A Comparison Between Adam Smith And Karl Marx

2544 words - 11 pages

A comparison between Adam Smith and Karl Marx

The purpose of this essay is to evaluate and discuss how economists Adam Smith and Karl Marx contributed to current management practices and, more specifically, how they influenced the field of economics. Through critical analysis, we will explore the theories of Adam Smith and Karl Marx. Adam Smith’s contributions, from division of labor and the shift from a mercantile society to a capitalistic one as proposed in his “Wealth of nations report,” will be critically evaluated as to determine both their relevance today and the influence that they have had. Similarly, Karl Marx’s theories that helped to develop the economy in its most ...view middle of the document...

Smith was able to achieve this accomplishment by changing the social attitudes of wealth by switching it from raising money for the government or those in power to encouraging individuals to act in the interest of themselves. This self-interest approach was a contrast to the idea that “individual interest was selfish and unproductive” (Smith, 1776). As Smith states, “it is not the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their self-interest” (Smith, 1776). This idea of self-interest changed the attitude towards wealth, creating a more dynamic economic system where countries began to trade with each other. This set the background for the modern, sophisticated financial trade system where countries and individuals accumulate revenue through the buying and selling of goods.
Division of Labor
“Smith’s greatest achievement in his career comes from his works in the ‘inquiry into the Nature and Causes of the Wealth of Nations” (Kucukaksoy, 2011). Smith developed a rationale for how countries accumulated their wealth and the different factors that influence their decisions. From this Smith achieved one of his “most notable contributions to current management practices, the promotion of division of labor” (Kucukaksoy, 2011). This involved specialists in specific areas performing specific tasks and roles in order to increase productivity. Smith believed division of labor was vital to economic growth, stating in his “Wealth of Nations” report “the greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity and judgment with which it is anywhere directed, or applied, seem to have been the effects of division of labor” (Smith, 1776). These works provided a significant influence to the way in which management was practiced. As it became more readily adopted, it was met with immediate success, which has continued through the present day. However, Noam Chomsky, a critic of Adam Smith, argues that Smith contradicts himself and has been given too much credit, stating, “People read snippets of Adam Smith, the few phrases they teach in school” (Needs citation). Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. Nevertheless, not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent the division of labor from exceeding its limits” (Chomsky, 1995).
Although it is a valid argument that Smith’s words are taken out of context, Smith is not denigrating the division of labor practice, but merely pointing out it is a great system that must be regulated in order to avoid “division of labor preceding its limits” (Chomsky,...

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