In his monumental work, Das Kapital, Karl Marx (1818-1883) tried to show that capitalism was both inefficient and immoral. His key to explaining capitalism is his labor theory of value, which he developed from ideas of Adam Smith and David Ricardo.

Marx argued that all profit, rent, and interest are "surplus-value", obtained by paying workers less than the value of their products. He maintained that the living conditions of the workers always tend to deteriorate, that competition automatically creates monopoly, and that the business cycle demonstrates the wastefulness of capitalism.