0:00:06 > 0:00:07Dover.
0:00:08 > 0:00:11The most dangerous man in Europe is about to arrive
0:00:11 > 0:00:12on Britain's shores.
0:00:15 > 0:00:17His preachings are so incendiary,
0:00:17 > 0:00:20he's been forced out of his native country.
0:00:26 > 0:00:30Only liberal Britain will tolerate his presence on her soil.
0:00:31 > 0:00:35He heads to London to live in exile.
0:00:35 > 0:00:38The year is 1849.
0:00:43 > 0:00:46But today, that man's writings are still dangerous.
0:00:46 > 0:00:50They're so radical, so revolutionary,
0:00:50 > 0:00:52they continue to divide the world.
0:00:55 > 0:00:57It's been more than 150 years
0:00:57 > 0:00:59since he started writing about the world.
0:00:59 > 0:01:00But you know what?
0:01:00 > 0:01:04If you're looking for an explanation of the global economic crisis,
0:01:04 > 0:01:07he's a surprisingly good place to start.
0:01:11 > 0:01:15With everything going so wrong, you have to wonder,
0:01:15 > 0:01:17is Karl Marx turning out to be right?
0:01:18 > 0:01:22Most people know Marx as the father of communism.
0:01:22 > 0:01:26You might be surprised to hear that most of what he wrote
0:01:26 > 0:01:28was about capitalism.
0:01:28 > 0:01:32And today his ideas about that are being taken seriously
0:01:32 > 0:01:34right at the heart of global business.
0:01:37 > 0:01:39His analysis was pretty on the button,
0:01:39 > 0:01:40and explains a lot, I think,
0:01:40 > 0:01:42about some of the things that we see going on
0:01:42 > 0:01:44around in our economy today.
0:01:46 > 0:01:50For Marx, the best argument against capitalism was that it was inherently unfair.
0:01:50 > 0:01:55His ideas on inequality have more resonance than ever today.
0:01:55 > 0:01:57What Marx did do
0:01:57 > 0:02:01is to install this sense of urgency.
0:02:01 > 0:02:05Things cannot go on for ever the way they are.
0:02:07 > 0:02:12In this series, I'll tell you about the lives and revolutionary thinking
0:02:12 > 0:02:14of three extraordinary men -
0:02:14 > 0:02:16John Maynard Keynes,
0:02:16 > 0:02:18Friedrich Hayek,
0:02:18 > 0:02:20and Karl Marx.
0:02:20 > 0:02:24Their worlds were changing as never before.
0:02:24 > 0:02:27They saw that the fate of nations would hang on the power of money
0:02:27 > 0:02:29and they had radically different ideas
0:02:29 > 0:02:32about how to control it.
0:02:33 > 0:02:36Today, the stakes could hardly be higher.
0:02:38 > 0:02:41All three of these men were giants whose ideas live on.
0:02:41 > 0:02:46But they speak to us right now because they, more than anyone,
0:02:46 > 0:02:49recognised the double-edged power of money -
0:02:49 > 0:02:52how markets could transform all of our lives,
0:02:52 > 0:02:54but also plunge us into chaos.
0:02:54 > 0:02:58Keynes and Hayek argued about whether government
0:02:58 > 0:03:03should try to tame this force of human nature, capitalism.
0:03:03 > 0:03:07Karl Marx had the most radical advice of all - get rid of it.
0:03:28 > 0:03:32In 1989, Karl Marx's reputation lay in ruins.
0:03:44 > 0:03:46What a mess!
0:03:50 > 0:03:52For most of us, the fall of the Berlin Wall
0:03:52 > 0:03:54meant the end of Marx.
0:03:56 > 0:03:58Millions rejected the horrors
0:03:58 > 0:04:01of a violent and repressive police state.
0:04:06 > 0:04:10And because the Communist countries claimed Marx as their inspiration,
0:04:10 > 0:04:13his ideas were cast aside, as well.
0:04:17 > 0:04:19When this wall came down, I was just
0:04:19 > 0:04:21studying economics at university.
0:04:21 > 0:04:23Back then we knew,
0:04:23 > 0:04:24or we thought we knew,
0:04:24 > 0:04:27two things about Marxism, Communism.
0:04:27 > 0:04:31One was it hadn't delivered freedom for the workers. Quite the opposite.
0:04:31 > 0:04:34And the other, just as bad if you're an economist,
0:04:34 > 0:04:36was it hadn't delivered prosperity.
0:04:36 > 0:04:41The Communist approach to the economy just hadn't worked.
0:04:43 > 0:04:46While the free market West took great strides,
0:04:46 > 0:04:51the Communist planned economies had been left behind.
0:04:51 > 0:04:55Marx's reputation as an economist was in shreds.
0:05:00 > 0:05:03In the last few years, something strange has happened.
0:05:03 > 0:05:05It's like the global financial crisis
0:05:05 > 0:05:07has brought Karl Marx back from the dead.
0:05:07 > 0:05:10And we still don't care what he said about Communism,
0:05:10 > 0:05:14but people are going back to his damming assessment of capitalism,
0:05:14 > 0:05:18all its deep seated flaws, with a nagging doubt.
0:05:18 > 0:05:21Is it all now coming true?
0:05:23 > 0:05:26When times were good, Marx was nowhere.
0:05:26 > 0:05:29But now the western economies are in crisis
0:05:29 > 0:05:31he's attracting new interest
0:05:31 > 0:05:34right at the heart of the economic establishment.
0:05:36 > 0:05:38From a former IMF chief economist...
0:05:38 > 0:05:42Marx is right on a number of dimensions.
0:05:42 > 0:05:46He certainly is right
0:05:46 > 0:05:50that income inequality can be a source of tremendous tension.
0:05:50 > 0:05:54..to the man who saw the 2008 crisis coming.
0:05:54 > 0:05:58He had understood that there are situations
0:05:58 > 0:06:00in which capitalism and globalisation
0:06:00 > 0:06:04can lead to economic crisis.
0:06:05 > 0:06:09And an economist at one of the world's leading banks.
0:06:09 > 0:06:12It's quite hard to convince people who live in Chelsea or Chelmsford
0:06:12 > 0:06:14that this is of great relevance to them, but actually,
0:06:14 > 0:06:16it's worth a bash.
0:06:18 > 0:06:24Anyone in Chelsea or Chelmsford who thinks Marx is only about communism, is in for a shock.
0:06:24 > 0:06:29It's what he said about capitalism that rings so true today.
0:06:33 > 0:06:38Marx's key insight was that capitalism was inherently unstable.
0:06:38 > 0:06:40He said we'd lurch from crisis to crisis
0:06:40 > 0:06:44and society would become increasingly unequal.
0:06:46 > 0:06:50Marx divided the world into bosses and workers.
0:06:50 > 0:06:54For him, they would always be at odds
0:06:54 > 0:06:57and that battle was a recipe for crises.
0:07:00 > 0:07:04To make profit, bosses squeeze what they pay workers.
0:07:04 > 0:07:08The crisis comes when workers then don't have enough money
0:07:08 > 0:07:11to buy what bosses are trying to sell them.
0:07:11 > 0:07:15And for decades after World War II, that looked completely wrong.
0:07:15 > 0:07:17We had years of stable growth,
0:07:17 > 0:07:21and the workers were taking a larger and larger share of the pie.
0:07:21 > 0:07:23But not anymore.
0:07:28 > 0:07:31Marx would explain this crisis in terms of the fact
0:07:31 > 0:07:34that ordinary people haven't got enough money to spend.
0:07:34 > 0:07:36Why haven't they got enough money to spend?
0:07:36 > 0:07:39Because there's been a big redistribution,
0:07:39 > 0:07:41over the last few decades,
0:07:41 > 0:07:45away from ordinary people towards capital, towards wealth.
0:07:49 > 0:07:52And for Marx, there's no turning back.
0:07:52 > 0:07:56He thought there were laws of motion running through human history.
0:07:56 > 0:08:00Capitalism would produce bigger and bigger crises
0:08:00 > 0:08:02and then it would collapse.
0:08:05 > 0:08:09And he believed that the force driving us to this final collapse
0:08:09 > 0:08:12was the same one that built our world in the first place -
0:08:12 > 0:08:14the power of money.
