Critically assess Marx’s analysis of the key dynamics of capitalist development. To what extent does his exegesis contribute to our understanding of trends in contemporary capitalism? Explain and justify your answer providing sociological examples. Marx is seen as one of the defining figures in the fight against capitalism as he saw it as the main source of alienation and he was interested in “the oppressiveness of the capitalist system that was emerging out of the Industrial Revolution” (Ritzer 2011:25). Moving from feudal to capitalist society, Marx assesses how life has changed for the proletariat (working class labourers) and the bourgeoisie (owners of capital, means of production) in terms of the process of production and ownership of labour (Giddens & Held 1982:5). He also analyses the class struggle against the capitalist bourgeoisie and how the commodities of capitalism, such as use and exchange value, allow capitalism to grow, expand and control the people which provide the basis for its growth (Ritzer, 2011; Giddens, 1971). Ritzer (2011) and others, then attempt to compare Marx’s beliefs of capitalism to the modern system of capitalism found in today’s society.
Through examples such as the U.S. Federal Review Board raising interest rates and blaming the “economy” in order to save the capitalists (Ritzer, 2011) and Morgenstern’s piece in The Economist (2012) on the change of economic wealth within the U.S and across the globe, this essay hopes to shine a light on how Marx’s views have shaped today’s society and how some of his beliefs, such as the eventual fall of capitalism (Giddens, 1971; Giddens & Held, 1982), were quite wrong. In the Communist Manifesto (1848), Marx explains how throughout the years, there has always been “a history of class struggles” (p.14). The bourgeoisie and proletariat classes rose out of feudal society but did not get rid of all the struggles attached, although they did simplify class antagonisms into the two groups above. The bourgeoisie represent the capitalists in society, those who own the means of production, the organisation and own the work of the paid labourers (Giddens, 1971; Marx & Engels, 1848). The proletariat represent all working class labourers who do not own the means of production and must sell their labour in return for wages (Giddens, 1971; Marx & Engels, 1848).
The capitalist system brought about a new way of trading, and with the help of the Industrial revolution, trade went from local level to national to international. The introduction of railway systems and roads allowed for a greater ease of transportation and led to the expansion of industries across the globe (Marx & Engels, 1848; Ritzer, 2011) but also meant a decrease in power and control for those who did not own the processes of production. The bourgeoisie relied on the majority group of proletariats in order for mass production to occur and the constant updating of production meant that capitalism was developing at a much faster speed than any other society before (Marx & Engels, 1848). Marx believed that capitalism was a strong force but it was also its own enemy. He analysed that there were two main faults in capitalism which could bring about change and create a new system of socialism (Giddens & Held, 1982). Capitalism, as Marx described, is a contradictory system of production as it was founded on the basis of “private appropriation” (Giddens & Held 1982:5) but in order to make a profit and find a suitable buyer, capitalism had to become social and in turn, it became the most socialised form of order ever created by a society.
Capitalism also is very prone to cycles of boom and depression, and these times of depression led to further “centralisation” of leading industries, economies and financial organisations and the disintegration of small businesses (Giddens & Held, 1982; Giddens, 1971). However, with this fast paced world of work came alienation and separation of workers into monotonous, unskilled labour. Marx believed that capitalism was the main root and cause of alienation within the workplace as the mass industry separated workers and de-skilled labourers. Ritzer (2011:26) describes alienation as, “the breakdown of the natural interconnection among people and what they produce”. Before capitalism, wage labourers usually didn’t own their own land but they worked on the land as they pleased and owned their own profits, and although Marx didn’t like this peasant system, he believed capitalism was much worse (Giddens & Held, 1982). Marx explains how the workers in factories become alienated from other people, and from their own work. The level of skill is low and humans become like animals, in the sense that they no longer create things in order to survive, they create things in order to earn money to survive: they fall into a monotonous system (Giddens & Held, 1982).
This alienation led to a class struggle between the proletariats and the bourgeoisie and although the proletariats were the majority group, they often lost their struggle against the capitalists or were left to fight the “petty bourgeois” who really had no connection to the industries and only owned local land (Marx & Engels, 1848:19). Workers then began to form Trade Unions in order to keep up their wage rates and to form a barrier against the bourgeoisie (Marx & Engels, 1848). The commodities of capitalist development also came about from this alienation as Marx describes how surplus value showed how the employer exploited his worker through manipulating his wages and hours in order to make a greater profit (Giddens & Held, 1982). The process of capitalist production and the accumulation of surplus value which is at its core, involves the continuous transformation of money capital, productive capital and commodity capital into one another in order to pay for a product to be made, produce it and then sell it, with profit attached (World Socialist Web Site, 2012). Other commodities attached to capitalist development include use and exchange value of products.
