Chapter 49: Karl Marx
This month we explore the life, times, and ideas of one of history’s most controversial figures. The Industrial Revolution marked a turning point in history, and Karl Marx used a combination of philosophy, economics, politics, and history to try to explain it – and what comes next.
Sources for this episode include:
“Karl Marx.” Stanford Encyclopedia of Philosophy. Last updated: Dec 2020.
Marx, Karl. Capital: A Critique of Political Economy. Volume I. 1867. Translated by Samuel Moore and Edward Aveling. Edited by Frederick Engels. 1887. Marx/Engels Internet Archive (marxists.org).
Marx, Karl. Capital: A Critique of Political Economy. Volume III. Edited by Friedrick Engels. 1894. Marx/Engels Internet Archive (marxists.org).
Marx, Karl and Frederick Engels. “Manifesto of the Communist Party.” 1848. Translated by Samuel Moore and Frederick Engels. Marx/Engels Internet Archive. (marxists.org.)
Rapport, Mike. 1848: Year of Revolution. Basic Books. 2008.
Screpanti, Ernesto and Stefano Zamagni. An Outline of the History of Economic Thought. Translated by David Field. Oxford University Press. 1993.
Sperber, Jonathan. Karl Marx: A Nineteenth-Century Life. Liveright. 2013.
Full Transcript
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As you may know, I started this podcast in order to explore a world in transition. Since the mid-1700s, the world has been changing at an ever-accelerating pace. The material developments we’ve realized in the process have reshaped our social arrangements, ideologies, and more. This is only going to become more and more the case as digitalization, automation, nanotechnology, and scientific discovery continue.
To get a sense of where all this is headed, I turned to history. I wanted to learn about how the developments of the past might inform our actions in the future. Maybe that’s what made you interested in this podcast too.
And if that’s the case, well, you and I have something in common with our subject today: The philosopher, historian, economist, activist, and futurist, Karl Marx.
By the time Napoleon was finally defeated at Waterloo, the French Revolution and Empire had catalyzed a shift in the ideological framework of Europe. Like the Americans and English before, many Europeans were embracing liberalism, with some Radicals going so far as to support full democratization and even republicanism. Others sought to ditch old religious superstitions for the rationalism so cherished in the Enlightenment. Still more were impressed by the efficiencies and justice of the Napoleonic legal code, as well as his meritocratic reforms to state bureaucracies.
The Marx family was among those embracing the change.
But by the late 1820s, things seemed to be slipping back into the old ways. With Austrian Chancellor Klemens von Metternich so influential across Continental Europe, political and ideological progress had stalled. Free trade and industrialization were delayed. Censorship, autocratic monarchs, and noble rights and privileges were coming back.
In Germany, the intellectual elites – who had once seen so much promise in the Jacobins and Napoleon – now sought to address the political question as best they could and as coy as they could. But they would soon be confronted with another question – a social question. Even if we extend rights and privileges to everybody, how is that going to help the working classes or the poor?
Throughout his life, Marx and his Radical contemporaries would try to address both questions. And although he was just one of many, it was Marx would enjoy the greatest legacy. Because of his disciples in the century that followed, his name became both praised and scorned throughout the world.
But imagine if the extent of your historical knowledge was limited to this podcast, and you were asked to synthesize that information and draw up an agenda of political economy. How do you think you would fare?
That’s where Karl Marx was. And so, I think right now is the perfect time for us to review his life, his work, and his ideas – before we follow the notorious branches of his legacy later on.
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This is the Industrial Revolutions
Chapter 49: Karl Marx
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Welcome back, everyone. It’s a new year and we’ve come to a new phase in our story. The First Industrial Revolution is now behind us. In less than a century, it had started upending much of traditional life in Europe and – increasingly – across much of the planet. And, as I explained in the opening today, it wasn’t clear yet where it was all headed. Some folks surged with optimism over the possibilities that new science and industry were opening up. Others dreaded the ways it seemed to be destroying the traditions of work, family, spirituality, and more.
And among the many thinkers who would try to explain what had just happened – and where the world was headed – was the subject of our story today.
Karl Heinrich Marx was born in the Prussian city of Trier in the Rhineland on May 5th, 1818. His father was a lawyer and Enlightenment liberal who read philosophers like Kant and Voltaire. Famously, both of Marx’s parents came from Jewish families with many rabbis among their relations and ancestors. But his father, who wasn’t all that religious, converted to Protestantism in order to practice law – a career forbidden to Jews in Prussia.
