With capitalism appearing to collapse all around us today even some right wing commentators have been forced to admit that Karl Marx might have been right about the crisis-ridden nature of the system.
Exiled in London, Marx embarked on his three-volume masterpiece Capital from a desk at the British Library.
It was his major study of capitalism, written in the wake of the crushing of Europe’s 1848 revolutions and an economic boom marked by a long lull in class struggle.
Marx hoped to explain capitalism’s “laws of motion” so that the working class would be better prepared the next time the system faced a crisis.
In the years to come some would regard Marx’s decision to write such a lengthy and complex work as a retreat into “dry theory”.
Yet Marx and his collaborator Frederick Engels saw the writing of Capital as a vital task and made it a political priority.
Nevertheless, when pressing political needs arose – such as supporting communists accused of an assassination attempt in Germany, or defending their ideas against challenge in the socialist movement – the project was put aside.
During the writing Marx and his family endured poverty, illness and great emotional distress – despite Engels’ financial support. Four of Marx’s children died during the 1850s.
Yet Marx produced what is still the definitive account of the workings of capitalism. In Capital he looked beneath the system’s surface to analyse the contradictions at its heart.
He pointed out that capitalism, while different from the other methods of production that had preceded it, is a class society.
A small minority, the bourgeoisie, controls the means of production such as factories, while the vast majority, the working class, have to sell their labour to this capitalist class in order to survive.
Supporters of this system claim that great riches are generated by the “innovation” of the bourgeoisie.
But, for Marx, all wealth in society is created by the labour of workers, and profits come from the capitalists stealing a proportion of that wealth.
The difference between the value workers produce and what they are paid for it, what Marx called “surplus value”, goes to the capitalists and becomes the source of their profits.
In Capital, Marx also looked at why the system had a tendency to move through cycles of boom and slump.
He pointed out that capitalism is based on the production of commodities for the market, in which individual capitalists compete with one another to win higher profits than their rivals.
Marx described the bourgeoisie’s motivation as, “Accumulate, accumulate! That is Moses and the prophets!”
Bosses hold down workers’ wages, increase their hours and erode their conditions, while investing in machinery that can increase productivity.
But in this competition the anarchy of the market reigns. Each capitalist rushes to produce goods that will make profits, but as many different capitalists follow suit, more goods are produced than can be sold, and the unsold ones begin to pile up.
This crisis of overproduction leads to firms going bust and workers being sacked. Spending on consumer goods falls and a general crisis occurs.
Despite this chaos, Capital shows that this crisis also holds the seeds of the system’s renewal. Large companies buy up the machinery of their fallen rivals, producing even bigger firms.
Marx said that capitalism is the most dynamic system of production that the world has ever seen, making it possible for the first time to give everyone a decent standard of living.
But because the need to generate profit is placed above all else, this possibility can never be achieved.
It will take a very different society, a socialist system based on workers’ control of the economy, to make this an actuality.
Marx saw that the capitalists, just like any ruling class, would not give up power willingly.
It would have to be taken from them by force, through a workers’ revolution.
It was for this end that Marx wrote Capital, the first volume of which appeared in 1867.
And the return of economic crisis to the system at the end of the 1850s pointed to the possibility of creating a new revolutionary organisation.
It was this opportunity that led Marx and Engels back to the struggle.