Marx saw use value as the term which underlined peoples need to create products in order to survive and to supply products to those at the immediate time (Ritzer, 2011). Capitalism, however, has now changed this from a personal use to the use of another (capitalist) in order to be exchanged on the market for money or other goods. This is known as exchange value (Ritzer, 2011) and although Marx saw every commodity as “two-fold” (Giddens 1971:46) he also believed that the value of a product could only be measured by the amount of work put in to producing it. Marx used the concept of alienation to show the devastating effect of capitalism on humans and society (Ritzer 2011: 54) and the use of commodities to help develop capitalism over time. In this next section, Marx’s beliefs and understandings of capitalist development will be used to help understand contemporary capitalist society today compared to 150 years ago. Morgenstern’s (2012) piece in the Economist portrays how the bourgeoisie have come to control even more of America’s wealth compared to 100 years ago.
The richest 1% of Americans now receive double the national income (from 10%-20%) than in 1980, and compared to 100 years ago, the top 0.01% with an income of $24 million has shot up from 1% to nearly 5%, meaning around 16,000 families in the whole of the U.S own the majority of capital. A huge difference to the top 0.01% since 100 years ago. These statistics highlight Marx’s belief that the bourgeoisie and capitalism will keep on growing through booms and depression until finally there was a major fall (Marx & Engels, 1848; Giddens & Held, 1982). In this current crisis, Marx’s works are being re-evaluated, but most experts reckon there is no real alternative to capitalism, and Marx never mentioned moving past the breakdown of this money driven society (Marx and Engels, 1848). Marx’s theory of alienation has also survived throughout the years of industrialisation and capitalism, and although he concentrated his views towards upper class capitalists during the industrial revolution, they still ring clear to the capitalist class of today’s society (Giddens, 1971; Safran 2012).
Marx had hoped his writings would reveal to the capitalists just how much they were exploiting their workers, but as we see in today’s industrial plants, such as Foxconn (makers of the iPhone ) (Kiss, 2012) the bigger the demand there is for a product, the more suppliers will try to drive down costs of production and wages. In the current crisis, these industrial jobs are becoming more and more popular in cheap labour countries such as Asia as big corporations want to make as much profit as possible to drive their businesses even further and keep labour costs to a minimum. Modern capitalists continue to alienate their workers, “demean their autonomy, and reduce them to mere machinery, much the same as it did in the mid-nineteenth century” (Safran, 2012). The last century has also seen many rises and falls in the economy, as Marx predicted (Marx & Engels 1848; Giddens, 1971; Ritzer 2011) and as Ritzer (2011) notes, the rise in interest rates and cuts in welfare have been all blamed on “the economy” not the over-spending capitalists.
As seen in the Federal Reserve Board of the United States (Ritzer, 2011), interest rates were raised for fear of inflation and the “economy” was blamed to hide the fact that workers were losing their jobs and were afraid to ask for wage increases while capitalists benefitted from the rise. Marx would have seen this situation as a political force backing up the capitalists at the expense of the workers (Ritzer, 2011:57). The effects of surplus value can also be seen in today’s society, in the form of “sub-prime” (Ritzer,2011), or in other words, excess capital that was given out to people in boom times in the form of credit cards and cheap sales in order to prevent over-production. Banks and capitalists began to lend excess money to people who couldn’t afford to pay it back, believing that the boom would keep going and they would gain from the extra profit being made. But when economy crashed in the U.S, thanks to the globalisation of the economy, the world crashed too. The banks and capitalists who had allowed for capital to be over-indulged were not affected, but every day workers lost their jobs, homes and finances in order to resurrect the banks debt (Kiss, 2012; Morgenstern, 2012). From the above analysis, it is clear to see that 150 years on, the exegesis of Karl Marx still plays a vital role in understanding capitalist society today and where its origins lay.
The constant development of capitalism made it a revolutionary system compared to its predecessors of feudal, Greek and roman civilisations (Marx & Engels, 1948) and it is just how the epoch keeps re-developing itself in order to keep up with the pressure for faster, more affordable goods and services in modern society. The effects of capitalism, in the form of alienation, surplus value, use and exchange value and the presence of the bourgeoisie and proletariats shaped the modern society that graces our presence today, and it is these commodities and dynamics which will lead us into further cycles of boom and depression (Giddens & Held, 1982) within capitalist society. Inequality has also had a major effect on the movement of capitalism throughout the world, and the Gini co-efficient (Morgenstern, 2012) shows us just how skewed inequality is within and between countries. In the 19th and 20th century, the time of industrial revolution (the powerhouse of capitalism) inequality was globally skewed as richer countries received all the wealth of development, but now in the 21st century, with poorer countries developing, inequality is levelling out globally (Morgenstern, 2012), which could improve capitalism once more, or create more problems in our future.