Adam Smith and Karl Marx are possibly two of the most recognized social as well as economic thinkers among others in history. Both of them wrote on capitalism or an economic framework in which the industry is regulated hugely by private entities with the intention of earning returns. Born in the 1720s in Scotland, Smith is believed to be the father of contemporary economics (Jordan, 2018, p. 293) . He came up with models that are very instrumental in the modern economic field today. He died in 1790 (Kocka, 2016, p. 34) . On the other hand, Karl Marx was born to this world in 1818 to a rich and educated family in Germany, quite later after the death of Smith (Gronow, 2016, p. 227) . In the university, Marx studied law but speedily changed his focus to philosophy. Marx is known for being one of the most significant figures in social and economic thinkers, and his work is still resourceful in assessing modern capitalist systems. As much as both Smith and Marx wrote on capitalism, they had varied suppositions regarding the operations of the economy and society that is worth considering.
Similarities and Differences between Adam Smith and Karl Marx
It is simple to recognize where and how Marx and Smith differed from one another in terms of ideologies on political and economic field. Smith composed The Wealth of Nations during the last years of 1700s, a time when a mercantilist culture was still experienced (Taylor, 2018, p. 122) . He understood the essence of a better and an efficient economy that profits everyone and the government concurrently (Stilwell, 2012, p. 88) . A framework of free trade was a very evident solution to this since it accorded each person the chance to own his own property and live the way they wished (Milios & Dimoulis, 2018, p. 46) . If an individual was not content with the kind of life he lived or the choices he made, a free trade society gave them the chance and ability to navigate through from one career to the next. Smith simply imagined about such a free society. He did not in practicality experience this free society and there is where the difference with Marx begins.
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Marx produced his book in the last years of 1800s, a time when industrial development had become dominant. Marx individually experienced and explored the messy and desensitizing circumstances in which British laborers in factories were engaged (Veblen, 2015). He witnessed employees that were engaged in longer hours only to be given little wages whereas the wealth factory tycoons had maximum profits (Gronow, 2016, p. 229) . Marx blamed capitalism for all the crises in the world. He felt that the social class in which an individual is born may never change. He accuses this capitalism for the very thing it attempts to change. The good thing about capitalist framework is that it free. That is, people can have properties, begin business and live as they deem fit, on condition that they are not causing hurt to anyone else. This freedom gives even the poorest individual in the society the opportunity to succeed. The assertion of Marx regarding the capitalist society was flawed (Kocka, 2016, p. 38) . Essentially, the capitalist system that gives individuals the chance to rise above from being poor and utilize maximally the resources in the society. Marx could not anticipate the end to this pathetic working circumstances in the factories (Jordan, 2018, p. 294; Cole, Cameron, & Edwards, 1991, p. 23) . The workers in these factories with poor working conditions have an option to resign or change their jobs. Quitting could not also be possible during that time since there were not many factories. Thus, Marx felt that working in factories was like punishment, dehumanization and intimidating.
Even though Mark and Smith had extremely divergent views, some of their economic models were comparable. Both scholars believed in the labor model of value. Each of them determined that the number of labor hours taken to create an object expressed the value and thus the cost of the object (Stilwell, 2012, p. 80) . This model was effectively disapproved by the Austrian School of economics model of value subjectivity. Based on the model, it is clear that a product has the value as identified by the person quantifying it. For the customer to be able to attach value on an object, it must be beneficial to him in some manner (Gronow, 2016, p. 232) . Thus, if the object is not useful, it may lack the value. The customer’s perspectives or subjective assessment provides the object its value. Based on the principles of supply and demand, if an object deserves a high utilization value, it be corresponding to its high exchange worth or value (Muñoz, 2016, 31) . That is, the more an object is desired or valued, the higher its cost. Both Mark and Smith find this as a logical theory regarding price and value. The labor theory can be doubted to the extent a lot of hours can be spent into creating an object, yet this will not be commensurate to its value if no one appreciates it or desires to acquire it.
Useful Elements of their Theories
The ideology of Smith on the most efficient kind of economy is an element that is useful as it helps in understanding how other companies control the market. Individual producers make products as much as they desire and then tag a price as they please. Smith’s basis for this concept is the invisible hand as a framework that controls the economy without interference. According to Smith, the system will work since every individual will make effort to maximize his relevance (Jordan, 2018, p. 296) . The perspective of Smith in describing the most efficient type of economy remains nearer to authentic ideas presently (Taylor, 2018, p. 122) . This perspective makes sense considering that some domineering companies can be challenged by introducing competitors such that the prices are then reduced and regulated.
Another element evident is the contrasting manner in which Karl Marx saw the aspect of utilizing of self-interest. He saw that the factories were presenting equal opportunities but were avenues for exploiting individuals. In fact, he determined that individuals were in situations that could not receive wages commensurate to their needs and they had no option (Milios & Dimoulis, 2018, p. 46) . This element is useful because some companies today are staging a similar situation to its customers. In some nations, for instance in developing ones, the high rate of unemployment is causing companies to recruit many individuals and give them low wages (Skousen, 2015) . The ideology of Marx is evident especially in capitalist countries where the businesses are dominated by the affluent in the society, and there is a big gap between them and the poor.
Conclusion
Our present economy has been influenced greatly by the ideas of Marx and Smith, especially Smith’s. Marx had excellent understandings into the mechanisms of an economy and explored comprehensively regarding the mathematical aspect of economics. His far-reaching political model and impact on past radical communist leaders has given a negative impression about his ideas and teachings. Besides political model, Marx’s ideologies are instrumental and resourceful as far as the some frameworks of an economic system is concerned. Smith is not just being referred to as the father of modern economics for no reason. The concept of the principles of supply and demand dominates the high school and university curriculums globally. Besides the misunderstood labor model of value, Smith’s contribution and moral models are appreciated and incorporated in education, analysis and implementation of modern free-trade economic frameworks currently.
Reference List
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Milios, J. and Dimoulis, D., 2018. Karl Marx and the classics: An essay on value, crises and the capitalist mode of production . Routledge.
Muñoz, L., 2016. Adam Smith Vrs Karl Marx: Stating the Structure and Implications of the Paradigm Clash that Led to the Death of Karl Marx’s World, to the Fall of the Soviet Bloc, and to the Rise of Socially Friendly Capitalism . Boletin CEBEM-REDESMA , (4), p.31.
Kocka, J., 2016, Capitalism: A Short History, Princeton : Princeton University Press.
Skousen, M., 2015. The Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes: Adam Smith, Karl Marx, and John Maynard Keynes . Routledge.
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Stilwell, F., 2012. Political economy: The contest of economic ideas . OUP Catalogue . Oxford: Oxford University Press.
Veblen, T., 2015. The socialist economics of Karl Marx and his followers . Read Books Ltd.