Not a whole lot is known about Marx’s childhood, but we know he attended a local school with strong liberal tendencies, and it was subsequently suppressed by the conservative Prussian authorities while Marx was a student there. No doubt these experiences forged his hatred of censorship and reactionary government – especially those of the Prussian state.
In 1835, Marx matriculated at the University of Bonn. There he took up philosophy and literature as his official academic focuses and wild partying as his unofficial focus, literally becoming the co-president of a university drinking club. Thanks to these extracurricular activities, he earned less-than-stellar grades, and so his father forced him to transfer to the University of Berlin.
And in Berlin, Marx became acquainted with the new philosophical ideas of a recently-deceased professor there: Georg Wilhelm Friedrich Hegel. Nobody influenced Marx quite like Hegel, whose concepts of metaphysics, history, and politics were stimulating all kinds of big intellectual conversations among early 19th Century German college students.
It was also around this time that Marx met, fell in love with, and proposed to Jenny von Westphalen – the daughter of a minor noble family. She accepted, although it would be another 7 years before they would tie the knot, as young Karl still had to complete his studies and get a career off the ground. Despite their different social backgrounds, the Westphalens were family friends of the Marxes, and her father shared his father’s liberal ideology.
His father, though, would die of tuberculosis in May of 1838. This changed the course of Marx’s life in a couple of ways.
First, it would begin his lifelong financial struggles, as he battled with his widowed mother over his share of the limited inheritance for years. Second, his father had always pushed him to pursue a legal career and – now that his father wasn’t there to pressure him anymore – Marx instead followed his greatest passion: Hegelian philosophy.
Before his death, Hegel had developed a following among the faculty at Berlin, including Marx’s academic advisor, Bruno Bauer. Under Bauer’s influence, Marx fell in with a crowd known as the Young Hegelians – students who took the late philosopher’s ideas in a radical direction. Using Hegel’s embrace of dialectical reasoning and metaphysical idealism as their guide, they started to favor liberalism – even republicanism – and most controversially, atheism. Influenced by the French revolutionaries of the generation the preceded them, they came to view the role of philosophers as not merely analyzing the nature of things, but also guiding its evolution. And this became Marx’s calling, as a philosopher-revolutionary.
Now, he hoped to do this as a working academic. He wrote a doctoral thesis analyzing the works of the ancient Greek philosophers Democritus and Epicurus through an Hegelian lens. It was deliberately controversial, and so he was not able to earn his doctorate at the conservative University of Berlin. Instead, he submitted it to the faculty at the more liberal University of Jena, which awarded him his Ph.D. in 1841.
Yet, Marx would never be able to find an academic job in Prussia, which was becoming increasingly reactionary toward its universities. Instead, Marx found work as a journalist in Cologne for a newspaper called the Rhineland News. There he promoted classical bourgeois liberal ideas that flew in the face of the Prussian government – freedom of religion, freedom of the press, free trade. Also during his time at the Rhineland News he first started learning about the so-called “social question” – the issues facing the working poor in these early years of German industrialization. He started learning the ideas of Germans who described themselves as socialists and communists (terms which were still ill-defined and somewhat interchangeable).
And when he was exposed to this way of thinking, Marx was…dismissive.
He was concerned about the political question – how to make Europe rational, just, and free from the oppression of kings and priests and so forth. He viewed the social question as, at best, a distraction. He viewed the socialists and communists as (ahem) Luddites (in the way we colloquially use the word today). Terrified by the changing economic order, they wanted to go back to the good ole days of guild monopolies and serfdom. Marx viewed them as culturally tied to German romanticism (think the Brothers Grimm) playing up the common folk of the Middle Ages. But this, he believed, would serve to reinforce to old order of monarchy, superstition, and feudalism that Marx detested. Thus, he saw these socialist and communist thinkers as putting up roadblocks to progress.
By 1843, the Prussian government had had enough and suppressed the Rhineland News. Marx then moved to Paris where he began editing a new publication called the German-French Annals. It wouldn’t last long, but while living in Paris, Marx went through a transformation. His social circle expanded to include much more radical viewpoints. At the same time, he grew more willing to shed himself of the relative moderation he stuck to in Cologne, when he was trying to keep his newspaper from getting shut down. Now he became more than a political radical. He also started becoming a social radical.
