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Contribution of adam smith to capitalism
Marx view of communism essay
Marx view of communism essay
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Adam Smith and Karl Marx are undoubtedly two of the finest economic minds of the eighteenth and nineteenth centuries respectively. Karl Marx was a revolutionary political philosopher and believed that those with means would invariably use their power to exploit the working class beneath them, and viewed communism and revolutions as an eventuality brought about by this rift between rich and poor. Adam Smith posited that individuals should own the means of production and reinvest said capital for the betterment of society, a system that he believed would allow equal opportunity for gaining wealth. Both men had big ideas pertaining to what is known as classical economics (with Marx even drawing inspiration from Smith); but while Smith is one
He postulated that a free market economy was entirely natural and was consistent with human nature as each person has a drive to improve their own lives. Each man pursuing his own interests and competing would make society better by guaranteeing a fair price for goods and services while also spurring constant economic innovation to keep pace with growth. In Smith 's mind, competition was responsible for keeping the prices of goods and services low because if a person was unhappy with a business they could simply choose to patronize another establishment. Unequal distribution of power was viewed as an imperfection in Smith 's ideal system so he left government intervention as an option if the inequality became detrimental to the free market. This theory, known as the 'invisible hand ' was, to Smith, the ideal system for the flourishing of a society because it allowed for capitalism with minimal intervention from the government. Smith saw the functions of society and the economy as outcomes of individuals, he put a great premium on the actions of individuals acting purely out of self interest as the catalyst for economic success and the well being of society. Smith 's individualistic view was summed up in his most popular work The Wealth of Nations. He wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we
Both men wrote in terms of both the present and future, and made predictions about the outcomes of their respective theories and free market economies. Smith saw a future where the individual pursuit of wealth and happiness reigned supreme, whereas Marx saw the capitalist system as a cycle of exploitation of the working class that would end in violent
As you can see, labor and trade are the key importance to modern wealth. Production and trade are not just needed but are essential for a country to survive. Smith makes it ideal for countries to interact and trade. Trade means you get more directs workers into jobs in which they have a comparative advantage, which means more
Marx’s ideals of communism were drawn from the realization that the cycle of revolutions caused by the class struggles throughout history lead society nowhere. Society as a whole was more and more splitting up into two great hostile camps, into two great classes that were directly facing each other—bourgeoisie and proletariat. According to Marx, in order for society to further itself a mass proletarian revolution would have to occur. The bourgeois, who were the employers and owners of the means of production, composed the majority of the modern capitalists. It was these individuals that controlled the capitalist society by exploiting the labor provided by the proletariats. For example, the bourgeoisie make property into a right because they are the ones with the property. However, without their power force of labor behind them, the bourgeoisie class would crumple. To accomplish a revolution, the workers (proletariats) would need to rise up against the bourgeoisie and take back the factors of production. Marx believed that after the inevitable revolution of the proletariats against the oppressive force of the bourgeoisie, a communistic form of government would take hold.
Adam Smith was a philosopher whose political philosophies was based off of economics. He believed to some extent that there should be a redistribution of wealth, but at the same time there should be a limit to government interference in economy. He wanted the state to end politics that favor industry over agriculture or vice versa, and that business should be left to the business people. He also believed that the government cannot make people virtuous with laws, and that the state should not promote religion or
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’s epistemology divides into four categories: assumptions, categories, relationships, and procedures. His assumptions underlie his argument and include: humans are homo economicus, minimal state presence within the economy, and fair competition across economies. Homo economicus describes human thought process as rational, including when making decisions within the economy. Smith believed the rationality came from the pursuance of the greatest accumulation of wealth. The increases in wealth develop from increases in productivity (and not inefficiency) and is what makes a society civilized instead of savage. Smith theorizes that productivity comes from the division of labor, which facilities the “increase[s] of dexterity in every particular workman”, the “saving of time which is commonly lost in passing from of species of work to another”, and “the invention of a great number of machines which facilitate and abridge labour”. Smith’s least optimal work is unskilled, lazy, and with little creativeness. An example Smith uses is pin-making, where before the division of labor one uneducated worker could make no more than twenty pins. With the division, the 18 distinct operations were divided between 10 workmen and together they could make 48,000 pins in a day. However, Smith is not without his critics. David Graeber writes
Adam Smith was the first person to publish ideas about the markets. He suggested that a free market was the most viable and sturdy option for the economic system, as it meant that there could be no governmental regulation. This was an advantage as selfishness of the individual creates competition
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...
