Paper written for my introductory philosophy class (got an A, for what it's worth)
Marxism is based upon the assumption that private ownership of property is unethical. This stems from the perceived inequity afforded workers employed by a property owner who controls their means of production under a capitalistic political and economic system. Capitalism is based on the private ownership of production-the firms, workplaces and finance system. Capitalists make a living on this ownership by getting profit on their investments. There may be some parts of the economy under public ownership, but the privately run big companies are the most important part.
The "working class," as defined by Marxism, are those who exchange labor for wages. Marxism makes a clear distinction between those who own capital and those who earn a living by selling their labor, often making comparisons to the feudal system in medieval Europe. This distinction is highly misleading. In a free-market economy, anyone can own capital and indeed, many if not most "working class" people own stock in major corporations. People also have the freedom to move from one class to another and in many situations, so-called class distinctions are vague and mostly meaningless.
Marxism also holds that labor creates value, that workers create the wealth. Labor does play a big part in the production of goods, but capital and organization is in truth, even more important. It takes a huge amount of overhead in terms of machinery, tools, raw materials, administration and coordination to produce a car, for example. Workers are not compelled to work as under the feudal system, either. Companies hire workers of their own free will, and competition between companies keeps the working wage at a reasonable level, just as market competition regulates the prices of goods.
It all comes down to a fundamental argument about whether or not private ownership of property is moral. The fact that a free-market economy is both efficient and productive, whereas a communist economy is inefficient and sluggish aside, the primary reason Marxism is wrong is that it devalues the individual. The right of private property follows from the principle that human beings are first, and foremost individuals. When you think of a particular person, the single most important attributes you associate with that person are applicable specifically to that person, not to the group or society to which they belong. One's identity is not racial, professional or religious- it is individual. People make individual choices, and because of this, ethics, on the most basic level, must deal with how individual people interact with one another. Individual sovereignty demands that people be allowed to own that which belongs to them. The state has no right to assume ownership of all goods. Indeed, if you concede the state this much, that the state should be turned into something in effect resembling a nursing home, you lose all freedom in exchange for the security of less personal responsibility.