Marx and the theory of the absolute impoverishment of the working class under capitalism
“The Money Changer and His Wife”; in Antwerp by Quentin Massys; 1514; located now in the Louvre Paris; image From Sophia.org
Introduction to this July 2025 re-publication by MLRG.online
This article was written by W.B. Bland in behalf of the Marxist-Leninist Research Bureau; in London (UK) around 2000. Bill was often forgetting to date his pieces so the exact date is uncertain.
Why are we re-publishing this now? One of the editors of MLRG.online has been in a “Capital” reading class using the text in the new edition of Karl Marx’s volume as edited by Eds – Paul North and Paul Streiter (as translated P.Reiter; “Capital Volume 1”; 2024; Princeton University Press). This as against the more commonly used English text version as contained in the translation by Ben Fowkes edited by Ernest Mandel; and published as “Capital Volume 1″; Harmondsworth 1976.
During this class several course comrades raised issues around whether Marx’s underlying views on the “immiseration” of the working class are outdated or not. We think this article addresses this question. We hope it is of use to readers.
The views of this attendee in the course, on the new English edition by North and Reiter – as compared to the immediately prior English edition by editor Mandel and translator Fowkes – will be given in a subsequent article. However one drawback of the new edition is the academic posturing adopted by the Princeton University Press. In comparison to the Mandel editing – the difference is marked. In addition, the Introduction by Mandel is excellent in this attendee’s view.
Indeed Bland clearly thought the Mandel ‘Introduction’ had addressed some of the misunderstanding surrounding Marx’s discussion – and indeed on Engels’s discussion also – on the themes of relative and absolute impoverishment of the working class under capital.
We end this re-publication with a short postscript, showing up to date information on the continued and growing in quality between rich and poor in the USA.
July 8, 2025
“Marx and the Theory of the Absolute Impoverishment of the working class under capitalism”
By W.B.Bland, for the Marxist-Leninist Research Bureau; New series No.9.
INTRODUCTION
‘Impoverishment’ is defined as the:
” . . . process of . . . making poor”,
‘Oxford English Dictionary’, Volume 9: Oxford: 1989; p. 736
while ‘poor’ is usually defined as:
” . . . having few, or no, material possessions . . . ; so destitute as to be dependent upon gifts or allowances for subsistence”.
‘Oxford English Dictionary’, Volume 12; Oxford; p. 108
‘Absolute impoverishment’ is defined in the ‘Great Soviet Encyclopedia’ as:
” . . . a tendency of lowering in the living standard of the proletariat”.
‘Great Soviet Encyclopedia’, Volume 1; New York; 1973; p.33
while ‘relative impoverishment’ is defined in the ‘Great Soviet Encyclopedia’ as:
” . . . a tendency toward decreasing the working class’s share in the national income”.
‘Great Soviet Encyclopedia’, Volume 1; New York; 1973; p.33
There is no doubt that KARL MARX accepted the theory of the relative impoverishment of the working class under capitalism, for he says:
“Real wages . . . never rise proportionally to the productive power of labour”.
Karl Marx: ‘Capital: A Critical Analysis of Capitalist Production’, Volume 1; Moscow; 1974; p. 566)
Sometimes, however, the theory of the absolute impoverishment of the working class, i.e., the theory that the real wages of the working class consistently decline with the development of capitalism, is also attributed to Marx. For example, the Austrian-born philosopher KARL POPPER (1902-95) states:
“Marx’s… law that misery must increase together with accumulation (of capital — Ed.) does not hold. Means of production have accumulated and the productivity of labour has increased since his day to an extent which even he would hardly have thought possible. But child labour, working hours, the agony of toil and the precariousness of the worker’s existence have not increased; they are on the decline. . . . Experience shows that Marx’s prophecies were false”.
Karl R. Popper: ‘The Open Society and Its Enemies’, Volume 2: ‘The High Tide of Prophecy: Hegel, Marx and the Aftermath’; London; 1945; p. 174-75
Similarly, the English-born American historian HENRY PARKES (1904-72) states that for what he alleges to be a ‘cardinal conclusion of Marxist economic theory’, namely:
” . . . that the misery of the working class will increase — there is no evidence at all. Throughout the history of capitalism . . . the working class, . . . have steadily gained higher standards of living and a shorter working day. Low wages. long hours and child labour have been characterirtics of capitalism not, as Marx predicted, in its old age. but in its infancy”.
Henry B. Parkes: ‘Marxism: A Post-Mortem’; London; 1940; p. 101-02
As a leading philosopher of the revisionist Communist Party of Great Britain, MAURICE CORNFORTH (1908-80), expresses the views of Popper and Parkes:
“Whereas Marx said that things would get worse and worse, they have, on the contrary, got better and better. Marxist theory, prophesying ‘absolute impoverishment’, bears no relation to what has actually happened”.
Maurice Cornforth: ‘The Open Philosophy and the Open Society: A Reply to Dr. Karl Popper’s Refutations of Marxism’; London; 1968; p. 205
This paper is an attempt to investigate whether or not Marx did, in fact, adhere to the theory of the absolute impoverishment of the working class under capitalism.
