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Smith and Marx in Economics - Essay Example

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The purpose of the following assignment is to overview the contributions of Adam Smith and Karl Marx to the development of the world economy throughout the history. An author of the paper concludes that where Smith chose to focus on capital, Marx preferred labor. …
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Smith and Marx in Economics
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Download file to see previous pages In his economic theory he focused largely on issues relating to labour and power, while Smith focused on capital and freedom. A significant number of people think that Adam Smith invented economics when he published The Wealth of Nations in 1776. In it, Smith wrote about how wealth is generated from both labour and land, and how this generation of wealth can lead to higher living standards and productivity. Accumulated wealth is capital that can be reinvested and yielf further dividends. The accumulation of wealth was a good thing; it was especially encouraged in systems that permitted free trade. Free trade permitted goods and services to be exchanged without tariffs. The main advantage of this was that it allowed people who had different items at their disposal to obtain things they needed. He wrote about the market’s “invisible hand.” This is an illustration that suggests that the market knows best, as it is the accumulation of peoples' desires. It is most famously summed up by Smith as follows: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages” (26-7). ...
[T]his produce … bears a greater or smaller proportion to the number of those who are to consume it … .[B]ut this proportion must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgement with which its labor is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed (Smith, 10). His insight into 18th century economics was remarkable at the time. But hindsight makes Smith's contribution especially impressive as it resulted in political freedom and a remarkable generation of wealth. This was in direct contrast to the work of Marx, which led to misery and death. Smith's work was picked up great economists such as Frederick Hayek and Milton Freedman to argue for freer markets and more private ownership. Today the Wealth of Nations is considered a foundational text and Smith, who was cited frequently in his own day, is considered one of the greatest economists (Campbell, et al, 7). Throughout the 19th century a number of economists took up Smith's work and added to it; but the greatest economist of that century was surely the German Karl Marx. His influence on world history was tremendous. His work was very different than Smith's. He focused on the unfairness inherent in the capitalistic system and felt that only labour was valuable. He felt that workers were being oppressed by employers and that they should rise up and form a new ruling class. Revolutionaries around the world took up his ideas in the 20th century to disastrous effect. ...Download file to see next pagesRead More
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