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Review of “Capital” by Carl Marx

Karl Marx is a famous philosopher known for a variety of economic works discussed and applied today. The most outstanding work is devoted to discussing capitalism and its components. Cooperating with Friedrich Engels, Marx created a small political group which is known as the Communist Correspondence Committee (Lebowitz 2020). Among their activities, the well-known Communist Manifesto was created, which consists of a preamble and four sections appealing to the communists to publicize their views and goals openly. Karl Marx foresaw that capitalism would conquer society and explored its basis. Considering the current economic situation, Marx’s works are essential to be studied and carefully analyzed. Special attention should be put on exploring the Capital and The Communist Manifesto, which are extremely important in understanding the market relationships of modern society.

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Capitalism has significantly influenced the whole society’s structural view of labor. The term capitalism was first mentioned at the end of the 19th century in France (BBC Masters of Money Karl Marx 2016). Originally it had a negative correlation with the speculators and profit-oriented society. Nowadays, many believe that capitalism is the most prevalent economic system for humanity. The rapid development of capitalism was noted after the industrial revolution when technologies became the main principle of production. The capital itself is a process of increasing the costs using labor. Capitalism is the system that puts production over the exchange (Marx and Engels 1848a). The main aim of production in capitalism is to gain maximum monetary benefits. Marx believes that Capital includes commodities, goods, and even intellectual resources, which can be beneficial for the entrepreneur (Economic Update 2019). Generally, capitalism consists of the relations of production striving for economic benefits (Marx and Engels 1848a). Marx highlights three essential “concepts of capital: classes, commodities, and the general formula of Capital” (Marx and Engels 1848b, 65). The classes of the capitalist society are divided into categories which include the exploiters and exploited.

From Marx’s perspective, commodities are considered to have a value that is estimated in labor measurements. Emphasizing this detail, Marx reveals the exploitation that lay in capitalism’s root structure (Marx and Engels 1848b, 66). The essential principle of the Capital in Marx’s theory is the General Formula for Capital which is represented by the combination of letters: “M (Money) – C (Commodities) – M (Money)” (Marx and Engels 1848b, 68). In other words, the entrepreneur strives to gain money by covering the initial expenditures through labor and machinery usage. The first M is the amount of money the product owner spends on possessing Capital, including materials, machinery, and labor (Marx and Engels 1848b, 68). The central C addresses the commodity which is created through money spendings. The last M is the amount of money that the entrepreneur gains from selling the commodities.

Marx considers the class distribution as the result of the capitalistic economy. One of the main principles in understanding Marx’s critique of capitalism is the parable of the Shmoo, which reflects the idea that exploitation is “a necessary condition for profits in a capitalist economy” (Marx and Engels 1848b, 67). As far as capitalists strive to get the maximum profits conditioned by the competition, the exploitation will rise: the wage will be reduced, while the working hours and machinery usage will increase. As a result, a “ruling” class will be formed, which holds the principal amount of the capital, while most people will be poor. Criticizing capitalism, Marx implements the term alienation, which causes the dissatisfaction with work caused by the fact that the entrepreneur owns the final products (Marx 1868). Smith consideres the division of labor the progressive tool of the productive development of society (Lebowitz 2020). Marx, on the contrary, believes that it is the main obstacle in the way of equal humanity. Therefore, Marx divides the capitalist society into two classes exploiting and working classes (Wright 2000). The first one operates the recourses and aligns the means of production. As far the commercial profits are mostly gained through exploitation, it is beneficial for the entrepreneurs to gain maximum material advantage using the labor. Thus, the owners of the means of production facilitate the exploitation of labor.

Another essential term for Marx’s capital theory is the surplus value. Various economists and philosophers like Smith and Ricardo also developed such a theory, but Marx’s one is the most detailed and rational (BBC Masters of Money Karl Marx 2016). Surplus value is the extra amount of money that the owner gains through the lowered real wages. Capital (C) includes the money spent on production (c) and labor (v) (Marx 1868, 320). After the end of production, the final product is sold for the price, which is higher than expenditures (c + v). Here the surplus value (s) appears, and the final formula of Capital represents the sum of three components: c, v, s (Marx 1868, 320). For example, the workers have fixed payment for an hour. They produce two goods per hour, having eight hours of labor daily. Entrepreneurs pay workers only a tiny part of the net value while assigning all other incomes to themselves (Lebowitz, 2000). This process illustrates how the owning production measures by the upper class encourages the exploitation of labor. This concept correlates with the General Formula of Capital, which shows that the owners are enriched after selling the commodities. The formula even has a similar structure to the Capital’s one. Analyzing these two concepts, it is essential to mention that the capital is mostly oriented on money rather than the production itself.

