Karl Marx Described the Process

Karl Marx

Marx described the process of historical materialism as beginning with the understanding that the organization of production forms the basis of economic structure in every country. Indeed, the move to agricultural production in ancient times both required and supported the development of some form of economic structure in order to occur. The institutions of society evolve in order to support production. This is the economic superstructure, which comprises government, the legal system, the banking system and other key components. The structure is the system of production and the power relations that govern it; the superstructure supports the structure.

When a shift occurs in the economic structure, a shift then must occur in the superstructure. If there is no such shift, a conflict will occur that forces a shift. Eventually, this series of conflict will result in the evolution of either the structure, the superstructure or both, but it may require economic catastrophe for this to occur.

Flowing from this is Marx' view of social change. Marx believes that social change results from the relationship between humans and their economic structures. The consciousness of men is affected by their circumstances. Thus, if the economic structure and superstructure are in conflict - as he proposes is the case in a capitalist economy - that conflict will shape the social existence of humans. This social change then drives changes in the factors of production, which ultimately will bring the economic structure and superstructure back out of conflict towards equilibrium.

Thus, if the superstructure is designed poorly, or is not kept up-to-date with the economic structure, then the conflict that naturally arises from that will be the key driver of social change.

Q2. Marx describes the process of capital accumulation in basic terms. Essentially, the equation begins with money, which buys a commodity. Value is added to that commodity, using the money. Then, the commodity is sold at a profit, creating more money. This monetary profit is then used to add more value to more commodities, in a cycle that endlessly generates an increasing amount of wealth.

He argues that in the pre-capitalist economy, the economic system worked differently. There may have been profit, but it was used differently. In many cases, he argues, it was stored for future use. This was valuable because prior to the agricultural and industrial revolutions the future supply of goods was not guaranteed, due to wars, appropriations, poor control over harvests and other factors endemic to life of that time. Another use was to redistribute it. In some societies, redistribution of wealth raised one's standing, rather than the accumulation of wealth. The third thing that was done with excess money in pre-capitalist times was that the holder built monuments to reflect that person's greatness.

The differences are that the capitalist system is designed to continually build wealth by investing profit back into the economy, with the intention to create more profit. Redistributing wealth (largesse) may have increased prestige, but it did not increase wealth. Likewise, building great monuments was essentially a form of redistribution, since the wealth spent on those monuments would go to the workers, but the monuments themselves would not generate any future profits. Storage of wealth did not generate future profits, although it was prudent during the pre-capitalist era. Marx viewed these two systems as entirely different, although a reasonable case could be made that this is not so.

Q3. Marx describes a cycle where capitalists are constantly attempting to drive down the cost of labor. As he views the issue, capitalists do as little as possible with respect to preventing wages from decreasing. Expansion was the key to their efforts. By expanding the scope of the economy, lower wages may occur in some jobs, but it would allow specialization of labor to keep good jobs domestically. He viewed, however, that despite periods of high unemployment that would keep wages down, over time wages would rise as the economy would demonstrate overall growth.