Adam Smith and the Division of Labor

Gavin Kennedy at Adam Smith's Lost Legacy says Adam Smith was "on the side of the labourers on the issues that mattered most to them: higher wages are preferred to lower wages, a point worth remembering, I think, on Labour Day.":

Adam Smith and the Importance of the Liberating Force of the Division of Labour, by Gavin Kennedy:  Daniel Bulone writes in Tunnel Vision (‘Observations on Exchange’), 1 September: “Adam Smith: Machine-Minded Misanthrope or Merry Man of Manufacture?” Here:

“Adam Smith lived in a time when industry was on the verge of revolution. A unique relationship between workers and machines had begun, one in which the two worked together, in an almost equal partnership, to produce marketable goods. This leads one to wonder if the newfound brotherhood of man and machine affected Smith’s writings. What is more, did Smith see people as a means toward an end? It is hard to avoid thinking as much, when he speaks of workers in terms of what they can produce. ... It is true that he was a scientist, whose job was to quantify the activities of workers. However, the way he speaks of the division of labor makes it seem as though it is a way to transcend the bothersome tendencies of humanity. ... Essentially, Smith’s process involves the greater value of the whole above that of the individual. According to him, people achieve maximum efficiency when they are cogs in a vast network of industry.

In addition to thinking of people as commodities, he does not have a particularly sunny view of humanity. When speaking of a common workman in WON, Smith states that the problem of too many tasks at once “renders him almost always slothful and lazy, and incapable of any vigorous application.” ...

Comment
This is rather a sad way to look at Adam Smith on the division of labour.

Smith’s approach, as a moral philosopher, was ‘to do nothing but observe everything’, and in his case he took the long-view of history to explain how and why a section of humanity in Europe had created societies somewhat advantageous to the spread of opulence compared to the stagnant 18th-century societies of India and China (the latter in the 15th century was on the verge of becoming the world’s leading economy – it had the technology - until it deliberately aborted its development on the instructions of a totalitarian emperor by cutting all links with other civilizations).

Also, compared to the earlier societies (‘the Age of Hunters’) of North and South America, the ‘meanest labourer’ in 18th-century Scotland was considerably richer in his annual consumption of goods than the ‘richest’ Indian (and African) Prince (Wealth Of Nations, I.i.11: pp 23-4). The difference in living standards (appalling as they may appear to appear to modern consumers) was down to the enhanced divisions of labour in Europe.

Instead of being relatively independent of others – each hunter going into the forest and with his own tools catching something for his family to eat, building his own shelter for the night and covering himself and his families with animal skins – the initial division of labour came from the propensity to truck, barter, and exchange one thing for another. Some people made arrow heads and flights for their arrows, others exchanged game for arrow heads, and so on. In doing so they became less independent and more dependent on their fellows and the mothers of their children.

The ‘pin factory’ by no means is the most important aspect of the division of labour in Adam Smith's view, though it is important to indicate the productivity consequences of co-operative labour, which is a singular matter of importance for the spread of opulence, especially among the lowest paid. ...

Indeed, it is in productivity gains all along a final product's supply chain, and the many separate supply chains connected to points on it, that is main the source of economic growth and the spread of opulence, which constantly works away under the entrepreneurial drive and technological enhancement brought about by thousands of others.

Allyn Young considered that

"Adam Smith's famous theorem that the division of labour depends upon the extent of the market … I have always thought, is one of the most illuminating and fruitful generalisations which can be found anywhere in the whole literature of economics".

This observation is particularly authoritative today because Young’s 1928 article in The Economic Journal article has recently promoted developments in modern growth theory away from its early versions (Harrod-Domar, Solow) towards recognizing increasing returns.

Smith went well beyond the restricted single-product example of a pin factory, with which most people associate his name, in his crucial example of the ‘multiplicity of trades’ in the making of a common labourer’s woollen coat, the ‘produce of the joint labour of a great number of workmen’, during which he displays emphatic and unusual excitement by placing exclamation marks at the end of three consecutive sentences, the last concluding: ‘What a variety of labour too is necessary in order to produce the tools of the meanest of those workmen!’(WN p 23) ...

The more developed the society, the more interconnected are the separate markets for each good or service.

It is the extent of the market that drives the division of labour and the division of labour that drives the extent of the market. By considering only the ‘pin factory’ example of an aspect of the division of labour, Daniel Bulone (like many others before him) may have missed entirely the grand sweep of Adam Smith’s analysis, as well has missing the essential humanity of his outlook on the pressing need to liberate the labouring poor from drudgery of extremely low incomes.

