Having charted the historical development of commodity production and money, Marx now turns his attention to the question that had stumped the classical economists: what is the source of profit within capitalism?

Up until this point in Capital, Marx deals mainly with historical processes and explanations of phenomena that were generally already comprehended. For example, although not fully developed, the concept of a labour theory of value had already been proposed by Marx’s predecessors. Similarly, the classical economists, like Marx, understood capitalism to be a system of commodity production and private ownership, driven by the profit motive. What none of the classical economists could answer or explain, however, was where profit within capitalism comes from.

What is capital?

In order to answer this question, Marx begins by asking: what is capital? How does this historical process arise? And what is it that differentiates capital from money or other commodities?

First off, Marx emphasises that capital is the result of a historical development – in particular, the development of commodity production and exchange:

“The circulation of commodities is the starting-point of capital. The production of commodities and their circulation in its developed form, namely trade, form the historic presuppositions under which capital arises. World trade and the world market date from the sixteenth century, and from then on the modern history of capital starts to unfold.” (p247, Capital, Volume One, Karl Marx, Penguin Classics edition)

The result of this development of commodity circulation, as outlined in previous chapters, is money – the “ultimate product” that marks “the first form of appearance of capital”. (p247)

The generalisation of commodity production and exchange; the development of a universal equivalent in the form of money; the division of labour in society; private ownership; the establishment of a world market: all these form, therefore, the prerequisites to the emergence of capital and of capitalism.

None of these in themselves, however, mark the qualitative distinction between capitalism and previous modes of production. Commodities, money, the division of labour, private ownership, and world trade have all existed in one form or another throughout class society. What then differentiates and defines capital?

“The first distinction between money as money and money as capital is nothing more than a difference in their form of circulation. The direct form of the circulation of commodities is C-M-C, the transformation of commodities into money and the re-conversion of money into commodities: selling in order to buy. But alongside this form we find another form, which is quite distinct from the first: M-C-M, the transformation of money into commodities, and the re-conversion of commodities into money: buying in order to sell. Money which describes the latter course in its movement is transformed into capital, becomes capital, and, from the point of view of its function, already is capital.” (p247-248)

With more primitive forms of commodity circulation, therefore, the overall aim for the producer is the fulfilment of needs. Each individual produces in order that he/she may sell; in turn, he/she sells in order that they may buy. “Consumption, the satisfaction of needs, in short use-value, is therefore its final goal.” (p250)

Now, however, we see an inversion: no longer are commodities and consumption the start and end point of the cycle; instead, we see a cycle that begins and ends with money. “[T]he buyer lays out money in order that, as a seller, he may recover money...The money therefore is not spent, it is merely advanced.” (p249)

With the generalisation of commodity production and exchange, and the resultant development of money, therefore, society has arrived at a point where production is no longer conducted for the purpose of fulfilling societal needs. Instead, the raison d’être for production and trade is profit: the creation of money from money. “The path M-C-M...proceeds from the extreme of money and finally returns to that same extreme. Its driving and motivating force, its determining purpose, is therefore exchange-value.” (p250)

The capitalist, therefore, does not care for the actual needs in society. In as much as they do care about fulfilling needs, it is only in order to sell their produce and realise their profits. The motor force for production therefore becomes the endless drive for profit:

“As the conscious bearer of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which money starts, and to which it returns. The objective content of the circulation we have been discussing – the valorisation of value – is his subjective purpose, and it is only in so far as the appropriation of ever more wealth in the abstract is the sole driving force behind his operations that he functions as a capitalist, i.e. as capital personified and endowed with consciousness and a will. Use-values must therefore never be treated as the immediate aim of the capitalist; nor must the profit on any single transaction. His aim is rather the unceasing movement of profit-making.” (p254)

Capital, then, is distinguished by its nature as self-reproducing wealth; money that begets money; value that creates more value; self-valorising value. The transformation of money into capital, therefore, is not merely the alteration of C-M-C into M-C-M, but the move to a circuit of M-C-M', where M' represents a value greater than M. In an ideal world for the capitalist, the circuit would be reduced further to M-M', eliminating the pesky need to actually produce anything.

This desire for financial alchemy - producing money from money - can be seen today, where finance capital has come to rule. The capitalists have now become completely divorced from reality and the process of real production. The bourgeois economists today have lost touch with everything their classical forefathers taught. At least Smith and Ricardo, like Marx, understood that value must have a material basis; today's bankers, however, have retreated to the most idealistic of positions, imagining that value can be created from nothing. However, from nothing can come nothing. Only the application of labour can produce new values in society.

