Part Four

Capitalism: Its Driving Forces and Contradictions

Capitalist production...more than any other mode of production, squanders human
lives, or living labor, and not only blood and flesh, but also nerve and brain.
Indeed, it is only by dint of the most extravagant waste of individual developme
nt that the development of the human race is at all safeguarded and maintained i
n the epoch of history immediately preceding the conscious reorganization of soc
iety. - MARX, Capital, vol. III (1894), p. 88
Introduction
The material in this section is taken in large measure from Capital, Marx's most
famous work, in which his thought is most fully elaborated. In form and appeara
nce Capital is an economic treatise - and indeed, comprising as it does three vo
lumes of over 2,200 pages, it is not only an encyclopedic but a profound economi
c study. It is, in addition, a penetrating running commentary on the history of
economic thought.
Yet it is far more than this. For Marx is concerned not only wih the economics o
f capitalism, but with the system in its totality. He sees history, politics, so
ciology and philosophy as integral elements of economics, just as he sees econom
ics as the bedrock of all social analysis. Because he was able to achieve this s
ynthesis, Marx did two things never before accomplished by an economic scientist
: he made clear the inner driving forces of capitalism; and at the same time he
showed how capitalism is only a particular stage in human history. This achievem
ent, perhaps more than any other, gives Marx a place in the social sciences anal
ogous to that of Copernicus and Darwin in the natural sciences.
Students of economic theory know that Marx's comprehensive analysis was a contin
uation of the work of the classical school - particularly Adam Smith and David R
icardo, who took for their subject not economics but political economy (a study
in which economics and politics are seen as interacting aspects of social life).
What Marx did was to carry the study of classical political economy to its logi
cal - and revolutionary - conclusion. Interestingly, those economists who compla
in about Marx's introduction of "extraneous" matters into his economic writings
do not raise the same objection to Smith and Ricardo. The reason, of course, is
that the latter, basically capitalist in outlook, stopped short of the full impl
ications of their own analysis. For them capitalism was an eternal, natural syst
em, not a temporary epoch in history. Moreover, since they did not go beyond the
bourgeois outlook, they were unable to unravel the mystery of surplus value, an
d thus could not explain fully what makes the weels of capitalism turn.
There are those, such a Joseph Schumpeter, who acknowledge Marx's contribuion as
sociologist-historian-philosopher, but who contend that his economics is wrong.
They view Marx, together with Smith, Ricardo and other classical economists, as
outdated theorists who failed to explain what happens in the workaday world of
business and whose ideas have no relevance to the sophisticated economic problem
s of contemporary society. Others, such as Robert Heilbroner, grant Marx a measu
re of prophetic acumen in foreseeing such features of capitalism as periodic cri
ses and the growth of monopoly enterprises. But they dismiss his labor theory of
value as a cumbersome and inacurate explanation of the phenomena of the market.
Further, seizing on alleged "flaws" in Marx's analysis, such as his conclusion
hat the rate of profit tends to fall or his discussion of the "absolute impoveri
shment" of the working class, they conclude that these so-called flaws prove tha
t the entire structure of Marx's economic theory falls to the ground.
The validity of Marx's basic propositions - the laws of value, surplus value, ca
pitalist accumulation, and the like - is not dependent on the correctness of all
his secondary or derivative formulations. In addition, the "errors" that some o

f Marx's adversaries find in his work stem from the fact that developments in su
bsequent times and other places call for qualifications of some of Marx's analys
es. Further, a careful reading of Capital reveals that some of the alleged "flaw
s" are really only flaws in the understanding of Marx's critics.* (* A full disc
ussion of these questions can be found in such works as Maurice Dobb's "Politica
l Economy and Capitalism (New York, 1945), Rudolph Schlesinger's "Marx, His Time
and Ours" (London, 1950), Joseph Gillman's "The Falling Rate of Profit" (New Yo
rk, 1958), Paul Sweezy's "The Theory of Capitalist Development" (New York, 1942)
.)
From the mid-19th century until about a generation ago, academic economists - wi
th few exceptions - simply rejected Marx out of hand. They found his analyses cr
ude and irrelevant, if not totally incomprehensible. In part, their rejection wa
s due to a lack of concern with the questions with which Marx dealt. Assuming th
e eternity of capitalism, they occupied themselves with working out formulas for
the circulation of goods in an ideal "free enterprise" system - a system in whi
ch such unpleasant things as crisis or class struggle or monopoly were merely an
noying aberrations.
Two events of the first half of this century - the Russian Socialist Revolution
of 1917 and the economic crisis of the 1930s - shook the complacency of traditio
nal economics and forced a confrontation with the ideas of Marx. A number of eco
nomists, among whom J. M. Keynes was the most prominent, began to turn to some o
f the central questions posed by Marx. (In doing so Keyns studiously avoided any
mention of Marx or his writings.) They admitted that capitalism was not an auto
matic self-regulating system; that big business and monopoly were transforming 1
9th century rugged individualistic capitalism into something quite different; th
at the big corporations desperately needed state intervention in economic affair
s if the entire system was not to collapse; that modern wars are very much relat
ed to imperialistic economic drives.
In the United States, despite the further expansion of capitalism, considerable
effort has been put into combating Marx's economic ideas. Alongside the old "ref
utations," theories have been advanced to prove that we have undergone a "manage
rial revolution," in which power has silently passed from the big capitalist own
ers to a new class of managers and technical elite. We are told that a welfare s
tate has taken power away from big business and we really now have a kind of soc
ialism in our country in the form of "people's capitalism." A few years ago we w
ere informed that poverty had become a thing of the past in our "affluent societ
y"; more recently proverty [sic] has been "rediscovered" but it is now supposedl
y only marginal, existing in "pockets" of our ever-more-affluent society. Other
economic and sociological theorists inform us that power is now equally shared b
y business, labor and government, and that this new equilibrium of "countervaili
ng power" will keep our capitalism alive and healthy far into the foreseeable fu
ture. Such, in essence, are the latter-day "refutations" of Marx's Capital.
To be sure, there are non-Marxist scholars who see in our system today some of t
he features pointed out by Marx more than a century ago. Men like C. Wright Mill
s have warned of the death-grip of the "power-elite," and more recently G. Willi
am Domhoff, in "Who Rules America?" has brilliantly demonstrated that the United
States has a small, powerful and clearly identifiable "governing class." J. K.
Galbraith, who wrote about the "affluent society" and "countervailing power," no
w takes a more sober view in his "The Industrial State." He talks about planning
as a necessary replacement for the capitalist market, and about "excluding the
capitalist from effective power" (of course, it is not to the working class that
Galbraith would give power, but to a technocratic "Educational Scientific Estat
e"). He also thinks he sees a "convergence" of the capitalist and Soviet systems
- a wishful idea increasingly popular among some liberals.
The excerpts from Marx, as well as from Engels and Lenin, presented in this sect

