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Crises in Capitalism and the Reactions under a Marxist Lens

This is a course paper I wrote for a class on Philosophy of Marx at University of Sussex summer school in 2012. Looking back now, this seem very basic, and could be more accurate in depicting some of the ideas from Marx, Gramsci etc... Oh well..

Marx’s political and economic theories have been a controversial topic since the early days. While most economists, and even sociologists might consider his theories out-dated, specially his prediction of a successful proletariat revolution, current socio-economic conditions has brought a new wave of enthusiasm in Marx’s works. Thus it is interesting to evaluate how his theories of capitalism and its demise stand today. One can possibly see parallels between what Marx identified as problems with capitalism and contemporary market crises that has penetrated deeply into the social sphere. However, the conditions capitalism created are only half of what is important today; the other half is how the society is reacting to these problems. Thus I will combine an analysis of problems of contemporary capitalism as predicted by Marx with an investigation of how the society is responding to these problems. The latter, however, is better carried out in light of Antonio Gramsci’s idea of ‘hegemony from the bottom’ or counter hegemony which is an extension of Marx’s notion of false consciousness. In light of these discussions I will argue that while the current conditions does not necessarily prove Marxism right, they still gives credibility to some of his and Gramsci’s ideas.

Is Capitalism in Crisis?

The reasons for the downturn of capitalism, as Marx pointed out in Grundrisse, are twofold;

Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. (Marx)

i.e. worsening conditions of the working class and the inadaptability of capitalism to the global demands with growing technology. Conditions of the working class again, are of two facets, one, the economic crises, and the other, which early Marx was fonder of, social crises, or Alienation. We would look at the most visible of these cases first, the economic side.

Economic conditions of the working class

Before evaluating how contemporary working class fares with Marx’s predictions, one needs to see the differences and similarities of the modern working class compared to Marx’s proletariat. His definition of a proletariat seems to be simply, any person without capital, who needs to sell their labour in order to meet his/her minimal needs. In modern terms, capital can be equated with financial assets and 2007 data for US shows that the bottom 80% of the households shares only 7% of the financial assets and bottom 90% of the households share only 12.2% of the investment assets (Wolff, 2010). Even more importantly, a study by CFED (Corporation for Enterprise Development) found that 43% of the US population are ‘liquid asset poor’, or do not have any fall back savings or investments in an emergency income loss. (Brooks & Wiedrich) These figures clearly show that vast majority of the people have to rely on their wage labour to satisfy their needs, and thus can be classified as proletariat. In addition, 60% of the US labour force is paid at hourly rates and 25% of the total labour force is identified as low-wage labourers (2009) (Characteristics of Minimum Wage Workers: 2011, 2011). While these facts validate Marx’s class definitions even for today, it is important to note that Marx also claims the proletariat will be limited to a level of minimum subsistence. This, however, is far from reality, especially in the case of post industrialized countries. Yet, the existence of two distinct classes, the working class or the wage labourers, and the capitalist class or the investors (job creators, as popular rhetoric might suggest), is quite clear.

With the identification of the proletariat, one can look to Marx’s predictions of worsening economic conditions. As he argues that in both good and bad cycles of economy, the worker suffers regardless. When the economy is growing, most of the wealth created accumulates in the coffers of the bourgeoisie while the worker is left behind the moving economy. In fact, recovering from the great recession, 93% of the income growth was captured by the top 1%, whose average income grew by 11.6% while the income growth of the rest (the 99%), was a mere 0.2%. (Saez, 2011) On the contrary, the income loss suffered by the top percentile in the recession was 36.3% while the rest absorbed a 11.6% decrease (Saez, 2011). With less and less savings to depend on, the average worker is the hardest hit given the rise in unemployment and loss of higher paying jobs. This fits perfectly with Marx’s analysis, as he concluded that the first counter balance to decreasing profits is layoffs and more exploitation of the workers. While these have not brought upon absolute grave conditions on the workers, the great recession is quite remarkable in its severity and scope, and thus, it is not far-fetched to assume that these boom and bust cycles are a threat to capitalism, as Marx suggested more than a century ago.

