The Marxist System

By Charles Sackrey & Geoff Schneider

Being an Introduction To Certain of

The Ideas of Karl Marx

Designed Especially For Those To Whom

It Has Been Suggested That Marx Has Nothing

To Say To Them About The World

In Which They Live

In what follows, our goal is to present a coherent summary of Marx’s analysis of economic forces in society and how he thought they shaped human lives.  We will do that in two parts.  The first of these is a brief description of a theory of historical change that Marx developed with his long-time collaborator, Frederick Engels.  In 1845-6, the two wrote a long manuscript they called The German Ideology that was largely an attack on prominent German philosophers of their time.  It was never published during their lives and, as Marx wrote later, he stored it in his attic, "abandoning it to the gnawing criticism of the mice."  However, when it was published in the Soviet Union in 1932 the world discovered that its first part, most probably written by Marx, contained an explanation of historical change that Marx called "the materialist conception of history."

In our presentation of this "conception of history," we seek only to provide a structural outline with a few examples to help the reader learn the basic terminology of the system.  Once this terminology is presented and exemplified, we then turn to an extended example 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 (the most complete version of their writings is projected to include over sixty thick volumes.)   However, the single most compact presentation is in Capital, v. 1, and in the second part of our essay we will concentrate attention on the arguments about capitalism in that book. 

In implementing this two-part breakdown of Marx’s "economics," we are trying to avoid what so frequently becomes a barrier to a modern understanding of his analysis of capitalism.  Too often, one or the other of these dimensions of his writing--the materialist conception of history or his analysis of capitalism--is obscured to the modern reader because it is presented separately from the other, is hastily thrown together as a list of terms, or not put into a modern context.  However, it is crucial to understand that Capital is by far Marx’s most thorough application of his materialist conception of history.  Thus, the one is actually an example of the other, and in presenting them in sequence we hope to make the "Marxian" view of capitalism less opaque.  We think that in doing so we might incline readers to see Marx’s analysis of capitalism as an intricate theoretical structure, buttressed by a huge compendium of historical description, that when studied closely can be genuinely breathtaking in his breadth and depth.

We also want to present Marx’s ideas in such a way that readers will see the great divide between his analysis of capitalism and that of most contemporary economists.  These economists, who in these pages we have labeled "mainstream," tend to look upon capitalism as a "given system" that somehow came from some place, but one that has no real interest for us.  In the mainstream, this ready-made system is looked upon as having various aspects that can be explained only if they are categorized, reduced, and, if possible, rendered quantitatively.  What is particularly striking about mainstream economics, in comparison to Marx’s work, is that it is stripped from its historical context. Indeed, this stripping process is now so advanced that U.S. graduate schools produce "economists" who are trained in mathematics and statistics but who are not required to take courses in economic history, or the history of economic thought (not to speak of the humanities or other social sciences.) As we tramp our way through the Marxist world we will see how substantial is this difference. We might also be led to ponder how costly it might be that most contemporary students of economics are trained in programs that systematically shield them from history, the history of the thought of their discipline, and such figures outside that mainstream as Marx.

To Marx, the fundamental question confronting all human societies concerns what we must do to survive. To live, we must 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's at hand in order to make this today into tomorrow. In more contemporary language, prominent U.S. economist, Lester Thurow, says something quite similar when he suggests that, "If you ask a modern individual who they are, they will usually not tell you about their religion, hobbies, or the clubs to which they belong. They will first tell you where they work and their occupation. Work is the domain from which one gets esteem in the modern world." In 1878, Frederick Engels summarized his and Marx's theory of historical change in the following way:

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.

Before other needs are addressed, human beings must organize themselves in order to produce the basic necessities of life such as food and shelter. This economic base of society, or the "mode of production" as Marx called it, is therefore the most powerful force in determining the structure of human society. Furthermore, how society is organized (for example, into serfs and lords, or into owners and workers) to produce necessities determines the "class structure" of society. Since virtually all production is a communal activity involving many different people, Marx concentrated on production as a social activity and analyzed the class structure that resulted from how this activity was organized. Marx's method of analysis is very different from that employed by Adam Smith, which was to focus on how individuals behaved within capitalist society. Moreover, Smith and his followers treated capitalism as a static, beneficent system that would always be characterized by atomistic competition.

By contrast, Marx did not assume the economic system as constant in order to study the actions of individual actors within that system, as do most of the followers of Smith. Instead, he sought to understand the forces that cause the economy to change over time, especially the struggle between opposing, or "dialetical," forces inherent in all societies that he believed caused such change. In his comprehensive study of human history, Marx found that the social activity of production took many different forms, depending on the prevailing forms of social organization and existing techniques of production. In his analysis of these various modes of production, Marx noted that European society passed through a number of different ones, including primitive communalism, slavery, and feudalism, on its way to capitalism. Thus one of the first conclusions that Marx drew from his study of history was there is no reason to believe that capitalism will always remain our economic system. Capitalism is simply the latest in a series of modes of production, and it, too, will yield to some other mode of production in the future.

A particular mode of production was characterized by what Marx called the "forces of production," and the "relations of production." The forces of production include technological factors such as machinery and tools as well as natural resources and human capital (skills and knowledge). In other words, the forces of the production are the machinery, materials and human labor that, when combined, yield the production of goods and services. Together, machinery/tools and resources make up the "means of production" that laborers use to make products. If you own the means of production yourself--a "bourgeoisie" in Marx's system--you can produce for yourself. However, if you do not own the means of production--a proletariat in his system--you must work for someone who does, and this dimension of the capitalist mode of production is its central characteristic. Indeed, as a shorthand definition of capitalism, we can say it is a system in which a profit-seeking minority owns the means of production, and where most others are wage laborers whose labor power actually generates these profits for the owners. We will explain further this definition later, but for now it is useful to help us to distinguish capitalism from other modes of production, such as slavery or feudalism.

The pattern of the ownership of the tools and materials in a society centrally shapes the nature of the system of social classes in that society. Marx described the relationship between the two dominant classes in capitalism--the owners of the means of production and the wage earners--as the "relations of production." Below, in Part II, we will discuss at length the composition of these two classes and what generates the conflict between them, but for now we can emphasize their different stations with a brief look at how wealth in the U.S. is divided between them. According to Doug Henwood (Wall Street, 1997), the richest 10% of the U.S. population owns over 80% of all stocks almost 90% of all the bonds. Since owning the stocks and bonds of companies means owning their "means of production," we can see that the wealth producing capital of the U.S. is almost all owned by the top tenth of the population. It also means that in order to make a living, most of the other 90% must work for these richest 10% and their managers.

Additionally, for the past two decades, the U.S. working classes have experienced a dramatic decline in their own income, relative to that of the owners for whom they work.

One interesting way to measure this relatively declining lot of the workers is this: in 1965, CEOs made 44 times the average factory worker's wages, and today CEOs make 326 times as much as their average workers. These changing fortunes for the owners and workers in U.S. capitalism are fine examples of what Marx meant by the inherent struggle between workers and capitalists. Interestingly, and perhaps a harbinger of what is to come, they mirror closely what Marx described in 1848 in The Communist Manifesto: "Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other: Bourgeoisie and Proletariat." Thus, the differences in the social classes in capitalism, in both their needs from the system and what they get from it, lead to the Marxian view that the interests of Wall Street rarely coincide with the interests of Main Street.

In Marx's study of history, he came to believe that conflict between the classes was the source of most major changes in human society. His studies convinced him that in every mode of production, there has been a conflict between the owners of the means of production and the workers. This idea is summarized in the following passage from The Manifesto:

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.

