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There's recently been a spate of great diaries on Marx, so I thought I'd throw my hat into the ring and discuss some basic Marxist themes.  Hopefully the scholarly Marxists won't come down too hard on what I say below.  This diary is intended for a non-academic, popular audience, so I'm intentionally dumbing things down.  I think us Marxists often shoot ourselves in the foot by insisting on embracing Marx's own dialectical way of speaking, thereby rendering ourselves incomprehensible to any but other academics.  If this diary does alright, I'll write a follow up diary on the labor theory of value, commodity fetishism, and surplus-value if people are interested.

Political Theory, Sociology, and Economics

It's not unusual to hear people dismiss Marx with statements like "communism is good in theory, but just doesn't work in practice."  People who say this might be surprised to discover that Marx says next to nothing about how governments should be structured.  To be sure, he makes a handful of proposals in the Manifesto-- nearly all of which have been adopted --but he just doesn't give us a picture of how governments should be structured in the way that Plato does in the Republic or John Locke does in his two treatises on government.

Marx was not so much a political theorist, as a sociologist and an economist.  What Marx wanted to understand, among other things, is why society is organized the way it is.  Why are the rich rich and the poor poor?  Why are there different classes of people?  Where is society going?  

Take the following analogy.  You're walking along a beach and you notice that there are sea shells and pebbles of fairly similar size along a particular place on the shore and nowhere else.  If you're of a scientific bent of mind you would like to know why those shells are there, in that particular place, and nowhere else and would also like to know why there are only shells and pebbles of a particular size in this band.  The case is the same with Marx.  He wants to understand why society is organized as it is and how it maintains this pattern over time and history.  

The take-away from this is that calling yourself a Marxist doesn't necessarily mean that you embrace socialism or communism.  You're a Marxist if you embrace Marx's particular theory of why society takes the form it takes and use his particular techniques for analyzing the social world around you.  Most Marxists believe that Marx has the most accurate explanation of why the contemporary world is structured as it is.  They're far more circumspect as to how we ought to respond to this or what sort of governance we ought to have given these circumstances.

Class:  Capitalists and Workers

Marx's fundamental thesis is that there's an intrinsic contradiction or antagonism between capitalists and workers.  The interests of these two groups are entirely different and are at odds with one another.  Before proceeding, it's important to understand what a capitalist is according to Marx.  You might say "I'm a capitalist because I think capitalist economy is the best economic structure of production and distribution and the one most capable of meeting the needs of consumption."  This is not, for Marx, what a capitalist is.

For Marx a capitalist is not a person that embraces a particular theory of economy, but rather a capitalist is a person who makes their money through money.  Capitalists are people who invest money in the labor of others, properties that they rent out, stocks, factories, goods that they sell, and so on.  Through the investment of their money, they make money.  Marx gives the famous equation M-C-M to represent the capitalist.  The capitalist invests money (M) in a commodity (C), and gets a return on that investment (M) in the form of more money than he initially invested.

With workers, matters are very different.  You're a worker if you sell a commodity, your labor, for money, and use that money to buy various commodities to live on.  Unlike the capitalist that uses his money for investments, workers use their money to pay rent and mortgages, to buy food, clothing, to pay bills, for entertainment, and so on.  Where the equation for the capitalist is M-C-M, the equation for workers is C-M-C.

Clearly there are a all sorts of gradations between workers and capitalists.  Many of us, for example, have 401 and 403k's and are thus behaving as capitalists insofar as we are investing money to make money.  It's also true that capitalists buy a variety of commodities in order to live.  However, while it is true that many of us invest money to make money, we don't do this at nearly the same scale as full blown capitalists, nor do we live entirely on our investments like capitalists.

It will be noticed that the category of workers is far larger than we often think.  You don't have to be someone who works with your hands or does manual labor in order to be a worker.  A worker is anyone who sells their labor in order to make a living and who has no choice but to sell their labor in order to make a living.

Contradiction and Class Conflict

As I already noted, Marx is famous for arguing that the interests of workers and the interests of capitalists are inherently at odds with one another.  Unlike capitalist economic theory, Marxist economic theory says that interests of capitalists and workers are inherently in contradiction with one another.  Why?

