Sunday, May 12, 2019
Adam Smith and Karl Marx Economic Theories Essay
Adam Smith and Karl Marx Economic Theories - Essay ExampleMost of the theories in economics like a shot are based on the ideas of Smith as well as Marx and Keynes. These individuals have different ideas on how the parsimoniousness works and the best economic system that would ensure the good of all people in the society. They too differ on the role the governing is supposed to take to drive the economy to prosperity. entirely these differences are prompted by the views held by different theorists regarding benevolent nature and this will be the subject of our sermon in the next section but emphasis on the role of human nature in economic theories of Smith and Marx. Adam Smith (1723-1790) As stated earlier, Smith is regarded as the father of forward-looking economics and capitalism. According to him, human beings are social and as such(prenominal) they have a vogue to care for each other. They are also driven by self-interest but this does not reject them from empathizing wit h and help each other (Skousen, 11). This is the basis of his economic theory written in his book An interrogatory into the nature and causes of the wealth of nations or what is commonly referred as Wealth of Nations in 1776 (Das Kapital). This brought about industrial mutation and emergence of capitalism as the dominant mode of merchandise (Hall). The capitalist economy is based on the mechanism of free markets whereby Smith believed that individuals driven by self-interest and not infringing on the rights of others bottomland in the process benefit the whole society (Hall). The market is driven by the invisible hand whereby begetrs produce goods and services and take to market where they meet purchasers who are in need of such goods for consumption. In this case, the buyer and seller only meet when exchanging products and do not negotiate on the quantity to be produced or bought (Skousen, 10). Individuals are assumed to self-regulate themselves in this economy and as such th ere is no need for government intervention unless to provide public goods such as infrastructure and make sure people dumbfound to contracts. There is thus free movement of labour, capital and goods (11). Smiths economic theory is also based on economic independence. Natural liberty according to smith is a fundamental human right thus individuals are given freedom to do what they want (Hall). They produce what they want, at a price they want but the principle of justice must be withheld, that is, there is freedom of production and exchange. As such, all the actors in the economy (workers, landlords and capitalists) work in harmony there is no strife of interest (Skousen, 27). In such case, Smith assumes that human beings are honest, just according to societal rules. They can therefore, pursues self-interest without offending or ignoring the needs of others but for the benefit of all. Smith did not envision esurience and egotism in human nature. Furthermore, capitalists have to co nsider the interests of consumers if they want to make profit. Human beings are combative in nature. This according to Smith was not a negative thing but affected the economy positively, that is, is led to economic growth (Hall). Man should therefore bring his industriousness and capital into competition with those of others to gain harmony (Skousen, 27). Competition leads to determination of prices in the market thus the market is always in the equilibrium. The producer is able to get profit for his produce and the consumer benefits from low prices as well as improved prime(prenominal) (to lower prices, manufacturers improve technology thus produce quality goods at low cost). As such economic prosperity is achieved through economic independence. Karl Marx (1818-1883) Smith and Marx had very different views regarding human nature and as such
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