The classical political economists shared, to a large extent, a vision of an eme

Question

The classical political economists shared, to a large extent, a vision of an emerging social system. Smith referred to this as the “society of perfect liberty” while Marx called it the “capitalist mode of production.” What were the central characteristics of this system and how did it differ from what existed previously? What are the major differences between Smith’s and Marx’s conceptions of this system? How did some of the other political economists we have studied such as Ricardo, Mill, or Owen expect the system to evolve? Compare their expectations with Marx’s.

Explanation / Answer

Considering society of perfect liability given by Adam smith, following are the characteristics:

1. When working out on a large scale of production, the regulation lies with the passion of the producer.

2. Competition motivates them to go for private action.

3. It is mostly understood as human motivation that organizes the market.

4. He has quoted this motivation and response as “invisible hand”.

6. He has favored a laissez-faire economic policy.

Smith’s analysis of economic forces demonstrated the importance, for a society, of free markets and the division of labor in the production of wealth. All later economic works have had to address this contribution in one way or another.

Now, considering the “capitalist mode of production”, given by Marx:

The classical political economist shared to a large extent, a vision of an emerging social system. Capitalist mode of production is given by Marx and states that the capitalism as an economic system based on private ownership of the means of production in which an individual earns profit through investment of capital and from labor income. It also states that the consumer welfare maximizes only if the market is left for free play of market forces, that is, no government intervention.

And following are the characteristics:

1. The system of organizing production and distribution within capitalist societies.

2. The economy follows MCM commodity production process or we say M-C-M’ where

M is the money in the beginning of the process or the initial step pf production, C means the commodity produced and M’ means the money receives after selling the commodities. In general way, M’>M, then only it will be profitable.

The common characteristic between the two is that:

1. Both of them target the personnel factors more than the social benefits.

2. Individual behavior is considered as the main factor of production.

3. Both of them did not required government intervention.

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