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By David Prychitko


By David Prychitko,

M ore than a century after his death, Karl Marx remains one of the most controversial figures in the Western world. His relentless criticism of capitalism and his corresponding promise of an inevitable, harmonious socialist future inspired a revolution of global proportions. It seemed that—with the Bolshevik revolution in Russia and the spread of communism throughout Eastern Europe—the Marxist dream had firmly taken root during the first half of the twentieth century.

That dream collapsed before the century had ended. The people of Poland, Hungary, Czechoslovakia, East Germany, Romania, Yugoslavia, Bulgaria, Albania, and the USSR rejected Marxist ideology and entered a remarkable transition toward private property rights and the market-exchange system, one that is still occurring. Which aspects of Marxism created such a powerful revolutionary force? And what explains its eventual demise? The answers lie in some general characteristics of Marxism—its economics, social theory, and overall vision.

Labor Theory of Value

The labor theory of value is a major pillar of traditional Marxian economics, which is evident in Marx’s masterpiece, Capital (1867). The theory’s basic claim is simple: the value of a commodity can be objectively measured by the average number of labor hours required to produce that commodity.

If a pair of shoes usually takes twice as long to produce as a pair of pants, for example, then shoes are twice as valuable as pants. In the long run, the competitive price of shoes will be twice the price of pants, regardless of the value of the physical inputs.

Although the labor theory of value is demonstrably false, it prevailed among classical economists through the midnineteenth century. Adam Smith , for instance, flirted with a labor theory of value in his classic defense of capitalism, The Wealth of Nations (1776), and David Ricardo later systematized it in his Principles of Political Economy (1817), a text studied by generations of free-market economists.

So the labor theory of value was not unique to Marxism. Marx did attempt, however, to turn the theory against the champions of capitalism, pushing the theory in a direction that most classical economists hesitated to follow. Marx argued that the theory could explain the value of all commodities, including the commodity that workers sell to capitalists for a wage. Marx called this commodity “labor power.”

Labor power is the worker’s capacity to produce goods and services. Marx, using principles of classical economics, explained that the value of labor power must depend on the number of labor hours it takes society, on average, to feed, clothe, and shelter a worker so that he or she has the capacity to work. In other words, the long-run wage workers receive will depend on the number of labor hours it takes to produce a person who is fit for work. Suppose five hours of labor are needed to feed, clothe, and protect a worker each day so that the worker is fit for work the following morning. If one labor hour equaled one dollar, the correct wage would be five dollars per day.

Marx then asked an apparently devastating question: if all goods and services in a capitalist society tend to be sold at prices (and wages) that reflect their true value (measured by labor hours), how can it be that capitalists enjoy profits —even if only in the short run? How do capitalists manage to squeeze out a residual between total revenue and total costs?

Capitalists, Marx answered, must enjoy a privileged and powerful position as owners of the means of production and are therefore able to ruthlessly exploit workers. Although the capitalist pays workers the correct wage, somehow—Marx was terribly vague here—the capitalist makes workers work more hours than are needed to create the worker’s labor power. If the capitalist pays each worker five dollars per day, he can require workers to work, say, twelve hours per day—a not uncommon workday during Marx’s time. Hence, if one labor hour equals one dollar, workers produce twelve dollars’ worth of products for the capitalist but are paid only five. The bottom line: capitalists extract “surplus value” from the workers and enjoy monetary profits.

Although Marx tried to use the labor theory of value against capitalism by stretching it to its limits, he unintentionally demonstrated the weakness of the theory’s logic and underlying assumptions. Marx was correct when he claimed that classical economists failed to adequately explain capitalist profits. But Marx failed as well. By the late nineteenth century, the economics profession rejected the labor theory of value. Mainstream economists now believe that capitalists do not earn profits by exploiting workers (see profits ). Instead, they believe, entrepreneurial capitalists earn profits by forgoing current consumption, by taking risks, and by organizing production.

There is more to Marxism, however, than the labor theory of value and Marx’s criticism of profit seeking. Marx wove economics and philosophy together to construct a grand theory of human history and social change. His concept of alienation, for example, first articulated in his Economic and Philosophic Manuscripts of 1844, plays a key role in his criticism of capitalism.

Marx believed that people, by nature, are free, creative beings who have the potential to totally transform the world. But he observed that the modern, technologically developed world is apparently beyond our full control. Marx condemned the free market , for instance, as being “anarchic,” or ungoverned. He maintained that the way the market economy is coordinated—through the spontaneous purchase and sale of private property dictated by the laws of supply and demand —blocks our ability to take control of our individual and collective destinies.

Marx condemned capitalism as a system that alienates the masses. His reasoning was as follows: although workers produce things for the market, market forces, not workers, control things. People are required to work for capitalists who have full control over the means of production and maintain power in the workplace. Work, he said, becomes degrading, monotonous, and suitable for machines rather than for free, creative people. In the end, people themselves become objects—robotlike mechanisms that have lost touch with human nature, that make decisions based on cold profit-and-loss considerations, with little concern for human worth and need. Marx concluded that capitalism blocks our capacity to create our own humane society.

Marx’s notion of alienation rests on a crucial but shaky assumption. It assumes that people can successfully abolish an advanced, market-based society and replace it with a democratic, comprehensively planned society. Marx claimed that we are alienated not only because many of us toil in tedious, perhaps even degrading, jobs, or because by competing in the marketplace we tend to place profitability above human need. The issue is not about toil versus happiness. We are alienated, he maintained, because we have not yet designed a society that is fully planned and controlled, a society without competition , profits and losses, money, private property, and so on—a society that, Marx predicted, must inevitably appear as the world advances through history.

Here is the greatest problem with Marx’s theory of alienation: even with the latest developments in computer technology, we cannot create a comprehensively planned system that puts an end to scarcity and uncertainty. But for Marxists to speak of alienation under capitalism, they must assume that a successfully planned world is possible. That is, Marx believed that under capitalism we are “alienated” or “separated” from our potential to creatively plan and control our collective fate. But if comprehensive socialist planning fails to work in practice—if, indeed, it is an impossibility, as we have learned from Mises and Hayek—then we cannot be “alienated” in Marx’s use of the term. We cannot really be “separated” from our “potential” to comprehensively plan the economy if comprehensive planning is impossible.

Scientific Socialism

A staunch antiutopian, Marx claimed that his criticism of capitalism was based on the latest developments in science. He called his theory “scientific socialism” to clearly distinguish his approach from that of other socialists (Henri de Saint-Simon and Charles Fourier, for instance), who seemed more content to dream about some future ideal society without comprehending how existing society really worked (see socialism ).

Marx’s scientific socialism combined his economics and philosophy—including his theory of value and the concept of alienation—to demonstrate that throughout the course of human history, a profound struggle has developed between the “haves” and the “have-nots.” Specifically, Marx claimed that capitalism has ruptured into a war between two classes: the bourgeoisie (the capitalist class that owns the means of production) and the proletariat (the working class, which is at the mercy of the capitalists). Marx claimed that he had discovered the laws of history, laws that expose the contradictions of capitalism and the necessity of the class struggle.

Marx predicted that competition among capitalists would grow so fierce that, eventually, most capitalists would go bankrupt, leaving only a handful of monopolists controlling nearly all production. This, to Marx, was one of the contradictions of capitalism: competition, instead of creating better products at lower prices for consumers, in the long run creates monopoly , which exploits workers and consumers alike. What happens to the former capitalists? They fall into the ranks of the proletariat, creating a greater supply of labor, a fall in wages, and what Marx called a growing reserve army of the unemployed. Also, thought Marx, the anarchic, unplanned nature of a complex market economy is prone to economic crises as supplies and demands become mismatched, causing huge swings in business activity and, ultimately, severe economic depressions.

The more advanced the capitalist economy becomes, Marx argued, the greater these contradictions and conflicts. The more capitalism creates wealth, the more it sows the seeds of its own destruction. Ultimately, the proletariat will realize that it has the collective power to overthrow the few remaining capitalists and, with them, the whole system.

The entire capitalist system—with its private property, money, market exchange, profit-and-loss accounting, labor markets, and so on—must be abolished, thought Marx, and replaced with a fully planned, self-managed economic system that brings a complete and utter end to exploitation and alienation. A socialist revolution, argued Marx, is inevitable.

An Appraisal

Marx was surely a profound thinker who won legions of supporters around the world. But his predictions have not withstood the test of time. Although capitalist markets have changed over the past 150 years, competition has not devolved into monopoly. Real wages have risen and profit rates have not declined. Nor has a reserve army of the unemployed developed. We do have bouts with the business cycle, but more and more economists believe that significant recessions and depressions may be more the unintended result of state intervention (through monetary policy carried out by central banks and government policies on taxation and spending) than an inherent feature of markets as such.

Socialist revolutions, to be sure, have occurred throughout the world, but never where Marx’s theory had predicted—in the most advanced capitalist countries. On the contrary, socialism was forced on poor, so-called Third World countries. And those revolutions unwittingly condemned the masses to systemic poverty and political dictatorship. In practice, socialism absolutely failed to create the nonalienated, self-managed, and fully planned society. It failed to emancipate the masses and instead crushed them with statism, domination, and the terrifying abuse of state power.

Nations that have allowed for private property rights and full-blown market exchange, in contrast to those “democratic socialist republics” of the twentieth century, have enjoyed remarkable levels of long-term economic growth . Free-market economies lift the masses from poverty and create the necessary institutional conditions for overall political freedom.

Marx just didn’t get it. Nor did his followers. Marx’s theory of value, his philosophy of human nature, and his claims to have uncovered the laws of history fit together to offer a complex and grand vision of a new world order. If the first three-quarters of the twentieth century provided a testing ground for that vision, the end of the century demonstrates its truly utopian nature and ultimate unworkability.

In the wake of communism’s collapse, traditional Marxism, which so many mainstream economists criticized relentlessly for decades, is now seriously questioned by a growing number of disillusioned radicals and former Marxists. Today there is a vibrant post-Marxism, associated with the efforts of those active in the scholarly journal Rethinking Marxism, for instance. Rather than trying to solve esoteric puzzles about the labor theory of value or offering new theoretical models of a planned economy, many of today’s sharpest post-Marxists appreciate marginal analysis and the knowledge and incentive problems of collective action. In this new literature, friedrich hayek seems to be getting a more positive reception than Marx himself. Exactly what will come out of these developments is hard to predict, but it is unlikely to look like the Marxism of the past.

About the Author

David L. Prychitko is an economics professor at Northern Michigan University.

Further Reading

Related content by david l. prychitko, the nature and significance of marx's: capital: a critique of political economy.

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Karl Marx: His Books, Theories, and Impact

karl marx analysis of capitalism

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karl marx analysis of capitalism

Karl Marx (1818-1883) was a philosopher, author, social theorist, and economist. He is famous for his theories about capitalism , socialism, and communism .

Marx, in conjunction with Friedrich Engels , published The Communist Manifesto  in 1848; later in life, he wrote Das Kapital  (the first volume was published in Berlin in 1867; the second and third volumes were published posthumously in 1885 and 1894, respectively), which discussed the labor theory of value .

Key Takeaways

  • Karl Marx was a prominent thinker who wrote on topics related to economics, political economy, and society.
  • Born in Germany, Marx spent much of his time in London, where he wrote many famous works, including The Communist Manifesto and Capital (Das Kapital).
  • Marx often collaborated with long-time friend and social theorist Friedrich Engels.
  • Marx is known for his revolutionary writings favoring socialism and a communist revolution.
  • While Marxism and Marxian economics have been largely rejected by the mainstream today, many of Marx's critiques of capitalism remain relevant today.

Investopedia / Joshua Seong

Born in Trier, Prussia (now Germany), on May 5, 1818, Marx was the son of a successful Jewish lawyer who converted to Lutheranism before Marx's birth. Marx studied law in Bonn and Berlin, where he was introduced to the philosophy of G.W.F. Hegel.

He became involved in radicalism at a young age through the Young Hegelians, a group of students who criticized the political and religious establishments of the day. Marx received his doctorate from the University of Jena in 1841. His radical beliefs prevented him from securing a teaching position, so instead, he took a job as a journalist and later became the editor of Rheinische Zeitung , a liberal newspaper in Cologne.

After living in Prussia, Marx lived in France for some time, and that is where he met his lifelong friend Friedrich Engels. He was expelled from France and then lived briefly in Belgium before moving to London, where he spent the rest of his life with his wife.

Marx died of bronchitis and pleurisy in London on March 14, 1883, and was buried at Highgate Cemetery in London. His original grave was nondescript, but in 1954, the Communist Party of Great Britain unveiled a large tombstone, including a bust of Marx and the inscription "Workers of all Lands Unite," an Anglicized interpretation of the famous phrase in The Communist Manifesto : "Proletarians of all countries, unite!"

Marx's Theories

Marx was inspired by classical political economists such as Adam Smith and David Ricardo , while his own branch of economics, Marxian economics, is not favored among modern mainstream thought. Nevertheless, Marx's ideas have greatly impacted societies, most prominently in communist projects such as those in the USSR, China, and Cuba. Among modern thinkers, Marx is still very influential in the fields of sociology, political economy, and strands of heterodox economics.

In general, Marx claimed there are two major flaws inherent in capitalism that lead to the exploitation of workers by employers: the chaotic nature of free market competition and the extraction of surplus labor. Ultimately, Marx predicted that capitalism would eventually destroy itself as more people become relegated to working-class status, inequality rose, and competition would lead the rate of corporate profits to zero. This would lead, he surmised, to a revolution where production would be turned over to the working class as a whole.

Exploitation and Surplus Value

While many equate Karl Marx with socialism, his work on understanding capitalism as a social and economic system remains a valid critique in the modern era. In Das Kapital  ( Capital  in English), Marx argues that society is composed of two main classes: Capitalists are the business owners who organize the process of production and who own the means of production such as factories, tools, and raw materials, and who are also entitled to any and all profits.

The other, much larger class is composed of labor (which Marx termed the "proletariat"). Laborers do not own or have any claim to the means of production, the finished products they work on, or any of the profits generated from sales of those products. Instead, labor works only in return for a monetary wage. Marx argued that because of this uneven arrangement, capitalists exploit workers.

This exploitation is the reason, according to Marx, that employers can generate profits: they extract a full day's worth of effort and production from workers but only pay them a smaller fraction of this value as wages. Marx termed this surplus value and argued that it was nefarious.

Labor Theory of Value

Like the other classical economists , Karl Marx believed in a labor theory of value (LTV) to explain relative differences in market prices. This theory stated that the value of a produced economic good can be measured objectively by the average number of labor hours required to produce it. In other words, if a table takes twice as long to make as a chair, then the table should be considered twice as valuable.

Marx understood the labor theory better than his predecessors (even Adam Smith) and contemporaries and presented a devastating intellectual challenge to laissez-faire economists in Das Kapital : If goods and services tend to be sold at their true objective labor values as measured in labor hours, how do any capitalists enjoy profits? It must mean, Marx concluded, that capitalists were underpaying or overworking, thereby exploiting laborers to drive down the cost of production .

While Marx's answer was eventually proved incorrect, and later economists adopted the subjective theory of value , his simple assertion was enough to show the weakness of the labor theory's logic and assumptions; Marx unintentionally helped fuel a revolution in economic thinking.

Historical Materialism

Another important theory developed by Marx is known as historical materialism. This theory posits that society at any given point in time is ordered by the type of technology used in production. Under industrial capitalism, society is so ordered, with capitalists organizing labor in factories or offices where they work for wages.

Prior to capitalism, Marx suggested that feudalism existed as a specific set of social relations between lord and peasant classes related to the hand-powered or animal-powered means of production prevalent at the time.

Marx's Written Works

During his lifetime, Karl Marx wrote and published no less than fifteen complete multi-volume books, along with numerous pamphlets, articles, and essays. He could often be found writing in the reading rooms at London's British Museum.

Perhaps his most famous work, The Communist Manifesto , summarizes Marx and Engels's theories about the nature of society and politics and is an attempt to explain the goals of Marxism and, later, socialism . When writing The Communist Manifesto , Marx and Engels explained how they thought capitalism was unsustainable and how the capitalist society that existed at the time of the writing would eventually be replaced by a socialist one.

Das Kapital  (in English, Capital: A Critique of Political Economy ) was a full and comprehensive three-volume critique of capitalism. By far the more academic work, it lays forth Marx's theories on commodities production, labor markets, the social division of labor, and a basic understanding of the rate of return to owners of capital. Marx died before the third volume was finished, which was published posthumously by Engels based largely on Marx's notes. Today, many of the ideas and critiques of capitalism remain relevant, such as the emergence of monopolistic mega-corporations, persistent unemployment, and the general struggle between workers and employers.

The exact origins of the term "capitalism" in English are unclear, and certainly, Marx was not the first to use the word "capitalism" in English. However, he contributed to the rise of its use and interest in the concept.

According to the Oxford English Dictionary , the English word was first used by author William Thackeray in 1854 in his novel The Newcomes , who intended it to mean a sense of concern about personal possessions and money in general. While it's unclear whether either Thackeray or Marx was aware of the other's work, both men meant the word to have a pejorative ring. Adam Smith also famously wrote about the capitalist economic system in his 1776 masterpiece, The Wealth of Nations, and Marx was well aware of Smith's writings.

Marx's work laid the foundations for future communist leaders such as Vladimir Lenin and Josef Stalin. Operating from the premise that capitalism contained the seeds of its own destruction, his ideas formed the basis of Marxism and served as a theoretical base for communism.

Nearly everything Marx wrote was viewed through the lens of the common laborer. From Marx comes the idea that capitalist profits are possible because the value is "stolen" from the workers and transferred to employers.

Marxist ideas in their pure form have very few direct adherents in contemporary times; indeed, very few Western thinkers embraced Marxism after 1898, when economist Eugen von Böhm-Bawerk's Karl Marx and the Close of His System  was first translated into English. In his damning rebuke, Böhm-Bawerk showed that Marx failed to incorporate capital markets or subjective values in his analysis, nullifying most of his more pronounced conclusions. Still, there are some lessons that even modern economic thinkers can learn from Marx.

Though he was the capitalist system's harshest critic, Marx understood that it was far more productive than previous or alternative economic systems. In Das Kapital , he wrote of "capitalist production" that combined "together of various processes into a social whole," which included developing new technologies.

He believed all countries should become capitalist and develop that productive capacity, and then workers would naturally revolt, leading to communism whereby the workers would become the dominant social class and collectively control the means of production. But, like Adam Smith and David Ricardo before him, Marx predicted that because of capitalism's relentless pursuit of profit by way of competition and technological progress to lower the costs of production, that the rate of profit in an economy would always be falling over time.

Economic Change to Social Transformation

Dr. James Bradford "Brad" DeLong, professor of economics at UC-Berkeley, wrote in 2011 that Marx's "primary contribution" to economic science actually came in a 10-paragraph stretch of The Communist Manifesto , in which he describes how economic growth causes shifts among social classes, often leading to a struggle for political power.

This underlies an often unappreciated aspect of economics: the emotions and political activity of the actors involved. A corollary of this argument was later made by French economist Thomas Piketty, who proposed that while nothing was wrong with income inequality economically, it could create blowback against capitalism among the people. Thus, there is a moral and anthropological consideration of any economic system. The idea that societal structure and transformations from one order to the next can be the result of technological change in how things are produced in an economy is known as historical materialism.

What Is Karl Marx's Main Theory?

Karl Marx’s theories on communism and capitalism formed the basis of Marxism. His key theories were a critique of capitalism and its shortcomings. Marx thought that the capitalistic system would inevitably destroy itself. The oppressed workers would become alienated and ultimately overthrow the owners to take control of the means of production themselves, ushering in a classless society.

What Is Karl Marx Best Known for?

Karl Marx is best known for his theories that led to the development of Marxism. His ideas also served as the basis for communism. His books, Das Kapital and The Communist Manifesto, formed the basis of Marxism.

What Is Marxism vs. Communism?

Marxism is a system of socioeconomic analysis, while communism is a form of economic production that extends to government or political movements. Marxism is a broad philosophy developed by Karl Marx in the second half of the 19th century that unifies social, political, and economic theory. It is mainly concerned with the battle between the working class and the ownership class and favors communism and socialism over capitalism.

