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Letter To Adam Smith Essay

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Dear Mom and Dad, I was pleased to discover that you were interested in what I had learned in Econ this year. In this letter I will explain the role of governments play in capitalist societies according to three famous economists. Adam Smith (the first general economist), Karl Marx (the most influential socialist), and John Maynard Keynes (arguably the most important economist of the 20th century) all had unique ideas pertaining to the amount of power governments should have in economies. However despite these individuals impact on economics only parts of their theories were ever utilized in real economies. Adam Smith 1776 work, “An inquiry into the Nature and Causes of the Wealth of Nations”, provided the frame that the free market economic …show more content…

Marx felt that the current system of economics, and in general the free market system although containing some benefits was at its core unfair. He felt that only the capitalists received true benefits and exploited the labors for their own personal agendas. The people who owned the means of production received all of the benefits and therefore had power of the labors. He felt that this would create a class struggle between the capitalists and labors which would eventually be the destruction of capitalism. This appealed to him, due to how he believed that capitalism would be the last mode of production (the economic system being the base of society) that driven by an upper class. He promoted that society should own the means of production and not individuals. He felt that the governments should play a role in ensuring that the modes of production within an economy remain in the hands of the citizens and should actively prevent the capitalists from exploiting individuals. This would lead to significant government regulations on the economy, something Smith wholeheartedly disagreed with. All these theories were outlined in his works, “The Communist Manifesto”, and “Das

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But because of the different time periods and locations that both men wrote from, they had different insights into the consequences and benefits that colonization and capitalism would bring to society. Adam Smith, in part because he didn’t fully experience the Industrial Revolution and rise of capitalism to its fullest extent focused on the efficiencies, increase in production and consumption, and advancements in technology. He caught only a glimpse of what would come at the pin factory, in terms of the mechanical treatment of workers. However, it was Marx, who witnessed and then grappled with the consequences of capitalism and industrialization that he came to criticize Smith’s

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He supported an economic system based on individual decision-making because he believed that if every person becomes wealthy, then the whole nation will be stronger and wealthier. Smith, also believed that the government shouldn 't be involved in trade and economic decisions-making. He wanted each person to be responsible for themselves. During the French Revolution, Mary Wollstonecraft, a British author, firmly recommended that women should be considered equal to men.

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In the Communist Manifesto (1848), the bourgeoisie and the proletariat had a tight relationship since a beginning of proletariat caused a collapse to the bourgeoisie. Karl Marx and his friend Friedrich Engels introduced their view and led to a very first beginning of a proletarian revolution. Marx believed that the replacement of the model of economic of Adam Smith is seen as evidence for the developing stages of history, the end of feudal system led to the birth of the bourgeoisie. The bourgeoisie lasted for a moment in history before collapsing and leading to the proletariat. Karl though that in Adam Smith’ economic model, the laissez-faire system, which focused on the individual entrepreneur, just benefited for big businesses and capitalists

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A Market Economy significantly reflects the principles of liberalism due to a Market Economy primarily advocating individualist beliefs. The capitalist system is constructed fundamentally from the beliefs of Adam Smith and Herbert Spencer, both economic philosophers who publicly supported the idea of recognizing the worth of individuals and their rationality. Both philosophers during their time, promoted the idea of competition among individuals to as a result, allow individuals to pursue their own personal well-fare without government interference. Therefore, Smith's and Spencer's beliefs severely consisted on the right side of the economic spectrum, therefore, inducing their beliefs to mirror the principles associated to a liberalist ideology.

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Robert Heilbroner, author of The Making of Economic Society, describes the three types of economies: traditional, command, and market. A market economy is “an organization that, in truly remarkable fashion, allows society to ensure its own provisioning with a minimum of recourse to either tradition or command.” Clearly, Heilbroner believes a market economy to be the best. Adam Smith strongly holds this belief as well. In The Wealth of Nations, Smith emphasizes the importance of free-trade and the right to individual property, and he believes that this will lead us to a prosperous nation.

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He believes that the wealth of the nation is increased by the increase of production, the increase of trade, improvement of technology, and expansion of the nation’s market. He believes that all of these things can be the result of division of labor between different classes. I think that Adam Smith would agree more with Ure because these ideas align with the support of industrial capitalism, which is what Ure believed in as well. Even though Smith and Ure may not agree with industrial capitalism for the same reasons, they were both still supporters of it, whereas Marx was not as much of a

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Adam Smith, an advocate of capitalism, in his book, The Wealth of Nations wrote that all individuals are selfish and by performing to the best of their capabilities towards their own selfish interests they contribute towards the nation’s collective growth. Karl Marx, on the other hand criticized capitalism and believed that socialism and communism are society’s best chance of maximizing individual happiness, about which he wrote in his book Das Kapital. In this paper, we will compare and contrast the economics theories of Adam Smith and Karl Marx on the lines of labor theory of value, division of labor, alienation of workers from labor and human happiness and surplus profit and its social implications. This paper will also discuss how… Adam Smith believes that there are two types of ‘values’ of a commodity – ‘utility value’ and ‘exchange value’. The utility value of a commodity is based on how useful a commodity is and the exchange value of a commodity refers to how much we can get in exchange for a commodity if we were to sell it.

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In conclusion, while both Adam Smith and Karl Marx agreed on a few core ideas, they differed on the method of production of goods and services and distribution of resources. Whereas Karl Marx went so far as suggesting revolution by the proletariat against the bourgeoisie for a more just, equitable society, Adam Smith preferred stability and peace over revolution. While Adam Smith’s envisioned ideal society would not distribute resources equitably or eliminate gaping wealth levels between the different classes in a society, Marx’s ideal economy would produce, according to the directives from a central authority, and distribute resources according to the needs of the public. In his ideal economy, Marx envisioned the elimination of class distinctions

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Karl Marx and Adam Smith are two of the greatest economic analysts the world has ever seen: one being the father of communism, and the other of modern economics. Despite being different in thought, it was both of their ideas that created the fundamental bases of economics. As the father of communism, Karl Marx's economic model is based on government ownership of the economic wealth and its equal distribution in the society. However due to major flaws in his thinking, his theories have failed to be adopted. Due to lack of competition and profit motive one is less likely to produce goods in most effective and efficient matter.

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However, this trust in the general marketplace may not always be in the best interest of the economy, as greater central planning may be needed to control and assure the necessary levels of production are being met. In addition, Smith’s relaxed view on government intervention may also lead to an economy that cannot level off downward turns of the business cycle. Marx views capitalism pessimistically and that it ignores class struggles, so rather he focuses his belief on the social issues between the “haves and have-nots.”

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From the cooperation among civilians by a division of labor, to the limitations of government in an effort to achieve a free and competitive market, to the prioritization of the individual profit motive and accumulation of personal wealth, Smith argues that society can succeed in such an environment. Even though Smith’s economic platform revolved around a pre-Industrial Revolution era, his solutions to economic prosperity via the free economy allowed for an adaptable and flexible system. Nowadays, the idea of pursuing one’s own self interest is viewed as narcissistic, and oftentimes overlooked due to the accumulation of personal wealth. Government regulations force wealthy individuals to give a higher portion of their wealth for the betterment of the society, which some may view as unproportionable to their benefits from living in society. Simpler, fairer ways of devising a tax regulation have been proven to promote economic growth, however the current economic platform is seen to be arbitrary and obscure.

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