Karl Marx On Capitalism
Karl Marx, the scholar, had actually found
Capitalism at a stage when he could not quite figure out which direction
this was going in. Some of his observations show that he had almost
grasped some of its key merits, but for some reason, he slipped in
understanding human behavior more carefully, and by extolling the
"workers" to the sky, created a Utopia instead.
The following is an extract from the Communist Manifesto, 1848:
"Modern industry has established the world market, for which the discovery
of America paved the way. This market has given an immense development to
commerce, to navigation, to communication by land. This development has,
in its turn, reacted on the extension of industry; and in proportion as
industry, commerce, navigation, railways extended, in the same proportion
the capitalist class developed, increased its capital, and pushed into the
background every class handed down from the Middle Ages.
"We see, therefore, how the modern capitalist class is itself the
product of a long course of development, of a series of revolutions in
the modes of production and of exchange.
"Each step in the development of the capitalist class was accompanied
by a corresponding political advance of that class. An oppressed
class under the sway of the feudal nobility, an armed and
self-governing association in the medieval commune; here independent
urban republic (as in Italy and Germany), there taxable "third estate"
of the monarchy (as in France), afterwards, in the period of
manufacture proper, serving either the semi-feudal or the absolute
monarchy as a counterpoise against the nobility, and, in fact,
cornerstone of the great monarchies in general, the capitalist class
has at last, since the establishment of Modern Industry and of the
world market, conquered for itself, in the modern representative
State, exclusive political sway. The executive of the modern State is
but a committee for managing the common affairs of the whole
capitalist class.
"The capitalist class, historically, has played a most revolutionary
part."
Instead of a stationary state where the rich get richer, in actual
captalism, the rich might get richer, under certain situations, but they
are not necessarily the same rich that were rich 50 years ago. There is
equal opportunity for the best to become rich and hence a 'capitalist' in
the common eye, no matter from which 'class' they start out from.
When an Indian engineer goes to USA and in 15 years creates wealth for
himself worth about 500 million dollars, that is part of capitalism. When
today, 90% of the workers in USA produce goods using technology that did
not exist 50 years ago, that is capitalism. When the Fortune 500 list of
50 years ago is virtually unrecognizable today, that is capitalism.
Compared to Marx who only got a bit of capitalism right, Schumpeter did
much better by elucidating the process of creative destruction. Today,
courtesy of Hayek, Friedman, and others [Psst! see * below], we understand
capitalism even better.
This interpretation is outdated and primitive. There is no capitalist
"class" (which implies stationarity) in capitalism and there can be none,
if government correctly moderates the misuse of imperfections in markets.