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Are Marx’s criticisms of capitalism valid?
author: Vladimir Unkovski-Korica
date: 20/08/02


‘If life was a thing that money could buy The rich would live and the poor might die.’ (from a folksong of the Upper Thames region)

Indeed, at no period in human history, as during the epoch of capitalism, has the development of the means of production been so advanced and the abject poverty of the international working, or lower, class so extreme. From its inception, capitalism has generated much analysis, discussion and criticism. One of the most devastating criticisms of that system of production, alleging that the system would lead to its own destruction by creating the conditions for a socialist revolution, was that offered by the nineteenth-century philosopher and economist Karl Marx.

Basing his work on historical materialism, Marx argues that new and higher systems of social life develop from previous ones with the growth of the productive forces that overcome the relations of production. The capitalist mode of production thus arose from the accumulation of capital and the rise of a new, trading class. This class, the bourgeoisie, established the possibility to trade goods not for their use-value (for their useful qualities) but for accumulating more goods and trading them to make money. Goods become commodities, and they are sought after simply for the sake of profit. In such a system, there is no necessary limit to the production of profit.

Clearly, then, the fundamental drive in capitalism becomes the huge accumulation of capital. The basis for creating capital, that is, the surplus value in production, is the exploitation of labour, which implies the division of society into classes, the exploiting and exploited. Membership of class is determined by the individual’s position with repect to the means of production. In capitalism, the bourgeois class is defined as the class of the ruling, propertied capitalists, who are the owners of the means of production and employers of wage labour. The other major class, the proletariat, is a class of wage labourers, who do not own the means of production, and who are ‘reduced to selling their labour power’ (Engels) in order to survive. These two classes have antagonistic relations by virtue of the fact that the former exploits the latter, which lives in destitution.

That classes as defined and described by Marx have existed since the nineteenth century is easily demonstrable. Owners of the means of production at the end of the nineteenth century lived in comfort and owned factories employing over 300 people, while the conditions of the growing working class betray tremendous hardship. In the last three years of the decade of peace before World War I, 1430 British coal miners would die of injury at work, and an average of 165 000 of them, ten percent of the working force, would sustain injury. The mid-1990s, too, justify Marx’s criticism. According to the UN, the richest twenty percent of the world’s population owned eighty percent of wealth. The poorest fifth owned just under two percent. There were between one and one and a half billion people unemployed in the world. Furthermore, the world's 358 billionaires have more assets than the combined incomes of countries representing nearly half, or 45 per cent, of the planet's population. The contrasts between the classes, today more on a global than a national scale, are obvious.

In a class society, labour is the source of the difference in the exchange-value of all goods, it is the key to the generation of surplus value, and, therefore, profit; the exchange value of labour power is the cost to purchase it, and this cost should optimally be just enough to sustain the worker for his work. The use value, on the other hand, can produce far more (in terms of the exchange value of commodities) than is needed to sustain the worker. The worker, then, is employed, and is paid for only a part of his labour, while the rest of the value generated is appropriated by the capitalist. The exploitation in this is evident. In time, surplus value extracted from the working class begins to be accumulated, for the purpose of producing even more of it (causing the increase in magnitude of the units of the means of production).

This process also causes, however, the inner contradictions of capitalism that lead to its demise. The drive for surplus value, under conditions of competition between capitalists, compels the capitalists to constantly find ways of cutting the cost of production. This, in turn, leads the owners of the means of production to increase productivity, most commonly through technological advance; to increase the concentration of labour; to reduce wages (unless these are at subsistence level) or the number of people employed; and to seek a cheaper source of resources or labour power itself.

The first of the effects of this is that capitalism is faced with the tendency of rates of profit to fall, since, with technological advance, the amount of human labour embodied in the production of a commodity is reduced, reducing the amount that can be extracted as surplus value by the capitalist. Depressing wages (unless they are already at subsistence level) also decreases the buying-power of the worker. So, the capitalist is forced to expand to embrace more resources, to gain access to cheaper labour, to create a new market, and to maintain the rate of profit:

‘The bourgeoisie by the rapid improvement of all instruments of production, by the immensely facilitated means of communication…compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.’

Failing to do so by trade, or fearing the victory of a rival, the ruling bourgeoisie of a particular nation may decide that military intervention is the only way to secure its sphere of influence and, ultimately, to survive. This can of itself lead to major military confrontation and, simultaneously, great devastation to the working class (Lenin expands on the subject in Imperialism: The Highest Stage of Capitalism).

