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
Karl Marx and Adam Smith are recognized as most significant contributors to the field of economics. Their contributions are resourceful is what create some similarities and disparities, particularly as concerns communism and capitalism. In fact, the idea of communism and capitalism appear to be contrasting one another in the initial place, and that is expected sometimes because Marx and Smith were foundationally very different individuals ( Wilk, 2018, p. 24) . Marx was recognized as a rather aggressive and revolutionary scholar, whereas Smith considered in his Theory of Moral Sentiments how someone’s potential to empathize with one another, which gives people the chance to make decisions that supersedes their own self-interest and consider others.
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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 (Wilk, 2018, p. 26) . 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 he or she 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.
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 might never change. He accuses this capitalism for the very thing it attempts to change. The good thing about capitalist framework is that it free ( Wilk, 2018, p. 26) . 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 these 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.
Marx goes ahead to reinforce that labor separates the workers from activity. This is what he maintains that is a dominant aspect of human life that capitalism isolates the worker from his own self. It is a notion that Marx calls self-estrangement. Humans are a result of nature, and a major element of humans is their potential to produce through their intentional thought or belief. They will frequently create products for other people besides themselves and family (Muñoz, 2016, p. 30) . Since capitalism alienates people from the results of their labor and from the process of labor, Marx emphasizes that capitalism differentiates man from his major purpose in life. Moreover, since the effect of capitalism is to isolate or be a stranger of himself, the worker is not capable of realizing the products he produced for both himself and others and the products produced and intended for him (Gronow, 2016, p. 230) . The workers views the capitalist as the principal of creation, snatching away his products from him. Marx sees this kind of opposition and subjection as one that finds its source from the link between estranged labor and private property (Wilk, 2018, p. 28) . He continues to elaborate that humans should be liberated from capitalism through the process of communism.
In The Communist Manifesto , Marx illustrates that the beginning of new markets and the growth of industry made the production structure to take control. As the market extended, the capitalists substituted the industrial structure with contemporary capitalism, and political frameworks concentrated around the middle class category were formed - the most recent of these structures being the representative one (Jordan, 2018, p. 295). The middle class has been heightening capitalism and shifting society to encourage power, but in spite of their revolutionary position in history, Marx determines that the structure was unpredictable (Muñoz, 2016, p. 30). Marx’s model of creative destruction illustrates the processes of fixing the continuous problems of overproduction that capitalist markets are categorized in, in that they terminate productive dynamics and extend into new regions. This has amounted in a fight for the middle class to be financially independent, as per as the assessment of Marx, the working class will be the reason behind the downfall of the middle class.
Contrarily, Adam Smith does not appear to lie on side one group of individuals, and in fact, he advocates for the financial achievement of the individuals. He supported an economy that would be responsible for itself. People’s self-interest would be countered by rivalry between profit-yearning organizations who feel that production fulfils the demand, and earnings would be determined based on various occupations and their profit returns (Wilk, 2018, p. 30). Smith was convinced that capitalism was a functional economic framework, where most people could have properties and utilize them the way they deemed fit, and earn money and use it the way they felt like (Muñoz, 2016, p. 31). He affirmed that owning private property, along with being stimulated to get and devote money, made the free market be functional. Preferably, no one business would be so superior because of the competitive market system (Jordan, 2018, p. 294). That is, if a profit yearning business opted to reduce its workers’ salaries, those workers would have no option but to quit their jobs and get other companies that offer higher wages that would interest them. Smith gave a framework for capitalism with the purpose of it bridging the gap with the average citizen also.
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) . The Austrian School of economics model of value subjectivity effectively disapproved this model. 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 ( Wilk, 2018, p. 34) . 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 many 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 ( Wilk, 2018, p. 34) . 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. 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.
Another useful element is examining the contrasting perspective of Smith with which he sought to escape hostility cropping up between social classes. He did not appreciate the inequality between the affluent in the society and the middle class. He yearned for peace and success of all the people in the society (Gronow, 2016, p. 232) . He would have challenged the attempts to eliminate or fight the middle class by the affluent and working class, not just because it would illicit disorder, but also since he felt that capitalism would fulfil the needs and wants of the working class (Wilk, 2018, p. 34) . The intention of the free market economy, as indicated above, was to give way for the average person to earn a decent life.
Conclusion
Our present economy has been influenced greatly by the ideas of Marx and Smith, especially ideas of Smith. 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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