Karl Marx remains controversial, but his writings still remain relevant today. Even as mainstream economics has relegated Marxism as a heterodox school of thought, Marx did have a lot to say about the capitalistic system of production and roundly critiqued it for generating social and wealth inequalities, negative externalities, and class struggle. Ultimately, Marx's predictions about the impending collapse of capitalism and the communist revolutions that would follow proved incorrect. This has led many to discount Marx and Marxian thought. Still, Marx's insights remain influential and inspiring to others.

Marxist.org. " Capital A Critique of Political Economy Volume I Book One: The Process of Production of Capital ," Pages 1-549.

The British Library. " Marx: Reader at the British Library ."

Marxist.org. " Capital A Critique of Political Economy Volume I Book One: The Process of Production of Capital ," Page 330.

karl marx analysis of capitalism

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Karl Marx: On Capitalism

By Frank W. Elwell

The forces of production are, strictly speaking, the technology and work patterns that men and women use to exploit their environment to meet their needs. These forces of production are expressed in relationships between men, which are independent of any particular individual and not subject to individual will and purposes. While industrialism would be a particular �force of production,� capitalism would be a particular �relation of production.� By relations of production, Marx means the social relationships people enter into by participation in economic life. The relations of production are the relations men (and women) establish with each other when they utilize existing raw materials and technologies in the pursuit of their production goals.

According to Marx, men and women are born into societies in which property relations have already been determined. These property relations, in turn, give rise to different social classes. Just as a man cannot choose who is to be his father, so he has not choice as to his class. [Social mobility, though recognized by Marx, plays no role in his analysis.] Once a man is ascribed to a specific class by virtue of his birth, once he has become a feudal lord or a serf, an industrial worker or a capitalist, his behavior is proscribed for him. His attitudes, beliefs, and behaviors are all �determined.� The class role largely defines the man. In the preface to Capital Marx writes: �Here individuals are dealt with only as fact as they are personifications of economic categories, embodiments of particular class-relations and class interests.� Different locations in the class structure lead to different class interests. Such differing interests flow from objective positions in relation to the forces of production. In saying this Marx does not deny the operation of other variables in human behavior; but he concentrates on class roles as primary determinants of that behavior. These class roles influence men whether they are conscious of their class interests or not. Men may well be unaware of their class interests and yet be moved by them, as it were, behind their backs.

"The class which has the means of material production at its disposal has control at the same time over the means of mental production.� This is done through control over the media, educational curricula, grants and such. This is not the result of a conspiracy; rather it is the dominant viewpoint that pervades the culture. Because the dominant class owns and controls the forces of production, the social class in power uses the non-economic institutions to uphold its authority and position. Marx believed that religion, the government, educational systems, and even sports are used by the powerful to maintain the status quo.

Although they are hampered by the ideological dominance of the elite, the oppressed classes can, under certain conditions, generate counter ideologies to combat the ruling classes. These conditions are moments when the existing mode of production is played out; Marx terms these moments �revolutionary.� The social order is often marked by continuous change in the forces of production, that is, technology. Marx argued that every economic system except socialism produces forces that eventually lead to a new economic form. The process begins with the forces of production. At times, the change in technology is so great that it is able to harness �new� forces of nature to satisfy man�s needs. New classes (and interests) based on control of these new forces of production begin to rise. At a certain point, this new class comes into conflict with the old ownership class based on the old forces of production. As a consequence, it sometimes happens that ��the social relations of production are altered, transformed, with the change and development�of the forces of production.�

In the feudal system, for example, the market and factory emerged but were incompatible with the feudal way of life. The market created a professional merchant class, and the factory created a new proletariat (or class of workers). Thus, new inventions and the harnessing of new technologies created tensions within the old institutional arrangements, and new social classes threatened to displace the old ones based on manorial farming. Conflict resulted, and eventually revolution that established a new ruling class based on the new forces of production. A new class structure emerged and an alteration in the division of wealth and power based on new economic forms. Feudalism was replaced by capitalism; land ownership as the dominant form of capital was replaced by factories and the ownership of capital.

As this new force of production gained sufficient weight (through technological development and the resulting accumulation of wealth of the ownership class), the bourgeoisie �burst asunder the feudal relations of production� in which this new mode of production first made its appearance. "The economic structure of capitalist society has grown out of the economic structure of feudal society. The dissolution of the latter sets free elements of the former.�

Like feudalism, Marx maintained, capitalism also carries the seeds of its own destruction. It brings into being a class of workers (the proletariat) who have a fundamental antagonism to the capitalist class, and who will eventually band together to overthrow the regime to which they owe their existence. We will get into the evolution of the revolution in a future lecture.

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.


Elwell, F. (2009), Macrosociology: The Study of Sociocultural Systems . Lewiston: Edwin Mellen Press.

Elwell, F. (2013), Sociocultural Systems: Principles of Structure and Change. Alberta: Athabasca University Press.

Engels, F. 1847. The Principles of Communism, (P. Sweezy, Trans.),   http://www.marxists.org/archive/marx/works/1847/11/prin-com.htm

Engels, F. 1883. � Eulogy for Marx .� Retrieved March 22, 2008, from 1883: The Death of Karl Marx: http://www.marxists.org/archive/marx/works/1883/death/dersoz1.htm

Marx, K. 1847/1999. The Poverty of Philosophy. Retrieved March 19, 2008, from Marx/Engels Archives http://www.marxists.org/archive/marx/ works/1847/poverty-philosophy/index.htm

Marx, K. and Engels, F. 1848. The Communist Manifesto. (F. Engels, Trans. and Ed.) Public Domain Books, Kindle Edition, (2005).

Marx, K. 1867/1887. Das Kapital Volume I (Capital). (S. Moore and E. Aveling, Trans.) Public Domain Books, Kindle Edition (2008-11-19).

Marx, K. 1894/1991. Capital: Volume III. (D. Fernbach, Trans.) New York: Penguin Books.

Marx, K., and Engels, F. 1962. Selected Works, 2 Vols. Moscow: Foreign Language Publishing House.

Marx, K. 1964. Selected Writings in Sociology and Social Philosophy. (T. Bottomore, Trans. and Ed.) London: McGraw-Hill.

Marx, K. 1964b. Early Writings. (T. B. Bottomore, Trans. and Ed.) New York: McGraw-Hill.

Referencing this Site:

Karl Marx and the Rise of Capitalism is copyrighted by Athabasca University Press and is for educational use only. Should you wish to quote from this material the format should be as follows: 

Elwell, Frank, 2013, "Karl Marx and the Rise of Capitalism ," Retrieved August 28, 2013 (use actual date), http://www.faculty.rsu.edu/~felwell/Theorists/Essays/Marx3.htm

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Karl Marx (1818–1883) is often treated as a revolutionary, an activist rather than a philosopher, whose works inspired the foundation of many communist regimes in the twentieth century. It is certainly hard to find many thinkers who can be said to have had comparable influence in the creation of the modern world. However, Marx was trained as a philosopher, and although often portrayed as moving away from philosophy in his mid-twenties—perhaps towards history and the social sciences—there are many points of contact with modern philosophical debates throughout his writings.

The themes picked out here include Marx’s philosophical anthropology, his theory of history, his economic analysis, his critical engagement with contemporary capitalist society (raising issues about morality, ideology, and politics), and his prediction of a communist future.

Marx’s early writings are dominated by an understanding of alienation, a distinct type of social ill whose diagnosis looks to rest on a controversial account of human nature and its flourishing. He subsequently developed an influential theory of history—often called historical materialism—centred around the idea that forms of society rise and fall as they further and then impede the development of human productive power. Marx increasingly became preoccupied with an attempt to understand the contemporary capitalist mode of production, as driven by a remorseless pursuit of profit, whose origins are found in the extraction of surplus value from the exploited proletariat. The precise role of morality and moral criticism in Marx’s critique of contemporary capitalist society is much discussed, and there is no settled scholarly consensus on these issues. His understanding of morality may be related to his account of ideology, and his reflection on the extent to which certain widely-shared misunderstandings might help explain the stability of class-divided societies. In the context of his radical journalism, Marx also developed his controversial account of the character and role of the modern state, and more generally of the relation between political and economic life. Marx sees the historical process as proceeding through a series of modes of production, characterised by (more or less explicit) class struggle, and driving humankind towards communism. However, Marx is famously reluctant to say much about the detailed arrangements of the communist alternative that he sought to bring into being, arguing that it would arise through historical processes, and was not the realisation of a pre-determined plan or blueprint.

1.1 Early Years

1.3 brussels, 2.1 the basic idea, 2.2 religion and work, 2.3 alienation and capitalism, 2.4 political emancipation, 2.5 remaining questions, 3.1 sources, 3.2 early formulations, 3.3 1859 preface, 3.4 functional explanation, 3.5 rationality, 3.6 alternative interpretations, 4.1 reading capital, 4.2 labour theory of value, 4.3 exploitation, 5.1 unpacking issues, 5.2 the “injustice” of capitalism, 5.3 communism and “justice”, 6.1 a critical account, 6.2 ideology and stability, 6.3 characteristics, 7.1 the state in capitalist society, 7.2. the fate of the state in communist society, 8.1 utopian socialism, 8.2 marx’s utopophobia, 9. marx’s legacy, primary literature, secondary literature, other internet resources, related entries, 1. life and writings.

Karl Marx was born in 1818, one of nine children. The family lived in the Rhineland region of Prussia, previously under French rule. Both of his parents came from Jewish families with distinguished rabbinical lineages. Marx’s father was a lawyer who converted to Christianity when it became necessary for him to do so if he was to continue his legal career.

Following an unexceptional school career, Marx studied law and philosophy at the universities of Bonn and Berlin. His doctoral thesis was in ancient philosophy, comparing the philosophies of nature of Democritus (c.460–370 BCE) and Epicurus (341–270 BCE). From early 1842, he embarked on a career as a radical journalist, contributing to, and then editing, the Rheinische Zeitung , until the paper was closed by the Prussian authorities in April 1843.

Marx married Jenny von Westphalen (1814–1881), his childhood sweetheart, in June 1843. They would spend their lives together and have seven children, of whom just three daughters—Jenny (1844–1883), Laura (1845–1911), and Eleanor (1855–1898)—survived to adulthood. Marx is also widely thought to have fathered a child—Frederick Demuth (1851–1929)—with Helene Demuth (1820–1890), housekeeper and friend of the Marx family.

Marx’s adult life combined independent scholarship, political activity, and financial insecurity, in fluctuating proportions. Political conditions were such, that, in order to associate and write as he wished, he had to live outside of Germany for most of this time. Marx spent three successive periods of exile in the capital cities of France, Belgium, and England.

Between late 1843 and early 1845, Marx lived in Paris, a cosmopolitan city full of émigrés and radical artisans. He was subsequently expelled by the French government following Prussian pressure. In his last months in Germany and during this Paris exile, Marx produced a series of “early writings”, many not intended for publication, which significantly altered interpretations of his thought when they were published collectively in the twentieth century. Papers that actually saw publication during this period include: “On the Jewish Question” (1843) in which Marx defends Jewish Emancipation against Bruno Bauer (1809–1882), but also emphasises the limitations of “political” as against “human” emancipation; and the “Critique of Hegel’s Philosophy of Right: Introduction” (1844) which contains a critical account of religion, together with some prescient remarks about the emancipatory potential of the proletariat. The most significant works that Marx wrote for self-clarification rather than publication in his Paris years are the so-called “1844 Manuscripts” (1844) which provide a suggestive account of alienation, especially of alienation in work; and the “Theses on Feuerbach” (1845), a set of epigrammatic but rich remarks including reflections on the nature of philosophy.

Between early 1845 and early 1848, Marx lived in Brussels, the capital of a rapidly industrialising Belgium. A condition of his residency was to refrain from publishing on contemporary politics, and he was eventually expelled after political demonstrations involving foreign nationals took place. In Brussels Marx published The Holy Family (1845), which includes contributions from his new friend and close collaborator Friedrich Engels (1820–1895), continuing the attack on Bruno Bauer and his followers. Marx also worked, with Engels, on a series of manuscripts now usually known as The German Ideology (1845–46), a substantial section of which criticises the work of Max Stirner (1806–1856). Marx also wrote and published The Poverty of Philosophy (1847) which disparages the social theory of Pierre-Joseph Proudhon (1809–1865). All these publications characteristically show Marx developing and promoting his own views through fierce critical attacks on contemporaries, often better-known and more established than himself.

Marx was politically active throughout his adult life, although the events of 1848—during which time he returned to Paris and Cologne—inspired the first of two periods of especially intense activity. Two important texts here are The Communist Manifesto (1848) which Marx and Engels published just before the February Revolution, and, following his move to London, The Class Struggles in France (1850) in which Marx examined the subsequent failure of 1848 in France. Between these two dates, Marx commented on, and intervened in, the revolution in Germany through the Neue Rheinische Zeitung (1848–49), the paper he helped to establish and edit in Cologne.

For well over half of his adult life—from late 1849 until his death in 1883—Marx lived in London, a city providing a secure haven for political exiles and a superb vantage point from which to study the world’s most advanced capitalist economy. This third and longest exile was dominated by an intellectual and personal struggle to complete his critique of political economy, but his theoretical output extended far beyond that project.

Marx’s initial attempt to make sense of Napoleon III’s rise to power in contemporary France is contained in The Eighteenth Brumaire of Louis Bonaparte (1852). Between 1852 and 1862 Marx also wrote well over three hundred articles for the New York Daily Tribune ; sometimes unfairly disparaged as merely income-generating journalism, they frequently contain illuminating attempts to explain contemporary European society and politics (including European interventions in India and China) to an American audience (helpfully) presumed to know little about them.

The second of Marx’s two especially intense periods of political activity—after the revolutions of 1848—centred on his involvement in the International Working Men’s Association between 1864 and 1874, and the events of the Paris Commune (1871), in particular. The character and lessons of the Commune—the short-lived, and violently suppressed, municipal rebellion that controlled Paris for several months in the aftermath of the Franco-Prussian war—are discussed in The Civil War in France (1871). Also politically important was Marx’s “Critique of the Gotha Programme” (1875), in which he criticises the theoretical influence of Ferdinand Lassalle (1825–1864) on the German labour movement, and portrays the higher stage of a future communist society as endorsing distribution according to “the needs principle”.

Marx’s critique of political economy remains controversial. He never succeeded in fixing and realising the wider project that he envisaged. Volume One of Capital , published in 1867, was the only significant part of the project published in his own lifetime, and even here he was unable to resist heavily reworking subsequent editions (especially the French version of 1872–75). What we now know as Volume Two and Volume Three of Capital were put together from Marx’s raw materials by Engels and published in 1885 and 1894, respectively, and Marx’s own drafts were written before the publication of Volume One and barely touched by him in the remaining fifteen years of his life. An additional three supplementary volumes planned by Engels, and subsequently called Theories of Surplus Value (or, more colloquially, the “fourth volume of Capital ”) were assembled from remaining notes by Karl Kautsky (1854–1938), and published between 1905 and 1910. (The section of the “new MEGA”—see below—concerned with Capital -related texts contains fifteen thick volumes, and provides some sense of the extent and character of these later editorial interventions.) In addition, the publication in 1953—a previous two-volume edition (1939 and 1941) had only a highly restricted circulation—of the so-called Grundrisse (written in 1857–58) was also important. Whether this text is treated as a freestanding work or as a preparatory step towards Capital, it raises many questions about Marx’s method, his relation to G.W.F. Hegel (1770–1831), and the evolution of Marx’s thought. In contrast, the work of political economy that Marx did publish in this period— A Contribution to a Critique of Political Economy (1859)—was largely ignored by both contemporaries and later commentators, except for the, much reprinted and discussed, summary sketch of his theory of history that Marx offered in the so-called “1859 Preface” to that volume.

Marx’s later years (after the Paris Commune) are the subject of much interpretative disagreement. His inability to deliver the later volumes of Capital is often seen as emblematic of a wider and more systematic intellectual failure (Stedman Jones 2016). However, others have stressed Marx’s continued intellectual creativity in this period, as he variously rethought his views about: the core and periphery of the international economic system; the scope of his theory of history; social anthropology; and the economic and political evolution of Russia (Shanin 1983; K. Anderson 2010).

After the death of his wife, in 1881, Marx’s life was dominated by illness, and travel aimed at improving his health (convalescent destinations including the Isle of Wight, Karlsbad, Jersey, and Algiers). Marx died in March 1883, two months after the death of his eldest daughter. His estate was valued at £250.

Engels’s wider role in the evolution of, and, more especially the reception and interpretation of, Marx’s work is much disputed. The truth here is complex, and Engels is not always well-treated in the literature. Marx and Engels are sometimes portrayed as if they were a single entity, of one mind on all matters, whose individual views on any topic can be found simply by consulting the other. Others present Engels as the distorter and manipulator of Marx’s thought, responsible for any element of Marxian theory with which the relevant commentator might disagree. Despite their familiarity, neither caricature seems plausible or fair. The best-known jointly authored texts are The Holy Family , the “German Ideology” manuscripts, and The Communist Manifesto , but there are nearly two hundred shorter items that they both contributed to (Draper 1985: 2–19).

Many of Marx’s best-known writings remained unpublished before his death. The attempt to establish a reliable collected edition has proved lengthy and fraught. The authoritative Marx-Engels-Gesamtausgabe , the so-called “new MEGA” (1975–), is still a work in progress, begun under Soviet auspices but since 1990 under the guidance of the “International Marx-Engels Stiftung” (IMES). In its current form—much scaled-down from its original ambitions—the edition will contain some 114 volumes (well over a half of which are published at the time of writing). In addition to his various published and unpublished works, it includes Marx’s journalism, correspondence, drafts, and (some) notebooks. Texts are published in their original language (variously German, English, and French). For those needing to utilise English-language resources, the fifty volume Marx Engels Collected Works (1975–2004) can be recommended. (References to Marx and Engels quotations here are to these MECW volumes.) There are also several useful single volume selections of Marx and Engels writings in English (including Marx 2000).

2. Alienation and Human Flourishing

Alienation is a concept especially, but not uniquely, associated with Marx’s work, and the intellectual tradition that he helped found. It identifies a distinct kind of social ill, involving a separation between a subject and an object that properly belong together. The subject here is typically an individual or a group, while the object is usually an “entity” which variously is not itself a subject, is another subject(s), or is the original subject (that is, the relation here can be reflexive). And the relation between the relevant subject and object is one of problematic separation. Both elements of that characterisation are important. Not all social ills, of course, involve separations; for instance, being overly integrated into some object might be dysfunctional, but it is not characteristic of alienation. Moreover, not all separations are problematic, and accounts of alienation typically appeal to some baseline unity or harmony that is frustrated or violated by the separation in question.

Theories of alienation vary considerably, but frequently: first, identify a subset of these problematic separations as being of particular importance; second, include an account (sometimes implicit) of what makes the relevant separations problematic; and, third, propound some explanatory claims about the extent of, and prognosis for, alienation, so understood.

Marx’s ideas concerning alienation were greatly influenced by the critical writings on religion of Ludwig Feuerbach (1804–1872), and especially his The Essence of Christianity (1841). One key text in this respect is Marx’s “Contribution of Hegel’s Critique of Right: Introduction” (1843). This work is home to Marx’s notorious remark that religion is the “opium of the people,” a harmful, illusion-generating painkiller ( MECW 3: 175). It is here that Marx sets out his account of religion in most detail.

While traditional Christian theology asserts that God created man in God’s own image, Marx fully accepted Feuerbach’s inversion of this picture, proposing that human beings had invented God in their own image; indeed a view that long pre-dated Feuerbach. Feuerbach’s distinctive contribution was to argue that worshipping God diverted human beings from enjoying their own human powers. In their imagination humans raise their own powers to an infinite level and project them on to an abstract object. Hence religion is a form of alienation, for it separates human beings from their “species essence.” Marx accepted much of Feuerbach’s account but argues that Feuerbach failed to understand why people fall into religious alienation, and so is unable to explain how it can be transcended. Feuerbach’s view appears to be that belief in religion is purely an intellectual error and can be corrected by persuasion. Marx’s explanation is that religion is a response to alienation in material life, and therefore cannot be removed until human material life is emancipated, at which point religion will wither away.