And then in 1844, two critical things happened.
First, Marx closely followed the news of an uprising of textile weavers in the far-away, Prussian dominated province of Silesia. (Shout out Chapter 22.) And, don’t forget, his cousin – Heinrich Heine – had written a poem about that uprising. Marx was already becoming familiar with British economists like Adam Smith and David Ricardo, and with French socialists like Henri de Sainte-Simone and Charles Fourier. But perhaps because it was now happening in his home country’s backyard, the Silesian Weavers woke Marx up to a different kind of struggle. Not a struggle between a liberal petty bourgeoisie (like his family) and a reactionary state government. This was a struggle between a new and impoverished working class and their bosses. And with the Prussian government suppressing the uprising on behalf of the bosses, Marx sympathized with the weavers.
Underscoring that awakening was the second thing that happened to Marx a few months later. That August, he had dinner with one of the contributors to his newspaper – another Rhinelander who was actually living in England, seeing that economic class struggle up front in his family’s textile mill; a budding Radical who was compiling his contributions to the German-French Annals into a new book about the poverty to be seen in Manchester. I am speaking, of course, about our old friend – and Marx’s lifelong friend, collaborator, and patron – Friedrich Engels.
Quickly realizing how much they had in common, ideologically, Marx and Engels spoke passionately about this new struggle brought on by the Industrial Revolution. They quickly came to the conclusion that this struggle would bring about a final revolution of human relations. The new Proletariat could be tapped to bring about the end of outdated social constructs like monarchy, religion, and class distinction.
Over the next few years, Marx got to work outlining these ideas.
At first, he borrowed heavily from Hegel. Using the Hegelian concept of alienation, Marx developed a theory of labor alienation. A craftsperson, he argues, can put something of himself into his work.
“In my production I would have…enjoyed not only an individual manifestation of my life during the activity, but also, when looking at the object, I would have the individual pleasure of knowing my personality to be objective, visible to the senses, and, hence, a power beyond all doubt.”
But in a factory system, the manufacturer uses division of labor to alienate his workers from that which they produce. Because the worker is nothing more than a cog in a machine, there is no spiritual reward he feels for his labor. Marx doesn’t fault new technologies for this, he faults private property rights, which create the social conditions for alienation. Thus, Marx’s #1 policy objective became the elimination of property rights (at least property in the form of capital or the means of production).
Alienation would always be a major foundational concept of Marxism.
But increasingly, Marx was becoming a Hegelian revisionist. He largely abandoned metaphysical idealism for metaphysical materialism. Like other Young Hegelians, he came to rethink historical development along these lines. History could still be seen as an evolution of ideas, but an evolution driven by society’s changes in material production. Now, this idea of history – that economics and new technologies determined historical development as much as (if not more than) religion or politics – would be one of Marx’s most enduring legacies. Hell, had it not been for Marx’s promotion of historical materialism, this podcast probably wouldn’t exist.
Now, though he was just one of many journalists and Radicals pissing off the Prussian government from abroad, Marx had caused enough ire that the Prussian king requested the troublemaker be expelled from France. French Interior Minister François Guizot honored the request, and in 1845 Marx moved to Brussels.
Over the next few years, he and Engels kept busy. They went to England to meet with Chartist leaders (and there Marx made a point of it to get some more economic education), they wrote various papers lambasting their fellow socialists as naïve (they loved that leftist traditional of factional bickering), and they joined a new Belgian political party called the League of the Just. They soon came to dominate the league, using their aggressive personalities, and in 1847 they got it renamed the Communist League.
To establish an official party doctrine, Marx took a draft of a pamphlet Engels had been working on and reworked it. They then released it in February 1848 as the Communist Manifesto.
Far beyond a statement of public policy recommendations or even ideological values, the Communist Manifesto sought to re-explain European society in terms of historical trajectory.
It begins with a macro-historical explanation of society through the lens of class struggle, right up to the then-present day. Now, for this month’s bonus episode, I am actually going to read you Part 1 of the Communist Manifesto, because it is largely telling the story of the lead-up to and development of the First Industrial Revolution. And since we just covered the history of the First Industrial Revolution, I thought you’d probably find that interesting.