Worsening social conditions

Degrading economy of the labourer is only the outer crust of his/her problems. The worsening social conditions due to worker exploitation or alienation, as early Marx described it, is arguably a bigger crisis. As the labourer becomes a mere tool for the machine which does the real work, his labour becomes alienated from the product, and thus alienating the labourer from his labour itself. However, with the increasing educational opportunities workers are able to achieve higher intellectual standards. Increasing intellectual growth of the working class is evident from high interesting in hard sciences such as physics and biology, and also higher public participation in political events facilitated by growth of communication technologies. As the public becomes more intellectually adapt, his/her alienation from the labour and the society becomes ever more oppressive, prompting them to move away from consumerist economy and capitalist mode of production. As Marx suggests, the capitalism has these gears education and alienation built in to its system, and thus, is incapable of stopping a reaction against itself by the proletariat.

Material limitations of capitalism

The other problem of capitalism Marx seems to indicate is its own limitations to growth. While he does not elaborate on this much, he does use transition from feudalism to capitalism as an example to show that capitalist mode of production will become the fetters of economic progress. The main argument that he does say is the formation of a monopoly, or an oligopoly. As the capital has the capability to grow itself, the larger corporations eventually becomes dominant over the smaller ones, and with each downturn in production, the smaller businesses either vanishes or merges to form bigger corporations. This is quite true today, in fact in a global level. One of the best indicators is the series of bank mergers between 1990 and 2009 which reduced 42 independent banks to just four giant investment banks, which were considered ‘too big to fail’. This trend is evident in almost any other sector, the number of industries, in which at least 50% of shipment value is accounted for by the largest four companies increased by more than fourfold during the last 60 years (Foster, McChesney, & Jonna). As the markets get less and less distributed, the consumer prices go up while the worker exploitation increases. However, the most damaging result might be the reduced competition. As the only incentive to advance the productivity is competition in a capitalist economy, losing the competitiveness might be the biggest limitation that is inherently built into capitalism.

Market monopoly, however, is not the only loophole in capitalism. As one study by researchers from Georgetown University and Berkeley found out, software patenting laws actually hinders new development (Cohen & Lamley, 2001). Parallels can be drawn from two centuries ago, when the steam engine was invented, its patenting rights to James Watson actually slowed the possible progress which was achieved by the cooperative efforts of Cornish minors after the patent rights were lifted. Another limitation of capitalism is, as one of the most prominent capitalist himself argues, the current global economy only serves the needs of a very limited number of people who are linked to the immediate market. As the global markets become more and more dynamic, the investments returns become increasingly short term, thus neglecting some markets in the developing world, reaching whom would need long term investment strategies. Thus the only way to attract the global markets is to create better infrastructure which is left to the national governments, which in turn is forced to implement neoliberal policies by the multinational companies thus limiting their capacity to develop. These problems, while not critically damaging, are structural and is built into the system of global markets and private property.

While these problems show strong parallels with some of the Marx’s predictions, it not entirely clear if they will lead to a collapse of capitalism. Even though the world has experienced the economic cycles of capitalism for the past three centuries, the working conditions of the labourers have actually become much better in the developed nations. Most economists would argue that capitalism has served to increase the living conditions of the working class, and speculate that it will continue to do so. Yet, it is clear that most of the wealth is concentrated at the top of the pyramid, while the benefits of capitalism that reach the bottom are quite marginal. In addition, the markets only seem to concentrate in ever smaller number of Multinational corporations, while increasing percentage of jobs that are created tend to pay only the minimum wage. Even though reforms such as welfare has somewhat alleviated the problem, one can easily argue that capitalism itself will not be able to sustain.