0:08:17 > 0:08:19Marx had a very simple formulation about crises,
0:08:19 > 0:08:26which is that they are manifestations of the fundamental flaws,
0:08:26 > 0:08:29or contradictions, as he called them, of capitalism.
0:08:29 > 0:08:33How would Marx have suggested solving the crisis is,
0:08:33 > 0:08:36of course, by abolishing capitalism.
0:08:36 > 0:08:41Is capitalism living on borrowed time?
0:08:45 > 0:08:51Sometimes it doesn't feel that farfetched.
0:08:51 > 0:08:55Here's why I've been thinking more about Marx -
0:08:55 > 0:09:00it's cos the last few years hasn't felt like an ordinary recession.
0:09:00 > 0:09:03It hasn't felt like a crisis for one economy
0:09:03 > 0:09:05or for a group of economies in the West.
0:09:05 > 0:09:09At times it really has felt like a crisis for the system,
0:09:09 > 0:09:11for capitalism as we know it.
0:09:11 > 0:09:14You want a bigger explanation.
0:09:14 > 0:09:16And no-one's ever had a bigger explanation
0:09:16 > 0:09:19for everything that's happened than Karl Marx.
0:09:28 > 0:09:30Capitalism's most implacable critic
0:09:30 > 0:09:35was born in the picture-postcard town of Trier,
0:09:35 > 0:09:36in what is now southwest Germany.
0:09:41 > 0:09:46Today, his birthplace makes its own contribution to the local economy -
0:09:46 > 0:09:49it's a big draw for tourists.
0:09:51 > 0:09:55But do you still have a lot of people coming here, tourists,
0:09:55 > 0:09:57from around the world?
0:09:57 > 0:09:59Yes, we have more than 40,000 tourists a year
0:09:59 > 0:10:04and 25% came from China.
0:10:04 > 0:10:07- So, a quarter of them come from China...- Yes, yeah.
0:10:07 > 0:10:09- ..to see Marx' birthplace.- Yeah.
0:10:09 > 0:10:11And what do they buy, what do they like?
0:10:11 > 0:10:13They like the red chocolate.
0:10:13 > 0:10:14The Karl Marx chocolate.
0:10:14 > 0:10:16Maybe I should get some of that, as well, actually.
0:10:16 > 0:10:17And the wine.
0:10:17 > 0:10:23Well, Marx's father, Heinrich Marx, he had a vineyard nearby Trier.
0:10:23 > 0:10:27And you don't think that Karl Marx would mind you selling all this stuff?
0:10:27 > 0:10:29A bit capitalist, having this shop.
0:10:29 > 0:10:35Perhaps he'd enjoy it because he had a good humour too.
0:10:40 > 0:10:43The man with the big theory about our world
0:10:43 > 0:10:45had big dreams right from the start.
0:10:46 > 0:10:47When he was 17,
0:10:47 > 0:10:52Marx had to write an essay about picking the right career.
0:10:52 > 0:10:56He said the best position in life was to serve all of mankind,
0:10:56 > 0:11:00so your deed would live on perpetually at work
0:11:00 > 0:11:04and over your ashes would be shed the hot tears of noble people.
0:11:04 > 0:11:08I wonder, would that young man, that rather grand young man,
0:11:08 > 0:11:12be surprised to hear that his first home had been turned into a museum?
0:11:12 > 0:11:13Probably not.
0:11:18 > 0:11:21But for all his ambitions, Marx was hardly a model student.
0:11:21 > 0:11:23When he was at university in Berlin
0:11:23 > 0:11:27he earned a reputation as a radical thinker.
0:11:29 > 0:11:34Marx comes across as a young man, as this, sort of,
0:11:34 > 0:11:38energetic, fiery, hairy figure.
0:11:38 > 0:11:41He was known as the Wild Boar of the Moor,
0:11:41 > 0:11:44which, sort of, points to his, sort of, Levantine complex.
0:11:44 > 0:11:47He was full of ideas. He was full of debate.
0:11:47 > 0:11:51He liked big drinking sessions and then deep philosophical debate
0:11:51 > 0:11:56about the nature of Christ and German Romanticism and politics.
0:12:00 > 0:12:02By the time he was 24,
0:12:02 > 0:12:05Dr Marx was a bit of a renaissance man.
0:12:05 > 0:12:09He was an expert in law, philosophy, you name it.
0:12:09 > 0:12:14In fact, the only thing he didn't know much about was economics.
0:12:18 > 0:12:22That all changed in 1842.
0:12:22 > 0:12:26Marx, by now working as a journalist,
0:12:26 > 0:12:28heard about a controversy in this wood
0:12:28 > 0:12:30that would help shape his understanding
0:12:30 > 0:12:32of how the world works.
0:12:37 > 0:12:42Peasants taking sticks from the forest floor to use as firewood
0:12:42 > 0:12:43were being prosecuted for theft.
0:12:43 > 0:12:45Wood had been gathered here for centuries
0:12:45 > 0:12:48but now the landowners had declared it belonged to them.
0:12:51 > 0:12:56What had been freely shared was now private property.
0:12:57 > 0:13:00You could say that thinking about this question
0:13:00 > 0:13:02turned Marx into an economist,
0:13:02 > 0:13:04but that wouldn't really capture it.
0:13:04 > 0:13:05He came to think that economics,
0:13:05 > 0:13:08the nature of economic relationships between people,
0:13:08 > 0:13:11were at the heart of absolutely everything.
0:13:13 > 0:13:17The foundations of Marx's thinking was materialism,
0:13:17 > 0:13:21that when you cut away religion, ideology, politics,
0:13:21 > 0:13:24at its root were the material relations
0:13:24 > 0:13:26between man - the need for food,
0:13:26 > 0:13:29the need to have a roof over your head.
0:13:29 > 0:13:33This is what ultimately drives so much of human interaction.
0:13:33 > 0:13:38What was unique in Marx, he didn't see economy
0:13:38 > 0:13:41just as a special sphere.
0:13:41 > 0:13:45He saw economy as the structuring principle
0:13:45 > 0:13:48of the entire social totality.
0:13:48 > 0:13:52For Marx, it all begins with private property,
0:13:52 > 0:13:55which divides the world starkly -
0:13:55 > 0:13:56there are those that have it,
0:13:56 > 0:13:58and those that don't.
0:14:00 > 0:14:02Take this wood.
0:14:02 > 0:14:05Before it became private property, I could do what I liked with it.
0:14:05 > 0:14:08I could heat my house with it, I could make a chair
0:14:08 > 0:14:10and exchange it for food.
0:14:10 > 0:14:14But if it belongs to someone else, the whole relationship changes.
0:14:14 > 0:14:17Now Marx would say I've become a member of the proletariat,
0:14:17 > 0:14:20now I have to work for the owner of the wood,
0:14:20 > 0:14:22the capitalist, for a wage.
0:14:22 > 0:14:25Then he can sell what I've made
0:14:25 > 0:14:26for more than he paid me.
0:14:26 > 0:14:28Look what's happened,
0:14:28 > 0:14:32something that was part of my life is now a financial transaction.
0:14:32 > 0:14:34And the capitalists made profit.
0:14:34 > 0:14:37He can use that to buy more wood, build factories,
0:14:37 > 0:14:38make more profit.
0:14:38 > 0:14:42And so it goes on. Profit is now the heart of everything.
0:14:48 > 0:14:51So, there you have it - the Marxian view of capitalism,
0:14:51 > 0:14:53or the gist of it, anyway.
0:14:53 > 0:14:55If you want more, you'll have to wade through
0:14:55 > 0:14:57hundreds of pages of Marx, yourself.
0:14:57 > 0:15:02The key point for us is that that driving force of capitalism,
0:15:02 > 0:15:04the need to earn more and more profit,
0:15:04 > 0:15:08well, Marx thought that was also a recipe for constant crises.
0:15:12 > 0:15:14So, Marx would say
0:15:14 > 0:15:17you could trace the roots of the crisis we're in today
0:15:17 > 0:15:20right to the very heart of capitalism,
0:15:20 > 0:15:22to its need to generate profit.