This section describes a series of social revolutions driven by material changes. First came a communistic pre-history of hunters and gatherers. Then the establishment of agriculture, which led to the development of empires, characterized as a struggle between slave and slave master. Then, when that system collapsed under its own weight, feudalism came along, characterized as a struggle between lord and serf.
Finally, the Black Death and other factors led many serfs into the towns to become burghers – that is, the bourgeoisie. Over the course of hundreds of years, they developed more and more sophisticated ways of making money until they were finally able to overthrow the power of the lords. So far, this had only materialized in Britain and France, but throughout the rest of Europe it was starting to be seen. Society was in transition and a new, though very brief social stratification would follow – one characterized as a struggle between the Proletariat and the bourgeoisie. The Proletariat would then win in yet another revolution to end all revolutions.
Part 1 serves as the premise for the entire Manifesto, describing a historical trajectory that just wasn’t super-accurate. Even England – at that point by far the most industrialized country on Earth – was not the hyper-industrial factory nation the Manifesto describes as being more or less the state of things throughout all Europe. Frankly, Marx understood this, but he was most likely thinking of the Manifesto being an enduring document – so that when that Proletariat revolution comes along in the coming decades, the leaders of it could turn to this document for instruction, and by that point it would all make sense.
In Part 2, then, Marx explains the position of the Communist League in relation to other Radical and socialist parties. Essentially, three points are made here. (1) “Don’t worry, we’re not going to step on anybody’s toes, we’re all on the same side here on the left.” (2) “No, communism really isn’t as scary as it might sound.” And (3) “Look! Look how reasonable our policy positions are!” And some of the specific policy recommendations really were quite reasonable. The Manifesto called for a progressive income tax, the abolition of child labor (and replacing it with free public education), and the expansion of national banks, lands, railways, and more.
But it’s Part 3 that I think is most interesting. Here, Marx explains the place of Communism as a distinct school of thought within socialism. And in differentiating it from the other schools, he not only dismisses the Utopian socialists we discussed back in Chapter 42, but also the reform-minded social democrats who merely sought to raise up everybody into the bourgeoisie. Instead, he explicitly advocates for a Proletarian revolution.
Again, it had to do with the Luddism of both reactionary and socialist Europeans. Marx argued the working class should embrace the changes brought by the Industrial Revolution. First of all, material development is a good thing – we can use industrialization to bring about a better quality of life. More importantly, Marx argues, the capitalist bourgeoisie is creating the unsustainable conditions for their own eventual and inevitable collapse. And when that day comes, the Proletariat will be ready to take power and usher in an age of rational, just, and truly democratic rule.
Now, in 1848, the world was changing. Everybody knew it. And nobody could have known exactly where it was all headed. So, I think we can forgive Marx for his prophesies which – even then, but especially in retrospect – seemed a bit peculiar.
But despite his daunting words opening the Manifesto – about a Radical specter haunting Europe – Marx couldn’t have known what was coming next.
Just as the Manifesto was being published, revolution did, in fact, break out across the Continent.
As the dominoes of uprisings consumed Europe, the 29-year-old Marx made his way back to Cologne, where he and Engels established the New Rhineland News, to support the creation of a unified German republic and lay the groundwork for a later Proletarian revolution. Stubbornly sticking to the trajectory laid out in the Manifesto, Marx pushed not for reforms that would help the working class in the short-term, but rather for supporting the bourgeoisie during their moment of triumph in the rigid historical progression he envisioned.
For example, while many German workers were signaling their opposition to the free trade policy of the Zollverein, for example, Marx embraced it. He believed that extending free trade would drive down wages and employment across the world, thus, it would create a further wedge between its winners (the bourgeoisie) and its losers (the Proletariat). Hence, he supported free trade as a means of hastening Proletarian revolution.
To explain, remember the duel revolutions described by our old friend, Hobsbawm – the French Revolution and the British Industrial Revolution. To Marx, these represented bourgeois revolutions against the feudal nobility, planting seeds that were reaped with the July Revolution of 1830 in France and the Great Reform Act of 1832 in Britain. Now France was seeing the beginning of a Proletarian Revolution with the June Days of 1848, and Britain was seeing it in the form of the Chartist movement.
But Germany was still playing catch-up.
Marx was convinced that the revolutions in Germany were the bourgeois revolutions he and Engels predicted in the Communist Manifesto. And this would be among the things that so alienated them from the rest of the socialists.