Precisely what it is about material life that creates religion is not set out with complete clarity. However, it seems that at least two aspects of alienation are responsible. One is alienated labour, which will be explored shortly. A second is the need for human beings to assert their communal essence. Whether or not we explicitly recognise it, human beings exist as a community, and what makes human life possible is our mutual dependence on the vast network of social and economic relations which engulf us all, even though this is rarely acknowledged in our day-to-day life. Marx’s view appears to be that we must, somehow or other, acknowledge our communal existence in our institutions. At first it is “deviously acknowledged” by religion, which creates a false idea of a community in which we are all equal in the eyes of God. After the post-Reformation fragmentation of religion, where religion is no longer able to play the role even of a fake community of equals, the modern state fills this need by offering us the illusion of a community of citizens, all equal in the eyes of the law. Interestingly, the political or liberal state, which is needed to manage the politics of religious diversity, takes on the role offered by religion in earlier times of providing a form of illusory community. But the political state and religion will both be transcended when a genuine community of social and economic equals is created.

Although Marx was greatly inspired by thinking about religious alienation, much more of his attention was devoted to exploring alienation in work. In a much-discussed passage from the 1844 Manuscripts , Marx identifies four dimensions of alienated labour in contemporary capitalist society ( MECW 3: 270–282). First, immediate producers are separated from the product of their labour; they create a product that they neither own nor control, indeed, which comes to dominate them. (Note that this idea of “fetishism”—where human creations escape our control, achieve the appearance of independence, and come to oppress us—is not to be equated with alienation as such, but is rather one form that it can take.) Second, immediate producers are separated from their productive activity; in particular, they are forced to work in ways which are mentally and/or physically debilitating. Third, immediate producers are separated from other individuals; contemporary economic relations socialise individuals to view others as merely means to their own particular ends. Fourth, and finally, immediate producers are separated from their own human nature; for instance, the human capacities for community and for free, conscious, and creative, work, are both frustrated by contemporary capitalist relations.

Note that these claims about alienation are distinct from other, perhaps more familiar, complaints about work in capitalist society. For instance, alienated labour, as understood here, could be—even if it is often not—highly remunerated, limited in duration, and relatively secure.

Marx holds that work has the potential to be something creative and fulfilling. He consequently rejects the view of work as a necessary evil, denying that the negative character of work is part of our fate, a universal fact about the human condition that no amount of social change could remedy. Indeed, productive activity, on Marx’s account, is a central element in what it is to be a human being, and self-realisation through work is a vital component of human flourishing. That he thinks that work—in a different form of society—could be creative and fulfilling, perhaps explains the intensity and scale of Marx’s condemnation of contemporary economic arrangements and their transformation of workers into deformed and “dehumanised” beings ( MECW 3: 284).

It was suggested above that alienation consists of dysfunctional separations—separations between entities that properly belong together—and that theories of alienation typically presuppose some baseline condition whose frustration or violation by the relevant separation identifies the latter as dysfunctional. For Marx, that baseline seems to be provided by an account of human flourishing, which he conceptualises in terms of self-realisation (understood here as the development and deployment of our essential human capacities). Labour in capitalism, we can say, is alienated because it embodies separations preventing the self-realisation of producers; because it is organised in a way that frustrates the human need for free, conscious, and creative work.

So understood, and returning to the four separations said to characterise alienated labour, we can see that it is the implicit claim about human nature (the fourth separation) which identifies the other three separations as dysfunctional. If one subscribed to the same formal model of alienation and self-realisation, but held a different account of the substance of human nature, very different claims about work in capitalist society might result. Imagine a theorist who held that human beings were solitary, egoistic creatures, by nature. That theorist could accept that work in capitalist society encouraged isolation and selfishness, but deny that such results were alienating, because those results would not frustrate their baseline account of what it is to be a human being (indeed, they would rather facilitate those characteristics).

Marx seems to hold various views about the historical location and comparative extent of alienation. These include: that some systematic forms of alienation—presumably including religious alienation—existed in pre-capitalist societies; that systematic forms of alienation—including alienation in work—are only a feature of class divided societies; that systematic forms of alienation are greater in contemporary capitalist societies than in pre-capitalist societies; and that not all human societies are scarred by class division, in particular, that a future classless society (communism) will not contain systematic forms of alienation.

Marx maintains that alienation flows from capitalist social relations, and not from the kind of technological advances that capitalist society contains. His disapproval of capitalism is reserved for its social arrangements and not its material accomplishments. He had little time for what is sometimes called the “romantic critique of capitalism”, which sees industry and technology as the real villains, responsible for devastating the purportedly communitarian idyll of pre-capitalist relations. In contrast, Marx celebrates the bourgeoisie’s destruction of feudal relations, and sees technological growth and human liberation as (at least, in time) progressing hand-in-hand. Industry and technology are understood as part of the solution to, and not the source of, social problems.

There are many opportunities for scepticism here. In the present context, many struggle to see how the kind of large-scale industrial production that would presumably characterise communist society—communism purportedly being more productive than capitalism—would avoid alienation in work. Interesting responses to such concerns have been put forward, but they have typically come from commentators rather than from Marx himself (Kandiyali 2018). This is a point at which Marx’s self-denying ordinance concerning the detailed description of communist society prevents him from engaging directly with significant concerns about the direction of social change.

In the text “On The Jewish Question” (1843) Marx begins to make clear the distance between himself and his radical liberal colleagues among the Young Hegelians; in particular Bruno Bauer. Bauer had recently written against Jewish emancipation, from an atheist perspective, arguing that the religion of both Jews and Christians was a barrier to emancipation. In responding to Bauer, Marx makes one of the most enduring arguments from his early writings, by means of introducing a distinction between political emancipation—essentially the grant of liberal rights and liberties—and human emancipation. Marx’s reply to Bauer is that political emancipation is perfectly compatible with the continued existence of religion, as the contemporary example of the United States demonstrates. However, pushing matters deeper, in an argument reinvented by innumerable critics of liberalism, Marx argues that not only is political emancipation insufficient to bring about human emancipation, it is in some sense also a barrier. Liberal rights and ideas of justice are premised on the idea that each of us needs protection from other human beings who are a threat to our liberty and security. Therefore, liberal rights are rights of separation, designed to protect us from such perceived threats. Freedom on such a view, is freedom from interference. What this view overlooks is the possibility—for Marx, the fact—that real freedom is to be found positively in our relations with other people. It is to be found in human community, not in isolation. Accordingly, insisting on a regime of liberal rights encourages us to view each other in ways that undermine the possibility of the real freedom we may find in human emancipation. Now we should be clear that Marx does not oppose political emancipation, for he sees that liberalism is a great improvement on the systems of feudalism and religious prejudice and discrimination which existed in the Germany of his day. Nevertheless, such politically emancipated liberalism must be transcended on the route to genuine human emancipation. Unfortunately, Marx never tells us what human emancipation is, although it is clear that it is closely related to the ideas of non-alienated labour and meaningful community.

Even with these elaborations, many additional questions remain about Marx’s account. Three concerns are briefly addressed here.

First, one might worry about the place of alienation in the evolution of Marx’s thought. The once-popular suggestion that Marx only wrote about alienation in his early writings—his published and unpublished works from the early 1840s—is not sustained by the textual evidence. However, the theoretical role that the concept of alienation plays in his writings might still be said to evolve. For example, it has been suggested that alienation in the early writings is intended to play an “explanatory role”, whereas in his later work it comes to have a more “descriptive or diagnostic” function (Wood 1981 [2004: 7]).

A second concern is the role of human nature in the interpretation of alienation offered here. In one exegetical variant of this worry, the suggestion is that this account of alienation rests on a model of universal human nature which Marx’s (later) understanding of historical specificity and change prevents him from endorsing. However, there is much evidence against this purported later rejection of human nature (see Geras 1983). Indeed, the “mature” Marx explicitly affirms that human nature has both constant and mutable elements; that human beings are characterised by universal qualities, constant across history and culture, and variable qualities, reflecting historical and cultural diversity (McMurtry 1978: 19–53). One systematic, rather than exegetical, variant of the present worry suggests that we should not endorse accounts of alienation which depend on “thick” and inevitably controversial accounts of human nature (Jaeggi 2016). Whatever view we take of that claim about our endorsement, there seems little doubt about the “thickness” of Marx’s own account of human flourishing. To provide for the latter, a society must satisfy not only basic needs (for sustenance, warmth and shelter, certain climatic conditions, physical exercise, basic hygiene, procreation and sexual activity), but also less basic needs, both those that are not always appreciated to be part of his account (for recreation, culture, intellectual stimulation, artistic expression, emotional satisfaction, and aesthetic pleasure), and those that Marx is more often associated with (for fulfilling work and meaningful community) (Leopold 2007: 227–245).

Third, we may ask about Marx’s attitude towards the distinction sometimes made between subjective and objective alienation. These two forms of alienation can be exemplified separately or conjointly in the lives of particular individuals or societies (Hardimon 1994: 119–122). Alienation is “subjective” when it is characterised in terms of the presence (or absence) of certain beliefs or feelings; for example, when individuals are said to be alienated because they feel estranged from the world. Alienation is “objective” when it is characterised in terms which make no reference to the beliefs or feelings of individuals; for example, when individuals are said to be alienated because they fail to develop and deploy their essential human characteristics, whether or not they experience that lack of self-realisation as a loss. Marx seems to allow that these two forms of alienation are conceptually distinct, but assumes that in capitalist societies they are typically found together. Indeed, he often appears to think of subjective alienation as tracking the objective variant. That said, Marx does allow that they can come apart sociologically. At least, that is one way of reading a passage in The Holy Family where he recognises that capitalists do not get to engage in self-realising activities of the right kind (and hence are objectively alienated), but that—unlike the proletariat—they are content in their estrangement (and hence are lacking subjective alienation), feeling “at ease” in, and even “strengthened” by, it ( MECW 4: 36).

3. Theory of History

Marx did not set out his theory of history in great detail. Accordingly, it has to be constructed from a variety of texts, both those where he attempts to apply a theoretical analysis to past and future historical events, and those of a more purely theoretical nature. Of the latter, the “1859 Preface” to A Critique of Political Economy has achieved canonical status. However, the manuscripts collected together as The German Ideology , co-written with Engels in 1845-46, are also a much used early source. We shall briefly outline both texts, and then look at the reconstruction of Marx’s theory of history in the hands of his philosophically most influential recent exponent, G.A. Cohen (Cohen 1978 [2001], 1988), who builds on the interpretation of the early Russian Marxist Georgi Plekhanov (1856–1918) (Plekhanov 1895 [1947]).

We should, however, be aware that Cohen’s interpretation is far from universally accepted. Cohen provided his reconstruction of Marx partly because he was frustrated with existing Hegelian-inspired “dialectical” interpretations of Marx, and what he considered to be the vagueness of the influential works of Louis Althusser (1918–1990), neither of which, he felt, provided a rigorous account of Marx’s views. However, some scholars believe that the interpretation that we shall focus on is faulty precisely for its insistence on a mechanical model and its lack of attention to the dialectic. One aspect of this criticism is that Cohen’s understanding has a surprisingly small role for the concept of class struggle, which is often felt to be central to Marx’s theory of history. Cohen’s explanation for this is that the “1859 Preface”, on which his interpretation is based, does not give a prominent role to class struggle, and indeed it is not explicitly mentioned. Yet this reasoning is problematic for it is possible that Marx did not want to write in a manner that would engage the concerns of the police censor, and, indeed, a reader aware of the context may be able to detect an implicit reference to class struggle through the inclusion of such phrases as “then begins an era of social revolution,” and “the ideological forms in which men become conscious of this conflict and fight it out”. Hence it does not follow that Marx himself thought that the concept of class struggle was relatively unimportant. Furthermore, when A Critique of Political Economy was replaced by Capital , Marx made no attempt to keep the 1859 Preface in print, and its content is reproduced just as a very much abridged footnote in Capital . Nevertheless, we shall concentrate here on Cohen’s interpretation as no other account has been set out with comparable rigour, precision and detail.

In his “ Theses on Feuerbach ” (1845) Marx provides a background to what would become his theory of history by stating his objections to “all hitherto existing” materialism and idealism, understood as types of philosophical theories. Materialism is complimented for understanding the physical reality of the world, but is criticised for ignoring the active role of the human subject in creating the world we perceive. Idealism, at least as developed by Hegel, understands the active nature of the human subject, but confines it to thought or contemplation: the world is created through the categories we impose upon it. Marx combines the insights of both traditions to propose a view in which human beings do indeed create —or at least transform—the world they find themselves in, but this transformation happens not in thought but through actual material activity; not through the imposition of sublime concepts but through the sweat of their brow, with picks and shovels. This historical version of materialism, which, according to Marx, transcends and thus rejects all existing philosophical thought, is the foundation of Marx’s later theory of history. As Marx puts it in the “1844 Manuscripts”, “Industry is the actual historical relationship of nature … to man” ( MECW 3: 303). This thought, derived from reflection on the history of philosophy, together with his experience of social and economic realities, as a journalist, sets the agenda for all Marx’s future work.

In The German Ideology manuscripts, Marx and Engels contrast their new materialist method with the idealism that had characterised previous German thought. Accordingly, they take pains to set out the “premises of the materialist method”. They start, they say, from “real human beings”, emphasising that human beings are essentially productive, in that they must produce their means of subsistence in order to satisfy their material needs. The satisfaction of needs engenders new needs of both a material and social kind, and forms of society arise corresponding to the state of development of human productive forces. Material life determines, or at least “conditions” social life, and so the primary direction of social explanation is from material production to social forms, and thence to forms of consciousness. As the material means of production develop, “modes of co-operation” or economic structures rise and fall, and eventually communism will become a real possibility once the plight of the workers and their awareness of an alternative motivates them sufficiently to become revolutionaries.

In the sketch of The German Ideology , many of the key elements of historical materialism are present, even if the terminology is not yet that of Marx’s more mature writings. Marx’s statement in the “1859 Preface” renders something of the same view in sharper form. Cohen’s reconstruction of Marx’s view in the Preface begins from what Cohen calls the Development Thesis, which is pre-supposed, rather than explicitly stated in the Preface (Cohen 1978 [2001]: 134–174). This is the thesis that the productive forces tend to develop, in the sense of becoming more powerful, over time. The productive forces are the means of production, together with productively applicable knowledge: technology, in other words. The development thesis states not that the productive forces always do develop, but that there is a tendency for them to do so. The next thesis is the primacy thesis, which has two aspects. The first states that the nature of a society’s economic structure is explained by the level of development of its productive forces, and the second that the nature of the superstructure—the political and legal institutions of society—is explained by the nature of the economic structure. The nature of a society’s ideology, which is to say certain religious, artistic, moral and philosophical beliefs contained within society, is also explained in terms of its economic structure, although this receives less emphasis in Cohen’s interpretation. Indeed, many activities may well combine aspects of both the superstructure and ideology: a religion is constituted by both institutions and a set of beliefs.

Revolution and epoch change is understood as the consequence of an economic structure no longer being able to continue to develop the forces of production. At this point the development of the productive forces is said to be fettered, and, according to the theory, once an economic structure fetters development it will be revolutionised—“burst asunder” ( MECW 6: 489)—and eventually replaced with an economic structure better suited to preside over the continued development of the forces of production.

In outline, then, the theory has a pleasing simplicity and power. It seems plausible that human productive power develops over time, and plausible too that economic structures exist for as long as they develop the productive forces, but will be replaced when they are no longer capable of doing this. Yet severe problems emerge when we attempt to put more flesh on these bones.

Prior to Cohen’s work, historical materialism had not been regarded as a coherent view within English-language political philosophy. The antipathy is well summed up with the closing words of H.B. Acton’s The Illusion of the Epoch : “Marxism is a philosophical farrago” (1955: 271). One difficulty taken particularly seriously by Cohen is an alleged inconsistency between the explanatory primacy of the forces of production, and certain claims made elsewhere by Marx which appear to give the economic structure primacy in explaining the development of the productive forces. For example, in The Communist Manifesto Marx and Engels state that: “The bourgeoisie cannot exist without constantly revolutionising the instruments of production” ( MECW 6: 487). This appears to give causal and explanatory primacy to the economic structure—capitalism—which brings about the development of the forces of production. Cohen accepts that, on the surface at least, this generates a contradiction. Both the economic structure and the development of the productive forces seem to have explanatory priority over each other. Unsatisfied by such vague resolutions as “determination in the last instance”, or the idea of “dialectical” connections, Cohen self-consciously attempts to apply the standards of clarity and rigour of analytic philosophy to provide a reconstructed version of historical materialism.

The key theoretical innovation is to appeal to the notion of functional explanation, also sometimes called “consequence explanation” (Cohen 1978 [2001]: 249–296). The essential move is cheerfully to admit that the economic structure, such as capitalism, does indeed develop the productive forces, but to add that this, according to the theory, is precisely why we have capitalism (when we do). That is, if capitalism failed to develop the productive forces it would disappear. And, indeed, this fits beautifully with historical materialism. For Marx asserts that when an economic structure fails to develop the productive forces—when it “fetters” the productive forces—it will be revolutionised and the epoch will change. So the idea of “fettering” becomes the counterpart to the theory of functional explanation. Essentially fettering is what happens when the economic structure becomes dysfunctional.

Now it is apparent that this renders historical materialism consistent. Yet there is a question as to whether it is at too high a price. For we must ask whether functional explanation is a coherent methodological device. The problem is that we can ask what it is that makes it the case that an economic structure will only persist for as long as it develops the productive forces. Jon Elster has pressed this criticism against Cohen very hard (Elster 1985: 27–35). If we were to argue that there is an agent guiding history who has the purpose that the productive forces should be developed as much as possible then it would make sense that such an agent would intervene in history to carry out this purpose by selecting the economic structures which do the best job. However, it is clear that Marx makes no such metaphysical assumptions. Elster is very critical—sometimes of Marx, sometimes of Cohen—of the idea of appealing to “purposes” in history without those being the purposes of anyone.

Indeed Elster’s criticism was anticipated in fascinating terms by Simone Weil (1909–1943), who links Marx’s appeal to history’s purposes to the influence of Hegel on his thought:

We must remember the Hegelian origins of Marxist thought. Hegel believed in a hidden mind at work in the universe, and that the history of the world is simply the history of this world mind, which, as in the case of everything spiritual, tends indefinitely towards perfection. Marx claimed to “put back on its feet” the Hegelian dialectic, which he accused of being “upside down”, by substituting matter for mind as the motive power of history; but by an extraordinary paradox, he conceived history, starting from this rectification, as though he attributed to matter what is the very essence of mind—an unceasing aspiration towards the best. (Weil 1955 [1958: 43])

Cohen is well aware of the difficulty of appealing to purposes in history, but defends the use of functional explanation by comparing its use in historical materialism with its use in evolutionary biology. In contemporary biology it is commonplace to explain the existence of the stripes of a tiger, or the hollow bones of a bird, by pointing to the function of these features. Here we have apparent purposes which are not the purposes of anyone. The obvious counter, however, is that in evolutionary biology we can provide a causal story to underpin these functional explanations; a story involving chance variation and survival of the fittest. Therefore these functional explanations are sustained by a complex causal feedback loop in which dysfunctional elements tend to be filtered out in competition with better functioning elements. Cohen calls such background accounts “elaborations” and he concedes that functional explanations are in need of elaborations. But he points out that standard causal explanations are equally in need of elaborations. We might, for example, be satisfied with the explanation that the vase broke because it was dropped on the floor, but a great deal of further information is needed to explain why this explanation works.

Consequently, Cohen claims that we can be justified in offering a functional explanation even when we are in ignorance of its elaboration. Indeed, even in biology detailed causal elaborations of functional explanations have been available only relatively recently. Prior to Charles Darwin (1809–1882), or arguably Jean-Baptiste Lamarck (1744–1829), the only candidate causal elaboration was to appeal to God’s purposes. Darwin outlined a very plausible mechanism, but having no genetic theory was not able to elaborate it into a detailed account. Our knowledge remains incomplete in some respects to this day. Nevertheless, it seems perfectly reasonable to say that birds have hollow bones in order to facilitate flight. Cohen’s point is that the weight of evidence that organisms are adapted to their environment would permit even a pre-Darwinian atheist to assert this functional explanation with justification. Hence one can be justified in offering a functional explanation even in the absence of a candidate elaboration: if there is sufficient weight of inductive evidence.