As an example of this process by which a mode of production is transformed over time, let us take a look briefly at part of the way European feudalism was transformed and ultimately replaced by capitalism. The invention in Europe of the cannon and large ships capable of sailing the earth, in the 15th century, caused profound and lasting changes all over the globe. Europeans ultimately used both ships and guns to dominate global trade, scouring the world for gold, silks and spices. But the changes in economic organization that came with trade, particularly the rise of the merchant class, put tremendous pressure on feudalism, then the dominant system of production. Feudalism was unsuited for trade because, while each manor was virtually self-sufficient, it typically produced little or no surplus to trade. Also, the surplus food that was produced was perishable and thus could not be traded over long distances. The lords (the royalty and those in their favor) who owned the land, desperately wanted the fine silks and spices that were becoming available from trade with Asia, but the existing system did not provide the money they needed to trade for these items. Thus the existing system of production and exchange within feudalism no longer suited the needs of the lords, and this, coupled with changing production and transportation techniques, ushered forth a period of dramatic upheaval and major class struggle.

During this struggle, feudalism was swept aside. Central to the process were "enclosure movements" all over Europe after 1400, by which the lords seized the common land farmed by the serfs. In some societies, like England, most of the land had been farmed by peasants, rather than serfs, and there typically the lords enclosed the common land in order to raise sheep for wool and the export of woolen cloth, giving them money for trade. By seizing the bulk of the land in England, the lords made it impossible for the peasants to make a living as farmers. (As we shall see in Part II, Marx knew well the history of these enclosure movements in England, and his accounting of them became central to key chapters in Capital.) Thus, over several centuries in England the farming peasants (and either serfs or peasants in other European countries) migrated to cities to become wage laborers for the increasingly dominant capitalist class. This process generated massive changes in production systems in Europe, and as production changed, so did everything else, including the notions that European people had about the gods, about beauty, and about each other. As E.K. Hunt describes this process in Property and Prophets, "this class struggle [between lords and serfs or peasants in this example] had destroyed one system [feudalism] only to create a new system based on exploitation of the masses by a new ruling class [capitalists], and hence the beginning of a new class struggle."

As we have implied, in addition to determining the nature of the class struggle, Marx thought that in each of the modes of production the material relationships of society shaped other relationships, including religion, law and culture. As C. Wright Mills wrote in The Marxists (1962):

Political, religious and legal institutions as well as the ideas, the images, the ideologies by means of which men understand the world in which they live, their place within it, and themselves--all these are reflections of the economic basis of society.

For example, religious beliefs in hunter-gatherer societies usually emphasize the importance of nature and the role of people within nature, which is a reflection of the importance to survival of the natural environment for that particular mode of production. During feudalism in Europe, respect for the lord, the Catholic church and the social order was a fundamental component of prevailing ideology. This ideology derived from the economic structure of feudal society, with serfs laboring for the lord first and then after the lord's requirements were met, working for themselves. In early capitalism, Marx was struck by the role that the Protestant Reformation played in supporting capitalist institutions. By preaching that one should accept her/his lot in life, and that all would be better in the hereafter, religions of the time made people more willing to accept the horrors of early capitalism. Thus Marx dubbed religion the "opiate of the masses" since he thought it made people numb and led them to resign themselves to their inferior position in the world.

Marx also argued that private property and the market system tend to demean and devalue all that they touch. In 1846, in On the Jewish Question, he noted that money could transform all things, until money itself was all that was important in life:

Money is the jealous god of Israel, in face of which no other god may exist. Money degrades all the gods of man -- and turns them into commodities. Money is the universal self-established value of all things. It has, therefore, robbed the whole world -- both the world of men and nature -- of its specific value. Money is the estranged essence of man's work and man's existence, and this alien essence dominates him, and he worships it.

If we think about the manner by which consumerism in capitalist societies has transformed Christmas, the celebration of the birth of Jesus, Marx's insights might become more clear. Some examples of this process are given in the box below.


About the habit of consumerism, Juliet Schor has noted that it "is not an ahistorical trait of human nature, but a specific product of capitalism." In their drive for profits from selling products, businesses seize on whatever opportunity they can to entice people to buy more. In the case of Christmas, advertisers try to connect caring and loving with the purchase of commodities. If you really love someone, you will buy them a more expensive gift! Thus we see how the economic system, in this case capitalism, is able to shape human relationships and social mores according to the dictates of the system.

To wind up this intentionally cursory introduction to the materialist conception of history, let us exemplify it, again briefly, by examining the process of globalization, a major social transformation now engulfing everybody, everywhere. Globalization is in some sense the ultimate expression of the free market system, as capitalism expands inexorably around the world in search of new markets and cheap, desperate labor. Marx described this search for desperate labor power, and in his often flamboyant style, by suggesting that, "The worshipful capitalists will never want for fresh exploitable flesh and blood, and will let the dead bury their dead." For the capitalists, globalization can be immensely profitable as they can search the globe for the cheapest labor and resources to minimize their costs of production. These capitalists can also increase the scale, of both production and profits, by adding customers from the furthest reaches of the world.

However, the capitalists do not act alone. Their behavior as often as not produces countervailing responses in the form of broad unintended consequences, and globalization is no exception to this rule. As an example, globalization in recent decades has contributed to the decline of the real wages of the working class in the United States. U.S. laborers cannot, for example, compete with Egyptian teenagers making $0.29 per hour, hundreds of millions of Chinese laborers making a few cents more, or with the billions of other low wage workers in other developing nations. But as U.S. workers lose jobs and income to these foreign workers, both they and their low-wage counterparts can lose the capacity to buy back all the output they are producing. Marx saw clearly that low wages in capitalism could mean the system could produce more than could be sold, with the result an international crises of "underconsumption" (and we will say more about this idea later). Furthermore, the increasing inequality generated by globalization tends further to destabilize the political institutions of developing societies. As recent rioting in Indonesia and other developing countries demonstrates, workers in such countries will not accept low wages and limited human rights forever. In the Marxian view, out of this new set of conflicts generated by globalization will arise new societies, ones which we now can only imagine vaguely, but which will be driven into being by the historical processes put in motion by the spread of capitalism.

In sum, Marx believed that the conflict between social classes over production and distribution of material product was the major cause of the evolution of society, and it was thus the dynamic center of his theory of historical change. The broad theoretical strokes in The German Ideology were not enriched by an adequate structural analysis of capitalism; that would come later. Yet, all his later works, a virtual torrent of articles, books, and letters about the capitalist mode of production, bore the stamp of his theory of history. And, none more advantageously flowed from that theory than the analysis in Capital of the "laws of motion of capitalism." We now turn to that analysis.


After Marx and Frederick Engels had developed their materialist conception of history sporadically between 1845 and 1857, Marx began work on a longer project where he sought to describe and to explain the "laws of motion" of capitalism. The overall structure of that explanation had been, with great compactness, presented in 1848 in the first part of The Communist Manifesto, but its dozen or so pages would only hint at what would be the complete story. The expanded version was published in 1867 in the first volume of what was to be a multi-volume project, and Marx gave it the title, Capital: A Critical Analysis of Capitalist Production. The book was published first in German and later editions in French (1872) and English (1886) made his critique available to most parts of the industrialized world.

Marx was emphatic all along that the task of his kind of analysis was not just "to understand the world, but to change it," as he had put it in 1845. His role as advocate distances his efforts from those of most mainstream economists who, whether they are able to do so or not, claim they are writing from a position of scientific dispassion. It does not perhaps bode well for the long-term influence of mainstream economics that Adam Smith, Karl Marx, and John M. Keynes, those who most substantially shaped modern economic analysis, all wrote often from a position of impassioned advocacy.

This first volume of Capital was the only one published during Marx's life. Volumes II and III were prepared by Engels from Marx's notes, and Volume IV, more a massive compendium of economic ideas than an extension of his critique, was edited by a German Marxist, Karl Kautsky, between 1905 and 1910. We will focus our attention almost entirely on volume I because in it Marx presents his most fundamental arguments about capitalism, especially the relationship between the owners of capital and wage earners who work for them. By focusing on Capital, we do not want to leave the impression that it is a compact statement of all that Marx wrote, for his other voluminous writings have influenced virtually every aspect of modern thought in the social sciences and the humanities. Nonetheless, as an argument about how the production system of capitalism comes to be, how it functions, and the crucial implications of those functions, Capital works well on its own terms.