Marx then joined the Cologne Democratic Society and pushed his way into a prominent place in the organization. He then led a somewhat-hostile takeover of the Cologne Workers’ Association – which had not shared his views of industrial progress nor of saving a Proletarian revolution for later – but his forceful personality helped him control and shape the association. (Mostly, though, he drove its members away. Membership fell by something like 90%.) He also served as a splinter in the German Congress of Craftsmen and Tradesmen that year.
But after the counter-revolution in Prussia, the New Rhineland News was suppressed, as were the worker organizations. Engels stayed in Germany to fight that doomed fight on the frontlines. Marx, much to his later shame, fled to Paris yet again. There he got involved with the Radicals, but as counter-revolution swept France with the rise of Louis-Napoleon Bonaparte, Marx had to flee yet again – this time settling in London.
Little did he know it at the time, but it was in London where he would spend the rest of his life.
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Exiled in London, the first thing Marx wanted to do was take stock of the revolutionary shortcomings of 1848 and 1849. In 1852, he published these thoughts as an essay, The Eighteenth Brumaire of Louis Bonaparte, in which he admonishes those who believed the class antagonisms of the past would give the Proletariat a path to empowerment. It was an only-slightly-veiled self-criticism. He now believed that all the powers of the world – capitalists, politicians, bureaucrats, armies, priests, even academics and journalists – were organized together in their opposition to working-class empowerment. The struggle he described in the Communist Manfiesto was now in full-swing.
These early years in London would see Marx – still in his early 30s – grow dark in his outlook. The failed Springtime of the Peoples, coupled with his growing financial difficulties, made him bitter and extremist.
Among the sizeable community of Radical Continental exiles in London, Marx became even more distant and disagreeable. He stopped supporting those who advocated a bourgeois revolution, or even democratic action. He believed all the Radical, far-left parties of Europe that weren’t explicitly Marxist would inevitably betray the workers.
Still, Marx remained ambitious. He began working on a project he had always sort of planned, but had always put on the back-burner – a review and critique of one of his favorite reading subjects: political economy.
This work continued to get delayed though, as it became more and more elaborate as he researched for it. He famously spent his days studying in the reading room of the British Museum, pouring over government-collected data on commodity prices, wages, health reports, as well as treatises by political economists up to that point. He also kept a close eye on various financial crises as they popped up in different countries over the years. And to do all this, he also needed to learn English. So, he did that too, albeit his English would never be all that proficient.
Of course, he also had a family – by this point, his wife had given him several children, including three daughters who would survive into adulthood – and he needed to provide for all them. So, to pay the bills he took side jobs for various newspapers, including stints throughout the 1850s and 60s as a London correspondent for the New York Daily Tribune, published by American progressive Horace Greeley. He also dodged creditors and begged extended family (both his and his wife’s) for loans against that inheritance of his that his mother was still holding back from him.
Fortunately for Marx, there was Engels. Cut-off from his family by this point, Engels made the difficult and personally-detestable decision to come crawling back to his parents – tail between his legs – promising to be a good capitalist moving forward. After some negotiations, they agreed to reinstall him in one of their Manchester mills. While working there, Engels discovered that their British business partners had been cheating the Engels family. This gave him the credibility he needed to stay on with the firm for the long-haul. Painful as it was for him, Engels built a career as a cotton baron so that he could patron the research and anti-capitalist writings of his friend in London.
In 1864, Marx was invited to join a conference of Radicals from across Europe in London. There they would try to bring together the voices of Trade Unionists, democrats, republicans, socialists, nationalists, and others. Represented there were Chartists and disciples of old friends Robert Owen and Pierre-Joseph Proudhon, as well as those of the French socialist Louis Auguste Blanqui, whose ideas about revolutionary vanguards would one day be as influential on Vladimir Lenin as Karl Marx’s ideas were.
Soon into the conference, the participants agreed to use it as the foundation of an international organization representing the workers of the world. They agreed that this International Workingmen’s Association – later known as the First International – would be based in London, where a 21-member central committee would direct its operations, starting with the drafting of bylaws and so-forth. And although he had been invited to this conference as something of an afterthought, Marx managed to get himself elected to the small central committee. And from there – just like he had in the League of the Just and the Cologne Democratic Society and the Cologne Workers’ Association – Marx used that forceful personality of his to take control of the committee.
