Engels discusses the theories of modern socialism in chapter two of part three of his book Anti-Dühring: Herr Eugen Dühring's Revolution in Science. We are informed that socialism is a politico-economic theory based on the materialist conception of history. Unlike idealist conceptions that history is based on the great ideas and actions of famous individuals, or guided by spiritual forces, or the expression of a grand plan set up by some deity or other (there are several choices as to which deity came up with the plan). Materialists believe that the existence of the various institutions and social structures that have developed over time, and by which various groups of humans arrange their social institutions, belief patterns, and social relations are to be understood, in the last analysis, by a study of how they interact to make their daily bread (production) and how they come to distribute what they made to each other (distribution). Thus, the causes of the different phases of human development , Engels says, "are to be sought, not in the philosophy but in the economics of each particular epoch."

Today, Engels says (he means the 1870s in Europe but his comments are still as true now as then) there is a growing sense that something is basically wrong and unfair in how our national and international economic system operates. It can't employ all who wish to work, millions of people are living in poverty, famines and droughts brought about by human activity engulf large sections of the globe, and hunger stalks the streets of many of our largest cities, families are homeless and uprooted, and our schools and colleges fail to properly educate the youth to understand the world they live in. Yet a very small group of wealthy people grow richer and richer while the vast majority of humanity suffers and wastes away.

This shows, according to Engels, that new ways of production and distribution have evolved and that the social order we live in has not kept up with these developments. In fact, our social order has become dysfunctional and is holding back all the possible potential improvements in human welfare that the new productive and distributive powers could provide. It is the task of socialists to discover and point out the current impediments which prevent the productive system from reaching its full potential and to discover the means of benefiting all humanity rather than just a small portion. And, he says: "These means are not to be invented, spun out of the head, but discovered with the aid of the head in the existing material facts of production."

<snip>

This mode of production, the creation of commodities for a market, has come to be called capitalism. The first capitalists found themselves subservient to a powerful ruling class of nobles consisting of feudal lords and (mostly) hereditary monarchs who lived by means of the agricultural exploitation of serfs and taxation of the income of the developing bourgeoisie. This ruling class stifled the productive capacity of the of the bourgeoisie and prevented it from reaching its true potential. In other words, the bounds within which the feudal system restricted the capitalists were incompatible with that class's growing mode of production and so, Engels says, the "bourgeoisie broke up the feudal system and built upon its ruins the capitalist order of society."