Economic Activity and Its Relationship to Return and Growth of Surplus Prepared for Investment

Abstract

Within the framework of classical economic thought, Adam Smith and Karl Marx present different visions of the relationship between the surplus prepared for investment and economic activity. This relationship developed thanks to the role played by imperialism in strengthening its control over this accumulated surplus through geographical expansion and the exploitation of colonies. The problem of the study focused on the great discrepancy between the economic theory presented by Adam Smith and Karl Marx, regarding the impact of economic activity on the return and growth of the surplus prepared for investment, especially under the imperialist system. While Smith believed that the division of labor and the accumulation of capital would lead to increased returns and surplus, Marx believed that the capitalist system leads to the concentration of wealth in the hands of the class that owns the means of production, and this class exploits the working class, which prevents a fair distribution of the economic surplus. Hence, the study seeks to show how we can understand the relationship between economic activity, return, and the growth of the economic surplus, in light of these two theories, and what is the impact of imperialism on this relationship. The study concluded that the organization of economic activity depends largely on the surplus prepared for investment. According to Adam Smith, free markets and free trade stimulate the growth of surplus by raising the efficiency of production. In contrast, Karl Marx believed that the capitalist system supported by imperialism leads to the exploitation of surplus for the benefit of a few owners at the expense of the majority, which deepens the gap between classes. The study also concluded that imperialism played a pivotal role in enhancing the concentration of capital and the exploitation of surplus in colonized countries, which led to the distortion of the process of economic growth and the transfer of resources from local investment to capitalist centers