What Capitalists and Marxists Agree and Disagree About
- Spencer Greenberg and Travis M.
- 13 minutes ago
- 10 min read
Short of time? Read the key takeaways.
⚖️ Smith balanced selfishness with sympathy. He's mostly remembered for the role of self-interest in his theory, but Smith also stressed the role of moral sentiments that restrain selfish impulses and make possible the trust and fairness commerce depends on.
🏭 For Marx, who owns productive resources shapes the rest of society. His critique centered on owners appropriating value created by workers. Workers produce more value than they're paid; a worker making $100 worth of goods but earning $40 leaves $60 (minus costs of things like materials) in surplus value captured by the factory owner. This is the foundation of exploitation.
🏛️ Their views of government were more complicated than “less” versus “more.” Smith supported government's role in defense, justice, public works, education, and some regulation. Marx envisaged the workers ruling government only as a transitional phase, but the end point is a classless society in which state power is completely dissolved and only public administration remains.
⚙️ They disagreed about whether capitalism’s problems required replacing capitalism. Smith favored addressing problems such as monopoly privileges and harmful regulations within commercial society. Marx regarded exploitation and recurring crises as rooted in capitalism itself, requiring complete dismantling.
🤝 Both viewed the wellbeing of workers as important and objected to their unfair treatment. Smith criticized employers’ influence over labor laws; Marx made the state’s support for the owning class central to his analysis.
🧠 Shared goals can coexist with radically different explanations and solutions. Smith and Marx both wanted society—including its workers—to prosper, but disagreed about the obstacles and remedies. Understanding a political theory means examining those explanations and proposals, not just its label.
Capitalism and Marxism could hardly be more opposed. But you may be surprised to learn that there were some things that their most famous early theorists actually agreed on. And what they actually disagree on is not as commonly understood as you might think.
Both of these perspectives continue to have a huge influence on society today. Whether you want to improve your ability to understand and analyze contemporary politics, become more historically informed, or you just want to know what people are talking about when they use certain buzzwords, we think it’s useful to learn about the influential theories that have sought to describe and shape society.
To that end, we’re going to take a look at the views of the most famous early thinkers associated with those two radically opposed systems: capitalism and Marxism. We’ll do so without advocating either of them.
In the capitalist corner, we have Adam Smith (sometimes referred to as the “father of capitalism”), who established many key arguments often used in favor of free markets. And in the Marxist corner, we have… Karl Marx, of course.
But before we take a look at what they said, here’s a challenge: can you guess which of the two of them said each of these quotes?
Who said this, Adam Smith or Karl Marx?(Answers listed at the end of the article) Quote 1: “The history of all hitherto existing society is the history of class struggles.” Quote 2: “But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. [...] It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Quote 3: “From each according to his ability, to each according to his needs!” Quote 4: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” Quote 5: “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.” Quote 6: “The less you eat, drink and buy books; the less you go to the theatre, the dance hall, the public house; the less you think, love, theorise, sing, paint, fence, etc., the more you save – the greater becomes your treasure which neither moths nor rust will devour – your capital. The less you are, the less you express your own life, the more you have” |
The answers are listed at the end of this article.
In what follows, we’ll be drawing from the articles about each thinker on our free site, Society Explained, which contains introductory explanations of over 100 different influential theories about how society works (or should work). If you find this article interesting or you want to explore many other theories of society, we hope you’ll check it out.
It goes without saying that not all capitalists agree with everything Smith said, and not all Marxists agree with everything Marx said. Fortunately, Society Explained also contains articles about lots of other thinkers from those traditions. But today, we’re focusing on those two “founding fathers”. First, here are the key points from the Society Explained article for Adam Smith (for the full article, click here):
Two Sides of Human Nature
In Adam Smith's theory, human behavior is driven by two fundamental forces:
self-interest (the desire to improve your own situation) and
moral sentiments (natural sympathy and fellow-feeling for others).
Most people know Smith only for self-interest, but he considered moral sentiments a fundamental and complementary force.
