Karl Marx (1818-1883) provided a revohdionary critique of capitalism and a theoretic foundation for socialism.
Modern socialism emerged as a response to the industrial era just as classical economics had, and just as the classical economists developed an ideology for the new order, the socialists developed a critique of it.
Some socialists were impractical, idealistic dreamers, some were hardheaded critics of the existing society, and others were revolutionists, but all were united by their criticisms of the new industrial society and by their belief in common rather than private ownership of the means of production. Socialists had a different view of the nature of society than did the classical economists, arguing that the social fabric was essentially an organic whole composed of classes, rather than a collection of independent individuals. They stressed the cooperative element in human nature, rather than the individualistic profit motive of private capitalism, and they advocated egalitarianism in place of the unequal distribution of income that prevailed. The socialists could often point to actual economic conditions—real defects in industrial capitalism—to support their arguments.
The economic and political events of the half-century from 1775 to 1825 provide a background for understanding the rise of modern socialism. Of primary importance was the Industrial Revolution. It provided substantial increases in living standards and opportunities for acquisition of great wealth for the new middle class. It was clear that the reasons for economic growth were industrialization, capital investment, and higher productivity, and that every widening of market opportunities made still further advances possible.
To the socialist, however, industrialism had a different face. Workers in the new factories were paid low wages. Although factory pay was high enough to draw labor from the countryside, unemployment in rural areas meant that workers were willing to accept very low wages. Hours of work were long, women and children were employed in substantial numbers in difficult and dangerous jobs, factory discipline was often harsh and rigorous, and in some areas company-owned stores profited from exclusive selling rights among employees. Particularly in the textile and coal industries, competition kept selling prices low, and firms competed with each other by squeezing labor costs whenever possible. These shortcomings were particularly evident in the first half of the nineteenth century in England, where the Industrial Revolution began.
The realities of industrial life created sharp contrasts between the growing wealth of the new industrialists and bankers and the poverty of those without property who formed the work force in the factories of the slumridden cities. During the "hungry forties" in England Benjamin Disraeli wrote of "the two nations"—the rich and the poor—while Charles Dickens examined the business ethic in Hard Times. The public read Thomas Hood's pathetic poem of the sewing woman. Song of the Shirt.
Poverty there had always been, and rich and poor had lived side by side for ages. Many people always had to wrest a meager living from a stingy natural environment. But industrialization promised abundance. For the first time it seemed as though the economy might be able to produce everything people could want, and that the great struggle for existence could be resolved. Yet the gray slums of Manchester and the black country of the coal mines told a different story. The promise and the reality were vastly different.
A similar difference between ideals and reality prevailed in politics. The French revolutionists of 1789 had proclaimed "Liberty, Equality, Fraternity," and with that slogan the French had overthrown the privileges of the old order and marched through Europe to sweep away the last remnants of feudalism and aristocracy. New beliefs in freedom and equality seemed to be creating a political order of full democracy, just as the Industrial Revolution seemed to portend an end to poverty.
But the defeat of Napoleon brought reaction and repression—and reestablishment of the old system of place and privilege. Even where parliamentary government existed, as in England and France, participation was limited to persons with property, and working people were excluded from the vote. Democracy, apparently, was fine for the middle class but dangerous if extended to the worker.
The Industrial Revolution and the French Revolution appeared to many as means of realizing some of the ageless and ancient ideals of Western civilization—abundance, an end to excessive toil, and the triumph of brotherhood and equality. Yet in the darkness of the post-Napoleonic reaction all this was betrayed, and postwar depressions seemed to produce even greater poverty and want than before, since the unemployed worker did not have even a small plot of land on which to grow food. To the early socialists it was self-evident that private ownership of the means of production was the
source of society's ills. Ownership of machines, factories, and other capital enabled the owner to reap rich rewards, to sit back and rake in profits while others worked. At the same time, economic position brought political power. In the eyes of the socialist, fifty years of social revolution had given wealth and power to a few owners of capital rather than to the great numbers of common people. Society as a whole had been betrayed for the benefit of a few.