All attempts to circumvent the labour process result in "fictitious capital" - to money circulating in society without any corresponding real value in circulation, and hence ultimately to bubbles and instability in the economy. The bankers and financiers of course take in enormous profits; but they do not generate these themselves from their financial dealings. Rather, the money that these dubious ladies and gentlemen pay themselves in terms of handsome fees and bonuses merely represents a slice of the actual surplus generated elsewhere in the real production process. Such is the parasitic nature of finance capital, which survives by sucking the blood from industry. The fact that such a sector has come to dominate the economy, in Britain particularly so, demonstrates the degeneracy of modern capitalism, which can no longer develop the real productive forces in society.

Buying cheap and selling dear

By what process, however, does capital generate value from value? In short, what is the source of surplus value?

Up until Marx, the popular conception was that the profit within capitalism came from buying cheap and selling dear. In other words, profit – that is, surplus value – could be created simply through the act of exchange, entirely within the sphere of circulation.

Marx explains, however, that the process of circulation is not a process of creation, but a process of metamorphosis – from money into commodities and vice-versa. In the sphere of circulation, value changes form, but it is not created. Value (exchange-value) is a relational expression of the socially-necessary labour time involved in production. Whilst being realised through the act of exchange, value is ultimately created in the process of production – that is, by the application of labour.

“The value of a commodity is expressed in its price before it enters into circulation, and it is therefore a pre-condition of circulation, not its result...

“...The same value, i.e. the same quantity of objectified social labour, remains throughout in the hands of the same commodity-owner, first in the shape of his own commodity, then in the shape of the money into which the commodity has been transformed, and finally in the shape of the commodity into which this money has been re-converted. This change of form does not imply any change in the magnitude of the value.” (p260)

The law of value – the laws of commodity production and exchange – therefore “necessarily involves the exchange of equivalents, provided the phenomenon occurs in its purity." (p260) This law, as discussed previously, is a generalisation that emerges from the many acts of exchange occurring universally in society. Whilst in any individual case there may be a divergence between the price at which a commodity is sold/bought and its value, on average commodities are exchanged on the basis of an equivalent quantity of value – i.e. of socially necessary labour time.

“It is true that commodities may be sold at prices which diverge from their values, but this divergence appears as an infringement of the laws governing the exchange of commodities. In its pure form, the exchange of commodities is an exchange of equivalents, and thus it is not a method of increasing value.” (p261)

It must be noted that prices and values are relational expressions between commodities – ultimately relationships between the labour of different individual producers. Therefore, as Marx explains, if commodities are consistently sold at prices above their actual costs, the result is just a general inflation, not the creation of any new value:

“Suppose then that some inexplicable privilege allows the seller to sell his commodities above their value, to sell what is worth 100 for 110, therefore with a nominal price increase of 10 per cent. In this case the seller pockets a surplus-value of 10. But after he has sold he becomes a buyer. A third owner of commodities now comes to him as seller, and he too, for his part, enjoys the privilege of selling his commodities 10 per cent too dear. Our friend gained 10 as a seller only to lose it again as a buyer. In fact the net result is that all owners of commodities sell their goods to each other at 10 per cent above their value, which is exactly the same as if they sold them at their true value. A universal and nominal price increase of this kind has the same effect as if the values of commodities had been expressed for example in silver instead of in gold. The money-names or prices of the commodities would rise, but the relations between their values would remain unchanged.” (p263)

The problem with the concept of obtaining profit by buying cheap and selling dear is its assumption that there exists a group of people in society who are purely buyers and a group that is purely sellers; “that there exists a class of buyers who do not sell, i.e. a class of consumers who do not produce” (p264). Such a concept derives from the undialectical view of Marx’s predecessors, who failed to see the interconnectivity within the economy. In a universal system of commodity production and exchange, we are all buyers and sellers. Even the capitalists are both sellers and buyers: of course they sell a product, but they must first buy in raw materials, invest in machinery, and pay out wages to workers.

Whilst there can be individual cases of “cheating” within any isolated act of exchange, such swindling cannot help to increase the value within society as a whole. What is gained by cheating with one hand will simply be lost later with the other; one man’s loss is another’s gain and vice-versa. “The value in circulation has not increased by one iota; all that has changed is its distribution between A and B. What appears on one side as a loss of value appears on the other side as surplus-value; what appears on one side as a minus appears on the other side as a plus...The capitalist class of a given country, taken as a whole, cannot defraud itself.” (p265-266)

When looking for the source of surplus value within capitalism, therefore, one cannot look at isolated acts of exchange, but must instead analyse production and exchange within society as a whole. “If equivalents are exchanged, no surplus-value results, and if non-equivalents are exchanged, we still have no surplus-value. Circulation, or the exchange of commodities, creates no value.” (p266)

If not from the act of exchange and in the sphere of circulation, where then does surplus value come from? “The money-owner, who is as yet only a capitalist in larval form, must buy his commodities at their value, sell them at their value, and yet at the end of the process withdraw more value from circulation than he threw into it at the beginning. His emergence as a butterfly must, and yet must not, take place in the sphere of circulation.” (p269)

Labour-power

What, then, is the source of profit? Our capitalist must begin with money, purchase commodities at their true cost, sell his product at a fair price, and yet end up with more money that he started with. “[O]ur friend the money owner,” therefore, “must be lucky enough to find within the sphere of circulation, on the market, a commodity whose use-value possesses the peculiar property of being a source of value, whose actual consumption is therefore itself an objectification of labour, hence a creation of value.” (p270)

In other words, there must be a commodity that the capitalist can buy that itself is able to create value. And as Marx explains, “the possessor of money does find such a special commodity on the market: the capacity for labour, in other words labour-power.” (p270)

This “labour-power” – the “capacity for labour” – is normally expressed in terms of employment for a given period of time. For example, workers are employed on contracts that specify a number of hours per week or weeks per year that they are due to work for the capitalist. How efficiently or how hard they work in this time – that is, how much they actually produce in a given week or year – is then a question for the capitalist to optimise separately. The capitalist pays for the worker’s time; it is then up to the capitalist to utilise this time as effectively as possible in order to produce as much as possible.

The qualitative leap forward by Marx, therefore, was to see that workers themselves are not only the buyers of commodities, but are also the sellers of a very special commodity: their labour power – the ability to work. What the capitalist buys from the worker, therefore, is not his/her actual labour, i.e. the products of his work, but his/her ability or capacity to work.

This social relationship between the worker as the seller of labour-power and the capitalist as the buyer of labour-power is qualitatively different from previous modes of production, such as slavery or feudalism. Under slavery, the labourer is nothing more than a tool – a commodity that is owned outright by the slave-owner. The slave does not sell his/her ability to work as a commodity; the slaves themselves are the commodity. Under feudalism, meanwhile, the serf works on the land and the land, in turn, is owned by the feudal landlord.

Under capitalism, however, the worker does not belong to the capitalist, but appears to sell his/her labour-power of his/her own volition. The worker, therefore, is not “forced” to work for the capitalist; he/she may always choose to end any contract and seek employment elsewhere. “[H]e must be the free proprietor of his own labour-capacity, hence of his person. He and the owner of money meet in the market, and enter into relations with each other on a footing of equality as owners of commodities, with the sold difference that one is a buyer, the other a seller; both are therefore equal in the eyes of the law.” (p271)

Such a situation, however, whereby one class of people sells their ability to work to another, does not arise naturally. Whilst the worker is not “forced” to work for any individual capitalist, nevertheless, in order to survive, the working class as a whole must seek employment from the capitalist class as a whole. In other words, for the worker-capitalist relation to arise, there must first be a situation in which a class of people have no other means of survival but to sell their labour-power to another – that is, to work for a wage.

“[N]ature does not produce on the one hand owners of money or commodities, and on the other hand men possessing nothing but their own labour-power. This relation has no basis in natural history, nor does it have a social basis common to all periods of human history. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older formations of social production.” (p273)

In order for capitalism to thrive, therefore, the working class first had to be created – that is, there needed to be a class of people who were not, like the serfs under feudalism, tied to working on the land, but who had nothing to sell for survival other than their ability to work. Such a class of wage-labourers did not emerge smoothly, but was the result of a violent process whereby peasants were ripped from the land and thrown into the new towns and cities, compelled to work for a wage or face a life of pauperism and misery.

Thus, as highlighted earlier, we arise at the true meaning of capital: not merely the development of commodity circulation, money, trade, the division of labour, and private property; but rather, capital as the result of the development and interaction of all these things; ultimately, a social relation between humans – between the capitalists, the owners of money and the means of production, on the one hand, and the working class, the wage-labourers on the other.

“The historical conditions of its [capital’s] existence are by no means given with the mere circulation of money and commodities. It arises only when the owner of the means of production and subsistence finds the free worker available, on the market, as the seller of his own labour-power. And this one historical pre-condition comprises a world’s history. Capital, therefore, announces from the outset a new epoch in the process of social production.” (p274)

Wages

The worker, then, sells the commodity of labour-power. “Like all other commodities,” Marx notes, “it has a value.” “How is that value determined?” (p274)

Marx explains: “The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this specific article...in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of its owner.” (p274)

The price of labour-power is represented by the wages paid to the working class. This wage, therefore, must be able to cover the necessary expenditure for worker to maintain himself/herself, including food, shelter, clothing, healthcare, education; that necessary “to maintain him in his normal state as a working individual.” (p275).