It was thanks to his work within the IWA, more than anything else in his lifetime, that secured for him a legacy. He cleverly injected his beliefs into the International’s program, and he used his position to attack other members – most famously the Russian anarchist Mikhail Bakunin, a one-time friend of his from his Paris days. This ongoing battle led to the famous split between the red and the black following the failed Paris Commune of 1871. Now, as I’ve promised before, we’re going to do another episode on late-19th Century socialism – including anarchism – in the future. And I think that’s probably the best place to discuss all these fascinating developments.
Besides, I need to spend time in this episode covering that big project of his – because in 1867 he finally finished the first volume of his take on political economy: the long-awaited Capital.
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Capital: A Critique of Political Economy – known also by it’s German title, Das Kapital – is a behemoth. In his lifetime, Marx only ever completed Volume I: The Process of Production of Capital. That one alone runs over 800 pages, not including the index. Volumes II and III – The Process of Circulation of Capital and The Process of Capitalist Production as a Whole – were finished by Engels in the later 1880s and 90s, taking from Marx’s notes but, ultimately, adding a lot of his own perspective to it.
So, trying to cover the totality of Capital for you is unrealistic, but I’ll highlight for you the important concepts that make Marxism what it is.
To begin, Marx outlines some fundamentals of economics, borrowing from predecessors like Adam Smith. He then gradually builds on them using the dialectical reasoning he learned in his Hegelian days. However, he also mixes in a positivist approach, helped along with the data he reviewed all those years in the British Museum. And this is a big reason why his school of economic theory would be described as “scientific socialism.”
Now, as much as Marx appreciated Smith – even crediting the Scottish philosopher as the most important figure of his economic studies – the economist who actually had the biggest influence on him was definitely David Ricardo. Because the key to understanding Marxism is understanding his take on the exploitation of labor – a concept inadvertently created by Ricardo a half century earlier.
To explain, Marx introduces a concept of “Abstract Labor” to the Ricardian line of thought. He explains that different kinds of labor, producing different kinds of goods and services, are not materially equal. But in a free market, they are effectively treated as equal or at least as interchangeable. A worker enters the labor market with his “labor power”, which he sells in exchange for a wage. Not his actual labor, but his labor power – what we might call his labor time. In this sense, labor is abstract because it is able to be commoditized.
Unlike his predecessors in political economy, Marx relies heavily on recent history to explain how this commoditization of abstract labor is helped along by the advancements of the Industrial Revolution. Artisans once owned their own tools, controlled their own workdays, etc. But now this was all in the hands of the bourgeois manufacturer. By controlling the “means of production” – that is, the tools and machinery used to produce goods – the capitalist has been able to deskill labor.
With abstract labor commoditized, the capitalist considers not only the “constant capital” of buildings, machines, etc., but also the “variable capital” – that is, his labor costs. Constant capital and variable capital become interchangeable, depending on the capitalist’s needs. Cooperation in production is made possible thanks to his decisions about how many machines are needed and how many workers and work hours are needed.
One of the effects of this is the alienation of labor that Marx first mentioned decades ago. And it leads to an unequal exchange between capitalist and worker. The employer pays the “exchange value” of the employee’s labor power (i.e. gives him a wage) and the employee gives the employer the “use value” of what is produced.
Okay, now what does that mean?
Let’s start by remembering Ricardo’s “iron law of wages” – that is, in the long-run, average real wages will not exceed the means of subsistence. In the supply and demand of the labor market, wages come to an equilibrium. And it just so happens that that equilibrium is roughly equivalent to the amount of money those workers need to keep themselves and their families alive. Nothing more.
And Marx goes to great lengths to demonstrate this with really minute details, like how much nutritional value is stored in food, and what the cost of that food is in a certain area, and how it compares to wages in that area.
But, Marx notes, the wages the workers accept have nothing to do with the value of the goods they are producing.
Let me give you a simplified example, since nothing Marx wrote here was actually simple. Let’s say you’re a textile worker in a cotton mill. You need to earn 10 shillings a day to keep yourself and your family alive. That’s more or less the case with all the workers in your town, all of whom also need to eat. All the local mill owners know this and so they are willing to pay a daily wage of 10 shillings.