0:15:36 > 0:15:40What Marx was seeing in Trier was a world in flux.
0:15:40 > 0:15:42Feudalism was on the way out -
0:15:42 > 0:15:46an entirely new way of doing things had arrived.
0:15:46 > 0:15:49Now, we know what capitalism's really made of,
0:15:49 > 0:15:51and the power of money today
0:15:51 > 0:15:55means a lot more than just throwing a few peasants in jail.
0:15:55 > 0:15:57A bunch of guys on a trading floor
0:15:57 > 0:16:00can turn the entire economy upside down.
0:16:00 > 0:16:05Around the world, all of our lives depend on markets,
0:16:05 > 0:16:07on capitalism being able to deliver.
0:16:07 > 0:16:12If Marx is right, if it's fundamentally flawed,
0:16:12 > 0:16:15well, that's a really big problem.
0:16:20 > 0:16:23We might see a complex, modern economy,
0:16:23 > 0:16:25which all of us have a stake in.
0:16:25 > 0:16:29But Marxists would say the same old rules still apply.
0:16:29 > 0:16:33For them, who owns what still means everything.
0:16:35 > 0:16:37They see workers still slaving away
0:16:37 > 0:16:41and capitalists, or bourgeoisie,
0:16:41 > 0:16:43still exploiting them,
0:16:43 > 0:16:46always striving to make more profit.
0:16:51 > 0:16:55In Marx's world, any capitalist that doesn't seek maximum profit
0:16:55 > 0:16:57is soon replaced by one who does.
0:17:00 > 0:17:04So, the system follows a completely predictable course,
0:17:04 > 0:17:06he would say, to its own destruction.
0:17:06 > 0:17:10It's not an idea that many people accept.
0:17:10 > 0:17:13He was completely wrong,
0:17:13 > 0:17:16including the idea that capitalism was merely a phase,
0:17:16 > 0:17:21and contained within it the seeds of its own destruction.
0:17:21 > 0:17:22That's not the case.
0:17:22 > 0:17:26Well, everything is bound to collapse if you wait long enough.
0:17:26 > 0:17:28I mean, the earth's going to, you know,
0:17:28 > 0:17:30sucked into the sun, some day.
0:17:32 > 0:17:35You'd be forgiven for thinking the total collapse of capitalism
0:17:35 > 0:17:37sounds a little implausible.
0:17:38 > 0:17:42How could seeking profit be so disastrous,
0:17:42 > 0:17:44when it's done such amazing things?
0:17:48 > 0:17:52Just look at how we eat under capitalism.
0:17:52 > 0:17:56We get fresh fruit flown in from all over the world.
0:17:56 > 0:18:00We can choose from 700 types of breakfast cereal.
0:18:00 > 0:18:03We have enough of it and it's all safe to eat.
0:18:06 > 0:18:08There's incredible plenty
0:18:08 > 0:18:12and the technology it depends on didn't come from the state.
0:18:12 > 0:18:15It's what happens when you let capitalists compete for profit.
0:18:17 > 0:18:19They didn't do it for our benefit.
0:18:19 > 0:18:21They did it because it made them rich.
0:18:23 > 0:18:25So, at first glance, Marx's idea
0:18:25 > 0:18:28that capitalism's search for profit would be its downfall,
0:18:28 > 0:18:30sounds absurd.
0:18:30 > 0:18:34Profit may often sound venal, it may often sound wrong,
0:18:34 > 0:18:36but it is what pushes progress ahead.
0:18:36 > 0:18:39Profit is actually what drives the world forward
0:18:39 > 0:18:41and that's what Marx could never quite handle.
0:18:41 > 0:18:43The profit motive is essential.
0:18:43 > 0:18:45I mean, after all, what is the profit motive?
0:18:45 > 0:18:50It's just a way of achieving a better society
0:18:50 > 0:18:54by people wanting to better their own individual lot.
0:18:57 > 0:19:00When you think of how fundamentally the profit motive
0:19:00 > 0:19:02has shaped and enriched our world,
0:19:02 > 0:19:05it's no wonder Marx fell out of favour.
0:19:07 > 0:19:10But you shouldn't dismiss Dr Marx quite yet.
0:19:10 > 0:19:14I mean, it's true he talked a lot about class exploitation, misery,
0:19:14 > 0:19:18chaos, but he didn't think capitalism was all bad.
0:19:18 > 0:19:19Far from it.
0:19:23 > 0:19:26This cocktail bar in London's Soho hides a revolutionary past.
0:19:29 > 0:19:31It used to be the Red Lion pub,
0:19:31 > 0:19:35site of a clandestine meeting of communists in 1847
0:19:35 > 0:19:38that would echo down the ages.
0:19:43 > 0:19:45It was at that meeting that they commissioned Karl Marx,
0:19:45 > 0:19:48and his side kick Friedrich Engels, to write
0:19:48 > 0:19:51one of the most incendiary pamphlets of all time,
0:19:51 > 0:19:53the Communist Manifesto.
0:19:59 > 0:20:01Some of this you probably know.
0:20:01 > 0:20:05The famous opening line - "A spectre is haunting Europe."
0:20:05 > 0:20:11And of course the end, about the workers having nothing to lose but their chains.
0:20:11 > 0:20:13"They have a world to win.
0:20:13 > 0:20:16"Working men of all countries UNITE!" in capital letters.
0:20:16 > 0:20:20But what you probably don't know, what I find most interesting,
0:20:20 > 0:20:22is what's in the middle.
0:20:22 > 0:20:24One of the most perceptive,
0:20:24 > 0:20:28and admiring, bits of writing about capitalism I've ever read.
0:20:28 > 0:20:33In fact, it reads a lot truer now than when it was written.
0:20:35 > 0:20:38I think what's surprising about a lot of Marx's writing
0:20:38 > 0:20:40is that you find, in amongst the communism,
0:20:40 > 0:20:46a lot of good analysis of capitalism and actually you also find within it
0:20:46 > 0:20:48quite a lot of praise for capitalism.
0:20:48 > 0:20:53Marx's attitude towards capitalism is basically ambiguous.
0:20:53 > 0:20:56He's, at the same time, he was honest, here, Marx,
0:20:56 > 0:20:59ultra-fascinated. He was fully aware
0:20:59 > 0:21:02that this is the most productive, dynamic system
0:21:02 > 0:21:04in the history of humanity, and so on.
0:21:07 > 0:21:10The truth is, Marx did understand that the drive for profit
0:21:10 > 0:21:12would achieve incredible things.
0:21:14 > 0:21:18"It has been the first to show what man's activity can bring about.
0:21:18 > 0:21:21"It's accomplished wonders far surpassing
0:21:21 > 0:21:22"Egyptian pyramids, Roman aqueducts
0:21:22 > 0:21:24"and Gothic cathedrals.
0:21:24 > 0:21:27"It has conducted expeditions that put in the shade
0:21:27 > 0:21:32"all former exoduses of nations and crusades."
0:21:32 > 0:21:35He did really get the kind of global aspect.
0:21:35 > 0:21:36He got the idea
0:21:36 > 0:21:38that people were suddenly being able to get things
0:21:38 > 0:21:40from all the way round the world
0:21:40 > 0:21:42in a completely new way and the impact of that.
0:21:42 > 0:21:47The need of a constantly expanding market for its products
0:21:47 > 0:21:51chases the bourgeoisie over the whole surface of the globe.
0:21:51 > 0:21:54It must nestle everywhere, settle everywhere,
0:21:54 > 0:21:56establish connections everywhere.
0:21:58 > 0:22:01It creates a world after its own image.
0:22:03 > 0:22:07But you know, there's got to be a downside for the bourgeoisie.
0:22:07 > 0:22:11Modern bourgeois society is like the sorcerer
0:22:11 > 0:22:15who is no longer able to control the powers of the netherworld
0:22:15 > 0:22:18whom he has called up by his spells.
0:22:18 > 0:22:22What the bourgeoisie therefore produces above all
0:22:22 > 0:22:24is its own gravediggers.
0:22:24 > 0:22:27Its fall, and the victory of the proletariat,
0:22:27 > 0:22:28are equally inevitable.