Another excellent example of the surplus value is the famous company devoted to the production of smartphones. According to the practical research, the exploitation rate within the iPhone production is “25 times higher” than the maximum, which Marx anticipated (Tricontinental 2019, 35). This example shows that the wage system is mostly capitalist-oriented. Nowadays’ society has come to the state which Marx was afraid of. To be precise, the most volume of capital is centralized in the entrepreneurs’ hands. At the same time, most of the population has lower than average incomes. Market relationships require the preservation of the wage system and capitalist relationships. Significant changes in the whole world’s economic system are needed to abolish the well-established capitalist economy structure.

The capitalist economy pattern and labor exploration are well-established in modern society. Today there is no dangerous crisis that can cause the whole system destruction because more significant problems are to be solved. However, there is an opinion that the current COVID-19 situation has significantly affected society’s structure and can lead to abolishing capitalism. Due to the more individualized approach to personal labor caused by the isolation period, many people value their work more than before the virus. Therefore, this can probably result in the reconsideration of the production values.

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The non-capitalist types of economic relationships are hard to imagine. However, capitalism encourages exploitation and promotes inequality within the whole community. Considering the upcoming tendencies for equality, the capitalist economy may also change someday. Wright criticizing capitalism offers the theoretical approach empowering the abolishing of the classes and surplus value called “an unconditional basic income” (Wright 2006, 6). The main advantage of this approach is that all the people are in identical conditions and gain governmental support. As a result of the wealthier society, unjust economic relationships will be exterminated. Another positive aspect of unconditional basic income is that it can control the upcoming high unemployment rate caused by technological development. Therefore, this concept is relevant for modern society but pretty challenging to apply.

Karl Marx devoted his life to exploring capitalism, limiting the freedom of the people. The outstanding philosopher predicted the rapid conquering of the world’s economy and tried to urge people to eliminate capitalism through understanding its root causes and principles. Even though society is still based on capitalistic relationships, someday, the situation will change due to the development of emerging technologies. The more the production is computerized, the less value can be found in such a fabrication. Thus, the more technologically advanced economy becomes, the fewer benefits capitalist can gain. It is caused due to fully automated production where the concept of value disappears. The exploitation of the machine is impossible because it does not allow to emerge the idea of surplus value. Considering the fact that human activities always strive for the economy, machines someday will replace human labor. This will declare the end of the capitalistic economic structure.

References

Democracy at Work. 2019. “Economic Update: Rise and Fall of the USSR.” YouTube video.

Lebowitz, Michael. 2000. The Contradictions of “Real Socialism.” New York: Monthly Review Press.

Marston, Darth. 2016. “BBC Masters of Money Karl Marx HD.” YouTube video.

Marx, Karl and Friedrich, Engels. 1848a. “Introduction to Capital.” In Sociological Theory in The Classical Era, edited by Laura, Edles, and Scott, Appelrouth, 51-65. London: SagePublications.

Marx, Karl and Friedrich, Engels. 1848b. “From The Communist Manifesto.” In Sociological Theory in The Classical Era, edited by Laura, Edles, and Scott, Appelrouth, 65-80. London: SagePublications.

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Marx, Karl. 1868. Capital: A Critique of Political Economy. Translated by Ben Fowkes. Washington: Penguin Books.

Tricontinental: Institute for Social Research. 2019. A Marxist Analysis of the iPhone.

Wright, Erik. 2000. Class Counts. Cambridge, Mass.: Cambridge University Press.

Wright, Erik. 2006. “Two Redistributive Proposals: Universal Basic Income and Stakeholder Grants.” Focus 24 (2): 5-7.

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