Marx’s Crisis of Capitalism

From Sociocultural Systems: Principles of Structure and Change.

Writing Capital in the early 1860s as English society was in the early stages of industrialization, Marx (1867/1887) forecast both the immediate course of the development of capitalism and its ultimate end. The coming crisis of capitalism that Marx predicted is rooted in his analyses of the capitalism of his day, an analysis that is both comprehensive and detailed throughout his massive work. Marx believed the coming crisis would result from contradictions within the capitalist system itself, and predicted that these contradictions would become more and more acute as the capitalist system evolved. Over time, Marx writes, capital takes control over the handcraft production processes and later manufacture where the workers were in control of the work process, centralizing the workers into workshops and factories. Through the process of competing for markets, some firms win and others lose, capital becomes enlarged and centralized; science and technology are consciously used to improve the productivity of the workplace, thus throwing many out of work while creating new jobs in service to the machines. In the process of competing for markets, unsuccessful capitalists fall into the proletariat and all productive labor, worldwide, come ultimately within the capitalist system (14195-14204).[1]

With this centralization and enlargements other developments take place on an ever increasing scale. The quest for profit leads corporations to adopt ever more sophisticated technology, to reorganize labor into ever more detailed divisions for the sake of efficient production, and to squeeze wages to maximize profit. Science is more directly harnessed to the production process through the research and the development of technologies that will ever more efficiently automate production and distribution processes. Workers are stripped of their skills and, becoming mere commodities, increasingly exploited to maximize capital (7837-7845).[2]

Agriculture too is transformed through science to become an exploitive relationship in which the crops and people are treated as commodities; millions are removed from the land as corporate farms replace the family farms of the past. In effect capital uses science and technology to transform agriculture into agribusiness, in the process not only exploiting the worker but exploiting and ultimately destroying the natural fertility of the land as well (8524-8533).[3]

          The lack of centralized planning under capitalism results in the overproduction of some goods and the underproduction of others, thus causing economic crises such as inflation and depression, feverish production followed by market gluts bringing on contraction of industry. These booms and busts are part of the structure of capitalism itself, as it grows by fits and starts. As the economy booms, labor costs rise and profit margins are squeezed, thus causing periodic crashes. Labor becomes cheap, industry begins to recover and the cycle begins anew (7721-7729).[4]

In addition to the booms and busts of capitalism that swing wider as capitalism evolves there is a constant churning of employment as machines replace men in one industry after another, throwing thousands out of work, thus swamping the labor market and lowering the cost of labor (7407-7420).[5] In all of this the labourers suffer. Mass production, machine technology, and economies of scale will increasingly be applied to all economic activities; unemployment and misery for many men and women results (11676-11684).[6] As capitalism develops the system must necessarily create enormous differences in wealth and power. The social problems it creates in its wake of boom and bust—of unemployment and under employment, of poverty amidst affluence will continue to mount. The vast majority of people will fall into the lower classes; the wealthy will become richer but ever fewer in number (11665-11681).[7]

All of these economic and political transformations and developments are harnessed to the economic interests of the capitalists. With this growing monopoly of economic, political and social power the exploitation of the many for the benefit of the few grows. With its continued development, the contradictions become worse, the cycles of boom and bust more extreme. As capitalism is international in scale the people of all nations are parts of the capitalist world system with the industrial center exploiting much of the world for raw materials, food, and labor. “A new and international division of labour, a division suited to the requirements of the chief centres of modern industry springs up, and converts one part of the globe into a chiefly agricultural field of production, for supplying the other part which remains a chiefly industrial field” (7715-7717).

Over the course of its evolution, capitalism brings into being a working class (the proletariat) consisting of those who have a fundamental antagonism to the owners of capital. The control of the state by the wealthy makes it ineffective in fundamental reform of the system and leads to the passage of laws favoring their interests and incurring the wrath of a growing number of workers. “The executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie” (Marx and Engels 1848, 2). Now highly urbanized and thrown together in factories and workplaces by the forces of capital, the workers of the world increasingly recognize that they are being exploited, that their needs are not being met by the present political-economic system. The monopoly of capital is preventing the production of goods and services for the many. Needed social goods and services are not being produced because there is no profit in it for the capitalists who control the means of production. Exorbitant wealth for the few amid widespread poverty for the many will become the norm.

As the crisis mount , Marx argues, the proletariat will become more progressive, though governments will be blocked from providing real structural change because of the dominance of the capitalists and their organization, money, and power. In time, the further development of production becomes impossible within a capitalist framework and this framework becomes the target of revolt. Eventually, Marx says, these contradictions of capitalism will produce a revolutionary crisis.

Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working-class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist integument. Thus integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated (Marx 1867/1887, 14204-14210).

With the revolution the production processes that were developed under the spur of capital accumulation will be harnessed to serve broad human needs rather than the needs of a few capitalists. For example, pharmaceutical companies could focus on developing drugs to fight the tuberculosis or malaria, diseases that kill millions in Africa. However, far more profit can be made by developing additional drugs to treat impotence and baldness (Bakan 2004, 49). Thus the need for profit keeps drug companies from serving broader human needs. In the Communist Manifesto Marx and Engels (1848) write: “We have seen above, that the first step in the revolution by the working class, is to raise the proletariat to the position of ruling as to win the battle of democracy. The proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total of productive forces as rapidly as possible” (14).

The revolution will first establish a democratic constitution and through this form of government begin to exercise increasing control over the economy. Measures advocated by Engels (1847) include limitations on private property through progressive taxation and inheritance taxes; purchase by the state of existing economic enterprises; the organization of labor; centralization of money and credit in the hands of the nation; increases in productive forces in proportion to the available capital and labor forces available to the nation; universal education for all at national cost; and concentration of all means of transportation in the hands of the nation (13-14).[8] The beginnings of the revolution will occur, indeed can only occur, in the advanced capitalist states that have developed productive forces to the limits of the profit system. True revolutions cannot be made arbitrarily or through the intentions of men or even entire classes; they can only occur when objective conditions are met (12). But because advanced capitalist states are tightly integrated with one another, once the revolution begins in one it will spread to others, and through their global markets to the rest of the world. The proletarian revolution will radically alter the course of economic development so that it serves people rather than narrow capitalist interests by freeing the production of goods and services from the constraint of profit.[9]  [end of excerpt].

For a more extensive discussion of Marx’s theories refer to Macro Social Theory by Frank W. Elwell.  Also see Sociocultural Systems: Principles of Structure and Change to learn how his insights contribute to a more complete understanding of modern societies.

References:

Elwell, Frank W. 2013. Sociocultural Systems: Principles of Structure and Change. Alberta: Athabasca University Press.

Engels, Frederick. (1847) 1999. “The Principles of Communism.” Translated by Paul Sweezy. http://www.marxists.org/archive/marx/works/1847/11/prin-com.htm.

Marx, Karl. 1867/1887. Capital: A Critique of Political Economy. Vol. 1, The Process of Production of Capital. Edited by Frederick Engels. Translated by Samuel Moore and Edward Aveling. Public Domain Books, Kindle Edition (2008-11-19). Originally published as Das Kapital: Kritik der politischen Ökonomie, vol. 1.

Marx, Karl, and Frederick Engels. 1848. The Communist Manifesto. Edited and translated by Frederick Engels. Public Domain Books, Kindle Edition, (2005). Originally published as Manifest der Kommunistischen Partei.

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