Modern political economic theory and philosophy can be greatly attributed to the works of two men who seemingly held polar opposite views on the subject. Adam Smith, a Scottish philosopher, published his most well known work An Inquiry into the Nature and Causes of the Wealth of Nations in 1776 and is most often associated with the ideas and principles of the political economic system known as Capitalism. At the other end of the spectrum is Karl Marx; the German philosopher most often associated with Communism and the author (or co-author) of The Communist Manifesto. This paper seeks to discuss the core differences in their respective political economic philosophies with regards to what economic value is and what the role of government should be in their versions of political economy. This will conclude with the argument that while Smith's work had laid the foundation for modern economic philosophy, it was Marx who would ultimately leave the most significant impression upon the world with his revolutionary ideas.
An Inquiry into the Nature and Causes of the Wealth of Nations (commonly abbreviated as The Wealth of Nations) is considered to be the first full treatment on the study of Economics. This work essentially lays the foundation for the economic system known as Capitalism. Interestingly enough, Capitalism was a term first brought into the public debate, somewhat pejoratively, by Karl Marx himself in describing a "capitalist" as a private owner of capital or the means or production. ("Capitalism" (Wikipedia), 2008). A consensus definition of this idea is an economic system based on private individual ownership of property in which the distribution of goods is determined freely by competing market forces and investments are made by individuals. ("Capitalism" (Merriam-Webster), 2008). In a Capitalist society, individuals are free to own property and invest their capital in the pursuit of profit with relatively limited influence or barriers from the government.
The Wealth of Nations was organized into five books of several chapters each. The first two books examine the fundamentals of the market system and include explanations relating to the role of labor, the nature of capital and markets, and the motives people have for entering into the market system. The third book is mostly an historical examination of the economics in ancient societies. The fourth book is the core of Smith's argument for the capitalist society and it in these chapters that Smith lays out the core arguments for the limited role of government that is required for long term economic success. The fifth book deals primarily with government spending, revenues and taxation.
The Communist Manifesto was much more a call to action than it was a treatise on economics and is a much shorter work than Smith's The Wealth of Nations. Marx also published a very thorough (and denser) economic examination known as Das Kapital in 1867. The conclusions reached in that and other works would underpin the concepts found in The Communist Manifesto. It is not inaccurate to say that Communism is in many ways the opposite of Capitalism. In The Communist Manifesto, Marx and co-author Friedrich Engels listed 10 attributes of an ideal Communist society. The first one lays out the primary condition: "Abolition of property in land and application of all rents of land to public purposes." (Marx & Engels, 2006, p. 32) This effectively describes state-ownership and control of all capital and the means of the production made for the benefit of all in a classless society. Communism espouses the idea that the economy should function for the greater good of all society and not merely act as a tool to enrich the 'bourgeois" or ruling classes. As the title would indicate, The Communist Manifesto lays out the purpose and reasoning for the existence of the Communist party that was developing across Europe in that time. In the prologue,...