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In "The Communist Manifesto", it is said that:
"The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the laborers, due to competition, by the revolutionary combination, due to association".
What is meant by that ?
"Revolutionary" is ambiguous here, depending on the context; it could mean either backward-looking (the bourgeois/capitalist revolution overthrowing feudalism) or forward-looking (the socialist revolution overthrowing capitalism) or both.
To make things a little more concrete, consider Adam Smith's discussion of a pin factory. In a pre-industrial economy, each pin is made by a single skilled individual. (Smith gives a list of steps that's something like drawing out the wire, measuring and cutting it, pointing one end and capping the other.) Putting a bunch of pin-makers in a single room together doesn't really make them more efficient or productive, because they're each still working individually, one pin at a time.
A factory, by contrast, is organized in what Henry Ford dubbed an assembly line. Each worker is responsible for exactly one step of the process. This (according to Smith) allows for more efficiency and increases production. (For some critical discussion and context, see here.) In the nineteenth century, assembly lines made effective use of steam engines (cf https://en.wikipedia.org/wiki/Cotton_mill#/media/File:Cotton_mill.jpg). This was a revolutionary increase in production relative to the old feudal system of piece-work manufacturing.
That was the backward-looking sense of "revolutionary." For the forward-looking sense, consider the social requirements for organizing a factory. An individual craftsperson doesn't need to coordinate their work with anyone else — they work at their own speed, according to their own schedule (more or less). But a factory run as an assembly line requires workers to be coordinated. Each worker needs to work at a certain speed for the assembly line to run smoothly, and workers need to start and stop their work according to strict schedules. Zooming out, whole industries need to be coordinated in the same way — raw materials have to be extracted, finished goods have to be sold to consumers, and everything needs to be transported in between. At the highest level, the entire global economy should be organized to run smoothly. So capitalism requires an elaborate infrastructure for coordinating and organizing productive activity and the transportation of goods, linking the work of each individual worker to the entire global economy.
But who controls this infrastructure? Clearly it would be developed by capital, over time, as ever-greater efficiency and productivity is sought for the sake of ever-greater profits. But, once developed, there's no reason why this infrastructure can't be controlled by the workers, collectively, for the good of all. Furthermore, the workers can use this infrastructure to coordinate their own political activities. (Think of the way socialists used the printing press, cheap newsprint, the mail system, telegraph, radio, and so on to spread revolutionary ideas.) Here's how Robert Paul Wolff put it:
Marx expected, for sound reasons, that the technology of production, communication, and management required for the central planning and control of an entire economy would develop first within capitalist firms, in direct response to the pressures of competition and the demands of profitability. And so they have. An immediate consequence of this process is the transformation of economic calculations into political decisions within the firm. Thus, if by socialism we mean the rationally coordinated planning of an entire national economy in such a way as to transform the major economic choices of the society into political choices, responsive to the will of the people, then it is true that socialism has been growing within the womb of capitalism, or at least that the technical pre-conditions for socialism can be seen to be developing there.
So the association (productive organization) of workers is also revolutionary in this forward-looking sense of creating a critical piece of infrastructure for a socialist society.
Is the forward-looking sense what Marx and Engels had in mind when they wrote the Manifesto? That's probably a stretch: they were only about 30 and 28, and industrialization was still a very new process. It's somewhat more plausible as an interpretation of Marx's Contribution to the Critique of Political Economy, which was written 11 years later. (Wolff's focus in his essay is on the Contribution.)
In simple terms, he is referring to monopolization.
The essential conditions for the existence and for the sway of the bourgeois class is the formation and augmentation of capital; the condition for capital is wage-labour. Wage-labour rests exclusively on competition between the labourers.
Here Marx is saying that the bourgeoisie need capital, capital needs wage labor, and wage labor needs competition. The foundations of all of capitalism is thus competition. If competition ceased to exist, then wage labor would cease to exist, then capital would cease to be useful for the bourgeoisie, and then the bourgeoisie as a class would collapse.
The advance of industry, whose involuntary promoter is the bourgeoisie, replaces the isolation of the labourers, due to competition, by the revolutionary combination, due to association.
It becomes obvious here from this perspective that this paragraph is referring to the destruction of competition, i.e., monopolization in simple terms. This concept is crucial to Marx's economic theories, and is something he develops much further in Capital.