When discussing wages and the value of labour-power, however, it is important to note that Marx is always and everywhere, as when discussing the value of any other commodity, talking about a social average, not an isolated case. We are not, therefore, concerned with the wages needed to maintain a given individual, but the social wage needed to maintain the working class as a whole. In this respect, Marx emphasises that the value of labour-power must cover not only the expenditure of the individual worker, but also his/her family, and indeed the continued existence of the working class a whole. If wages – the price of labour-power – are pushed below this socially necessary value, the capitalist will quickly find himself/herself with a dearth of workers and the market forces of supply and demand will work to push wages back up.

Similarly, by viewing the value of labour-power in terms of society as a whole, Marx explains the social and historical factors present in determining wages:

“[T]he number and extend of his so-called necessary requirements, as also the manner in which they are satisfied, are themselves products of history, and depend therefore to a great extent on the level of civilisation attained by a country; in particular they depend on the conditions in which, and consequently on the habits and expectations with which, the class of free workers has been formed. In contrast, therefore, with the case of other commodities, the determination of the value of labour-power contains a historical and moral element.” (p275)

The social wage necessary, therefore, is not simply that required for the bare minimal subsistence of the working class, but is that of a given social and historical situation, varying from country-to-country and from epoch-to-epoch. On the one hand, therefore, higher wages are needed for the additional expenditures, such as the latest technologies and higher levels of education, that workers need to function within the fast pace of modern capitalism; on the other hand, the working class, through a history of class struggle, has raised the social expectation of what an average wage – and thus an average standard of living – should be.

The value of labour-power, therefore, comes back down to that of a social relation – ultimately of a class struggle between the working class and the capitalist class; a struggle for higher wages on the side of the workers, and greater profits on the side of the capitalists.

The process of production

The source of profit, then, is to be found inside the process of production; this profit, meanwhile, is realised through the act of circulation.

This process of production, Marx explains, is the unity of two sub-processes: the labour process and the valorisation process. Marx starts by examining the labour process in its most generalised and abstracted form, free of any particular socio-economic formation: as “a process between man and nature” in which “he acts upon external nature and changes it.” (p283)

“The simple elements of the labour process are (1) purposeful activity, that is work itself, (2) the object on which that work is performed, and (3) the instruments of that work.” (p284)

We see here, therefore, how Marx does not distinguish between different types of labour. In particular, he highlights that “It is not what is made but how, and by what instruments of labour, that distinguishes different economic epochs.” (p286)

Today the mistaken concept has developed that the working class does not exist in the advanced capitalist countries because of the destruction of industry and “blue-collar” jobs in these countries. Marx, however, does not romanticise any particular section of the working class or any particular form of industry. There are millions under capitalism today involved in the “service sector” and in “white-collar” jobs who, not only are clearly still wage-labourers, but who have also been forced to organise, unionise, and take collective action in defence of their conditions. Again, we see that the concept of the working class is a question of objective social relations, of relationships between people and their social role in production and society, not simply a badge of honour to be pinned to on certain groups on the basis of a subjective and personal appraisal.

In the process of production, the products of previous labour – existing use-values – are combined and turned into new use-values. “The same use-value is both the product of a previous process, and a means of production in a later process. Products are therefore not only results of labour, but also its essential conditions.” (p287) And it is this application of labour that gives life and vitality to use-values; without labour, objects succumb to the ravages of time, losing their usefulness and thus their quality as use-values. “Living labour must seize on these things, awaken them from the dead, change them from merely possible into real and effective use-values.” (p289)

The process of production, therefore, is also a process of consumption – productive consumption. However, Marx distinguished between this productive consumption – consumption of use-values for the creation of new use-values – and unproductive, or “individual”, consumption, which whilst using up use-values, does not create any new use-values. “Such productive consumption is distinguished from individual consumption by this, that the latter uses up products as means of subsistence for the living individual; the former, as means of subsistence for labour.” (p290)

Such a distinction is important in light of modern Keynesian ideas of government stimulus. There are those who believe that a depressed economy can be resuscitated by simply paying workers to perform laborious but unproductive activities, whether it be digging holes in the ground, building roads to nowhere, or creating and dropping bombs. But such activity merely consumes use-values without creating any new use-value; it wastes productive forces without creating any new ones, acting not as source of salvation, but as an almighty drain on the economy.

Surplus value

Alongside this labour process, which “is common to all forms of society in which human beings live,” (p290) Marx presents the valorisation process. The former is a general abstraction of the productive process, free of any social or historical context, and thus free of any social relations or mode of production. Now Marx turns his attention specifically towards the capitalist mode of production and the universal production and exchange of commodities.