MARX’S FIRST THEORY OF WAGES
The Marxist theory of wages was, of course, not magically revealed to Marx as he sat in the shade of a banyan tree in the grounds of the Briish Museum. It developed gradually, and was modified in the light of experience — in accordance with the English proverb which Engels, in particular, was fond of quoting: ‘The proof of the pudding is in the eating’, that is, the test of the validity of a hypothesis is whether it works out in practice.
Marx’s first theory of wages was based on the ‘subsistence theory’ put forward in the writings of the English ‘classical’ economists DAVID RICARDO (1772-1823) and THOMAS MALTHUS (1766- 1834).
The subsistence theory of wages,
” . . . advanced by David Ricardo and other classical economists, was based on the population theory of Malthus. It held that the market price of labour would always tend toward the minimum required for subsistence. If the supply of labour increased, wages would fall, eventually causing a decrease in the labour supply. If the wage rose above the subsistence level, population would increase until the larger labour force would again force wages down”.
‘New Encyclopaedia Britannica’, Volume 12: Chicago: 1994; p. 447
In Ricardo’s words:
“The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution”.
David Ricardo: ‘On the Principles of Political Economy and Taxation’, in: Piero Sraffa (Ed.): ‘The Works and Correspondence of David Ricardo’, Volume 1; Cambridge; 1981; p. 93
“Ricardo’s theory of wages was largely inspired by Malthus. . . . An increase in wages causes . . . a decline in infant mortality — which results in an increase in the supply of hands, and so a fall in wages. On the other hand, a fall in wages . . . increases the rate of infant mortality — and so decreases the supply of hands. . . . These two movements of the pendulum tend to even out the level of wages, but at the lowest level, just sufficient to keep a worker with an ‘average’ family alive”.
Ernest Mandel: ‘The Formation of the Economic Thought of Karl Marx: 1843 to “Capital”‘ hereafter listed as ‘Ernest Mandel (1971’); London; 1971; p. 140
The subsistence theory of wages:
” . . . stated simply that the price of labour depended on the subsistence of the labourer. Wages equalled the amount of commodities necessary to feed and clothe a worker and his family, which represented the cost to society of ‘enabling the labourers to subsist and perpetuate their race’ (Ricardo)”.
Maurice Dobb: ‘Wages’; London; 1938; p. 95
In his lectures of 1880-81, the English historian ARNOLD TOYNBEE (1889-1975) states that Marx and Engels:
” . . . adopted Ricardo’s law of wages. . . . They have argued that, . . . by this law, wages, under our present social institutions, can never be more than sufficient for the bare subsistence of the labourer”.
Arnold Toynbee: ‘Lectures on the Industrial Revolution in England’; London; 1884; p. 130
The Ricardian/Malthusian ‘law’ of wages:
” . . . did undoubtedly influence them (Marx and Engels – Ed.) in formulating their first, faulty theory of wages, which implies, like the Ricardo/Malthus theory, a tendency for wages to decline towards the physiological minimum living wage and stay there”.
Ernest Mandel (1971): op. cit.; p. 142
For example: ‘Outlines of a Critique of Political Economy’, written by Engels in October/November 1843, states:
“Only the very barest necessities, the mere means of subsistence, fall to the lot of labour”.
Friedrich Engels: ‘Outline of a Critique of Political Economy’, in: Karl Marx: ‘Economic and Philosophic Manuscripts of 1844’; London; 1970; p. 223
‘Economic and Philosophic Manuscripts of 1844’, written by Marx between April and August 1844, states:
“The lowest and the only necessary wage-rate is that providing for the subsistence of the worker for the duration of his work and as much more as is necessary for him to support a family and for the race of labourers not to die out. The ordinary wage rate . . . is the lowest compatible with . . . a cattle-like existence”.
Karl Marx: ‘Wages of Labour’, in: ‘Economic and Philosophic Manuscripts of 1844’; London; 1970; p. 65
Here it must be noted that in a note, written in 1885, to the German edition of ‘The Poverty of Philosophy’, Engels said:
“The thesis that the ‘natural’, i.e., normal, price of labour power coincides with the wage minimum, i.e., with the equivalent in value of the means of subsistence absolutely indispensable for the life and reproduction of the worker, was first put forward by me in ‘Outlines of a Critique of Political Economy’ (1844) and in ‘The Condition of the Working Class in England’. . . . As seen here, Marx at that time accepted the thesis. Lassalle took it over from both of us. . . . The above thesis is nevertheless incorrect”.
Friedrich Engels: Note to the German Edition of ‘The Poverty of Philosophy’; London; 1936; p. 45
‘The Poverty of Philosophy‘, written by Marx in the winter of 1846-47, states:
“Labour, being itself a commodity, is measured as such by the labour time needed to produce the labour-commodity. And what is needed to produce this labour-commodity? Just enough labour time to produce the objects indispensable to the constant maintenance of labour, that is, to keep the worker alive and in a condition to propagate his kind. The natural price of labour is no other than the wage minimum.”
Karl Marx: ‘The Poverty of Philosophy’: London; 1936; p. 45-46
‘Principles of Communism‘, the first draft of what was to be ‘The Communist Manifesto‘, written by Engels in October 1847, states:
“In a regime of . . . free competition, . . . the price of labour is . . . equal to the cost of production of labour. But the costs of production of labour consist of precisely the quantity of means of subsistence necessary to enable the worker to continue working and to prevent the working class from dying out. The worker will therefore get no more for his labour than is necessary for this purpose; the price of labour or the wage will, in other words, be the lowest, the minimum, required for the maintenance of life. . . . This economic law of wages operates the more strictly the greater the degree to which big industry has taken possession of all branches of production”.
Friedrich Engels: ‘Principles of Communism’; London; 1971; p. 6-7
‘Address on the Question of Free Trade‘, delivered by Marx in January 1848, states:
“The minimum of wages is the natural price of labour. And what is the minimum of wages? Just so much as is required for the production of the articles indispensable for the maintenance of the worker, for putting him in a position to sustain himself, however badly, and of propagating his race, however slightly”.
Karl Marx: ‘Address on the Question of Free Trade’, in: ‘The Poverty of Philosophy’; London; 1936; p. 205
‘Wage Labour and Capital’, written by Marx in December 1847, states:
“The price of labour will be determined by . . . the labour time necesary to produce this commodity — labour power. What then is the cost of production of labour power? It is the cost required for maintaining the worker as a worker and of developing him into a worker. . . . The price of his labour will, therefore, be determined by the price of the necessary means of subsistence. The cost of production of simple labour power, therefore, amounts to the cost of the existence and reproduction of the worker. The price of this cost of existence and reproduction constitutes wages. Wages so determined are called the wage minimum. . . . The wages of the whole working class level themselves out within their variations to this minimum”.
Karl Marx: ‘Wage Labour and Capital’; in: ‘Selected Works’, Volume 1; London; 1943; p. 262,263
‘The Communist Manifesto‘, written jointly by Marx and Engels between December 1847 and January 1848, states:
“The average price of wage labour is the minimum wage, i.e., that quantum of the means of subsistence which is absolutely requisite to keep the labourer in bare existence as a labourer. What, therefore, the wage labourer appropriates by means of his labour merely suffices to prolong and reproduce a bare existence”.
Karl Marx & Friedrich Engels: ‘Manifesto of the Communist Party’, in: Karl Marx: ‘Selected Works’, Volume 1; London; 1943; p. 220-21
SINCE MARX AND ENGELS HELD AND PUT FOWARD AT LEAST UNTIL THE LATE 1850s THE RICARDIAN THEORY OF WAGES, WHICH MAINTAINED THAT WAGES WERE LIMITED TO THE LEVEL OF SUBSISTENCE, THEY COULD NOT HAVE, IN THIS PERIOD, UPHELD A THEORY OF THE INCREASING IMPOVERISHMENT OF THE WORKING CLASS UNDER CAPITALISM.
THIS ALSO FOLLOWS, SINCE THEY AT THIS TIME HELD THE VIEW THAT WAGES WERE ALREADY AT THE PHYSIOLOGICAL MINIMUM ABLE TO SUSTAIN AND REPRODUCE LIFE, SO THAT:
” . . . an ‘absolute deterioration’ from a level that represented a physiological minimum could not be imagined”.
Karl Kuhne, ‘Economics and Marxism’, Volume 1; London; 1979; p. 231
MARX’S AMENDED THEORY OF WAGES
By the early 1960s, Marx and Engels had become convinced that their acceptance of the Ricardian theory of wages had been mistaken.
One factor in this change of position was that the German Social Democrat FERDINAND LASSALLE (1840-1913) had – not illogically – developed the Ricardian theory of wages into the form of ‘the iron law of wages’:
“The iron economic law that determines wages under present-day conditions . . . is this: that the average wage always remains reduced to the necessary basis for existence and propagation”.
Ferdinand Lassalle: ‘Offnes Antwortschreiben an das Central-Comit‚ zur Berufung eines Allgemeinen Deutschen Arbeitercongresses zu Leipzig’ (An Open Answer to the Central Committee of the General Congress of German Workers at Leipzig); Zurich; 1863; p. 13
Lassalle ‘s ‘iron law of wages’:
” . . . led a large section of the German Labour movement on a policy which had the impossibility of improving working class standards of life under capitalism as its principal tenet”.
John Strachey: ‘Contemporary Capitalism’; London; 1956; p. 105
In a letter written some years later to the leading German Social Democrat AUGUST BEBEL (1840-1913), Engels now describes the Ricardian wage theory on which it was based as ‘quite antiquated’:
“The Lassallean ‘iron law of wages’ . . . is based on a quite antiquated economic view, namely, that the worker only receives on the average the minimum of the labour wage”.
