Marxism, Communism, and Socialism
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Origins of Marxism 
Lenin traces the roots of Marxism to German Philosophy, British Classical Economics, and French Socialism. Thus, it is best to look at these components in layman's English.
As a note, it is best to say Dialecticians rather than German philosophers influenced Marx and Engels. Hegel is the major player in both cases; he was "the most encyclopedic" of the dialecticians, and German philosophy "culminated" in the Hegelian System.
But what is "dialectics"? It is, more or less, a form of logic. It began with the Ancient Greeks as the logic. Literally, dialectic corresponds to "discourse" since the Greek dialectic was simply a discourse between a "pro" and "con" position on an issue.
Hegel changed this, for Hegel had created the "Modern" dialectic. This note will be a step by step explanation of his method, so it may be a longer section than the others. Hegel believed the starting point is the immediately given experience at a particular historical juncture. This immediate experience is not "apprehended". Thought must proceed from that which is initially given onwards.
Yet what is "initially given"? This brief moment is when Hegel, a philosopher who is an idealist, is empirical. Or, in other words, this is when Hegel looks at reality (empiricism) rather than only thinking about it.
The goal is not to "create" the world out of pure thought processes, but to reconstruct the "intelligibility" (ability to apprehend by intellect only) of the world. This requires us to assign the fundemental categories that captures that intelligibility.
Hegel writes: "In order that this science (i.e. Hegel's own theory) may come into existence, we must have the progression from the individual and particular to the universal - an activity which is a reaction on the given material of empiricism in order to bring about its reconstruction. The demand of a priori knowledge, which seems to imply that the Idea should construct from itself, is thus a reconstruction only ... In consciousness it then adopts the attitude of having cut away the bridge from behind it; it appears to be free to launch forth in its ether only, and to develop without resistance to this medium; but it is another matter to attain to this ether and to development of it."
Now, what exactly is a "category"? Hegel explains that a category articulates a structure with two poles, a pole of unity and a pole of differences. From this general notion of a category we can go on to derive three general types of categorial structures.
In one the moment of unity is stressed, with the moment of differences implicit. In another the moment of difference is emphasised, with the moment of unity now being only implicit (or in other words the nature of the moment of unity is left undeveloped). In a third both unity and differences are made explicit together, both are developed.
Another way of speaking of the connections is the concept of dialectical contradiction. Hegel's views on contradiction has been very controversial (to say the least). In terms of categories, what he means is fairly straightforward. If a category is a principle that unifies a manifold, then if a category ehibits only the moment of unity, then there is a "contradiction" between what is inherently qua is category (unifier of a manifold) and what it is explicitly (moment of unity alone). Overcoming the contradiction requires the intial category to be negated (in the sense that a second category must be formulated that makes the moment of difference explicit). Yet when this is done the moment of difference will be emphasized at the cost of having the moment of unity implicit. This means there is another contradiction. To overcome this the second category needs to be replaced with a category in which both poles, unity and difference, are each made explicit simultaneously.
Hegel is well aware of what contradiction and negation means in formal logic. He was following a tradition since Plato of using "contradiction" and "negation" as logical operators. The logic is dialectical logic.
British Classical Economics 
Classical Economics is a vast school of economic thought which will not be entirely discussed here. Instead, only David Ricardo and Adam Smith will be reviewed.
Adam Smith had argued that value could not have originated in utility. He presented the counterpoint: if utility was the basis of value, how is it that water (which we need to live) is of no value compared to diamonds (which have no use at all)? He came to the conclusion that the labor used to make the commodity determines the value in exchange.
As a general matter, Smith thought, the amount of labor required to produce the goods would determine the rate at which they could be exchanged for one another, though he mentioned some exceptions. If the supply of goods could not be increased by labor, then their value would be determined by their scarcity, and not by the labor embodied in them. Old master paintings would be a case in point -- no more could be produced, since all the old masters were dead, so the price of these paintings could rise to any height without calling forth a competing supply of new production. Monopoly would be another exception. The monopoly would be able to keep the good scarce, preventing any competing new production. The general idea seems to have been the people can always choose to produce for themselves rather than obtaining goods and services in exchange for others. If they must give up more labor to get the good by exchange, then they would produce for themselves instead.
