Marxist Critique of Capitalism: Causes, Effects, and Dynamics
Critique of Capitalism
The capitalist mode of production is one of the modes of production which Marx defined as a stage in the evolution of economic history, defined by a level of development of the productive forces and a particular form of production relations. The preceding mode of production is the feudal mode, and in predicting the future Marx's logic led to its replacement by a socialist mode of production.
While capitalism is generally defined as an economic system, for historical materialism capitalism is a mode of production. The Marxist definition of the capitalist mode of production focuses on the establishment of relations of production based on the existence of socially dispossessed proletarians of all types, whose relations with the means of production belong to the capitalist. They are forced to enter into an apparently free contract, in which they sell their labor power in exchange for a wage.
Capitalism organizes production in its technical aspect according to a specific level of economic development characteristic of the industrial age. Capital acquired dominion over the land, which was the dominant productive force in earlier modes of production (slavery and feudalism).
The key concepts in Marx's analysis of capitalism are alienation (the process and product of labor become external to the worker) and surplus value: the portion of labor embodied in the product that exceeds the value paid in wages. That difference in value is, for Marx, the profit of the capitalist, since it is this surplus that allows the capitalist, upon selling the product on the market, to obtain a price higher than the cost of production when the economic activity is successful.
Situation of the Worker
The formally free contract between capitalist and worker barely masks the pressure to which the worker is subjected by the existence of an industrial reserve army (the unemployed) willing to replace them. The functioning of market wages subjects wages to a law that prevents them from rising beyond the limits of subsistence. The proletariat must ensure the reproduction of their labor power.
Capitalist Crisis and Contradictions
The Marxist critique of capitalism argues that capitalist production contains inherent contradictions that cause cyclical crises. In Capital, Marx argues that it becomes increasingly difficult for capitalists to realize surplus value. Competitive relations force capitalists to continually invest in new and better machinery to increase labor productivity and thereby lower commodity prices relative to competitors. This process reduces the demand for labor and contributes to the growth of the industrial reserve army, that part of the working class that awaits employment.
This dynamic produces, on the one hand, a large mass of poor and destitute people, and on the other hand makes rapid wage increases impossible due to the excess supply of labor.
Key Concepts
- Alienation: labor and its product become external to the worker
- Surplus value: value created by labor beyond wages
- Industrial reserve army: unemployed workers as pressure on wages
- Capital accumulation and competition
- Cyclical crises resulting from internal contradictions