Karl Marx’s reading of Adam Smith

Adam Smith and Karl Marx are commonly viewed as opposites, both in terms of their approaches to political economy and their ideological outlooks: Smith as a champion of individual self-interest and unfettered capitalist development; Marx as the harsh critic of the injustice and irrationality of capitalist commodity production. Marx was, however, in many important methodological and theoretical dimensions, in fact, a “Smithian”. In this paper we explore Smith’s influence on Marx in several dimensions. The most important in our view is Marx’s adoption of Smith’s “long-period reasoning” as the framework for his theories of value, surplus value, allocation of labor and exploitation. Marx instinctively shared many other Smithian views, including Smith’s rejection of diminishing returns to specialization as a limiting factor in capital accumulation, the factors underlying demographics, the role and potential of technical change, and the theory of money. Marx’s “vision” diverged sharply from Smith on the question of the universality of capitalist social relations of commodity production, and the possibility of socialist alternatives to capitalist commodity production as a framework for organizing the division of labor. This paper surveys the areas where Marx found substantial common ground with Smith, as well as the questions on which Marx parted company with Smith through a careful exegesis of Marx’s own discussion and evaluation of Smith’s ideas. This clarifies the ways in which Marx worked from his understanding of Smith as a base to develop his critique of political economy.