A Study on The Opinion of Karl Marx in Regard to Opposing Capitalism

Karl Marx believed that the future world’s history is deterministic. During his lifetime there were pockets of revolutionary activity springing up in Germany, Austria and into Russia. Marx saw this and saw a pattern – a pattern that could only be brought on by capitalism. The beginning of the end of capitalism for Marx was the end of perfect competition, when monopolies would rise up and drive wages down. Demand would drop along with wages, and hence so would profit for these monopolies. After this, Marx thought, revolution was inevitable. Marx believed that after a revolution took place, class systems would end. With no class systems there would be no more exploitation of workers, as everyone would be on an even keel. With no class system, there would be no government, as it is the governments purpose to protect the exploited masses.

The first step of Marx’s revolutionary spiral is the end of perfect competition and the rise of monopoly capitalism. Perfect competition exists when many sellers exists, too many to be able to individually and mechanically control market prices. Monopoly capitalism is when there is but one seller, this seller faces no competition from other sellers, and therefore has full control over market prices and can drive them where it wills. Rae notes: “Serious monopolies are always in things which people need and for which they don't readily find substitutes.”

Monopolies thrive when the advancement of technology thrives. Technology advances through what Joseph Schumpeter called “creative destruction” – through the creation of new technologies, comes the destruction of old technologies. As technology advances, there is a greater possibility for increased rates of production. In order to explain this to myself, I imagined an assembly line. In the past, workers who manually put the pieces of a product together manned assembly lines. However, as technology has advanced the assembly line has become mechanized and production is now largely be done by machines. Because of this, now only a fraction of the labor force needed before is needed. This new technology increases the rate of production; more output per hour is created than before and profit increases drastically. Manual labor is not deemed as significant as it once was, and as less labor is needed, there is a larger pool of laborers to choose from. This shifts the power in favor of the capitalist, who can drive wages down with little to no consequence.

Schumpeter saw creative destruction as the only thing that could sustain economic growth. Creative destruction does have the ability to destroy existing monopolies however, as described above, also leads to increased rates of profit. Marx, on the other hand, saw creative destruction as the springboard from which capitalism could flourish, and was critical of the effects creative destruction had on the laborers.

During his time, Marx saw creative destruction happening more frequently and the effect that had on monopolies. He also saw revolutions springing up around him and saw the two as directly correlated. He saw a pattern and believed he could foresee the end of capitalism.