United States in the Views of Adam Smith and Karl Marx Essay Sample

7 July 2017


The aim is to analyze the United States political and economic system in the point of position of two outstanding economic minds. Adam Smith and Karl Marx. Both theories will be used to research the economic determinations of the United States discoursing scarceness. stakeholders and their influence on economic determinations. production and the usage of productive resources. Adam Smith-Biography

Adam Smith. shown in Figure 1. was born in Kirkadly. Scotland in the twelvemonth of 1723. He graduated from the University of Glasgow at the age of 17 and his instructions and publications became good known. While going throughout Europe. he met many leaders known as physiocrats. whose beliefs influenced Smith. Adam was against the economic system of his coevals which was mercantile system. This system was successful when a state would export more than they import and they would restrict imports ensuing in money fluxing into the state and really small traveling out which making a more profitable state. He believed that people should be allowed to work without any limitations and by making so. it work will in favor of the economic system. Smith’s economic theory was based on how individuals’ ego involvement benefits the economic system instead than the unreal Torahs enforced by the authorities. He wrote about his theories in his two most celebrated plants. The Theory of Moral Sentiments and The Wealth of Nations. Adam Smith died on July 17. 1790 ( Bolotta. Hawkes. Mahoney. Piper ) . Karl Marx-Biography

Karl Heinrich Marx. shown in figure 2. was born on May 5. 1818 in Rhineland. Germany. He studied doctrine and history at the University of Berlin. He received his doctor’s degree at the age of 23 and married two old ages subsequently. He was in resistance of the economic construction during his clip as it was based on nucleus capitalist rules. The rich get rich off the labor of the hapless. He was really much against the affluent life. besides known as the Bourgeoisie and supported the lower working category. known as the Proletariat. He started printing his socialist positions through columns to the populace and so he was shortly in problem with the authorities and was forced to go forth the state. He and Friedrich Engels joined together and wrote their theory of communism in The Communist Manifesto. They believed that the revolution of communism would get down after the Proletariat rise to the Bourgeoisie ( Bolotta. Hawkes. Mahoney. Piper ) . History and Description of Government

The United States became its ain state on July 4th 1776. which is now known as its Independence Day. after the American Revolution when they separated from the control of Great Britain ( Wikipedia History ) . The state established a kind of authorities called the Fundamental law of the United States in 1787 which allowed citizens equal rights and a implemented a guideline of their responsibilities as good. The Bill of Rights followed shortly after in 1791. amending that each person has certain rights that can non be taken off from them even by the authorities ( Wikipedia 2010 ) . It is apparent from the actions of the United States that the authorities was operated under many rules by Adam Smith. Leting citizens their rights demonstrates that a cardinal authorization will non be in power which was the beliefs of Karl Marx. Democracy was exhibited by the United States as people were given the power to vote and elect representatives for the state ( Wikipedia 2010 ) . Description of Economy

With a population of 310 million and a GDP of $ 14. 4 trillion. shown in figure 3. the United States ranks as one of the biggest human dynamo states in the universe. The economic construction that was foremost introduced by Alexandar Hamilton in the late seventeenth century has globally become the strongest system ( Wikipedia 2010 ) . The gross domestic merchandise measures the states overall value of economic production. The higher a states GDP is. the more profitable the economic system becomes ( Wikipedia 2010 ) . Adam Smith supported The Law of Population which shows an indirect correlativity between the production of a state and its population. For illustration. it is shown in figure 2 and 3 that both the GDP and population of the United States have increased over the past twosome of decennaries. This theory states that as production additions. employment will increase and companies will shortly increase the rewards of the workers they employ. As a consequence of higher rewards. citizens’ living conditions will better including being able to supply better wellness attention therefore. mortality rates decrease and population additions. In the United States this has been true as the lower limit pay has significantly increased from about $ 3. 35 to $ 7. 25 in the past twosome of decennaries which has been one of the causes for population to increase ( Wikipedia 2010 ) . Adam Smith’s rules are clearly apparent in the economic construction of the United States.

He believed that self involvement. net income being the incentive. will overall profit the economic system presenting a “free market” where it is guided by supply and demand. The United States is a capitalist assorted economic system intending largely everything in the state is in private owned. This allows concerns to run and maintain net incomes nevertheless Karl Marx believed. capitalist economy will merely let the rich to acquire richer and the hapless get poorer. This theory is true in the United States because the authorities does non step in in production. The unseeable manus which is a theory Adam Smith believed will let the forces of the market to run its natural class. Factors such as supply. demand. competition will of course command the economic system which is why he believed Torahs should non curtail the market. The American economic system in private owns largely everything such as wellness attention ( Bolotta. Hawkes. Mahoney. Piper ) . Health attention in the United States is one of the most profitable industries because everything must be paid for by citizens ( OECD ) . Unlike bulk of other to the full developed states that provide wellness attention to citizens. wellness attention installations are chiefly owned and run by the private sector ( Wikipedia 2010 ) . Shown in Figure 4. American citizens spend the most in the universe on wellness attention which proves a drawback for a capitalist economic system as citizens receive really small aid from the authorities. Use of Scarce Resources and its Effectss

