Small Element, Big Difference: A comparison of Adam Smith and Karl Marx’s

Adam Smith and Karl Marx are both considered few of the most influential giants in social and economical history. When viewing their economical standpoints, it is not difficult to recognize the difference in ideas that they have regarding society. Adam Smith is an advocator for capitalism and the wealth that can be accumulated in it, while Karl Marx critiques on the flaws of capitalism and praises communism that will overthrow the capitalist society. However, both of them base their theories on the characteristic of labor.

Even though Marx and Smith both point to the significance of one’s labor in a capitalist society, Smith views labor as having the potential, in conjunction with the division of labor, to stimulate the public wealth and encourage the growth of an ultimately unregulated opulent commercial society. Marx, while starting at a conceptually similar point, observes that in a capitalist system people cannot acquire the wealth produced by their labor due to the alienation between the laborer and his/her means of production. The result of this alienation is exponential division of wealth between the rich bourgeois and the deprived proletariat, leading to revolution in the capitalist economy.

Although ownership of one’s own labor is a key element in both Smith and Marx’s theories, they have subtle dissimilarities, leading to substantial opposing conclusions about a capitalist society. In a capitalist society, while Smith views labor as the most sanctified property in the laborers disposal to achieve the goals of self-interest, Marx states that with two classes in society, labor is not truly “free” to use since the laborer is forced to work for the capitalist owner in order to survive. This is because of the alienation between the laborer and his means of production. As Marx states, ” If the product of work is externalization, production itself must be active externalization” If the worker is alienated from the product, then the worker is alienated from production itself.

According to Smith, one’s property is determined by his/her labor. He states that, “the property which every man has in his own labor, the original foundation of all other property, so it is the most sacred and inviolable. To hinder a poor man from employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property,” clearing indicating that one should use his/her labor to act towards his/her self-betterment. He also makes it clear that depriving the use of this labor is clearly an intolerable violation of property. Even though Marx agrees with Smith by stating “labour-power can appear on the market as a commodity only if, and in so far as, it’s possessor, the individual whose labour power it is, offers it for sell or sells it as a commodity,” he believes that for the proletariat, the freedom of using their labor-power is deprived. When an individual sells his/her labor as a commodity to the Bourgeoisie, he/she sells his/her labor time instead of the product itself.

As Marx observes that capitalism “has resolved personal worth into exchange value,” the workers become simply commodities and loses control of the products and their means of production. In result, the worker is forced to sell his/her labor-power because the consequence of not doing so is starvation. Marx states that the worker “must be free in the double sense that as a free individual he can dispose of his labour-power as his own commodity, and that, on the other hand, he has no other commodity for sale.” This “forced” labor causes the workers to be further alienated from their labor, their products, others, and even themselves. As Smith believes that, in a capitalist society, one’s labor is free for his/her own self-interest, Marx recognizes that labor-power is not truly free but forced because of alienation. This seemingly insignificant difference led the two thinkers into very dissimilar conclusions about the society as a whole.

With free labor as the worker’s own property, Smith claims that the division of labor and specialization is the most efficient method for production, leading to substantial economic growth. He claims that “The greatest improvement in the productive powers of labour, and the great part of the skill, dexterity, and judgment with which it is any where directed, or applied, see to have been the effects of the division of labour” Smith gives the example of a small pin factory with ten workings employed in it. He states that if the ten workers make pins by themselves, they would only product twenty pins or less per person each day. If the workers divide up the task and each specialize in one or two simple procedure, the factory can produce the equivalent of 4800 pins per person everyday.

Further more, since it takes less labor to produce more, commodities will become more affordable. “The wages of labour would have augmented with every improvement in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labour.” With the increase in productivity and decrease in price from the division of labor, society will accumulate enough wealth and welfare for everyone.

Despite the many benefits of the division of labor stated by Smith, Marx claims that the division of labor diminishes the laborers share in production and skill, leading to a lower standard of living for the working class. Marx believes that humans should not be limited to a monotonous form of work. With the division of labor and specialization, one loses his/her ability to produce any whole product. With only the skill to tighten a screw, one loses connection to the product that requires the screw, nor is he/her of any use away from the product. After such dehumanization, one’s self-consciousness ceases, as Marx states, “It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.” An individual loses his social being when himself/herself becomes a commodity. With the division of labor, society can accumulate great wealth but would cause dehumanization and alienation of the workers.

Paying no attention to the alienation of labor-power, Smith believes that every laborer pursuing his/her self-interest, in addition to the division of labor, will cause the invisible hand to come into effect and lead to the overall betterment of the society. Smith claims that in an unregulated market, it is a person’s nature to only work for his or her self-interests. He states that, “it is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest” , signifying that people’s actions are solely based on their own benefits from it. However, when everyone seek their own benefits, the market will be regulated by an “invisible hand” as they use reasoning to take advantage of every opportunity of profit and compete with each other. This method of free-competition will ultimately lead to self-regulation and improvement of the society as a whole.

While Smith believes that labor for self-interest can improve the wealth of a society, Marx recognizes that the alienation of labor and laborer will inevitably increase the distance of wealth between the Bourgeois and the Proletariat. After dehumanization, a worker loses all hope for self-interest besides survival. Only the capital owning bourgeoisie has means of self-betterment, thus exponentially increasing the distance between the wealth of the proletariat and the bourgeoisie. Furthermore, as the bourgeoisie constantly find better ways to improve their profit, some of them will be out competed and become proletariat. Marx states that “the bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production,” indicating that without constantly searching for more profitable methods of production, they will cease to “exist.” With the bourgeoisie becoming ever wealthier and the proletariat ever increasing, the difference of wealth between the two classes will increase in stunning speed.

Smith does not overlook this increase in difference of wealth between the worker and the owner, but he underestimates the magnitude of it. He states that “an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an Africa king, the absolute master of the lives and liberties of ten thousand naked savages” , indicating it is better to be poor in a rich country than rich in a developing country. He also states that “in a well-governed [capitalist] society, that universal opulence which extends itself to the lowest ranks of the people” . Overall, Smith believes that if the wealth of nation increases, the whole society will benefit, despite any class differences. Therefore, Smith views a capitalist society as the ideal final form of what a society should be like.

Despite his critiques, Marx also believes that only capitalism can acquire great wealth among a nation, but he foresees that the boundless increase in wealth between the two classes will inevitably lead to a communist revolution by the proletariat. He views the capitalist society as a stepping-stone towards communism. He claims that only a capitalist society can produce such wealth that could sustain a communist society. Incidentally, it is only a capitalist society that can produce such alienation that would engender the communist revolution. By stating, “the proletarians have nothing to lose but their chains. They have world to win” , Marx infers that every proletariat with sense will inevitably revolt against the bourgeoisie.

Both Smith and Marx express the importance of an individual’s labor, but the difference of the true freedom of labor in their theories cause them to develop very different ideas about a capitalist society. Smith, believing that labor is free, praises the capitalist society as it generates abundance of wealth that benefits all the classes; Marx, who believes that labor is actually forced due to oppressive specialization, views a capitalist society only as a problematic stepping-stone that can raise the production of the country. Viewing today, the communist revolution is unlikely to occur in the new future because individuals are not entirely deprived from their means of production. With the means of production, alienation will not be complete, leading to a more stable capitalist society than what Karl Marx predicted.