The Marxist System
By Charles Sackrey & Geoff Schneider
Being an Introduction To Certain of
The Ideas of Karl Marx
Designed Especially For Those To Whom
It Has Been Suggested That Marx Has Nothing
To Say To Them About The World
In Which They Live
In what follows, our goal is to present a coherent summary of Marx’s analysis of economic forces in society and how he thought they shaped human lives. We will do that in two parts. The first of these is a brief description of a theory of historical change that Marx developed with his long-time collaborator, Frederick Engels. In 1845-6, the two wrote a long manuscript they called The German Ideology that was largely an attack on prominent German philosophers of their time. It was never published during their lives and, as Marx wrote later, he stored it in his attic, “abandoning it to the gnawing criticism of the mice.” However, when it was published in the Soviet Union in 1932 the world discovered that its first part, most probably written by Marx, contained an explanation of historical change that Marx called “the materialist conception of history.”
In our presentation of this “conception of history,” we seek only to provide a structural outline with a few examples to help the reader learn the basic terminology of the system. Once this terminology is presented and exemplified, we then turn to an extended example of how Marx applied his theory of historical change to capitalism. This application is spread over thousands of pages of material that Marx and Engels wrote (the most complete version of their writings is projected to include over sixty thick volumes.) However, the single most compact presentation is in Capital, v. 1, and in the second part of our essay we will concentrate attention on the arguments about capitalism in that book.
In implementing this two-part breakdown of Marx’s “economics,” we are trying to avoid what so frequently becomes a barrier to a modern understanding of his analysis of capitalism. Too often, one or the other of these dimensions of his writing--the materialist conception of history or his analysis of capitalism--is obscured to the modern reader because it is presented separately from the other, is hastily thrown together as a list of terms, or not put into a modern context. However, it is crucial to understand that Capital is by far Marx’s most thorough application of his materialist conception of history. Thus, the one is actually an example of the other, and in presenting them in sequence we hope to make the “Marxian” view of capitalism less opaque. We think that in doing so we might incline readers to see Marx’s analysis of capitalism as an intricate theoretical structure, buttressed by a huge compendium of historical description, that when studied closely can be genuinely breathtaking in his breadth and depth.
We also want to present Marx’s ideas in such a way that readers will see the great divide between his analysis of capitalism and that of most contemporary economists. These economists, who in these pages we have labeled “mainstream,” tend to look upon capitalism as a “given system" that somehow came from some place, but one that has no real interest for us. In the mainstream, this ready-made system is looked upon as having various aspects that can be explained only if they are categorized, reduced, and, if possible, rendered quantitatively. What is particularly striking about mainstream economics, in comparison to Marx’s work, is that it is stripped from its historical context. Indeed, this stripping process is now so advanced that U.S. graduate schools produce “economists” who are trained in mathematics and statistics but who are not required to take courses in economic history, or the history of economic thought (not to speak of the humanities or other social sciences.) As we tramp our way through the Marxist world we will see how substantial is this difference. We might also be led to ponder how costly it might be that most contemporary students of economics are trained in programs that systematically shield them from history, the history of the thought of their discipline, and such figures outside that mainstream as Marx.[1]
To Marx, the fundamental question confronting all human societies concerns what we must do to survive. To live, we must mix our intelligence and our energy--our work--with the basic "materials" of the world we find ourselves in, its soil, water, and air. We must work with what's at hand in order to make this today into tomorrow. In more contemporary language, prominent U.S. economist, Lester Thurow, says something quite similar when he suggests that, "If you ask a modern individual who they are, they will usually not tell you about their religion, hobbies, or the clubs to which they belong. They will first tell you where they work and their occupation. Work is the domain from which one gets esteem in the modern world." In 1878, Frederick Engels summarized his and Marx's theory of historical change in the following way:
The materialist conception of history starts from the principle that production, and with production the exchange of its products, is the basis of every social order; that in every society that has appeared in history the distribution of the products, and with it the division of society into classes or estates, is determined by what is produced and how it is produced, and how the product is exchanged.
