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Economic determinism is a socioeconomic theory that economic relationships (such as being an owner or capitalist, or being a worker or proletarian) are the foundation upon which all other societal and political arrangements in society are based. The theory stresses that societies are divided into competing economic classes whose relative political power is determined by the nature of the economic system. In the version associated with Karl Marx, the emphasis is on the proletariat who are considered to be locked in a class struggle with the capitalist class, which will eventually end with the revolutionary overthrow of the capitalist system and the gradual development of socialism. Marxist thinkers have dismissed plain and unilateral economic determinism as a form of "vulgar Marxism", or "economism", nowhere included in Marx's works.
In the writing of American history the term is associated with historian Charles A. Beard (1874–1948), who was not a Marxist but who emphasized the long-term political contest between bankers and business interest on the one hand, and agrarian interests on the other.
According to Marx, each social mode of production produces the material conditions of its reproduction, that is, ideology (which gathers all the political, law and cultural spheres). Thus, ideology permits the mode of production to reproduce itself. Furthermore, Marx and Engels are said to have believed, should a revolutionary force change the mode of production, the dominant class will immediately set out to create a new society to protect this new economic order. In the modernity of their era, Marx and Engels felt the propertied class had essentially accomplished the establishment of a new societal and economic order, instinctively creating a society protective of their capitalist interests. They made this statement to the Bourgeoisie in the Communist Manifesto: "Your very ideas are but the outgrowth of conditions of your bourgeois production and bourgeois property, just as your jurisprudence is but the will of your class, made into law for all, a will whose essential character and direction are determined by the economic conditions of the existence of your class." The young Marx hence criticized man's alienation, a concept which he later replaced by the critique of commodity fetishism. "Vulgar Marxism" has considered that the relation between the economical infrastructure and the ideological superstructure was a unicausal one, and thus believed in economic determinism. Engels said "The final causes of all social changes and political revolution are to be sought, not in men's brains, not in man's insight into internal truth and justice... but in the economies of each epoch." Therefore, Engels advocated a revolution in economic structure as the only valid way of improving society and ending the oppression of the working class.
Other Marxists and Marx-scholars—including György Lukács, Antonio Gramsci, Louis Althusser, Maurice Godelier, Franz Jakubowski, Edward P. Thompson and Michael Lowy—completely reject the interpretation of Marx and Engels as "economic determinists". They claim this idea is based on a poor and selective reading of Marx and Engels' work.
They argue that this interpretation originated in the early years of the Second International and was popularised by Karl Kautsky and Nikolai Bukharin, among many others. They refer to the disclaimers by Engels (see historical materialism) to the effect that while Marx and himself had focused a lot on the economic aspects, they were very aware that this did not in fact constitute the totality of society or of social life. However, some have viewed such comments as Engels's attempt to extricate himself from an untenable position: Max Weber and other influential sociological and economic thinker agreed that Marx's views were really unidimensional in regard to economic determinism. They did not agree that economic determinism was a vulgar interpretation of Marx. They regarded this to be the explicitly stated and true interpretation of Marx (See own admission in Friedrich Engels, Socialism—Utopian and Scientific, pg 54). They criticized the simplicity in Marx's arguments and held that ideas and cultural beliefs and values determine societal progress and the evolution of society. (See Weber's The Protestant Ethic and the Spirit of Capitalism (1905)).
Non-Marxist scholars have also objected that economic determinism is overly generalized, insofar as any serious historical explanation of economic realities must always refer to non-economic realities. This became obvious when one had to specify exactly of what the economic determinism precisely consisted. In addition, a lot of confusion about "economic determinism" is due to the conflation of the "commercial" with the "economic". For Marx at least, these were very different concepts.
The dynamic of history according to Marx was shaped precisely by the clash of those interests (class struggle), and that clash could not be understood simply in terms of economic self-interest, because it also involved human needs, customs, traditions, morals and values encompassing a whole way of life. On the other hand, Lenin wrote that "an idea that captures the minds of the masses becomes a material force," meaning that the said needs, customs, traditions, morals and values can be equated to economic forces.
The end result of economic determinism in this view is both economism (a narrow focus on how people earn their livelihood) and economic reductionism (the attempt to reduce a complex social reality to one factor—the economic—such that this one factor causes all other aspects of society).
American geostrategist Thomas P. M. Barnett describes himself as an economic determinist in his book The Pentagon's New Map.