Despite the wide influence of Capital for over a century, few people outside of universities have the time or inclination to read the book. Inside U.S. universities, new interest in Marx emerged in the 1960s and 1970s, and then waned until quite recently because the dominance of market ideology had purged from the academy the radical bug that had infected it in the 1960s. This lack of access to an ordered and protracted discussion of Capital, however, does not mean we need to remain ignorant of the basic ideas put forth there. Indeed, the central ones are quite easy to understand when they are placed in a modern context, using the experiences common to people who live in capitalist culture. It is our purpose here to take up the major themes in Marx's critique of capitalism in precisely that kind of context. And we will begin our analysis by elaborating, in Marx's often-dramatic presentation of capitalist culture, on the principal players we alluded to briefly above.

The Players on the Capitalist Field, I: Owners/Managers and the Competition They Face

As we stated earlier, Marx argued that most everyone engaged in economic activity in the capitalist mode of production would fall into one of two major groups. First, there are the capitalists and their managers, or what Marx called the "bourgoisie." Their identifying trait is that they own the capital equipment of society, the buildings, furniture, materials, and everything else needed to produce commodities (goods and services) for sale. Like the classical economists before him, such as Adam Smith and David Ricardo, and the mainstream economists in our time, Marx believed these capitalists have the single goal to maximize profits from what they invest in machines, materials, and labor power. And, like all the others, he had a high regard for the power of capitalist competition to accomplish gigantic tasks. As early as 1848, in The Manifesto, Marx wrote this oft-quoted passage:

[The capitalist class] during its rule of barely one hundred years, has created more massive and more colossal productive forces than have all preceding generations together…. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former exoduses of nations and crusades.

Few in our own capitalist age would disagree with this claim, though others might use less florid language to make it. Marx says elsewhere in The Manifesto that the capitalists can be depended upon constantly "to revolutionize the means of production," by which he meant that the owning/managing class will never stop imagining ways to make their production more efficient and thus less costly. Using a new technique, a new "revolution in the means of production," will give the individual capitalist the power to make extra profits until the inevitable occurs and competitors adopt the same technique, or perhaps even better ones. Less industrial societies will have their "walls battered down by cheap commodities," as Marx put it in The Manifesto, for no mode of production can compete with capitalism in its capacity to drive down costs and shape the world after its own image. The globalization of capitalism that is now restructuring the world economy is a process Marx saw with uncanny accuracy in 1848, as reading The Communist Manifesto will demonstrate.

To Marx, when the capitalist brings together land, labor, and capital he or she produces a volatile mix, with conflict an inevitable outcome. This view that struggle preeminently characterizes the capitalist workplace puts him at odds with Adam Smith and others in the Classical School, and with mainstream economists. It is, of course, not lost on mainstream economists that owners often have conflicts with their workers. Yet, anything beyond a perfunctory mention of the relationship between labor and capital, or what Marx called the relations of production, is typically left outside the province of mainstream economics. From his different perch, Marx saw market competition compelling owners to see their workers as decidedly two-sided creatures. On the one hand, workers are crucial to keep production going. On the other, they are unpredictable, resistant to change and authority, given to slowdowns if they are not monitored carefully, and, if united, in possession of the collective power to demand higher wages, different working conditions, or to halt production altogether. This threat posed by workers means that they have to be controlled continually, their rebellions squelched at their inceptions.

Marx concluded that this world of hostile workers, and grasping, hungry competitors, would ultimately corrupt even the most saintly capitalist. It doesn't matter whether he or she is a Christian, Muslim, Jew, is friendly, mean-spirited, is Asian, Latin American, or what you will. Ultimately, the forces of competition would entice the most well-intentioned capitalist to close the factory, reduce wages when possible, break the law, buy the politicians, adulterate the product, and so on. Whereas mainstream economists see competition as the "invisible hand" that gives the system its great moral authority over its competitors, Marx saw it as an unrelenting pressure that threatens always to drag capitalists down to the moral level of the most unscrupulous ones. As an example, and one that Marx emphasized in Capital, without laws against child labor, some capitalists will hire children if doing so will lower costs, and the advantage thereby gained will necessarily force competitors downward into a squalid moral landscape. This imperative to follow the least scrupled leader produces the assaults of the capitalist class on their customers, their workers, and on the environment that one can find described daily in any newspaper.

In his assessment of the great power of competition to shape the actions of capitalists, Marx wrote this in ch. 10, on "The Working Day":

To the out-cry as to the physical and mental degradation, the premature death, the torture of over-work, [capital] answers: Ought these to trouble us since they increase our profits? But looking at things as a whole, all this does not, indeed, depend on the good or ill will of the individual capitalist. Free competition brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist. (p. 257)

And, regarding the effects of competition on capitalist morality, toward the end of Capital, in ch. 31, Marx quotes approvingly from a contemporary British writer this appraisal:

With adequate profit, capital is very bold. A certain 10% [profit] will ensure its employment anywhere; 20% certain will produce eagerness; 50%, positive audacity; 100% will make it ready to trample on all human laws; 300%, and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged. (p. 760)

As one can see, Marx's descriptions of the owners can be distinguished dramatically from the mainstream version, where the capitalist is perched on a heroic pedestal as a risk taker who brings together the factors of production, land, labor, and capital. Or, to paraphrase Marx's view of that version, "Mr. Capital and Mr. Labor combine with Madam Land (as he actually did put it) to produce the best of all possible worlds for them all."

The Players on the Capitalist Field, II: The Workers

Estranged Labor

As for the workers in capitalism, the importance Marx gave to their oppression in capitalism means our discussion of them bears some relevant background. In 1844, while Marx lived in Paris, he wrote a long manuscript, clearly intended to be a book that provided a kind of structural overview of his thinking about "economics" at the time. The notes lay undiscovered for almost a century and were not published in English until the 1950s. When they were published, as The Economic and Philosophic Manuscripts, they created great interest among Marxist scholars because in them Marx advanced a modern-sounding and compelling view about how wage labor in capitalist countries limits human freedom.

In particular, The Manuscripts contained a section called "Estranged Labor" in which Marx described what, for him, were the fundamental conditions of labor under capitalism, and why he found them so appalling. This theme--workers in capitalism are alienated from their work, their fellow employees, and themselves--is a preeminent one in Marx and in all those who followed in his steps. Alienation stems, in the first instance, from historical processes starting in the 14th century in England that gradually separated (alienated) workers from the land and tools with which as peasants they had forged a living, and which would eventually make their survival dependent on being hired as wage laborers. The most famous passage from Estranged Labor about working conditions in capitalism goes likes this:

First…labour is external to the worker, i.e., it does not belong to his essential being;…in his work, therefore, he does not affirm himself but denies himself, does not feel content but unhappy, does not develop freely his physical and mental energy but mortifies his body and ruins his mind. The worker therefore only feels himself outside his work, and in his work feels outside himself. He is at home when he is not working, and when he is working he is not at home. His labour is therefore not voluntary, but coerced; it is forced labour. It is therefore not the satisfaction of a need; it is merely a means to satisfy needs external to it. Its alien character emerges clearly in the fact that as soon as no physical or other compulsion exists, labour is shunned like the plague. External labour, labour in which man alienates himself, is a labour of self-sacrifice, of mortification. Lastly, the external character of labour for the worker appears in the fact that it is not his own, but someone else's, that it does not belong to him, that in it he belongs, not to himself, but to another. Just as in religion the spontaneous activity of the human imagination, of the human brain and the human heart, operates independently of the individual--that is, operates on him as an alien, divine or diabolical activity--in the same way the worker's activity is not his spontaneous activity. It belongs to another; it is the loss of his self.

We don't need to add much to this long quote, because in it Marx speaks plainly enough for himself. His conclusion that "lost labor" is a "lost self" perhaps says it all. Soon after writing The Manuscripts, Marx would enter into his long collaboration with Frederick Engels and they would turn out thousands of pages of essays, books, journalism, and letters about capitalism. An ongoing burden of these pages would be to explain to workers the nature of the system that oppressed them and to urge them to rise up against it. The collaborators had concluded that, if imaginative and creative work were not possible for workers in capitalism, how could the system be defended?

