Marxism

A critical perspective of how a capitalist economic system exploits workers while accumulating more capital for business owners

What is Marxism?

Marxism is an analytical concept concerning the social, economic, and political philosophy that examines the problematic nature of capitalism on the economy. The philosophy was coined after Karl Max, who, alongside Friedrich Engels, aimed to understand the systematically hidden dimensions in the economic realm.

 

Marxism

 

Marxism suggests that class conflicts, especially between the proletariat (workers) and bourgeoisies (business owners), are unequal opposites in the capitalistic economy that will inevitably culminate in a revolution because of material exploitation. According to the concept, the bourgeoisie will first decrease and lose their political power, while the number of workers will increase to take over the means of production.

 

Summary

  • Marxism is a critical perspective of how a capitalist economic system exploits workers while accumulating more capital for business owners.
  • The Marxian economics and Marxist class conflict are the primary founding principles of Marxism, which analyze the class conflict theory and its basis.
  • Marxism argues that because of social class order and the exploitation of workers by business owners, a revolution would suffice due to prejudice and hate against the bourgeois.

 

Understanding Marxism

 

The Structure and Content of The Communist Manifesto and Das Kapital

Marxism is a social and political theory of continuous struggle characterized by Marxian economics and Marxist class conflict. Marxism first came into the public limelight in 1848 through a document dubbed The Communist Manifesto, written by Karl Marx assisted by Friedrich Engels, which outlines power alignments and class struggle.

The manuscript was written upon request by the Communist League program and later printed in London. On the other hand, Marxian economics presents an analysis and criticism of a mature capitalist economy. Karl Marx also advanced his theory in his three-volume book called Das Kapital that operates at two main levels – capital in general and many capitals.

 

The Theory of Class Struggle

Marxism’s theory of class struggle posits that class struggle is a law of history and the factors that accelerate economic development. According to Marxism, the law of history works well for every society consisting of social classes, fighting for a higher role in the area of production.

Marx saw every society to be socially stratified based on classes, where the presence or absence of means of production serves as the basis of separation in the groups. He believed that only two types of classes exist in a capitalist society, the bourgeois (business owners) with the means of production and the proletariat who turn resources into products.

Since the bourgeois monopolizes the means of production, they are more economically powerful and politically influential than the proletariat counterparts. It allows workers to be exploited by the bourgeoisie, and their ability to produce and get what they need for survival is limited.

 

Commodities as the Basis of Class Struggle

Another perspective of Marx’s theory of class struggles is that capitalism is defined by commodities, taking the form of services and capital goods.

In Marx’s view, employees are nothing more than commodities sold and bought on the market. Such ordinary laborers cannot wield immense power in the capitalist economic system because they do not own the means of production – such as raw materials, factories, or equipment.

In addition, employees are readily replaceable during times of unemployment, which reduces workers’ perceived value and worth. Conversely, business owners enjoy the incentive to exploit workers by unfairly compensating labor with wages, while maximizing their profits.

Capitalists eventually own the added value as private profit that is the result of workers’ labor. They also take the ultimate profit, which is the beneficial surplus produced by the entire collectivity of society and nature.

 

The Superstructure of Marxism

The bourgeoisie uses various means to build up power against the proletariat. The governing elites, charged with guaranteeing universal economic progress, enforce the will of the business owners. They use ideological and political power to enforce laws and property rights.

The awareness of bourgeoisie-proletariat class relations is suppressed by the media and academics and, instead, advocates for the capitalist system. Organized religion uses fictional divine punishments to console the proletariat and convinced them to accept the increased exploitation, which Marx referred to as “the opiate of the masses.”

The consolidation of capital ownership is also facilitated by the financial and banking systems, which regularly stage-manage the financial crisis and trap workers with predatory debts to undermine workers’ bargaining power by ensuring a sufficient supply of unfree labor.

 

Class Revolution

Marx believed that capitalism is a means of controlling one class by another, thus creating a system of exploitation and enslavement. Business owners exploit workers for their gain by only paying them enough for survival. Consequently, the proletariat radicalizes their attitude towards their humanity and business owners since they have a little personal stake in the production process and view their employment as nothing more than a means of survival. The old power must be abolished by force, given that no class is ready to surrender its privileges voluntarily.

Capitalist businesses concentrate on capital accumulation, while workers are focused on basic survival. Marxism doctrine acknowledges that the close interrelation between different relations of each class to the means of production is the main reason for the class conflict. The social problems created by such an unfair imbalance would eventually be settled through economic and social revolution.

In Marx’s view, the capitalist system designed its destruction because the exploitation of the proletarians would eventually drive the rebels closer to the specter of revolution and seize control of the means of production. Marx further predicted that collective ownership of means of production would lead to socialism.

 

More Resources

CFI is the official provider of the Certified Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

  • Development Economics
  • Socialism vs. Capitalism
  • Keynesian Economic Theory
  • Monetarist Theory

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes!