Tag Archives: Adam Smith

Is Capitalism to Blame?

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I found it captivating to read The Communist Manifesto Party by Karl Marx and Frederick Engels shortly after discussing Adam Smith’s Wealth of Nations. Smith advocated for industrialization and capitalism in his work. He believed that as a states’ wealth and productivity grew, class disparities within that state would decrease. Marx and Engels disagreed with this idea. Wealthier, stronger entities dominated over less developed ones for centuries during the time these authors wrote their works. Marx believed that capitalism only extended the potential for this issue. He claims in The Communist Manifesto Party, “Modern bourgeois society, springing from the wreck of feudal society, had no abolished class antagonisms. It has but substituted new classes, new conditions of oppressions, new forms of warfare, for the old.”[1] Rather than restricting class disparities, Marx fully believed that the bourgeois society that rose from capitalism exemplified another dominating, ruthless power.

In my senior seminar for International Studies last semester, we discussed how superior races have dominated over “lesser” peoples since the beginning of time. Whether it was during Christopher Columbus’s reign over the Native Americans beginning towards the end of the fifteenth century or Great Britain’s invasion of India during the eighteenth century, more developed nations have always seen it in their interest to dominate over “lesser” people. Through this domination, these superior nations gained land, territory, and, ultimately, power. Marx would argue that capitalism is completely to blame for this continuous power struggle.

christopher-columbus-631I now pose these questions: Is Marx correct- is capitalism completely to blame for the power struggle that continues to exist today? What are some prominent examples that showcase this divide? How can we combat these struggles? How have First World countries made attempts to understand lesser nations? Or have they only made these issues worse?

Picture from: http://edmethods.com/author/tommaloneup/

[1] Karl Marx and Frederick Engels, “The Manifesto of the Communist Party,” in The Communist Manifesto and other Revolutionary Writings, ed. Bob Blaisdell (Mineola, New York: Dover Publicans, 2003), 126.

Fordism Before Fordism Was Cool

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The Industrial Revolution was an important step for many countries during the late 18th century to 19th century, as it changed the way products were manufactured to what is now seen today.  In Adam Smith’s first chapter of, An Inquiry into the Nature and Causes of the Wealth of Nations, the division of labor is seen as a necessity for maximizing the efficiency of creating manufactured goods.  The way Smith describes the importance of the division of labor relates back to Hoffmann in, “European Modernity and Soviet Socialism”, as both emphasize the categorization of the branches of labor and making humans more efficient during their livelihood.  The division of labor sets apart the most powerful countries from rest of the world.  Smith argues that, “In agriculture, the labour of the rich country is not always much more productive than that of the poor…” ((An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith)) ,in his attempt to show that the taste and price of agricultural goods will never diverge too much between countries.  However, countries that are industrialized will be able to sell finished goods of higher quality and lower cost to their consumers.  This in return leads to a society with a higher standard of living, with more people being able to afford various finished products.  

Smith outlines three circumstances necessary for the division of labor to be effective in a state.  Dexterity relates to the time in which one can complete his job in.  If the job becomes more simple, then the worker will be able to complete this job at a faster rate.  The time between each process is the next important part of this outline.  If the time between each process is reduced, there will be more energy being spent on the development of the product rather than the transport.  Lastly, the development of machinery helps increase the overall speed of creating goods.  All three of these concepts are seen to be necessary to build an industrialized society.    

What group of people is this being written for?

Does Smith miss any points necessary for an industrialized society?

Manifesto of the Communist Party

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Of the many thought provoking and avant-garde ideas contained in Karl Marx and Friedrich Engels’ Manifesto of the Communist Party, the core concept is explicitly stated in the opening line of the document where they wrote, “The history of all hitherto existing society is the history of class struggle.” (126) This concept of class antagonisms is alluded to throughout several portions of the text. They believed that the proletariat would ultimately rise up and unify, dissolving all class distinctions to create a society conducted by a tier-less working class. In the process of developing their argument, Marx and Engels described the implications of the bourgeoisie’s rise to power. In this post I seek to expand on this notion.

