Tag Archives: Wealth of Nations

Division of Wealth and Labor

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The distributed wealth among nations is never going to be the same and there are many factors that go into that wealth. One factor that economist and philosopher Adam Smith talks in An Inquiry into the Nature and Cause of Wealth of Nation about is the division of labor. Division of Labor is characterized as “Narrow specialization of tasks within a production process so that each worker can become a specialist in doing one thing”.[i] This concept of division of labor changed the way of thinking in terms of production due to the fact that manufacturing could be done all year, unlike agriculture.

Manufacturing is an all year around practice while the practices of agriculture can mostly be seasonal depending on locale. Nations that have more wealth than others weren’t necessarily ahead of other nations in agriculture but were further ahead in manufacturing and production due to the discrepancies in wealth among different nations. Transportation was also a big key those nations who had large manufacturing operations. In the beginning it was easier for cities closer to waterways to transport their product because it was easier to get the product from the manufacturer to the customer. The discrepancies in wealth among different nations can cause for loss of market share for certain nations that don’t have the money to compete with larger nations.

Division of labor is not only more efficient that one man doing all of the work, it allows for more creativity and innovation in whatever field the manufacturer is in. Division of labor is like an assembly line where each employee has one specific task to complete in the process of production. Innovation can be elicited from this concept of division of labor in the way that each employee has one specific task and they could find different tools or different methods to complete their task. Innovation can lead to being more productive if an employee can find a quicker way to produce their part of the product.

The wealthier you are as a nation the more you are going to prosper. This is the case for the nations who have a larger hand in manufacturing because it’s a more efficient way to produce a variety of products. This book birthed the mark of capitalism. In chapter one, it showed how manufacturing can be a weapon of capitalism and how nation can further increase their wealth.

[i] ((http://www.businessdictionary.com/definition/division-of-labor.html#ixzz3zigkaacd)

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.

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.

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.

The Wealth of Nations and Essay on Population

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Chapter 1 of Smith’s famous text argued that specialization is key to economic growth. He explained how making each man a master of his particular trade makes production faster and leads to further innovation; a cycle of rapid growth then ensues. This growth spreads more wealth over more people, narrowing the gap between princes and peasants. Malthus, in his First Essay on Population, debunked Godwin’s argument that a more egalitarian society and economics will end poverty. Malthus mainly argued that population inevitably reaches an equilibrium with subsistence because population naturally tends to increase but subsistence is definite.

These two philosophers’ arguments are more closely related than they seem at face value. Malthus argued that population is limited by what the earth has to offer. Smith proposed a way to make production much more efficient–specialization. Increased specialization, makes production of materials, all of which are either directly or indirectly from the earth, more efficient. Therefore the more efficient production becomes, the more people the rather can support. The only true limitation on the human population is technology, which is forever developing at an increasing rate. Thus population capacity can never be accurately predicted. The factors which we see at limitations to the population capacity now are mainly space, food, water, and clean air. However, what if science brings up the ability to turn all waste from resources into new resources? Then space would become the final limitation. What if we then develop a way to live at higher elevations or beneath the sea? Questions like these seem unreasonable at the present day, but who could have predicted that nuclear energy would possible one thousand years ago?