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Anna Creek is at The University of Kent, Canterbury and is studying Criminology and Sociology.
Mark Steel Lecture on Marx 1/3
London 1883 and the death of Karl Marx, few English newspapers reported on this event at the time and yet today, Marx is a hugely recognised figure, his contributions particularly in the realm of economics are extremely well heard. Essentially, Marx predicted that capitalism would implode because it would grow and grow and the thirst for profit would lead to selfishness, war or financial collapse.
Akin to this, Marx also believed that capitalism was prone to crisis; he saw overproduction as a debilitating factor and believed that capitalism would in fact dig its own grave (Vaizey, 1971). In contemporary society it is possible to see some effect of Marx’s predictions relating to how capitalism overcomes crises, for example think about how many crises have unfolded but have subsequently been fixed. However, one must not forget to notice where Marx was also blindingly wrong, in other words, there has been no workers revolution and capitalism is still standing, if only just!
This essay will begin by briefly introducing capitalism, before searching further into how Karl Marx perceived it. It will do this by looking into the notion of the materialist concept of history as well as by emphasising the key themes of exploitation and alienation. Once Marx’s understanding of capitalist society has been identified, this essay will go on to note how Marx sees capitalism both overcoming crises and importantly how he perceives the self destructive nature of the system. Moreover, to answer the second part of the question, the text will focus on two previous hits to the capitalist system; the great depression and the near crisis in 2001, as well as a focus on the current crisis of capitalism. An analysis of these crises will stand as a base for an argument as to whether or not to agree with Marx’s assessment of capitalism. It will draw upon Marx’s predictions and argue that the factors he sees causing the self destructive nature of capitalism are apparent within society, suggesting that there is exploitation and that capitalism is growing to a point where it cannot get any bigger. But it will also consider that Marx’s overall assumption of capitalism falling to communism is unlikely but that it may instead revolutionise into socialism (Woods, 2011). Finally, the text will ask why, (if the analysis that Marx writes is so prominent) is it not being considered by the social elite as a way to develop our society? This essay will argue that it is simply due to the stubborn nature of politicians over what is right and what is wrong, they have their own ‘habitus’ (Bourdieu, 1992) and see no way out other than to fix the current capitalist system.
Firstly however, what is capitalism? Marx saw it as a system of production and identified two key elements; those being capital and wage labour (Giddens, 2009). Marx wrote extensively about capital in his book ‘Das Kapital’ which was produced in three volumes and has been translated into English (see Marx, 2004). Giddens (2009, p.18) (when talking about Marx), refers to capital as “any asset that can be used or invested to make future assets”. He further goes on to describe wage labour as those individuals who do not own the means of production. This gives a brief introduction to capitalism in terms of a Marxian approach but also assumes some level of prior knowledge on the topic. Furthermore, to understand Marx’s specific theory of capitalism and self destruction, one must understand in context his overall outlook on such a system of production.
Thus we move on to talk about historical materialism, but it must be noted here that Marx never actually used this term and instead referred to it as ‘the materialist concept of history’ (McLellan, 1980). This theory simply tried to find the causes of developments in society and Marx explains this in ‘a contribution to the critique of political economy’ (Marx, 2010). In addition, it is also important to draw upon the work of Hegel, Smith and also Ricardo, each of which influenced the work of Marx himself. As McLellan (1980) writes, Hegel saw history as the development and conflict of abstract principles, he saw that “each stage was a progress beyond those that had preceded, and contained elements from them” (McLellan, 1980, p.134). This process was what Hegel termed the dialectic (McLellan, 1980), a theme which Marx took over but instead saw that the changing economic base and social classes were the reasons for the development of society, as opposed to the abstract principles that Hegel had suggested (McLellan, 1980). Marx famously states that “the history of all hitherto existing society is the history of class struggles” (Marx and Engels, 1992, p.3) and this grounds how he perceived the materialist concept of history.