0:22:35 > 0:22:39It's stirring stuff, but it does raise a bit of a puzzle.
0:22:39 > 0:22:43How can Marx think the capitalists, the bourgeoisie,
0:22:43 > 0:22:46are so brilliant and yet so doomed?
0:22:46 > 0:22:49Well, for him, it all came down to the way they treat their staff.
0:22:57 > 0:23:01To understand Marx's analysis of crises
0:23:01 > 0:23:05we have to first understand the capitalism that he knew.
0:23:05 > 0:23:0819th century capitalists might have built wonders
0:23:08 > 0:23:10surpassing Egyptian pyramids,
0:23:10 > 0:23:13but they also forced their workers
0:23:13 > 0:23:17to endure terrible conditions and pay.
0:23:25 > 0:23:26The Industrial Revolution
0:23:26 > 0:23:30and all the incredible achievements that followed
0:23:30 > 0:23:32were made possible by coal miners.
0:23:34 > 0:23:38This is a replica of what it were like in Victorian era underground.
0:23:38 > 0:23:40The man you can see at far side he had a pick and shovel,
0:23:40 > 0:23:43he would work the coal, fill that corf.
0:23:43 > 0:23:48And his wife had to drag the coal behind her to a loading point
0:23:48 > 0:23:51which, well, could be up to 30 or 40 metres away.
0:23:51 > 0:23:54I didn't realise that they were husband and wives that worked here.
0:23:54 > 0:23:55Oh, yeah, it were all families.
0:23:55 > 0:23:58They needed a little boy or a little girl
0:23:58 > 0:24:00to work this door as well.
0:24:00 > 0:24:03But if you took the job you had to provide a small child, so...
0:24:03 > 0:24:06Yeah. The only light they had between them were a candle
0:24:06 > 0:24:09which their dad kept so he could see where he was in the coal face,
0:24:09 > 0:24:10so the little boy or girl
0:24:10 > 0:24:15was sat on their own, in the dark, for twelve hours a day.
0:24:16 > 0:24:18It is difficult to overstate
0:24:18 > 0:24:22the horror of industrialisation in Europe.
0:24:22 > 0:24:26In 1829 Liverpool, for example,
0:24:26 > 0:24:29the life expectancy at birth was about 28 years.
0:24:29 > 0:24:32And that was the lowest age since the Black Death.
0:24:32 > 0:24:36So the impact of the Industrial Revolution on life chances
0:24:36 > 0:24:39was absolutely terrifying.
0:24:42 > 0:24:45By 1849, his revolutionary writings had got Marx
0:24:45 > 0:24:47banned from everywhere but Britain.
0:24:50 > 0:24:54Here he could observe the power money had to ruin lives,
0:24:54 > 0:24:57at a suitably safe distance, of course.
0:24:59 > 0:25:00I think in the last few minutes
0:25:00 > 0:25:03I've come closer to what it was actually like,
0:25:03 > 0:25:07the drudgery of Victorian times, than Karl Marx ever did.
0:25:07 > 0:25:10He never went to a mine and as far as we can tell
0:25:10 > 0:25:13he only went to a factory once towards the end of his life.
0:25:13 > 0:25:16But it didn't stop him writing vividly
0:25:16 > 0:25:20about the horrors of Britain's dark, satanic mills.
0:25:23 > 0:25:26The horrors of Victorian working conditions
0:25:26 > 0:25:28clearly shaped Marx's economics.
0:25:30 > 0:25:36In his time, minimum pay for proles meant maximum profits for bosses,
0:25:36 > 0:25:39and any bosses who did choose to pay more usually went bust.
0:25:41 > 0:25:44He thought there'd always be downward pressure on wages
0:25:44 > 0:25:46and that wages would come down to the minimum
0:25:46 > 0:25:48that enabled bare survival.
0:25:48 > 0:25:51They couldn't go lower than that, otherwise the workers would die.
0:25:51 > 0:25:53But he thought they'd be depressed down to that minimum.
0:25:53 > 0:25:55The reality, of course, has been the opposite.
0:25:55 > 0:25:59It has been a continual advancement in wages, year in year out,
0:25:59 > 0:26:00decade in decade in, decade out.
0:26:04 > 0:26:06Marx was wrong.
0:26:06 > 0:26:08He thought it would all get so bad
0:26:08 > 0:26:10the workers would overthrow the system.
0:26:12 > 0:26:14Yet even as he was writing,
0:26:14 > 0:26:18reformers were beginning to get rid of the worst employment practices.
0:26:18 > 0:26:22Capitalism got kinder, not nastier.
0:26:22 > 0:26:25But the idea that the competing interests of bosses
0:26:25 > 0:26:29and workers would cause crises, well, that does seem relevant today.
0:26:37 > 0:26:39That's a very sophisticated argument,
0:26:39 > 0:26:42so, I'm going to need children's toys to explain it.
0:26:42 > 0:26:44But let me say, right at the start,
0:26:44 > 0:26:49none of these toys endorse any kind of violent revolution.
0:26:49 > 0:26:53Now here's a mine owner - capitalist.
0:26:53 > 0:26:57Miners, with or without hat.
0:26:57 > 0:27:02Now, imagine that there aren't very many miners around.
0:27:02 > 0:27:07Then the mine owner has to compete with the other capitalists
0:27:07 > 0:27:13for workers, probably ends up having to pay them more than he'd like to.
0:27:13 > 0:27:16Trouble is, those higher costs
0:27:16 > 0:27:18cut into profits.
0:27:18 > 0:27:20Now if that's happening across the economy,
0:27:20 > 0:27:23you've got a declining rate of profit
0:27:23 > 0:27:26and a lot of capitalists going out of business.
0:27:26 > 0:27:27You get a crisis.
0:27:27 > 0:27:30You get countless workers losing their jobs,
0:27:30 > 0:27:35having a terrible time, until finally wages fall far enough,
0:27:35 > 0:27:38the capitalists can go back to exploiting them again.
0:27:39 > 0:27:43So, high labour costs are bad for business.
0:27:43 > 0:27:47But what makes the collapse of capitalism inevitable for Marx
0:27:47 > 0:27:50is that the bosses are in trouble even when they have things
0:27:50 > 0:27:52their own way.
0:27:52 > 0:27:55Now, imagine the opposite situation.
0:27:55 > 0:28:02You've got loads of workers, all of this lot competing for a single job.
0:28:02 > 0:28:05Then, well, no wonder he's smiling,
0:28:05 > 0:28:10the capitalist only has to pay the workers
0:28:10 > 0:28:12the bare minimum.
0:28:13 > 0:28:16This bucket is what Marx would have called
0:28:16 > 0:28:18the industrial reserve army of the unemployed.
0:28:18 > 0:28:22As long as that's full, this lot can keep paying
0:28:22 > 0:28:25very low wages and keep making profits.
0:28:25 > 0:28:29Except, in the end, there's a problem.
0:28:29 > 0:28:32Cos badly paid workers don't spend very much,
0:28:32 > 0:28:36and not very much spending in an economy is not good for business.
0:28:36 > 0:28:39You get another crisis, more capitalists going bust,
0:28:39 > 0:28:43and this crisis is going to be harder to fix.
0:28:43 > 0:28:46So, you can see why Marx thought the capitalists were in trouble
0:28:46 > 0:28:47no matter what they do.
0:28:47 > 0:28:50They never want to pay the workers more money.
0:28:50 > 0:28:53They always need to make more profit. But in seeking out profit,
0:28:53 > 0:28:56they end up eroding the basis on which it's made.
0:28:56 > 0:28:58They've forgotten, if you like,
0:28:58 > 0:29:00where their money ultimately comes from.
0:29:00 > 0:29:03The punch line, as ever with Marx,
0:29:03 > 0:29:07is that capitalism is doomed.
0:29:09 > 0:29:12So, that's how problems with wages can cause crises,
0:29:12 > 0:29:13at least in theory.
0:29:13 > 0:29:16But how is any of that relevant to right now?
0:29:19 > 0:29:22A Marxist would say that little parable with the toy men
0:29:22 > 0:29:25tells you everything you need to know about the financial
0:29:25 > 0:29:27crisis we've just seen.
