Marxism: The Idea That Refuses to Die

By Tibor Rutar

Thursday, April 10, 2025

 

Note: This article was first published in Areo Magazine in June 2023.

 

It’s been almost a century and a half since Karl Marx’s death, and decades since the collapse of socialism in the Soviet Union, Yugoslavia, and elsewhere. In the still nominally Communist China, almost 90 percent of the workforce is employed in the private sector (as compared to 0 percent when Deng Xiaoping seized power). The core structures of capitalist society are more firmly entrenched across the world than ever before. Even the spectre of climate change has not been enough to challenge capitalism’s total domination—no IPCC climate mitigation scenario presumes the radical restructuring of economic institutions. It seems there really is no viable alternative to capitalism. Yet the debate between Marx’s defenders and critics shows no signs of abating.

 

There are two interrelated sets of ideas that should be of interest to anyone examining the usefulness or otherwise of Marxism. The first is his theory of history, which he views as progressing through distinct stages in a single, specific direction, towards an endpoint. According to Marx, history unfolds through increasingly technologically advanced epochs, which are separated by revolutionary upheavals carried out by the dominated classes (such as the bourgeoisie under feudalism and the proletariat under capitalism). Technology is constantly advancing, while social relations remain the same, until at some point there is a revolution and new social relations spring into being because technological progress has rendered the old ones obsolete. This cycle will continue until the end of history which, for Marx, will occur when society has become so technologically advanced that class exploitation is no longer possible due to extreme universal material abundance (a kind of Star Trek future).

 

The second set of ideas constitute Marx’s theory of society and social phenomena, which addresses the question of why and how underlying economic structures, such as capitalism, shape society at large. For example, Marx offers explanations of why economic crises recur under capitalism; of why the capitalist state typically protects the rich; how workers are exploited; and why the working class is the only truly revolutionary class. His theorising is not restricted solely to capitalist society. He also, for instance, tries to explain why feudalism was so war-like and violent, while modern capitalist societies are much more democratic and peaceful.

 

Both sets of ideas are connected by the notion of economic determination and in particular the idea of surplus extraction, a concept that Marx defines in the 1859 Preface to A Contribution to the Critique of Political Economy:

 

In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production … The totality of these relations constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness.

 

He repeats a similar notion in Capital:

 

The specific economic form in which unpaid surplus-labour is pumped out of direct producers determines the relationship of rulers and ruled … Upon this … is founded … the economic community which grows out of the production relations themselves, thereby simultaneously its specific political form.

 

For Marx, the precise nature of the relationship between the economic ruling classes and those who are exploited by them determines the broader structure of any society. First, the very fact that in class societies some people extract unremunerated work from other people (i.e., capitalists exploit workers and feudal lords exploit peasants) gives the first group disproportionate power in all social matters, not just economic ones. Second, the way in which surplus extraction is carried out shapes the non-economic aspects of society.

 

To better grasp the second point, consider the following Marxist proposition: under capitalism, workers lack their own independent property and are therefore dependent on the ruling class. This means that the ruling class don’t need to take things from them by force (like a warlord riding in and seizing grain stores or abducting women). Instead, the workers themselves voluntarily approach the capitalists, seeking employment, and because they control the means of earning a living, capitalists can leverage this to extract surplus value from them (by exploiting the gap between wages and profits). This is the “mute compulsion of economic relations” of which Marx writes in Capital. It is very different from what happens in feudal societies, in which each peasant works his own plot of land and doesn’t need to go to the lord’s manor to seek paid work.

 

Marx suggests that this structural difference between economic systems leads to certain political differences between them. Key institutions and features—such as democracy, the rule of law, and civil and interstate peace—can only emerge under capitalism and are always absent from pre-capitalist societies. This is because, under capitalism, the ruling class has no need to resort to violence to amass money, while, in a feudal society, the rulers maintain their power and wealth through unequal laws, aristocratic privileges, and constant territorial incursions. Capitalist elites don’t need to do this: they can let the impersonal forces of the market do the work for them.

 

This analytical framework offers explanations for a wide variety of social and historical events. Say you’re trying to understand why the welfare state—which Marx himself did not predict—came into being in the twentieth century. Marx’s system suggests that this, like all large-scale social phenomena, was primarily motivated by economic considerations. Thus, perhaps the welfare state was an instrument of the ruling class to pacify an exploited workforce, or perhaps it was a bulwark against socialist radicalisation emanating from the Soviet Union.

 

Or perhaps you’re interested in why World War 1 started. The Marxist formula suggests that the war might have begun as an attempt to further the interests of German businessmen, who had close links with leading politicians, through a land grab by a rising imperial power. How about the Norman Conquest or the Crusades? Marxist theory suggests that these were the result of hunger for land during a pre-capitalist age, when the upper classes could not achieve economic growth by increasing the productivity of the labour force because the peasants possessed their own land, rather than working in factories under someone else’s supervision.