Again, Marx emphasises that, under capitalism, production is not about production of use-values, but the production of surplus value. “His [the capitalist’s] aim is to produce not only a use-value, but a commodity; not only use-value, but value; and not just value, but also surplus-value.” (p293)

We have seen that the source of this value is labour; the source of surplus value is the worker. But by what means is the capitalist able to extract a surplus from his workers? If the capitalist advances £1,000 in raw materials, machinery, and wages, then surely the total value of the product is merely equal to this £1,000? How does the capitalist class as a whole extract a surplus from the productive process?

Marx outlines the various arguments put forward by the apologists of capitalism to justify the existence of the capitalists within society and defend their right to obtain a profit. Profit, as has been argued from before Marx’s time through to today, is said to be the reward to the capitalist for “taking a risk”; the compensation for providing means of production, for supplying jobs and means of subsistence to the working class; the payment for “overseeing” the process of production.

Of course, such arguments are nothing but a “whole litany...simply meant to pull the wool over our eyes.” (p300) Clearly the capitalists do not take a risk – otherwise, why was it ordinary people who were forced to bail out the banks? Equally, far from providing workers with jobs and wages, the capitalists today are responsible for mass unemployment, demanding brutal austerity from their political representatives in power. What’s more, these wealthy ladies and gentlemen rarely play any role in production at all; far from “overseeing” production, they are more divorced from production than ever, sitting in ivory towers, loosely connected to the real world merely through phone calls to their financial managers.

But, as Marx notes, the capitalists themselves are not the ones who feel the need the trot out such trite and repetitive arguments. “He [the capitalist] does not care twopence for it. He leaves this and all similar subterfuges and conjuring tricks to the professors of political economy, who are paid for it. He himself is a practical man, and although he does not always consider what he says outside his business, within his business he knows what he is doing.” (p300)

The capitalist, therefore, clearly understands the source of his/her surplus value: the fact that the commodity he/she purchases – labour-power – from the worker is different from the actual labour conducted by that worker. In essence, surplus value arises from the fact that the value of the commodities produced by the worker in the course of a day is greater than the value of his/her own labour-power. The capitalists can sell the commodities produced for a greater amount than that paid to the worker in the form of wages. Surplus value, in other words, is simply the unpaid labour of the working class.

“[T]he past labour embodied in the labour-power and the living labour it can perform, and the daily cost of maintaining labour-power and its daily expenditure in work, are two totally different things. The former determine the exchange-value of the labour-power, the latter is its use-value. The fact that half a day’s labour is necessary to keep the worker alive during 24 hours does not in any way prevent him from working a whole day. Therefore the value of labour-power, and the value which that labour-power valorises in the labour-process, are two entirely different magnitudes; and this difference was what the capitalist had in mind when he was purchasing the labour power.” (p300)

“If we now compare the process of creating value with the process of valorisation, we see that the latter is nothing but the continuation of the former beyond a definite point. If the process is not carried beyond the point where the value paid by the capitalist for the labour-power is replaced by an exact equivalent, it is simply a process of creating value; but if it is continued beyond that point, it becomes a process of valorisation.” (p302)

“The trick has at last worked: money has been transformed into capital.

“Every condition of the problem is satisfied, while the laws governing the exchange of commodities have not been violated in any way. Equivalent has been exchanged for equivalent.” (p301)

Constant capital and variable capital

The labour of the worker is the source of value, and, in turn, the unpaid labour of the worker is the source of surplus value and thus of profit. But since the production process is also a consumptive process – a process of turning old use-values into new ones – what happens to the exchange-value of the old use-values? Marx explains:

“The workers adds fresh value to the material of his labour by expending on it a given amount of additional labour...On the other hand, the values of the means of production used up in the process are preserved, and present themselves afresh as constituent parts of the value of the product...The value of the means of production is therefore preserved by being transferred to the product.” (p306)

In other words, during the production process – of labour and valorisation – the worker both uses up old use-values, whose value is transferred through to the product, whilst simultaneously creating new use-values that contain additional value due to his/her labour. Again, the source of all new value is the result of socially necessary labour time, applied by the worker in the process of production.

“By the simple addition of a certain quantity of labour, new value is added, and by the quality of this added labour, the original values of the means of production are preserved in the product.” (p309)

The previous use-values – the products in which previous socially necessary labour time is crystallised – consumed in the process of production include the materials, machinery, equipment, and infrastructure required to produce the new use-values. All of these “[do] not undergo any quantitative alteration of value in the process of production,” (p317) and are therefore referred to by Marx as “constant capital”.

