See L. P. Adams and R. L. Aronson, The History of Workers and Industrial Change (1957); J. Kuczynski, The Rise of the Working Classes (tr. 1967); S. Avineri, The Social and Political Thought of Karl Marx (1968).
Marxism sees the proletariat and bourgeoisie (merchant class) as occupying conflicting positions, since (for example) factory workers automatically wish wages to be as high as possible, while owners and their proxies wish for wages (costs) to be as low as possible.
In Marxist theory,the proletariat may also include (1) some elements of the petite bourgeoisie, if they rely primarily but not exclusively on self-employment at an income no different from an ordinary wage or below it, and (2) the lumpen proletariat, who are not in legal employment. Intermediate positions are possible, where some wage-labor for an employer combines with self-employment. Socialist political parties have often struggled over the question of whether they should seek to organize and represent the entire proletariat, or just the wage-earning working class.
According to Marxism, capitalism is a system based on the exploitation of the proletariat by the bourgeoisie (the "capitalists", who own and control the means of production). This exploitation takes place as follows: the workers, who own no means of production of their own, must seek jobs in order to live. They get hired by a capitalist and work for him, producing some sort of goods or services. These goods or services then become the property of the capitalist, who sells them and gets a certain amount of money in exchange. One part of the wealth produced is used to pay the workers' wages, while the other part (surplus value) is split between the capitalist's private takings (profit), and the money used to pay rent, buy supplies and renew the forces of production. Thus the capitalist can earn money (profit) from the work of his employees without actually doing any work, or in excess of his own work. Marxists argue that new wealth is created through work; therefore, if someone gains wealth that he did not work for, then someone else works and does not receive the full wealth created by his work. In other words, that "someone else" is exploited. Thus, Marxists argue that capitalists make a profit by exploiting workers.
Marx himself argued that it was the goal of the proletariat itself to displace the capitalist system with socialism, changing the social relationships underpinning the class system and then developing into a communist society in which: "..the free development of each is the condition for the free development of all" (Communist Manifesto).
Marx makes a clear distinction of proletariat as salaried workers, which he sees a progressive class, with Lumpen proletariat, "rag-proletariat", the poorest and outcasts of the society, such as beggars, tricksters, entertainers, buskers, criminals and prostitutes, which he considers a retrograde class.
Arnold J. Toynbee uses the term "internal" and "external proletariat" in his monumental "A Study of History" to describe the groups within and external to the frontiers of the state, who during the time of troubles, the World Empire and the decay of a civilization, are progressively disenfranchised, and come to have little loyalty to the survival of that civilization.