At this point the issue, then, divides into a theoretical question and an empirical one. The empirical question is whether or not there is evidence that forms of society exist only for as long as they advance productive power, and are replaced by revolution when they fail. Here, one must admit, the empirical record is patchy at best, and there appear to have been long periods of stagnation, even regression, when dysfunctional economic structures were not revolutionised.

The theoretical issue is whether a plausible elaborating explanation is available to underpin Marxist functional explanations. Here there is something of a dilemma. In the first instance it is tempting to try to mimic the elaboration given in the Darwinian story, and appeal to chance variations and survival of the fittest. In this case “fittest” would mean “most able to preside over the development of the productive forces”. Chance variation would be a matter of people trying out new types of economic relations. On this account new economic structures begin through experiment, but thrive and persist through their success in developing the productive forces. However the problem is that such an account would seem to introduce a larger element of contingency than Marx seeks, for it is essential to Marx’s thought that one should be able to predict the eventual arrival of communism. Within Darwinian theory there is no warrant for long-term predictions, for everything depends on the contingencies of particular situations. A similar heavy element of contingency would be inherited by a form of historical materialism developed by analogy with evolutionary biology. The dilemma, then, is that the best model for developing the theory makes predictions based on the theory unsound, yet the whole point of the theory is predictive. Hence one must either look for an alternative means of producing elaborating explanation, or give up the predictive ambitions of the theory.

The driving force of history, in Cohen’s reconstruction of Marx, is the development of the productive forces, the most important of which is technology. But what is it that drives such development? Ultimately, in Cohen’s account, it is human rationality. Human beings have the ingenuity to apply themselves to develop means to address the scarcity they find. This on the face of it seems very reasonable. Yet there are difficulties. As Cohen himself acknowledges, societies do not always do what would be rational for an individual to do. Co-ordination problems may stand in our way, and there may be structural barriers. Furthermore, it is relatively rare for those who introduce new technologies to be motivated by the need to address scarcity. Rather, under capitalism, the profit motive is the key. Of course it might be argued that this is the social form that the material need to address scarcity takes under capitalism. But still one may raise the question whether the need to address scarcity always has the influence that it appears to have taken on in modern times. For example, a ruling class’s absolute determination to hold on to power may have led to economically stagnant societies. Alternatively, it might be thought that a society may put religion or the protection of traditional ways of life ahead of economic needs. This goes to the heart of Marx’s theory that man is an essentially productive being and that the locus of interaction with the world is industry. As Cohen himself later argued in essays such as “Reconsidering Historical Materialism” (1988), the emphasis on production may appear one-sided, and ignore other powerful elements in human nature. Such a criticism chimes with a criticism from the previous section; that the historical record may not, in fact, display the tendency to growth in the productive forces assumed by the theory.

Many defenders of Marx will argue that the problems stated are problems for Cohen’s interpretation of Marx, rather than for Marx himself. It is possible to argue, for example, that Marx did not have a general theory of history, but rather was a social scientist observing and encouraging the transformation of capitalism into communism as a singular event. And it is certainly true that when Marx analyses a particular historical episode, as he does in the 18th Brumaire of Louis Napoleon (1852), any idea of fitting events into a fixed pattern of history seems very far from Marx’s mind. On other views Marx did have a general theory of history but it is far more flexible and less determinate than Cohen insists (Miller 1984). And finally, as noted, there are critics who believe that Cohen’s interpretation is entirely wrong-headed owing to its dismissive attitude to dialectical reasoning (Sayers 1984 [1990]).

4. Economics

How to read Marx’s economic writings, and especially his masterpiece Capital Volume 1, remains a matter of controversy. An orthodox reading is that Marx’s essential task is to contribute to economic theory, based on a modified form of the labour theory of value. Others warn against such a narrow interpretation, pointing out that the character of Marx’s writing and presentation is very far from what one would expect in a standard economic text. Hence William Clare Roberts (2017), for example, argues that Capital Volume 1 is fundamentally a work of political theory, rather than economics. Be that as it may, nevertheless, the work does contain substantial presentation of an economic analysis of capitalism, and it is on this that we will focus here.

Capital Volume 1 begins with an analysis of the idea of commodity production. A commodity is defined as a useful external object, produced for exchange on a market. Thus, two necessary conditions for commodity production are: the existence of a market, in which exchange can take place; and a social division of labour, in which different people produce different products, without which there would be no motivation for exchange. Marx suggests that commodities have both use-value—a use, in other words—and an exchange-value—initially to be understood as their price. Use value can easily be understood, so Marx says, but he insists that exchange value is a puzzling phenomenon, and relative exchange values need to be explained. Why does a quantity of one commodity exchange for a given quantity of another commodity? His explanation is in terms of the labour input required to produce the commodity, or rather, the socially necessary labour, which is labour exerted at the average level of intensity and productivity for that branch of activity within the economy. Thus the labour theory of value asserts that the value of a commodity is determined by the quantity of socially necessary labour time required to produce it.

Marx provides a two-stage argument for the labour theory of value. The first stage is to argue that if two objects can be compared in the sense of being put on either side of an equals sign, then there must be a “third thing of identical magnitude in both of them” to which they are both reducible. As commodities can be exchanged against each other, there must, Marx argues, be a third thing that they have in common. This then motivates the second stage, which is a search for the appropriate “third thing”, which is labour in Marx’s view, as the only plausible common element. Both steps of the argument are, of course, highly contestable.

Capitalism can be distinguished from other forms of commodity exchange, Marx argues, in that it involves not merely the exchange of commodities, but the advancement of capital, in the form of money, with the purpose of generating profit through the purchase of commodities and their transformation into other commodities which can command a higher price, and thus yield a profit. Marx claims that no previous theorist has been able adequately to explain how capitalism as a whole can make a profit. Marx’s own solution relies on the idea of exploitation of the worker. In setting up conditions of production the capitalist purchases the worker’s labour power—his or her ability to labour—for the day. The cost of this commodity is determined in the same way as the cost of every other; that is, in terms of the amount of socially necessary labour power required to produce it. In this case the value of a day’s labour power is the value of the commodities necessary to keep the worker alive for a day. Suppose that such commodities take four hours to produce. Accordingly the first four hours of the working day is spent on producing value equivalent to the value of the wages the worker will be paid. This is known as necessary labour. Any work the worker does above this is known as surplus labour, producing surplus value for the capitalist. Surplus value, according to Marx, is the source of all profit. In Marx’s analysis labour power is the only commodity which can produce more value than it is worth, and for this reason it is known as variable capital. Other commodities simply pass their value on to the finished commodities, but do not create any extra value. They are known as constant capital. Profit, then, is the result of the labour performed by the worker beyond that necessary to create the value of his or her wages. This is the surplus value theory of profit.

It appears to follow from this analysis that as industry becomes more mechanised, using more constant capital and less variable capital, the rate of profit ought to fall. For as a proportion less capital will be advanced on labour, and only labour can create value. In Capital Volume 3 Marx does indeed make the prediction that the rate of profit will fall over time, and this is one of the factors which leads to the downfall of capitalism. (However, as pointed out by Paul Sweezy in The Theory of Capitalist Development (1942), the analysis is problematic.) A further consequence of this analysis is a difficulty for the theory that Marx did recognise, and tried, albeit unsuccessfully, to meet also in the manuscripts that make up Capital Volume 3. It follows from the analysis so far that labour-intensive industries ought to have a higher rate of profit than those which use less labour. Not only is this empirically false, it is theoretically unacceptable. Accordingly, Marx argued that in real economic life prices vary in a systematic way from values. Providing the mathematics to explain this is known as the transformation problem, and Marx’s own attempt suffers from technical difficulties. Although there are sophisticated known techniques for solving this problem now there is a question about the degree to which they do rescue Marx’s project. If it is thought that the labour theory of value was initially motivated as an intuitively plausible theory of price then when the connection between price and value is rendered as indirect as it is in the final theory, the intuitive motivation of the theory drains away. Others consider this to be a superficial reading of Marx, and that his general approach allows us to see through the appearances of capitalism to understand its underlying basis, which need not coincide with appearances. How Marx’s theory of capitalism should be read remains an active area of scholarly debate (Heinrich 2012).

A further objection is that Marx’s assertion that only labour can create surplus value is unsupported by any argument or analysis, and can be argued to be merely an artefact of the nature of his presentation. Any commodity can be picked to play a similar role. Consequently, with equal justification one could set out a corn theory of value, arguing that corn has the unique power of creating more value than it costs. Formally this would be identical to the labour theory of value (Roemer 1982). Nevertheless, the claims that somehow labour is responsible for the creation of value, and that profit is the consequence of exploitation, remain intuitively powerful, even if they are difficult to establish in detail.

However, even if the labour theory of value is considered discredited, there are elements of his theory that remain of worth. The Cambridge economist Joan Robinson, in An Essay on Marxian Economics (1942), picked out two aspects of particular note. First, Marx’s refusal to accept that capitalism involves a harmony of interests between worker and capitalist, replacing this with a class-based analysis of the worker’s struggle for better wages and conditions of work, versus the capitalist’s drive for ever greater profits. Second, Marx’s denial that there is any long-run tendency to equilibrium in the market, and his descriptions of mechanisms which underlie the trade-cycle of boom and bust. Both provide a salutary corrective to aspects of orthodox economic theory.

As noted, traditionally Marx’s definition of exploitation is given in terms of the theory of surplus value, which in turn is taken to depend on the labour theory of value: the theory that the value of any commodity is proportional to the amount of “socially necessary” labour embodied in it. However, the question arises of whether the basic idea of exploitation should be so dependent on a particular theory of value. For if it is, the notion of exploitation becomes vulnerable to Robert Nozick’s objection: that if the labour theory of value can be shown to be faulty, the Marxist theory of exploitation collapses too (Nozick 1974).

Others have felt that it is possible to restore the intuitive core of a Marxist theory of exploitation independent of the labour theory of value (cf. Cohen 1979, Wolff 1999, Vrousalis 2013). John Roemer, to take one leading case, states:

Marxian exploitation is defined as the unequal exchange of labor for goods: the exchange is unequal when the amount of labor embodied in the goods which the worker can purchase with his income … is less than the amount of labor he expended to earn that income.(Roemer 1985: 30)

Suppose I work eight hours to earn my wages. With this perhaps the best thing I can buy is a coat. But imagine that the coat took only a total of four hours to make. Therefore I have exchanged my eight hours work for only four hours of other people’s work, and thereby, on this view, I am exploited.

The definition requires some refinement. For example, if I am taxed for the benefit of those unable to work, I will be exploited by the above definition, but this is not what the definition of exploitation was intended to capture. Worse still, if there is one person exploited much more gravely than anyone else in the economy, then it may turn out that no-one else is exploited. Nevertheless, it should not be difficult to adjust the definition to take account of these difficulties, and as noted several other accounts of Marx-inspired accounts of exploitation have been offered that are independent of the labour theory of value.

Many of these alternative definitions add a notion of unfreedom or domination to unequal exchange of labour and goods (Vrousalis 2013). The exploited person is forced to accept a situation in which he or she just never gets back what they put into the labour process. Now there may be, in particular cases, a great deal to be said about why this is perfectly acceptable from a moral point of view. However, on the face of it such exploitation appears to be unjust. Nevertheless, we will see in the next section why attributing such a position to Marx himself is fraught with difficulty.

5. Morality

The issue of Marx and morality poses a conundrum. On reading Marx’s works at all periods of his life, there appears to be the strongest possible distaste towards bourgeois capitalist society, and an undoubted endorsement of future communist society. Yet the terms of this antipathy and endorsement are far from clear. Despite expectations, Marx never directly says that capitalism is unjust. Neither does he directly say that communism would be a just form of society. In fact he frequently takes pains to distance himself from those who engage in a discourse of justice, and makes a conscious attempt to exclude direct moral commentary in his own works. The puzzle is why this should be, given the weight of indirect moral commentary one also finds in his writings.

There are, initially, separate questions concerning Marx’s attitude to capitalism and to communism. There are also separate questions concerning his attitude to ideas of justice, and to ideas of morality more broadly concerned. This, then, generates four questions: (a) Did Marx think capitalism unjust?; (b) did he think that capitalism could be morally criticised on other grounds?; (c) did he think that communism would be just? (d) did he think it could be morally approved of on other grounds? These are some of the questions we consider in this section.

The initial argument that Marx must have thought that capitalism is unjust is based on the observation that Marx argued that all capitalist profit is ultimately derived from the exploitation of the worker. Capitalism’s dirty secret is that it is not a realm of harmony and mutual benefit but a system in which one class systematically extracts profit from another. How could this fail to be unjust? Yet it is notable that Marx never explicitly draws such a conclusion, and in Capital he goes as far as to say that such exchange is “by no means an injury to the seller” (MECW 35: 204), which some commentators have taken as evidence that Marx did not think that capitalism was unjust, although other readings are possible.

Allen Wood (1972) is perhaps the leading advocate of the view that Marx did not believe that capitalism is unjust. Wood argues that Marx takes this approach because his general theoretical approach excludes any trans-epochal standpoint from which one can comment on the justice of an economic system. Even though it is acceptable to criticise particular behaviour from within an economic structure as unjust (and theft under capitalism would be an example) it is not possible to criticise capitalism as a whole. This is a consequence of Marx’s analysis of the role of ideas of justice from within historical materialism. Marx claims that juridical institutions are part of the superstructure, and that ideas of justice are ideological. Accordingly, the role of both the superstructure and ideology, in the functionalist reading of historical materialism adopted here, is to stabilise the economic structure. Consequently, to state that something is just under capitalism is simply a judgement that it will tend to have the effect of advancing capitalism. According to Marx, in any society the ruling ideas are those of the ruling class; the core of the theory of ideology.

Ziyad Husami (1978) however, argues that Wood is mistaken, ignoring the fact that for Marx ideas undergo a double determination. We need to differentiate not just by economic system, but also by economic class within the system. Therefore the ideas of the non-ruling class may be very different from those of the ruling class. Of course, it is the ideas of the ruling class that receive attention and implementation, but this does not mean that other ideas do not exist. Husami goes as far as to argue that members of the proletariat under capitalism have an account of justice that matches communism. From this privileged standpoint of the proletariat, which is also Marx’s standpoint, capitalism is unjust, and so it follows that Marx thought capitalism unjust.

Plausible though it may sound, Husami’s argument fails to account for two related points. First, it cannot explain why Marx never explicitly described capitalism as unjust, and second, it overlooks the distance Marx wanted to place between his own scientific socialism, and that of other socialists who argued for the injustice of capitalism. Hence one cannot avoid the conclusion that the “official” view of Marx is that capitalism is not unjust.

Nevertheless, this leaves us with a puzzle. Much of Marx’s description of capitalism—his use of the words “embezzlement”, “robbery” and “exploitation”—belie the official account. Arguably, the only satisfactory way of understanding this issue is, once more, from G.A. Cohen, who proposes that Marx believed that capitalism was unjust, but did not believe that he believed it was unjust (Cohen 1983). In other words, Marx, like so many of us, did not have perfect knowledge of his own mind. In his explicit reflections on the justice of capitalism he was able to maintain his official view. But in less guarded moments his real view slips out, even if never in explicit language. Such an interpretation is bound to be controversial, but it makes good sense of the texts.

Whatever one concludes on the question of whether Marx thought capitalism unjust, it is, nevertheless, obvious that Marx thought that capitalism was not the best way for human beings to live. Points made in his early writings remain present throughout his writings, if no longer connected to an explicit theory of alienation. The worker finds work a torment, suffers poverty, overwork and lack of fulfilment and freedom. People do not relate to each other as humans should. Does this amount to a moral criticism of capitalism or not? In the absence of any special reason to argue otherwise, it simply seems obvious that Marx’s critique is a moral one. Capitalism impedes human flourishing. It is hard to disagree with the judgement that Marx

thinks that the capitalist exploitation of labor power is a wrong that has horrendous consequences for the laborers. (Roberts 2017: 129)

Marx, though, once more refrained from making this explicit; he seemed to show no interest in locating his criticism of capitalism in any of the traditions of moral philosophy, or explaining how he was generating a new tradition. There may have been two reasons for his caution. The first was that while there were bad things about capitalism, there is, from a world historical point of view, much good about it too. For without capitalism, communism would not be possible. Capitalism is to be transcended, not abolished, and this may be difficult to convey in the terms of moral philosophy.

Second, and perhaps more importantly, we need to return to the contrast between Marxian and other forms of socialism. Many non-Marxian socialists appealed to universal ideas of truth and justice to defend their proposed schemes, and their theory of transition was based on the idea that appealing to moral sensibilities would be the best, perhaps only, way of bringing about the new chosen society. Marx wanted to distance himself from these other socialist traditions, and a key point of distinction was to argue that the route to understanding the possibilities of human emancipation lay in the analysis of historical and social forces, not in morality. Hence, for Marx, any appeal to morality was theoretically a backward step.

This leads us now to Marx’s assessment of communism. Would communism be a just society? In considering Marx’s attitude to communism and justice there are really only two viable possibilities: either he thought that communism would be a just society or he thought that the concept of justice would not apply: that communism would transcend justice.

Communism is described by Marx, in the Critique of the Gotha Programme , as a society in which each person should contribute according to their ability and receive according to their need. This certainly sounds like a theory of justice, and could be adopted as such (Gilabert 2015). However, many will hold that it is truer to Marx’s thought to say that this is part of an account in which communism transcends justice, as Lukes has argued (Lukes 1987).

If we start with the idea that the point of ideas of justice is to resolve disputes, then a society without disputes would have no need or place for justice. We can see this by reflecting upon the idea of the circumstances of justice in the work of David Hume (1711–1776). Hume argued that if there was enormous material abundance—if everyone could have whatever they wanted without invading another’s share—we would never have devised rules of justice. And, of course, there are suggestions in Marx’s writings that communism would be a society of such abundance. But Hume also suggested that justice would not be needed in other circumstances; if there were complete fellow-feeling between all human beings, there would be no conflict and no need for justice. Of course, one can argue whether either material abundance or human fellow-feeling to this degree would be possible, but the point is that both arguments give a clear sense in which communism transcends justice.

Nevertheless, we remain with the question of whether Marx thought that communism could be commended on other moral grounds. On a broad understanding, in which morality, or perhaps better to say ethics, is concerned with the idea of living well, it seems that communism can be assessed favourably in this light. One compelling argument is that Marx’s career simply makes no sense unless we can attribute such a belief to him. But beyond this we can be brief in that the considerations adduced in Section 2 above apply again. Communism clearly advances human flourishing, in Marx’s view. The only reason for denying that, in Marx’s vision, it would amount to a good society is a theoretical antipathy to the word “good”. And here the main point is that, in Marx’s view, communism would not be brought about by high-minded benefactors of humanity. Quite possibly his determination to retain this point of difference between himself and other socialists led him to disparage the importance of morality to a degree that goes beyond the call of theoretical necessity.

6. Ideology

The account of ideology contained in Marx’s writings is regularly portrayed as a crucial element of his intellectual legacy. It has been identified as among his “most influential” ideas (Elster 1986: 168), and acclaimed as “the most fertile” part of his social and political theory (Leiter 2004: 84). Not least, these views on ideology are said to constitute Marx’s claim to a place—alongside Friedrich Nietzsche (1844–1900) and Sigmund Freud (1856–1939)—as one of the “masters of suspicion”; that is, as an author whose work casts doubt on the transparency of our everyday understandings of both our own identity and the social world we inhabit (Ricouer 1970: 32–33).

