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Essay: Exploring Capitalism vs. Marxism with this Article:​​​​​

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Evaluation of Marxism and Capitalism

Marxism is a method of socioeconomic analysis, originating from the mid-to-late 19th century works of German philosophers Karl Marx and Friedrich Engels that analyzes class relations and societal conflict using a materialist interpretation of historical development and a dialectical view of social transformation.

Marxist methodology originally used economic and social political inquiry to analyze and critique the development of capitalism and the role of class struggle in systemic economic change. According to Marxist analysis, class conflict within capitalism arises due to intensifying contradictions between highly productive mechanized and socialized production performed by the proletariat, and private ownership and appropriation of the surplus products in the form of surplus value (profit) by a small minority of private owners called the bourgeoisie.

 As the contradiction becomes apparent to the proletariat, social unrest between the two antagonistic classes intensifies, culminating in a social revolution. The eventual long-term outcome of this revolution would be the establishment of socialism – a socioeconomic system based on social ownership of the means of production, distribution based on ones contribution, and production organized directly for use. As the productive forces and technology continued to advance, Marx hypothesized that socialism would eventually give way to communist stage of social development, which would be a classless, stateless, humane society erected on common ownership and the principle of " from each according to his liability, to each according to his needs”.

 Capitalism is an economic system based on private ownership of the means of production and the creation of goods and services for profit .Central characteristics of capitalism include private property, capital accumulation, wage labor and competitive markets. In a capitalist market economy, investments are determined by private decision and the parties to a transaction typically determine the prices at which they exchange assets, goods, and services.

The degree of competition in markets, the role of intervention and regulation, and the scope of state ownership vary across different modes of capitalism. Economists, political economists and historians have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free market capitalism, capitalism and state capitalism. Each model has employed varying degrees of dependency on free markets, public ownership, obstacles to free competition, and inclusion of state-sanctioned social policies.

Differences between the two philosophies

The two theories are historic enemies, and their differences are most acute when examining their attitudes toward individualism, private property and profits.

However the most common differences occur in the followings areas:

Capitalism and Marxism are competing social, economic and political theories that have dominated the organization of society since the 19th century. Capitalism emerged during the demise of feudalism in the 14th century, and is based on the principle of economic individualism, or the right to own private property and exercise autonomy in making economic decisions. Marxism, oftentimes interchangeable with communism, emerged from the writings of Karl Marx and Fredrick Engels in the 19th century, and is based on the theory that class conflict will eventually result in the establishment of a society where the public owns the means of production. The two theories are historic enemies, and their differences are most acute when examining their attitudes toward individualism, private property and profits.

Individualism

• Individualism, which places the rights of the individual above the rights of a collective, is integral to capitalism and is most commonly associated with economic theorist Adam Smith, who posited in the "Wealth of Nations" that the pursuit of a rational self-interest in a market free from regulation would result in economic and social well-being. Karl Marx was influenced by Smith, and, ironically, also espoused the virtues of individual freedom. Marx, however, believed that capitalism dehumanized individuals, especially those in the work force, and that only through communal equality would the individual truly be free.

Private Property

• The concept of private property can be traced back to the writings of John Locke who argued that man had a natural right to own what he has produced through his labor. This concept evolved in capitalist theory to mean that ownership of the means of production signifies ownership of what is produced. Marx, in contrast, was devoted to abolishing the concept of private property, which he interpreted as the denial of private property of others. According to the "Communist Manifesto," collective ownership over the means of production and what is produced will result in the emancipation of humanity. For Marx, private property is an expression of man's relation to the natural world, and the pursuit of it transforms man into an object. When man is freed from private property he is given the freedom to be purely human.

Profit

• Capitalism allows for the individual to determine the profit margin derived from the sale of private property in a free market, which was a source of intense criticism from Marx. Marx's labor theory of value, a foundation stone of Marxian economics and the basis for his criticism of capitalism, equated the value of a product to the number of labor hours needed to produce it. Profits, therefore, could only be derived by capitalists from exploiting the working class. In Marx's vision for a communist state, reconstructed by Bertell Ollman, an NYU professor of politics, all profits from the previous regime are applied to public purposes and the surplus from production is distributed equally.

Similarities between the two

Democracy and market forces are the main similarities between these two economic systems. In my view, a major similarity of these two systems is democracy.  While democracy is not absolutely essential to either of these systems, it is the most common form of government in capitalist countries and even in socialist (as opposed to communist) countries.

With regards to economics, the main similarity between the two, as I see it, is some amount of market competition.  A purely capitalist economy (no country has such an economy) would be run completely by market forces.  The government would not intervene in the economy at all.  A socialist system would be under more government control than a capitalist economy, but there would still be many market forces at work.  People would be able to own private property and make many of their own economic decisions.  Small-scale private enterprises would be allowed to exist.  Thus, both systems would include market forces, though such forces would play a larger role in a capitalist system.

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