Adam Smith and Karl Marx

Adam Smith is sometimes referred to as "father of modern economics". His most famous publication was titled "An Inquiry into the Nature and Causes of the Wealth of Nations" which is more commonly known as "Wealth of Nations". This book expanded his political philosophy that: Self-Interest most effectively guides the market to the best possible end.

Let's break that sentence down and make sure we understand it. Self-Interest, ok, interest in oneself. Also known as selfishness if you consult your dictionary. Guides the market. What did we say the market was? A purchase/sale made when there is supply and demand, the seller is serving something the buyer wants or needs, and the buyer is willing and able to make the purchase. So he's saying that being selfish most effectively guides a purchase/sale to the best possible result? Yes. He argued that the market forces (which are based on self-interest) are the fastest solution to problems and that government involvement slows things down and weakens the economy.

Karl Marx is another famous economist. His most famous publication was titled "Manifest der kommunistischen Partei" or "Communist Manifesto" in English. His basic political argument is much different from Smith's. He argues that the interests of the rich force the poor to become only poorer. He argues that the best way to fix this is for the government to take all of our money and redistribute it to us equally. He idealizes a society where everyone is equal. In it, doctors and scientists make the same as gas station attendants and grocery baggers. While Smith's arguments are placed in a rather lengthy book on Economic Philosophy, Marx (and Engels) produced more of an essay.

In this essay they emphasize the class warfare between the lower and upper classes and argue that the interests of the upper classes ultimately force the poor to work harder and harder for less money. The argument further evolves to state that the only way to solve this is through a revolution of the lower classes. Stalin further expanded this idea and emphasized the need for an 'iron fist' in controlling those who disagreed with this argument. It is argued (even by Karl Marx) that the only way for Communism to work is through force.

These are the two opposite ends of the economic spectrum. Many nations have taken to somewhere in between. Later on we will discuss the merits and flaws of both. For now, think about it for yourself. I'll leave you a famous quote from each.

Sincerely,
Ted

In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property. – Manifesto of the Communist Party - Karl Marx and Frederick Engels

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from 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. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens. – Adam Smith, "The Wealth of Nations"