New to Marxism: Session 1 of 6
Capitalism produces extraordinary wealth, yet leaves millions struggling to meet their basic needs. Marxism explains this contradiction by looking beneath the buying and selling we see around us to the class relations on which the system rests.
This first session asks what capitalism is, how it exploits workers and why the working class has the collective power to replace it.
What you will learn
- What Marxists mean by capitalism and social class.
- How wage labour produces profit through exploitation.
- Why the working class has both an interest in ending capitalism and the collective power to do so.
At a glance
Capitalism is a system in which the main resources needed to produce society’s wealth are privately owned and operated for profit. A small capitalist class controls companies, banks, land and infrastructure. Most people do not own enough productive property to live independently. They must sell their ability to work to an employer in return for a wage.
The wage appears to pay for all the work performed. But workers produce more value during the working day than is returned to them in wages. The remainder—surplus value—is controlled by the employer and is the source of profit. Exploitation is therefore not simply the result of greedy or dishonest bosses. It is built into the wage system.
Capitalism also creates its potential alternative. Workers are brought together through social production. They keep hospitals, transport, communications, distribution and industry functioning. Acting collectively, they can interrupt profit and take control of production. The working class can free itself only by replacing capitalist ownership and class rule with collective ownership and democratic planning.
A society divided into classes
People commonly use ‘class’ to describe income, accent, education or lifestyle. These differences are real, but Marxism begins somewhere more fundamental: a person’s relationship to the production of society’s wealth.
The capitalist class owns or controls the major means of production—the workplaces, machinery, land, financial institutions and infrastructure on which society depends. Capitalists do not invest primarily to meet human needs. They invest in order to obtain a return and expand their capital.
The working class, or proletariat, consists of those who depend on selling their capacity to work because they do not own the means of production. It includes far more than the traditional image of a male factory worker. Nurses, teachers, delivery drivers, retail workers, software developers, cleaners, office workers and many others are part of the modern working class. Unemployed and retired workers, and people dependent on a worker’s wage, also belong to this class in a broader social sense.
Some salaried managers exercise the employer’s authority, control other workers or receive a share of profits. Small business owners may work alongside their employees while also exploiting their labour. Society contains intermediate layers, but these do not abolish its central division between capital and labour.
Labour power and profit
Workers sell an employer their labour power: their capacity to work for a set period. Like other commodities, labour power has a cost. Wages must, at least over time, cover what workers and their households need in order to live, recover and raise the next generation of workers. Their level is also shaped by skill, historical conditions and class struggle.
Once the employer has bought labour power, workers produce goods or services under the employer’s control. During part of the working day they create value equivalent to the cost of their wages. During the rest they continue producing value for the employer. Marx called this extra portion surplus value.
Suppose, as a simplified example, that a worker produces the equivalent of their daily wage in four hours but works for eight. The value created in the remaining four hours belongs to the company. After other costs are met, it becomes the basis of profit, interest and rent.
This does not mean every company makes a profit or that prices correspond neatly to the labour contained in each individual product. Competition redistributes surplus value across the economy. Nor does it mean that public-service workers perform unimportant work when their labour does not directly produce a commodity for profit. The central point is that capitalist accumulation rests on the exploitation of wage labour across the system.
Even an employer who pays the agreed wage and obeys every employment law participates in exploitation. The exchange can be legally equal while the relationship remains socially unequal: the employer owns the workplace and the product, directs the work and controls the surplus.
Competition, accumulation and crisis
Capitalists are driven not only by personal greed but by competition. A business that does not reduce costs, introduce new technology or find new markets risks being defeated by its rivals. Each employer is therefore pushed to increase productivity, hold down wages, intensify work and turn as much surplus value as possible into new capital.
This process develops science, technology and production on an enormous scale. But it does so without an overall social plan. Separate companies decide what to produce according to expected profit. Competition drives each to expand without knowing whether its products can continue to be sold profitably. Investment rushes into expanding sectors and then collapses. Goods remain unsold, workplaces close and useful work goes undone—not because human needs have disappeared, but because meeting them is no longer profitable.
Economic crises are not outside interruptions to an otherwise balanced system. They arise from capitalism’s contradictions: production is social, involving millions of cooperating workers, but ownership and control remain private. The drive to accumulate repeatedly collides with the limits of profitable production.
Why the working class?
Being exploited does not automatically make somebody a socialist. Workers are divided by occupation, income, nationality, racism, sexism and competition for jobs. The ideas of the ruling class are reproduced through schools, the media, political institutions and everyday life. Workers can support reactionary politics as well as revolutionary ones.
But the working class occupies a unique position. Capital depends on its labour. A strike reveals this dependence immediately: when workers stop, services and production stop, and profits are threatened. Collective struggle can overcome divisions, produce new leaders and teach workers that they can run workplaces and society themselves.
Other oppressed groups and social layers can play powerful revolutionary roles. But the working class is brought together by production across every division of society. It has no need to establish a new system of exploitation. To liberate itself, it must abolish the private ownership of the major means of production that creates classes. In doing so, it can lead a struggle for the liberation of all the oppressed.
This outcome is not inevitable. Collective power has to be organised and directed towards a conscious struggle for political power. Understanding that problem is the starting point of revolutionary Marxism.
Key terms
- Capitalism: a system of generalised commodity production in which the main means of production are privately owned and wage labour is exploited for profit.
- Capital: value invested in order to produce more value; also a social relationship in which owners control production and the labour of others.
- Working class or proletariat: the class that depends on selling its labour power in order to live.
- Labour power: a worker’s capacity to work, sold to an employer for a wage.
- Surplus value: the value produced by workers beyond the value returned to them in wages; the source of capitalist profit.
Read and discuss
For a group session, everyone should read this guide and at least one of the two short introductory readings.
Start here
- Workers Power, E is for Exploitation — a short explanation of labour power, surplus value and why exploitation is part of the profit system (about 6 minutes).
- Workers Power, P is for Proletariat — who belongs to the working class and why class is not simply a question of income or culture (about 5 minutes).
Go deeper
- Karl Marx, Wage Labour and Capital — Marx’s accessible account of wages, capital and the conflict between workers and capitalists.
- Workers Power, The Marxist theory of political economy — a fuller introduction to value, exploitation, accumulation and capitalist crisis.
Questions for discussion
- How does the Marxist definition of class differ from everyday ideas about class?
- If a worker agrees to a wage, in what sense are they still exploited?
- What is the difference between labour and labour power?
- Why does competition make exploitation systemic rather than a matter of individual greed?
- How can capitalism produce abundance and crisis at the same time?
- What gives workers the potential to lead a transformation of society—and what prevents that potential being realised automatically?
Activity: map the power behind an ordinary service
Choose something people use every day: a supermarket delivery, a hospital appointment, a train journey or a mobile phone. List the groups of workers whose labour makes it possible. Then identify who owns or controls the main organisations involved, where profit is made and what would happen if one or more groups of workers stopped work.
The aim is to make the social and collective character of production visible beneath the appearance of a simple purchase or service.
The central point
Capitalism is not simply an unfair distribution of wealth. It is a class relationship based on capitalist ownership of the major means of production and the exploitation of wage labour. The same system that exploits workers also brings them together and gives them the collective power to replace it.