Deciphering Marx’s Capital

Alex Callinicos’s new book Deciphering Capital argues that Karl Marx’s main work is still vital to understand how to change the world, writes Mark L Thomas

There has been a real renewal of interest in Karl Marx’s masterpiece Capital in recent years.

The huge success of Marxist writer David Harvey’s online lectures on Capital is one of the most visible signs. Alex Callinicos’s new book is a powerful addition to this process.

“The main reason is because of the radicalisation and resistance to neo-liberalism that we’ve seen since the 1990s,” explains Alex. “But over time there’s been a greater and greater focus on the Marxist critique of political economy, and that’s involved going back to Capital.”

It isn’t entirely surprising that Marx’s revolutionary study of capitalism should gain in popularity as the capitalists’ own explanations fail to explain the recent crisis.

Even before the crisis began in 2007 many people had begun to question whether capitalism was the best way to organise society.

Marx did not write Capital as an academic exercise. He developed his method of understanding the capitalist mode of production as part of a process of overthrowing it.

Alex writes of current debates about changes in the structure of the working class, “The fact that they seep into the interpretation of Capital is yet another indication of how much this is still a living work.”

Deciphering Capital is a work Alex has in some ways been working on “all my adult life”. It shows how Marx laboured to understand capitalism to arm revolutionaries for the fight against it.

“The trick in reading Capital is to track Marx’s formulation and reformulation, his orderings and reorderings of categories, while not losing sight of the big picture that Harvey commands with such panache,” Alex argues.

In doing this he draws on insights from recent debates about Capital, but also challenges some of their limitations and confusions.

Our knowledge of Capital has been boosted by the recent publication of more of Marx’s extensive draft manuscripts. Marx liked to “think with his pen” as Alex puts it and our increasing knowledge of his “laboratory” offers new insights into his method.

Marx witnessed the outbreak of probably the world’s first global economic crisis in 1857. This led him to begin the economic studies that would lead to Capital.

Marx had a unique vantage point when he sat down to write in the British Library. London was the centre of the British Empire. It was the commercial and financial hub of the first industrial nation.

From here Marx sought to understand all the contradictions of this explosive new form of production and society.

Alex’s book is not an introduction to Marx’s book. Its focus is on the development of Marx’s method as he developed and reworked concepts that enabled the nature of capitalism to be fully grasped.


This was important because unlike in earlier systems of exploitation under capitalism how things appear on the surface is not how they really are.

The heart of capitalism is workers engaging in an apparently free voluntary exchange with capitalists. Exploitation is not obvious as it is, for example, with slavery.

In financial markets money appears to possess the power to simply make more money without relating to workers’ labour.

The roots of complex financial instruments such as credit derivatives in the exploitation of workers are well hidden—until an economic crisis takes place.

Marx’s aim is to understand both the hidden inner nature of capitalist relations of production and to explain why they appear to be very different.

Central to Alex’s argument is that Marx understood capital as a web of social relationships. These interactions need to be explored if we are to make sense of the system.

As Marx put it, “Does a worker in a cotton factory produce merely cotton textiles? No, he produces capital.”

Two central relationships are at the heart of capital. The first is between capitalists and workers. Capitalists who control the means of production are able to exploit wage labourers who lack any means to survive except their capacity to work for those capitalists.

Second is the relationship between capitals themselves. This is based on competition. Rival capitals have to successfully compete or face takeover or bankruptcy.

This means that capitalists are compelled on pain of extinction to relentlessly exploit workers.

The great classical political economists Adam Smith and David Ricardo had grasped central elements of this new system. Marx drew on their insights but also sought to overcome their limitations.

Ricardo, more clearly than even Smith, laid out the labour theory of value. This is the idea that the value of any commodity is based on the amount of labour that went into producing it.

It is a vital insight that points to the exploitative nature of capital. But Ricardo was unable to explain how this theory connected with aspects of capitalism that seemed to contradict it.

