its breadth and depth.

We also want readers to see the great divide between Marx's analysis of capitalism and that of most current mainstream economists, who tend to look upon capitalism as a "given system," and exhibit little or no professional interest in the historical process that gave rise to it. They have ripped economic analysis from its historical context, ignoring the development and evolution of the capitalist system. As we move through the Marxist view of the world we will be demonstrating the major differences between his work and that of mainstream economists.

One. The Materialist Conception of History and Class Struggle

Marx and Engels began their economic analysis by making the obvious claim that in order to survive, we human beings must learn to mix our intelligence and our energy-our work-with the basic "materials" of the world we find ourselves in: its soil, water, and air. We must work with what is at hand in order to make this today into tomorrow. In eighteen seventy-eight, Friedrich Engels described how this truism about human survival would be the basis of their materialist theory of historical change:

The materialist conception of history starts from the principle that production, and with production the exchange of its products, is the basis of every social order; that in every society that has appeared in history the distribution of the products, and with it the division of society into classes or estates, is determined by what is produced and how it is produced, and how the product is exchanged.

In other words, the economic organization of human society, or the "mode of production," as Marx called it, is the most powerful factor in determining social structure. Notably, the way society is organized to produce necessities-for example, organized into serfs and lords in feudalism, or into owners and workers in capitalist societies-constitutes the "class structure" of society. Since virtually all production involves many different people, Marx concentrated on production as a social activity and analyzed the class structure created by the organization of production.

Marx's method of analysis is very different from that of Adam Smith, who focused on how individuals behaved within a benignly competitive capitalist society. In contrast, Marx sought to understand the forces that cause the economy to change over time. He believed that change resulted from the struggle between opposing, or "dialectical"-what we might think of as "contradictory" or competing-forces inherent in all societies. As an example, one that Marx made much of, all economic systems produce hierarchies of social classes, with a top and a bottom, and endless competition and resentment at every level in between. These class struggles emerge in the form of wars, revolutions, democratic reform, and in other ways, and one can find them grinding away in any history book. That is, social classes are inherently contradictory-inherently opposing-forces in almost all societies, and class conflicts provoke major changes in how societies are structured.

Marx found that the social activity of production took many different forms throughout history, with stages of social organization corresponding to techniques of production. He noted that European society passed through a number of different modes of production, including primitive communalism, slavery, and feudalism, on its way to capitalism. He concluded that capitalism is simply the latest in a series of modes of production and that it, too, will yield to some other mode of production in the future.

In analyzing capitalism, Marx focused on what he considered the two principal social classes. On top were the capitalists, what he called the "bourgeoisie," consisting of those who owned the machines, factories, and other necessities for production. On the bottom were the workers, or what he called the "proletariat," who, in order to live must work for a capitalist. Thus, in his analysis of capitalism, he would pay special attention to relations between these two classes and how their inherent struggle would spur the forces of change in the system.

Below, we will discuss further this inherent struggle, but for now we will use a few numbers regarding the workers' share of income and wealth produced by our society. These numbers explain well why there is a constant murmur of seething resentment among the working classes about their relative weakness compared to the power of the capitalists. According to the Institute for Policy Studies, the richest ten percent of the United States population now owns about ninety percent of all stocks and over ninety percent of all bonds. The top one percent of the United States population has an average family income of one million four hundred fifty-three thousand one hundred dollars; the bottom twenty percent has an average income of twenty-four thousand six hundred dollars. Average pay in nineteen eighty for a CEO in the United States was forty-two times as great as that of the average wage owner; that ratio increased to three hundred seventy-three to one in two thousand fourteen. Or, to think in global terms, according to Oxfam the wealth of the top one percent of the world's population is equal to the wealth of the other ninety-nine percent, and the richest sixty-two people in the world had as much wealth in two thousand sixteen as the poorest half of the global population.

Aside from these numbers being evidence that capitalism generates inequality, it also suggests that we are moving further and further away from an egalitarian society. The figures underscore a further crucial point about capitalism: since owning the stocks and bonds of companies means owning the "means of production," the wealth-generating capital of the United

States is almost all owned by one tenth of the population. Thus, in order to make a living, most of the other ninety percent who work for wages do so either for these richest ten percent, their managers, or in the public sector of the economy. Reflecting all these numbers, from the nineteen seventies through two thousand thirteen, United States wage earners experienced a dramatic decline in income relative to that of the owners and top managers for whom they work. For example, in nineteen sixty-five, the average CEO's salary was forty-four times the average factory worker's wages, but by two thousand thirteen this ratio had reached over three hundred to one (or more, depending on the source you use).

All the measures regarding wealth, income, and control over the production system are examples of what Marx meant by the inherent struggle between the two groups. They also exemplify the inherent contradictions, or dialectical pressures, within U.S. capitalism, because sustained relative declines in income for the majority of a society's population tend to produce political upheaval. The Occupy Wall Street movement that burst out in September twenty eleven reflected a deep anger on the part of much of the population against the plutocracy they see as having bought their way into control of both the politics and the economic activity in the United States. Occupy members often repeated the old argument that "The interests of Wall Street rarely coincide with those of Main Street," as they embodied the class conflict that Marx and Engels had begun to predict in the eighteen forties. These themes were echoed in Bernie Sanders' campaign for president in twenty sixteen.

Marx and Engels had summarized this idea of inherent class struggle in the following passage from The Communist Manifesto, written in eighteen forty-eight:

The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes.