(Originally posted as a response to a post in RmspacedashRfspaceslash)
Something I find interesting is what Marx got wrong ... more-or-less. Marx's theory of the inevitability of the collapse of capitalism rests on two concepts: surplus value and immiseration. Surplus value is the difference between the value of work and what the worker actually gets paid. You can argue with the details of the labour theory of value, but it's a no-brainer that you don't want pay workers the full value of their labour because if you did, there'd be no profit. As technology improves, the value goes up, but, Marx claimed, capitalists would do everything they could to keep wages at subsistence level, so surplus value increases. This process is immiseration. Marx argued that immiseration increases to the point where (a) workers get sufficiently pissed off to revolt and (b) even if they weren't, capitalism would still go into crisis because there aren't enough people with enough spending power to buy the goods that are produced.
This didn't happen for a number of reasons, three of which are:
- Basic goods became absurdly cheap compared with the past, so workers enjoyed better life conditions even without a rise in wages.
- Governments intervened with things like progressive taxation and minimum wages.
- Trade unions forced companies to increase wages.
(I'm ignoring the international dimension here just to keep things simple.)
These came together in the twentieth century to create a large, prosperous and politically powerful middle class, and a working class that could at least get by. Capitalism survived by inoculating itself with a little socialism. It didn't just work, it worked better than anyone could have imagined. In 1850, a typical British industrial worker made enough money to keep himself in bread and gin. In 1910, he could take his family to the seaside for a weekend. In 1970 he could take them to Spain for a week. Marx was proved conclusively wrong, the end of history happened, and in the 21st century we have achieved the dreamed-of workers' paradise ... not.
What now seems to be happening in America (and other post-industrial countries to a lesser degree) is that government intervention is regarded with horror, and the unions are toothless, so the only thing that is keeping capitalism from collapse is factor #1: technological change happening quickly enough to soften immiseration. This is a dangerous strategy, because even if electronic toys continue to get cheaper, the price of food rarely falls much. All the circuses in the world aren't enough if you can't provide the bread.