Karl Marx, crisis and capitalism

The growth of inequality and the persistence of economic crisis mean Marx’s ideas are as relevant as ever, argues James Supple

There is a renewed interest in the ideas of Karl Marx. The global economic crisis since 2008 has sent many people searching for answers.

Last year’s celebrated book by Thomas Picketty, Capital in the 21st century, referenced Marx’s own work in its title (although Picketty rejects Marxism and said he’d never actually read Marx). Comedian Russell Brand gained legions of fans in 2013 when he took on the snobbish Jeremy Paxman in a TV interview and called for revolution. The excitement is a product of deeper concern about the growth in inequality under a rampaging free market capitalism. This was the key theme of the Occupy movement of 2009, and its opposition to the rule of the 1 per cent.

For anyone who wants to understand why capitalism is in crisis, and the possibility of revolution, engagement with Marx’s ideas is essential.

Understanding capitalism

Marx lived at the dawn of modern capitalism, when only England was fully dominated by capitalist production. Observing capitalism’s evolution helped him grasp what was unique about this new system.

Marx recognised that competition and the drive for profit are at the heart of how capitalism operates. Different companies must compete with each other to sell what they produce on the market. Goods that can be produced more cheaply can be sold for less, undercutting competitors and winning a bigger share of profits.

Remaining competitive means having the newest technology and improving what you’re selling. This requires continuous new investment. Think of the way computers have faster processors and better storage every year. A computer company that failed to innovate, and that could only offer the same technology while competitors produced ever faster and cheaper computers, would quickly go out of business. The same thing is true across the whole economy, from machines and fertilisers in farming to modern cars.

Since profits are necessary to continue production and investment, all production is subordinated to the drive for profit. So under capitalism, production does not take place to satisfy human need, but in order to enable the capitalist to survive competition on the market. Amassing ever greater profits is put before all other concerns, including the environment and social justice. As Marx put it, “Accumulate, accumulate! That is Moses and the prophets!”

Labour and exploitation

One of Marx’s key insights was explaining how profits are created. He concluded that human labour was the source of profit. Without people to work on machines and resources, nothing could be produced.

If workers are the source of wealth, profits are the result of their exploitation. A worker makes more wealth for the boss than they take home in wages—the remainder is the boss’ profit. This is what Marx called, “surplus value”.

This also means company owners can increase their profits by forcing workers to work longer hours, work harder during work hours, or accept a pay cut.

Marx studied the early period of the industrial revolution, where capitalists experimented to see how long people were physically capable of working. In one famous example workers in iron foundaries were made to work three consecutive 12-hour shifts. As there was a huge pool of people desperate for work, the fact that people were literally worked to death did not bother these early capitalists.

Thankfully, such conditions are rarely accepted in advanced capitalist countries like Australia, where bosses usually pay enough for a worker to sustain themselves and their family so they can continue working. But as business demands for an end to penalty rates or lowering the minimum wage show, the desire to squeeze workers continues. Whether an individual capitalist wants to force this on their workers or not, there is pressure on them as a result of competition to drive down their production costs.

The conclusion Marx drew was that the relationship between company owners and their workers was fundamentally exploitative. But this was also a source of power for workers. The fact that profits cannot be produced without labour means workers potentially have power over their employers, through going on strike and stopping production.

The attempts by capitalists to squeeze more profit out of their workforce would be resisted by workers, and result in class struggle against their bosses.

Marx argued that when class struggles reached a high point, workers were capable of carrying through a social revolution to introduce a new type of society, socialism. Such a society would be based on seizing control of the enormous wealth owned by a tiny elite and putting it to use in the interests of the whole of society.

A socialist society

Marx’s vision of socialism has been repeatedly ridiculed and misunderstood. We need to rescue what Marx really thought from under a mound of slander and distortions. This is necessary not just because of the attacks on Marx by his opponents, but because people who have claimed to be his intellectual inheritors have distorted his ideas. Above all, this is true of the rulers of Stalinist Russia, China and the host of other countries that called themselves socialist. These countries had nothing to do with Marx’s idea of socialism.

It is often asserted that Marx’s ideas are utopian dreams that do not work in the real world. But Marx was no academic philosopher. He developed his ideas in the process of involvement in the great European social movements of his day.

Marx began his political life not as a socialist but a radical democrat. Across his native Germany, there was a growing desire among the educated middle classes for democracy, and widespread hostility towards the repressive Prussian monarchy. Young activists hoped to transform the German provinces into a modern state along the lines of France in the decades following the 1789 revolution.

The young Marx was first involved in practical politics editing a newspaper set up by supporters of democratic reform. But he discovered that the support for democracy among the middle class intellectuals and emerging capitalists was severely limited.

They fell silent in their opposition to government oppression when it was aimed at the working class or peasantry. And even when the government moved to shut down their own progressive newspapers or restrict their right to hold public meetings they did little to oppose the crackdown. Most of them were more concerned with maintaining their wealth and privileges than in the struggle for democratic rights.

Marx played an active part when revolution came to Germany in 1848. When the revolt failed, he was forced to flee to Britain. But Marx threw himself into political struggles whenever there was a real opportunity throughout his life.

What distinguished Marx was a belief in the power of the emerging working class to completely transform society and introduce socialism. Marx did not simply spin these ideas out of his head. They were based on observing actual working class struggles.

The most important event in showing what the future might hold was the example of the Paris Commune of 1871, the first time that workers formed their own government and took over running a major city.

Marx recognised the Commune as a “new point of departure of worldwide significance” and, after it was eventually crushed, tried to analyse what was new about the Commune and the lessons about what socialism would look like.

The Commune was run according to a much deeper form of democracy than had ever existed previously, many times more democratic than the parliamentary democracies that dominate the world today. It effectively dismantled the old state institutions and built a new form of democracy in its place.

Unlike democracy in Australia, where politicians are free once they are elected to misrepresent their electors for the three years between elections, representatives elected under the Commune were subject to immediate recall if their constituents were unhappy at their decisions.

As a government run by ordinary workers, it introduced measures in their interests such as banning the power of employers to fine their workers for misbehaviour, handing over to workers factories shut down by their owners, introducing pensions for widows and free education for children, and canceling evictions for non-payment of rent.

In doing so it began to exercise control both over the economy as well as ordinary political decisions. This is a far cry from the kind of capitalist democracies we have today, where the rights of a small minority to keep control of enormous wealth are never questioned. Instead of production governed by profit, the Commune showed how collective ownership of production could organise production based on human needs.

This alternative of a society run by ordinary working class people has been posed again and again in the time since Marx’s death. Every great mass movement increases the confidence of ordinary people, and gives them a taste of what it feels like to have control over the decisions that affect their daily lives.

When the last great wave of class struggle shook the system in the late 1960s and 1970s, the beginnings of workers’ control emerged in revolutionary situations such as France 1968, Chile in 1973 and Portugal 1974-1975.

The high point in history so far was when Russian workers took over a whole country in 1917, before their revolution was crushed by the pressure of world capitalism from outside and from within by Stalin’s dictatorship.

The global economic crisis has produced new mass movements against capitalist austerity. This has brought radical left-wing party Syriza to government in Greece, where it now faces a conflict with the IMF and the EU over its call for an end to austerity.

In Australia there is a widespread rejection of privatisation and neo-liberalism, seen in the dramatic rejection of both Campbell Newman in Queensland and Tony Abbott’s budget.

Marx spent his life encouraging the growth amongst the workers’ movement of a conscious understanding about how a society based on real democracy was possible. Building that understanding today is just as necessary. As Marx said, “Philosophers have merely interpreted the world. The point is to change it.”


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