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Capitalism, Socialism, and Communism?

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Karl Marx (1818–1883) is best known not as a philosopher but asa revolutionary, whose works inspired the foundation of many communistregimes in the twentieth century. It is hard to think of many who havehad as much influence in the creation of the modern world. Trained asa philosopher, Marx turned away from philosophy in his mid-twenties,towards economics and politics. However, in addition to his overtlyphilosophical early work, his later writings have many points ofcontact with contemporary philosophical debates, especially in thephilosophy of history and the social sciences, and in moral andpolitical philosophy. Historical materialism — Marx’s theory ofhistory — is centered around the idea that forms of society riseand fall as they further and then impede the development of humanproductive power. Marx sees the historical process as proceedingthrough a necessary series of modes of production, characterized byclass struggle, culminating in communism. Marx’s economic analysis ofcapitalism is based on his version of the labour theory of value, andincludes the analysis of capitalist profit as the extraction ofsurplus value from the exploited proletariat. The analysis of historyand economics come together in Marx’s prediction of the inevitableeconomic breakdown of capitalism, to be replaced by communism. HoweverMarx refused to speculate in detail about the nature of communism,arguing that it would arise through historical processes, and was notthe realisation of a pre-determined moral ideal.

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The German Ideology, co-written with Engels in 1845, wasalso unpublished but this is where we see Marx beginning to develophis theory of history. The Communist Manifesto is perhapsMarx’s most widely read work, even if it is not the best guide to histhought. This was again jointly written with Engels and published witha great sense of excitement as Marx returned to Germany from exile totake part in the revolution of 1848. With the failure of therevolution Marx moved to London where he remained for the rest of hislife. He now concentrated on the study of economics, producing, in1859, his Contribution to a Critique of PoliticalEconomy. This is largely remembered for its Preface, in whichMarx sketches out what he calls ‘the guiding principles’of his thought, on which many interpretations of historicalmaterialism are based. Marx’s main economic work is, of course,Capital (Volume 1), published in 1867, although Volume 3,edited by Engels, and published posthumously in 1894, contains much ofinterest. Finally, the late pamphlet Critique of the GothaProgramme (1875) is an important source for Marx’s reflections onthe nature and organisation of communist society.

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The issue of Marx and morality poses a conundrum. On reading Marx’sworks at all periods of his life, there appears to be the strongestpossible distaste towards bourgeois capitalist society, and anundoubted endorsement of future communist society. Yet the terms ofthis antipathy and endorsement are far from clear. Despiteexpectations, Marx never says that capitalism is unjust. Neither doeshe say that communism would be a just form of society. In fact hetakes pains to distance himself from those who engage in a discourseof justice, and makes a conscious attempt to exclude direct moralcommentary in his own works. The puzzle is why this should be, giventhe weight of indirect moral commentary one finds.

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However, even if the labourtheory of value is considered discredited, there are elements of his theory that remain ofworth. The Cambridge economist Joan Robinson, in An Essay onMarxian Economics, picked out two aspects of particularnote. First, Marx’s refusal to accept that capitalism involves aharmony of interests between worker and capitalist, replacing thiswith a class based analysis of the worker’s struggle for better wagesand conditions of work, versus the capitalist’s drive for ever greaterprofits. Second, Marx’s denial that there is any long-run tendency toequilibrium in the market, and his descriptions of mechanisms whichunderlie the trade-cycle of boom and bust. Both provide a salutarycorrective to aspects of orthodox economic theory.

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Many defenders of Marx will argue that the problems stated areproblems for Cohen’s interpretation of Marx, rather than for Marxhimself. It is possible to argue, for example, that Marx did not havea general theory of history, but rather was a social scientistobserving and encouraging the transformation of capitalism intocommunism as a singular event. And it is certainly true that when Marxanalyses a particular historical episode, as he does in the 18thBrumaire of Louis Napoleon, any idea of fitting events into afixed pattern of history seems very far from Marx’s mind. On otherviews Marx did have a general theory of history but it is far moreflexible and less determinate than Cohen insists (Miller). Andfinally, as noted, there are critics who believe that Cohen’sinterpretation is entirely wrong-headed (Sayers).

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It appears to follow from this analysis that as industry becomes moremechanised, using more constant capital and less variable capital, therate of profit ought to fall. For as a proportion less capital will beadvanced on labour, and only labour can create value. InCapital Volume 3 Marx does indeed make the prediction that therate of profit will fall over time, and this is one of the factorswhich leads to the downfall of capitalism. (However, as pointed out byMarx’s able expositor Paul Sweezy in The Theory of CapitalistDevelopment, the analysis is problematic.) A further consequenceof this analysis is a difficulty for the theory that Marx didrecognise, and tried, albeit unsuccessfully, to meet also inCapital Volume 3. It follows from the analysis so far thatlabour intensive industries ought to have a higher rate of profit thanthose which use less labour. Not only is this empirically false, it istheoretically unacceptable. Accordingly, Marx argued that in realeconomic life prices vary in a systematic way from values. Providingthe mathematics to explain this is known as the transformationproblem, and Marx’s own attempt suffers from technicaldifficulties. Although there are known techniques for solving thisproblem now (albeit with unwelcome side consequences), we shouldrecall that the labour theory of value was initially motivated as anintuitively plausible theory of price. But when the connection betweenprice and value is rendered as indirect as it is in the final theory,the intuitive motivation of the theory drains away. A furtherobjection is that Marx’s assertion that only labour can create surplusvalue is unsupported by any argument or analysis, and can be argued tobe merely an artifact of the nature of his presentation. Anycommodity can be picked to play a similar role. Consequently withequal justification one could set out a corn theory of value, arguingthat corn has the unique power of creating more value than itcosts. Formally this would be identical to the labour theory ofvalue. Nevertheless, the claims that somehow labour is responsible forthe creation of value, and that profit is the consequence ofexploitation, remain intuitively powerful, even if they are difficultto establish in detail.