Basically, the work of Adam Smith that is relevant to Marxism is summed up to a single proposition: Exchange Value must depend on something common to all goods; embodied labor is the one common factor on which exchange value depends.
Ricardo essentially reformed the Labor Theory of Value so value wasn't "entirely" based on labor, although a large portion of value is. He theorized about the influence of machinery affecting value. Ricardo saved the labor theory of value from a serious objection. The objection had to do with land and rent. On the one hand, land rent seems to be a cost of production -- shouldn't the "natural price" of an agricultural product depend on the rent of land? On the other hand, labor will be more productive on land that is more fertile. Crops grown on fertile land will cost less labor. Does that mean it has less value?
I'll skip the math and come to Ricardo's conclusions. It is the labor required for production on marginal land (the next unit of land) that determines the normal price or value of agricultural products. And the surplus of production on more fertile land is "absorbed" by rent. Landowners don't have to do anything to earn this rent -- they get it automatically as a result of the competition for fertile land.
Ricardo fortified the Labor Theory of Value from most criticisms. There were three main vulnarable points: absolutely scarce goods, international trade, and monopoly. Marx played with these, which will be discussed later.
French Socialism 
French Socialism can be summed up as the rejection of capitalism. All sorts of outlandish ideas have been associated with French socialism (e.g. polygamy, etc.).
French socialism is only one name of the concepts. Marx referred to them as utopian socialism. Marx grounded his theory in scientific materialism (i.e. beyond physical reality there is nothing), and thus criticized the Utopian socialists for not having a basis in reality for their theories.
The utopian socialists explained that "somehow" everything will fit together into an ideal society. Of course they never bothered to investigate how socialism would come about. They wrote instead of what socialism is.
This may not seem like a bad idea, but to Marx it was a grievous error. Marx explained his theory with historical materialism, which is our next topic.
Historical Materialism 
"[People] make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like an nightmare on the brains of the living."
In the beginning, according to Historical Materialism, is material reality. A particular group of humans, living in a specific part of the world, with a unique history, a particular technology, etc. It is Marx's idea that those specific details produce a certain kind of society with certain kinds of classes, certain relationships between them. Those relationships, in turn, generate ideas, religions, cultures, etc.
So we have an "orderly" explanation of human society: material conditions leading to technology leading to classes leading to culture. It was Marx's observation that there were "regularities" over long periods of time in this process. (He called them "laws" because that was the custom in 19th century European science.) He saw the evolution of human society in these "regularities" or "stages" (taken from the wikipedia article) This is the "Ladder of Marxism".
1. Primitive communism. Human society organised in traditional tribe structures, typified by shared production and consumption of the entire social product. As no permanent surplus product is produced, there is also no possibility of a ruling class coming into existence. As this mode of production lacks differentiation into classes, it is said to be classless. Paleolithic and neolithic tools, pre- and early-agricultural production, and rigorous ritualised social control are the typifying productive forces of this mode of production.
2. The asiatic mode of production. This is a controversial contribution to Marxist theory, initially used to explain pre-slave and pre-feudal large earthwork constructions in China, India, the Euphrates and Nile river valleys (and named on this basis of the primary evidence coming from greater "Asia"). The asiatic mode of production is said to be the initial form of class society, where a small group extracts social surplus through violence aimed at settled or unsettled band communities within a domain. Exploited labour is extracted as forced corvee labour during a slack period of the year (allowing for monumental construction such as the pyramids, ziggurats, ancient Indian communal baths or the Chinese Great Wall). Exploited labour is also extracted in the form of goods directly seized from the exploited communities. The primary property form of this mode is the direct religious possession of communities (villages, bands, hamlets) and all those within them. The ruling class of this society is generally a semi-theocratic aristocracy which claims to be the incarnation of gods on earth. The forces of production associated with this society include basic agricultural techniques, massive construction and storage of goods for social benefit (grainaries).
