Ironic | Capitalism Helped Defined By Karl Marx?


The word “capitalism” can mean many things to many different people. It is seen as a blessing to hundreds of millions, a scourge to probably an equal amount of world citizens. A key point in the debate over capitalism’s morality is to understand how Karl Marx understood capitalism and how he analyzed the system in his work with Friedrich Engels, Das Kapital, published in 1867.

“Capitalism” in its modern sense was coined in the mid-19th Century and turns up several times in Das Kapital, although the words “capitalistic system,” “capitalist” and “capitalist mode of production” appear more than 2,000 times.

When Marx referred to the capitalistic system, he understood it to be a system where there was private ownership of the means of production in a market economy, with power centered in an exclusive, wealthy class. In contrast, the worker was an unprotected cog in the machine of modern economics, a tool that would always be shamelessly exploited by the controllers of production. Consequently, Marx called capitalism the “dictatorship of the bourgeoisie” and called on workers to plan organized revolts in hopes of creating a “dictatorship of the proletariat.” Marx believed that after a period of socialist government, the next step that societies would take would be to form a stateless and classless society that he called Communism.

This “workers’ state” was an inevitable future reality due to the tensions that capitalism created in society, Marx believed, which would result in social explosions all over the globe. Exiled for his beliefs several times, Marx lived in Paris, Brussels, Cologne and London during his turbulent life and summarized his most prominent ideas in The Communist Manifesto, published in 1848. Marx acted upon his beliefs by becoming a key figure in the International Workingmen’s Association towards the end of his life.

Marx was correct in many of his thoughts, but incorrect in many others. Capitalism, to use the term very loosely in regards to the systems in place in czarist Russia and imperialist China, did indeed disintegrate in some parts of the world in the 20th Century. Marxism inspired working class people to fight to the death for the institution of a new system wherein the state controlled production and labor. Several decades after his death in 1883, Marx lived on in a sense as the Soviet Union was formed in 1922 and the People’s Republic of China was inaugurated in 1949. Many other countries implemented their versions of Communism as well, and Marxist principles reigned over much of the world during a large part of the 20th Century.

Marxist ideas also powered the formation of many labor unions and worker’s parties in countries where Communism did not hold sway, and Communist party candidates can still be found in many countries in the 21st Century, including France and Great Britain.

Where Marx erred was in believing that a vague ruling class always owned the means of production in capitalist societies, and that the state could be morally neutral in governing a socialist economy. Perhaps his biggest blunder was in believing that men and women would give maximum effort for a fuzzy notion of the common good and lay aside their self-interest once the revolution took hold.

As the unraveling of the Soviet Union proved (and as China’s continual evolution proves), states that control production are a worse poison than the bourgeoisie ever was. Tens of millions of workers have died in both the Soviet Union and in China over the past seven decades due to heartless government policies that favored certain regions and ethnic groups.

Communism has also failed to a large degree because one key ingredient was overlooked in Marxism: the motivation of a worker who knows that s/he will get paid the same amount as his/her colleague no matter how much effort each workers gives. This led to industries with very low production per unit and the complete collapse of the economy in some cases.

Marx also did not understand that in many modern versions of the capitalistic system the workers do, in fact, own the means of production when they have shareholder interest in the industries for which they work. As they own stock, receive performance bonuses and make continual suggestions for improvement, millions of modern workers have a stake in their parent companies and are, in fact, a large part of “the ruling class.” This leads to extremely high motivation for such workers and a dynamic economic machine that has set record levels of growth, a fact even Russia and China have understood as the 21st Century proceeds.

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”  Sir Winston Churchill