Divided Labor

In Capital, Marx had a good deal more to say about the causes of estranged labor, and his analysis was more in the language of classical economics than Hegelian philosophy. In three key chapters of the book (13-15), Marx outlines the evolution of what 19th century economists called the "division of labor" (and what we more likely call "specialization"). Marx saw that central to the estrangement of factory labor was that it was profitable for the owners to break all tasks down into smaller and smaller individual units of work. As Marx put it, in describing the division of labor in manufacturing:

Some crippling of body and mind is inseparable even from division of labour in society as a whole. Since, however, manufacture carries this social separation of branches of labour much further, and also, by its peculiar division, attacks the individual at the very roots of his life, it is the first to afford the materials for, and to a give a start to, industrial pathology. (p. 363)

He then quotes from a French economist of the time, who wrote that

To subdivide a man is to execute him, if he deserves the sentence, to assassinate him if he does not…. The subdivision of labour is the assassination of a people." (p. 363)

Thus, the words are a bit different here than in The Manuscripts in 1844, but the argument is the same: the capitalist mode of production strips the souls from working people.

Stripped of their souls, or not, who are these workers in the Marxist system if we take at a look at them in less general terms? Or, said differently, who is truly a worker, and who is not? Are supervisors workers? Are medical doctors? How about teachers in public schools, or in private schools? These are important questions, not answered well by Marx's habit of putting everyone into two warring groups, capitalists and their workers. Yet, his two-part class system is not as lacking in substance as it might seem. Consider our own society, where most Americans work for wages or for salaries in positions where the following conditions prevail: they do not control what they produce, how it is produced, or how it is priced; they have nothing to say about whether their workplace will be open tomorrow; typically they must take the wage offered them, even if it is below enough to live on (unless they are part of a union that will collectively fight with them for higher pay). And, we can also say that their labor is "divided" as a matter of course, and it will be sub-divided down into ever-smaller tasks as long as it is profitable for the owners to do so. If these are the conditions of your job, you are a worker in the Marxian version of the capitalist world. On the other hand, if you do have some control over a few, or all, of these matters, you are a capitalist, or a high ranking official in a capitalist firm; that is, you are in the capitalist class. But, then, we all know that the control that the owners have over their workers does not come easy, and what follows describes Marx's comments about why he thought that is true.

Controlled Labor

With the development of manufacturing (used in this context to mean, "things made by hand") in 17th and 18th century England, and with the industrialization that followed, production necessarily moved from individual families to factories. When that happened, because the factory workers toiled for owners, rather than for their own immediate benefit, their efforts had to be monitored more carefully. From this process evolved the need for a new kind of worker--managers and supervisors--who were necessary to monitor other workers at increasingly alienated jobs. Jobs were that way, according to Marx, because the division of labor gradually separated "the hand from the brain" in capitalist workshops by generating ever more tasks demanding hand-power but not brainpower. This aspect of the factory system led Marx often to compare it to the similar way by which military officers keep the ranks in order. As he put it in Capital, when production begins, the capitalist:

…hands over the work of direct and constant supervision of the individual workmen, and groups of workmen, to a special kind of wage-labourer. An industrial army of workmen, under the command of a capitalist, requires, like a real army, officers (managers), and sergeants (foremen, overlookers), who, while the work is being done, command in the name of the capitalist.

To Marx, the increasing complexity of capitalist systems, and given that profit is the single goal of the capitalist, demands ever more complex and sophisticated ways to keep workers on jobs they typically do only in order to pay their bills.

This argument should not be foreign to anyone who has worked in a capitalist firm, because what the people there want from the experience varies with their relationship to the firm: do they own, manage, or supervise the work, or do they do it themselves for wages? The owners want brisk, timely, committed work, done as quickly as possible consistent with high quality output. They want the workers there promptly in the morning, to stay at least as long as they are supposed to, and longer if possible, and so on. Workers, though, compelled to be in some workplace as a wage earner to make a living, would prefer a friendly, flexible environment, over which they have some measure of control. Thus, workers keep their noses to the grindstone only when forced to do so by managers, supervisors, electronic monitors, spies, or whatever else the owners can use to compel them to greater productivity.

In brief, then, the major players on the capitalist field are the capitalist hustling profits and workers hustling a living wage or salary. Marx waited until the last chapters of the book to consider the historical processes that brought these two classes into being, and how the capitalist minority came to dominant the social order (and we will take a brief look at his argument below). We have described the two classes in the way that Marx chose to describe them, as "in relation to each other." He meant by this that the term "capitalist" refers to someone who hires "wage laborers," that neither can exist without the other. He also believed that their relationship to each other produces the central dramatic action of the capitalist mode of production. Like all good dramatic action, this one is a waxing and waning struggle, and, in this case, what is being fought over is what Marx called "surplus value."

Surplus Value

For Marx, the origin of profits in capitalism is surplus value, and the difference between Marx and the mainstream on the origin of profits is essentially twofold. In the first place, as we have shown, Marx's capitalist world is one in which the present is the quintessential pinpoint tip of a vast iceberg. And, second, even when he reaches similar conclusions as mainstream economists about certain aspects of capitalism--such as the drive to maximize profits--he is so often looking at them from a different perspective. To appreciate how this difference works out, as we describe Marx's theory of profits in capitalism we should keep in mind the following (quite typical) version from a popular mainstream principles textbook:

Profit is what entrepreneurs earn for undertaking the risks and uncertainties of enterprise. It is distinct from the wages or salary entrepreneurs may receive for providing managerial skills. The entrepreneurs associated with modern corporations are its many stockholders, who assume all corporate risk and uncertainty, which generate for the stockholders their profit (or losses). Corporate managers earn salaries. (Fred Gottheil, Principles of Economics, South-Western, 1999.)

Let's look at Marx's alternative tale about how profits emerge in capitalism. He defined surplus value simply as the difference between the value of what a worker produces and what he or she is paid (and we shall present a simple example shortly). In his analysis Marx adopted what he calls "socially necessary labor time" as his standard of value for products exchanged in the market. He meant by this that the exchange value of a good or service was determined by the average number of hours of labor time that went into its production. The issue of what gave products their value had been debated by social theorists before Marx, including most prominently Adam Smith and David Ricardo, both of whom had also developed a version of the "labor theory of value."

Marx's own version of this theory is much more closely argued, and he uses the first several chapters of Capital to work out its internal consistencies and logical implications. In these chapters, Marx assumed, without proving the case, that value as he defined it would in the long run determine (more or less) market prices. In volume III of Capital, at least in the version Engels fashioned from Marx’s notes, Marx attempted to prove that the labor theory of value could be used as a basis for determining market prices. However, many critics have not been persuaded, and the issue has been debated for over a century. Fortunate for us, the framework Marx establishes about value is useful in analyzing capitalism, and this is true whether value determines prices, as Marx argued, or not. In the example below we will work with the market prices of labor, materials, capital equipment, and products, rather than their embodied "socially necessary labor time." And, as we shall see, doing so does no harm to the analysis.

The idea of surplus value is easy for anyone to understand who has worked for wages, or for a salary. Take for example, a young woman, a recent graduate from college who is offered $26,000 dollars a year to work for a capitalist firm. What can we surmise about this transaction? We know that the student likely will be taking such a job because she is making an important transition in life and will soon begin to pay for the bills heretofore paid by her parents. We can imagine that she will have surveyed the possibilities and will have taken the best job available, given all her needs. What we know, for certain about the capitalist is that (unless the capitalist is the student's uncle, for example) he or she will be looking for one thing to emanate from the work of the student, and that thing is profit. In a nutshell, then, our student will be expected to produce something over $26,000 of new value, net of the cost of any materials used while doing it. Pure and simple. Our student knows the rules, too, we can be sure. She knows that during this first year of her employment, or even sooner, if she does not produce an amount of value greater than what she is paid, she will unceremoniously be ushered out the door.

