Capitalism-and-Its-Critics-A-History-From-the

The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.

The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations.66

These passages were written at a moment when Britain had established itself as an industrial superpower, the United States was starting to catch up, and France and (still divided) Germany were stirring. Britain, as the lowcost producer of manufactured products, had adopted the self-interested stance of promoting free trade. Many of its economic rivals, including the United States, were erecting tariff walls to protect their developing industries. Marx and Engels didn’t dwell on the details of these economic strategies, but they highlighted the social and cultural consequences of capitalism’s onward global march:

In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.67

How far could this process of globalization and homogenization go? The Manifesto is unequivocal:

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.68

A member of the Communist League, on reading these descriptions of the capitalist economy and its wonders, could surely have been forgiven for wondering how such a mighty edifice would ever be toppled. In answering this question, the Manifesto invokes Goethe’s ballad “The Sorcerer’s Apprentice,” in which the lazy trainee bestows magic powers upon a broom, with unintended and disastrous results.69 The bourgeoisie plays the role of the sorcerer, and capitalism plays the role of the broom.

One of the unintended consequences of capitalism’s immense productiveness, the Manifesto points out, is the emergence, at regular intervals, of “commercial crises”: unsold goods pile up, workers are thrown out of their jobs, and “it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence.”70 Through the “enforced destruction of a mass of productive forces  … the conquest of new markets, and by the more thorough exploitation of the old ones,” the system has demonstrated a capacity to rebound from these slumps. However, each recovery is merely “paving the way for more extensive and more destructive crises” in the future.71

This passage closely follows Engels’s analysis of economic cycles in The Condition of the English Working Class. The Manifesto goes on to identify the underlying problem as one of overproduction, which it describes as a creation of the bourgeoisie that is potentially fatal to it: “But not only has the bourgeoisie forged the weapons that bring death to itself; it has also called into existence the men who are to wield those weapons—the modern working class—the proletarians.”72 Again, this argument follows Engels’s earlier work, but the Manifesto lays out in greater detail how the proletariat develops into a revolutionary class. Initially, its members are an “incoherent mass,” broken up “by their mutual competition.” Powerless to resist mechanization, they “destroy imported wares that compete with their labour, they smash to pieces machinery, they set factories ablaze, they seek to restore by force the vanished status of the workman of the Middle Ages.” (Marx and Engels had studied the Luddites.) But as industrialization proceeds, it gradually “obliterates all distinctions of labour.” The proletariat “not only increases in number; it becomes concentrated in greater masses, its strength grows, and it feels that strength more … The collisions between individual workmen and individual bourgeois take more and more the character of collisions between two classes.”73

To boost their wages and defend their work conditions, workers organize and form labor unions. They may even secure some political advances: the Manifesto singles out the British Factory Act of 1847, which limited the workday to ten hours for women and for children under eighteen. Ultimately, though, this progress is illusory. The worker, “instead of rising with the progress of industry, sinks deeper and deeper  … He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident that the bourgeoisie is unfit any longer to be the ruling class in society  … It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery.”74

This is the famous immiseration thesis. Whereas Engels, in The Condition of the Working Class in England, had qualified it with an acknowledgment that some factory workers earn more than others, and that wages can rise at least for a time, the Manifesto contains no such nuances. It presents the impoverishment of the workers as a remorseless process that ultimately destroys the system that generates it, because the oppressed proletariat, having no alternative, turns into a revolutionary class: “What the bourgeoisie therefore produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.”75

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The Manifesto is a remarkable polemic. Even today the vividness and prescience of its language leap from the page, especially in its descriptions of globalization and the “world market.” And yet it was written at a time when modern transport and communications technologies were at their dawn. The railways were largely confined to Britain and the United States. Although Samuel Morse had recently developed his telegraph, it was still a novelty. As Isambard Brunel’s Great Western Steamship Company was transporting passengers between Bristol and New York, mariners in much of the world were relying on windsails. Industrial capitalism itself was far from ubiquitous. In his introduction to a 150th anniversary edition of the Manifesto published in 1998, the historian Eric Hobsbawm pointed out that in 1848 economies of continental Europe and North America were still primarily agricultural. Hobsbawm was surely correct when he said that the Manifesto’s descriptions of industrialization and globalization should be read as statements about “the necessary long-term historical tendencies of capitalist development” rather than as descriptions of mid-nineteenth century reality.76

Could the same be said about the Manifesto’s binary taxonomy of bourgeoisie and proletariat? Up to a point. In industrial cities like Manchester, the working class consisted of many different occupations— from factory workers to construction laborers to domestic workers to skilled artisans. Even in the cotton mills, there were many different jobs, each with its own skill set, pay scale, and social standing. Among the ranks of the propertied, striking divisions existed between the lower middle class, such as shopkeepers and small business owners; the professional middle class, which encompassed lawyers and merchants; and the nouveau riche factory owners. Marx and Engels insisted that capitalism was rapidly eliminating these internal class distinctions. In reality, this process was slow and uneven.

