This essay will compare the economic principles of capitalism and communism by giving brief historical background on both and describing the two. I will begin with the father of economy, Adam Smith, and finish with the theories of Karl Marx.Adam Smith believed that if everyone behaves selfishly we are doing what is best for the economy of our society. This is what is known as enlightened selfishness. Enlightened selfishness is one of the main elements of capitalism. Profit is the motive for production of goods and greed is a virtue. You can own private property, but to maintain that private property you need capital to invest. Investing in something is always a risk. The larger the risk, the larger the pay-off. In a capitalistic society, the government does what is known as laissez-faire. This means that the government does not interfere with the market. This is known as the hidden hand. The desired result of laissez-faire and enlightened selfishness is competition. Ideally, this competition will bring out the best product for the buyers, and those who produce the best will be rewarded.Before explaining the theories of communism it is necessary to understand the factory system of the time, otherwise known as industrialization. In the mid 1800s, the cottage industry was switching over to the factory industry. The invention of the steam engine benefited the cities closest to water. Many new industries were emerging, but there were many negative effects of industrialization such as the exploitation of the worker. This was accomplished by the regimentation of the working class in the massive factories of the times. The factory system increased production but the workers were poorly treated; struggling to support their family; working 60-72 hour workweeks; suffering the horrors of working with dangerous machinery and they were being paid subsistent wages. The workers were, in general, unskilled and often repeated the same series of actions...