ion, although they are of necessity fragmentary and omit the elaborate technical
structure of the argument of "Capital", nevertheless show the basic pattern of
Marxian economic thinking. They should enable the reader to see how this analysi
s stands up against the kind of criticism mentioned above.
Of course the capitalism Marx writes about is that which existed in England a ce
ntury ago, and his conclusions and observations must be considered in that light
. Marx, in economics as in other areas, was not giving all answers for all time.
What he did - and did with genius - was to describe and explain the driving for
ces of capitalism and to indicate the direction of its development. Since Marx w
rote, some of his analyses have had to be extended to take into account new feat
ures, such as state monopoly capitalism, the coexistence of two economic systems
, the problems of relations between socialist states, the need for varied patter
ns of economic programs in socialist countries at different levels of developmen
t, the problems of newly liberated countries in Asia and Africa. It is only natu
ral that some of Marx's formulations have had to be further refined or qualified
; some have been given differing interpretations; and others are being re-examin
ed in the light of new problems and new knowledge.
The selections make clear the central proposition of Marx's socio-economic theor
y - namely, that relations of production are the foundation of every social econ
omic formation. Under capitalism the primary social relation is that of capitali
st and worker. Relations of production cannot of course be separated from the pr
oductive forces. The study of production relations entails the simultaneous stud
y of the forces of production - the labor process, technology, division of labor
, and cooperation.
In his study of capitalist society Marx begins with the commodity, which he hold
s is the basic cell of the capitalist organism. Examining the commodity historic
ally and analytically, he demonstrates that commodity transactions - the buying
and selling of goods - though they appear to be the movement of things, are in r
eality relations between people at a particular level of social production. The
mistaking of the appearance for the reality of the commodity results in what Mar
x calls "commodity fetishism."
Proceeding to an examination of capitalist commodity production, Marx again insi
sts that capital, though it appears to be money, or factories and raw material,
or machinery and goods, is essentially a social relation. He traces the emergenc
e of capital, dealing with the history of technology and social change. He shows
that for capital to come into being there had to exist, on the one hand, a part
icular level of technology, and on the other, a particular social condition - na
mely, a mobile body of people, unhampered by ties to the soil or to feudal lords
, and thus free to operate the capitalists' factories. In other words, capitalis
m had to have a modern working class.
Marx next analyzes the relations of worker and capitalist. He here makes his epo
chal discovery - the law of surplus value, which hinges on disclosing the crucia
l distinction between labor and labor power. Simultaneously, he deals with the g
rowth of the working class in Europe, the conditions of factory workers and thei
r struggles as capitalism develops at a rate and on a scale unprecedented in the
evolution of mankind. The pages of "Capital" devoted to the history and life of
the working class are among the most moving in all literature.
The capitalism of Marx's day had already manifested its cyclical character - its
tendency to swing from boom to bust. While he did not deal with the subject sys
tematically in any one particular plae, Marx gave us brilliant insights into thi
s phenomenon. His observations, taken in their totality, constitute the most ade
quate theory of crises to date. He saw crisis not as accidental or adventitious,
but as inherent in the system itself and symptomatic of its fatal flaw - what h
e called its basic contradictions.

Perhaps the most impressive evidence of the validity of Marx's economic analysis
is its previsioning of the way in which the "free enterprise" capitalism of his
day would develop into the modern system of mammoth industrial and financial co
mplexes, girding the globe and shaping the political establishments of the major
capitalist countries. In Volume I, and more fully in Volume III, of "Capital,"
Marx describes the "centralization and concentration" of capital and the role of
what were called "stock companies." Building on Marx's foundation, Lenin made a
major contribution to economics by elaborating his theory of imperialism, which
has enormous contemporary significance. We include a selection from Lenin's cla
ssic work in this section.
The final excerpt deals briefly with the way in which capitalism prepares the wa
y for socialism.