Once again, none of this would be news to anyone raised in a capitalist society, though mainstream economists, for example, choose to look at it differently. They also hold the view that workers will be hired if they make profits for a firm, yet their arguments are based typically on the assumption that the distribution of resources, power, and income is a given. And, given this distribution, the capitalist entrepreneur will somehow appear to take the risks, as our hypothetical owner did, and to hire workers when the value of their output exceeds their wage. However, for Marx a central question is this: where did this distribution of income and power derive from and does this history shape profit making now? His answer is a detailed historical description of how the land and tools necessary for production were stripped from peasants and artisans, making it mandatory that they work for wages in order to survive. Thus, when the entrepreneur and the worker arrive at the workplace to seek their fortunes, the principal rule that has emerged from this historical (rather than natural, or divine) process is that one must work to produce surplus value for the other. Marx, in his analysis of the working day, to which we now turn, described the emergence of profits in capitalism in a way that provokes a number of interesting questions that mainstream economists long ago promised not to ask each other.

The Working Day

At the beginning of his great historical essay called "The Working Day," (ch. 10 of Capital), Marx breaks down the day into two parts, a very simple model but one with complex implications. He asks the reader to look at the day of the typical employee as comprised of two parts, as follows:

A---------------------B and B----------------------C

The first of these parts, A—B is the part of the day it takes for the worker to produce enough output (again, net of any additional material costs) to pay for his or her wage. We can more clearly exemplify this, perhaps, if we extend the example we began earlier with our student making $26,000 a year. We have chosen that apparently random number on purpose because it allows us to draw a simple example to make the point. Such an annual salary would come to $500 a week, or $100 a day. This means that, on average, each day this worker must add extra value to the firm's output of more than $100 a day in order to justify being hired.

To extend the example, let's assume that this employee adds value to the firm's output of $160 a day, or (assuming the typical eight hour day), $20 an hour. Already, we can see that the employee is making surplus value (profit) for the owner, because the $160 of extra value is more than the $100 daily salary. As we take one step further into this analysis, we move away from the depoliticized firm of the mainstream and into the Marxist capitalist world. That step is simply to say this: if he employee is adding $20 per hour of extra value, he or she will have produced enough extra value to pay for the wage during the first five hours of the day. And, given the eight-hour workday in our example, that means the last three hours the student will be producing surplus value for the capitalist, the only reason why the student was given the job in the first place. Marx called the first five hours of this day "necessary labor" and the remaining three hours "surplus labor" to emphasize what part of the day the worker was working for the wage, and the part of the day taken by toiling to produce the owner's profits.

The importance Marx gave to this matter can be measured by the fact that he focuses the whole center section of Capital, several hundred pages, on these last three hours, or the B—C part of the day. He does so because this is the part that provides the capitalist surplus value, the quest for which gives the system its single most distinguishing trait. We also should note emphatically here that Marx does not, in his theorizing anyway, pass judgment on the process by which surplus value arises in capitalism. As we have already learned from the first part of this discussion of Marx's ideas, the capitalist is only doing what is necessary to survive, and the worker is doing the same thing. The nature of the working day, in Marx's view, is but another way to look at the experience of most people who live in capitalist culture, because most of them do, in that view, work to produce surplus value for someone else.

Given this particular configuration of the day, what did Marx make of it? The answer is "just about everything" in his system, and here we will take up the most important such things. To begin with, we can ask ourselves a simple question: what are ways the owner of our firm, or any firm, can increase the B---C part of the day? It is quickly apparent that an immediate way would be simply to extend the length of the working day. Marx called surplus value generated this way "absolute surplus value," to distinguish it from "relative surplus value,’ which we will take up soon. In our example, if our recent graduate worked say, 10 hours a day, rather than 8, this would generate roughly another $40 of revenue for the firm. The rub, of course, is that the owner cannot do that in most modern capitalist countries, because it is illegal, without paying an extra premium for such "overtime" hours. Marx describes the political realities of the length of the working day this way:

But when the transaction was concluded, [the worker] discovered that he was no 'free agent', that the period of time for which he is free to sell his labour-power is the period of time for which he is forced to sell it, that in fact the vampire will not let go 'while there remains a single muscle, sinew or drop of blood to be exploited'. For 'protection' against the serpent of their agonies, the workers have to put their heads together and, as a class, compel the passing of a law, an all-powerful social barrier by which they can be prevented from selling themselves and their families into slavery and death by voluntary contract with capital. In the place of the pompous catalogue of the 'inalienable rights of man' there steps the modest Magna Carta of the legally limited working day, which at last makes clear 'when the time which the worker sells is ended, and when his own begins'. (p. 416)

Some of the more compelling chapters of British history, and of US history (and of that of the histories of all capitalist countries), describe the battle waged over the length of the working day. When Marx was writing Capital, both British and U.S. laborers were engaged in a protracted and often bloody battle with owners over all the conditions of work in virtually every industry. To Marx, this struggle over the length of the working day is an inevitable outcome of the capitalist mode of production, and focusing on the B--C part of the day will make it obvious why this is the case. Both parties, owner and worker, have diametrically opposing needs: the one has to fight off the impulse to work the worker to death, while the other will (typically) do anything to make the work day shorter.

These laws concerning the workday, along with a tangled forest of others that have sprung from the same forces, exist in all advanced capitalist countries. In the U.S., the violence against workers, the use of the militia against them and their sorry working conditions led to overwhelming support by the working classes for reform. Thus, in the early part of the 20th century, a reform movement emerged, led by working people and their allies from other classes, that still is unfolding in our time. The unending political battles in the U.S for the past sixty years over workplace safety, social security, unemployment compensation, minimum wages, welfare, federal trade, monetary and fiscal policy (to name only a suggestive list of issues), attest to this fact.

Once the workday is fixed at eight hours, the essential nature of the "contested terrain," as one writer described the workplace, does not change. Surplus value remains the goal of the owners and high wages and good (if not easy) work conditions the goal of the workers. What's a poor owner to do? Consider again the working day, A-----B-----C. If "C" is limited by law to represent eight hours in total, and the owner wants the part of the day in which the workers produce surplus value, that is, B----C, to be as long as possible, what are ways to expand that part of the day? Below is a list of exemplary actions that owners can take to pursue extra profits this way and generate what Marx called "relative surplus value." (It should be noted that Marx's discussion of relative surplus value is often difficult to follow, with equally difficult "simplifying examples." We have used contemporary examples that follow exactly some of his own, as well as others that follow the logic of his argument.)

Technological displacement of workers. Marx was quite explicit in one example concerning relative surplus value. As we have seen, for him the hunger for surplus value and market competition force owners always to replace their workers with machines when it is profitable do to so. Making workers more productive with better, faster machines means that they pay for their wage earlier in the day. Marx took up the issue of machinery at great length in ch. 15 of Capital. And, though his argument concerns British capitalism in the 19th century, and thus concerns capitalist industrial production, his language remains contemporary. He says at one point:

…a machine immediately becomes a competitor of the workman himself. The self-expansion of capital by means of machinery is thenceforward directly proportional to the number of the workpeople, whose means of livelihood have been destroyed by that machinery. The whole system of capitalist production is based on the fact that the workman sells his/her power as a commodity. Division of labour specializes this labour power, by reducing it to skill in handling a particular tool. So soon as the handling of this tool becomes the work of a machine, then….the workman becomes unsaleable…. That portion of the working-class thus by machinery rendered superfluous, either goes to the wall in the unequal contest of the [other outmoded industries] or else floods all the more easily accessible branches of industry, swamps the labour-market, and sinks the price of labour power...(pp. 405-406)

Of course, this is the natural process by which technological unemployment occurs in capitalism. As an example from our own capitalist world, assume a capitalist firm that can make 1,000 units of a commodity at an average price of $1.00, with a process that uses one machine and 100 workers. Then, a supplier drops by with news about a new machine which will allow the owner to produce the same 1,000 units but with only 50 workers and at a cost of $.80 per unit. Will the capitalist fire fifty of his workers? What else can a poor owner do?

