Karl Marx On Capitalism

[Preamble | Manifesto | Agenda]

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."

This interpretation is outdated and primitive.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.

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.

[ * e.g., Sanjeev Sabhlok, John Rozario, Atul Gupta, and Nirvikar Singh]
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