In explaining why the Manifesto’s confident prediction of a class war has so far turned out to be wishful thinking, it is vital to take account of these complications. A similar point applies to the immiseration thesis that Marx and Engels promulgated. Economic historians have long debated what happened to working-class living standards during the industrial revolution, but they generally agree that, starting in the mid-1840s or thereabouts, the wages of English workers rose steadily. According to Bank of England data,77 between 1845 and 1865, average inflation-adjusted weekly wages increased by 30 percent. By 1900, wages were about 50 percent higher than they had been in 1850. In other parts of western Europe, the pattern was broadly similar. A 2014 study by researchers at the Parisbased Organisation for Economic Co-operation and Development (OECD) compared workers’ wages in six countries to the cost of a basic “subsistence basket” of food goods necessary for human survival. On this basis, the researchers concluded that between the decades of the 1850s and the 1900s wages increased by more than 70 percent.78

Marx himself would eventually be forced to contend with the evidence that many British workers were seeing their wages rise. When he and Engels were writing the Manifesto, however, they were basing their analysis on the experiences of the early industrialization period, which provided more support for their immiseration thesis. Adam Smith argued that, as capitalist development progressed, wages would steadily increase, and the population would be elevated into a state of “opulence.” But during the half-century from 1790 to 1840, according to calculations by Charles Feinstein, an English economic historian, the inflation-adjusted wages of British workers rose by just 12 percent—a barely perceptible increase year by year—despite much larger increases in output and output-per-worker.79 In a 2009 paper titled “Engels’ Pause,” another economic historian, Robert Allen, pointed out that profits rose sharply during the same period, and the share of overall income accruing to owners of capital rose by about 5 percentage points while the labor share fell by the same amount. Workers didn’t share the fruits of capital investment and productivity growth: wages stagnated while capitalists got richer. “Engels’ description of the industrial revolution was, in many respects, an insightful one,” Allen concluded.80

It should be noted that Feinstein’s figures are disputed: other scholars have produced considerably higher estimates of British wage growth over the period. All estimates of economy-wide real wages are acutely sensitive to which workers are included in them and the cost-of-living indices used to deflate nominal wages. Still, if Feinstein’s figures are even roughly accurate, industrialization and technological progress didn’t translate into appreciably higher worker living standards for a considerable period.

But the immiseration thesis didn’t age well. From the 1840s onward, the wages of British workers rose along with productivity, and in some periods, they grew even faster. Between 1860 and 1900, according to Allen’s estimates, output-per-worker rose at an annual rate of 1 percent and real wages rose at a rate of 1.6 percent.81 Consequently, the share of total income accruing to labor increased by 10 percentage points, and the share accruing to capital fell by the same amount.82 The basic economic assumption underlying the Manifesto was that workers don’t share the rewards of technological progress and productivity growth. After about 1850, this assumption no longer held—a point that Alfred Marshall, the leading orthodox economist of his day, would emphasize in his 1879 book The Economics of Industry.83 If wages had continued to lag behind productivity growth, as they had done in the first half of the nineteenth century (and would again in the late twentieth century), subsequent history could well have followed the Manifesto’s predictions more closely.

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When Marx and Engels were writing the Manifesto, they had no way of knowing that they were living through a historical inflection point for workers’ living standards. The hardship and financial instability that characterized early industrial capitalism were continuing. In 1847 a speculative railroad boom had ended in a banking crisis that gripped the City of London and relented only after the British government suspended the Bank Charter Act of 1844 to enable the Bank of England to print more money. In Ireland, the Great Famine was raging. In France, following a poor harvest in 1846, the economy had entered a slump that led to rebellions in the countryside and bread riots in Paris and Lyon. Throughout France and Germany, representatives of the rising middle class were demanding more political rights, including, in some cases, universal suffrage.

In many parts of Europe, this febrile conjuncture created a potential alliance of convenience between middle-class radicals and alienated members of the working class. During the last week of February 1848, even before the Communist League could distribute copies of its newly printed Manifesto, a violent uprising began in Paris. Crowds packed the streets and erected barricades. On February 24, King Louis Philippe abdicated. The next day a provisional government declared a republic. Within weeks, the revolutionary impulse had spread to Berlin, Vienna, and many other European cities. But despite the hopes of Marx and Engels, it didn’t spread to Britain. The Great Reform Act had already enfranchised large elements of the British middle class, which made the situation very different from that in other parts of Europe. And the British working-class movement, despite the repressive measures inflicted on it during the Chartist protests, remained largely committed to nonviolence.

The two German exiles, having no such compunctions, traveled from Brussels to Paris, and eventually moved home to Germany to catch up with the action there. Although they regarded the initial uprising as a bourgeois revolution, they were hopeful it would presage a continent-wide workers’ insurrection. In Cologne, they created a new version of the newspaper they had worked on years earlier: Neue Rheinische Zeitung (New Rhenish Newspaper). Shaken by events, the absolutist rulers of Germany’s various kingdoms had agreed to elections for a Constituent National Assembly. When it met in Frankfurt in May, most of its members were middle-class notables who were content to work alongside the ruling monarchs.

