Economic deals with study of human nature hence most theories in economic are based on the nature of humans.Adam Smith and Karl Marx are considered as the greatest economists of their time, in fact Smith is regarded as the father of modern economics …
Most of the theories in economics today are based on the ideas of Smith as well as Marx and Keynes. These individuals have different ideas on how the economy works and the best economic system that would ensure the good of all people in the society. They also differ on the role the government is supposed to take to drive the economy to prosperity. All these differences are prompted by the views held by different theorists regarding human nature and this will be the subject of our discussion in the next section but emphasis on the role of human nature in economic theories of Smith and Marx. Adam Smith (1723-1790) As stated earlier, Smith is regarded as the father of modern economics and capitalism. According to him, human beings are social and as such they have a tendency to care for each other. They are also driven by self-interest but this does not deter them from empathizing with and help each other (Skousen, 11). This is the basis of his economic theory written in his book An inquiry into the nature and causes of the wealth of nations or what is commonly referred as Wealth of Nations in 1776 (Das Kapital). This brought about industrial revolution and emergence of capitalism as the dominant mode of production (Hall). The capitalist economy is based on the mechanism of free markets whereby Smith believed that individuals driven by self-interest and not infringing on the rights of others can in the process benefit the whole society (Hall). The market is driven by the ‘invisible hand’ whereby producers produce goods and services and take to market where they meet buyers who are in need of such goods for consumption. In this case, the buyer and seller only meet when exchanging products and do not negotiate on the quantity to be produced or bought (Skousen, 10). Individuals are assumed to self-regulate themselves in this economy and as such there is no need for government intervention unless to provide public goods such as infrastructure and make sure people adhere to contracts. There is thus free movement of labour, capital and goods (11). Smith’s economic theory is also based on economic independence. Natural liberty according to smith is a fundamental human right thus individuals are given freedom to do what they want (Hall). They produce what they want, at a price they want but the principle of justice must be withheld, that is, there is freedom of production and exchange. As such, all the actors in the economy (workers, landlords and capitalists) work in harmony; there is no conflict of interest (Skousen, 27). In such case, Smith assumes that human beings are honest, just according to societal rules. They can therefore, pursues self-interest without offending or ignoring the needs of others but for the benefit of all. Smith did not envision greed and egotism in human nature. Furthermore, capitalists have to consider the interests of consumers if they want to make profit. Human beings are competitive in nature. This according to Smith was not a negative thing but affected the economy positively, that is, is led to economic growth (Hall). Man should therefore “bring his industriousness and capital into competition with those of others to create harmony” (Skousen, 27). Competition leads to determination of prices in the market thus the market is always in the equilibrium. The producer is able to get profit for his produce and the consumer benefits from low prices as well as improved quality (to lower prices, manufacturers improve technology thus produce quality goods at low cost). As such economic prosperity is achieved through economic independence. Karl Marx (1818-1883) Smith and Marx had very different views regarding human nature and as such ...
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“Adam Smith and Karl Marx Economic Theories Essay”, n.d. https://studentshare.net/macro-microeconomics/81088-adam-smith-and-karl-marx.
These rights include the right to posses, exclude others, transfer the object, use the object, enjoy the profits accrued from the object or destroy the object. Most of the civilized societies have laws which guarantee these rights and property ownership can be said to be only as strong as the laws supporting these rights.
He therefore strongly opposed any government intervention into business affairs. Trade restrictions, minimum wage laws, and product regulation were all viewed as detrimental to a nation's economic health. This laissez-faire policy of government non-intervention remained popular throughout the Victorian Era and still plays an important part in present-day economic policy.
The Communist Manifesto (1848) by Karl Marx and The Wealth of Nations (1776) by Adam Smith are documents which make a stand of diverging principles and ideals. The Manifesto sets down the tenets of Communism whereas The Wealth of Nations bases its ideas on Democracy. The Manifesto has its background in the industrialization era.
He shares in the produce of their labor or in the value which it adds to the materials on which it is bestowed; and in the same consists of his profit.” (Wealth of Nations) Tocqueville: “It was no slight task to reunite people who had been strangers to each other or foes for many centuries (and) very difficult to teach them to come to an understanding for the transaction of their common business.
Adam Smith is regarded as the father of modern economics, following his treatise, ‘the wealth of nations’ (Derek, & Steven, 2003). He developed his theory at a time when capitalism was beginning to take shape as the society was gradually moving from feudalism with rapid industrialization in Europe at the time.
While Smith’s theories proved widely prescient, in some regards they clung to an overly idealistic articulation of world processes. This essay examines Smith’s understanding of capitalism and demonstrates why his ideals cannot entirely be followed in the modern world. In the Wealth of Nations Smith established a pure view of capitalism.
requires state intervention to ensure that the prices of labor, land, and money are all controlled only by economic factors internal to that self-regulating market. When social, environmental, religious or national policies interfere with the operating of that self regulating
According to both Adam Smith and Carl Marx, the economic system of today known as the modern industry arose from the development of the industries into global and more specified industries. The economic system today has production reduced from the mere single
According to the researcher, Adam Smith and Karl Marx are individuals that played a major role in the economics field. Their theories have been adopted, referred to and used by several economists in the analysis of concepts. It is important to note that while Adam Smith shows harmony and development, Marx shows struggle, instability and chaos.
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