In the two preceding chapters, 13 and 14, Marx had demonstrated, as he had in The Manifesto, a genuine appreciation for the ability of the bourgeoisie to develop technology rapidly enough to transform the world with a theretofore unprecedented breadth and speed. He remained committed to the idea that machines could, in a mode of production designed for "free men," deliver people from the drudgery that has been the lot of most of them throughout human history. Yet, with the emergence of a system whose central dynamic is the production of surplus value, the machine becomes the agent of the worker's displacement and, more horribly, it leads to workers being crushed among its moving wheels. Selected quotes from the chapter will make his point. On the moral imperatives of capitalism and the machines, Marx wrote:

In so far as machinery dispenses with muscular power, it becomes a means of employing labourers of slight muscular strength…The labour of women and children was, therefore, the first thing sought for by capitalist who used machinery. (p. 372)


…machinery sweeps away every moral and natural restriction on the length of the working -day. Hence, too, the economic paradox, that the most powerful instrument for shortening labour-time, becomes the most unfailing means for placing every moment of the labourer's time and that of his family, at the disposal of the capitalist for the purpose of expanding the value of his capital. (p. 385)

Concerning dangers of the factory, Marx had this to say:

[In the factory] every organ of sense is injured in an equal degree by artificial elevation of the temperature, by the dust laden atmosphere, by the deafening noise, not to mention danger to life and limb among the thickly crowded machinery, which, with the regularity of the seasons, issues its list of the killed and wounded in the industrial battle. (p. 401)

On this last point, Marx was, as we have said, writing about industrial capital, rather than our own capitalism (with its 70 per cent of the workforce in the services industries), but we should not presume his comments about safety are outdated. In 1995, for example, in the United States, 5,300 people were killed on the job and another 3.9 million received disabling injuries. Thus, the capitalist workplace remains a threat to life and limb. For those workers who remain on the job, and ambulatory, what else can the owner do to get them to pay for their wage earlier in the day?

Cutting Wages. Let's assume that the student from our earlier example is toiling away for $26,000 a year in a consulting firm with a hundred workers. Assume further that the owner decides to cut wages for all of them. Doing so would increase surplus value by moving the "B" part of the work day to the left, if we assume productivity doesn't change, because at a lower wage workers will provide enough extra value to pay for their wage earlier in the day. Will the workers accept these wage cuts like good soldiers? It depends, of course. If they are in a union, and if unemployment outside the plant is relatively low, they will probably fight like the devil to keep it from happening. It all depends, and Marx made it clear he believed this battle over wages, like that over all the other conditions of work, would wax and wane. Depending mostly on conditions of the larger economy outside the plant, often workers do not resist wage cuts, as has been the case in the United States for the past two decades. Other times, every inch of the factory turf will be battled over, particularly when unionization rates are high and workers therefore can keep the political environment from being overtly hostile to their interests.

As an excellent example of this waxing and waning battle between capital and labor, wage earners held their own against their bosses in the United States for about twenty-five years after World War II. During this period, real wages rose regularly because of steadily rising productivity, and because there was an informal "accord" between major firms and their workers (itself one reason productivity was rising). This accord reflected that with roughly one-third of the work force unionized, including virtually all of the big industries, labor unions had considerable clout at the workplace and on the national political scene. However, for several reasons, including a declining manufacturing sector and the globalization process, labor’s collective power relative to their bosses began to decline in the early 1970s. Since then, the rate of unionization has fallen by about a half—it is less than 15% of the workforce—and real wages for an hour’s work are now lower for most workers than they were in 1970. Because Marx assumed the struggle at the workplace, he would therefore not likely see the current generation of "bottom line" employers as any more cold-blooded than their counterparts from, say, 20 years, or 120 years ago. The difference is that the weakened political power of workers allows the cold-bloodedness to come to the surface, where it ever lurks in capitalism. Or, to put it another way, if we ask ourselves, when do employers try to lower the wages of their employees, the answer comes quickly to any of us: whenever they can get away with it.

Speeding up the workplace. Consider again our student and her ninety-nine fellow workers in the hypothetical a capitalist firm. Let's say these workers toil in a firm that provides consulting services to other business firms. Maybe fifty of these workers are using computers to keep information flowing through the office, or to keep tabs on costs, or what have you; maybe the other fifty are outside the office doing the consulting, drumming up customers, or hanging out when they get away with it. How could the owner speed up the work of these hundred employees? Or, formulaically, how can he or she make them more productive, thus to enlarge the B----C part of the workday, by moving "B" to the left. The owner could monitor the work of those fifty on the computers, rank them according to their speed, and publicize the rankings. That would show them! Or, he or she might devise ways to speed up the efforts of the outside workers by increasing the number of contacts they must make daily, or by transferring to them some of the computer work usually done in the office. Again, we ask the question: when will the owners/managers speed up the work of employees? The answer, again, is: whenever they can get away with it.

Moving the production somewhere else. Another major method by which owners try to enlarge the B----C part of the day is to seek out lower wages somewhere else. Most of the shoes worn by Americans used to be made in mills in New England, produced by family-owned firms which dominated local economies but nonetheless provided relatively high wages and a good measure of security. Now, only a few such shoe mills continue to exist in New England. First, the plants were moved to the southern U.S. because wages were lower there and, stemming from the same conditions that generate low wages, there was a relative hostility to organized labor. But, before long, producers were moving their mills further south to places like the Dominican Republic, because the wages were lower there; then, the move was to Taiwan and South Korea. This search for low wages reached one of its low points when the Nike Corporation moved its production to Indonesia, where, in the early 1990s, it hired young women to make its shoes for 14 cents an hour.

In sum, in his arguments about "relative surplus value," Marx showed that confining the length of the working day to a maximum number of hours did not change the essential dynamic of the capitalist mode of production. However, it mandated that capitalists, in order to maximize surplus value, would (using Marx's term) have "intensified" labor, by cutting wages, speeding up work, replacing workers with machines, or marching around the globe in search of the footprints of low wage workers.

The Industrial Reserve Army

In chs. 10, 15, and 25 of Capital, drawing on dozens of reports of Parliamentary investigations of the conditions of British workers, Marx (along with Charles Dickens and others in the 19th century) chronicled the debauched circumstances endured by so much of the working class in Britain. Of course, his principal guide into this territory was Frederick Engels, whose book, The Condition of the Working Class in England (1845), had early on helped to draw Marx's attention away from philosophy and toward political economy. In ch. 25, Marx theorized about these conditions, paying particular attention to the nature of what we call "unemployment" and why it occurs with regularity in capitalism. What, in part, distinguishes Marx's treatment from contemporary ones, is the content and tone of the language he uses. In this case, an important one, Marx called those without jobs in capitalism "the industrial reserve army." His definition employs words that conjure complex images in our minds as we think about the matter and presents a far richer notion about workers without jobs than the abstract mainstream term, "unemployment." Consider the implications of Marx's term. First, again he uses a military metaphor, reminding us that those without jobs are foot soldiers in some capitalist's army, and like their counterparts in the real army, utterly at the mercy of the "generals" directing the struggle. More important, however, is the key word "reserve" in Marx's definition because in his system it carries crucial political and economic implications.

The unemployed in Marx's system are "in reserve" in the sense that they provide an absolutely key role in allowing the capitalist to make surplus value. Consider first, an economic contraction, where production and employment spiral down together, the decline in each bringing about further declines in the other. We know from common sense and from many studies of the matter that the first workers to get the axe will be the latest to have been added, that is, the least skilled, least educated, least desirable for other reasons. If the contraction is great enough, those losing jobs will be a bit more educated, experienced, (white!), and all the rest. We all know this, but what Marx adds is the emphasis that these people gotten rid of must take their lumps, if not in silence, without posing a political threat to everyone else. Clearly, capitalism cannot work economically if owners are not readily allowed to fire workers when they can't sell their products. Nor will it last for very long if those who are tossed into the street arm themselves and revolt, or otherwise pose a threat to the capitalists' efforts to amass surplus value. Thus, capitalism needs, absolutely so, a class of people at the bottom who can be fired without explanation, and sent off to fend for themselves, but who also are not able to organize a resistance to the system that has tossed them to the side. Capitalism also needs these, and any other unemployed workers, graciously to blame their lot on themselves, rather than a production system that makes their unemployment necessary and predictable.