Friedrich Engels: Letter to August Bebel (March 1875), in: Karl Marx & Friedrich Engels: Correspondence: 1846-1895: A Selection with Commentary and Notes’; London; 1936; p. 235
In June 1865, Marx presented his amended theory of wages in an address to the General Council of the First International. The amended theory was still based on the subsistence theory:
“The value of labouring power is determined by the value of the necessaries required to produce, develop, maintain and perpetuate the labouring power”.
Karl Marx: ‘Value. Price and Profit’, in: ‘Selected Works’, Volume 1; London; 1943; p. 315
But the theory was now modified by the inclusion of some ‘peculiar features’ which distinguish labour power from all other commodities:
“There are some peculiar features which distinguish the value of the labouring power . . . from the values of all other commodities”.
Karl Marx: ibid., Volume 1; p. 332
According to Marx’s amended theory, the ‘peculiar features’ which distinguish labour power from all other commodities relate to the presence of a ‘historical or social element’ in the former:
“The value of the labouring power is formed by two elements – the one merely physical, the other historical or social. Its ultimate limit is determined by the physical element, that is to say, to maintain and reproduce itself, to perpetuate its physical existence, the working class must receive the necessaries absolutely indispensable for living and multiplying. The value of those indispensable necessaries forms, therefore, the ultimate limit of the value of labour”.
Karl Marx: ibid., Volume 1; p. 332
As a result of the historical or social element in the value of labour power, this value:
” . . . is in every country determined by a traditional standard of life. It is not mere physical life, but it is the satisfaction of certain wants springing from the social conditions in which people are placed and reared up. . . . The historical or social element entering into the value of labour may be expanded or contracted, or altogether extinguished, so that nothing remains but the physical limit”.
Karl Marx: ibid., Volume 1; p. 332-33
In the first volume of Marx’s ‘Capital‘, published in September 1867, Marx repeated the basis of his amended law of wages:
“The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. . . . In other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer.”
‘Karl Marx: ‘Capital: A Critical Analysis of Capitalist Production’, Volume 1; Moscow; 1974; p. 167
However, Marx adds, a worker’s
” . . . natural wants, such as food, clothing, fuel and housing vary according to the climatic and other physical conditions of his country. On the other hand, the number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development, and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed. In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labour-power a historical and moral element”.
Karl Marx: ibid., Volume 1; p. 168
But the historical development of these ‘necessary wants’ continues, so that along with them the value of labour power also increases. New inventions arise – such as the refrigerator, the car, television – and develop from luxuries for the rich into items which workers come to regard as necessaries. Marx himself speaks of a rise in the price of labour as a consequence of the accumulation of capital:
“A rise in the price of labour as a consequence of accumulation of capital only means, in fact, that the length and weight of the golden chain the wage-worker has already forged for himself allow of a relaxation in the tension of it”.
Karl Marx: ibid., Volume 1; p. 579-80
and of:
” . . . the worker’s participation in the higher even cultural satisfactions, . . . newspaper subscriptions, attending lectures, educating his children, developing his taste, etc.”.
Karl Marx: ‘Grundrisse’ (Foundations); Harmondsworth; 1973; p. 287
Marx indeed points out that one of the contradictions of capitalist society is that the capitalist has an interest in keeping low the income of his own employees in order to maximise his profits; but in contrast has an interest in not keeping low the income of the employees of other capitalists since these are (to him) merely consumers, part of his market. That is, he is interested in
” . . . fobbing the worker off with ‘pious wishes’ . . . but only his own, because they stand towards him as workers; but by no means the remaining world of workers, for these stand towards him as consumers. In spite of all ‘pious’ speeches he therefore searches for means to spur them on to consumption, to give his wares new charms, to inspire them with new needs by constant chatter, etc.”
Karl Marx: ibid.; p. 287
In periods of relatively full employment, in fact,
” . . . the workers . . . themselves act as consumers on a significant scale”.
Karl Marx: ‘Theories of Surplus Value’, Part 3; Moscow; 1975; p. 223
As Maurice Cornforth correctly points out:
“The very great advances in technology which accompany the accumulation of capital have the result that all kinds of amenities become available on a mass scale, and consequently the consumption of these becomes a part of the material requirements and expectations of the worker. In other words, with an advanced technology the worker comes to require for his maintenance various goods and services his forefathers did without”.
Maurice Cornforth: op. cit.; p. 206-07
Indeed, reputable economists agree that
” . . . Marx actually took for granted an increase in real wages in the course of capitalist development”.
Karl Kuhne: op. cit., Volume 1; p. 227
and that:
” . . . Marx never denies that real wages may rise under capitalism”.
Mark Blaug: ‘Economic Theory in Retrospect’: Homewood (USA); 1962; p.243
In addition, trade unionism — the application of the principle of monopoly power to the sale of labour power — enables organised workers to sell their labour power at a higher rate than they could under conditions of free competition between workers. As Engels wrote in May 1881:
“The law of wages . . . is not one which draws a hard and fast line. It is not inexorable within certain limits. There is at every time (great depression excepted) for every trade a certain latitude within which the rate of wages may be modified by the results of the struggle between the two contending parties”.
