Karl Marx vs Adam Smith- Who Has The Best Approach?

In class, we did a great, interactive activity to help us learn a few different forms of government. The purpose of the activity was to get us to understand what capitalism, socialism, and communism feel like in a much smaller scale. In this activity, each person in the class got chocolate kisses to represent the private ownership of industry in a society. At first, everybody in the class was given two Hersey's kisses, but me and one other student were given eight. Many of the other students complained and said it was not fair that we started out with more. I felt pretty good because I had an advantage, but I also thought that it was unfair to the rest of the class because I didn't do anything special to get them; it was unfair to them. We then played rock, paper, scissors and if you won, you got a candy from the other person and if you lost, you had to give them one. This represented the freedom of competition in a society. Many people complained about this game too because they said I had an unfair advantage because they ran out of kisses more quickly than I did. Everyone including me also complained about the fact that you had to keep playing because you couldn't save any of your kisses; you had to keep risking them. At the end of the game, there were "unequal economic classes" which were represented by the number of kisses people had left. Some people had none and were ‘poor’ and some people had a lot and were ‘rich’. The ‘poor’ people were mad because they had lost and were out of candy very quickly. However, I had 5 pieces of candy left that I had earned from playing, so I felt happy that I had earned the candy. This all represented capitalism. Then, our teacher collected everybody's candy and redistributed it, this time giving everyone two so that it was fair. The "poor" people were happy with this because they ended up gaining candy, but the "rich" people were unhappy because they ended up loosing their candy. They worked for the candy and didn't think it was fair to take it away. This represents socialism which is a system that aims for a classless society with economic equality. After socialism comes communism. Our teacher told us that we didn't have to play rock, paper, scissors if we didn't want to; we could keep our candy. The majority of the class wouldn't play because the chance of losing their candy was too high. This represents how people would agree to share their industry and not participate in competition because the chances of having a class division were too high. A classless society will be achieved in communism, and the teacher or government will no longer be needed to supervise. I really liked this activity because it was a great way to get us up and moving and thinking interactively about the topic. It got us interested and we will remember doing this activity. We also got to feel some of the emotions that people in a communist society felt on a much smaller scale. We wanted the candy and didn't like when we had to give it away. This was an activity that we will remember because it is unique, and it will help us better understand the concepts because we felt them.

 

Karl Marx and Adam Smith both had theories about what the government will become and how this will help the poor, however their theories were different. In Karl Marx's theory, he stated that the government would eventually evolve into communism in which it was inevitable that the poor, or the proletarians, would help themselves by overthrowing the rich, or the bourgeoisie. He tried to help his theory along and encourage the poor during his lifetime. He said that freedom of competition will result in unequal economic classes meaning that some people will be successful and become rich (bourgeoisie) and some will not and will become poor (proletarian). This will cause a class struggle meaning the proletarians will get angry about being poor and considered inferior to the bourgeoisie. They will get so angry that eventually they will revolt because they can't take the poverty any longer. Marx theorizes that the government will then evolve into socialism which aims for a classless society where everyone is given equal ownership of industry. The government will control the industry so there is no competition and it will bring economic equality. Lastly it will evolve to communism, where the majority of people in society will not participate in competition because they won't want to risk the class divisions (bourgeoisie and proletarians). The people will agree to share the property and industry, and there will no longer be a need for the government. Click here to watch a video about Karl Marx and his theories. However, Adam Smith had a different theory. He believed that the way to help the poor was to leave the people alone to buy and sell freely among themselves. The traders and the economic market will eventually work itself out because the traders will have to adjust their price based on their competitors, and they will have to sell new things that aren’t already being sold to attract customers. Eventually, all products needed by people will be sold, and they will be sold at a reasonable price. This system is called the Invisible Hand theory because the economy will work itself out as if it were being controlled by an invisible hand, as shown in the picture below. However, this system takes a long time to get started and the wait causes unemployment and it causes the economy to stall. This is why this system has never actually been tested; it takes too long to start it and businesses will fail before it can get a good start. Click here to watch an explanation of the Invisible Hand theory.

Smith's Invisible Hand theory- society will govern itself as if it were controlled by an invisible hand
Picture taken from the video by The Open University: https://www.youtube.com/watch?v=ulyVXa-u4wE&feature=youtu.be

 

          I think that the best kind of system is a happy medium between both capitalism and the Invisible Hand. The people should be in control of their money and how they trade, but the government should also be able to step in a little bit if the economy or unemployment gets too bad. The Invisible Hand theory is a good system, it just takes a while to get going. With a little assistance from the government to get started and keep it stable, I think this is a good system. I think that this is close to the economic system that we have now where the people are in control of their money, and if they work hard, they can earn more money. They decide what to do with their money, but the government helps the economy when it is needed. The Invisible Hand system plus some governmental help to get it started and help it when the economy is bad seems like a good system that is in the middle of both Marx’s theories and Smith’s theory.