From: hauben@cunixf.cc.columbia.edu (Michael Hauben)
Subject: The Real Voice of Adam Smith
Organization: Columbia University
Date: Mon, 14 Sep 1992 01:11:43 GMT








                        The Real Voice of Adam Smith
                

Michael Hauben
     An Inquiry Into the Nature and Causes of The Wealth of
Nations focuses on the wealth of nations; which is the fund the
"annual labour of every nation" produces. (Modern Library, 1965,
p. ivii) From the very introduction of The Wealth of Nations,
Adam Smith concentrates on the laborer, the person who's labor
constitutes the wealth of the nation. A common thread throughout
the book that has received very little emphasis is Smith's
empathy for the common worker. Smith believes that there should
be a fair relationship between employers and workers. 
     
     The interests of society are Adam Smith's interests. Smith's
empathy for the common laborer stream from the interests of
society. In Book I, Chapter XI, Smith equates the interests "of
those who live by wages" with "the interest of the society."
(249) However the "interest of this third order," which is "those
who live by profit," or manufacturers, "has not the same connec-
tion with the general interest of the society" as do the workers
or land-owners. (250) Smith explains these differences by writing
"As their thoughts, however, are commonly exercised rather about
the interest of their own particular branch of business, than
about that of the society." (250) Interests that sway from those
of society's, often hurt society. Smith writes:
     
     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 occa-
     sions, both deceived and oppressed it. (250)

Smith is critical of this deception and oppression. Smith equates
     
     a well-governed society as one where the whole of the people gain
     from the society's production. In the beginning of Book I, Adam
     
     Smith writes:
     
     It is the great multiplication of productions of all the
     different arts, in consequence of the division of labour,
     which occasions, in a well-governed society, that universal
     opulence which extends itself to the lowest ranks of the
     people. (11)

This differentiates from when only the manufacturers or certain
classes of society gain from society's production. A society's
improvement as a whole is linked to "what improves the circum-
stances of the greater part" of society. (78) Smith states that
"servants, labourers, and workmen of different kinds" (78) make
up the greater part of every political society. He finishes this
sentiment by writing, "No society can surely be flourishing and
happy, of which the far greater part of the members are poor and
miserable." (78) His statements point out that high earnings of
labor are an advantage to society.
     
     The attempts the manufacturing class use for their advan-
tage, in total disregard of the workers, hurts the society since
the wealth of society is made up of the production from the great
collection of individuals who are the workers. In the striving
for employer's "personal" gain, the individual workers are hurt
and thus society is hurt. Adam Smith is thus against inflated
profits which the manufacturing class always seek. He is vehe-
mently opposed to the opportunities allowed to monopolies. Smith
writes:
     
     The monopolists, by keeping the market constantly under-
stocked, by never fully supplying the effectual demand, sell
     their commodities much above the natural price, and raise
     their emoluments, whether they consist in wages or profit,
     greatly above their natural rate. (61)

In the search for greater and greater profits, companies neglect
or purposely attempt to keep wages down and raise prices so as to
collect higher and higher profits. Smith reports this in the
following:
     
     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 execut-
     ed, or would be consistent with liberty and 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 then necessary. (128)
     
     When the manufacturer's interest is for the highest profits,
the worker is the first to be affected by this policy. Among the
first place a manufacturer can gain is by increasing the percent-
age of income that goes to profit while lowering the percent that
goes to the worker as wages. Smith explains this conflict:
               
               What are the common wages of labour, depends every
     where upon the contract usually made between those two
     parties, whose interests are by no means the same. The
     workmen desire to get as much, the masters to give as
     little as possible. The former are disposed to combine
     in order to raise, the latter in order to lower the
     wages of labour. (66)
     
     The manufacturer is frustrated by the worker's contradictory
role. On the one hand, the worker's labor is integral to produc-
tion. On the other hand, the worker's wages represent a drain or
reduction in profit. The crucial contradiction lies in the well-
being of the worker. While being contrary to the wants of the
employer, the worker must be able to live and support a family to
continue able production for his employer. Adam Smith writes:
     
     A man must always live by his work, and his wages must
     at least be sufficient to maintain him. They must even
     upon 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 genera-
     tion. (67)

It is thus in the best interest of the employer to keep their
workers well paid in order to keep production high. Smith goes on
to write:
     
     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, im-
     proves in proportion to the encouragement it receives.
     (81)

In this case high wages keep productivity which leads to higher
profits for companies: 
     
     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. (81) 

Smith explains that high wages are a common interest of both
workers and manufacturers in that productivity is direct affected
by the wage rate:
     
     Where wages are high, accordingly, we shall always find
     the workmen more active, diligent, and expeditious,
     than where they are low; (81)

Often the manufacturer's reliance on the workers restrains some
otherwise tempting activity. He writes:
     
     The pretence that corporations are necessary for the
     better government of the trade, is without any founda-
     tion. . . . It is the fear of losing their [workmen]
     employment which restrains his frauds and corrects his
     negligence. (129)
     
     Adam Smith talks about the use of laws and regulations.
While the common belief is that Adam Smith is against such
measures he comes out in favor of laws in favor of workers. He
writes:
     
     Whenever the legislative attempts to regulate the
     differences between masters and their workmen, its
     counsellors are always the masters. When the regula-
     tion, therefore, is in the favor of the workmen, it is
     always just and equitable; but it sometime is otherwise
     when in favor of the masters. (142)
     
     Much is made of the "father of deregulation." Adam Smith has
been designated such by many in the field of economics. His
connection takes on a mythical role. These connections are taken
for granted, and perhaps, like mythical legends are not always
true. Adam Smith's beliefs have been stereotyped so when someone
says "individuality" or "deregulation", we are supposed to think
"Adam Smith." The actual reading of Smith's books must be a
curiosity because he constantly winds up supporting the rights of
workers and seeking a fair relationship between employers and
workers. While Smith is connected to "laissez faire" economics,
throughout The Wealth of Nations, there is a strong sentiment
that society is better off when the common worker is treated
good.
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