Adam Smith Adam Smith-The Wealth of Nations Karl Marx-Das Kapital

The Classics Adam Smith : The Wealth of Nations/ Theory of Moral Sentiments Karl Marx: Capital, Communist Manifesto

Adam Smith Division of Labor is Key Labor is the basis of wealth; The division of labor implies economic interdependence. Markets are self-regulating systems for the orderly coordination of the division of labor.

Adam Smith Invisible Hand: Self-Interest and Competition Regulates Economy Naturally

Adam Smith Invisible Hand – Assumptions: –Our preferences are consistent –We act based on self-interest –Individual Good adds up to Social Good Government Ensures Property Rights.

Adam Smith Invisible Hand – Assumptions: –Enough buyers and sellers as for there not to be a monopoly

Invisible Hand – Assumptions: –Perfect Information that backs up our economic decisions

Marx Reaction: Owners and Workers Owners exploit workers and live off the money which the workers earn Members of classes bind together in the pursuit of their common interests. Workers put up with this inequality because: –They are oppressed wage slaves and cannot fight the system –They are indoctrinated by ideology and religion into believing what they are told by the powerful.

Marx Reaction: Capitalism / Change Technical progress, the growth of knowledge, and conflict among classes all foster perpetual change. Capitalism as an economic system is irrational in the sense that it stands in the way of making good the ability of modern science and technology to meet human needs.