Friedrich Engels: ‘The Wages System’, in: Karl Marx & Friedrich Engels: ‘Collected Works’, Volume 24; London; 1989; p. 380
AS REGARDS THE THEORY OF THE ABSOLUTE IMPOVERISHMENT OF THE WORKING CLASS THUS:
NEITHER IN ITS ORIGINAL NOR ITS AMENDED FORM, DID MARX’S WAGES THEORY CONFORM WITH THE THEORY OF THE ABSOLUTE IMPOVERISHMENT OF THE WORKING CLASS UNDER CAPITALISM.
Indeed, it is generally recognised by reputable writers who have studied Marx’s writings that these never mention the absolute impoverishment of the working class:
“The word ‘Verelendung (progressive deterioration, growing poverty) never occurs in Marx’s works, nor does it occur in the classic history of doctrines published by Gide and Rist. (i.e., Charles Gide & Charles Rist: ‘A History of Economic Doctrines, from the Time of the Physiocrats to the Present Day’; London; 1915; — Ed.) . . . The so-called ‘theory of growing poverty’ has been a red herring in the interpretation of Marx’s work. A large number of analysts . . . have (often bona fide) taken this theory for granted. This suggests that they have read Marx rather carelessly. . . Marx himself never spoke of ‘Verelendung’ – progressive deterioration, or growing poverty. . .
Marx never held a theory of growing poverty”.
Karl Kuhne: op. cit.; p. 197, 226, 227, 231
“The theory of absolute impoverishment is not to be found in the works of Marx. . . . The idea that the real wages of the workers tend to decline more and more is totally alien to Marx’s writings”.
Ernest Mandel: ‘Marxist Economic Theory’ (hereafter listed as ‘Ernest Mandel (1968)’), Volume 1; London; 1968; p. 150, 151
“Marx never denies that real wages may rise under capitalism. . . The notion that he propounds a theory of the growing poverty of the working class is just folklore Marxism”.
Mark Blaug: op. cit.; p. 243
Indeed, as we have seen, Marx accepted that the development of capitalism would be accompanied by an increase in real wages:
“The relevant pasages show quite clearly that Marx actually took for granted an increase in real wages in the course of capitalist development”.
Karl Kuhne: op. cit.; p. 227
and recognised ,
” . . . that the situation of the working class has improved as a result of wage increases resulting from trade-union action or ‘factory laws'”.
Andr‚ Piettre: ‘Marx et Marxisme’ (Marx and Marxism); Paris; 1957; p. 62
‘PAUPERISM’
Sometimes Marx’s references to ‘pauperism’ are taken as references to ‘impoverishment’. However, a ‘pauper’ is:
” . . . a person destitute of . . . means of livelihood; one . . . who is dependent on the charity of others; . . . a beggar”.
‘Oxford English Dictionary’, Volume 11; Oxford; 1989; p. 364
while ‘pauperism’ is defined as:
” . . . the existence of a pauper class; . . . paupers collectively”.
‘Oxford English Dictionary’, Volume 11; Oxford; 1889; p. 364)
Marx himself defined ‘pauperism’ as:
” . . . that part of the working-class which has forfeited its condition of existence (the sale of labour-power) and vegetates upon public alms”,
Karl Marx: ‘Capital’, Volume 1; Moscow; 1974; p. 611
i.e.; as the unemployed and those unable to work by reason of age or incapacity:
“The lowest sediment of the relative surplus-population finally dwells in the sphere of pauperism. Exclusive of vagabonds, criminals, prostitutes, in a word, the ‘dangerous’ classes’, this layer consists of three categories. First, those able to work. One need only glance superficially at the statistics of English pauperism to find that the quantity of paupers increases with every crisis, and diminishes with every revival of trade. Second, orphans and pauper children. These are candidates for the industrial reserve army. . . Third, the demoralised and ragged, and those unable to work. . . people who have passed the normal age of the labourer; the victims of industry, whose number increases with the increase of dangerous machinery, of mines, chemical works, &c. the mutilated, the sickly, the widows, &c. . . The greater the social wealth, . . . the greater is the industrial reserve army. . . The more extensive, finally, the lazarus-layers of the working-class and the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation”.
Karl Marx: ibid., Volume 1; p.602-03
Thus, when Marx speaks of an increase of pauperism with the development of capitalism, he does not mean that the working class as a whole suffers absolute impoverishment:
“The word ‘pauperism’ must never be equated with ‘growing poverty’, and it is even more erroneous to apply the latter term to the working class in its entirety. . . . This is one of the gravest misinterpretations of Marx. . . . The word pauperisation’, which means that a class of underprivileged appears, has been confounded with the idea of a deterioration of the living standards of the working class as whole”.