0:29:27 > 0:29:28In fact, they'd say
0:29:28 > 0:29:31you could explain the last 40 years of world history
0:29:31 > 0:29:34entirely in terms of capitalism's desperate need
0:29:34 > 0:29:38to have the advantages of a ready supply of cheap labour,
0:29:38 > 0:29:39but none of the costs.
0:29:39 > 0:29:42And you don't have to take my word for it.
0:29:48 > 0:29:51Let's take a look at the last 40 years of history
0:29:51 > 0:29:53through the prism of Marxist theories.
0:29:53 > 0:29:57To show how they might explain the mess we're in.
0:29:57 > 0:30:00An imaginary Marxist Broadcasting Corporation
0:30:00 > 0:30:04would see it all as a good-old, 1970s-style class struggle.
0:30:04 > 0:30:10As usual, the world's divided between workers and capitalists,
0:30:10 > 0:30:14always fighting to get a bigger slice of the pie.
0:30:14 > 0:30:17And the crisis happened, Marxists would argue,
0:30:17 > 0:30:21because the capitalists have been coming out on top a bit too often.
0:30:22 > 0:30:24The fight is over wages.
0:30:24 > 0:30:28Capitalists want to pay less - the workers want to get more.
0:30:28 > 0:30:30All those in favour, please show.
0:30:30 > 0:30:32THEY CHEER
0:30:33 > 0:30:37In the '70s, powerful trade unions battled to keep wages high.
0:30:41 > 0:30:45Then we come to the '80s. Fight back time for capitalists.
0:30:49 > 0:30:52Marx would have seen Margaret Thatcher and Ronald Regan
0:30:52 > 0:30:56as acting purely in the interests of the capitalist bosses.
0:30:56 > 0:31:00It was their governments that helped business
0:31:00 > 0:31:03by getting rid of the obstacles that made it hard to cut wages.
0:31:04 > 0:31:06The violence and intimidation
0:31:06 > 0:31:08we have seen should never have happened.
0:31:08 > 0:31:12It is the work of extremists. It is the enemy within.
0:31:12 > 0:31:15If they do not report for work in 48 hours
0:31:15 > 0:31:19they have forfeited their jobs and will be terminated.
0:31:20 > 0:31:22End of statement.
0:31:24 > 0:31:27So, for the Marxist Broadcasting Corporation,
0:31:27 > 0:31:30the capitalist won in the 1980s, and they kept on winning.
0:31:34 > 0:31:37The guaranteed high wages and job security
0:31:37 > 0:31:40that workers had enjoyed until the seventies had gone.
0:31:42 > 0:31:46And downward pressure on wages started to lay the seeds
0:31:46 > 0:31:47of the crisis we see today.
0:31:57 > 0:31:59Well, it's great telly. Is it actually true?
0:31:59 > 0:32:03Well, we know the Marxist view of history is right about one thing,
0:32:03 > 0:32:04at least in Britain and America.
0:32:04 > 0:32:08Earnings at the very top have soared in the last few years
0:32:08 > 0:32:11and everyone else has been squeezed.
0:32:11 > 0:32:14In Britain, real earnings have been flat or falling
0:32:14 > 0:32:17for the best part of ten years, since before the crisis.
0:32:17 > 0:32:22And in America, that's been happening since the '70s.
0:32:24 > 0:32:29In the United States, a full-time male worker,
0:32:29 > 0:32:33median income has stagnated for a third of a century.
0:32:33 > 0:32:35No increase.
0:32:35 > 0:32:41Household income today is the same as it was fifteen years ago.
0:32:41 > 0:32:43All the increase to the income has gone to the top.
0:32:43 > 0:32:47The share of income in the United States
0:32:47 > 0:32:52that was going to the top 1% of the households
0:32:52 > 0:32:5720 years ago, was around 12%.
0:32:57 > 0:33:03Today that share is closer to 23%.
0:33:08 > 0:33:10Things haven't gone that far in the UK
0:33:10 > 0:33:13but inequality is certainly creeping up the agenda.
0:33:15 > 0:33:19So, have the greedy capitalists been picking the pockets of the workers?
0:33:23 > 0:33:26So, why do I think all that money's been flowing to the top?
0:33:26 > 0:33:29Well, I don't think it's a big conspiracy
0:33:29 > 0:33:31but there have been social and political changes
0:33:31 > 0:33:33that have made a difference.
0:33:33 > 0:33:35We used to have really big unions,
0:33:35 > 0:33:39we used to have very high tax rates on rich people.
0:33:39 > 0:33:42And we had social norms.
0:33:42 > 0:33:44It just wasn't done for the people running a bank
0:33:44 > 0:33:47to take a huge chunk of the profits for themselves.
0:33:47 > 0:33:50Those things helped keep a lid on inequality.
0:33:50 > 0:33:52We don't have them anymore.
0:33:52 > 0:33:54But really crucial to all of this
0:33:54 > 0:33:57has been the changing structure of our economy.
0:34:03 > 0:34:05A lot of it's down to new technology.
0:34:05 > 0:34:08# We are the robots
0:34:08 > 0:34:10# We are the robots
0:34:10 > 0:34:14Work previously done by hand is now done by machines.
0:34:17 > 0:34:21Fewer workers needed, there are more competing for every job,
0:34:21 > 0:34:22meaning bosses can pay them less.
0:34:25 > 0:34:29But perhaps the most significant factor is globalisation.
0:34:30 > 0:34:33With falling barriers to trade around the world,
0:34:33 > 0:34:38global business has gained access to a giant new pool of cheaper labour.
0:34:39 > 0:34:42You have brought into the market now
0:34:42 > 0:34:45millions and millions of new workers.
0:34:45 > 0:34:50In China, in India, in other parts of Asia,
0:34:50 > 0:34:53in parts of South America, Brazil, for instance.
0:34:53 > 0:34:57So, that process has transformed
0:34:57 > 0:35:01the capital labour ratio on a global scale.
0:35:01 > 0:35:07For example an analyst can as well be sitting in the Philippines
0:35:07 > 0:35:10or in Mumbai to do the job that is done
0:35:10 > 0:35:14at a much higher price in New York.
0:35:18 > 0:35:21Many workers in the rich countries
0:35:21 > 0:35:23are now competing with an industrial reserve army
0:35:23 > 0:35:27running into the billions.
0:35:29 > 0:35:33I think, in emerging market economies,
0:35:33 > 0:35:36there'd be an overwhelming vote in favour of what has happened
0:35:36 > 0:35:39because almost everyone is better off than they were,
0:35:39 > 0:35:40and would have been.
0:35:40 > 0:35:43But that's less evident in the industrialised world
0:35:43 > 0:35:47where many lower paid people have become even lower paid
0:35:47 > 0:35:50relative to those who have prospered, and that is a concern.
0:35:54 > 0:35:56For years after World War II
0:35:56 > 0:35:58we could be pretty sure Marx was wrong.
0:35:58 > 0:36:01Where you had capitalism, it was working pretty well.
0:36:01 > 0:36:05You could talk about a rising tide lifting all boats,
0:36:05 > 0:36:08but you look at the global economy today
0:36:08 > 0:36:11and I think you see a capitalism that Marx would recognise.
0:36:11 > 0:36:14It's lifted hundreds of millions out of poverty in China,
0:36:14 > 0:36:16but for most ordinary people in the West,
0:36:16 > 0:36:18the system's not working at all.
0:36:18 > 0:36:23For them, capitalism's not coming through on its side of the deal.
0:36:28 > 0:36:30It's an analysis that rings true
0:36:30 > 0:36:33even for the leader of the world's biggest economy.
0:36:35 > 0:36:37Long before the recession,
0:36:37 > 0:36:40jobs in manufacturing began leaving our shores.
0:36:40 > 0:36:43Technology made businesses more efficient
0:36:43 > 0:36:46but also made some jobs obsolete.
0:36:46 > 0:36:50Folks at the top saw their incomes rise like never before.
0:36:50 > 0:36:53But most hardworking Americans struggled
0:36:53 > 0:36:56with costs that were growing, pay cheques that weren't
0:36:56 > 0:36:59and personal debt that kept piling up.
