"A spectre is haunting Europe — the spectre of communism. All the powers of old Europe have entered into a holy alliance to exorcise this spectre: Pope and Tsar, Metternich and Guizot, French Radicals and German police-spies. Where is the party in opposition that has not been decried as communistic by its opponents in power? Where is the opposition that has not hurled back the branding reproach of communism, against the more advanced opposition parties, as well as against its reactionary adversaries? ... It is high time that Communists should openly, in the face of the whole world, publish their views, their aims, their tendencies, and meet this nursery tale of the Spectre of Communism with a manifesto of the party itself,” (Preamble).

• German idealism: History^† is a clear trend of abstract and unstoppable forces, manifested in Zeitgeist, the “spirit of the age”

• To understand History (and the future), one should not study the past, but study ideas

• Can be instantiated in Volksgeist, the “national spirit”, guided by the State to achieve the goals of History

• Praised/blamed for the rise of existentialism, communism, fascism, death of God theology, and historicist nihilism

• Phänomenologie des Geistes, 1807 (Phenomenology of Spirit)

• History unfolds in linear fashion as a constant march towards transcendence and Truth, as a dialectical struggle between a triad of ideological forces:
  • A thesis
  • An antithesis arises which contradicts the thesis
  • The death struggle between thesis and antithesis breeds a synthesis
  • This produces a new thesis, which will ultimately be opposed by an antithesis, which ...

• In law, property is alienable, it can be separated from a person and transferred (as in a gift or an exchange)

  • e.g. Declaration of Independence: natural rights are “unalienable”

• Marx: under capitalism, labor services are alienated from workers for production and market exchange

  • Labor is commodified and sold on markets; corrupting or hollowing out human flourishing

• Alienation and commodification are essential to market exchange and private propety: the point is to produce and sell something that another will own

• Labor is exploited by capital; Proletariat is exploited by Bourgeoisie

• Capitalist direct production to produce goods for their exchange value on the marketplace, in pursuit of profit, rather than for their use value

  • trying to get more exchange value beyond mere use value, i.e. profit

• Marxist methodology: because capitalists own the means of production (private property, factories, tools, etc) and workers do not, capitalists can control & exploit labor

  • Keep wages low so profits are high

• In his analysis, uses most of the classical (Ricardian) tools and assumptions to analyze:

  • Labor cost theory of value
  • Neutral money
  • Diminishing returns in agriculture
  • Constant returns in manufacturing
  • Perfect competition
  • Rational agents
  • Wages fund doctrine

• Rejected Malthusian population principle, full employment (Say’s Law), and Ricardo’s production function (i.e. homogenous “doses” of L+K)

• Differences vs. Classicals/Ricardo are not in analysis, only in ideology!

• Rejects Malthusian population principle

  • But it explains why, with economic growth (capital accumulation), wages don’t squeeze profits to zero (population increases, depressing real wages to subsistence)

• Marx needs to explain existence of surplus value & profits under capital accumulation and rising wages

  • Solution: “reserve army of the unemployed”, an excess supply always exists in labor markets!
  • This depresses wages, keeping surplus value & profits positive
  • Machines replacing labor (wage increases cause capitalists to substitute cheaper capital for labor)

• Smith, Ricardo, Mill: in long run, profit declines from more competition

• Marx: With capital accumulation, and rising wages, capitalists substitute machinery for labor, further increasing supply of capital and pushing down profits

• Problem — two opposing forces affect rate of profits:

  • capital subject to diminishing returns, increases in capital lower profits
  • technological improvement increases profits
  • so an empirical question: compare rate of capital accumulation with rate of technological improvement

• Recognized that occasional depressions happen under capitalism

• Overproduction, violations of Say’s Law

• But Marx had no theory of the business cycle (why it happens and what causes it)

• Hypothesized that sudden bursts of technological change could generate a depression

  • increase capital accumulation $\to$ increased wages & smaller reserve army $\to$ fall of profit and surplus value $\to$ spiral into depression
  • but this creates opportunity for expansion: unemployed labor $\to$ lowers wages $\to$ restores profits & production again

• Corporations further increase centralization

• Corporation $⟹$ separation of ownership and control

• Lenin and later socialists will argue that monopoly/corporate capitalism is the transition stage to socialism:
  • just replace “managers” with government, “shareholders” with society; run the economy as a giant corporation!

• Marx’s “laws of capitalism” explain only that there are contradictions, does not provide a theory to explain or predict depressions, monopolies, or unemployment; or how to solve them

• So what comes next (socialism), and how does it work?

• In Marxian methodology: socialism is defined as merely the negation of capitalism

  • the antithesis to the thesis, that yields a synthesis
  • instead of bourgeois capitalists privately owning the means of production, they are seized by the Proletariat (through the State)
  • Marx spent little to no time on explaining how socialism ought to work, only wrote that it’s better! 🤷