Karl Marx

Who was 'Karl Marx'

Karl Marx (1818-1883) was a philosopher, author and economist famous for his theories about capitalism and communism. Marx, in conjunction with Friedrich Engels, published "The Communist Manifesto" in 1848; later in life, he wrote "Das Kapital" (the first volume was published in Berlin in 1867; the second and third volumes, were published posthumously in 1885 and 1894, respectively), which discussed the labor theory of value. Ironically, Marx was eloquent in describing the exploitation of the working class while personally failing to maintain a job for a significant period of time.

BREAKING DOWN 'Karl Marx'

Marx's work laid the foundations for future communist leaders such as Vladimir Lenin and Joseph Stalin. Operating from the premise that capitalism contained the seeds of its own destruction, his ideas formed the basis of Marxism and served as a theoretical base for communism. He believed nearly everything Marx wrote was viewed through the lens of the common laborer. From Marx comes the idea that capitalist profits are possible because value is "stolen" from the workers and transferred to the employers. He was, without question, one of the most important and revolutionary thinkers of his time.

Early Life

Born in Trier, Prussia (now Germany), in 1818, Marx was the son of a successful Jewish lawyer who converted to Lutheranism before Marx’s birth. Marx studied law in Bonn and Berlin, and at Berlin, was introduced to the philosophy of G.W.F. Hegel. He became involved in radicalism at a young age through the Young Hegelians, a radical group of students who criticized the political and religious establishments of the day. Marx received his doctorate from the University of Jena in 1841. His radical beliefs prevented him from securing a teaching position, so instead, he took a job as a journalist and later became the editor of Rheinische Zeitung, a liberal newspaper in Cologne.

Personal Life

After living in Prussia, Marx lived in France for some time, and that is where he met his lifelong friend Friedrich Engels. He was expelled from France, and then lived for a brief period in Belgium before moving to London where he spent the rest of his life with his wife. Marx died of pleurisy in London on March 14, 1883. He was buried at Highgate Cemetery in London. His original grave was nondescript, but in 1954, the Communist Party of Great Britain erected a large tombstone, including a bust of Marx and the inscription "Workers of all Lands Unite," an anglicized interpretation of the famous phrase in "The Communist Manifesto": 'Proletarians of all countries, unite!'

Famous Works

"The Communist Manifesto" summarizes Marx' and Engels' theories about the nature of society and politics, and is an attempt to explain the goals of Marxism, and, later, socialism. When writing "The Communist Manifesto," Marx and Engels explained how they thought capitalism was unsustainable and how the capitalist society that existed at the time of the writing would eventually be replaced by a socialist one.

"Das Kapital" (full title: "Capital: A Critique of Political Economy) was a critique of capitalism. By far the more academic work, it lays forth Marx's theories on commodities, labor markets, the division of labor and a basic understanding of the rate of return to owners of capital. Contrary to popular belief, Karl Marx was not the first to use the word 'capitalism' in English, although he certainly contributed to the rise of its use. The English word was coined by author William Thackeray in 1855, in his novel "The Newcomes," where it was used in the sense of concern about personal possessions and money in general. There is very little chance that Thackeray – who was not a German speaker – could have known about Marx's work to incorporate the word capitalism into his novel, although it is definitely possible that Marx may have read Thackeray's book. Both men meant the word to have a pejorative ring.

Contemporary Influence

Marxist ideas in their pure form have very few direct adherents in contemporary times; indeed, very few Western thinkers embraced Marxism after 1898, when economist Eugen von Böhm-Bawerk's "Karl Marx and the Close of His System" was first translated into English. In his damning rebuke, Böhm-Bawerk showed that Karl Marx failed to incorporate capital markets or subjective values in his analysis, nullifying most of his more pronounced conclusions. Still, there are some lessons that even modern economic thinkers can learn from Marx.

1. Capitalism Is the Most Productive Economic System

Though he was its harshest critic, Marx understood the capitalist system was far more productive than previous economic systems. In "Das Kapital," he wrote of "capitalist production" that combined "together of various processes into a social whole," which included developing new technologies. He believed all countries should become capitalist and develop that productive capacity, and then workers would naturally revolt into communism.

You do not have to believe in Marx's final conclusions to understand he is exactly correct: Capitalism is the most productive economic system in world history. According to a 2003 report from the Federal Reserve Bank of Minneapolis, per capita income and productivity around the world never grew faster than populations until the late 18th century, when Britain first adopted pro-free market policies.

2. The Labor Theory of Value Cannot Explain Profits

Like all of the classical economists, Karl Marx believed in the labor theory of value to explain market prices. This theory stated that the value of a produced economic good can be measured objectively by the average number of labor hours required to produce it. In other words, if a table takes twice as long to make as a chair, then the table should be considered twice as valuable.

Marx understood the labor theory better than his predecessors (even Adam Smith) and and contemporaries, and presented a devastating intellectual challenge to laissez-faire economists in "Das Kapital": If goods and services tend to be sold at their true objective labor values as measured in labor hours, how do any capitalists enjoy profits? It must mean, Marx concluded, that capitalists were underpaying or overworking, and thereby exploiting, laborers to drive down the cost of production.

While Marx's answer was eventually proven incorrect and later economists adopted the subjective theory of value, his simple assertion was enough to show the weakness of the labor theory's logic and assumptions; Marx unintentionally helped fuel a revolution in economic thinking.

3. Economic Change Leads to Social Transformation

Dr. James Bradford "Brad" DeLong, professor of economics at U.C. Berkeley, wrote in 2011 that Marx's "primary contribution" to economic science actually came in a 10-paragraph stretch of "The Communist Manifesto," in which he describes how economic growth causes shifts among social classes, often leading to a struggle for political power.

This underlies an often unappreciated aspect about economics: the emotions and political activity of the actors involved. A corollary of this argument was later made by French economist Thomas Piketty, who proposed that while nothing was wrong with income inequality in an economic sense, it could create blow back against capitalism among the people. Thus, there is a moral and anthropological consideration to any economic system.