There are a variety of interpretations of Karl Marx's (1818 - 1883) theory of capitalism. This arises from both its unfinished nature and Marx's shifting points of emphasis across his lifetime. The focus of Marx's work, however, was undoubtedly on the historical basis of inequality, and specifically inequality under capitalism. Marx's critiques of the capitalist system - its tendency towards crises, the necessity of inequality - are still relevant today.
Marx's powerful critique has as it basis a unique approach to reality - the dialectic. Taking from G.W.F. Hegel (1770 - 1831), Marx believed that any study of reality must be attuned to the contradictions within society and, indeed, he sees contradiction as the motor of historical change. Unlike Hegel, Marx believed that these contradictions existed not simply in our minds (i.e., in the way we understand the world), but that they had a concrete material existence. At the heart of capitalism was the contradiction between the demands of the capitalist to earn a profit and the demands of the worker, who wants to retain some profit to subsist. Over time, the workings of the capitalist system would exacerbate this contradiction, and its resolution can be had only through social change.
The Dialectical Method
The dialectical approach does not recognize the division between social values and social facts. To do so leads away from any real understanding of the problems people face. Additionally, the dialectical method does not envision the social world as being dominated by a cause-and-effect relationship; instead, it looks at the reciprocal relations among social factors within the totality of social life. These relations include not only contemporary phenomena but also the effects of history, as dialecticians are concerned with how the past shapes the present and how the present lays the seeds for the future. Because of this complex set of relations, which often fold back in on themselves, the future is both indeterminate and contingent on individual action. Indeed, this relationship between actors and structures is at the heart of Marx's theory. Structures both constrain and enable individuals, having the potential of both helping them to fulfill themselves and contributing to their exploitation.
Marx's insights into actors and structures must be understood in the context of his views on human nature, which is the basis for his critical analysis of the contradictions of capitalism. Marx viewed human nature as historically contingent, shaped by many of the same relations that affect society. In his view, a contradiction exists between our human nature and work in the capitalist system. Though we have powers that identify us as unique animals, our species being, the possibilities for realizing human potential within the capitalist system are frustrated by the structures of capitalism itself. Unlike most social theories that have implicit assumptions about human nature, Marx elaborates a concept of human nature that also informed his view of how society should look. An important factor in this is Marx's ideas about labor. By objectifying our ideas and satisfying our needs, labor both expresses our human nature and changes it. Through this process, individuals develop their human powers and potentials.
Under capitalism, the relationship between labor and human expression changes: rather than laboring to fulfill their needs or express ideas, workers do so at the demands of capitalists. Workers are alienated from their labor because it no longer belongs to the worker, but rather to the capitalist. This alienates workers in four ways:
- Workers are alienated from their productive activity, in that they no longer labor to satisfy their own needs.
- Workers are alienated from the product of their labor, which now belongs to the capitalist. Instead of finding expression in producing, workers turn to consuming to express themselves.
- The cooperative nature of work is destroyed through the organization of the labor process, alienating workers from their fellow workers. Additionally, workers often must compete against one another for work and pay.
- Workers are alienated from their human potential, as the transformative potential of labor is lost under capitalism.
The Structures of Capitalist Society
Marx wrote in response to the rapid changes taking place in Europe in response to industrialization, particularly in Germany. This period of dislocation and poverty is the context for Marx's notion of alienation, and his critiques were designed to show that capitalism was the basis for alienation and to develop a plan for action for overcoming the structures of capitalism. Marx understood that inherent within capitalism was also a system of power: it is both economic and political; it both coerces and exploits workers. Actions undertaken in the name of economic necessity disguise political decisions For example, although it is an accepted economic method for dealing with inflation, raising interest rates protects the wealthy, while causing unemployment among the poor. The political decision to privilege the wealthy at the expense of workers is hidden behind economics.
Marx's understanding of commodities (products of labor intended for exchange) is central to understanding his ideas about the nature of capitalism. Commodities produced to subsist and to satisfy their needs have use value. Under capitalism, where workers produce for others and exchange commodities for money, products have exchange value. Because it is often unclear where a commodity's value comes from, it takes on an independent, external reality. Marx called this the fetishism of commodities, when the value of an object or commodity is believed to be tied to something "natural" or independent of human action, such as markets. Thus, the reality that value originates from labor and the satisfaction of needs is obscured. Marx used the term reification to describe the process whereby social structures become naturalized, absolute, independent of human action, and unchangeable. Just as the fetishism of commodities obscures the relationship between commodities, value, and human labor, reification obscures the underlying relationships within the capitalist system and allows supposedly natural and objective social structures to dominate people.
