: Adam Smith and Karl Mark: Contrasting Views of Capitalism Essay

896 Words May 28th, 2006 4 Pages
The theory of capitalism describes the essential features of capitalism and how it functions. Adam Smith focused his theories on the role of enlightened self-interest "led by an invisible hand" or incorrectly "the invisible guiding hand", and the role of specialisation in promoting the efficiency of capital accumulation. Some proponents of capitalism emphasize the role of free markets, which, they claim, promote freedom and democracy. For many, capitalism hinges on the extension into a global dimension of an economic system in which goods and services are traded with others and capital goods belong to private ownership. To Karl Marx defined capitalism by the creation of a labor market in which most people have to sell their labor in order …show more content…
When Marx firmly established this principle, the Labor Theory of Value was criticized and abandoned by supporters of capitalism.
Although Smith accepted that competition for better profits and wages could turn individual self-interest into socially productive labor, he also was aware that these same values of self-interest would help ensure that every effort was made to lessen competition. In fact as Smith continues his observations he might even be considered to have some Marxist or class based conclusions.
In my opinion Adam Smith, unlike Karl Marx, believed that capitalism would work in theory. However, in practice co-operation among the theoretically, competing capitalists, and also among the workers, meant that there was no truly "fair" wage or profit or price. Because of this fact much unproductive activity is engaged in by workers and capitalists trying to combine to get their "fair" share. Smith also believed that capitalism tends to over-reward the capitalists, because "The masters being fewer in number, can combine much more easily..." and they also have more time and resources. Also since there is no fair wage or level of profit under capitalism, and the workers are the least secure; capitalism has a tendency toward violence; "the most shocking violence and outrage". References

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