Essay on Smith vs. Marx - a Comparison

1259 Words Apr 29th, 2007 6 Pages
Smith versus Marx – A Comparison
S. Glen Balanoff
July 04, 2004

Smith versus Marx – A Comparison
Modern economic society can be described as a combination of certain points from several theories combined into one. Changing dynamics and economic needs of nations has spawned a development of various, and contrasting, economic systems throughout the world. Perhaps the two most contrasting philosophies seen in existence today are that of capitalism and communism. The two philosophers most notably recognized for their views on these economic systems are Adam Smith and Karl Marx. This paper will identify several fundamental aspects of economic philosophy as described by Smith and Marx, and will compare and contrast the views of these
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The concept of ‘value' in itself has different interpretations by Smith and Marx. Smith considered value to be the labor put into producing an output (Heilbroner, 1999). Marx, on the other hand, saw value as a "surplus value" represented as unpaid work. In Marx viewpoint, this surplus labor represented profit (Heilbroner, 1999). The concept of profit brought forth the question of dealing with profit erosion. As labor increased in duration to produce the increased demand of product, Smith believed that the workforce would proportionally increase to maintain profit (Heilbroner, 1999). Marx believed that profit erosion was inevitable in a capitalist society, and the answer to profit erosion was in the development of labor-saving machinery (Heilbroner, 1999). Today, we see some semblance of both philosophies in practice. The workforce increases when demand dictates higher production and profits allow the expense of labor resources, and technological advances allow society to mechanize many labor-intensive operations to increase productivity and maintain quality.
Smith and Marx agree that through a concerted effort on behalf of society, greater economic good could be achieved. Despite this common thread belief, contrasting philosophical perspectives placed both theories on opposite sides of the spectrum. Today, we see Adam Smith's concept of a free market society much more prevalent that Marx fundamentals of communism. Marx was not completely off base with his

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