According to Marx, history progresses according to the following laws:
(1) Social development is based on the development of productive forces, which are material.
(2) Man, in his social life, is inevitably involved in production relations as his most basic social relationship.
(3) The production relations progress, inevitably, following and corresponding to the progress of the production forces.
(4) Production forces and the production relations progress independently of man's will.
(5) When the production relations become a fetter to the progress of the production forces, revolution occurs.
(6) The superstructure, namely the various views and institutions (ideological forms) is the product of the production relations which are the foundation of society.
(7.) Every type of state is a power institution (power organization) of the ruling class; the state is the institution of oppression which one class uses to oppress other classes Therefore the shifting of the state power from one class to another can be accomplished only by revolution (the theory of the state and revolution).
Marx's historical materialism is based on a historical understanding of how surplus is delivered from the producer to the ruling class. This materialism is made of two elements: the forces, or the technology and labor involved in production both economic and political, and the relations, which control the means of production or have economic ownership. The products of these two elements are the social-economic classes and their inherent problems. Hunter-gatherer societies were structured so that the economic forces and the political forces were one and the same. The elements of force and relation operated together, harmoniously. In the feudal society, the political forces of the kings and nobility had their relations with the economic forces of the villages through serfdom. The serfs, although not free, were tied to both forces and, thus, not completely alienated. Capitalism, Marx argued, completely separates the economic and political forces, leaving them to have relations through a limiting government. To Marx, democracy steals power from the working class as it is controlled by the elite. This does not make sense to Marx, so he begins to look at the object of capitalism through pure logic using the LassiezFaire capitalist model.
Marx begins by examining the exchange value and the use value of products. He is dissatisfied with the supply and demand curve, as it does not show the power relationships involved. Marx sees that labor is not being paid according to the use value, but according to the commodity price, or the exchange value. Labor has now become a commodity, because the capitalist has paid him according to the exchange value in order to gain a profit, the purpose of capitalism. The difference between what the capitalist pays the worker and the value of what the worker produces is called the surplus value, value that the worker never sees and the capitalist receives because he put up the capital in the first place. Capitalists achieve this surplus value through division of labor, which not only deskills the laborer, but also demoralizes him after he works day after day producing more than he ever did before the advent of capitalism, yet for equal or even less money. Labor begins to be exploited by a system that legalizes the capitalist?s appropriation of what is produced by labor, who works for however long of a period of time that the capitalist tells him to work.
The capitalist finds ways to further this exploitation through technology. Machines, designed to produce more than a multitude laborers, are run by one man who is paid less. As an industry is saturated with such machines, a crisis of overproduction ensues when industry produces more product than the market has the purchasing power to obtain. This market saturation causes a production cutback, which results in unemployment. This downsizing occurs because the capitalist believes labor wants more money from the surplus value than he is willing to pay. Some capitalists do not see the trend and go out of business, or are bought out by bigger firms. This results in a concentration of capital. This cycle, Marx argues, cannot be stopped.
To Marx, this mode of production is completely irrational because it contradicts its own necessity towards growth through the destruction of its smaller elements and although it seems to have eliminated real scarcity through overproduction, there is really an artificial scarcity maintained due to the lack of purchasing power. Marx sees us all as dependent upon each other, even though the power is in the hands of the large corporations working above and through government. This is power that these corporations have because the worker is there to produce.
Marx believed that as capitalism expanded globally, we would begin to question its rationality as the difference between the stuff that it made lessened, thus making us less and less happy with it. Capitalism first commodified the labor, and then, it commodified our daily life by expanding inwardly to be a part of everything in our lives to the point that it convinces us that all of the extras in the stuff we obtain is worth the stress and pressures of the capitalist system. This is what Marx calls the fetishism of commodities[?].
Marx sees that we gain such a fetish for commodities that we give up all control. We do not control how the job is done, we do not control how the product is produced, priced, distributed or chosen, and we begin to compete as rivals for these commodities. This loss of control produces a Hegelian alienation which Marx, as a Young Hegelian, transforms into exploitation when he begins to look at the social structures that account for alienation.
See also: Labor theory of value