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At one time, of course, all economies were "traditional" (and, aspects of them always will be). People's ways of making a living evolve slowly. People developed time-tested means for growing, adapting and exchanging the things they want. By modern standards, traditional economies had no great abundance, and life was not easy, (except for the nobility). But, the problem of scarcity was addressed in predictable ways. Farmers farmed, merchants traded, artisans created needed goods, and people generally lived close to their work and pulled together, when necessary, in ways that everyone could understand.
Then came the series of huge technological and social changes called the Industrial Revolution. New manufacturing technology made workers far more productive than ever before. One important factor in this increased productivity was the specialization of workers and the division of labor. Where workers had been more or less self-sufficient creators of an entire product (a suit of clothes, for example), they now became a "cog in the machine", performing one task over and over. This demanded less skill and less strength from workers, and their wages went down. In many early textile mills, for example, children were commonly hired because they could scurry into dangerous spaces adults couldn't reach -- and they didn't have to be paid as much. Throughout the 19th century, the wages of industrial workers went steadily downward, and their working conditions became more oppressive and dangerous, until industrial workers were reduced to a state of virtual slavery that was harder on then, in many ways, than the explicit slavery practiced on Southern plantations.
All of this happened while new technology was making those workers more productive all the time. So it might be said that the problem of the industrial revolution was not the problem of scarcity -- because technology had made goods much less scarce! Societies now had to deal with a new problem of abundance. They had to deal with the famous question posed by the American economist Henry George: "Why, in spite of progress, does poverty persist and deepen?" Industrial progress acted, George said, like a giant wedge that cuts through society, lifting up the wealthy and pushing down the poor.
Karl Marx saw in these processes a dynamic of class struggle that would inevitably lead to an overthrow of the capitalist system. The capitalists, he reasoned, would replace as many workers with machines as they possibly could. Once they had done that, however, their profits would begin to fall, and they would be compelled to treat workers more and more harshly. Eventually, working conditions would become so intolerable that the suffering, alienated industrial workers (the "proletariat") would seize control of the "means of production" (land and capital). Informed by socialist theory, they would create a new "planned economy" that would use industrial progress to benefit the entire community.
In Marxist theory, these processes of alienation, class struggle, revolution and transformation into socialism are inherent in the very nature of industrial society, and sooner or later, they will certainly happen. Critics of Marxist theory point, however, to a couple of key events that did not happen as predicted.
For one thing, industrial societies, faced with the real prospect of widespread labor unrest, strikes, and the possibility of revolution, made enough concessions to make workers believe that they had "a stake in the system". These processes happened very gradually. Child labor was outlawed. The factory work day was given a definite length: first twelve hours, then ten, then eight. Worker safety and health regulations were gradually imposed. A minimum wage was established. Social security ensured that the aged would not be thrown into dire poverty. In short, the development of the modern "welfare state" proved acceptable to both the capitalist and the worker classes. Workers got a better deal and a chance to improve their lives. Capitalists, while forced to surrender some of their profits, were saved from losing their entire system.
Secondly, Marxists predicted that the revolution would be led by the proletariat, the alienated industrial workers. Communist groups worked tirelessly to educate these workers in Marxist ideas and organize them to act. However, the nations that actually adopted socialist or communist systems, such as Russia, China, Cuba and Nicaragua, have been pre-industrial, agrarian societies. In each of those countries, a small minority owned almost all of the land. This shows that class struggle has actually been deepest in nations where rural land monopolists -- not industrial capitalists -- have been the dominant class.
Critics of Marxism suggest that in lumping together diverse factors such as capital, land, finance, monopoly, etc. into the overall category of "means of production", Marx missed important facts about how economic processes work. For example, the factor of "capital" is usually understood as capital goods -- physical products that are used by labor in production. It is clear that the mere ownership of capital as such cannot exploit or abuse labor. That is because capital cannot be used unless labor uses it, and when labor does use it, labor produces more wealth than it otherwise would have! Therefore, the use of capital, or technological improvement, or any other labor-saving process cannot cause the exploitation of labor, because labor could benefit from the use of those things -- unless workers have no means to find self-employment. If workers can find places to make their own living, then they need not go to work for capitalists at bare-subsistence wages. Therefore, the cause of exploitation of labor must have something to do with labor's opportunity to produce wealth for itself, and with the economic laws that govern the distribution of wealth once it is produced.
However, although Marxist theory may not have adequately explained it, it cannot be denied that class struggle plays a gigantic role in today's economy, and that technological change continues to act as a wedge, lifting up the rich and grinding down the poor. More and more today, the source of this class struggle is coming to be seen as not so much the ownership of the means of production, but rather of the ownership of privileges and monopolies that allow a powerful few to glean most of the benefits of progress.
Background Questions
- Why are traditional economies vulnerable when they come into contact with industrial economies?
- Why did the industrial revolution lead to alienation among workers?
- Why did Karl Marx believe that capitalism would inevitably be superseded by socialism?
- How did the development of the welfare state make the capitalist system more acceptable to both workers and bosses?
- Is the exploitation of labor caused by the use of labor-saving technology? Explain.
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