Adam Smith Research Paper

I hope this letter finds you well, and you are doing okay. I got your message about wanting to know about the relationship between the market, and the state. I am happy to tell you that I have researched it, and I can now discuss this topic for you. While doing my research for this topic, I came across articles by Adam Smith, Karl Marx, and John Maynard Keynes. In short I have learned that the state should have some form of intervention in the markets. I will first begin with the philosophy of Adam Smith. Adam Smith has a different view from me on the market, and the state. Smith believes that we should look at both the pre-capitalist societies, and the capitalist societies, and look at them as a way to progress a nation towards capitalism. Also, Smith explains that in a free market economy consumption and production would be based on pursuing self-interest. Smith believed that if everyone was simply just looking out for themselves and their self-interest it would lead to constant improvements of production, and services. Also, Smith discusses about division of labor. Division of labor would result in different specializations, but only as the market demands it. Finally, in a free market the factors of production (labor, capital, and land.) would increase production. Adam believed that the market to act as an “invisible hand.” This means that the free market would fuel the selfish motives of individuals, and brew a more successful economy in the process, and also promote good welfare of the society. In a market such as the one that Adam Smith believes in, the state would have limited or no roles in the market. The state would only be tasked with the public works (not related to the market), the national defense of the nation, and finally justice. These are the views of Adam Smith on whether or not the state should be …show more content…
Unlike Adam Smith, Marx doesn’t come right out to discuss if he believes that the market should remain free, or government controlled. Marx believes that each type of production from different era is unique in its own way. He doesn’t believe in the progression of capitalism, because as I stated before each type of production is unique, and this includes capitalism. Marx’s believes that the act of consumption, and production are both social acts. This is true, because the cooperation of everybody in a society is required to make the economy successful. All societies have to become one in order to make the environment livable for all. Also, very different from Adam’s view is Marx’s view that nature does not transform its self or make itself better. Only human labor can transform nature, and natural resources into useable goods and services. Marx also believes that in every capitalist society there are four different classes. These classes are: the capitalists, small shopkeepers and professional people, poverty stricken class, and the working class. These four classes need each other to make the economy work as one, which is what Marx was trying to explain earlier one. Marx believed that the state should have some say in what goes on in the market. The state should be able to enforce property rights to the rightful owners of the property rights, and also act as an authority figure, or a judge between the rivalries against capitalists. These are the characteristics of a socialism