The humanitarian and idealistic roots of early socialism are typified by the work and writings of the Englishman Robert Owen (1771-1858). Apprenticed to a linen-draper at ten years of age, he worked at various establishments in the textile industry throughout his youth, including one shop that "often worked their employees from 8 A.M. to 2 a.m." After failing in business for himself, he became manager of a textile mill when only nineteen years old. Seven years later he was able to buy control of textile mills at New Lanark, in Scotland, and in 1800 he took over their active management. The former management had used children from orphanages as part of its labor supply, along with adults, many of whom were "thieves, drunkards, and criminals of every sort." The workday ran from 6 a.m. to 7 p.m. for children as well as adults, and the company town was composed of wooden oneroom houses. These working and living conditions were not considered bad for the time.
Owen was a religious man who believed that the workers of New Lanark were evil because of their surroundings, so he decided to turn New Lanark into a model community. He took no more children from workhouses or orphanages and allowed no child under ten to work. The workday was set at ten and one-half hours for both children and adults. He provided schools in the evening for the working children (imagine a child of ten going to school after working ten and one-half hours!) and set up nursery schools for younger ones. For his adult workers he established a "register of character," which recorded drunkenness and other delinquencies, such as illicit sexual behavior, so effectively that pubs quickly disappeared from the town, and there were only twenty-eight illegitimate births in nine years. An elected committee, called "bug hunters" by the women, inspected for domestic cleanliness once each week. A support fund for the injured, sick, and aged was established, into which workers were required to pay one-sixtieth of their wages. Thrift was encouraged by establishment of a savings bank and by provision of better houses for those who used the bank. Finally, Owen established a store that sold food and other products to workers, charging considerably lower prices and providing goods of higher quality than did private shopkeepers.
How could Owen do all this and still make money in the highly competitive textile industry? Apparently there were two reasons. First, his plants were located in an area of labor surplus and his wages were low: An
investigating committee in 1819 reported that he paid 9 shillings, 11 pence—about $2.40—per week to men, and 6 shillings—about $1.50—per week to women, figures that were below average for the time. Second, even though his methods were paternalistic, the attention he paid to workers seems to have brought relatively high labor productivity. In 1819 profits were 12.5 percent of the invested capital.
Owen recognized that the reforms at New Lanark had come from the patron rather than from the workers themselves and that some form of industrial self-government would have to follow. He published his views in 1816 in one of the landmark books of the socialist movement. The New View of Society, at a time when England was debating the first factory act, designed to limit the hours of work and establish a minimum age for child labor. Owen lobbied hard for the act, but failure of the bill adequately to cover child labor disappointed him, and the unwillingness of other employers to imitate the example of New Lanark drove him to more radical schemes.
He tried to establish cooperative communities, in which land was owned in common, and in 1824 went to the United States to open one at New Harmony, Indiana. But the community in America, and others in England, failed, with substantial financial loss to Owen. More successful were the cooperative retail stores established under Owen's leadership in England, beginning the far-flung consumers' cooperative movement that has been highly successful in England and Scandinavia and has developed to some extent in the United States. Owen also tried to set up producers' cooperatives—groups of workers who owned the factory in which they worked—but these projects did not succeed.
Owen was a visionary who sought to reform society through workerowned communities and enterprises in which profits were not permitted. He expected that in such communities the life of the individual would achieve a larger meaning through full integration into the cooperative life of the group. In an individualistic era, his efforts were doomed to fail. Perhaps he was right when he wrote to a business partner, "All the world is queer save thee and me, and methinks at times that thou art a little touched."
In sharp contrast to the idealistic and impractical Owen was the intense German, Karl Marx (1818-1883). Born and raised in the most economically advanced part of Germany, the Rhineland, and son of a petty legal official of the government, Marx displayed great intellectual ability at an early age. Sent to the universities at Bonn and Berlin, he first studied law with a view toward a governmental career, but his opposition to the autocratic governments in Germany precluded that. The young Marx then turned to philosophy, with the goal of a professorship, but his studies of philosophy and religion at Berlin—his doctoral dissertation was on the Stoic and Epicurean roots of Christian doctrine—led him to atheism, and this barred him from a
university career. So Marx went into journalism and became editor of a liberal Cologne newspaper in 1842. It was there, while writing on economic problems, that he became convinced of the economic basis of politics—that underlying political theories and political power lay the economic interests of various groups in society. His newspaper was suppressed by the government for its liberal views, however, and Marx went to Paris where he married his childhood sweetheart, the daughter of a German baron/ and became acquainted with a number of socialists.