Marx and Engels wrote that the bourgeoisie had, “replaced an exploitation veiled by religious and political illusions by exploitation open, unashamed, direct, and brutal.”(127) These statements were in reference to how the industrial revolution had created a system of exploitation in which the owners of capital, the bourgeoisie, exploited the wage-laborers, the proletariat, by enacting exploitative labor practices. They believed that the division of labor created a situation where, “He (the worker) becomes a mere appendage of the machine, of whom only the simplest, most monotonous operations are required,” ultimately creating a situation where “the price of a commodity, and therefore of labor, is equal to the cost of its production.”(131) While it is true that the division of labor drastically improves production, Marx and Engels objected to this practice because it marginalizes the worker to the extent where his labor becomes so simplified and monotonous that they lose all bargaining power and leverage against the firm. Adam Smith, in his work An Inquiry into the Nature and Case of the Wealth of Nations, emphatically promoted this division of labor. He did not recognize the inherent pitfalls that inevitably arise with this boost of productive efficiency. Marx and Engels countered this stance by claiming that the increases in production were nullified by the working class’ horrific existence.

Marx and Engels argued that such an exploitative system could only remain in place for a limited time because “the bourgeoisie has not only forged the weapons that bring death to itself; it has also produced the men who will wield these weapons – the modern workers, the PROLETARIATS.” (130) It appears as though these “weapons” which they allude to are products of the very industrial system that has subjugated the working class: new technologies. Marx and Engels wrote, “the union, which took centuries for the burghers of the Middle Ages with their wretched highways, to establish, the modern proletariat achieves by means of railways in a few years.” (133) Once the proletariat rises up against its oppressors it is capable of commandeering the new technologies that they created with their own labor, such as the railroads, to help disperse their new ideas and help the revolution materialize at a previously unfathomable pace.

Question:

In addition to railroads, what other newly developed technologies and structures created by constantly expanding markets would prove to be valuable for the dispersion of communist ideals?

The Wealth of Nations and Essay on Population

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An Inquiry into the Nature and Cause of the Wealth of Nations

Author: Adam Smith. A pioneering economist who developed revolutionary concepts associated with free market economic theory. He argued that rational people, acting in their own self-interest, could create en efficient economic system. He studied in England but was of Scottish decent. He was influenced by the Scottish Enlightenment.

Context: The work was published in 1776. It was published during the beginning of the industrial revolution in response to the outdated economic ideas of the time. The industrial revolution necessitated a new understanding of how a modern economic systems function.

Language: Very clear and concise; he argues his points with many examples and avoids using difficult rhetoric.

Audience: Intellectuals and Industry leaders of the day. Since the language is easily comprehended this work could also appeal to intellectually curious members of the middle and upper classes.

Intent: To explain how the division of labor leads to a boost in output. A team of workers, each of whom have one specific task, can produce a good far more efficiently than one man who must be versed in every phase of production.

Message: Industrialization and the division of labor provide societies with far more good than societies who are less developed and who do not capitalize on the advantages that the division of labor provides. The standard of living in industrialized societies is superior because goods are more numerous and attainable, so there is less disparity between the upper and lower class than in underdeveloped nations. 

 

First Essay on Population (1798)

Author: Thomas Malthus. He was a highly educated Englishmen who had strong ties with the Church of England. He was well versed in the humanities, but also in mathematics. He argued against many popular opinions of the time, which is perhaps why he first published the work under the alias Joseph Johnson.

Context: Industrialization had spurred rapid population growth, especially in urban areas. Many Enlightenment thinkers who believed that society would continue to constantly improve without any hitches surrounded him. Some of his beliefs were in contrast with those of his friends, so he sought to cast doubt on their beliefs by pointing disconcerting population trends.

Language: Eloquent and declamatory. Does a good job hammering his point.

Audience: Targeted towards the intellectuals of the society. He originally wrote this piece in rebuttal to some of his enlightenment-influenced colleagues and friends. Although the text has many repercussions for everyday people, I doubt they composed much of the audience.