Karl Kuhne: op. cit., Volume 1; p. 229
“Pauperisation’ relates to the ‘reserve army’, not to the working class as a whole, and it is an ascertainable fact that, where the market economy has remained ‘free’, it has invariably produced an immense bottom layer of paupers”.
George Lichtheim: ‘Marxism in Modern France’; New York; 1970; p. 146
In other words:
” . . . what one finds in Marx is an idea of the absolute impoverishment not of the workers, the wage-earners, but of that section of the proletariat which the capitalist system throws out of the production process:
unemployed, old people, disabled persons, cripples, the sick, etc. . . This analysis retains its full value, even under the ‘welfare capitalism’ of today”.
Ernest Mandel (1968): op. cit., Volume 1; London; 1968; p. 52
SPIRITUAL IMPOVERISHMENT
In addition, genuine misunderstanding sometimes arises from Marx’s assertion that the development of capitalism is accompanied by the spiritual impoverishment or alienation of working people.
The ‘Great Soviet Encyclopedia’ defines ‘alienation’ as:
” . . . an objective social process, inherent in antagonistic class society and characterised by the transformation of human work and its results into an independent force that dominates and is hostile to the individual”.
‘Great Soviet Encyclopedia’, Volume 19; New York; 1978; p. 2
In the ‘Economic and Philosophic Manuscripts’ of 1844, Marx writes that, with the development of capitalism:
” . . . the worker becomes all the poorer, the more wealth he produces. . . With the increasing value of the world of things proceeds in direct proportion the devaluation of the world of men. . . The object which labour produces – labour’s product – confronts it as something alien, as a power independent of the producer”.
Karl Marx: ‘Economic and Philosophic Manuscripts of 1844’; London; 1970; p. 107, 108
According to Marx, instead of being a source of creative pleasure, as it may well be with the peasant and the artisan, work bcomes a tyranny:
“In handicrafts and manufacture (i.e., work by hand – Ed.), the workman makes use of a tool; in the factory, the machine makes use of him. There the movements of the instrument of labour proceed from him, here it is the movements of the machine that he must follow. In manufacture the workmen are parts of a living mechanism. In the factory we have a lifeless mechanism independent of the workman, who becomes its mere living appendage. . . At the same time that factory work exhausts the nervous system to the uttermost, it does away with the many-sided play of the muscles, and confiscates every atom of freedom, both in bodily and intellectual activity. The lightening of the labour, even, becomes a sort of torture, since the machine does not free the labourer from work, but deprives the work of all interest”.
Karl Marx: ‘Capital’, Volume 1; Moscow; 1974; p. 398
“Within the capitalist system all methods for raising the social productiveness of labour are brought about at the cost of the individual labourer; all means for the development of production transform themselves into means of domination over, . . the producers; they mutilate the labourer into a fragment of a man, degrade him to the level of an appendage of a machine, destroy every remnant of charm in his work and turn it into a hated toil; they estrange from him the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power; they distort the conditions under which he works, subject him during the labour- process to a despotism the more hateful for its meanness”.
Karl Marx: ‘Capital’,Volume 1; Moscow; 1974; p. 604
Clearly, what Marx intends to convey here:
“. . . is the inner psychological impoverishment of the man who is dominated by machinery, instead of being its master, and thus becomes ‘an appendage to the machine'”.
Karl Kuhne: op. cit., Volume 1; op. cit.; p. 228
Marx makes it doubly clear that he is referring to spiritual impoverishment of the worker, and not to his material impoverishment, when he says:
“In proportion as capital accumulates, the lot of the labourer, be his payment high or low, (Our Emphasis – Ed.) must grow worse”.
Karl Marx: ‘Capital’, Volume 1; Moscow; 1974; p. 604
It is true that in his later work Marx used such terms as ‘alienation’ and ‘estrangement’ less frequently than in his earlier work, but this was not because he had repudiated the concepts expressed in these terms (as we see from the excerpts from ‘Capital‘ given above);
“Marx gave up using such terms as ‘estrangement’, ‘alienation’, ‘return of man to himself’, as soon as he noticed that they had turned into ideological prattle in the mouths of petty-bourgeois authors, instead of a lever for the empirical study of the world and its transformation. . ”
Alfred Schmidt: ‘The Concept of Nature in Marx’; London; 1971; p. 129
In a note to this passage, Schmidt adds:
“The concept of ‘alienation’ is still found frequently in ‘Capital’ and in ‘Theories of Surplus Value’, and indeed Marx’s general abandonment of such terms does not mean that he did not continue to follow theoretically the material conditions designated by them”.
Note to: Alfred Schmidt: ibid.; p. 228
‘INCREASING MISERY’
Finally, misunderstanding sometimes arises from Marx’s statement that the development of capitalism is accompanied by the ‘increasing misery’ of the working class. For example, a famous passage in ‘Capital’ reads:
“Accumulation of wealth at one pole is, therefore, accumulation of misery, . . . at the opposite pole”.
