Karl Marx (1818 0 1883) was born in Prussia, present day Germany. He studied law and philosophy but his ideas were considered too radical for a profession as a university professor. One of the pivotal moments of his life was when he defended peasants who took wood from their landlord’s estate to keep warm during the winter. The peasants were prosecuted for theft and Marx defended them in the newspaper he was writing for. He lost his job for his efforts, but this story would stay with him as he studied economics in England.
The word term “capitalism” was first coined by Marx in his book Das Kapital to describe the free market system. Marx proposed that the key motivating force of capitalism was the exploitation of labor. As owners get richer and workers get poorer, Marx predicted that capitalism, which he viewed as unsustainable, would collapse under the weight of its own contradictions.
Marx explained that because profits mainly revert to the owners as markets develop, some would become richer than others and own more of the productive machinery. Everyone else would have try and to sell their labor. As workers compete against one another for fewer jobs, they will see their wages decline. To protect against this, workers need to organize themselves into trade unions and align themselves with political parties that support labor interests. Marx predicted that eventually labor organizations would become strong enough to overthrow capitalism and establish social control of industry.
Social control of industry meant that all economic production would be centrally planned and based on the real needs of society.
Marx’s Socialism however did not account for the role that material incentives played in human behavior, and that greed and abuse of power by the few party planners could lead to major economic dysfunction. This was eventually recognized in the failed extreme communist socialist countries like the Soviet Union and China,
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