There are a variety of interpretations of Karl Marx's (1818 - 1883) theory of capitalism. This arises from both its unfinished nature and Marx's shifting points of emphasis across his lifetime. The focus of Marx's work, however, was undoubtedly on the historical basis of inequality, and specifically inequality under capitalism. Marx's critiques of the capitalist system — its tendency towards crises, the necessity of inequality — are still relevant today.

The Dialectic

Marx's powerful critique has as it basis a unique approach to reality — the dialectic. Taking from G.W.F. Hegel (1770 - 1831), Marx believed that any study of reality must be attuned to the contradictions within society and, indeed, he sees contradiction as the motor of historical change. Unlike Hegel, Marx believed that these contradictions existed not simply in our minds (i.e., in the way we understand the world), but that they had a concrete material existence. At the heart of capitalism was the contradiction between the demands of the capitalist to earn a profit and the demands of the worker, who wants to retain some profit to subsist. Over time, the workings of the capitalist system would exacerbate this contradiction, and its resolution can be had only through social change.

The Dialectical Method

The dialectical approach does not recognize the division between social values and social facts. To do so leads away from any real understanding of the problems people face. Additionally, the dialectical method does not envision the social world as being dominated by a cause-and-effect relationship; instead, it looks at the reciprocal relations among social factors within the totality of social life. These relations include not only contemporary phenomena but also the effects of history, as dialecticians are concerned with how the past shapes the present and how the present lays the seeds for the future. Because of this complex set of relations, which often fold back in on themselves, the future is both indeterminate and contingent on individual action. Indeed, this relationship between actors and structures is at the heart of Marx's theory. Structures both constrain and enable individuals, having the potential of both helping them to fulfill themselves and contributing to their exploitation.

Human Nature

Marx's insights into actors and structures must be understood in the context of his views on human nature, which is the basis for his critical analysis of the contradictions of capitalism. Marx viewed human nature as historically contingent, shaped by many of the same relations that affect society. In his view, a contradiction exists between our human nature and work in the capitalist system. Though we have powers that identify us as unique animals, our species being, the possibilities for realizing human potential within the capitalist system are frustrated by the structures of capitalism itself. Unlike most social theories that have implicit assumptions about human nature, Marx elaborates a concept of human nature that also informed his view of how society should look. An important factor in this is Marx's ideas about labour. By objectifying our ideas and satisfying our needs, labour both expresses our human nature and changes it. Through this process, individuals develop their human powers and potentials.

Alienation

Under capitalism, the relationship between labour and human expression changes: rather than labouring to fulfil their needs or express ideas, workers do so at the demands of capitalists. Workers are alienated from their labour because it no longer belongs to the worker, but rather to the capitalist. This alienates workers in four ways:

1. Workers are alienated from their productive activity, in that they no longer labour to satisfy their own needs.
2. Workers are alienated from the product of their labor, which now belongs to the capitalist. Instead of finding expression in producing, workers turn to consuming to express themselves.
3. The cooperative nature of work is destroyed through the organization of the labor process, alienating workers from their fellow workers. Additionally, workers often must compete against one another for work and pay.
4. Workers are alienated from their human potential, as the transformative potential of labor is lost under capitalism.