Marx, Engels, and Smith on Capitalism and Labor

Introduction: Capitalism and Class Subjugation

Capitalism does not create a marketplace of free and fair economic competition; rather, it creates a state of human as well as economic subjugation. Or so argued Frederick Engels, Karl Marx's co-author of the Manifesto of the Communist Party, when he wrote that "in making itself the master of all the means of production to use them in accordance with a social plan, society puts an end to the former subjection of men to their own means of production. It goes without saying that society cannot free itself unless every individual is freed. The old mode of production must therefore be revolutionized from the top to bottom, and in particular the former division of labor must disappear" (Engels, "On the Division of Labor in Production").

As this quotation makes clear, Marx and Engels saw all of human society locked in a continual cycle of polarized class warfare — between the haves and the have-nots. The solution, they believed, was to abolish class divisions and establish a society in which all property and economic profits were held in common by those who produced the commodities and profits for society. Communal ownership would free the individual from wage-slavery and the tyranny of working for a capitalist — upon a capitalist's property, producing a surplus of value enjoyed only by the capitalist, not by the worker.

Adam Smith and the Division of Labor

Marx's most damning view of capitalist wage-slavery appears in the first volume of his treatise Capital, where he wrote with horror about how workers were alienated from their means of production. In other words, for the enrichment of the factory owner, the worker rented out his or her body and the labor that body could provide. Forced to sustain wages within a monetary system of capitalist ownership, the worker was compelled to produce far more commodities — pins, for example — than he or she could ever conceivably require in a day.

Adam Smith's defense of capitalism, The Wealth of Nations (1776), written in praise of industrialization, saw such a division of labor as a boon — from the consumer's as well as the capitalist's point of view, if not the worker's. "The greatest improvement," wrote Smith, that had been conferred upon "productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied," arose from the effects of the division of labor between owner and worker — the very division so denounced later by Marx and Engels (Smith, Section I.1.1, pp. 7–8). Productivity of factories was Smith's primary form of economic evaluation, not the ability of economics to create a society infused with social justice. Nevertheless, Smith did believe that the more divided the productive process, the more efficient it could be, and the greater the opportunities for worker employment and marketplace competition.

For example, Smith writes with great approval of the modern industrial revolution, whereby a pin maker who could once, "with his utmost industry, make one pin in a day, and certainly could not make twenty," now benefited from a factory system allowing for a much more specialized — though far less skilled, Marx might add — division of labor: "one man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head… In this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them" (Smith, Section I.1.3, p. 9).

Smith focuses not on the laborer's work or the wealth produced by the laborer for comparatively small wages, as Marx did, but on the greater profits for the maker of pins. In Smith's analysis, the pin maker seamlessly becomes the owner of a pin-making factory. Where once the pin maker could only produce a few pins, the manufacturer can now produce many and sell them at a much cheaper price. Marx, however, would note that the real achievement of the industrialist is not making anything, but simply owning the pin factory.

What was formerly an individual and specialized trade — owned by the pin maker himself, who provided his own labor, workplace, and materials — had become a mechanical process performed in a series of steps by many workers in a factory owned by a capitalist. In Smith's view, the consumer profited from lower pin prices and greater commodity availability, while the factory owner profited from an increased supply of goods to sell, enabling him to lower prices in a competitive market. Freedom and the division of workers, Smith believed, driven by self-interest, produced positive results because it generated more jobs and more commodities to be sold in an increasingly competitive and diverse marketplace.

Marx on Alienation and Surplus Value

By contrast, in Chapter 7, Volume 1 of Capital, Marx argues that it is really the production of labor — the crafting of goods by human hands — that confers value upon raw materials, transforming metal through the worker's sweat and toil into a pin. Throughout this capitalist process of conferring value upon raw materials, the factory owner did nothing but supply the raw materials, pay the labor, and idle away the day. The capitalist owner experienced no physical wear or tear by simply owning the factory and hiring workers. The worker labored harder than the property-owning capitalist but earned far less profit.

This is why private ownership of factory production space — or any productive space — was unjust, Marx argued: it was based merely on an accident of ownership. The capitalist profited more through the ownership of the factory and the means of production than the laborer toiling all day, whose functional body was treated as an implement and a piece of property rather than as a human being (Marx, Capital, pp. 283–293). Thus, in Capital, Marx defined wage-slavery as the condition of the worker being forced to labor beyond personal need in the service of profits for the capitalist.

Marx expanded upon this belief in "The German Ideology," arguing that the nature of human economic and historical life "involves before everything else eating and drinking, a habitation, clothing and many other things. The first historical act is thus the production of the means to satisfy these needs, the production of material life itself. And indeed this is an historical act, a fundamental condition of all history, which today, as thousands of years ago, must daily and hourly be fulfilled merely in order to sustain human life" (Marx, "The German Ideology — Chapter on 'History: Fundamental Conditions'").

Conclusion: Competing Frameworks

The more politically incendiary words of Marx and Engels regarding communal ownership are what history remembers best, much like Adam Smith's notion of an invisible hand that sets all market excesses right. Although neither concept perfectly explains the inequities or benefits of communal or capitalist economies, these frameworks remain the schematic lenses through which Marxism and capitalism are understood.

Works Cited

Marx, Karl. "The German Ideology." 1845. Marx Engels Archive. http://www.marxists.org/archive/marx/works/1845/german-ideology/ch01a.htm#a3

Marx, Karl & Frederick Engels. The Communist Manifesto. 1848. Reprinted Signet Classics, 1998; also available via Marx Engels Archive. http://www.marxists.org/archive/marx/works/1848/communist-manifesto/ch02.htm

Marx, Karl. Capital. Originally published 1867. Translated by Samuel Moore and Edward Aveling; edited by Frederick Engels. New York: Penguin Classics, 1992.

Smith, Adam. The Wealth of Nations. Originally published 1776. London: Methuen and Co., Ltd., ed. Edwin Cannan, 1904. Fifth edition. Reprinted in Bantam Classics Edition, 2000.