Intent: To prove that human society can never be perfected because if it is proven that it cannot be perfected in one particular area, then those who belief it can be perfected as a whole will be proven wrong.

Message: Humanity is trapped in a vicious cycle that coincides with food production and the population. When the population of a particular area reaches a certain point it will usher in a period of misery or vice because the demand for food exceeds the supply. Eventually the situation will become tolerable once again as food production is bolstered through human innovation, but this cycle will once again repeat itself as populations continue to grow past a certain threshold. This reality is unavoidable as it is inseparable form human nature. Thus humanity can never achieve perfection.

ACLAIMing a Great Method for Primary Sources

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An Inquiry into the Nature and Causes of the Wealth of Nations:

 

Author: Adam Smith (1723-1790)

  • British philosopher and key member of the Scottish Enlightenment period; the “father of modern economics”; lots of higher education at the University of Glasgow and Oxford (although he preferred to study on his own when at Oxford).
  • Born into a relatively well-off family; father worked for the government; Smith was able to attend a relatively prestigious school.
  • Close relationship with David Hume, a fellow Scottish intellectual
  • The Theory of Moral Sentiments (1759) made Adam Smith well known in his area
    • Gets him a tutoring job with a young Duke
  • Tutoring job enabled Smith to travel and meet various intellectual greats in the areas he traveled to
    • One of which was Turgot!
    • Tutor job ended in 1766, and Smith returned home soon after

 

Context:

  • Industrial revolution in Britain – technology is moving quite fast
  • Published three months after Thomas Paine’s Common Sense pamphlet
  • Pre-French Revolution → prior to the large class struggle and upheaval → would not have impacted his writing

 

Language: Smith wrote in an educated manner, meant to be understood by those with an educated background. Long paragraphs make it harder to read, and as such, it is quite dense.

 

Audience: Smith presumably was writing for those that could understand him, thus, the educated people of Britain. Economically, this would likely have included the middle class, the bourgeoisie, and the upper class.

 

Intent: Intrigued by the latest developments in Britain, in his writing, Smith appears to be making comments and theories regarding the economic state of Britain. In some cases, he was trying to explain a recent economic history of Britain, and how it could be a model for future use and growth of the nation.

 

Message: In short, Smith advocated the division of labor, and credited it to the increase in the skill of the workforce, the increased efficiency of keeping key information about working between generations of people, and the innovations and inventions in technology. He believed that if the nation continued along these trends, then the nation’s economy would continue to grow.

 

 

Essay on Population

 

Author: Thomas Malthus (1766-1834)

  • English cleric and scholar
  • Born into a relatively affluent family
  • Moved quickly through his higher education, doing well at Cambridge and winning lots of awards and contests
  • His most notable work is the “Essay on Population,” as it is now known as
    • Consistently made updated versions of the essay, between 1798 and 1826, to ensure current examples and to combat critiques

 

Context:

  • The essay originally was not published under his own name
  • The Industrial Revolution continued to persist in Britain
  • There is a large amount of economic and population growth due to increased technological efficiency
  • This is written after Smith’s Wealth of Nations, but is more specifically a response to William Godwin’s Enquiry Concerning Political Justice

 

Language: The language of the essay is very straightforward and easy to read. The essay is structured in a simplistic manner, making it easier to follow than Smith.

 

Audience: Malthus was likely writing for every literate person, so that his warning may spread. However, it was likely more specifically directed towards those with control over population and territorial expansion.

 

Intent: Malthus’s intent was to respond to a rival intellectual’s theories about population and resources. It, in many ways, is a warning to present and future society about perceived limitless expansion.

 

Message: Malthus argued that population growth was very likely to continue due to natural conditions and desires that promote population growth. However, Malthus argues that population and economic growth cannot be unchecked and limitless, because of the scarcity of resources. If population numbers continue to rise, it will increase the risk of famine and disease.