Motivated by this and by its concentration in places of work where conditions of life are unbearable, Marx argued, would facilitate the creation of a revolutionary consciousness among the workers. With rates of profit falling, then, and the socialisation of the centralised means of production, the bourgeois class becomes all the more unnecessary to the process of production. In effect, it itself; its creations, like private property, the division of labour and the nation state; and its dominant ideology and state apparatus; would all become historically bankrupt, a fetter on the means of production. This would occur since, ultimately, profit rates would fall to such a level that the bourgeoisie would not be able to survive on the proceeds of the exploitation of labour, while the working class would be educated enough to run the process of production, which is simplified through the advance of technology. The workers’ revolution, for the working class is the dominant class whose further developing of the means of production is hindered, becomes inevitable.

That this actually occurs in reality can be shown by a number of examples in history. From the 1870s, the accumulation of capital in Europe and the US led to a similar process described above. The introduction of machinery and new methods in agriculture in England, as an illustration, led to the depreciation of the price of wheat in 1897 to a third of its value in 1867. As a result of this falling rate of profit, conglomerates and monopolies were formed on a large scale in countries like Britain, Germany, France, the US, and Russia. An instance of this can be observed in Germany, where, in 1900, there were more than six significant companies in the electrical industry; by 1912, those surviving had grouped into two large, co-operating companies. A small number of big banks dominated the smaller banks in terms of capital possessed. This occurred in Germany in 1912-1913, where the ‘big’ banks (i.e., those with more than ten million marks), of which there were around sixty, had come to own five times more capital than 115 medium sized banks (one to twelve million marks) and a great number of small banks combined. These amounts are staggering, and enabled bankers to greatly influence policy, both of capitalists and government (and hence the military).

As the countries developed economically and in amount of capital accumulated, so too did their need for colonies, which would offer resources, a cheap work force, a market and strategic importance. Thus, the scramble for colonies began, leading up to the situation where only around twenty percent of the globe was not in the state of colonial or semi-colonial oppression and exploitation by 1914. Of that figure, it was Britain, France and Russia, which held the largest percentage of the colonies. Crucial, though, was that to survive and have a corresponding reputation to wealth, there were countries that needed to expand in terms of colonies. One such example, and the crucial one, was Germany. It needed colonies to maintain profit rates against Britain and France, who were being rapidly outpaced in terms of economic growth by Germany, and who needed to retain their own colonies to survive. Survival of the fittest implies struggle. This cleavage in international capitalism was among the most important factors for the outbreak of World War One.

Simultaneously, the mass misery of the working class, the concentration of workers in production (that was at the same time also the ‘socialisation of the means of production’ as Rosa Luxemburg put it) and the threats posed by war, did create a revolutionary consciousness among the international working class, as Marx had predicted. The forces of production needed to free themselves of the fetters on their own progress: to prevent the bourgeois class leading it into a war that would destroy much human life and retard the development of the means of production, or even make them regress, the working class was forced into revolution. Indeed, the revolutionary wave occurred, in Tsarist Russia (1917), Hungary (1919) and Germany (1918-1919 and 1923), and Spain (1936-39), which, however, failed to bring world revolution for a number of reasons. Factors that could be included are argued about: they could be the incompetence of the ‘vanguards’ of the working class in many countries, bourgeois use of force to stop revolution (one could argue that this proves the Marxist contention that the state and law are one of the means to maintain the capitalist mode of production), fascist dictatorship, the contradictory role of Social Democracy (many would argue that there was nothing contradictory in it, for Social Democracy prefers reform to revolution) combined with the rise of the Stalinist bureaucracy in Soviet Russia, or simply the resilience of capitalism as a system. That Marxist theory can be used to explain the process, and generally explain and predict subsequent events, like World War Two and its results, and the failure of the Stalinist model of ‘socialism’ (as done, perhaps, by Leon Trotsky), is indicative of the perceptiveness of Marx’s method.

It can probably also be used to argue that the period since the 1960s and the phenomenon of globalisation are very similar in essence to the period between the 1870s and 1914-1918. Europe and Japan developed at a fast pace for almost twenty years after the Second World War, with US aid. Europe caught up with the US in output, and Japan produces half less than either of the other two. Marx’s accumulation of capital is evident, setting the stage for the next stage in development: concentration of capital. Indeed, by the 1960s, companies in these nations began to merge in order to be able to compete on a world scale, as a result of de-colonisation, and to maintain profit rates. Global recessions in the 1970s and the 1980s accelerated the mergers creating, ultimately, what we have come to know as transnational corporations. This was the multinational corporation, or monopoly, on a new level (of the largest one hundred economic entities in 2001, more than half were the major corporations, which were larger, then, than most countries in the world), which could organise production on an international scale (the pronounced improvement of information technology adds to the justification of Marx in many fields) but be protected by national borders. That is a clear indication that capitalist social relations are acting as an impediment to the further, international development of the forces of production, which would be unimpeded by capitalist competition, restriction and borders.

