# Understanding Marxism: Differences vs. Communism, Socialism, Capitalism

What you need to know about these social, political, and economic theories

![Marxism Definition](https://www.investopedia.com/thmb/Z8nikXveobeVafP7W2kRpNHW4U8=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/marxism-final-6a8c13e1cbbf42658aa2c06266eb82d3.png)

*— Zoe Hansen / Investopedia*

## What Is Marxism?

Marxism, developed by [Karl Marx](https://www.investopedia.com/terms/k/karl-marx.asp), explores the impact of [capitalism](https://www.investopedia.com/terms/c/capitalism.asp) on labor and economic growth, advocating for change through a worker-led revolution. Central to Marxism is the belief that class struggle—particularly between the ruling bourgeoisie and the working proletariat—shapes economic dynamics, ultimately leading to a communist transformation.

### Marxist

The term “Marxist“ can be an adjective or noun. It means “of, relating to, or having the characteristics of Marxism.”

### Key Takeaways

*   Marxism is a social, political, and economic philosophy developed by Karl Marx that critiques capitalism and envisions a classless society.
*   Marxists believe that capitalism inherently leads to class conflict between the bourgeoisie (owners) and the proletariat (workers), which will result in a revolution.
*   Marxian economics, based on the labor theory of value, argues that capitalists profit by exploiting workers and underpaying them compared to the value their labor creates.
*   Marx's predictions of capitalism self-destructing through monopolies and class revolt have not yet materialized, as modern capitalist societies have adapted with regulations.
*   While Marxism provides the basis for communism, real-world communist countries have not achieved the classless society Marx envisioned.

## Exploring the Fundamentals of Marxism

Marxism is a social and political theory that includes class [conflict theory](https://www.investopedia.com/terms/c/conflict-theory.asp) and [Marxian economics](https://www.investopedia.com/terms/m/marxian-economics.asp). Marxism was first publicly formulated in 1848 in the pamphlet “The Communist Manifesto” by Karl Marx and [Friedrich Engels](https://www.investopedia.com/terms/f/friedrich-engels.asp), which lays out the theory of class struggle and revolution.

In "Das Kapital," published in 1867, Marx outlined his critique of capitalism through Marxian economics.

Marxism generally argues that capitalism is flawed and will eventually fail as an economic system.

In capitalism, business owners control all means of production, including factories, tools, raw materials, finished products, and profits. Workers—labor—are hired for wages and have no ownership stake and no share in the profits.

Moreover, the wages paid to workers are lower than the economic value that their work creates for the capitalist. This source of profit creates a class struggle between labor and capital.

> **Fast Fact**
>
> Historical materialism, another Marx theory, suggests society is shaped by its production methods and technology. In the modern era of industrial capitalism, capitalists organize labor in factories or offices where they work for wages using modern tools and machines.

## Insights Into Marxian Economic Theory

Like other [classical economists](https://www.investopedia.com/terms/c/classicaleconomics.asp), Karl Marx believed in a [labor theory of value (LTV)](https://www.investopedia.com/terms/l/labor-theory-of-value.asp) to explain relative differences in market prices. This theory stated that the value of a product can be measured objectively by the average number of hours of labor required to produce it. In other words, if a table takes twice as long to make as a chair, then the table should be considered twice as valuable. What Marx added to this theory was the conclusion that this labor value represented the exploitation of workers.

Marx claimed that there are two major flaws in capitalism that lead to the exploitation of workers by employers: the chaotic nature of free market competition and the extraction of surplus labor.

Marx predicted that capitalism would eventually destroy itself as more people become relegated to working-class status, inequality rises, and competition drives corporate profits to zero. This would lead, he surmised, to a revolution after which production would be turned over to the working class as a whole.

## Class Struggle and the Predicted Fall of Capitalism

Marx’s class theory portrays capitalism as one step in a historical progression of economic systems that follow one another in a natural sequence. They are driven, he posited, by vast impersonal forces of history that play out through the behavior and conflict among social classes. According to Marx, every society is divided into social classes, whose members have more in common with one another than with members of other social classes.

