THE WEALTH OF NATIONS, THE BETTERMENT OF A PEOPLE: A LOOK INTO THE CONSTRASTING WRITINGS AND THE CORRESPONDING GOALS OF ADAM SMITH, AND OF KARL MARX AND FRIEDRICH ENGELS

The differing opinions between capitalists and socialists on how to approach economics and politics have long caused conflict and disagreements. Both the capitalist Smith and the socialists Marx and Engels had the goal of improving the standard of living for their society. Through the opposing methods, both sides and were convinced that their economic principles were the key to best improving the lives of all people in their society. So the question that we come to is this: “Is it possible for the same goal to be achieved through opposite means?”

By comparing two excerpts from the differing works of Smith and of Marx and Engels we will see that in different times, and with correspondingly different viewpoints, indeed opposite ideologies can reach their common goal of bettering society, though only if viewed through the appropriate and corresponding lens.

Adam Smith’s lens was that of a Scottish social climber who, when writing The Wealth of Nations in the late 1760s and early 1770s, saw revolutionary change occurring around him. Indeed much of the world was preparing for major political and thus economic changes. Having just exited the Seven Years’ War, and on the eve of the American and then French Revolutions, the world was changing, and with that so were class structures and the traditional views on economics [Nolan 183]. With the population boom and the transition from a feudal to a mercantile and to a capitalist or free market system, came an increased freedom to choose whatever occupation you wished to persue. Previously birth and rank had predetermined one’s social standing for life, but as the capitalist Benjamin Franklin later put it, “The ‘‘commodity’’ of ‘‘high birth’’ was worth next to nothing… what mattered about a man was ‘‘What can he DO?’ ’” [Waldstreicher 268-278] With this freedom to choose what you do, and the opportunity to benefit from your skills, came the chance for social mobility, something that had never before been so readily available to the common man.

As a common man himself, a professor of moral philosophy from average means [Wikipedia] Adam Smith wrote The Wealth of Nations to explain that as “every individual… can, in his local situation, judge much better than any statesman” what the most efficient use of his money would be [Smith], “[t]he division of labor, combined with freedom of occupational choice, [leads] to increased output and a surplus beyond basic needs. Individual self-interest end[s] up benefiting all” [Green 111-113]. Nolan summarizes this saying that “Smith’s great insight was that private self-interest could be a public virtue” [Nolan]. Smith saw that the maximum benefit to society would come not from a centrally planned nation, but from a capitalist market where “[b]y pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” By having each person act in their own best interest, rather than have a public figure or other monopoly “attempt to direct private people in what manner they ought to employ their capitals”, “the produce is likely to be of the greatest value.” With this self directed capitalist system, Smith saw that when individuals produce what they are best at, and then trade for mutual interest, there is more capital produced to be traded for the greatest total benefit, and increased wealth and hence increased benefit divided among the people [Smith].

Even in Smith’s time, it was apparent that this system was not unilaterally equitable, but did function to produce the greatest total with the supposition that some aspect of equity would travel down to even the least privileged workers [Green 112]. Smith lived in a time where capitalists used the putting out system to exploit labor, yet this system allowed money, albeit little, to travel to the country and into the hands of rural families [Bentley 651-52]. For Marx and Engels who lived during the transition from rural to factory based labor they saw this progression as developing “the modern working class… who must sell themselves piecemeal, [who] are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market” [Marx 838].

Over time, and as the dust from political and economic change settled, people saw more and more the gap between those who benefited directly from capitalism, the capitalist bourgeoisie, and those whose work went to benefit others, the proletariats. Though Smith’s capitalism did indeed produce higher yields and greater formation of wealth, this resulting wealth was not being distributed evenly, and so the success of capitalism as a unilateral benefactor became highly debatable. Nearly one hundred years after Smith’s The Wealth of Nations, Marx and Engels published an opposing set of ideals more in tune with how they saw society, and detailing how they envisioned the future in light of the past and the present.

After observing Smith’s capitalist economy in action, Marx and Engels decided that a society based not on maximum production, but on equitable distribution of what is produced, will result in a better society for all. To Marx and Engels, capitalism, though a change, was no better than the feudal system of old. For these socialists the changes that came with capitalism merely changed the titles, but the underlying battle between “oppressor and oppressed” remained [Marx].

Unlike Smith who was living in a world of exciting change and new movement, Marx and Engels were living among and seeing the resulting hardships of a capitalist society after more than a century of this economic movement. They saw that rather than dissipating the class structures that existed before the revolutionary changes of Smith’s time and after, capitalism merely “established new classes, new conditions of oppression, new forms of struggle in place of the old ones.” Rather than creating wealth for everyone as Smith supposed, capitalism effectively used the backs of the oppressed to make still more money for the oppressors [Marx]. The capitalists gained wealth, but at what price?