The competition is made more fierce by the falling rate of profit: and the falling rate of profit is indicated in that, in the US, average growth in the period 1964-1973 was four per cent annually; between 1993-1998, it was three. During the same periods, that in Germany was four and a half per cent and one and a half per cent annually. Finally, that of Japan was 9.6 per cent in 1964-1973; four per cent 1983-1993; just under one per cent 1993-1998. The ‘technology bubble’ may also be similar result of a process similar to the Great Depression at the end of the nineteenth century. Consequently, we have increasing friction that is similar to the friction of the major powers in the years prior to the Great War. This in turn is becoming evident in trade disputes (the ‘Banana Wars’, and subsequent trans-Atlantic disagreements), increasingly independent military organisation and action (the US in Afghanistan and potentially in Iraq, the EU in attempts to create the Rapid Reaction Force) and the global competition that drives companies into accounting fraud to keep afloat on the market and stock market. Whether this could lead to major imperialist clashes, and whether capitalism can expand fast enough in terms of markets and diversity of products to prevent another attempt at revolution is questionable, but that Marx’s method predicts much of what is currently occurring is undeniable.

It is also difficult to reject that Marx predicted that this process would force the working class into a more oppositional stance to capitalism. Industrial strikes occurred all over Europe as the ruling class of Europe made blatant attacks on the welfare state, in order to make itself more competitive on an international scale. The working class unrest in Argentina, resistance to the coup in Venezuela and general apathy to bourgeois politics, as evidenced by lower voter turnout across Europe, implies that the prospect of revolution is not impossible. That it has not yet occurred does not disprove Marx; for Marxists can argue that part of the reason for failure thus far was that the international working class falsely perceived the Soviet experience as representative of Marxist economics, which is a contestable notion. The criticism of capitalism and the seeds of revolution, more generally, historical materialism, can be argued to be valid because the trends within, and faults of, the capitalist are demonstrable in two separate epochs, 1870s-1918 (part of the period was known as the Great Depression), and 1960s-2002. The crisis of the ‘vanguard’ today, too, is explicable using historical materialism.

Marx, in addition to providing the criticism of capitalism specifically, also develops a theory of the nature of Man. Without explaining Man and expounding the theory of labour, Marx would risk not being all-inclusive in his analysis, which would be contrary to historical materialism. He was clearly keenly aware of how important the nature of Man is when considering His environment, history, way of life, and proposed changes to the economic system. Man is, according to Marx, at once a natural, human, social and individual being, since all these are aspects of His existence (He lives in the natural, material world, for example, but cannot overcome nature, which is hostile to His survival; so, He needs to work in groups, or society, in order to overcome the antagonism of nature). Again, it is labour that unifies in Man these aspects, and it also forms His consciousness.

It would be difficult to prove or disprove Marx’s axiom about the nature of Man. Many psychologists have argued about the nature of Man, and a number of them have supported or sympathised with the Marxist conception of Man. Some examples include Vygotsky and Fromm. A survey of psychological problems or social reactions to capitalism in the past and today would, in many ways, support Marx’s views, especially that Man’s interaction with his environment is the overriding factor in the formulation of his consciousness.

Theoretically, in capitalism, as in other economic systems, ‘The alienation of the worker in his product means not only that his labour becomes an object, an external existence, but that it exists outside him, independently, as something alien to him, and that it becomes a power on its own confronting him.’ So, (the working) Man’s own products appear to be above and hostile to Him, as nature was at first. This leads on to the notion that someone else is the master of His products, which, in capitalist society, leads to His feeling that His labour is not an end in itself, and makes Him feel estranged from His fellow Man. Clearly, then, class relations, division of labour and private property are very much tied to the separation of Man’s aspects. Labour, which should be the embodiment of his whole self, in this kind of society, is not a reflection of himself, not an end, but a means. It is a means to survival. So, to add to Man’s alienation, this makes His labour ‘an activity as suffering, strength as weakness, begetting as emasculating, the worker’s own physical and mental energy, his personal life – for what is life but activity – as an activity which turns against him…’

In the century leading up to the First World War and just after it, we can see many manifestations of the trends Marx identifies. Man feeling out of control, as if attacked by the machines He uses, is evident in the Luddite movement of the early-mid nineteenth century. Poets like T.S. Eliot and authors like James Joyce, at the beginning of the twentieth century, identify the chaos, alienation and misunderstanding of the world by Man. The mere name of one of Eliot’s most famous works, The Waste Land, implies the dreadfulness and disorientation of the world as might have been experienced by most at the time. Eliot also writes with disdain of the City in London, and is characteristic of many who see the displacement of humanity on a large scale as something sickening and degrading to Man Himself (the poem entitled Burbank with a Baedeker: Bleistein with a Cigar is an example of the combined destructiveness of capitalism and its perceived results on Man, while earlier poems like the Prufrock and Other Observations anthology show Man as human body parts with no wholeness, and this lack of wholeness echoes the view of Marx). Some of the reasons for the alienation and degradation of Man in these works may be contrary to Marx’s explanations of these, but they do often identify the same effects with some force and immediacy.