This failure has allowed other economists who wanted to say capitalism was not based on exploitation to abandon Ricardo’s ideas as incoherent.

Alex shows how Marx, through successive drafts of Capital grappled to overcome the flaws in Ricardo’s ideas.

To do so he drew on the work of the great German idealist philosopher Georg Hegel. He had to rework Hegel’s concepts to develop a materialist method for understanding capitalism.

Alex assumes a familiarity with these thinkers’ ideas, which can make some arguments hard to follow for people who do not know them.

But this is a complex issue that has confounded mainstream economists as long as capitalism has existed.

The reward of being able to understand key features of contemporary capitalism far better than the supposed experts repays the effort. This is particularly true in two areas that Alex explores in the later chapters of the book.

He notes that many recent thinkers, including David Harvey, have tended to downplay the centrality of wage labour to the system.


But Alex argues that one of Marx’s main points was that exploitation of wage labourers was key to capitalism.

He writes, “Marx was surrounded by radical thinkers who treated exploitation as a consequence of capitalists’ illegitimate manipulation of the laws of the market.

“His presentation of the capital relation is intended to show that exploitation is a ‘normal’ feature of a system of generalised commodity production where labour power has been transformed into a commodity.”

It is true that capital does tend to replace workers with machinery, so creating a reserve army of underemployed and unemployed workers.

But capital also continues to create new industries, sometimes in new locations that draw on workers displaced from older industries.

Capitalism also creates new pools of workers, for example women who were previously outside the labour market or peasants who are driven off the land.

Indeed a central feature of the last 30 years has been the massive expansion of wage labour in the rising industrial capitalisms of East Asia.

Capitalism still depends on wage labour, more so than ever.

As Alex puts it, this continues to give workers “the collective capacity to disrupt, paralyse, and take control of the production process.”

Alex also takes another look at Marx’s theory of economic crises. He argues that Marx developed a sophisticated and multi-layered theory of how and why capitalism goes into periodic crises.

In an extensive chapter on crises he argues that, “Their significance lay in part in how they concentrated and summarised all the contradictions of the capitalist mode of production, and in part because they announced that ‘the survival of the bourgeois world’ could not be taken for granted.”

At its centre was an understanding of the interaction between the tendency for the rate of profit under capitalism to fall and the role of financial markets.

“But what you see developing, from the original version of that idea in the Grundrisse to the draft of Volume Three of Capital,” Alex explains “is the notion of the falling rate of profit becoming more complex. This is because Marx lends more and more weight to what he calls the counteracting tendencies.”

“In other words, there are forces built into capitalism as an economic system that both bring down the rate of profit but also help to bring it back up again.”

Marx identified the boom, bubble and bust cycle of the financial markets as playing a key role in both expansion and destruction of capital.

This underlines a key point that Alex makes about Marx’s Capital. Far from being outdated, it retains an astonishing freshness in its understanding about capitalism.

In many ways the world we live in today is even more like the picture of capitalism that Marx drew in Capital than it was a generation or two ago.

A key feature of neo-liberal capitalism since the late 1970s has been the lifting of tight state controls over financial markets.

The vast growth of global trade, production networks and finance and the regular convulsions of economic crises would have been familiar to Marx. Marx’s method remains critical to all those who want to carry on the struggle against capitalism in the 21st century.

Socialist Worker UK

Deciphering Capital: Marx’s Capital and its destiny
By Alex Callinicos


Solidarity meetings

Latest articles

Read more

Why revolution is the only route to real change

Radical parties that have tried to introduce sweeping change through parliament have continually failed, argues James Supple, because the system is set up to stop them

Workers and the alternative to capitalism

The history of workers’ struggles shows the possibility of a socialism based on mass democratic control of society, writes Judy Cox.

How colonial war led to revolution in Portugal

The revolution in Portugal beginning 50 years ago in 1974 with a revolt in the army, saw workers take control of hundreds of factories, writes Luke Ottavi