Revolutionary Economic Thinkers Adam Smith v. Karl Marx (Polar Opposites)

Adam Smith ( ) The Wealth of Nations—1776 Historic book explaining how a market system can work Laissez Faire—Individuals left alone by the GOV try to succeed and produce a “multiplication of riches” Invisible Hand—without GOV direction businesses very efficiently provide goods and services most needed Self Interest & Competition: Invisible engines or forces that cause the FM to continuously work quite efficiently

Karl Marx ( ) Communist Manifesto 1848—History is a struggle between capital owners & laborers The result of this struggle will be a revolution resulting in a classless society—TRUE? Das Kapital 1867—explored the relationship between labor, profit and the distribution of wealth Theory of Surplus Value— “Human labor is the source of all added value.” Cited problem was that capitalists do not return this “surplus value” to the workers – exploited

Who was right? Both theories have evolved since Marx & Smith have died. In action, however, central planning has failed to achieve & markets are flourishing. USSR v. USA Hong Kong v. China (why improving) Marginal change—as counties increase economic freedom they get wealthier. As they decrease it they get poorer!