Rise of counter hegemony against capitalist ideals

With the rise of capitalism the problems abovementioned have also become increasingly troublesome. However, most post-industrial states seem to move toward more and more neo liberal policies than moving away, hence leading a quick observer to conclude that Marx’s theory of communism as the next mode of production is invalid. Yet, a closer look at the current dynamics produces some interesting evidence into what can only be called as an undercurrent of a social evolution away from capitalism. The best tools to analyse this movement is found not in Marx’s writings, but in Italian Marxist philosopher Gramsci’s theory of cultural hegemony. There, he posits that for a revolution to happen in Western Europe, one must first carry out ‘war of position’ which builds up the hegemony or the leadership of the working class. Current changes in society that oppose capitalistic solutions can be seen as this ‘war of position’ which according to Gramsci is the backbone of a real revolution. Thus I will bring together seemingly loosely related movements of contemporary society to argue that these, in fact, are the visible parts of the ‘war of position’.

Cultural hegemony and War of Position

Gramsci presents cultural hegemony as a dynamic relation between classes, in which the dominant class represent its interests as universal interests of the society thus coercing the other classes by both force and consent to their own domination by the ruling class. He proposes that these relations arise from the society’s superstructure, and the civil society can actually strengthen dominant cultural hegemony rather than standing against it. The idea of ‘individual responsibility’, the belief that hard work and skill will bring monetary success, and the notion that investors work harder than other individuals, in one side, and demonization of poor on the other side can be seen as part of this consensual social ideology. Suppression of the labour movement,  protests, and campaigns against socialist and communist leaders are where the forced domination is prevalent. As Gramsci points out, these coercive elements have been able to keep the workers under the rule of the bourgeoisie, and any sort of change must start with challenging the cultural hegemony of capitalist class.

Thus, he argues, depending on the national terrain, a real workers revolution is possible only when the hegemony of the working class becomes more and more powerful. Building this counter hegemony, as later philosophers have called it, is the most important task of the revolutionary. This is achieved through ‘war of position’, which, as Robert Coz sums up, “is slowly building up and strengthening of the social foundations of a new state” by “creating alternative institutions and alternative intellectual resources within existing society (Cox, 1983). Some elements of modern society can be seen as direct manifestations of this conflict. Thus it is important to analyse these elements, such as occupy movement, and cooperative business models, under the model of counter hegemony and ‘war of position’.


While protests are more in line with direct action, and thus with ‘war of manoeuvre’, modern protests are not, in many cases, revolutionary. Yet, these are inherently against the ruling class, and their ideologies. While numerous protests across the globe has brought significant changes that are advancements of war of position, such as labour laws and universal education, I will only consider the impact of occupy moment. It will allow us to see a clear development of counter hegemony while also keeping the discussion short.

Occupy movement is the most visible reaction against the current socio-economic conditions. With participants of more than 92 countries within the first few weeks, and overall participation of several millions across the globe, it definitely is one of the largest global protests. Its significance, however, lies in the subtle change in global culture. Bringing up the slogan “99 percent”, it directly challenged the idea that what’s best for investors is best for all i.e. the current cultural hegemony. Moving the focus of public debate from ‘Austerity’ to ‘Inequality’, it furthered class consciousness of the public. For instance, research done in 2011 claimed that 66% of the participants agreed that there’s “strong or very strong conflicts between rich and the poor”, compared to 42% in 2009, While only 7% said there is no conflict (taylor, Parker, & Morin, 2012). Moreover, it brought together people from a wide spectrum, reaching beyond the petty boundaries and demonization through of nationalism, religion, terrorism, immigration, crime and drugs. In addition it enables workers build communities to support each other through the occupation while supporting direct democracy. These elements are direct examples of growing counter hegemony and are the most visible aspects of it.

Cooperative movement

While not as apparent as protests, cooperative business models might be the strongest reaction against capitalism. These institutions are anti-capitalistic in their nature, and in some cases, non-profit. Building consensus supporting these cooperatives is an indication that the social consciousness is moving away from profit oriented big business monopoly to more community oriented organic solutions to production. For an example credit unions in the US, mostly non-profit community banks, saw 650,000 new members added to their log books along with some 4.5 billion of new savings transferred within a period of a little over a month following bank of America’s debit fee blunder (CUNA, 2011). Moreover, in a global scale close to a billion people are members of a cooperative and the numbers seem to be increasing. Among many examples of successful worker cooperatives are Mondragon cooperative, United steel workers union and Ohio Employee ownership centre. These corporations follow a business model of worker ownership and democratic decision making, and thus able to achieve higher employee satisfaction (Rolland, 2006). While amalgamating the problem of alienated labour, cooperatives are also able to providing better job security in slow economy and distributing profits in a growing economy. Hence these are in fact the ideal anti thesis of the problems of capitalism, and not surprisingly, are based on communal ideals.

