1. Materialist Interpretation of History

In his materialist interpretation, Karl Marx stated that conflicts between various classes and groups in human society since ancient times have been based on economic issues.

According to him, the class structure within society always maintains a distinction between the rich and the poor, or the haves and have-nots. The primary reason for this class struggle is the ongoing conflict between the mode of production and the relations of production in the economy.

The mode of production in the economy is always structured with policies and rules that favor the producers or the wealthy class. On the other hand, the relations of production (also known as the ownership of the means of production), such as land, labor, capital, and machinery, are not in favor of the productive forces (laborers).

Karl Marx's materialist interpretation suggests that the class struggle between the propertyless working class and the limited exploiting landlord or capitalist class, who concentrate ownership, drives economic development.

According to Marx, economic development accelerates when there is harmony between the producers and the means of production; otherwise, the economy collapses. Consequently, the economic, social, and political foundations of the economy are destroyed.

2. Surplus Value

Surplus value refers to the additional wage that a worker can obtain by selling their labor for a period longer than the necessary working hours. In his theory, Marx stated that the struggle between the capitalist class and the working class is due to surplus value. In his view, only workers and capitalists are involved in production activities in a capitalist economy.

Capitalists pay workers significantly less than the total value or wages produced by the workers' labor. For example, if a worker works for 8 hours a day at a rate of Rs. 10 per hour, they can earn a total wage of Rs. 80 to sustain their livelihood.

However, the capitalist or producer employs the same worker for an additional 2 hours and keeps the additional earnings of Rs. 20 as net profit. Marx called this unpaid value earned from the worker's additional 2 hours of labor surplus value or the rate of exploitation.

The capitalist directly receives this saving or surplus value, which then serves as a source of capital accumulation. Ultimately, this burden or weight of surplus value destroys the capitalists themselves.

3. Capital Accumulation

The main goal of capitalists is to accumulate as much capital as possible. According to Marx, they adopt three methods to accumulate capital:

First, by increasing the daily working hours of laborers and keeping the resulting surplus value. For example, if a worker works for 8 hours at a rate of Rs. 10 per hour and earns Rs. 80, the capitalist can employ the same worker for an additional 4 hours and extract an additional surplus value of Rs. 40, thereby accumulating more capital.

Second, by reducing the payment for the daily working hours of laborers and keeping the resulting surplus value. For example, instead of paying a worker Rs. 80 for 8 hours of work at a rate of Rs. 10 per hour, the capitalist can pay only Rs. 60 for 6 hours and keep the surplus value of Rs. 20 earned in 2 hours, thereby accumulating more capital.

Third, by using machines and equipment in production. Karl Marx presented the idea that capitalists can accumulate capital by using machines and equipment in addition to laborers in production, thereby producing large quantities at lower costs and earning surplus value. 

The value obtained in this way can be further invested to achieve even larger production, profits, and capital accumulation. Observing that this method reduces production costs and increases profits, producers gradually adopt a policy of eliminating unnecessary laborers from production.

4. Capitalist Crisis

When capitalists increasingly rely on large machines and equipment in production, removing laborers to increase capital accumulation, the surplus value obtained from laborers gradually decreases. Profit earnings decline.

On the other hand, the income of the workers who have been laid off decreases, and their ability to purchase the goods produced by the capitalists using machines gradually diminishes. Consequently, the demand for goods produced by industries decreases, and as supply exceeds demand, market prices fall, leading to a further decrease in profits.

Production is reduced, resulting in a rapid increase in unemployment and a decrease in workers' wages, plunging the capitalist economy into crisis.

Criticisms of Marxist Theory of Economic Development

The Marxist theory of economic development is criticized in different ways by various economists. Some of the main criticisms are as follows:

1. Excessive Focus on Class Struggle
   Marxist theory argues that class conflict between workers and capitalists is the driving force of economic development. But in reality, economic progress can also be achieved through cooperation among labor and capital.

2. Failure to Predict the Adaptability of Capitalism
   Marx predicted that capitalism would collapse due to increasing worker exploitation. However, labor laws, minimum wage policies, and social welfare programs have improved workers’ conditions, that allows capitalism to survive and grow.

3. Neglect of Market Mechanisms
   The marxist theory ignores the role of supply and demand, price mechanisms, and private enterprises in economic development. In practice, competitive markets play a significant role in to improve efficiency and innovation.

4. Lack of Practical Implementation
   Although Marxist ideas were adopted in some countries, most socialist economies failed to achieve sustained economic development due to inefficiency, lack of incentives, and failures of central planning.

5. Overemphasis on Historical Materialism
   Marxist theory assumes that economic development follows a fixed historical pattern from feudalism to capitalism and then to socialism. However, different countries have developed in different ways, which contradicts this rigid framework.