Given this enthusiastic reception, it can come as something of a surprise to turn to Marx’s writings and discover how little they contain about ideology, and how inchoate and opaque those infrequent and passing observations on that topic are. There are, of course, some famous quotations, not least from The German Ideology manuscripts. The references there to ideology as involving an “inversion” of the relation between individuals and their circumstances, perhaps analogous to the workings of a “camera obscura”—an optical device which projected an image of its surroundings, upside down but preserving perspective, onto a screen inside—have often mesmerised commentators but not always generated much genuine illumination ( MECW 5: 36). The point should not be exaggerated, but these striking images notwithstanding, there is no clear and sustained discussion of ideology in the Marxian corpus.

Many commentators maintain that the search for a single model of ideology in his work has to be given up. Indeed, there is something of an “arms race” in the literature, as commentators discover two, three, even five, competing models of ideology in Marx’s writings (Mepham 1979; Wood 1981 [2004]; Rosen 1996). Most surprisingly, it seems that some licence can be found in Marx’s corpus for three very different ways of thinking about what ideology is. There is textual evidence of his variously utilising: a “descriptive” account of ideology involving a broadly anthropological study of the beliefs and rituals characteristic of certain groups; a “positive” account of ideology as a “worldview” providing the members of a group with a sense of meaning and identity; and a “critical” account seeking to liberate individuals from certain false and misleading forms of understanding (Geuss 1981: 4–26).

It is the last of these—the critical account rather than either of the two “non-critical” accounts—which is central to his wider social and political theory, but this account is itself subject to some considerable interpretative disagreement. Marx’s theory of ideology is usually portrayed as an element in what might be called Marx’s sociology, as distinct from his philosophical anthropology say, or his theory of history (although complexly related to the latter).

Marx does not view ideology as a feature of all societies, and, in particular, suggests that it will not be a feature of a future communist society. However, ideology is portrayed as a feature of all class-divided societies, and not only of capitalist society—although many of Marx’s comments on ideology are concerned with the latter. The theory of ideology appears to play a role in explaining a feature of class-divided societies which might otherwise appear puzzling, namely what might be called their “stability”; that is, the absence of overt and serious conflict between social classes. This stability is not permanent, but it can last for extended historical periods. This stability appears puzzling to Marx because class-divided societies are flawed in ways which not only frustrate human flourishing, but also work to the material advantage of the ruling minority. Why do the subordinate classes, who form a majority, tolerate these flaws, when resistance and rebellion of various kinds might be in their objective interests?

Marx’s account of the sources of social stability in class-divided societies appeals to both repressive and non-repressive mechanisms. Such societies might often involve the direct repression (or the threat of it) of one group by another, but Marx does not think that this is the whole story. There are also non-repressive sources of social stability, and ideology is usually, and plausibly, considered one of these. Very roughly, Marx’s account of ideology claims that the dominant social ideas in such societies are typically false or misleading in a fashion that works to the advantage of the economically dominant class.

We should note that ideology would seem to be a part and not the whole of Marx’s account of the non-repressive sources of stability in class divided societies. Other factors might include: dull economic pressure, including the daily grind of having to earn a living; doubts—justified or otherwise—about the feasibility of alternatives; sensitivity to the possible costs of radical social change; and collective action problems of various kinds which face those who do want to rebel and resist. Marx does not think individuals are permanently trapped within ideological modes of thinking. Ideology may have an initial hold, but it is not portrayed as impervious to reason and evidence, especially in circumstances in which the objective conditions for social change obtain.

For Marx ideological beliefs are social in that they are widely shared, indeed so widely-shared that for long periods they constitute the “ruling” or “dominant” ideas in a given class-divided society ( MECW 5: 59). And they are social in that they directly concern, or indirectly impact upon, the action-guiding understandings of self and society that individuals have. These action-guiding understandings include the dominant legal, political, religious, and philosophical views within particular class-divided societies in periods of stability (MECW 29: 263).

Not all false or misleading beliefs count for Marx as ideological. Honest scientific error, for example can be non-ideological. And ideological belief can be misleading without being strictly false. For example, defenders of the capitalist economy portray what Marx calls the “wage form”, with its exchange of equivalents, as the whole (rather than a part) of the story about the relation between capital and labour, thereby ignoring the exploitation which occurs in the sphere of production. Indeed, the notion of the “falsity” of ideology needs to be expanded beyond the content of the “ideas” in question, to include cases where their origins are in some way contaminated (Geuss 1981: 19–22). Perhaps the only reason I believe something to be the case is that the belief in question has a consoling effect on me. Arguably such a belief is held ideologically, even if it happens to be true. Nevertheless paradigmatic examples of ideology have a false content. For example, ideology often portrays institutions, policies, and decisions which are in the interests of the economically dominant class, as being in the interests of the society as a whole ( MECW 5: 60); and ideology often portrays social and political arrangements which are contingent, or historical, or artificial, as being necessary, or universal, or natural ( MECW 35: 605).

In addition to false or misleading content, ideological beliefs typically have at least two additional characteristics, relating to their social origin and their class function. By the “social origin” of ideology is meant that Marx thinks of these ideas as often originating with, and being reinforced by, the complex structure of class-divided societies—a complex structure in which a deceptive surface appearance is governed by underlying essential relations (Geras 1986: 63–84). Capitalism is seen as especially deceptive in appearance; for example, Marx often contrasts the relative transparency of “exploitation” under feudalism, with the way in which the “wage form” obscures the ratio of necessary and surplus labour in capitalist societies. Ideology stems, in part, from this deceptive surface appearance which makes it difficult to grasp the underlying social flaws that benefit the economically dominant class. Marx portrays the striving to uncover essences concealed by misleading appearances as characteristic of scientific endeavour ( MECW 37, 804). And, in this context, he distinguishes between classical political economy, which strove—albeit not always successfully—to uncover the essential relations often concealed behind misleading appearances, and what he calls vulgar economy, which happily restricts itself to the misleading appearances themselves ( MECW 37, 804).

By the “class function” of ideology is meant that Marx holds that the pervasiveness of ideology is explained by the fact it helps stabilise the economic structure of societies. All sorts of ideas might get generated for all sorts of reasons, but the ones that tend to “stick” (become widely accepted) in class-divided societies do so, not because of their truth, but because they conceal or misrepresent or justify flaws in that society in ways which redound to the benefit of the economically dominant class (Rosen & Wolff 1996: 235–236).

In response critics often see this as just another example of sloppy functional reasoning—purportedly widespread in the Marxist tradition—whereby a general pattern is asserted without the identification of any of the mechanisms which might generate that pattern. In the present case, it is said that Marx never properly explains why the ruling ideas should be those of the ruling class (Elster 1985: 473). Yet there are obvious possible mechanisms here. To give two examples. First, there is the control of the ruling class over the means of mental production, and in particular the print and broadcast media which in capitalist societies are typically owned and controlled by the very wealthy ( MECW 5, 59). A second possible mechanism appeals to the psychological need of individuals for invented narratives that legitimise or justify their social position; for instance, Marx identifies a widespread need, in flawed societies, for the consolatory effects of religion ( MECW 3, 175).

7. State and Politics

This broad heading—the state and politics—could cover very many different issues. To make the present account manageable, only two are addressed here: Marx’s account of the state in capitalist society; and Marx’s account of the fate of the state in communist society. (Consequently, many other important political issues—the nature of pre-capitalist states, relations between states, the political transition to communism, and so on—are not dealt with.)

Marx offers no unified theoretical account of the state in capitalist society. Instead his remarks on this topic are scattered across the course of his activist life, and deeply embedded in discussions of contemporary events, events which most modern readers will know very little about. Providing some initial order to that complexity, Jon Elster helpfully identifies three different models in Marx’s writings of the relationship, in capitalist society, between the political state, on the one hand, and the economically dominant class, on the other. (The next three paragraphs draw heavily on Elster 1985: 409–437.)

First, the “instrumental” model portrays the state as simply a tool, directly controlled by the economically dominant class, in its own interests, at the expense of the interests both of other classes and of the community as a whole. Marx is usually said to endorse the instrumental account in the Communist Manifesto , where he and Engels insist that “the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie” ( MECW 6: 486). On this account, the state might also act against the short term, or the factional, interests of particular capitalists. The picture here is of the state as an instrument directed—presumably by a subset of capitalists or their representatives—in ways which promote the long term interests of the bourgeoisie as a whole. The precise mechanisms which might facilitate that result are not clear in Marx’s writings.

Second, the “class balance” model portrays the state as having interests of its own, with capitalist interests as merely one of the strategic limits on its pursuit of these. This model gets its name from the exceptional social circumstances said to explain the independence of the state in this case. In situations where the social power of the two warring classes of contemporary society—capitalists and workers—are very nearly balanced, the political state (and especially the executive) can gain independence from both, exploiting that conflict in order to promote its own interests (the interests of the political caste). Something like this picture appears in Marx’s discussions of the continued existence of certain absolutist states after the revolutions of 1848, and of the Bonapartist state established in France by the coup of Napoleon III in December 1851. The state now competes with capitalists and proletarians (and is not merely the tool of the former), and by “promising each of the major classes to protect it against the other, the government can rule autonomously” (Elster 1985: 425). On this account, the state has interests of its own, but presumably only gets to pursue them if those promises to others are plausible, finding some reflection in its policies and behaviour. Capitalist interests accordingly remain a political constraint, but they are now only one of the factors constraining the state’s actions rather than constituting its primary goal.

Third, the “abdication” model presents the bourgeoisie as staying away from the direct exercise of political power, but doing this because it is in their economic interests to do so. As Elster notes, strictly speaking, “abdication” here covers two slightly different cases—first, where the bourgeoisie abdicate from the political power that they initially controlled (relevant to France); and, second, where the bourgeoisie abstain from taking political power in the first place (relevant to Britain and Germany)—but they can be treated together. In both cases, Marx identifies a situation where “in order to save its purse, [the bourgeoisie] must forfeit the crown” ( MECW 11: 143). Where the instrumental picture claims that the state acts in the interests of the capitalist class because it is directly controlled by the latter, the abdication picture advances an explanatory connection between the promotion of bourgeois interests and the retreat from the direct exercise of power. Circumstances obtain where “the political rule of the bourgeoisie” turns out to be “incompatible” with its continued economic flourishing, and the bourgeoisie seeks “to get rid of its own political rule in order to get rid of the troubles and dangers of ruling” ( MECW 11: 173). There are several possible explanations of why the bourgeoisie might remain outside of politics in order to promote their own interests. To give three examples: the bourgeoisie might recognise that their own characteristic short-termism could be fatal to their own interests if they exercised direct political as well as economic power; the bourgeoisie might find political rule sufficiently time and effort consuming to withdraw from it, discovering that the economic benefits kept on coming regardless; or the bourgeoisie might appreciate that abdication weakened their class opponents, forcing the proletariat to fight on two fronts (against capital and government) and thereby making it less able to win those struggles.

There are many questions one might have about these three models.

First, one might wonder which of these three models best embodies Marx’s considered view? The instrumental account is the earliest account, which he largely abandons from the early 1850s, presumably noticing how poorly it captured contemporary political realities—in particular, the stable existence of states which were not directly run by the capitalist class, but which still in some way served their interests. That outcome is possible under either of the two other accounts. However, Marx seems to have thought of the class balance model as a temporary solution in exceptional circumstances, and perhaps held that it failed to allow the stable explanatory connection that he sought between the extant political arrangements and the promotion of dominant economic interests. In short, for better or worse, Marx’s considered view looks closer to the abdication account, reflecting his conviction that the central features of political life are explained by the existing economic structure.

Second, one might wonder which model allows greatest “autonomy” to the political state? A weak definition of state autonomy might portray the state as autonomous when it is independent of direct control by the economically dominant class. On this definition, both the class balance and abdication models—but not the instrumental account—seem to provide for autonomy. A stronger definition of state autonomy might require what Elster calls “explanatory autonomy”, which exists

when (and to the extent that) its structure and policies cannot be explained by the interest of an economically dominant class. (Elster 1985: 405)

Only the class balance view seems to allow significant explanatory autonomy. In his preferred abdication account, Marx allows that the state in capitalist society is independent of direct capitalist control, but goes on to claim that its main structures (including that very independence) and policies are ultimately explained by the interests of the capitalist class.

For reasons discussed below (see Section 8 ), Marx declines to say much about the basic structure of a future communist society. However, in the case of the fate of the state, that reluctance is partially mitigated by his view that the institutional arrangements of the Paris Commune prefigured the political dimensions of communist society.

Marx’s views on the nature and fate of the state in communist society are to be distinguished from his infrequent, and subsequently notorious, use of the term “the dictatorship of the proletariat”. (On the infrequency, context, and content, of these uses see Draper 1986 and Hunt 1974.) The idea of “dictatorship” in this historical context has the (ancient) connotation of emergency rule rather than the (modern) connotation of totalitarianism. Marx’s use makes it clear that any such temporary government should be democratic; for instance, in having majority support, and in preserving democratic rights (of speech, association, and so on). However, it is by definition “extra-legal” in that it seeks to establish a new regime and not to preserve an old one. So understood, the dictatorship of the proletariat forms part of the political transition to communist society (a topic not covered here), rather than part of the institutional structure of communist society itself. The “dictatorial”—that is, the temporary and extra-legal—character of this regime ends with establishment of a new and stable polity, and it is the latter which is discussed here (Hunt 1974: 297).

The character of the state in communist society consists, in part, of its form (its institutional arrangements) and its function (the tasks that it undertakes).

Some sense of the form of the state in communist society can be gained from Marx’s engagement with the Paris Commune. His preferred future political arrangements involve a high degree of participation, and the radical “de-professionalisation” of certain public offices. First, Marx is enthusiastic about regular elections, universal suffrage, mandat impératif , recall, open executive proceedings, decentralisation, and so on. Second, he objects to public offices (in the legislature, executive, and judiciary) being the spoils of a political caste, and sought to make them working positions, remunerated at the average worker’s wage, and regularly circulating (through election). This combination of arrangements has been characterised as “democracy without professionals” (Hunt 1974: 365). Marx saw it as reflecting his view that:

Freedom consists in converting the state from an organ superimposed upon society into one completely subordinate to it. ( MECW 24: 94)

Some sense of the function of the state in communist society can be gained from Marx’s distinction between “necessary” tasks that a state would need to undertake in all societies (at least, economically developed societies), and “unnecessary” tasks that a state would only need to undertake in class-divided societies. The difficulty here is less in allowing this distinction, than in deciding what might fall into each category. On the necessary side, Marx appears to require that the state in communist society provide both: democratic solutions to coordination problems (deciding which side of the road traffic should drive on, for instance); and the supply of public goods (health, welfare, education, and so on). On the unnecessary side, Marx seems to think that a communist society might hugely reduce, or even eliminate, the element of organised coercion found in most states (in the form of standing armies, police forces, and so on). At least, this reduction might be feasible once communist society had reached its higher stage (where distribution is based on “the needs principle”), and there is no longer a threat from non-communist societies.

Again, there are many reservations that one might have about this account.

First, many will be sceptical about its feasibility, and perhaps especially of the purported reduction, still less elimination, of state coercion. That scepticism might be motivated by the thought that this would only be possible if communist society were characterised by widespread social and political consensus, and that such consensus is, both unlikely (at least, in modern societies), and undesirable (diversity and disagreement having a value). However, the reduction, or even elimination, of state coercion might be compatible with certain forms of continuing disagreement about the ends and means of communist society. Imagine that a democratic communist polity introduces a new law prohibiting smoking in public places, and that a representative smoker (call her Anne) obeys that law despite being among the minority who wanted this practice permitted. Anne’s motivation for obedience, we can stipulate, is grounded, not in fear of the likely response of bodies of armed persons enforcing the law, but rather in respect for the democratic majority of the community of which she is a part. In short, reasonably strong assumptions about the democratic commitments of individuals might allow the scaling down of organised coercion without having to presume universal agreement amongst citizens on all issues.

Second, some might object to the reference, throughout this section, to the “state” in communist society. It might be said that a polity whose form and functions are so radically transformed—the form by democratic participation and de-professionalisation, the function by eliminating historically unnecessary tasks—is insufficiently “state-like” to be called a state. That is certainly possible, but the terminological claim would appear to assume that there is greater clarity and agreement about just what a state is, either than is presupposed here or than exists in the world. Given that lack of consensus, “state” seems a suitably prudent choice. As well as being consistent with some of Marx’s usage, it avoids prejudging this very issue. However, anyone unmoved by those considerations can simply replace “state”, in this context, with their own preferred alternative.

8. Utopianism

It is well-known that Marx never provided a detailed account of the basic structure of the future communist society that he predicted. This was not simply an omission on his part, but rather reflects his deliberate commitment, as he colloquially has it, to refrain from writing “recipes” for the “restaurants” of the future ( MECW 35: 17, translation amended).

The reasoning that underpins this commitment can be reconstructed from Marx’s engagement with the radical political tradition that he called “utopian socialism”, and whose founding triumvirate were Charles Fourier (1772–1837), Henri Saint-Simon (1760–1825), and Robert Owen (1771–1858). Note that the distinction between Marxian socialism and utopian socialism is not an exhaustive one. Marx happily allows that there are socialists who are neither Marxian nor Utopian; for example, the “feudal socialists” discussed in the Communist Manifesto .

What distinguishes utopian from other socialists is, in large part, their view that providing persuasive constructive plans and blueprints of future socialist arrangements is a legitimate and necessary activity. (The expression “plans and blueprints” is used here to capture the necessary detail of these descriptions, and not to suggest that these designs have to be thought of as “stipulative”, as having to be followed to the letter.) On the utopian account, the socialist future needs to be designed before it can be delivered; the plans and blueprints being intended to guide and motivate socialists in their transformative ambitions. Of course, that Marx is not in this sense utopian does not rule out the possibility of additional (here unspecified) senses in which he might accurately be so described.

Marx’s account of utopian socialism might appear contradictory. It is certainly easy to find not only passages fiercely criticising utopian authors and texts, but also passages generously praising them. However, that criticism and that praise turn out to attach to slightly different targets, revealing an underlying and consistent structure to his account.

That underlying structure rests on two main distinctions. The first distinction is a chronological one running between the founding triumvirate, on the one hand, and second and subsequent generations of utopian socialists, on the other. (These later generations including both loyal followers of the founding triumvirate, and independent later figures such as Étienne Cabet (1788–1856)). The second distinction is a substantive one running between the critical part of utopian writings (the portrayal of faults within contemporary capitalist society), on the one hand, and the constructive part of utopian writings (the detailed description of the ideal socialist future), on the other.

Note that these distinctions underpin the asymmetry of Marx’s assessment of utopian socialism. Simply put: he is more enthusiastic and positive about the achievements of the first generation of utopians, by comparison with those of second and subsequent generations; and he is more enthusiastic and positive about the utopians’ criticism of contemporary society, by comparison with the utopians’ constructive endeavours.

The remainder of this section will focus on Marx’s disapproval of the constructive endeavours of the utopians.

In trying to organise and understand Marx’s various criticisms of utopianism, it is helpful to distinguish between foundational and non-foundational variants. (This distinction is intended to be exhaustive, in that all of his criticisms of utopianism will fall into one of these two categories.) Non-foundational criticisms of utopian socialism are those which, if sound, would provide us with a reason to reject views which might be held by, or even be characteristic of, utopian socialists, but which are not constitutive of their utopianism. That is, they would give us a reason to abandon the relevant beliefs, or to criticise those (including utopians) who held them, but they would not give us cause to reject utopianism as such. In contrast, foundational criticisms of utopian socialism are those which, if sound, would provide us with a reason to reject utopianism as such; that is, a reason to refrain from engaging in socialist design, a reason not to describe in relevant detail the socialist society of the future. (Of course, that reason might not be decisive, all things considered, but it would still count against utopianism per se.)

Many of Marx’s best-known criticisms of utopian socialism are non-foundational. For instance, in the Communist Manifesto , he complains that utopian socialists hold a mistaken “ahistorical” view of social change. The utopians purportedly fail to understand that the achievement of socialism depends on conditions which can only emerge at a certain stage of historical development. They might, for instance, recognise that there are strategic preconditions for socialism (for instance, the right blueprint and sufficient will to put it into practice), but (mistakenly on Marx’s account) imagine that those preconditions could have appeared at any point in time. This complaint is non-foundational in that one can accept that there are historical conditions for establishing a socialist society, and that the utopian socialists fail to understand this, without thereby having a reason to abandon utopianism as such. A commitment to the necessity and desirability of socialist design does not require one to hold an “ahistorical” view of social change.