The interest of the capitalist is to maximize profit.  The interest of the worker is to maximize wages and benefits, while also shortening the working week.  At a certain point, the capitalist can only maximize profit by reducing the costs of production.  Capitalists reduce the cost of production through the mechanization of factories (which leads to job loss), outsourcing to other countries where people will work for lower wages and fewer benefits, and using the threat of outsourcing and mechanization to compel workers to accept cuts to wages and benefits.  

Important Caveat

It's important to understand that this tendency towards the reduction of wages and benefits for workers is not simply the result of greed.  I often hear progressives say that capitalists are motivated by greed.  They seem to suggest that if we could only persuade capitalists not to be greedy there could be some sort of harmony between capitalists and workers.  While there are certainly plenty of greedy capitalists, the tendency of capitalism to reduce wages and benefits is a structural feature of capitalism itself, and not primarily the result of individual moral failings.

To see this, take the hypothetical example of three doughnut shops.  These doughnut shops are in competition with each other for the same customers and have to show profit each quarter to retain investments from their shareholders allowing them to continue to run their company.  How can each doughnut shop accomplish this goal?  One strategy would be that of creating the best product, but this is expensive (i.e., it cuts into profit) and can only take the company so far.  At a certain point, our doughnut company will have to cut costs of production so that they might attract the lion's share of customers and maximize profit.  This means cutting wages, benefits, the number of employed, and the cost of raw materials for making doughnuts.  If doughnut company A will not cut production costs, company B or C will.  The other companies will then attract more investors (because investors are getting a greater return on their investment) and company A will gradually be unable to stay in business.  

It is this dynamic of competition between capitalists, not individual greed, that drives wage and benefit reduction.  Capitalists have little to no choice but to cut production costs so as to stay in business and ensure an increase in profit over the profit of the preceding quarter.  Three things follow from this.  First, it follows that over time wages for workers will necessarily stagnate or decrease.  Second, and more importantly, it follows that in capitalist systems, money will gradually come to be concentrated in the hands of a few.  Returning to our example of the three doughnut shops, there will always be a doughnut company willing to go further in reducing the costs of production to maximize profit.  This means that gradually the competing businesses will go out of business because they cannot compete with the company that produces at the cheapest cost thereby maximizing profit, and money will come to be concentrated in the hands of that few that were more ruthless than all the others.  

Finally, third, it simply isn't true that capitalism generates the highest quality products.  As we saw above, the reduction of profit costs is intrinsic to capitalism.  Costs are reduced not only by reducing wages and benefits, but also by reducing the quality of materials and workmanship.  Over time, commodities produced under capitalism will thus cease to have as much quality as they once did.  At this point, capitalists come to rely on brand name recognition and loyalty, rather than the quality of their product.
Taken together, the foregoing shows just how mistaken capitalist economic theory is when it argues that "a rising tide lifts all boats."

Capitalism is Intrinsically Prone to Crisis

Capitalist economic theory argues that capitalist economic systems are inherently self-regulating and therefore stable or naturally able to avoid crisis.  The idea is that if wealth concentration or poverty becomes too great, capitalist economies will correct for this so as to continue functioning.  The foregoing shows why this is false.

As we've seen, capitalist economies intrinsically tend towards a reduction in wages or benefits for workers.  Capitalist economic theory argues that wealth arises from capitalists through investing their capital in means of production that create jobs for people (something I'll show to be false in my next post if I write it), but those capitalists would have no capital if consumers did not exist to buy their commodities.  Because capitalists make up a vanishingly small percentage of consumers in any society, it is workers who overwhelmingly buy the goods produced by businesses.  However, because capitalism, in its pursuit of ever expanding profit, tends towards the concentration of wealth in the hands of a few and a decrease of wages and benefits for workers, it creates a situation in which there are no longer consumers to buy commodities.  As a consequence, companies begin to go out of business and joblessness and poverty rises.  The dynamics of capitalist economies are equivalent to sawing of the branch upon which the capitalist sits; and this doesn't even begin to address why capitalism is intrinsically destructive to the environment due to its voracious pursuit of profit.

Originally posted to JosephK74 on Mon Apr 15, 2013 at 09:20 AM PDT.

Also republished by Community Spotlight.

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