Adam Smith developed an economic system based upon private business, competition, and limited government involvement. He believed that an invisible hand would guide the market towards increased productivity and lower prices. In Smith’s The Wealth of Nations, he wrote about how competition would encourage businesses to find ways of being more productive by mechanizing specialized tasks and urge entrepreneurs, or undertakers, to innovate so that they may make a profit for themselves. A new innovation would result in a short-term profit for the undertaker. The profits emerge from the innovator being the only producer and distributor of the product, for a time they have a monopoly on the market. Soon other businesses take notice of the success of the product; in response they create an imitation of the original product, sometimes an improved version, sometimes a cheaper version. Either way, imitations result in increased competition because several businesses are trying to produce the same good. This competition evens out the incomes of the entrepreneurs, preventing one person from becoming too wealthy. When the incomes start to even out that inspires others to innovate and reap the ...
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... term The Race to the Bottom. This is the idea that businesses will do everything within their powers to cut costs, allowing for them to have larger profits or a lower selling price to undercut their competition. The Race to the Bottom isn’t just an idea; it is a reality. Businesses cut wages, decrease the safety of the work place, and squeeze as much as they can out of their workers. Out of necessity, governments have had to pass laws and regulations to keep workers and consumer safe.
Marx and Smith, two people with a common goal of reducing poverty, with completely different opinions on how to achieve it. Smith believes in the power of the invisible hand to guide businesses to help the poorest of society. Marx believes in the power of the people themselves to help those in the lowest economic classes of society. Each solution is not without its flaws or benefits.
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