The way to save capitalism will be hotly debated in London this week and suddenly the man who predicted its demise is fashionable again. Two writers argue over his legacy.

YES – Boom and bust is inevitable, says Francis Wheedon

“Of course,” the French theorist Louis Althusser wrote, “we have all read, and all do read, Das Kapital.”

What a posturing ninny he was: of course we haven't and we don't. Even Althusser himself, who produced a book on Karl Marx's magnum opus, eventually confessed in his memoirs that he was a “trickster and deceiver” who had read no more than “a few passages of Marx”.

Yet in a broader sense he was right: ever since the publication of Das Kapital's first volume in 1867 — the only one completed in Marx's lifetime — we have read it in the world about us, in the dramas and conflicts of contemporary history.

Like Molière's bourgeois gentilhomme who discovered to his amazement that for more than 40 years he had been speaking prose without knowing it, many have absorbed Marx's ideas without ever noticing. Think of the famous slogan that Bill Clinton's campaign staff stuck on their wall during the 1992 presidential election, “It's the economy, stupid!”, a perfect précis of Marx's argument that we are creatures of our material circumstances.

Since the latest crisis began I've heard many people say that “we're all Keynesians now” — a reference to the most influential economist of the 20th century who challenged the notion that capitalism had a natural tendency to regulate and balance itself. John Maynard Keynes, who was born in the year of Marx's death, argued that its occasional crises were intrinsic to the system, not negligible aberrations.

So did Karl Marx. No one claims that we're all Marxists now but I do think the old boy deserves some credit for noticing that it's the economy, stupid — and that many of the apparently omniscient titans who ascend the commanding heights of the economy are not so much stupid as downright imbecilic, driven by a mad exploitative greed that threatens us all.

Marx's work is not holy writ, despite the strivings of some disciples to present it as such. The fact that he brilliantly discovered a new continent — the contours of capitalism, with its precipitous cliffs and fatal crevasses — doesn't mean that he mapped it all correctly. The fall of the bourgeoisie and the victory of the proletariat have not come to pass.

Even so, he exposed for the first time that capitalism is a force of creative destruction, and that its most lethal wounds may be inflicted by its own weapons. “All that is solid melts into air,” he wrote — as good a summary as one can imagine for the headlines of the past year, which revealed even apparently robust and prudent Scottish banks to be as flimsy as Posh Spice's underwear.

Gordon Brown told me almost a decade ago that he had read and admired one of my books about Karl Marx. Why, then, did he keep reciting that ridiculous ­mantra, “No return to boom and bust”? Marx, for all his faults, would never have said anything half so silly. Even in capitalism's infancy he could see that it depended on boom and bust, just as humans live by inhaling and exhaling.

In the Communist Manifesto of 1848, Marx noted “the commercial crises that by their periodical return put on trial, each time more threateningly, the ­existence of the entire bourgeois ­society”. As every war contains the seeds of another war, so each crisis makes the next crisis inevitable.

The credit crunch was caused by ­reckless lending and spending. What was Gordon Brown's solution? To urge the banks to lend even more. “That is to say,” as Marx wrote more than 150 years ago, “by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.”

The first consequence of a recession is a huge fall in prices and depreciation in capital; but that restores the rate of profit, enabling investment and growth to resume. “And so we go round the whole circle,” Marx wrote in Volume 3 of Das Kapital. “The same cycle of errors is pursued once more.”

In the 1990s, after the fall of the Berlin Wall and the collapse of Soviet communism, Marx's sibylline warnings seemed to have been confounded. Things — as D:Ream sang — could only get better. Marx was now irrelevant, obsolete, exploded.

Not for long. Even those who gain the most from financial instability have begun to question whether it is sustainable. “The capitalist system by itself shows no tendency towards equilibrium,” says the billionaire speculator George Soros. “The owners of capital seek to maximise their profits. Left to their own devices, they would continue to accumulate capital until the system became unbalanced. Marx and Engels gave a very good analysis …”

While all that is solid melts into air, Marx's vivid portrayal of the forces that govern our lives will never lose its ­resonance, or its power to bring the world into focus.