Karl Marx: ‘Capital’, Volume 1; Moscow; 1974; p. 604
But ‘misery’ is defined as:
” . . . great sorrow or distress of mind; . . . extreme unhappiness”.
Oxford English Dictionary, Volume 9; Oxford; 1989; p. 865
Furthermore, in the most famous of the passages concerned, Marx is clearly referring to the ‘misery’ of the ‘pauperised’ strata of the working class, not to that of the working class as a whole:
“Two famous passages in ‘Capital’, Volume 1, have been consistently misinterpreted. In both these passages Marx does speak about ‘increasing misery’ . . . and about ‘accumulation of misery’. But the context clearly indicates that what he was referring to is the . . . misery of the ‘surplus population’, of the ‘Lazarus-layer of the working class’, that is, of the unemployed or semi-employed poor. . . . The point to be made is simply that this chapter . . . is not concerned with movements of real wages at all. . . . This is clearly indicated in the very passage in question by Marx’s statement that as capital accumulates the situation of workers becomes worse irrespective of whether their wages are high or low”.
Ernest Mandel: Introduction to: Karl Marx: ‘Capital: A Critical Analysis of Political Economy’, Volume 1; Harmondsworth; 1976; p. 71
In other words, so far as the working class as a whole is concerned, we are dealing again here not with material impoverishment, but with spiritual impoverishment, with alienation.
In this respect, one must recall Engels’ criticism of the use of the word ‘misery’ in the 1891 Erfurt draft programme of the German Social Democratic Party, in the clause reading:
“The number and the misery of the proletariat increases continuously”.
Draft Programme of German Social-Democratic Party, in: Friedrich Engels: ‘A Critique of the Draft Social-Democratic Programme of 1891’, in: Karl Marx & Friedrich Engels: ‘Collected Works’, Volume 27; Moscow; 1990; p. 223
On which Engels commented:
“This is incorrect when put in such a categorical way. . . . However, what certainly does increase is the insecurity of existence. I should insert this”..
Friedrich Engels: ibid.; p. 223
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Republished MLRG.online on 8 July, 2025
Postscript July 9, 2025
This 2025 postscript, has a simple aim. We try to address whether Marx’s theory of rising inquity between the working class and the ruling class holds according to data from a current period – up to today.
Some simple facts about today’s wealth inequity.
1. The data source
To simplify this task, we will focus on only one country – the USA. Moreover we largely – although not exclusively – rely on only one source. But fortunately, that data source is a robust, and a readily accessible source (at least up till 9 July, 2025). These data are available from “Inequality.org”.
A quick glance at their proposed solutions for the glaring problems their own data shows is a rapidly escalating inequity – is adequate to convince that this is an organisation with only reformist aspirations (See: Dedrick Asante-Muhammad, Chuck Collins, Darrick Hamilton, and Josh Hoxie; “Ten Solutions to bridge the racial wealth divide”; April 15, 2019; at April 15, 2019). Their reformist orientation emerges when examines their listing of “Our People. They for example include academics, previous aides for Bernie Sanders – but also a founding member of “the Patriotic Millionaires”. (See “Our People” nd)
We state this at the start only to emphasise how widely these following facts are understood. The organisation whose data we are citing is far from being Marxists. However their data is widely applicable. Acknowledging a growing inequality in the USA is common in current sociology. This source is within the boundaries of the mainstream thought and experiences of the people of the USA.
2. Limitations of this short summary
We openly acknowledge the limitations of this short report. We have already made it clear that the following data and discussion is largely confined to one data source for the USA. However it can comfortably be stated that innumerable other sources testify to the growing inequity in the USA.
In addition we explicitly only give data for one country, the USA. However what holds true for the largest and wealthiest country in the world, is true elsewhere. Here we do not attempt to document this assertion.
3. What does the selected information we provide show?
i) Wealth of the super-rich stratum of the wealthy.
The wealth of the “billionaires” has dramatically increased. Even in the short time interval between 2020-2024 – the rise in wealth of the Top 12 US billionaires is staggering (see below). Note that the x-axis shows the increase in terms of billions of dollars. . .
Figure from Inequality.org; “Wealth Inequality in the US”; nd, accessed 09 July, 2025
The above figure of increase in billionaire wealth is very revealing and graphic. But are we talking of only a handful of ultra-rich people? After all the graph shows only 12 people.
In fact this is not a matter of individuals, but of a class difference. This figure below, shows this clearly.
By Inequality.org; “Income Inequality in the US”; nd, accessed 09 July, 2025 at 9 July 2025
In 2021, the bottom 20% of wage earners made $22,500 per year on average. The top 1% made on average $3,126,400. This is 139 times as much as the bottom 20%.
(ii) Moreover this class difference has been growing over the years from 1980-2020.
a) Below one sees a time line from 1980 to 2020 on the x-axis. The bottom 20% of income earners is basically flat in terms of increase in percent terms over those years (the blue flat line).
In contrast the very high line (in red-rust) sweeping upwards is the top 0.01% of Americans – the ultra-rich.