Open source production

Another growing counter hegemonic element is the idea of open source industries. The most well-known example of open source production is open source software. These are collaborative developments that anyone can amend, modify and use free of charge. The growth of open source software, a purely communal development in most cases (Esp. in large software, such as Linux and Open office/Libre Office), is one of the most exiting trends, with its branches reaching sectors like education, healthcare and synthetic biology. Oracle Corporation, well known for some of their open source software, has released an open source 64-bit microprocessor, citing a new movement called ‘open source hardware’. Some other less well known projects that carry out the collaborative efforts of open source initiative under the very nose of competitive capitalism are Global Village construction set, which the founders define as “a network of farmers, engineers, and supporters working to complete a DIY Global Village Construction Set (GVCS) – “a modular, DIY, low-cost, open source, high-performance platform that allows for the easy fabrication of the 50 different industrial machines that it takes to build a small, sustainable civilization with modern comforts.”, and Local motors, an open manufacturing car company based in Arizona. Growth of support for these movements indicates an increasing disengagement from the capitalist mode of production, which can be seen as evidence for ‘war on position’.

While these are the main indications of rising counter hegemony, the above list is in no way exhaustive. Remarks from conservatives that the public universities has a liberal bias, if true, would be another example of this ‘war’, as this would mean a rising force of organic intellectuals. Anger against corporations in their labour practices, environmental record and abusive supply chains is also moving giant corporations towards more socially responsible business practices. Customers supporting free trade coffee and even regular organic food is more evidence of the changing social mentality. While these separate elements of current economy, taken individually, might seem insignificant, taken together, and connecting them with the theory of building counter hegemony, shows increasing evidence of a greater social transformation.

Most of above movements against capitalism has become quite popular. However, their role still is quite far from being revolutionary. It is quite feasible to argue that these organic movements can exist alongside capitalist mode of production and strengthen the social foundations of capitalism. In fact, Gramsci sometimes equate ‘war of position’ with passive revolution, which in fact is used to support the dominant cultural hegemony. Yet, one cannot neglect the more universal transformation of social consciousness. Most of above movements are actually solutions to the problems of capitalism we discussed in the first part of the paper. Thus, while it might be far-fetched to claim that these transformations are a precursor to a proletariat revolution, as Gramsci envisioned, it is evident that the working class is moving away from supporting laissez faire capitalist mode to a more organic and communal mode of production. Would this continue till we get to true communism or not, only time will tell.


Characteristics of Minimum Wage Workers: 2011. (2011). Retrieved from Bureau of Labor Statistics:

Brooks, J., & Wiedrich, K. (n.d.). Assets & Opportunity Scorecard.

Cohen, J. E., & Lamley, M. A. (2001). Patent Scope and Innovation in the Software Industry. California Law Review, 89.

Cox, R. (1983). Gramsci, Hegemony and International Relations: An Essay in Method” . Millennium: Journal of International Studies, 12(2):162-175.

CUNA. (2011, Nov). 650,000 new members ahead of Bank Transfer Day. Retrieved from Credit Union National Association:

Foster, J. B., McChesney, R., & Jonna, R. J. (n.d.). Monopoly and Competition in Twenty-First Century Capitalism. Retrieved July 2012, from Monthly Review:

Marx, K. (n.d.). Grundrisse.

Rolland, S. (2006). Mondragon Corporation Cooperatives, People Working Together.

Saez, E. (2011). Striking it Richer:The Evolution of Top Incomes in the United States. Berkeley, CA.

taylor, p., Parker, K., & Morin, R. (2012, jan). Rising Share of Americans See Conflict Between Rich and Poor. Washington, D. C.

Wolff, E. N. (2010). Recent Trends in Household Wealth in the United States.


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