Assessing the soundness of non-foundational criticisms, and their relevance to the utopian socialist tradition, is a complicated task (see Leopold 2018). However, even if sound and relevant, these criticisms would provide no reason to abandon utopianism as such . Consequently, they are pursued no further here. Instead, the focus is on the three main foundational arguments against utopianism that can be located in Marx’s writings; namely, that utopian plans and blueprints are necessarily undemocratic, impossible, and redundant (see Leopold 2016).

Marx’s first argument involves a normative claim that utopian plans and blueprints are undemocratic . (“Democracy” here connoting individual and collective self-determination, rather than political forms of governance.) The basic argument runs: that it is undemocratic to limit the self-determination of individuals; that providing a plan or blueprint for a socialist society limits the self-determination of individuals; and that therefore the provision of plans and blueprints for a socialist society is undemocratic. If we add in the assumption that undemocratic means are undesirable; then we can conclude that it is undesirable to provide plans or blueprints of a future socialist society. One central reason for resisting this argument is that it is hard to identify a plausible account of the conditions for self-determination, according to which it is necessarily true that merely providing a socialist plan or blueprint restricts self-determination. Indeed, one might heretically think that detailed plans and blueprints often tend to promote self-determination, helping individuals think about where it is they want to go, and how they want to get there.

Marx’s second argument rests on an epistemological claim that that utopian plans and blueprints are impossible , because they require accurate knowledge of the future of a kind which cannot be had. The basic argument starts from the assumption that to be of any use a blueprint must facilitate the construction of a future socialist society. Moreover, to facilitate the construction of a future socialist society a blueprint must be completely accurate; and to be completely accurate a blueprint must predict all the relevant circumstances of that future society. However, since it is not possible—given the complexity of the social world and the limitations of human nature—to predict all the relevant circumstances of that future society, we can conclude that socialist blueprints are of no use. One central reason for resisting this argument is that, whilst it is hard to deny that completely accurate plans are impossible (given the complexity of the world and the limitations of human understanding), the claim that only completely accurate plans are useful seems doubtful. Plans are not simply predictions, and providing less than wholly accurate plans for ourselves often forms part of the process whereby we help determine the future for ourselves (insofar as that is possible).

Marx’s third argument depends on an empirical claim that utopian plans and blueprints are unnecessary , because satisfactory solutions to social problems emerge automatically from the unfolding of the historical process without themselves needing to be designed. The basic argument runs as follows: that utopian blueprints describe the basic structure of the socialist society of the future; and that such blueprints are necessary if and only if the basic structure of future socialist society needs to be designed. However, given that the basic structure of the future socialist society develops automatically (without design assistance) within capitalist society; and that the role of human agency in this unfolding historical process is to deliver (not design) that basic structure, Marx concludes that utopian blueprints are redundant. Reasons for resisting this argument include scepticism about both Marx’s reasoning and the empirical record. Marx is certain that humankind does not need to design the basic structure of the future socialist society, but it is not really made clear who or what does that designing in its place. Moreover, the path of historical development since Marx’s day does not obviously confirm the complex empirical claim that the basic structure of socialist society is developing automatically within existing capitalism, needing only to be delivered (and not designed) by human agency.

This brief discussion suggests that there are cogent grounds for doubting Marx’s claim that utopian plans and blueprints are necessarily undemocratic, impossible, and redundant.

Finally, recall that Marx is less enthusiastic about the second and subsequent generations of utopians, than he is about the original triumvirate. We might reasonably wonder about the rationale for greater criticism of later utopians. It is important to recognise that it is not that second and subsequent generations make more or grosser errors than the original triumvirate. (Indeed, Marx appears to think that all these different generations largely held the same views, and made the same mistakes). The relevant difference is rather that, by comparison with their successors, this first generation were not to blame for those errors. In short, the rationale behind Marx’s preference for the first over the second and subsequent generations of utopian socialists is based on an understanding of historical development and an associated notion of culpability .

Marx held that the intellectual formation of this first generation took place in a historical context (the cusp of the eighteenth and nineteenth centuries) which was sufficiently developed to provoke socialist criticism, but not sufficiently developed for that socialist criticism to escape serious misunderstandings (Cohen 2000: 51). Since neither the material conditions of modern society, nor the historical agent capable of bringing socialism about, were sufficiently developed, this first generation were bound to develop faulty accounts of the nature of, and transition to, socialism. However, that defence—the historical unavoidability of error—is not available to subsequent generations who, despite significantly changed circumstances, hold fast to the original views of their intellectual forerunners. Marx maintains that more recent utopians, unlike the original triumvirate, really ought to know better.

At this point, we might be expected briefly to survey Marx’s legacy.

That legacy is often elaborated in terms of movements and thinkers. However, so understood, the controversy and scale of that legacy make brevity impossible, and this entry is already long enough. All we can do here is gesture at the history and mention some further reading.

The chronology here might provisionally be divided into three historical periods: from Marx’s death until the Russia Revolution (1917); from the Russian Revolution to the fall of the Berlin Wall (1989); and since 1989. It seems hard to say much that is certain about the last of these periods, but some generalisations about the first two might be hazarded.

That first period of “Classical Marxism” can be thought of in two generational waves. The first smaller group of theorists was associated with the Second International, and includes Karl Kautsky (1854–1938) and Plekhanov. The succeeding more activist generation includes Rosa Luxemburg (1871–1919), V.I. Lenin (1870–1924) and Leon Trotsky (1879–1940).

The second period is perhaps dominated by “Soviet Marxism” and the critical reaction from other Marxists that it provoked. The repressive bureaucratic regimes which solidified in the Soviet Union and Eastern Europe repressed independent theoretical work, including scholarly editorial work on the writings of Marx and Engels. However, they also provoked a critical reaction in the form of a body of thought often called “Western Marxism”, usually said to include the work of Antonio Gramsci (1891–1937), Theodor Adorno (1903–1969), and Althusser. The later parts of this period saw the continuing development of “Critical Theory”, as well as the birth of currents such as “Analytical Marxism” whose longer term impact is uncertain.

These first two periods are both partly covered by the Polish philosopher and historian of ideas, Leszek Kołakowski, in the final two volumes of his encyclopaedic three volume Main Currents of Marxism (1976 [1978]). A succinct critical account of the emergence and distinctive character of Western Marxism is provided by Perry Anderson in his Considerations on Western Marxism (1976). And some of the more philosophically interesting authors in this latter tradition are also covered elsewhere in this Encyclopaedia (see the Related Entries section below). Finally, and edging a little into the third of these historical periods, Christoph Henning offers an account of the (mis) readings of Marx—especially those replacing social theory with moral philosophy—in German philosophy from Heidegger to Habermas and beyond, in his Philosophy After Marx (2014).

However, we might also think of Marx’s legacy, less in terms of thinkers and movements, and more in terms of reasons for wanting to study Marx’s ideas. In that context, we would stress that this is not simply a question of the truth of his various substantive claims. The work of philosophers is, of course, also valued for the originality, insight, potential, and so on, that it may also contain. And, so judged, Marx’s writings have much to offer.

The various strands of Marx’s thought surveyed here include his philosophical anthropology, his theory of history, his critical engagement with the economic and political dimensions of capitalism, and a frustratingly vague outline of what might replace it. Whatever the connections between these threads, it seems implausible to suggest that Marx’s ideas form a system which has to be swallowed or rejected in its entirety. It might, for instance, be that Marx’s diagnosis looks more persuasive than his remedies. Readers may have little confidence in his solutions, but that does not mean that the problems he identifies are not acute.

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Adorno, Theodor W. | alienation | Althusser, Louis | critical theory | exploitation | Feuerbach, Ludwig Andreas | Hegel, Georg Wilhelm Friedrich | Lukács, Georg [György] | revolution | socialism

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Marx’s theory of capital in the history of economics: Marx’s concept of capital, classical school, Austrian School, and growth theory

Kiichiro yagi.

Setsunan University, Neyagawa, Osaka Japan

This was originally written in mid-2018 to celebrate the 200-year anniversary of Karl Marx’s birth. Its aim is to identify the position of Marx’s theory of capital in the history of economics. Thus, this article discusses Marx’s critical reception of his predecessors and the investigation after him. In this respect, Hicks’ distinction of capital theoreticians between “fundists” and “materialists” is useful. Marx’s view of capital shows several fundist characteristics in line with the classical economists preceding him. However, viewed from the materialistic perspective of capital theory, he had successors in the Russian planners of socialist centralized economy in the twentieth century. The peculiarity of Marx’s capital theory lies in its critical dimension, which supersedes the positivistic theorizing of ordinary economists. Marx would recognize the relationship of production that emerges out of the antagonistic split between subjective and objective elements (“primitive accumulation”). Thus, we must now ask if two centuries of mankind’s history has discovered a solution or made any progress in this respect.

Three moments that compose Marx’s concept of capital

What place does Marx’s theory of capital occupy in the history of economics? 1 One difficulty in answering this question is that his theory of capital has plural dimensions, so it is hard to briefly summarize. As most people know, Marx’s lifework, Capital , has the subtitle A Critique of Political Economy . This means that his theory of capital is located both on a positive dimension, but also on a critical dimension. Here, we are not using the term “positive” and “critical” in the sense of the author’s political attitudes. We use this pair to suggest the level of reflection—whereas “positive” denotes a flat description of the term such as a definition of, or generalization about phenomena, “critical” means the quest for the essence that is revealed by reflection.

From the past to the present, most researchers stayed in the domain of positivist science and refrained from entering the “critical” dimension due to their fear of speculation. Thus, at first, on the level of a simple comparison of capital theories, we must remain in the positive dimension of the historical development of economic science. However, we hope that by reflecting on the historical constellation of theoretical development, we will be able to attain the critical dimension of this discipline as a social science.

In his first draft of System of the Critique of Political Economy that Marx wrote in the year of 1857, 2 he presents a summary of his concept of capital with three moments.

The third moment to be developed in the formation of the concept of capital is original accumulation as against labor, hence the still objectless labor vis-à-vis accumulation. The first moment took its point of departure from value, as it arose out of and presupposed circulation. This was the simple concept of capital; money on the direct path to becoming capital; the second moment proceeded from capital as the presupposition and result of production; the third moment posits capital as a specific unity of circulation and production. (Relation between capital and labor, capitalist and worker itself [posited] as a result of the production process.) (Marx 1973 , p. 319) 3

We paraphrase them in reference to the arguments in his later work, Capital (Marx 1867 , 1885 , 1894 ). The first is “the simple concept of capital; money on the direct path to becoming capital” (Marx 1973 , p. 319). This is the definition of capital or “the general formula for capital” (Marx 1967 , p. 153), as seen from the sphere of circulation corresponding to M–C–M' from the fourth chapter in the first volume of Capital on the transformation of money to capital. The increase in value provides money with the motivation of investment, thus transforming money into capital. With this element, capital is conceived as having “self-expanding value” (ibid., p. 152).

However, this remains an abstract concept of capital because the realization of the transformation of money into capital does not take place without leaving the sphere of circulation to enter the sphere of production. The second moment proceeds “from capital as the presupposition and result of production.” This is the definition of capital in its substantial aspect. Capital is not only the value that transforms itself into the subjective and objective elements of the production process, but also the reproduced value destined for further production. Marx understood the substance of capital in its various forms in such a precondition as well as a result of the circulation of capital. This substantial dimension of Marx’s concept of capital has commonalities with the classical economics from François Quesnay and Adam Smith to David Ricardo and John Stuart Mill. It is in this substantial aspect that the normal level of comparison in capital theory between Marx and other economists is made. We would regard such a comparison as remaining in the positive dimension of theory of capital.

Next comes the revelation of class relations within the concept of capital. “The third moment to be developed in the formation of the concept of capital is original accumulation as against labor, hence the still objectless labor vis-à-vis accumulation.” Marx envisaged in the preconditions, as well as in the results, of the capitalist system of production the accumulation of capital in monetary form on one side and the mass of laborers on the other—laborers that cannot live without selling their labor power due to their separation from the means of production. He called this “the original accumulation that is opposed to labor” and regarded it as the unified result of production and circulation of capital. Historically, the “original accumulation” ( ursprüngliche Accumulation ) is the antecedent to proper capitalist accumulation. However, this division is reproduced by the latter in an enlarged scale. The “original accumulation” of capital, i.e., the division of the subjective and objective conditions of production, represents the class relations that are reproduced by the total process of circulation and production under the hegemony of capital. In Marx’s view, the “third moment posits capital as a specific unity of circulation and production,” as we quoted before.

A glance into the conclusive part of the first volume of Capital , we can at once see that Marx kept this moment as his core insight of his analysis of the capitalist production. He named the historical process or the reorganization of the subjective and objective elements of production “primitive accumulation.” (Marx 1967 , p. 668).

The capitalist system pre-supposes the complete separation of the labourers from all property in the means by which they can realise their labour. As soon as capitalist production is once on its own legs, it not only maintains this separation, but reproduces it on a continually extending scale. (ibid., p. 668) 4

Marx’s reproduction view of capital

Hodgskin and ramsay in theories of surplus value.

Marx’s Theories of Surplus Value occupies a considerably large portion of the manuscript that he wrote between 1861 and 1863 in 23 notebooks. When he began writing this manuscript, he would continue A Contribution to the Critique of Political Economy (Marx 1970 ), which had been published in 1859 (Marx 1859 ) as the first and second chapter (on commodity and money, respectively) of the first book on capital in the frame of his uncompleted master work, System of a Critique of Political Economy . Critical commentaries on previous literature appeared in this manuscript because Marx was following the style of Contribution in which critical assessments of preceding literature appeared in each chapter. Thus, we can regard the commentary part of the 1861–1863 manuscript as his assessment of previous literature on the theory of capital. Indeed, it was Marx himself that named this commentary “theories of surplus value”—indicating that its main theme is nothing other than capital, since the exploitation of surplus value was, in Marx’s view, the essential function of capital.

Naturally, the main literature that Marx examined in his 1861–1863 manuscript commentary consists of classical authors such as François Quesnay, Adam Smith, David Ricardo, and Ricardian economists. This corresponds to the second moment of capital concept, its substantial element being wages and the means of production. Was there anyone among those authors listed in this manuscript who anticipated the third critical moment of capital? In the final part of the manuscript, we find several sections that deal with opponents of capital as an advance (e.g., Thomas Hodgskin and others), skeptics of the function of wage capital (e.g., George Ramsay and Antoine E. Cherbuliez), and a historical critique of capital (e.g., Richard Jones).

Hodgskin is most clear in his devastating criticism of the concept capital which was prevalent among classical economists. He rejected the claim of capitalists for profit by denying the existence of the accumulation of workers’ necessaries in the hands of capitalists. He considered wage goods as the product of the “coexisting labor” of fellow workers. To him, it was only a trick of money that workers were assumed to depend on capitalists to acquire their subsistence in the form of wages. He further applied this “coexisting labor” perspective to the materials and instruments for production. Thus, “the effects attributed to a stock of commodities, under the name of circulating capital, are caused by coexisting labor” (Hodgskin 1825 , p. 9; Cited in Marx 1963–1971 , Pt.3, p. 268; Man. 867). Hodgskin denied the advance view of circulating capital held by classical economists. Marx summarizes this criticism in his own words:

[Raw] cotton, yarn, fabric, are not only produced one after the other and from one another, but they are produced and reproduced simultaneously, alongside one another. What appears as the effect of antecedent labor, if one considers the production process of the individual commodity, present itself at the same time as the effect of coexisting labor, if one considers the reproduction process of the commodity, that is, if one considers this production process in its continuous motion and in the entirety of conditions, and not merely an isolated action or a limited part of it. There exists not only a cycle comprising various phases, but all the phases of the commodity are simultaneously produced in the various spheres and branches of production. (Marx 1963–1971 , Pt. 3, p. 279; Man.866)

In this reproduction view, the temporal sequence in the production of individual goods is replaced by a synchronized relationship of parallel production. Here, we must pay attention to the shift of Marx’s viewpoint from the production of individual goods to the total process of reproduction. The advance view of capital, in the form of both wage goods and productive goods, seems to be inevitable in the individual production process and disappears when one grasps the entire production process and its reproduction of the preconditions for individual production.

However, Marx noticed that Hodgskin’s criticism remained as a naïve negation of the significance of capital. Marx admitted that the real dominance of capital over labor in their direct relationship in the individual process of production included the purchase of labor as a commodity. Workers cannot buy their necessaries directly from their fellow workers with the product of their labor. They can only do so after receiving first from capitalists (i.e., employer) a draft (i.e., money); “a draft moreover which the capitalist is entitled to issue only thanks to the worker’s past, present or future product” (ibid., 293; Man. 877). Wage labor is the ground for the mystification of the conditions of reproduction in the form of capital. In his critical comments on Ramsay ( 1836 ), who would separate wages as circulating capital from other means of production, he wrote:

What Ramsay overlooks is that if the means of subsistence of the workers did not confront them as “capital” (as circulating capital, as he calls it), neither would the objective conditions of labor confront them as “capital”, as “fixed capital”, as he calls it. (ibid., p. 328; Man.XVIII-1086)

In one word:

Capital—that is, the social form of the means of reproduction assumed on the basis of wage-labor. (ibid.)

This is Marx’s most peculiar viewpoint, which is alien to bourgeois economists that took wage labor, and the employer’s right of appropriation of the product of that labor, for granted. It goes only one step further from the negation of “accumulation by capitalists” to attain to the secret of “original accumulation,” i.e., not the accumulation from production but the antagonistic split of the subjective and objective elements of production, which is the precondition for capitalist relations of production.

Marx’s another criticism on Hodgskin consist in his relative neglect of the significance of the objective element, the material means of production. To Marx, “the stage of the development of the productivity of labor…comprises not only the skill and capacity of the worker, but likewise the material means which this labor has created and which it daily renews” (ibid., p. 294; Man. 877). As capital, it takes the form of constant capital, of fixed capital in particular. However, a problem may arise here—whether the synchronized view of reproduction is applicable to the reproduction process using fixed capital.

We have seen that the whole of production presupposes the simultaneous reproduction of the required constituent parts and product in their different forms as raw materials, semi-manufactured goods, etc. But all fixed capital presupposes future labor for its reproduction and for the reproduction of its equivalent, without which it cannot be reproduced. (ibid., p. 292; Man. 876)

We will return to this problem when we consider the determination of the labor value of the product of capitalist production.

Consequences of reproduction view

Marx’s critical commentaries on Hodgskin and others revealed his dualistic view of production. Marx did not adopt the classical “advance” view of capital, at least in reference to wage capital (i.e., variable capital), and assimilated Hodgskin’s concept of “coexisting labor” in his total reproduction framework covering simultaneous production processes of all interrelated trades and industries. But this perspective did not deny the view of the individual production process in which new commodities are produced by bestowing fresh labor on materials with the help of the productive apparatus (i.e., fixed capital). In this advance view, a single stream that flows through an individual branch of production is the characteristic feature, while parallelism prevails in the reproduction view.

The shift from the individual production process to the total reproduction process is also clear in the first manuscript of volume 2 of Capital (Circulation Process of Capital), written in 1865. In the planned third chapter, “Circulation and Reproduction,” Marx sketched a picture of the entire reproduction process in a subsection entitled “Parallelism, Stage Following, Upward Line, Circulation of Reproduction Process ( Parallelismus, Stufenfolge, Aufsteigende Linie, Kreislauf der Reproductionsprocesses )” (Marx 1988a , b , MEGA, Abt. II. Bd.4-1, S. 363).

Because the total process of production is the same with the process of reproduction, the reproduction of products goes in all of their various phases at the same time. What is characteristic here is the continuity of the synchronization, continuity of going side by side, or parallelism of all processes of production. They may retain the relations of domination and subordination, or mutual dependence of their products. (My translation) 5

In this first draft of the Circulation Process of Capital , Marx makes a few significant remarks on several elements of his theory on the process of reproduction.