What These Forces Create
Self-interest, channeled through market competition, drives economic coordination. Meanwhile, sympathy and social interaction create an 'impartial spectator' — an internalized moral judge that asks 'would a fair-minded person approve of what I'm doing?' This inner voice restrains our selfish passions and provides the moral foundation of society — including the norms of justice and fair dealing upon which commerce depends.
The Market Mechanism
Several mechanisms create prosperity:
The division of labor (breaking production into specialized tasks) dramatically increases productivity.
Capital accumulation (saving and reinvesting profits) expands productive capacity and enables further specialization.
And the price system (through the tendency of market prices to gravitate toward their 'natural' levels) coordinates individual decisions without any central plan.
The Essential Framework
Smith argued that markets require a framework of law and government to function properly. Government has three essential roles: defense, justice, and public works and institutions (including roads, bridges, and education). Smith was not anti-government, but he argued strenuously that government should stop granting the monopoly privileges and trade restrictions that distort markets.
The Good Outcome
When competition, moral sentiment, and rule of law work together, the result is rising prosperity (especially for the laboring poor, whom Smith cared deeply about) and a commercial society built on trust and self-restraint.
What Goes Wrong
Smith warned extensively about monopoly and cronyism — merchants 'conspiring against the public' by using political influence to restrict competition and gain special privileges. When monopolists capture government, markets become distorted, leading to corruption and stagnation.
Our site, Society Explained, also offers diagram versions of all the theories. Here’s what the one for Smith looks like:
Now, let’s consider Marx’s theory, before comparing and contrasting them. Again, this is an abridged version of the full Society Explained entry (which you can read here).
Private Ownership of Means of Production
In Marx's theory, the most fundamental fact shaping all of society is who owns the 'means of production' — the factories, land, tools, and resources needed to create goods. Marx called this (along with the relations between classes) the economic 'base' of society, and argued it strongly conditions everything else: politics, culture, religion, and law are shaped by the mode of production.
Bourgeoisie, Proletariat, and Surplus Value
Under capitalism, private ownership produces a central class antagonism between two main classes:
the bourgeoisie (capitalists who own the means of production) and
the proletariat (workers who own nothing but their ability to work).
The key mechanism connecting them is 'surplus value' — workers produce more value through their labor than they receive in wages, and the capitalist appropriates this difference. For example, a factory worker might produce goods worth $100 per day but be paid $40; the remaining $60 (minus costs of things like materials) is surplus value extracted by the owner. Marx argued this extraction is the structural basis of all exploitation under capitalism.
State and Ideology Maintain the System
The system sustains itself through two reinforcing mechanisms:
The state — police, courts, military — serves the interests of the owning class by enforcing property rights and suppressing labor movements.
Meanwhile, the 'superstructure' — religion, law, media, education — functions as ideology that makes the arrangement seem natural, inevitable, or divinely ordained.
Exploitation and Alienation
The results are:
exploitation (the structural extraction of surplus labor even when workers are paid the going wage) and
alienation (workers cut off from the products of their labor, from the process of work itself, from other human beings, and from their own creative potential).
Over time, he predicted capitalism would concentrate wealth at the top while producing growing insecurity, dependence, and relative impoverishment among workers — a process called 'immiseration' — even if material living standards sometimes rise.
Internal Contradictions and Crisis
Marx argued capitalism contains built-in contradictions that make it inherently unstable. Capitalism's drive to expand production outpaces profitable investment opportunities, producing overaccumulation and crises of overproduction. Falling wages may worsen these crises, but Marx saw them as rooted in deeper contradictions of the accumulation process itself. Each crisis is temporarily resolved through destruction of capital or new markets, but returns worse than before.
Class Consciousness and Classless Society
As crises deepen and ideology loses its grip, workers develop 'class consciousness' — they recognize that their individual struggles are part of a collective condition created by capitalism's structure, not by personal failure. This awareness leads to organized collective action. Marx envisioned this culminating in revolution where workers seize state power — a transitional phase he called the 'dictatorship of the proletariat' — to dismantle capitalist institutions and hold the means of production in common. As class distinctions are abolished, the state, which Marx and Engels argued exists primarily to enforce class rule, would eventually 'wither away.'
Again, Society Explained offers a diagram version of the theory:
Before we get into what they agree on, what are their main disagreements, really?
