Adam Smith And Karl Marx: Contrasting Views Of Capitalism

 Karl Marx presented his philosophical and sociological critique of capitalism where the effects of the market varied or are distinct from man’s economic well being. Capitalism according to him brought about alienation where workers became degraded or dehumanized. Marx’s view on alienation was based on or oriented on work and sociological aspects. Assumptions made were that workers dignity would only be maintained if autonomy, responsibility and self-fulfilment were allowed in the work place.

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Alienation brings about powerlessness, isolation as well as self-estrangement. Powerlessness arises, as there is a distinct separation from ownership and the means of production. People or labourers are not in a position to influence managerial policies and they cannot control the conditions of employment or their immediate work process. To Marx, capitalism brought about the development of division of labour and specialization where people tend to advance on areas they are best suited in. The industrial capitalism workers are completely separated from the means of production. (

The workers also became like a tool, a commodity or a machine whose main duty is to produce. They can also be hired or fired at will. Marx coined the word command to describe the market where the wages were determined by the forces of the market. In becoming alienated the capitalist becomes isolated not only from himself but from the world including his fellows and nature. Self-entanglement means that workers are alienated from their ‘inner self’ and they are dehumanized.

 To Marx, capitalism is bad because it brings about exploitation of the poor by the risk. It is geared at benefiting the rich while exploiting the poor. According to Marx in production men not only act on nature but on one another. They produce only by co-operating in a certain way and mutually exchange their activities. In order to produce, they enter into definite connections and relations with one another and ‘only within these social connections and relations does their action on nature takes place’.

According to Marx, the production process comes about from the desire to meet the needs of people in society. In capitalism workers were also overworked. Work alienated people from the society, the human race as well as the product that they produced. Poor wages were offered to workers and it was just sufficient to keep them alive. The employers were only interested in gains regardless of the pain it caused to the workers. Since the poor lacked a choice they had to put up with the stressful conditions to survive. The resultant effect of capitalistic exploitation was an early death. (Skousen M, 2007).

The division of labour made human beings to become machine like structures especially as it advanced. It became like a commodity that could only be sold in the market.

To Marx, elimination of capitalism was necessary so that people would live freely, away from exploitation, isolation and alienation. Capitalism hinders self-determination, which is an important aspect for human beings. It also controls people both at the work place as well as their economic life. Marx advocates for a society that has economic democracy in addition to political and social democracy. If people were to have control of their workplace they would be more effective as real liberty is experienced. They should not be treated as ‘domesticated animals’ or machines but should be left to guide their own direction. To him, workers should be left to own and control their work places from which they earn a living and spend most of their time. (

Marx suggests that workers would be more effective especially if they were left to control their workplace. They, like artists could devote more of their time and under adverse conditions if they were given full control. To Marx, workers should be empowered and provided for basic needs by their employees like food shelter and clothing. (

Marx favours a communist society to replace the capitalist society. The wealthy class is the bourgeoisie and the proletariat are the poor. The wealthy or the ruling class control the means of production and consequently the economy. Marx advocated for a revolution of the proletariat so as to remove the bourgeoisie. Capitalism brings about class-consciousness, which is unfair as it brings about inequalities. There is evidence struggle between the classes as the bourgeoisie strive to maximize and retain profits; the proletariat strive to earn decent wages and fair treatment. Marx supports government involvement that would result to central planning geared to solve the current problems. (

He coined the idea of ‘surplus value’ to explain the gap between the value that a worker produces to the wages he or she gets in return where there were signs of exploitation. To him, capitalism is subject to fail and was headed for doom from its first inception due to competition involved, lack of centralized planning, control by the rich and it was subject to create social problems due to the great gaps between the rich and the poor.

 Smith on the other hand provides positive outcomes of capitalism. To him, the free market economy provides a means for mutual gain and that the division of labour. It improves productivity and is hence beneficial to the whole society and does not destabilize it.

