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 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. Marx did not believe that the same economic rules governed all of history, but that each new era brought with it new economic factors. 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." Marx also believed that the same ideas could not grow out of just any economic system:'Don Quixote long ago paid the penalty for wrongly imagining that knight-errantry was compatible with all economical forms of society.'
The young Marx hence criticized man's alienation. "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.
Other Marxists and Marx-scholars—including Eduard Bernstein, Gerald Hubmann, 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 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. In Socialism: Utopian and Scientific Engels notes how the same material conditions and class situation led to different political situations in Britain as that society tried to adapt to the results of the French Revolution and other external events. Richard Wolff also notes that Marx studied things he thought under appreciated by mainstream academia but did not proclaim or think their theories to be irrelevant.
However, some have viewed Engels' claim to not being an economic determinist as an attempt to extricate himself from an untenable position: Max Weber and other influential sociological and economic thinkers agreed that Marx's views were really unidimensional in regard to economic determinism. They did not believe that economic determinism was a vulgar interpretation of Marx, but regarded this to be the explicitly stated and true interpretation of Marx. They criticized the perceived 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).
The dynamic of history according to Marx was shaped precisely by clash of interests determined by material conditions, like inequalities between clearly separate groups (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.