‘Why I believe Karl Marx still gets it right’
A senior lecturer in business and economic history at the University of Dundee with expertise in retail, child poverty and inequality. He has advised the Scottish government and the Equalities & Human Rights Commission.
Happy birthday, Karl Marx! It is 200 years since the philosopher and economist was born in Germany. His ideas have shaped the last century of history. But are they really still relevant?
It is remarkable for an economic thinker and political activist that 200 years after their birth, millions are still avidly discussing their work. Yet Karl Marx’s Capital continues to influence every new generation.
In an era of anti-globalisation protests and the movement against the 1%, Marx’s analysis continues to be relevant — he explains how the capitalist system goes hand in hand with aggressive competition and innovation, and why this leads to poverty, crisis and eventually revolution.
These insights apply as much to the 21st century as the 19th.
For Marx, the very dynamism that saw capitalism expand also caused its downfall.
Some political scientists argue that the internet and particularly the gig economy have fundamentally changed the nature of work. Capitalism has become so dominant over labour, they argue, that old bonds between workers are increasingly meaningless.
On this analysis, worker action and revolution are off the agenda. And jobs likely to get automated in future are seen as part of the same trend.
But Marx had a different perspective. For Marx, the very dynamism that saw capitalism expand also caused its downfall. Companies have no choice, he believed, but to compete with one another in a war for survival. They seek to defeat their rivals by lowering the prices of their goods — thus, for example, a computer today is far cheaper than it was yesterday.
But this means that there is a tendency towards a falling rate of profit for each player. To offset this and to make their goods even cheaper, the capitalists either become more concentrated through mergers and acquisitions, or by driving down wages and making people redundant.
As Marx wrote, it becomes a competition between “the generalists, the capitalists… as to who can discharge most soldiers of industry”.
And this, he thought, was the inherent problem. Like the classic economists of his time, Marx believed in a labour theory of value — the idea that the value of a product should be based on the amount of labour that has gone into it. The more the capitalists sought to protect their profitability, the more they undermined the value of the products they were creating with labour power.
The Sainsbury/ASDA merger is the perfect example. These two supermarkets’ motivation is not high levels of profits but the opposite — the squeeze both companies face from Amazon on the one hand and low-cost retailers like Lidl and Aldi on the other.
As the battle for thinner and thinner profits wears on, Marx argued that the capitalists become ever more estranged from a burgeoning working class. The workers are both increasingly frustrated and facing rising levels of unemployment. In time, competition to accumulate more wealth creates a systemic crisis.
Companies like Deliveroo and Uber are not really a means of thwarting worker power at all — they just lead to collective action by workers seeking to address the imbalance between capital and labour.
Marx, therefore, helps us make sense of modern power relations. Then, as now, there is no contradiction between capitalism and crisis: it is a process of historical development and economic transition within the system.
I would argue that the lasting legacy of Marx 200 years after his birth comes from the conclusion he and Friedrich Engels drew in their 1848 publication The Communist Manifesto: “The proletarians have nothing to lose but their chains. They have a world to win. Workers of all countries unite.”
This is an extract from an article published by The Conversation UK. You can find the full version in Become An Expert.
- Will capitalism fail?
- Try to summarise Marx’s ideas in a paragraph — no more than 50 words. If you’re not sure where to start, use the links in Become An Expert to help you.
- 200 years
- Karl Marx was born on May 5, 1818, in the city of Trier, Germany.
- A reference to the world’s richest 1% of people. Last month, a report by the House of Commons library predicted they would own almost two-thirds of the world’s wealth by 2030.
- Gig economy
- An economy where temporary or freelance jobs are common. For example, delivery companies like Deliveroo do not consider their drivers to be employees. Instead, they are self-employed. This means they do not have the right to minimum wage or holiday pay.
- When jobs are performed by robots and computers. Last year, an analysis by Oxford Martin School predicted that 80% of posts in transport, warehousing and logistics were at risk of automation.
- Sainsbury/ASDA merger
- Last week, the two supermarkets announced they would be merging. They have combined sales of £51 billion each year.
- Marx’s word for working class people.