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Katelyn Curto
Professor Frangos
CH 400
February 26 2014
An Inquiry into the Wealth of Nations and The Communist Manifesto: A Comparison
While Adam Smith’s An Inquiry into the Wealth of Nations was considered the “bible of modern capitalists,” The Communist Manifesto by Karl Marx and Freidrich Engels was seen as a doctrine for communism. Both writings were first brought important economic ideas to light and are still considered extremely influential works.
First published in 1776, The Wealth of Nations was the magnum opus of Adam Smith. In the novel, he studies the economics of what builds a nation’s wealth and the benefits of capitalism. He explains that supply and demand is based off of the produce of labor in relation to the number of consumers. In production, Smith explains, division of labor is the most practical approach to manufacturing produce, which led to skill specialization and therefore trade. While it is seen that people are born with certain abilities and distinctive talents that can then be fostered, Smith believes that difference in people come down to habit, customs, and education. Although mercantilism is the idea that the wealth of a nation is measured and ensured in the amount of gold and silver its government favorably balances in trade, it is Smith’s opinion that no regulation of commerce can actually increase the quality of industry beyond what its capital can maintain. Each individual, in his or her economic pursuit in the light of self-interest, can better dictate the economy for the common good. In this laissez faire system of extremely limited government interaction, there are select cases in which encouraging domestic industry would be
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the best for societal benefit, such as ind...
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...e diversely significant works of theological importance to the economy reflect their respective times. An Inquiry into the Wealth of Nations was written at the beginning
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of the Industrial revolution and mirrored the no governmental impact idea that Smith believed would best benefit the promotion of self-interest and the encouragement a better quality of industry. The specialization that provides so many with a specific spot in industrial society as seen by Smith, is considered fruitless after technology took over manufacturing, as Marx and Engels explain in The Communist Manifesto. The self-interest of society has led to the strictly monetary consideration of relationships and self, which is unproductively beneficially only the bourgeoisie. Though both works expansively cover the same central ideas, these writings offer antithesis to economic thought.
Smith, A. (1904). An Inquiry into the Nature and Causes of the Wealth of Nations (5th Ed.). (e. Edwin Cannan, Ed.) London: Methuen & Co., Ltd.
Smith's Influential work, The Wealth of Nations, was written based on the help with the country’s economy who bases it off his book. Smith’s book was mainly written on how inefficient mercantilism was...
Socialism is one of the roles of government in the economy. Adam Smith, who is the father of capitalism, believes in laissez-faire, "hands off" the government. He believes all production should be sale at the best possible lowest price. (Doc 5) While Adam Smith believes in capitalism, Engel is criticizing it. Engel believes the capitalism seizes everything for themselves but not the poor, they remain nothing. (Doc 7) Karl Marx, the author of a 23 page pamphlet, "The Communist Manifesto", and Engels recommend that all the working men of all countries should unite and is to be equal, should overthrow of all existing social conditions.
Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, (London: 1776), 190-91, 235-37.
Smith and Marx agree upon the importance of capitalism as unleashing productive powers. Capitalism is born out of the division of labour... that is, it is made possible by dividing jobs up into simple tasks as a way of increasing efficiency. By increasing efficiency, then everyone can produce more than they personally need. The extra produced can go towards the accumulation of capital, (machines, more land, more tools, etc) which will allow for even more increased efficiency and production. Both thought that this increased production was great. But Marx said that capitalism was only one stage... that every country must go through capitalism, to get that increased production, but that capitalism is unstable. It requires expanding markets and will end up creating a large gap between the wealthy and the poor, with more and more people becoming poor. Because of this instability, he thought that it would eventually collapse.
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Edwin Cannan. 1904 ed. London: Methuen, 1776. Library of Economics and Liberty. Web. 4 May 2014. .
