Tuesday, September 20, 2005

Adam Smith vs. Karl Marx

- My computer acted up, so I'm expanding this post slightly and posting it a day late...
We've discussed their opinions. Let's discuss the relevancy and effectiveness of both with regards to human beings. First, we know they were both economists, so what is economics? Are we listening to a bunch of accountants? This is my favorite (based on simplicity) definition of economics:

Economics is the scientific study of how people make decisions in a world where wants and needs are unlimted, but resources to meet our wants and needs are scarce.

Let's simplify that a little further:

Economics is the study of how people make decisions in a world of scarce resources.

Interesting. Economics is the study of people. We're not looking at accountants. We're looking at the people who study people. These gentlemen studied people. Let's see how the people who followed these very different economic ideals faired 'in a world of scarce resources'.

Karl Marx advocated a society with governmetn intervention to equalize everyone. It has been attempted on several occasions, though never successfully implemented in full. He did not expand on his ideas, in his essay, so much as simply cite that the "Communist Party" was right in the matter. Therefore, Communism is commonly attributed to him today. Communism, as we said, though never full implemented, has been attempted in Cuba, Russia, China, and a number of other countries.

Using Russia (called the United Soviet Socialist Republic at the time) as one of our examples of the closest yet achieved, we can look at the lives of the people. The average person in the USSR spent 70% of their lives in line. That's right, 70%. In addition, many citizens were killed or tortured for disagreeing with the Communist philosophy of the country. This, you will find, is generally true across the board with communism. In fact, Communism is so well-known for this attitude that the "Socialist-Libertarian" party of England argues that communism needs to be effectively implemented without Marx's advocated revolution, and can only be effective when humanity's viewpoint changes. What about the other viewpoint?

Adam Smith advocated an 'every man for himself' type of system. The first government to be set up based on his economic policies in pure ideal, is America. Really? Yes. It's still imperfect. Frederik Bastiat addressed its imperfections in his famous "The Law". However, the US has brought about many inventions (inventors even flocked here from Europe and Canada) and was able to become a Major World Power under the direction of this approach in less than 100 years.

Their policies can be compared by Stalin's "Iron Fist" approach and Smith's "Invisible Hand". The 'iron fist' is that of the government wiping out those who disagree by whatever means necessary. Adam Smith argued that market forces act like an 'invisible hand' creating the best possible outcome. Some have found middle ground between these two philosophies and the majority of today's governments fall in that middle ground. If you look at it on a graph from Liberty (Smith) to Security (Marx) it looks kind of like this.

Anarchy-Capitalism-Types of Socialism-Communism-Totalitarianism
Complete Freedom----------------------------------Complete Security

Smith advocated a small government because the market, he argued, more effectively helps people and the environment. He was expanded later, but that will be for another day. Marx advocated large government to equally distribute everything. While benevolent, it creates problems with human beings competetive nature. In the end, people wanted things instead of wanting to work. This resulted in 70% of lives in line on average. Also, we find that these countries cannot effectively compete in a global market with Capitalistic countries. The Capitalistic countries expand knowledge faster because they are freer to think.

Further, lets examine how things are done. With Adam Smith's small government, the government only protects our three Natural Rights. By doing so, it only uses force when it has been initiated by the person it is using force on. Karl Marx advocates using the government to take money and distribute it evenly. Not only does this violate our Natural Right to property (resulting in revolts or worse), but it is THEFT. The government is taking our money, through its only function: Force. This is forced theft. We cannot justify theft, even in the event of helping others. Charity is the only proper option ethically, within Rights, and legally.

Adam Smith vs. Karl Marx. Who won this? Marx wrote an essay; Smith wrote a book. Marx advocates Forced Theft; Smith advocates protecting our Natural Rights. Marx advocates an Iron Fist; Smith advocates the Invisible Hand. Those following Marx's ideals stop growing; those following Smith's expand exponentially. I'm not going to spell it out any more than this. You must decide for yourself: Liberty or Security?


There is only one way to kill capitalism – by taxes, taxes, and more taxes. – Karl Marx

Every individual necessarily labors to render the annual revenue of society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own gain, and he is, in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention. – Adam Smith, Wealth of Nations


jaina mariella said...

this is so unbelievable!!!
i was so amazed!!
this is the best page i've read in my entire life..
i just hope and pray that it sould help me win in our parliamentary debate...
thanks a lot!!

LGendrot said...

I was with you until the point when you insisted that Marx "lost". The middle ground is where it's at.

Anyway, other than that great article.