The following are some key elements of Marx’s theories of how class conflict would play out in a capitalist system:

1.  Capitalist society is made up of two classes: the bourgeoisie, or business owners, who control the [means of production](https://www.investopedia.com/terms/f/factors-production.asp), and the proletariat, or workers, whose labor transforms raw [commodities](https://www.investopedia.com/terms/c/commodity.asp) into goods that have market value.
2.  Ordinary laborers, who do not own the means of production, such as factories, buildings, and materials, have little power in the capitalist economic system. Workers are also readily replaceable in periods of high unemployment, further devaluing their perceived worth.
3.  To maximize profits, business owners have to get the most possible work out of their laborers while paying them the lowest possible wages. This creates an imbalance between owners and laborers, whose work is exploited by the owners for their own gain.
4.  Since workers have little personal stake in the process of production, Marx believed they would become alienated from their work, and even from their own humanity, and turn resentful toward business owners.
5.  The bourgeoisie are able to leverage social institutions, including government, media, academia, organized religion, and the banking and financial systems, as tools and weapons against the proletariat with the goal of maintaining their positions of power and privilege.
7.  Ultimately, the inherent inequalities and exploitative economic relations between these two classes will lead to a revolution in which the working class rebels against the bourgeoisie, takes control of the means of production, and abolishes capitalism.

Thus, Marx believed capitalism would destroy itself. The alienation and exploitation of workers would drive them to rebel and take control of production.

Enlightened leaders, the "vanguard of the proletariat," would lead the revolution, uniting workers by raising class awareness.

After the revolution, Marx predicted, private ownership of the means of production would be replaced by collective ownership, first under [socialism](https://www.investopedia.com/terms/s/socialism.asp) and then under [communism](https://www.investopedia.com/terms/c/communism.asp).

In the final stage of human development, social classes and class struggle would no longer exist.

> **Fast Fact**
>
> Karl Marx believed that the proletariat would overthrow capitalism in a violent revolution.

## Comparing Communism, Socialism, and Capitalism

Marx and Engels’ ideas laid the groundwork for the theory and practice of communism, which advocates for a classless system in which all [property and wealth are communally](https://www.investopedia.com/terms/e/egalitarianism.asp) rather than privately owned.

China, Cuba, Laos, North Korea, and Vietnam are the only nations that have communist systems today. Notably, most of these nations have relaxed some of their most rigid policies in the name of economic progress and global trade.

The Soviet Union was an experiment in communism that was created in 1921 and collapsed in 1991, leaving behind 15 former Soviet Socialist Republics to rebuild their economies from scratch. None chose communism as a model.

Notably, Marx and Engels didn’t consistently differentiate between socialism and communism. Today, there is often confusion about the ways they are distinct.

### Socialism

[Socialism predates communism](https://www.investopedia.com/ask/answers/020915/what-are-differences-between-capitalism-and-socialism.asp) by several decades. Its early adherents called for a more egalitarian distribution of wealth, solidarity among workers, better working conditions, and common ownership of land and manufacturing equipment.

Socialism is based on the concept of [public ownership and regulation](https://www.investopedia.com/articles/investing/082014/what-exactly-socialist-economy.asp) of the means of production, but individuals may still own property. Rather than rising out of a class revolution, socialist reform has taken place within existing social and political structures, whether they are democratic, technocratic, oligarchic, or totalitarian.

### Capitalism

Both communism and socialism oppose capitalism, an economic system characterized by private ownership and a system of laws that protect the right to own or transfer private property.

In a capitalist economy, private individuals or the companies they create own the means of production and the right to profit from them.

Communism and socialism aim to right the wrongs of capitalism’s free-market system. These include worker exploitation, inequities between classes, and outright poverty.

