Adam Smith’s Division of Labor – “stupid and ignorant as it is possible for a human creature to become”

Hi,

Karl Marx wrote the Communist Manifesto in 1848. I just finished a quick analysis of the document for anyone interested. I argue that Marx’s ideas were nothing new. If you wanted to know about the dangers of Capitalism, all you have to do is read from the father of Capitalism himself.

Let’s take a quick look at Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations. This remarkable book appeared in 1776, and is still be regarded as the greatest existing essay in the field of political economy.

Everybody reads the first paragraph where Smith talks about the wonders of the division of labor. Few read to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as “stupid and ignorant as it is possible for a human creature to become”.

Here is the good, the bad, and the outright ugly from Adam Smith’s Wealth of Nations:

The Good:

Introduction and Plan of the Work, Pg. 2:

Among civilized and thriving nations, on the contrary, though a great number of people do no labor at all, many of whom consume the produce of ten times, frequently of a hundred times more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied, and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire.

Book I, Chapter I, Pg. 7:

The greatest improvement in the productive powers of labour, and the greatest part of skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour.

Book I, Chapter I, Pgs. 8-9:

Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth, part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations.

Book I, Chapter II, Pg. 19:

Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.

Book I, Chapter V, Pg. 38:

Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command.

Book I, Chapter VIII, Pg. 81:

A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.

Book I, Chapter VIII, Pg. 94:

Servants, labourers, and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniencey to the whole. No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.

Book I, Chapter VIII:

It appears, accordingly, from the experience of all ages and nations, I believe, that the work done by freemen comes cheaper in the end than that performed by slaves.

Book I, Chapter IX, Pg. 111:

A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have a little, it is often easier to get more. The great difficulty is to get that little.

Book IV, Introduction, Pg. 459.

Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.

Book IV, Chapter I, Pg. 460:

The great affair, we always find, is to get money.

Book IV, Chapter I, Pg. 469:

When the profits of trade happen to be greater than ordinary, over-trading becomes a general error both among great and small dealers.

Book IV, Chapter I, p. 470.

It would be too ridiculous to go about seriously to prove that wealth does not consist in money, or in gold and silver; but in what money purchases, and is valuable only for purchasing. Money no doubt, makes always a part of the national capital; but it has already been shown that it generally makes but a small part, and always the most unprofitable part of it.

Book IV, Chapter I, p. 471.

It is not for its own sake that men desire money, but for the sake of what they can purchase with it. Chapter I, p. 471.

Book IV, Chapter II, p. 486.

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in his view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.

Book IV, Chapter II, p. 488-489:

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

Book IV, Chapter II, Pg. 489:

To give the monopoly of the home-market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.

Book IV, Chapter V, Digression, p. 572.

The man who employs either his labour or his stock in a grater variety of ways than his situation renders necessary, can never hurt his neighbour by underselling him. He may hurt himself, and he generally does so. Jack of all trades will never be rich, says the proverb. But the law ought always to trust people with the care of their own interest, as in their local situations they must generally be able to judge better of it than the legislator can do.

Book IV, Chapter VIII, Pg. 719:

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.

Book IV, Chapter IX, Pg. 749:

Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.

Book V, Chapter I, Part III, Article I, Pg. 786:

The tolls for the maintenance of a high road, cannot with any safety be made the property of private persons.

Book V, Chapter I, Part III, Pg. 820.

Though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from these rules, in consequence of some flattering speculation of extraordinary gain, is almost always extremely dangerous, and frequently fatal to the banking company which attempts it.

Book V, Chapter I, Part III, p. 845.

The education of the common people requires, perhaps, in a civilized and commercial society, the attention of the public more than that of people of some rank and fortune.

Book V, Chapter I, Part IV, Conclusion, Pg. 881:

It is unjust that the whole of society should contribute towards an expence of which the benefit is confined to a part of the society.

Book V, Chapter II, Part II, Article I, Pg. 911:

A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

Book V, Chapter II, Part II, Appendix to Articles I and II, Pg. 935:

All registers which, it is acknowledged, ought to be kept secret, ought certainly never to exist.

Book V, Chapter II, Part II, Article IV, Pg. 951:

If a workman can conveniently spare those three halfpence, he buys a pot of porter. If he cannot, he contents himself with a pint, and, as a penny saved is a penny got, he thus gains a farthing by his temperance.

The Bad:

Book I, Chapter VI, Pg. 60:

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.

Book I, Chapter VIII, Pg. 80:

We rarely hear, it has been said, of the combinations of masters, though frequently of those of the workman. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject.

We should stop for a minute and define Smith’s “Masters”. Smith defines “two of the largest classes of masters” as “landlords and farmers”. Other types of masters are “Merchants” and “Master Manufacturers”.

Book I, Chapter IX, Pg. 117:

Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.

Book I, Chapter X, Part II, Pg. 152:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Book I, Chapter X, Part II, Pg. 168:

Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.

Book I, Chapter XI, Part II, Pg. 202

With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves.

Book I, Chapter XI, Part III, Conclusion of the Chapter, Pg. 292:

The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers.

Book I, Chapter XI, Part III, Conclusion of the Chapter, Pg. 292:

The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

Book III, Chapter IV, Pg. 456:

A merchant, it has been said very properly, is not necessarily the citizen of any particular country.

Book IV, Chapter III, Part II, Pg. 530:

The sneaking arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire; for it is the most underling tradesmen only who make it a rule to employ chiefly their own customers. A great trader purchases his good always where they are cheapest and best, without regard to any little interest of this kind.

Book IV, Chapter III, Part II, Pg. 531:

In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people.

Book IV, Chapter VII, Part Second, Pg. 619:

The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.

Book IV, Chapter VII, Part Third, Pg. 684:

Monopoly of one kind or another, indeed, seems to be the sole engine of the mercantile system. 

Book V, Chapter I, Part II, Pg. 770:

Wherever there is great property, there is great inequality. 

Book V, Chapter I, Part II, Pg. 775:

Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.

The Ugly

Book III, Chapter IV, Pg. 448:

All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.

Book IV, Chapter III, Part II, Pg. 531:

The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit a remedy.

…And my favorite. Smith gives us the logical conclusion to the process of division of labor.

Book V, Chapter 1, Article II, Pg. 616-617:

In the process of division of labour, the employment of the far greater part of those how live by labour, that is, of the great body of people….The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.

But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people must necessarily fall, unless government take some pains to prevent it.

[Man falls] into that drowsy stupidity which, in a civilized society, seems to benumb the understanding of almost all the inferior ranks of people.

So, we start with all the wonders of the division of labor and end with all they misery which such a system produces. Like I said earlier, we don’t need Marx to tell us about the horrors of the new capitalist system. Adam Smith himself warned us.

Thanks for reading,

Notes

References are to book, chapter, subdivisions and (in some cases), paragraph, as given in the Glasgow edition (see below). Other editions include book and chapter only. Page numbers are included as a locational help.

Smith. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. R. H. Campbell and A. S. Skinner. 2 vols. Glasgow Edition of the Works and Correspondence of Adam Smith 2. Oxford U. Press, 1976.

Complete Online Version: An Inquiry Into The Nature And Causes Wealth Of Nations by Smith Adam

 

 

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