Aristotle, Adam Smith and Karl Marx

Aristotle, Adam Smith and Karl Marx

On Some Fundamental Issues in 21st Century Political Economy

Spencer J. Pack

Spencer Pack compares and contrasts Aristotle’s, Smith’s and Marx’s theoretical systems on six fundamental issues: exchange value, money, capital, character, government, and change. This book also provides insights on issues concerning the continuing development of world money, saving, managerial capitalism, corrupt governments, and various secular and religious movements for social change.

Chapter 7: Adam Smith on Government and Change

Spencer J. Pack

Subjects: economics and finance, economic psychology, political economy, politics and public policy, political economy


Smith departs from Aristotle on the issues of the role of the government, and social change. Unlike Aristotle, Smith is not a wholehearted proponent of what we would now call the social welfare state. Also, he did not view change in general, or historical change in particular, as essentially circular. Rather, there is evolutionary change and development. These are big differences. 7.1 7.1.1 SMITH ON THE ROLE OF THE GOVERNMENT On Mercantilist Policies Smith’s position on the proper role of the government is complex.1 In the first place, Smith was clearly against many (or most) of the governmental rules and regulations in his time. He claimed these rules constituted a system, which he named the mercantilist system. Obviously, Smith opposed this system. As Warren Samuels and Steven Medema succinctly argued in a recent article, If government and law seem anathema in the Wealth of Nations, it is because of Smith’s opposition to the direction of certain activities of government at the time. The point of the Wealth of Nations is not that government is bad, but that government was doing bad things in promulgating mercantilist policy. This does not negate the centrality of government and law. (2005: 225, emphasis in original) 1 Perhaps somewhat paradoxically, I think the complexity of his argument, both here and elsewhere, is obscured by the clarity of his writing style and the smoothness of his exposition. Schumpeter, for one, was taken in by this, actually arguing that ‘He [Smith] never moved above the heads of...

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