The Conflicting Views of Adam Smith and Karl Marx on the Division of Labor and the Role of Money in Exchange
In their works, Adam Smith and Karl Marx prove to have differing opinions on money and the division of labor. Although they understand money as a representation of value and as a medium of exchange, they arrive at different conclusions about the role of money in social life. Smith sees the division of labor as a constructive system and a means of furthering exchange, leading to the use of money. Marx, on the other hand, finds labor to turn human beings into alienated workers, and the division of labor to spread and increase this concept. Smith and Marx’s views on the division of labor lead to their different conclusions about money. …show more content…
For Smith, this development certainly had flaws, but the facilitation of exchange through the use of a universal currency outweighs the issues. Smith deals with the history of money by telling the story of how money came to be. After the division of labor, everyone had something of their own making to exchange; so, they would carry around their commodity. However, this proved to be flawed logic, as some commodities were highly impractical to carry around on one’s person every day. Thus came the need for a portable bartering chip. It seemed that universally, men “[gave] the preference, for [exchange], to metals above every other commodity” (Smith, 38). Thus, metals such as gold and silver began to be used in exchange. They both had universal use value and exchange value, part of their use value being their exchange value. One could wear the metals as jewelry or use them to acquire other commodities they desired. The downfall of using metals was that they needed to be weighed and assayed, and some took advantage of this inconvenience by faking metals to cheat workers out of their commodities. So came the birth of the coin. Coins were weighed beforehand and marked to indicate both the weight and the type of metal used. Over time, “the avarice and injustice of princes and sovereign states, abusing the confidence of their subjects, have by degrees diminished the real quantity of metal, which had been originally contained …show more content…
In the following, let C represent Commodity, M represent Money, and M’ represent a different and greater amount of Money to M. The first process he presents is C–M–C, whose result “is, so far as concerns the objects themselves, C–C, the exchange of one commodity for another” (Capital, 115). According to Marx, the original intent of barter was trading one commodity for another: C–C. When money came into play, it served as a middleman of sorts in this process: C–M–C. Money allowed for a greater amount of trades to occur in that it was universally desired and universally accepted as a form of exchange. For example, a man selling a chair may not always desire a table, but will always desire money; so, he can sell his chair for money and use that money to purchase that which he desires. The escalation from this point where money becomes particularly problematic in the eyes of Marx is that men started using it to accumulate wealth by acquiring more money rather than commodities. This point in exchange is represented by the process M–C–M’, whose “leading motive, and the goal that attracts it, is therefore mere exchange value: (Capital, 160). It has been previously established that workers become alienated from the commodities they make by working to live, the commodities they have lost
In their works, Adam Smith and Karl Marx prove to have differing opinions on money and the division of labor. Although they understand money as a representation of value and as a medium of exchange, they arrive at different conclusions about the role of money in social life. Smith sees the division of labor as a constructive system and a means of furthering exchange, leading to the use of money. Marx, on the other hand, finds labor to turn human beings into alienated workers, and the division of labor to spread and increase this concept. Smith and Marx’s views on the division of labor lead to their different conclusions about money. …show more content…
For Smith, this development certainly had flaws, but the facilitation of exchange through the use of a universal currency outweighs the issues. Smith deals with the history of money by telling the story of how money came to be. After the division of labor, everyone had something of their own making to exchange; so, they would carry around their commodity. However, this proved to be flawed logic, as some commodities were highly impractical to carry around on one’s person every day. Thus came the need for a portable bartering chip. It seemed that universally, men “[gave] the preference, for [exchange], to metals above every other commodity” (Smith, 38). Thus, metals such as gold and silver began to be used in exchange. They both had universal use value and exchange value, part of their use value being their exchange value. One could wear the metals as jewelry or use them to acquire other commodities they desired. The downfall of using metals was that they needed to be weighed and assayed, and some took advantage of this inconvenience by faking metals to cheat workers out of their commodities. So came the birth of the coin. Coins were weighed beforehand and marked to indicate both the weight and the type of metal used. Over time, “the avarice and injustice of princes and sovereign states, abusing the confidence of their subjects, have by degrees diminished the real quantity of metal, which had been originally contained …show more content…
In the following, let C represent Commodity, M represent Money, and M’ represent a different and greater amount of Money to M. The first process he presents is C–M–C, whose result “is, so far as concerns the objects themselves, C–C, the exchange of one commodity for another” (Capital, 115). According to Marx, the original intent of barter was trading one commodity for another: C–C. When money came into play, it served as a middleman of sorts in this process: C–M–C. Money allowed for a greater amount of trades to occur in that it was universally desired and universally accepted as a form of exchange. For example, a man selling a chair may not always desire a table, but will always desire money; so, he can sell his chair for money and use that money to purchase that which he desires. The escalation from this point where money becomes particularly problematic in the eyes of Marx is that men started using it to accumulate wealth by acquiring more money rather than commodities. This point in exchange is represented by the process M–C–M’, whose “leading motive, and the goal that attracts it, is therefore mere exchange value: (Capital, 160). It has been previously established that workers become alienated from the commodities they make by working to live, the commodities they have lost