What is Marxism? Part 1: An analysis of Capitalism

Marxism begins as a critique of the economic system that dominates our modern society: capitalism. It seeks to explain how capitalism works, why it creates inequality and instability, and why these things are not accidental but are rooted in the system itself.

Capitalism is defined by a particular way of organising economic life. The means of production—the things needed to produce goods and services (factories, land, machinery, tech infrastructure etc.)—are privately owned. Production is motivated by profit; what will allow a business to make the most money not what will meet human needs. Most people, lacking access to productive resources of their own, must sell their ability to work in exchange for wages in order to survive. In this way, the main division in society is between those who own and those who work.

At the centre of the argument is that profit arises from exploitation. Workers, through their labour, produce goods and services that have value. However, the wages they receive do not correspond to the full value they create. The difference between the value produced and the wage the worker is paid—what is called surplus value—is taken by the owners of capital as profit. This process is not the result of individual moral failure; it is a necessary feature of the structure of capitalism. Firms must generate profit in order to survive within a competitive market, and this creates constant pressure to reduce costs and increase productivity in order to increase the creation of surplus value.

Competition between firms is a defining feature of capitalism, and it contributes to the system’s vitality and adaptability, as well as its instability. In order to remain competitive, businesses are compelled to adopt new technologies, reorganise production, and expand into new markets. While these processes can drive innovation and growth, they also lead to disruption. Jobs are lost as industries are transformed, smaller firms are displaced by larger ones, and entire sectors can rise and fall over relatively short periods. The result is a system that is constantly in motion, but rarely stable.

As a result capitalism experiences frequent economic crises. No other economic system in the history of human society has experienced such frequent crises. These often take the form of overproduction or underconsumption, in which more goods are produced than can be sold profitably. The push to reduce costs and increase profit creates a downward pressure on wages, this limits the ability of workers to buy goods, which then reduces demand. When goods cannot be sold, production is cut back, workers are laid off, and investment declines. This leads to unemployment, unused productive capacity, and widespread social hardship, even though society retains the ability to produce more than enough to meet human needs. These crises are not anomalies but recurring patterns.

Over time, capitalism also tends to concentrate wealth and power. Large firms expand by outcompeting or absorbing smaller ones, leading to increasing centralisation of economic control. Wealth is amassed in the hands of a relatively small section of society, while the majority remain dependent on wages which usually only just about cover a basic living. This concentration of economic power has broader social consequences, shaping political institutions and influencing the direction of social development.

This critique of capitalism extends beyond economic structures and into the experience of everyday life. Under capitalism, workers often have little control over their work or its outcomes. We are often disconnected from the things we produce through our labour, and are without real meaningful control over our own daily lives in work. Marx described this condition as alienation: a sense in which human beings are separated from their own creative capacities and from one another.

The overall picture is of a system that is highly productive but filled with tensions and contradictions. Capitalism generates wealth and innovation on a vast scale, but does so through processes that produce inequality, instability, and forms of social disconnection. For Marxism, these are not surface-level problems that can be solved by making small policy changes, but instead they are structural features that are rooted in the basic organisation of the system itself.

Read Part 2: A Method