Paper Topic:

Adam Smith and Karl Marx: Contrasting Views of Capitalism

Karl Marx and Adam Smith : Contrasting Views of Capitalism

Introduction

For centuries , philosopher-economists have given rise to a myriad of theories in an attempt to find that which perpetuates the most effective and profitable economy . Albeit contested , a famous school of thought in this field is Classical Economics . It school is deemed the first modern school of economic thought . Two economists belonging to this genre are Adam Smith and Karl Marx , who were advocates of capitalism and socialism , respectively

Dubbed as the father of economics as a science , Smith merged economics

br with moral theory as a standard for man 's lifestyle . More importantly his explanation of market forces and the state 's role in economics serves as the foundation of the capitalist economic system of modern times . In 1700s , at a time when a mercantilist society persisted , Smith authored An Inquiry into the Nature and Causes of the Wealth of Nations which is the first comprehensive defense of free market policies . In the book , Adam Smith identified three pillars of free market economics namely : division of labor pursuit of self-interest and free trade

Karl Marx , on the other hand , finds fault in the ideology and practice of capitalism , as it breeds class-consciousness and is inherently unfair because it favors the wealthy and exploits the poor . In 1800s , Marx authored Das Kapital , which condemns capitalism because of its desire and ability to achieve maximum profits , private ownership , lack of central planning , and exploitation of labor

Although extreme opposites in political perspective , Marx and Smith belong in the same school of economic thought - such classification indicates that their respective ideologies are parallel despite their glaring contradictions to one another . The former is a champion of communism and the latter a proponent of capitalism . This provides comparisons and contrasts of these economic theories , and finds the point at which their ideologies differentiated

This is divided into four sections . The first section discusses the importance of production and labor in the economic process . The second section compares and contrasts Marx 's and Smith 's take on the labor theory of value . The third section discusses Smith 's rationale about capitalism and Marx 's indictment of it and his corresponding solutions found in communism . Lastly , the fourth section the theory of the invisible hand

Importance of Production Labor

Marx advocated a historical materialist view of society and the world - he believed that men create change in their lives and in their environment through practical activity in the practical world (Wolff 2002 . Such activity leads to the desire to meet the needs of people in society . The need to meet these desires leads to production . In this relation , Marx identified the four-part economic process , namely : 1 production 2 ) distribution 3 ) exchange and 4 ) consumption

Consumption cannot exist without production . According to Marx production is twofold consumption , subjective and objective : the individual not only develops his abilities in production , but also expends them , uses them up in the act of production , just as natural procreation...

11 pages

56.0 KB

Free sing-up