Arguably, the three most noted economists in history- Adam Smith, John Maynard Keynes, and Carl Marx- have dictated economic theory throughout the world and their thoughts have affected today’s modern societies. Smith, Keynes and Marx all have vastly different viewpoints on the economy and weaknesses to their thoughts. Smith focuses on the theory of “the invisible hand” and self-regulation, however, there are negative consequences that can arise from self-regulation such as shortages or downward turns of the business cycle. As noted in the article, Smith believes that “the butcher, the baker, and the candlestick maker…. produce the amount of meat, bread, and candlesticks he judges to be correct.” 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.” …show more content…
A major weakness of Marx’s theories is the “limitations of central planning.” Top-down government controlled levels of production may not accurately represent the levels of demand needed in the marketplace. Further, general profit sharing amongst labor owned production devalues that some goods or services have greater value and/or cost than others as “all labor is created by the labor involved in producing whatever is being produced.” This can then lead to profit maximization not occurring due to lack of incentives for