3. The slave mode of production. It is similar to the asiatic mode, but differentiated in that the form of property is the direct possession of individual human beings. Additionally, the ruling class usually avoids the more outlandish claims of being the direct incarnation of a god, and prefers to be the decendents of gods, or seeks other justifications for its rule. Ancient Greek and Roman societies are the most typical examples of this mode. The forces of production associated with this mode include advanced (two field) agriculture, the extensive use of animals in agriculture, and advanced trade networks.
4. The feudal mode of production. It is usually typified by high feudalism in Western Europe. The primary form of property is the possession of land in reciprocal contract relations: the possession of human beings as peasants or serfs is dependent upon their being entailed upon the land. Exploitation occurs through reciprocated contract (though ultimately resting on the threat of forced extractions). The ruling class is usually a nobility or aristocracy. The primary forces of production include highly complex agriculture (two, three field, lucerne fallowing and manuring) with the addition of non-human and non-animal power devices (clockwork, wind-mills) and the intensification of specialisation in the crafts--craftsmen exclusively producing one specialised class of product.
5. The capitalist mode of production. It is usually associated with modern industrial societies. The primary form of property is the possession of objects and services through state guaranteed contract. The primary form of exploitation is wage labour (see Das Kapital, wage slavery and exploitation). The ruling class is the bourgeoisie, which exploits the proletariat. The key forces of production include the factory system, mechanised powered production, Taylorism, robotisation, bureaucracy and the modern state.
6. The socialist mode of production. Since this mode of production has not yet come into effect, its exact nature remains debatable. Some theorists argue that prefiguring forms of socialism can be seen in voluntary workers' cooperatives, strike committees, labour unions, soviets and revolutions. The socialist mode of production is meant to be a society based on workers' control of all production, with a property form equating consumption with productive labour. The key forces of production are similar to those in capitalism, but changed in their nature due to workers' control and collective management. Additionally, the merging of mental and manual labour is meant to increase the level of productivity and quality of the productive forces. The primary ruling class of this mode is meant to be the working class. The primary form of exploitation is meant to be self-exploitation - in other words, the exploitation of some people by others (the "exploitation of man by man") is meant to be abolished.
7. The communist mode of production. Since it refers to the far future, it is a highly debated theoretical construct. Some theorists argue that prefiguring forms of communism can be seen in communes and other collective living experiments. Communism is meant to be a classless society, with the management of things replacing the management of people. Particular productive forces are not described, but are assumed to be more or less within the reach of any contemporary capitalist society. Despite the imminent potential of communism, some economic theorists have hypothesised that communism is more than a thousand years away from full implementation.
These are not rigid and impenetrable catagories. There were capitalists in Ancient Greece and Egypt, and elements of feudalism exist today with American Corporations.
The Marxist hypothesis is that while the ultimate cause for such changes lies in technological innovation, the means by which one social order surplants another is that of class struggle. Nomads had to physically defeat savages; early despots had to defeat nomad barbarians; feudal lords had to defeat the despots; and capitalists had to defeat the feudal lords. These were not simply military struggles; they also took place in the realm of ideas. For example, new religions were invented to "justify" the rise of a new kind of ruling class. New "moralities", new "legal" concepts, new "philosophies", followed. If this "metahistory" is more or less correct, asked Marx, what happens next? Is capitalism the "end of history", or will there be another new social order?
We know the answer that Marx gave, of course. Possibly he noticed the curious trajectory that was followed: primitive equality to proto-classes to centralized despotism, then mini-despots, then a lot of mini-despots, then...advanced equality? More likely, I must admit, he probably used Hegalian dialectics to arrive at the same conclusion (Hegalian philosophy was very fashionable in Marx's youth and exerted a lasting influence on the way he approached matters).
Technologically advanced equality, which he called communism, would be the next "stage" of human history, and one in which classes would no longer exist at all. Moreover, like all the others, it would come into existence through class struggle with the old ruling class. To Marx, it seemed inevitable that capitalism, left to itself, would become more and more openly despotic (and with fewer and fewer significant despots) and, because of its own economic constraints, would generate crisis after crisis threatening a return to barbarism or savagry unless overthrown...by all those who were not capitalists, the working class.