Marx was building on economists before him. Adam Smith wrote,
The owner of the stock which employs a great number of labourers, necessarily endeavours, for his own advantage, to make such a proper division and distribution of employment that they may be enabled to produce the greatest quantity of work possible. For the same reason, he endeavours to supply them with the best machinery which either he or they can think of. What takes place among the labourers in a particular workhouse takes place, for the same reason, among those of a great society. The greater their number, the more they naturally divide themselves into different classes and subdivisions of employment. More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented.
Adam Smith argued that capitalists (employers/business owners) in a competitive market would want to reduce labor time as much as possible, they would much rather their workers produce, let's say, 10 cellphones an hour than 1 cellphone an hour. This is known as worker productivity, and capitalists would strive to make their workers as productive as possible. Thus, it is in the capitalist's interests to innovate, to invest in new technology and machinery, and to invest in research.
Marx agrees with Smith that capitalists would want to innovate. Fundamentally, the reason employers innovate it to cheapen the price of commodities. If they can produce the commodity cheaper than their competition, they can undercut them, so they want to make the production process as productive as possible.
The battle of competition is fought by cheapening of commodities. The cheapness of commodities demands, caeteris paribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller.
The problem with this that Marx points out is that this inherently means that larger capitals defeat smaller capitals, large businesses crush small businesses. Most people know someone who has complained about Walmart coming into the town and bankrupting all their local grocery stores. It's just inevitable since that's the reason capitalists innovate in the first place.
It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and in inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish.
Here Marx points out one of main reasons why small businesses cannot compete with large ones. As large businesses industrialize and become more and more technologically advanced, the cost of operating a business at that scale becomes ever so larger, and the cost of investing in that new technology, the barrier of entry for new businesses, becomes ever so larger.
Therefore, small businesses, or new start-ups, simply do not have the wealth necessary to compete. Most will go bankrupt, or they will move to some part of the economy that is currently underdeveloped and still has competition, but it is only a matter of time before these large enterprises find a way to move into those economic sectors as well.
We see then what Marx means in the Manifesto when he later goes onto say this:
The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie therefore produces, above all, are its own grave-diggers.
Capitalists will tell you the reason capitalism is great is because it is great at "innovating". The point Marx is making here is that this very innovation, the very act of developing industry, inevitably destroys capitalism over time, because the bourgeoisie, that is, the owners of industry, can only make wealth off of capital if they have wage labor, but wage labor can only exist with competition, and the development of industry destroys competition.
Vladimir Lenin in the first chapter of Imperialism, the Highest Stage of Capitalism goes into detail using economic data to demonstrate how this process is occurring in real life, and he summarizes it as such:
Competition becomes transformed into monopoly. The result is immense progress in the socialisation of production. In particular, the process of technical invention and improvement becomes socialised. This is something quite different from the old free competition between manufacturers, scattered and out of touch with one another, and producing for an unknown market...Capitalism in its imperialist stage leads directly to the most comprehensive socialisation of production; it, so to speak, drags the capitalists, against their will and consciousness, into some sort of a new social order, a transitional one from complete free competition to complete socialisation.
In summary, the development industry takes workers out of isolation from one another and puts them into association with one another.
Friedrich Engels uses similar language to this in The Principles of Communism
What will this new social order have to be like? Above all, it will have to take the control of industry and of all branches of production out of the hands of mutually competing individuals, and instead institute a system in which all these branches of production are operated by society as a whole – that is, for the common account, according to a common plan, and with the participation of all members of society. It will, in other words, abolish competition and replace it with association.
What Engels is saying here is that in a post-capitalist, socialist society, competition would be replaced by association. You would no longer have competition between individual economic firms, rather, all workers would work in cooperation with each other according to an nationwide economic plan.
When Marx and Engels criticized capitalism, their criticism of capitalism is not that capitalism is morally bad. In fact, they criticized those who said as much. As Engels writes in Socialism: Utopian and Scientific:
The Socialism of earlier days certainly criticized the existing capitalistic mode of production and its consequences. But it could not explain them, and, therefore, could not get the mastery of them. It could only simply reject them as bad. The more strongly this earlier Socialism denounced the exploitations of the working-class, inevitable under Capitalism, the less able was it clearly to show in what this exploitation consisted and how it arose. but for this it was necessary
What Marx and Engels are trying to point out here in the Manifesto is not that capitalism will fall because capitalism is "bad", but that capitalism will fall because capitalism's foundations are built upon competition, and capitalism itself reshapes the material conditions of the economy over time such that competition is no longer possible.
Therefore, the inevitable conclusion is that capitalism must collapse, and into its place will be a new economic system which favors these new conditions, and this new economic system is socialism.
