KARL Marx's philosophical and sociological critique of capitalism centred upon alleged deleterious effects of the market economy upon the worker's inner life as distinct from his 'economic' well-being. The development of private property capitalism and the division of labour caused workers to become degraded or dehumanized, and to reach a state of affairs which is summarized under his oft-used term 'alienation' ('Entfremdung'). Although this concept, which is now the subject of a voluminous sociological, philosophical, psychological, and political literature, has clear Hegelian/ Marxian roots there are important traces of it in earlier writers. It still comes as a surprise to many people when they learn that the first writer to make use of the idea in Britain was Adam Smith. Meanwhile, among those who have for a long time known about Smith's views on 'alienation', there are several scholars who are now confidently drawing from them conclusions to the effect that the Wealth of Nations was an important precursor of Marxist socialism.2 The purpose of the present paper is to draw attention to several misunderstandings in popular beliefs concerning the 'similarity' between the Marxian and Smithian treatment of 'alienation'. A secondary purpose is to reapply the discipline of political economy to a subject which in the twentieth century seems to have become the exclusive province of the other social sciences. In comparing Smith's treatment of 'alienation' with that of Marx we shall not confine ourselves to one source of writing from each author but draw widely from their total works. The first part of the paper