Smith suggests that there is an invisible hand that controls the market and this refers to the forces of demand and supply. The ‘invisible hand’ guides people in their decision-making and as a result individual decisions can affect the while economy. He opposes Marx’s idea that ‘capitalism breaks down human spirits potential and forces him to always think of work. It becomes like a monster or “universal whore”

“Every individual necessarily labours to render annual revenue of society as great as he can he …. Neither intends to promote public interests, 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. By pursuing his own interests he frequently promotes that of the society more effectually than when he really intends to promote it’’. (

Smith views capitalism as a system where individuals have the right to own property and have the free will to do whatever they please with it. Private property ownership, desire to earn spend and act productively control how the natural markets function in a free economy. (Gianaris N, 1996). Competition affects the pricing of goods and services in the market. It is essential as it ensures that the prices offered are fair and only the most efficient producers survive in the market.

While Marx sees inequalities in terms of benefits gained in capitalism, Smith argues that capitalism benefits all in the society regardless of their status in the society. All people, according to Smith can create, own or earn their living. Smith’s views are of a moral society where he hopes that capitalists will be guided by virtues and selfish or greedy motives would be countered. Smith does not see the importance of a revolution as supported by Marx. Peace would be maintained as all people enjoy the benefits of a capitalistic market. (Skousen M, 2007).

Marx wrote his ideas of a capitalist system as during his time it was operational and he could point out the shortcomings, Smith on the other hand expressed his views when a mercantilist society was in existence. To him, capitalism opened grounds where people had the will to make choices that best suited them. Marx experienced the evils of capitalism and he was convinced that it was the root of all evils in the society. (Skousen M, 2007).

Marx’s views on capitalism are criticized on the basis that he presented an argument where one was bound to retain his or her status quo in society. His views were also based on the current situations and he did not foresee the end of the terrible working conditions. (Gianaris N, 1996). This is however not the case as one can move up or down the social ladder status is therefore not inherent. Capitalism is free and people can own properly or run business, which can see them rise through the ranks as long as the freedom causes no harm to others. Capitalism would be beneficial to all in the society.

Smith does not see the need for government involvement in the market operations because that would be checked by ‘invisible hand’. To him individualism, freedom of enterprises and competition contributed to the increase in the wealth of nations. To smith competitive markets are best in planning for resource allocation and development. Governments should not interfere with the market directly but they can help business to thrive by protecting societies from invasion or violence, injustice or oppressions, and they can erect public utilities that can be run by individuals or companies. In capitalistic societies individuals would produce as par their talents or competitive advantages and they would acquire that which they can’t produce from those who can. To smith, a more equitable distribution of income would be necessary if progress and development was to be achieved in the capitalistic system.

‘No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable’

Competition is a basic natural and structuring principle of the market. Tampering with the market mechanism should be avoided as much as possible or be limited as much as possible. To Smith, man is not a work machine “it is the interest of every man to live as much at his ease as he can”. Capitalism also produces individuals who work for the benefit of the society at large for instance those based on arts, spiritual and non-material or non-greedy initiatives. Surplus of wealth also goes to programs that are not necessarily materialistic in nature for instance charities and assistance to help the needy. (Almond G, 2002).

Smith does not view consumers as undignified unnatural or alienated like Marx does. According to him, division of labour in capitalistic systems occurs naturally from the human need or purpose to trade. People of different classes can trade in the capitalistic systems linked to specified classes in the society. To smith, labour is a measure of value but it is not as the exclusive source of it as Marx suggests. He also does not agree with Marx’s idea that workers were powerless and faced inevitable exploitation through poor pays. (Almond G, 2002). To him, if national income and division of labour were increased wages would not be a cause of alarm or dissatisfaction to workers. Smith did not show that workers in capitalistic systems were isolated as Marx thought.


The Contrast between the Views of Karl Marx and Adam Smith

L. T. A Journal for Western Man. Issue LVI- May 2, 2006. Retrieved on 7th March 2008 from

Nicholas Gianaris.1996. Modern Capitalism: Privatization, Employee Ownership, and Industrial Democracy. Group Management. Greenwood Publishing.

P 22-25

Gabriel Almond. 2002. Ventures in Political Science: Narratives and Reflections. Lynne Rienner Publishers. P 139

Mark Skousen 2007. The Big Three in Economics: Adam Smith, Karl Marx, And John Maynard Keynes. M.E. Sharpe.

Louis Kelso. Karl Marx: The Almost Capitalist. Retrieved on 7th March 2008 from

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