0:37:13 > 0:37:17Marx would say this squeeze on wages was the root cause
0:37:17 > 0:37:22of the huge economic crisis that we've been living through.
0:37:22 > 0:37:27But you might see a problem with the Marxist explanation.
0:37:27 > 0:37:30If it was all down to low wages,
0:37:30 > 0:37:32you'd expect the crisis to have started
0:37:32 > 0:37:36where people spend their pay, out in the real economy.
0:37:36 > 0:37:37One way or another,
0:37:37 > 0:37:40that is how most of the recessions since the war have got started.
0:37:40 > 0:37:43But this time it wasn't the high street that sank the city -
0:37:43 > 0:37:45it was the other way round.
0:37:45 > 0:37:49The explosion that rocked the global economy in 2008
0:37:49 > 0:37:52was detonated deep inside the banks.
0:37:56 > 0:38:00So, how would Marx link low wages to troubled banks?
0:38:00 > 0:38:03The answer is - he saw capital as endlessly adaptable.
0:38:03 > 0:38:07It could solve one problem - low wages -
0:38:07 > 0:38:09but only at the cost of creating another.
0:38:12 > 0:38:14Remember, Marx didn't underestimate capitalism.
0:38:14 > 0:38:16He thought it was fundamentally flawed.
0:38:16 > 0:38:18He didn't think it was stupid.
0:38:18 > 0:38:21If large parts of the population weren't being paid enough
0:38:21 > 0:38:25to support demand, well, he wouldn't have been at all surprised
0:38:25 > 0:38:28to hear that capitalists had come up with a brilliant solution,
0:38:28 > 0:38:30the credit card.
0:38:31 > 0:38:34Now are you sure you've got everything, Money?
0:38:34 > 0:38:35Let me see, wine...
0:38:35 > 0:38:40With consumer credit, people can carry on spending,
0:38:40 > 0:38:42even if they haven't got the money.
0:38:42 > 0:38:47The economy stays afloat, and the capitalists still make their profit.
0:38:52 > 0:38:56So, credit provided an answer to all of capitalism's woes.
0:38:56 > 0:38:58But only for a while.
0:38:58 > 0:39:01Remember, Marx thought the system was fundamentally flawed.
0:39:01 > 0:39:04They might be very clever, these capitalists,
0:39:04 > 0:39:10but now, more than ever, they were living on borrowed time.
0:39:10 > 0:39:15# Baby, your ship has come in.... #
0:39:16 > 0:39:20As we know, it went well beyond credit cards.
0:39:20 > 0:39:23What ultimately brought the crisis to a head
0:39:23 > 0:39:26was the billions borrowed on mortgages.
0:39:26 > 0:39:30People thought the value of their house would keep going up for ever.
0:39:30 > 0:39:33Housing credit is beautiful
0:39:33 > 0:39:35because if your house price is increasing
0:39:35 > 0:39:39and you're borrowing against the increase in value of your house,
0:39:39 > 0:39:42you don't feel you're borrowing your way into debt.
0:39:42 > 0:39:45But, of course, you are.
0:39:45 > 0:39:49In America, it happened on a massive scale.
0:39:49 > 0:39:56There, as we know, the capitalists were getting richer and richer.
0:39:56 > 0:39:59They couldn't spend all of their extra money.
0:39:59 > 0:40:03Driven, as ever, by the desire to make more profit,
0:40:03 > 0:40:07they lent it out in riskier and riskier ways.
0:40:07 > 0:40:12The name given to this lending might well be familiar.
0:40:14 > 0:40:16Subprime.
0:40:20 > 0:40:23What we did is, as the incomes
0:40:23 > 0:40:25of most Americans were stagnating,
0:40:25 > 0:40:27or even declining,
0:40:27 > 0:40:30we said, "Don't let it bother you.
0:40:30 > 0:40:33"Keep spending as if your income was going up."
0:40:33 > 0:40:35And they did that very well.
0:40:35 > 0:40:38I mean, who would oppose it? The banks who are making money?
0:40:38 > 0:40:41The households who are getting their house?
0:40:41 > 0:40:44The politicians who have happy constituents?
0:40:44 > 0:40:45I mean, there is nobody
0:40:45 > 0:40:49who's going to be unhappy in this process until it collapses.
0:40:51 > 0:40:54And we all know how it ended.
0:40:54 > 0:40:57In retrospect, it seems obvious.
0:40:57 > 0:40:59Lending to people who couldn't afford it
0:40:59 > 0:41:02wasn't a lasting solution to anything.
0:41:02 > 0:41:05It led to a housing bubble which burst,
0:41:05 > 0:41:08threatening some of the world's biggest banks,
0:41:08 > 0:41:11and thanks to our integrated world,
0:41:11 > 0:41:13what started in the United States
0:41:13 > 0:41:16spread and infected the entire system,
0:41:16 > 0:41:18causing a global recession.
0:41:21 > 0:41:25So, here's the Marxist explanation for the crisis we've just seen.
0:41:25 > 0:41:27You've got a global economy
0:41:27 > 0:41:29with businesses getting better and better
0:41:29 > 0:41:31at squeezing wages and pushing up profits.
0:41:31 > 0:41:33But there's a problem.
0:41:33 > 0:41:35They're producing a lot of stuff
0:41:35 > 0:41:37that the workers can no longer afford,
0:41:37 > 0:41:40and a lot of profits looking for a new home.
0:41:40 > 0:41:44A global property bubble provided an answer to both those problems.
0:41:44 > 0:41:49The system was kept afloat on a mountain of debt
0:41:49 > 0:41:53but it was only a matter of time before it all came crashing down.
0:41:53 > 0:41:58Capitalism's only ever as strong as its latest, temporary fix.
0:42:01 > 0:42:06It's an extraordinary tale and a lot of people would say
0:42:06 > 0:42:09it's completely wrong.
0:42:09 > 0:42:11Marxism doesn't actually work,
0:42:11 > 0:42:14but it keeps coming back, cos it makes for a good story.
0:42:14 > 0:42:17I don't think low wages played any role at all in causing the crisis.
0:42:17 > 0:42:20The crisis was caused by governments and central banks
0:42:20 > 0:42:23flooding the market with cheap credit and cheap money
0:42:23 > 0:42:26because politicians don't like the downturn in an economy
0:42:26 > 0:42:27that throws people out of work.
0:42:27 > 0:42:30I think it may have, to some degree,
0:42:30 > 0:42:32increased the level of indebtedness
0:42:32 > 0:42:35that people went into the crisis with,
0:42:35 > 0:42:38which, I think, intensifies how deep the crisis became,
0:42:38 > 0:42:41but it wasn't the underlying cause.
0:42:41 > 0:42:43It was a contextual factor which made it a bit worse.
0:42:45 > 0:42:50But the idea that low wages may have contributed to the crisis
0:42:50 > 0:42:54is gaining ground, even if the name Marx is as toxic as ever.
0:42:58 > 0:43:01George Magnus is a senior economic adviser
0:43:01 > 0:43:05to one of the world's leading banks.
0:43:05 > 0:43:08You've been writing quite a lot about Marx since this crisis started.
0:43:08 > 0:43:10How did you come to look at him again?
0:43:10 > 0:43:12Actually it was on this trading floor.
0:43:12 > 0:43:16It was probably the weekend before Lehman's went bust,
0:43:16 > 0:43:19and it's normally a little bit noisy,
0:43:19 > 0:43:21but at the time it was...
0:43:21 > 0:43:24you could hear a pin drop, it was that deathly quiet
0:43:24 > 0:43:29and I could almost feel, you know, that the global system was frozen.
0:43:29 > 0:43:31And it was quite a scary thought.
0:43:31 > 0:43:35It took me back to a lot of the things that I used to read about
0:43:35 > 0:43:37and study when I was much younger -
0:43:37 > 0:43:41the days when I actually read Marx for fun.
0:43:41 > 0:43:43And you wrote about that, and what was the reaction?
0:43:43 > 0:43:45I did get a lot of hate mail, I have to say.
0:43:45 > 0:43:49There are a lot of people who were quite opposed to the idea
0:43:49 > 0:43:52that anything that was socialistic or Marxist,
0:43:52 > 0:43:56you know, could be at all considered serious in the mainstream.