Closely followed by the rest of the top 1% of Americans (in yellow).
By Inequality.org; “Income Inequality in the US”; nd, accessed 09 July, 2025 at 09 July
b) Some data also looks at an even longer time line. Let us now look at the years 1965- approximately 2024.
Here however, the inequality is expressed as a so-called “GINI Index”, in percent terms.
Details of the GINI are given in the appendix at the bottom in more detail (See Appendix – below). However if a great degree of detail is not needed by the reader, the following may suffice.
It can be assumed that on the y-axis – a level of 0% would express a complete equality of income across the population; while a level of 100% would be a complete inequality of income (Literally all incomes to a small fraction of people). If this simple explanation suffices for now, it can. best be seen that this measure of inequality has steadily risen from 2965. The short dip in the graph just after 2020 reflects the COVID period.
GINI Index for the United States From FRED (Federal Reserve Economic Data Base) Federal Reserve bank at St Louis; Accessed 9 July 2025; FRED
c) Now if an even longer time scale is warranted, the data below shows an x-axis from 1920 to 2019.
While it comes from an academic paper, it was reprinted in the New York Times (David Leonhardt; “How Elba Makes a Living Wage; NYT July 7, 2023). While it uses a different statistic and set of comparisons – it makes essentially the same point as in the above two figures, and one other. The new point made in this graph, is the importance of union power in maintaining wage levels of the working class.
Only two lines are now shown – both expressing a y-axis of the share of the national income obtained. The dark-blue line is for the top 10% of income earners; and the yellow line is for the share of worker in a union. It can be for our purposes assumed these were from the working class, and were paid less.
There are two obvious things that can be seen.
First during the pre-Second World War during the war, the two lines come together. This was during the so-called “Great Depression”. During these years many top businessmen underwent bankruptcy. A certain number even committed suicide.
Secondly the income share going to those in a union steadily declined from the 1960s onwards. As union busting and worker oppression becmae more intense.
(iii) Is this slide in measures of income of the working class in relation to income of the bosses – perhaps due to workers not working hard – not being productive enough?
Well in fact it is not – since the productivity of USA workers has grown while their compensation has not – over the years from 1949-2017.
By Inequality.org; “Income Inequality in the US”; nd, accessed 09 July, 2025 at 09 July 2025
Appendix: The Gini Coefficient.
The Gini coefficient was not devised before Marx’s death. We believe he would have been intrigued with it.
For those who want more detail on the “Gini Coefficient”, we provide this. It is a measure that provides in a single figure, the degree of inequity in a society. It compares incomes of the lower stratums of society with those at the top. While the statistic is used to evaluate other phenomena, it is if particular interest for Marxists when used in this way, for displaying a relative inequity.
The statistic of the ‘Gini” coefficient was described by Corrado Gini (1884-1965) :
“an Italian statistician, demographer and sociologist who developed the Gini coefficient, a measure of the income inequality in a society. . . in 1912.”
Corrado Gini, Wikipedia
Most of what follows, is a derivation from Joe Hasell‘s work – for “Our World in Data” as referenced below. This is simply an attempt to explain for the non-statistical Marxist, a useful statistical tool.
The scale is structured from 0 to 1 (or sometimes as in the Fed diagram shown above – it is expressed in percentages from 0% to 100%):
“The Gini Index measures inequality on a scale from 0 to 1, where higher values indicate higher inequality. . . A value of 0 indicates perfect equality: everyone has the same income. A value of 1 indicates perfect inequality, where one person receives all the income, and everyone else receives nothing.”
Joe Hasell (2023) – “Measuring inequality: what is the Gini coefficient?” Published online at OurWorldinData.org. Retrieved from: ‘https://ourworldindata.org/what-is-the-gini-coefficient’ [Online Resource]
How this is calculated or derived is shown below,. This explanation is adapted from Hasell J’s original article cited above. The graph-figures are from the same source.
Figure 1 A (on the left hand side – shows a simple distribution of incomes.
The “share of the population” on the x-axis is split into fifths – so each 20% of the population is a bar.
The y-axis is the share of income that each fifth of the population gets.
Figure 1 B is on the right.
This has the same data, but it is shown in a differing way (it is termed the “Lorenz Curve”).
The y-axis is now the cumulative (or summed up) share of the income level.
The x-axis is the cumulative (or summed up) share of the population.
The straight line is what would be seen if there was no inequality of wages – or perfect equality
But the actual data is this:
The poorest 20% of the population earn 5% of the total income;
the next 20% earn 10% – so that the poorest 40% of the population earn 15% . . . and so on.
The amount by which the curve deviates from the straight line is an estimate of the degree to which there is an inequity of income. As Hasel puts it (Ibid), the mathematical derivation then becomes as follows:
“A larger area (A) between the Lorenz Curve and the Line of Equality means a higher level of inequality. The ratio of A/(A+B) is therefore a measure of inequality and is referred to as the Gini coefficient, Gini index, or simply the Gini.”
Editors MLRG.online on July 9, 2025
