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Adam Smith’s Laissez-Faire Policies
‘s belief that competition, the market’s invisible hand, would lead to proper pricing played a large role in his economic policy recommendations. Trade restrictions, minimum wage laws, and product regulation were all viewed as detrimental to a nation’s economic health. This laissez-faire policy of government non-intervention remained popular throughout the Victorian Era and still plays an important part in present-day economic policy. Capitalists, in particular, supported Smith’s policies and often twisted his words to justify mistreatment of workers. They suggested that child labor laws, maximum working hours, and factory health codes constituted a violation of their rights and Smith’s golden rule. Similar attempts by factory owners to use Smith’s teaching in order to further their own ends continued well into the twentieth century. Contrary to popular belief Smith was not an apologist for the capitalist class. For this reason Smith firmly favored anti-monopoly laws. His support of competition remained contingent on the fact that it encouraged economic growth, something Smith felt would benefit all members of society. He failed to consider that the process of urbanization wouldreak havoc on the labor market, and his optimism about growth seemingly ignored the possibility that capitalists might disproportionately consume the benefits of expansion. The inability of growth to substantially increase general living conditions became the primary concern of Smith’s intellectual descendants. Economics, which started with Smith’s guarded optimism, quickly became known as “The dismal science”.
Karl Marx History Economic Ideas Summary ~ ECONOMIC THEORIES
The career of Karl Marx-an economist, but also a philosopher, sociologist, prophet, and revolutionist-is proof of the importance of economic ideas. It remains important for us to examine the ideas of such a singularly influential man as Karl Marx. In contrast to the classical economists Marx advocated a fundamental revolution in the society and economy, not small, marginal changes. Because Marx is popularly associated with the economic systems of socialism and communism, people often assume that he wrote about these systems. Marx studied what he called capitalism-his major work is titled Das Kapital, or Capital. In all the vast literature produced by Marx and his collaborator, Friedrich Engels, there is little reference to how a socialist or communist economy is to be organized, other than a short list of items characterizing the nature of communism that appeared in The Communist Manifesto. Marx’s economic theory is an application of his theory of history to the capitalist economy. Whereas other classical economists focused on the static equilibrium of the economy, Marx focused on the dynamic process of change. In discussing growth, Marx emphasized the deterministic role of technology and increasing returns. Born into a Jewish family that turned to Christianity, the young Marx began studying law but soon became interested in philosophy. After receiving his doctorate in philosophy, Marx was unable to find an academic appointment because of his radical views, so he turned to journalism. Marx had tremendous intellectual powers coupled with a strong drive to read and study.