Consider, also, the other side of the business cycle. When the economy starts expanding it won't grow for long unless there are people "in reserve" who can be absorbed back into the system. And, naturally, the hope is that those in reserve will not have made themselves into a real "army" in the meantime. Throughout Capital, Marx fulminates and rages, in between the lines of his typically dense theoretical arguments, about the lot of workers in capitalism. It deeply provoked his moral outrage. Yet, in comparison, in mainstream economics the morality of unemployment is typically ignored and looked upon as a short-term failure of the system or a long-term failure of hopeless individuals. The relationship between joblessness and the political system is also generally ignored because, as is usual in mainstream economics, the politics and the questions of power are left for someone else to worry about. Marx's use of the term "industrial reserve army" emphatically relates unemployment to the realities of political power and persuasion in capitalist societies. The "army" of unemployed also points to the array of social classes in capitalism, about which he had much to say.

Social Classes

One of the more intriguing aspects of life in America society is that opinion shapers, including many professors, have long denied the fact of social classes. Instead of concepts such as "working class," or "ruling classes," we have substituted entirely different kinds of ideas and metaphors, such as "social status" or that the United States is a "melting pot." Another, the "American Dream," is a solid anchor to this mythical understanding of ourselves, and in this dreamland any lad or lassie can, if he or she tries hard enough, make it to the top. Those who actually have done so are paraded through our media and our history books as proof of typical experiences, though they are really not that at all. The research on this matter debunks the myth with a crashing finality by showing that, while there is a great fluidity to American life, most of the upward mobility that takes place is across one class line. What this means is that many people born in working class families get to go to college and end up as low-end professionals or in comparable occupations. And, of course, some go all the way "to the top," at least in terms of the money and power they accumulate. The research indicates that only 10 to 20% of those born in the lower stations move up substantially in the hierarchy of social classes. Most of us end up where we started, and it is still true in the United States that the best way to get to the top is to be born of parents already there.

Marx wrote often about social class, both theoretically and through his accounting of key events that occurred during his times. However, the theory part is actually quite undeveloped, and he never abandoned what he argued early on in The Manifesto about society ultimately being divided into the two great camps of the bourgeoisie and the proletariat. Other classes in his system were bound to extinction. The "petit bourgeois" in his system referred to owners of small firms, and intellectuals, and all others, who did not hire wage laborers. He also referred to the bottom of the heap as the "lumpenproletariat," a term very close to our own notion of the "underclass," all those truly outside the production system. But, Marx believed that the petit bourgeois would ultimately fail to compete with the big firms and would be "hurled into the proletariat," as he put it, and that, "when the train of history turns a corner, the intellectuals will fall off." Thus, there was in his thinking the ongoing presumption that a basic dynamic of capitalism was its tendency to move in the direction of the two great warring camps, or owners and their workers.

If we think of Marx's model of social classes as made up of "those who control" production and "those who don't" we might better grasp his idea of what the terms "capitalist" and "proletariat" meant to him (and now mean to contemporary Marxists). The complexity of the modern world has led these latter-day Marxists to construct variations on Marx's themes about social class mostly by adding more classes, especially those that don't fit very neatly into any of Marx's categories. For instance, Pat Walker, in Between Capital and Labor (1978), describes a "professional managerial class," made up of professionals such as doctors, lawyers, academics, and others who have some control over their working environment but who do not typically hire wage laborers and earn surplus value. Other scholars have, in this same vein, tried to account for these "in between" classes. In their accounting for professionals, these theorists are not abandoning the Marxist framework, but are trying to modernize it so that it can remain a viable paradigm in which to think about capitalism.

Implicit in Marx's discussion about social class is the quite limited number of scripted roles that can be played out in particular modes of production. As an example, presume that a youngster reads captivating books that make him or her want to be a shining knight, or a provincial duchess, or a hardy English yeoman, or a plains Indian warrior, are a pioneering woman ready to prove yourself when pushed up against the rough elements of the weather (not to mention patriarchy), or the fair-minded leader of a workers' council in a democratic socialist state. It is not possible to play these, or a limitless number of other roles, if one resides in modern capitalism because you only can be an owner, a worker, a government servant, or inhabit some other slot in between these. The rest of the slots of all the other modes or production are closed to you. And, once inside your role, you must play it to the hilt to survive: as an owner you must worship the bottom line, and as a worker you must obey the owner. This does not mean, of course, you have no agency--any free will--but as Marx put it so very well:

Men make their own history, but they do not make it just as they please: they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past. The tradition of all the dead generations weighs like a nightmare on the brain of the living. (The 18th Brumaire of Louis Napoleon, 1852.)

By placing people in social classes in terms of "their relationship to the means of production," Marx introduced new language in the terms of a larger, powerful theoretical framework, and discussions of social class continue to ignore Marx at a cost. As one economist, Teresa Amott, put it recently:

…No matter how far from Capital the debate [about social class in capitalism] has strayed, Marx’s original conceptions continue to define the shape and logic of the argument. In fact, one could argue that the burden of twentieth century thought on class has been the task of rehabilitation, elaboration, deconstruction, and contestation of Marx’s original construction of class, that to criticize Marxist concepts of class, one must stand in the space that Marx cleared. (Michael Payne, editors, A Dictionary of Cultural and Critical Theory, 1996).

Thus, though Marx did not himself give the same kind of full theoretical treatment to social class that did many other writers, he set the stage for a discussion that continues into our day and will do so as long as the production of surplus value is at the center of our production system. How could there not be social classes when even the village idiot will be aware that the people in the villages who own or control the businesses also own houses, cars, food, clothes, opportunities and all the rest, that are better than the people who work for them?

Other Economic Arguments about Capitalism

Capital is a book of about seven hundred pages, and in it Marx wrote about many, many aspects of capitalism. We have taken up those of his arguments that dominate the book and which we believe remain mostly germane, even eye opening, to readers in our own day. We have ignored some of his arguments because they do not seem to us to have a great deal to say about our own world. Still other claims Marx made do not merit much explanation in this kind of review, because they are now so-common place. However, we will mention two of these latter ones because they have a particular importance to Capital and might help one to see the book better as a whole. We will also say just a few words about his theory of revolution.

Booms and Busts

In mainstream economics, the modern study of the business cycle is generally thought by mainstream practitioners to have begun with John M. Keynes in the mid-1930s. However, most such practitioners are no longer required to study the history of their discipline in graduate school and thus do not know that several others, including Marx, had developed complex and persuasive theories of the business cycle long before Keynes produced his own system. The problem is that Marx has smatterings of arguments about the instability of capitalism strewn about all four volumes of capital, and few readers have taken the time to compile and assess his claims. One of his arguments, made in Volume III and quite modern, indeed, is this:

The ultimate reason for all real crises [recessions/depressions] always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to [produce as much output as possible.] (p. 484)

This idea is now central to all modern mainstream theories, and interestingly, it is an insight into capitalist processes that is gathering considerable current attention. Many economists, including prominent ones in the U.S., are beginning to fear that the increasing inequality in the distribution of world income is creating just such a "restricted consumption of the masses." Such economists suspect that consequent underconsumption could bring the world economy into a serious depression, if not worse.

