Comparing Marx And Smith's Interpretation Of Capitalism

Both Smith and Marx are influential writers whom wrote and studied the concept of “capitalism” with a constant concentration into the economic system that revolves around a capitalistic society. The concept of capitalism is very frequently studied, as it is essentially determines both the economic and political state a country carries. However with Capitalism itself having a very straightforward meaning, the interpretation of capitalism often vary as is the case with Marx and Smith. In this essay, I will compare the economic theories put forward by the two writers. The paper will heavily focus on the opinions the two writers’ hold towards the following: Division of labor, alienation and human happiness. In addition the paper will also address
Both the writers believe that the division of labor is essentially the most important element to capitalism. However, if one delves into how both writers discuss this idea, one notices that they do in fact differ. Smith believes that the division of labor is a system that creates specializations as the division of labor produces productive efficiency ( Smith 7) in addition to promoting efficiency by: increasing skill, saving time and encouraging the development of new technology (Smith 11-13). Overall the argument put forward by Smith creates a utopian economic atmosphere. This argument put forward is convincing as when labor is divided, people will have a clear set of conventional actions to go by and hence being exposed to obstacles as a result of a lack of knowledge will be less likely; hence it being time
This is overall determines by the now conventional idea of supply and demand. In other words a commodities worth is determined by the amount of buyers and amount of supply of the product in the market. This hence acts as an explanation as to why the nominal price may be either higher or lower than the real price. Similarly, Marx also believes in his writing that the wealth one holds is a result of the accumulation of commodities. Marx believes similarly to smith, that labor must be considered and adapted to configure a pricing system for a product, as it is labor that acts as a common factor, which allows for prices to be established. However, unlike smith, Marx does not address the difficulty in quantifying labor. In my point of view, this is what gives Smiths argument the upper hand as it addresses the possible flaws and difficulties one may have in determining accurate, fair and reasonable pricing policies and