Adam Smith and Karl Marx: Economic Visionaries

Adam Smith Father of Capitalism 1776 wrote “The Wealth of Nations” The division of labor creates greater productivity and wealth Competition keeps prices down and quality up EOC study guide Basic Economic Concepts #13

Adam Smith Cont. Father of Capitalism Greed is good “Invisible hand” means economic decisions are best left to the market  Government should provide national defense, a system of justice, and public works Self-interest causes people to work hard and take risks, which benefits society Self-interest causes people to work hard and take risks, which benefits society

Wheaton Glass Factory Ordinary working people found increased opportunities for employment in the new mills and factories, but these were often under strict working conditions with long hours of labor dominated by a pace set by machines. As late as the year 1900, most industrial workers in the United States still worked a 10-hour day (12 hours in the steel industry), yet earned from 20 to 40 percent less than the minimum deemed necessary for a decent life

Karl Marx Father of Socialism He wrote “The Communist Manifesto” in 1848 All value in produced goods comes from labor. EOC study guide Basic Economic Concepts #14

Karl Marx Cont. Father of Socialism His vision put the needs of the group over the individual  Capitalists exploit laborers He called for the elimination of private property He believe workers will rebel against the elite and demand a classless society He believed capitalism will lead to communism