Question

compare and contrast Marx’s and Smith explanations of the origins of capitalism and their visions of capitalism’s futures, which of the frameworks or which parts of the frameworks of Smith and Marx do you think is closer to the theories of capitalist evolution ? How do their views matter to today’s society? Give real life examples. (please type and don’t copy paste) (500-800 words please)

Answer 1

Both Adam Smith and Karl Marx wrote about capitalism .They shared a common notion about the capitalism that industries are controlled by the private individuals to reap higher profits but Karl Marx and Smith had differed conclusions on how economy and society should function.According to Karl Marx emphasized the importance of maximizing self interest which would result in a state of equilibrium.Where as Karl Marx emphasized on the exploitation of workers and a situation where the individuals were not receiving the benefits to satisfy the basic needs.
Theory of invisible hands is one of the major contribution of Adam Smith.In theory of invisible hand Adam Smith restricted any type of government regulation and argued that the individual producers should not be restricted by any regulation and they should be free to produce whatever they need and they should be able to charge consumers at a price they wishes to be. Through this economic system individuals will be able to maximise their benefits.Self interest plays an important role in Adam Smith theory.Each individual will try to maximise his or her benefit and reaches a state of equilibrium where demand equals the supply.Adam Smith was in favour of free market economy and opposed government regulations.

Karl Marx had a different view.While Smith emphasized the self interest and maximization of benefits of individuals Karl Marx through his theory argued a situation of exploitation and a situation where the individual do not receive benefits even to satisfy their basic needs.In his book Das Capital Marx argues that there are there are two classes in the economy Capitalists and laborers.Capitalists earns profit by exploiting the Laborers. The laborers are only provided with substantial wages.According to Marx capitalism contained the seeds of it's own destruction.Karl Marx had a contradictory view on Adam Smith's theory.According to Adam Smith the capitalists always tries to earn profit but according to Karl Marx the surplus of value is drawn from labor and the rate of profit tends to fall.
In todays society we still get inspirations from Marxian ideas.Marxian ideas were used to study analyze the recession that took place in European economies during 2007-2008 due to increased inequality and class polarization.Adam Smith's theories especially the invisible hand is even more relevant today because as a result of economic reforms much of the restriction in nations for trade are removed Smith's laizzes faire policy ie less government regulation is being implemented in many economies.