Karl Marx—The Communist | Economic Game Changers | PragerU

The Industrial Revolution in the first half of the 19th century brought great change to Europe and America. After a difficult early transition, the free trade ideas of Adam Smith and David Ricardo began to bear fruit. Privately owned businesses rapidly produced a large quantity of goods in factories without government interference. The standard of living for most people rose substantially, and a new class of wealth emerged composed of bankers, professionals, and factory owners. This new system of capitalism, as we now call it, was clearly the future. But this newfound productivity came with major changes. Many tradesmen and small farmers, struggling to compete with lower-priced industrial products, moved from the countryside for jobs in cities like London and Manchester. Workers, and sometimes even young children, labored in factories for long hours. While national wealth soared in tandem with production, some felt they were excluded from this new prosperity. This opened the door for resentment among some of the working class. Add to that periods of high food prices due to lingering trade protectionism across Great Britain and Europe, and you had a recipe for chaos. And chaos is exactly what the young intellectuals of the time wanted, seizing upon the simmering class divisions to push for radical solutions. One of these intellectuals was a German philosopher named... Karl Marx. That's me. Karl the Great. Karl the Only. The Magnificent. Marx was a perpetual freeloader who never held a steady job and was always asking his mother for money. Thanks, Ma. Influenced by radicals in college, he later spent much of his time holed up in the British Museum in London, reading and writing on the hot revolutionary ideas of the time. These ideas are hot! He published his first major work in 1848, crafting his own theory of economics, politics, and even history. The Communist Manifesto, written by me, Karl Marx, and Friedrich Engels. Oi! What was that last part? And Friedrich Engels. What? What? What? Friedrich Engels, okay? Happy now? In it, Marx divided society into two economic classes. The bourgeoisie, made up of nobles, successful capitalists, and the growing middle class. And the proletariat, made up of workers who contributed their labor and owned very little. History is a long struggle between them, the winners, the bourgeoisie, oppressing the losers, which is you, the proletariat. This class struggle explains everything. Everything? Yeah, everything. This led Marx to argue that the capitalist system, which was already improving the standard of living of many, was really a system of exploitation. Exploitation? How? Because the owners pay you less than the value of what you produce. For example, let's say a worker produces $200 worth of goods per day, but the worker is only paid $80 per day. This difference is what I call surplus value. The owners take this from you and use it as profit. But profit is actually... Trust me, that's profit. Now, instead of making conditions better for you, the workers, or increasing your wages, the greedy capitalists use this to expand their interests and their fortunes. Our wages are not bad, actually. But it gets even worse. Capitalism is alienating you too. You are disconnected from the fruit of your labor, given no say in the process of production, and you are forced to compete with each other instead of cooperating. The bourgeoisie are guilty, I tell you. Guilty! A revolution is inevitable! I said, a revolution is inevitable! This led Marx's belief that capitalism was merely a stage in history, and its features of private ownership, First, there was primitive communism in small tribes. Next came slave societies. Then came feudalism, with serfs working the land for the kings or nobles. And then, this evil, awful, terrible capitalism! You are here! But wait, there's more! to be replaced with a temporary system called Socialism, with the state controlling the means of production. Until, finally, communism! A system with abundance for all, and no class struggle! To Marx, this final stage would be a system so perfect that nothing could improve it. Under communism, farms, factories, and all means of production would be owned communally for the benefit of the workers. There would be no wealthy bourgeoisie, no exploited proletariat struggling at the bottom, no competition, no private property, from each according to his ability, to each according to his needs. Does he do any real work? Nope. Marxism, as his ill-conceived ideas later came to be called, developed into an anti-capitalist philosophy that exaggerated class conflicts to distort reality. Marx cherry-picked and even invented examples of hardship to incite public outrage. He portrayed the free exchange of goods and services in a negative light, even as that very capitalism continued to improve wages, life expectancy, and living conditions across Europe and America. It turns out that the workers of the world had no interest in Marx's ideas, and they actually liked the freedom and opportunities that capitalism offered them. Workers of the world, unite! I said, workers of the world, unite! Marx remained relatively unknown in his time, but like the zombie apocalypse, his ideas never died. They would percolate throughout the second half of the 19th century, as industrialization boomed. By the 20th century, those ideas would be spread through brute force. And once Marxists got control, they used terrorism, torture, and even murder to keep it. They ruled through fear. In every case where it was implemented, from Russia, China, Cambodia, and Cuba, to dozens of other places, Marxism utterly failed. With hundreds of millions of people suffering its terrible consequences. Next time, we cross the English Channel to a country experiencing its third revolution in half a century. There we meet a man who stood against the revolutionary and authoritarian fervor that marked the work of radicals like Karl Marx. Let me tell you a story. Thanks for watching this episode of Economic Game Changers. Become an expert on economics and financial literacy in no time with more episodes like this at PragerUKids.com. Parents, subscribe today!