1. In The Wealth of Nations, Adam Smith extensively discusses what is natural about human activity in a commercial society. By contrast, Marx extensively insists much of what Smith called “natural” is in fact social. Smith believed that each individual would try to maximize his own utility and gains. As a result, consumers would pay as what they would value the benefit of the good as, and producers would only sell as much as they spent of producing the good or higher based on value. Smith also states that the lowest ranked members of society can enjoy the advantages of the division of labor. In contrast, Marx did not believe that benefits to producers and consumers would both be maximized, insisting that natural is actually social. Marx believed that workers would be exploited by capitalists or owners of the means of production and that this capitalist system favors the rich and not the poor. Further, as the owner, the owner is able to negotiate lower and lower wages for the worker alienating them from their production in the class conflict between the bourgeoisie and the proletariat. This matters as how we think about markets and how embedded or important they will be in our everyday lives and determines if natural, will
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Karl Polanyi demonstrated the fallacy of the idea that the market was self-regulating, which is an idea first articulated by Adam Smith. Similarly, Polanyi argued extensively in this book that Smith was wrong to suggest that the division of labor in society depended upon markets, or, humans’ natural inclination to “barter, truck and exchange.” First, Smith reasoned that the division of labor and exchange are connected. Smith believed the DOL was connected to exchange as the growth is rooted in the increasing DOL, such as specialization and increasing production of commodities. Exchange is enhanced as the DOL increases the production of commodities by saving time, application of proper machinery and the improvement of dexterity of
Karl Polanyi demonstrated the fallacy of the idea that the market was self-regulating, which is an idea first articulated by Adam Smith. Similarly, Polanyi argued extensively in this book that Smith was wrong to suggest that the division of labor in society depended upon markets, or, humans’ natural inclination to “barter, truck and exchange.” First, Smith reasoned that the division of labor and exchange are connected. Smith believed the DOL was connected to exchange as the growth is rooted in the increasing DOL, such as specialization and increasing production of commodities. Exchange is enhanced as the DOL increases the production of commodities by saving time, application of proper machinery and the improvement of dexterity of