Capital, Capitalists, and Proletariat
Under capitalism, there are two main groups: the proletariat, who are wage-laborers, and the capitalists, who own the means of production. Whereas workers are wholly dependent upon wages, capitalists are dependent upon money invested to create more money. Capital is unique to the circulation of commodities under capitalism. Under non-capitalist forms of exchange, commodities are traded for money, which is then traded for another commodity (C1 - M - C2). The primary reason for exchange is to obtain a commodity for use. Under capitalism, money is used to purchase a commodity, which is then sold to create a greater amount of money (M1 - C - M2). The purpose of this form of exchange is to create greater and greater sums of money.
Exploitation is a set of social relations on which capitalism is built. Capitalists exploit workers by paying them less in wages than the value they produce. While a worker may earn eight dollars a day in wages, s/he may produce ten dollars a day worth of value, creating what Marx called surplus value. Capital grows by exploiting workers to generate ever greater amounts of surplus value, usually by lowering workers' wages. In addition, capitalists constantly compete with one another over capital by finding new ways to generate profit and surplus value in order to maintain an edge. Marx calls this drive the general law of capitalist accumulation. Capitalism is not the only historical epoch in which individuals are exploited, but it is the only one in which the mechanisms of exploitation are hidden behind independent, objectified, and reified structures, such as the market.
The conflict created by the contradictory positions of two groups, the proletariat and the capitalists, is at the heart of capitalism. Because these represent groups in conflict, Marx called them classes. For Marx, every period of history contained fault lines upon which potential conflict could result, and, thus, every historical period had its own class formations. Because capitalists are continually accumulating capital while also competing with other capitalists, Marx believed that more and more members of society would eventually become proletarians in a process he called proletarianization. Society would then be characterized by a very small number of capitalists exploiting a large number of poor proletarians subsisting on low wages. Marx called this group of proletarians the industrial reserve army. Thus, the normal operation of the capitalist system, through competition and exploitation, produces an ever greater number of workers who will eventually rise up to overthrow the system.
Capitalism as a Good Thing
Despite his criticisms, Marx was aware of the benefits of capitalism, and generally understood it to be a good thing. The productive capacity of capitalism could free people from need, and it delivered people from the traditions that have dominated them throughout history. Marx criticized capitalism from a future-oriented perspective, based upon his understanding of what capitalism, as a revolutionary force in modern society, was capable of, and what its limits were.
Marx thought that capitalism had fully developed itself and that it was ready to enter a new mode of production, communism.
The Materialist Conception of History
Marx's future-oriented perspective has its basis in his materialist conception of history. He suggests that the ways societies provide for their material well-being affects the type of relations that people will have with one another, their social institutions, and the prevailing ideas of the day. Marx uses the term "the forces of production" to refer to the ways in which people provide for their needs. He uses the term "relations of production" to describe social relationships that dominate the productive capacities of a society. Under capitalism, the forces of production lead to a set of relations of production which pit the capitalist and the proletariat against one another. To change the relations of production, Marx felt revolution was necessary. Revolution arises from exploited classes agitating for change in the relations of production that favor transformations in the forces of production.
The relations of production act to dissuade revolutionary behavior, as do the prevalent ideas within society. Many of these ideas cloud the true relationships that underlie capitalist society. Marx called these kinds of ideas ideologies. The first type of ideology is emergent from the structure of society, and can be seen in things like the fetishism of commodities, or money. The second type is used by the ruling class to hide the contradiction of this system when it becomes apparent. These explain away the contradiction by making them seem coherent (as in religion or philosophy), making them seem the product of personal pathologies, or making them seem a reflection of the contradiction within human nature itself and, therefore, immutable. Marx used equality and freedom, our ideas of which stem from the nature of commodity exchange in capitalist society. These mask the fact that we are neither equal with one another nor able to freely control our labor or the products of our labor. Capitalism inverts our notion of equality and freedom: it is capital that is freely and equally exchanged, not individuals who are free and equal.
Marx also viewed religion as an ideology. Just as freedom and equality are ideas to be cherished, religion also contains positive dimensions, but it has been used to disguise the true set of relations that undergird capitalism.
Marx has faced a number of criticisms. Most importantly, actual existing communism failed to fulfill its promise. Though these experiments may have distorted Marx's thought, Marxist theory certainly did not reflect its practice. Second, history has shown that workers have rarely been in the vanguard of revolutionary movements, and indeed have resisted communism in some places. Third, Marx failed to adequately consider gender as factor in the reproduction of labor and commodity production. Fourth, some have accused Marx of focusing far too much on production, without giving enough attention to the act of consumption. Last, Marx's historical materialist approach uncritically accepts Western notions of progress.