Marxist Economics 
On Commodities 
Commodities is to capitalism as elements are to chemistry. It is very important in capitalism. (Economics, Marx and Engels argued, is the science of capitalism).
The commodity has two values: one if its usefulness, fulfilling a need, it's called a use-value; the other "expresses" the use-value in relations to each other, called the exchange-value. Use-value is concerned with "quality"(or the character of different sorts of commodities), and exchange-value is concerned with "quantity".
Here's where Marx's translation gets warped: every commodity has both forms of value. If we take away value, we are left with labor. But since we screwed around with the value, we screw around with the labor also.
Value is affected directly by labor. Marx cites the example of power-looms which decreased the labor necessary to weave by half, in effect the value of the linen decreased by half also.
There are two factors in labor: labor-power, the degree of power given by labor; and labor-time, how much time is consumed by laboring. The reason why gold is so valuable is because so much labor-time is dedicated to finding it, then labor-power to extract it. For example: Brazil around the 1820s found a rich vein of diamonds. They spent so much labor-power on the diamonds that the combined value within the next three years of the diamonds is as much as Brazil's sugar crops within one year, because the amount of labor dedicated to each respective sector created a balanced value. We determine labor through necessary labor time.
NOTE: Not all things with a use-value is created by labor, e.g. virgin soil, air, etc. A use-value can have no value. Labor is able to create value, but it is also capable of not doing so.
Marx gives the example a coat=20 yards of linen. That would mean that the coat takes 2W labor time, and the 20 yards of linen has 2W labor time. The element that allows us to say 1 coat=20 yards linen is value. Money is a commodity which is used to express value, it could be gold, cattle, etc.
Now it gets tricky... when there is a series of commodities set to be expressed through the means of gold, it is the "money form of value"; for example:
2 ton Iron 20 yards linen 2 coats = 3 ounces gold 1 table x commodity A
This is the "price form". Prices go up because of an increased amount of labor on the commodity, or a decreased amount on the gold. The opposite is true too.
The circulation of commodities and money is a little weird at first, but I'll try to explain it. There is the sale transaction, the commodity-money(C-M), which exchanges a commodity for money. Then there is the purchase transaction, the money-commodity(M-C), which exchanges money for commodity.
What happens is the two form the C-M-C process, the circulation of commodities; or selling in order to purchase. The equation N x P = V x S, or the number of sales(N) at the average price(P) equals the velocity, or number of transactions,(V) multiplied by the money supply(S).
This all assumes that money is not being hoarded, of course. Then money itself is a commodity. Finally, money, if based on a standard, has its standard as the universal money; that is to say, if money is backed by gold, the unvirsal money is gold.
Transformation of Money into Capital 
The general formula for the circulation of commodities is C-M-C. The opposite is basically the same for the merchant's point of view: M-C-M. However, there is a profit to be "made". If one buys 1000 yds of linen for $20, then sells it for $25, you exchange $20 for $25. So, it is M-C-M', where M'= M + M. That triangle thingy, for those who don't know, means "the difference between"; in this case it would mean $5 surplus-value.
There is a contradiction, though, that the value is expressed through another commodity of equal value. Yet the exchange was of unequal values! This surplus-value could be used to get more capital. Well, the difference between M' and M would be the percent which prices are affected.
Every human has labor-power. It is the only commodity which they are born with, and forced to sell in capitalism. There is a limit, however, to how much labor-power that can be expended; old age takes its toll. As Marx says: "The price of the labour-power is fixed by the contract, although it is not realised till later, like the rent of a house. The labour-power is sold, although it is only paid for at a later period."
Citations and Referances 
- Utopian And Scientific - Frederick Engels, March 1880
- 18th Brumaire of Louis Napoleon - Karl Marx, March 1852
- Communist Manifesto - Karl Marx, February 21, 1848.
- The State and Revolution - Vladimir Lenin, 1918.
- Annotations - A Website of a Marxist economist who analyzes Marx's major economic texts line by line.