* Francis Wheen is author of Marx's Das Kapital: A Biography, published by Atlantic Books.

NO – the class system has fallen apart, says Emma Duncan

With share prices continuing to collapse, one stock is riding high: that of Karl Marx. Sales of his work have soared since last summer. Peer Steinbruck, the German foreign minister, recently commended “certain parts of his thinking”.

Nicolas Sarkozy has been photographed reading Das Kapital. Even the Pope has put in a good word for his analytical powers.

A German director has just produced a movie about him (at more than nine hours long it is perhaps not for casual students of his thought). Now a Chinese company is planning Marx: the ­Musical.

The international revival of enthusiasm for Marx has reached London, where men with intellectual stubble sit around late at night discussing whether the inevitable crises of capitalism create the conditions for workers' revolution, while their wives look at their watches and wonder whether the babysitter is going to withdraw her labour.

Marx, in other words, is fashionable in a way that he hasn't been since the 1930s, when news of the horrible reality of the regime that his ideas had engendered began to seep out of the Soviet Union.

One reason Marx is getting a second hearing is that he said that capitalism would be racked by crises. To those who thought that boom and bust had been banished, history had come to an end, and we could therefore put our feet up and enjoy the benefits of democracy and the profits of capitalism, along with a nice cup of tea, this might make him sound like a prophet for our times. But the idea that this revelation is unique to Marx is daft. All of history's serious economists understood that the ­economic system is unstable, and that crises are consequently to be expected.

What's more, to suggest that Marx was right because he said capitalism was unstable is like saying that Hitler was right because he thought we should take more care of the environment. Both had larger and more important things to say; and it is on their wider message that they should be judged.

Marx was interested in capitalism's crises because he thought they would eventually lead to revolution. That's the other reason why people are interested in Marx today. If he was correct about capitalism's crises, the men with the stubble hope, then maybe his prediction that the whole system would fall apart will also be fulfilled.

It won't, because the world Marx was writing about looks nothing like ours. He thought the driving force in society was class conflict between the bourgeoisie — the rich, who owned the factories — and the proletariat — the poor who owned nothing but their labour. The proletariat would get fed up with ­economic crises, seize the factories and establish a dictatorship. Class war would thus destroy capitalism.

Class war may have been a reasonable way of looking at the world in Dickensian London, where Marx lived and wrote, when a third of children died in infancy, but a lot has happened since then. People have the vote. The government takes more than a third of the nation's income in tax. Nobody starves. Everybody gets free health care and education.

Most importantly for Marx's theory, the class system has fallen apart. Sure, some people have bigger houses and smarter accents than others. But Marx was talking about more than vague antipathy between hoorays and chavs. He required the means of production — land, offices, factories, machinery — to be controlled by a small group of owners: fat cigar-smoking capitalists who paid the mass of workers just enough to allow them to multiply, while the owners' profits grew and grew.

Today's wage-earners are not an undifferentiated mass. They include footballers, estate agents, molecular biologists, website designers and florists: people with different incomes and needs. Many earn generous salaries; many enjoy what they do. The unskilled labourers who made up the bulk of the working class in Marx's day, and whom he expected to man the barricades, have been reduced to a tiny rump.

What's more, the central idea in Marxism — that the interests of the workers and owners were separate and opposed — is no longer true. Anybody who has a pension or life insurance owns part of the means of production because the pension funds and life insurance companies are the biggest owners of shares in companies in the world. The bourgeoisie and the proletariat are thus the same people these days, so the class war which Marx thought would bring the system down is over.

I visited Marx's grave in Highgate Cemetery a couple of weekends ago. Somebody had put orchids on it. I'm glad he's there, because his presence is ­evidence of how important London was to intellectuals at a time when people were not allowed to speak and write freely in the rest of Europe. But I'm also very glad that he was, in the end, wrong. Capitalism is going through one of its periodic crises but it will recover soon — and a good thing, too, since it has done a great deal better by all of us than what he had in mind.

* Emma Duncan is deputy editor of The Economist.

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