Before other needs are addressed, human beings must organize themselves in order to produce the basic necessities of life such as food and shelter. This economic base of society, or the "mode of production" as Marx called it, is therefore the most powerful force in determining the structure of human society. Furthermore, how society is organized (for example, into serfs and lords, or into owners and workers) to produce necessities determines the "class structure" of society. Since virtually all production is a communal activity involving many different people, Marx concentrated on production as a social activity and analyzed the class structure that resulted from how this activity was organized. Marx's method of analysis is very different from that employed by Adam Smith, which was to focus on how individuals behaved within capitalist society. Moreover, Smith and his followers treated capitalism as a static, beneficent system that would always be characterized by atomistic competition.
By contrast, Marx did not assume the economic system as constant in order to study the actions of individual actors within that system, as do most of the followers of Smith. Instead, he sought to understand the forces that cause the economy to change over time, especially the struggle between opposing, or "dialetical," forces inherent in all societies that he believed caused such change.[2] In his comprehensive study of human history, Marx found that the social activity of production took many different forms, depending on the prevailing forms of social organization and existing techniques of production. In his analysis of these various modes of production, Marx noted that European society passed through a number of different ones, including primitive communalism, slavery, and feudalism, on its way to capitalism. Thus one of the first conclusions that Marx drew from his study of history was there is no reason to believe that capitalism will always remain our economic system. Capitalism is simply the latest in a series of modes of production, and it, too, will yield to some other mode of production in the future.
A particular mode of production was characterized by what Marx called the "forces of production," and the "relations of production." The forces of production include technological factors such as machinery and tools as well as natural resources and human capital (skills and knowledge). In other words, the forces of the production are the machinery, materials and human labor that, when combined, yield the production of goods and services. Together, machinery/tools and resources make up the "means of production" that laborers use to make products. If you own the means of production yourself--a "bourgeoisie" in Marx's system--you can produce for yourself. However, if you do not own the means of production--a proletariat in his system--you must work for someone who does, and this dimension of the capitalist mode of production is its central characteristic. Indeed, as a shorthand definition of capitalism, we can say it is a system in which a profit-seeking minority owns the means of production, and where most others are wage laborers whose labor power actually generates these profits for the owners. We will explain further this definition later, but for now it is useful to help us to distinguish capitalism from other modes of production, such as slavery or feudalism.
The pattern of the ownership of the tools and materials in a society centrally shapes the nature of the system of social classes in that society. Marx described the relationship between the two dominant classes in capitalism--the owners of the means of production and the wage earners--as the "relations of production." Below, in Part II, we will discuss at length the composition of these two classes and what generates the conflict between them, but for now we can emphasize their different stations with a brief look at how wealth in the U.S. is divided between them. According to Doug Henwood (Wall Street, 1997), the richest 10% of the U.S. population owns over 80% of all stocks almost 90% of all the bonds. Since owning the stocks and bonds of companies means owning their "means of production," we can see that the wealth producing capital of the U.S. is almost all owned by the top tenth of the population. It also means that in order to make a living, most of the other 90% must work for these richest 10% and their managers.
Additionally, for the past two decades, the U.S. working classes have experienced a dramatic decline in their own income, relative to that of the owners for whom they work.
One interesting way to measure this relatively declining lot of the workers is this: in 1965, CEOs made 44 times the average factory worker's wages, and today CEOs make 326 times as much as their average workers. These changing fortunes for the owners and workers in U.S. capitalism are fine examples of what Marx meant by the inherent struggle between workers and capitalists. Interestingly, and perhaps a harbinger of what is to come, they mirror closely what Marx described in 1848 in TheCommunist Manifesto: "Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other: Bourgeoisie and Proletariat." Thus, the differences in the social classes in capitalism, in both their needs from the system and what they get from it, lead to the Marxian view that the interests of Wall Street rarely coincide with the interests of Main Street.
In Marx's study of history, he came to believe that conflict between the classes was the source of most major changes in human society. His studies convinced him that in every mode of production, there has been a conflict between the owners of the means of production and the workers. This idea is summarized in the following passage from The Manifesto:
The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes.