Now, with your co-workers, there’s about 100 employees in the mill. Together, over the course of an hour, you all create cotton cloth goods that, in total, can fetch 250 shillings on the market. Congratulations! Your contribution to the overall effort, then, is two and a half shillings. So, by the time four hours of work are done, you’ve produced the total value of your pay for the day.
Except, you’re not just working for four hours, are you?
It’s the 1860s. You’re probably working at least 10 hours a day. The first four hours were for you – the next six were all for your boss. And this happens day in, day out, for year after year.
Each day you produce 25 shillings worth of cotton goods. The boss earns all 25 of those shillings on the market, pays you your 10, and keeps the rest. It’s what you agreed to when you contracted your labor power – again, not your actual labor, but your labor power – to him.
Marx called it “surplus labor” and – expanding on the Smithian view that all value is derived from labor – he explained this exploitation as the source of all economic growth.
Now, some of the remaining 15 shillings will be used to pay for the constant capital, right? Maybe it’s to pay rents on the land used for the building, or taxes, or interest on debts taken out to invest in machines, etc. But much of it will be the mill owner’s profit.
In a capitalist economy, this exploitation of labor is everywhere and it is totally unavoidable. You, as a worker, have no choice in the matter. You need to live. Therefore, you need money. In order to get money, you need to produce stuff. But you don’t possess the means of production. The only way you can access the means of production is by selling your labor power to the capitalist – the owner of those tools and machines – so you can produce goods for him to sell.
As Marx puts it:
“…the labourer belongs to capital before he has sold himself to capital. His economic bondage is both brought about and concealed by the periodic sale of himself, by his change of masters, and by the oscillations in the market-price of labour-power. Capitalist production, therefore, under its aspect of a continuous connected process, of a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capitalist relation; on the one side the capitalist, on the other the wage labourer.”
And in a certain sense, it has always been like this, even in pre-capitalist societies. In the old slave societies, it might have looked like the slave was always working for the slave master. But, really, a certain amount of the slave’s work was for her own subsistence. The slave master had to account for how much food the slave would need, clothing, shelter, etc. In feudal societies, it was actually made very explicit what hours the serf was working for his own subsistence and what hours he was working for his lord.
But in a capitalist society, the hood is pulled over your head. By accepting an hourly wage, you have effectively tricked yourself into thinking that each hour you work is for you and you alone. In reality, though, you are no better than a serf, no better than a slave.
So, like Ricardo, Marx is arguing that profits are only made possible due to the exploitation of labor. But that’s not the only problem with profits. The other problem is the booms and busts of the business cycle.
Again, we should turn to the Hegelian idea of alienation that Marx so often used. In this case, the alienation of “use value.”
Basically, Marx explains that every good (or “commodity,” as it’s often translated from German to English) has a use value and an exchange value. Imagine you live in a primitive society. You have a bushel of wheat. You are most likely to think of its value in terms of its use. You can use it to make bread and eat. But as society becomes more complex, with commercial instruments like prices, a commodity takes on an exchange value as well. Now you might be thinking of that bushel of wheat in terms of how many dollars you can get for it. At that point, it becomes alienated from its use value.
Under this system, the producer does not really consider the usefulness of her product, only that she can get money for it. Over time, money becomes the single, universal commodity. It loses its social connection to the labor which created the exchange values on which it is based. Marx calls this phenomenon “fetishism.”
Under these conditions, a market develops in which that money circulates. And as it does, it takes the form of capital.
As capital, money can be used to buy the means of production. Thanks to the Industrial Revolution, not only did those means of production become more efficient, they also became more expensive. Only a few could afford them. So their bourgeois owners started hiring laborers to use them. This allowed them to start exploiting workers, much the way that lords use to exploit serfs and slave masters use to exploit slaves in the olden days.
The difference between the olden days and the industrial present is what the bourgeoisie does with the fruits of their exploitation – what they do with the profits.
The capitalist uses money (M) to buy commodities (C), then uses his capital – both constant capital (like tools and machines) and variable capital (i.e. workers) – to make new commodities from these. These new commodities have a higher exchange value than they started out with, thanks to the labor of his employees using his tools. The capitalist can then sell the new commodities for more money. (M-prime). Thanks to the exploitation of labor, M becomes C becomes M-prime.
From there, M-prime can be reinvested once again into more capital and more commodities. The goods keep getting sold off. The capital and the profits, though, accumulate.
