— Capital —

Is Karl Marx Relevant to Modern Capitalism

Editorial Note

Marx was a brilliant thinker and a versatile writer who would become the pioneering social scientist in history.

“Aspecter is haunting Europe- the specter of Communism”- the tour-de-force opening lines of The Communist Manifesto, co-authored by Fredrich Engels and Karl Marx may not be a war cry of the proletariat anymore as it is ruthlessly abandoned into the ash heaps of history. But the specter of Marx’s predictions on the course of unfettered capitalism and its subsequent fostering of social inequality is haunting the world stage of intelligentsia, economists and policy makers who are deliberating on the most desirable and efficient economic system.

Marx was a brilliant thinker and a versatile writer who would become the pioneering social scientist in history. He formulated an avant-garde social theory based not only on the interplay of the factors of production but also on the relationships between the owners of capital (bourgeois) and the workers (proletariat). Thus, class struggles and the thesis of emancipation of workers in chains became the cornerstone of Marx’s magnum opus “Das Capital”. It is hailed as the Bible of workers manifesto leading to the creation of a utopian ideal state, and a classless society founded on “Scientific Socialism” and “Dialectical Materialism” that heralded the dawn of the Left in the world socio-political arena. 

Marx is still a monumental figure in global socio-economic affairs. Marxian thoughts are revisited by scholars and layman alike, bewildered by his precise prognosis in the late 19th Century on 21st Century Capitalism! One of Marx’s foremost contention was that Capitalism is essentially a rent-seeking machinery. That bourgeois is unilaterally focused only on increasing their profits, and wealth through myriad exploitation of the workers. This seemed to be an anachronism in the industrial societies post World War II, when visionary entrepreneurs dreamt up new products and new ways of organizing production. The incremental profits were percolated to the grass root worker so that he had adequate salary, bonus, pension funds and purchasing power for a decent quality life for him and his generation. Contrary to Marx, the blighted circumstances of the average worker were transformed into relative prosperity. Marx’s contention on the decline and fall of capitalism owing to falling rate of profits never seem to become a self-fulfilling prophecy since the modern-day neo-liberal capitalist countries expand to multiple geographies, their markets and production facilities (for optimizing costs and bypass saturation in their national markets), especially that of labor to reap and maintain high profitability. Globalization has created a seamlessly integrated global market without borders while at the same time decimating the fortunes of low-wage, semi and unskilled labor force. 

In its wake, The American Dream was born and its success emulated in non-communist western societies. But with the advent of new age economies spearheaded by the digital revolution, the intelligentsia and ideologues alike are convinced that Marx was right. The modern-day bosses’ ulterior motive is only furthering their salaries and perks at the expense of their subordinates. They are mere corporate bureaucrats and zero wealth creators who collude with similar rent seekers in the value chain, namely consultants, board members and politicians to amass wealth and control resources. In this context, perhaps nothing is more farcical than the annual World Economic Forum meet in Davos, Switzerland, which, is an eclectic and elite platform where rich men debate economic and social inequality and diversity! A forum adorned by Hollywood celebrities and philanthropists wearing designer suits, fly in by chartered private jets spewing greenhouse gases, to pontificate climate change and global warming! Borderless CEO’s and corporate honchos engage in heated discourses on social and environmental issues they created in the first place. 

In the world’s most powerful economy of US, the real wage of the worker has stagnated, the rich-poor divide widens, the median income of the American middle class is lower than it was 25 years ago. Most societies reel under the yoke of social and income inequality. For instance, in the US, the GDP has grown incrementally over the last 30 years, but the top 1% currently owns 62% of the total wealth created! An Oxfam report in 2018 revealed that top 1% of elites control and own 82% of global resources and wealth. Global economies are besotted by alarming paradigms since several decades; declining growth, rise of oligarchic rule, institutional corruption and income inequality. The common man clamor for change. The renewed interest in Karl Marx grows, more of disillusionment with the neoliberal system than fascination with Marxism as a socio-political program. 

Marx maintained that Capitalism will evolve into a global system, through the interdependence and integration of global economies. An impossible proposition in the 19th century Victorian era he lived, the world has since witnessed globalization; a phenomenon consummated by the revolutionary advancement in transportation and telecommunications. The 21st Century world is reduced to a “global village”, inhabited by a “global audience”. One of the significant political developments of the late 20th Century has been to progressively dismantle the barriers of the factors of production in the form of opening up cross-border trade and commerce, free deployment of capital and to an extent free people to people movement.

Marx believed that Capitalism will engender a monopoly market structure. For a while, the world thought Marx was wrong with the proliferation of goods, services, brands and choices increasing competition driving down prices of consumer goods making it affordable for the common man! Free market competition in all its glory. But with globalization and the Internet and the emergence of New Age, asset light, digital companies like Facebook, WhatsApp, Uber, Airbnb, LinkedIn, Amazon whose cost to capital infrastructure ratio is significantly lower than traditional brick and mortar companies, have taken the corporate world and social life by storm! These corporate behemoths are devoid of heavy competition, either acquiring small disruptive players or causing a “crowding out” of smaller players and thus reinstating a near monopoly market. Marx the prophet was right again!

Finally, Marx foresaw the “Gig Economy”, that is becoming a new socio-economic reality now. A significant proportion of the work force around the world are forced to juggle themselves between different part-time, on-call jobs, facilitated by digital medium in the growing dearth of full-time permanent employment. This is partly due to automation and lack of appropriate technical education and skill sets among the workforce to compete for New Age economy jobs.

But Communism in its puritanical Marxist-Leninist version was hardly a panacea for all ills plaguing mankind. On the contrary, 40% of humanity under communist rule endured oppression, famines, gulags and party dictatorships. There was no incentive for living under a social system where “everyone gives according to their powers and receive according to their needs”. The production and redistribution models destroyed efficiency and quality. Marxism in its empirical form, offered sub-optimal solutions compared to Capitalism in the absence of market and pricing mechanisms, demand and supply economics, innovation and customer-centricity.  Their rulers had blood on their hands- guilty of genocides and political killings. Millions were mercilessly murdered during Stalinist purges, Chairman Mao’s “Long March” and Cambodian dictator Pol Pot’s experiment of an “Agrarian Utopia”. The blood of the innocents in Tiananmen Square is crying out in unison two repressed words- “Freedom, Democracy”!

Anything in its excess will be destroyed by itself. Marx had his share of spectacular failures. History has debunked the seductive mysticism of Marxist- Leninist ideology of equality, justice and fraternity. The only successful Marxist regime today, China is an enthusiastic practitioner of Capitalism or euphemistically “socialism with Chinese characteristics”! Marx overlooked the rise of fascism, was oblivious of the power of reforms in capitalist societies and erroneously concluded that Communist regimes will ascend to sustained power in developed western world.

Amidst the socio-economic and political turmoil that ravage the contemporary world, amidst the roller coaster rides of economic recession and recovery and the aggravating discontent of globalization, the world tries to grapple with the mystery of Marx- the sheer power of his intellect and personality. But unbeknownst of all these gathering storms, in the lawns of the Highgate Cemetery in London, among the trees, busheries and wild flowers, Karl Marx rests in peace…