As an example of this process by which a mode of production is transformed over time, let us take a look briefly at part of the way European feudalism was transformed and ultimately replaced by capitalism. The invention in Europe of the cannon and large ships capable of sailing the earth, in the 15th century, caused profound and lasting changes all over the globe. Europeans ultimately used both ships and guns to dominate global trade, scouring the world for gold, silks and spices. But the changes in economic organization that came with trade, particularly the rise of the merchant class, put tremendous pressure on feudalism, then the dominant system of production. Feudalism was unsuited for trade because, while each manor was virtually self-sufficient, it typically produced little or no surplus to trade. Also, the surplus food that was produced was perishable and thus could not be traded over long distances. The lords (the royalty and those in their favor) who owned the land, desperately wanted the fine silks and spices that were becoming available from trade with Asia, but the existing system did not provide the money they needed to trade for these items. Thus the existing system of production and exchange within feudalism no longer suited the needs of the lords, and this, coupled with changing production and transportation techniques, ushered forth a period of dramatic upheaval and major class struggle.
During this struggle, feudalism was swept aside. Central to the process were "enclosure movements" all over Europe after 1400, by which the lords seized the common land farmed by the serfs. In some societies, like England, most of the land had been farmed by peasants, rather than serfs, and there typically the lords enclosed the common land in order to raise sheep for wool and the export of woolen cloth, giving them money for trade. By seizing the bulk of the land in England, the lords made it impossible for the peasants to make a living as farmers. (As we shall see in Part II, Marx knew well the history of these enclosure movements in England, and his accounting of them became central to key chapters in Capital.) Thus, over several centuries in England the farming peasants (and either serfs or peasants in other European countries) migrated to cities to become wage laborers for the increasingly dominant capitalist class. This process generated massive changes in production systems in Europe, and as production changed, so did everything else, including the notions that European people had about the gods, about beauty, and about each other. As E.K. Hunt describes this process in Property and Prophets, "this class struggle [between lords and serfs or peasants in this example] had destroyed one system [feudalism] only to create a new system based on exploitation of the masses by a new ruling class [capitalists], and hence the beginning of a new class struggle."
As we have implied, in addition to determining the nature of the class struggle, Marx thought that in each of the modes of production the material relationships of society shaped other relationships, including religion, law and culture. As C. Wright Mills wrote in The Marxists (1962):
Political, religious and legal institutions as well as the ideas, the images, the ideologies by means of which men understand the world in which they live, their place within it, and themselves--all these are reflections of the economic basis of society.
For example, religious beliefs in hunter-gatherer societies usually emphasize the importance of nature and the role of people within nature, which is a reflection of the importance to survival of the natural environment for that particular mode of production. During feudalism in Europe, respect for the lord, the Catholic church and the social order was a fundamental component of prevailing ideology. This ideology derived from the economic structure of feudal society, with serfs laboring for the lord first and then after the lord's requirements were met, working for themselves. In early capitalism, Marx was struck by the role that the Protestant Reformation played in supporting capitalist institutions. By preaching that one should accept her/his lot in life, and that all would be better in the hereafter, religions of the time made people more willing to accept the horrors of early capitalism. Thus Marx dubbed religion the "opiate of the masses" since he thought it made people numb and led them to resign themselves to their inferior position in the world.
Marx also argued that private property and the market system tend to demean and devalue all that they touch. In 1846, in On the Jewish Question, he noted that money could transform all things, until money itself was all that was important in life:
Money is the jealous god of Israel, in face of which no other god may exist. Money degrades all the gods of man -- and turns them into commodities. Money is the universal self-established value of all things. It has, therefore, robbed the whole world -- both the world of men and nature -- of its specific value. Money is the estranged essence of man's work and man's existence, and this alien essence dominates him, and he worships it.
If we think about the manner by which consumerism in capitalist societies has transformed Christmas, the celebration of the birth of Jesus, Marx's insights might become more clear. Some examples of this process are given in the box below.