0:43:56 > 0:44:00A lot of this hate mail, I have to say, came from the United States
0:44:00 > 0:44:03and I was accused of being, you know, an Obama clone and...
0:44:03 > 0:44:06- President Obama - the well-known Marxist.- The well-known Marxist(!)
0:44:06 > 0:44:07Very mysterious forces.
0:44:07 > 0:44:11So, there was a lot of negative reaction from, I think
0:44:11 > 0:44:15people that probably predictably, you know,
0:44:15 > 0:44:18had already tied their own ideological colours to the mast.
0:44:18 > 0:44:21But the people who do find value in Marx
0:44:21 > 0:44:24aren't necessarily going to follow him all the way.
0:44:28 > 0:44:30I think Marx helps in framing the problem,
0:44:30 > 0:44:33but I think the solutions have to be different,
0:44:33 > 0:44:37given the different environment we are in.
0:44:37 > 0:44:42Except, Marx would insist, the trap is inescapable.
0:44:42 > 0:44:46Capitalists must seek profit above all else
0:44:46 > 0:44:47or they'll go out of business.
0:44:47 > 0:44:49So, why would they ever choose
0:44:49 > 0:44:51to give workers a bigger share of the pie?
0:44:51 > 0:44:58What Marx would say is that we have to look for ways out of this crisis,
0:44:58 > 0:45:01which look beyond the restoration
0:45:01 > 0:45:02of capitalist class power.
0:45:02 > 0:45:06And, I think, this is a time when we actually need to start thinking
0:45:06 > 0:45:09about the revolutionary solution again.
0:45:12 > 0:45:14But who, exactly, is revolting against who?
0:45:14 > 0:45:18Marx divided the world neatly into workers and capitalists
0:45:18 > 0:45:22but today his stark distinction is incredibly blurred.
0:45:22 > 0:45:25Bosses work for themselves and workers own shares.
0:45:33 > 0:45:36In our modern world, enough of us do have a stake in the system,
0:45:36 > 0:45:39whether mobile phones or pension plans,
0:45:39 > 0:45:42to stave off talk of armed revolt.
0:45:45 > 0:45:47But what about the people capitalism's failing?
0:45:47 > 0:45:50What does Marx have to say to them?
0:45:56 > 0:46:00It's really amazing how well Marx seems to understand our world,
0:46:00 > 0:46:03where we're more interconnected than he could ever have imagined
0:46:03 > 0:46:07and where all the faces of capitalism, good and bad,
0:46:07 > 0:46:11are now on display in pretty much every corner of the globe.
0:46:11 > 0:46:13But he was the one who famously said
0:46:13 > 0:46:17it wasn't enough to interpret the world - the point was to change it.
0:46:17 > 0:46:22If you ask him what exactly we're supposed to replace capitalism with,
0:46:22 > 0:46:26well, he had remarkably little to say about that.
0:46:31 > 0:46:33As Marx entered his final years,
0:46:33 > 0:46:35he seemed quite content with the way things were.
0:46:39 > 0:46:42He'd been poor for a lot of his life,
0:46:42 > 0:46:46but by 1856, he had enough money to move to London's suburbs.
0:46:49 > 0:46:54The young firebrand now looked like part of the establishment.
0:46:54 > 0:46:58He would spend his day walking around Hampstead Heath
0:46:58 > 0:47:01and he would worry about personal finances,
0:47:01 > 0:47:03he would worry about his daughters
0:47:03 > 0:47:05and the expense of their piano lessons.
0:47:05 > 0:47:11I mean, he lived a remarkably bourgeois life, in many ways.
0:47:13 > 0:47:17In his later years, Marx was the world authority on the revolution,
0:47:17 > 0:47:20but he didn't seem to be in a hurry to make it happen.
0:47:20 > 0:47:23Young hot-headed socialists from around the world
0:47:23 > 0:47:26would come to North London to pay their respects, win his support.
0:47:26 > 0:47:29Mr M seemed happy to watch and wait.
0:47:35 > 0:47:38Marx only really had contempt for terrorists,
0:47:38 > 0:47:41those who were seeking to fast-forward political progress
0:47:41 > 0:47:45by having change through arbitrary violence.
0:47:45 > 0:47:48You needed the economic fundamentals in place
0:47:48 > 0:47:52for a proper revolution to succeed.
0:47:53 > 0:47:57To understand why he didn't want to rush revolution
0:47:57 > 0:48:00we need to understand - for the last time, I promise -
0:48:00 > 0:48:02a bit more Marxist theory.
0:48:05 > 0:48:12As usual, he had a grand analysis of the history of the world.
0:48:12 > 0:48:15He saw the great sweep of humanity's endeavours,
0:48:15 > 0:48:17from the caveman,
0:48:17 > 0:48:21to the slave societies of Greece and Rome,
0:48:21 > 0:48:25to the feudalism of kings and castles.
0:48:25 > 0:48:28All of which was replaced, in turn, by our own capitalist system
0:48:28 > 0:48:31of bosses and workers.
0:48:32 > 0:48:34Incredibly unfair,
0:48:34 > 0:48:37but also incredibly productive.
0:48:40 > 0:48:43Marx said only when we'd got everything we could
0:48:43 > 0:48:44out of capitalism
0:48:44 > 0:48:47could we afford to have a revolution.
0:48:51 > 0:48:57In his words, "the knell of capitalist private property sounds,
0:48:57 > 0:49:00"the expropriators are expropriated,
0:49:00 > 0:49:03"all to be replaced by
0:49:03 > 0:49:06"more or less nothing."
0:49:06 > 0:49:10Irritatingly there's next to no alternative laid out.
0:49:10 > 0:49:12Marx, basically,
0:49:12 > 0:49:15was not the one who simply gave us a blueprint, you know,
0:49:15 > 0:49:17five stages after capitalism -
0:49:17 > 0:49:20communism, here you have the basic guidelines,
0:49:20 > 0:49:21what to do, and so on.
0:49:21 > 0:49:23No, no, it's up to us.
0:49:23 > 0:49:26He just opened up the field.
0:49:26 > 0:49:28Is there an alternative to capitalism?
0:49:28 > 0:49:30I've no idea.
0:49:30 > 0:49:33Well, I suppose there could be all kinds of alternatives.
0:49:33 > 0:49:36Dead silence, starvation,
0:49:36 > 0:49:38or the end of the world or anything,
0:49:38 > 0:49:40but I simply have no idea if there is an alternative.
0:49:40 > 0:49:43It doesn't occur to me, it doesn't seem to me to be important.
0:49:43 > 0:49:46It's like saying, is there an alternative to weather?
0:49:50 > 0:49:53Marx said we couldn't describe what the next stage of human development
0:49:53 > 0:49:56would look anymore than a feudal serf
0:49:56 > 0:49:59could have described our lives today,
0:49:59 > 0:50:02to which you might say, "fair enough."
0:50:02 > 0:50:04Except you might also think it was pretty telling.
0:50:04 > 0:50:07After all, nobody else has been able to describe
0:50:07 > 0:50:09a convincing alternative to capitalism either.
0:50:12 > 0:50:16I think he would have written a lot more
0:50:16 > 0:50:18had he lived ten years more,
0:50:18 > 0:50:21on what a socialist republic would look like,
0:50:21 > 0:50:27and who knows, but that might have saved the world a lot of bother.
0:50:32 > 0:50:37Without his blueprint, we all know what happened next.
0:50:37 > 0:50:40There weren't any revolutions
0:50:40 > 0:50:44in the rich, developed countries, as Marx predicted.
0:50:44 > 0:50:49Instead it happened in one of the world's poorest nations.
0:50:49 > 0:50:52Soviet Russia may have left Marx far behind
0:50:52 > 0:50:56but it was an attempt to try something else,
0:50:56 > 0:51:00and many have drawn lessons from its failure.
0:51:00 > 0:51:03The truth is, at the moment there are different forms of capitalism.
0:51:03 > 0:51:06But on the big argument about whether you really want
0:51:06 > 0:51:09to have a communist system or a capitalist one,
0:51:09 > 0:51:11that is pretty much won everywhere I think.