As capital accumulates, though, the returns diminish. So, the capitalist has two options. He can lengthen the number of hours in the workday – which does often happen – but that has its limitations. So, he needs to go with the second option: he needs to invest in ever-more efficient machinery for the workers to use. With technologies that make the workers more productive, the socially-conceived value of their product becomes dwarfed by the actual value created. This is what Marx calls “surplus value.” And the rate of profit is equal to the ratio of surplus value to capital.
Capitalism, then, is a finely-tuned instrument in which surplus value must grow faster than the costs of capital. The capitalist needs ever-improving technologies, ever-greater access to raw materials, ever-expanding consumer markets across the globe. Otherwise, he goes bankrupt and the entire system collapses.
On a basic level, Marx is thinking of the events leading up to 1848. The potato famine and other food shortages caused the price of food to increase. Thus, workers needed higher wages. Thus, the cost of variable capital increased faster than surplus value did. Thus, profits fell and bosses started laying off workers, adding them to the ranks of what Marx calls the “Industrial Reserve Army” – or what we would, more simply, call the unemployed.
Additionally, Marx argues the circulation of capital in the economy is chaotic and, thus, there will be times when the equilibrium of supply and demand are mismatched. Now he never actually admitted it, but Marx was heavily influenced by Say’s Law. (Remember? That theory that says supply creates its own demand and, thus, there won’t be gluts in the market.) Yet, Marx argues, this just isn’t true all the time, at least not in the short run. Capitalists have a tendency to overproduce goods, anticipating higher demand than actually exists, and then selling at a loss. And when that happens across the market – like was seen with American railroad stocks in 1857 – it creates a panic.
In fact, Marx believed it was exactly these economic downturns which would bring about a Proletarian Revolution. After 1848, pretty much through the end of his life, he was always scouring the news for economic crises, trying to predict if this one or that one will finally bring about the end of bourgeois dominance.
And because of the “tendency of the rate of profit to fall”, Marx believed that such a revolution was inevitable. The bourgeoisie unintentionally planted the seeds of their own demise. In fact, he saw the rise of trade unions as evidence of this – that already there was a working-class movement trying to take a greater share of the surplus value they were creating. And so, Marx envisioned the forces of living labor overthrowing the industrial capitalist oligarchy and replacing it with industrial socialist democracy.
And we’re not talking about some macro-historical prediction here. Marx really believed this was going to happen in his lifetime or shortly thereafter. And he didn’t mean any ole’ class-based revolution in favor of socialism – he is specifically talking about a revolution of mostly-urban, industrial workers in a highly-developed capitalist society.
But like many generations that followed him, Marx never lived to see it. After years of declining health – thanks, in part, to his love of booze and cheap cigars – he followed his late wife, Jenny, and died of a lung illness in 1883. He was survived by his three daughters and, critically, Engels, who not only finished Capital for him, but promoted his friend’s life and work for years to come.
And thanks in large part to Engels, as well as his work in the First International, Marx created just enough of a legacy for himself to be carried on in Continental Europe after his death, leading up to the Russian Revolution 34 years later. Thanks to the USSR, more than anything else, we still remember Marx and discuss his work at length to this day.
Overall, I would describe Marx as a decent philosopher, an innovative historian, a talented and interesting economist (though, like most economists, he got a fair bit wrong), a fairly counter-productive activist (leftists sure do love their circular firing squads) and a terrible, terrible futurist. And yeah, he wasn’t right about everything. But I think it’s fair to say he wasn’t wrong about everything either.
While academics today are well aware of his flaws, he remains a towering figure across the social sciences. He’s largely responsible for the development of both historical materialism and sociology, and he remains massively influential in economics (specifically socialist economic theory) and political science. The Marxian lens – that is, applying the construct of class and class struggle to an analysis of a topic – is frequently used in the study of history, anthropology, literature, and the arts.
I think to truly understand Marx, we need to look at him in the context of his time. We need to understand the Industrial Revolution. And to understand why so many of his predictions never materialized, I think we need to understand what came next. Because so many of the problems he and Engels highlighted – long hours, bitter poverty, worsening health, polluted slums – did, in time, get better. And many of these problems were alleviated thanks to the work of policymakers and others who set about rethinking the growing cities – next time on the Industrial Revolutions.
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