On the other hand we have “variable capital”, “that part of capital which is turned into labour-power” and which “both reproduces the equivalent of its own value and produces an excess, a surplus-value, which may itself vary, and be more or less according to circumstances.” (p317)

It is only the variable capital, the application of new labour, therefore, that adds value in the production process. Materials used up in production transfer their value through to the new product; meanwhile, machinery and equipment used to produce a multitude of commodities transfer their value over to the new products gradually over the lifetime of their productive use. If a commodity could be produced purely by automation, therefore, taking in materials and transforming them into new products simply using machinery without any labour, then – presuming that the law of value was free to operate – such a commodity would have a value equal to that of the materials and machinery used in its production. Equally, if a product can be obtained from nature without any labour – for example, by simply picking it up from the ground or plucking it from the tree – then it has no exchange value. Thus, nature is a free source of use-values.

Under capitalism, competition and the drive for greater profits forces the capitalists to continually try to reduce both the constant and variable parts of their capital advanced. By reducing either or both, an individual capitalist can sell their commodity at a price below the current social average value, thus undercutting their competitors, gaining a greater market share, and creating super-profits. This competitive process is what drove capitalism forward in its heyday, allowing it to develop the means of production to extraordinary levels, with the continual reinvestment of profits into new science, technology, and techniques that reduce the costs of constant capital, whilst also increasing the productivity of labour and thus producing more use-values for a given quantity of variable capital.

But this progressive quality of capitalism also turns into its opposite and creates the conditions for crises. With the replacement of labour by machinery to competitively reduce costs, a dual problem occurs. On the one hand, it is only the application of labour – i.e. of variable capital – that has the power to create new value and thus surplus value. A production line solely consisting of machines would produce no surplus value and thus no profit for the capitalist – profit that forms the driving force for his very being. At the same time, it is the variable capital – the wages paid to workers – that forms the demand for the commodities produced within the capitalist mode of production. With workers replaced by machines, who is to buy the goods being churned out? Robots, for all their productivity and efficiency, cannot buy commodities.

Thus, we see how capitalism sows the seeds for its own destruction. Such crises do not, therefore, arise due to the individual qualities or mistakes of the capitalists, but as a result of the laws and inner logic of capitalism itself. Only by replacing these laws of production with a different set of laws – of those based on a rational and democratic plan of production; driven by the fulfilment of society’s needs, not by profit – can we put an end to the continual crises that capitalism inflicts upon humankind, throwing us back into a state of barbarism and poverty amidst plenty.

Part four -->>

Marx Capital in a Day

Marx Capital in a Day

Educate Yourself

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Many of these are smaller books or pamphlets; some are more lengthy books; and others are just short articles. This list should therefore be more digestible than the full Education Plan, particularly those with busy work or school schedules. All of them are available to

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Dialectical Materialism is the philosophy or methodology of Marxism. Every political movement, party, or even statement of any kind bases itself, consciously or unconsciously, on some sort of philosophy or world outlook. Marxism is concerned with effecting a radical change in society, and therefore requires an exceptionally clear, thoroughgoing, and systemic set of philosophical principles.

The ideas of Dialectical Materialism, based on the best traditions of philosophical thought, are not a fixed dogma but a system of tools and general principles for analysing the world materialistically and scientifically.

If we are to understand society in order to change it, this cannot be done arbitrarily, since the human will is not master of nature; rather, our ideas and thoughts are reflections of necessary material laws. Instead, we must seek to understand the laws of how human society changes. By following our education plan for Dialectical Materialism, the reader will familiarise themselves with this way of looking at the world so that they too can begin to apply Marxist ideas.

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Historical Materialism is the result of Dialectical Materialism applied to human society and history. It encompasses the general theory of how and why society develops in the way it does. A deeper, more concrete understanding of these principles in combination with a study of real, living history of class struggles enables us to come to a general understanding of where capitalist society is headed and what political strategy is required to successfully influence the course of events.

The basic principles of Historical Materialism are that human society has inherent laws guiding it - its developments are by no means arbitrary or accidental, nor the mere subject of the will of great men and ideas. Human individuals can and do influence society according to their ideas, but only ever within definite material constraints and conditions. Above all, the law determining historical development is that of the development of the means of production - meaning economically productive technology, science, technique etc. The extent of the development of the productive forces determines the social relations of production - i.e. the structure of society, class relations etc. Each social system has its inherent laws of motion. If we want to overthrow capitalist society, we must understand how capitalism works.

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Marxist economics is the study of the laws of motion of capitalist society. Why does capitalism perpetually go into crisis? Why does mass unemployment exist? Are commodity production, the domination of the market, and rich and poor natural, immutable states of being for humanity? Or are they merely the products of this specific mode of production - capitalism? If so, is there any way capitalism can exist without these problems, or by minimising them?