Marx and Engels saw no true benefit in a capitalist society which had removed families from the home setting, antagonized class distinctions, and made workers commodities that were “like every other article of commerce… consequently exposed to all the vicissitudes of competition.” Indeed they even doubted the benefits to the capitalist bourgeoisie themselves, seeing bourgeoisie not as benefactors of their efforts, but as having created a “constantly expanding market” that caused them to work faster and harder, cutting costs and ultimately using the ‘laborers, who must sell themselves piecemeal” as the “[bourgeoisie’s] own grave-diggers”[Marx]. For Marx and Engels the rose-colored glasses with which Smith viewed capitalism had been shattered by a century of abuse and now they viewed the best way to benefit both classes was to eliminate class structures entirely, and that this would happen by having the proletariats “rise up, and destroy capitalist society” [Bentley 838].

Marx and Engels saw the proletariat working class as being both the result from and the cure for capitalist inequalities. Though history had shown a pattern of class structures being uprooted by “a revolutionary reconstitution of society at large, or in the common ruin of the contending classes” Marx and Engels saw a key change in action that would affect this result. Where as historically the workers were isolated “due to competition” capitalist factories brought them into “association” with one another and created a “revolutionary combination”. Marx and Engels saw this combination, this united working class as the “grave-diggers” for the bourgeoisie, and stating that the fall of the capitalist bourgeoisie “and the victory of the proletariat are equally inevitable” (Marx) under these pressured circumstances.

And yet, the bourgeoisie did not fall, nor did the class distinctions disappear in a great rebellion. Many socialist efforts have been made, and some succeeded, but overwhelmingly capitalism and it’s pursuit of increase survived. Smith saw capitalism as an effective tool to maximize production and societal wealth. Marx and Engels saw capitalism as detrimental to the equitable distribution of wealth, and sought an equitable alternative with which to benefit all members of society. Though very different methods, each of the two made compromises and found a middle ground benefiting society on which to work. Unions were formed [Marx], similar but more powerful than the “sidestepped” [Bentley 651-2] guilds of old, and the distinct class lines of bourgeois and proletariat has since become less distinct in much of the world. Socialist thought helped fuel action for equality and better treatment, and the beneficial trade between continued labor and better treatment and benefits for workers allowed market labor and capitalist action to continue. As with the beneficial action of two parties in an economic transaction, the corresponding action of both socialism and capitalism allowed for an increase in the equity of wealth distribution and the production capabilities of society as a whole. Different means, same result – an improved though not perfect society.

Works Cited

“Adam Smith.” Wikipedia. 8 October 2004. 22 August 2006. link.

Green, Hardy. “Adam, We Hardly Knew Ye.” Business Week. 9/18/2006. 4001, 111-113. link

Marx, Karl and Friedrich Engels. “Manifesto of the Communist Party.” Trans. Samuel Moore. London: W. Reeves, 1888. Traditions and Encounters: A Global Perspective on the Past. Jerry Bentley and Herb Ziegler. Boston: McGraw Hill, 2006. 838.

Nolan, Joseph. “Adam Smith’s Free Market Capitalism” Vital Speeches of the Day. 1/1/95. 61.6, 183.
link

Smith, Adam. “An Inquiry into the Nature and Causes of the Wealth of Nations.” Edinburgh: 1863. 198-200. Traditions and Encounters: A Global Perspective on the Past. Jerry Bentley and Herb Ziegler. Boston: McGraw Hill, 2006. 654.

Waldstreicher, David. “The Vexed Story of Human Commodification Told by Benjamin Franklin and Venture Smith.” Journal of the Early Republic. Summer2004. 24.2, 268-278.
link

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terryman

Sarah is in her fourth year at UBC studying International Relations and English, and is currently on Co-op exchange teaching in an IBO institution and coaching an Odyssey of the Mind team in Mexico. With the perfect combination of an introverted love of the written word and an extroverted love of people, Sarah has volunteered at Amnesty International as an administrative assistant, was elected the Public Relations executive, treasurer, and acting President for UBC`s Varsity Outdoor Club, was slated to Kappa Alpha Theta’s Vice President Membership position, and once won a gold medal for `Interview Skills` in a national Skills Canada competition. Long-term goals include the beauty-pageant answer of world peace, the scholarly answer of increased writing and publication, the diplomatic answer of continued developments in personal and academic relations, and the humanitarian answer of the ability to help those less fortunate than herself through education. When at UBC Sarah can most often be found at the Pendulum enjoying a marinated garlic-mushroom salad and chatting about old classics and even older problems in a new and ever-changing world.

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