With China inexorably moving to catch up economically with the US – now predicted to occur by 2036 – many countries, not surprisingly, are giving its Marxist-based economic system another look. And also not surprisingly another look at Das Capital, the book that started it all by critiquing the dominant paradigm of capitalism and proposing an alternative path to economic success – while avoiding its negative downsides. While most would have thought the “fall of communism” in 1989 in the USSR and its “Eastern Bloc” would be the death knell of Marx’s relevance, the 2008 collapse of the neo-liberal paradigm – which was supposed to have done the job – in accordance of Marx’s theory, and the rise of China gave Das Capital a new relevance.
Das Capital grounded Marx’s theory of capitalism onto an excruciatingly detailed development of the English working class. But this fact, in and of itself, should signal that with the passage of time and the historical development of capitalism, some of Marx’s conclusions might not necessarily be wrong and may even be quite relevant in the present.
One of the fundamental Marxian ideas developed in Das Capital is his particular interpretation of “labour theory of value”, which was proposed earlier by the economists Adam Smith and David Ricardo to explain the different prices at which goods were bought and sold. These pioneering economists proposed that the value of a commodity could be measured objectively by the average number of labour hours necessary to produce it.
Marx’s contribution was to query if this were so, then where do “profits” come from? His simple answer was that workers were being paid less than the true worth of their labour and profits were, therefore, squeezed from the latter. This was the essential exploitative relationship between those who own “capital” – “capitalists” – and those who provided their labour to produce commodities – “the proletariat”. He said, “Capital cares nothing for the length of life of labour power. All that concerns it is simply and solely the maximum of labour power that can be rendered fluent in a workday.” But in so doing the “labour” of persons becomes a commodity like any other that is sold and bought like any other.
In their urge to extract increasing amounts of profits, Marx proposed, capitalists would always seek to reduce the price of labour and those who are most successful at this manoeuvre can sell more commodities and acquire more profits. We witnessed this when US businesses moved en masse to China. This results in the number of capitalists decreasing as the fittest (most exploitative of labour) survives while the number of unemployed or underemployed increases. But that also sets the seed of inevitable crises in this “capitalist mode of production”: with the increasing unemployed, there are fewer customers to purchase the commodities and with the piled-up surpluses, the market periodically “crashes”.
“Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organised by the very mechanism of the process of capitalist production itself.”
After Marx, trade unions were formed in the “developed capitalist economies”, which improved the wages of their workers. However, the capitalists moved to underdeveloped countries like China, where they could pay labour at much lesser rates than in their own countries. This was the beginning of the “outsourcing” of manufacturing and services which led, among other factors, to the 2008 collapse. At present, the richest 1% owns as much wealth as the rest of the world combined and in fact just 62 persons have as much wealth as the poorest half of the world’s population. Marx is vindicated.
China’s innovation is to use capitalist techniques for efficient production, but for the government to ensure a more equitable distribution of goods and ownership of enterprises. Huawei, for instance, is owned by its employees.