We must however consider this in relation to capitalism; simply, it explains how Marx foresaw the rise of a capitalist state and how he believed capitalism to be a stage in the history of the world (Vaizey, 1971). Furthermore, Marx was able to study both the work of Adam Smith, who spoke about the functioning of laissez-faire capitalism (McLellan, 1980 and Smith, 2007) and the work of Ricardo. David Ricardo is particularly helpful in this context because as McLellan (1980) explains, it was Ricardo who created a labour theory of value which created a basis for Marx to develop and show his own theory of how one class would exploit another in society (McLellan, 1980). Ricardo (1996, p.5) saw that
“The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour”
Evidently then, it is possible to see how a theory of the materialist concept of history leads on to a theory of exploitation. Once again it is important to understand this because as Patnaik (1984) explains, capitalism can be seen as a kind of mode of production that is based on exploitation. Capitalists make profit by exploiting the workers (Conway, 1987) or as we identified earlier, the ‘wage labourers’. Marx believed that if the workers produced an amount of value that was greater than the value of their wages, then a profit must have been made (Conway, 1987). This is essentially what surplus value relates to; the workers’ labour power (McLellan, 1980). But to understand the notion of surplus value further, we can turn to an example given by the Stanford Encyclopedia of Philosophy (2003), they write an example similar to this: If a commodity were to take three hours to produce, then those first three hours of the day spent creating that commodity (of equal value to the paid wages of the worker), is known as necessary labour. Any work over this is known as surplus labour, which leads to surplus value for the owners of production. This is the source of all profit, something Marx looks at in volume two of ‘Das Kapital’ (see Marx, 2006) in relation to the cycle of production.
In addition to exploitation in a capitalist society, Marx talks about alienation within a capitalist society. Generally speaking, Marx wrote about alienation as an antithesis between man and his social being (McLellan, 1980). This simply means a direct contrast between an individual and how they portray themselves in society but what about alienation in terms of capitalism? Marx speaks of ‘alienated labour’ (Marx, 1994) and claims that the worker “is related to the product of his labour as to an alien object” (McLellan, 1980, p.119). In other words, the worker has no relationship with his labour or what he produces. However, Marx also notes that whatever commodity the wage labourer produces does not belong to him but has power over him and eventually increases his level of poverty (McLellan, 1980). So, the worker is indeed alienated from his labour in that he has no relationship with it but at the same time the labour will affect him in nearly all aspects of his life. This then refers back to the idea of an antithesis. Hitherto, it is possible to see how alienation can be closely related to exploitation; although the worker has no relationship with his labour, he is essentially being exploited by it. Furthermore one can see how both alienation and exploitation can be considered in terms of a capitalist society where exploitation refers to the bourgeoisie exploiting the proletariat and alienation refers to the relationship between the worker and their labour under capitalism (Marx and Engels, 1992).
Hopefully, this essay has now given Marx’s theory of capitalism context and with this we can now consider why he believed capitalism to be on a road towards self destruction. It was noted in the introduction that Marx believed that greed would lead to financial collapse; this prediction will also be mentioned when the current crisis of capitalism is considered. Moreover we can identify here what Marx said about crises of capitalism. According to Elster (1986), he saw that capitalism was prone to crisis when the limits of growth are reached. Elster (1986, p.71) goes on to say that growth has reached its limits when “expansion of capitalist sectors comes up against the limited supply of labour, decreasing demand of products or both”. Again this specific notion will be considered when Marx’s assessment is pitched against previous crises of capitalism. However, Marx also saw that capitalism would be able to overcome such crises through innovation of capital (Elster, 1986). What Marx means by innovation of capital is essentially finding new ways to make a profit and in a crisis to fix the economic downturn.
But if capitalism can overcome a crisis, why is it that Marx sees it as self destructing? One of the key arguments put forward for this is to do with the rate of profit falling (Vaizey, 1971). Vaizey (1971) explains that as output rises, the profit rate falls and thus in thinking, Marx saw that capitalism would suffer. Marx predicted that the innovation of capital would occur and that the bourgeoisie would continue to exploit the workers at an even higher rate to gain profit back and subsequently ‘fix’ capitalism. This is how Marx sees capitalism undermining itself (Marx and Engels, 1992). Under capitalism, he observes the workers becoming more and more united and organized, predicting that they will eventually overthrow the capitalist system. Hence, capitalism will have created its own grave diggers, that is, the workers (Elster, 1986). As Elster (1986, p.160) explains “what will motivate the workers to revolution will be the observable features of capitalism: alienation, exploitation, waste, inefficiency...” Marx believed that just as capitalism felled feudalism; capitalism itself would bow out to a superior system of communism (Marx and Engels, 1992).