In Paris, more dramatic events were in train. The provisional government abolished slavery throughout the French Empire. On the domestic front, it took up a version of Louis Blanc’s proposal for “national workshops,” where jobless workers could obtain work or receive unemployment benefits. This policy drew a lot of impecunious people to the French capital. But a Constituent Assembly, which was elected on the basis of universal suffrage, turned out to be dominated by moderates and conservatives from outside Paris. On June 22 the government, responding to demands by members of the new Assembly, issued a decree closing the Paris workshops and requiring workers who were claiming relief to enlist in the army or leave for the provinces.

In the crowded eastern part of the city, workers and leftists took to the streets carrying banners emblazoned with the slogan “Work or Death.” Barricades went up, and protesters clashed with members of the National Guard.84 When news of the rising reached Germany, Marx and Engels were excited. In a June 27 editors’ note in Neue Rheinische Zeitung, they proclaimed: “Paris bathed in blood; the insurrection growing into the greatest revolution that has ever taken place, into a revolution of proletariat versus the bourgeoisie.”85 The French government, acting as if it agreed with this analysis, empowered General Louis-Eugène Cavaignac, who had served for years in colonial Algeria, to crush the rebellion. Employing cannonfire to break through the barricades, Cavaignac’s forces routed the insurgents, killing or wounding thousands of them.86 By the end of June,

Engels’s “greatest revolution” had met a premature end. In the rest of Europe, further setbacks were to follow.

“Our friend, Moneybags”

Karl Marx’s Capitalist Laws of Motion

On August 24, 1849, the thirty-one-year-old Karl Marx traveled from Paris to London, where he was to live for the rest of his life.1 The hopes that he and Engels had harbored for the revolutions of 1848 had been dashed. From Paris to Berlin to Vienna, the forces of reaction were back in the ascendancy. After the Prussian government shut down his newspaper, Neue Rheinische Zeitung, Marx had moved to France, where Louis Napoleon, the former emperor’s nephew, had been elected as president, and rightist forces were consolidating power in the National Assembly. The French authorities quickly ordered Marx to leave Paris. He decided to move to London, where many of his associates in the Communist League now resided. A few weeks later, his wife, Jenny, who was pregnant, joined him. On November 5, 1849, their fourth child, a son called Guido, was born.

Life in London was tough on Marx and his family, who were perennially short of money. After initially living in Chelsea, they moved into a squalid two-room apartment at 64 Dean Street in Soho, then a poor, immigrant neighborhood. Subsequently, they moved down the block to another grotty flat at number 28. “In the whole apartment there is not one clean and solid piece of furniture. Everything is broken down, tattered and torn, with a half inch of dust over everything and the greatest disorder everywhere,” a Prussian police spy reported in 1853.2 During the seven-plus years that the Marx family lived in Soho, Karl and Jenny both suffered frequent illnesses. Three of their seven children died in infancy, Guido included. In June 1851, the couple’s housekeeper, a German woman named

Helene “Lenchen” Demuth, who had once worked for Jenny’s parents, had a baby. According to an 1898 letter from a friend of Demuth, Engels said on his deathbed that Marx was the father. Other evidence also points to this conclusion, including a July 1851 letter from Marx to Engels, in which he said his home life was “in a state of siege,” with “floods of tears,” presumably Jenny’s.3 After putting the child up for adoption, Demuth stayed with the family.

Assuming Marx was the father, this obviously raises questions about his attitude toward women and domestic workers, neither of whom feature prominently in his economic analysis. In June 1850, he had obtained a ticket to the reading room of the British Museum, in nearby Bloomsbury, which would become his study. With colleagues from the German Workers Educational Association, he worked on the launch of another Germanlanguage journal, Neue Rheinische Zeitung—Politisch-ökonomische Revue (New Rhenish Newspaper—Political-Economic Review), which first appeared in early 1850. In a series of articles for the new publication, Marx examined the failure of the 1848 revolution in France. He claimed that the bloody putdown of the June rising had “created all the conditions under which France can seize the initiative of the European revolution.”4 He also hadn’t given up hope of a revolution in Britain. In an article published in February 1850, he predicted that another great commercial crisis would arrive “as early as the end of spring, at the latest in July or August,” and that it would “bear fruit of a very different type from all preceding crises.”5

Marx’s analysis of the class conflicts that gave rise to the 1848 revolutions was acute, but his prognostications were dubious. In Paris and other European cities, the left had been vanquished. Louis Napoleon remained firmly ensconced in power. (In December 1851 he would stage a military coup and later declare himself Emperor Napoleon III.) In Britain, the “hungry forties” had been left behind, and a great mid-Victorian boom was beginning. British capitalism was entering a new era in which heavy industries like railroads, steel, and steamships would play the leading role. In 1850 Britain’s rail network already extended to six thousand miles, and by 1870 it would nearly triple in size.6 During the same twenty-year period, as iron steamships took over the oceans, the annual output of British shipyards rose from 13,000 tons to more than 250,000 tons.7 British exports of railway machinery, including steam locomotives, rose almost tenfold.8