Karl Marx And Karl Polanyi

1805 WordsMar 25, 20178 Pages
Adam Smith, Karl Marx and Karl Polanyi, have influenced different parts of capitalism. Adam Smith known as the father of the political economy, developed the concept of the invisible hand; which explains how self-interest and competition in a free market economy, would allow economy prosperity. Smith, also developed the division of labour which say that different jobs in a business should be specialised, instead of one person having to carry out all the processes. Karl Marx, on the other hand, demonstrated to us the negative impact of the capitalist system upon workers and society in general. As Marx believed that workers gain nothing, instead get exploited by the capitalist who employ the; he established this through his labour theory of…show more content…
Critics of the invisible hand say that it’s not as strong as it was in Smith’s time, due to large powerful cooperation, effective marketing system and inefficient financial market blocks the mechanism of the invisible hand which does not allow the scare resources to be used at their best use. An example of the invisible hand is, say if a candle maker sells one candle stick for £1 but, another candle maker sells 3 sets of candles for £2, it would mean he would get all the business making the other candle maker lose out and make even run out of business. So, to compensate the lose the candle marker would be forced lower his prices to survive and not get out of business, therefore, the candle maker is guided by the invisible hand being his self-interest to gain profit to lower his prices. Division of labour another, one of Adam Smith’s concept explain that productive power of workers and increase in total output would occur if, each worker had a specialised job to carry out. Smith further, says that division of labour is not something that is regulated by an authority, instead it is human nature. As what make us human is our propensity to truck, barter and exchange items, which gives us assurance to be able to trade what we have produced goes on to encourage division of labour. Smith gives 3 reasons as to why division of labour increase’s productivity. First, division of labour would allow the worker to have specialised knowledge of the task he is
Open Document