The theories of both economic experts did non straight see natural resources but with the pattern of their economic systems. the usage of trade goods can be analysed. Karl Marx believed that a cardinal authorization should command what to bring forth and how much of it would be based on the demands of its people ( Bolotta. Hawkes. Mahoney. Piper ) . Demand does non come into drama in this theory because people are lasting on what is necessary and non on their wants. When analyzing the United States’ determinations on the usage of scarce resources. the market decides. In position of both minds. the United States follows more rules sing scarceness from Adam Smith than Karl Marx. Looking further in item at this theory. natural resources are non used as expeditiously if a state follows this economic theory. Operating under this system has proven to non be the most logical. If a state is bring forthing every bit much as consumers want of a merchandise. the scarce resource will shortly plenty run out. As shown in figure 5 ( Ausubel ) . the entire backdown of H2O has been geometrically increasing for the last 100 old ages.

The existent ingestion of H2O is much less ; showing that a big bulk of H2O is being wasted. At the rate that H2O is being used. it will run out and mankind will non be able to bring forth anything without it. Oil is another illustration of a trade good that is being over used for about everything. America imported about 3. 300. 000 1000 barrels of oil in the past twelvemonth ( U. S. 2010 ) . Consumer demand of oil is infinite ( shown in figure 6 ) and until it finishes. it will ever be in demand. The “free market” of the United States allows people to buy any trade good. even if supply is significantly diminishing ( Bolotta. Hawkes. Mahoney. Piper ) . For illustration. oil is being used for transit. to fuel autos. trucks. aeroplanes. etc. Although it is allowed. it is non indispensable for everyone to buy a auto or a plane ticket. By making so. consumer’s desires and wants consequence in the unneeded ingestion of natural resources. While analyzing the scarceness in a state. Karl Marx’s theory works better in favor of efficiency as natural resources will non be traveling to blow. given that in a communist economic system. the figure of goods being produced will merely be plenty to prolong human endurance and non their desires.

His sentiment is that a cardinal authorization controls the basicss of production and duty is shared between all citizens every bit. The monetary value of goods will ne’er increase as consumers are non given the option to demand for manufacturers to raise monetary values ( Bolotta. Hawkes. Mahoney. Piper ) . By runing under Adam Smith’s beliefs. the United States authorities is leting manufacturers to bring forth every bit much as possible so long as consumer demand is high. This will shortly plenty lead the United States to an economic crisis when a resource runs out and consumers will be left in the cold. If there was no more oil left in the universe. the most of import stakeholders that would be affected are the manufacturers and consumers. Oil pull outing companies will hold no supply and manufacturers would be forced to close down. Consumers will non be able to drive crude oil fuelled autos. aeroplane transit will be in arrest until other methods of fuelling aeroplanes are discovered and the authorities will no longer be having any money from oil revenue enhancements.

Other industries would be affected as they will hold chances to make other goods and services that will replace the complimentary goods of oil. The auto industry will hold the greatest impacts as all auto ironss will hold one million millions of dollars in useless assets and engineering promotion in autos will be geared towards utilizing ethyl alcohol and electricity. If the United States decided to run under a communist society. stakeholders would non hold such an influence on concern determinations as opposed to a capitalist society because they do non hold control over the complete power over concern determinations against the authorities as they would hold in a capitalist society. Stakeholders would prefer following Adam Smith’s rules as they do non hold to stay by all authorities Torahs and have more of a say on what concern determinations occur. Fundamentalss of Production

Adam Smith’s thought of the unseeable manus influenced a new type of authorities called “laissez faire” significance leave it entirely. He believed that the authorities should non curtail citizens with unreal Torahs as they are uneffective and natural Torahs should basically regulate the economic system. In this type of economic system. the authorities merely pose really few Torahs to forestall monopolies on consumer goods and productive resources ( Bolotta. Hawkes. Mahoney. Piper ) . The United States market operates on these rules and the manufacturers and consumers are the 1s in control of the foundation of production. In the American economic system. the production of goods and services is chiefly based on the demands and wants of consumers. Karl Marx’s theory on what to bring forth is determined by the authorities based on the demands of the people ( Bolotta. Hawkes. Mahoney. Piper ) . To find what merchandises should be produced. tendencies will be examined to analyze its influence on consumer wants. A tendency that played a important function in the music industry was the promotion in engineering of portable music participants. After the iPod and mp3 participants were introduced. they were in high demand ( shown in figure 7 ) and in the United States whatever is in demand is produced.

Since the market’s demand of this merchandise increased. Apple created more iPods. Karl Marx’s theory opposes Adam Smith’s because alternatively of a “free market” ( Bolotta. Hawkes. Mahoney. Piper ) . the authorities controls the market so tendencies would non hold an influence as consumers do non hold any say of the goods available to them. This economic system would hold a different consequence because stakeholders are non important to a concern as the authorities overrules them. Manufacturers would non be able to fulfill consumers or do determinations in the best involvement of their concern as they must stay by authorities orders in respects to production. Stakeholders are greatly affected by the influence of tendencies on client wants as they are financially involved with a business’ activities. For this illustration. record label companies. creative persons and electronic industries would be greatly affected by the demand of iPods. Record label companies and creative persons gross revenues will drop now that Cadmiums aren’t as popular. and electronic makers will be in demand.