One of the more important trends to notice in the world today is that illnesses like depression are on the rise in the world, and that there is a connection with the position of people in society or the circumstances in society finds itself in. For example, people getting depressed before the age of thirty-four in America has risen from around six per cent in 1955 to more than fifteen per cent at the end of the 1990s (similar trends were established in another eight nations, mostly of the Northern Hemisphere). Poverty in America was at its worst in the 1990s since 1950, and there has been an increasing division of labour. A similar trend is evident in France where there is an increasing rate of suicide among the unemployed youth in France. According to a study by the National Association for the Prevention of Suicides, in 2000 suicide became the most common cause of death among young people between twenty-five and thirty-four years of age. The suicide rate is fourteen times higher among the unemployed than among business executives. In Beirut, too, suicide rates shot up during the civil war, according to Daniel Goleman, who unsurprisingly names the last decades of the twentieth century the ‘Age of Melancholy’.

All this implies, firstly, that Marx’s view of Man as shaped by his circumstance is accurate, but, more importantly, that with increasing poverty and division of labour, Man does feel more distant from others, his work and himself. Many would argue, however, that these forms of dissatisfaction and alienation are not tied to the worker’s perception of himself as a worker but more as, for example, a parent who cannot send his children to university, a driver who cannot afford a car, or a consumer unable to buy what he desires.

To counter this argument, one could stress the fact that Man’s consciousness is formed by His experience of society, which is based on a certain mode of production. This mode of production in many ways determines the ruling ideology, which in turn shapes such aspects of human society individual morals, individual wants and the law. Since Man is not whole, that is, not all His aspects (the social, individual and other) are in harmony, and the contradictions of society are responsible for this, and vice versa, the ruling ideology will attempt to justify itself in terms of false consciousness. Thus, when a worker cannot send his children to university, he may be deprived as a parent (and think that this is a problem for him as primarily a parent, which is an expression of false consciousness, according to Marx), but he finds himself in this position only by virtue of his position with regard to the means of production. Similarly, Man thinks of Himself as free in capitalism. Yet, if His consciousness is greatly determined by the ruling ideology, then He is in fact forced to accept many of the restrictions on liberty without actually realising it. Thus, in the French elections, a huge endorsement of Chirac in the second round of the election was seen as a rejection of what Le Pen stood for and the ‘defence of the values of the Republic’. Among these is ‘liberte’, or liberty. Yet, some would argue that Chirac’s stress on ‘law and order’ in his campaign did not differ much in essence to the promises of Le Pen. We see, then, that the ruling ideology can in fact mask over relations in society as they really are, and maintain the status quo. The Rule of Law often does the same, whether overtly, as in Germany during the Spartacist uprising, or indirectly, as through the Law of Contract, which cements capitalist relations. It masks reality, moreover, for it presupposes the equality of participants in a contract, whether or not they are, in the actual world, materially equal. As a result, one sees justification for the description of law as the ‘will of the ruling class’, even though that is not meant to be a categorical statement. One can also see why there is an argument for the hypocritical ruling ideology to be unmasked and replaced. The concentration of the working class in the highly centralised means of production provides the basis for their realising the contradictions of the system and for their acting to prevent further exploitation and degradation (by ending the division of labour, private property and class division, and reorganising into a democratic society based on communal labour, common property and abolition of class), and, thus, to overcome the division of His aspects as Man.

All in all, it is clear that Marx’s criticism holds much validity, force and relevance, even today. Even though some of his particular arguments no longer seem as apparent, are not as compelling as they had been at the end of the nineteenth century and the beginning of the twentieth, or are simply wrong (like that there is always a plentiful supply of workers for capitalism within the nation state), Marx’s method certainly enables us to form a coherent and comprehensive view of capitalism as an epoch in history. The fact that Marx himself had not predicted the future with precision, most importantly the time and place of the Revolution, cannot of itself disqualify his general conclusions about the way that history progresses or about the contradictions of capitalism. The contradictions of the system have, in fact, been seen and exploited a large number of times in the last 150 years, but particularly since 1917. A system that claims to have reformed itself and overcome its major deficiencies would not constantly be vulnerable to the same type of criticism or the repetition of its errors. With global overproduction and simultaneous mass poverty; the constant threat of war; and cyclical repetition of the same processes, capitalism leaves one with little choice but to conclude on its historical bankruptcy and the need for radical change.


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