Marxist economics is a “holistic” way of analysing capitalist economy. It starts out by placing it in its real historical context (rather than dreaming up abstract idealisations of capitalism to justify it, as bourgeois economics does), studying all its interconnections and contradictions, rather than artificially isolating one aspect of it. In doing so, Marxist economics lays bare the functioning of capitalism; the exploitation and injustice inherent within it. Those who want to get to the essence of why, in the 21st Century, despite having a more advanced understanding of the world than ever before, humanity seems plunged into perpetual crisis it cannot get to grips with, should look no further than Marxist economics, beginning with the writings of Marx himself.

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Like money, the state is something we are all very familiar with and take for granted, but its real essence tends to elude us. The ideologists of capitalism have tried, in various ways, to justify the capitalist state as supremely rational; a neutral arbiter for society, and the embodiment of justice. For Marxists, the state is not at all neutral, nor just. It is certainly anything but rational. We must strip the vale of mysticism away and reveal the state’s real basis. To do that, we have to treat the state historically - taking in its origins, rise, and eventual fall.

The state has not always existed. It is inseparable from class society. Ultimately, it is the instrument for the ruling class to oppress and hold down the masses, guaranteeing the status quo and the sanctity of property. Although the modern state performs many other functions, these are secondary to its real basis - the protection of a set of property relations. To do this, it needs “armed bodies of men” and a monopoly on the use of violence. To establish socialism, it will not be possible for the working class to use the state as it currently exists - that is, with the same network of judges, heads of police and army etc. All the key texts explaining how exactly we relate to the state, and the

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The Russian Revolution is the greatest event in world history for Marxists. For the first time, the working class successfully took and held power. The slaves fought back and won. For these reasons, the name of Lenin and Trotsky, and the entire 1917 episode, has been deliberately dragged through the mud by the bourgeoisie ever since.

Naturally they are aided in this task by the degeneration of the revolution and by the existence of Stalin’s monstrous dictatorship. However, Stalinism represents the opposite of Bolshevism’s real traditions, which readers can read about in this section, as well as the Marxist explanation for why Stalinism took place and what this means for our movement.

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Radicalised youth, seeking to understand how to change modern society, naturally tend to look to both Marxism and Anarchism in equal measure. The question as to which philosophy, or which combination of the two, has the best answers, has long been at the forefront of the minds of revolutionaries.

Anarchism is naturally attractive to all those correctly alienated by bureaucracy in the revolutionary movement. Anarchists are certainly correct to reject Stalinism and careerism. However, it is not sufficient simply to reject these phenomena. We need to understand why bureaucracy and oppression exist and what role they play, in order to understand how to avoid them. We believe that, for all its opposition, Anarchism has little to say about the alternative to bureaucracy. Instead, it is Marxism’s historical materialist method that allows us to understand these problems. In this section the reader will find a series of articles dealing with anarchism and the issues that anarchism raises.

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The discrimination and oppression of women is integral to class society, such that Engels even referred to it as the “first class oppression”. Along with the class system itself, the oppression of women often takes on the appearance of being natural, immutable and eternal, since it has been with us for so long.

But Marxism is a historical science, concerned with understanding the fundamental changes that society goes through. It cannot be satisfied with comfortable prejudices. A study of the origins of human society, as Engels famously conducted in his book The Origins of the Family, Private Property and the State, reveals that the oppression of women is by no means natural and was not even known for much of our history. As Engels explains, the oppression of women arose with the emergence of class society and private property; it will fall with it.

Marxists are fully in solidarity with feminists: we are irreconcilably opposed to the oppression of women and fully support the struggle for their emancipation. We believe this will be achieved through the class struggle, since that is the basic locomotive of history in a class society such as ours. However, Marxism represents a distinct set of ideas from feminism, which is a more eclectic and varied set of ideas. We believe that in this section, readers will find the tools Marxism

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Fascism is something of a bogeyman in modern British society, and has an almost mythical character in bourgeois public opinion. But despite constant talk of it, very little is said about why it happened and how it may or may not happen again.

Fascism is really the death agony of capitalism and the “distilled essence of imperialism”. The fascists in Germany, Italy, Spain and other countries were only able to come to power on the back of defeats of the working class. Ultimately, the madness of fascism expresses the historic crisis and dead-end of capitalism that had arrived by the early 20th Century, alongside the inability of the working class to take power and replace capitalism with a workers’ state, due to the corruption of their leadership, in the form of both reformism and Stalinism. Fascism could and should have easily been avoided had the working class possessed a militant and united leadership prepared to take power.

