Adam Smith argued that self-interest is a critical element in a society’s economic development. Karl Marx, by contrast, argued that society functions better when each of us is more community oriented.
Pretend you are either Adam Smith or Karl Marx, and explain economic recession from these perspectives.
- Discuss when greed and selfishness in businesses go too far and become a hazard to society.
I think that Marx would argue that greed and selfishness is intrinsic to capitalism. The presence of extreme and obscene wealth and extreme and shocking poverty represents how capitalism has already gone too far. Marx would make the case that capitalism is a "runaway train" in which it has already gone too far in society. Its presence has to be stopped. For Marx, this requires ownership of the means of production to be public and not private. Privatization under capitalism has led to a "no limit" approach in which the very wealthy have consolidated their power over the very poor without any limitations or regulations. Marx would argue that this is inherently undemocratic, as there are more poor than rich.
For Smith, I think that the argument resides in the presence of the marketplace. Smith saw the marketplace as the embodiment of human rationality and reasonability. Smith would argue that the marketplace can self regulate. When greed and selfishness becomes an element that the marketplace determines as having gone too far, it will react and this becomes the critical factor in deciding what is hazardous to society. External intervention is not needed from Smith's point of view because if the marketplace represents the collection point of reasonability and rationality, there would be no need to limit it through regulation. Smith has faith in a marketplace that can provide a self- corrective mechanism if humans act in a way that is unreasonable.