One of them was Pierre Joseph Proudhon (1809-1865), a socialist leader who influenced him very strongly. Proudhon's chief work was a book called What Is Property? ("Property is theft," he answered to his own question), a forceful statement that the whole product of industry should go to the worker, and that private property in the means of production enabled the capitalist to appropriate wealth that rightfully belonged to the worker. This concept—not original with Proudhon—was a basic tenet of nineteenthcentury socialism and fundamental to Marx's own view of capitalism. Another of Proudhon's books, subtitled The Philosophy of Poverty, attacked the orthodox economics of his time and especially the "iron law of wages"—the Malthusian argument that wage rates tended toward the subsistence level because of population growth. Convinced that Proudhon's arguments were specious, Marx attacked his friend in a book sarcastically titled The Poverty of Philosophy, and legend has it that Proudhon never spoke to Marx again.
Another socialist whom Marx met in Paris was Friedrich Engels (1820— 1895), son of a wealthy German textile manufacturer who owned mills in England and Germany. Marx and Engels formed a friendship that lasted until Marx's death, and the two men collaborated in developing the ideas that Marx was later to publish. Engels supported Marx and his family for most of the next thirty-five years.
While in Paris Marx continued his journalistic career, writing articles especially critical of Prussia, and he was soon expelled from France at the request of the Prussian government. Moving to Brussels in 1848, just before the outbreak of the revolutions of that year, Marx and Engels wrote The Communist Manifesto: "A spectre is haunting Europe . . . Workingmen of the world unite, you have nothing to lose but your chains!" Marx had entered on his career as active revolutionary.
When the revolution broke out, Marx returned to Cologne, began editing his newspaper again, and publicized the revolution sweeping Europe. But the revolt was suppressed and Marx, expelled from Germany and
'Jenny Marx was herself a fiery radical. After the family settled in London in 1849, a series of strongly stated revolutionary articles appeared in several leftist English papers, under male pseudonyms, which recent scholarship suggests were written by Jenny Marx. She also is reputed to have translated The Communist Manifesto into English. The couple's family life was marred when, in 1851, while Jenny was pregnant with their fifth child, Marx fathered a child by a household servant. The child was adopted by another family, with financial assistance from Marx's friend, Friedrich Engels, who announced that the child was his in order to shield Marx when rumors about the true parentage began to circulate. After that the pseudonymous radical articles stopped.
unwelcome in France, went to England, where he spent the rest of his life. He continued working in journalism from time to time. For a while he was English correspondent for the New York Tribune, and he wrote about the French Commune of 1871 for the London Times. But most of his time was spent in scholarship, doing research on economics in the library of the British Museum and writing his great work. Capital. This book was both a denunciation of capitalism—Marx invented the word—and an explanation of why it must fail. The first volume appeared in 1867 and was the only part completed by Marx himself. The second volume, edited by Engels, appeared in 1885, two years after Marx's death, while the third volume, edited by Karl Kautsky, was not issued until 1894.
Scholarship did not completely replace revolutionary agitation, however, for when the International—an international alliance of socialist parties—was formed in 1864, Marx took a leading part. It was not enough to be a theorist, he felt, for there had to be a revolutionary party to take control when capitalism collapsed. He wrote extensively in support of the proletarian revolutionary movement and in opposition to socialists whose views differed from his own. Marx set a precedent in the use of vitriolic denunciation that has continued to plague left-wing radicalism to the present day.
Marx died in 1883 after having given to revolutionary socialism its theoretical foundations. One wonders how different the world might be today had not the rigid authoritarianism of post-Napoleonic Prussia barred Marx from a career in government or university.
