Marx used the term mode of production to refer to the specific organization of economic production in a given society. A mode of production includes the means of production used by a given society, such as factories and other facilities, machines, and raw materials. It also includes labor and the organization of the labor force. The term relations of production refers to the relationship between those who own the means of production (the capitalists or bourgeoisie) and those who do not (the workers or the proletariat). According to Marx, history evolves through the interaction between the mode of production and the relations of production. The mode of production constantly evolves toward a realization of its fullest productive capacity, but this evolution creates antagonisms between the classes of people defined by the relations of production—owners and workers.

Capitalism is a mode of production based on private ownership of the means of production. Capitalists produce commodities for the exchange market and to stay competitive must extract as much labor from the workers as possible at the lowest possible cost. The economic interest of the capitalist is to pay the worker as little as possible, in fact just enough to keep him alive and productive. The workers, in turn, come to understand that their economic interest lies in preventing the capitalist from exploiting them in this way. As this example shows, the social relations of production are inherently antagonistic, giving rise to a class struggle that Marx believes will lead to the overthrow of capitalism by the proletariat. The proletariat will replace the capitalist mode of production with a mode of production based on the collective ownership of the means of production, which is called Communism.

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