 

 

Smith’s Wealth of Nations and Malthus’ Essay on Population

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The Wealth of Nations, 1776

Author: Adam Smith was a Scottish moral philosopher, and is known as “the father of modern economics.” He enjoyed a thorough education at the University of Glasgow, and after graduating traveled around Europe as a tutor.

Context: Smith wrote The Wealth of Nations during the Industrial Revolution. It was published shortly after Thomas Paine’s Common Sense. At the time, Great Britain’s economy was booming, and it’s imperialist influence was spreading through Africa, the Americas, and Asia.

Language: Smith uses simple and concise language. His ideas are well developed and clearly explained.

Audience: The Wealth of Nations targeted an educated demographic. Smith wanted to influence people who could affect the economy, like business men, philosophers, and political officials.

Intent: The objective was to explain economic ideas, like productivity, division of labor, free markets, and the invisible hand. The first chapter discusses the division of labor

Message: The Wealth of Nations is a collection of ideas that Smith hypothesized would build a nation’s prosperity. The first chapter focusses on the three benefits of the division of labor. Firstly, with divided labor, each contributor is very good at producing his or her product, and can therefore produce a lot of it. Secondly, dividing labor prevents contributors from having to switch tasks, which wastes time. Thirdly, when contributors focus on one simple task, they are more likely to find an easier, more efficient way to perform that task.

Essay on Population, 1798

Author: Thomas Robert Malthus was an English cleric and scholar. He believed that society can never be perfect, and disagreed with many 18th century enlightenment thinkers. He pioneered Malthusianism, which explains the “preventative checks” on populations, such as disease, food supply, and available space.

Context: Disease and famine were common in England, even with the agricultural and medical advancements form the Industrial Revolution. England’s population was increasing, and people were starting to live longer

Language: Malthus uses colorful and descriptive language.

Audience: Malthus’ Essay on Population targeted an intellectual demographic. It’s audience was even more specific than Smith’s Wealth of Nations. Malthus wanted to influence scholars and thinkers like himself

Intent: The goal was to show that society cannot be perfect. There will always be food shortages, disease, and other problems.

Message: There is a cap on every human population. Disease, limited food, and limited space prevent society from increasing forever. Once the population gets too big, people will die off because of a lack of food or space. As the population drops, more food or space will become available. The population will rise again, only to fall as food or space become scarce.

Competitive Industry

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In Comte de Saint-Simon’s The Incoherence and Disorder of Industry, Saint-Simon disapproves and criticizes laissez-faire capitalism for its brutal competitive nature. He views industrialists as self-centered and vain. He claims, “the industrialist is very little concerned about society’s interests.” Saint-Simon has a Hobbesian view on the Industrial Revolution. He suggests that when two men pursue the same career, they inevitably become enemies; their lives become nasty, short, and brutish as they seek glory over each other’s career. Saint-Simon reasons that when masses of people charge into production, the result is disastrous with few industrialists succeeding and the majority victimized and suffering. The hardworking men that lose in these crises become broke and dismayed. These men assume new roles of dishonest characteristics in order to prevent capsizing in the laissez-faire capitalism. In Saint-Simon’s words, these men are “lost to humanity.” Saint-Simon supports an industrialized system where its leaders view society as the primary component and work to settle the needs of the poor.

While Saint-Simon views the laissez faire capitalism competition as disastrous, Adam Smith in his Inquiry into the Nature and Cause of the Wealth of Nations, believes that through division of labor, laissez faire will increase productivity resulting in a higher standard of living. Smith focuses on the value production as the means to success whereas Saint-Simon emphasizes the ill will of man. Saint-Simon’s position assumes that personal and social interests do not coincide and thus government intervention is required to protect the poor. Saint-Simon in his Hobbesian view has little faith in the ability of men to work together for society’s interests rather than personal interests.