In the second and third volumes of Capital, Marx developed other intriguing theories of the business cycle. One of them, his argument that profit rates in capitalism would gradually decline over the long run, thus extinguishing the fire at the belly of the system, has simply not come to be. Profit rates seem more closely tied to the short term business cycle, and each time Marx's theory is resuscitated in the face of longer term declining profits, they seem to start going up again. Another of Marx's explanation for the business cycle is a clear precursor to Keynes, and in it Marx argues that there is interdependency between the investment and consumption sectors of a capitalist economy. He shows, with a fine logical consistency in Volume II, that over- or under-production in one of these can produce a "realization" crisis, or what we call a downturn, in the economy. It is only because British economists, who with Keynes developed modern macroeconomics, were not reading Marx that they did not see much of their own work an extension of that already imagined by Marx.

Concentration and Centralization

Marx was the first major social theorist to predict that capitalism would lead to a growing centralization and concentration of power in the hands of a few capitalists. Marx meant by this language what we call horizontal, vertical, and conglomerate mergers (respectively, in contemporary economic language, these would be a firm buying one of its competitors, one of its suppliers, or a firm from a completely different industry). In the middle chapters of Capital, Marx explains in great detail how the technological imperative of capitalism would produce ever more costly machinery, buildings, and ever more complex and centralized systems of finance, to the point that in time the economy would be dominated by a few big multinational firms. His arguments on these matters are more interesting for their prescience than as new information, because it is a fact about contemporary capitalism that only the genuinely mindless could fail to see. Marx also tied the concentration of capital to the eventual collapse of capitalism, as discussed below, because he thought that as the monopolies grew in power they would gradually "hurl" everyone else into an increasingly immiserated proletariat.

Marx's comments about how the petit bourgeois (small business owners) would be thusly "hurled" downward is worth further mention because such a process is clearly underway for some such owners in most capitalist societies. Consider the example of Wal Mart. The increasing monopolization of retail sales by such giant firms means that, increasingly, main street merchants are finding it more difficult to compete with such monsters. Wal Mart gains its advantage over its smaller competitors in two principal ways: its huge stores spread the overhead for each sale over hundreds of thousands of products in the typical store. And, now Wal Mart (similar to what is happening in other industries) purchases directly almost one quarter of the total output of another giant, Proctor & Gamble. This market leverage means that Wal Mart can buy its inventory at volume prices considerably lower than such products can be bought by smaller retail outlets. Direct purchases such as these immediately wipe out a whole strata of small wholesalers, who used to be in the middle between producers and suppliers, and it puts at risk all the retailers who compete with the giants. As a consequence of this process, literally millions of small business owners, particularly those who are not highly educated or do not have professional skills, must often wince when they think of a future that might hurl them into a job market less inviting all the time to people with their kinds of skills. As another example, if you owned a Mobil, or an Exxon, gasoline station, would you not also wince at the news that these two giants have now merged and plan to "consolidate?"

The Theory of Revolution

In one rhetorical outburst in the next-to-last chapter of Capital, Marx predicted that capitalism was ultimately doomed, and that it was but a matter of time before the capitalist "expropriators were expropriated."(p. 715) Marx's argument was that the booms and busts would get more and more tumultuous, each one leaving a greater and greater trail of debris—small businesses driven from the field, workers ever more immiserated—and the tumult eventually would lead to an overthrow of the capitalist class by all the other classes. That this has not happened is a testament to the resilience of capitalism, and its great capacity to adapt over time to technological and political changes. Marx, too, in his last years, was aware of this adaptability, and in particular he thought that in democratic capitalist societies workers might restructure the system, and make it more civilized, without overthrowing it. To some degree, this is what happened in the capitalist welfare states in Northern Europe. Whether, however, the workers of the world will ultimately "unite" and overthrow their oppressors remains to be seen. One estimate of the current level of worldwide unemployment is 150 million, and we can only expect these numbers to grow as industrialization in developing countries drives more rural people to cities looking for wage labor. At what level of world unemployment, we might ask, might Marx's prediction about revolutionary upheaval come true? It, as they say, remains to be seen.

The Moral Standing of Capitalism

In the last six chapters of Capital, Marx takes up a question that throughout the book he has only implied an answer: where does accumulated capital originate? This is a crucial question, and one would have thought he might have taken it up earlier in the book, better to provide grounding for his argument that capitalism is a system that grinds into dust most of its participants. Yet, he did wait, and the substance of his answer to the question is generalized in ch. 31, in which he says:

The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turn of Africa into a warren for the commercial hunting of black-skins, signalized the rosy dawn of the era of capitalist production. (p. 751)

Actually, these examples follow two chapters on the enclosure movements, particularly in Britain, whereby the crown joined with land barons and the church to drive most of the agricultural work force--the peasants and the yoemanry of Britain--off the land and into the cities as vagabonds or wage laborers. Thus, to Marx, capital originated in plunder and violence, it was seized by a minority from the whole population, and, because wealth (and power) is passed down from generation to generation, this early pillaging remained the foundation of the distribution of wealth and power in Marx's time. Later on in the chapter, Marx unburdened himself of this rhetorical thunder:

If money, according to Augier [a Frenchmen writing in 1842] "comes into the world with a congenital blood-stain on one cheek," capital comes dropping from head to foot, from every pore, with blood and dirt. (p. 760)

In these last six chapters, Marx is actually making two interconnected claims. The first of these is that capitalism is born in pillage and murder, and the second that, in any case, it is a system of unremitting oppression and violence against working people. Do these claims have any merit as descriptions of modern capitalism? Was U.S. capitalism built on violence and plunder? And, does it remain oppressive to the majority of the people who live in it? The answer, of course, depends on whom you ask. The story of the United States is subject to countless versions, and some of them differ dramatically concerning the questions we're posing. Were John D. Rockefeller and J.P. Morgan "robber-baron" criminals, as some historians have concluded? Or were they entrepreneurs who made modern industrial capital possible, as others conclude? For those who adopt the benign meritocratic view of capitalism, its inequalities of opportunity and outcome can be justified with the claim that it is, and always has been, an open system in which all who genuinely make the effort can make the grade (and even rise to the top). This view is, without question, the dominating one in our times.

Others, though, many of them led to their beliefs in part by reading Marx, see things quite differently from the currently dominant view. They see, as almost certainly Marx would have seen, that central to modern capitalism are owners and their managers who by definition live off surplus value produced by someone else; who must create mindless tasks for most of their workers; who must withhold loyalty to their workers and who must fire, or replace, or even harm their health, if doing so will increase their surplus value; who must ever monitor their workers' efforts to keep them on jobs which most of them hate; and so on.

This is a language of force and oppression, and to a Marxist, it is also the language of plunder and pillage. The surplus value--stolen from the workers only because the capitalists control the productive system--is the means by which these owners build their fortunes, amass their political power, and dominate the capitalist world. Last, and more specifically, for all the cheap products the capitalist class has helped to bring into the world, it is a class that also has a long history of doing damage to everything in its path. Consider, for a moment, tobacco executives who claim their product doesn't kill their customers, or Phil Knight of Nike refusing to accept responsibility for the wretched conditions of the workers who make the shoes that make him a billionaire, or the countless chemical companies that have left in their wake toxic fields for children to play on. Are such characters on the modern capitalist stage any different from the "blood sucking werewolves" of Marx's world? Like everything else, it depends on your point of view.


This second part of our essay has been confined to trying to put into an unforbidding language the basic ideas about capitalism that Marx advanced in the first volume of Capital. He was a prodigious writer and thinker about the economy, and the remaining volumes of Capital, along with the arguments in many other of his and Engels' writings, contain a further elaboration of the ideas we have presented here, many of them in powerful, sometimes elegant, language. Yet, we defend the focus on the first volume of his masterwork because we believe it contains many ideas with great relevance to our own world.

In fact, this entire introduction is meant to urge readers to look for themselves into Marx's writings. As suggested earlier, if one wants to take on Capital, or some of the other more demanding texts, the best way to do so is in a college course or in a reading group. On the other hand, much of what he and Engels wrote is quite accessible, as the reader will see if he or she browses through a compilation of these works. Our readers should give Marx another chance and not listen to those who claim from the rooftops that "Marx is dead!" That is, quite frankly, a claim that could only be made by someone who has never, in fact, read his works.