Of course, both thinkers wrote a lot more than we’ve covered here, but let’s consider just a few of the most substantial disagreements between Smith and Marx, based on what we’ve learned above.
They disagree on:
1. The source of capitalism’s problems.
Marx argued that the problems capitalism encounters are inherent to capitalism and inevitable under it because capitalism contains built-in contradictions that make it inherently unstable and lead to crises that worsen over time. To pick just one example, Marx argued that free market competition incentivizes businesses to absorb or eliminate competitors, thereby producing concentration of ownership (including monopolies) that reduce or undermine free market competition.
Whereas Smith focused most on problems capitalism encounters when it is distorted it by things like monopolies, merchants colluding over prices, or misregulation. That being said, he did also identify some problems coming from within capitalism (such as from repetitive specialized labor) but argued that these could be resolve through education.
2. What should change in society
Given their different diagnoses of societal problems, Smith and Marx obviously gave different prescriptions.
Smith argued that government should stop permitting various distortions of the market. In doing so, he opposed regulations that sought to protect well-established businesses from competition and he warned of the dangers of monopolies and money in politics. But he wasn’t against all regulation. For example, he advocated some restrictions on banking to protect the public.
Marx argued that the problems of capitalism will be solved when the workers dismantle capitalist institutions, hold the means of production in common (i.e., the tools needed to build things are owned by everyone together), eliminate class divisions, and ultimately dissolve the state entirely.
3. The role of government
For Smith, there are three things the government should be involved in: defense, justice (such as the police and court system), and public works/institutions (such as roads, bridges, and education).
For Marx, government’s essential role in class-divided societies is to enforce class divisions and the rule of one class over the rest. That’s why he ultimately sought to dissolve the state and reduce the government to “simple administrative functions” (after a transitional phase that takes us away from capitalism, in which the government is transformed into one run by workers).
And what do they agree on?
Despite substantial disagreement, Smith and Marx did agree on some things, including:
1. There is unfairness in the way government treats rich vs poor
Both theorists objected to laws that gave employers unfair power over workers. Smith even went so far as to say that:
“Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.”
But the two theorists differed substantially on what to do about it. Both advocated various legal reforms, but Marx favored going further by completely transforming the basis of employment, labor, and ownership.
2. Capitalism has achieved impressive things
Smith obviously had lots of positive things to say about the ways that specialization under capitalism can improve productivity. It might be more surprising to learn that Marx also acknowledged this. He wrote that:
“It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades.”
Marx simply believed that these achievements could also be built upon by a communist society that lacked what he saw as the “naked, shameless, direct, brutal exploitation” of capitalism.
3. To evaluate an economy, the wellbeing of the working class ought to be a fundamental consideration
There are lots of ways to measure the strength or performance of an economy, such as the total market value of the goods and services they produce (a.k.a. “GDP”), the performance of stock markets, or the condition of the average person.
Long before the invention of GDP, Smith and Marx both made a point that is today used to criticize many such metrics: that the workers’ wellbeing should be considered. For Marx, this is hardly surprising, but it can also be seen in Smith’s writings, such as:
“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. [...] they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.”
Ultimately, Smith and Marx were both concerned with seeing society prosper (including the working class). Despite that, they arrived at radically different worldviews. If you found exploring these theories useful or interesting, we hope you’ll consider checking out our free site, Society Explained, where you can explore over 100 different theories of society – all broken down into handy flow charts to help you learn.
You might also be interested in this older article in which we analyze a variety of different worldviews (from American Christian Conservatives to Social Justice Advocates and beyond) by giving their answers to the following questions:
What is intrinsically valuable?
Where does good come from?
Where does bad come from?
Who deserves good things?
What should you do to be good?
How should you learn the truth?
What are the cultural associations with this worldview?
Who are some notable people with this worldview?
What is this worldview’s view of history?
Quote Challenge Answers:
Quote 1: Karl Marx (and Friedrich Engels) (Source)
Quote 2: Adam Smith (Source)
Quote 3: Karl Marx (Source)
Quote 4: Adam Smith (Source)
Quote 5: Adam Smith (Source)
Quote 6: Karl Marx (Source)