 

Its ability to churn out such plausible sounding explanations for historical and social phenomena is part of Marxism’s core appeal. But this grand theoretical framework simply does not hold up in the light of modern social science.

 

First—and perhaps most crucially—Marx’s theory of history has proved unfounded and unworkable. Marx never offered a convincing explanation of how exactly technology is constantly improving, bumping up against stale social relations, and triggering revolutionary upheavals that birth new, ostensibly more appropriate social relations. He relies instead on functionalist theory, which postulates that particular phenomena come into being because they are needed for a social system to function. This is a frustratingly circular explanation. Moreover, it is not the case that technology was constantly (if slowly) improving in the past, or that societies that replaced older ones never regressed technologically. Marx’s idea of how and why bourgeois revolutions occur is inaccurate too. Contemporary Marxists like George Comninel and Vivek Chibber themselves argue that the French Revolution of 1789 was not led by an ascendant urban capitalist class battling against a feudal aristocracy, nor did it result in the creation of a democratic capitalist society; the same is true of the English Civil War of 1642–48. Marx regarded the working class as the only potentially revolutionary class—but, in fact, history shows that revolutions can be started by any disgruntled group.

 

What about Marx’s social theories? Take, for example, the idea that economic crises occur due to “the tendency of the rate of profit to fall.” Marx reasoned that capitalists will always be looking for ways to cut costs by automating production and that, over time, this will lead to the replacement of labourers by machines. Since he viewed human labour as the only source of economic value, he concluded that, over the long-term, all businesses will gradually cease to be profitable, as more and more workers are laid off. But without robust profits, capitalists will be unable to fund new investment, and without investment the whole economic system will grind to a halt, resulting in a general crisis.

 

There are many issues with this hypothesis. For one thing, empirical evidence demonstrates that profits have not declined over the past 40 years, despite increasing automatisation. And, more importantly, Marx’s assumption that labour is the only source of economic value has been completely rejected by almost all mainstream economists.

 

Marx’s concept of “surplus value” implies that workers are always necessarily being exploited even if they freely sign a legal contract with an employer under competitive conditions (since the cost of their wages is always less than the profits they allow the company to make). This is simply wrong. It’s not that workers are never exploited under capitalism; they just aren’t always exploited.

 

Marx also underestimated the problem of free riding among the working class and instead wrongly attributed working-class division and passivity to false consciousness (a semi-conspiratorial, quasi-Freudian notion). In fact, as Mancur Olson has argued in The Logic of Collective Action, under normal circumstances, workers have no compelling reason to take part in a revolution. The chances of an individual worker tilting the scales are extremely small. The revolution will succeed or fail regardless of what he personally decides to do. So, he’s better off simply staying on the sidelines and not risking getting arrested or killed. If the revolution succeeds, he’ll still enjoy its benefits, if any—say, expanded democratic rights or the abolition of exploitation—even if he didn’t participate in it. Assuming most workers are rational, one would expect large-scale revolutionary collective action to be an uncommon phenomenon: no “false consciousness” is necessary to explain this.

 

And what about Marx’s idea that the form of a society is determined by the structure of its economy? As a single overarching explanatory principle, it has not fared well. Most social scientists reject it in favour of the more pragmatic stance associated with sociologist Max Weber, known as methodological pluralism, according to which economic power (and conflict), political power, and ideological power are three irreducible and equally important factors. Sometimes, economics is the most important driver of historical events and social change. At other times, it is not. Contemporary historians are clear that World War 1 cannot be reduced to its economic dimension. The same goes for the Crusades—we now know that they probably had little to do with the crusaders’ desire for wealth and land, given that knights usually lost money on that adventure and probably knew from the outset that it would be costly, not profitable. That’s not what motivated them.

 

Of course, Marx was a philosopher as well as a social scientist and some people find his philosophical ideas more persuasive than his historical analyses. The idea of commodity fetishism, or reification, is one example. Reification happens when people endow a physical thing with human-like properties or act as if they were in a human relationship with it. The classic example of this is a religious icon, which is worshipped as if it were capable of performing certain human acts, such as mending a broken friendship or improving crop yields. For Marx, the fundamental reified aspect of capitalist society is that people’s economic relationships to each other are represented by relationships between things (products) and mediated by impersonal market forces. What gets produced and how it gets produced is determined, he says, not by people’s personal relationships and ideas but by abstract shifts in supply and demand. Such, he says in Capital, is the “domination of things” over people in capitalism.

 

But supply and demand are themselves directly determined by people’s personal wants and preferences, as expressed through their purchasing decisions. Moreover, most contemporary Marxists and socialists do not defend centralised state planning, but instead support so-called market socialism. Any market society with a highly sophisticated division of labour and a system of economic exchange—whether “socialist” or not—would surely exhibit the same apparently problematic “domination of things” in this sense.