Furthermore, another of Marx’s key points concerning capitalism leading to self destruction is the problem of overproduction. Paitnak (1984) identifies this as the crisis of overproduction, or the realisation crisis. Easterling (2003) breaks this down, explaining that if there is overproduction within leading industries, they will either make a loss on a sale or worse, make no sale at all; products may have to be stockpiled. Moreover, the industries dependant on supplying such leading manufacturers will also become overproduced and thus the chain of payment contracts is subsequently broken. From this it is easy to see how a crisis could spiral out of control, with dependencies and reliance on factors further down the chain of a capitalist society. It also relates back to what Elster (1986) noted about workers revolting due to the waste and inefficiency of capitalism.
But what about capitalism today, can the current crisis be overcome? Were Marx’s predictions that capitalism would eventually fail correct all along? Before looking into the current economic crisis let us firstly identify two previous crises and gain an understanding on both the causes and how they were overcome. We can apply the predictions of Karl Marx and his assessment of capitalism to each crisis and see the extent to which they are evident. Once the current crisis has also been covered, one will have enough scope to base an overall concluding comment on how accurate Marx appears to have been, based on what we can see in society. Firstly we can talk about the collapse of the stock markets in October 1929, leading to the great depression. Essentially, consumers stopped consuming (Romer, 1988) and mass unemployment blanketed (Nelson, n.d). Referring back to Marx, we can see that he claimed that capitalism was prone to crisis if both demand for products diminishes and labour is in short supply (Elster, 1986). On this level, Marx’s predictions of a crisis prone capitalist system appear true. However, the great depression was initially overcome by tax cuts and later by pumping money back into the economy in an attempt to heighten demand (Romer, 1988). This approach adheres to the work of John Maynard Keynes (1883-1946) rather than that of Marx. Pongracic (2007) talks about how Keynes saw fiscal policy as the way to avoid (or to fix) a recession, he goes on to explain how Keynes saw that the government should “engage in massive deficit spending” (Pongracic, 2007, p.1) which is essentially what happened. In this case, Marx’s specific theory of overcoming a crisis was incorrect in terms of how but still right in terms of capitalism being able to overcome a crisis, generally.
Secondly, let us look at the interesting issue of the near crisis in 2001. Although this didn’t become a full blown crisis of capitalism, it highlights how capitalism can be seen as self destructing through growth and financial collapse (Marx and Engels, 1992). Harvey (2010) has written a brilliant article detailing this particular incident perfectly. Harvey (2010) talks about the importance in the continuity within the circle of capital, which we know Marx also talks extensively about. In 2001 there was a disruption to the cycle when the September eleventh terrorist attacks occurred; people stopped going out and spending money and they were certainly not flying (Harvey, 2010). Thus, financial markets were closed down and as Harvey (2010, p.41) notes “it became clear that the flows had to be revived or the economy would be in deep trouble”. This then led to public appeals urging people to shop, to consume and to travel (Harvey, 2010). With this example in particular it becomes possible to draw on globalisation; Marx saw the driving force of change in society as technical change (Elster, 1986). In this case, the globalisation of technologies permitting for air travel allowed for the growth of capitalism, leading to a near crisis in terms of a financial collapse; a factor present in Marx’s theory of self destruction.
Thirdly, let us consider the current economic crisis that is going on around us. Is this the financial collapse that Marx predicted? Woods (2011), claims that the crisis in Greece (which threatens to destroy Europe), underlines the inability of both economists and politicians to come up with a solution. Moreover, Woods (2011) argues that there is no way to fix capitalism and that not even pumping money back into the economy will help, at best it will buy the crisis a bit of time before it escalates to an even worse state. Capitalism, as Marx predicted, has reached the limits of its growth (Woods, 2011). István (2008) argues that the only hope for the future is to implement a radical systemic of change. If this change does not happen, millions will suffer; “unemployment will soar, living standards will fall and the inevitable result will be the class struggle everywhere” (Woods, 2011, p.1). Even the media are beginning to look to Karl Marx for answers and solutions (for example, see Gray, 2011). The issue that Marx mentioned that seems to be most apparent and relevant here is that of capitalist forces having nowhere left to grow, they (being industry, science and technology) have reached the point where they can no longer be held within the realms of private ownership (Woods, 2011). Is this the end of capitalism? Will there be a revolution?