0:51:11 > 0:51:14There are more humane versions of capitalism
0:51:14 > 0:51:18or more barbaric forms of capitalism.
0:51:18 > 0:51:21But I don't think there's a systemic alternative to capitalism.
0:51:21 > 0:51:24Will there ever be? Yes, I would think so.
0:51:24 > 0:51:26I mean, you know, nothing is for ever.
0:51:26 > 0:51:31Absolutely nothing, and capitalism is not for ever.
0:51:34 > 0:51:37But anyone looking for a fairer alternative
0:51:37 > 0:51:41knows they can't ever repeat what happened east of the Berlin Wall.
0:51:41 > 0:51:46Dictatorship, political oppression and millions of ruined lives.
0:51:53 > 0:51:55From 1945 till 1989,
0:51:55 > 0:52:00this was the main remand centre for political prisoners
0:52:00 > 0:52:02in communist East Germany.
0:52:03 > 0:52:06Today it's been turned into a memorial.
0:52:09 > 0:52:11There was a special ideology.
0:52:11 > 0:52:15Whoever we arrest, he or she is guilty.
0:52:17 > 0:52:20It's possible that places like this
0:52:20 > 0:52:24explain why even capitalism's toughest critics today
0:52:24 > 0:52:27seldom talk seriously about replacing it.
0:52:32 > 0:52:36You can see with all these protests in Europe, Greece, and so on.
0:52:36 > 0:52:42I was in Spain, in Greece, asking always the same question,
0:52:42 > 0:52:44OK, what do you want?
0:52:44 > 0:52:47Apart from some purely moralistic answers,
0:52:47 > 0:52:49I didn't get any good, complete proposals,
0:52:49 > 0:52:51you know, answers like,
0:52:51 > 0:52:56"Oh, money should serve people, not people serving money."
0:52:56 > 0:53:00My God, Hitler and everyone would have agreed with this, I'm sure.
0:53:00 > 0:53:04You would have thought that with this implosion of the banking system
0:53:04 > 0:53:07at the heart of capitalism in the United States
0:53:07 > 0:53:09as well as the United Kingdom, and so on,
0:53:09 > 0:53:12there would be a huge rush
0:53:12 > 0:53:17to Marxism and extreme socialism.
0:53:17 > 0:53:18That hasn't really happened.
0:53:18 > 0:53:24It is quite surprising and I'm very pleased.
0:53:28 > 0:53:30But if memories of this place do fade,
0:53:30 > 0:53:34could there ever be an alternative to capitalism,
0:53:34 > 0:53:39or should what happened here be a lesson for all time?
0:53:39 > 0:53:43If someone wants to seek an alternative to capitalism,
0:53:43 > 0:53:46and they're saying by seeking that alternative
0:53:46 > 0:53:51that capitalism is a system rather than a fact of life,
0:53:51 > 0:53:54and they're saying that, for instance,
0:53:54 > 0:53:55that human nature can be altered,
0:53:55 > 0:53:58fundamentally they're revealing themselves as utopian.
0:53:58 > 0:54:00And the problem with utopia
0:54:00 > 0:54:04is that it can only ever be approached across a sea of blood
0:54:04 > 0:54:05and you never arrive.
0:54:05 > 0:54:08This is my big mantra, when we leftists are accused of utopians.
0:54:08 > 0:54:12Maybe, but the only real utopia is to think
0:54:12 > 0:54:15that with some cosmetic changes
0:54:15 > 0:54:19things can go on indefinitely the way they are now.
0:54:20 > 0:54:24# Arise ye Stalins from your slumbers
0:54:24 > 0:54:27# Arise ye criminals of want
0:54:28 > 0:54:32# For reason in revolt now thunders
0:54:32 > 0:54:35# And at last ends the age of can't. #
0:54:35 > 0:54:38Marx died in 1883.
0:54:38 > 0:54:42In a speech at his grave, his long time friend and collaborator,
0:54:42 > 0:54:43Freidrich Engels,
0:54:43 > 0:54:47declared his name and work will endure through the ages.
0:54:50 > 0:54:54For most of the 20th century his name did endure,
0:54:54 > 0:54:56though, usually, for all the wrong reasons.
0:54:59 > 0:55:01But now it's 21st century,
0:55:01 > 0:55:05what can this long-dead Prussian really say to us?
0:55:05 > 0:55:07APPLAUSE
0:55:12 > 0:55:15Fundamentally, I think Marx reminds us
0:55:15 > 0:55:20that if capitalism doesn't work for everyone, it might not work at all.
0:55:22 > 0:55:26When you look at what's happening and the pressure on wages,
0:55:26 > 0:55:29can you understand why people are sort of looking again
0:55:29 > 0:55:32at some of Marx's analysis?
0:55:32 > 0:55:34Yes, it... The big picture.
0:55:34 > 0:55:37The workers versus the capitalists.
0:55:37 > 0:55:40And there is no doubt that there have been significant changes
0:55:40 > 0:55:43in inequality and in the distribution of income,
0:55:43 > 0:55:48which make you pause about the benefits of the developments
0:55:48 > 0:55:51of output and prosperity that we've seen.
0:55:51 > 0:55:53And I don't think you can afford
0:55:53 > 0:55:57to believe that the benefits of a market economy
0:55:57 > 0:55:59in bringing prosperity will be there
0:55:59 > 0:56:02unless there is a collective commitment to keep the system going,
0:56:02 > 0:56:04and that does require people to believe
0:56:04 > 0:56:06that everyone will benefit in the end.
0:56:06 > 0:56:10I think some of the ugliness of capitalism
0:56:10 > 0:56:13that he saw in the 19th century
0:56:13 > 0:56:17seems to be appearing in the 20th and 21st,
0:56:17 > 0:56:23and in a way we have to keep our perspective on this.
0:56:23 > 0:56:25The health conditions are much better,
0:56:25 > 0:56:29living standards are starting from a higher level,
0:56:29 > 0:56:33but it is still the case that
0:56:33 > 0:56:37things aren't the way they ought to be.
0:56:37 > 0:56:40And they're not moving in the way they should be.
0:56:41 > 0:56:46But let's face it, Marx wasn't just talking about tweaking the system.
0:56:46 > 0:56:50He had a much grander claim than that.
0:56:50 > 0:56:53Did Marx change the world? Of course he did.
0:56:53 > 0:56:54And after that funeral,
0:56:54 > 0:56:57people did weep hot tears at his grave,
0:56:57 > 0:57:00just as his 17-year-old self would have wanted.
0:57:00 > 0:57:02Probably many more lived to curse his name.
0:57:02 > 0:57:06But there's no getting round it, capitalism's still here.
0:57:09 > 0:57:14Marx was right to see capitalism as inherently unstable
0:57:14 > 0:57:16and often unfair.
0:57:16 > 0:57:21Keynes and Hayek saw that too, but Marx was the first
0:57:21 > 0:57:26and unlike them, he didn't think we should find a way to live with it.
0:57:26 > 0:57:29He said capitalism would bounce back from crises
0:57:29 > 0:57:31and reinvent itself,
0:57:31 > 0:57:34but in the end a compelling alternative would appear,
0:57:34 > 0:57:36and capitalism would collapse.
0:57:36 > 0:57:40For all that rings true now in Marx,
0:57:40 > 0:57:43on that he seems to have been dead wrong.
0:57:43 > 0:57:46Maybe he did underestimate capitalism.
0:57:46 > 0:57:49He certainly overestimated the opposition to it.
0:57:49 > 0:57:53I think the system needs to reinvent itself now, again.
0:57:53 > 0:57:55If it can pull that off,
0:57:55 > 0:57:59we'll be talking even less about Marx a century from now.
0:57:59 > 0:58:02But the last few years have left capitalism with plenty to prove.
0:58:11 > 0:58:14The open University's produced six one minute animations
0:58:14 > 0:58:18to explain some of the key economic ideas that affect all of us,
0:58:18 > 0:58:20so, if you want to spot an invisible hand,
0:58:20 > 0:58:22or other secrets of economics,
0:58:22 > 0:58:26go to...
0:58:26 > 0:58:29..and follow the link to the Open University.
0:58:36 > 0:58:40Subtitles by Red Bee Media Ltd