The latter paragraphs of his post on Smith the ‘cynic’, and so on, are particularly unhelpful of understanding his general disposition that high wages are better for all concerned than low wages:

Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society?*38 The answer seems at first sight abundantly plain. 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 inconveniency to the whole. No society can surely be flourishing and happy, of which the far 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, cloathed and lodged… (WN I.viii.36: p 96)

And:

…The liberal reward of labour, as it encourages the propagation, so it increases the industry of the common people. The wages of labour are the encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentiful subsistence increases the bodily strength of the labourer, and the comfortable hope of bettering his condition, and of ending his days perhaps in ease and plenty, animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low (WN I.viii.44: p 99).

I would have thought these sentiments would place Adam Smith on the side of the labourers on the issues that mattered most to them: higher wages are preferred to lower wages, a point worth remembering, I think, on Labour Day.

Comments

[Barkley Rosser]

Two commments:

1) It would appear that Daniel Bulone has not read _The Theory of Moral Sentiments_.

2) In fact when Smith wrote WOT, machine manufacture had not really gotten going big time, or barely at all. It came out the same year as Watt's improved steam engine, which would allow such a greater degree of dehumanized cog in wheel systems, but in 1776 most "manufacturing" was indeed done by peoples' hands, as the word actually suggests ("manu" means "hand," so "manufacturing" is literally "making by hand" not "with machines" as it is now). Go read the pin factory example, not a lot of machines there, although, of course, such a mostly manual manufactory might still be alienating in an old fashioned, more or less Marxist way, with the first known industrial strike dating back to the late 13th century in Flanders in a textile manufactory that certainly had at most very rudimentary machines.

[Everyone Loses, Except the Lucky Few]

What good are higher wages if prices rise faster than wages do? A few decades ago a single median wage could easily support a family. Now thanks to constant inflation, the median wage can no longer do so. Retirees standard of living is falling each and every year thanks to inflation. What a rip off.

The next time $300 billion is created out of thin air, send all citizens an equal check for $1000. Prices will still go up, but everyone will at least get a slice of the pie. Why should a lucky few live high on new money while everyone else loses ground over time.

[Noni Mausa]

An indication of the "manual" part of manufacturing shows up plentifully in English proper names. (Others too, but I know the English ones best.)

Fletcher, Cooper, Turner, Weaver, Fuller, Fowler, Potter, Wainwright, Cordwainer... it hasn't been that long since people knew what all these were.

Hint: you don't want to be a fuller.

[robertdfeinman]

Two observations.
1. The most highly prized items in modern society are still those made by an individual craftsman or under his guidance. Since the 1960's there has been a movement back to handicrafts (building on the earlier Roycrofters and similar). This showed up in all the woodworkers, potters and the like that moved to Vermont and similar places. The recent surge in organic food and farmer's markets is another example.

Mass production may be good at making consumer goods, but they tend not to be highly prized. Not only are the workers treated as indistinguishable but so are the products. The ongoing challenge of advertising is to disguise this fact.

2. There was an obvious benefit to all in the industrial revolution (at least eventually) as the comforts of life became widely available. We reached the point where we had all that we reasonably needed somewhere in the 1950's with the advent of TV and affordable automobiles. Ever since we have been buying more than we need as consumerism has replaced other values in life. Sure the internet is an improvement, but a small one.

The only area where the quality of life is still improving is in medicine. Dying or being permanently disabled by disease tends to take the fun out of life!

This is why I keep harping on the idea that we have reached the limits of what capitalism can provide. It is geared towards more "stuff" whether it's needed or not and whether the world can afford the ecological burden that producing it places on resources. If the pattern holds I expect to see some pundits with a bigger platform than mine discussing "getting more out of life" two years from now.

I do have a bit of a Cassandra complex...

[ken melvin]

Seems all about maintaining the status quo.

[stick]

Labor day always reminds me of Marx's discussion of productivity gains and a 35 hour work week in Capital Vol. III. Using productivity gains to liberate people from their labors in pursuit of more "human" pursuits seems like an ideal rooted in the Enlightenment and worthy of consideration in public discourse...

Damn Weber and his insight into our Calvinist souls!

[kevin quinn]

The other neat thing about Smith on the DOL is the implicit egalitarianism, as David Vevy and Sandra Peart have reminded us. For Smith, while some part of the advantages derived from the DOL are a function of exploting pre-existent differences betwen people, by far the bulk of the gain he attributes to differences created by specialization. The street porter and philosopher are only different as a result of their different positions in the DOL; human beings are basically alike.

[Ronald Rutherford]

Adam Smith and the Division of Labor

Gavin Kennedy at Adam Smith's Lost Legacy says Adam Smith was "on the side of the labourers on the issues that mattered most to them: higher wages are preferred to lower wages, a point worth remembering, I think, on Labour Day."
I guess with that analysis and no concept of an "ideal level" then why not transfer all output to labourers wages? It seems that Communist regimes tried that.

This also neglects capital accumulation and human capital formation. Or am I missing something, Dr. Thoma?