Marx viewed history as the constant struggle between oppressor and oppressed. In the ancient world, we find the master and the slave. By the Middle Ages, society had moved on to feudalism-- lords and serfs (serfs were different from slaves in that they were bound to the land of an estate, while slaves were considered the property of a given person). When the burgher class of the Middle Ages overthrew feudalism, the lord-serf dichotomy was replaced by that that exists between the two modern classes: the bourgeoisie and the proletariat. The etymology of the word "bourgeoisie" is French in origin, and can be traced to burgeis or bourjois (town dweller), which are related to the English variant, "burgher." In the Middle Ages, the burghers developed as a class that didn't really fit into the conventional feudal order of lords, vassals and serfs. Mainly comprised of merchants and other non-farming types, they represented a shift from agrarian culture (which was a result of the unstable culture of Late Antiquity and the early Merovingian era of the Middle Ages) towards a more town-based society. Burghers were commonly younger sons of feudal lords who were forced to make a living on their own, as they would not inherit the lord's estate.
A depiction of medieval feudalism
Over time, a town-based burgher class evolved. This would eventually become the bourgeoisie of capitalism.
According to the Marxist view of history, the bourgeoisie eventually acquired sufficient education, influence and capital to overthrow the existing feudal regime and replace it with a new economic system-- capitalism. Capitalism was no better than the preceding economic systems in that it still entailed exploitation of the lower class-- the proletariat. The main difference between capitalism and feudalism was that capitalism seemed to allow the lower classes some say in their destiny and position in society. This delusion was called "false consciousness." In reality, the proletariat was just as oppressed as serfs had been under feudalism.
Above and below: The proletariat of the 19th Century.
Since Marx saw history as an inevitable historical evolution of the relationship between oppressor and oppressed, he hypothesized that when capitalism had reached its highest level of development (or, to put it another way, its highest level of exploitation of the proletariat), the proletariat would break out of their false consciousness and overthrow the bourgeois regime. A brief period would ensue that Marx called the "dictatorship of the proletariat." The government would quickly collapse, however, thrusting society into a perpetual communist utopia.
Marx's view of communism did not work in the same way that it has been practiced in places like the Soviet Union and China. He saw communism as a natural phenomenon that would work in a similar fashion to the "invisible hand" of capitalism-- no centralized controlling body would be needed. This would work because Marx saw human nature as innately good. He believed that all people wanted to live in peace and harmony, and that if only the oppressive class (the bourgeoisie) could be eliminated, there would be no impediment to perpetual utopia.
Taking this into consideration, communism has never been practiced in the world (at least as far as we know). The major difference is that countries that became communist in the 20th century were, for the most part, not developed, and in some places not even capitalistic. The communist revolution was led by a small group of elites, called the "Vanguard of the Proletariat," which was supposedly acting on behalf of the common people. Since the proletariat did not initiate the revolution, Marx would likely have said that communism as practiced in the 20th century was not really communism at all, but just another incidence of one class oppressing another.
As a result of what I have just outlined, there are some interesting questions for the political theorist to consider. Is Marxist communism a discredited ideology, or is it something that could potentially happen in the future (the most likely candidates for Marxist communism would, in fact, be developed, capitalistic democracies such as the United States and some countries of Europe)? Is communism, and the view of human nature that it assumes, consistent with human nature as it really is?
The conventional view of socialism (as conceived by political theorists such as Frederic Bastiat) is that it is a transitional phase that leads to communism. On the other hand, many modern political theorists have put forward the idea that becoming socialist is the best way to avoid becoming communist, because socialism addresses problems of inequality while still maintaining, to some extent, institutions such as capitalism and democracy. At its simplest, communism was the hypothetical embodiment of ideals like equality, justice and fairness. Stated communist aims included abolition of child labor and equal rights for women. Since many communist aims have now been achieved without actually implementing communism, one could argue that communism is not necessary to solve the very real problems that Marx saw with capitalism.
In short, the modern popular view of communism is somewhat incomplete. The only experience the world has with communism is the perhaps counterfeit version created by people like Mao and Lenin. The question of the merit of communism as envisioned by Marx remains to be answered definitively.
A communist party.