Marx observed that the employees of a factory have no claim of ownership regarding what is produced by that factory. The owner of the product is the investor, the capitalist. Marx had a problem with this because it places unbalanced power in the hands of the investor as compared to the worker. Why is the labor of the investor to be valued more than the labor of the worker. Certainly without the investor the product could not have been produced, but it could also not be produced without the worker. This is a very clear example of how investment capitalism is contrary to the spirit of economic democracy and invalidates the capitalist ideal of the free market. Unfortunately Marx made a mistake. He then went on to say that this should be fixed by sharing the products of the factory with the people. The ideal end of Marxism is mutual ownership of all goods by all the people. The first problem is that in the middle of this democratization of goods Marx declares that a revolution should lead to an ultimate centralized power and then that power would dissolve leaving a Marxist utopia. If there's one thing we know about ultimate centralized powers, it's that they don't like dissolving, they'd rather stay ultimate centralized powers. This critique of Marxism is well understood though. The real problem with Marx comes before this. If the problem is the disparity between labor and ownership, then why do we give ownership to the masses? The masses do not work in the factory. The factory workers work in the factory. Some guy in New York did not provide labor to build a car made in Michigan, so why should the New Yorker have equal claim to the car? Marx's conclusion of societal ownership does not match his supporting argument. It is no wonder his theories have led us on a social tangent that has only bolstered support for investment capitalism as the best economic system at our disposal. The natural conclusion to Marx's argument is a company owned by the employees, that every employee of a company should own the products of the company. In this way the labor of the worker is valued equally with the labor of the investor. Furthermore we do not run away from Capitalism, but rather we fix investment capitalism by transforming it into real free market capitalism, Economic Democracy.
Many of the Marxist thoughts are not dependent on the principle of social ownership of goods. Marx's conclusions regarding the proper structure of society and the path social evolution will take seems to be the main tangent caused by this false conclusion. Clearly Marx's conclusion regarding the disparity between labor and ownership is a valid one, as this disparity does lead to a disbalance of power in favor of investors which in turn detracts from the free market and the ideal of Economic Democracy. Many of Marx's other thoughts and ideas are also quite valid as well. As it turn out, however, they are not contrary to capitalism. In fact, the thoughts of Marx can be quite complimentary to capitalism when his conclusion is adjusted. If we shrink the idea of the masses to just the employees we can apply all of Marx's other thoughts to the employees as we would have to the masses. While I am not an expert on Marx, I am confident that many of his ideas could be well applied in such a setting.
Competitiveness and capitalism are very natural for a group. It is human nature to form tribes and lead wars against neighboring tribes. This natural group competitiveness could make for a very strong and efficient capitalism. Our contemporary capitalism, investment capitalism, relies on the competitiveness of individuals. It is with human individual nature to cooperate, so only those few who have a very strong taste for conquest and dominance can win in an individually competitive field. By leveraging group competitiveness an Employee Owned capitalist model means more competitive groups, and thanks to the human disposition for cooperation, these groups will most likely be stronger and more effective than contemporary capitalist groups where the individual only works for a pay check. Group competition brings achievement and competitiveness to everyone, and group ownership encourages greater involvement rather than merely doing enough to keep the job.
An Employee Owned model also creates a buffer between the individual and the harshness of a competitive environment. Not only does this mean that the competition can be even fiercer without harm to the individual and therefore reducing the need for socialist programs, but it also means that individuals can feel safer and more comfortable in their position. Individual competition creates a great deal of stress in individuals and will often result in an atmosphere of isolation, as every man is for himself. As it is natural for humans to form tribes it seems almost obvious that the tribe mentality which leads to a stronger more competitive capitalism also leads to more comfort, safety, and strength for the individual. Most people want to belong to a group, and with Employee Owned capitalism they can. The group is strong and true because of the mutual ownership. The attitude of succeeding as a group and achieving together replaces the investment model of doing enough to keep the boss happy. This increases employee willingness and, most importantly, gives the individual a sense of fulfillment from their job. Going to work just to make money because you have to is not very fulfilling for many people. Going to work to be part of a group and to accomplish something for yourself and for those you are cooperating with is very fulfilling for most people.