by Zach Neal
Earth
calling Adam Smith. Earth calling Adam Smith…
Come
in, please.
,,,,,hisss………………………………………………………………………. …………
…….. ….
***
He’s been called away or something. We’ll try again
later.
So anyways, Wikipedia has a little article on Adam Smith.
“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.”
And of course my
interest lies in having dinner. I give the butcher money, he gives me some
meat, the brewer gives me beer, (hey,
this is fun) and so on and so forth.
As aphorisms go, that one seems fair enough.
I’m only going to discuss one of his points, just to
show how it’s done:
“Agriculture is less amenable than industry to
division of labour; hence, rich nations are not so far ahead of poor nations in
agriculture as in industry.”
The last part of the sentence holds true. There are
plenty of undeveloped parts of the world where agriculture is still conducted
with a low level of technology, not much better than Smith’s time, with
predictable results.
Things are a little different now.
The gulf between the developed nations and
undeveloped nations in terms of agriculture is vast.
That spread, that ratio has changed since Smith’s
time. Back then, the gap in technology between the developed and undeveloped
world was much narrower. The world has changed, and to the nth degree.
Nothing written hundreds of years ago on the subject
of economics is Gospel. Too much has changed.
Another of his points supports
this thesis by saying, ‘manufacturing lends itself to the division of labour
more than agriculture.’
That’s probably still mostly true. Partially true…
That’s due to the complexity of the processes, for
example making steel—and feeding raw materials, labour and some kind of motive
power into the plant that makes it.
But in the 21st century, agriculture is
more than just lambs in a field and a wife drawing the iron plough with the
baby in a bowl at the end of the furrow, which back then was divided up to
approximately what a man and an oxen could plow in a day. The fields were
common land, narrow strips that were rotated in terms of crops, fallow and
pasture.
Now, agriculture includes a certain amount of
high-technology industrial plant for producing corn starch. It includes a plant
for making vegetable oil, and it includes the makers of combines, tractors,
specialty tires and the chemical industry. It includes distribution warehouses,
transportation systems by land, air and sea, and buyers scouring the world for
new and marketable flavours. All of
it is now connected digitally in a system that allows instantaneous
communication globally, something that would have taken months, back in Smith’s
time.
The visualization required by the modern commercial
landscape is inconceivable to a man of Smith’s day.
They didn’t have the
electronic and digital terms of reference. They wouldn’t have known what we
were talking about, and yet we have the advantage of knowing what they were talking about.
They are history and we are the future of their
agricultural knowledge of the time—some of the speculative philosophers of
Smith’s time might have theorized us,
but only in the most limited fashion.
The division of labour would seem to be fairly
complex, when you consider the GPS and the onboard computers, engine and brake
and transmission control, and all the cell phones and hearing aids, spectacles
on the farmer’s eyes and in the farmer’s pockets and the satellites in space
needed to make such a vast information and communication system actually work.
In that sense, agriculture is totally integrated
into the overall economy. It’s not that it wasn’t before, but now it is more
complex and more far-reaching in the sense of global commerce. This might include a sixty-cent New Zealand apple,
shipped and trucked 12,000 miles, ending up in your supermarket, (and how much
of the food in there doesn’t have some kind of agricultural basis?)
Someone had to figure out how to make that happen,
and surely it’s not a farmer, it’s a specialist.
We are so much more specialized now, and in that
sense the system has evolved into something new.
Our food chain is un-recognizable to our ancestors.
That process, from start to finish, has mushroomed,
and in a sense flourished, all based on some motives of enlightened
self-interest and mutual benefit, all based on that simple notion of a division
of labour. Division of labour causes efficiency
in this great economic engine.
There is also such a thing as division of rewards,
especially when labour is exchanged for money, as this isn’t exactly the same
as an exchange of commodities.
Anything Adam Smith said, way back when, is only of
historical note at this point in time. He set the art of formulating economic
theories on a rational basis, a scientific basis, one using measurable
quantities, and leaving out all supernatural and mystical elements.
Also, I doubt if he foresaw globalization, or if he
could account for a sort of fungus-ring effect, like ripples going out in a
pond from a rock being tossed in. The way industry and jobs were farmed out and
outsourced and ultimately exported to less expensive labour markets, even in
the face of growing prosperity for an ever-increasing number of people.
Maybe free trade is a good thing, but unregulated free trade might not be such
a good thing. Unsupervised and uninspected free trade might not be such a good
thing.
According to Thomas Hobbes (or somebody) ancient men
led lives that were ‘nasty, brutish, poor and short.’
Their lives were pretty simple back then. The human
condition has improved by all statistical measures, and with the increase in
population we can take a better sample even.
You have to be able to measure things, even such
things as progress.
Are
we making progress?
Are
we backsliding, or is this just a temporary glitch in a system that works?
What
causes such glitches?
When
all this has worked itself out, what comes next?
***
Back then, Smith knew virtually nothing of
‘entitlements,’ everything from the GST rebate here in Canada to pensions, home
heating grants, student grants, all kinds of government largesse. Although he
would have recognized patronage, even corruption, as some of the Prime
Ministers of the time (back then, when the whole notion of party was coming into being) governed by patronage, handing out key appointments,
and they somehow kept a government going. Some would forget that that’s what a
government is for—to manage and run a country. As to whether Smith had any
great philosophical notions about social questions, such as the rise of social
capital or the welfare state, or secular humanism, or social democracy, that is
unknown to me. These entitlements are a tool of government fiscal policy, make
no mistake. The government has a social agenda, and well it should have.
“A monarch’s greatest glory lies in the health and
happiness of the people,” still holds true today although I forget who said
it—probably some monarchist somewhere.
However, the point I am trying to make is that a marketplace, which is what Smith was
talking about in his book, is certainly social,
but it is not a government in any
sense of the world.
These are two different things, no matter how
closely intertwined in mutually dependent self-interest.
It is a dichotomy, and a struggle at times to see
which system will rule the other.
It is cause and effect, supply and demand, but it is
up to the government to manage the equitable redistribution of excess
wealth—and the wealth of nations was the subject of his book after all—for the
market seems incapable of doing that fairly and equitably.
Surpluses and excesses that are not reinvested into
the marketplace end up being hoarded and essentially dead to the economy when
its reinjection would do much social good. Cash flow trumps bullion held in
reserve any day of the week.
A nation’s wealth consists not in its visible
wealth, the result of seven or ten years output, but in its actual output at
any given moment in the instantaneous digital world we now inhabit.
As for pensions and the like, which tend to
stimulate local economies, (and
everything is politics, and all politics is local politics,) rather than the
government develop an infrastructure of arbitrary redistribution (strictly
merit-based) they have delegated the supervision of aforesaid monies to me.
Maintaining the health and welfare
of the people, and without people a state has little or no reason (or right) to
exist, creates its own commerce. Adam Smith, I think, would have, or at least
should have, been opposed to austerity. To him, the ideal marketplace was a
model of rationality, but of course real life isn’t like that all of the time.
I choose to redistribute the funds to a local
grocer. They are the most efficient local grocer—hence their prices are lower
and I get more bang for my buck. They have merit. Some folks patronize other
stores—based on their relative perceived merits.
The citizen subsists, commerce flows, the progress
of civilization continues, and the state is perpetuated in a symbolic dance.
The interconnection between commerce for all, and prosperity for all, is easy enough to see.
END
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