END OF MARX

People will move to towns or population centers if there is work there; if there is work, people earn wages and spend them; of they spend their wages they move capital, and when they move capital -- every time they move capital -- the capitalist, that is the person whose life is dedicated to the accumulation of capital -- benefits, if the system is working correctly. That is, the capitalist sets up factories and businesses and conveyance companies and services and in all these cases he employs people to whom he pays wages, always a little less than it costs to sell the product or provide the service or move the goods. The wages the capitalist pays are then put right back into circulation to buy the objects and services he produces. This circular set-up works to the capitalist's advantage if and only if her can keep selling as much as possible to as many people as possible.

He has two markets - the workers, who by definition have little to spare since he tries to pay them less than the value of the goods they produce for him. That is he pays wages that, added to the cost of setting up and running the plant and paying for the raw materials used in manufacturing, never add up to the selling price of the thing produced.He also sells to people like himself, those whose 'job' is to produce profit for themselves. These people have much more disposable income and will spend some of it, but since their job is also to maximize profit they will be very careful consumers and will hold back most of their capital for reinvestment purposes. 

So, the budding capitalist soon needs new ways to produce capital, ways that are not available from his workers or his fellow capitalists. Marx postulates two necessary sources of capital, which were clearly centrally important in his day, the heyday of European imperialism and huge armaments races. 

First, the post-monarchical analog of the wasteful priests and monarchs, and better than either for the capitalist, is the modern nation-state, which is dedicated to protecting its citizens and to advancing what it tells them are their national interests. Patriotism, as any sensible capitalist knows, pays. It pays in the sense that states have the power to levy taxes on both individual citizens and on corporations, taking in this manner a great deal of capital from capitalists and their businesses, as well as from the common people. These taxes are then fed right back into the capitalist system for a number of purposes, the most gratifying of which is war and the preparations for war. If the capitalist can whip up patriotic feelings,and create a narrative in which the state and its people are always at some risk from envious, evil or depraved neighbors, then he can get the government to spend huge, almost ruinous sums on the best of all capitalist products -- weapons and soldiers. Soldiers, because these are utterly non-produtvie people, in large numbers, who eat great quantities of food, wear government issued clothing, live in government housing and use government health care facilities. Soldiers are no competition for the capitalist because they do not business; all they do is consume, and the capitalist contract with the government to feed and house and clothe and tend them, thereby creating one level of profit from their consumption of his services and another when they spend their paychecks to buy his goods on their own. Soldiers are perfect consumers.

Second, weapons are the ideal commodity because they are expensive to produce (rather, cheap to produce, expensive to purchase because they are absolutely necessary), they become obsolete quickly and therefore have to be upgraded, also an expensive proposition, and, best of all, they are constantly breaking, getting destroyed, being left behind, getting lost, and so forth, because in war and even in training exercises things get used up quickly and broken easily. Making and maintaining and improving weapons is a huge money-maker, and whoever makes the most effective weapons has a strangle hold on the state -- it has to pay high prices to defend itself, because this is what people come to expect in a nation state. And no expects this more than the capitalist, who is of course supplying all the military needs and making a fortune from this, which he plows back into new production and investment, keeping the economy humming.

Peace is bad, or was bad, for capitalism. [Note: when people in 2010 moan about th cost of American wars they fail to understand that one of the few expensive objects American workers and scientists still get to make are high tech weapons, which are largely made in America. We cannot afford to make washing machines or TV sets or undershirts, but we can afford to at least assemble, and even make of the parts for, Abrams battle tanks and F-18s]. Just something to think about.

The second additional source of capital has to be foreign markets. Capitalists need folks to buy their product and they quickly get so efficient at making a lot of whatever it that they make that they cannot possibly sell it all at home, especially since they cannot pay their workers enough to buy all that they make. [Note: one often unnoted source of economic downturns is that in a capitalist system there is enormous pressure, always, to keep upping production and cost-per-unit, so that the normal condition of capitalist is one of glut, in which manufacturing capacity begins to outstrip consuming capacity, leading to a downward spiral that is hard to stop once it begins. 

Here is how it works: because we are capitalists dedicated to producing as much capital as possible we cannot help but push the limits of production until we produce more than the market can absorb. When this happens people making things and delivering services get laid off because there is an inventory backlog. The more people get laid off the buying power there is to reduce the inventory buildup, which leads to more backup and more layoffs and thus to more buildup, and so on down the rabbit hole. 

To avoid this problem maintaining a large military is one option. [We could add universal public education, which again puts lot of spending money into the hands of people who, like soldiers, produce nothing tangible but are good spenders. Dedicated teachers, school psychologists, crossing guards, coaches, social workers, and so forth are non-productive but have modest capital to spend, and they serve the additional purpose of keeping young people out of the job market for long stretches, thereby avoiding a surplus of laborers and creating another large consumer market that is non-productive. Education also helps some people prepare to be capitalists, or to staff the next generation of holding facilities - schools -]

But an equally good or even better option is to export, export, export. During the 19th century Europeans extended their political and economic control over vast stretches of the world -- to inland central Asia, Africa, the Middle East, south Asia -- and Marx conjectured that the reason for this huge expansion of empire was to create captive markets for the overflow of goods produced by the emerging capitalist nation states.

This expedient, allied with keeping the nation on a war footing, worked for a time but not forever. Two problems afflicted capitalism. First, overseas markets were much poorer than the home country; their capacity to absorb the ever-increasing volume of production is soon saturated. Second, being prepared for war tends to produce wars, and wars are both excellent for capitalists and potentially dengerous. The bigger the war the greater the profits because the greater the waste of materiel and the use of men. At the same time, wars create social upheaval and even, potentially, revolutions, which could depose the pro-capitalist war-friendly governments. 

So, capitalism has to come up with new and more sustainable ways to produce consumers for its products. Marx died in 1883 and the great marxist revolution in Russia happened in 1917. In both cases capitalism was still developing

and had not developed anything like the sophistication and flexibility it would later demonstrate. There was no ay either Marx or his Russian successors -- Lenin, Trotsky, Stalin -- could know what capitalism could create. 

The essential idea here is the identity, who each person is and feels herself to be, are strict functions of what class they belong to and where they find themselves in the economic system. Marx believed that we are all strictly determined by class membership and class loyalty, and that only a few revolutionaries know enough to question the assumptions of the ruling class. 

Ask yourself the extent to which you think the way you see the world depends on how deeply you have been shaped by such class membership and loyalty.