The ideas of adam smith and karl marx have changed

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: we expect our dinner, but from their regard vision A sense of how the world works. The ideas of Adam Smith and Karl Marx have changed the world. Two Economic Visionaries Two Economic Visionaries Topic Topic Adam Smith Adam Smith Karl Marx Karl Marx Born Died Born–Died 1723 1790 1723–1790 1818 1883 1818–1883 Place of birth Place of birth Kircaldy, Scotland Kircaldy, Scotland Trier, Germany (Rhineland) Germany (Rhineland) University Universities Glasgow and Oxford Universities of Glasgow and Oxford Universities Universities of Bonn, Berlin, and Jena Berlin, and Jena Major work work An An Inquiry into the Nature and Causes of t he and Causes of the Wealth of Nations published 1776 the Wealth of Nations; published 1776 Das Kapital Kapital Economic system Economic system based on his ideas based on his ideas Free enterprise, capitalism enterprise, capitalism Som, communism Som, communism Some ideas Some ideas contributing to contributing to his “visions“ • Self-interest causes people to work hard Self-interest people work hard and take risks, which benefits society. and take risks, which benefits society. • The division of labor creates greater The division labor greater productivity and wealth. productivity and wealth. • Competition keeps prices down and Competition keeps prices down and quality quality up. • Government should provide national should rovide national defense, defense, a system of justice, and of and public works. public works. • All value in produced goods comes from All value produced goods from labor. labor. • Capitalists exploit laborers. Capitalists exploit laborers. • Nations will progress through six stages Nations of development, from primitive to pure development, primitive pure communism. Section 1 Economic Systems 39 02 (030-053) EMC Chap 02 11/17/05 4:13 PM Page 40 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. In other words, the butcher, brewer, and baker do not give us our dinner because they love us or because they want to assist us. They give us our dinner because they cannot get what they want from us until they first give us what we want. According to Smith, we are led by an “invisible hand” to do good for others. In probably the most famous passage in The Wealth of Nations, he says: labor theory of value The belief that all value in produced goods is derived from labor. surplus value The difference between the total value of production and the subsistence wages paid to workers. Every individual . . . 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 no part of his intention. Labor Theory of Value Karl Marx saw things very differently. He didn’t see self-interest as leading to good things; instead, he saw it as hurting others. Mar...
View Full Document

This document was uploaded on 01/16/2014.

Ask a homework question - tutors are online