Adam Smith vs. Karl Marx, living in the typical capitalist community in the United States, it is much easier to relate to the thoughts of Adam Smith. This is not to say that I do not agree with some of the precepts of pure Communism, but like the old adage says, Communism looks good on the outside.
Adam Smith states his opinion on the mercantile system and its faults, while he dissected, clarified, and revolutionized the mercantilist economy and advocated the classical economy. Smith disagreed with the regulation of economic activity by the State in the interests of the merchant classes. He proposed a free, competitive market, which through an "invisible hand" would do a better job in guiding the economy than the mercantilists.
He emphasized the invisible hand: Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it.
The system in which the invisible hand is most often assumed to work is the free market. Adam Smith assumed that consumers choose for the lowest price, and that entrepreneurs choose for the highest rate of profit. He asserted that by thus making their excess or insufficient demand known through market prices, consumers "directed" entrepreneurs' investment money to the most profitable industry. Remember that this is the industry...