All seven economists that were can be compared and contrasted extensively. However, for this essay, Adam Smith, Thomas Robert Malthus, Karl Marx, and Milton Friedman will be compared and contrasted with each other. They all have similarities and differences among their theories and beliefs, but this essay will only discuss a few of them. Smith, considered the father of economics, was a firm believer in a laissez fair method of monitoring the economy. He wanted to leave things alone and work out on their own, rather than have the government step in and control things.
Malthus was a pessimistic economist influenced by the economic conditions of the industrial revolution. One of his theories stated that people grow geometrically, while food can only be produced arithmetically. Marx was the father of communism, and believed that history was a constant clash and resolution of opposite ideas. He also developed the labour theory of value that states that the exchange value of a commodity is determined by the quantity of socially necessary value in it. Finally, Friedman was a firm believer in capitalism and a free market.
He also thought that government interference was bad and developed the natural rate of unemployment. To begin, Smith and Malthus had two very different theories about the effects of labour on the economy. Firstly, Smith saw an increase in the population, therefore the labour force, as a positive thing. He believed that when there is an increase in the labour force, workers would be competing with one another to find jobs, and the industrialists would be able to continue making healthy profits.
Malthus, on the other hand, saw increasing population in a negative way. He said that if the standard of living for people was increased, then there would be a decrease in mortality and increase in population. This increase in population would have a negative impact on the economy, in Malthus’s opinion, because there wouldn’t be enough food to sustain the growing population, since food will only grow arithmetically. To prevent this, he proposed that living standards and wages should be kept lower so the population would not spiral out of control.
So while Smith saw the increase in population as a positive thing that would actually help improve the economy by providing more profits for industrialists, Malthus saw the increase in population as something that would harm the economy. While Smith and Malthus had differences in their beliefs when it came to the increase in population, Smith, and Friedman shared some of the same beliefs and theories. Smith and Friedman were both supporters of free market capitalism, and believers of little to no interference of the government. The free market is defined as a market in where there is no economic intervention and regulation of the state.
Friedman said that free market would allow for stronger basic legal protection of economic rights and freedoms. This would further promote industrial and commercial growth and prosperity. A free market would also support democracy and the rule of law generally in society. Both Smith and Friedman stated that the free markets would be self-correcting; therefore the government would not need to regulate it. The reason Smith thought the government was not needed was because the natural laws of the physical world would eventually maintain the economic system on its own.
Because of this, artificial laws would not be needed to control the economy. Friedman did not want government interference because he believed that government-influenced employment would cause inflation, which would have a negative impact on the economy. Overall, both their theories included the idea a free market would resolve any problems on its own, thus, it did not need any government interference. In addition, both economists felt that the government is inefficient, and not something that is needed to maintain economic prosperity.
While Smith and Friedman shared some of their beliefs about economics, Friedman and Marx had very different ones. Marx and Friedman believed in opposite socioeconomic theories. Marx was the father of communism, so he believed in putting the society before self. Friedman was a firm believer in capitalism, which is extremely individualistic. In communism, the private or individual ownership of land and resources is shunned. This political theory is one that encourages all property to be publicly owned, and each person should be paid according to abilities and needs.
However, in capitalism, private ownership of land and any means of production is encourages. Friedman’s economic theory believes in “survival of the fittest”, and every man for himself. In Marx’s opinion, capitalism would eventually destroy itself because it induced a class struggle between the workers and the capitalists, and that would lead into socialism, which would then lead into communism. Marx wanted the working class labourers to overthrow the industrial capitalists and landlords because they were exploiting the workers.
Capitalism would instead advocate distinction between the classes, and allows the richer class to control the production process and have the power to impose their own whims on society. So, in short, Marx and Friedman had very different socioeconomic beliefs; Marx believed in communism and equality in society, while Friedman thought that it was best when the people of higher classes ruled over the rest. To conclude, the four economists compared and contrasted in this essay had many similar and different theories and beliefs.
Marx and Friedman believed in two extremes of socioeconomic theories; Marx was the father of communism, while Friedman was a major supporter of capitalism. Friedman and Smith shared the belief that governments should interfere less in the economy, since the free market would resolve itself. Finally, Smith and Malthus had opposing views on how population increases would affect the economy; Smith saw an increase in population as a positive thing, while Malthus saw an increase in population as a contribution to the downfall of the economy.