Classical Economics: Adam Smith And David Ricardo

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Developed in the late 18th century, classical economics contains the idea of economists who hold various theories regarding how society works under the backgrounds of emerging capitalism. Though with occasional theoretical variations, each classical economist shared similar thoughts and advanced these hypotheses of former writers. Discussed by the most influential classical economists Adam Smith and David Ricardo, one specific distinctive of classical economics is its theory of wages in which Smith and Ricardo consider wages steady at a minimum level of subsistence. On the other hand, Karl Marx and his critiques of political economy in Das Kapital lead people to wonder whether Marx should be considered as a classical economics or not. Upon …show more content…
Paralleled to Ricardo’s understanding of labor, Marx recognizes the same force in the production process which “is itself an embodiment of labor” as labor power, and identifies labor power as a commodity when it is available to be sold by “untrammeled” labors at their own disposal (II.VI.3). In Marx’s account, labors who could freely choose to work or not are actually selling their commodities of labor power to employers as they work for others. After setting up the idea of labor power as a commodity, Marx offers his definition of wages, advocating that “value and price of labor-power, present themselves in this transformed condition as wages” (Marx, VI.XIX.9). In Marx’s idea, labor power as a commodity requires a price for exchange of such to occur, and wage is the presentation of the value of labor power. When committing to work for money owners, labors receive wages for they have provided or sold their labor powers as commodities in exchange for money. Marx also explains, as same as Smith did, that the exchange for labor power between labors and money owners could happen only if the two parties with equal rights reach mutual agreement on the price of labor power, and there exists a steady level of wages that could satisfy both workers and businessmen and last

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