Marx and Capitalism. Why and how does Marx think Capitalism is bound to collapse - Essay Example

?Marx and Capitalism Introduction Capitalism is a means of production that has several contradictions. These contradictions lead to tensions between one class of people and the other. Karl Marx, the key proponent of the theory, asserted that tensions were self destructive and would eventually lead to collapse of the system. Rising unemployment levels, recurring layoffs, tumultuous stock booms and corporate scandals are indicative of the economic crises that would reach sufficient proportions to cause a collapse of capitalism. One must therefore look into the contradictions and sources of instability in this system to understand why capitalism will eventually fail. Karl Marx’s understanding of the collapse of capitalism The views of several contemporary and traditional economists were substantially different from Karl’s Marx’s ideas. Most economists, including prominent ones like Adam Smith, felt that free market economics and hence capitalism was a given fact. They presumed that it emanated from man’s propensity to exchange goods and services. Also, these economists focused on the interaction between man and products rather than between the market participants themselves. Wage labour as well as its relation to capital was the key concern for Marx. He felt that it was more critical to study the relationship between people who participated in these systems. In conventional economics, a millionaire who purchased a loaf of bread was treated in the same way as a simple wage labourer. Furthermore, the person selling the item was nothing more than a trader. However, Marx challenged this thinking by showing that people were not equals in capitalist markets. The rich and the poor had different relations to capital and wage labour (Marx and Engels, 1997). Therefore, contradictions arose in this process, yet they were ignored by predominant economists. Karl Marx acknowledged that capitalism perpetuates poverty and inequality. However, these were not sufficient ingredients to lead to its end. Instead, he stated that the cyclical and frequent economic crises that occurred in the capitalist system could lead to an unstable and insecure environment. Workers would lose confidence in their methods of earning a living because the system in which they worked constantly threatened to make them superfluous. The antagonism that would arise from that situation would lead to a state of anarchy. In other words, economic crises that are inevitable in capitalism cannot guarantee workers even the miniscule amounts to which they were entitled. Such problems would cause a breakdown in world systems. Capitalism does not just affect workers alone; it also has an impact on owners of capital too. The bourgeoisie are in a war for survival; they are fighting against themselves as well as against the proletariat. For this reason, when minor economic crises occur, they can lead to a war as well as an increase in class struggles between the two groups. The possibility of a revolution thus arises because of these crises. Marx did not believe that the revolution was expected, but that it was a possibility that workers could embrace in their response. For a revolution to occur, it is not sufficient for the oppressed to be unable to sustain their living conditions. The upper classes must also be unable to maintain their old system of governance. Since instability affects both parties, then it is likely that it will lead to a collapse. In order to understand Marx’s prediction of collapse in capitalism, it is critical to understand how crises occur in the first place. The theorist explained that owners of capital had one sole aim when conducting business and this was to accumulate more capital. It was not that they were greedy for money; however, they needed to accumulate more capital in order to beat their rivals. In capitalism, a manufacturer often uses their money to purchase resources in order to create goods. This person would not be able to produce those goods if they lacked vast finances to begin with. Once these individuals make money from the sale of their goods, they often invest in better means of production in order to beat their competition. Therefore, accumulation of wealth is crucial to the survival of the capitalist. In order to achieve accumulation, capitalists must establish more efficient means of products. Usually, they will utilise machines in order to enhance production. However, machines cannot be made to work faster once they have been purchased. On the other hand, workers have the potential to produce more than they are paid for. The concept of surplus value of labour is what explains the eventual doom of this method of production. Workers are entitled to payment that equals the amount of labour they have put into production of a certain good. If a worker dedicates more time into the production of a certain food and exceeds the value of that commodity, then this becomes surplus value for which they are not compensated. Capitalists will often look for different ways of obtained more labour time from their employees by requiring them to work faster or to spend more time at work. Workers thus create more value than they get paid for or consume. It is the capitalist who keeps this extra value because he dissociates wages from the value of commodities made. This aspect leads to exploitation of the working classes (Moyn, 2002). The surplus value of labour can only work effectively for the capitalist if he can convert it to money. He can then use it to engage in greater production and thus outdo other traders. However, to get surplus value of labour, the producer must sell of the products created. The problem with several capitalists is that their quest for greater accumulation causes them to produce as much possible. They do not consider who will be responsible for consumption of those products. Therefore, excessive supply is bound to arise. The market is anarchic, so one cannot sell all their mass-produced items. Overproduction eventually leads to a crisis in this system owing to contradictions. Marx explained that regardless of an excess supply of commodities, a vast majority of people cannot buy them because they do not have the resources to do so. Distribution of goods depends on people’s ability to meet certain demands. However, the amount of wages that workers receive for their input is insufficient to meet the needs of the population. A number of them are thus unable to sustain the high levels of production in capitalism, and this causes a crisis of overproduction. Another problem that creates contradictions in capitalism is diminishing profits. In an attempt to extract surplus value from production, several investors will purchase machines to speed up work. When no other competitor possesses these machines, their workers will raise their productivity through the help of those machines. Therefore, the owner of the business will make more money than his rivals because he may have the same number of workers as others but they are making more than everyone else. However, their competitors will soon get wind of the technology and embrace it as