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Introduction
Society exists with rules and regulations that support it. It is a mingling of different aspects that makes it whole. One important aspect of society that helps balance the needs and wants of the people is Economics, the social science that deals with goods and services.
Any business needs an amount of risk and determination to succeed. The capital is one important factor that determines the future of one industry that is why the amount invested in any given company or business must be carefully monitored if it is being used to the fullest and if it will augment all the needs needed to make it.
Early Roman and Greek civilization based their economic activities largely on the perspective of the Church and ideologies about the society presented by the scholars (Reismann, 1998). Most of the theories used in economics were those that were influenced by the early Greek and Roman empires. Influences that might be seen as little but did have a huge impact on the kind of society that we lived in today (Cunningham and Reich, 2006).
Though everyone will agree that the Greeks and Romans have significant contributions in the different theories on the economy, it was not until the 16th and 17th centuries when tangible writings were presented to the public. This was done by the mercantilists, a group of European scholars, who focuses on exports while minimizing imports in one country (Reismann, 1998). Some of the famous economists who have presented theories about this are James Steuart, Thomas Mun, and Edward Misselden.
As they say, the only constant thing would be to change or develop. During the 17th century, a new group of economists emerges. These are the Classical economists and after which the Austrians and the Germans school have been active in developing theories and beliefs in the field of economy.
Most classical economists share a common point of view on the process of making and distributing products, goods, and services. It was during these times that the term capitalism was first introduced in society as well as the process involved in it. Capitalism has been favored greatly over the idea of mercantilism. Capitalism is the system of producing goods and services as ordered by the employers, which in turn has started the importance of money in daily living and had limited the control of the government over the economic activities of one country (Reismann, 1998).
An economist who had embedded the principles governing economic life and desires of human beings to live and prosper can not help but see the importance of capitalism. Two famous and renowned economists who are also advocates of capitalism are Adam Smith and Karl Marx. No one will argue that these two people have contributed immense knowledge that is still of great importance to society. They are both advocates of capitalism but they also have contrasting viewpoints about capitalism that are worthy of discussion.
Adam Smith
Adam Smith is a native of Fife, Scotland born in 1723. At the early age of 15, he was already being educated by Francis Hutcheson in the University of Glasgow and afterward started his career in the same university as well as in Edinburgh. Some of the most important contributions of Smith that have been preserved are The Theory of Moral Sentiments (1759), An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), Essays on Philosophical Subjects (1795), Lectures on Jurisprudence (1796) and Lectures on Rhetoric and Belle Lettres. Among these, the one that played a significant role in the field of economics is the book “An Inquiry Into the Nature and Causes of the Wealth of Nations” or “Wealth of Nations” as it is more commonly called. Because of this book, Smith was considered an icon in the field of the economy (Rae, 2005).
His works had opposed mercantilism and had promoted a “system of natural liberty”. These had contributed much to the succeeding ideas about the nature of the economy. Though he has not used the term capitalism in any of his works, Smith was still regarded to be the father of capitalism for most of his ideas had been used as the foundation for the theory on capitalism (Dobb, 1973).
Karl Marx
It was the year 1818 that another revolutionary economist was born in the Kingdom of Prussia’s Province of the Lower Rhine. Karl Heinrich Marx or better known as Karl Marx went to the University of Bonn in 1835 at the age of seventeen. His life was a story of struggle and survival. Some of Marx’s writings are Critique of Hegel’s Philosophy of Right, (1843), Economic and Philosophic Manuscripts (1844), The Communist Manifesto (1848) Theories of Surplus Value – Volume 1,2 and 3 (written 1861) [Mehring 2003].
Among his works, the one that caught the attention of the mass is “The Communist Manifesto”. Marx is seen as a revolutionary rather than a scholar. It must have to do with the fact that he was raised in a very climatic situation and society in the Soviet Union State that made his views as it is. His ideals ate still held high by most countries practicing communism (Avineri, 1968).
Contrasting Views of Capitalism
Capitalism is an economic system that deals with the relationship among people. Different economists have a different point of view on how capitalism should be viewed but everyone agrees that aside from the money invested by the employee, the effort was given by the workers also play a crucial role in determining the success of one business or company. Views on how one perceives work and how one determines the effort given by a worker are the major differences of Smith and Marx’s concept of capitalism.
The system of natural liberty as presented by Smith is based on the assumption that a worker will perform based on his own will and on what he perceives to be a right or wrong decision in that given situation. Smith believes in an “unseen hand” that governs an individual’s decision thus in turn affecting the outcome of economic activities undertaken. He believes that freedom in the economic world will in turn result in an orderly pattern with a logical determination that everyone would want to have. Freedom in the economic world, as Smith has seen it, is not something without rules and responsibilities. He still believes that rules and laws should still be taken into consideration when a businessman undertakes industrial competition. Monopolies and government take over are not part of his ideals. “Laissez-faire” was the term given to distinguished his ideals on giving the economy the freedom to set their supply and demand without too much dictation from the government or one specific governing body only. As he has foreseen, a free competition that resulted in an ordered society is caused by the interests of an individual to work, with enough freedom, for himself that benefits the company as well (Dobb, 1973). Smith promoted division of labor in an industry as one way of coming up with a more efficient and improved output. His labor theory of value states that the price given to a specific output depends on the amount of labor that was given to it.
