Contrasting views on capitalism. The comprehensive analysis of the two theories of production by Karl Marx and Adam Smith

Karl Marx was a German political economist and a theorist who was more concerned with the economic issues on production. Being the most controversial figure in 19th century, Karl Marx advocated for communal mode of production and opposed the capitalism that was being embraced by the Western powers. He was a radical person with hard stand on his principles. On the other side, Adam Smith was recognized as the best economist in the world and most scholars refers to him as the father of economics.

He explained the market forces and the role of the State in determining the how people should live and set morals that can promote economic growth. Despite the fact that the two scholars were more interested in the economic principles of production, there were marginal difference on their economic opinions and explanations regarding the economic growth of the State and the living standards of the citizens.

It has been controversial to most scholars to analyze the two schools of thought in relation to their economic principles and to determine the most effective model of economic growth. There has been two competing school of thoughts, the most controversial one is the classical economics school that is based on the principles of Adam Smith. However some people believed that Marx belonged to the same school of thought with Smith. Marx was more interested on the disadvantages of capitalism as a mode of production and the advantages of communal mode of production. It can therefore be said that Adam Smith was more concerned with the capitalism as a mode of production. Even though there are similarities between the two schools of thought, as pointed out by Austrian School, there has been a challenge in determining the best mode of production that is efficient.

The classical school of thought became more relevant during the time when the feudal mode of production was overtaken by capitalism. There was a problem in determining the best way the demands of the consumers and producers could be realized without interfering with the economic proponents. The economists had to take key objective of coming up with a proper plan to determine how the peasants and the barons could make a living bearing the fact that feudal mode of production had failed and the majority were relying on the feudal land.

Economists had to ensure that the wages and the prices of the commodities were taken care of since the majority were not used to the capitalist mode of production. In analyzing the two major challenges, the two major schools of thought by Marx and Smith, can help a lot in analyzing the best mode of production. Even though the two theories of production are relevant or necessary for economic growth, I strongly defend the policies from the Adams Smith School of thought as most applicable and practical ideals for production hence relevant for economic growth.

This paper will focus on the variations of principles supported by both philosophers on economic growth of the State in relation to their theories and the difference between the two theories.

Differences between Marx and Smiths thinking on Economic Growth
Karl Marx is believed to be the most controversial political economist born in 1818 in Germany and was the best friend of Friedrich Engel, who was 20 years older than Marx and people acknowledge him as the teacher and the mentor of Karl Marx. His contributions and arguments on the mode of production have made him famous in the world of production and in the school of Economics. He advocated for changes in production level especially for the lower class or the proletariats (Tucker, 1971).

Marxs and Smith arguments on capitalism
On analyzing the principles of capitalism in line with Marxs arguments, Marx believed that capitalism could lead to more problems in the society and could make many people poor and desperate as the means of productions are owned by individuals who are naturally greedy for accumulation of wealth and exploitation of the poor in the society. He further argued that since most of the workers rights are violated by the rich in the society, there was great danger to empower the bourgeoisie in the society since they could easily violate the legal provisions of the poor as Marx believed that the law always favors the rich in the society.

According to Riemer (1987), Smith believed strongly that capitalism was the sure way of serving the interest of the majority since it was characterized with high productivity and high quality. He further argued that production could be increased if the focus is on profit margin in relation to the input cost and argued that communal mode of production was a primitive mode that was characterized with low quality products and high level of risk and a danger to economic growth.

Marxs and Smith on labor
For Marx, labor force is the basis of production in any society. He believed that the wages of the labors are always minimal in capitalist mode of production. He argued that the bourgeoisie are always exploitative and they end up underpaying the workers. However for Smith, capitalism was the best mode of production as he argued that labor can only be important if it can increase the profit of the company to a greater level. He further argued that labor can be sometimes expensive to hire and therefore application of machines can reduce the cost of labor. In there view, labor can be productive or unproductive. Marx argued that labor can add value on the product which can be exchanged for other goods of different values. He believed that the value of labor can be improved if the working condition is conducive and without exploitation of the workers.

However, Smith strongly believed that payment for the laborers should be rational and be calculated in line with the profit margin to avoid loses. Marx further argued that for the profit to be realized, the fundamental freedom of the workers should not be denied and the wages paid should correspond with the time taken for the duty. He claimed that in capitalism, workers were being exploited in that they worked for more hours and the wages paid do not match-up with the quantity of the work done. However according to Smith, the time taken by a worker depends on the quality of the work done in relation to the value added.

He argued that time do not account for the value of work done as he claimed that in communist mode of production, the value of a worker is reduced since it is characterized with laziness as everybody is doing the same thing. He also argued that in capitalism, people are employed in different areas of specialization hence the value of a worker can be ascertained by the employer. According to Marx, specialization can lead to bureaucracy and create a barrier between the employer and the worker which is against the communal mode of production.

Though the two schools of thought had divergent views on production, both Schools held labor theory attached to value. It is worth noting that in most countries, the economic policies of both scholars are relevant in production. Even though Marxs ideologies were more brilliant in production, it is true to say that he was more concerned with the welfare of the workers and the mathematical values of production. However, Smiths theory on production and labor cost are relevant in the modern economies and preferred by most countries since the principles can be used for teaching and even in analysis hence remain the most dominant and modern theory of production.


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