In the American economic system. every concerns end is to do money. In attempts of making so. concerns aim to minimise their disbursals which will maximise their net incomes. The agencies of how to bring forth goods and services are normally operated in the least dearly-won manner for the organisation. Depending on the concern. there are many different ways of how to bring forth. Adam Smith’s economic system leaves manufacturers and consumers to calculate it out on themselves which is how the United States economic system operates. Businesss have really few Torahs that they are required to follow on how they should bring forth which is an influenced communist rule. The mix of these rules from both theoreticians makes the American economic system assorted ( Bolotta. Hawkes. Mahoney. Piper ) . The production of goods and services vary from industries. In the agribusiness industry for illustration. production is chiefly performed by manually reaping sometimes or machinery for larger farms. This is an illustration of free endeavor as the husbandman keeps all the net income. This same scenario would be much different if it was a communist economic system as the authorities would give the husbandman land and work but maintain a big part of the net incomes. The difference between these two economic systems is that in a communist economic system the authorities would direct what to bring forth and how much of it to bring forth which besides means consumers do non hold limitless supply of goods and everything is shared every bit with the community ( Bolotta. Hawkes. Mahoney. Piper ) .

Throughout the Industrial Revolution during the eighteenth century. mills started going more efficient with production with the usage of machinery. Goods were being mass produced and manual labor was diminishing ( Hooker ) . The degree of efficiency in production was increasing. there was division in labor and single specialisation was being recognized. Peoples started working in Fieldss that they were more efficient working in and as a consequence. better quality of goods were being produced. This has more of a positive consequence in Adam Smith’s theory since everyone is working in the best involvement of themselves where as in position of Karl Marx’s. the authorities commands people what to make which will non let them to thrive ( Bolotta. Hawkes. Mahoney. Piper ) . Karl Marx believed that capitalist economy forced bondage amongst the hapless. He witnessed workers being exploited and the rich were merely acquiring wealthier off the labor of the hapless ( Kuhn ) . This has been an ongoing uninterrupted job that is a consequence of a capitalist economic system like the United States. Marx believed in two thoughts which he called labour value and excess value.

The labour value implies that the value of any point is determined by the value of labor. The worker puts the value on the point as they are the 1 who produced it. For illustration. in the United States. the Nike Company pays kids 2 cents a twenty-four hours to bring forth multiple braces of places and Nike makes a net income on norm of $ 30 per shoe. In this theory. the $ 30 that is made in net income should hold been $ 30 more the kid makes so $ 32. 02 since they prepared that shoe ( Azam ) . The excess value implies that net income made from the good should travel back to the laborer or else the company is fundamentally stealing from the worker. The United States works against this theory as everyone is forced work in the best involvement of themselves ( Bolotta. Hawkes. Mahoney. Piper ) . Who to bring forth for is left for consumers and manufacturers to find. The United States authorities does non direct concerns who they can sell their goods and services to. Businesss have specific mark markets and produce harmonizing to the demands and wants of their consumers.

Adam Smith is supportive of this system but Karl Marx would reason that this would pervert the economic system. Harmonizing to him. a cardinal authorization should command who goods are produced for. This theory may prolong the economic system longer than Adam Smith’s since natural resources are used more expeditiously ( Bolotta. Hawkes. Mahoney. Piper ) . It has been demonstrated in the United States that leting concerns to bring forth for whomever is non really logical. For illustration. bulk of the American population is now addicted to fast nutrient. Children have been raised around fast nutrient since they can walk which is accordingly ensuing in the high per centum of fleshiness. As demonstrated in figure 8. the per centum of fleshiness in American population has been significantly increasing. This proves that the United States giving concerns such as fast nutrient ironss complete control over who to sell to has become a disadvantage in this instance. This may non be an issue in a communist society. as the cardinal authorization would regulate who concerns can sell to and if they could curtail kids from fast nutrient. this would non hold been an issue. Decision

In decision. the United States economic and political system is much more clearly influenced by the rules of Adam Smith. However. it has been revealed that some of these theories are non the most rational for the United States economic system to be runing under as it has many current and possible hazards which may take the state into an economic crisis. Though. the U. S. has become a assorted economic system and does run under a few communist rules. the foundation of the economic system relies on capitalist economy.

Plants Cited

Print Beginnings
Bolotta. Angelo. Charles Hawkes. Rick Mahoney. and John Piper. Economic Now Analyzing Current Issues. Toronto: Oxford University Press. 2002. 48-50. 55-58. Print. Web Beginnings
Guisepi. R. A. “The United States of America. ” History-World n. pg. Web. 22 Sep 2010. .
“US Economic Profile. ” Economy Watch n. pg. Web. 21 Sep 2010. .
Azam. Faraz. “NIKE: Nike Shoes and Child Labor in Pakistan. ” TED Case Studies n. pg. Web. 22 Sep 2010. . “Economy of the United States. ” Wikipedia
( 2010 ) : n. pg. Web. 22 Sep 2010.

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