 

Dialectics—which in the Marxist sense is a mysterious, never fully defined method of inquiry—is another confused concept. On the one hand, dialectical thinking is sometimes taken to simply mean a kind of thinking that acknowledges the existence of vicious and virtuous cycles, reciprocal dynamics, unintended consequences, and the fact that phenomena can be “overdetermined” (i.e., caused by many different factors at once). For example, Marxist Antonio Gramsci emphasised that, even though the behaviour of capitalists determines the state’s political decisions, state policies also influence capitalist behaviour. This idea is often expressed in rather impenetrable jargon such as “the economic base influences the political superstructure, but then the superstructure feeds back into the base.” In this sense, however, dialectics is obviously not especially Marxist at all and is pretty much synonymous with sophisticated thinking or careful analysis of complex phenomena. The Marxist philosopher Étienne Balibar defines dialectics as “a logic or form of explanation specifically adapted to the determinant intervention of class struggle in the very fabric of history.” But if this is not meaningless, it’s pernicious. If you can’t defend Marxism using conventional forms of critical thinking and have to resort to a style of verbal gymnastics specially tailored for the purpose, that does not indicate anything good about Marxism. And the fact remains that Marxism is usually understood as a social scientific paradigm that explains how the world works. In this, it has mostly failed.

 

Some contemporary Marxists admit that Marx’s classical theories are mostly mistaken, but propose that we rework them, extracting what is useful and discarding the rest. For instance, we could abandon the notion of surplus value, while still holding onto the idea that workers are exploited under capitalism. Contemporary Marxists, such as Erik Olin Wright and Vivek Chibber, deduce this from the fact that there is an asymmetric relationship between relatively powerless individual workers and powerful individual capitalists.

 

The problem is that there’s nothing specifically Marxist about such an observation. Standard neoclassical economics makes the same point about asymmetric bargaining positions using the so-called monopsony model. Imagine a market with only one employer, without whose paid work people would starve: she would be free to set wages as high or as low as she pleased. Although, in our current world, the employment market is more competitive than that, it is still imperfectly competitive: competition can still be stifled in certain ways (e.g., through monopolies or government regulation), leading to artificially lower wages.

 

In contrast to the Marxists, however, neoclassical economists have gathered robust quantitative evidence of the amount of worker exploitation that results from imperfectly competitive markets of this kind. The typical statistical estimate indicates that US workers, on average, receive wages that are about 20 percent lower than their actual contribution to the firm would merit. The problem for Marxists is that these economic models also reveal that inequality of power is just one mechanism of exploitation. Other factors responsible for the discrepancy between economic contributions and wages include search costs and frictions—i.e., the fact that a worker cannot switch to a higher paying job without first gathering information about potential employers and spending time putting in job applications and will sometimes have to relocate to take up the new job. This all costs so much time and money that the worker might prefer to remain employed with the original company, even though they pay him a suboptimal wage. This has nothing inherently to do with capitalism: such disincentives to change employer would also exist in a hypothetical future socialist society.

 

Some Marxists have tried saving Marx’s theory of history by stripping it of its technological bias and functionalist framing and focusing on the dynamic of class struggle. The idea is that we can explain historical change in terms of struggles between groups—say, the middle class against the peasantry—for control of resources. The Marxist historian Robert Brenner, for instance, speaks of “vertical” and “horizontal class struggle.” This definitely expands Marx’s rigid schema, but what is gained by relabelling well understood sociological phenomena such as, say, religious infighting as “horizontal class struggle”? Why even call this class struggle? This smells of what philosopher of science Imre Lakatos has termed a “degenerating research programme,” the main characteristic of which is not discovering any actual new insights, but merely reframing older ones every time they are empirically falsified by new data—a kind of ideological p-hacking.

 

The heart of the Marxist system of thought is the principle of economic determinism. The uncompromising version of this principle is misguided and unusable. However, more recent Marxists have tried to salvage it by watering it down. Friedrich Engels began this process just a few years after Marx died, by talking about “determination in the last instance.” As Engels pointed out, economic class relations are not the sole cause of social phenomena. Instead, he argues, the economic aspect of society is simply “the basis” of everything else, though non-economic aspects also play a role in shaping social outcomes. But it is unclear exactly what—if anything—this means or what practical applications such a theory could have. Even hardworking Marxists like Louis Althusser have failed to make Engels’ idea of “economic determination in the last instance” comprehensible or practicable.

 

Marx’s failed theories, then, can be propped up by reframing them with the help of non-Marxist ideas, by downplaying their distinctively Marxist tone, by modifying them to better fit new data, or by stretching the meanings of words like class and economic determinism almost to breaking point. But if the original concepts for which Marx is justifiably best known are nowhere to be seen, there’s really no reason to invoke Marx’s name.

 

This does not mean that Marx himself is not worth reading. He was approximately correct about quite a few things, like the existence of exploitation under capitalism, the fact that capitalists and politicians enter into mutually beneficial deals that screw over the public, and that economic inequality is a pernicious social problem. But his main theory has nothing further to offer us. RIP.