Karl Marx, a German philosopher, saw this inequality growing between what he called "the bourgeoisie" and "the proletariat" classes. The bourgeoisie was the middle/upper class which was growing in due to the industrial revolution, and the proletariats were the working class, the poor. These two classes set themselves apart by many different factors. Marx saw five big problems that set the proletariat and the bourgeoisie aside from each other. These five problems were: The dominance of the bourgeoisie over the proletariat, the ownership of private property, the set-up of the family, the level of education, and their influence in government. Marx, in The Communist Manifesto, exposes these five factors which the bourgeoisie had against the communist, and deals with each one fairly. As for the proletariat class, Marx proposes a different economic system where inequality between social classes would not exist.
Adam Smith is widely regarded as the father of modern economics and one of the greatest economists throughout the course of history. He is mainly famous for two books that he wrote, these two books are considered the base and infrastructure of the world of economics. The two books he wrote were, “The Theory of Moral Sentimental” and “The Wealth of Nations”. But although Adam Smith was such a great economic philosopher, he wasn’t a very good forecaster or future predictor. The economic scenario now is very different from the economic landscape of the 1700’s.
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 is in regards to human nature and how the division of labour emerges from self-interest.
Smith's formulation transcends a purely descriptive account of the transformations that shook eighteenth-century Europe. A powerful normative theory about the emancipatory character of market systems lies at the heart of Wealth of Nations. These markets constitute "the system of natural liberty" because they shatter traditional hierarchies, exclusions, and privileges.2 Unlike mercantilism and other alternative mechanisms of economic coordination, markets are based on the spontaneous and free expression of individual preferences. Rather than change, even repress, human nature to accord with an abstract bundle of values, market economies accept the propensities of humankind and are attentive to their character. They recognize and value its inclinations; not only human reason but the full panoply of individual aspirations and needs.3 Thus, for Smith, markets give full expression to individual, economic liberty.
The central thesis of The Wealth of Nations is that capital is best employed for the production and distribution of wealth under conditions of governmental noninterference, or laissez-faire, and free trade. In Smith’s view, the production and exchange of goods can be stimulated, and a consequent rise in the general standard of living attained, only through the efficient operations of private industrial and commercial entrepreneurs acting with a minimum of regulation and control by the governments. To explain this concept of government maintaining laissez-faire attitude toward the commercial endeavors, Smith proclaimed the principle of the “invisible hand”: Every individual in pursuing his or her own good is led, as if by an invisible hand, to achieve the best good for all. Therefore any interference with free competition by government is almost certain to be injurious.
Marx believed Capitalism would eventually self-destruct because of the tension it creates, and would be replaced by Socialism. Marx felt eventually the masses or the common people would rise up and create a society free of classes. Marx fought tooth and nail for implementation of this new society, arguing the working class should demand this social-economic change.
Karl Marx emphasized a lot on the importance of socialism in society. In his theory, socialism was the only way to end the huge in socio-economic classes. He condemned the emergence of capitalism and the growth of industries that made disunited employers and employees as captured in his theory of labour. In his view, under capitalist production, a great number of people, more often than not, are confiscated from their rewards after so much hard work, and have utterly no control over the environment in which they work under. Jobs no longer reflect human imagination, but rather an insignificant method of generating more profits to enrich modest elite. Marx 's fixation on class reflects even today 's post-modern, socially dynamic world. Marx ideas
...llow the “invisible hand” to guide everyone in their economic endeavors, create the greatest good for the greatest number of people, and generate economic growth. Smith also delved into the dynamics of the labor market, wealth accumulation, and productivity growth. His work was later discovered to be precise, after the Great depression took place allowing the governments interference by reducing taxes and increasing governments spending.