Capitalism is a type of society in which the private ownership of themeans of productionis the dominant form of providing the means to live. What distinguishes capitalism from Marxism is the emphasis on the rights of property and the individual owner’s right to employ capital as he or she thinks fit.
The transformation of society into socialism and ultimately to communism is the philosophy of Marxism.
What is Capitalism?
Capitalismis a social and economic system based on the idea that private individuals or businesses have ownership in which the free market controls the production of goods and services.
Capitalism is often considered an economic system in which individuals privately own and control property according to their interests. In a capitalist economy, assets such as factories, railroads, and mines can be privately owned and controlled, for instance.
The essential feature of capitalism is the motivation to make a profit. Labor is purchased for money wages, capital gains accrue to private owners, and prices allocate capital and labor between competing uses (Jahan & Mahmud, 2015).
The production of goods and services in a capitalist economy is based on supply and demand in the general market.
In a capitalist economy, a market mechanism determines the prices through interactions between buyers and sellers. In return, prices allocate resources that naturally seek the highest reward for goods, services, and wages (Jahan & Mahmud, 2015).
What Was Karl Marx’s View Of Capitalism?
In simple terms, Marx’s ideas are about how capitalism changes society, creates inequality, and leads to conflict between the rich and the poor. He believed this conflict would eventually lead to a revolution where the workers take control.
Karl Marx, in his work “The Manifesto of the Communist Party,” talks about how capitalism, the economic system where individuals or companies own businesses, changes society.
He says capitalism was a step up from the old system (feudalism) because it used resources more efficiently. But, just like feudalism, capitalism was creating its own problems that would eventually lead to its downfall.
Karl Marxasserted that capitalism is a system that alienates the masses and that workers do not have control over the goods they produce for the market.
Marism is critical of capitalism because the people who are the laborers behind the goods and services lose their value over time. When once the workers would have crafted the whole product, they may now be reduced to producing one component on the production line.
Capitalism predisposes societies to unjust systems favoring a small group of people, the ruling class bourgeoisie, over the majority, the working class proletariat.
The Bourgeoisie
In capitalism, thebourgeoisie,sometimes called the capitalists, own the means of production. They are the owners of capital and can acquire the means of creating goods and services, such as natural resources or machinery.
With their capital, the bourgeoisie can purchase and exploit labor power, using the surplus value that their employees generate to accumulate or expand their capital (Wolf & Resnick, 2013).
The key differentiation between the bourgeoisie and other social elites is this ownership of the means of production.
Marx believed that the bourgeoisie began in medieval Europe with traders, merchants, craftspeople, industrialists, manufacturers, and so on who could increase wealth through industry. These individuals employed labor to create capital (Wolf & Resnick, 2013).
The Proletariat
The second major class in Marxism is theproletariat, which owns their labor but does not have any means of production. Because these workers have no property, they must find employment in order to survive and obtain an income.
Being confined to a component means that workers lose value and are potentially less skilled when seeking other employment (Chiapello, 2013).
Proletariat Revolution
Marxists see capitalism as an unstable system that will eventually result in a series of crises. The more that capitalism grows, the more people take advantage of it, and the more oppressed, degraded, and exploited the proletariat will be (Marx, 1873).
Marx explains that competition between business owners would lead to fewer people owning more and more wealth.
These business owners, or capitalists, always look for ways to cut costs and make more money. This would lead to too many goods being produced, causing a crisis. The businesses that couldn’t keep up would fail, increasing wealth concentration.
As capitalism grows, the middle class (like shopkeepers and small business owners) would shrink, and more people would become part of the working class, or proletariat.
These workers would live in similar conditions, work in factories where their skills don’t matter much, and earn low wages. Marx believed this would lead to a society divided into two main groups: the capitalists and the proletariat.
Marx thought that workers would fight back if they realized they were being exploited. At first, this might be individual workers against their bosses, but eventually, workers would form unions to protect their interests.
But he thought that eventually, the workers would rise and overthrow the capitalists. This revolution would be violent because the capitalists would not give up their power easily. They controlled not just the wealth, but also the government, religion, and even the family structure.
Marx argued that a social revolution would mean changing the existing social and political system from a capitalist to a communist society. A communist society means there are no social classes or private property.
Communism
Derived from the work of Marx, the implementation of communism involved totalitarian control of society. The empirical manifestation of communism was in the Soviet Union and the socialist organizations of eastern Europe until their collapse in 1989-90. Communism continues to dominate China (People’s Republic of China), North Korea, Laos (Lao People’s Democratic Republic), and Cuba.
Capitalists argue that private ownership allows individuals to use resources more efficiently than the government, meaning that the free market decides who receives profits and who does not.
However, communists argue that capitalism’s private ownership allows relatively fewer wealthy people to control most of the properties, meaning that the rich get richer while the poor get poorer.
A communist society would mean there would be no inherited wealth, there would be steeply graduated income tax, centralized control of the banking, communication, and transport industries, as well as free public education (Marx & Engels, 2019).
Instead, private property will be replaced with collective ownership, meaning that the means of production will come to a common agreement. Under communism, there would be no exploitation of the labor of others. Instead, accumulated labor is a means of widening and enriching the workers’ existence (Marx & Engels, 2019).
References
Callinicos, A. (2003).Anti-capitalist manifesto. Polity.
Chiapello, E. (2013). Capitalism and its criticisms.New spirits of capitalism? Crises, justifications, and dynamics,60-81.
Jahan, S., & Mahmud, A. S. (2015). What is capitalism. International Monetary Fund, 52(2), 44-45.
Marx, K., & Engels, F. (1967).The communist manifesto.1848. Trans. Samuel Moore. London: Penguin, 15.
Mueller, D. C. (Ed.). (2012).The Oxford handbook of capitalism.Oxford University Press.
Rand, A. (1967).What is capitalism?(pp. 11-34). Second Renaissance Book Service.
Stern, B. J. (1948). Engels on the Family.Science & Society,42-64.
Resnick, S. A., & Wolff, R. D. (2013).Marxism. Rethinking Marxism, 25(2), 152-162.
Saul McLeod, PhD
BSc (Hons) Psychology, MRes, PhD, University of Manchester
Saul McLeod, PhD., is a qualified psychology teacher with over 18 years of experience in further and higher education. He has been published in peer-reviewed journals, including the Journal of Clinical Psychology.
Olivia Guy-Evans, MSc
BSc (Hons) Psychology, MSc Psychology of Education
Olivia Guy-Evans is a writer and associate editor for Simply Psychology. She has previously worked in healthcare and educational sectors.