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The question of nationalities - that is, the oppression of nations and national minorities, which has characterised capitalism from its birth till the present time - has always occupied a central position in Marxist theory. Once again, the historical materialist approach of Marxism dissolves the apparent “natural” role of the nation as a necessary expression of human society. Nations have by no means always existed, nor will they always exist in the future.

The nation as we know it today is a product of the development of capitalism and its need to unify peoples into units of a certain size (depending on the level of the system’s development – e.g. more recently formed nations tend to be much bigger) to consolidate the market. The contradictions and tensions between nations are a result of capitalism’s “combined and uneven” development. The contradictions of the capitalist mode of production itself force each ruling class to expand outwards, developing a global market and imperialism in the process.

The violent tensions that this process breeds in turn give rise to nationalism, racism and wars. There is no way a successful world revolution, abolishing the global capitalist system, can take place without a careful and nuanced understanding of the national question, with all the sensitivities and complexity it brings. Therefore this section is of the utmost importance for revolutionaries.

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War is a constant feature of life under capitalism, especially in the epoch of imperialism. There has not been a single day of peace since the end of WWII, despite the appearance of WWII (and all previous wars) of being the “war to end all wars”. Capitalism is inherently unstable, competitive and violent. Moreover, there can be no final peace between the classes, since this system is based on the exploitation of the working class by the rich. 

However, there are wars of different kinds under capitalism. The question of war is the hardest equation of all to judge, so careful study is essential so that revolutionaries are not blown off course by the complexities involved. For example, some “socialists” called for support for the war in Iraq, as it had the appearance of establishing “democracy” over dictatorship. Equally, the failure to understand the true meaning of WWI and its implications was the direct cause of the death of the Second International.

Wars, like revolutions, represent the sharp extreme of capitalism’s crisis. Under capitalism, there will be many wars in the future. The more revolutionaries study and understand capitalism’s previous wars, the better equipped we will be to fight against future wars and the capitalist system itself.

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Socialist Appeal is the British section of the International Marxist Tendency, which is active in around 40 countries. Our aim is to spread the ideas of Marxism, in an organised fashion, in the labour and youth movement. Only the British working class has the ability to change British society, because of the central role they play in production and their shared interest in establishing socialism.

However, we must carefully study the history and traditions of the British working class in order for Marxist ideas to connect with them. There are all too many groups who simply declare themselves the vanguard of the British working class, and have a dismissive attitude to the class’ real traditions.

In this section readers will find a series of articles explaining our position on the class struggle in Britain, the key points in the history of the British working class and the lessons to be learnt from them, and the strategy of the Marxists in relation to the movements of the masses.

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The ideas of Marxism and the need for a revolutionary party are not the result simply of a single individual, but arise from the study of history - the history of class struggle. In this respect, the revolutionary party is often referred to as being the memory of the working class, and our task is to learn the lessons from history in order to prepare for the revolutionary events taking place today and in the future.

In this section we present a series of articles and audios covering the key revolutionary struggles in history - from the early class struggles in Rome to the tremendous movements of the working class in the 20th Century. By reading and listening to these, our readers should gain a good overview of the history of the revolutionary movement and the main lessons to be learnt from these.

For analysis of 21st Century revolutionary movements, check out the News and Analysis sections of the website!

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Marxist theory

Hitler and the Rise of Fascism in Germany Hitler and the Rise of Fascism in Germany
Duration: 00:51:40
Date: 9 Mar 2017
Workers’ control, democracy, and power Workers' control, democracy, and power
Duration: 00:57:00
Date: 2 Mar 2017
In Defence of the Russian Revolution - part two In Defence of the Russian Revolution - part two
Duration: 00:21:16
Date: 17 Feb 2017
In Defence of the Russian Revolution -  part one In Defence of the Russian Revolution - part one
Duration: 00:22:04
Date: 1 Feb 2017
Materialism and Dialectics in Ancient Greece Materialism and Dialectics in Ancient Greece
Duration: 00:48:58
Date: 27 Jan 2017
Imperialism in the 21st century Imperialism in the 21st century
Duration: 00:57:35
Date: 13 Dec 2016
Fascism: What it is and how to fight it Fascism: What it is and how to fight it
Duration: 00:36:44
Date: 12 Dec 2016
Dialectics, science, and nature Dialectics, science, and nature
Duration: 00:48:55
Date: 9 Dec 2016
Fidel Castro and the Cuban Revolution Fidel Castro and the Cuban Revolution
Duration: 00:42:54
Date: 30 Nov 2016
Marxism, Imperialism, and War Marxism, Imperialism, and War
Duration: 00:50:16
Date: 25 Nov 2016
The Hungarian Revolution: 60 years on The Hungarian Revolution: 60 years on
Duration: 00:47:10
Date: 1 Nov 2016