Thus, the arguments drawn upon in this essay indicate that Marx’s assessment of a capitalist society has some element of truth, according to the principle by which they are argued. In other words, by arguing Marx’s assessment against three crises of capitalism, one can begin to see the similarities between the continuing and frequency of such crises and the way in which Marx predicted this under the rule of capitalism. His assessment is profound. However, it is simply not possible to draw upon an argument indicating Marx’s assessment of the fall of capitalism and the rise of communism because this has just not happened. Furthermore, due to the ongoing nature of the current crisis of capitalism, Marx’s assessment of a revolution of some kind cannot yet be rejected. Although it is unlikely that communism will replace capitalism (Woods, 2011), it will still be interesting to see whether or not several years down the line, the capitalist system is overthrown. If this does occur then an essay similar to this will read that because of the frequent crises that capitalism suffered and the consequent fall of the system, Marx’s assessment of the rise and fall of capitalism can be deemed truthful to a high level.
Additionally, this text goes one step further and asks the motivating question: why are the politicians ignoring Marx’s profound analysis of capitalism in their endeavour to fix the economic crisis? The introduction mentioned that this was due to their stubborn nature, so let us develop this concept. Saying that the politicians are stubborn is a bit of an abstract and unsubstantial answer but if we draw upon the writings of Pierre Bourdieu it becomes a little bit clearer and more academic, so to speak. Bourdieu talks about ‘habitus’ which can be defined as “a set of acquired dispositions of thought, behaviour and taste which is said to constitute the link between social structures and social practice...” (Scott and Marshall, 2009, p.299) Bourdieu (1992) notes that habitus may be unconscious and may give an explanation for behaviours we show as we try to fulfil the role we perceive that we have within society. So, to relate to the politicians in the current economic crisis; unconsciously, they believe that their role is to overcome this crisis of capitalism as has been done time and time before. Woods (2011) claims that the politicians are so blinkered, fixated and narrow minded that they are holding on to capitalism, despite its destructive nature. This set of acquired thoughts stops the social elite from reading and taking on the thoughtful work of Marx and his solution to the problem, that is, a revolution.
Furthermore, Bourdieu and Passeron (1990) write about reproduction within society. He claims that within society, those with cultural capital will mix and associate with others who have cultural capital and similarly, those without cultural capital will mix with other individuals without and thus class inequalities are reproduced in our society. In effect, nobody moves out of their social system. This is relevant because the social elite (that is, the politicians) are governing over the rest of society, seeking a solution to the current economic crisis but they are only in conversations with others of the same group who probably have the same or similar opinions that there must be a way of fixing capitalism. Therefore, they will not even consider the option of bringing in a totally new system, in their eyes it is not an alternative.
To conclude, this essay set out to understand why Karl Marx believed that capitalism was set on a course towards destruction and to find out to what extent and on what basis his assessment could be agreed with. Firstly, the text looked at Marx’s definition of capitalism and what it entailed and this led on to a discussion of how Marx pictured the capitalist structure within society. The issues of historical materialism, exploitation and alienation were all discussed to illustrate Marx’s outlook. Moreover, this text then focused specifically on how Marx believed the capitalist structure to be one leading to destruction, it mentioned overproduction and the falling rate of profit. Furthermore, the essay drew upon previous crises of capitalism as well as the current economic crisis, allowing for a judgement to be made on the validity of Marx’s assessment. It was concluded that there must be an element of truth and agreement of his assessment. But this essay then went one step further and questioned why it is that the politicians seem to be ignoring Marx’s profound assessment and how he sees a solution to crises. Thus, the text has served its purpose. Karl Marx predicted that capitalism was prone to crises but crises which could be overcome. He was right. Karl Marx predicted that capitalism would self destruct and be replaced by communism. He was wrong.
Bourdieu, P. and J.C. Passeron, (1990), Reproduction in Education, Society and Culture, London: Sage Publications Limited
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Harvey, D., (2010), Capital Assembled, London: Profile Books
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Pongracic, I., (2007), The great Depression According to Milton Friedman, [internet site], The Freeman,
Available from: <www.thefreemanonline.org/featured/the-great-depression-according-to-milton-friedman/>, Accessed 10th December 2011
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Bureau of Economic Research, Available from: <www.nber.org/papers/w2639>, Accessed 10th December 2011
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Woods, A., (2011), Marx was Right!, [internet site], Available from: <http://ireland.marxist.com/marxist-theory/analysis/8358-marx-was-right>, Accessed 10th December 2011
Mark Steel Lecture on Marx 2/3
Mark Steel Lecture on Marx 3/3
The podcast on Marx's predictions on Capitalism & Communism from Radio 4's John Gray.
The Significance of Socialism
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