Marxism isn't dead, just on vacation. And if Marx's problem was being historically anchored, then we would be forced to level the same criticism against every other social scientist and social philosopher. He based his ideas on empirical evidence and made the best extrapolations possible with the data at hand. If the conditions of the working class had remained as they were in Marx's time, his predictions of workers revolutions in the major industrialized nations would no doubt have been fulfilled. Luckily, many leaders in Europe and America were aware of Marx's writings and took his predictions seriously. They, in effect, compromised with Marxist theory and integrated limited socialism and increased regulation to provide enough relief to the working class to avoid revolution. Indeed, much of Franklin Roosevelt's motivation for pushing the New Deal was to prevent a workers revolution in America. He understood that the immiseration of the working class had to be alleviated or all hell was going to break loose.
Marx's biggest shortcoming was his failure to explain exactly how human society was going to arrive at a perfect communist state (recall that the end result was a democratic and egalitarian society free from private property). He explains why a workers revolution would occur and the necessity of a strong central government to oversee the transition of society and ideology, but he never really explains just how that strong central government goes away. It's irksome to read that this strong central government will just 'gradually wither away' after reading his meticulous explanations of why and how everything else would occur. It's enough to make you want to buy stock in Wal-Mart!