It is difficult to condense the grand scheme of Marx's thought without doing injustice to the power and consistency of his reasoning. The very fact that Marx's argument is long and intricate, with all parts of it logically connected and integrated, makes almost any short summary a falsification. Nevertheless, it is important that it be understood, if only because it is the basis of one of the most powerful ideologies in the modern world.
Marx begins with the idea that economic relationships are the fundamental driving force in any society. Particularly under capitalism, however, people are motivated primarily by their own economic interests—but let him say it in his own words, from the Preface to A Contribution to the Critique of Political Economy (1859):
In the social production which men carry on they enter into definite relations that are indispensable and independent of their will; these relations of production correspond to a definite stage of development of their material powers of production. The sum total of these relations of production constitutes the economic structure of society—the real foundation, on which rise legal and political superstructures and to which correspond definite forms of social consciousness. The mode of production in material life determines the general character of the social, political and spiritual process of life.
Marx's View of Capitalism 63
In a capitalist society, according to Marx, the two great economic interests are those of capitalist and worker. These two classes stand in opposition to each other, since the capitalist can prosper only if the worker is exploited. In this respect capitalism is only the latest in a series of social organizations in which one class exists at the expense of another. The Communist Manifesto (1848) puts it bluntly:
The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guildmaster and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another. . . . The modern bourgeois society that has sprouted from the ruins of feudal society has not done away with class antagonisms.
It has but established new classes, new conditions of oppression, new forms of struggle in place of the old ones.
Marx started his attack on capitalism with the labor theory of value. Recall that this theory, which was developed by the economic liberals and the classical economists, stated that the true value of any product or service was simply the amount of labor used in its production. A table that takes ten hours of labor to make is worth twice as much as a chair that requires five hours of labor, assuming labor of equal quality.
In Marx's view, labor under capitalism is exploited because it is not paid the full value of the products and services it produces. The capitalist employs workers at the current wage rate and works them for as many hours each day as possible, making sure that the value of the workers' output is greater than the wages paid. This difference between the wage and the value added by the worker, which Marx called "surplus value," becomes the capitalist's profit. Exploitation of the worker can be intensified, and the surplus value appropriated by the capitalist can be increased, by an employer's efforts to achieve lower wages, longer hours, and employment of a greater number of women and children. Thus Marx explained some of the more widely prevalent characteristics of the industrial economy of his time.
Exploitation exists in another sense as well. Marx saw capitalism as a gigantic mechanism through which the labor time of the worker is transformed first into profits and from profits into capital. Whereas labor time is owned by the worker, capital is the property of the capitalist. In this fashion the capitalist class grows increasingly wealthy out of the labor of the working class: "They coin our very life blood into gold," to quote a radical song from pre-World War I America.
This exploitation of workers is only the direct economic effect of capitalism on the working class. It has psychological effects as well. Marx viewed work as a continuing interaction between people, nature, and the product of labor. Work was an essential element in the development of the human personality, so a full realization of the self required a full and rich development of the individual's relationship with the means of production and the product. Yet under capitalism the worker is separated from both the fruits of labor and the tools of production, which are the property of the employer.
Full development of the self and the personality is prevented. The result is a pervasive alienation that dehumanizes all personal and social relationships. Market exchange and money payments take the place of human feelings and human relationships, and life becomes dehumanized and pointless. The result is a range of social and psychological pathology that pervades all capitalist society and is inherent in its basic economic relationships.*
Exploitation and alienation are one side of capitalism. The other is accumulation of capital and growth of wealth. This side of the economic process also develops out of the relationships between capital and labor. However much the employer tries to squeeze his labor, the labor market itself will determine the level of wage rates, while hours of work are limited by human endurance, and employment of women and children is affected by a combination of technological factors and labor-market conditions. The individual employer has relatively little flexibility in these matters and cannot readily gain a competitive advantage over other capitalists except by reinvesting profits (surplus value) in new machinery and equipment, which raises productivity of labor and increases profits still further. Indeed, the employer is compelled to do so to survive, because competitors will do the same. The result is a continuing drive to expand investment. In this way Marx explained the process of capital accumulation and the growing productivity and increased output it generates.
Capitalism, then, presents two faces: capital accumulation and growth on the one hand, exploitation and alienation on the other.