The first is that not only parallel production, but the replenishment of productively consumed elements in due time, i.e., before the start of the reproduction, is necessary (ibid., S. 367; Man. I-143). This presupposes the temporal coordination of the circulation of capital in both value as well as material.

The second is the flexibility in the amount and the “changeability” in the material form of capital in its reproduction. Evidently, this flexibility/changeability exists within a given limit, but it is important to understand the reproduction process as an adaptation process run by the profit motive of capitalists (ibid., S. 369; Man. I-145).

The third is that the consumption of individuals is also an inevitable intrinsic element of the reproduction process seen in total (ibid., S. 370; Man. I-283). This is not confined to the consumption of workers that reproduces the labor force of workers, but also the consumption of non-workers, including capitalists. Both are necessary for the circulation of the total economy.

Marx admitted the reformulation of the concept of value together with this shift in perspective from production to reproduction. From the viewpoint of the latter, the value of commodities is determined not by the quantity of the embodied labor, but the quantity of socially necessary labor required for their reproduction.

The definition of value by the necessary labor hours embodied in a commodity alters to, or receives a further definition, that its value is determined by the (socially) necessary labor hours for its reproduction when the production process as a whole is considered. What determines the value of commodities is not the labor hour necessary for their production but that for their reproduction, so far as they are not sold immediately, or the process of circulation gives enough time for a deviation between the bestowed quantity of labor and the quantity for their reproduction to emerge. (My translation) 6

This passage echoes Michio Morishima’s argument on Marx’s dual definition of value, i.e., embodied labor and socially necessary labor. 7 In his modern interpretation of Marx’s theory of value, while the former is determined by simultaneous equations that are now known as Dmitriev equations, the latter is derived as the sum of labor inputs required to obtain one unit of net product as counted by Leontief’s input–output equations. If Morishima’s interpretation is correct, socially necessary 8 labor signifies the sum of coexisting labor, as maintained by Hodgkin. Can this passage support Morishima’s argument? To our regret, judging from the text in which the cited passage is found, we must say no. The advanced determination of value from the viewpoint of reproduction in the cited passage signifies only socially necessary labor for new production.

Here, it should be noted that Marx had come very close to anticipating such “socially necessary labor” as Morishima posited. Marx had the view of reproduction that plural production processes run in parallel. His failure to apply simultaneous equations to the determination of value prevented him from making forward progress and the task was therefore left for his successors.

However, reproduction, too, needs time. The production periods of various branches differ. The period of selling and purchasing must also be considered. Furthermore, as previously mentioned, fixed capital, such as machines and buildings, endure longer than the production period of the product concerned. In the first 1865 draft of the second book of Capital , as well as in its present version edited by Friedrich Engels, the common linear depreciation method was adopted. The text cited above is also found in a section discussing the reproduction period of fixed capital. From the viewpoint of the original embodied definition of value, fixed capital adds a part of its value during each production period of the product concerned. However, from the viewpoint of reproduction, its estimated value for its future replacement differs from its past original value. Here, Marx did not miss the arbitrary and flexible nature of the evaluation of the reproductive value of fixed capital. 9

Criticism of Marx and capital theory

The decline of the classical concept of capital.

When Marx was writing Capital , John Stuart Mill’s Principles of Political Economy was the standard work of classical economics. Mill adopted from his predecessors the view of capital as an “accumulated stock of the produce of labor” to support the production and to maintain productive labor (Mill 1848 , Book 1, Chap. 3) and placed it in an early equilibrium view based on supply and demand analysis. In the fourth chapter of Principles , Mill surmised his view on capital in the following several “fundamental propositions”:

  • Industry is limited by capital
  • An increase in capital gives increased employment to labor, without assignable bounds
  • Capital is the result of savings and all capital is consumed
  • Capital is maintained by perpetual reproduction, as shown in the recovery of countries from devastation (ibid., Chap.4)

The foundation of these propositions is the notorious theory of capital as “wages fund,” although Mill admitted its increase and restoration by accumulation and reproduction. In a lecture to the General Council of the First International Workingmen’s Association, Marx refuted the negative view of the wage struggle grounded in this theory. 10 Although his opponent, John Weston, was not a scholar but a veteran Owenist, Marx had to convey the results of his long-continued investigation in plain language. Of course, he stressed workers’ resistance against wage cuts and long working days. He supported their demand for wage hikes during phases of increased productivity. In Marx’s view, the labor movement is directly related to the production and distribution of “surplus value.” Although Marx maintained the classical concept of “wages fund” under the name “variable capital,” its true significance is rooted in its relationship with “surplus value.”

Hicks ( 1974 ) classified theories of capital in the history of economics into the camp of fundists and that of materialists. The former regard the essence of capital in the value invested in production, since merchants see in their commodities the funds that they invested in their purchase. Economists who stress original inputs (i.e., labor or land, or both) and regard capital as an intermediate product on the way to the final products belong to the camp of fundists.

Hicks considered most classical economists, including Marx, fundists. This naming is like the term “advance” view of capital in our usage. The latter, materialists, considers capital goods as real entities that can serve production process (and thus, indirectly, serve consumption). The value of capital goods is derived from their service in production or consumption, not from the value (or labor) bestowed upon them. In Hicks’s view, most modern neo-classicists since Léon Walras and Alfred Marshall were materialists for whom capital meant the physical capital goods themselves, particularly production facilities. This view is solid and strict in so far as each individual capital good is specified and measured in material units. The strictest materialist is probably John von Neumann, who postulated that every durable means of production transforms itself into the same productive means, one-period senior capital goods, and integrated them into the process of joint production. However, in most cases, when materialists deduce any meaningful result from their analysis, they aggregate all individual capital goods into one unit, K , to constitute the productive function together with aggregated labor, L  =  P  ( K, L ). 11

The decline of the classical concept of capital began with Mill’s so-called recantation of the wage-fund doctrine in 1869. After 2 years, William St. Jevons and Carl Menger published their books, which were based on the value determination of marginal utility. However, despite the proximity in years, the shift from fundism to materialism is not the same as the move from the classical to the neo-classical school. Jevons ( 1871 ) retained the fundist view in conceiving the transformation of “free capital” into real capital. Even Marshall ( 1890 ) was ambiguous in this respect. 12 A significant stream of fundism that survived through the twentieth century is the Austrian capital theory postulated by scholars like Eugen von Böhm-Bawerk and Friedrich Hayek. This school focused their attention on the time structure of the production process. It is no coincidence that Böhm-Bawerk has emerged as the most prominent critic of Marx in the history of economics. Therefore, we will now compare Böhm-Bawerk and Marx in terms of their conceptions of capital and time in the following section.

The time structure of capital

In 1894, in his open criticism of Marx, Böhm-Bawerk highlighted the inconsistencies between labor value in the first volume of Capital and production price in its third volume. Marxists would defend their master by arguing that the surplus value in the first volume is transformed into profit, or total labor value into aggregate prices, with a general rate of profit in the third volume. Since then, many ideas have been provided to solve the so-called “transformation” riddle. 13

Böhm-Bawerk had good reason to challenge Marx’s theory of value and capital. In the mid of 1980s, Takashi Negishi discussed Böhm-Bawerk’s criticism of Marx in the relation of his time preference ( Zeitagio ) theory of interest. 14 Negishi found that Böhm-Bawerk had already, in 1884, criticized Marx in History and Critique of Interest Theories (Böhm-Bawerk 1983 ). 15 In this book, Böhm-Bawerk criticized Johann C. Rodbertus’s surplus ( Rente ) theory together with Marx’s surplus value theory and posited that the exploitation of surplus value is not validated when the identity of goods at a different time is not assumed. Böhm-Bawerk’s own theory of interest, the theory of the premium of time, was presented in the sequel, Positive Theory of Capital (1889), which, together with the aforementioned work, comprises Böhm-Bawerk’s lifework, Capital and Interest ( Kapital und Kapitalzins ) (1884–1889). 16

Present productive goods, including labor, produce consumable goods only after time has elapsed. Therefore, the former must endure a discount in value compared with the acquisition of the latter. In other words, those that can provide present consumable goods can acquire a premium compared with those who can have them only in the future. 17 This premium emerges as the profit of capitalist (employer) when he provides workers (employee) the present consumable goods as wage. Then, the relationship between capitalists and workers changes from that of exploitation to that of an exchange of present goods for future goods. Böhm-Bawerk argued that, if the preference of present (consumable) goods to future goods is positive, it can explain a positive rate of interest on present capital.

Such an explanation of exchange with a time preference signifies Böhm-Bawerk’s characteristic neo-classicalism. However, Böhm-Bawerk was a fundist that considered production to be a time-consuming process (roundabout production) promoted by the original input of labor and understood capital as the total of intermediate products in that process. He regarded capital as an “intermediate product” that exists during the process of roundabout production. It is the provisional result of the labor input that remains in the production process for a certain time. Thus, in his view, capital has two elements—labor and time. In its simplest version, the quantity of capital of a production process consists of the sum of each labor input multiplied by the time spent (i.e., stay period) in the production process. Böhm-Bawerk devised a measure of the capital intensity of a production process by inventing the index of “average production period.” 18 Simplest version of this index—the average weighted by the stay period—is not valid in the case of the compound interest rate. If such a time index was possible, it would represent the magnitude of capital and could function as a version of the neo-classical production function in the form of P ( L , Average production period ) .

The production process that Böhm-Bawerk conceived is illustrated in Fig.  1 with an example of the five-stage production model. Labor input 1 ( L 1) at the beginning of Stage 1 will become the final product after five stages of production. Additional labor input in the Stage 2 ( L 2) becomes the final product after four stages. L 3 after three stages, L 4 after two stages, L 5 after one stage. When we see the process in relation to the inputs of labor and capital, the last stage of production (Stage 5) consists of intermediate product K 5 and labor L 5. K 5 is the product of K 4 and L 4 from the previous stage. K 4 is the product of K 3 and L 3, K 3 of K 2 and L 2, and K 2 is one stage senior to K 1, which is the direct result of the original labor input, L 1.

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Capital in Böhm-Bawerk’s production process

Classical economists as well as Marx viewed production as a combination of labor and material inputs (i.e., the means of production). In the scheme shown in Fig.  1 , the latter is decomposed into the input of labor and the intermediate product produced in the previous stage. Thus, the final product is the result of the series of labor inputs in all preceding stages. In the case of Fig.  1 , these are L 1 , L 2 , L 3 , L 4, and L 5. Since the material inputs (i.e., intermediate product) in every production decline as we back track through each stage of production, viewing the entire production process as a cumulative series of labor inputs over the whole stage is also possible. In Fig.  1 , the simple version of the labor value theory adds them together and maintains the sum as the embodied labor in the final product: L 1 +  L 2 +  L 3 +  L 4 +  L 5.

However, Ricardo already noticed in his Principles (Ricardo 1817 ) that the lapse of time inevitably modifies a simple labor value theory, since the capital bestowed in the previous period requires compensation, assuming that the profit rate is positive. If we follow Ricardo’s suggestion, denoting the general profit rate as r , the modified labor value should be:

If we take the Austrian view that neither the means of production nor labor has an independent value as such but both derive their value from the final product that can appeal to consumers and thus acquires value based on their marginal utility, the value of the preceding intermediate product as well as the labor input must be discounted for the time interval required to obtain the final consumable product. If we use discount rate ρ , the value attributed to labor input L 5 (wage) and material capital input ( K 5) is the subjective value (i.e., marginal utility) of the final product, divided by (1 + ρ). By further operation of discount, we receive a series of discounts by (1 + ρ) 2 , (1 + ρ) 3 , (1 + ρ) 4 , and (1 + ρ) 5 . Böhm-Bawerk’s interest theory considers this discount rate to be the interest rate, that is, r = ρ .

Negishi approved of Böhm-Bawerk’s criticism that Marx’s theory of exploitation assumed an ungrounded identification of goods at different times. Although he admitted that such identification could only prevail in a strict, stationary economy such as in the case of simple reproduction, he declared that so long as a surplus exists, an economy begins growth that violates such an identification. However, Negishi’s logic is purely neo-classical in the sense that he denied any structural relationship with the surplus in society and forgot that the source of accumulation is also the surplus that flows into the capitalist class as the profits of capital.

If we adopt the reproduction view as suggested in the previous section, all the labor inputs to the system of production appear simultaneously. The problem shifts from the difference of time to that of the difference of labor in various related production branches. In this respect, Marx assumed the tendency toward the equalization of skills and the universalization of the working force under capitalism as the essential foundations for the formation of a united working class. Then, we can assume the same (daily) wage for workers in all branches and assume the same length of a working day. This implies the same rate of surplus value (or rate of exploitation) holds in all production branches. The theory of labor value can function as a system of prices (value price) that compensates all labor inputs equally and guarantees reproduction at the same size. As long as the extended input matrix including wage (variable capital) is productive, there exists surplus labor and surplus products. However, these two surpluses are the result of the conditions in which the daily consumption of workers is fixed from the beginning.

Negishi suggested that reproduction with a surplus inevitably triggers growth, under which the command of present goods enables an increased amount of future goods. He maintained that this undermines the validity of the labor theory of value. We can reject this criticism by adopting the reproduction view of value theory. We can use the labor value theory to judge the rate of exploitation (i.e., the rate of distribution) independently from the wage-profit (interest) rate frontier and without interfering in price formation under this choice. As Piero Sraffa’s w − r frontier suggests, production with a surplus itself shows only the possibility of the choice of distribution (Sraffa 1960 ). But such a dualistic view introduces the problem of explaining the relationship of the value system and the price system and interlinking the key figures of both—exploitation rate and profit rate, surplus value and profit, and total value and total price.

Since Morishima and Seton ( 1961 ), it has been known that on the von Neumann path of optimal growth in which all branches of production grow at the same rate, the postulates of the so-called transformation problem—i.e., (1) profit rate in value term = profit rate in price term, (2) total value = total price, and (3) total surplus value = total profit—hold. In this steady-state growth path, the price of every product must guarantee the increased input of the same growth rate. In optimal growth, the growth rate equals the profit rate ( g max  =  r ). This equality reflects the necessity of reproduction, since, in the case of extended reproduction, reproduction requires an increased amount of input, not the same amount.

Growth theory and capital

From capital theory to macroeconomics.

The progress of capital theory in the twentieth century was mainly achieved in terms of materialism. Walras considered capital substantially as durable capital goods that have no relationship with labor or wages. Capital is the source of revenue, the value of which is derived from capitalization of the revenue (net profit). On the market of capital goods, this valuation on the demand side and the production cost on the supply side are equalized. However, capitalization requires a positive interest rate. To fulfill this precondition, Walras formulated an imaginary commodity E that promises the owner perpetual net revenue. If the total income of a society surpasses its total consumption and the difference between the two flows into savings in the form of purchases of the commodity E , it encourages positive savings, which stimulates the growth of the economy and disturbs the equilibrium (Walras 1954 ). Hicks ( 1939 ) solved this problem by postulating a succession of temporary equilibria.

In the fundists camp, Wicksell ( 1936 ) integrated Böhm-Bawerk’s capital theory into the Walrasian equilibrium analysis. Although Wicksell added the use of land in parallel to labor as the original inputs, his theory of capital structure was essentially a refined version of Böhm-Bawerk’s capital theory. On the assumption of a given amount of capital, progress in technology, which usually requires the lengthening of the production period, results in a decrease in annual capital investment, thus decreasing the demand for labor. If technological progress goes hand-in-hand with accumulation, the result depends on the combination of the positive effect of the increase in capital and the negative effect of capital deepening. Hayek applied this Austrian theory of capital structure (i.e., Hayek’s triangular figures) to explain the process of prosperity and the crisis caused by introducing ungrounded optimism during a phase of prosperity. 19

John Maynard Keynes did not delve deeply into capital theory. It is unknown if he fully read Marx’s Capital . However, he did know and converse with a circle of Marxists (e.g., Maurice H. Dobb) and others deeply impressed by Marx (e.g., Sraffa and Joan Robinson). In his manuscript for the General Theory , Keynes cited Marx’s M–C–M' formula to inspire his retreat from the orthodox classical view. 20 Remember that the first moment of capital in Marx’s view was “money on the direct path to become capital.” Money represents not only the effective demand but also yields interest when its service is provided. In Hicks’s view, Keynes was not exempt from the materialist conception of capital; however, those Keynesians that would not adopt the production function and favored the use of the capital coefficient in their analysis of growth theory are fundists.

The experience of socialism

The materialist concept of capital probably better suits a planned economy that was liberated by the owner’s interest than a capitalist economy. In distributing scarce resources to the multitudes that need them, rationing is generally recognized as one of the most practical alternatives to a competitive market with fluctuating prices. As Otto Neurath dreamed at the rationing office of the short-lived revolutionary government in Bavaria (Neurath 1925 ), the wartime experience of a delegated economy under World War One (WWI) nourished the belief in the possibility of a planned economy without having the market managed by a circle of technology-oriented intellectuals. Ludwig von Mises ( 1935 ) and Hayek ( 1935 ) criticized them and argued that such a collectivist economy would inevitably fail due to the lack of rational calculation. This debate is well known and the prevalent view at present is in favor of the critics.

Compared with the Western debate on the economic calculation under socialism, the efforts of Soviet Russian economists are not widely known. In the preface of an anthology of the mathematical economics of Russian and Polish economists published in Moscow during the age of Khruschchov, Nemchinov (ed. 1964 ) highlighted the Balance Tables of National Economy for the years 1923/24 as an early achievement of Russian economists. 21 He regretted that the honor of creating input–output analysis has been attributed to Wassily Leontief who left Russia in 1925. Nemchinov’s Balance Tables were the work of practical statisticians, not of theoretical economists.

Nemchinov further appreciated the sub-table of the balance of productive instruments and investments, which consisted of key relationships in macroeconomic analysis. Although revolutionary Russia during the lively years of the 1920s produced a creative growth theorist such as Grigory Feldman, 22 the political repression under Stalin’s regime suffocated any original economic thought. Originality survived only in the stream of mathematical economists and statisticians leading the investigation into central planning.

In the economy of the Union of Soviet Socialist Republics (USSR), or Soviet Russia, since all large industries were state-owned and the distribution sector was also public, the transaction of productive goods were executed without any change in ownership, except for the transaction between the state and cooperatives ( Kolkhoz ). Formally, the state sector’s productive goods were not commodities with prices representing compensation for their transfer. Commodities remained only in the transaction between the state and cooperatives and in the final purchase of consumer goods by individuals. However, because Rubles remained the means of exchange for the transaction, both factory managers as well as Gosplan planners used it as a tallying measure.

Soon planners and economists realized that a rational price system was necessary for any consistent planning. The discussions first started in the age of ambitious growth but suffocated under the terror of the Stalin age. After Stalin’s death, it was revived and continued until the Kosygin reform era. Of course, many dogmatic Marxian economists adhered to the use of Marxian labor values in the planning economy. But it had a fatal defect in coping with growth. First, it could not cope with the distribution of scarce resources. Second, it did not correspond with the necessity of reproduction on a wider scale. For the industrialization of such a large but backward nation, the scarcity of improved capital goods was a serious problem. Russian economists repeatedly discussed how to distribute investment throughout various sectors to attain rapid growth and sought appropriate efficient criteria for this purpose.

Extending Marx’s concept of socially necessary labor expenditure (SNLE) to the production system of the entire national economy, Novozhilov ( 1964 , 1972) proposed a modified concept of differential SNLE as the modified value that enabled optimal planning. In terms of the (1) substitutability of the means of production among various production processes, (2) differences of efficiency in their various uses, and (3) relative scarcity in relation to demand, it was assumed that the use of superior productive goods in some sectors inevitably caused a feedback effect on costs for other sectors. Other sectors would have to endure incremental labor inputs, compared with the case in which superior goods should not be used in the above sector. Novozhilov argued that planners who evaluated the production variants from the viewpoint of optimal growth should add this increment to real expenditures for the production sector concerned.

With such a modification of the SNLE concept, the modified value informs the price, considering the rent from the different conditions of land and the emergence of a general profit rate in the capitalist economy.

When there is high level and rate of growth of the productive forces then in each unit of production not only the best but also less effective means of production are utilized. Then, socially necessary expenditure is not determined by an average quantity expended on the production of the given goods but by the increment of labor expended on the whole final social product, required for the production of the given goods. (Novozhilov 1972 , p. 389).

