Early Capitalism, Smith, Malthus, Marx and Engels

Throughout the ages societies have struggled to find the perfect economic system. While economists may still be searching, countries like the U.S. have settled for capitalism. However, in the mid-1800s, when capitalism was still struggling to earn its wings, many philosophers foresaw capitalism as collapsing. Adam Smith felt that the growth of the market in a capitalistic society would eventually to come to a halt (Heilbroner1 67). Thomas Malthus saw inevitable doom in capitalism due to the rapid growth of population exceeding the growth of subsidence (Malthus 13). And finally, the infamous Karl Marx and Friedrich Engels called for the proletariats to rise together and form a communistic society because capitalism was destined to be the cause of its own demise.

The foundation of capitalism is the based on the idea of private property and free markets. Individuals are allowed to own property and are encouraged to follow their own self-interest by selling their property in order to increase private capital (Colander 29). From this ensues the “profit motive” generating a natural drive in society to maximize income by offering the best marke

Technology and society changes have also influenced the economy in ways these four men could never have fathomed. Marx, who called for a proletariat revolt due to horrendous working conditions was ignorant to the fact that technology advanced would improve working conditions, thus increasing wages. He also ignored the fact that workers would not be satisfied being stuck as middle class equals; it is human nature to strive for wealth.

Medical advances significantly reduced child mortality rates. This made Adam Smith’s growth model is inapplicable because is assumes that a certain percentage of children will die before working age (Heilbroner2 53).

“The history of all hitherto existing society is the history of class struggle” (Marx 473). Marx and Engels felt that capitalism would inevitably destroy itself and, in doing so, would give birth to its successor; the successor would be communism. “The materialistic view of history” led Marx to believe that the government was only a “political ruling organ of the economic rulers.” Government could never act as a third party between the two classes. The upper class was always going to control government and therefore have control over the lower class (Heilbroner1 161). This belief led Marx and Engels to view capitalism as nothing more than a system of exploitation. In every society there exists one common trait: that “one part of society exploits the other” (Marx 489).

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