well. These traders will have to spend a lot of money on constant capital. The standard social labour time will thus reduce to the level that the machines allow the workers, yet capital investments in the machines have already been made. This presents a constant problem to manufacturers because the surplus value of wage labour will remain the same but their investments will not. This continuous competition and difficulty in maintaining constant profits also leads to a crisis. When capitalists experience diminishing profits, they have different methods of solving the problem. They may increase working hours or push workers to continue engaging in these practices even more. Alternatively, they could use foreign investment or tax systems to maintain profitability. Regardless of the method chosen, these falling profits will always destabilise the worker’s position. Discovery of better methods of production often lead to greater oppression among workers. This causes clashes between the working class and their employers, who must use these strategies in order to stay profitable. The introduction of better methods of production also displaces workers that contend with mass unemployment. This implies that their ability to consume will also go down. A capitalist crisis will take place because too many goods will be chasing few capable consumers. Some firms will go out of business because of the crisis. Usually, these are small organisations that lack the mechanisms for outsmarting their competitors. Remaining large capitalists will enjoy the real value of their investments in technology because they will buy them for less than their value. This places them in an advantageous position because they can now make more profits and expand (Resnick and Wolff, 2010). All the few remaining capitalists will again start another cycle in which they will try to extort more value from their resources. The above cycle of overproduction will manifest and lead to all the latter-mentioned consequences. The overall effect is a pattern of recessions, and slumps, each being more destructive than its predecessor. Therefore, production becomes more condensed in the hands of even fewer players. The level of exploitation, oppression and misery become insurmountable thus causing the working class to fight against it. A number of them will organise themselves and attempt to confront capitalists. They may call for a change in the system of production. Capitalists themselves will have no other alternative to abandon their methods because of these clashes. The masses will call for new and less destructive economic systems like socialism. Once the latter methods become adopted, then the demise of capitalism will be a reality. These contradictions in capitalism can also be manifested across various nations of the world. Uneven growth patterns between poor and rich nations will also lead to instability. Several international monopolies arose from wealthy nations. These companies strive to keep out small and local organisations, which are weeded out by their superior methods of production. Therefore, concentration and centralisation become a pertinent part of their lives. Surplus value created by workers in poor nations thus goes into the hands of capitalists in rich ones. Even supporters of capitalism who predicted that globalisation would lead to improvements in developing nations have been deeply disappointed. Nations like Mexico and Brazil are yet to reap the rewards of neoliberalism. These countries are still living in debt as their workers’ standard of living continues to remain unsatisfactory. Therefore, the legacy of decay that Karl Marx predicted seems to have manifested. The poor remain poorer while the rich continue to accumulate more wealth (McConnell, 2001). Centralisation of firms also assists in cementing the capitalist position, as it gives him political power. When larger firms become responsible for most production, it becomes inevitable for these individuals to acquire political power. A number of them will influence politicians to create laws that protect them. As a result, they will cement their position even further. A breakdown of capitalism is thus inevitable because as soon as capital sees itself as an impediment to development, it will adopt methods which will minimise free competition. Since competition is the basis upon which capitalism is founded, then any attempts to improve capitalism on a large scale will destroy its foundations. For this reason, reform will lead to dissolution of the economic system. Marx realised that capitalism was attempting to transform itself. However, this would eventually lead to the adoption of socialism. The more concentrated capitalist systems seemed, the more displacement of both workers and other capitalists took place. This would spell doom to the system of economic organisation. Socialism would displace industry from the hands of capital owners to that of the masses. This would leave no room for capitalists to thrive. Transformations may come in the forms of workplace democracy, communal enterprises as well as democratic planning. The challenge with these approaches is that they are creating a socialist character in capitalist systems. As individuals continue to revise and alter capitalism, they will incur various differences in the manner in which these choices are made. History has shown that these attempts at reforming capitalism have not worked. They are not sufficient to overcome the conditions of crisis. Unless one can tackle those fundamental problems, then it is not possible to eradicate the contradictions. On the other hand, failure to minimise these contradictions may also contribute to disgruntlement and rebellion. Conclusion Karl Marx provided a well-reasoned explanation concerning how he thought capitalism was bound to collapse. He stated that overproduction was a key problem in this economic system because no centralised method of planning existed. Therefore, sellers would not enjoy the surplus value of production. Falling profits were also a key trait, and they normally emanated from labour saving technology. These created contradictions that would minimise consumption levels in the population. Additionally, Marx realised that monopolies were an inevitable part of competition. Small and weak firms would be displaced by big ones which would centralise production even further. Each of these contradictions leads to more contradictions which caused disgruntlement amongst workers. Capitalists will also realise the problems with their system of approach. Therefore, capital will become conscious of itself and call for transformation. However, those transformations will undermine competition and thus the basis upon which capitalism occurs. For this reason, it will eventually collapse. References Marx, K. and Engels, F., 1997. Manifesto of the communist party. NY: International Publishers. McConnell, S., 2001. Rapid development. Redmond, WA: Microsoft Press. Moyn, S., 2002. The politics of economy. Ethics and International Affairs Journal, 16(2), pp 44-48. Resnick, S. and Wolff, R., 2010. The economic crisis: A Marxian interpretation. Rethinking Marxism Journal, 22(2), pp. 170-186. Read More