In the Humanistic Tradition the author, Gloria Fiero introduces Adam smith as a Scottish moral philosopher, pioneer of political economy, and a key figure in the Scottish Enlightenment. Smith also known as the Father of Political economy, is best known for one of his two classic works An Inquiry into the nature and causes of the Wealth of Nations. Fiero looks at Smith’s work because the division of labor is important. One thing Smith thinks is even more important for creating a wealthy nation, is to interact and have open trade with different countries. Fiero states,“It is necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter,
The pivotal second chapter of Adam Smith's Wealth of Nations, "Of the Principle which gives occasion to the Division of Labour," opens with the oft-cited claim that the foundation of modern political economy is the human "propensity to truck, barter, and exchange one thing for another."1 This formulation plays both an analytical and normative role. It offers an anthropological microfoundation for Smith's understanding of how modern commercial societies function as social organizations, which, in turn, provide a venue for the expression and operation of these human proclivities. Together with the equally famous concept of the invisible hand, this sentence defines the central axis of a new science of political economy designed to come to terms with the emergence of a novel object of investigation: economic production and exchange as a distinct, separate, independent sphere of human action. Moreover, it is this domain, the source of wealth, which had become the main organizational principle of modern societies, displacing the once-ascendant positions of theology, morality, and political philosophy.
The German thinker, Karl Marx (1818-1883), wanted to understand and explain the changes that occurred in society at the time of the Industrial Revolution in Europe. (ibid) In 1843 Marx met Engels in Paris. It marked the beginning of a lifelong of friendship and professional collaboration. In 1848 Marx and Engels published “The Communist Manifesto”. The Manifesto outlined the struggles between classes. From then onwards it has become apparent that Marx was not an economist. His theories are a combination of economics, history, sociology and politics. Marx moved to London in 1849 where he spent the rest of his life.
Thomas Robert Malthus's research was very significant, it helped provide insight on the possible dim future with the geometrical progression of population, while the rate of food production would only be at the arithmetical progression. These ideas heavily counteracted Smith's theories because it showed a very possible catastrophic future, if the economy was to be governed by natural laws. There is also David Ricardo's iron law of wages, which said that since reproduction rates were always unsupervised labour's natural wages would stay at subsistence level. This theory was extremely effective against smith's theory of natural laws because it was highly plausible that labour wages would always be very low. In addition, Karl Marx theory of the labour theory of value was also very vital to the study of economics, because it gave provides us with knowledge on how capitalism might fail because the labourers would feel exploited for their
...would also trigger an unintentional effect that would eventually benefited the society as a whole by maximizing the total profit if individuals all follow their self-interest to behave. Newbert explained “For, only capitalism allows individuals to automously choose their own course of action, provided that in so doing, they do not violate the rights of others by forcing them to buy or sell a given product or service” (Newbert 2003, 253). From here, we can realize Smith’s insight towards the early form of capitalism. Finally, Smith’s suggested that free trade is the only way that helps a nation to sustain stable economic growth. He thinks that mercantilism is a barrier of the growth of a nation. He claimed that a nation will be able to maximize the wealth only if they use their competitive advantage on production and trade the surplus under the free trade economy.
Although this view has undergone considerable modification by economists in the light of historical developments since Smith’s time, many sections of The Wealth of Nations notably those relating to the sources of income and the nature of capital, have continued to form the basis of theoretical study of the field of political economy. The Wealth of Nations has also served as a guide to the formulation of governmental economic policies.
Adam Smith's Wealth of Nations was published in 1776, coincidently the same year as the Declaration of Independence, is considered by many economic scholars to be the early framework of capitalism. Smith’s “invisible hand” metaphor explains how the motivation of the individual, a strong workforce and a decentralized market are the driving forces for economic prosperity. According to Dr. Crowley:
The division of labour described by Adam Smith in The Wealth of Nations is a product of individual self-interest. This is representative of Smith’s methodological individualist interpretations of human nature. Adam Smith deduces that the division of labour is beneficial to the individual, as it is in one’s own interest to work less whilst still engaging in tasks that are to their own specialities. Highly specialized work is beneficial for nations to grow economically whilst allowing individuals to further pursue their own rational self-interest. To further explain the concepts that Smith proposes I will first explain what rational self-interest in regards to human nature and how the division of labour emerges from self-interest. Secondly, I
Adam smith argues that the amount of labor used in production of a commodity determines its exchange value in a primitive society; however, this changes in an advanced society where the exchange value now includes the profit for the owner of capital.