Karl Marx’s objective was the same as other economists are, he also had the growth of the economic system in mind. His ideals differ from Smith in the sense that Marx’s believes in achieving this by giving less room for personal development and workers acting in a way as dictated by few. If Smith wanted the government to minimize control over the economy, Marx believes that success can be achieved if the government and only a few enterprises take hold of the business dealings and give the people only what they need, no more and no less. He had used the term “bourgeois society” to denote how he pictures capitalism in his era. This is a society wherein the power lies in the hand of the few; societies where everyone can be part of any production without taking into consideration other factors like sex, age, or ability. Marx’s ideal on the other hand was to have a classless and stateless society. Communism as they have termed it today is still being practice in some countries though its desired output is still overshadowed by what others see as suppression of freedom.
Smith and Marx’s ideas on capitalism have also affected the system of government that countries have nowadays. It can be assumed that Smith’s principles can be interpreted as democratic views on handling economic activities while Marx’s is an open advocate of communist principles. It would be incorrect to say that one is right and one is wrong in their ideals. One system would work in one product as well as the other. People give high importance to things that they know they would benefit highly from. In our present society, most people give higher importance to their freedom and liberty amongst others, and that Smith’s approach has more faith in the efficacy of the capitalist system rather than Marx’s. Smith’s ideas had shown more efficiency and fairness thus it has won the attention of many and adopted by most economists and businessmen as well.
In an era of globalization, Global trade is becoming the trend in business. In a global economy, the movement of goods and materials is very crucial for the success of a company. When one wants to be known globally, it will market its products around the world, thus the right timing of shipment is necessary for profit. For an individual to grow, he needs to make a sound decision about the changes that he is going to adapt to. The same thing goes for a business establishment or any country. Businesses and companies exist within society and society prescribe behavior norm.
Laws and rules make sure that the competition within a market stays just and fair. When a company operates internationally, there are competition laws that exist within and outside of the United States of America. The laws outside are also called the Antitrust laws, which were designed to make sure that no single company has a monopoly on providing a service or a product. Every company needs to comply with the competitive free market system as they compete in the marketplace. In a globalized economy, there are no borders anymore, no more restrictions; the only difference between states will be the time zones but all places are reachable. Each component contributes to the behavior of the system. No component has an independent effect on the system. The behavior of the system is changed if any component is removed or changed. The system has an outside – an environment – which provides inputs into the system and receives outputs from the system.
Culture sets the business behavior that surrounds a corporation’s code of conduct. These factors include how we perceive the environment, time, power, structures, and space; the emphasis we place on relationships or tasks, on individuals or the collective; how we think and communicate. Productivity within a team needs to be established for this is critical regarding the success of a company. Competition becomes beneficial for one company when because without it there will be no need for innovations and changes in the industry. Consumers have a choice thus companies are always evolving to make their products and company more appealing. Consumers would want something and would need something that they can use anytime and anywhere without so much conflict. A standard that is refined and implementable. Business is not only about numbers and figures but also what society is expecting which is also a company is overall perceived. There are three essential foundations of a successful business; financial, environmental, and social performance. It must be understood that everyone has a life outside of the business or company. Punishments and discipline should be effective. One way of making sure that this is effective is being fair in giving punishments to those who have faults, with no favoritism on the part of the supervisor. This would make them feel that they are working as a team and that they are responsible for their action and their teammates as well. It would help if employees could be felt that superiors are aware of it and that are more than willing to do something about creating a balance between work and private life. Better productivity within one’s work would be achieved if one make has less stress.
References
- Avineri, Shlomo.(1968). The social and political thought of Karl Marx. United Kingdom: Cambridge University Press.
- Comaroff , Jean. (2001). Millennial capitalism and the culture of neoliberalism. Unite States of America: Duke University Press.
- Cunningham, Lawrence and John Reich. (2006). Culture and values: A survey of the humanities. California: Thomson Wadsworth.
- Dobb, Maurice.(1973). Theories of value and distribution since Adam Smith: Ideology and economic . New York: Cambridge University Press.
- Economics. (2007). In Wikipedia, The Free Encyclopedia.Web.
- Giddens, Anthony. (1971). Capitalism and modern social theory: An analysis of the writings of Marx. United Kingdom: Cambridge University Press.
- Mehring, Franz. (2003). Karl Marx: The story of his life. London: Routledge
- Mercantilism. (2007). In Wikipedia, The Free Encyclopedia.Web.
- Rae, John. (2005). Life of Adam Smith. London: Adamant Media Corporation.
- Tool, Marc R. and Warren J. Samuels.(1989). The methodology of economic thought. New Jersey: Transaction Publishers
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