Marx Contrasting Smith

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In the writings of the Compte de Sainte Simon, Robert Owens, and Karl Marx, an alternate perspective- other than laissez faire capitalism- regarding industry is approached. Adam Smith- a strong proponent of the productivity that the division of labor supplied the economy- stated that industrial perspectives were the ideal way to support the economy. However, these three writers offer contrasting perspectives that certainly align more with socialism. In “Estranged Labour,” written in 1844, Marx specifically discusses how these economic changes towards industry will actually cause a cultural collapse. Instead of the idea that Smith discusses where industry will expand our economy through efficiency, Marx notes that this move will actually sever the two classes, of which only one will economically benefit. Smith’s focus of production proves to Marx that the quantity of production has overshadowed the quality of lives of those producing the goods. Marx sees that society will become even more divided and the property and factory owners will excel- be able to buy afford more, have more choice due to expanded production, etc- and yet those doing the producing will see none of the benefits of what they create. The gap between the classes will be entirely exacerbated as the workers will never live in the type of society that the goods they produce belong to. Not only does these create an economic gap, but also a largely societal one where the owners and the producers cannot relate on a basic human level: the owner does not respect the worker and the worker resents the owner.

When looking at Marx’s theory of the alienation of the workers and the owners, it is evident that these issues still exist. However, instead of simply having one owner and many workers in a community, the workers that are isolated from society are out of sight in other countries that are easy to exploit and the citizens of wealthy, western nations serve the role of the owners. Our nations’s wealth provides access to the products that the workers slave all day to make, yet they would never be able to afford those products. They work their whole day to create a society they will never live in. In a world that understands both Smith and Marx, have we consciously chosen that exploitation of others because we truly believe in Smith and laissez faire or because Marx is inconvenient?

On Division of Labor

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Smith states that the division of labor significantly improves the productive power in manufacture through three ways: the increased dexterity of workman by repetition, the reduced time brought by the quick transition between workers, and the efficiency brought by the machines. These workers, who perform repetitive and tedious work in order to make accommodations, are only a small part of labor in the industry world. A large quantity and variety of labor is needed in every chain of the manufacturing industry, from collecting the raw material to transporting goods from one place to another. As the industry thrives, more jobs are provided and the economics improves. Therefore it seems that a large supply of labor is good for a country to flourish industrially. In Thomas Malthus’ “Essay on Population,” however, oversize population, which means the people residing on the land exceed the land’s ability to feed them, eventually results in oversupply in the labor market, and the poor will have to live a harder life because the price of labor decrease. “The labourer therefore must work harder to earn the same as he did before,” as Malthus clearly stated in the essay. When putting the two essays together, a question is raised: if the labor lives a worse life while the economy is thriving, who lives a better life? Obviously, the employer.

Is Adam Smith intentionally deviating from the fact that employers are exploiting the labors? He discusses the great efficiency and employment brought by the industrialization, and the peasants actually live a better life than before, in contrast to what Malthus has argued, because, “perhaps, that the accommodation of an European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages.”

Wealth and Population

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Adam Smith primarily focuses the relationship individuals have with one another in a capitalist society, which he describes within An Inquiry into the Nature and Causes of the Wealth of Nations.  Adam Smith begins his inquiry with a look into the division of labor among a population.  Smith determines that the individuals are most productive when they do what they are best at, through their own discovery of his/her own talents and abilities.  With his pin-maker scenario, Smith’s provides an easy to understand example for his ideal working conditions.  In which, Smith says that each step of pin-making is to be completed by a number of different individuals who specialize on one specific part of the process.  Smith views this division of labor to be vastly superior in contrast to an individual doing all the steps in creating a pin.  He believes it this division of labor will increase the amount of work and goods an individual can do, as well as cutting down on the length of time is takes to create a product. Additionally, he states that machinery can be put to more efficient use.Smith continues his inquiry, calling the possibility of maintaining subsistence for humankind.  He thinks that earth is simply incapable of keeping up with the forever increasing human population.

Smith’s sees the division of labor as a vital step into creating a healthy and productive economy.  The specialization of work in each individual allows for a large quantity of a specific piece of a product to be traded and sold to create a more completed product.  This product can then be traded for other products that individuals may require, thus promoting a large scale economy that spreads across nations and continents.