## Analyzing the Criticisms of Marxism

Marx inspired multitudes of followers, but many of his predictions have not come to pass. Marx believed that increasing competition would not produce better goods for consumers but would lead to bankruptcies and the rise of monopolies, with control of production in fewer and fewer hands.

Bankrupt former capitalists, he thought, would join the proletariat, eventually creating an army of the unemployed. In addition, the [market economy](https://www.investopedia.com/terms/m/marketeconomy.asp), which by its nature is unplanned, would experience crippling supply-and-demand problems and cause severe economic depressions.

Capitalism has not collapsed, but it has changed since Marx’s time. Governments in many capitalist countries, including the United States, have the power to crack down on monopolies and monopolistic business practices. Governments set minimum wages and regulatory agencies set standards for worker protection.

[Economic inequality](https://www.investopedia.com/economic-inequality-4845459) has increased in many capitalist societies. There have been recessions periodically as well as one Great Depression, but they are not thought to be an inherent feature of free markets.

Indeed, a society entirely without competition, money, or private property has not materialized in the modern world, and recent history suggests it is unlikely to emerge in the future.

## What Kind of Philosophy Is Marxism?

Marxism is a philosophy developed by Karl Marx in the second half of the 19th century that unifies social, political, and economic theory. It is mainly concerned with the consequences of a society divided between an ownership class and a working class and proposes a new system of shared ownership of the means of production as a solution to the inevitable inequality that capitalism fosters.

## What Did Marx Predict for the Future?

Marx thought that the capitalistic system would inevitably self-destruct. Competition would grow so fierce that most businesses would fold and be absorbed into unwieldy monopolies. Workers would reject a system that exploited them. The oppressed workers would ultimately overthrow the owners to take control of the means of production, ushering in a classless society of shared ownership.

## Was Karl Marx Right?

Not so far. Since the collapse of the Soviet Union in 1991, the most successful of the few remaining communist countries, notably China and Vietnam, have reformed some of their most rigid practices. None has been able to entirely eliminate personal property, money, and class systems in the way that Karl Marx envisioned.

Capitalism, in its various forms, remains the dominant economic system. But it has changed, too, since Marx’s time, with some of the worst excesses addressed. Worker safety standards, child labor laws, minimum wage laws, and anti-poverty programs are all examples.

## Is Marxism the Same Thing As Communism?

Marxism is a philosophy, while communism is a system of government based on Marxist principles. Marx envisioned a society in which workers owned the means of production. In real-world communism, governments own the means of production.

## The Bottom Line

Marxism, developed by Karl Marx, critiques capitalism by highlighting inherent injustices against workers, predicting that these would lead to class conflict and eventual revolution. This theory has influenced historical events, notably the rise and fall of the Soviet Union and ongoing experiments, like China's unique blend of socialism and capitalism. While Marx's envisioned classless society has not materialized, his critiques hold lessons about labor dynamics and economic systems for today’s world.

> **Article Sources**
>
> 1.  Brown, Theodore M., and Fee, Elizabeth, via National Center for Biotechnology Information. “[Friedrich Engels: Businessman and Revolutionary](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447947/).” _American Journal of Public Health_, vol. 93, no. 8 (August 2003).
>     
> 2.  Marxists.org. “[Karl Marx: Capital: A Critique of Political Economy Volume I, Book One: The Process of Production of Capital](https://www.marxists.org/archive/marx/works/1867-c1/).”
>     
> 3.  Marxists Internet Archive. “[Works of Karl Marx 1843: A Contribution to the Critique of Hegel’s Philosophy of Right](https://www.marxists.org/archive/marx/works/1843/critique-hpr/intro.htm).”
>     
> 4.  ThoughtCo. “[A List of Current Communist Countries in the World](https://www.thoughtco.com/communist-countries-overview-1435178).”
>     
> 5.  History. “[How Are Socialism and Communism Different?](https://www.history.com/news/socialism-communism-differences)”
>     
> 6.  The Library of Economics and Liberty. “[Marxism](https://www.econlib.org/library/Enc/Marxism.html).”