Novozhilov found a resemblance between his concept of modified value (i.e., differential SNLE) and the capitalist economy’s production price. Both result from the quest for the most efficient use of scarce resources (Novozhilov 1964 ). Their difference lies in the conscious application in planning and the unintended outcomes of the quest for higher rentability.

In a growing economy, a necessary condition of expanded reproduction is the provision and acquisition of an increased amount of the means of production and an increased input of labor. If the growth rate is g percent, then the price of a product must guarantee a profit rate not less than g percent, all other conditions remaining the same. From the perspective of the labor theory of value, the SNLE under extended reproduction must count a g percent increase in labor input. Negishi limited the possibility of the labor value theory in the case of simple reproduction and denied it in the case of extended reproduction. Our view is that a modified concept of value (i.e., SNLE) that guarantees the reproduction of the system is desired in the case of extended reproduction. 23

In the West, where economic backwardness was less pervasive, the postulates of reproduction were treated purely as a theoretical problem of growth theory. von Neumann formulated the optimal equilibrium growth path of a multi-sector economy considering the use of fixed capital with the joint production of one-period senior capital goods as early as 1932. Although his original German paper was published in 1938, it was only after the publication of its English translation in The Review of Economic Studies (von Neumann 1945 ) that his original idea was added to the common stock of theoretical economists. 24 On this path, all sectors grow simultaneously, staying in proportion to constant prices.

Michio Morishima developed an analysis of a growing economy by improving von Neumann’s equilibrium growth theory. He proved that the so-called “transformation problem” is solved in the case of a price system on this equilibrium path (Morishima and Seton 1961 ). In 1973, he published Marx’s Economics, in which he recommended Marxian economists to adopt the optimal value derived from the inequality system. Although many articles were published on the duality of value (or price) systems and the quantity system, Morishima’s view was generally considered to be the culmination of theoretical debates on Marx’s value and price theories at the end of the 1970s.

This overview is biased since we have focused on the temporal dimension of capital in relation to the Marxian concept of reproduction. If we shift our focus to distribution as Sraffa did it in his 1960 book, Production of Commodities by Means of Commodities , a different scene may emerge. However, we can conclude the story of capital theory in the twentieth century as revolving around the duality between quantity systems and value systems in the process of reproduction. This dimension is better understood now as compared with the discussion that took place during the nineteenth century.

Reproduction of the “original accumulation”

The last problem remaining is regarding the third moment of capital, a concept that we introduced in the first section. It is the reproduction of “the original accumulation” of capital against labor. First, we have to pay attention to the fact that Marxian concept of original accumulation is totally different from the classical concept of “previous accumulation” as stipulated by Adam Smith ( 1776 ). As a typical classical fundist, Smith thought that previous accumulation must exist to form capital as an advance. Since he did not adopt the synchronized view of reproduction, he had to suppose that capitalists accumulated their capital by their own work and thrift. However, Marx, in the chapter on original accumulation in the French edition of Capital , cited a poetic style dialog from Johann Wolfgang von Goethe on the origin of a family’s assets that traced back to a theft ( prise ). 25 In such case, the praise for diligence and thrift is too childish. Thus, whether the ultimate origin might be savings or theft, the starting point is the division of the subjective and objective elements of production under the hegemony of capital. As French Structuralists maintained (Althusser and Balibar 1971 ), it’s not the historical continuity but its rupture that the quest for the “origin” of the capitalist production relations reveals us. We have already discussed in the second section that it is not the past act that entitles one to the receipt of revenue, but it is the structure and condition of reproduction that determines the value and price.

In Marx’s intellectual development this concept had its origin in the concept of “alienation of labor.” In his 1844 manuscript, known as Economic and Philosophic Manuscript , young Marx depicted the three- or fourfold alienation of workers under capitalism, i.e., alienation of the labor itself, of the product of labor, of the species-character and of the relations with others. (Marx 1959 , 1982 ) As the causation between these three or four aspects of alienation was not discussed, not the historical sequence but the structural relation of the alienation in its totality was the problem to Marx. When Marx identified this relation of alienation and appropriation as the production relation under capitalism that reproduces itself perpetually, his critical investigation into the political economy of capitalism began.

Marx’s lifework Capital is devoted to reveal the mechanism of this alienation and appropriation. In its volume 1, it explains the accumulation of capital on the ground of the exploitation of surplus value. The contrast of accumulation of capital and the misery of the exploited class was realistically described. However, it was also in this part that the “original accumulation” was placed in Marx’s theoretical system and the possibility of the social and cooperative production was told. He described it as the reestablishing of the “individual property based on the acquisition of the capitalist era: i.e., on co-operation and the possession of land of the means of production.” (Marx 1967 , p.715) 26 In the volume 2 (Marx 1885 ), the socio-economic structure of capitalism is described from the viewpoint of reproduction. This volume is dedicated to reveal the mechanism that the split of subjective and objective elements of production is maintained via the circulation of capital. It is in this volume that Marx’s peculiar view of capital takes full-fledged theory of socio-economic reproduction: the original condition of capitalist production (“original accumulation”) is reproduced and maintained in the ever-growing scale.

However, Marx’s Capital provided us with the veil that tends to cover the reality and shows the superficial relations in the surface. The exchange of capitalists and workers in the sphere of circulation keeps the feature of voluntary transactions of the legally equal agents. As Thomas Hodgskin realized, this is the trick of “money” (wage) that hides the exploitative nature of production relations under capitalism. Further, under the influence of the asset holders’ way of thinking, the labor (labor power) is lined along with capital and land as an origin of revenue (wage in this case). As Marx intended to start the last part of volume 3 of Capital (Marx 1894 ) with the sarcasm on the “trinity formula” that sacralizes capital, land, and labor as the holy origins of revenues in a bourgeois society, even workers may be trapped in the illusion of the equal holders of private assets.

Apparently, it was rather difficult for ordinary academic economists to deal with the theory of capital from Marx’s third critical viewpoint. After the emergence of marginal productivity analysis in the late nineteenth century, neo-classical economists neglected the production relations between capital and labor and tended to consider profit and wage separately. Their destination is the trinity formula of assets and their revenues.

They may have concerns over the situation of working class and seek for solutions to remedy it. However, apart from the brave attempts of socialists, anarchists, or syndicalists, recommendation of neo-classical economists generally remains in the level of distribution. After two centuries from Marx’s birth, at least in the advanced economies, the real wage has risen considerably, and the labor distribution ratio is considered as one of the key variables that can influence the general economic condition of the countries concerned.

Problems of distribution is only one element of the modern capitalism. From the viewpoint of capital theory, the constant capital, or means of production are the base on which labor realizes its productivity. In the contemporary understanding, wage is usually considered as cost and seldom considered as capital. Means of production, constant capital in Marxian term, such as machinery, equipment, fabricated or rare materials, patents, know-hows, etc., and the command over them are decisive in the modern production process of capitalism. The recovery of the harmony between subjective and objective elements of production needs the vision that overcome the alienation of those means of production from the hands of workers.

In this respect we would mention a unique Japanese economist that contributed to widen the perspective of political economy of capitalism in the Marxian sense. Shigeto Tsuru studied at Harvard in 1930s under Joseph A. Schumpeter together with Paul Samuelson and Paul Sweezy. After his return to Japan, he not only occupied the central position in the economics academia between the revived Marxian economics and the introduction of Western modern economics, but also kept considerable intellectual influence in the post-1945 Japanese politics.

In 1959, he circularized several questions on the status quo of the post-war capitalism among prominent economists and published their answers with his concluding article in Japanese (Tsuru ed. 1959 ) and in English (Tsuru ed. 1961 ). Tsuru’s questions as well as his conclusion were unique, as he maintained the path of mixed economy in which the economic surplus is socialized in wider extent. He proposed the socialization of surplus flow instead of the socialization of stock (capital). It was a roundabout way to conquer capitalism that fit the advance of welfare state.

Another valuable insight Tsuru provided was the appreciation of the material aspect of the human economy that was often hidden under the surface of exchangeable value. Facing serious environmental deteriorations in the late stage of the rapid growth era of Japan, he expanded the perspective of socio-economic reproduction to the material circulation and the natural environment. He applied his idea of the “socialization of flow” to the problem of pollution and proposed pollution tax. This proposal was to him a step forward to recover the harmony between the material aspect and the value aspect of the production and consumption. (Tsuru 1971 ).

Compared with the socialization of ownership and the introduction of central planning, Tsuru’s proposals may sound too mild and gradual. However, in our view, he was one of the rare economists that applied Marx’s critical ideas to the contemporary problems.

Concluding remarks

One of the most significant lessons of the twentieth century is that neither collective ownership nor central planning were successful in overcoming of the split between the subjective and objective elements of production. To the contrary, people in the so-called socialist countries suffered severe alienation due to the monopolization of control over production as well as the pressure of their publicly admitted ideology. The split of the subjective element and the objective element under capitalism was dissolved into the coercive unity under the omnipotent state. Indeed, the socialist economic system, characterized by collective ownership and central planning, replaced capitalism for several decades in a number of countries. A new pattern of primitive accumulation occurred for the state occupied by nomenklatura . Nonetheless, it could not excel to the level of performance of advanced capitalism. It is now clear that, at best, collective ownership and central planning are, with appropriate use, auxiliary tools for the improvement of economic governance. 27

On the other hand, Tsuru’s proposal of the “socialization of surplus,” too, did not advance smoothly. While welfare expenditure has continued to rise, considerable portion of the public control over the financial activity has been abolished under the name of “deregulation.” An international race to the bottom appeared in the corporate taxation. Under the name of “neo-liberalism,” a strong adverse intellectual tide that rejects any public control over business activities influenced politicians and businessmen as well. However, the global financial crisis in 2008 as well as the present COVID-19 pandemic crisis may contribute to the change of the tide in economic policies.

Another very significant lesson for the solution of Marx’s third moment of capital is that we cannot neglect the natural backgrounds of capitalist production. Both the subjective and the objective elements of the production exist in the material world of the nature. External effect always accompanies with the private economic activities of production and consumption. Due to the expansion of the resource wasting economic activity, the environmental deterioration has become a global problem. A narrow view of the objective element of production in the form of the means of production does not suffice for the recognition and solution of the split under capitalism. A wider view is also necessary to understand the subjective element, i.e., labor as the activity of living men and women. Labor or work consists of two natural capabilities of human beings: the intellectual capability and the physiological nature. Under the modern conditions of labor, we should take the stress on both capabilities seriously.

According to the traditional ideas of socialism and communism, ownership has been considered as an exclusive legal command over tangible or intangible resources. However, real utilization of the resources depends on the knowledge, skill, and the cooperation of agents concerned. Thus, not the legal form of property but the forms of the command of knowledge and skill and of the cooperation are more important for the solution of the alienated antagonistic relations between subjective and objective elements of production (i.e., the reestablishment of “individual property”). In this respect, the recovery of science and technology, which are at present in the hands of big business and of the closed academic circles under the ruling authority, back to the hands of people is significant. Not the economic or political power, but the democratic cooperation of the people can solve the split of the subjective and objective element of production including nature in and out of the both elements.

Performance of capitalism differs considerably between countries. Some advanced countries have succeeded in enhancing the well-being of their workers. As long as the means of production and products are owned by employers (i.e., capitalists) and the surplus is appropriated by them as profit, the split between the subjective and objective elements of production is inevitably reproduced. Since investment is financed by profit, the volume of investment ultimately determines the level of profit. The condition of workers depends on the decisions of investors. This split is institutionalized in the form of the corporation, which is really the personification of profit-seeking capital. If this situation should continue, the third moment of capital would not change. However, as we mentioned Tsuru’s idea of “socialization of the surplus,” the democratic control of the surplus may alter this situation.

But the one-sided view of the economy from the perspective of capital might be erroneous, or incomplete at best. As Marx conceived a book on labor as a sequel to Capital , modern capitalism required a countervailing viewpoint from the subjective element of production, or that of labor. The subjective element of production is not powerless. The knowledge and skill of workers are crucial for firms in competition. Workers also require advanced means of production, which is the embodiment of the collective knowledge of humanity to exert their skills and creativity. They can also unite themselves to present their demands to management and negotiate through collective bargaining on several levels. Furthermore, they can influence business through legislation, governance, and other public institutions. Under the taxation system, the surplus is, as Tsuru maintained, already being socialized at least partly.

Capital, whose essence lies in profit-seeking, naturally seeks a way to repress the demands of workers and evade public control. Capitalist firms would eventually develop their activity in greenbelts within borders and beyond them. Internationally they would move to a new frontier where they could enjoy more freedom. However, while capital is no more than the alienated labor in the form of self-expanding value, labor represents the living activity of human being. Thus, the latter is dominant everywhere in reality at any time. The task is to develop the way of cooperation on the ground of the achievement of human species in the science and technology including management and culture.

The real investigation into the third moment of capital, i.e., the split of the subjective and objective elements of production, or the alienation of labor, is not a speculative task. It is true that this perspective must be widened so as to contain the natural base or backgrounds of production, consumption, and the livelihood of the people. The liberty of individuals in the modern world is not assured without their control over the objective elements and knowledge and intelligence as the common social stock embodied in capital. In the first section, I asserted that the third moment of capital belongs to a reflective dimension. As the final word of this historical reflection on the concept of capital, I would posit that it is the common task of all human and social sciences to assess the present situation of this fundamental split in the contemporary age that has transformed itself widely since Marx’s and seek a better way to cope with it. In this cooperative task, I hope that economics can contribute through the analysis and exploration of the reproductive process of the subjective and objective elements of production, which is, at present, understood in the form of capital.


The author appreciates comments of discussants at several academic meetings in 2018 and 2019. Special thanks is directed to anonymous reviewers of this journal, under whose suggestion the 5 th section was added to the original manuscript.

Compliance with ethical standards

The author states that there is no conflict of interest.

1 This article focuses on theoretical aspects of Marx’s theory. For an overview of the intellectual history of Marx researchers ( Marxologen ) in the twentieth century, see my another writing (Yagi 2019 ).

2 This manuscript is named Grundrisse der politischen Ökonomie. It is available at present in MEW 42 (Marx 1983 ) as well as MEGA II/1.1-2 (Marx 1976–1981 ).

3 In German original: “Das dritte Moment, das zu entwickeln ist in der Formung des Begriffs des Kapitals, ist die ursprüngliche Akkumulation der Arbeit gegenüber, also auch die gegenstandslose Arbeit der Akkumulation gegenüber. Das erste Moment ging aus der Wert, als aus der Zirkulation herkommend und sie voraussetzend. Es war der einfache Begriff des Kapitals; das Geld wie es unmittelbar zum Kapital fortbestimmt wird; das zweite Moment ging von Kapitals vor der Produktion und Resultat derselben aus das dritte Moment setzte das Kapital als ein bestimmte Einheit der Zirkulation und Produktion.”(Marx 1983 , S. 253).

4 In German original: “Das Kapitalverhältniss setzt die Scheidung zwischen den Arbeitern und dem Eigentum an den Verwirklichungsbedingungen der Arbeit voraus. Sobald die kapitalistische Produktion einmal auf eignen Füssen steht, erhält sie nicht nur jene Scheidung, sondern reproduciert sie auf stets wachsender Stufenleiter.”(Marx 1867 , S. 700).

5 In German original: Weil der Gesamtproductionsproceß zugleich Reproductionsproceß ist, gleichzeitig Reproduction der Producte in allen ihren verschiedenen Phasen statt. Das Charakterische ist hier die fortwährende Gleichzeitigkeit, das beständige Nebeneinanderlaufen oder der Parallelismus aller Productionsprocesse, welches Verhältniß der Ueber und Unterordnung oder wechselseitigen Abhängigkeit ihre Producte zu einander haben mögen. (Marx 1988a , MEGA Abt. II 4-1, S. 368; Man. I-143).

6 In German original: Die Bestimmung des Werths durch die in einer Waare enthaltene nothwendige Arbeitszeit ändert sich, oder bestimmt sich weiter, wenn der Reproductionsproceß als Ganzes betrachtet wird, dahin, daß ihr Werth durch die zu ihrer Reproduction (gesellschaftlich) notwendige Arbeit bestimmt ist. Es ist nicht die Arbeitszeit, nöthig um Waare zu producieren, sondern die, sie zu reproducieren, die ihren Werth bestimmt, sobald sie nicht gleich verkauft wird, oder ihr Circulationsproceß Zeit genug läßt für die Abweichung des in ihr enthaltnen Quantums und des zu ihrer Reproduction nothwendigen Quantums Arbeit (Marx 1988a , b , MEGA Abt. II. 4-1, S. 271f.; Man. I-81.).

7 Marx’s Economics (Morishima 1973 , p. 11). While the first corresponds with the additional view of past labor embodied in the means of production and the present labor, the second represents the sum of the labor input in all of the related branches of production to acquire one net product of the commodity concerned.

8 The meaning of “socially necessary” is delicate. While the text in the first chapter of Capital explains it as “the labor-time …. that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time” (Marx 1967 , p.47), “socially” in the level of circulation and reproduction implies the wider perspective of the production system as a whole.

9 Marx’s model of the circuit of capital consists of three forms of capital (financial, productive, and commercial capital) and three processes corresponding the formers (purchase, production, and sales). The analysis of this circuit model with time lags was first explored by Foley ( 1986 ) and then further investigated by Mori ( 2004 ).

10 Value, Price and Profit delivered on 20 and 27 June 1865 at the General Council of the International Workingmen’s Association. The original manuscript is in Marx ( 1988b ) (MEGA II 4.1, S. 385–432).

11 The criticism against the materialist view was raised in the mid of the twentieth century by Piero Sraffa and Joan Robinson. Despite the significance of this “capital controversy” fought by two Cambridgeans, we won’t discuss it from the reason that Marxian view is not concerned in this controversy.

12 As Marshall ( 1890 ) explained formation of capital with the concept of “waiting,” we can apply our discussion on the Austrian understanding of the interest to him, too. See Yagi ( 1992 ).

13 See relevant chapters in Hunt and Schwarz ( 1972 ) in this respect.

14 Negishi ( 1980 , 1985 , 1986 ). Negishi referred Weizäcker ( 1973 ) further.

15 Basic elements of his interest theory appeared in his early manuscript of 1876 (Böhm-Bawerk 1983 ) already. It contained his explanation of the exchange between worker and his employer from the viewpoint of time preference. But Marx was not referred in this early work.

16 Translated into English by William Smart in 1890 and 1891 respectively. Both are now available as a kindle edition, amazon.com (Böhm-Bawerk 1890 , 1891 ).

17 Böhm-Bawerk ( 1891 ) mentioned three causes for the emergence of time preference, i.e. differences in want and provision for want, underestimate of the future, and the technical superiority of present goods.

18 Böhm-Bawerk’s simplest version of “average production period” is valid in case of simple-interest model but not in case of compound interest model.

19 Hicks’s neo-Austrian capital theory (Hicks 1973 ) is a macro synthesis of the circulating capital model and fixed capital model. The continuous input—point output structure of the former model and the point input—continuous output structure of the latter model is integrated in the model of continuous input—continuous output structure.

20 Keynes ( 1979 ), p.81.

21 Nemchinov ed. ( 1964 ) Introductory chapter.

22 See Domar ( 1957 ), chap. 9.

23 See the appendix to chapter 8 in Dobb ( 1969 ).

24 von Neumann( 1945 ). Sraffa ( 1960 ) adopted von Neumann’s joint production approach in his treatment of the fixed capital. Hicks ( 1965 ) surmised the progress of growth theory after von Neumann.

25 Marx ( 1872 ) p. 314. Marx cited from Goethe’s poetry “Catechisation” (Goethe 1850 , S. 276).

26 In German original: “Diese stellt das individuelle Eigenthum wieder her, aber auf Grundlage der kapitalistischen Aera, der Cooperation freier Arbeiter und ihren Gemeineigenthum an der Erde und den durch die Arbeit selbst producierten Produktionsmitteln.” (Marx 1867 , S. 745).

27 On the discussions and the process of the “transition” from the regime of planned economy to market economy, see Yagi ( 2020 ).

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